Health Catalyst (HCAT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $76.4 million, up 3% year-over-year, driven by new clients and expansion with existing clients, and adjusted EBITDA was $7.3 million, both exceeding guidance midpoints.

• 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, with adjusted EBITDA guidance raised to $25–$27 million.

• Bookings performance remains strong, with net new platform subscription client additions in the low 20s, the highest in company history.

• The company continues to focus on improvement, growth, and scale, with notable client case studies and external recognitions.

Financial highlights

• Technology revenue for Q3 2024 was $48.7 million, up 6% year-over-year; professional services revenue was $27.7 million, flat year-over-year.

• Adjusted gross margin was 48%, up 70 basis points year-over-year; Q3 2024 gross margin was 36% (up from 34%).

• Adjusted technology gross margin was 65%, down 330 basis points due to upfront costs for migrations; adjusted professional services gross margin was 17%, up 550 basis points year-over-year.

• Adjusted EBITDA increased by $5.3 million year-over-year; adjusted net income per share was $0.07.

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

Outlook and guidance

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

• Full-year 2024 guidance raised for both revenue and adjusted EBITDA.

• Double-digit revenue growth and approximately 50% adjusted EBITDA growth targeted for 2025.

• Bookings and retention rates are expected to improve in Q4 2024, with a higher proportion of bookings anticipated in the fourth quarter.

• Migration to Health Catalyst Ignite is expected to be completed over two years, with near-term margin headwinds but long-term benefits.