HealthEquity, the top provider of health savings accounts, missed fiscal Q4 earnings forecasts late Tuesday due to an increase in fraud-related costs. HQY stock, which had rallied after the Nov. 5 election, partly on hopes of expanded HSA access under President Donald Trump, tumbled back to preelection levels in early Wednesday stock market action.
HealthEquity said service costs related to managing and reimbursing customers for fraudulent activity rose to $17 million in the latest quarter, up from $8 million in Q3.
"We continue to invest in our fraud prevention and detection capabilities, and we believe these event-driven costs will continue in the first half of FY '26, but normalize toward the end of the year," CFO James Luciana said in an earnings call, according to a SeekingAlpha transcript.
HealthEquity Earnings
Results: The Draper, Utah-based company posted Q4 earnings per share of 69 cents, up 10% from a year ago, but 3 cents below forecasts. Revenue grew 19% to $311.8 million, topping estimates of around $306 million.
Health savings accounts rose 14% from a year ago to 9.9 million, while HSA assets grew 27% to $32.1 billion.
Outlook: HealthEquity offered a fiscal 2026 outlook for revenue of $1.28 billion to $1.305 billion, with the top end of the range in line with analysts' $1.3045 billion forecasts. The company sees EPS of $3.57 to $3.74, with the midpoint slightly below $3.69 estimates.
HQY Stock Tumbles Early
HQY tumbled 13.9% to 87.55 early Wednesday. The stock, which had already fallen below its 50-day moving average during the stock market correction, is set to open below its 200-day moving average.
Jefferies analyst Glen Santangelo kept a buy rating and 118 price target, writing that HealthEquity's "core remains strong," but higher fraud-related costs will weigh on near-term sentiment.
Citizens JMP analyst Constantine Davides cut the firm's price target to 110 from 120, keeping an outperform rating, noting transitory fraud-related expenses.
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