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 and year ended December 31, 2023.
“For the full year 2023, I am pleased to share
that we achieved strong performance across our business, including
total revenue of $295.9 million, with this result beating the
midpoint of our most recent guidance, and Adjusted EBITDA of $11.0
million, with this result in line with the midpoint of our most
recent guidance. Additionally, I am pleased by our meaningful 2023
Adjusted EBITDA margin progress relative to 2022, and I am excited
that we anticipate material year-over-year Adjusted EBITDA growth
again in 2024, at a rate of approximately 125%+,” said Dan Burton,
CEO of Health Catalyst.
“Additionally, in connection with our annual
planning process, we are enacting multiple Leadership level
changes. First, Bryan Hunt will be transitioning from CFO to a
Strategic Advisor role, effective March 1, 2024. I would like to
express my heartfelt gratitude to Bryan for his countless
contributions to Health Catalyst’s growth and success over the last
ten years, including his service as our CFO, helping us navigate
through a global pandemic, record high inflation, and a period of
tremendous financial pressure for our health system clients. Bryan
has been an extraordinary leader and partner to me and to our Board
of Directors, and we are grateful for his dedication,
professionalism and commitment to the company and its mission. I am
also pleased to share that Jason Alger will begin as Health
Catalyst’s CFO, effective March 1, 2024. Jason has been with Health
Catalyst for more than ten years, having contributed significantly
during that time, including most recently as our Chief Accounting
Officer. Prior to joining Health Catalyst, Jason held various roles
at Ernst & Young. My fellow board members and I, along with our
finance organization, have the utmost confidence in and respect for
Jason. Also, effective March 1, 2024, Dan LeSueur will be promoted
to Health Catalyst’s Chief Operating Officer role, with
responsibilities spanning both our Technology and Professional
Services business units. Dan brings a wealth of experience to this
role, having had leadership responsibility across many functions
during his twelve years at Health Catalyst, most recently as the
Senior Vice President and General Manager of our Professional
Services Business Unit. I am thrilled to have someone with Dan’s
breadth and depth of expertise to lead this important strategic
function as Health Catalyst continues on its maturation path,
focusing on operational excellence to enable scalable growth and
profitability.”
Financial Highlights for the Three and
Twelve Months Ended December 31, 2023Key
Financial Measures
|
Three Months EndedDecember
31, |
|
Year over Year Change |
|
Twelve Months EndedDecember
31, |
|
Year over Year Change |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
2023 |
|
|
|
2022 |
|
|
GAAP Financial
Measures: |
(in thousands, except percentages) |
|
(in thousands, except percentages) |
|
|
Technology revenue |
$ |
47,100 |
|
|
$ |
44,664 |
|
|
5 |
% |
|
$ |
187,583 |
|
|
$ |
176,288 |
|
|
6 |
% |
Professional services
revenue |
$ |
27,984 |
|
|
$ |
24,498 |
|
|
14 |
% |
|
$ |
108,355 |
|
|
$ |
99,948 |
|
|
8 |
% |
Total revenue |
$ |
75,084 |
|
|
$ |
69,162 |
|
|
9 |
% |
|
$ |
295,938 |
|
|
$ |
276,236 |
|
|
7 |
% |
Loss from operations |
$ |
(32,785 |
) |
|
$ |
(36,745 |
) |
|
11 |
% |
|
$ |
(126,897 |
) |
|
$ |
(140,005 |
) |
|
9 |
% |
Net loss |
$ |
(30,312 |
) |
|
$ |
(35,782 |
) |
|
15 |
% |
|
$ |
(118,147 |
) |
|
$ |
(137,403 |
) |
|
14 |
% |
Non-GAAP Financial
Measures:(1) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Technology Gross
Profit |
$ |
31,388 |
|
|
$ |
30,725 |
|
|
2 |
% |
|
$ |
127,744 |
|
|
$ |
122,284 |
|
|
4 |
% |
Adjusted Technology Gross
Margin |
|
67 |
% |
|
|
69 |
% |
|
|
|
|
68 |
% |
|
|
69 |
% |
|
|
Adjusted Professional Services
Gross Profit |
$ |
3,305 |
|
|
$ |
4,325 |
|
|
(24 |
)% |
|
$ |
16,316 |
|
|
$ |
23,565 |
|
|
(31 |
)% |
Adjusted Professional Services
Gross Margin |
|
12 |
% |
|
|
18 |
% |
|
|
|
|
15 |
% |
|
|
24 |
% |
|
|
Total Adjusted Gross
Profit |
$ |
34,693 |
|
|
$ |
35,050 |
|
|
(1 |
)% |
|
$ |
144,060 |
|
|
$ |
145,849 |
|
|
(1 |
)% |
Total Adjusted Gross
Margin |
|
46 |
% |
|
|
51 |
% |
|
|
|
|
49 |
% |
|
|
53 |
% |
|
|
Adjusted EBITDA |
$ |
1,352 |
|
|
$ |
(603 |
) |
|
324 |
% |
|
$ |
11,021 |
|
|
$ |
(2,487 |
) |
|
543 |
% |
________________________
(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.
Other Key Metrics
|
As of December 31, |
|
2023 |
|
2022 |
|
2021 |
DOS Subscription
Clients |
109 |
|
|
98 |
|
|
90 |
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
2021 |
Dollar-based Retention
Rate |
100 |
% |
|
100 |
% |
|
112 |
% |
|
|
|
|
|
|
|
|
|
Financial Outlook
Health Catalyst provides forward-looking guidance on total
revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP
measure.
For the first quarter of 2024, we expect:
- Total revenue between $72.5 million and $76.5 million, and
- Adjusted EBITDA between $2.0 million
and $4.0 million
For the full year of 2024, we expect:
- Total revenue between $304 million and $312 million, and
- Adjusted EBITDA between $24 million
and $26 million
We have not reconciled guidance for Adjusted
EBITDA to net loss, the most directly comparable GAAP measure, and
have not provided forward-looking guidance for net loss, because
there are items that may impact net loss, including stock-based
compensation, that are not within our control or cannot be
reasonably forecasted.
Quarterly Conference Call Details
The company will host a conference call to
review the results today, Thursday, February 22, 2024 at 5:00
p.m. E.T. The conference call can be accessed by dialing (800)
267-6316 for U.S. participants, or (203) 518-9783 for international
participants, and referencing conference ID “HCAT Q423.” 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 Q1 and
fiscal year 2024. 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) macroeconomic challenges (including high
inflationary and/or high interest rate environments, or market
volatility caused by bank failures and measures taken in response
thereto) and any new public health crisis; 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, 2023 that was
filed with the SEC on November 6, 2023 and the Annual Report on
Form 10-K for the year ended December 31, 2023 expected to be
filed with the SEC on or about February 22, 2024. All
information provided in this release and in the attachments is as
of the date hereof, and we undertake no duty to update or revise
this information unless required by law.
Condensed Consolidated Balance
Sheets(in thousands, except share and per share data,
unaudited)
|
As of December 31, |
|
|
2023 |
|
|
|
2022 |
|
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
106,276 |
|
|
$ |
116,312 |
|
Short-term investments |
|
211,452 |
|
|
|
247,178 |
|
Accounts receivable, net |
|
60,290 |
|
|
|
47,970 |
|
Prepaid expenses and other assets |
|
15,379 |
|
|
|
16,335 |
|
Total current assets |
|
393,397 |
|
|
|
427,795 |
|
Property and equipment,
net |
|
25,712 |
|
|
|
25,928 |
|
Operating lease right-of-use
assets |
|
13,927 |
|
|
|
16,658 |
|
Intangible assets, net |
|
73,384 |
|
|
|
92,189 |
|
Goodwill |
|
190,652 |
|
|
|
185,982 |
|
Other assets |
|
4,742 |
|
|
|
3,734 |
|
Total assets |
$ |
701,814 |
|
|
$ |
752,286 |
|
Liabilities and
stockholders’ equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
6,641 |
|
|
$ |
4,424 |
|
Accrued liabilities |
|
23,282 |
|
|
|
19,691 |
|
Deferred revenue |
|
55,753 |
|
|
|
54,961 |
|
Operating lease liabilities |
|
3,358 |
|
|
|
3,434 |
|
Total current liabilities |
|
89,034 |
|
|
|
82,510 |
|
Convertible senior notes |
|
228,034 |
|
|
|
226,523 |
|
Deferred revenue, net of
current portion |
|
77 |
|
|
|
105 |
|
Operating lease liabilities,
net of current portion |
|
17,676 |
|
|
|
18,017 |
|
Other liabilities |
|
74 |
|
|
|
121 |
|
Total liabilities |
|
334,895 |
|
|
|
327,276 |
|
Commitments and
contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock, $0.001 par value per share and additional paid-in
capital; 25,000,000 shares authorized and no shares issued and
outstanding as of December 31, 2023 and 2022
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value per share, and additional paid-in
capital; 500,000,000 shares authorized as of December 31, 2023
and 2022; 58,295,491 and 55,261,922 shares issued and outstanding
as of December 31, 2023 and 2022,
respectively |
|
1,484,056 |
|
|
|
1,424,681 |
|
Accumulated
deficit |
|
(1,117,170 |
) |
|
|
(999,023 |
) |
Accumulated other
comprehensive income
(loss) |
|
33 |
|
|
|
(648 |
) |
Total stockholders’ equity
|
|
366,919 |
|
|
|
425,010 |
|
Total liabilities and
stockholders’
equity |
$ |
701,814 |
|
|
$ |
752,286 |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations(in thousands, except per share data,
unaudited)
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue: |
|
|
|
|
|
Technology |
$ |
47,100 |
|
|
$ |
44,664 |
|
|
$ |
187,583 |
|
|
$ |
176,288 |
|
Professional services |
|
27,984 |
|
|
|
24,498 |
|
|
|
108,355 |
|
|
|
99,948 |
|
Total revenue |
|
75,084 |
|
|
|
69,162 |
|
|
|
295,938 |
|
|
|
276,236 |
|
Cost of revenue, excluding depreciation and amortization: |
|
|
|
|
|
|
|
Technology(1)(2)(3) |
|
16,719 |
|
|
|
14,747 |
|
|
|
62,474 |
|
|
|
56,642 |
|
Professional services(1)(2)(3) |
|
27,857 |
|
|
|
23,359 |
|
|
|
101,631 |
|
|
|
86,407 |
|
Total cost of revenue, excluding depreciation and amortization |
|
44,576 |
|
|
|
38,106 |
|
|
|
164,105 |
|
|
|
143,049 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing(1)(2)(3) |
|
17,271 |
|
|
|
20,373 |
|
|
|
67,321 |
|
|
|
87,514 |
|
Research and development(1)(2)(3) |
|
20,288 |
|
|
|
19,614 |
|
|
|
72,627 |
|
|
|
75,680 |
|
General and administrative(1)(2)(3)(4)(5) |
|
15,430 |
|
|
|
16,150 |
|
|
|
76,559 |
|
|
|
61,701 |
|
Depreciation and amortization |
|
10,304 |
|
|
|
11,664 |
|
|
|
42,223 |
|
|
|
48,297 |
|
Total operating expenses |
|
63,293 |
|
|
|
67,801 |
|
|
|
258,730 |
|
|
|
273,192 |
|
Loss from operations |
|
(32,785 |
) |
|
|
(36,745 |
) |
|
|
(126,897 |
) |
|
|
(140,005 |
) |
Loss on extinguishment of
debt |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Interest and other expense,
net |
|
2,616 |
|
|
|
1,022 |
|
|
|
9,106 |
|
|
|
(1,678 |
) |
Loss before income taxes |
|
(30,169 |
) |
|
|
(35,723 |
) |
|
|
(117,791 |
) |
|
|
(141,683 |
) |
Income tax provision
(benefit)(2) |
|
143 |
|
|
|
59 |
|
|
|
356 |
|
|
|
(4,280 |
) |
Net loss |
$ |
(30,312 |
) |
|
$ |
(35,782 |
) |
|
$ |
(118,147 |
) |
|
$ |
(137,403 |
) |
Net loss per share, basic |
$ |
(0.53 |
) |
|
$ |
(0.66 |
) |
|
$ |
(2.09 |
) |
|
$ |
(2.56 |
) |
Net loss per share, diluted |
$ |
(0.53 |
) |
|
$ |
(0.66 |
) |
|
$ |
(2.09 |
) |
|
$ |
(2.63 |
) |
Weighted-average shares outstanding used in calculating net loss
per share, basic |
|
57,476 |
|
|
|
54,496 |
|
|
|
56,418 |
|
|
|
53,722 |
|
Weighted-average shares outstanding used in calculating net loss
per share, diluted |
|
57,476 |
|
|
|
54,496 |
|
|
|
56,418 |
|
|
|
54,080 |
|
_______________(1) Includes stock-based
compensation expense as follows:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Stock-Based
Compensation Expense: |
(in thousands) |
|
(in thousands) |
Cost of revenue, excluding
depreciation and amortization: |
|
|
|
|
|
|
|
Technology |
$ |
458 |
|
$ |
495 |
|
$ |
1,866 |
|
$ |
2,058 |
Professional
services |
|
1,687 |
|
|
2,148 |
|
|
7,369 |
|
|
8,230 |
Sales and
marketing |
|
4,933 |
|
|
7,157 |
|
|
20,982 |
|
|
28,082 |
Research and
development |
|
2,536 |
|
|
3,295 |
|
|
11,213 |
|
|
12,938 |
General and
administrative |
|
3,397 |
|
|
5,653 |
|
|
14,326 |
|
|
20,796 |
Total |
$ |
13,011 |
|
$ |
18,748 |
|
$ |
55,756 |
|
$ |
72,104 |
(2) Includes acquisition-related costs, net as follows:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Acquisition-related
costs, net: |
(in thousands) |
|
(in thousands) |
Cost of revenue, excluding
depreciation and amortization: |
|
|
|
|
|
|
|
Technology |
$ |
65 |
|
$ |
84 |
|
$ |
273 |
|
$ |
351 |
|
Professional
services |
|
93 |
|
|
146 |
|
|
391 |
|
|
655 |
|
Sales and
marketing |
|
393 |
|
|
337 |
|
|
697 |
|
|
1,894 |
|
Research and
development |
|
200 |
|
|
687 |
|
|
787 |
|
|
3,045 |
|
General and
administrative |
|
1,904 |
|
|
452 |
|
|
3,609 |
|
|
(1,051 |
) |
Income tax
benefit |
|
— |
|
|
— |
|
|
— |
|
|
(4,533 |
) |
Total |
$ |
2,655 |
|
$ |
1,706 |
|
$ |
5,757 |
|
$ |
361 |
|
|
|
|
|
|
|
|
|
(3) Includes restructuring costs, as follows:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Restructuring
costs: |
(in thousands) |
|
(in thousands) |
Cost of revenue, excluding
depreciation and amortization: |
|
|
|
|
|
|
|
Technology |
$ |
484 |
|
$ |
229 |
|
$ |
496 |
|
$ |
229 |
Professional
services |
|
1,398 |
|
|
892 |
|
|
1,832 |
|
|
1,139 |
Sales and
marketing |
|
1,210 |
|
|
1,464 |
|
|
2,415 |
|
|
3,023 |
Research and
development |
|
3,051 |
|
|
1,153 |
|
|
3,337 |
|
|
3,410 |
General and
administrative |
|
624 |
|
|
188 |
|
|
742 |
|
|
624 |
Total |
$ |
6,767 |
|
$ |
3,926 |
|
$ |
8,822 |
|
$ |
8,425 |
(4) Includes litigation costs, as follows:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Litigation
costs: |
(in thousands) |
|
(in thousands) |
General and
administrative |
$ |
— |
|
$ |
— |
|
$ |
21,279 |
|
$ |
— |
(5) Includes non-recurring lease-related charges, as
follows:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
Non-recurring
lease-related charges: |
(in thousands) |
|
(in thousands) |
General and
administrative |
$ |
1,400 |
|
$ |
98 |
|
$ |
4,081 |
|
$ |
3,798 |
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Cash
Flows(in thousands, unaudited)
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(118,147 |
) |
|
$ |
(137,403 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
Stock-based compensation expense |
|
55,756 |
|
|
|
72,104 |
|
Depreciation and amortization |
|
42,223 |
|
|
|
48,297 |
|
Investment (discount accretion) and premium amortization |
|
(9,720 |
) |
|
|
(2,236 |
) |
Impairment of long-lived assets |
|
4,081 |
|
|
|
5,023 |
|
Non-cash operating lease expense |
|
2,990 |
|
|
|
3,231 |
|
Provision for expected credit losses |
|
1,821 |
|
|
|
691 |
|
Amortization of debt discount and issuance costs |
|
1,511 |
|
|
|
1,500 |
|
Deferred tax provision (benefit) |
|
8 |
|
|
|
(4,523 |
) |
Change in fair value of contingent consideration liabilities |
|
— |
|
|
|
(4,668 |
) |
Payment of acquisition-related contingent consideration |
|
— |
|
|
|
(3,234 |
) |
Other |
|
67 |
|
|
|
(145 |
) |
Change in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(13,663 |
) |
|
|
788 |
|
Prepaid expenses and other assets |
|
164 |
|
|
|
(478 |
) |
Accounts payable, accrued liabilities, and other liabilities |
|
4,868 |
|
|
|
(4,702 |
) |
Deferred revenue |
|
(1,487 |
) |
|
|
(5,997 |
) |
Operating lease liabilities |
|
(3,552 |
) |
|
|
(3,518 |
) |
Net cash used in operating
activities |
|
(33,080 |
) |
|
|
(35,270 |
) |
Cash flows from
investing activities |
|
|
|
Proceeds from the sale and
maturity of short-term investments |
|
336,801 |
|
|
|
315,171 |
|
Purchase of short-term
investments |
|
(290,836 |
) |
|
|
(308,961 |
) |
Capitalization of internal use
software |
|
(11,957 |
) |
|
|
(12,987 |
) |
Acquisition of businesses, net
of cash acquired |
|
(11,392 |
) |
|
|
(27,846 |
) |
Purchases of property and
equipment |
|
(1,236 |
) |
|
|
(2,167 |
) |
Purchase of intangible
assets |
|
(1,118 |
) |
|
|
(2,260 |
) |
Proceeds from the sale of
property and equipment |
|
31 |
|
|
|
29 |
|
Net cash provided by (used in)
investing activities |
|
20,293 |
|
|
|
(39,021 |
) |
Cash flows from
financing activities |
|
|
|
Proceeds from employee stock
purchase plan |
|
3,588 |
|
|
|
3,153 |
|
Repurchase of common
stock |
|
(1,808 |
) |
|
|
(8,393 |
) |
Proceeds from exercise of
stock options |
|
950 |
|
|
|
3,969 |
|
Payments of
acquisition-related consideration |
|
— |
|
|
|
(1,342 |
) |
Net cash provided by (used in)
financing activities |
|
2,730 |
|
|
|
(2,613 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
21 |
|
|
|
(11 |
) |
Net decrease in cash and cash
equivalents |
|
(10,036 |
) |
|
|
(76,915 |
) |
|
|
|
|
Cash and cash equivalents at
beginning of period |
|
116,312 |
|
|
|
193,227 |
|
Cash and cash equivalents at
end of period |
$ |
106,276 |
|
|
$ |
116,312 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
To supplement our financial information
presented in accordance with GAAP, we believe certain non-GAAP
financial measures, including Adjusted Gross Profit, Adjusted Gross
Margin, Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted
Net Income (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 financial
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
certain other non-recurring operating 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 and twelve months ended December 31,
2023 and 2022:
|
Three Months Ended December 31, 2023 |
|
(in thousands, except percentages) |
|
Technology |
|
Professional Services |
|
Total |
Revenue |
$ |
47,100 |
|
|
$ |
27,984 |
|
|
$ |
75,084 |
|
Cost of revenue, excluding
depreciation and amortization |
|
(16,719 |
) |
|
|
(27,857 |
) |
|
|
(44,576 |
) |
Gross profit, excluding
depreciation and amortization |
|
30,381 |
|
|
|
127 |
|
|
|
30,508 |
|
Add: |
|
|
|
|
|
Stock-based compensation |
|
458 |
|
|
|
1,687 |
|
|
|
2,145 |
|
Acquisition-related costs, net(1) |
|
65 |
|
|
|
93 |
|
|
|
158 |
|
Restructuring costs(2) |
|
484 |
|
|
|
1,398 |
|
|
|
1,882 |
|
Adjusted Gross Profit |
$ |
31,388 |
|
|
$ |
3,305 |
|
|
$ |
34,693 |
|
Gross margin, excluding
depreciation and amortization |
|
65 |
% |
|
|
— |
% |
|
|
41 |
% |
Adjusted Gross Margin |
|
67 |
% |
|
|
12 |
% |
|
|
46 |
% |
___________________
(1) Acquisition-related costs, net include deferred retention
expenses following the ARMUS and KPI Ninja acquisitions.(2)
Restructuring costs include severance and other team member costs
from workforce reductions.
|
Three Months Ended December 31, 2022 |
|
(in thousands, except percentages) |
|
Technology |
|
Professional Services |
|
Total |
Revenue |
$ |
44,664 |
|
|
$ |
24,498 |
|
|
$ |
69,162 |
|
Cost of revenue, excluding
depreciation and amortization |
|
(14,747 |
) |
|
|
(23,359 |
) |
|
|
(38,106 |
) |
Gross profit, excluding
depreciation and amortization |
|
29,917 |
|
|
|
1,139 |
|
|
|
31,056 |
|
Add: |
|
|
|
|
|
Stock-based compensation |
|
495 |
|
|
|
2,148 |
|
|
|
2,643 |
|
Acquisition-related costs, net(1) |
|
84 |
|
|
|
146 |
|
|
|
230 |
|
Restructuring costs(2) |
|
229 |
|
|
|
892 |
|
|
|
1,121 |
|
Adjusted Gross Profit |
$ |
30,725 |
|
|
$ |
4,325 |
|
|
$ |
35,050 |
|
Gross margin, excluding
depreciation and amortization |
|
67 |
% |
|
|
5 |
% |
|
|
45 |
% |
Adjusted Gross Margin |
|
69 |
% |
|
|
18 |
% |
|
|
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.
