HealthEquity (NASDAQ: HQY) delivered accelerated revenue growth in the second quarter of fiscal 2027, reporting a record adjusted EBITDA margin of 48% and raising its full-year guidance.

The health savings account (HSA) administrator posted GAAP net income of $65.6 million, or $0.78 per diluted share, supported by strong account growth and technology-enabled efficiency gains across its platform.

Financial Performance

Revenue grew 8% year over year to a combined total driven by service and custodial streams. Service revenue reached a record $124.4 million, up 6% from the prior year period, while custodial revenue climbed 10% to $175.9 million. Interchange revenue also expanded 5% to $50.4 million.

Gross profit hit a record $258 million, representing approximately 74% of revenue, an expansion from 71% in the second quarter of the prior fiscal year. This margin improvement was fueled by AI-driven automation that reduced service costs per account despite a 4% increase in total accounts.

Non-GAAP net income stood at $103.8 million ($1.24 per diluted share). Adjusted EBITDA reached a record $167 million, up 11% year over year. The results included a one-time disposal expense of $3.3 million related to previously capitalized software.

What the Numbers Show

The divergence between revenue growth (8%) and account growth (4%) highlights the company's success in deepening engagement with existing members rather than relying solely on new acquisition. With active app users surging 62% year over year to 1.4 million, HealthEquity is successfully monetizing higher transaction volumes and investment activity within its installed base, driving service revenue ahead of pure volume metrics.

Balance Sheet and Capital Allocation

The company ended the quarter with $256 million in cash and generated $136 million in operating cash flow. Net debt stood at approximately $931 million. Management repurchased approximately $108 million of shares during the quarter at an average price below $90, leaving $948 million remaining under its cumulative authorization.

Regarding interest rate management, HealthEquity ended the quarter with $3 billion in outstanding forward treasury contracts, effectively locking in a five-year treasury rate of approximately 3.9% net of costs for fiscal years 2027 through 2029. The annualized yield on HSA cash was 3.833%.

Guidance and Outlook

Management raised its fiscal 2027 guidance, reflecting strong first-half performance and ongoing efficiency investments:

• Revenue: $1.411 billion to $1.421 billion
• GAAP Net Income: $242 million to $248 million ($2.88 to $2.96 per share)
• Non-GAAP Net Income: $392 million to $398 million ($4.66 to $4.73 per share)
• Adjusted EBITDA: $628 million to $636 million

HSA accounts reached a record 10.7 million, with total HSA assets growing 14% year over year. New HSAs from sales set a quarterly record, growing 24% year over year. The company plans to launch a next-generation app in coming months to further consolidate member engagement and marketplace access.

HealthEquity (NASDAQ: HQY) has raised its fiscal year 2027 GAAP earnings per share guidance while also lifting the top-end of its sales forecast. The health savings account administrator increased the upper bound of its GAAP EPS range from $2.95 to $2.96, now slightly exceeding the $2.94 analyst consensus.

The company simultaneously raised its FY2027 sales guidance from $1.410 billion-$1.420 billion to $1.411 billion-$1.421 billion. This adjustment places the new revenue midpoint above the $1.416 billion analyst estimate. HealthEquity maintained its adjusted EPS guidance at $4.66-$4.73, which aligns with the $4.72 market consensus.

Guidance Updates

What the Numbers Show

The divergence between the stable adjusted EPS and the raised GAAP EPS suggests a specific driver in the bottom-line improvement. While the non-GAAP profit outlook remains unchanged, the lift in the statutory GAAP figure implies that items excluded from adjusted earnings—such as stock-based compensation or amortization—are expected to be lower than previously modeled, or that tax benefits have improved. The narrow $1 million increase in revenue guidance indicates high forecasting precision rather than a broad shift in demand assumptions.