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What changed in Health Catalyst, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Health Catalyst, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+470 added−491 removedSource: 10-K (2026-03-12) vs 10-K (2025-02-26)

Top changes in Health Catalyst, Inc.'s 2025 10-K

470 paragraphs added · 491 removed · 370 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

61 edited+8 added−8 removed134 unchanged
Biggest changeOverseeing care coordination, care management, or ambulatory operations teams could be alleged in some cases to involve treatment or diagnosis of patients which requires a clinic license or other state license or permission. 19 Table of Contents Any determination that we are acting in the capacity of a healthcare provider and acting improperly as a healthcare provider, exercising undue influence or control over a healthcare provider or impermissibly sharing fees with a healthcare provider, may result in additional compliance requirements, expense, and liability to us, and require us to change or terminate some portions of our contractual arrangements or business.
Biggest changeAny determination that we are acting in the capacity of a healthcare provider and acting improperly as a healthcare provider, exercising undue influence or control over a healthcare provider or impermissibly sharing fees with a healthcare provider, may result in additional compliance requirements, expense, and liability to us, and require us to change or terminate some portions of our contractual arrangements or business. 20 Table of Contents Patient safety organization certification and other certification requirements Our patient safety organization (PSO) is certified by the Agency for Healthcare Research and Quality (AHRQ), an agency of the Department of Health and Human Services (HHS).
When team members feel connected to our mission and are listened to, cared for, and respected at an extraordinary level, they produce outstanding work, which enables our clients to measurably improve.
When team members feel connected to our mission and are listened to, cared for, and respected at an extraordinary level, they produce outstanding work, which enables our clients to measurably improve.
As clients realize improvements, their trust in Health Catalyst builds, their engagement in our shared work increases, and they choose to renew and expand their relationship with us, while also referring Health Catalyst to key decision-makers at other potential clients. Client renewal, expansion, and referral produce growing, scalable, and predictable financial performance.
As clients realize improvements, their trust in Health Catalyst builds, their engagement in our shared work increases, and they choose to renew and expand their relationship with us, while also referring Health Catalyst to key decision-makers at other potential clients. Client renewal, expansion, and referral produce growing, scalable, and predictable financial performance.
We will continue to emphasize the Health Catalyst Way, including our operating principles and cultural attributes, which we believe will be central to our long-term success. 6 Table of Contents Our Operating Principles The principles that govern our daily interactions include: Improvement • We are deeply committed to enabling our clients to achieve and sustain measurable clinical, financial, and operational improvements • We nurture deep, long-term client partnerships because achieving and sustaining improvement is a transformational journey (not a quick trip) • We pragmatically prioritize innovations that accelerate improvement • We attract, develop, and retain experts who know best practices in their domain, leverage analytics for insight, and accelerate adoption for sustained improvement Accountability • We are all accountable to ourselves and to one another to proactively show up every day in support of our company’s mission • We make decisions that balance and optimize the interests of our teammates, clients, patients, and shareholders • We avoid an entitlement mentality and are good stewards of our assets • We don’t micro-manage and we show trust while also having high expectations of ourselves and of one another Respect • We recognize the immeasurable value of every individual • We listen carefully to one another and learn from each of our colleagues • We care deeply about our colleagues, including teammates, clients, patients, and shareholders • We benefit from one another’s diverse backgrounds and experiences, and are unified by our company’s mission Transparency • We are honest and compassionate in our interactions with others and with ourselves, even if the truth is hard • We strive to live up to the Health Catalyst Way in all settings • We treat confidential information appropriately, and we protect the private data of our clients’ patients • We recommend the best solutions for our clients, whether or not those solutions come from Health Catalyst Our Cultural Attributes The attributes we prioritize in hiring, retention, and promotion include: Continuous learning • I can share with and learn from others • I love to learn, and I am a lifelong student • I recognize my mistakes and correct them quickly 7 Table of Contents • I seek and respond favorably to feedback and coaching • I value my autonomy and use it to gain new knowledge and skills • I recognize that diversity of perspectives leads to better decisions • I am self-aware and seek improvement, personally and professionally • I watch, listen, and learn from others; thank them for their teachings; and apply the teachings to the mastery of my profession; and I do the same for others Commitment • I stick to the task until the job is completed • I recognize that not every part of my job will be fun • I make personal sacrifices, as needed, to get the work done • I am willing to contribute more than my fair share to a project • I have a deep, long-term commitment to healthcare improvement • I lead a balanced, healthy life that enables me to sustain my pace Humility • I listen first • I serve others without looking for recognition • My first assumption with others is positive intent • I often acknowledge others for their contributions • I am secure in my own abilities (quiet self-confidence) • I seek to improve myself before trying to improve others • I am excited when others succeed, and I offer sincere praise • I empower others to do their best and give proper credit to others • I frequently express gratitude and appreciation to those around me Excellence • I strive for excellence and quality in all aspects of my work; I show up to fulfill my role in the company's mission to the best of my ability • I recognize the importance of excellence in pursuit of our mission • I strive to be well informed about events and trends in healthcare, data and analytics, and improvement • I actively contribute to the company’s pursuit of excellence—in the technology we build, in the services we provide, and in the functions that support this important work • I recognize and ask for help when I need it 8 Table of Contents Our Governing Principle: The Golden Rule Treat others as we would wish to be treated—with kindness, humility, and respect.
