SALT LAKE CITY, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Health Catalyst, Inc. (Nasdaq: HCAT), a leading provider of data and analytics technology and services to healthcare organizations, today reported financial results for the third quarter ended September 30, 2019.

“In the third quarter of 2019, I am pleased that we achieved strong performance across all areas of our business and exceeded the guidance we provided for the quarter,” said Dan Burton, CEO of Health Catalyst. “In addition to this financial and operational execution, we held our sixth annual Healthcare Analytics Summit conference in September, where over 1,600 attendees joined us in Salt Lake City. This year’s Summit was an important opportunity for Health Catalyst to continue to provide thought leadership within the healthcare data and analytics industry, while carefully listening to our customers and the broader industry’s needs. Overall, a positive third quarter positions us well to deliver strong results for the full year 2019 and beyond.”

Financial Highlights for the Three Months Ended September 30, 2019

Key Financial Metrics

 Three Months Ended
September 30,
 Year over
Year Change
 2019 2018 
           
GAAP Financial Data:(in thousands, except percentages)
Technology revenue$21,160  $18,283  16%
Professional services revenue$18,263  $14,585  25%
Total revenue$39,423  $32,868  20%
Loss from operations$(20,736) $(16,495) 26%
Net loss$(21,416) $(16,876) 27%
Other Non-GAAP Financial Data:(1)          
Adjusted Technology Gross Profit$14,484  $12,169  19%
Adjusted Technology Gross Margin68% 67%  
Adjusted Professional Services Gross Profit$6,677  $4,172  60%
Adjusted Professional Services Gross Margin37% 29%  
Total Adjusted Gross Profit$21,161  $16,341  29%
Total Adjusted Gross Margin54% 50%  
Adjusted EBITDA$(8,446) $(11,333) 25%

________________________
(1) These measures are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"). See the accompanying "Non-GAAP Financial Measures" section for more information about these financial measures, including the limitations of such measures, and for a reconciliation of each measure to the most directly comparable measure calculated in accordance with GAAP.

Financial Outlook

Health Catalyst provides forward-looking guidance on total revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP measure.

For the fourth-quarter of 2019, we expect:

  • Total revenue between $40.0 million and $43.0 million, and
  • Adjusted EBITDA between $(9.2) million and $(7.2) million

For the full-year of 2019, we expect:

  • Total revenue between $151.4 million and $154.4 million, and
  • Adjusted EBITDA between $(30.1) million and $(28.1) million

We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for net loss, because there are items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably predicted.

Quarterly Conference Call

The third quarter 2019 earnings conference call and webcast will be held Tuesday, November 12, 2019 at 5:00 p.m. EST. The conference call can be accessed by dialing 1-877-295-1104 for U.S. participants, or 1-470-495-9486 for international participants, and referencing participant code 6569426. A live audio webcast will be available online at https://ir.healthcatalyst.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

About Health Catalyst

Health Catalyst is a leading provider of data and analytics technology and services to healthcare organizations, committed to being the catalyst for massive, measurable, data-informed healthcare improvement. Its customers leverage the cloud-based data platform—powered by data from more than 100 million patient records and encompassing trillions of facts—as well as its analytics software and professional services expertise to make data-informed decisions and realize measurable clinical, financial, and operational improvements. Health Catalyst envisions a future in which all healthcare decisions are data-informed.

Available Information

Health Catalyst intends to use its Investor Relations website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook for Q4 and full year 2019. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key customers or partners; and (v) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 that was filed with the SEC on August 23, 2019.  All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.

Condensed Consolidated Balance Sheets
(in thousands, except share and per share data, unaudited)



