HealthEquity Inc (HQY)

Interest coverage

		Jan 31, 2025	Jan 31, 2024	Jan 31, 2023	Jan 31, 2022	Jan 31, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	162,334	130,495	10,328	-30,169	39,021
Interest expense	US$ in thousands	60,634	55,455	48,424	36,572	34,881
Interest coverage		2.68	2.35	0.21	-0.82	1.12

January 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $162,334K ÷ $60,634K
= 2.68

Based on the provided data, HealthEquity Inc's interest coverage ratio has fluctuated over the past five years. In January 2021, the interest coverage ratio was 1.12, indicating that the company generated just enough operating income to cover its interest expenses. However, in January 2022, the ratio fell to -0.82, implying that the company's operating income was insufficient to cover its interest payments, resulting in a negative coverage.

By January 2023, the interest coverage improved slightly to 0.21, but still remained below 1, suggesting a continued struggle to meet interest obligations. Subsequently, HealthEquity Inc saw a significant improvement in its interest coverage ratio in January 2024, reaching 2.35. This suggests that the company's operating income was more than double its interest expenses, indicating a stronger ability to cover interest payments.

Finally, as of January 2025, the interest coverage ratio further improved to 2.68, reflecting a consistently favorable trend in the company's ability to meet its interest obligations. Overall, the fluctuations in HealthEquity Inc's interest coverage highlight varying levels of financial health and the importance of closely monitoring the company's ability to manage its interest expenses.