Health Catalyst (NASDAQ:HCAT) Exceeds Q4 Expectations But Full-Year Guidance Underwhelms
Healthcare software provider Health Catalyst (NASDAQ:HCAT) beat analysts' expectations in Q4 FY2023, with revenue up 8.6% year on year to $75.08 million. On the other hand, next quarter's revenue guidance of $74.5 million was less impressive, coming in 5.4% below analysts' estimates. It made a non-GAAP profit of $0.02 per share, improving from its loss of $0.05 per share in the same quarter last year.
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Health Catalyst (HCAT) Q4 FY2023 Highlights:
Revenue: $75.08 million vs analyst estimates of $73.59 million (2% beat)
EPS (non-GAAP): $0.02 vs analyst estimates of -$0.01 ($0.03 beat)
Revenue Guidance for Q1 2024 is $74.5 million at the midpoint, below analyst estimates of $78.75 million
Management's revenue guidance for the upcoming financial year 2024 is $308 million at the midpoint, missing analyst estimates by 5.1% and implying 4.1% growth (vs 7.2% in FY2023)
Free Cash Flow was -$21.92 million, down from $24,000 in the previous quarter
Gross Margin (GAAP): 40.6%, down from 46.9% in the same quarter last year
Market Capitalization: $524.9 million
“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,” said Dan Burton, CEO of Health Catalyst.
Founded by healthcare professionals Tom Burton and Steve Barlow in 2008, Health Catalyst (NASDAQ:HCAT) provides data and analytics technology to healthcare organizations, enabling them to improve care and lower costs.
Data Analytics
Organizations generate a lot of data that is stored in silos, often in incompatible formats, making it slow and costly to extract actionable insights, which in turn drives demand for modern cloud-based data analysis platforms that can efficiently analyze the silo-ed data.
Sales Growth
As you can see below, Health Catalyst's revenue growth has been unremarkable over the last two years, growing from $64.72 million in Q4 FY2021 to $75.08 million this quarter.
Health Catalyst's quarterly revenue was only up 8.6% year on year, which might disappoint some shareholders. However, we can see that the company's revenue grew by $1.31 million quarter on quarter, re-accelerating from $560,000 in Q3 2023.
Next quarter's guidance suggests that Health Catalyst is expecting revenue to grow 0.9% year on year to $74.5 million, slowing down from the 8.5% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $308 million at the midpoint, growing 4.1% year on year compared to the 7.1% increase in FY2023.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Health Catalyst burned through $21.92 million of cash in Q4, increasing its cash burn by 20.5% year on year.
Health Catalyst has burned through $46.27 million of cash over the last 12 months, resulting in a negative 15.6% free cash flow margin. This low FCF margin stems from Health Catalyst's constant need to reinvest in its business to stay competitive.
Key Takeaways from Health Catalyst's Q4 Results
It was good to see Health Catalyst beat analysts' revenue expectations this quarter. That stood out as a positive in these results. On the other hand, its full-year revenue guidance was below expectations and cash burn increased. Overall, this was a mixed quarter for Health Catalyst. The stock is up 2.6% after reporting and currently trades at $8.69 per share.
So should you invest in Health Catalyst right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
