Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Health Catalyst Reports Third Quarter 2022 Results By: Health Catalyst, Inc. via GlobeNewswire November 08, 2022 at 16:03 PM EST SALT LAKE CITY, Nov. 08, 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 September 30, 2022. “In the third quarter of 2022, I am pleased to share that we achieved strong performance across our business, including exceeding the mid-point of our quarterly guidance for both revenue and Adjusted EBITDA, and, based on an expanding pipeline and ahead-of-schedule cost reduction efforts, we are also pleased to raise our full year 2022 revenue and Adjusted EBITDA guidance. In addition, we now expect our 2022 dollar-based retention achievement level to be between 97% and 101%, an increase relative to the range we shared last quarter. This incremental confidence is driven by growth in our existing client expansion pipeline relative to prior expectations and a modest reduction in forecasted churn for 2022.” said Dan Burton, CEO of Health Catalyst. “In addition to this financial and operational execution, we held our ninth annual Healthcare Analytics Summit conference in Salt Lake City in September. We viewed this year’s in-person event as highly successful, hosting over a thousand attendees, representing more than 175 existing client and prospective client organizations, and included over 70 representatives from existing client organizations presenting their improvement case studies realized in partnership with Health Catalyst. This year’s Summit was an important opportunity for Health Catalyst to continue to provide thought leadership within the healthcare data and analytics ecosystem, while further cultivating and deepening our relationships with clients and prospects.” Financial Highlights for the Three Months Ended September 30, 2022 Key Financial Metrics Three Months Ended September 30, Year over Year Change 2022 2021 GAAP Financial Data:(in thousands, except percentages, unaudited)Technology revenue$43,997 $38,262 15%Professional services revenue$24,357 $23,475 4%Total revenue$68,354 $61,737 11%Loss from operations$(45,721) $(42,249) (8)%Net loss$(45,735) $(40,014) (14)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$29,993 $26,731 12%Adjusted Technology Gross Margin 68% 70% Adjusted Professional Services Gross Profit$4,970 $4,696 6%Adjusted Professional Services Gross Margin 20% 20% Total Adjusted Gross Profit$34,963 $31,427 11%Total Adjusted Gross Margin 51% 51% Adjusted EBITDA$(4,554) $(5,794) 21% ________________________ (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 fourth quarter of 2022, we expect: Total revenue between $66.9 million and $68.9 million, and Adjusted EBITDA between $(2.1) million and $(0.1) million For the full year of 2022, we expect: Total revenue between $274.0 million and $276.0 million, and Adjusted EBITDA between $(4.0) million and $(2.0) 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, Tuesday, November 8, 2022, at 5:00 p.m. E.T. The conference call can be accessed by dialing (800) 225-9448 for U.S. participants, or (203) 518-9708 for international participants, and referencing conference ID “HCAT Q322.” 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 Q4 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 September 30, 2022 expected to be filed with the SEC on or about November 8, 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 ofSeptember 30, As ofDecember 31, 2022 2021 (unaudited) Assets Current assets: Cash and cash equivalents$124,224 $193,227 Short-term investments 255,918 251,754 Accounts receivable, net 49,544 48,801 Prepaid expenses and other assets 13,764 14,609 Total current assets 443,450 508,391 Property and equipment, net 25,042 23,316 Intangible assets, net 100,653 104,788 Operating lease right-of-use assets 17,254 21,133 Goodwill 185,982 169,972 Other assets 3,819 4,496 Total assets$776,200 $832,096 Liabilities and stockholders’ equity Current liabilities: Accounts payable$6,816 $4,693 Accrued liabilities 24,405 23,725 Deferred revenue 56,381 56,632 Operating lease liabilities 3,464 3,425 Contingent consideration liabilities — 4,576 Total current liabilities 91,066 93,051 Convertible senior notes 226,147 180,942 Deferred revenue, net of current portion 315 929 Operating lease liabilities, net of current portion 18,586 20,244 Contingent consideration liabilities, net of current portion — 14,719 Other liabilities 120 113 Total liabilities 336,234 309,998 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021 — — Common stock, $0.001 par value per share; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 54,213,795 and 52,622,080 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 54 53 Additional paid-in capital 1,404,032 1,400,972 Accumulated deficit (963,241) (878,860)Accumulated other comprehensive loss (879) (67)Total stockholders’ equity 439,966 522,098 Total liabilities and stockholders’ equity$776,200 $832,096 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Revenue: Technology$43,997 $38,262 $131,624 $107,630 Professional services 24,357 23,475 75,450 69,580 Total revenue 68,354 61,737 207,074 177,210 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2) 