We will continue to emphasize the Health Catalyst Way, including our operating principles and cultural attributes, which we believe will be central to our long-term success. 7 Table of Contents Our Operating Principles The principles that govern our daily interactions include: Improvement • We are deeply committed to enabling our clients to achieve and sustain measurable clinical, financial, and operational improvements • We nurture deep, long-term client partnerships because achieving and sustaining improvement is a transformational journey (not a quick trip) • We pragmatically prioritize innovations that accelerate improvement • We attract, develop, and retain experts who know best practices in their domain, leverage analytics for insight, and accelerate adoption for sustained improvement Accountability • We are all accountable to ourselves and to one another to proactively show up every day in support of our company’s mission • We make decisions that balance and optimize the interests of our teammates, clients, patients, and shareholders • We avoid an entitlement mentality and are good stewards of our assets • We don’t micro-manage and we show trust while also having high expectations of ourselves and of one another Respect • We recognize the immeasurable value of every individual • We listen carefully to one another and learn from each of our colleagues • We care deeply about our colleagues, including teammates, clients, patients, and shareholders • We benefit from one another’s diverse backgrounds and experiences, and are unified by our company’s mission Transparency • We are honest and compassionate in our interactions with others and with ourselves, even if the truth is hard • We strive to live up to the Health Catalyst Way in all settings • We treat confidential information appropriately, and we protect the private data of our clients’ patients • We recommend the best solutions for our clients, whether or not those solutions come from Health Catalyst Our Cultural Attributes The attributes we prioritize in hiring, retention, and promotion include: Continuous learning • I can share with and learn from others • I love to learn, and I am a lifelong student • I recognize my mistakes and correct them quickly 8 Table of Contents • I seek and respond favorably to feedback and coaching • I value my autonomy and use it to gain new knowledge and skills • I recognize that diversity of perspectives leads to better decisions • I am self-aware and seek improvement, personally and professionally • I watch, listen, and learn from others; thank them for their teachings; and apply the teachings to the mastery of my profession; and I do the same for others Commitment • I stick to the task until the job is completed • I recognize that not every part of my job will be fun • I make personal sacrifices, as needed, to get the work done • I am willing to contribute more than my fair share to a project • I have a deep, long-term commitment to healthcare improvement • I lead a balanced, healthy life that enables me to sustain my pace Humility • I listen first • I serve others without looking for recognition • My first assumption with others is positive intent • I often acknowledge others for their contributions • I am secure in my own abilities (quiet self-confidence) • I seek to improve myself before trying to improve others • I am excited when others succeed, and I offer sincere praise • I empower others to do their best and give proper credit to others • I frequently express gratitude and appreciation to those around me Excellence • I strive for excellence and quality in all aspects of my work; I show up to fulfill my role in the company's mission to the best of my ability • I recognize the importance of excellence in pursuit of our mission • I strive to be well informed about events and trends in healthcare, data and analytics, and improvement • I actively contribute to the company’s pursuit of excellence—in the technology we build, in the services we provide, and in the functions that support this important work • I recognize and ask for help when I need it 9 Table of Contents Our Governing Principle: The Golden Rule Treat others as we would wish to be treated—with kindness, humility, and respect.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, and provides adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QMSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced, and provides adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal, and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with requirements governing Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
We fulfill our mission through a confluence of the following elements: • Data and Analytics Platform : Integrate data in a flexible, open, scalable, and modular platform to power insights; • Applications : Deliver analytics insights on how to measurably improve and automate processes to drive efficiency; • Expertise : Enable data-informed improvement by providing expertise and managed services; • Measurable Improvement: Trust builds, client engagement increases, and learnings expand across the ecosystem; and • Engagement : Attract, develop, retain, and empower extraordinary team members deeply engaged and committed to the mission of improvement. 5 Table of Contents The Health Catalyst Flywheel We accomplish our mission with each of our clients by following a process and strategy we call the Health Catalyst Flywheel (the Flywheel).
We fulfill our mission through a confluence of the following elements: • Data and Analytics Platform : Integrate data in a flexible, open, scalable, and modular platform to power insights; • Applications : Deliver analytics insights on how to measurably improve and automate processes to drive efficiency; • Expertise : Enable data-informed improvement by providing expertise and managed services; • Measurable Improvement: Trust builds, client engagement increases, and learnings expand across the ecosystem; and • Engagement : Attract, develop, retain, and empower extraordinary team members deeply engaged and committed to the mission of improvement. 6 Table of Contents The Health Catalyst Flywheel We accomplish our mission with each of our clients by following a process and strategy we call the Health Catalyst Flywheel (the Flywheel).
These laws and regulations include or may include the following: • The federal Anti-Kickback Statute makes it illegal for any person to knowingly and willfully solicit, receive, offer, or pay any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in exchange for, or intended to induce or reward, including arranging for or recommending, either the referral of an individual, or the purchase, lease, order, prescription, or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid program.
These laws and regulations include or may include the following: 19 Table of Contents • The federal Anti-Kickback Statute makes it illegal for any person to knowingly and willfully solicit, receive, offer, or pay any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in exchange for, or intended to induce or reward, including arranging for or recommending, either the referral of an individual, or the purchase, lease, order, prescription, or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal healthcare program, such as the Medicare and Medicaid program.
The majority of our clients who are not Platform Clients are technology clients resulting from our business acquisitions and typically operate under subscription contracts. 9 Table of Contents Our clients include academic medical centers, integrated delivery networks, community hospitals, large physician practices, Accountable Care Organizations (ACOs), health information exchanges, health insurers, and other risk-bearing entities.
