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Tag: Health Savings Account (HSA)

HealthEquity: Incorrectly Correlated To Healthcare Downturn

Posted on June 22, 2019June 20, 2019 by Noah Kiedrowski

HealthEquity Inc. (HQY) has witnessed several volatile moves of significant magnitude over the past few months with sell-offs highly correlated to the overall healthcare sector. Despite the company’s fundamentals, growth narrative, financial profile, and addressable market remaining strong and positive, the stock has underperformed over the past few months. Historically, HealthEquity’s valuation has been rich, so it’s no surprise that the stock has traded off with the broader market downturns, which disproportionally impact growth stocks with high price-to-earnings multiples. HealthEquity has traded in a 52-week range between $101 and $50 and currently trades at the $70 level after posting its most recent earnings. The company continues to post quarter after double-digit quarter growth in revenue and EPS without any debt on the balance sheet. I feel that the stock is incorrectly lumped into the broader healthcare cohort due to its business model and independence from healthcare insurers, the pharmaceutical supply chain, and drug manufacturers. For long-term investors, HealthEquity presents a compelling picture of growth with a large addressable market moving forward.

Incorrect Correlation to Healthcare

HealthEquity’s business model is such that it stands as an intermediary servicing the secular growth Health Savings Account (HSA) space that’s largely independent of legislative actions, drug pricing, rising insurance costs while not playing any role in the pharmaceutical supply chain from health insurers to end user pharmacies. The company simply manages funds allocated for medical, dental, and vision expenses that are deducted on a pre-tax basis and deposited into a dedicated HSA account. The HSA space has grown in popularity as corporate adoption has allowed access to these plans in conjunction with consumer awareness.
Many of the healthcare related stocks have lost significant portions of their respective market capitalization over the past year. Large-cap stocks such as CVS Health (CVS), Walgreens (WBA), McKesson (MCK) and Cardinal Health (CAH) have been some of the worst performing stocks. These stocks have been in secular decline due to the confluence of legislative threats, drug pricing pressures, and pro-single payer healthcare by top Democratic officials. HealthEquity is in a unique position that circumvents many issues that have plagued these stocks. The company is here to stay regardless of the aforementioned hot button issues. Continue reading "HealthEquity: Incorrectly Correlated To Healthcare Downturn" →

Posted in INO.com ContributorsTagged Affordable Health Care Act Flexible Savings Account (FSA) Health Plans Health Savings Account (HSA) HealthEquity Inc. (NASDAQ:HQY) High Deductible Health Plans (HDHPs) HSA Assets Medical Coverage Medical Plan Premiums noah kiedrowski Retirement Planning Tax Break traditional IRA

HealthEquity - Compelling Buy Heading Into Q4 Earnings

Posted on March 2, 2019March 1, 2019 by Noah Kiedrowski

HealthEquity Inc. (HQY) was not immune to the market wide sell-off in equities during the fourth quarter of 2018 which disproportionally impacted growth stocks with high price-to-earnings multiples. The market quickly lost its appetite for these richly valued high-growth stocks with steep valuations. Health Equity’s rich valuation became a concern to me during the fourth quarter as its growth albeit double-digits, did not justify its sky-high valuation. This concern prompted me to write a piece discussing this concern and warned that the “current valuation is rich in an already frothy market thus caution at these levels is wise” prior to the stock selling off from $101 to $47 shedding 53% of its market value during the fourth quarter of 2018. The company continues to post quarter after quarter of double-digit growth in revenue and EPS without any debt on the balance sheet thus has been rewarded with a rich valuation as a function of its impressive growth and total addressable market. This high price-to-earnings multiple came under fire as the market moved into a risk-averse environment in the fourth quarter. As high-flying equities came down in the broader market sell-off, Health Equity lost over half of its market capitalization and erased all of its gains in 2018. Now that the market correction has passed and the company continues to post great quarterly growth along with enhancing its growth profile, the valuation is now compelling moving into its Q4 earnings and the stock is still well off its highs for a long-term investment.