 As of As of
 September 30,December 31,
 2019 2018
Assets   
Current assets:   
Cash and cash equivalents$52,059  $28,431 
Short-term investments189,360  4,761 
Accounts receivable, net31,019  27,696 
Deferred costs978  649 
Prepaid expenses and other assets6,403  5,321 
Total current assets279,819  66,858 
Property and equipment, net4,228  4,676 
Intangible assets, net26,684  28,304 
Operating lease right-of-use assets4,494  6,344 
Other assets1,050  1,099 
Goodwill3,694  3,694 
Total assets$319,969  $110,975 
Liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)   
Current liabilities:   
Accounts payable$5,179  $1,812 
Accrued liabilities9,544  9,203 
Acquisition-related consideration payable3,403  2,172 
Deferred revenue32,131  24,755 
Operating lease liabilities2,790  2,577 
Current portion of long-term debt  1,287 
Total current liabilities53,047  41,806 
Long-term debt, net of current portion47,916  18,814 
Acquisition-related consideration payable, net of current portion1,826  3,770 
Deferred revenue, net of current portion7,505  7,280 
Operating lease liabilities, net of current portion2,435  4,228 
Other liabilities687   
Total liabilities113,416  75,898 
Commitments and contingencies   
Redeemable convertible preferred stock, $0.001 par value; no shares and 22,713,694      
shares issued and outstanding as of September 30, 2019 and December 31, 2018,
respectively
  409,845 
Stockholders’ equity (deficit):   
Common stock, $0.001 par value; 36,472,223 and 4,779,356 shares issued and      
outstanding as of September 30, 2019 and December 31, 2018, respectively36  5 
Additional paid-in capital802,777   
Accumulated deficit(596,248) (374,772)
Accumulated other comprehensive loss(12) (1)
Total stockholders’ equity (deficit)206,553  (374,768)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)$319,969  $110,975 
        
        

 

Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)

 Three Months Ended Nine Months Ended
 September 30,September 30,
 2019 2018 2019 2018
Revenue:       
Technology$21,160  $18,283  $61,393  $38,459 
Professional services18,263  14,585  50,047  38,031 
Total revenue39,423  32,868  111,440  76,490 
Cost of revenue, excluding depreciation and amortization:       
Technology(1)(2)6,740  6,132  20,536  12,782 
Professional services(1)(2)(3)11,892  10,865  33,132  28,343 
Total cost of revenue, excluding depreciation and amortization18,632  16,997  53,668  41,125 
Operating expenses:       
Sales and marketing(1)(2)(3)14,721  13,771  35,579  32,496 
Research and development(1)(2)(3)13,477  10,839  33,209  28,031 
General and administrative(1)(2)(3)11,013  5,605  23,333  16,748 
Depreciation and amortization2,316  2,151  6,844  5,252 
Total operating expenses41,527  32,366  98,965  82,527 
Loss from operations(20,736) (16,495) (41,193) (47,162)
Loss on extinguishment of debt    (1,670)  
Interest and other expense, net(659) (374) (2,924) (1,389)
Loss before income taxes(21,395) (16,869) (45,787) (48,551)
Income tax provision (benefit)21  7  43  (142)
Net loss$(21,416) $(16,876) $(45,830) $(48,409)
Less: accretion (reversal of accretion) of redeemable convertible preferred stock18,170  514  180,826  (12,045)
Net loss attributable to common stockholders$(39,586) $(17,390) $(226,656) $(36,364)
Net loss per share attributable to common stockholders, basic and diluted$(1.40) $(3.71) $(17.78) $(7.56)
Weighted-average shares outstanding used in calculating net loss per share attributable to common stockholders, basic and diluted28,223  4,686  12,750  4,813 
              
Pro forma adjusted net loss per share, basic and diluted(4)$(0.27)     $(0.72)    
Pro forma as adjusted weighted-average number of
shares outstanding used in calculating Adjusted
Net Loss per share, basic and diluted(4)
36,373       36,183     

_______________
(1) Includes stock-based compensation expense as follows:

    
 Three Months Ended
September 30,

 Nine Months Ended
September 30,

 2019 2018 2019 2018
                
 (in thousands)
Stock-Based Compensation Expense:               
Cost of revenue, excluding depreciation and amortization:               
Technology$64  $18  $129  $49 
Professional services306  120  593  325 
Sales and marketing1,358  298  2,639  1,023 
Research and development3,067  179  3,502  532 
General and administrative5,179  318  6,165  958 
Total$9,974  $933  $13,028  $2,887 

(2)   Includes tender offer payments deemed compensation expense as follows:

 Three Months Ended
September 30,

 Nine Months Ended
September 30,
  2019  2018
 2019 2018
                
Tender Offer Payments Deemed Compensation Expense:(in thousands)
Cost of revenue, excluding depreciation and amortization:               
Technology$  $  $  $28 
Professional services      284 
Sales and marketing      3,967 
Research and development      906 
General and administrative      3,133 
Total$  $  $  $8,318 

