I’ve written a handful of articles highlighting HealthEquity Inc. (NASDAQ:HQY) in 2017 as a great growth play in the rapidly growing Health Savings Accounts (HSAs) space. HealthEquity just reported beats on both the top and bottom line, beating revenue and EPS estimates by $1.39 million and $0.04, respectively. It’s noteworthy to point out that revenue was up 30% year-over-year for its Q3 FY18 quarter. HealthEquity is a major player in the HSA secular growth market and has continued to gain market share over the years. HealthEquity has posted annual revenue growth of 42%, 44%, and 41% when comparing FY14 to FY15, FY15 to FY16 and FY16 to FY17, respectively. If consensus estimates are accurate for FY18, revenue growth will come in at 27% when comparing FY17 to FY18 (Figure 1). The sustainability of this growth will likely move in lock-step with the growth in the HSA market in addition to 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. I feel that HealthEquity will continue to post strong growth as it services the double-digit HSA growth market and manages more assets and investments within these accounts. As HealthEquity rolls out additional products such as the launch of its 401k offerings paired with HSA accounts, HSA members elect to invest money within these accounts and accounts age; revenue will continue to accelerate with stock appreciation.
Figure 1 – Fiscal year-over-year growth in revenue, number of HSA accounts and custodial assets
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