Issue #43

The real transformation in healthcare isn’t happening in hospitals — it’s happening in data and financial technology.

The healthcare economy is entering a new era — one shaped not by hospitals or insurance giants, but by the data engines and financial platforms powering every decision behind the scenes. As medical costs rise, regulation tightens, and AI accelerates the demand for real-world evidence, two very different companies are emerging as winners in this quiet transformation.

👉 One is turning massive pools of de-identified patient data into high-margin analytics that guide drug development, market access, and clinical strategy.
👉 The other sits at the center of a fast-growing $100B+ ecosystem, where healthcare savings, consumer spending, and financial technology collide.
👉 Both are delivering strong growth, expanding margins, and gaining analyst confidence — yet still fly under the radar compared to the healthcare mega-caps dominating headlines.

In this edition, we break down two essential but often overlooked players reshaping the future of healthcare data and financial wellness — and why investors are paying attention as 2026 approaches.

Forian Inc. (NASDAQ: FORA)

Forian Inc. (NASDAQ: FORA) is a health technology company that provides a suite of software solutions, proprietary data, and predictive analytics to optimize the operational, clinical, and financial performance for customers in the life science, healthcare, and financial services industries.

Business Model and Revenue Streams 📦

Forian's core business model revolves around transforming complex, disparate healthcare data into actionable, proprietary insights for its clients. The company leverages its Data Factory, a secure and HIPAA-compliant data lake, which integrates massive amounts of de-identified patient-level data.

The primary customer base includes life science companies, pharmaceutical services, healthcare payers, and providers. The company generates revenue through two main channels:

• Subscription and Services-Based Solutions: This segment provides a high-margin, recurring revenue base supported by multi-year contracts. Customers subscribe to Forian's Software-as-a-Service (SaaS) and data management platforms, which are used for commercial analysis, Real World Evidence (RWE) studies, and market access solutions.
• Analytics and Consulting Services: Revenue is generated from custom projects, such as health economics and outcomes research, and advanced analytics that help clients with market analysis, patient journey mapping, and optimizing clinical trials.

Macroeconomic Impact

Forian operates in a growing and relatively recession-resilient sector: healthcare data analytics. U.S. healthcare spending is consistently growing faster than GDP, driving demand for solutions that improve efficiency and cost-effectiveness.

• Positive Impact: The macroeconomic trend of digital transformation in healthcare and the growing need for Real World Evidence (RWE) to inform drug development and pricing strategy acts as a tailwind. This long-term trend supports Forian's core product offerings.
• Mitigated Impact: While broader economic uncertainty could cause clients to temper discretionary spending, Forian's focus on solutions that drive operational efficiency and commercial performance for major life science and healthcare firms helps stabilize demand, as these services are critical for maintaining a competitive edge and regulatory compliance.

Recent Performance and Corporate Developments 📈

Forian has shown a strong growth trajectory, driven by both organic expansion and strategic acquisitions.

Q3 2025 Financial Highlights: 💰

The company reported robust growth and significant progress toward profitability in its third quarter of 2025 results.

• Total Revenue: $7.76 million, marking a substantial +66% Year-over-Year (YoY) increase. This growth was driven by the Kyber acquisition and strong organic expansion.
• Net Loss: Narrowed significantly to $151,000, representing a +26% improvement YoY, which demonstrates improved operating leverage.
• Adjusted EBITDA: Reached a positive $471,000, reflecting a massive +153% YoY increase and indicating highly effective cost management.

Growth Drivers: The Kyber Data Science acquisition contributed to this rapid growth, but the company also reported strong organic business expansion (approximately 23% of Q3 growth was internal), reflecting increased demand for its integrated healthcare data assets.

• Balance Sheet: Forian maintains a strong balance sheet with $28.2 million in cash and marketable securities as of September 30, 2025.

Strategic Initiatives and Mergers: 🤝

• Merger/Acquisition: The most significant recent corporate development was the acquisition of Kyber Data Science, which has been successfully integrated and has contributed materially to revenue and expanded the company’s data capabilities.
• Key Initiative: Management has consistently highlighted the Forian Data Factory as the core competitive differentiator, with continued selective investments in data quality and product innovation to enhance the depth and utility of its analytics. The company also introduced new data-driven financial analytics offerings, positioning it for market diversification.

Path to Profitability and Fair Value 🎯

Forian's strategic path to achieving full GAAP net profitability is clearly centered on leveraging its robust growth while continuing to improve operating efficiency.

Path to Profitability:

1. Sustaining Revenue Growth: Management is focused on driving revenue at the high end of its full-year 2025 guidance of $28 million to $30 million, primarily through increasing its high-margin subscription base and cross-selling enhanced analytics solutions.
2. Operational Leverage: The company's significant improvement in Adjusted EBITDA (projected to be at the high end of the full-year guidance of $1.0 million to $1.0 million demonstrates improved operating leverage and disciplined cost management, which is the key mechanism for transitioning from a narrowed loss to a net profit.

Valuation and Fair Price:

Forian's current valuation is complex, given that it is a high-growth company that is still closing in on net profitability.

• Price Assessment: Based on a Discounted Cash Flow (DCF) model, some analyses suggest the current price may be above the estimated fair value. However, high-growth tech companies are often valued on future revenue potential rather than immediate earnings. When compared to the industry average Price-to-Sales (P/S) ratio for the US Healthcare Services industry 2.6x, Forian's P/S ratio 2.4x is slightly lower, suggesting it is not obviously overvalued relative to its peers on a sales basis.
• Analyst Estimates and Ratings: The consensus rating from analysts is overwhelmingly positive, with a strong "Buy" consensus 83% analyst buy rating). The average 12-month price target is approximately $5.10, which implies a significant potential upside of over $\text{135\%}$ from the current price level. This strong endorsement from analysts, including recent reiterations of "Buy" ratings, suggests the market views the stock as undervalued relative to its future growth and profitability trajectory.

Investor-Focused Takeaway: Is FORA Right for Your Portfolio?

Forian offers investors a compelling play in the high-growth healthcare data and RWE market. The company is in a clear transition phase, moving rapidly toward full profitability on the back of aggressive revenue growth and successful strategic acquisitions.

What to Watch in the Near Term: 📈

• Sustained Adjusted EBITDA: Monitor the transition to consistently positive Adjusted EBITDA and the subsequent move to full net profitability.
• Organic Growth vs. Acquisitions: Continue to track the proportion of revenue growth that is organic, as this indicates the core strength of its platform without relying on M&A.
• Contract Backlog: A growing committed contract backlog is an excellent indicator of future recurring revenue stability.

Recommendation:

Forian (FORA) is viewed as a high-growth opportunity with significant upside potential, backed by strong analyst confidence and impressive year-over-year performance metrics. While its market cap is relatively small and its path to net profitability is not yet fully realized, the massive revenue expansion and improved Adjusted EBITDA suggest its strategic plan is on track.

HealthEquity Inc. (NASDAQ: HQY)

HealthEquity is the nation's leading administrator of Health Savings Accounts (HSAs) and a major provider of Consumer-Directed Benefits (CDBs), such as Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs). The company’s mission is to connect health and wealth by empowering consumers to save and spend smarter on healthcare.

Business Model and Revenue Streams 📦

HealthEquity’s business model is centered on a "total solution" platform that serves members, employers, and health plans. It acts as a financial custodian and technology service provider for tax-advantaged healthcare savings and spending accounts. Its revenue is derived from three primary, distinct sources:

• Custodial Revenue: This is the largest and most interest-rate-sensitive stream. It is earned from the assets held in members' HSAs. Revenue is generated from the interest/yield earned on the cash portion of these assets held at depository partners and from investment fees on the non-cash portion (invested assets). This stream benefits directly from both higher prevailing interest rates and growth in total HSA assets under management (AUM).
• Service Revenue: This recurring stream is generated from account fees charged to customers (employers and health plans) for the administration of HSAs and other CDBs. This revenue grows primarily with the increase in the number of accounts and enrolled members.
• Interchange Revenue: This stream is generated from transaction fees (swipe fees) when members use their debit cards for qualified medical expenses from their HSAs/CDBs.

Macroeconomic Impact

HealthEquity is uniquely exposed to macroeconomic policies, particularly those related to interest rates and employment:

• Interest Rate Sensitivity (High Impact): Custodial revenue is directly tied to the Federal Reserve’s interest rate policy. In a rising rate environment, the yield on HSA cash assets increases, significantly boosting this high-margin revenue stream. Conversely, a sustained period of low interest rates negatively impacts custodial yield and profitability. The company has taken steps, such as hedging a portion of its HSA cash, to mitigate this risk.
• Labor Market Dynamics (Moderate Impact): HSA growth is closely linked to employer-sponsored high-deductible health plans (HDHPs). A strong, growing labor market facilitates new employer enrollments and account openings, acting as a tailwind. Slower job creation or a softening labor market can mute the pace of new HSA formation, creating a headwind for the Service Revenue segment.
• Favorable Regulatory/Policy Environment: Recent regulatory expansions that increase the eligible HSA addressable market (e.g., for certain ACA Bronze plans) act as a significant, long-term structural tailwind for account growth.

Recent Performance and Corporate Developments 📈

HealthEquity has demonstrated a strong performance, characterized by robust asset growth and significant margin expansion.