The majority of our clients who are not Platform Clients are technology clients resulting from our business acquisitions and typically operate under subscription contracts. 10 Table of Contents Our clients include academic medical centers, integrated delivery networks, community hospitals, large physician practices, Accountable Care Organizations (ACOs), health information exchanges, health insurers, and other risk-bearing entities.
From our perspective, discussions regarding data and analytics strategy have oftentimes transitioned from a discussion with members of the IT department to an enterprise-wide, strategic discussion with the C-suite and other leadership members. No client represented more than 10% of our total revenue for the years ended December 31, 2024, 2023, and 2022.
From our perspective, discussions regarding data and analytics strategy have oftentimes transitioned from a discussion with members of the IT department to an enterprise-wide, strategic discussion with the C-suite and other leadership members. No client represented more than 10% of our total revenue for the years ended December 31, 2025, 2024, and 2023.
We believe there is ample room to win new business and deepen market penetration in our core market. Further, healthcare providers outside of the United States face similar challenges to those in the United States and can implement our Solution to address them. We have a presence in Singapore, the UK, Saudi Arabia, and a small number of other countries.
We believe there is ample room to win new business and deepen market penetration in our core market. Further, healthcare providers outside of the United States face similar challenges to those in the United States and can implement our Solution to address them. We have a presence in Singapore, the UK, and a small number of other countries.
Manufacturers of medical device products marketed in the United States are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
Manufacturers of medical device products marketed in the United States are required to comply with the applicable portions of the QMSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation, and servicing of finished devices intended for human use.
Manage fragmented data across multiple source systems by making mastered patient and provider data broadly accessible from one central location and ingest mastered data from any vendor. 12 Table of Contents • Data security: Sensitive data discovery, security, and access control with activity monitoring. • Support and Account Management ◦ 24 x 7 tech support.
Manage fragmented data across multiple source systems by making mastered patient and provider data broadly accessible from one central location and ingest mastered data from any vendor. 13 Table of Contents • Data security. Sensitive data discovery, security, and access control with activity monitoring. • Support and Account Management. ◦ 24 x 7 tech support.
A healthcare patient engagement SaaS technology that, among other uses, helps automate patient-centered, personalized, multi-channel communication between care teams and patients, with the goals of transforming the patient experience, driving better care outcomes, and reducing healthcare costs. 13 Table of Contents • Oncology care management and patient engagement (Carevive).
A healthcare patient engagement SaaS technology that, among other uses, helps automate patient-centered, personalized, multi-channel communication between care teams and patients, with the goals of transforming the patient experience, driving better care outcomes, and reducing healthcare costs. 14 Table of Contents • Oncology care management and patient engagement (Carevive).
The unique combination of talent and experience across healthcare and technology, as well as our management team’s commitment to the Health Catalyst Way, underpin everything we do. 10 Table of Contents Our Growth Strategies Our growth strategies reflect our mission to be the catalyst for massive, measurable, data-informed healthcare improvement.
The unique combination of talent and experience across healthcare and technology, as well as our management team’s commitment to the Health Catalyst Way, underpin everything we do. 11 Table of Contents Our Growth Strategies Our growth strategies reflect our mission to be the catalyst for massive, measurable, data-informed healthcare improvement.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for more information regarding the definitions of Dollar-based Retention Rate and Platform Clients. • Add new applications and offerings.
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K for more information regarding the definitions of Dollar-based Retention Rate and Platform Clients. • Add new applications and offerings.
Platform Clients are defined as: (i) all Platform Clients as of December 31, 2024 under our historical definition (formerly referred to as DOS Subscription Clients, which we also referred to as Platform Subscription Clients), and (ii) going forward in 2025 and beyond, any client that signs technology contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
Platform Clients are defined as: (i) all Platform Clients as of December 31, 2024 under our historical definition (formerly referred to as DOS Subscription Clients, which we also referred to as Platform Subscription Clients), and (ii) as of January 1, 2025, any client that signs technology contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
This process includes delivering on the three components of our Solution: data and analytics platform, applications, and expertise, which together drive measurable improvements. At the center of the Flywheel is the engagement of our team members. Team member engagement is foundational to everything we do and is the #1 priority of our CEO and broader leadership team.
This process includes delivering on the three components of our Solution: data and analytics platform, applications, and expertise, which together drive measurable improvements. At the center of the Flywheel is the engagement of our team members. Team member engagement is foundational to everything we do and is a high priority of our CEO and broader leadership team.
Team Members and Culture We currently employ more than 1,500 team members. Our Gallup team member engagement scores demonstrate that we have good relationships with our team members. None of our team members are subject to collective bargaining agreements or are represented by a union. Our corporate culture is a critical component of our success.
Team Members and Culture We currently employ more than 1,200 team members. We believe our Gallup team member engagement scores demonstrate that we have good relationships with our team members. None of our team members are subject to collective bargaining agreements or are represented by a union. Our corporate culture is a critical component of our success.
We have generated over 1,800 documented, client-verified improvements across clinical, financial, and operational domains. Each of these documented improvements is highly valuable to our clients, enabling them to realize substantial clinical improvements, financial savings, or operational efficiencies. As we deliver measurable improvements, trust builds, and our clients engage with us more broadly and refer new business.
We have generated over 2,000 documented, client-verified improvements across clinical, financial, and operational domains. Each of these documented improvements is highly valuable to our clients, enabling them to realize substantial clinical improvements, financial savings, or operational efficiencies. As we deliver measurable improvements, trust builds, and our clients engage with us more broadly and refer new business.