14,572 12,094 41,895 34,766 Professional services(1)(2)(3) 21,768 20,992 63,048 55,711 Total cost of revenue, excluding depreciation and amortization 36,340 33,086 104,943 90,477 Operating expenses: Sales and marketing(1)(2)(3) 25,401 20,808 67,141 53,164 Research and development(1)(2)(3) 20,770 16,385 56,066 45,254 General and administrative(1)(2)(3)(4) 19,192 23,056 45,551 60,596 Depreciation and amortization 12,372 10,651 36,633 26,604 Total operating expenses 77,735 70,900 205,391 185,618 Loss from operations (45,721) (42,249) (103,260) (98,885)Interest and other income (expense), net 142 (4,423) (2,700) (12,082)Loss before income taxes (45,579) (46,672) (105,960) (110,967)Income tax provision (benefit)(2) 156 (6,658) (4,339) (6,749)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Net loss per share, basic$(0.84) $(0.82) $(1.89) $(2.27)Net loss per share, diluted$(0.84) $(0.82) $(1.97) $(2.27)Weighted-average shares outstanding used in calculating net loss per share, basic 54,304 48,999 53,667 45,937 Weighted-average shares outstanding used in calculating net loss per share, diluted 54,304 48,999 54,025 45,937 _______________ (1) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Stock-Based Compensation Expense:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $494 $533 $1,563 $1,481Professional services 1,991 2,149 6,082 5,866Sales and marketing 7,037 6,098 20,925 16,848Research and development 3,390 2,510 9,643 7,443General and administrative 4,392 6,197 15,143 17,086Total $17,304 $17,487 $53,356 $48,724 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Acquisition-related costs (benefit), net:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $74 $30 $267 $30 Professional services 143 64 509 64 Sales and marketing 367 296 1,557 296 Research and development 693 455 2,358 455 General and administrative 2,015 5,672 (1,503) 15,942 Income tax provision (benefit) $— $(6,829) $(4,533) $(6,829)Total $3,292 $(312) $(1,345) $9,958 (3) Includes restructuring costs, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Restructuring costs:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Professional services $247 $— $247 $—Sales and marketing 1,559 — 1,559 —Research and development 2,257 — 2,257 —General and administrative 436 — 436 —Total $4,499 $— $4,499 $— (4) Includes non-recurring lease-related charges, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Non-recurring lease-related charges:(in thousands) (in thousands)General and administrative 3,700 1,800 3,700 1,800 Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Nine Months EndedSeptember 30, 2022 2021 Cash flows from operating activities Net loss $ (101,621) $ (104,218)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 53,356 48,724 Depreciation and amortization 36,633 26,604 Impairment of long-lived assets 4,925 1,800 Non-cash operating lease expense 2,458 3,165 Amortization of debt discount and issuance costs 1,124 8,843 Amortization of investment discount and premium (608) 678 Provision for expected credit losses 700 698 Deferred tax benefit (4,527) (6,823)Change in fair value of contingent consideration liabilities (4,668) 13,655 Other (71) (17)Change in operating assets and liabilities: Accounts receivable, net (800) 1,021 Prepaid expenses and other assets 2,020 (2,131)Accounts payable, accrued liabilities, and other liabilities 873 3,281 Deferred revenue (4,365) 6,540 Contingent consideration liabilities (3,234) (11,766)Operating lease liabilities (2,644) (3,402)Net cash used in operating activities (20,449) (13,348) Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 270,171 186,893 Purchase of short-term investments (274,529) (188,407)Acquisition of business, net of cash acquired (27,846) (46,763)Capitalization of internal-use software (10,024) (3,641)Purchase of intangible assets (1,317) (1,269)Purchases of property and equipment (1,752) (9,827)Proceeds from the sale of property and equipment 20 19 Net cash used in investing activities (45,277) (62,995) Cash flows from financing activities Repurchase of common stock (8,393) — Proceeds from exercise of stock options 3,927 17,303 Proceeds from employee stock purchase plan 2,558 3,975 Payments of acquisition-related consideration (1,342) (6,290)Proceeds from public offering, net of discounts, commissions, and offering costs — 245,180 Net cash (used in) provided by financing activities (3,250) 260,168 Effect of exchange rate changes on cash and cash equivalents (27) (14)Net (decrease) increase in cash and cash equivalents (69,003) 183,811 Cash and cash equivalents at beginning of period 193,227 91,954 Cash and cash equivalents at end of period 124,224 275,765 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, acquisition-related costs, net, and restructuring costs as applicable. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$43,997 $24,357 $68,354 Cost of revenue, excluding depreciation and amortization (14,572) (21,768) (36,340)Gross profit, excluding depreciation and amortization 29,425 2,589 32,014 Add: Stock-based compensation 494 1,991 2,485 Acquisition-related costs, net(1) 74 143 217 Restructuring costs(2) — 247 247 Adjusted Gross Profit$29,993 $4,970 $34,963 Gross margin, excluding depreciation and amortization 67% 11% 47%Adjusted Gross Margin 68% 20% 51% ___________________(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.