Highlights of the second quarter include:
- Net income increased 10% to $65.6 million, and net income margin increased to 19% from 18% last year.
- Adjusted EBITDA increased 11% to $167.0 million, and Adjusted EBITDA margin increased to 48% from 46% last year.
- Revenue increased 8% to $350.7 million.
- Net income per diluted share rose 15% to $0.78 from $0.68 one year ago, and non-GAAP net income per diluted share increased 15% to $1.24.
- Total HSA Assets grew 14% to $37.9 billion.
- Returned $108.1 million to shareholders through stock repurchases.
DRAPER, Utah, Aug. 27, 2026 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ: HQY) ("HealthEquity" or the "Company"), the largest independent health savings account ("HSA") custodian by account volume and a leader in consumer-directed benefits ("CDBs"), today announced financial results for its second quarter ended July 31, 2026.
"HealthEquity delivered a record-setting second quarter, with record Adjusted EBITDA margin of 48%, record HSA accounts of 10.7 million and record HSA Assets of nearly $38 billion," said Scott Cutler, President and CEO of HealthEquity. "These results reflect strong execution across the business and the durability of our model as growth comes from more places, member relationships deepen and technology-enabled efficiency improves how we serve members and clients. This momentum gives us confidence to raise fiscal 2027 guidance and enter the second half focused on scaling efficiently and creating long-term value."
Second quarter financial results
Revenue for the second quarter ended July 31, 2026 was $350.7 million, an increase of 8% compared to $325.8 million for the second quarter ended July 31, 2025. Revenue this quarter included: service revenue of $124.4 million, custodial revenue of $175.9 million, and interchange revenue of $50.4 million.
Net income was $65.6 million, or $0.78 per diluted share, for the second quarter ended July 31, 2026, compared to $59.9 million, or $0.68 per diluted share, for the second quarter ended July 31, 2025. Net income margin was 19% for the second quarter ended July 31, 2026, compared to 18% for the second quarter ended July 31, 2025.
Non-GAAP net income was $103.8 million, or $1.24 per diluted share, for the second quarter ended July 31, 2026, compared to $94.6 million, or $1.08 per diluted share, for the second quarter ended July 31, 2025.
Adjusted EBITDA was $167.0 million for the second quarter ended July 31, 2026, an increase of 11% compared to the second quarter ended July 31, 2025. Adjusted EBITDA was 48% of revenue, compared to 46% for the second quarter ended July 31, 2025.
Account and asset metrics
New HSAs from sales were 202 thousand, an increase of 24% compared to the second quarter ended July 31, 2025. HSAs as of July 31, 2026 were 10.7 million, an increase of 8% year over year, including 0.9 million HSAs with investments, an increase of 20% year over year. Total Accounts as of July 31, 2026 were 17.8 million, including 7.0 million complementary CDBs.
Total HSA Assets as of July 31, 2026 were $37.9 billion, an increase of 14% year over year. Total HSA Assets included $17.4 billion of HSA cash and $20.6 billion of HSA investments. Client-held funds, which are deposits held on behalf of our Clients to facilitate administration of our CDBs, and from which we generate custodial revenue, were $0.9 billion as of July 31, 2026.
Stock repurchase program
The Company repurchased 1.2 million shares of its common stock for $108.1 million during the second quarter ended July 31, 2026. As of July 31, 2026, $948.4 million of common stock remained authorized for repurchase under the stock repurchase program.
Business outlook
For the fiscal year ending January 31, 2027, management is raising guidance and now expects revenues of $1.411 billion to $1.421 billion. Its outlook for net income is between $242 million and $248 million, resulting in net income of $2.88 to $2.96 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $392 million and $398 million, resulting in non-GAAP net income per diluted share of $4.66 to $4.73 (based on an estimated 84 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $628 million to $636 million.
See “Non-GAAP financial information” below for definitions of our Adjusted EBITDA and non-GAAP net income. A reconciliation of the non-GAAP financial measures used throughout this release to the most comparable GAAP financial measures is included with the financial tables at the end of this release.
Conference call
HealthEquity management will host a conference call at 8:30 a.m. (Eastern Time) on Thursday, August 27, 2026 to discuss the fiscal 2027 second quarter financial results. The conference call will be accessible by dialing 1-833-630-1956, or 1-412-317-1837 for international callers, and referencing conference ID "HealthEquity." A live audio webcast of the call will be available on the investor relations section of our website at http://ir.healthequity.com.
