ADVERTISEMENT
Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

Health Catalyst Reports Third Quarter 2021 Results

November 9, 2021 GMT

SALT LAKE CITY, Nov. 09, 2021 (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, 2021.

“In the third quarter of 2021, 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 held our eighth annual Healthcare Analytics Summit conference in September, hosting more than 3,000 registrants representing more than 675 organizations and 18 countries. This year’s Summit was an important opportunity for Health Catalyst to continue to provide thought leadership within the healthcare data and analytics ecosystem, while further cultivating and deepening our relationships with customers and prospects.”

ADVERTISEMENT

Financial Highlights for the Three Months Ended September 30, 2021

Key Financial Metrics

ADVERTISEMENT
 Three Months Ended September 30,  
 2021 2020  Year over Year
Change
GAAP Financial Data:(in thousands, except percentages, unaudited)
Technology revenue$38,262   $27,964   37%
Professional services revenue$23,475   $19,227   22%
Total revenue$61,737   $47,191   31%
Loss from operations$(42,249)  $(23,458)  (80)%
Net loss$(40,014)  $(27,326)  (46)%
Other Non-GAAP Financial Data:(1)     
Adjusted Technology Gross Profit$26,731   $19,115   40%
Adjusted Technology Gross Margin70 % 68 %  
Adjusted Professional Services Gross Profit$4,696   $4,823   (3)%
Adjusted Professional Services Gross Margin20 % 25 %  
Total Adjusted Gross Profit$31,427   $23,938   31%
Total Adjusted Gross Margin51 % 51 %  
Adjusted EBITDA$(5,794)  $(6,434)  10%

_____________________

(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 2021, we expect:

  • Total revenue between $61.4 million and $64.4 million, and

  • Adjusted EBITDA between $(7.5) million and $(5.5) million

For the full year of 2021, we expect:

  • Total revenue between $238.6 million and $241.6 million, and

  • Adjusted EBITDA between $(12.5) million and $(10.5) 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 9, 2021, 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 9356638. 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, the impact of COVID-19 on our business and results of operations and our financial outlook for Q4 and fiscal year 2021. 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 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 Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on or about February 25, 2021 and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 expected to be filed with the SEC on or about November 9, 2021. 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,
 2021 2020
Assets   
Current assets:   
Cash and cash equivalents$275,765   $91,954  
Short-term investments179,420   178,917  
Accounts receivable, net47,681   48,296  
Prepaid expenses and other assets12,471   10,632  
Total current assets515,337   329,799  
Property and equipment, net20,999   12,863  
Intangible assets, net113,590   98,921  
Operating lease right-of-use assets21,649   24,729  
Goodwill169,659   107,822  
Other assets4,279   3,606  
Total assets$845,513   $577,740  
Liabilities and stockholders’ equity   
Current liabilities:   
Accounts payable$4,771   $5,332  
Accrued liabilities20,523   16,510  
Acquisition-related consideration payable   2,000  
Deferred revenue55,332   47,145  
Operating lease liabilities2,299   2,622  
Contingent consideration liabilities2,601   14,427  
Convertible senior notes, net177,837     
Total current liabilities263,363   88,036  
Convertible senior notes, net   168,994  
Deferred revenue, net of current portion1,131   1,878  
Operating lease liabilities, net of current portion21,947   23,669  
Contingent consideration liabilities, net of current portion7,632   16,837  
Other liabilities2,234   2,227  
Total liabilities296,307   301,641  
Commitments and contingencies   
Stockholders’ equity:   
Common stock, $0.001 par value; 51,863,870 and 43,376,848 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively52   43  
Additional paid-in capital1,379,032   1,001,645  
Accumulated deficit(829,868)  (725,650) 
Accumulated other comprehensive (loss) income(10)  61  
Total stockholders' equity549,206   276,099  
Total liabilities and stockholders’ equity$845,513   $577,740  


