Jul. 30 at 8:13 PM
Moody’s upgraded HealthEquity’s corporate family rating to Ba2 from Ba3, citing strong operating performance, successful integration of BenefitWallet, improved free cash flow generation, and faster-than-expected debt reduction. The outlook was revised to stable from positive.
HealthEquity reported leverage of 2.1x debt/EBITDA, interest coverage of 9.0x, EBITDA margins in the low-to-mid 30% range, and generated over
$400 million in free cash flow over the last 12 months. Moody’s expects annual free cash flow of
$400–450 million in fiscal 2027 and 2028, supported by solid liquidity and available credit capacity.
The rating remains constrained by the company’s relatively smaller revenue scale, potential pressure from weaker labor markets or lower interest rates, and increased shareholder returns following the expansion of its share repurchase program. Moody’s also upgraded HealthEquity’s
$600 million senior unsecured notes to Ba3 from B1.
$HQY