Summary
Health Catalyst reported second quarter revenue of $80.7 million, up 6.3% from the prior-year quarter, and first half revenue of $160.1 million, up 6.3% from the prior-year period. The GAAP bottom line moved sharply lower. Net loss widened to $41.0 million in the quarter from $13.5 million a year earlier, and diluted EPS was negative $0.59 versus negative $0.23. For the six months, net loss widened to $64.7 million from $34.1 million. Operating loss for the quarter was $37.1 million compared with $15.8 million in the prior-year quarter, and operating margin fell to negative 46.0% from negative 20.8%. A non-cash goodwill impairment charge weighed on GAAP results. Non-GAAP Adjusted EBITDA rose 24% to $9.3 million, a 12% margin.
Backlog and billing metrics showed mixed signals. Deferred revenue was $67.3 million at June 30, 2025, up 19.3% from the prior-year quarter. Remaining performance obligations, however, fell 18.7% to $252.3 million. Operating cash flow turned negative, with the quarter at negative $9.0 million versus positive $1.6 million in the prior-year quarter, and the six-month period at negative $8.7 million versus positive $11.9 million. Management said technology revenue growth was offset by pressure in professional services, and that some clients are choosing price reductions as they migrate to Health Catalyst Ignite.
Guidance leans on profitability rather than growth. For the third quarter of 2025, the company guides to Adjusted EBITDA of approximately $10.5 million, up 44% with a 14% margin. For the full year 2025, Adjusted EBITDA guidance is approximately $41 million, up 57% with a 13% margin. Management also framed the revenue outlook and tied the 2025 revenue reduction to four factors: platform clients pocketing Ignite savings and fewer or smaller expansions (about five points), a proactive focus on restructuring services contracts to improve profitability (about two points), Carevive life sciences delays (about one point), and lower next-year bookings for net new platform client contracts (less than one point).
The macro backdrop remains the central risk. Health Catalyst cited the recently passed OBBBA, which is projected to reduce federal Medicaid spending by nearly $1 trillion over 10 years, as a multi-year headwind. Other named risks include cuts in research funding, high inflation, high interest rates, tariff uncertainty, client churn, and the loss of key clients or partners. The company also announced a restructuring plan that affects about 9% of its workforce and includes non-headcount cost reductions. Management expects the restructuring and contract updates to improve Adjusted EBITDA by more than $40 million on an annualized basis. Management also said it expects run-rate annualized Adjusted EBITDA of $60 million, about a 20% margin, in the fourth quarter of 2025.
On the client front, 2025 dollar-based retention is expected in the low-90s, and 98 of the company's 100 largest Platform Client relationships have been maintained. Health Catalyst still expects about 30 net new Platform Clients in 2025, up 43%, though average ARR plus non-recurring revenue for those clients is expected at the lower end of the $300,000 to $700,000 range. Application Technology revenue grew 20% over the trailing twelve months ended June 30, 2025, and carries the highest profit margins, according to the shareholder letter. Total Adjusted Gross Margin was 50%, flat with the prior-year quarter. The company continues to invest in Health Catalyst Ignite and expects the migration of Platform Clients to Ignite to weigh on Adjusted Technology Gross Margin in the near term, with the bulk of migrations planned by mid-2026. Dan Burton will retire as CEO effective June 30, 2026, after 15 years leading Health Catalyst full-time, and the board's Nominating and Corporate Governance Committee will run a CEO search.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $80.7M | $79.4M | +1.6% | $75.9M | +6.3% |
| Research & development | $12.4M | $15.2M | -18.4% | $13.9M | -10.7% |
| Sales & marketing | $13.2M | $14.7M | -10.4% | $12.7M | +3.6% |
| General & administrative | $8.3M | $14.2M | -41.5% | $14.4M | -42.3% |
| Total operating expenses | $75.3M | $56.4M | +33.6% | $51.6M | +45.9% |
| Operating income (loss) | -$37.1M | -$20.2M | -83.9% | -$15.8M | -134.7% |
| Operating margin | -46.0% | -25.4% | -20.6 pp | -20.8% | -25.1 pp |
| Net income (loss) | -$41.0M | -$23.7M | -72.6% | -$13.5M | -203.2% |
| Net margin | -50.8% | -29.9% | -20.9 pp | -17.8% | -33.0 pp |
| Diluted EPS | -$0.59 | -$0.35 | -$0.24 | -$0.23 | -$0.36 |
Risks
The MD&A states that the OBBBA, signed July 4, 2025, is projected to reduce federal Medicaid spending by nearly $1 trillion over 10 years, creating additional financial strain for clients and prospective clients. It says certain sales cycles have elongated and some opportunities, such as Life Sciences, have pushed, negatively impacting year-to-date bookings achievement and expectations for revenue in the second half of 2025.
