HealthEquity, Inc. (HQY): History, Ownership, Mission, How It Works & Makes Money

As a financial professional, you have to ask: how did HealthEquity, Inc. (HQY) become the nation's largest Health Savings Account (HSA) custodian, especially with fiscal year 2025 revenue hitting a record-breaking $1.20 billion? This company is not just a custodian; it's a critical link between health and wealth, administering nearly 10 million HSAs with a total of $32.1 billion in assets under management, a 27% jump in assets from the prior year. You need to understand the three core revenue streams-service, custodial, and interchange fees-that drove a 74% surge in net income to $96.7 million, so you can map out the real risks and opportunities in this rapidly expanding market.

HealthEquity, Inc. (HQY) History

As a financial analyst who has watched this space for two decades, I can tell you HealthEquity, Inc.'s story is a textbook example of being in the right place at the right time with the right technology. They didn't just administer Health Savings Accounts (HSAs); they were built around the very law that created them. That focus is why they now manage billions in assets.

Given Company's Founding Timeline

Year established

The company was founded in 2002, just before the legislation that would create their core product, the Health Savings Account (HSA), was passed in 2003.

Original location

HealthEquity was incorporated in January 2002 in Tucson, Arizona. However, it quickly relocated and moved its incorporation to Utah in February 2004, establishing its headquarters in Draper, Utah.

Founding team members

The company was co-founded by Dr. Stephen Neeleman, Nuno Battaglia, and David Hall. Dr. Neeleman, a physician, was central to the vision of empowering consumers with healthcare saving and spending tools.

Initial capital/funding

Initial funding came from founder contributions and early-stage venture capital. While the specific seed capital is not public, the company later raised a total of $15.3 million over six funding rounds, demonstrating a relatively capital-efficient start before its public offering.

Given Company's Evolution Milestones

Given Company's Transformative Moments

The company's trajectory was shaped by three major, deliberate shifts: the initial regulatory alignment, the move to public markets, and the aggressive acquisition strategy to dominate the consumer-directed benefits market.

Honestley, the biggest game-changer wasn't just the IPO, but the massive scale-up through M&A (mergers and acquisitions).

• The HSA Mandate: The 2003 Medicare Modernization Act created the HSA, giving HealthEquity a clear, tax-advantaged product to build their entire business around. They were defintely positioned to capitalize on the shift toward high-deductible health plans.
• The WageWorks Acquisition: The 2019 purchase of WageWorks for $2 billion was a pivot from being an HSA specialist to a comprehensive benefits administrator. This move instantly added millions of new accounts and a full suite of non-HSA Consumer-Directed Benefits (CDBs), dramatically increasing their total addressable market.
• Fiscal 2025 Asset Milestone: The end of the 2025 fiscal year (January 31, 2025) marked a new level of scale, with Total HSA Assets reaching $32.1 billion across 9.9 million HSAs. Here's the quick math: that's a 27% growth in assets in a single year, driven by both organic sales and the BenefitWallet acquisition.

The company's strategic focus remains clear: connect health and wealth by being the largest HSA custodian, a position solidified by their 17.0 million total accounts as of January 31, 2025.

HealthEquity, Inc. (HQY) Ownership Structure

HealthEquity's ownership structure is heavily concentrated in the hands of institutional investors, a common trait for a large, publicly traded company on the NASDAQ. This means the company's strategic direction is largely influenced by major asset managers like BlackRock and Vanguard, but the leadership team still steers the day-to-day operations and innovation, like the recent push into expanded Health Savings Account (HSA) eligibility.

HealthEquity's Current Status

HealthEquity, Inc. (HQY) is a publicly traded company, listed on the NASDAQ Stock Market. As of the end of the 2025 fiscal year, the company had a market capitalization of approximately $8.77 billion, reflecting its significant presence as the largest Health Savings Account (HSA) custodian in the nation. This public status subjects the company to rigorous reporting standards by the Securities and Exchange Commission (SEC), ensuring transparency for all stakeholders.