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

  Three Months Ended  
September 30,
  Nine Months Ended 
September 30,
 2021 2020 2021 2020
Revenue:       
Technology$38,262   $27,964   $107,630   $78,150  
Professional services23,475   19,227   69,580   57,416  
Total revenue61,737   47,191   177,210   135,566  
Cost of revenue, excluding depreciation and amortization:       
Technology(1)(2)12,094   9,045   34,766   25,148  
Professional services(1)(2)20,992   15,307   55,711   46,401  
Total cost of revenue, excluding depreciation and amortization33,086   24,352   90,477   71,549  
Operating expenses:       
Sales and marketing(1)(2)20,808   14,629   53,164   40,618  
Research and development(1)(2)16,385   13,390   45,254   38,539  
General and administrative(1)(2)(3)23,056   13,297   60,596   31,111  
Depreciation and amortization10,651   4,981   26,604   10,952  
Total operating expenses70,900   46,297   185,618   121,220  
Loss from operations(42,249)  (23,458)  (98,885)  (57,203) 
Loss on extinguishment of debt         (8,514) 
Interest and other expense, net(4,423)  (3,854)  (12,082)  (7,500) 
Loss before income taxes(46,672)  (27,312)  (110,967)  (73,217) 
Income tax provision (benefit)(2)(6,658)  14   (6,749)  (1,218) 
Net loss$(40,014)  $(27,326)  $(104,218)  $(71,999) 
Net loss per share, basic and diluted$(0.82)  $(0.68)  $(2.27)  $(1.87) 
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted48,999   40,292   45,937   38,517  
        
Adjusted net loss(4)$(9,048)  $(8,287)  (11,802)  (20,110) 
Adjusted net loss per share, basic and diluted(4)$(0.18)  $(0.21)  $(0.26)  $(0.52) 

______________________

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

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 2021 2020 2021 2020
Stock-Based Compensation Expense:(in thousands) (in thousands)
Cost of revenue, excluding depreciation and amortization:       
Technology$533  $196  $1,481  $575 
Professional services2,149  903  5,866  2,609 
Sales and marketing6,098  3,233  16,848  9,724 
Research and development2,510  2,025  7,443  5,987 
General and administrative6,197  3,139  17,086  8,388 
Total$17,487  $9,496  $48,724  $27,283 

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

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 2021 2020 2021 2020
Acquisition-related costs (benefit), net:(in thousands) (in thousands)
Cost of revenue, excluding depreciation and amortization:       
Technology$30   $  $30   $ 
Professional services64     64    
Sales and marketing296     296    
Research and development455     455    
General and administrative5,672   1,963  15,942   1,666 
Income tax provision (benefit)(6,829)    (6,829)   
Total$(312)  $1,963  $9,958   $1,666 

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

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 2021 2020 2021 2020
Non-recurring lease-related charges(in thousands) (in thousands)
General and administrative$1,800  $584  $1,800  $709 

(4)   Includes non-GAAP adjustments to net loss. Refer to the “Non-GAAP Financial Measures—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 activities2021 2020
Net loss$(104,218)  $(71,999) 
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization26,604   10,952  
Loss on extinguishment of debt   8,514  
Amortization of debt discount and issuance costs8,843   5,260  
Impairment of lease-related assets1,800     
Non-cash operating lease expense3,165   2,865  
Investment discount and premium amortization678   854  
Provision for expected credit losses698   822  
Stock-based compensation expense48,724   27,283  
Deferred tax benefit(6,823)  (1,280) 
Change in fair value of contingent consideration liabilities13,655   (1,004) 
Settlement of acquisition-related contingent consideration(11,766)    
Other(17)  85  
Change in operating assets and liabilities:   
Accounts receivable, net1,021   (4,450) 
Prepaid expenses and other assets(2,131)  (2,937) 
Accounts payable, accrued liabilities, and other liabilities3,281   6,567  
Deferred revenue6,540   (838) 
Operating lease liabilities(3,402)  (2,701) 
Net cash used in operating activities(13,348)  (22,007) 
    
Cash flows from investing activities   
Purchase of short-term investments(188,407)  (163,346) 
Proceeds from the sale and maturity of short-term investments186,893   208,467  
Acquisition of businesses, net of cash acquired(46,763)  (102,471) 
Purchase of property and equipment(9,827)  (1,320) 
Capitalization of internal use software(3,641)  (751) 
Purchase of intangible assets(1,269)  (1,249) 
Proceeds from sale of property and equipment19   10  
Net cash used in investing activities(62,995)  (60,660) 
    
Cash flows from financing activities   
Proceeds from public offering, net of discounts, commissions, and offering costs245,180     
Proceeds from convertible note securities, net of issuance costs   222,482  
Purchase of capped calls concurrent with issuance of convertible senior notes   (21,743) 
Repayment of credit facilities   (57,043) 
Proceeds from exercise of stock options17,303   29,393  
Proceeds from employee stock purchase plan3,975   3,528  
Payments of acquisition-related consideration(6,290)  (748) 
Net cash provided by financing activities260,168   175,869  
Effect of exchange rate on cash and cash equivalents(14)  5  
Net increase in cash and cash equivalents183,811   93,207  
    