Our Solution has generated over 1,800 documented, client-verified improvements across clinical, financial, and operational domains. Attractive operating model. We have an attractive operating model due to the recurring nature of the vast majority of our revenue and the modularity and scalability of our Ignite platform and analytics applications. Our recurring revenue subscription model provides a high degree of revenue visibility.
Our Solution has generated over 2,000 documented, client-verified improvements across clinical, financial, and operational domains. Attractive operating model. We have an attractive operating model due to the recurring nature of the vast majority of our revenue and the modularity and scalability of our Ignite platform and analytics applications. Our recurring revenue subscription model provides a high degree of revenue visibility.
While we believe there are significant opportunities in our core market, these business segment adjacencies have the potential to significantly grow our addressable market and business over time. • Selectively pursue acquisitions and partnerships.
While we believe there are significant opportunities in our core market, these business segment adjacencies have the potential to significantly grow our addressable market and business over time. • Selectively pursue partnerships and maximize return on acquisitions.
Help clients ingest data sources and provide consulting around Ignite best practice and strategy around leveraging new Ignite features. • Analytics engineering services. Partner with clients to generate meaningful insights produced from our technology that lead improvement efforts. Guides best practice and training. • Implementation services. Implement and configure Ignite and analytics applications. • Data science services.
Help clients ingest data sources and provide consulting around Ignite best practice and strategy around leveraging new Ignite features. • Analytics engineering services. Partner with clients to generate meaningful insights produced from our technology that lead improvement efforts. Guides best practice and training. • Implementation services.
Human Capital Management At the center of the Flywheel is the engagement of our team members. Team member engagement is foundational to everything we do and is the #1 priority of our CEO and broader leadership team.
Human Capital Management At the center of the Flywheel is the engagement of our team members. Team member engagement is foundational to everything we do and is a high priority of our CEO and broader leadership team.
A cardiology registry solution that combines technology and services offerings, clinical expertise, and customer service—combined with rapid registry development and cloud-based solutions—to provide certified, timely, and comprehensive registry solutions and updates to clients. 14 Table of Contents • Cancer registries (CRStar).
A cardiology registry solution that combines technology and services offerings, clinical expertise, and customer service—combined with rapid registry development and cloud-based solutions—to provide certified, timely, and comprehensive registry solutions and updates to clients. • Cancer registries (CRStar).
The contents of any website referred to in this Annual Report on Form 10-K are not intended to be incorporated into this Annual Report on Form 10-K or in any other report or document we file. 24 Table of Contents
The contents of any website or social media account referred to in this Annual Report on Form 10-K are not intended to be incorporated into this Annual Report on Form 10-K or in any other report or document we file. 25 Table of Contents
Point solution companies include Optum Analytics, Premier, Arcadia.io, Strata Decision Technology, Craneware, Innovaccer, and Intersystems. 17 Table of Contents The principal competitive factors in our industry include: • level of client satisfaction; • ease of deployment and use of solutions and applications; • breadth and depth of solution and application functionality; • access to, and ability to glean insights from, large data sets; • brand awareness and reputation; • modern and adaptive technology platform; • capability for customization, configurability, integration, security, scalability, and reliability of applications; • total cost of ownership; • ability to innovate and respond to client needs rapidly; • size of client base and level of user adoption; • regulatory compliance verification and functionality; • domain expertise with respect to healthcare; and • ability to integrate with legacy enterprise infrastructures and third-party applications.
The principal competitive factors in our industry include: 18 Table of Contents • level of client satisfaction; • ease of deployment and use of solutions and applications; • breadth and depth of solution and application functionality; • access to, and ability to glean insights from, large data sets; • brand awareness and reputation; • modern and adaptive technology platform; • capability for customization, configurability, integration, security, scalability, and reliability of applications; • total cost of ownership; • ability to innovate and respond to client needs rapidly; • size of client base and level of user adoption; • regulatory compliance verification and functionality; • domain expertise with respect to healthcare; and • ability to integrate with legacy enterprise infrastructures and third-party applications.
Work with client teams to apply scientific methods, processes, algorithms, and systems to ask and answer questions using data. In addition, build software tools to enable self-service capabilities for clients. 15 Table of Contents • Analytics strategy services.
Implement and configure Ignite and analytics applications. 16 Table of Contents • Data science services. Work with client teams to apply scientific methods, processes, algorithms, and systems to ask and answer questions using data. In addition, build software tools to enable self-service capabilities for clients. • Analytics strategy services.
The team member experience is the #1 priority of our CEO and other members of our leadership team.
The team member experience is a high priority of our CEO and other members of our leadership team.
We have implemented and continue to develop many programs designed to achieve these priorities, some of which are further described below. 22 Table of Contents As of December 31, 2024, we had more than 1,500 team members, the vast majority of whom are located in the United States and approximately 10% of whom are located in India.
We have implemented and continue to develop many programs designed to achieve these priorities, some of which are further described below. As of December 31, 2025, we had more than 1,200 team members, the vast majority of whom are located in the United States and approximately 16% of whom are located in India.
Moreover, we believe the companies we partner with and acquire choose us because of our collaborative, best-in-class culture which we view as a differentiating factor in sourcing acquisitions and partnerships. 11 Table of Contents Our Solution Our Solution empowers our clients to run a data-informed business.
