U.S. Markets closed
  • S&P 500

    3,666.72
    -2.29 (-0.06%)
     
  • Dow 30

    29,969.52
    +85.73 (+0.29%)
     
  • Nasdaq

    12,377.18
    +27.82 (+0.23%)
     
  • Russell 2000

    1,848.70
    +10.67 (+0.58%)
     
  • Crude Oil

    45.70
    +0.06 (+0.13%)
     
  • Gold

    1,840.70
    +3.90 (+0.21%)
     
  • Silver

    24.18
    +0.04 (+0.18%)
     
  • EUR/USD

    1.2148
    +0.0032 (+0.2673%)
     
  • 10-Yr Bond

    0.9200
    -0.0280 (-2.95%)
     
  • Vix

    21.28
    +0.11 (+0.52%)
     
  • GBP/USD

    1.3453
    +0.0077 (+0.5758%)
     
  • USD/JPY

    103.8400
    -0.5840 (-0.5593%)
     
  • BTC-USD

    19,447.85
    +498.95 (+2.63%)
     
  • CMC Crypto 200

    382.19
    +7.79 (+2.08%)
     
  • FTSE 100

    6,490.27
    +26.88 (+0.42%)
     
  • Nikkei 225

    26,809.37
    +8.39 (+0.03%)
     

Health Catalyst Reports Third Quarter 2020 Results

Health Catalyst, Inc.
·20 min read

SALT LAKE CITY, Nov. 10, 2020 (GLOBE NEWSWIRE) -- Health Catalyst, Inc. (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, 2020.

“In the third quarter of 2020, I am pleased to share that we achieved strong performance across our business, including exceeding the mid-point of our quarterly guidance for both revenue and Adjusted EBITDA,” said Dan Burton, CEO of Health Catalyst. “In addition to this financial and operational execution, we are excited to announce the promotion of Patrick Nelli, our current Chief Financial Officer, to the role President of Health Catalyst, effective January 1, 2021. Patrick's responsibilities as President will include all the major growth functions of the company, including with existing customers, new customers, international expansion, sales operations, marketing and communications. Additionally, I am pleased to announce the promotion of Bryan Hunt, our current Senior Vice President of Financial Planning & Analysis to the role of Chief Financial Officer, effective January 1, 2021. Patrick and Bryan, in their newly appointed roles, have my full support and confidence and the unanimous support and confidence of our board of directors. Lastly, I would also like to share two additional promotions related to these changes. Jason Alger, our Senior Vice President of Finance, has been promoted to Chief Accounting Officer, and Adam Brown, our Senior Vice President of Investor Relations, has been promoted to Senior Vice President of Investor Relations and Finance Planning & Analysis.”

Financial Highlights for the Three Months Ended September 30, 2020

Key Financial Metrics

Three Months Ended
September 30,

Year over Year Change

2020

2019

GAAP Financial Data:

(in thousands, except percentages)

Technology revenue

$

27,964

$

21,160

32%

Professional services revenue

$

19,227

$

18,263

5%

Total revenue

$

47,191

$

39,423

20%

Loss from operations

$

(23,458

)

$

(20,736

)

(13)%

Net loss

$

(27,326

)

$

(21,416

)

(28)%

Other Non-GAAP Financial Data:(1)

Adjusted Technology Gross Profit

$

19,115

$

14,484

32%

Adjusted Technology Gross Margin

68

%

68

%

Adjusted Professional Services Gross Profit

$

4,823

$

6,677

(28)%

Adjusted Professional Services Gross Margin

25

%

37

%

Total Adjusted Gross Profit

$

23,938

$

21,161

13%

Total Adjusted Gross Margin

51

%

54

%

Adjusted EBITDA

$

(6,434

)

$

(8,446

)

24%

________________________
(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 2020, we expect:

  • Total revenue between $50.5 million and $53.5 million, and

  • Adjusted EBITDA between $(7.3) million and $(5.3) million

For the full year of 2020, we expect:

  • Total revenue between $186.1 million and $189.1 million, and

  • Adjusted EBITDA between $(23.9) million and $(21.9) 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 predicted.

