Health Catalyst (HCAT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $76.4 million, growing 3% year-over-year, with adjusted EBITDA of $7.3 million, both exceeding prior guidance midpoints and driven by new and expanding clients.

• Net loss narrowed to $14.7 million in Q3 2024 from $22.0 million in Q3 2023; nine-month net loss improved to $48.8 million from $87.8 million.

• Full-year 2024 revenue is now expected between $305–$311 million, and adjusted EBITDA between $25–$27 million, reflecting raised guidance.

• Bookings performance remains strong, with net new platform subscription client additions in the low 20s, the highest in company history; bookings and retention rates are expected to improve in Q4 2024.

• Migration to the Health Catalyst Ignite platform is underway, expected to drive long-term margin improvements despite near-term headwinds.

Financial highlights

• Q3 2024 revenue grew 3% year-over-year to $76.4 million; nine months: $227.0 million (+3%).

• Technology revenue was $48.7 million (6% growth YoY); professional services revenue was $27.7 million (flat YoY).

• Adjusted gross margin was 48% (up 70 bps YoY); adjusted technology gross margin was 65% (down 330 bps YoY); adjusted professional services gross margin was 17% (up 550 bps YoY).

• Q3 2024 net loss: $14.7 million (improved from $22.0 million); adjusted net income per share was $0.07; 60.4 million weighted average shares.

• Cash, cash equivalents, and short-term investments totaled $387.3 million at Q3 end.

Outlook and guidance

• Q4 2024 revenue expected between $78–$84 million; adjusted EBITDA between $6.8–$8.8 million.

• Full-year 2024 revenue guidance raised to $305–$311 million; adjusted EBITDA to $25–$27 million.

• Expects higher YoY revenue growth in H2 2024 versus H1 2024; professional services revenue growth is expected to slightly outpace technology revenue growth for full-year 2024.

• 2025 outlook includes double-digit revenue growth and ~50% adjusted EBITDA growth.

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