Moreover, we believe the companies we partner with and acquire choose us because of our collaborative, best-in-class culture which we view as a differentiating factor in sourcing acquisitions and partnerships. In the near-term our focus is on maximizing the return on our past acquisitions. 12 Table of Contents Our Solution Our Solution empowers our clients to run a data-informed business.
Our team is comprised of over 1,200 analytics experts and domain experts, including several nationally-recognized healthcare and analytics leaders. Our domain experts provide services across a range of specialties, including: Infrastructure, data, and analytics expertise: • Data engineering services.
As of December 31, 2025, our team is comprised of over 950 analytics experts and domain experts, including several nationally-recognized healthcare and analytics leaders. Our domain experts provide services across a range of specialties, including: Infrastructure, data, and analytics expertise: • Data engineering services.
The FDA has broad regulatory compliance and enforcement powers. 21 Table of Contents If the FDA determines that a company has failed to comply with applicable regulatory requirements, including a determination that medical software products require prior FDA clearance or approval to be legally marketed in the United States, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; recalls, withdrawals, or administrative detentions or seizure of products; operating restrictions or partial suspension or total shutdown of production; refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; withdrawing 510(k) clearances or PMA approvals that have already been granted; refusal to grant export or import approvals; or criminal prosecution.
If the FDA determines that a company has failed to comply with applicable regulatory requirements, including a determination that medical software products require prior FDA clearance or approval to be legally marketed in the United States, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties; recalls, withdrawals, or administrative detentions or seizure of products; operating restrictions or partial suspension or total shutdown of production; refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; withdrawing 510(k) clearances or PMA approvals that have already been granted; refusal to grant export or import approvals; or criminal prosecution. 22 Table of Contents Foreign regulations Our subsidiaries in the United Kingdom, India, Singapore, the United Arab Emirates, and Australia are subject to additional regulations by the governments of the United Kingdom, India, Singapore, the United Arab Emirates, and Australia, respectively, as well as their respective subdivisions.
As of December 31, 2024, we served 130 Platform Clients (formerly the most similar defined term was DOS Subscription Clients, which we also referred to as Platform Subscription Clients) and over 900 App Clients (formerly the most similar defined term was other clients).
As of December 31, 2025, we served 162 Platform Clients (formerly the most similar defined term was DOS Subscription Clients, which we also referred to as Platform Subscription Clients) and over 1,000 App Clients (formerly the most similar defined term was other clients).
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (QSR), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality Management System Regulation (QMSR), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. 21 Table of Contents Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device.
In total, we have been recognized 110 times as a “best place to work” by Glassdoor, Gallup, and Modern Healthcare, among others. Additionally, we have received multiple awards for client satisfaction and excellence from KLAS, among others.
Moreover, we have received numerous awards and recognition for our culture and service to our clients. In total, we have been recognized 132 times as a “best place to work” by Glassdoor, Gallup, and Modern Healthcare, among others. Additionally, we have received multiple awards for client satisfaction and excellence from MedTech and KLAS, among others.
Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO’s social media accounts, in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD.
The SEC’s website (https://www.sec.gov) contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 24 Table of Contents Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our and our CEO’s social media accounts (including our CEO’s and our account on LinkedIn (https://www.linkedin.com/in/ben-albert-0a763b1/ and https://www.linkedin.com/company/healthcatalyst/, respectively)), in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD.
Our research and development organization is responsible for the design, development, and testing of the technology portion of our Solution. Based on client feedback and needs, we focus our efforts on developing or acquiring new products, functionality, applications, and core technologies and further enhancing the usability, functionality, reliability, performance, and flexibility of our Solution.
Based on client feedback and needs, we focus our efforts on developing or acquiring new products, functionality, applications, and core technologies and further enhancing the usability, functionality, reliability, performance, and flexibility of our Solution.
In addition, there may be other federal and state certification requirements that we may be required to meet from time to time in connection with our Solution. We cannot be certain that our Solution will continue to meet these standards. The failure to comply with these certification requirements could result in the loss of certification. Interoperability Standards .
We must meet certain requirements to maintain this certification. In addition, there may be other federal and state certification requirements that we may be required to meet from time to time in connection with our Solution. We cannot be certain that our Solution will continue to meet these standards.
As of December 31, 2024, we had fourteen issued U.S. patents, four issued Canadian patents, one issued Great Britain patent, and one issued European patent, which expire between 2026 and 2038, as well as one utility patent application pending in the United States. These patents and patent applications seek to protect proprietary inventions relevant to our business.
As of December 31, 2025, we had fifteen issued U.S. patents, four issued Canadian patents, one issued Great Britain patent, and one issued European patent, which expire between 2026 and 2046. These patents and patent applications seek to protect proprietary inventions relevant to our business.
The QSR also requires, among other things, maintenance of a device master file, device history file, and complaint files. Device manufacturers are also subject to periodic scheduled or unscheduled inspections by the FDA.
The QMSR also requires, among other things, maintenance of a medical device file and complaint files. Device manufacturers are also subject to periodic scheduled or unscheduled inspections by the FDA. The FDA has broad regulatory compliance and enforcement powers.
While we expect this will be less of a focal area in the near term, we plan to continue evaluating and identifying opportunities where we can leverage our Ignite platform to scale and consolidate both data assets and best-of-breed applications.
While we do not expect to acquire new entities in the near term, in the long-term we plan to continue evaluating and identifying opportunities where we can leverage our Ignite platform to scale and consolidate both data assets and best-of-breed applications.