(2) Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended September 30, 2021 (in thousands, except percentages) Technology Professional Services TotalRevenue$38,262 $23,475 $61,737 Cost of revenue, excluding depreciation and amortization (12,094) (20,992) (33,086)Gross profit, excluding depreciation and amortization 26,168 2,483 28,651 Add: Stock-based compensation 533 2,149 2,682 Acquisition-related costs, net(1) 30 64 94 Adjusted Gross Profit$26,731 $4,696 $31,427 Gross margin, excluding depreciation and amortization 68% 11% 46%Adjusted Gross Margin 70% 20% 51% ___________________(1) Acquisition-related costs, net includes deferred retention expenses and post-acquisition restructuring costs incurred as part of business combinations. 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 provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, (vi) restructuring costs, and (vii) non-recurring lease-related charges. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 2021 (in thousands)Net loss $(45,735) $(40,014)Add: Interest and other (income) expense, net (142) 4,423 Income tax provision (benefit) 156 (6,658)Depreciation and amortization 12,372 10,651 Stock-based compensation 17,304 17,487 Acquisition-related costs, net(1) 3,292 6,517 Restructuring cost(2) 4,499 — Non-recurring lease-related charges(3) 3,700 1,800 Adjusted EBITDA $(4,554) $(5,794) _______________(1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other minor miscellaneous charges. For additional details refer to Note 18 in our condensed consolidated financial statements.(3) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters. Adjusted Net Loss and Adjusted Net Loss Per Share Adjusted Net Loss is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs (benefit), net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) restructuring costs, and (v) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Loss provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Numerator:(in thousands, except share and per share amounts)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Add: Stock-based compensation 17,304 17,487 53,356 48,724 Amortization of acquired intangibles 9,400 8,965 28,724 23,091 Acquisition-related costs (benefit), net(1) 3,292 (312) (1,345) 9,958 Restructuring costs 4,499 — 4,499 — Non-recurring lease-related charges 3,700 1,800 3,700 1,800 Non-cash interest expense related to convertible senior notes 375 3,026 1,124 8,843 Adjusted Net Loss$(7,165) $(9,048) $(11,563) $(11,802)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 54,303,667 48,998,548 53,666,667 45,937,227 Weighted-average number of shares used in calculating net loss per share, diluted 54,303,667 48,998,548 54,024,697 45,937,227 Adjusted Net Loss per share, basic and diluted$(0.13) $(0.18) $(0.22) $(0.26) ______________(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 acquisitions. For additional details refer to Note 2 in our condensed consolidated financial statements. Health Catalyst Investor Relations Contact:Adam BrownSenior Vice President, Investor Relations and FP&A+1 (855)-309-6800ir@healthcatalyst.com Health Catalyst Media Contact:Tarah Neujahr BryanChief Marketing Officermedia@healthcatalyst.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Health Catalyst Reports Third Quarter 2022 Results By: Health Catalyst, Inc. via GlobeNewswire November 08, 2022 at 16:03 PM EST SALT LAKE CITY, Nov. 08, 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 September 30, 2022. “In the third quarter of 2022, I am pleased to share that we achieved strong performance across our business, including exceeding the mid-point of our quarterly guidance for both revenue and Adjusted EBITDA, and, based on an expanding pipeline and ahead-of-schedule cost reduction efforts, we are also pleased to raise our full year 2022 revenue and Adjusted EBITDA guidance. In addition, we now expect our 2022 dollar-based retention achievement level to be between 97% and 101%, an increase relative to the range we shared last quarter. This incremental confidence is driven by growth in our existing client expansion pipeline relative to prior expectations and a modest reduction in forecasted churn for 2022.” said Dan Burton, CEO of Health Catalyst. “In addition to this financial and operational execution, we held our ninth annual Healthcare Analytics Summit conference in Salt Lake City in September. We viewed this year’s in-person event as highly successful, hosting over a thousand attendees, representing more than 175 existing client and prospective client organizations, and included over 70 representatives from existing client organizations presenting their improvement case studies realized in partnership with Health Catalyst. This year’s Summit was an important opportunity for Health Catalyst to continue to provide thought leadership within the healthcare data and analytics ecosystem, while further cultivating and deepening our relationships with clients and prospects.” Financial