8-K: Health Catalyst Exceeds 2025 Revenue Guidance, Boosts Client Growth

Health Catalyst, Inc. announced preliminary unaudited 2025 financial results, exceeding revenue guidance and meeting Adjusted EBITDA targets, alongside strategic updates for 2026.

Summary

• Preliminary unaudited 2025 Total Revenue is expected to slightly exceed guidance of ~$310 million.
• Preliminary unaudited 2025 Adjusted EBITDA is expected to be in line with guidance of ~$41 million.
• Net new Platform Clients for 2025 were 32, surpassing the target of 30.
• Average Annual Recurring Revenue (ARR) + non-recurring revenue for new Platform Clients was near the midpoint of the $300k to $700k range.
• Dollar-Based Retention Rate for 2025 was 93%.
• The company plans to sharpen its strategic focus on areas of clear differentiation and measurable value for clients, assessing opportunities to rebalance investment and exit initiatives.
• Ignite migration efforts are advancing with a client-centric approach, offering flexibility for clients to remain on DOS for the near to medium term, aiming to improve client experience and Dollar-Based Retention Rate.
• The product portfolio will focus on solutions driving operational efficiency, cost management, clinical quality, and consumer/patient experience.
• Operational updates for 2026 include continued investment in India resourcing and prioritization of AI utilization, which is anticipated to increase cost structure earlier in the year but lead to optimization and lower overall cost structure as the year progresses.
• The company anticipates building upon its 2025 bookings achievement in 2026, expecting to add a greater level of overall bookings than in 2025.

Sentiment

Score: 7

Explanation: The filing presents generally positive preliminary financial results, exceeding revenue guidance and client acquisition targets. Strategic initiatives for 2026, including focus on core offerings, client-centric migration, and AI investment, suggest a proactive approach to growth and efficiency. However, the Dollar-Based Retention Rate of 93% and the initial increase in cost structure due to investments temper the overall sentiment slightly. The preliminary nature of the results also introduces a degree of uncertainty.

Positives

• Total Revenue is expected to slightly exceed guidance of ~$310 million.
• Adjusted EBITDA is expected to be in line with guidance of ~$41 million.
• Net new Platform Clients were 32, ahead of the target of 30.
• Anticipates building upon 2025 bookings achievement in 2026, expecting a greater level of overall bookings.
• Strategic focus on areas of clear differentiation and measurable value for clients.
• Client-centric approach to Ignite migration, offering flexibility and aiming to improve client experience and Dollar-Based Retention Rate.
• Robust product portfolio positioned for consolidation and leverage, focusing on operational efficiency, cost management, clinical quality, and patient experience.
• Investment in India resourcing and AI utilization expected to optimize and lower overall cost structure as 2026 progresses.

Negatives

• Dollar-Based Retention Rate was 93%, which could indicate some churn or reduced spending from existing clients.
• Investment in India and AI is anticipated to increase cost structure earlier in 2026.
• Preliminary unaudited financial results are inherently uncertain and subject to change.

Risks

• Preliminary unaudited financial results are inherently uncertain and subject to change as the company completes preparation of consolidated financial statements for the year ended December 31, 2025.
• During the course of preparation of consolidated financial statements and related notes, the company or its independent registered public accountants may identify items that could cause final reported results to be materially different from the preliminary unaudited financial estimates presented.
• The company has not reconciled the expected range for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, because items that may impact net loss, including stock-based compensation, cannot be reasonably forecasted.

Future Outlook

The company anticipates sharpening its strategic focus, advancing Ignite migration with a client-centric approach, leveraging its product portfolio for operational efficiency and clinical quality, and investing in India resourcing and AI in 2026. It expects to build upon 2025 bookings, achieving a greater level of overall bookings in 2026. Additional details on 2026 Adjusted EBITDA expectations and growth will be provided on the upcoming earnings call.

Management Comments

• We expect to sharpen our strategic focus on areas where we deliver clear differentiation and measurable value for our clients.
• We plan to strengthen our core offerings while also assessing opportunities to rebalance investment and exit initiatives to enhance client return on investment and maximize long-term value for our shareholders.
• We anticipate making continued progress on the migration by the end of the first half of 2026, and we have adjusted our timeline and approach to be more client-centric, recognizing that some organizations prefer to remain on DOS for the near to medium term.
• We are committed to providing more flexibility and meeting clients where they are, with a goal of improving client experience and our Dollar-Based Retention Rate.
• We believe our robust portfolio of organically developed and acquired solutions positions us well for continued consolidation and leverage with a particular focus on products that uniquely drive operational efficiency and cost management while improving clinical quality and consumer/patient experience.
• We expect to continue to invest in resourcing in India and to prioritize the utilization of AI across our teams in 2026.
• These efforts are anticipated to increase our cost structure earlier in the year while allowing for optimization and lowering our overall cost structure as the year progresses.
• We anticipate building upon our 2025 bookings achievement in 2026 where we expect to add a greater level of overall bookings than 2025.

Industry Context

Health Catalyst operates in the healthcare data analytics and technology sector, which is increasingly focused on operational efficiency, cost management, and improving patient outcomes through data-driven insights. The company's emphasis on AI and investment in global resourcing (India) aligns with broader industry trends of leveraging advanced technologies and optimizing cost structures to remain competitive. The client-centric approach to platform migration reflects the need for flexibility and strong client relationships in a competitive market.

Stakeholder Impact

• Shareholders: Positive impact from exceeding revenue guidance and client acquisition targets, potential for long-term value maximization through strategic focus and operational efficiency. Uncertainty from preliminary results and initial cost structure increase.
• Clients: Improved experience and flexibility due to client-centric Ignite migration approach, enhanced value from sharpened strategic focus and robust product portfolio.
• Employees: Potential for new opportunities and skill development through investment in AI and India resourcing.

Next Steps

• Complete preparation of consolidated financial statements for the year ended December 31, 2025.
• Undergo annual audit procedures.
• Announce complete financial results for 2025, including reconciliation of Adjusted EBITDA to net loss.
• Provide additional information related to 2026 Adjusted EBITDA expectations on the upcoming earnings call.
• Provide additional details on 2026 bookings as part of the upcoming earnings call.
• Continue progress on Ignite migration efforts, anticipating completion by the end of the first half of 2026.
• Continue to invest in resourcing in India and prioritize the utilization of AI across teams in 2026.

Key Dates

Recommendation

While Health Catalyst reported better-than-expected preliminary revenue and client acquisition, the 93% Dollar-Based Retention Rate suggests some challenges in retaining or expanding existing client revenue. The strategic shifts and investments in AI and India are positive long-term moves, but the anticipated increase in cost structure early in 2026 and the preliminary nature of the results introduce near-term uncertainty. A 'hold' recommendation is appropriate as investors await the final audited results and more detailed 2026 guidance to assess the full impact of these strategic initiatives and cost implications.

Keywords

Health Catalyst, HCAT, preliminary results, financial outlook, 2025 results, 2026 outlook, healthcare technology, data analytics, Adjusted EBITDA, revenue, platform clients, dollar-based retention, Ignite migration, AI, operational efficiency, cost management