Industry-agnostic analytics companies that help healthcare organizations develop homegrown solutions include IBM, Databricks, Snowflake, Microsoft, Tableau CRM, and Qlik. EHR companies include Oracle Health and Epic Systems.
Industry-agnostic analytics companies that help healthcare organizations develop homegrown solutions include IBM, Databricks, Snowflake, Microsoft, Tableau CRM, and Qlik. EHR companies include Oracle Health and Epic Systems. Point solution companies include Optum Analytics, Premier, Arcadia.io, Strata Decision Technology, Craneware, Innovaccer, and Intersystems.
The Office of National Coordinator for Health Information Technology (ONC) is charged under the 21st Century Cures Act with developing a Trusted Exchange Framework that establishes governance requirements for trusted health information exchange in the United States. ONC has developed the U.S. Common Data Set for Interoperability which may lay the groundwork for future data exchange requirements for trusted exchange.
The failure to comply with these certification requirements could result in the loss of certification. Interoperability Standards . The Office of National Coordinator for Health Information Technology (ONC) is charged under the 21st Century Cures Act with developing a Trusted Exchange Framework that establishes governance requirements for trusted health information exchange in the United States. ONC has developed the U.S.
While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
These special controls can include performance standards, post-market surveillance, patient registries, and FDA guidance documents. While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. 18 Table of Contents Fraud, waste, and abuse Even though we do not directly order or provide healthcare services that are reimbursable by Medicare, Medicaid, or other third-party payors or submit claims or receive reimbursement from any such payor, certain federal and state healthcare laws and regulations pertaining to fraud, abuse, and waste apply or may apply to our business and to the financial arrangements through which we market, sell, and provide our services to our healthcare provider clients.
Fraud, waste, and abuse Even though we do not directly order or provide healthcare services that are reimbursable by Medicare, Medicaid, or other third-party payors or submit claims or receive reimbursement from any such payor, certain federal and state healthcare laws and regulations pertaining to fraud, abuse, and waste apply or may apply to our business and to the financial arrangements through which we market, sell, and provide our services to our healthcare provider clients.
A foundational product for integrating hundreds of measures across financial, regulatory, and quality departments and reporting those measures to third-party entities like the Centers for Medicare & Medicaid Services (CMS). Enables proactive measures surveillance to enhance outcomes and facilitates monitoring behaviors, interventions, and activities needed to influence, manage, or change outcomes. • Cardiology registries (ARMUS Suite ).
A foundational product for integrating hundreds of measures across financial, regulatory, and quality departments and reporting those measures to third-party entities like the Centers for Medicare & Medicaid Services (CMS).
Since the COVID-19 pandemic, we have allowed all team members to work remotely to protect their health, safety, and wellness, and we continue to support our workforce with the technology and infrastructure necessary to work from a remote location, including a work equipment and utilities reimbursement program to help our team members improve their dynamic workspaces. 23 Table of Contents Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement, and all amendments to these filings are available free of charge from our investor relations website (https://ir.healthcatalyst.com/financial-information/sec-filings) as soon as reasonably practicable following our filing with or furnishing to the Securities and Exchange Commission, or the SEC, of any of these reports.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement, and all amendments to these filings are available free of charge from our investor relations website (https://ir.healthcatalyst.com/financial-information/sec-filings) as soon as reasonably practicable following our filing with or furnishing to the Securities and Exchange Commission, or the SEC, of any of these reports.
ONC continues to modify and refine these standards. We may incur increased software development and administrative expense and delays in delivering technology and services if we need to update our services to conform to these varying and evolving requirements. In addition, delays in interpreting these standards may result in postponement or cancellation of our clients’ decisions to purchase our services.
Common Data Set for Interoperability which may lay the groundwork for future data exchange requirements for trusted exchange. ONC continues to modify and refine these standards. We may incur increased software development and administrative expense and delays in delivering technology and services if we need to update our services to conform to these varying and evolving requirements.
We believe that competing point solutions vendors will have difficulty growing their offerings into sustainable businesses, which we believe translates into a robust mergers and acquisitions pipeline for us. We have a track record of identifying and integrating new and complementary capabilities, including our acquisitions of Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, ERS, Carevive, Lumeon, and Intraprise.
We have a track record of identifying and integrating new and complementary capabilities, including our acquisitions of Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, ERS, Carevive, Lumeon, Intraprise, and Upfront.
We believe our currently marketed products are not currently regulated by the FDA as medical devices, or are otherwise subject to the FDA’s current enforcement discretion policies. 20 Table of Contents FDA premarket clearance and approval requirements - Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, or approval of a premarket approval application (PMA).
FDA premarket clearance and approval requirements - Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a 510(k) premarket notification, or approval of a premarket approval application (PMA).
This event also features our annual Catalyst Awards, highlighting the best examples of healthcare improvement amount our clients. Research and Development Our ability to compete depends in large part on our continuous commitment to research and development and our ability to rapidly introduce and refine new applications, technologies, features, and functionality.
Research and Development Our ability to compete depends in large part on our continuous commitment to research and development and our ability to rapidly introduce and refine new applications, technologies, features, and functionality. Our research and development organization is responsible for the design, development, and testing of the technology portion of our Solution.
If our services are not compliant with these evolving standards, our market position and sales could be impaired, and we may have to invest significantly in changes to our technology and services. The 21 st Century Cures Act includes provisions related to data interoperability, information blocking, and patient access.
In addition, delays in interpreting these standards may result in postponement or cancellation of our clients’ decisions to purchase our services. If our services are not compliant with these evolving standards, our market position and sales could be impaired, and we may have to invest significantly in changes to our technology and services.
