What happened

Shares of HealthEquity (NASDAQ:HQY) climbed 17.8% in December, according to data from S&P Global Market Intelligence, after the health-centric financial services company announced better-than-expected quarterly results.

To be sure, HealthEquity stock rose 9% on Dec. 4, 2019, alone -- the first trading day after the company's third-quarter fiscal 2020 update hit the wires.

Stock charts indicating gains.


So what

HealthEquity's headline numbers were solid indeed: Third-quarter revenue soared 123% year over year to $157.1 million, translating to a 52% increase in non-GAAP (adjusted) net income to $0.47 per share. Analysts, on average, were modeling adjusted net income of only $0.22 per share on lower revenue of $152.1 million.

And the underlying drivers of those results were equally impressive. HealthEquity's number of health savings accounts grew 37% year over year (or 16% excluding acquired accounts) to exceed 5 million. And total HSA assets at the end of the quarter stood at $10.5 billion, up 48% year over year (or 24% excluding acquisitions).

Now what

Noting HealthEquity closed on its acquisition of WageWorks at the end of August, management also revealed the company has already achieved annual run-rate synergies of $15 million. As such, HealthEquity now anticipates meeting its original goal for $50 million in run-rate synergies by the end of fiscal 2021 -- well ahead of its initial target for hitting the milestone 24 to 36 months after closing.

Looking ahead to the full fiscal-year 2020, HealthEquity now anticipates revenue to arrive between $520 million and $526 million, with adjusted net income per share ranging between $1.46 and $1.52.

In the end, it was hardly surprising to see shares rally last month on this straightforward quarterly beat and faster-than-expected acquisition synergy progress. And I suspect this healthcare stock could have more room to run as long as it's able to maintain the momentum for its underlying business going forward.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.