The high level of institutional ownership-with some reports indicating it is near 99.55% of the stock-signals strong confidence from professional money managers, but also means the stock price can be sensitive to large block trades.

HealthEquity's Ownership Breakdown

The company's governance is driven by a mix of institutional powerhouses and its internal executive team. The concentration of shares among a few top institutional holders gives them significant voting power on corporate matters, which is defintely something to watch.

HealthEquity's Leadership

The executive team has seen some key transitions in the 2025 fiscal year, aligning the company for its next phase of growth, particularly around the Mission Statement, Vision, & Core Values of HealthEquity, Inc. (HQY). The most significant change was the CEO succession plan that took effect early in the year.

• Scott Cutler: President and Chief Executive Officer (CEO). He assumed the role on January 6, 2025, succeeding the long-serving Jon Kessler. He brings a strong background in digitally-driven growth from his time as CEO of StockX and senior roles at eBay Inc.
• Steve Neeleman: Vice Chair and Founder. He remains a key figure, providing continuity and vision as the company's founder.
• Robert Selander: Chairman of the Board. He oversees the Board of Directors, bringing extensive experience from his former role as President and CEO of MasterCard Incorporated.
• Mukund Ramachandran: Chief Marketing Officer (CMO). Appointed in September 2025, he joined from Mastercard to capitalize on the historic HSA market expansion.
• Michael Fiore: Chief Commercial Officer (CCO). He is a central figure in the go-to-market strategy, with new senior executives reporting directly to him.

The new leadership is focused on leveraging technology and innovation to capture the expanded market opportunity from recent federal legislation, which is set to allow millions more Americans to be HSA-eligible starting in January 2026. That's a huge tailwind for their business model.

HealthEquity, Inc. (HQY) Mission and Values

You're looking past the income statement to understand the soul of HealthEquity, Inc., and that's smart; a strong mission is the bedrock of long-term performance. HealthEquity's core purpose is defintely focused on merging healthcare and financial wellness, aiming to empower you, the consumer, to take control of your medical savings and spending.

This commitment is more than just managing the over 17 million accounts they administer; it's a cultural blueprint, often referred to internally as the Purple culture, that drives their business model and their goal to make Health Savings Accounts (HSAs) a primary financial tool. For a deeper look at how this translates into financial results, check out Breaking Down HealthEquity, Inc. (HQY) Financial Health: Key Insights for Investors.

Given Company's Core Purpose

Official mission statement

The company's mission is clear, active, and centered on the individual. It's not about being the biggest, but about impact. They want to be the reason people can afford to get better care.

• Save and improve lives by empowering healthcare consumers.

This mission directly informs their product strategy, like the launch of HealthEquity Assist™ in 2025, a suite of tools designed to simplify spending decisions and drive cost savings for both employers and employees. They are trying to solve the complexity problem.

Vision statement

A vision statement should be ambitious, and HealthEquity's is a powerful market-share goal that redefines the HSA's place in the American financial landscape. It shows they believe the HSA is a superior long-term savings vehicle.

• By 2030, make Health Savings Accounts (HSAs) as widespread and popular as 401(k) retirement accounts.

Here's the quick math: achieving this means capturing a massive portion of the market, building on their fiscal year 2025 revenue of $1.20 billion. That's a huge growth target, but the recent regulatory expansion allowing millions of new ACA plan members to qualify for HSAs certainly helps their case.

Given Company slogan/tagline

While they don't use a single, public-facing slogan like a soda company, their cultural identity and service commitment are encapsulated in their 'Purple' branding and a key internal directive. This is how they translate values into action for their team of 3,120 employees.

• Purple Service: The standard for their customer experience, emphasizing empathy and world-class, technology-enabled solutions.
• Be Remarkable: One of the core Purple Values, it sets the bar for every interaction with members, clients, and partners.

Their core values-Do the right thing, Be Remarkable, Make a difference, and Celebrate people-are the DNA of that Purple Service, ensuring their focus remains on the member's financial and health well-being, not just transactional processing.

