HealthEquity Shares Drop 19% as Higher Service Costs Weigh on Earnings
HealthEquity (HQY, Financials) shares fell 19% to $82.29 as of 11:15 a.m. ET Wednesday after the company reported fourth-quarter earnings that showed strong revenue growth but a lower-than-expected profit due to higher service costs.
Warning! GuruFocus has detected 3 Warning Signs with HQY.
With a sales of $311.82 millionan 18.8% rise from the previous yearthe firm exceeded experts' projections by $5.99 million. But profits per share came in at $0.69, below projections by $0.03. Strong year over-year increase in Health Savings Accounts, invested assets, and custodial income drove the results.With 17 million total accounts at end of the quarter, HealthEquity had 9.9 million HSAs totaling $32 billion in assets. 23% more members of HSAs made investments, which helped to boost invested assetswhich came to $14.7 billionby 44%.Gross profit margin dropped from 62% a year ago to 61% notwithstanding income increase. The corporation blamed the decline on extra $17 million in service costs, mostly for system consolidation of card processing and handling of fraudulent activity in member accounts.On the results conference, Chief Financial Officer James Lucania said HealthEquity keeps improving fraud prevention strategies and anticipates service expenses to remain high in the first half of fiscal 2026 before leveling later in the year.Expecting revenue between $1.28 billion and $1.305 billion, HealthEquity offered direction for fiscal 2026. Projected GAAP net income falls between $164 million and $179 million, or $1.85 to $2.01 per share. Forecasts of adjusted EBITDA fall between $525 million and $545 million.Driven by fresh deposits and a change toward enhanced rate placements, the business also anticipates the average return on HSA cash to rise to 3.45% over the year. With an aim to achieve 60% by the end of fiscal 2027, 49% of HSA cash placements now are in improved rates.The firm unveiled its Assist suite of digital solutions meant to maximize advantages for businesses and workers. Along with Navigator, a tool created with TALON to assist educated healthcare choices, the portfolio has Analyzer, which offers statistical insights on benefit patterns.HealthEquity keeps making investments in security and fraud avoidance while giving cost savings via service automation first priority. To simplify processes and lower service costs, the corporation intends to deploy digital technologies and artificial intelligence more widely.Under its $300 million buyback authorization, HealthEquity has $178 million left after purchasing $122 million worth of shares in fiscal 2025. The corporation also paid back loans totaling $50 million, leaving around $1.1 billion in outstanding borrowings.Regarding possible acquisitions, Cutler said the firm has a high bar for M&A and emphasizes portfolio purchases in line with its main business instead of broad development.The business is keeping an eye on legislative actions like the bipartisan HOPE Act and other regulatory changes pertaining to HSA growth. Cutler expressed hope for possible legislative reforms meant to increase the acceptance of HSA.Expanding its HSA platform, enhancing digital engagement, and tackling fraud-related issues are HealthEquity's top priorities. Over fiscal 2026, the business anticipates further revenue growth, profitability improvements, and more technological and security enhancing investments.
This article first appeared on GuruFocus.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNET
2 days ago
- CNET
One of Our Favorite Smart Scales Is Just $40, Its Lowest Price Yet
As the weather gets warmer, many of us are getting active again. There's never been a better time to work on your fitness, and one of our top-rated smart scales can definitely help there. Smart scales offer all the data you need to make informed decisions on your body and your workout routines. Right now, you can get the Renpho smart scale for only $40, which is a massive $25 discount. That matches a previous low price -- and this time it's available to Prime and non-Prime members alike. This Renpho smart scale tracks metrics, including muscle mass, body mass index (BMI), metabolic age, bone health and more. All you have to do is step on the scale and watch your health and fitness statistics appear on the LCD screen. For additional display options, download the Renpho Health App to view data from 13 categories. Hey, did you know? CNET Deals texts are free, easy and save you money. You can also use this scale on pets and babies when the scale is calibrated through the Renpho health app. With a load-bearing capacity of up to 180kg (400 lbs) and the ability to create multiple profiles, this scale is perfect for the entire family. Note that Renpho recommends that users who have osteoporosis, are pregnant or have a pacemaker wear shoes when stepping on the scale. Amazon also accepts HSA/FSA dollars for this scale, which saves a few extra bucks. Need a fitness device but aren't sure if this deal is for you? Check out our list of the best fitness trackers or the best smartwatches for alternate options. Why this deal matters The Renpho smart scale is great for those interested in keeping an eye on their health and includes baby and pet settings that make it suitable for the entire family. At just $40, this smart scale is as low as it was during holiday sales like Cyber Week and Black Friday. Amazon also accepts HSA and FSA dollars for this deal, which could help you save more and make now a great time to consider this offer.
