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Here's Why HealthEquity Is Plummeting Today

By Matthew Frankel, CFP® – Dec 7, 2021 at 11:28AM

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The HSA provider is under pressure after some disappointing numbers.

What happened

It was a strong start for the overall stock market on Tuesday morning, but HealthEquity (HQY 2.59%) wasn't exactly moving in a positive direction. At 10:30 a.m. EST, the health savings account custodian was down by 22% on the day after having fallen by more than 30% earlier in the session.

So what

HealthEquity reported its third-quarter results, and that's what is weighing on the stock today.

Pills on hundred dollar bills.

Image source: Getty Images.

For starters, HealthEquity met expectations for adjusted earnings, but missed on top-line revenue. The $180 million in third-quarter revenue HealthEquity reported was essentially flat from the same quarter a year ago and was more than $5 million less than analysts were looking for. On a non-adjusted (GAAP) basis, HealthEquity lost $5 million for the quarter, down from a $1.8 million profit in the third quarter of last year.

More significantly, HealthEquity trimmed its guidance for the year on both the top and bottom lines. The full-year revenue guidance is now for a range of $750 million to $755 million, down by $7.5 million at the midpoint compared with previous guidance, and adjusted earnings are now expected to fall in the range of $1.30 to $1.35, down from a previous range of $1.45 to $1.50.

Now what

To be sure, one of the most reliable ways to make a stock drop after earnings is to disappoint investors with forward guidance. The company reported that its customers added $1 billion to their HSAs in the third quarter, and the long-term trends are still favorable for HSA's business, but it's not surprising to see investors disappointed with the third-quarter numbers.

Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends HealthEquity. The Motley Fool has a disclosure policy.

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