(3)   Includes post-acquisition restructuring costs as follows:

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2019   2018   2019   2018 
                
Post-Acquisition Restructuring Costs:(in thousands)
Cost of revenue, excluding depreciation and amortization:               
Technology$  $  $  $ 
Professional services   332  108  332 
Sales and marketing  749  306  749 
Research and development  484  32  484 
General and administrative   513    513 
Total$  $2,078  $446  $2,078 

(4)   Includes pro forma adjustments to net loss attributable to common stockholders and the weighted average number of common shares outstanding directly attributable to the closing of our initial public offering on July 29, 2019 as well as certain other non-GAAP adjustments. Refer to the "Non-GAAP Financial Measures—Pro Forma Adjusted Net Loss Per Share" section below for further details.

 
 
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
 
 Nine Months Ended
September 30,
  2019   2018 
Cash flows from operating activities       
Net loss $(45,830) $(48,409)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization6,844  5,252 
Loss on extinguishment of debt 1,670   
Amortization of debt discount and issuance costs797  393 
Investment discount and premium amortization(443) (120)
Change in fair value of warrant liability  (37)
Gain on sale of property and equipment(36) (21)
Stock-based compensation expense13,028  2,887 
Change in operating assets and liabilities:   
Accounts receivable, net(3,323) (1,206)
Deferred costs(329) 191 
Prepaid expenses and other assets(1,033) (650)
Operating lease right-of-use assets1,850  (3,957)
Accounts payable, accrued liabilities, and other liabilities 1,661  7,518 
Deferred revenue7,601  7,415 
Operating lease liabilities(1,580) 3,434 
Net cash used in operating activities (19,123) (27,310)
    
Cash flows from investing activities   
Purchases of property and equipment(1,658) (760)
Proceeds from the sale of property and equipment40  21 
Purchase of short-term investments(221,444) (9,234)
Proceeds from the sale and maturity of short-term investments37,277  26,700 
Purchase of intangible assets (1,747) (18)
Net cash (used in) provided by investing activities(187,532) 16,709 
    
Cash flows from financing activities   
Proceeds from initial public offering, net of underwriters' discounts and commissions194,649   
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs12,073  33,987 
Proceeds from exercise of stock options2,177  2,800 
Proceeds from employee stock purchase plan 1,216   
Repurchase of common stock  (8,712)
Payment of SVB line of credit and mezzanine loan(21,821)  
Proceeds from credit facilities, net of debt issuance costs47,169   
Payments of acquisition-related consideration(773) (12,348)
Payments of deferred offering costs(4,407)  
Net cash provided by financing activities230,283  15,727 
Net increase in cash and cash equivalents23,628  5,126 
    
Cash and cash equivalents at beginning of period28,431  22,978 
Cash and cash equivalents at end of period$52,059  $28,104 
        

Non-GAAP Financial Measures

To supplement our financial information presented in accordance with generally accepted accounting principles in the United States, or GAAP, we believe certain non-GAAP measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, Adjusted Net Loss, and Adjusted Net Loss per share, basic and diluted, are useful in evaluating our operating performance. We use this non-GAAP financial information to evaluate our ongoing operations, as a component in determining employee bonus compensation, and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization and excluding (i) stock-based compensation and (ii) post-acquisition restructuring costs. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses. The following is a reconciliation of revenue, the most directly comparable GAAP financial measure, to Adjusted Gross Profit, for the three months ended September 30, 2019 and 2018:

 Three Months Ended September 30, 2019
 (in thousands, except percentages)
 Technology Professional
Services
 Total
Revenue $21,160  $18,263  $39,423 
Cost of revenue, excluding depreciation and amortization(6,740) (11,892) (18,632)
Gross profit, excluding depreciation and amortization14,420  6,371  20,791 
Add:     
Stock-based compensation64  306  370 
Adjusted Gross Profit$14,484  $6,677  $21,161 
Gross margin, excluding depreciation and amortization 68% 35% 53%
Adjusted Gross Margin68% 37% 54%
         

 

 Three Months Ended September 30, 2018
 (in thousands, except percentages)
 Technology Professional
Services
 Total
Revenue$18,283  $14,585  $32,868 
Cost of revenue, excluding depreciation and amortization(6,132) (10,865) (16,997)
Gross profit, excluding depreciation and amortization 12,151  3,720  15,871 
Add:     
Stock-based compensation18  120  138 
Post-acquisition restructuring costs  332  332 
Adjusted Gross Profit$12,169  $4,172  $16,341 
Gross margin, excluding depreciation and amortization 66% 26% 48%
Adjusted Gross Margin 67% 29% 50%

