Summary
Health Catalyst reported total revenue of $75.9 million for the second quarter of fiscal 2024, up 3.7% from the prior-year quarter. Year-to-date revenue was $150.6 million, up 2.4%. The operating loss narrowed to $15.8 million for the quarter and to $38.6 million for the first six months. Net loss narrowed to $13.5 million, or $0.23 per diluted share, for the quarter, and to $34.1 million, or $0.58 per diluted share, year to date. Operating margin improved to negative 20.8% for the quarter.
Cash generation improved. Operating cash flow was $1.6 million for the quarter and $11.9 million for the first six months, up in both periods. Capital expenditures were $0.3 million for the quarter and $0.5 million year to date, down in both periods. Deferred revenue stood at $56.4 million, down 5.4% from the prior-year quarter. Remaining performance obligations were $310.4 million, up 152.6%. Adjusted EBITDA was $7.5 million for the quarter, up 114%, and $10.9 million for the six months. Adjusted Gross Margin was 50% for the quarter.
Management guided third-quarter 2024 total revenue and Adjusted EBITDA, with Adjusted EBITDA of $6.0 million to $8.0 million for the quarter. Full-year 2024 guidance covers total revenue and Adjusted EBITDA of $24.0 million to $26.0 million. The company did not reconcile Adjusted EBITDA guidance to net loss, citing items such as stock-based compensation that fall outside its control or cannot be reasonably forecasted.
Bookings momentum was the standout. Health Catalyst signed more net new Platform Subscription Clients in the first half of 2024 than in all of 2023, and expects low-20s net new Platform Subscription Clients for full year 2024, which would be the strongest year in its history for the metric. It updated the full-year Dollar-Based Retention Rate expectation to 100% to 106%, excluding an additional expected 3 to 4 points of 2025 revenue growth from non-recurring expansions. New client wins included SingHealth in Singapore, Adena in Ohio, and an expansion with South Dakota Health Link. The company said the bookings pipeline supports renewed confidence in returning to double digit topline growth and roughly 50% Adjusted EBITDA growth in 2025.
Capital deployment continued. Health Catalyst closed the Carevive acquisition on May 24, 2024 for $22.1 million, including $18.6 million in net cash, $2.6 million in stock, and $0.9 million in contingent consideration. On August 1, 2024 it acquired Lumeon for $37.5 million in cash and $2.5 million in stock, plus up to $25 million in earn-out payments tied to recurring revenue. On July 16, 2024 the company entered a credit facility of up to $225 million, with a $125 million initial term loan funded and a $100 million delayed draw facility available for permitted acquisitions.
Risks stay tied to the health system end market. Management cited high inflation, high interest rates, and a tight labor market, along with client margin pressure that can reduce spending on offerings without near-term return on investment. Churn remains elevated in some clinically focused technology offerings and traditional consulting professional services, and Medicity clients are expected to generate declining revenue. The migration to Microsoft Azure and Health Catalyst Ignite raises hosting costs and pressures technology gross margin near term, even as the company expects a medium-term tailwind. TEMS contracts carry minimal initial services gross margin, and execution on TEMS bookings in the second half of 2024 will shape the full-year Dollar-Based Retention Rate. Litigation, security incidents, loss of key clients or partners, regulatory changes, and team member retention round out the disclosed risk factors.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $75.9M | $74.7M | +1.6% | $73.2M | +3.7% |
| Research & development | $13.9M | $14.9M | -6.6% | $17.6M | -21.1% |
| Sales & marketing | $12.7M | $19.1M | -33.1% | $16.4M | -22.3% |
| General & administrative | $14.4M | $14.6M | -1.4% | $23.7M | -39.3% |
| Total operating expenses | $51.6M | $59.0M | -12.5% | $68.4M | -24.5% |
| Operating income (loss) | -$15.8M | -$22.8M | +30.7% | -$34.6M | +54.3% |
| Operating margin | -20.8% | -30.5% | +9.7 pp | -47.3% | +26.5 pp |
| Net income (loss) | -$13.5M | -$20.6M | +34.3% | -$32.6M | +58.6% |
| Net margin | -17.8% | -27.6% | +9.7 pp | -44.5% | +26.7 pp |
| Diluted EPS | -$0.23 | -$0.35 | +$0.12 | -$0.58 | +$0.35 |
Risks
Health system end market is experiencing financial strain from high inflation and high interest rates, with increases in labor and supply costs without commensurate revenue, leading to margin pressure and reduced spending. MD&A states these factors could cause clients to file for bankruptcy, fail to renew, or reduce spending.
In early May 2024, client Steward Health Care filed a voluntary petition for reorganization under Chapter 11. As of June 30, 2024, this client's outstanding balance represented approximately 15% of outstanding accounts receivable, and the company cannot predict the outcome or potential credit loss.
The sales cycle for a new DOS Subscription Client is estimated at approximately one year and in some cases has exceeded two years, and it could lengthen as experienced in 2022 and 2023. TEMS sales cycles can be more difficult to predict and at times longer than the typical sales cycle.
Existing clients may not renew, renew at lower fee levels, or decline to purchase additional technology and services. MD&A notes elevated realized and anticipated down-sell and churn levels, primarily for clinically-focused technology offerings and traditional consulting Professional Services, and technology revenue growth was partially offset by elevated churn levels.
Adjusted Technology Gross Margin decreased from 68% to 67% for the three months ended June 30, 2024, and from 69% to 68% for the six months, due to the Azure transition and Health Catalyst Ignite migration. Total Adjusted Gross Margin is expected to fluctuate and decline in the near term due to anticipated growth in professional services, including TEMS.
The company acquired Carevive in May 2024 and Lumeon in August 2024, following ERS in October 2023, and may face difficulty integrating personnel, operations, and technologies or achieving anticipated benefits. A significant portion of purchase price may be allocated to goodwill subject to impairment.
The 2023 Restructuring Plan reduced the global workforce by approximately 10% during the fourth quarter of 2023 and the first quarter of 2024. The company may incur additional expenses, lose institutional knowledge, or fail to realize anticipated benefits and savings.
Competition for senior sales executives and software engineers is intense, and several senior leaders are active members of the Church of Jesus Christ of Latter-Day Saints who may receive a call to serve full-time. This already occurred with former Chief Operating Officer Paul Horstmeier, who stepped down effective March 31, 2023.
Changes in the healthcare industry, including the increasing market share of EHR companies in data analytics at hospital systems, could cause clients to terminate contracts or demand unfavorable terms. Client and vendor consolidation results in fewer, larger entities with increased bargaining power.
On July 16, 2024, the company entered a credit agreement providing a five-year term loan facility of up to $225 million, with an initial $125 million funded, bearing interest at SOFR plus 6.5%. Quarterly principal payments begin with the quarter ending December 31, 2024, and final maturity is July 16, 2029.
The market for healthcare solutions is intensely competitive, with competitors including Epic Systems, Cerner, Optum Analytics, and IBM that have greater name recognition, longer operating histories, and significantly greater resources. Increased competition is likely to result in pricing pressures that could negatively impact sales, profitability, or market share.
SaaS KPIs
All quarters →Adjusted EBITDA
Summary, forecast, risks and KPIs are extracted from Health Catalyst, Inc.'s SEC filings for Q2 FY2024 (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.