Quarterly Conference Call Details

The company will host a conference call to review the results today, Tuesday, November 10, 2020 at 5:00 p.m. E.T. The conference call can be accessed by dialing 1-877-295-1104 for U.S. participants, or 1-470-495-9486 for international participants, and referencing participant code 7195951. 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 customers 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

Health Catalyst intends to use its Investor Relations website as a means of disclosing material non-public information and for complying with its 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 2020. 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 customers or partners; (v) the impact of COVID-19 on our business and results of operation; 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 Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 28, 2020 and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020 expected to be filed with the SEC on or about November 10, 2020. 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,

2020

2019

Assets

Current assets:

Cash and cash equivalents

$

111,239

$

18,032

Short-term investments

163,898

210,245

Accounts receivable, net

36,339

27,570

Prepaid expenses and other assets

11,290

8,392

Total current assets

322,766

264,239

Property and equipment, net

5,319

4,295

Intangible assets, net

105,926

25,535

Operating lease right-of-use assets

25,833

3,787

Goodwill

107,822

3,694

Other assets

2,997

810

Total assets

$

570,663

$

302,360

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

5,189

$

3,622

Accrued liabilities

14,061

8,944

Acquisition-related consideration payable

3,214

2,192

Deferred revenue

35,090

30,653

Operating lease liabilities

2,425

2,806

Contingent consideration liabilities

5,893

Total current liabilities

65,872

48,217

Long-term debt, net of current portion

166,200

48,200

Acquisition-related consideration payable, net of current portion

1,860

Deferred revenue, net of current portion

1,635

1,459

Operating lease liabilities, net of current portion

24,245

1,654

Contingent consideration liabilities, net of current portion

10,279

Other liabilities

2,817

326

Total liabilities

271,048

101,716

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.001 par value; 42,239,922 and 36,678,854 shares issued and outstanding as
of September 30, 2020 and December 31, 2019, respectively

42

37

Additional paid-in capital

982,139

811,049

Accumulated deficit

(682,632

)

(610,514

)

Accumulated other comprehensive income

66

72

Total stockholders' equity

299,615

200,644

Total liabilities and stockholders’ equity

$

570,663

$

302,360



Condensed Consolidated Statements of Operations

(in thousands, except per share data, unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Revenue:

Technology

$

27,964

$

21,160

$

78,150

$

61,393

Professional services

19,227

18,263

57,416

50,047

Total revenue

47,191

39,423

135,566

111,440

Cost of revenue, excluding depreciation and amortization:

Technology(1)

9,045

6,740

25,148

20,536

Professional services(1)(3)

15,307

11,892

46,401

33,132

Total cost of revenue, excluding depreciation and amortization

24,352

18,632

71,549

53,668

Operating expenses:

Sales and marketing(1)(3)

14,629

14,721

40,618

35,579

Research and development(1)(3)

13,390

13,477

38,539

33,209

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

13,297

11,013

31,111

23,333

Depreciation and amortization

4,981

2,316

10,952

6,844

Total operating expenses

46,297

41,527

121,220

98,965

Loss from operations

(23,458

)

(20,736

)

(57,203

)

(41,193

)

Loss on extinguishment of debt

(8,514

)

(1,670

)

Interest and other expense, net

(3,854

)

(659

)

(7,500

)

(2,924

)

Loss before income taxes

(27,312

)

(21,395

)

(73,217

)

(45,787

)

Income tax provision (benefit)

14

21

(1,218

)

43

Net loss

$

(27,326

)

$

(21,416

)

$

(71,999

)

$

(45,830

)

Less: accretion of redeemable convertible preferred stock

18,170

180,826

Net loss attributable to common stockholders

$

(27,326

)

$

(39,586

)

$

(71,999

)

$

(226,656

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.68

)

$

(1.40

)

$

(1.87

)

$

(17.78

)

Weighted-average shares outstanding used in calculating net
loss per share attributable to common stockholders, basic and diluted

40,292

28,223

38,517

12,750

Adjusted net loss(6)

$

(8,287

)

$

(9,817

)

$

(20,110

)

$

(26,014

)

Pro forma adjusted net loss per share, basic and diluted(6)

$

(0.21

)

$

(0.27

)

$

(0.52

)

$

(0.72

)

Pro forma as adjusted weighted-average number of shares
outstanding used in calculating Adjusted Net Loss per share, basic and diluted(6)

40,292

36,373

38,517

36,183

_______________

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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Stock-Based Compensation Expense:

(in thousands)

(in thousands)

Cost of revenue, excluding depreciation and amortization:

Technology

$

196

$

64

$

575

$

129

Professional services

903

306

2,609

593

Sales and marketing

3,233

1,358

9,724

2,639

Research and development

2,025

3,067

5,987

3,502

General and administrative

3,139

5,179

8,388

6,165

Total

$

9,496

$

9,974

$

27,283

$

13,028

(2) Includes acquisition transaction costs as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Acquisition transaction costs:

(in thousands)

(in thousands)

General and administrative

$

1,399

$

$

2,670

$

Total

$

1,399

$

$

2,670

$

(3) Includes post-acquisition restructuring costs as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Post-Acquisition Restructuring Costs:

(in thousands)

(in thousands)

Cost of revenue, excluding depreciation and amortization:

Professional services

$

$

$

$

108

Sales and marketing

306

Research and development

32

Total

$

$

$

$

446

(4) Includes the change in fair value of contingent consideration liabilities, as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Change in fair value of contingent consideration liabilities:

(in thousands)

(in thousands)

General and administrative

$

564

$

$

(1,004

)

$

Total

$

564

$

$

(1,004

)

$

(5) Includes duplicate headquarters rent expense, as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2020

2019

2020

2019

Duplicate Headquarters Rent Expense:

(in thousands)

(in thousands)

General and administrative

$

584

$

$

709

$

Total

$

584

$

$

709

$

(6) Includes pro forma adjustments to net loss attributable to common stockholders and the weighted average number of common shares outstanding directly attributable to the closing of our initial public offering on July 29, 2019 as well as certain other non-GAAP adjustments. Refer to the "Non-GAAP Financial Measures—Pro Forma Adjusted Net Loss Per Share" section below for further details.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

Nine Months Ended
September 30,

Cash flows from operating activities

2020

2019

Net loss

$

(71,999

)

$

(45,830

)

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

Depreciation and amortization

10,952

6,844

Loss on extinguishment of debt

8,514

1,670

Amortization of debt discount and issuance costs

5,260

797

Non-cash operating lease expense

2,865

2,696

Investment discount and premium amortization

854

(443

)

Provision for expected credit losses

822

Stock-based compensation expense

27,283

13,028

Deferred tax (benefit) provision

(1,280

)

Change in fair value of contingent consideration liabilities

(1,004

)

Other

85

(36

)

Change in operating assets and liabilities:

Accounts receivable, net

(4,450

)

(3,323

)

Prepaid expenses and other assets

(2,937

)

(1,362

)

Accounts payable, accrued liabilities, and other liabilities

6,567

1,661

Deferred revenue

(838

)

7,601

Operating lease liabilities

(2,701

)

(2,426

)

Net cash used in operating activities

(22,007

)

(19,123

)

Cash flows from investing activities

Purchase of short-term investments

(163,346

)

(221,444

)

Proceeds from the sale and maturity of short-term investments

208,467

37,277

Acquisition of businesses, net of cash acquired

(102,471

)

Purchase of property and equipment

(2,071

)

(1,658

)

Purchase of intangible assets

(1,249

)

(1,747

)

Proceeds from sale of property and equipment

10

40

Net cash used in investing activities

(60,660

)

(187,532

)

Cash flows from financing activities

Proceeds from convertible note securities, net of issuance costs

222,482

Purchase of capped calls concurrent with issuance of convertible senior notes

(21,743

)

Proceeds from credit facilities, net of debt issuance costs

47,169

Repayment of credit facilities

(57,043

)

(21,821

)

Proceeds from exercise of stock options

29,393

2,177

Proceeds from employee stock purchase plan

3,528

1,216

Payments of acquisition-related consideration

(748

)

(773

)

Proceeds from initial public offering, net of underwriters’ discounts and commissions

194,649

Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs

12,073

Payments of deferred offering costs

(4,407

)

Net cash provided by financing activities

175,869

230,283

Effect of exchange rate on cash and cash equivalents

5

Net increase in cash and cash equivalents

93,207

23,628

Cash and cash equivalents at beginning of period

18,032

28,431

Cash and cash equivalents at end of period

$

111,239

$

52,059

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 Loss, and Adjusted Net Loss per share, basic and diluted, are useful in evaluating our operating performance. 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 and excluding (i) stock-based compensation and (ii) post-acquisition restructuring costs (none during periods presented). 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, 2020 and 2019:

Three Months Ended September 30, 2020

(in thousands, except percentages)

Technology

Professional Services

Total

Revenue

$

27,964

$

19,227

$

47,191

Cost of revenue, excluding depreciation and amortization

(9,045

)

(15,307

)

(24,352

)

Gross profit, excluding depreciation and amortization

18,919

3,920

22,839

Add:

Stock-based compensation

196

903

1,099

Adjusted Gross Profit

$

19,115

$

4,823

$

23,938

Gross margin, excluding depreciation and amortization

68

%

20

%

48

%

Adjusted Gross Margin

68

%

25

%

51

%


Three Months Ended September 30, 2019

(in thousands, except percentages)

Technology

Professional Services

Total

Revenue

$

21,160

$

18,263

$

39,423

Cost of revenue, excluding depreciation and amortization

(6,740

)

(11,892

)

(18,632

)

Gross profit, excluding depreciation and amortization

14,420

6,371

20,791

Add:

