HealthEquity reported second-quarter fiscal 2027 results that exceeded Wall Street expectations, yet its stock fell 13.6% after the market reacted to guidance that some analysts viewed as conservative. The company posted non-GAAP earnings of $1.24 per share on revenue of $350.7 million, beating estimates by $0.05 and $1.5 million, respectively.
GAAP net income totaled $65.6 million, or $0.78 per diluted share, while non-GAAP net income reached $103.8 million, or $1.24 per share. Adjusted EBITDA rose 11% year-over-year to $167 million, with margins expanding to 48% from 46%. Gross profit climbed to $258 million, representing 74% of revenue, up from 71% a year earlier. Service revenue increased 6% to a record $124.4 million, while custodial revenue rose 10% to $175.9 million.
For the first half of fiscal 2027, revenue grew 7% year-over-year to $705.4 million, with non-GAAP net income up 14% to $208.9 million. Adjusted EBITDA for the period reached $331.5 million, with a 47% margin. Operating cash flow totaled $136 million in the quarter and $331.5 million for the six-month period.
HealthEquity ended the quarter with $256 million in cash and approximately $931 million in debt. The company repurchased $108 million of its shares during the period at an average price below $90, leaving $948 million available under its $1.6 billion authorization. Shares fell 13.59% to $90.23 in premarket trading, erasing $14.19 from the prior close of $104.42.
The company maintained 10.7 million HSAs at quarter-end, up 8% year-over-year, with total HSA assets increasing 14%. New HSAs from sales climbed 24%, while mobile active users reached 1.4 million in July, a 62% year-over-year increase. Approximately 9% of HSA members invested assets, with balances up 28%.
Management raised its full-year fiscal 2027 guidance, projecting revenue of $1.411 billion to $1.421 billion, non-GAAP EPS of $4.66 to $4.73, and adjusted EBITDA of $628 million to $636 million. The average yield on HSA cash is expected to range between 3.85% and 3.9%.
CEO Scott Cutler emphasized the company's progress in scaling its platform, stating, "Q1 demonstrated that the model is scaling, and Q2 showed that the model is becoming more durable." CFO James Lucania added, "We remain optimistic about fiscal 2027 and are raising our guidance," while noting the benefits of ongoing technology and security investments.
