Healthequity, Inc. (NASDAQ: HQY)

Sector: Healthcare Industry: Health Information Services CIK: 0001428336
Market Cap 7.32 Bn
P/B 3.43
P/E 38.14
P/S 5.67
ROIC (Qtr) 7.06
Div Yield % 0.00
Rev 1y % (Qtr) 7.23
Total Debt (Qtr) 1.03 Bn
Debt/Equity (Qtr) 0.48

About

HealthEquity, Inc., often recognized by its stock symbol HQY, operates in the healthcare benefits administration industry. This sector is experiencing a shift towards greater consumer responsibility for healthcare costs, and HealthEquity is at the forefront of this evolution, offering technology-enabled services to aid consumers in making informed healthcare saving and spending decisions. HealthEquity's primary business activities revolve around the administration of health savings accounts (HSAs) and other consumer-directed benefits (CDBs). The...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 414.93M provides robust 0.40x coverage of total debt 1.03B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 309.26M provide 31.14x coverage of short-term debt 9.93M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong operating cash flow of 414.93M provides 1.98x coverage of SG&A expenses 209.78M, showing efficient operational cost management.
  • Robust free cash flow of 362.96M exceeds capital expenditure of 51.97M by 6.98x, indicating strong organic growth funding capability.
  • Operating cash flow of 414.93M fully covers other non-current liabilities 125.07M by 3.32x, showing strong long-term stability.

Bear case

  • Operating cash flow of 414.93M barely covers its investment activities of (52.26M), with a coverage ratio of -7.94, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (52.26M) provide weak support for R&D spending of 256.81M, which is -0.20x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 309.26M provide limited coverage of acquisition spending of (293000), which is -1055.49x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 305.61M show weak coverage of depreciation charges of 155.16M, with a 1.97 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 362.96M represents just -3.63x of debt issuance (100M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Health Information Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TEM Tempus AI, Inc. 45.63 Bn -223.83 41.29 1.34 Bn
2 GEHC GE HealthCare Technologies Inc. 38.75 Bn 19.85 2.19 10.28 Bn
3 VEEV Veeva Systems Inc 37.30 Bn 43.36 12.11 0.09 Bn
4 DOCS Doximity, Inc. 7.81 Bn 30.87 12.57 0.01 Bn
5 BTSG BrightSpring Health Services, Inc. 7.70 Bn 59.42 0.62 2.70 Bn
6 HQY Healthequity, Inc. 7.32 Bn 38.14 5.67 1.03 Bn
7 WAY Waystar Holding Corp. 5.00 Bn 44.97 4.81 1.25 Bn
8 PRVA Privia Health Group, Inc. 2.79 Bn 153.67 1.37 0.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.37 2.77
EV to Cash from Ops. EV/CFO 19.44 -10.86
EV to Debt EV to Debt 7.84 161.93
EV to EBIT EV/EBIT 26.39 -106.48
EV to EBITDA EV/EBITDA 17.98 4.22
EV to Free Cash Flow [EV/FCF] EV/FCF 22.22 7.46
EV to Market Cap EV to Market Cap 1.10 -14.93
EV to Revenue EV/Rev 6.25 1.76
Price to Book Value [P/B] P/B 3.43 10.57
Price to Earnings [P/E] P/E 38.14 147.14
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -8.65
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 5.00
Dividend per Basic Share Div per Share (Qtr) 0.00 0.04
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.57
Interest Coverage Int. cover (Qtr) 5.17 -584.72
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -2.05 -24.09
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -4.01 172.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -1.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 62.91 -17.73
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 40.11 39.85
EBIT Growth (1y) % EBIT 1y % (Qtr) 74.83 -38.83
EBT Growth (1y) % EBT 1y % (Qtr) 112.88 -4.52
EPS Growth (1y) % EPS 1y % (Qtr) 97.32 2.60
FCF Growth (1y) % FCF 1y % (Qtr) 25.05 -48.57
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.30 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.38 0.66
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 2.56 1.87
Current Ratio Curr Ratio (Qtr) 4.13 3.27
Debt to Equity Ratio Debt/Equity (Qtr) 0.48 -0.43
Interest Cover Ratio Int Coverage (Qtr) 5.17 -584.72
Times Interest Earned Times Interest Earned (Qtr) 5.17 -584.72
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 35.70 -435.80
EBIT Margin % EBIT Margin % (Qtr) 23.68 -464.70
EBT Margin % EBT Margin % (Qtr) 19.10 -461.74
Gross Margin % Gross Margin % (Qtr) 67.70 44.03
Net Profit Margin % Net Margin % (Qtr) 14.90 -468.01