HealthEquity, Inc. (HQY) How It Works

HealthEquity, Inc. operates as a technology-enabled services platform and the nation's largest Health Savings Account (HSA) custodian, connecting healthcare consumers with their savings and spending accounts. The company simplifies the complex world of consumer-directed benefits (CDBs) by providing a unified platform for employers, partners, and individual members, ultimately making it easier for people to save and pay for healthcare expenses.

Honestly, their core business is being the financial and administrative backbone for a massive, growing pool of tax-advantaged healthcare money.

HealthEquity, Inc.'s Product/Service Portfolio

HealthEquity, Inc.'s Operational Framework

The company's operational model is built on a high-tech, high-touch strategy, using a proprietary technology platform to manage a massive volume of accounts and assets. Value creation comes from three primary revenue streams, which totaled $1.20 billion for the fiscal year ended January 31, 2025.

• Custodial Revenue: This is the largest component, contributing 45.5% of FY2025 revenue. It's earned from the interest or investment income generated by the $33.1 billion in Total HSA Assets under management as of July 31, 2025. The company earns a spread on the cash portion of these assets.
• Service Revenue: Accounting for 39.9% of FY2025 revenue, this comes from administrative fees paid by employer clients and partner organizations for managing the HSAs and other CDBs. This includes account maintenance and other administrative services.
• Interchange Revenue: This makes up the remaining 14.7% of FY2025 revenue. It's generated from transaction fees when members use their debit cards to pay for qualified medical expenses.

The platform relies heavily on digital innovation, including AI-powered services and a mobile-first experience, to drive scalable effiency and enhance the member experience. This automation helps keep service costs down, which is defintely critical with 17.1 million total accounts.

HealthEquity, Inc.'s Strategic Advantages

HealthEquity's market success is rooted in its scale, integrated platform, and diversified revenue model, which offers a cushion against interest rate fluctuations. You can see their commitment to their purpose in their Mission Statement, Vision, & Core Values of HealthEquity, Inc. (HQY).

• Market Leadership and Scale: They are the largest HSA custodian by number of accounts, holding an estimated 21% market share of HSA assets as of 2024. This scale creates a powerful network effect with partners and employers.
• Partner-Centric Distribution: The company works with over 200 network partners, including health plans and retirement providers, which drives a consistent, high volume of new account growth. For instance, they added a record one million new HSAs from sales in fiscal year 2025.
• Custodial Float Leverage: The large and growing base of HSA cash, which was $17.0 billion as of July 31, 2025, provides a substantial and stable source of custodial revenue, especially in a higher interest rate environment.
• Legislative Tailwinds: Recent regulatory changes, such as those allowing direct primary care and pre-deductible telehealth to qualify for HSAs, are poised to accelerate new account openings and AUM growth, creating the largest addressable market increase in two decades.

HealthEquity, Inc. (HQY) How It Makes Money

HealthEquity, Inc. primarily makes money by acting as the nation's largest custodian for Health Savings Accounts (HSAs), generating revenue from three core areas: the interest earned on the cash balances in these accounts, the fees charged for administering the accounts, and the transaction fees from debit card usage.

This is a financial model built on the 'float' of healthcare savings. It's simple: the more money members save in their HSAs, the more money the company can generate from that pool of assets, especially in a higher interest rate environment.

HealthEquity's Revenue Breakdown

For the fiscal year ended January 31, 2025 (FY 2025), HealthEquity reported total revenue of approximately $1.20 billion, a strong 20% increase over the prior fiscal year. The revenue mix is critical to understanding the business's sensitivity to interest rates and account growth.

Business Economics

The core of HealthEquity's financial engine is Custodial Revenue, which accounted for the largest share of revenue in FY 2025 at 45.5%. This revenue stream is essentially interest income, earned by investing the cash balances held in member Health Savings Accounts (HSAs).

