Definitive Healthcare Earnings Call: Mixed Sentiment Amid Challenges

Definitive Healthcare Corp. Class A ((DH)) has held its Q3 earnings call. Read on for the main highlights of the call.

Definitive Healthcare Corp. Class A’s recent earnings call presented a mixed sentiment, reflecting both optimism and caution. The company reported strong profitability and cash flow, alongside growth in enterprise customers and improved retention rates. However, challenges such as a decline in revenue and ongoing pressure in the life sciences segment were also highlighted. While strategic partnerships and operational efficiencies are positive indicators, the revenue decline and macroeconomic uncertainties temper the overall sentiment.

Exceeded Guidance on Profitability

Definitive Healthcare exceeded its profitability guidance, reporting an adjusted EBITDA of $18.9 million, which represents a 32% margin. This performance was $2 million above the high end of guidance, showcasing the company’s continued operational improvements and solid expense discipline.

Strong Cash Flow

The company demonstrated strong cash generation capabilities, with approximately $51 million in unlevered free cash flow for the trailing 12 months. This highlights Definitive Healthcare’s ability to generate cash effectively, despite the challenging economic environment.

Enterprise Customer Growth

Enterprise customer count grew by 10 since the last quarter, reaching 520 enterprise customers, marking the highest level since Q3 of the previous year. This growth indicates a positive response to the company’s strategic efforts in expanding its customer base.

Improvement in Retention Rates

Retention rates showed year-over-year improvement, suggesting that customers are responding positively to the company’s strategic initiatives. This improvement is a key indicator of customer satisfaction and loyalty.

Strategic Partnerships and Innovations

Definitive Healthcare launched a partnership with LiveRamp for digital marketing and secured relationships with new strategic partners. These initiatives are part of the company’s strategy to expand its digital engagement and enhance its market presence.

Operational Efficiency

The company achieved significant cost savings, including a $1.5 million onetime benefit from a data contract renegotiation and a $1 million net cost reduction from replacing a data source. These efficiencies reflect the company’s focus on optimizing operations.

Revenue Decline

Total revenue was reported at $60 million, down 4% year-over-year. This decline underscores the ongoing challenges in revenue growth that the company is facing.

Life Sciences Segment Pressure

The life sciences segment continues to experience pressure, with tighter budget constraints among biopharma customers affecting upsell and downsell opportunities. This segment remains a challenging area for the company.

Challenges in Subscription Revenue

Subscription revenues declined 4% year-over-year, indicating stabilization in absolute dollars but ongoing challenges in this revenue stream.

Cautious Macro Environment

The company remains cautious about the macroeconomic environment, with pressures on renewals and a dynamic competitive landscape. This caution reflects the broader economic uncertainties impacting the industry.

Forward-Looking Guidance

Definitive Healthcare provided a cautious yet optimistic outlook for the future. For Q4 2025, the company expects revenue between $59 million and $60 million, and adjusted EBITDA between $16 million and $17 million. The focus will be on strategic pillars such as differentiated data, seamless integrations, customer success, and innovation. The company aims to maintain solid expense discipline while navigating macroeconomic challenges, with a particular focus on the upcoming large renewal cohort in December and January. Adjusted net income is projected to be between $8 million and $9 million, with non-GAAP earnings per share of $0.05 to $0.06.

In summary, Definitive Healthcare Corp. Class A’s earnings call highlighted a mixed sentiment, with strong profitability and cash flow offset by revenue decline and challenges in the life sciences segment. The company’s strategic partnerships and operational efficiencies are positive signs, but macroeconomic uncertainties remain a concern. Looking forward, the company is cautiously optimistic, focusing on strategic initiatives to drive growth and improve customer retention.