Health Catalyst (HCAT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $75.9 million, up 4% year-over-year, exceeding guidance midpoint, driven by new and expanding clients, especially in Tech-enabled Managed Services.

• Adjusted EBITDA was $7.5 million, a 114% increase year-over-year, also above guidance, reflecting cost reductions and improved operating leverage.

• Net loss narrowed to $13.5 million from $32.6 million year-over-year, a 59% improvement.

• Bookings performance was strong, with net new platform subscription clients in H1 2024 surpassing all of 2023 and a forecast for record net new additions.

• Over 90% of revenue is recurring, providing high predictability from platform subscription contracts.

Financial highlights

• Q2 2024 revenue: $75.9M (+4% YoY); H1 2024 revenue: $150.6M (+2% YoY).

• Adjusted Gross Margin was 50% for Q2 2024 and H1 2024; technology gross margin at 67%, professional services gross margin at 20% (up 330 bps YoY).

• Net loss per share improved to $(0.23) from $(0.58) year-over-year; adjusted net income per share was $0.12.

• Cash, cash equivalents, and short-term investments totaled $308.3 million at quarter end.

• Operating cash flow for H1 2024 was $11.9 million, compared to a $(17.2) million outflow in H1 2023.

Outlook and guidance

• Q3 2024 revenue expected between $74.5M–$77.5M; adjusted EBITDA $6M–$8M.

• Full year 2024 revenue guidance reiterated at $304M–$312M; adjusted EBITDA $24M–$26M.

• Double-digit revenue growth expected to return in 2025, with higher margin bookings supporting EBITDA growth.

• Bookings and retention rates expected to improve in 2024, with a higher proportion of bookings anticipated in H2.

• Adjusted technology gross margin expected in the high 60s% for 2024; professional services gross margin in the high teens%.