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HEALTHEQUITY, INC. (HQY)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY2026 delivered solid growth and expanding profitability: revenue $325.8M (+9% YoY), non-GAAP EPS $1.08 (+26% YoY), and record gross margin 71% with adjusted EBITDA $151.1M (+18% YoY) .
  • Both revenue and EPS beat Wall Street consensus; revenue $325.8M vs $320.7M*, and non-GAAP “primary” EPS $1.08 vs $0.918*; GAAP diluted EPS was $0.68 . The company raised FY2026 guidance across revenue, GAAP/non-GAAP EPS, and adjusted EBITDA .
  • Strategic tailwinds include the largest HSA market expansion in two decades (ACA bronze/catastrophic plans become HSA-eligible on Jan 1, 2026) and heightened employer demand to manage rising healthcare costs; management is leaning in with mobile-first security, passkeys, and AI-driven service modernization .
  • Custodial economics have been de-risked with $1.2B of Treasury forward contracts locking the five-year base near ~4%, supporting guidance assumption of ~3.5% average HSA cash yield for FY2026; fraud costs continue normalizing toward a run-rate target of 1 bp of total HSA assets per annum by year-end .

What Went Well and What Went Wrong

  • What Went Well
    • Record profitability metrics: gross margin 71% and adjusted EBITDA margin ~46% in Q2, reflecting cost efficiencies and mix; “record adjusted EBITDA of $151 million” (CEO) .
    • Strong custodial revenue growth (+15% YoY to $159.9M) on higher yields and balances; interchange revenue grew +8% YoY, outpacing account growth as on-platform payments increased (CFO) .
    • Legislative catalyst: “largest legislative expansion of HSAs since 2006,” adding millions of potential HSA households; company preparing redesigned mobile enrollment and targeted campaigns (Founder/VC) .
  • What Went Wrong
    • Softer macro and labor market dampened net new HSA sales (163K vs 187K in Q2 FY2025), as management cited slower job growth; still, enterprise pipeline and retention remain strong .
    • Fraud costs persist though improving: ~$1.2M member fraud reimbursements in Q2 and net reserve release of ~$1M; normalization to 1 bp target expected in H2 FY2026 (CFO) .
    • HSA cash growth slower vs investments; mix shift to investors (23% growth YoY to $16.1B) and higher spending can temper custodial cash growth quarter-to-quarter (CFO) .

Financial Results

Core P&L vs Prior Year and Prior Quarter

MetricQ2 FY2025Q1 FY2026Q2 FY2026
Revenue ($USD Millions)$299.9 $330.8 $325.8
GAAP Diluted EPS ($)$0.40 $0.61 $0.68
Non-GAAP Diluted EPS ($)$0.86 $0.97 $1.08
Gross Margin (%)68% 68% 71%
Adjusted EBITDA ($USD Millions)$128.3 $140.2 $151.1
Adjusted EBITDA Margin (%)43% 42% 46%
Net Income ($USD Millions)$35.8 $53.9 $59.9
Net Income Margin (%)12% 16% 18%

Segment Revenue Mix

SegmentQ2 FY2025Q1 FY2026Q2 FY2026
Service Revenue ($USD Millions)$116.7 $119.8 $117.9
Custodial Revenue ($USD Millions)$138.7 $156.5 $159.9
Interchange Revenue ($USD Millions)$44.5 $54.6 $48.1

KPIs and Balance Mix

KPIQ4 FY2025Q1 FY2026Q2 FY2026
HSAs (Millions)9.889 9.886 9.989
HSAs with Investments (Thousands)753 770 782
Total Accounts (Millions)17.033 17.060 17.142
HSA Cash ($USD Billions)$17.435 $17.066 $17.035
HSA Investments ($USD Billions)$14.676 $14.205 $16.102
Total HSA Assets ($USD Billions)$32.111 $31.271 $33.137

Guidance Changes

MetricPeriodPrevious Guidance (Q1 FY2026)Current Guidance (Q2 FY2026)Change
RevenueFY2026$1.285B – $1.305B $1.290B – $1.310B Raised
GAAP Net IncomeFY2026$173M – $188M $185M – $200M Raised
GAAP Diluted EPSFY2026$1.96 – $2.13 $2.11 – $2.28 Raised
Non-GAAP Net IncomeFY2026$320M – $335M $329M – $344M Raised
Non-GAAP Diluted EPSFY2026$3.61 – $3.78 $3.74 – $3.91 Raised
Adjusted EBITDAFY2026$530M – $550M $540M – $560M Raised
Diluted Weighted-Average SharesFY202689M 88M Lower

Notes:

  • Management expects average HSA cash yield ~3.5% for FY2026 (assumption) .
  • Share repurchase authorizations remaining ~$352M (CFO) and $351.8M at Q2-end .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY2025, Q1 FY2026)Current Period (Q2 FY2026)Trend
AI/Technology initiativesLaunched expedited claims and stacked chip card; Assist portfolio rollout; AI chat/agent support; mobile-first orientation Expanding Agentic AI in voice channel; V5 platform 100% cloud, performance +92%; continuing claims automation awards (HSAnswers) Accelerating
Fraud mitigation/securityElevated Q4 fraud; Q1 direct fraud ~$3M, monthly declines; passkey plan and secure mobile app adoption Q2 direct fraud reimbursements ~$1.2M; reserve release ~$1M; target exit run-rate of 1 bp by FY-end; 1.7M app downloads; passkey rollout Improving
Custodial yield managementAmended/extended some maturities; initial $500M forwards at ~4% (Q1) $1.2B Treasury forwards locked just over 4% on five-year; targeting ~3.5% average cash yield FY26 De-risking
Macro/employer demandSofter macro slows HSA sales; enterprise pipeline strong; value prop to reduce employer costs Labor growth down; demand for cost management rising; upsell/cross-sell via Analyzer tool; SMB adoption of HDHPs Stable demand; cost focus
Legislative expansion (ACA)House budget bill proposals expanding HSAs (Medicare Part A, exchanges, DPC, telehealth, etc.) Law passed: ACA bronze/catastrophic HSA-eligible Jan 1, 2026; targeting 3–4M households; campaigns and redesigned onboarding Expanding TAM
Member engagement/mobileDriving mobile-first secure experience; app authentication planned by year-end Active engagement focus; broader adoption; app downloads 1.7M; passkey rollout Increasing engagement

Management Commentary

  • CEO: “record gross margin of 71% and record adjusted EBITDA of $151 million” and “largest legislative expansion of HSAs since 2006” .
  • CFO on mix and margins: “Custodial revenue grew 15%… Interchange revenue grew 8%… Gross profit… a record 71% of revenue… adjusted EBITDA… 46%” .
  • Founder/VC on ACA expansion: “All individual bronze and catastrophic plans will be allowed to be coupled with HSAs beginning January 1, 2026… could allow 3 to 4 million more American families to have access” .
  • CFO on cash taxes: “accelerating these tax deductions may reduce our federal cash taxes paid over the next two fiscal years by $65 million-$75 million” .
  • CEO on AI roadmap: “We expect to further leverage Agentic AI in our voice channel… reducing call wait time… expanded AI service capabilities can potentially… further drive down our service costs” .

Q&A Highlights

  • Fraud normalization: Progress each month; target exit run-rate near 1 bp of total HSA assets per year; no major milestone, continued execution (CEO) .
  • Custodial yield hedging: ~$1.2B five-year Treasury forwards; locking base near ~4%; majority of maturing basic-rate cash likely migrates to enhanced rates with spread (CFO) .
  • HSA growth dynamics: Q2 net new HSAs from sales 163K; macro headwinds acknowledged; enterprise pipeline and retention strong (CEO/CFO) .
  • Mix shift and economics: Investor balances up; spending up; interchange growing faster than account growth; cash growth more “lumpy” across quarters (CFO) .
  • ACA opportunity: Company will not separate ACA-origin HSAs; focus on capturing several million households through partners and marketing (CFO/Founder) .

Estimates Context

MetricConsensus*Actual
Revenue ($USD Millions)320.7*325.8
Primary EPS (“Non-GAAP”) ($)0.918*1.08

Notes:

  • Values retrieved from S&P Global.*
  • Result: Revenue beat (+$5.1M vs consensus*) and EPS beat (+$0.162 vs consensus*). GAAP diluted EPS was $0.68 .

Key Takeaways for Investors

  • Earnings quality strengthening: expanding gross margin (71%) and adjusted EBITDA margin (46%) reflect operating discipline and mix; expect continued leverage as AI/service modernization scale .
  • FY2026 guidance raised across all key metrics; hedging program supports custodial yields and reduces volatility risk as major maturities roll through Q4 FY2026–Q4 FY2027 .
  • Structural TAM catalyst in 2026 from ACA plan eligibility, with company prepared via redesigned mobile onboarding and targeted campaigns; watch enterprise wins and ACA conversion into HSAs .
  • Fraud cost trajectory improving; monitor progress toward 1 bp exit-run rate and mobile/passkey adoption (1.7M downloads) as key underwriting variables for service cost normalization .
  • Mix matters: investor balances +23% YoY to $16.1B and rising on-platform spend drive interchange/fee momentum; custodial cash growth can be seasonally lumpy .
  • Capital allocation: robust operating cash flow ($200.6M in H1), debt paydown, and remaining $351.8M authorization support opportunistic buybacks and portfolio acquisitions .
  • Near-term trading lens: raised guidance and consensus beats, plus legislative expansion narrative, are positive sentiment drivers; hedge-backed yield visibility reduces macro rate sensitivity .