Non-GAAP financial information
To supplement our financial information presented on a GAAP basis, we disclose non-GAAP financial measures, including Adjusted EBITDA, non-GAAP net income, and non-GAAP net income per diluted share.
- Adjusted EBITDA is earnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, amortization of incremental costs to obtain a contract, costs associated with unused office space, and certain other non-operating items.
- Non-GAAP net income is calculated by adding back to GAAP net income before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, costs associated with unused office space, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.
- Non-GAAP net income per diluted share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.
Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to the Company's financial condition and results of operations. The Company cautions investors that non-GAAP financial information, by its nature, departs from GAAP; accordingly, its use can make it difficult to compare current results with results from other reporting periods and with the results of other companies. In addition, while amortization of acquired intangible assets is being excluded from non-GAAP financial measures, the revenue generated from those acquired intangible assets is not excluded. Whenever we use these non-GAAP financial measures, we provide a reconciliation of the applicable non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed in the tables below.
About HealthEquity
HealthEquity and its subsidiaries administer HSAs and other consumer-directed benefits for more than 17 million accounts in partnership with employers, benefits advisors, and health and retirement plan providers who share our mission to save and improve lives by empowering healthcare consumers. For more information, visit www.healthequity.com.
Forward-looking statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our industry, business strategy, plans, goals and expectations concerning our markets and market position, product expansion, future operations, expenses and other results of operations, revenue, margins, profitability, acquisition synergies, future efficiencies, tax rates, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “may,” “believes,” “intends,” “seeks,” “aims,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to be correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, risks related to the following:
- our ability to adequately place and safeguard our custodial assets, or the failure of any of our depository or insurance company partners;
- our ability to compete effectively in a rapidly evolving healthcare and benefits administration industry;
- our dependence on the continued availability and benefits of tax-advantaged HSAs and other CDBs;
- the impact of fraudulent account activity involving our member accounts or our third-party service providers on our reputation and financial results;
- our ability to successfully identify, acquire and integrate additional portfolio purchases or acquisition targets;
- the significant competition we face and may face in the future, including from those with greater resources than us;
- our reliance on the availability and performance of our technology and communications systems;
- potential future cybersecurity breaches of our technology and communications systems and other data interruptions, including resulting costs and liabilities, reputational damage and loss of business;
- the current uncertain healthcare environment, including changes in healthcare programs and expenditures and related regulations;
- our ability to comply with current and future privacy, healthcare, tax, ERISA, investment adviser and other laws applicable to our business;
- our reliance on partners and third-party vendors for distribution and important services;
- our ability to develop and implement updated features for our technology platforms and communications systems; and
- our reliance on our management team and key team members.
For a detailed discussion of these and other risk factors, please refer to the risks detailed in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 and subsequent periodic and current reports. Past performance is not necessarily indicative of future results. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
Investor Relations Contact
Richard Putnam
801-727-1000
[email protected]
Condensed consolidated balance sheets
(in thousands, except par value)July 31, 2026
January 31, 2026
(unaudited)
Assets Current assets Cash and cash equivalents$ 256,003 $ 318,927 Accounts receivable, net of allowance for doubtful accounts of $1,067 and $924 as of July 31,
