• Revenue Growth: Up 19% year-over-year for Q4.
• Adjusted EBITDA: Increased 9% to $107.8 million for Q4.
• HSA Growth: HSAs grew 14%, totaling 9.9 million accounts.
• HSA Assets: Increased 27% to $32 billion.
• Invested Assets: Grew 44% to $14.7 billion.
• Gross Profit: $189 million, representing 61% of revenue for Q4.
• Net Income: $26.4 million or $0.30 per share (GAAP) for Q4.
• Non-GAAP Net Income: $61.3 million or $0.69 per share for Q4.
• Full Year Revenue: $1.2 billion, up 20% year-over-year.
• Full Year Adjusted EBITDA: $471.8 million, up 28% year-over-year.
• Cash on Hand: $296 million as of year-end.
• Fiscal '26 Revenue Guidance: $1.28 billion to $1.305 billion.
• Fiscal '26 GAAP Net Income Guidance: $164 million to $179 million.
• Fiscal '26 Non-GAAP Net Income Guidance: $318 million to $333 million.
• Fiscal '26 Adjusted EBITDA Guidance: $525 million to $545 million.

• Warning! GuruFocus has detected 3 Warning Signs with HQY.

Release Date: March 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• HealthEquity Inc (NASDAQ:HQY) reported a 19% year-over-year increase in revenue for Q4 2025.
• The company achieved a milestone of 1 million new Health Savings Accounts (HSAs) from sales for the year.
• HSA assets increased by 27% year over year, with invested assets up 44% to $14.7 billion.
• The company launched a new app experience, downloaded by over 1 million members, enhancing user engagement.
• HealthEquity Inc (NASDAQ:HQY) introduced the Assist Portfolio, offering solutions like Analyzer and Navigator to improve benefits offerings for employers and employees.

Negative Points

• The company faced increased service costs due to sophisticated fraud activities, impacting gross profit.
• Gross profit margin decreased slightly from 62% to 61% year over year due to additional service costs.
• HealthEquity Inc (NASDAQ:HQY) expects elevated service costs to continue into the first half of fiscal 2026.
• The company is experiencing increased cyber threats and fraud attacks, leading to excess service expenses.
• Despite strong revenue growth, the adjusted EBITDA margin decreased from 38% to 35% in Q4 2025.

Q & A Highlights

Q: Can you explain the incremental service costs incurred in Q4 and their impact on fiscal '26? A: James Lucania, Executive Vice President and CFO, explained that the costs were due to sophisticated fraud activities, including reimbursements to members and increased service center costs. The impact was higher than expected in Q4, and similar costs are anticipated in the first half of fiscal '26, with normalization expected in the latter half.

Q: What factors could drive results towards the lower end of your fiscal '26 guidance range? A: Scott Cutler, President and CEO, highlighted confidence in custodial line growth and enhanced rates. He mentioned the focus on expense management and service modernization to drive margin expansion, suggesting that these efforts support optimism for fiscal '26.

Q: Is there direct monetization associated with the Assist initiative, and who are the partners involved? A: Scott Cutler stated that the Assist initiative focuses on enrollment, adoption, and engagement. Analyzer, an internally developed product, helps employers manage healthcare costs. Navigator, developed with Talend, aids in engagement and compliance. The initiative leverages technology and partnerships to enhance member experiences.

Q: How should we think about investment in R&D given the focus on technology enhancements? A: Scott Cutler indicated no material change in R&D spending as a percentage of revenue but emphasized prioritizing a member-first secure mobile experience. The focus will be on enhancing app adoption, AI-driven claims automation, and overall tech efficiency.

Q: Can you discuss the fraud activity and its resolution? A: Scott Cutler clarified that the fraud involved account takeovers, not data breaches. The company is enhancing security measures, including multifactor authentication, to address these issues. James Lucania added that the fraud is not a cybersecurity incident but rather traditional account impersonation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.