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 First Quarter 2023 Results By: Health Catalyst, Inc. via GlobeNewswire May 09, 2023 at 16:03 PM EDT SALT LAKE CITY, May 09, 2023 (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 March 31, 2023. “In the first quarter of 2023, 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. This financial performance demonstrates our ability to continue to scale our business as we drive toward our long-term profitability goals,” said Dan Burton, CEO of Health Catalyst. “Additionally, I am excited to announce a meaningful expansion of our tech-enabled managed services partnership with our longest-standing client, Allina Health. This expansion, which includes more chart abstraction responsibility, increases Allina’s recurring revenue to now be approximately $11 million per year. We continue to appreciate Allina’s multi-faceted partnership and trust in Health Catalyst since the beginning of our relationship with them nearly 15 years ago, and we are encouraged to see other potential areas of expansion with them in the future.” Financial Highlights for the Three Months Ended March 31, 2023 Key Financial Metrics Three Months Ended March 31, Year over YearChange 2023 2022 GAAP Financial Data:(in thousands, except percentages, unaudited) Technology revenue$47,186 $42,230 12%Professional services revenue$26,682 $25,857 3%Total revenue$73,868 $68,087 8%Loss from operations$(34,914) $(24,347) (43)%Net loss$(33,190) $(22,458) (48)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$32,958 $29,598 11%Adjusted Technology Gross Margin 70% 70% Adjusted Professional Services Gross Profit$5,414 $7,574 (29)%Adjusted Professional Services Gross Margin 20% 29% Total Adjusted Gross Profit$38,372 $37,172 3%Total Adjusted Gross Margin 52% 55% Adjusted EBITDA$4,164 $671 521% ___________________(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 second quarter of 2023, we expect: Total revenue between $70.3 million and $74.3 million, andAdjusted EBITDA between $0.75 million and $4.75 million For the full year of 2023, we expect: Total revenue between $290.0 million and $295.0 million, andAdjusted EBITDA between $9.0 million and $11.0 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, May 9, 2023, 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 Q123.” 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 clients 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 Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO's social media accounts, in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our 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 Q2 and fiscal year 2023. 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 clients or partners; (v) the impact of the challenging macroeconomic environment (including high inflationary and/or high interest rate environments) 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 March 31, 2023 expected to be filed with the SEC on or about May 9, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023. 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 ofMarch 31, As ofDecember 31, 2023 2022 (unaudited) Assets Current assets: Cash and cash equivalents$133,479 $116,312 Short-term investments 223,448 247,178 Accounts receivable, net 61,862 47,970 Prepaid expenses and other assets 15,728 16,335 Total current assets 434,517 427,795 Property and equipment, net 26,441 25,928 Operating lease right-of-use assets 16,161 16,658 Intangible assets, net 84,410 92,189 Goodwill 185,982 185,982 Other assets 4,790 3,734 Total assets$752,301 $752,286 Liabilities and stockholders’ equity Current liabilities: Accounts payable$9,243 $4,424 Accrued liabilities 23,953 19,691 Deferred revenue 65,905 54,961 Operating lease liabilities 3,394 3,434 Total current liabilities 102,495 82,510 Convertible senior notes 226,900 226,523 Deferred revenue, net of current portion 189 105 Operating lease liabilities, net of current portion 17,448 18,017 Other liabilities 123 121 Total liabilities 347,155 327,276 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of March 31, 2023 and December 31, 2022 — — Common stock, $0.001 par value per share, and additional paid in capital; 500,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 55,843,457 and 55,261,922 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 1,437,654 1,424,681 Additional paid-in capital Accumulated deficit (1,032,213) (999,023)Accumulated other comprehensive loss (295) (648)Total stockholders’ equity 405,146 425,010 Total liabilities and stockholders’ equity$752,301 $752,286 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedMarch 31, 2023 2022 (in thousands)Revenue: Technology$47,186 $42,230 Professional services 26,682 25,857 Total revenue 73,868 68,087 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2)(3) 14,727 13,327 Professional services(1)(2)(3) 23,577 20,669 Total cost of revenue, excluding depreciation and amortization 38,304 33,996 Operating expenses: Sales and marketing(1)(2)(3) 18,569 20,818 Research and development(1)(2)(3) 17,082 17,148 General and administrative(1)(2)(3)(4) 23,833 8,823 Depreciation and amortization 10,994 11,649 Total operating expenses 70,478 58,438 Loss from operations (34,914) (24,347)Interest and other expense, net 1,793 (1,662)Loss before income taxes (33,121) (26,009)Income tax provision (benefit)(2) 69 (3,551)Net loss$(33,190) $(22,458)Net loss per share, basic$(0.60) $(0.42)Net loss per share, diluted$(0.60) $(0.54)Weighted-average shares outstanding used in calculating net loss per share, basic 55,485 53,007 Weighted-average shares outstanding used in calculating net loss per share, diluted 55,485 53,215 _______________(1) Includes stock-based compensation expense as follows: Three Months Ended March 31, 2023 2022Stock-Based Compensation Expense:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$416 $589Professional services 1,774 2,167Sales and marketing 5,442 7,013Research and development 2,673 3,090General and administrative 3,579 5,261Total$13,884 $18,120 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended March 31, 2023 2022 Acquisition-related costs (benefit), net:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$71 $106 Professional services 101 219 Sales and marketing 101 397 Research and development 194 558 General and administrative 14 (6,031)Income tax provision (benefit) — (3,600)Total$481 $(8,351) (3) Includes restructuring costs, as follows: Three Months Ended March 31, 2023 2022Restructuring costs:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$12 $—Professional services 434 —Sales and marketing 1,205 —Research and development 286 —General and administrative 118 —Total$2,055 $— (4) Includes litigation costs, as follows: Three Months Ended March 31, 2023 2022Litigation costs:(in thousands)General and administrative$11,664 $—Total$11,664 $— Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Three Months EndedMarch 31, 2023 2022 Cash flows from operating activities Net loss$(33,190) $(22,458)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 13,884 18,120 Depreciation and amortization 10,994 11,649 Change in fair value of contingent consideration liabilities — (8,424)Non-cash operating lease expense 764 819 Investment (discount) premium amortization (1,979) 398 Amortization of debt discount and issuance costs 377 374 Provision for expected credit losses 1,514 200 Deferred tax provision (benefit) 2 (3,598)Other 19 (49)Change in operating assets and liabilities: Accounts receivable, net (15,405) 6,019 Prepaid expenses and other assets (420) 437 Accounts payable, accrued liabilities, and other liabilities 7,709 (4,812)Deferred revenue 11,027 4,106 Contingent consideration liabilities — (741)Operating lease liabilities (876) (882)Net cash (used in) provided by operating activities (5,580) 1,158 Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 107,100 80,960 Purchase of short-term investments (81,070) (56,719)Acquisition of business, net of cash acquired — (18,509)Capitalization of internal-use software (2,864) (3,261)Purchase of intangible assets (98) (463)Purchase of property and equipment (425) (356)Proceeds from the sale of property and equipment 6 4 Net cash provided by investing activities 22,649 1,656 Cash flows from financing activities Proceeds from exercise of stock options 727 1,809 Proceeds from employee stock purchase plan 1,174 1,509 Repurchase of common stock (1,808) — Payments of acquisition-related consideration — (930)Net cash provided by financing activities 93 2,388 Effect of exchange rate changes on cash and cash equivalents 5 (1)Net increase in cash and cash equivalents 17,167 5,201 Cash and cash equivalents at beginning of period 116,312 193,227 Cash and cash equivalents at end of period$133,479 $198,428 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 March 31, 2023 and 2022: Three Months Ended March 31, 2023 (in thousands, except percentages) Technology Professional Services TotalRevenue$47,186 $26,682 $73,868 Cost of revenue, excluding depreciation and amortization (14,727) (23,577) (38,304)Gross profit, excluding depreciation and amortization 32,459 3,105 35,564 Add: Stock-based compensation 416 1,774 2,190 Acquisition-related costs, net(1) 71 101 172 Restructuring costs(2) 12 434 446 Adjusted Gross Profit$32,958 $5,414 $38,372 Gross margin, excluding depreciation and amortization 69% 12% 48%Adjusted Gross Margin 70% 20% 52% _______________(1) Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and ARMUS acquisitions.(2)Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended March 31, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$42,230 $25,857 $68,087 Cost of revenue, excluding depreciation and amortization (13,327) (20,669) (33,996)Gross profit, excluding depreciation and amortization 28,903 5,188 34,091 Add: Stock-based compensation 589 2,167 2,756 Acquisition-related costs, net(1) 106 219 325 Adjusted Gross Profit$29,598 $7,574 $37,172 Gross margin, excluding depreciation and amortization 68% 20% 50%Adjusted Gross Margin 70% 29% 55% ___________________(1)Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and Twistle acquisitions. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) litigation costs, and (vii) restructuring costs. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs and litigation costs allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 (in thousands)Net loss$(33,190) $(22,458)Add: Interest and other (income) expense, net (1,793) 1,662 Income tax provision (benefit) 69 (3,551)Depreciation and amortization 10,994 11,649 Stock-based compensation 13,884 18,120 Acquisition-related costs, net(1) 481 (4,751)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Adjusted EBITDA$4,164 $671 _______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 in our condensed consolidated financial statements. Adjusted Net Income (Loss) Per Share Adjusted Net Income (Loss) is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) litigation costs, (v) restructuring costs, and (vi) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Income (Loss) provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months Ended March 31, 2023 2022 Numerator:(in thousands, except share and per share amounts)Net loss$(33,190) $(22,458)Add: Stock-based compensation 13,884 18,120 Amortization of acquired intangibles 7,780 9,348 Acquisition-related costs, net(1) 481 (8,351)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Non-cash interest expense related to convertible senior notes 377 374 Adjusted Net Income (Loss)$3,051 $(2,967)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 55,484,835 53,006,704 Non-GAAP weighted-average effect of dilutive securities 792,630 — Non-GAAP weighted-average number of shares used in calculating Adjusted Net Income (Loss) per share, diluted 56,277,465 53,006,704 Adjusted Net Income (Loss) per share, basic$0.05 $(0.06)Adjusted Net Income (Loss) per share, diluted$0.05 $(0.06) ______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include 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 2022 acquisition of KPI Ninja. For additional details refer to Notes 1, 2, and 13 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 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 First Quarter 2023 Results By: Health Catalyst, Inc. via GlobeNewswire May 09, 2023 at 16:03 PM EDT SALT LAKE CITY, May 09, 2023 (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 March 31, 2023. “In the first quarter of 2023, 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. This financial performance demonstrates our ability to continue to scale our business as we drive toward our long-term profitability goals,” said Dan Burton, CEO of Health Catalyst. “Additionally, I am excited to announce a meaningful expansion of our tech-enabled managed services partnership with our longest-standing client, Allina Health. This expansion, which includes more chart abstraction responsibility, increases Allina’s recurring revenue to now be approximately $11 million per year. We continue to appreciate Allina’s multi-faceted partnership and trust in Health Catalyst since the beginning of our relationship with them nearly 15 years ago, and we are encouraged to see other potential areas of expansion with them in the future.” Financial Highlights for the Three Months Ended March 31, 2023 Key Financial Metrics Three Months Ended March 31, Year over YearChange 2023 2022 GAAP Financial Data:(in thousands, except percentages, unaudited) Technology revenue$47,186 $42,230 12%Professional services revenue$26,682 $25,857 3%Total revenue$73,868 $68,087 8%Loss from operations$(34,914) $(24,347) (43)%Net loss$(33,190) $(22,458) (48)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$32,958 $29,598 11%Adjusted Technology Gross Margin 70% 70% Adjusted Professional Services Gross Profit$5,414 $7,574 (29)%Adjusted Professional Services Gross Margin 20% 29% Total Adjusted Gross Profit$38,372 $37,172 3%Total Adjusted Gross Margin 52% 55% Adjusted EBITDA$4,164 $671 521% ___________________(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 second quarter of 2023, we expect: Total revenue between $70.3 million and $74.3 million, andAdjusted EBITDA between $0.75 million and $4.75 million For the full year of 2023, we expect: Total revenue between $290.0 million and $295.0 million, andAdjusted EBITDA between $9.0 million and $11.0 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, May 9, 2023, 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 Q123.” 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 clients 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 Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO's social media accounts, in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our 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 Q2 and fiscal year 2023. 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 clients or partners; (v) the impact of the challenging macroeconomic environment (including high inflationary and/or high interest rate environments) 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 March 31, 2023 expected to be filed with the SEC on or about May 9, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023. 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 ofMarch 31, As ofDecember 31, 2023 2022 (unaudited) Assets Current assets: Cash and cash equivalents$133,479 $116,312 Short-term investments 223,448 247,178 Accounts receivable, net 61,862 47,970 Prepaid expenses and other assets 15,728 16,335 Total current assets 434,517 427,795 Property and equipment, net 26,441 25,928 Operating lease right-of-use assets 16,161 16,658 Intangible assets, net 84,410 92,189 Goodwill 185,982 185,982 Other assets 4,790 3,734 Total assets$752,301 $752,286 Liabilities and stockholders’ equity Current liabilities: Accounts payable$9,243 $4,424 Accrued liabilities 23,953 19,691 Deferred revenue 65,905 54,961 Operating lease liabilities 3,394 3,434 Total current liabilities 102,495 82,510 Convertible senior notes 226,900 226,523 Deferred revenue, net of current portion 189 105 Operating lease liabilities, net of current portion 17,448 18,017 Other liabilities 123 121 Total liabilities 347,155 327,276 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of March 31, 2023 and December 31, 2022 — — Common stock, $0.001 par value per share, and additional paid in capital; 500,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 55,843,457 and 55,261,922 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 1,437,654 1,424,681 Additional paid-in capital Accumulated deficit (1,032,213) (999,023)Accumulated other comprehensive loss (295) (648)Total stockholders’ equity 405,146 425,010 Total liabilities and stockholders’ equity$752,301 $752,286 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedMarch 31, 2023 2022 (in thousands)Revenue: Technology$47,186 $42,230 Professional services 26,682 25,857 Total revenue 73,868 68,087 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2)(3) 14,727 13,327 Professional services(1)(2)(3) 23,577 20,669 Total cost of revenue, excluding depreciation and amortization 38,304 33,996 Operating expenses: Sales and marketing(1)(2)(3) 18,569 20,818 Research and development(1)(2)(3) 17,082 17,148 General and administrative(1)(2)(3)(4) 23,833 8,823 Depreciation and amortization 10,994 11,649 Total operating expenses 70,478 58,438 Loss from operations (34,914) (24,347)Interest and other expense, net 1,793 (1,662)Loss before income taxes (33,121) (26,009)Income tax provision (benefit)(2) 69 (3,551)Net loss$(33,190) $(22,458)Net loss per share, basic$(0.60) $(0.42)Net loss per share, diluted$(0.60) $(0.54)Weighted-average shares outstanding used in calculating net loss per share, basic 55,485 53,007 Weighted-average shares outstanding used in calculating net loss per share, diluted 55,485 53,215 _______________(1) Includes stock-based compensation expense as follows: Three Months Ended March 31, 2023 2022Stock-Based Compensation Expense:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$416 $589Professional services 1,774 2,167Sales and marketing 5,442 7,013Research and development 2,673 3,090General and administrative 3,579 5,261Total$13,884 $18,120 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended March 31, 2023 2022 Acquisition-related costs (benefit), net:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$71 $106 Professional services 101 219 Sales and marketing 101 397 Research and development 194 558 General and administrative 14 (6,031)Income tax provision (benefit) — (3,600)Total$481 $(8,351) (3) Includes restructuring costs, as follows: Three Months Ended March 31, 2023 2022Restructuring costs:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$12 $—Professional services 434 —Sales and marketing 1,205 —Research and development 286 —General and administrative 118 —Total$2,055 $— (4) Includes litigation costs, as follows: Three Months Ended March 31, 2023 2022Litigation costs:(in thousands)General and administrative$11,664 $—Total$11,664 $— Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Three Months EndedMarch 31, 2023 2022 Cash flows from operating activities Net loss$(33,190) $(22,458)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 13,884 18,120 Depreciation and amortization 10,994 11,649 Change in fair value of contingent consideration liabilities — (8,424)Non-cash operating lease expense 764 819 Investment (discount) premium amortization (1,979) 398 Amortization of debt discount and issuance costs 377 374 Provision for expected credit losses 1,514 200 Deferred tax provision (benefit) 2 (3,598)Other 19 (49)Change in operating assets and liabilities: Accounts receivable, net (15,405) 6,019 Prepaid expenses and other assets (420) 437 Accounts payable, accrued liabilities, and other liabilities 7,709 (4,812)Deferred revenue 11,027 4,106 Contingent consideration liabilities — (741)Operating lease liabilities (876) (882)Net cash (used in) provided by operating activities (5,580) 1,158 Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 107,100 80,960 Purchase of short-term investments (81,070) (56,719)Acquisition of business, net of cash acquired — (18,509)Capitalization of internal-use software (2,864) (3,261)Purchase of intangible assets (98) (463)Purchase of property and equipment (425) (356)Proceeds from the sale of property and equipment 6 4 Net cash provided by investing activities 22,649 1,656 Cash flows from financing activities Proceeds from exercise of stock options 727 1,809 Proceeds from employee stock purchase plan 1,174 1,509 Repurchase of common stock (1,808) — Payments of acquisition-related consideration — (930)Net cash provided by financing activities 93 2,388 Effect of exchange rate changes on cash and cash equivalents 5 (1)Net increase in cash and cash equivalents 17,167 5,201 Cash and cash equivalents at beginning of period 116,312 193,227 Cash and cash equivalents at end of period$133,479 $198,428 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 March 31, 2023 and 2022: Three Months Ended March 31, 2023 (in thousands, except percentages) Technology Professional Services TotalRevenue$47,186 $26,682 $73,868 Cost of revenue, excluding depreciation and amortization (14,727) (23,577) (38,304)Gross profit, excluding depreciation and amortization 32,459 3,105 35,564 Add: Stock-based compensation 416 1,774 2,190 Acquisition-related costs, net(1) 71 101 172 Restructuring costs(2) 12 434 446 Adjusted Gross Profit$32,958 $5,414 $38,372 Gross margin, excluding depreciation and amortization 69% 12% 48%Adjusted Gross Margin 70% 20% 52% _______________(1) Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and ARMUS acquisitions.(2)Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended March 31, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$42,230 $25,857 $68,087 Cost of revenue, excluding depreciation and amortization (13,327) (20,669) (33,996)Gross profit, excluding depreciation and amortization 28,903 5,188 34,091 Add: Stock-based compensation 589 2,167 2,756 Acquisition-related costs, net(1) 106 219 325 Adjusted Gross Profit$29,598 $7,574 $37,172 Gross margin, excluding depreciation and amortization 68% 20% 50%Adjusted Gross Margin 70% 29% 55% ___________________(1)Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and Twistle acquisitions. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) litigation costs, and (vii) restructuring costs. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs and litigation costs allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 (in thousands)Net loss$(33,190) $(22,458)Add: Interest and other (income) expense, net (1,793) 1,662 Income tax provision (benefit) 69 (3,551)Depreciation and amortization 10,994 11,649 Stock-based compensation 13,884 18,120 Acquisition-related costs, net(1) 481 (4,751)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Adjusted EBITDA$4,164 $671 _______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 in our condensed consolidated financial statements. Adjusted Net Income (Loss) Per Share Adjusted Net Income (Loss) is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) litigation costs, (v) restructuring costs, and (vi) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Income (Loss) provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months Ended March 31, 2023 2022 Numerator:(in thousands, except share and per share amounts)Net loss$(33,190) $(22,458)Add: Stock-based compensation 13,884 18,120 Amortization of acquired intangibles 7,780 9,348 Acquisition-related costs, net(1) 481 (8,351)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Non-cash interest expense related to convertible senior notes 377 374 Adjusted Net Income (Loss)$3,051 $(2,967)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 55,484,835 53,006,704 Non-GAAP weighted-average effect of dilutive securities 792,630 — Non-GAAP weighted-average number of shares used in calculating Adjusted Net Income (Loss) per share, diluted 56,277,465 53,006,704 Adjusted Net Income (Loss) per share, basic$0.05 $(0.06)Adjusted Net Income (Loss) per share, diluted$0.05 $(0.06) ______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include 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 2022 acquisition of KPI Ninja. For additional details refer to Notes 1, 2, and 13 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 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, May 09, 2023 (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 March 31, 2023. “In the first quarter of 2023, 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. This financial performance demonstrates our ability to continue to scale our business as we drive toward our long-term profitability goals,” said Dan Burton, CEO of Health Catalyst. “Additionally, I am excited to announce a meaningful expansion of our tech-enabled managed services partnership with our longest-standing client, Allina Health. This expansion, which includes more chart abstraction responsibility, increases Allina’s recurring revenue to now be approximately $11 million per year. We continue to appreciate Allina’s multi-faceted partnership and trust in Health Catalyst since the beginning of our relationship with them nearly 15 years ago, and we are encouraged to see other potential areas of expansion with them in the future.” Financial Highlights for the Three Months Ended March 31, 2023 Key Financial Metrics Three Months Ended March 31, Year over YearChange 2023 2022 GAAP Financial Data:(in thousands, except percentages, unaudited) Technology revenue$47,186 $42,230 12%Professional services revenue$26,682 $25,857 3%Total revenue$73,868 $68,087 8%Loss from operations$(34,914) $(24,347) (43)%Net loss$(33,190) $(22,458) (48)%Other Non-GAAP Financial Data:(1) Adjusted Technology Gross Profit$32,958 $29,598 11%Adjusted Technology Gross Margin 70% 70% Adjusted Professional Services Gross Profit$5,414 $7,574 (29)%Adjusted Professional Services Gross Margin 20% 29% Total Adjusted Gross Profit$38,372 $37,172 3%Total Adjusted Gross Margin 52% 55% Adjusted EBITDA$4,164 $671 521% ___________________(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 second quarter of 2023, we expect: Total revenue between $70.3 million and $74.3 million, andAdjusted EBITDA between $0.75 million and $4.75 million For the full year of 2023, we expect: Total revenue between $290.0 million and $295.0 million, andAdjusted EBITDA between $9.0 million and $11.0 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, May 9, 2023, 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 Q123.” 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 clients 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 Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO's social media accounts, in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our 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 Q2 and fiscal year 2023. 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 clients or partners; (v) the impact of the challenging macroeconomic environment (including high inflationary and/or high interest rate environments) 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 March 31, 2023 expected to be filed with the SEC on or about May 9, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023. 