2026 and January 31, 2026, respectively 122,193 123,696 Prepaid expenses and other current assets 82,008 69,658 Total current assets 460,204 512,281 Property and equipment, net 4,823 3,177 Operating lease right-of-use assets 32,874 36,310 Intangible assets, net 1,047,797 1,097,172 Goodwill 1,648,145 1,648,145 Other assets 77,520 83,247 Total assets$ 3,271,363 $ 3,380,332 Liabilities and stockholders’ equity Current liabilities Accounts payable$ 8,592 $ 12,159 Accrued compensation 37,913 60,392 Accrued liabilities 97,300 74,388 Operating lease liabilities 9,970 9,911 Total current liabilities 153,775 156,850 Long-term liabilities Long-term debt, net of issuance costs 931,062 957,379 Operating lease liabilities, non-current 29,984 34,190 Other long-term liabilities 73,999 31,007 Deferred tax liability 92,433 93,710 Total long-term liabilities 1,127,478 1,116,286 Total liabilities 1,281,253 1,273,136 Commitments and contingencies Stockholders’ equity Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and
outstanding as of July 31, 2026 and January 31, 2026, respectively — — Common stock, $0.0001 par value, 900,000 shares authorized, 82,909 and 85,007 shares
issued and outstanding as of July 31, 2026 and January 31, 2026, respectively 8 8 Additional paid-in capital 1,896,571 1,916,989 Accumulated earnings 162,583 195,906 Accumulated other comprehensive loss (69,052) (5,707)Total stockholders’ equity 1,990,110 2,107,196 Total liabilities and stockholders’ equity$ 3,271,363 $ 3,380,332
Condensed consolidated statements of operations (unaudited) Three months ended July 31,
Six months ended July 31,
(in thousands, except per share data) 2026 2025 2026 2025 Revenue Service revenue$ 124,444 $ 117,873 $ 247,376 $ 237,657 Custodial revenue 175,936 159,876 350,270 316,331 Interchange revenue 50,352 48,086 107,727 102,691 Total revenue 350,732 325,835 705,373 656,679 Cost of revenue Service costs 73,170 75,156 151,496 163,161 Custodial costs 12,083 11,137 23,738 21,884 Interchange costs 7,525 6,947 15,873 14,728 Total cost of revenue 92,778 93,240 191,107 199,773 Gross profit 257,954 232,595 514,266 456,906 Operating expenses Sales and marketing 23,215 19,922 50,048 45,906 Technology and development 73,923 64,804 141,690 126,240 General and administrative 34,869 29,990 66,000 55,526 Amortization of acquired intangible assets 26,286 27,001 52,801 54,003 Merger integration 971 1,266 2,084 2,541 Total operating expenses 159,264 142,983 312,623 284,216 Income from operations 98,690 89,612 201,643 172,690 Other expense Interest expense (12,605) (14,955) (25,193) (29,813)Other income, net 1,780 3,391 3,828 6,124 Total other expense (10,825) (11,564) (21,365) (23,689)Income before income taxes 87,865 78,048 180,278 149,001 Income tax provision 22,221 18,194 45,216 35,232 Net income$ 65,644 $ 59,854 $ 135,062 $ 113,769 Net income per share: Basic$ 0.79 $ 0.69 $ 1.61 $ 1.31 Diluted$ 0.78 $ 0.68 $ 1.60 $ 1.29 Weighted-average number of shares used in computing net income per share: Basic 83,374 86,550 83,885 86,601 Diluted 84,014 87,746 84,578 88,153
Condensed consolidated statements of comprehensive income (unaudited) Three months ended July 31, Six months ended July 31,(in thousands) 2026 2025 2026 2025Net income$ 65,644 $ 59,854 $ 135,062 $ 113,769Other comprehensive income (loss) Cash flow hedges Net unrealized gains (losses) (37,322) 203 (63,219) 203Reclassification of net (gains) losses included in net income 22 — (126) —Net change, net of income tax benefit (expense) of $12,135, $(70), $20,598, and $(70), respectively (37,300) 203 (63,345) 203Total other comprehensive income (loss) (37,300) 203 (63,345) 203Comprehensive income$ 28,344 $ 60,057 $ 71,717 $ 113,972
Condensed consolidated statements of cash flows (unaudited) Six months ended July 31,
(in thousands) 2026 2025 Cash flows from operating activities: Net income$ 135,062 $ 113,769 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 80,169 77,195 Stock-based compensation 41,616 33,404 Amortization of debt discount and issuance costs 558 533 Amortization of gains on derivatives (168) — Deferred taxes 19,321 30,711 Changes in operating assets and liabilities: Accounts receivable, net 1,503 6,842 Prepaid expenses and other current and non-current assets (12,581) (20,650)Operating lease right-of-use assets 3,436 3,339 Accrued compensation (21,095) (35,032)Accounts payable, accrued liabilities, and other current liabilities (13,595) (3,785)Operating lease liabilities, non-current (4,206) (3,951)Other long-term liabilities 3,665 (1,771)Net cash provided by operating activities 233,685 200,604 Cash flows from investing activities: Capitalized software development costs (30,720) (26,464)Purchases of property and equipment (1,340) (859)Settlement of derivatives, net (7,759) — Net cash used in investing activities (39,819) (27,323)Cash flows from financing activities: Repurchases of common stock (231,054) (125,810)Principal payments on long-term debt (26,875) (50,000)Settlement of client-held funds obligation, net 480 596 Proceeds from exercise of common stock options 659 10,446 Net cash used in financing activities (256,790) (164,768)Increase (decrease) in cash and cash equivalents (62,924) 8,513 Beginning cash and cash equivalents 318,927 295,948 Ending cash and cash equivalents$ 256,003 $ 304,461
