Press Releases

Health Catalyst Reports Second Quarter 2022 Results

SALT LAKE CITY, Aug. 04, 2022 (GLOBE NEWSWIRE) — Health Catalyst, Inc. ("Health Catalyst," Nasdaq: HCAT), a leading provider of data and analytics technology and services to healthcare organizations, today reported financial results for the quarter ended June 30, 2022.

“I am pleased to share that Q2 2022 marked another quarter of strong financial performance, including exceeding the mid-point of our quarterly guidance for both revenue and Adjusted EBITDA,” said Dan Burton, CEO of Health Catalyst. “I am also happy to report that in the most recent team member engagement survey, independently administered by the Gallup organization, team member engagement scores at Health Catalyst measured in the 97th percentile. This latest engagement level continues a pattern that has been in place for many years, of industry-leading engagement, consistently ranked between the 95th and 99th percentile in overall team member engagement scores. We as a leadership team continue to maintain a primary, prioritized focus on team member engagement – the center of our strategic flywheel – because we recognize the central and foundational contributions that our team members make in building the software and providing the services expertise that enable our customers to achieve massive, measurable improvement.”

“While we are pleased with these Q2 2022 results, we are disappointed that we are revising down our revenue and Adjusted EBITDA outlook for the full year. We are witnessing a challenging end market environment that has materially impacted our year-to-date bookings performance relative to our plan at the beginning of the year. Importantly, however, as we navigate this challenging macro-environment, we are committed to operating with financial discipline. As such, while our near-term growth is impacted by the macro-economic pressure on our end market, we are confident in our ability to drive meaningful, positive Adjusted EBITDA leverage in 2023 and beyond.”

Financial Highlights for the Three Months Ended June 30, 2022

Key Financial Metrics

  Three Months Ended June 30,   Year over Year
Change
    2022       2021    
                     
  (in thousands, except percentages, unaudited)
Technology revenue $ 45,397     $ 35,529     28 %
Professional services revenue $ 25,236     $ 24,098     5 %
Total revenue $ 70,633     $ 59,627     18 %
Loss from operations $ (33,192 )   $ (32,319 )   3 %
Net loss $ (33,428 )   $ (35,834 )   (7 )%
Other Non-GAAP Financial Data:(1)          
Adjusted Technology Gross Profit $ 31,968     $ 24,256     32 %
Adjusted Technology Gross Margin   70 %     68 %    
Adjusted Professional Services Gross Profit $ 6,696     $ 8,174     (18 )%
Adjusted Professional Services Gross Margin   27 %     34 %    
Total Adjusted Gross Profit $ 38,664     $ 32,430     19 %
Total Adjusted Gross Margin   55 %     54 %    
Adjusted EBITDA $ 1,999     $ 1,661     20 %
                     
________________________
(1) These measures are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). See the accompanying "Non-GAAP Financial Measures" section below for more information about these financial measures, including the limitations of such measures, and for a reconciliation of each measure to the most directly comparable measure calculated in accordance with GAAP.
 

Financial Outlook

Health Catalyst provides forward-looking guidance on total revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP measure.

For the third quarter of 2022, we expect:

  • Total revenue between $65.3 million and $68.3 million, and
  • Adjusted EBITDA between $(6.0) million and $(4.0) million

For the full year of 2022, we expect:

  • Total revenue between $271.5 million and $275.5 million, and
  • Adjusted EBITDA between $(6.0) million and $(4.0) million

We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for net loss, because there are items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably forecasted.

Quarterly Conference Call Details

The company will host a conference call to review the results today, Thursday, August 4, 2022, at 5:00 p.m. E.T. Participants can pre-register for the conference call at  https://register.vevent.com/register/BI819cb5d2860c4bd5a9054759c47b3898.

A live audio webcast will be available online at https://ir.healthcatalyst.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Health Catalyst

Health Catalyst is a leading provider of data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable, data-informed healthcare improvement. Its customers leverage the cloud-based data platform—powered by data from more than 100 million patient records and encompassing trillions of facts—as well as its analytics software and professional services expertise to make data-informed decisions and realize measurable clinical, financial, and operational improvements. Health Catalyst envisions a future in which all healthcare decisions are data informed.

