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Health Catalyst Reports Third Quarter 2023 Results

Health Catalyst, Inc.
Health Catalyst, Inc.

Health Catalyst Q3 2023 Financial Highlights & Key Themes

November 2, 2023
November 2, 2023

SALT LAKE CITY, Nov. 02, 2023 (GLOBE NEWSWIRE) -- Health Catalyst, Inc. ("Health Catalyst," Nasdaq: HCAT), a leading provider of data and analytics technology and services to healthcare organizations, today reported financial results for the quarter ended September 30, 2023.

“For the third quarter of 2023, I am pleased by our strong financial results, including total revenue of $73.8 million and Adjusted EBITDA of $2.0 million, with these results beating the mid-point of our quarterly guidance on each metric. Additionally, we are grateful to be in a position to raise our full year 2023 revenue guidance range and reiterate our full year 2023 Adjusted EBITDA guidance range. We are also encouraged by our bookings results through Q3 2023, which are in line with our expectations,” said Dan Burton, CEO of Health Catalyst. “I am also happy to report that in the most recent team member engagement survey, independently administered by the Gallup organization, team member engagement scores at Health Catalyst measured in the 94th percentile. This latest engagement level continues a pattern that has been in place for many years, of industry-leading engagement, consistently ranking at or above this percentile level in overall team member engagement scores. We as a leadership team continue to maintain a primary, prioritized focus on team member engagement – the center of our strategic flywheel – because we recognize the central and foundational contributions that our team members make in building the software and providing the services expertise that enable our clients to achieve massive, measurable improvement.”

Financial Highlights for the Three Months Ended September 30, 2023

Key Financial Metrics

 

Three Months Ended September 30,

 

Year over Year

 

 

2023

 

 

 

2022

 

 

Change

GAAP Financial Data:

(in thousands, except percentages, unaudited)

Technology revenue

$

45,973

 

 

$

43,997

 

 

4%

Professional services revenue

$

27,800

 

 

$

24,357

 

 

14%

Total revenue

$

73,773

 

 

$

68,354

 

 

8%

Loss from operations

$

(24,580

)

 

$

(45,721

)

 

46%

Net loss

$

(22,032

)

 

$

(45,735

)

 

52%

Other Non-GAAP Financial Data:(1)

 

 

 

 

 

Adjusted Technology Gross Profit

$

31,367

 

 

$

29,993

 

 

5%

Adjusted Technology Gross Margin

 

68

%

 

 

68

%

 

 

Adjusted Professional Services Gross Profit

$

3,205

 

 

$

4,970

 

 

(36)%

Adjusted Professional Services Gross Margin

 

12

%

 

 

20

%

 

 

Total Adjusted Gross Profit

$

34,572

 

 

$

34,963

 

 

(1)%

Total Adjusted Gross Margin

 

47

%

 

 

51

%

 

 

Adjusted EBITDA

$

1,992

 

 

$

(4,554

)

 

144%

________________________
(1) These measures are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). See the accompanying "Non-GAAP Financial Measures" section below for more information about these financial measures, including the limitations of such measures, and for a reconciliation of each measure to the most directly comparable measure calculated in accordance with GAAP.

Financial Outlook

Health Catalyst provides forward-looking guidance on total revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP measure.

For the fourth quarter of 2023, we expect:

  • Total revenue between $70.1 million and $75.1 million, and

  • Adjusted EBITDA between $0.3 million and $2.3 million

For the full year of 2023, we expect:

  • Total revenue between $291.0 million and $296.0 million, and

  • Adjusted EBITDA between $10.0 million and $12.0 million

We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for net loss, because there are items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably forecasted.

Quarterly Conference Call Details

We will host a conference call to review the results today, Thursday, November 2, 2023, at 5:00 p.m. E.T. The conference call can be accessed by dialing (800)-225-9448 for U.S. participants, or 203-518-9708 for international participants, and referencing conference ID “HCAT Q323.” A live audio webcast will be available online at https://ir.healthcatalyst.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Health Catalyst

Health Catalyst is a leading provider of data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable, data-informed healthcare improvement. Its clients leverage the cloud-based data platform — powered by data from more than 100 million patient records and encompassing trillions of facts—as well as its analytics software and professional services expertise to make data-informed decisions and realize measurable clinical, financial, and operational improvements. Health Catalyst envisions a future in which all healthcare decisions are data informed.