Condensed consolidated statements of cash flows (unaudited) (continued) Six months ended July 31,(in thousands) 2026 2025Supplemental cash flow data: Interest expense paid in cash$ 23,350 $ 28,362Income tax payments, net 35,586 6,507Supplemental disclosures of non-cash investing and financing activities: Capitalized software development costs included in accounts payable, accrued liabilities, or accrued compensation 3,434 3,380Purchases of property and equipment included in accounts payable or accrued liabilities 1,294 155Repurchases of common stock included in accrued liabilities 3,255 1,246Exercise of common stock options receivable 57 —
Total stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive income is as follows:
Three months ended July 31, Six months ended July 31,(in thousands) 2026 2025 2026 2025Cost of revenue$ 2,713 $ 3,114 $ 5,500 $ 6,501Sales and marketing 3,229 1,529 7,753 6,399Technology and development 6,178 5,732 10,131 11,652General and administrative 10,090 8,693 18,232 8,852Total stock-based compensation expense$ 22,210 $ 19,068 $ 41,616 $ 33,404
(in thousands, except percentages)July 31, 2026 July 31, 2025 % Change January 31, 2026HSAs 10,739 9,989 8 %
10,570New HSAs from sales - Quarter-to-date 202 163 24 %
553New HSAs from sales - Year-to-date 374 312 20 %
1,040New HSAs from acquisitions - Year-to-date — — * —HSAs with investments 939 782 20 %
832CDBs 7,016 7,153 (2)% 7,221Total Accounts 17,755 17,142 4 %
17,791Average Total Accounts - Quarter-to-date 17,710 17,044 4 %
17,462Average Total Accounts - Year-to-date 17,772 17,083 4 %
17,220
* Not meaningful
(in millions, except percentages)July 31, 2026 July 31, 2025 % Change January 31, 2026HSA cash$ 17,369 $ 17,035 2%
$ 17,982HSA investments 20,552 16,102 28%
18,482Total HSA Assets 37,921 33,137 14%
36,464Average daily HSA cash - Quarter-to-date 17,388 17,017 2%
17,090Average daily HSA cash - Year-to-date 17,547 17,149 2%
17,082
The following table summarizes the amount of HSA cash held by our depository partners and insurance company partners that is expected to reprice by fiscal year and the respective average annualized yield currently earned on that HSA cash as of July 31, 2026:
Year ending January 31, (in billions, except percentages)HSA cash expected to reprice Average annualized yieldRemainder of 2027$ 2.3 1.5%
2028 2.5 4.0%
2029 1.8 3.8%
2030 2.3 4.4%
Thereafter 7.8 4.4%
Total (1)$ 16.7 3.9%
(1) Excludes $0.7 billion of HSA cash held in floating-rate contracts as of July 31, 2026.
(in millions, except percentages)July 31, 2026 July 31, 2025 % Change January 31, 2026Client-held funds$ 931 $ 818 14 %
$ 1,090Average daily Client-held funds - Quarter-to-date 936 884 6 %
879Average daily Client-held funds - Year-to-date 986 893 10 %
864
Six months ended July 31,
(in thousands) 2026 2025 2026 2025 Net income$ 65,644 $ 59,854 $ 135,062 $ 113,769 Interest income (1,760) (3,364) (3,647) (6,097)Interest expense 12,605 14,955 25,193 29,813 Income tax provision 22,221 18,194 45,216 35,232 Depreciation and amortization 15,669 11,453 27,368 23,192 Amortization of acquired intangible assets 26,286 27,001 52,801 54,003 Stock-based compensation expense 22,210 19,068 41,616 33,404 Merger integration expenses 971 1,266 2,084 2,541 Amortization of incremental costs to obtain a contract 2,139 1,951 4,255 3,877 Costs associated with unused office space 1,016 723 1,702 1,575 Other (20) (27) (181) (27)Adjusted EBITDA$ 166,981 $ 151,074 $ 331,469 $ 291,282
Three months ended July 31, Six months ended July 31, (in thousands, except
percentages) 2026 2025 $ Change % Change 2026 2025 $ Change % ChangeNet income$ 65,644 $ 59,854 $ 5,790 10 % $ 135,062 $ 113,769 $ 21,293 19 %As a percentage of revenue 19 % 18% 19 % 17 % Adjusted EBITDA$ 166,981 $ 151,074 $ 15,907 11 % $ 331,469 $ 291,282 $ 40,187 14 %As a percentage of revenue 48 % 46% 47 % 44 %
(unaudited)
Outlook for the year ending(in millions)January 31, 2027Net income$242 - 248Interest income(7)
Interest expense50
Income tax provision81 - 83Depreciation and amortization54
Amortization of acquired intangible assets104
Stock-based compensation expense87
Merger integration expenses5
Amortization of incremental costs to obtain a contract9
Costs associated with unused office space3
Adjusted EBITDA$628 - 636
Note: Values presented may not calculate due to rounding.