Available Information

Health Catalyst intends to use its Investor Relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth, and our financial outlook for Q3 and fiscal year 2022. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key customers or partners; (v) the impact of COVID-19 and inflation on our business and results of operations; and (vi) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2022 expected to be filed with the SEC on or about August 4, 2022 and the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.

Condensed Consolidated Balance Sheets
(in thousands, except share and per share data, unaudited)

  As of
June 30,
  As of
December 31,
    2022       2021  
  (unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 176,983     $ 193,227  
Short-term investments   226,365       251,754  
Accounts receivable, net   47,752       48,801  
Prepaid expenses and other assets   14,270       14,609  
Total current assets   465,370       508,391  
Property and equipment, net   26,527       23,316  
Intangible assets, net   109,508       104,788  
Operating lease right-of-use assets   20,228       21,133  
Goodwill   185,982       169,972  
Other assets   3,724       4,496  
Total assets $ 811,339     $ 832,096  
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $ 5,691     $ 4,693  
Accrued liabilities   18,612       23,725  
Deferred revenue   60,883       56,632  
Operating lease liabilities   3,498       3,425  
Contingent consideration liabilities   1,625       4,576  
Total current liabilities   90,309       93,051  
Convertible senior notes   225,772       180,942  
Deferred revenue, net of current portion   553       929  
Operating lease liabilities, net of current portion   19,142       20,244  
Contingent consideration liabilities, net of current portion   6,390       14,719  
Other liabilities   118       113  
Total liabilities   342,284       309,998  
Commitments and contingencies      
       
Stockholders’ equity:      
Preferred stock, $0.001 par value per share; 25,000,000 shares authorized as of       
June 30, 2022 and December 31, 2021; no shares issued and outstanding as of
June 30, 2022 and December 31, 2021
         
Common stock, $0.001 par value per share; 500,000,000 shares authorized as of               
June 30, 2022 and December 31, 2021; 54,053,379 and 52,622,080 shares
issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
  54       53  
Additional paid-in capital   1,386,946       1,400,972  
Accumulated deficit   (917,506 )     (878,860 )
Accumulated other comprehensive loss   (439 )     (67 )
Total stockholders’ equity   469,055       522,098  
Total liabilities and stockholders’ equity $ 811,339     $ 832,096  
               

Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2022       2021       2022       2021  
Revenue:              
Technology $ 45,397     $ 35,529     $ 87,627     $ 69,368  
Professional services   25,236       24,098       51,093       46,105  
Total revenue   70,633       59,627       138,720       115,473  
Cost of revenue, excluding depreciation and              
amortization:              
Technology(1)(2)   13,996       11,847       27,323       22,672  
Professional services(1)(2)   20,611       18,206       41,280       34,719  
Total cost of revenue, excluding depreciation and                              
amortization   34,607       30,053       68,603       57,391  
Operating expenses:              
Sales and marketing(1)(2)   20,922       16,705       41,740       32,356  
Research and development(1)(2)   18,148       14,524       35,296       28,869  
General and administrative(1)(2)   17,536       22,525       26,359       37,540  
Depreciation and amortization   12,612       8,139       24,261       15,953  
Total operating expenses   69,218       61,893       127,656       114,718  
Loss from operations   (33,192 )     (32,319 )     (57,539 )     (56,636 )
Interest and other expense, net   (1,180 )     (3,707 )     (2,842 )     (7,659 )
Loss before income taxes   (34,372 )     (36,026 )     (60,381 )     (64,295 )
Income tax provision (benefit)(2)   (944 )     (192 )     (4,495 )     (91 )
Net loss $ (33,428 )   $ (35,834 )   $ (55,886 )   $ (64,204 )
Net loss per share, basic $ (0.62 )   $ (0.80 )   $ (1.05 )   $ (1.45 )
Net loss per share, diluted $ (0.62 )   $ (0.80 )   $ (1.15 )   $ (1.45 )
Weighted-average shares outstanding used in                              
calculating net loss per share, basic   53,675       44,886       53,343       44,381  
Weighted-average shares outstanding used in                              
calculating net loss per share, diluted   53,675       44,886       53,804       44,381  
Adjusted net loss   (1,431 )     (1 )     (4,398 )     (2,754 )
Adjusted net loss per share, basic and diluted(3) $ (0.03 )   $ (0.00 )   $ (0.08 )   $ (0.06 )
               