Corporate practice of medicine regulations and other similar laws may also prevent fee-splitting, or the sharing of professional service income with non-professional or business interests.
Corporate practice of medicine regulations and other similar laws may also prevent fee-splitting, or the sharing of professional service income with non-professional or business interests. Overseeing care coordination, care management, or ambulatory operations teams could be alleged in some cases to involve treatment or diagnosis of patients which requires a clinic license or other state license or permission.
Sales and Marketing We market and sell our services to healthcare organizations primarily in the United States and we opportunistically market and sell in other countries and regions. Our dedicated sales team identifies healthcare organizations that would benefit from our Solution.
We believe that these honors demonstrate the loyalty of our team members and our clients and that our culture is driving the behaviors that will help fuel our future growth. Sales and Marketing We market and sell our services to healthcare organizations primarily in the United States and we opportunistically market and sell in other countries and regions.
The information on our website is not incorporated by reference into this Annual Report on Form 10-K. Team member engagement We regularly engage with our team members to assess their job satisfaction, including conducting regular team member surveys and hosting monthly all-team-member meetings in which leadership answers questions from team members.
We have not experienced any work stoppages, and we believe our Gallup scores demonstrate that we have high quality team member relations and engagement. 23 Table of Contents Team member engagement We regularly engage with our team members to assess their job satisfaction, including conducting regular team member surveys and hosting monthly all-team-member meetings in which leadership answers questions from team members.
We will continue to invest in helping clients identify additional uses for our Solution, ensuring they achieve measurable improvements throughout our relationship with them, including through our Tech-Enabled Managed Services (TEMS) offering.
We had a Dollar-based Retention Rate of 100% for each of the years ended December 31, 2024 and 2023, respectively, based on our legacy definition. We will continue to invest in helping clients identify additional uses for our Solution, so that they achieve measurable improvements throughout our relationship with them, including through our TEMS offering.
We engage compensation consultants to enable us to make data-informed decisions with respect to our compensation and benefit packages so we continue to attract and retain top talent. Moreover, we have received numerous awards and recognition for our culture and service to our clients.
This continuous interaction across the entire Health Catalyst community creates a cycle that further reinforces our culture and fuels our growth. 17 Table of Contents We engage compensation consultants to enable us to make data-informed decisions with respect to our compensation and benefit packages so we continue to attract and retain top talent.
It uses secure, bi-directional data integration and clinical logic to drive patients to the next best clinical action. • Clinical accelerators .
It uses secure, bi-directional data integration and clinical logic to drive patients to the next best clinical action. • Patient acquisition and retention (Upfront). Upfront’s advanced patient engagement solutions are designed to motivate patients by curating hyper-personalized healthcare experiences, fostering trusted, long-term relationships, and maximizing service utilization to drive enterprise-wide impact. • Clinical accelerators .
We strive to achieve Platform Client growth in part through strong client retention and client referrals. Our Dollar-based Retention Rates for Platform Clients has been 100% for each of the years ended December 31, 2024, 2023, and 2022.
We strive to achieve revenue growth in part through strong client retention and client referrals.
Our sales team works closely with our subject matter experts to foster long-term relationships with our clients’ and sales prospects’ leadership teams. In August 2025, we will hold our annual Health Catalyst Analytics Summit (HAS), a client event showcasing best practices for driving improvement using data and analytics in healthcare, industry trends, and Health Catalyst strategy.
Our dedicated sales team identifies healthcare organizations that would benefit from our Solution. Our sales team works closely with our subject matter experts to foster long-term relationships with our clients’ and sales prospects’ leadership teams.
In addition, certain foreign laws govern the privacy and security of personal data, including health-related data.
In addition, certain foreign laws govern the privacy and security of personal data, including health-related data. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.
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We have demonstrated an elite, consistent level of team member engagement over time as demonstrated by a 94th to 99th percentile ranking, as measured by Gallup.
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We updated our definition of Dollar-based Retention Rate in early 2025 and, under that updated Dollar-based Retention Rate, described in more detail in the section titled “Financial Measures and Key Business Metrics,” the rate was 93% and 102% for the years ended December 31, 2025 and 2024, respectively.
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This continuous interaction across the entire Health Catalyst community creates a cycle that further reinforces our culture and fuels our growth. 16 Table of Contents Our team member engagement scores, as measured by Gallup, have consistently ranked in the 94th to 99th percentile.
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We believe that competing point solutions vendors will have difficulty growing their offerings into sustainable businesses, which we believe translates into a robust mergers and acquisitions pipeline for us.
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For example, our Chargemaster Management product, a revenue analytics product addition through the Vitalware acquisition, was ranked Best in KLAS for 2019 through 2024. We believe that these honors demonstrate the loyalty of our team members and our clients and that our culture is driving the behaviors that will help fuel our future growth.
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Enables proactive measures surveillance to enhance outcomes and facilitates monitoring behaviors, interventions, and activities needed to influence, manage, or change outcomes. 15 Table of Contents • Cardiology registries (ARMUS Suite ).
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Patient safety organization certification and other certification requirements Our patient safety organization (PSO) is certified by the Agency for Healthcare Research and Quality (AHRQ), an agency of the Department of Health and Human Services (HHS). We must meet certain requirements to maintain this certification.
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For example, the 2025 MedTech Breakthrough Awards recognized us with top honors in two areas of excellence: patient experience and cybersecurity, while our Chargemaster Management product, a revenue analytics product addition through the Vitalware acquisition, has been ranked Best in KLAS in multiple years.