|
Twelve Months Ended December 31, 2023 |
|
(in thousands, except percentages) |
|
Technology |
|
Professional Services |
|
Total |
Revenue |
$ |
187,583 |
|
|
$ |
108,355 |
|
|
$ |
295,938 |
|
Cost of revenue, excluding
depreciation and amortization |
|
(62,474 |
) |
|
|
(101,631 |
) |
|
|
(164,105 |
) |
Gross profit, excluding
depreciation and amortization |
|
125,109 |
|
|
|
6,724 |
|
|
|
131,833 |
|
Add: |
|
|
|
|
|
Stock-based compensation |
|
1,866 |
|
|
|
7,369 |
|
|
|
9,235 |
|
Acquisition-related costs, net(1) |
|
273 |
|
|
|
391 |
|
|
|
664 |
|
Restructuring costs(2) |
|
496 |
|
|
|
1,832 |
|
|
|
2,328 |
|
Adjusted Gross Profit |
$ |
127,744 |
|
|
$ |
16,316 |
|
|
$ |
144,060 |
|
Gross margin, excluding
depreciation and amortization |
|
67 |
% |
|
|
6 |
% |
|
|
45 |
% |
Adjusted Gross Margin |
|
68 |
% |
|
|
15 |
% |
|
|
49 |
% |
___________________(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.
|
Twelve Months Ended December 31, 2022 |
|
(in thousands, except percentages) |
|
Technology |
|
ProfessionalServices |
|
Total |
Revenue |
$ |
176,288 |
|
|
$ |
99,948 |
|
|
$ |
276,236 |
|
Cost of revenue, excluding
depreciation and amortization |
|
(56,642 |
) |
|
|
(86,407 |
) |
|
|
(143,049 |
) |
Gross profit, excluding
depreciation and amortization |
|
119,646 |
|
|
|
13,541 |
|
|
|
133,187 |
|
Add: |
|
|
|
|
|
Stock-based compensation |
|
2,058 |
|
|
|
8,230 |
|
|
|
10,288 |
|
Acquisition-related costs, net(1) |
|
351 |
|
|
|
655 |
|
|
|
1,006 |
|
Restructuring costs(2) |
|
229 |
|
|
|
1,139 |
|
|
|
1,368 |
|
Adjusted Gross Profit |
$ |
122,284 |
|
|
$ |
23,565 |
|
|
$ |
145,849 |
|
Gross margin, excluding
depreciation and amortization |
|
68 |
% |
|
|
14 |
% |
|
|
48 |
% |
Adjusted Gross Margin |
|
69 |
% |
|
|
24 |
% |
|
|
53 |
% |
__________________ (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.
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, including the fair change in value
of contingent consideration liabilities for potential earn-out
payments, (vi) litigation costs, (vii) restructuring costs, and
(viii) 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 that excluding
restructuring costs, litigation costs, and non-recurring
lease-related charges allows for more meaningful comparisons
between operating results from period to period as this is 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 and
twelve months ended December 31, 2023 and 2022:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in thousands) |
|
(in thousands) |
Net loss |
$ |
(30,312 |
) |
|
$ |
(35,782 |
) |
|
$ |
(118,147 |
) |
|
$ |
(137,403 |
) |
Add: |
|
|
|
|
|
|
|
Interest and other (income) expense, net |
|
(2,616 |
) |
|
|
(1,022 |
) |
|
|
(9,106 |
) |
|
|
1,678 |
|
Income tax provision (benefit) |
|
143 |
|
|
|
59 |
|
|
|
356 |
|
|
|
(4,280 |
) |
Depreciation and amortization |
|
10,304 |
|
|
|
11,664 |
|
|
|
42,223 |
|
|
|
48,297 |
|
Stock-based compensation |
|
13,011 |
|
|
|
18,748 |
|
|
|
55,756 |
|
|
|
72,104 |
|
Acquisition-related costs, net(1) |
|
2,655 |
|
|
|
1,706 |
|
|
|
5,757 |
|
|
|
4,894 |
|
Litigation costs(2) |
|
— |
|
|
|
— |
|
|
|
21,279 |
|
|
|
— |
|
Restructuring costs(3) |
|
6,767 |
|
|
|
3,926 |
|
|
|
8,822 |
|
|
|
8,425 |
|
Non-recurring lease-related charges(4) |
|
1,400 |
|
|
|
98 |
|
|
|
4,081 |
|
|
|
3,798 |
|
Adjusted EBITDA |
$ |
1,352 |
|
|
$ |
(603 |
) |
|
$ |
11,021 |
|
|
$ |
(2,487 |
) |
__________________(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 Notes 1, 2, and
7 in our 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 Note 16 in
