Latest news with #JamesLucania
Yahoo
19-03-2025
- Business
- Yahoo
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 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 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 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 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 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 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 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 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 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 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.
Yahoo
19-03-2025
- Business
- Yahoo
HealthEquity Inc (HQY) Q4 2025 Earnings Call Highlights: Strong Revenue Growth Amidst Rising ...
Revenue Growth: Up 19% year-over-year for Q4. Adjusted EBITDA: Increased 9% to $107.8 million for Q4. HSA Growth: HSAs grew 14%, totaling 9.9 million accounts. HSA Assets: Increased 27% to $32 billion. Invested Assets: Grew 44% to $14.7 billion. Gross Profit: $189 million, representing 61% of revenue for Q4. Net Income: $26.4 million or $0.30 per share (GAAP) for Q4. Non-GAAP Net Income: $61.3 million or $0.69 per share for Q4. Full Year Revenue: $1.2 billion, up 20% year-over-year. Full Year Adjusted EBITDA: $471.8 million, up 28% year-over-year. Cash on Hand: $296 million as of year-end. Fiscal '26 Revenue Guidance: $1.28 billion to $1.305 billion. Fiscal '26 GAAP Net Income Guidance: $164 million to $179 million. Fiscal '26 Non-GAAP Net Income Guidance: $318 million to $333 million. Fiscal '26 Adjusted EBITDA Guidance: $525 million to $545 million. Warning! GuruFocus has detected 3 Warning Signs with HQY. Release Date: March 18, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. HealthEquity Inc (NASDAQ:HQY) reported a 19% year-over-year increase in revenue for Q4 2025. The company achieved a milestone of 1 million new Health Savings Accounts (HSAs) from sales for the year. HSA assets increased by 27% year over year, with invested assets up 44% to $14.7 billion. The company launched a new app experience, downloaded by over 1 million members, enhancing user engagement. HealthEquity Inc (NASDAQ:HQY) introduced the Assist Portfolio, offering solutions like Analyzer and Navigator to improve benefits offerings for employers and employees. The company faced increased service costs due to sophisticated fraud activities, impacting gross profit. Gross profit margin decreased slightly from 62% to 61% year over year due to additional service costs. HealthEquity Inc (NASDAQ:HQY) expects elevated service costs to continue into the first half of fiscal 2026. The company is experiencing increased cyber threats and fraud attacks, leading to excess service expenses. Despite strong revenue growth, the adjusted EBITDA margin decreased from 38% to 35% in Q4 2025. Q: Can you explain the incremental service costs incurred in Q4 and their impact on fiscal '26? A: James Lucania, Executive Vice President and CFO, explained that the costs were due to sophisticated fraud activities, including reimbursements to members and increased service center costs. The impact was higher than expected in Q4, and similar costs are anticipated in the first half of fiscal '26, with normalization expected in the latter half. Q: What factors could drive results towards the lower end of your fiscal '26 guidance range? A: Scott Cutler, President and CEO, highlighted confidence in custodial line growth and enhanced rates. He mentioned the focus on expense management and service modernization to drive margin expansion, suggesting that these efforts support optimism for fiscal '26. Q: Is there direct monetization associated with the Assist initiative, and who are the partners involved? A: Scott Cutler stated that the Assist initiative focuses on enrollment, adoption, and engagement. Analyzer, an internally developed product, helps employers manage healthcare costs. Navigator, developed with Talend, aids in engagement and compliance. The initiative leverages technology and partnerships to enhance member experiences. Q: How should we think about investment in R&D given the focus on technology enhancements? A: Scott Cutler indicated no material change in R&D spending as a percentage of revenue but emphasized prioritizing a member-first secure mobile experience. The focus will be on enhancing app adoption, AI-driven claims automation, and overall tech efficiency. Q: Can you discuss the fraud activity and its resolution? A: Scott Cutler clarified that the fraud involved account takeovers, not data breaches. The company is enhancing security measures, including multifactor authentication, to address these issues. James Lucania added that the fraud is not a cybersecurity incident but rather traditional account impersonation. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