Yahoo
3 days ago
- Yahoo
I Let ChatGPT Review My Retirement Plan: Here's Where It Told Me To Change
Most of us have no idea if our retirement plan is actually any good. Sure, we're contributing to our 401(k) and maybe we've got some vague target numbers floating around in our heads, but is that enough? Will we actually be able to retire comfortably? Find Out: Read Next: Since professional financial advice can cost hundreds of dollars, I decided to ask ChatGPT to review my retirement strategy. I'm 40, aiming to retire around 67, and have what I thought was a pretty solid plan. Here's what ChatGPT had to say when I let it review my retirement plan. First, the good news. ChatGPT gave me credit for several smart moves: Taking the 401(k) match: 'Taking full advantage of your 401(k) match is free money — excellent.' Can't argue with that logic. Saving 10%-15% of income: The AI called this 'solid, especially if you started early.' Though as we'll see, the early part is key. Simple investment strategy: My low-cost, diversified funds approach got a thumbs up as 'a great default.' Planning ahead: ChatGPT liked that I'm thinking about increasing contributions over time and using windfalls for retirement savings. So far, so good. But then came the reality check. Learn More: Here's where things got interesting. ChatGPT didn't just pat me on the head and send me on my way; it had some serious suggestions for improvement. First, my savings targets are too low. I was aiming for three times my salary by age 45, which ChatGPT called 'a good minimum.' But then it hit me with this: 'If you're behind or started late, try pushing toward 4-5x salary by 45.' The AI laid out a much more aggressive timeline: Age 45: 4x salary Age 50: 6x salary Age 55: 8x salary Age 60: 10x salary Age 67: 12-15x salary That's significantly higher than what I was planning. Talk about a wake-up call. Second, I need to save more, period. If I didn't start saving in my 20s or 30s (guilty), ChatGPT recommended bumping my savings rate to 15%-20% of my income, including employer match. That's a big jump from my current 10%-15%. This is where ChatGPT really opened my eyes. I'd been thinking about maybe adding a Roth IRA to the mix, but the AI made it clear it's important. 'Try to diversify tax exposure,' ChatGPT explained, recommending I fund both a Roth IRA and keep some money in a regular taxable brokerage account. The reason? Flexibility. Having different types of accounts gives you more options for withdrawals and managing taxes in retirement. I honestly hadn't thought much about tax diversification, but it makes total sense. Why put all your (financial) eggs in one (tax) basket? Here's something I completely overlooked: my health savings account. ChatGPT called maxing out an HSA 'a powerful triple-tax-advantaged retirement tool.' Triple tax advantage? That got my attention. Turns out you get a tax deduction when you contribute, tax-free growth and tax-free withdrawals for medical expenses. After age 65, you can withdraw for any reason and just pay regular income tax. This basically makes it another retirement account. ChatGPT also called out something I've been guilty of: lifestyle creep. 'As income rises, be intentional about directing extra cash to savings, not spending,' the AI warned. That hit close to home. Every time I get a raise, somehow my expenses seem to magically increase too. The AI was right; I need to be more deliberate about funneling extra income into retirement savings instead of letting it disappear into my day-to-day spending. Goodbye, Starbucks. Hello, Fidelity. ChatGPT's overall assessment of my retirement plan? The AI thought it was 'clear, sensible, and grounded in widely recommended personal finance principles.' But, of course, there's room for improvement. The biggest takeaways: I need higher savings targets, better tax diversification and to max out that HSA I've been ignoring. Was it as good as talking to a real financial advisor? Probably not. But for free advice that I could get in 10 minutes, ChatGPT definitely gave me some valuable insights and a solid roadmap for improvement. Now I just have to figure out where to find that extra 5%-10% of income to save… More From GOBankingRates 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth This article originally appeared on I Let ChatGPT Review My Retirement Plan: Here's Where It Told Me To Change Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
