The Healthcare Stock Powering America’s $100B HSA Boom

30‑Second Take

Why now? Demand for telehealth platforms and associated services is climbing, and HQY is perfectly positioned to capitalize on that trend. Its Q1 financial results (released June 03) confirm sales grew 15% to a record high of $330.8 million, while net income spiked by 87%. 

The company has also lifted its full-year guidance as the shift towards consumer-managed benefits picks up pace. This sector of the healthcare and personal finance market is very much in its infancy, but it’s rapidly gaining traction.Bottom line? Unlike volatile biotech stocks, HQY is a good pick for investors seeking predictable, long-term growth.

Trade Setup

Time frame: Swing to medium-term position
Edge type: Momentum breakout with earnings-driven catalyst

Snapshot Table

Chart

5-Day Synopsis

Tuesday’s earnings call showed a company with strong revenue growth and a clear path to expansion. It beat analysts’ expectations and indicated that it expects the remainder of the year to follow the same pattern. Key findings included a 19% increase in adjusted EBITDA, a steep decline in quarterly fraud costs, and developments in AI-enabled member experiences. Stock prices have increased by more than 11% in the last five days, with HQY trading at the top of its 52-week range.

Bull Case 

Core thesis: HealthEquity manages Health Savings Accounts (HSAs) and related benefits (like FSAs and HRAs). This fintech-healthcare hybrid operates at the intersection of personal finance, healthcare, and benefits tech. It’s in on the ground floor of the shift toward consumer-managed benefits, with room to expand as the U.S. healthcare system evolves. The company has high retention rates and strong margins, and has been expanding via smart acquisitions. Recent examples include WageWorks and Further.

Catalysts: U.S. employers and individuals are increasingly turning to high-deductible health plans (HDHPs), which pair with HSAs. HealthEquity is the largest non-bank custodian of HSAs in America, so it has a strong recurring revenue base and enormous potential for growth. HSAs are triple tax-advantaged and growing rapidly in popularity as retirement planning tools — especially among millennials and Gen Z workers. With every increase in contributions, account balances, and investment activity, HQY benefits. 

Valuation upside: The average analyst price target is $115.14, with a high of $130.

Technical tailwind: Technical indicators, including an RS Rating of 82, suggest strong bullish momentum.

Bear Case 

Key risk: A large chunk of HQY’s revenue comes from interest income on HSA cash balances. With President Trump pressuring the Federal Reserve to cut interest rates, income from interest would fall. That loss of income could weigh on margins and revenue growth. In a worst-case scenario where the Fed makes aggressive cuts, this tailwind could become a headwind.

Macro/sector headwinds: The health tech space is becoming more competitive, with banks, fintechs, and benefits platforms such as Paychex all muscling in on HQY’s HSAs and wellness benefits territory. 

Competitive threat: HQY’s growth is tied closely to the U.S. healthcare system. It has minimal international diversification, which could limit its ability to scale compared with competitors who have a global presence. 

Crowded-trade concern: With a short interest of 6.85% of the float, HQY stock could be vulnerable to any increase in volatility due to shifting policies or a change in investor sentiment.

Quick Checklist 

✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (June 04, 2025)

Deep‑Dive Links

• Q1 2025 Earnings Report 

• Analyst Ratings and Price Targets

• Short Interest Data

• Company Profile and Investor Relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha