HealthEquity – The HSA Play
I first highlighted HealthEquity Inc. (NASDAQ:HQY) last month as a great growth play in the ever expanding Health Savings Accounts (HSAs) space when the stock was trading at $42 per share. HealthEquity just reported blowout numbers that beat on both the top and bottom line, posting 25.9% year-over-year growth in revenue and now trading at $53 per share or 26% appreciation in stock price. Briefly, HealthEquity’s IPO was in 2014 and since then the stock has returned 210% moving from ~$17 to currently ~$53 (Figure 1). HealthEquity has been riding this secular growth market since its IPO and looks to be continuing this performance. Over the four quarters including the most recent earnings announcement, HealthEquity has beaten on both EPS and revenue while posting double-digit growth (Figure 2). Revenue came in at the following: Q2 - $44.2M (45.0% growth), Q3 - $43.3M (42.0% growth), Q4 - $46.81M (30.4% growth). The sustainability of this growth will likely move in lock-step with the growth in the HSA market while optimizing revenues extracted from the investments within these accounts via offering investment advising, collecting fees from the investment line-up and its newly announced 401k with paired HSA offerings.
Figure 1 – HealthEquity’s performance since its IPO in 2014