Available Information

Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO's social media accounts, in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for Q4 and fiscal year 2023. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment, and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key clients or partners; (v) the impact of the challenging macroeconomic environment (including high inflationary and/or high interest rate environments) on our business and results of operations; and (vi) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023 expected to be filed with the SEC on or about November 2, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.


Condensed Consolidated Balance Sheets
(in thousands, except share and per share data, unaudited)

 

 

As of
September 30,

 

As of
December 31,

 

 

 

2023

 

 

 

2022

 

 

 

(unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

94,971

 

 

$

116,312

 

Short-term investments

 

 

252,726

 

 

 

247,178

 

Accounts receivable, net

 

 

46,085

 

 

 

47,970

 

Prepaid expenses and other assets

 

 

14,671

 

 

 

16,335

 

Total current assets

 

 

408,453

 

 

 

427,795

 

Property and equipment, net

 

 

26,096

 

 

 

25,928

 

Intangible assets, net

 

 

71,996

 

 

 

92,189

 

Operating lease right-of-use assets

 

 

15,277

 

 

 

16,658

 

Goodwill

 

 

185,982

 

 

 

185,982

 

Other assets

 

 

5,116

 

 

 

3,734

 

Total assets

 

$

712,920

 

 

$

752,286

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

6,327

 

 

$

4,424

 

Accrued liabilities

 

 

21,457

 

 

 

19,691

 

Deferred revenue

 

 

53,067

 

 

 

54,961

 

Operating lease liabilities

 

 

3,402

 

 

 

3,434

 

Total current liabilities

 

 

84,253

 

 

 

82,510

 

Convertible senior notes

 

 

227,655

 

 

 

226,523

 

Deferred revenue, net of current portion

 

 

312

 

 

 

105

 

Operating lease liabilities, net of current portion

 

 

18,233

 

 

 

18,017

 

Other liabilities

 

 

73

 

 

 

121

 

Total liabilities

 

 

330,526

 

 

 

327,276

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value per share, and additional paid-in capital; 500,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 57,044,112 and 55,261,922 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

1,469,422

 

 

 

1,424,681

 

Accumulated deficit

 

 

(1,086,858

)

 

 

(999,023

)

Accumulated other comprehensive loss

 

 

(170

)

 

 

(648

)

Total stockholders’ equity

 

 

382,394

 

 

 

425,010

 

Total liabilities and stockholders’ equity

 

$

712,920

 

 

$

752,286

 


Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

(in thousands)

 

(in thousands)

Revenue:

 

 

 

 

 

 

 

 

Technology

 

$

45,973

 

 

$

43,997

 

 

$

140,483

 

 

$

131,624

 

Professional services

 

 

27,800

 

 

 

24,357

 

 

 

80,371

 

 

 

75,450

 

Total revenue

 

 

73,773

 

 

 

68,354

 

 

 

220,854

 

 

 

207,074

 

Cost of revenue, excluding depreciation and amortization shown below:

 

 

 

 

 

 

 

 

Technology(1)(2)(3)

 

 

15,169

 

 

 

14,572

 

 

 

45,755

 

 

 

41,895

 

Professional services(1)(2)(3)

 

 

26,618

 

 

 

21,768

 

 

 

73,774

 

 

 

63,048

 

Total cost of revenue, excluding depreciation and amortization

 

 

41,787

 

 

 

36,340

 

 

 

119,529

 

 

 

104,943

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing(1)(2)(3)

 

 

15,084

 

 

 

25,401

 

 

 

50,050

 

 

 

67,141

 

Research and development(1)(2)(3)

 

 

17,667

 

 

 

20,770

 

 

 

52,339

 

 

 

56,066

 

General and administrative(1)(2)(3)(4)(5)

 

 

13,625

 

 

 

19,192

 

 

 

61,129

 

 

 

45,551

 

Depreciation and amortization

 

 

10,190

 

 

 

12,372

 

 

 

31,919

 

 

 

36,633

 

Total operating expenses

 

 

56,566

 

 

 

77,735

 

 

 

195,437

 

 

 

205,391

 

Loss from operations

 

 

(24,580

)

 

 

(45,721

)

 

 

(94,112

)

 

 

(103,260

)

Interest and other income (expense), net

 

 

2,607

 

 

 

142

 

 

 

6,490

 

 

 

(2,700

)

Loss before income taxes

 

 

(21,973

)

 

 

(45,579

)

 

 

(87,622

)

 

 

(105,960

)

Income tax provision (benefit)(2)

 

 

59

 

 

 

156

 

 

 

213

 

 

 

(4,339

)

Net loss

 

$

(22,032

)

