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.