Risk Factors state the sales cycle for a new Platform Client is estimated at approximately one year and could lengthen, as experienced in 2022 and 2023, delaying revenue relative to operating expenses. MD&A adds that Medicaid and research funding reductions have elongated certain sales cycles and pushed some opportunities.
MD&A says an increasing number of clients are opting for a price reduction as part of migration to Health Catalyst Ignite, resulting in lower overall spend, and that Platform Clients migrating to Ignite have elected to retain inherent savings, resulting in smaller bookings. It also expects higher cost of technology revenue from Ignite migrations to negatively impact Adjusted Technology Gross Margin near term.
MD&A reports a $28.8 million non-cash goodwill impairment charge in the three and six months ended June 30, 2025, after declines in stock price and market capitalization and a downward revision of future revenue forecast. It warns that if the stock price continues to decline or other adverse events occur, goodwill may be at risk of further impairment.
Risk Factors disclose the January 2025 Restructuring Plan reduced global workforce by approximately 4% in Q1 2025, primarily R&D and professional services, and the August 2025 Restructuring Plan will reduce global workforce by approximately 9%, mostly in Q3 2025, primarily R&D and sales and marketing. The filing cites risks of reduced morale, difficulty hiring, and unintended attrition from these plans.
Risk Factors expand on increasing reliance on AI and machine learning technologies, including risks that AI Technologies produce false or hallucinatory outputs, depend on third-party AI Technologies, and face rapidly evolving federal and state regulation such as California automated decision-making rules and Colorado's AI Act. It says compliance costs could increase operating expenses and harm results.
Risk Factors state the healthcare solutions market is intensely competitive, with competitors including EHR companies such as Epic Systems and Oracle Health, and larger competitors such as Optum Analytics and IBM that have greater resources and name recognition. Increased competition is likely to result in pricing pressures that could negatively impact sales, profitability, or market share.
Risk Factors state the three largest clients during 2024 comprised 5.5%, 4.4%, and 3.9% of revenue, or 13.8% in the aggregate, and during 2023 comprised 12.6% in the aggregate. The sudden loss or renegotiation of any largest client contract could adversely affect results.
Risk Factors say changes in the healthcare industry, including increasing market share of EHR companies in data analytic services at hospital systems, may cause existing clients to terminate contracts or make it harder to negotiate acceptable terms. General reductions in healthcare expenditures, including reduced governmental funding and cuts to government research funding, could reduce demand for the Solution.
MD&A reports net cash used in operating activities was $8.7 million for the six months ended June 30, 2025, compared to net cash provided by operating activities of $11.9 million for the six months ended June 30, 2024, and cash, cash equivalents, and short-term investments were $97.3 million as of June 30, 2025. It states the company may require additional capital resources in the future and may not be able to raise them on acceptable terms.
SaaS KPIs
All quarters →Adjusted EBITDA
Adjusted Gross Margin
App Clients
Adjusted Gross Profit
Recurring Revenue (% of total revenue)
Summary, forecast, risks and KPIs are extracted from Health Catalyst, Inc.'s SEC filings for Q2 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.