 

$

(45,735

)

 

$

(87,835

)

 

$

(101,621

)

Net loss per share, basic

 

$

(0.39

)

 

$

(0.84

)

 

$

(1.57

)

 

$

(1.89

)

Net loss per share, diluted

 

$

(0.39

)

 

$

(0.84

)

 

$

(1.57

)

 

$

(1.97

)

Weighted-average shares outstanding used in calculating net loss per share, basic

 

 

56,711

 

 

 

54,304

 

 

 

56,062

 

 

 

53,667

 

Weighted-average shares outstanding used in calculating net loss per share, diluted

 

 

56,711

 

 

 

54,304

 

 

 

56,062

 

 

 

54,025

 

________________________
(1) Includes stock-based compensation expense as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Stock-Based Compensation Expense:

 

(in thousands)

 

(in thousands)

Cost of revenue, excluding depreciation and amortization:

 

 

 

 

 

 

 

 

Technology

 

$

497

 

 

$

494

 

 

$

1,408

 

 

$

1,563

 

Professional services

 

 

1,927

 

 

 

1,991

 

 

 

5,682

 

 

 

6,082

 

Sales and marketing

 

 

5,149

 

 

 

7,037

 

 

 

16,049

 

 

 

20,925

 

Research and development

 

 

2,927

 

 

 

3,390

 

 

 

8,677

 

 

 

9,643

 

General and administrative

 

 

3,732

 

 

 

4,392

 

 

 

10,929

 

 

 

15,143

 

Total

 

$

14,232

 

 

$

17,304

 

 

$

42,745

 

 

$

53,356

 


(2) Includes acquisition-related costs (benefit), net, as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Acquisition-related costs (benefit), net:

 

(in thousands)

 

(in thousands)

Cost of revenue, excluding depreciation and amortization:

 

 

 

 

 

 

 

 

Technology

 

$

66

 

 

$

74

 

 

$

208

 

 

$

267

 

Professional services

 

 

96

 

 

 

143

 

 

 

298

 

 

 

509

 

Sales and marketing

 

 

102

 

 

 

367

 

 

 

304

 

 

 

1,557

 

Research and development

 

 

198

 

 

 

693

 

 

 

587

 

 

 

2,358

 

General and administrative

 

 

1,664

 

 

 

2,015

 

 

 

1,705

 

 

 

(1,503

)

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

(4,533

)

Total

 

$

2,126

 

 

$

3,292

 

 

$

3,102

 

 

$

(1,345

)


(3) Includes restructuring costs as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Restructuring costs:

 

(in thousands)

 

(in thousands)

Cost of revenue, excluding depreciation and amortization:

 

 

 

 

 

 

 

 

Technology

 

$

 

 

$

 

 

$

12

 

 

$

 

Professional services

 

 

 

 

 

247

 

 

 

434

 

 

 

247

 

Sales and marketing

 

 

 

 

 

1,559

 

 

 

1,205

 

 

 

1,559

 

Research and development

 

 

 

 

 

2,257

 

 

 

286

 

 

 

2,257

 

General and administrative

 

 

 

 

 

436

 

 

 

118

 

 

 

436

 

Total

 

$

 

 

$

4,499

 

 

$

2,055

 

 

$

4,499

 


(4) Includes litigation costs as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Litigation costs:

 

(in thousands)

 

(in thousands)

General and administrative

 

$

24

 

 

$

 

 

$

21,279

 

 

$

 

Total

 

$

24

 

 

$

 

 

$

21,279

 

 

$

 


(5) Includes non-recurring lease-related charges as follows:

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Non-recurring lease-related charges:

 

(in thousands)

 

(in thousands)

General and administrative

 

$

 

 

$

3,700

 

 

$

2,681

 

 

$

3,700

 

Total

 

$

 

 

$

3,700

 

 

$

2,681

 

 

$

3,700

 


Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

 

2022

 

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(87,835

)

 

$

(101,621

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Stock-based compensation expense

 

 

42,745

 

 

 

53,356

 

Depreciation and amortization

 

 

31,919

 

 

 

36,633

 

Impairment of long-lived assets

 

 

2,681

 

 

 

4,925

 

Non-cash operating lease expense

 

 

2,272

 

 

 

2,458

 

Amortization of debt discount and issuance costs

 

 

1,132

 

 

 

1,124

 

Investment discount and premium (accretion) amortization

 

 

(6,816

)

 

 

(608

)

Provision for expected credit losses

 

 

1,626

 

 

 

700

 

