Health Catalyst (HCAT) Q1 2026 earnings summary

Executive summary

• Q1 2026 revenue was $70.8M, exceeding expectations but down 11% year-over-year due to churn from DOS to Ignite migrations and exit from lower-margin arrangements.

• Adjusted EBITDA improved to $9.1M from $6.3M year-over-year, reflecting cost discipline and operational transformation.

• Project Nexus restructuring was launched, targeting a 9% workforce reduction, operational streamlining, and $30M in annualized cost savings.

• Leadership and board were refreshed, adding experienced executives and healthcare leaders to drive execution and strategic focus.

• The company is investing in AI-driven solutions, leveraging proprietary healthcare improvement data to differentiate its offerings.

Financial highlights

• Q1 2026 total revenue was $70.8M, with technology revenue at $49.5M and professional services at $21.3M.

• Adjusted gross margin was 51.5% (up from 49.2% year-over-year); technology gross margin was 65.3%; professional services gross margin was 19.4%.

• Adjusted operating expenses were $27.3M (39% of revenue), down from $32.8M (41%) in Q1 2025.

• Adjusted EBITDA was $9.1M, exceeding guidance and up from $6.3M in Q1 2025.

• Cash, equivalents, and short-term investments totaled $108.8M as of March 31, 2026, up $13.1M from year-end 2025.

• Net loss widened to $111.0M from $23.7M year-over-year, primarily due to a $95.5M non-cash goodwill impairment.

Outlook and guidance

• Full-year 2026 revenue expected at $260–$265M; adjusted EBITDA guidance is $30–$33M.

• Q2 2026 revenue guidance is $68–$70M; adjusted EBITDA $9–$10M.

• Project Nexus restructuring charges of ~$4M expected in Q2, with annualized run rate savings of ~$30M.

• Management expects continued near-term revenue headwinds from Medicaid funding cuts, Ignite migration churn, and elongated sales cycles.

• Anticipated $22–$26M in new bookings for 2026, with bookings typically converting to revenue in 3–6 months.