HealthEquity Reports Second Quarter Ended July 31, 2025 Financial Results
Highlights of the second quarter include:
Revenue of $325.8 million, an increase of 9% compared to $299.9 million in Q2 FY25.
Net income of $59.9 million, an increase of 67% compared to $35.8 million in Q2 FY25, with non-GAAP net income of $94.6 million, an increase of 24% compared to $76.3 million in Q2 FY25.
Net income per diluted share of $0.68, an increase of 70% compared to $0.40 in Q2 FY25, with non-GAAP net income per diluted share of $1.08, an increase of 26% compared to $0.86 in Q2 FY25.
Adjusted EBITDA of $151.1 million, an increase of 18% compared to $128.3 million in Q2 FY25.
10.0 million HSAs, an increase of 6% compared to Q2 FY25.
Total HSA Assets of $33.1 billion, an increase of 12% compared to Q2 FY25.
17.1 million Total Accounts, including both HSAs and complementary CDBs, an increase of 5% compared to Q2 FY25.
The Company repurchased 0.7 million shares of its common stock for $66.0 million.
DRAPER, Utah, Sept. 02, 2025 (GLOBE NEWSWIRE) -- HealthEquity, Inc. (NASDAQ:HQY) ("HealthEquity" or the "Company"), the nation's largest health savings account ("HSA") custodian by number of accounts, today announced financial results for its second quarter ended July 31, 2025.
"The HealthEquity team delivered continued momentum during our second quarter with strong 9% revenue growth, record gross margin of 71% and record adjusted EBITDA of $151 million," said Scott Cutler, President and CEO of HealthEquity. "We believe our outlook is even brighter with our national lawmakers providing the largest legislative expansion of HSAs since 2006 as more American families seek access to the financial security and tax benefits that they provide. Through our proprietary technologies and platforms, Team Purple continues to empower a growing number of savvy healthcare consumers with tools and resources that drive better member outcomes."
Second quarter financial results
Revenue for the second quarter ended July 31, 2025 was $325.8 million, an increase of 9% compared to $299.9 million for the second quarter ended July 31, 2024. Revenue this quarter included: service revenue of $117.9 million, custodial revenue of $159.9 million, and interchange revenue of $48.1 million.
HealthEquity reported net income of $59.9 million, or $0.68 per diluted share, and non-GAAP net income of $94.6 million, or $1.08 per diluted share, for the second quarter ended July 31, 2025. The Company reported net income of $35.8 million, or $0.40 per diluted share, and non-GAAP net income of $76.3 million, or $0.86 per diluted share, for the second quarter ended July 31, 2024.
Adjusted EBITDA was $151.1 million for the second quarter ended July 31, 2025, an increase of 18% compared to the second quarter ended July 31, 2024. Adjusted EBITDA was 46% of revenue, compared to 43% for the second quarter ended July 31, 2024.
Account and asset metrics
HSAs as of July 31, 2025 were 10.0 million, an increase of 6% year over year, including 782,000 HSAs with investments, an increase of 10% year over year. Total Accounts as of July 31, 2025 were 17.1 million, including 7.2 million other consumer-directed benefits ("CDBs").
Total HSA Assets as of July 31, 2025 were $33.1 billion, an increase of 12% year over year. Total HSA Assets included $17.0 billion of HSA cash and $16.1 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 $0.8 billion as of July 31, 2025.
Stock repurchase program
The Company repurchased 0.7 million shares of its common stock for $66.0 million during the second quarter ended July 31, 2025. As of July 31, 2025, $351.8 million of common stock remained authorized for repurchase under the Company's stock repurchase programs.
Business outlook
For the fiscal year ending January 31, 2026, management expects revenues of $1.290 billion to $1.310 billion. Its outlook for net income is between $185 million and $200 million, resulting in net income of $2.11 to $2.28 per diluted share. Its outlook for non-GAAP net income, calculated using the method described below, is between $329 million and $344 million, resulting in non-GAAP net income per diluted share of $3.74 to $3.91 (based on an estimated 88 million diluted weighted-average shares outstanding). Management expects Adjusted EBITDA of $540 million to $560 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 4:30 pm (Eastern Time) on Tuesday, September 2, 2025 to discuss the fiscal 2026 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 net income, 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;
risks relating to our recent CEO transition;
the impact of increased 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;
recent and 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;
potential regulatory changes and changes in the enforcement environment under the new U.S. administration;
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, 2025 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 ContactRichard
HealthEquity, Inc. and subsidiariesCondensed consolidated balance sheets
(in thousands, except par value)
July 31, 2025
January 31, 2025
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
304,461
$
295,948
Accounts receivable, net of allowance for doubtful accounts of $920 and $2,070 as of July 31, 2025 and January 31, 2025, respectively
111,164
118,006
Prepaid expenses and other current assets
77,207
63,795
Total current assets
492,832
477,749
Property and equipment, net
3,088
3,239
Operating lease right-of-use assets
39,756
43,185
Intangible assets, net
1,152,456
1,204,658
Goodwill
1,648,145
1,648,145
Other assets
80,401
71,574
Total assets
$
3,416,678
$
3,448,550
Liabilities and stockholders' equity
Current liabilities
Accounts payable
$
9,600
$
14,361
Accrued compensation
32,482
69,330
Accrued liabilities
64,543
62,631
Operating lease liabilities
9,950
10,001
Total current liabilities
116,575
156,323
Long-term liabilities
Long-term debt, net of issuance costs
1,006,834
1,056,301
Operating lease liabilities, non-current
38,240
42,219
Other long-term liabilities
21,993
22,962
Deferred tax liability
86,615
55,834
Total long-term liabilities
1,153,682
1,177,316
Total liabilities
1,270,257
1,333,639
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively
—
—
Common stock, $0.0001 par value, 900,000 shares authorized, 86,421 and 86,536 shares issued and outstanding as of July 31, 2025 and January 31, 2025, respectively
9
9
Additional paid-in capital
1,919,312
1,905,628
Accumulated other comprehensive income
203
—
Accumulated earnings
226,897
209,274
Total stockholders' equity
2,146,421
2,114,911
Total liabilities and stockholders' equity
$
3,416,678
$
3,448,550
HealthEquity, Inc. and subsidiariesCondensed consolidated statements of operations (unaudited)
Three months ended July 31,
Six months ended July 31,
(in thousands, except per share data)
2025
2024
2025
2024
Revenue
Service revenue
$
117,873
$
116,720
$
237,657
$
234,934
Custodial revenue
159,876
138,684
316,331
260,328
Interchange revenue
48,086
44,524
102,691
92,263
Total revenue
325,835
299,928
656,679
587,525
Cost of revenue
Service costs
75,156
76,915
163,161
159,262
Custodial costs
11,137
10,108
21,884
19,165
Interchange costs
6,947
8,853
14,728
17,908
Total cost of revenue
93,240
95,876
199,773
196,335
Gross profit
232,595
204,052
456,906
391,190
Operating expenses
Sales and marketing
19,922
21,525
45,906
45,019
Technology and development
64,804
58,580
126,240
114,670
General and administrative
29,990
32,260
55,526
70,496
Amortization of acquired intangible assets
27,001
30,981
54,003
56,526
Merger integration
1,266
1,777
2,541
3,920
Total operating expenses
142,983
145,123
284,216
290,631
Income from operations
89,612
58,929
172,690
100,559
Other expense
Interest expense
(14,955
)
(15,427
)
(29,813
)
(27,222
)
Other income, net
3,391
3,114
6,124
6,518
Total other expense
(11,564
)
(12,313
)
(23,689
)
(20,704
)
Income before income taxes