Deferred tax provision (benefit)

 

 

6

 

 

 

(4,527

)

Change in fair value of contingent consideration liabilities

 

 

 

 

 

(4,668

)

Other

 

 

101

 

 

 

(71

)

Change in operating assets and liabilities:

 

 

 

 

Accounts receivable, net

 

 

259

 

 

 

(800

)

Prepaid expenses and other assets

 

 

385

 

 

 

2,020

 

Accounts payable, accrued liabilities, and other liabilities

 

 

1,847

 

 

 

873

 

Deferred revenue

 

 

(1,688

)

 

 

(4,365

)

Contingent consideration liabilities

 

 

 

 

 

(3,234

)

Operating lease liabilities

 

 

(2,673

)

 

 

(2,644

)

Net cash used in operating activities

 

 

(14,039

)

 

 

(20,449

)

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

Proceeds from the sale and maturity of short-term investments

 

 

256,101

 

 

 

270,171

 

Purchase of short-term investments

 

 

(254,448

)

 

 

(274,529

)

Capitalization of internal-use software

 

 

(9,331

)

 

 

(10,024

)

Purchase of intangible assets

 

 

(986

)

 

 

(1,317

)

Purchases of property and equipment

 

 

(981

)

 

 

(1,752

)

Proceeds from the sale of property and equipment

 

 

21

 

 

 

20

 

Acquisition of businesses, net of cash acquired

 

 

 

 

 

(27,846

)

Net cash used in investing activities

 

 

(9,624

)

 

 

(45,277

)

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

Proceeds from exercise of stock options

 

 

937

 

 

 

3,927

 

Proceeds from employee stock purchase plan

 

 

3,206

 

 

 

2,558

 

Repurchase of common stock

 

 

(1,808

)

 

 

(8,393

)

Payments of acquisition-related consideration

 

 

 

 

 

(1,342

)

Net cash provided by (used in) financing activities

 

 

2,335

 

 

 

(3,250

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(13

)

 

 

(27

)

Net decrease in cash and cash equivalents

 

 

(21,341

)

 

 

(69,003

)

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

116,312

 

 

 

193,227

 

Cash and cash equivalents at end of period

 

$

94,971

 

 

$

124,224

 


Non-GAAP Financial Measures

To supplement our financial information presented in accordance with GAAP, we believe certain non-GAAP measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, Adjusted Net Income (Loss), and Adjusted Net Income (Loss) per share, basic and diluted, are useful in evaluating our operating performance. For example, we exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance and allows investors the ability to make more meaningful comparisons between our operating results and those of other companies. We use this non-GAAP financial information to evaluate our ongoing operations, as a component in determining employee bonus compensation, and for internal planning and forecasting purposes.

We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization, adding back stock-based compensation and acquisition-related costs, net as applicable. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses. The following is a reconciliation of revenue, the most directly comparable GAAP financial measure, to Adjusted Gross Profit, for the three months ended September 30, 2023 and 2022:

 

 

Three Months Ended September 30, 2023

 

 

(in thousands, except percentages)

 

 

Technology

 

Professional Services

 

Total

Revenue

 

$

45,973

 

 

$

27,800

 

 

$

73,773

 

Cost of revenue, excluding depreciation and amortization

 

 

(15,169

)

 

 

(26,618

)

 

 

(41,787

)

Gross profit, excluding depreciation and amortization

 

 

30,804

 

 

 

1,182

 

 

 

31,986

 

Add:

 

 

 

 

 

 

Stock-based compensation

 

 

497

 

 

 

1,927

 

 

 

2,424

 

Acquisition-related costs, net(1)

 

 

66

 

 

 

96

 

 

 

162

 

Adjusted Gross Profit

 

$

31,367

 

 

$

3,205

 

 

$

34,572

 

Gross margin, excluding depreciation and amortization

 

 

67

%

 

 

4

%

 

 

43

%

Adjusted Gross Margin

 

 

68

%

 

 

12

%

 

 

47

%

________________________
(1) Acquisition-related costs, net include deferred retention expenses attributable to the ARMUS and KPI Ninja acquisitions.

