Summary
Health Catalyst reported first quarter 2025 total revenue of $79.4 million, up 6.3% from $74.7 million in the prior-year quarter. Growth came from new clients, acquired relationships, and expansion from existing clients. The operating loss narrowed to $20.2 million from $22.8 million. Net loss widened to $23.7 million from $20.6 million. Diluted EPS was flat at -$0.35. Operating margin improved to -25.4% from -30.5%. Adjusted EBITDA, a non-GAAP measure, was $6.3 million, up 86% from $3.4 million. Adjusted Gross Margin, also non-GAAP, was 49%, down from 51%. The company had guided to approximately $4 million of Adjusted EBITDA for the first quarter.
Cash generation weakened. Operating cash flow was $0.3 million, down 97.3% from $10.3 million in the prior-year quarter. Capital expenditures were $0.7 million, up 222.1% from $0.2 million. Deferred revenue rose 13.1% to $71.9 million from $63.6 million. Remaining performance obligations fell 7.9% to $276.9 million from $300.5 million. The drop in RPO points to pressure on longer-term bookings even as deferred revenue grew. The operating cash flow decline reflected the net loss and working capital movements, including a build in accounts receivable.
Operationally, Health Catalyst added 10 net new Platform Clients in the first quarter of 2025. Management targets approximately 40 net new Platform Clients for the full year 2025 and expects to be about halfway to that goal by the end of the second quarter. Dollar-Based Retention (Tech plus TEMS) was approximately 103%, unchanged. Recent wins include a Midwest Health Information Exchange, Canopy Cancer Collective, and a major patient engagement opportunity. The company noted that Q1 is typically a quieter bookings quarter, making the additions encouraging. Management also said it is more than twice as effective at selling into organizations where it has an existing relationship. For the second quarter of 2025, guidance calls for Adjusted EBITDA of approximately $8 million. For the full year 2025, guidance includes Adjusted EBITDA of approximately $41 million and Technology business unit Adjusted EBITDA of approximately $40 million. The company also provided revenue guidance for the second quarter and full year 2025.
The company is responding with a strategic operating plan that emphasizes offerings where it has competitive differentiation and where clients can achieve measurable ROI. Restructuring actions tied to workforce reductions weighed on first quarter results. Management expects the reduction in headcount to lower future operating expenses. The company also expects stock-based compensation as a percentage of revenue to improve to mid-to-high single digits by 2026, two years ahead of its prior target. Management believes there are several points of additional operating leverage in 2026. The company is also focused on migrating clients to Health Catalyst Ignite and expects the large majority of that migration to be completed by mid-2026.
Risks remain elevated. Management described the sales environment as dynamic and is tracking Medicaid, research funding, and tariffs. Health system operating margins have been relatively stable, but policy changes could delay client decisions. The company continues to see elevated churn levels and is migrating Platform Clients from its DOS platform to Health Catalyst Ignite, which is expected to pressure technology gross margins in the near term. Professional services gross margin fell due to lower utilization and costs related to a pilot ambulatory operations TEMS offering that the company plans to exit. Goodwill impairment risk is also present: the fair values of the Technology and Professional Services reporting units exceeded their carrying values by approximately 10% and 13%, respectively, and a continued decline in the stock price could put goodwill at risk. Interest expense increased with the new credit agreement, adding another pressure point. The company also faces integration costs from recent acquisitions, including Upfront, Intraprise, Lumeon, and Carevive. The company also flagged the tight labor market and high inflation as ongoing pressures.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2025 | Q4 FY2024 | QoQ | Q1 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $79.4M | $79.6M | -0.2% | $74.7M | +6.3% |
| Research & development | $15.2M | $15.0M | +1.2% | $14.9M | +2.1% |
| Sales & marketing | $14.7M | $11.2M | +31.1% | $19.1M | -22.7% |
| General & administrative | $14.2M | $15.7M | -9.7% | $14.6M | -2.8% |
| Total operating expenses | $56.4M | $52.2M | +8.1% | $59.0M | -4.4% |
| Operating income (loss) | -$20.2M | -$17.5M | -15.3% | -$22.8M | +11.6% |
| Operating margin | -25.4% | -22.0% | -3.4 pp | -30.5% | +5.1 pp |
| Net income (loss) | -$23.7M | -$20.7M | -14.8% | -$20.6M | -15.3% |
| Net margin | -29.9% | -26.0% | -3.9 pp | -27.6% | -2.3 pp |
| Diluted EPS | -$0.35 | -$0.34 | -$0.01 | -$0.35 | ±$0.00 |
Risks
Recent macroeconomic challenges including high inflation, high interest rates, uncertainty with tariffs, and actual or potential changes in Medicaid and research funding continue to pressure healthcare provider clients. MD&A says these uncertainties in the end market could cause delays in client decisions, and the tight labor market also affects operations.
