Health Catalyst (HCAT) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $79.4 million, up 6% year over year, exceeding guidance, driven by new and acquired clients and expansion with existing clients.

• Adjusted EBITDA was $6.3 million, up 86% year over year, also above guidance, aided by revenue growth and cost reduction initiatives.

• Net loss widened to $23.7 million from $20.6 million in Q1 2024, reflecting higher costs and restructuring charges.

• Ignite platform added 10 net new clients in Q1, supporting confidence in 2025 growth targets and cross-sell strategy.

• The company completed the acquisition of Upfront Healthcare Services for $80 million, expanding its patient engagement platform capabilities.

Financial highlights

• Technology revenue grew 10% year over year to $51.5 million, representing 65% of total revenue; professional services revenue was $27.9 million, flat year over year.

• Adjusted gross margin was 49% (down 210 bps year over year); adjusted technology gross margin was 67% (down 120 bps year over year, up 260 bps sequentially); adjusted professional services gross margin was 16% (down 630 bps year over year, up 240 bps sequentially).

• Gross margin declined to 36% from 39% year over year.

• Adjusted net income per share was $0.01; net loss per share was $(0.35), unchanged from Q1 2024.

• Cash, cash equivalents, and short-term investments totaled $342 million at Q1 end.

Outlook and guidance

• Q2 2025 guidance: revenue of ~$80.5 million, adjusted EBITDA of ~$8 million.

• Full-year 2025 guidance: revenue of ~$335 million, technology revenue of ~$220 million, adjusted EBITDA of ~$41 million.

• Technology revenue expected to grow >10% year over year in Q2; professional services revenue to be slightly down sequentially and year over year due to implementation delays.

• Adjusted technology and professional services gross margins expected flat to slightly down in Q2; improvement expected in the second half of 2025 as Ignite migrations progress.

• Operating expenses expected to decline by $1–2 million in Q2 versus Q1.

• Stock-based compensation as a percentage of revenue targeted to reach mid to high single digits by 2026, two years ahead of prior plan.

• Most revenue is recurring, with over 90% predictability, and the majority of future bookings expected from existing clients.