Highlights for the Three Months Ended September 30, 2022 Key Financial Metrics Three Months Ended September 30, Year over Year Change 2022 2021 GAAP Financial Data:(in thousands, except percentages, unaudited)Technology revenue$43,997 $38,262 15%Professional services revenue$24,357 $23,475 4%Total revenue$68,354 $61,737 11%Loss from operations$(45,721) $(42,249) (8)%Net loss$(45,735) $(40,014) (14)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$29,993 $26,731 12%Adjusted Technology Gross Margin 68% 70% Adjusted Professional Services Gross Profit$4,970 $4,696 6%Adjusted Professional Services Gross Margin 20% 20% Total Adjusted Gross Profit$34,963 $31,427 11%Total Adjusted Gross Margin 51% 51% Adjusted EBITDA$(4,554) $(5,794) 21% ________________________ (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 fourth quarter of 2022, we expect: Total revenue between $66.9 million and $68.9 million, and Adjusted EBITDA between $(2.1) million and $(0.1) million For the full year of 2022, we expect: Total revenue between $274.0 million and $276.0 million, and Adjusted EBITDA between $(4.0) million and $(2.0) 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, Tuesday, November 8, 2022, at 5:00 p.m. E.T. The conference call can be accessed by dialing (800) 225-9448 for U.S. participants, or (203) 518-9708 for international participants, and referencing conference ID “HCAT Q322.” 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 Q4 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 September 30, 2022 expected to be filed with the SEC on or about November 8, 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 ofSeptember 30, As ofDecember 31, 2022 2021 (unaudited) Assets Current assets: Cash and cash equivalents$124,224 $193,227 Short-term investments 255,918 251,754 Accounts receivable, net 49,544 48,801 Prepaid expenses and other assets 13,764 14,609 Total current assets 443,450 508,391 Property and equipment, net 25,042 23,316 Intangible assets, net 100,653 104,788 Operating lease right-of-use assets 17,254 21,133 Goodwill 185,982 169,972 Other assets 3,819 4,496 Total assets$776,200 $832,096 Liabilities and stockholders’ equity Current liabilities: Accounts payable$6,816 $4,693 Accrued liabilities 24,405 23,725 Deferred revenue 56,381 56,632 Operating lease liabilities 3,464 3,425 Contingent consideration liabilities — 4,576 Total current liabilities 91,066 93,051 Convertible senior notes 226,147 180,942 Deferred revenue, net of current portion 315 929 Operating lease liabilities, net of current portion 18,586 20,244 Contingent consideration liabilities, net of current portion — 14,719 Other liabilities 120 113 Total liabilities 336,234 309,998 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021 — — Common stock, $0.001 par value per share; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 54,213,795 and 52,622,080 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 54 53 Additional paid-in capital 1,404,032 1,400,972 Accumulated deficit (963,241) (878,860)Accumulated other comprehensive loss (879) (67)Total stockholders’ equity 439,966 522,098 Total liabilities and stockholders’ equity$776,200 $832,096 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Revenue: Technology$43,997 $38,262 $131,624 $107,630 Professional services 24,357 23,475 75,450 69,580 Total revenue 68,354 61,737 207,074 177,210 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2) 14,572 12,094 41,895 34,766 Professional services(1)(2)(3) 21,768 20,992 63,048 55,711 Total cost of revenue, excluding depreciation and amortization 36,340 33,086 104,943 90,477 Operating expenses: Sales and marketing(1)(2)(3) 25,401 20,808 67,141 53,164 Research and development(1)(2)(3) 20,770 16,385 56,066 45,254 General and administrative(1)(2)(3)(4) 19,192 23,056 45,551 60,596 Depreciation and amortization 12,372 10,651 36,633 26,604 Total operating expenses 77,735 70,900 205,391 185,618 Loss from operations (45,721) (42,249) (103,260) (98,885)Interest and other income (expense), net 142 (4,423) (2,700) (12,082)Loss before income taxes (45,579) (46,672) (105,960) (110,967)Income tax provision (benefit)(2) 156 (6,658) (4,339) (6,749)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Net loss per share, basic$(0.84) $(0.82) $(1.89) $(2.27)Net loss per share, diluted$(0.84) $(0.82) $(1.97) $(2.27)Weighted-average shares outstanding used in calculating net loss per share, basic 54,304 48,999 53,667 45,937 Weighted-average shares outstanding used in calculating net loss per share, diluted 54,304 48,999 54,025 45,937 _______________ (1) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Stock-Based Compensation Expense:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $494 $533 $1,563 $1,481Professional services 1,991 2,149 6,082 5,866Sales and marketing 7,037 6,098 20,925 16,848Research and development 3,390 2,510 9,643 7,443General and administrative 4,392 6,197 15,143 17,086Total $17,304 $17,487 $53,356 $48,724 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Acquisition-related costs (benefit), net:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $74 $30 $267 $30 Professional services 143 64 509 64 Sales and