The sales cycle for a new Platform Client is estimated at approximately one year and has exceeded two years in some cases; it lengthened in 2022 and 2023. Macroeconomic and Medicaid funding uncertainties could further delay client decisions.
The healthcare data analytics market is intensely competitive, with competitors including Epic Systems, Oracle Health, Optum Analytics, and IBM that have greater resources and established relationships. Increased competition is likely to result in pricing pressures that could hurt revenue and market share.
Increasing reliance on AI, generative AI, and machine learning includes risks of false or hallucinatory outputs, insufficient data rights, third-party AI availability and pricing, and evolving federal and state AI regulations. These could subject HCAT to legal claims, require product changes, and increase operating expenses.
Total gross margin decreased from 39% for the three months ended March 31, 2024 to 36% for the three months ended March 31, 2025, and Adjusted Gross Margin decreased from 51% to 49%. MD&A expects total Adjusted Gross Margin to fluctuate and decline in the near term due to revenue mix and Ignite migration costs.
Migrating existing Platform Clients from the DOS platform to Health Catalyst Ignite has and will continue to result in higher cost of technology revenue and may cause service disruptions, client dissatisfaction, and non-renewals. MD&A expects the large majority of the migration to be completed by mid-2026.
An interim goodwill impairment test found the Technology and Professional Services reporting unit fair values exceeded carrying values by approximately 10% and 13%, respectively. Continued stock price declines or other adverse events could put goodwill at risk of impairment.
The January 25, 2025 restructuring plan reduced global workforce by approximately 4% in Q1 2025, primarily in R&D and professional services, and restructuring costs were $3.558 million for the three months ended March 31, 2025 versus $1.813 million for the prior-year period. It may cause attrition beyond intended reductions, lower morale, and loss of institutional knowledge.
The Silver Point Credit Agreement carries interest at SOFR plus 6.5% and contains covenants including a minimum liquidity threshold, a maximum recurring revenue-based ratio, and a maximum EBITDA-based net leverage ratio. Interest expense increased $5.5 million, or 300%, for the three months ended March 31, 2025 compared to the prior-year period.
HCAT relies on a limited number of clients for a significant portion of revenue; its three largest clients during 2024 comprised 5.5%, 4.4%, and 3.9% of revenue, or 13.8% in the aggregate. Loss, termination, or renegotiation of any largest client contract could adversely affect results.
Operating cash flow decreased 97.3% to $0.3 million for the three months ended March 31, 2025 from $10.3 million for the prior-year quarter, while net loss widened 15.3% to $23.7 million. HCAT may need additional capital resources in the future, though it believes existing cash is sufficient for at least the next 12 months.
Remaining performance obligations decreased 7.9% to $276.9 million at March 31, 2025 from $300.5 million at March 31, 2024. Because revenue is generally recognized ratably over contract terms, a decline in new contracts may not be immediately reflected but could reduce future revenue.
SaaS KPIs
All quarters →Recurring revenue
Adjusted Gross Margin
App Clients
Summary, forecast, risks and KPIs are extracted from Health Catalyst, Inc.'s SEC filings for Q1 FY2025 (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.