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 ofMarch 31, As ofDecember 31, 2023 2022 (unaudited) Assets Current assets: Cash and cash equivalents$133,479 $116,312 Short-term investments 223,448 247,178 Accounts receivable, net 61,862 47,970 Prepaid expenses and other assets 15,728 16,335 Total current assets 434,517 427,795 Property and equipment, net 26,441 25,928 Operating lease right-of-use assets 16,161 16,658 Intangible assets, net 84,410 92,189 Goodwill 185,982 185,982 Other assets 4,790 3,734 Total assets$752,301 $752,286 Liabilities and stockholders’ equity Current liabilities: Accounts payable$9,243 $4,424 Accrued liabilities 23,953 19,691 Deferred revenue 65,905 54,961 Operating lease liabilities 3,394 3,434 Total current liabilities 102,495 82,510 Convertible senior notes 226,900 226,523 Deferred revenue, net of current portion 189 105 Operating lease liabilities, net of current portion 17,448 18,017 Other liabilities 123 121 Total liabilities 347,155 327,276 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of March 31, 2023 and December 31, 2022 — — Common stock, $0.001 par value per share, and additional paid in capital; 500,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 55,843,457 and 55,261,922 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 1,437,654 1,424,681 Additional paid-in capital Accumulated deficit (1,032,213) (999,023)Accumulated other comprehensive loss (295) (648)Total stockholders’ equity 405,146 425,010 Total liabilities and stockholders’ equity$752,301 $752,286 Condensed Consolidated Statements of Operations(in thousands, except per share data, unaudited) Three Months EndedMarch 31, 2023 2022 (in thousands)Revenue: Technology$47,186 $42,230 Professional services 26,682 25,857 Total revenue 73,868 68,087 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2)(3) 14,727 13,327 Professional services(1)(2)(3) 23,577 20,669 Total cost of revenue, excluding depreciation and amortization 38,304 33,996 Operating expenses: Sales and marketing(1)(2)(3) 18,569 20,818 Research and development(1)(2)(3) 17,082 17,148 General and administrative(1)(2)(3)(4) 23,833 8,823 Depreciation and amortization 10,994 11,649 Total operating expenses 70,478 58,438 Loss from operations (34,914) (24,347)Interest and other expense, net 1,793 (1,662)Loss before income taxes (33,121) (26,009)Income tax provision (benefit)(2) 69 (3,551)Net loss$(33,190) $(22,458)Net loss per share, basic$(0.60) $(0.42)Net loss per share, diluted$(0.60) $(0.54)Weighted-average shares outstanding used in calculating net loss per share, basic 55,485 53,007 Weighted-average shares outstanding used in calculating net loss per share, diluted 55,485 53,215 _______________(1) Includes stock-based compensation expense as follows: Three Months Ended March 31, 2023 2022Stock-Based Compensation Expense:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$416 $589Professional services 1,774 2,167Sales and marketing 5,442 7,013Research and development 2,673 3,090General and administrative 3,579 5,261Total$13,884 $18,120 (2) Includes acquisition-related costs (benefit), net, as follows: Three Months Ended March 31, 2023 2022 Acquisition-related costs (benefit), net:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$71 $106 Professional services 101 219 Sales and marketing 101 397 Research and development 194 558 General and administrative 14 (6,031)Income tax provision (benefit) — (3,600)Total$481 $(8,351) (3) Includes restructuring costs, as follows: Three Months Ended March 31, 2023 2022Restructuring costs:(in thousands)Cost of revenue, excluding depreciation and amortization: Technology$12 $—Professional services 434 —Sales and marketing 1,205 —Research and development 286 —General and administrative 118 —Total$2,055 $— (4) Includes litigation costs, as follows: Three Months Ended March 31, 2023 2022Litigation costs:(in thousands)General and administrative$11,664 $—Total$11,664 $— Condensed Consolidated Statements of Cash Flows(in thousands, unaudited) Three Months EndedMarch 31, 2023 2022 Cash flows from operating activities Net loss$(33,190) $(22,458)Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense 13,884 18,120 Depreciation and amortization 10,994 11,649 Change in fair value of contingent consideration liabilities — (8,424)Non-cash operating lease expense 764 819 Investment (discount) premium amortization (1,979) 398 Amortization of debt discount and issuance costs 377 374 Provision for expected credit losses 1,514 200 Deferred tax provision (benefit) 2 (3,598)Other 19 (49)Change in operating assets and liabilities: Accounts receivable, net (15,405) 6,019 Prepaid expenses and other assets (420) 437 Accounts payable, accrued liabilities, and other liabilities 7,709 (4,812)Deferred revenue 11,027 4,106 Contingent consideration liabilities — (741)Operating lease liabilities (876) (882)Net cash (used in) provided by operating activities (5,580) 1,158 Cash flows from investing activities Proceeds from the sale and maturity of short-term investments 107,100 80,960 Purchase of short-term investments (81,070) (56,719)Acquisition of business, net of cash acquired — (18,509)Capitalization of internal-use software (2,864) (3,261)Purchase of