marketing 367 296 1,557 296 Research and development 693 455 2,358 455 General and administrative 2,015 5,672 (1,503) 15,942 Income tax provision (benefit) $— $(6,829) $(4,533) $(6,829)Total $3,292 $(312) $(1,345) $9,958 (3) Includes restructuring costs, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Restructuring costs:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Professional services $247 $— $247 $—Sales and marketing 1,559 — 1,559 —Research and development 2,257 — 2,257 —General and administrative 436 — 436 —Total $4,499 $— $4,499 $— (4) Includes non-recurring lease-related charges, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Non-recurring lease-related charges:(in thousands) (in thousands)General and administrative 3,700 1,800 3,700 1,800 Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Nine Months EndedSeptember 30, 2022 2021 Cash flows from operating activities Net loss $ (101,621) $ (104,218)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 53,356 48,724 Depreciation and amortization 36,633 26,604 Impairment of long-lived assets 4,925 1,800 Non-cash operating lease expense 2,458 3,165 Amortization of debt discount and issuance costs 1,124 8,843 Amortization of investment discount and premium (608) 678 Provision for expected credit losses 700 698 Deferred tax benefit (4,527) (6,823)Change in fair value of contingent consideration liabilities (4,668) 13,655 Other (71) (17)Change in operating assets and liabilities: Accounts receivable, net (800) 1,021 Prepaid expenses and other assets 2,020 (2,131)Accounts payable, accrued liabilities, and other liabilities 873 3,281 Deferred revenue (4,365) 6,540 Contingent consideration liabilities (3,234) (11,766)Operating lease liabilities (2,644) (3,402)Net cash used in operating activities (20,449) (13,348) Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 270,171 186,893 Purchase of short-term investments (274,529) (188,407)Acquisition of business, net of cash acquired (27,846) (46,763)Capitalization of internal-use software (10,024) (3,641)Purchase of intangible assets (1,317) (1,269)Purchases of property and equipment (1,752) (9,827)Proceeds from the sale of property and equipment 20 19 Net cash used in investing activities (45,277) (62,995) Cash flows from financing activities Repurchase of common stock (8,393) — Proceeds from exercise of stock options 3,927 17,303 Proceeds from employee stock purchase plan 2,558 3,975 Payments of acquisition-related consideration (1,342) (6,290)Proceeds from public offering, net of discounts, commissions, and offering costs — 245,180 Net cash (used in) provided by financing activities (3,250) 260,168 Effect of exchange rate changes on cash and cash equivalents (27) (14)Net (decrease) increase in cash and cash equivalents (69,003) 183,811 Cash and cash equivalents at beginning of period 193,227 91,954 Cash and cash equivalents at end of period 124,224 275,765 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, acquisition-related costs, net, and restructuring costs as applicable. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$43,997 $24,357 $68,354 Cost of revenue, excluding depreciation and amortization (14,572) (21,768) (36,340)Gross profit, excluding depreciation and amortization 29,425 2,589 32,014 Add: Stock-based compensation 494 1,991 2,485 Acquisition-related costs, net(1) 74 143 217 Restructuring costs(2) — 247 247 Adjusted Gross Profit$29,993 $4,970 $34,963 Gross margin, excluding depreciation and amortization 67% 11% 47%Adjusted Gross Margin 68% 20% 51% ___________________(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.(2) Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended September 30, 2021 (in thousands, except percentages) Technology Professional Services TotalRevenue$38,262 $23,475 $61,737 Cost of revenue, excluding depreciation and amortization (12,094) (20,992) (33,086)Gross profit, excluding depreciation and amortization 26,168 2,483 28,651 Add: Stock-based compensation 533 2,149 2,682 Acquisition-related costs, net(1) 30 64 94 Adjusted Gross Profit$26,731 $4,696 $31,427 Gross margin, excluding depreciation and amortization 68% 11% 46%Adjusted Gross Margin 70% 20% 51% ___________________(1) Acquisition-related costs, net includes deferred retention expenses and post-acquisition restructuring costs incurred as part of business combinations. 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 provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, (vi) restructuring costs, and (vii) non-recurring lease-related charges. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 2021 (in thousands)Net loss $(45,735) $(40,014)Add: Interest and other (income) expense, net (142) 4,423 Income tax provision (benefit) 156 (6,658)Depreciation and amortization 12,372 10,651 Stock-based compensation 17,304 17,487 Acquisition-related costs, net(1) 3,292 6,517 Restructuring cost(2) 4,499 — Non-recurring lease-related charges(3) 3,700 1,800 Adjusted EBITDA $(4,554) $(5,794) _______________(1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other minor miscellaneous charges. For additional details refer to Note 18 in our condensed consolidated financial statements.