HealthEquity Stock Plummets as Firm's Profit Hurt by Cyber Threats, Fraud

 

• HealthEquity said it had added costs because of cyber threats and fraud attacks.
• The health savings account custodian missed profit estimates and gave weak full-year guidance.
• HealthEquity blamed "bad actors" for an approximately $17 million reduction in gross profit.

Shares of HealthEquity (HQY) sank 20% Wednesday, a day after the Health Savings Account (HSA) custodian missed profit estimates and gave weak guidance as it dealt with the costs of a rise in criminal activity targeting the firm.1

The company reported fourth-quarter fiscal 2025 adjusted earnings per share (EPS) of $0.69, while analysts surveyed were looking for $0.71. Revenue rose 19% year-over-year to $311.8 million, exceeding expectations.

In a transcript of the analyst call provided by AlphaSense, CEO Scott Cutler explained that along with other financial firms, HealthEquity has seen "increased cyber threats and fraud attacks from bad actors using sophisticated technology, techniques and methods." Cutler noted those activities "led to excess service expense."2

CFO James Lucania said gross profit was cut by about $17 million because of additional service costs "incurred to protect members from and reimburse those impacted by sophisticated fraud activity and to assist members during our card processor consolidation."

HealthEquity sees full-year adjusted EPS of $3.57 to $3.74, and revenue from $1.280 billion to $1.305 billion. The estimates were for $3.66 and $1.302 billion, respectively.

https://www.investopedia.com/healthequity-stock-plummets-as-profit-hurt-by-cyber-threats-fraud-11699639