Addressable Market and Market Position

On the fundamental level, the company is an intermediary servicing the secular growth Health Savings Account (HSA) space that’s largely independent of legislative actions, drug pricing, rising insurance costs while not playing any role in the pharmaceutical supply chain. The company manages funds allocated for medical, dental and vision expenses that are deducted on a pre-tax basis and deposited into a dedicated HSA account. The HSA space has grown in popularity as corporate adoption has allowed access to these plans in conjunction with consumer awareness. Continue reading "HealthEquity - Compelling Buy Heading Into Q4 Earnings" →

Posted in INO.com ContributorsTagged Affordable Health Care Act Flexible Savings Account (FSA) Health Plans Health Savings Account (HSA) HealthEquity Inc. (NASDAQ:HQY) High Deductible Health Plans (HDHPs) HSA Assets Medical Coverage Medical Plan Premiums noah kiedrowski Retirement Planning Tax Break traditional IRA

HealthEquity Inc. - Rich Valuation Concerns?

Posted on December 7, 2018 by Noah Kiedrowski

The market-wide sell-off in equities during the fourth quarter has disproportionally impacted growth stocks that possess high price-to-earnings multiples translating into rich valuations. The market appears to have lost its appetite for the high growth and steep valuation equities that had huge upward moves throughout this record-setting bull market. HealthEquity Inc. (HQY) continues to post quarter after double-digit quarter growth in revenue and EPS and has been rewarded with a rich valuation as a function of its impressive growth. This high price-to-earnings multiple may be in jeopardy as the market moves into a risk-averse environment. As high-flying equities come down in the broader market sell-off, Health Equity may come down as a result and erase some of its monster gains that were witnessed in 2018. To be clear, Health Equity is an intermediary servicing the secular growth Health Savings Account (HSA) space that’s largely independent of legislative actions, drug pricing, rising insurance costs and not playing any role in the pharmaceutical supply chain. HealthEquity manages funds allocated for medical, dental and vision expenses that are deducted on a pre-tax basis and deposited into a dedicated HSA account. The company blew out the numbers when it reported its Q3 FY19 results and beat on both the top and bottom line.

HealthEquity manages $7.1 billion in assets across 3.7 million accounts against a potential market maturity of $1 trillion in assets across 50-60 million accounts. The durability of this growth has a long runway due to the secular growth in the HSA market. The company is sitting on largely untapped revenue sources where the vast majority of account holders have yet to invest any HSA money in investment offerings. Expanding margins for greater profitability is also unfolding as the older the account, the greater the gross margins. HealthEquity is currently sitting on a healthy balance sheet with $330 million in cash and cash equivalents with no debt. The company is posting accelerating revenue, cash flow, margin expansion and income growth with a strong balance sheet. I feel that HealthEquity will continue to post strong growth as it services the double-digit HSA growth market and manages more assets, accounts, and investments within these accounts. HealthEquity may be a great long-term investment in the healthcare space that’s independent of the health insurances, pharmaceutical supply chain companies, drug makers or pharmacies. Previously, I warned that the “current valuation is rich in an already frothy market thus caution at these levels is wise” and now it appears this heeding was responsible as the stock has sold off from $101 to $74 shedding 26% of its market value during the fourth quarter. Health Equity looks compelling after this healthy correction as the long-term narrative remains intact. Continue reading "HealthEquity Inc. - Rich Valuation Concerns?" →

Posted in INO.com ContributorsTagged Affordable Health Care Act Flexible Savings Account (FSA) Health Plans Health Savings Account (HSA) HealthEquity Inc. (NASDAQ:HQY) High Deductible Health Plans (HDHPs) HSA Assets Medical Coverage Medical Plan Premiums noah kiedrowski Retirement Planning Tax Break traditional IRA

HealthEquity Inc. - Roaring Through $100

Posted on September 15, 2018September 14, 2018 by Noah Kiedrowski

I’ve written several articles highlighting HealthEquity Inc. (HQY) since the sub $40 range as a great play on the secular growth in the Health Savings Account (HSA) space that’s mostly independent of legislative actions, the drug pricing debate or rising insurance costs. HealthEquity is not an insurance company thus does not possess any liability for coverage in any capacity nor does the company play any role in the pharmaceutical supply chain. HealthEquity is at the center of a healthcare paradigm shift where consumers are taking control of their healthcare dollars via leveraging HSAs. HealthEquity manages funds allocated for medical, dental and vision expenses that are deducted on a pre-tax basis and deposited into a dedicated HSA account. The company blew out the numbers when it reported its Q2 FY19 results with the stock following suit breaking out above $95 per share to an all-time high of $98 and looking to break through $100.