(3) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters. Adjusted Net Loss and Adjusted Net Loss Per Share Adjusted Net Loss is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs (benefit), net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) restructuring costs, and (v) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Loss provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Numerator:(in thousands, except share and per share amounts)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Add: Stock-based compensation 17,304 17,487 53,356 48,724 Amortization of acquired intangibles 9,400 8,965 28,724 23,091 Acquisition-related costs (benefit), net(1) 3,292 (312) (1,345) 9,958 Restructuring costs 4,499 — 4,499 — Non-recurring lease-related charges 3,700 1,800 3,700 1,800 Non-cash interest expense related to convertible senior notes 375 3,026 1,124 8,843 Adjusted Net Loss$(7,165) $(9,048) $(11,563) $(11,802)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 54,303,667 48,998,548 53,666,667 45,937,227 Weighted-average number of shares used in calculating net loss per share, diluted 54,303,667 48,998,548 54,024,697 45,937,227 Adjusted Net Loss per share, basic and diluted$(0.13) $(0.18) $(0.22) $(0.26) ______________(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 acquisitions. For additional details refer to Note 2 in our condensed consolidated financial statements. Health Catalyst Investor Relations Contact:Adam BrownSenior Vice President, Investor Relations and FP&A+1 (855)-309-6800ir@healthcatalyst.com Health Catalyst Media Contact:Tarah Neujahr BryanChief Marketing Officermedia@healthcatalyst.com
SALT LAKE CITY, Nov. 08, 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 September 30, 2022. “In the third quarter of 2022, I am pleased to share that we achieved strong performance across our business, including exceeding the mid-point of our quarterly guidance for both revenue and Adjusted EBITDA, and, based on an expanding pipeline and ahead-of-schedule cost reduction efforts, we are also pleased to raise our full year 2022 revenue and Adjusted EBITDA guidance. In addition, we now expect our 2022 dollar-based retention achievement level to be between 97% and 101%, an increase relative to the range we shared last quarter. This incremental confidence is driven by growth in our existing client expansion pipeline relative to prior expectations and a modest reduction in forecasted churn for 2022.” said Dan Burton, CEO of Health Catalyst. “In addition to this financial and operational execution, we held our ninth annual Healthcare Analytics Summit conference in Salt Lake City in September. We viewed this year’s in-person event as highly successful, hosting over a thousand attendees, representing more than 175 existing client and prospective client organizations, and included over 70 representatives from existing client organizations presenting their improvement case studies realized in partnership with Health Catalyst. This year’s Summit was an important opportunity for Health Catalyst to continue to provide thought leadership within the healthcare data and analytics ecosystem, while further cultivating and deepening our relationships with clients and prospects.” Financial Highlights for the Three Months Ended September 30, 2022 Key Financial Metrics Three Months Ended September 30, Year over Year Change 2022 2021 GAAP Financial Data:(in thousands, except percentages, unaudited)Technology revenue$43,997 $38,262 15%Professional services revenue$24,357 $23,475 4%Total revenue$68,354 $61,737 11%Loss from operations$(45,721) $(42,249) (8)%Net loss$(45,735) $(40,014) (14)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$29,993 $26,731 12%Adjusted Technology Gross Margin 68% 70% Adjusted Professional Services Gross Profit$4,970 $4,696 6%Adjusted Professional Services Gross Margin 20% 20% Total Adjusted Gross Profit$34,963 $31,427 11%Total Adjusted Gross Margin 51% 51% Adjusted EBITDA$(4,554) $(5,794) 21% ________________________ (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 fourth quarter of 2022, we expect: Total revenue between $66.9 million and $68.9 million, and Adjusted EBITDA between $(2.1) million and $(0.1) million For the full year of 2022, we expect: Total revenue between $274.0 million and $276.0 million, and Adjusted EBITDA between $(4.0) million and $(2.0) 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, Tuesday, November 8, 2022, at 5:00 p.m. E.T. The conference call can be accessed by dialing (800) 225-9448 for U.S. participants, or (203) 518-9708 for international participants, and referencing conference ID “HCAT Q322.” 