Jefferies examines HealthEquity stock short interest rise

Investing.com - Short interest in HealthEquity shares (NASDAQ: HQY) rose to 7.2% of diluted shares outstanding as of September 30, according to a report released today by Jefferies. The firm analyzed the reasons behind elevated short positions in the healthcare services and technology stock.

Short interest in healthcare services and IT stocks increased 0.1% for the two-week period ended September 30, compared to a 0.9% increase for the S&P 500 and 3.4% for NASDAQ. HealthEquity shares shorted jumped 1.4% in mid-September.

Jefferies identified three primary investor concerns driving the short interest: HealthEquity's apparent lack of exposure to near-term treasury rate upside, uncertain marketplace adoption and terminal value, and falling cash balances per HSA accounts. The firm noted that $3 billion of forward contracts are locked at a 3.9% rate.

The investment bank said $2.3 billion in fiscal 2027 maturities could reprice at a higher yield net of the 3.9% treasury rate lock, depending on when individual contracts mature and how management has structured their swaps. This does not include the likely more than $1 billion in seeding cash for new accounts hitting in January 2027.

HSA cash balances per account peaked in the second quarter of fiscal 2025 and have been declining over the past two years. Jefferies said declining cash balances reflect greater engagement with members who are choosing to spend with their HSAs, which generally leads to higher replacement contributions, and HSAs with investments grew more than 20% in the second quarter of fiscal 2027.

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