 

 

Three Months Ended September 30, 2022

 

 

(in thousands, except percentages)

 

 

Technology

 

Professional Services

 

Total

Revenue

 

$

43,997

 

 

$

24,357

 

 

$

68,354

 

Cost of revenue, excluding depreciation and amortization

 

 

(14,572

)

 

 

(21,768

)

 

 

(36,340

)

Gross profit, excluding depreciation and amortization

 

 

29,425

 

 

 

2,589

 

 

 

32,014

 

Add:

 

 

 

 

 

 

Stock-based compensation

 

 

494

 

 

 

1,991

 

 

 

2,485

 

Acquisition-related costs, net(1)

 

 

74

 

 

 

143

 

 

 

217

 

Restructuring costs(2)

 

 

 

 

 

247

 

 

 

247

 

Adjusted Gross Profit

 

$

29,993

 

 

$

4,970

 

 

$

34,963

 

Gross margin, excluding depreciation and amortization

 

 

67

%

 

 

11

%

 

 

47

%

Adjusted Gross Margin

 

 

68

%

 

 

20

%

 

 

51

%

________________________
(1) Acquisition-related costs, net include deferred retention expenses attributable to the ARMUS, KPI Ninja, and Twistle acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions.


Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision, (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) litigation costs, and (vii) non-recurring lease-related charges. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs and litigation costs allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended September 30, 2023 and 2022:

 

 

Three Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

 

 

(in thousands)

Net loss

 

$

(22,032

)

 

$

(45,735

)

Add:

 

 

 

 

Interest and other (income) expense, net

 

 

(2,607

)

 

 

(142

)

Income tax provision

 

 

59

 

 

 

156

 

Depreciation and amortization

 

 

10,190

 

 

 

12,372

 

Stock-based compensation

 

 

14,232

 

 

 

17,304

 

Acquisition-related costs, net(1)

 

 

2,126

 

 

 

3,292

 

Litigation costs(2)

 

 

24

 

 

 

 

Restructuring costs(3)

 

 

 

 

 

4,499

 

Non-recurring lease-related charges(4)

 

 

 

 

 

3,700

 

Adjusted EBITDA

 

$

1,992

 

 

$

(4,554

)

________________________
(1) Acquisition-related costs, net include third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments.
(2) Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Note 14 in our condensed consolidated financial statements.
(3) Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 18 in our condensed consolidated financial statements.
(4) Non-recurring lease-related charges include the lease-related impairment charge related to our corporate office space designated for subleasing. For additional details, refer to Note 1 in our condensed consolidated financial statements.


Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

Adjusted Net Income (Loss) is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) restructuring costs, (iv) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, (v) litigation costs, (vi) non-recurring lease-related charges, and (vii) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Income (Loss) provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

 

 

Three Months Ended September 30,

 

 

 

2023

 

 

 

2022

 

Numerator:

 

(in thousands, except share and per share amounts)

Net loss

 

$

(22,032

)

 

$

(45,735

)

Add:

 

 

 

 

Stock-based compensation

 

 

14,232

 

 

 

17,304

 

Amortization of acquired intangibles

 

 

7,063

 

 

 

9,400

 

Restructuring costs

 

 

 

 

 

4,499

 

Acquisition-related costs, net(1)

 

 

2,126

 

 

 

3,292

 

Litigation costs(2)

 

 

24

 

 

 

 

Non-recurring lease-related charges(3)

 

 

 

 

 

3,700

 

Non-cash interest expense related to convertible senior notes

 

 

378

 

 

 

375

 

Adjusted Net Income (Loss)

 

$

1,791

 

 

$

(7,165

)

Denominator:

 

 

 

 

Weighted-average number of shares used in calculating net loss per share, basic

 

 

56,710,602

 

 

 

54,303,667

 

Non-GAAP weighted-average effect of dilutive securities

 

 

857,570

 

 

 

 

Non-GAAP weighted-average number of shares used in calculating Adjusted Net Income (Loss) per share, diluted

 

 

57,568,172

 

 

 

54,303,667

 

 

 

 

 

 

Adjusted Net Income (Loss) per share, basic

 

$

0.03

 

 

$

(0.13

)

Adjusted Net Income (Loss) per share, diluted

 

$

0.03

 

 

$

(0.13

)

________________________
(1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments.
(2) Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Note 14 in our condensed consolidated financial statements.
(3) Non-recurring lease-related charges include the lease-related impairment charge related to our corporate office space designated for subleasing. For additional details, refer to Note 1 in our condensed consolidated financial statements.


Health Catalyst Investor Relations Contact:

Adam Brown
Senior Vice President, Investor Relations and FP&A
+1 (855)-309-6800
ir@healthcatalyst.com

Health Catalyst Media Contact:
Tarah Neujahr Bryan
Chief Marketing Officer
media@healthcatalyst.com

November 2, 2023
November 2, 2023


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