HealthEquity manages $7.0 billion in assets across 3.6 million accounts against a potential market maturity of $1 trillion in assets across 50-60 million accounts. The durability of this growth has a long runway due to the secular growth in the HSA market. The company is sitting on largely untapped revenue sources where the vast majority of account holders have yet to invest any HSA money in investment offerings. Expanding margins for greater profitability is also unfolding as the older the account, the greater the gross margins observed. HealthEquity is currently sitting on a healthy balance sheet with ~$303 million in cash and cash equivalents with zero debt. The company is posting accelerating revenue, cash flow, margin expansion and income growth with a strong balance sheet. I feel that HealthEquity will continue to post strong growth as it services the double-digit HSA growth market and manages more assets, accounts, and investments within these accounts. HealthEquity may be a great long-term investment in the healthcare space that’s independent of the health insurances, pharmaceutical supply chain companies, drug makers or pharmacies. The current valuation is rich in an already frothy market thus caution at these levels is wise.

HealthEquity’s FY19 Q1 Earnings and Analyst Sentiment

Q1 FY19 earnings delivered another double-digit growth story across the board with revenue coming in at $71.1 million, an increase of 25% year-over-year. Net income came in at $22.5 million, an increase of 33% year-over-year. Total HSA members came in at 3.6 million, an increase of 23% compared to Q2 FY18. Total custodial assets were $7.0 billion, an increase of 31% compared to year-over-year. Continue reading "HealthEquity Inc. - Roaring Through $100" →

Posted in INO.com ContributorsTagged Affordable Health Care Act Flexible Savings Account (FSA) Health Plans Health Savings Account (HSA) HealthEquity Inc. (NASDAQ:HQY) High Deductible Health Plans (HDHPs) HSA Assets Medical Coverage Medical Plan Premiums noah kiedrowski Retirement Planning Tax Break traditional IRA

HealthEquity - Breaking Out Above $80

Posted on June 16, 2018June 19, 2018 by Noah Kiedrowski

Noah Kiedrowski - INO.com Contributor - Biotech


Introduction

HealthEquity Inc. (HQY) once again blew out the numbers when it reported its Q1 FY19 results with the stock following suit breaking out above $80 per share to an all-time high. I first profiled HealthEquity when it was trading in the sub $40 range as a play on a secular growth trend in the healthcare space regardless of legislative actions, drug pricing debate or rising insurance costs. HealthEquity is not an insurance company thus does not possess any liability for coverage in any capacity nor does the company play any role in the pharmaceutical supply chain.

HealthEquity is at the center of a healthcare paradigm shift where consumers are taking control of their healthcare dollars via leveraging Health Savings Accounts (HSAs). HealthEquity manages funds allocated for medical, dental and vision expenses that are deducted on a pre-tax basis and deposited into a dedicated HSA account. HealthEquity manages $6.9 billion in assets across 3.5 million accounts against a potential market maturity of $1 trillion in assets across 50-60 million accounts.

HealthEquity has posted annual revenue growth of 42%, 44%, 41% and 29% over fiscal years 2015, 2016, 2017 and 2018. The durability of this growth has a long runway due to the secular growth in the HSA market. The company is sitting on largely untapped revenue sources where the vast majority of account holders have yet to invest any HSA money in investment offerings. Expanding margins for greater profitability is also unfolding as the older the account, the greater the gross margins hence gross margins increased 269 basis points in the recent quarter. HealthEquity is currently sitting on a healthy balance sheet with ~$270 million in cash and cash equivalents with zero debt. HealthEquity is posting accelerating revenue, cash flow, margin expansion and income growth with a strong balance sheet. I feel that HealthEquity will continue to post strong growth as it services the double-digit HSA growth market and manages more assets, accounts, and investments within these accounts. HealthEquity may be a great long-term investment in the healthcare space that’s independent of the health insurances, pharmaceutical supply chain companies, drug makers or pharmacies. Continue reading "HealthEquity - Breaking Out Above $80" →

Posted in INO.com ContributorsTagged Affordable Health Care Act Flexible Savings Account (FSA) Health Plans Health Savings Account (HSA) HealthEquity Inc. (NASDAQ:HQY) High Deductible Health Plans (HDHPs) HSA Assets Medical Coverage Medical Plan Premiums noah kiedrowski Retirement Planning Tax Break traditional IRA1 Comment on HealthEquity - Breaking Out Above $80

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