Cash and cash equivalents at beginning of period91,954   18,032  
Cash and cash equivalents at end of period$275,765   $111,239  

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. 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, stock-based compensation, and acquisition-related costs, net. 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, 2021 and 2020:

 Three Months Ended September 30, 2021
 (in thousands, except percentages)
 Technology Professional Services Total
Revenue$38,262   $23,475   $61,737  
Cost of revenue, excluding depreciation and amortization(12,094)  (20,992)  (33,086) 
Gross profit, excluding depreciation and amortization26,168   2,483   28,651  
Add:     
Stock-based compensation533   2,149   2,682  
Acquisition-related costs, net(1)30   64   94  
Adjusted Gross Profit$26,731   $4,696   $31,427  
Gross margin, excluding depreciation and amortization68 % 11 % 46 %
Adjusted Gross Margin70 % 20 % 51 %

_________________________________
(1) Acquisition-related costs, net impacting Adjusted Gross Profit includes deferred retention payments and post-acquisition restructuring costs incurred as part of business combinations. For additional details refer to Note 2 in our condensed consolidated financial statements.

 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 amortization18,919   3,920   22,839  
Add:     
Stock-based compensation196   903   1,099  
Adjusted Gross Profit$19,115   $4,823   $23,938  
Gross margin, excluding depreciation and amortization68 % 20 % 48 %
Adjusted Gross Margin68 % 25 % 51 %

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) income tax (benefit) provision, (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, and (vi) 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 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, 2021 and 2020:

  Three Months Ended 
September 30,
 2021 2020
 (in thousands)
Net loss$(40,014)  $(27,326) 
Add:   
Interest and other expense, net4,423   3,854  
Income tax (benefit) provision(6,658)  14  
Depreciation and amortization10,651   4,981  
Stock-based compensation17,487   9,496  
Acquisition-related costs, net(1)6,517   1,963  
Non-recurring lease-related charges(2)1,800   584  
Adjusted EBITDA$(5,794)  $(6,434) 

________________________________
(1) Acquisition-related costs, net impacting Adjusted EBITDA includes legal, due diligence, accounting, consulting fees, deferred retention payments, and post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. For additional details refer to Note 2 in our condensed consolidated financial statements.
(2) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters and duplicate rent expense incurred during the relocation of our corporate headquarters.

Adjusted Net Loss Per Share

Adjusted Net 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) loss on extinguishment of debt, (iv) acquisition-related costs (benefit), net, including the change in fair value of contingent consideration liabilities and the deferred tax valuation allowance release from the acquisition of Twistle, (v) non-cash interest expense related to our convertible senior notes, and (vi) non-recurring lease-related charges. 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.

 Three Months Ended September 30, Nine Months Ended September 30,
 2021 2020 2021 2020
Numerator:(in thousands, except share and per share amounts)
Net loss$(40,014)  $(27,326)  $(104,218)  $(71,999) 
Add:       
Stock-based compensation17,487   9,496   48,724   27,283  
Amortization of acquired intangibles8,965   4,276   23,091   8,786  
Loss on extinguishment of debt         8,514  
Acquisition-related costs (benefit), net(1)(312)  1,963   9,958   1,666  
Non-cash interest expense related to convertible senior notes3,026   2,720   8,843   4,931  
Non-recurring lease-related charges(2)1,800   584   1,800   709  
Adjusted Net Loss$(9,048)  $(8,287)  $(11,802)  $(20,110) 
Denominator:       
Weighted-average number of shares used in calculating net loss, basic and diluted48,998,548   40,292,380   45,937,227   38,517,272  
Adjusted Net Loss per share, basic and diluted$(0.18)  $(0.21)  $(0.26)  $(0.52) 

_____________________
(1) Acquisition-related costs (benefit), net impacting Adjusted Net Loss includes legal, due diligence, accounting, consulting fees, deferred retention payments, and post-acquisition restructuring costs incurred as part of business combinations, changes in fair value of contingent consideration liabilities for potential earn-out payments, and the deferred tax valuation allowance release from the acquisition of Twistle. For additional details refer to Notes 2 and 13 in our condensed consolidated financial statements.
(2) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters and duplicate rent expense incurred during the relocation of our corporate headquarters.

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:
Amanda Hundt
Vice President, Corporate Communications
amanda.hundt@healthcatalyst.com
+1 (575) 491-0974