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

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Healthequity Inc (NASDAQ: HQY) stock rose over 3% on 4th December, 2019 (as of 9:38 am GMT-5; Source: Google finance) after the company posted better than expected results for the third quarter of FY 20. HealthEquity has reported a non-GAAP net income of $32.8 million for the third quarter ended October 31, 2019 compared to non-GAAP net income of $20 million in the third quarter ended October 31, 2018. The company delivered the adjusted EBITDA of $55.5 million for the third quarter ended October 31, 2019, which increased 87% compared to $29.7 million for the third quarter ended October 31, 2018, and 24% excluding the impact of the WageWorks acquisition and related net realized synergies. At the end of October 2019, HealthEquity had generated $174.6 million of cash and cash equivalents and $1.2 billion of outstanding debt, net of issuance costs. This is compares to $361.5 million in cash and cash equivalents and no outstanding debt at the end of January, 2019.

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Moreover, HSA members reached 5 million and HSA assets, $10.5 billion, will be, at quarter’s end, which is a growth of 37% and 48%, respectively, year-over-year. Total Accounts at the end of October, 2019 reached 12.5 million, including 7.5 million CDBs, 6.8 million from the WageWorks acquisition. Further, HealthEquity had reported sales of 141,000 new HSAs in the third quarter ended October 31, 2019, about  18% more than in the year-ago period. HSA members grew their balances by about $260 million in the third quarter, more than four times greater than in the year-ago period, which is on back of both large net inflows and a positive market backdrop.

HQY in the third quarter of FY 20 has reported the adjusted earnings per share of 47 cents, beating the analysts’ estimates for the adjusted earnings per share of 22 cents, according to Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 123 percent to $157.12 million in the third quarter of FY 20, beating the analysts’ estimates for revenue by 3.29%.

For fiscal year 2020 for the combined HealthEquity, which includes five months of WageWorks’ operating results, the company projects the revenue to be in the range of $520 million and $526 million. The net income is expected to be in a range of $16 million to $20 million, resulting in net income per diluted share range of $0.24 to $0.28. The Adjusted EBITDA is projected to be a range of $182 million to $186 million.

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