• The 'Float' Effect: As of July 31, 2025, the company managed $33.1 billion in total HSA assets. Of this, the HSA cash balance-the 'float' that generates custodial revenue-was approximately $17.0 billion.
• Yield is King: The average yield on HSA cash for the full FY 2025 was approximately 3.1%. A small change in interest rates can dramatically impact this revenue line, so you must watch the Federal Reserve's actions closely.
• Service Revenue: This 39.9% of revenue comes from administrative fees paid by clients (employers, health plans) for managing HSAs and other consumer-directed benefits (CDBs), plus fees on invested assets. The trend here is toward lower per-account fees but higher volume due to account growth.
• Interchange Revenue: At 14.7% of revenue, this is the fee earned every time a member uses their HealthEquity debit card for a qualified medical expense. This revenue stream is a direct indicator of member engagement and transaction volume, and it grew by nearly 15% year-over-year in the third quarter of FY 2025.

The business model is highly scalable. Once the technology platform is built, adding a new HSA member costs very little, meaning a high percentage of new custodial and interchange revenue drops straight to the bottom line. You can see the full picture of the company's purpose and values here: Mission Statement, Vision, & Core Values of HealthEquity, Inc. (HQY).

HealthEquity's Financial Performance

The fiscal year 2025 showed robust growth, driven by both the acquisition of new accounts and the benefit of higher interest rates on the custodial float. This combination is a powerful lever for profitability.

• Total Revenue: Reached $1.20 billion for FY 2025, an increase of 20% year-over-year.
• Account Growth: The company ended FY 2025 with 9.9 million Health Savings Accounts, representing a 14% increase. Total HSA Assets grew even faster, up 27% to $32.1 billion.
• Profitability: Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for FY 2025 was $471.8 million, a 28% increase from the previous year.
• Margin Expansion: The Adjusted EBITDA margin expanded to 39% of revenue in FY 2025, up from 37% in the prior year. This shows the operating leverage is defintely kicking in.
• Net Income: GAAP Net Income surged 74% to $96.7 million for the fiscal year, demonstrating that the strong top-line growth is translating into real profit.

The key takeaway here is the rapid growth in HSA assets, which is the long-term fuel for the high-margin custodial revenue stream. The business is built on a network effect: more accounts mean more assets, and more assets mean more interest income.

HealthEquity, Inc. (HQY) Market Position & Future Outlook

HealthEquity, Inc. is positioned as a market leader in the Health Savings Account (HSA) industry, leveraging its technology platform to drive account growth and asset accumulation. The company's future outlook is strong, with management projecting FY2026 revenue between $1.290 billion and $1.310 billion and net income in the range of $185 million to $200 million, signaling a significant profit surge.

Competitive Landscape

The HSA market is consolidating, with the top five providers holding approximately 75% of total HSA assets as of mid-2025. HealthEquity is a dominant force, though it faces intense competition from financial giants and other major benefit administrators.

Opportunities & Challenges

The core challenge is the interest rate environment, but the market's structural growth and recent legislative changes create clear opportunities. Here's the quick math: the total HSA market is expected to grow from nearly $159 billion at mid-2025 to over $208 billion by the end of 2027, so the tailwind is defintely there.

Industry Position

HealthEquity remains a leading force in the Health Savings Account (HSA) space, administering 10.0 million HSAs and $33.1 billion in total HSA assets as of July 31, 2025. This scale gives the company a significant advantage in negotiating custodial yields and investing in platform technology.

• Maintain market leadership in total accounts, which provides a large base for future asset growth.
• Benefit from the shift of HSA assets into investments, where the average invested account balance is nine times higher than a deposit-only account.
• Leverage the 'Purple' service culture and proprietary technology to differentiate from bank-centric and brokerage-centric competitors.
• The company's revenue model is diversified: custodial revenue was 45.5%, service revenue was 39.9%, and interchange revenue was 14.7% in FY2025.

To understand how these dynamics translate to the bottom line, you should review Breaking Down HealthEquity, Inc. (HQY) Financial Health: Key Insights for Investors.