Healthcare stock to watch: Healthequity Inc (NASDAQ: HQY)

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Healthequity Inc (NASDAQ: HQY) stock lost over 1.4% on December 5th, 2017 after hours as the group narrowed their guidance range. They forecast a revenue outlook from $223 million to $228 million range to a range in the range of $225 million and $228 million. Their net income outlook is narrowing from a range of $41 million and $45 million to a range between $43 million and $45 million. HQY stock lost over 4.6% in the last four weeks but gained over 15.6% in the last three months.

 

The group reported a Revenue rise of 31% year-over-year to $56.8 million in the third quarter of 2017 with adjusted EBITDA rising 46% year-over-year to $21.2 million. HSA members topped $3 million for the first time and surged 27%on a yoy basis. Custodial assets rose 30% yoy to $5.6 billion during the quarter. Service revenue enhanced 22% on a year-over-year basis to $23 million during the third quarter. On the other hand, service revenue, as a percent of total revenue, fell to 40% during the third quarter as compared to 43% of total revenue that it represented in the third quarter last year.

Invested assets comprised over 18% of custodial assets at the end of the quarter, while Interchange revenue enhanced 22% yoy to $11.7 million in the third quarter of 2017 from $9.6 million in the third quarter last year. Interchange revenue was driven by 27% on a year-over-year rise in average HSAs in the quarter against pcp which offset lower spend per average HSA against the earlier year.

The group opened 109,000 new HSAs during the quarter, which is an increase of 23% as compared to pcp. HSA members added $150 million in custodial assets during Q3 and that’s 81% rise against pcp. They added a further 14,000 HSAs and $55 million in custodial assets from their friends at First Interstate Bank for a total of 123,000 additional HSAs and $205 million in custodial assets in the quarter. They enhanced their Gross profit by 30% in the third quarter to $33.7 million from $25.9 million in the prior year, for a gross margin of 59%.

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