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 Q4 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 September 30, 2022 expected to be filed with the SEC on or about November 8, 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 ofSeptember 30, As ofDecember 31, 2022 2021 (unaudited) Assets Current assets: Cash and cash equivalents$124,224 $193,227 Short-term investments 255,918 251,754 Accounts receivable, net 49,544 48,801 Prepaid expenses and other assets 13,764 14,609 Total current assets 443,450 508,391 Property and equipment, net 25,042 23,316 Intangible assets, net 100,653 104,788 Operating lease right-of-use assets 17,254 21,133 Goodwill 185,982 169,972 Other assets 3,819 4,496 Total assets$776,200 $832,096 Liabilities and stockholders’ equity Current liabilities: Accounts payable$6,816 $4,693 Accrued liabilities 24,405 23,725 Deferred revenue 56,381 56,632 Operating lease liabilities 3,464 3,425 Contingent consideration liabilities — 4,576 Total current liabilities 91,066 93,051 Convertible senior notes 226,147 180,942 Deferred revenue, net of current portion 315 929 Operating lease liabilities, net of current portion 18,586 20,244 Contingent consideration liabilities, net of current portion — 14,719 Other liabilities 120 113 Total liabilities 336,234 309,998 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized as of September 30, 2022 and December 31, 2021; no shares issued and outstanding as of September 30, 2022 and December 31, 2021 — — Common stock, $0.001 par value per share; 500,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 54,213,795 and 52,622,080 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 54 53 Additional paid-in capital 1,404,032 1,400,972 Accumulated deficit (963,241) (878,860)Accumulated other comprehensive loss (879) (67)Total stockholders’ equity 439,966 522,098 Total liabilities and stockholders’ equity$776,200 $832,096 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Revenue: Technology$43,997 $38,262 $131,624 $107,630 Professional services 24,357 23,475 75,450 69,580 Total revenue 68,354 61,737 207,074 177,210 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2) 14,572 12,094 41,895 34,766 Professional services(1)(2)(3) 21,768 20,992 63,048 55,711 Total cost of revenue, excluding depreciation and amortization 36,340 33,086 104,943 90,477 Operating expenses: Sales and marketing(1)(2)(3) 25,401 20,808 67,141 53,164 Research and development(1)(2)(3) 20,770 16,385 56,066 45,254 General and administrative(1)(2)(3)(4) 19,192 23,056 45,551 60,596 Depreciation and amortization 12,372 10,651 36,633 26,604 Total operating expenses 77,735 70,900 205,391 185,618 Loss from operations (45,721) (42,249) (103,260) (98,885)Interest and other income (expense), net 142 (4,423) (2,700) (12,082)Loss before income taxes (45,579) (46,672) (105,960) (110,967)Income tax provision (benefit)(2) 156 (6,658) (4,339) (6,749)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Net loss per share, basic$(0.84) $(0.82) $(1.89) $(2.27)Net loss per share, diluted$(0.84) $(0.82) $(1.97) $(2.27)Weighted-average shares outstanding used in calculating net loss per share, basic 54,304 48,999 53,667 45,937 Weighted-average shares outstanding used in calculating net loss per share, diluted 54,304 48,999 54,025 45,937 _______________ (1) Includes stock-based compensation expense as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Stock-Based Compensation Expense:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $494 $533 $1,563 $1,481Professional services 1,991 2,149 6,082 5,866Sales and marketing 7,037 6,098 20,925 16,848Research and development 3,390 2,510 9,643 7,443General and administrative 4,392 6,197 15,143 17,086Total $17,304 $17,487 $53,356 $48,724 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Acquisition-related costs (benefit), net:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Technology $74 $30 $267 $30 Professional services 143 64 509 64 Sales and marketing 367 296 1,557 296 Research and development 693 455 2,358 455 General and administrative 2,015 5,672 (1,503) 15,942 Income tax provision (benefit) $— $(6,829) $(4,533) $(6,829)Total $3,292 $(312) $(1,345) $9,958 (3) Includes restructuring costs, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Restructuring costs:(in thousands) (in thousands)Cost of revenue, excluding depreciation and amortization: Professional services $247 $— $247 $—Sales and marketing 1,559 — 1,559 —Research and development 2,257 — 2,257 —General and administrative 436 — 436 —Total $4,499 $— $4,499 $— (4) Includes non-recurring lease-related charges, as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021Non-recurring lease-related charges:(in thousands) (in thousands)General and administrative 3,700 1,800 3,700 1,800 Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Nine Months EndedSeptember 30, 2022 2021 Cash flows from operating activities Net loss $ (101,621) $ (104,218)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 53,356 48,724 Depreciation and amortization 36,633 26,604 Impairment of long-lived assets 4,925 1,800 Non-cash operating lease expense 2,458 3,165 Amortization of debt discount and issuance costs 1,124 8,843 Amortization of investment discount and premium (608) 678 Provision for expected credit losses 700 698 Deferred tax benefit (4,527) (6,823)Change in fair value of contingent consideration liabilities (4,668) 13,655 Other (71) (17)Change in operating assets and liabilities: Accounts receivable, net (800) 1,021 Prepaid expenses and other assets 2,020 (2,131)Accounts payable, accrued liabilities, and other liabilities 873 3,281 Deferred revenue (4,365) 6,540 Contingent consideration liabilities (3,234) (11,766)Operating lease