• Q3 2025 Financial Highlights:
  • Revenue was $322.2 million, a 7% increase YoY, beating analyst consensus.
  • Non-GAAP EPS was $1.01, a strong 29% increase YoY, significantly surpassing estimates.
  • Adjusted EBITDA rose 20% YoY, demonstrating substantial margin expansion (Adjusted EBITDA margin reached 44% of revenue).
  • HSA Assets grew 15% YoY to $34.4 billion, with total HSA accounts reaching 10.1 million +6% YoY. The growth in both cash and invested assets fuels future custodial revenue.
• Strategic Initiatives and Mergers:
  • The company has been aggressively focusing on operational efficiency and AI integration, notably incorporating the Parloa platform to enhance member experience and reduce service costs. This focus on technology is a primary driver of the recent margin expansion.
  • The 2019 WageWorks acquisition has been successfully integrated, solidifying its market leadership in both HSAs and CDBs.
  • The company actively repurchased 1.0 million shares for $\text{\$93.7 million}$ in Q3, demonstrating confidence and returning capital to shareholders.

Path to Profitability and Fair Value 🎯

HealthEquity is a highly profitable company, reporting a GAAP net income of $51.7 million for Q3 2025. Its path to sustained and higher profitability is clear:

1. Custodial Yield Optimization: Continuing to benefit from a higher interest rate environment and strategically hedging cash assets to stabilize yield.
2. Scalable Technology Investment: Leveraging AI and automation to "bend the cost curve" in its service operations, driving further margin expansion.
3. HSA Asset Growth: The long-term, structural increase in HSA adoption, fueled by favorable regulatory changes, provides a stable, high-growth backdrop for its most profitable revenue stream (Custodial Revenue).

The stock trades at a relatively high Price-to-Earnings (P/E) ratio of approximately $\text{43x}$, reflecting the market's high expectation for continued growth and margin expansion. However, many analysts believe the price is fair or undervalued when looking at its growth trajectory and long-term potential:

• Valuation models, particularly DCF models, often point to a significantly undervalued stock based on the projected acceleration in earnings and margin growth.
• The company's strong 15% growth in high-value HSA Assets, combined with its operational efficiency, justifies a premium valuation compared to slower-growing peers.

Analyst Estimates and Ratings 📊

Analyst sentiment is highly positive, aligning with the company’s recent earnings beat and margin performance.

• Consensus Rating: The consensus rating from analysts is a strong "Buy" or "Strong Buy" over 90% of recent ratings are Buy/Strong Buy). The stock has received a perfect Piotroski Score of 9, indicating exceptional financial health.
• Price Target: The average 12-month price target is approximately $120 to $122, suggesting a significant potential upside from the current price. Firms like BofA Securities and Citizens have recently reiterated their Buy/Market Outperform ratings and raised their price targets following the strong Q3 report.

Investor-Focused Takeaway: Is HQY Right for Your Portfolio?

HealthEquity offers exposure to the growing consumer-driven healthcare and financial services market. Its business model, which benefits from both rising interest rates and structural growth in tax-advantaged health accounts, provides a powerful and resilient revenue structure.

What to Watch in the Near Term: 📈

• Federal Reserve Policy: Any change in the interest rate outlook will directly affect its custodial revenue.
• Margin Expansion: Continue to monitor its Adjusted EBITDA margin to confirm the success of its AI and automation initiatives in generating operational leverage.
• HSA Asset Growth: The sustained, double-digit growth in HSA assets is the key long-term metric for its most profitable business segment.

Recommendation:

HealthEquity (HQY) is a well-managed market leader with a favorable structural growth story. While the stock trades at a premium valuation, the strong margin expansion, solid execution, and overwhelming analyst support suggest it is a compelling Buy for long-term investors focused on the intersection of healthcare and financial technology.

Final Take: Two Underrated Winners Powering the Future of Healthcare

While hospitals and insurers dominate headlines, Forian (FORA) and HealthEquity (HQY) are quietly building the digital backbone of the next-generation healthcare economy. These companies aren’t just riding the wave of healthtech — they’re shaping the infrastructure of how care is funded, measured, and delivered.

One is harnessing healthcare data to drive drug development and clinical optimization. The other is leading a fintech revolution in health savings and benefits.

📊 Forian (FORA) – Turning Big Health Data Into Real-World Profits
✔ 66% YoY revenue growth with expanding margins
✔ Strong EBITDA inflection, moving toward GAAP profitability
✔ Analyst-backed upside of 135%+ with growing recurring revenue
➤ Best for: Growth investors seeking an early-stage data platform with real-world applications in life sciences and payer analytics.

💸 HealthEquity (HQY) – Where Healthcare and Fintech Converge
✔ $34B+ in HSA assets and 10M+ accounts
✔ Margin expansion + AI automation driving long-term earnings growth
✔ Benefiting directly from rising rates and consumer-driven healthcare
➤ Best for: Long-term investors looking for a cash-rich, rate-leveraged healthcare fintech with recurring revenue and regulatory tailwinds.

Investor Insight:

📈 Want an emerging analytics disruptor with massive margin potential? → FORA
​ 🏦 Want a rate-sensitive healthcare fintech with recurring yield + growth? → HQY

These aren’t just healthcare plays — they’re the picks and shovels of a digital health economy in transition. Smart investors are already paying attention.

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Happy Trading
​— Team Premium Stock Alerts