intangible assets (98) (463)Purchase of property and equipment (425) (356)Proceeds from the sale of property and equipment 6 4 Net cash provided by investing activities 22,649 1,656 Cash flows from financing activities Proceeds from exercise of stock options 727 1,809 Proceeds from employee stock purchase plan 1,174 1,509 Repurchase of common stock (1,808) — Payments of acquisition-related consideration — (930)Net cash provided by financing activities 93 2,388 Effect of exchange rate changes on cash and cash equivalents 5 (1)Net increase in cash and cash equivalents 17,167 5,201 Cash and cash equivalents at beginning of period 116,312 193,227 Cash and cash equivalents at end of period$133,479 $198,428 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 March 31, 2023 and 2022: Three Months Ended March 31, 2023 (in thousands, except percentages) Technology Professional Services TotalRevenue$47,186 $26,682 $73,868 Cost of revenue, excluding depreciation and amortization (14,727) (23,577) (38,304)Gross profit, excluding depreciation and amortization 32,459 3,105 35,564 Add: Stock-based compensation 416 1,774 2,190 Acquisition-related costs, net(1) 71 101 172 Restructuring costs(2) 12 434 446 Adjusted Gross Profit$32,958 $5,414 $38,372 Gross margin, excluding depreciation and amortization 69% 12% 48%Adjusted Gross Margin 70% 20% 52% _______________(1) Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and ARMUS acquisitions.(2)Restructuring costs include severance and other team member costs from workforce reductions. Three Months Ended March 31, 2022 (in thousands, except percentages) Technology Professional Services TotalRevenue$42,230 $25,857 $68,087 Cost of revenue, excluding depreciation and amortization (13,327) (20,669) (33,996)Gross profit, excluding depreciation and amortization 28,903 5,188 34,091 Add: Stock-based compensation 589 2,167 2,756 Acquisition-related costs, net(1) 106 219 325 Adjusted Gross Profit$29,598 $7,574 $37,172 Gross margin, excluding depreciation and amortization 68% 20% 50%Adjusted Gross Margin 70% 29% 55% ___________________(1)Acquisition-related costs, net include deferred retention expenses following the KPI Ninja and Twistle acquisitions. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) litigation costs, and (vii) restructuring costs. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs and litigation costs allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 (in thousands)Net loss$(33,190) $(22,458)Add: Interest and other (income) expense, net (1,793) 1,662 Income tax provision (benefit) 69 (3,551)Depreciation and amortization 10,994 11,649 Stock-based compensation 13,884 18,120 Acquisition-related costs, net(1) 481 (4,751)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Adjusted EBITDA$4,164 $671 _______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 in our condensed consolidated financial statements. Adjusted Net Income (Loss) Per Share Adjusted Net Income (Loss) is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from acquisitions, (iv) litigation costs, (v) restructuring costs, and (vi) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Income (Loss) provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. Three Months Ended March 31, 2023 2022 Numerator:(in thousands, except share and per share amounts)Net loss$(33,190) $(22,458)Add: Stock-based compensation 13,884 18,120 Amortization of acquired intangibles 7,780 9,348 Acquisition-related costs, net(1) 481 (8,351)Litigation costs(2) 11,664 — Restructuring costs(3) 2,055 — Non-cash interest expense related to convertible senior notes 377 374 Adjusted Net Income (Loss)$3,051 $(2,967)Denominator: Weighted-average number of shares used in calculating net loss per share, basic 55,484,835 53,006,704 Non-GAAP weighted-average effect of dilutive securities 792,630 — Non-GAAP weighted-average number of shares used in calculating Adjusted Net Income (Loss) per share, diluted 56,277,465 53,006,704 Adjusted Net Income (Loss) per share, basic$0.05 $(0.06)Adjusted Net Income (Loss) per share, diluted$0.05 $(0.06) ______________(1)Current year acquisition-related costs, net includes deferred retention expenses, while the prior year acquisition-related costs, net include 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 2022 acquisition of KPI Ninja. For additional details refer to Notes 1, 2, and 13 in our condensed consolidated financial statements.(2)Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Notes 8 and 14 in our condensed consolidated financial statements.(3)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 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