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other expense, net, (ii) income tax provision, (iii) depreciation and amortization, (iv) stock-based compensation, and (v) post-acquisition restructuring costs. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of our net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three months ended September 30, 2019 and 2018:

 Three Months Ended September 30,
  2019   2018 
                
 (in thousands)
Net loss$(21,416) $(16,876)
Add:   
Interest and other expense, net659  374 
Income tax provision21  7 
Depreciation and amortization 2,316  2,151 
Stock-based compensation 9,974  933 
Post-acquisition restructuring costs   2,078 
Adjusted EBITDA $(8,446) $(11,333)
        

Pro Forma Adjusted Net Loss Per Share

Adjusted Net Loss is a non-GAAP financial measure that we define as net loss attributable to common stockholders adjusted for (i) accretion of redeemable convertible preferred stock, (ii) stock-based compensation, (iii) post-acquisition restructuring costs, (iv) amortization of acquired intangibles, and (v) loss on debt extinguishment. We believe Adjusted Net Loss provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

On July 29, 2019, we closed our initial public offering (our IPO) in which we issued and sold 8,050,000 shares (inclusive of the underwriters’ option to purchase an additional 1,050,000 shares, which was exercised on July 25, 2019) of common stock at $26.00 per share. We received net proceeds of $194.6 million after deducting underwriting discounts and commissions and before deducting offering costs of $4.6 million. Upon the closing of our IPO, all shares of our outstanding redeemable convertible preferred stock converted into 23,151,481 shares of common stock on a one-for-one basis. As a result of our IPO closing during the three and nine months ended September 30, 2019, we have prepared the below adjusted condensed consolidated statement of operations data in order to present pro forma adjusted net loss per share amounts that will be comparable to future periods.  The following calculation gives effect to the following pro forma adjustments:

  1. The automatic conversion of all outstanding shares of our redeemable convertible preferred stock (using the if-converted method) into common stock as though the conversion had occurred as of the beginning of each period.
  2. The issuance of 8,050,000 shares of common stock as part of the IPO, assuming the shares of common stock were issued and sold as of the beginning of each period.

The table below presents our calculation of pro forma adjusted net loss per share, basic and diluted, including a reconciliation of Adjusted Net Loss and the pro forma as adjusted weighted-average shares used in calculating pro forma adjusted net loss per share, basic and diluted, to the most directly comparable financial measures calculated in accordance with GAAP:

 Three Months
Ended
September 30,
2019
 Nine Months
Ended
September 30,
2019
    
 (in thousands, except share and per share amounts)
Numerator:   
Net loss attributable to common stockholders  $(39,586)  $(226,656)
Add:       
Accretion of redeemable convertible preferred stock18,170  180,826 
Stock-based compensation9,974  13,028 
Post-acquisition restructuring costs  446 
Amortization of acquired intangibles1,625  4,672 
Loss on extinguishment of debt  1,670 
Adjusted Net Loss$(9,817) $(26,014)
Denominator:   
Weighted-average number of shares used in calculating net loss per share attributable to
common stockholders, basic and diluted 
28,222,555  12,749,903 
Pro forma adjustments:    
Pro forma adjustment to reflect conversion of redeemable convertible preferred stock to
common stock, assuming the conversion took place at the beginning of each period 
6,039,517  17,384,812 
Pro forma adjustment to reflect issuance of shares of common stock as part of IPO,
assuming the issuance took place at the beginning of each period 
2,111,413  6,048,718 
Pro forma as adjusted weighted-average number of shares used in calculating Adjusted Net
Loss per share, basic and diluted 
36,373,485  36,183,433 
Pro forma adjusted net loss per share, basic and diluted $(0.27) $(0.72)
        

Health Catalyst Investor Relations Contact:
Adam Brown
Senior Vice President, Investor Relations
+1 (855)-309-6800
ir@healthcatalyst.com

Health Catalyst Media Contact:
Kristen Berry
Vice President, Public Relations
+1 (617) 234-4123
+1 (774) 573-0455 (m)
kberry@we-worldwide.com