our consolidated financial statements.(3) Restructuring costs
include severance and other team member costs from workforce
reductions, impairment of discontinued capitalized software
projects, and other miscellaneous charges. For additional details,
refer to Note 11 in our consolidated financial statements.(4)
Non-recurring lease-related charges includes lease-related
impairment charges for the subleased portion of our corporate
headquarters. For additional details refer to Note 9 in our
consolidated financial statements.Adjusted Net Income
(Loss) and 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
deferred tax valuation allowance release from acquisitions, (iv)
litigation costs, (v) restructuring costs, (vi) non-recurring
lease-related charges, and (vii) 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. The following
is a reconciliation of our net loss, the most directly comparable
GAAP financial measure, to Adjusted Net Income (Loss), for the
three and twelve months ended December 31, 2023 and 2022:
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Numerator: |
(in thousands, except share and per share
amounts) |
Net loss |
$ |
(30,312 |
) |
|
$ |
(35,782 |
) |
|
$ |
(118,147 |
) |
|
$ |
(137,403 |
) |
Add: |
|
|
|
|
|
|
|
Stock-based compensation |
|
13,011 |
|
|
|
18,748 |
|
|
|
55,756 |
|
|
|
72,104 |
|
Amortization of acquired intangibles |
|
7,243 |
|
|
|
8,464 |
|
|
|
29,636 |
|
|
|
37,188 |
|
Acquisition-related costs, net(1) |
|
2,655 |
|
|
|
1,706 |
|
|
|
5,757 |
|
|
|
361 |
|
Litigation costs(2) |
|
— |
|
|
|
— |
|
|
|
21,279 |
|
|
|
— |
|
Restructuring costs(3) |
|
6,767 |
|
|
|
3,926 |
|
|
|
8,822 |
|
|
|
8,425 |
|
Non-recurring lease-related charges(4) |
|
1,400 |
|
|
|
98 |
|
|
|
4,081 |
|
|
|
3,798 |
|
Non-cash interest expense related to convertible senior notes |
|
379 |
|
|
|
376 |
|
|
|
1,511 |
|
|
|
1,500 |
|
Adjusted Net Income (Loss) |
$ |
1,143 |
|
|
$ |
(2,464 |
) |
|
$ |
8,695 |
|
|
$ |
(14,027 |
) |
Denominator: |
|
|
|
|
|
|
|
Weighted-average number of shares used in calculating net loss per
share, basic |
|
57,476,187 |
|
|
|
54,496,128 |
|
|
|
56,418,397 |
|
|
|
53,721,702 |
|
Non-GAAP weighted-average effect of dilutive securities |
|
283,805 |
|
|
|
— |
|
|
|
666,488 |
|
|
|
— |
|
Non-GAAP weighted-average number of shares used in calculating
Adjusted Net Income (Loss) per share, diluted |
|
57,759,992 |
|
|
|
54,496,128 |
|
|
|
57,084,885 |
|
|
|
53,721,702 |
|
|
|
|
|
|
|
|
|
Adjusted Net Income (Loss) per share, basic |
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
0.15 |
|
|
$ |
(0.26 |
) |
Adjusted Net Income (Loss) per share, diluted |
$ |
0.02 |
|
|
$ |
(0.05 |
) |
|
$ |
0.15 |
|
|
$ |
(0.26 |
) |
______________(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, 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 Notes 1, 2, 7, and 15
in our 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 Note 16 in
our consolidated financial statements.(3) Restructuring costs
include severance and other team member costs from workforce
reductions, impairment of discontinued capitalized software
projects, and other miscellaneous charges. For additional details,
refer to Note 11 in our consolidated financial statements.(4)
Includes the lease-related impairment charge for the subleased
portion of our corporate headquarters. For additional details refer
to Note 9 in our 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
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