liabilities (2,644) (3,402)Net cash used in operating activities (20,449) (13,348) Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 270,171 186,893 Purchase of short-term investments (274,529) (188,407)Acquisition of business, net of cash acquired (27,846) (46,763)Capitalization of internal-use software (10,024) (3,641)Purchase of intangible assets (1,317) (1,269)Purchases of property and equipment (1,752) (9,827)Proceeds from the sale of property and equipment 20 19 Net cash used in investing activities (45,277) (62,995) Cash flows from financing activities Repurchase of common stock (8,393) — Proceeds from exercise of stock options 3,927 17,303 Proceeds from employee stock purchase plan 2,558 3,975 Payments of acquisition-related consideration (1,342) (6,290)Proceeds from public offering, net of discounts, commissions, and offering costs — 245,180 Net cash (used in) provided by financing activities (3,250) 260,168 Effect of exchange rate changes on cash and cash equivalents (27) (14)Net (decrease) increase in cash and cash equivalents (69,003) 183,811 Cash and cash equivalents at beginning of period 193,227 91,954 Cash and cash equivalents at end of period 124,224 275,765 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, acquisition-related costs, net, and restructuring costs as applicable. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$43,997 $24,357 $68,354 Cost of revenue, excluding depreciation and amortization (14,572) (21,768) (36,340)Gross profit, excluding depreciation and amortization 29,425 2,589 32,014 Add: Stock-based compensation 494 1,991 2,485 Acquisition-related costs, net(1) 74 143 217 Restructuring costs(2) — 247 247 Adjusted Gross Profit$29,993 $4,970 $34,963 Gross margin, excluding depreciation and amortization 67% 11% 47%Adjusted Gross Margin 68% 20% 51% ___________________(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.(2) Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended September 30, 2021 (in thousands, except percentages) Technology Professional Services TotalRevenue$38,262 $23,475 $61,737 Cost of revenue, excluding depreciation and amortization (12,094) (20,992) (33,086)Gross profit, excluding depreciation and amortization 26,168 2,483 28,651 Add: Stock-based compensation 533 2,149 2,682 Acquisition-related costs, net(1) 30 64 94 Adjusted Gross Profit$26,731 $4,696 $31,427 Gross margin, excluding depreciation and amortization 68% 11% 46%Adjusted Gross Margin 70% 20% 51% ___________________(1) Acquisition-related costs, net includes deferred retention expenses and post-acquisition restructuring costs incurred as part of business combinations. 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 provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, (vi) restructuring costs, and (vii) non-recurring lease-related charges. 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 September 30, 2022 and 2021: Three Months Ended September 30, 2022 2021 (in thousands)Net loss $(45,735) $(40,014)Add: Interest and other (income) expense, net (142) 4,423 Income tax provision (benefit) 156 (6,658)Depreciation and amortization 12,372 10,651 Stock-based compensation 17,304 17,487 Acquisition-related costs, net(1) 3,292 6,517 Restructuring cost(2) 4,499 — Non-recurring lease-related charges(3) 3,700 1,800 Adjusted EBITDA $(4,554) $(5,794) _______________(1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other minor miscellaneous charges. For additional details refer to Note 18 in our condensed consolidated financial statements.(3) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters. Adjusted Net Loss and Adjusted Net Loss Per Share Adjusted Net Loss is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs (benefit), net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) restructuring costs, and (v) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Loss provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2022 2021 2022 2021 Numerator:(in thousands, except share and per share amounts)Net loss$(45,735) $(40,014) $(101,621) $(104,218)Add: Stock-based compensation 17,304 17,487 53,356 48,724 Amortization of acquired intangibles 9,400 8,965 28,724 23,091 Acquisition-related costs (benefit), net(1) 3,292 (312) (1,345) 9,958 Restructuring costs 4,499 — 4,499 — Non-recurring lease-related charges 3,700 1,800 3,700 1,800 Non-cash interest expense related to convertible senior notes 375 3,026 1,124 8,843 Adjusted Net Loss$(7,165) $(9,048) $(11,563) $(11,802)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 54,303,667 48,998,548 53,666,667 45,937,227 Weighted-average number of shares used in calculating net loss per share, diluted 54,303,667 48,998,548 54,024,697 45,937,227 Adjusted Net Loss per share, basic and diluted$(0.13) $(0.18) $(0.22) $(0.26) ______________(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 acquisitions. For additional details refer to Note 2 in our condensed consolidated financial statements. Health Catalyst Investor Relations Contact:Adam BrownSenior Vice President, Investor Relations and FP&A+1 (855)-309-6800ir@healthcatalyst.com Health Catalyst Media Contact:Tarah Neujahr BryanChief Marketing Officermedia@healthcatalyst.com
