HealthEquity Shares Plunge 10% Despite Strong Performance: Key Concerns for Investors

Solid Results and Guidance, Yet Stock Slumped 10% in a Day

HealthEquity Inc. (HQY) shares plunged 10.2% on January 10 to close at $84.55 on Nasdaq. The drop erased about $670 million from its $7.22 billion market value. Despite reporting strong fiscal 2025 results and issuing solid guidance for the year ending January 2026, valuation pressure and growing caution around insider and institutional trading weighed on the stock.

$1.2 Billion Revenue and 74% Profit Surge…High Expectations Became a ‘Poison’?

HealthEquity reported fiscal 2025 revenue of $1.2 billion and net income of $96.7 million, up 74% year-over-year. It forecast adjusted EBITDA of $520–545 million for the year ending January 2026, underscoring its growth commitment. However, an EPS surprise that was mostly priced in left the shares trading at over 40× P/E and above 8× price-to-sales, demanding further upside momentum. Even with continued growth, investors began to reassess the premium amid interest-rate and macro uncertainties.

Insider and Institutional Selling Added Fuel to Sentiment

Recent insider sales and institutional stake reductions further cooled sentiment:

• All 12 insider transactions over the past six months were sales, with some executives and directors selling tens of thousands of shares to raise millions.
• Several institutions sharply reduced their HQY holdings.
• U.S. congressional trading data showed only sell orders.

Focus shifted from fundamentals to who’s selling, prompting a selloff of nearly 1.7 million shares in a single day.

Growth Story Intact…Valuation Reset as Key Variable

HealthEquity’s core Health Savings Account (HSA) platform and Consumer-Directed Benefits (CDB) services operate in structurally growing markets. In July, Wall Street analysts maintained a Hold rating on HQY, citing strong HSA growth and margin improvements. The recent selloff likely reflects a valuation reset common for high-growth stocks post-earnings rather than a fundamental collapse. If upcoming quarterly results confirm sustained account growth and margin expansion, HQY may see a re-rating. In the near term, stock performance will remain sensitive to insider/institutional trading trends and the interest-rate environment.