Why HealthEquity Stock Was Sliding This Week

Over the past few days HealthEquity (NASDAQ: HQY) shares have been rather sickly. The health savings account (HSA) specialist's stock was rocked by a disappointing earnings report, and as a result its price was down by nearly 15% week to date as of mid-afternoon Thursday, according to data compiled by S&P Global Market Intelligence.

A mixed fourth quarter

HealthEquity divulged its fourth-quarter and full-year fiscal 2024 results just after market close on Tuesday. These showed that the company earned $311.8 million for the period ended Jan. 31, representing a year-over-year increase of 19%. Non-GAAP (adjusted) net income also saw a rise, improving by 11% to $61.3 million. On a per-share basis, that figure was $0.69.

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This meant a mixed quarter for HealthEquity. While it beat the average analyst estimate of $305.8 million for revenue, it fell short of the consensus $0.72 projection for adjusted profitability.

In the earnings report, management attributed its improvements largely to volume. It said that it added a record 1 million new HSAs in fiscal 2024 to 9.9 million. Total HSA assets amounted to $32.1 billion at the end of that year, for an increase of 27% over fiscal 2023.

Single-digit surprise

HealthEquity also proffered guidance for the entirety of fiscal 2025. The company is forecasting revenue of $1.28 billion to $1.305 billion; the high end of the range is 9% above the fiscal 2024 tally, which is somewhat disappointing given the past quarter's double-digit improvement. That $1.31 billion also sits below the consensus analyst expectation of $1.309 billion.

Adjusted net income, meanwhile, should come in at $318 million to $333 million, or $3.57 to $3.74 per share. Although the former projection is at least 15% higher than the actual fiscal 2024 result, on a per-share basis it doesn't quite reach the $3.76 collective projection from pundits.

While I think HealthEquity is in a good and potentially long-term lucrative business, that anticipated revenue growth slowdown is concerning. Hopefully management will be able to get the double-digit growth train running again.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.