_______________
(1)   Includes stock-based compensation expense as follows:

  Three Months Ended June 30,   Six Months Ended June 30,
    2022     2021     2022     2021
                       
Stock-Based Compensation Expense: (in thousands)   (in thousands)
Cost of revenue, excluding depreciation and amortization:              
Technology $ 480   $ 574   $ 1,069   $ 948
Professional services   1,924     2,282     4,091     3,717
Sales and marketing   6,875     5,932     13,888     10,750
Research and development   3,163     2,676     6,253     4,933
General and administrative   5,490     6,263     10,751     10,889
Total $ 17,932   $ 17,727   $ 36,052   $ 31,237
                       

(2)   Includes acquisition-related costs (benefit), net, as follows:

  Three Months Ended June 30,   Six Months Ended June 30,
    2022       2021     2022       2021
                 
Acquisition-related costs (benefit), net: (in thousands)   (in thousands)
Cost of revenue, excluding depreciation and amortization:              
Technology $ 87     $   $ 193     $
Professional services   147           366      
Sales and marketing   793           1,190      
Research and development   1,107           1,665      
General and administrative   2,513       8,114     (3,518 )     10,270
Income tax provision (benefit) $ (933 )   $   $ (4,533 )   $
Total $ 3,714     $ 8,114   $ (4,637 )   $ 10,270
                           

(3)   Includes non-GAAP adjustments to net loss. Refer to the "Non-GAAP Financial Measures—Adjusted Net Loss Per Share" section below for further details.

Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
  Six Months Ended
June 30,
    2022       2021  
Cash flows from operating activities      
Net loss $ (55,886 )   $ (64,204 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Stock-based compensation expense   36,052       31,237  
Depreciation and amortization   24,261       15,953  
Non-cash operating lease expense   1,660       1,926  
Amortization of debt discount and issuance costs   749       5,817  
Investment discount and premium amortization   403       569  
Provision for expected credit losses   400       398  
Deferred tax provision (benefit)   (4,529 )     4  
Change in fair value of contingent consideration liabilities   (7,303 )     9,064  
Other   (78 )     (25 )
Change in operating assets and liabilities:      
Accounts receivable, net   1,294       927  
Prepaid expenses and other assets   1,584       (1,548 )
Accounts payable, accrued liabilities, and other liabilities   (4,886 )     (2,439 )
Deferred revenue   374       7,465  
Contingent consideration liabilities   (741 )     (11,025 )
Operating lease liabilities   (1,772 )     (2,107 )
Net cash used in operating activities   (8,418 )     (7,988 )
       
Cash flows from investing activities      
Proceeds from the sale and maturity of short-term investments   185,171       174,293  
Purchase of short-term investments   (160,548 )     (53,686 )
Acquisition of business, net of cash acquired   (27,846 )      
Capitalization of internal-use software   (7,026 )     (1,912 )
Purchase of intangible assets   (1,298 )     (770 )
Purchases of property and equipment   (558 )     (8,138 )
Proceeds from the sale of property and equipment   10       12  
Net cash (used in) provided by investing activities   (12,095 )     109,799  
       
Cash flows from financing activities      
Proceeds from exercise of stock options   3,688       14,076  
Proceeds from employee stock purchase plan   1,531       2,619  
Payments of acquisition-related consideration   (930 )     (5,360 )
Net cash provided by financing activities   4,289       11,335  
Effect of exchange rate changes on cash and cash equivalents   (20 )     (5 )
Net (decrease) increase in cash and cash equivalents   (16,244 )     113,141  
       
Cash and cash equivalents at beginning of period   193,227       91,954  
Cash and cash equivalents at end of period $ 176,983     $ 205,095  
               

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with GAAP, we believe certain non-GAAP measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, Adjusted Net Loss, and Adjusted Net Loss per share, basic and diluted, are useful in evaluating our operating performance. For example, we exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance and allows investors the ability to make more meaningful comparisons between our operating results and those of other companies. We use this non-GAAP financial information to evaluate our ongoing operations, as a component in determining employee bonus compensation, and for internal planning and forecasting purposes.

