Summary
Health Catalyst closed its fiscal 2021 first quarter with total revenue of $55.8 million, up 23.8% from the prior-year quarter. The top line benefited from new customers, acquired technology customers, and contractual annual escalators. The company still operates at a loss. Loss from operations was $24.3 million, and the loss widened 34.3% from the prior-year quarter. Net loss was $28.4 million, and the loss widened 62.2%. Diluted EPS was negative $0.65, down 38.3%. Operating margin was negative 43.5%, down 3.4 percentage points from the prior-year quarter.
Non-GAAP profitability improved. Adjusted EBITDA was negative $0.8 million, compared with negative $6.0 million in the prior-year quarter. Total Adjusted Gross Margin was 54%, up from 49%, and Adjusted Professional Services Gross Margin rose to 31% from 25%. Adjusted Technology Gross Margin was 69% in both periods. Adjusted net loss was $2.8 million, compared with $6.1 million, and adjusted net loss per share was negative $0.06, compared with negative $0.16. Management attributed the adjusted improvement to cost containment and professional services mix. The company had more than 1,000 team members.
Balance sheet and backlog metrics showed momentum. Deferred revenue was $52.8 million, up 43.5% from the prior-year quarter. Remaining performance obligations were $79.6 million, up 59.5% from the prior-year quarter. Operating cash flow was negative $3.1 million, an improvement from the prior-year quarter, up 81.3%. Capital expenditures were $5.9 million, up 1274.3% from the prior-year quarter. The MD&A notes spending on Microsoft Azure transitions and acquisitions.
Guidance points to continued investment. For the second quarter of 2021, Health Catalyst provided guidance for total revenue and Adjusted EBITDA. Adjusted EBITDA is expected between negative $4.8 million and negative $2.8 million. For the full year 2021, the company provided guidance for total revenue and Adjusted EBITDA, with Adjusted EBITDA expected between negative $15.0 million and negative $13.0 million. The company did not reconcile Adjusted EBITDA guidance to net loss because items such as stock-based compensation are not within its control or cannot be reasonably predicted.
Risks remain. COVID-19 continues to disrupt healthcare providers and could reduce demand, delay renewals, or hurt collections. The company also cites loss of key customers or partners, litigation or security incidents, regulatory changes, and challenges recruiting and retaining team members. Integration of Able Health, Healthfinch, and Vitalware adds costs and complexity, and Medicity customers are expected to show flat to declining revenue. The transition of customers to Microsoft Azure is more costly on a per-customer basis and could pressure Adjusted Technology Gross Margin. Professional services margins may decline due to service mix and operational overhead. The board also transitioned its chair, with Dr. Tim Ferris resigning effective May 1, 2021, and Jack Kane becoming chair.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2021 | Q4 FY2020 | QoQ | Q1 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $55.8M | $53.3M | +4.8% | $45.1M | +23.8% |
| Research & development | $14.3M | $15.0M | -4.2% | $13.1M | +9.6% |
| Sales & marketing | $15.7M | $14.8M | +5.8% | $13.5M | +16.0% |
| General & administrative | $15.0M | $28.1M | -46.6% | $9.7M | +54.8% |
| Total operating expenses | $52.8M | $65.7M | -19.6% | $39.2M | +34.9% |
| Operating income (loss) | -$24.3M | -$38.9M | +37.5% | -$18.1M | -34.3% |
| Operating margin | -43.5% | -73.0% | +29.5 pp | -40.1% | -3.4 pp |
| Net income (loss) | -$28.4M | -$43.0M | +34.1% | -$17.5M | -62.2% |
| Net margin | -50.8% | -80.7% | +29.9 pp | -38.8% | -12.0 pp |
| Diluted EPS | -$0.65 | — | — | — | — |
Risks
The COVID-19 pandemic could decrease healthcare industry spending, cause customers to file for bankruptcy or terminate contracts, and lengthen sales cycles. MD&A states there continues to be uncertainty as to the extent the pandemic may adversely impact business operations, financial performance, and results of operations.
The sales cycle for a new customer has averaged approximately one year and in some cases exceeded two years. MD&A notes customers are large, complex organizations with long procurement cycles that may lead to declines in the pace of new customer additions.
The healthcare solutions market is intensely competitive, with competitors including Epic Systems, Cerner, Optum Analytics, and IBM, some of which have greater resources and established distribution networks. Increased competition is likely to result in pricing pressures that could negatively impact sales, profitability, or market share.
The company relies on Microsoft Azure and other third-party providers for computing infrastructure. MD&A states hosting customers in Azure is more costly per customer than the private data center and will provide a headwind against increases in Adjusted Technology Gross Margin.
Net loss widened to $28.4 million for the three months ended March 31, 2021 from $17.5 million for the three months ended March 31, 2020, a 62.2% increase in the loss. The company had an accumulated deficit of $725.7 million as of December 31, 2020 and may need to raise additional capital.
The three largest customers during 2020 comprised 5.6%, 4.6%, and 3.9% of revenue, or 14.1% in the aggregate. The sudden loss or renegotiation of any largest customer contract could adversely affect results of operations.
Competition is intense for senior sales executives and software engineers with healthcare and analytics experience. Several senior leaders are active members of the Church of Jesus Christ of Latter-Day Saints, and one or more could receive a call to serve full-time, as previously occurred with co-founder Steven Barlow.
The Final Rule implementing the 21st Century Cures Act creates uncertainty around information blocking and interoperability. It may limit data access if vendors block interfaces, or it may make it easier for similar companies to enter the market and increase competition.
The company acquired Able Health, Healthfinch, and Vitalware in 2020 and is integrating them. MD&A states Medicity customers have generated a lower Dollar-based Retention Rate than DOS Subscription Customers and expects flat to declining revenue from Medicity customers in the foreseeable future.
The company issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025. Servicing the Notes may require a significant amount of cash, and the company has a history of net losses and may not have sufficient cash or ability to raise funds when required.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted Professional Services Gross Margin
Adjusted Technology Gross Margin
Recurring revenue
Total Adjusted Gross Margin
Adjusted Professional Services Gross Profit
Adjusted Technology Gross Profit
Total Adjusted Gross Profit
Summary, forecast, risks and KPIs are extracted from Health Catalyst, Inc.'s SEC filings for Q1 FY2021 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.