Revenue during the quarter surged 41.90 percent to $43.36 million from $30.56 million in the previous year period. Gross margin for the quarter expanded 187 basis points over the previous year period to 59.71 percent. Total expenses were 79.15 percent of quarterly revenues, down from 79.37 percent for the same period last year. This has led to an improvement of 22 basis points in operating margin to 20.85 percent.

Operating income for the quarter was $9.04 million, compared with $6.30 million in the previous year period.

However, the adjusted EBITDA for the quarter stood at $14.53 million compared with $9.85 million in the prior year period. At the same time, adjusted EBITDA margin improved 127 basis points in the quarter to 33.50 percent from 32.24 percent in the last year period.

"Our third quarter results continued to build on our record-setting year which has increased total HSA Members by more than 776,000 since the end of the third quarter last year. Total AUM has grown by nearly $1.6 billion, or 59%, over that same time frame," remarked Jon Kessler, President and CEO of HealthEquity. "The growth in these base metrics of our business has driven a consistently strong performance from all three of our revenue streams. Our year-over-year revenue growth of 42% in the quarter continues to outpace the industry, and our Adjusted EBITDA growth of 47% demonstrates our ability to continue to scale profitability our business."

For fiscal year 2017, HealthEquity, Inc. expects revenue to be in the range of $174 million to $178 million for financial year 2017. The company forecasts net income to be in the range of $23 million to $25 million. It projects diluted earnings per share to be in the range of $0.38 to $0.42.

The company has spent $9.78 million cash to meet investing activities during the nine month period as against cash outgo of $81.17 million in the last year period.

Cash flow from financing activities was $20.46 million for the nine month period, down 43.81 percent or $15.95 million, when compared with the last year period.

Cash and cash equivalents stood at $125.35 million as on Oct. 31, 2016, up 47.45 percent or $40.34 million from $85.01 million on Oct. 31, 2015.

Working capital increases sharply
HealthEquity, Inc. has recorded an increase in the working capital over the last year. It stood at $175.62 million as at Oct. 31, 2016, up 33.19 percent or $43.77 million from $131.86 million on Oct. 31, 2015. Current ratio was at 17.83 as on Oct. 31, 2016, up from 15.08 on Oct. 31, 2015.

Cash conversion cycle (CCC) has decreased to 22 days for the quarter from 24 days for the last year period. Days sales outstanding went down to 26 days for the quarter compared with 31 days for the same period last year.

Days inventory outstanding has decreased to 2 days for the quarter compared with 5 days for the previous year period. At the same time, days payable outstanding went down to 7 days for the quarter from 12 for the same period last year.