Stock-based compensation

64

306

370

Adjusted Gross Profit

$

14,484

$

6,677

$

21,161

Gross margin, excluding depreciation and amortization

68

%

35

%

53

%

Adjusted Gross Margin

68

%

37

%

54

%

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other expense, net, (ii) loss on extinguishment of debt (none in periods presented), (iii) income tax (benefit) provision, (iv) depreciation and amortization, (v) stock-based compensation, (vi) acquisition transaction costs, (vii) change in fair value of contingent consideration liability, (viii) duplicate headquarters rent expense, and (ix) post-acquisition restructuring costs when they are incurred. We believe Adjusted EBITDA 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. 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, 2020 and 2019:

Three Months Ended
September 30,

2020

2019

(in thousands)

Net loss

$

(27,326

)

$

(21,416

)

Add:

Interest and other expense, net

3,854

659

Income tax (benefit) provision

14

21

Depreciation and amortization

4,981

2,316

Stock-based compensation

9,496

9,974

Acquisition transaction costs

1,399

Change in fair value of contingent consideration liability

564

Duplicate headquarters rent expense

584

Adjusted EBITDA

$

(6,434

)

$

(8,446

)

Pro Forma Adjusted Net Loss Per Share

Adjusted Net Loss is a non-GAAP financial measure that we define as net loss attributable to common stockholders adjusted for (i) accretion of redeemable convertible preferred stock, (ii) stock-based compensation, (iii) amortization of acquired intangibles, (iv) loss on debt extinguishment, (v) acquisition transaction costs, (vi) change in fair value of contingent consideration liability, (vii) non-cash interest expense related to our convertible senior notes, (viii) duplicate headquarters rent expense (see explanation above), and (ix) post-acquisition restructuring costs. Non-cash interest expense related to our convertible senior notes relates to the convertible senior notes that were issued in a private placement in April 2020. Under GAAP, we are required to separately account for liability (debt) and equity (conversion option) components of the convertible senior notes. Accordingly, for GAAP purposes we are required to recognize the effective interest expense on our convertible senior notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense, and the amortization expense of issuance costs are excluded from management’s assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance.We believe Adjusted Net 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.

On July 29, 2019, we closed our initial public offering (our IPO) in which we issued and sold 8,050,000 shares (inclusive of the underwriters’ option to purchase an additional 1,050,000 shares) of common stock at $26.00 per share. We received net proceeds of $194.6 million after deducting underwriting discounts and commissions and before deducting offering costs of $4.6 million. Upon the closing of our IPO, all shares of our outstanding redeemable convertible preferred stock converted into 23,151,481 shares of common stock on a one-for-one basis. We have prepared the below adjusted condensed consolidated statement of operations data to present pro forma adjusted net loss per share amounts that will be comparable between the current and prior periods presented as if the conversion of all outstanding shares of redeemable convertible preferred stock and the issuance of the IPO shares had occurred as of the beginning of the prior year comparative periods.

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Numerator:

(in thousands, except share and per share amounts)

Net loss attributable to common stockholders

$

(27,326

)

$

(39,586

)

$

(71,999

)

$

(226,656

)

Add

Accretion of redeemable convertible preferred stock

18,170

180,826

Stock-based compensation

9,496

9,974

27,283

13,028

Amortization of acquired intangibles

4,276

1,625

8,786

4,672

Loss on extinguishment of debt

8,514

1,670

Acquisition transaction costs

1,399

2,670

Change in fair value of contingent consideration liability

564

(1,004

)

Non-cash interest expense related to convertible senior notes

2,720

4,931

Duplicate headquarters rent expense

584

709

Post-acquisition restructuring costs

446

Adjusted Net Loss

$

(8,287

)

$

(9,817

)

$

(20,110

)

$

(26,014

)

Denominator:

Weighted-average number of shares used in
calculating net loss per share attributable to
common stockholders, basic and diluted

40,292,380

28,222,555

38,517,272

12,749,903

Pro forma adjustments

Pro forma adjustment to reflect issuance and
conversion of redeemable convertible
preferred stock to common stock, assuming
the conversion took place as of
the beginning of the 2019 period

6,039,517

17,384,812

Pro forma adjustment to reflect issuance of
shares of common stock as part of IPO,
assuming the issuance took place as of the
beginning of the 2019 period

2,111,413

6,048,718

Pro forma as adjusted weighted-average
number of shares used in calculating
Adjusted Net Loss per share, basic and diluted

40,292,380

36,373,485

38,517,272

36,183,433

Pro forma adjusted net loss per share, basic and diluted

$

(0.21

)

$

(0.27

)

$

(0.52

)

$

(0.72

)


Health Catalyst Investor Relations Contact:
Adam Brown
Senior Vice President, Investor Relations
+1 (855)-309-6800
ir@healthcatalyst.com

Health Catalyst Media Contact:
Amanda Hundt
amanda.hundt@healthcatalyst.com
+1 (575) 491-0974