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, above guidance, reflecting cost reductions and improved operating leverage.

• Net loss narrowed to $13.5 million from $32.6 million year-over-year, reflecting restructuring and margin improvement.

• Net new platform subscription clients in H1 2024 surpassed all of 2023, with forecasted additions in the low 20s for 2024, marking a record year.

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

Financial highlights

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

• Gross profit for Q2 2024 was $28.8 million, up 8% year-over-year; gross margin improved to 38% from 36%.

• Adjusted Gross Margin was 50% for Q2 2024 and H1 2024; technology gross margin at 51–67%, professional services gross margin at 15–20%.

• Adjusted EBITDA of $7.5 million, up from $3.5 million in Q2 2023; adjusted net income per share was $0.12.

• Cash, cash equivalents, and investments totaled $308.3 million as of June 30, 2024.

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, driven by strong bookings and cross-sell momentum.

• Professional services revenue growth to slightly outpace technology revenue growth for full-year 2024.

• Adjusted operating expenses as a percentage of revenue expected to trend lower due to restructuring and operating leverage.