3 days ago
- Yahoo
Gusto Partners with Elevate to Enhance Consumer Benefit Account Offerings
Elevate's automated benefits technology helps drive 51% increase in user satisfaction DENVER, June 11, 2025 /PRNewswire/ -- Elevate, a modern consumer directed benefits administration platform, today announced a partnership with Gusto, which helps more than 400,000 small businesses take care of their teams by simplifying payroll, HR, benefits, and compliance. Through this partnership, Gusto now offers enhanced health savings accounts (HSAs), flexible spending accounts (FSAs), and commuter benefits to its small business customers – —complementing its existing benefits platform that includes health insurance and more. Elevate and Gusto have created a portal for benefits plan participants showcasing Gusto's bold branding, have built automated integrations for streamlined plan setup, onboarding, and enrollment, and have collaboratively transitioned existing accounts to the new platform. Following the HSA, FSA, and commuter benefits integration, Gusto achieved: 26% reduction in questions per customer 57% increase in customer likelihood to recommend Gusto products and services 51% increase in customer satisfaction Gusto chose Elevate as its new technology partner for its built-in automation, API-first design, flexible branding, and strong user experience. Gusto needed a partner that could move fast and scale alongside its growth. "The decision to partner with Elevate was driven by our commitment to deliver the best possible experience for our small business customers," said Julia Miller, General Manager and Head of Benefits at Gusto. "Elevate's technology allows us to streamline our consumer account offerings, so our customers can enroll in, manage, and use these tax advantaged accounts with ease. We're excited about the initial results and the possibilities this partnership unlocks, further enabling Gusto to be a leading comprehensive benefits solution for small businesses and their teams." "Working with Gusto has been an incredible opportunity for us to demonstrate the full capabilities of the Elevate platform," said Brian Cosgray, CEO and co-founder of Elevate. "We're proud to provide a solution that not only meets Gusto's current needs but also provides a strong foundation for future growth and innovation. Our collaboration with Gusto shows how advanced technology and a shared vision for excellence can drive remarkable outcomes." Elevate partners with third-party administrators, health plans, financial institutions, professional employer organizations, and benefit platforms looking for more advanced technology solutions, and has helped partners realize up to 35% in gross margin savings. To learn more visit: About Elevate Elevate is the first completely cloud-based, API-driven, and AI-enabled consumer-directed benefits platform with a focus on configurability, embeddability and real-time automation. The all-in-one platform can manage all types of benefit accounts, from health savings accounts (HSAs) to complex health reimbursement arrangements (HRAs), and even commuter and lifestyle accounts. Elevate's team of industry experts recognized the need for modern technology in an outdated benefits administration industry, which led to the creation of Elevate in 2020. About Gusto Gusto is a leading provider of cloud-based payroll, benefits, and HR solutions for small and medium-sized businesses. Gusto serves over 400,000 businesses nationwide. Each year Gusto processes tens of billions of dollars of payroll and provides employee benefits—like health insurance and 401(k) accounts—while helping companies create incredible workplaces. Through one refreshingly easy, integrated platform, Gusto automates and simplifies payroll, benefits, and HR, all while providing expert support. View original content: SOURCE Elevate