Reconciliation of net income to non-GAAP net income (unaudited)Three months ended July 31, Six months ended July 31,(in thousands, except per share data) 2026 2025 2026 2025Net income$ 65,644 $ 59,854 $ 135,062 $ 113,769Income tax provision 22,221 18,194 45,216 35,232Income before income taxes - GAAP 87,865 78,048 180,278 149,001Non-GAAP adjustments: Amortization of acquired intangible assets 26,286 27,001 52,801 54,003Stock-based compensation expense 22,210 19,068 41,616 33,404Merger integration expenses 971 1,266 2,084 2,541Costs associated with unused office space 1,016 723 1,702 1,575Total adjustments to income before income taxes - GAAP 50,483 48,058 98,203 91,523Income before income taxes - Non-GAAP 138,348 126,106 278,481 240,524Income tax provision - Non-GAAP (1) 34,586 31,526 69,620 60,130Non-GAAP net income 103,762 94,580 208,861 180,394 Diluted weighted-average shares 84,014 87,746 84,578 88,153GAAP net income per diluted share$ 0.78 $ 0.68 $ 1.60 $ 1.29Non-GAAP net income per diluted share$ 1.24 $ 1.08 $ 2.47 $ 2.05
Outlook for the year ending(in millions, except per share data)January 31, 2027Net income$242 - 248Income tax provision81 - 83Income before income taxes - GAAP323 - 331Non-GAAP adjustments: Amortization of acquired intangible assets104Stock-based compensation expense87Merger integration expenses5Costs associated with unused office space3Total adjustments to income before income taxes - GAAP199Income before income taxes - Non-GAAP522 - 530Income tax provision - Non-GAAP (1)131 - 133Non-GAAP net income$392 - 398 Diluted weighted-average shares84GAAP net income per diluted share$2.88 - 2.96Non-GAAP net income per diluted share$4.66 - 4.73
Note: Values presented may not calculate due to rounding.
(1) The Company utilizes a normalized non-GAAP tax rate to provide better consistency across the interim reporting periods within a given fiscal year by eliminating the effects of non-recurring and period-specific items, which can vary in size and frequency, and which are not necessarily reflective of the Company’s longer-term operations. The normalized non-GAAP tax rate applied to each period presented was 25%. The Company may adjust its non-GAAP tax rate as additional information becomes available and in conjunction with any other significant events occurring that may materially affect this rate, such as merger and acquisition activity, changes in business outlook, or other changes in expectations regarding tax regulations.TermDefinitionHSAHealth Savings Account, which is a financial account through which consumers spend and save long-term for healthcare on a tax-advantaged basis.CDBConsumer-directed benefits offered by employers, including flexible spending and health reimbursement arrangements (“FSAs” and “HRAs”), Consolidated Omnibus Budget Reconciliation Act (“COBRA”) administration, commuter and other benefits.HSA memberConsumers with HSAs that we serve.Total HSA AssetsHSA members’ custodial cash assets held by our federally insured depository partners and our insurance company partners. Total HSA Assets also includes HSA members' investments held by our custodial investment fund partner.ClientOur employer clients.Total AccountsThe sum of HSAs and CDBs on our platforms.Client-held fundsDeposits held on behalf of our Clients to facilitate administration of our CDBs.Network PartnerOur health plan partners, benefits administrators, and retirement plan recordkeepers.Adjusted EBITDAEarnings before interest, taxes, depreciation and amortization, amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, amortization of incremental costs to obtain a contract, costs associated with unused office space, and certain other non-operating items.Non-GAAP net incomeCalculated by adding back to GAAP net income before income taxes the following items: amortization of acquired intangible assets, stock-based compensation expense, merger integration expenses, acquisition costs, gains and losses on equity securities, costs associated with unused office space, and losses on extinguishment of debt, and subtracting a non-GAAP tax provision using a normalized non-GAAP tax rate.Non-GAAP net income per diluted shareCalculated by dividing non-GAAP net income by diluted weighted-average shares outstanding.