We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization, adding back stock-based compensation, and acquisition-related costs, net. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses. The following is a reconciliation of revenue, the most directly comparable GAAP financial measure, to Adjusted Gross Profit, for the three months ended June 30, 2022 and 2021:

  Three Months Ended June 30, 2022
  (in thousands, except percentages)
  Technology   Professional
Services
  Total
Revenue $ 45,397     $ 25,236     $ 70,633  
Cost of revenue, excluding depreciation and amortization   (13,996 )     (20,611 )     (34,607 )
Gross profit, excluding depreciation and amortization   31,401       4,625       36,026  
Add:          
Stock-based compensation   480       1,924       2,404  
Acquisition-related costs, net   87       147       234  
Adjusted Gross Profit $ 31,968     $ 6,696     $ 38,664  
Gross margin, excluding depreciation and amortization   69 %     18 %     51 %
Adjusted Gross Margin   70 %     27 %     55 %

  Three Months Ended June 30, 2021
  (in thousands, except percentages)
  Technology   Professional
Services
  Total
Revenue $ 35,529     $ 24,098     $ 59,627  
Cost of revenue, excluding depreciation and amortization   (11,847 )     (18,206 )     (30,053 )
Gross profit, excluding depreciation and amortization   23,682       5,892       29,574  
Add:          
Stock-based compensation   574       2,282       2,856  
Adjusted Gross Profit $ 24,256     $ 8,174     $ 32,430  
Gross margin, excluding depreciation and amortization   67 %     24 %     50 %
Adjusted Gross Margin   68 %     34 %     54 %
                       

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other expense, net, (ii) income tax (benefit) provision, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended June 30, 2022 and 2021:

  Three Months Ended June 30,
    2022       2021  
               
               
  (in thousands)
Net loss $ (33,428 )   $ (35,834 )
Add:      
Interest and other expense, net   1,180       3,707  
Income tax (benefit) provision   (944 )     (192 )
Depreciation and amortization   12,612       8,139  
Stock-based compensation   17,932       17,727  
Acquisition-related costs, net(1)   4,647       8,114  
Adjusted EBITDA $ 1,999     $ 1,661  

_______________
(1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.

Adjusted Net Loss and Adjusted Net Loss Per Share

Adjusted Net Loss is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs (benefit), net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from the acquisitions of ARMUS and KPI Ninja, and (iv) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Loss provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

  Three Months Ended
June 30,
  Six Months Ended
June 30,
    2022       2021       2022       2021  
                               
Numerator: (in thousands, except share and per share amounts)
Net loss $ (33,428 )   $ (35,834 )   $ (55,886 )   $ (64,204 )
Add:              
Stock-based compensation   17,932       17,727       36,052       31,237  
Amortization of acquired intangibles   9,976       7,045       19,324       14,126  
Acquisition-related costs (benefit), net(1)   3,714       8,114       (4,637 )     10,270  
Non-cash interest expense related to                              
  convertible senior notes   375       2,947       749       5,817  
Adjusted Net Loss $ (1,431 )   $ (1 )   $ (4,398 )   $ (2,754 )
Denominator:              
Weighted-average number of shares used in                              
calculating net loss per share, basic   53,675,377       44,886,489       53,342,887       44,381,196  
Weighted-average number of shares used in                              
calculating net loss per share, diluted   53,675,377       44,886,489       53,804,441       44,381,196  
               
Adjusted Net Loss per share, basic and diluted $ (0.03 )   $ (0.00 )   $ (0.08 )   $ (0.06 )

______________
(1) Acquisition-related costs (benefit), net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, changes in fair value of contingent consideration liabilities for potential earn-out payments, and the deferred tax valuation allowance release from the acquisitions of ARMUS and KPI Ninja. For additional details refer to Note 2 in our condensed consolidated financial statements.  

Health Catalyst Investor Relations Contact:
Adam Brown
Senior Vice President, Investor Relations and FP&A
+1 (855)-309-6800
ir@healthcatalyst.com

Health Catalyst Media Contact:
Tarah Neujahr Bryan
Chief Brand and Communications Officer
media@healthcatalyst.com 

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