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Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries, and FDA guidance documents.
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As part of our Health Catalyst Analytics Summit (HAS), we have showcased best practices for driving improvement using data and analytics in healthcare, industry trends, and Health Catalyst strategy. This event also features our Catalyst Awards, highlighting the best examples of healthcare improvement amount our clients.
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Foreign regulations Our subsidiaries in the United Kingdom, India, Singapore, the United Arab Emirates, and Australia are subject to additional regulations by the governments of the United Kingdom, India, Singapore, the United Arab Emirates, and Australia, respectively, as well as their respective subdivisions.
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The 21 st Century Cures Act includes provisions related to data interoperability, information blocking, and patient access.
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We have not experienced any work stoppages, and our Gallup scores demonstrate that we have high quality team member relations and engagement. We encourage you to review the Environmental, Social and Governance scorecard found on our website at https://ir.healthcatalyst.com/esg/overview (ESG Website) for more detailed information regarding our human capital programs and initiatives, which we intend to update later this year.
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We believe our currently marketed products are not currently regulated by the FDA as medical devices, or are otherwise subject to the FDA’s current enforcement discretion policies.
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The SEC’s website (https://www.sec.gov) contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
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Since the COVID-19 pandemic, we have allowed all team members to work remotely to protect their health, safety, and wellness, and we continue to support our workforce with the technology and infrastructure necessary to work from a remote location, including a work equipment and utilities reimbursement program to help our team members improve their dynamic workspaces.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSome of the factors that could cause our financial performance and results of operations to fluctuate from quarter to quarter include: • the extent to which our Solution achieves or maintains market acceptance; • our ability to introduce new applications, updates, and enhancements to our existing applications on a timely basis; • new competitors and the introduction of enhanced products and services from new or existing competitors; • the length of our contracting and implementation cycles and our fulfillment periods for our Solution; • the mix of revenue generated from professional services as compared to technology subscriptions; • the extent to which our clients opt for non-recurring project-based work rather than FTE subscription contracts since non-recurring, project-based fees are less predictable than our recurring services and can drive fluctuations in quarterly professional services revenues and in our new Dollar-based Retention Rate metric and in prior period comparisons; • clients reducing or eliminating their spend with us in response to macroeconomic factors or otherwise; • the financial condition of our current and future clients; • changes in client budgets and procurement policies; • changes in regulations or marketing strategies; • the impact of macroeconomic challenges, including the high inflationary and/or high interest rate environments, new tariffs, market volatility and measures taken in response thereto, and public health crises and natural disasters on our clients, partners, and business; • the amount and timing of our investment in research and development activities; • the amount and timing of our investment in sales and marketing activities; • technical difficulties or interruptions to our Solution, including related to updates to our technology or technology migrations, in particular, those related to our migration of DOS clients to Health Catalyst Ignite; • our ability to hire and retain qualified personnel; • changes in the regulatory environment related to healthcare; • regulatory compliance costs; • the timing, size, and integration success of potential future acquisitions; • unforeseen legal expenses, including litigation and settlement costs; and • buying patterns of our clients and the related seasonality impacts on our business. 30 Table of Contents Many of these factors are not within our control, and the occurrence of one or more of them might cause our results of operations to vary widely.
Biggest changeSome of the factors that could cause our financial performance and results of operations to fluctuate from quarter to quarter include: • the extent to which our Solution achieves or maintains market acceptance; • our ability to introduce new applications, updates, and enhancements to our existing applications on a timely basis; • new competitors and the introduction of enhanced products and services from new or existing competitors; • the length of our contracting and implementation cycles and our fulfillment periods for our Solution; • the mix of revenue generated from professional services as compared to technology subscriptions; • the extent to which our clients opt for non-recurring project-based work rather than FTE subscription contracts since non-recurring, project-based fees are less predictable than our recurring services and can drive fluctuations in quarterly professional services revenues and in our new Dollar-based Retention Rate metric and in prior period comparisons; • clients reducing or eliminating their spend with us in response to political or macroeconomic factors or otherwise, including in connection with their migration from our DOS platform to our Ignite platform; • the financial condition of our current and future clients; • changes in client budgets and procurement policies; • changes in regulations or marketing strategies; • the impact of macroeconomic challenges, including the high inflationary and/or high interest rate environments, tariffs, cuts in Medicaid and research funding, market volatility and measures taken in response thereto, natural disasters, public health crises, and regional or global conflicts (including the conflicts in the Middle East) on our clients, partners, and business; • the amount and timing of our investment in research and development activities; • the amount and timing of our investment in sales and marketing activities; • technical difficulties or interruptions to our Solution, including related to updates to our technology or technology migrations, in particular, those related to our migration of existing DOS clients to Health Catalyst Ignite; • our ability to hire and retain qualified personnel, including risks related to reduced morale, difficulty hiring, and unintended attrition as a result of our January 2025 Restructuring Plan and our August 2025 Restructuring Plan; • changes in the regulatory environment related to healthcare; • regulatory compliance costs; • the timing, size, and integration success of potential future acquisitions; • unforeseen legal expenses, including litigation and settlement costs; and • buying patterns of our clients and the related seasonality impacts on our business. 31 Table of Contents Many of these factors are not within our control, and the occurrence of one or more of them might cause our results of operations to vary widely.
Despite the implementation of security measures, our information technology systems and those of our clients, contractors, consultants, and collaborators are vulnerable to attack, damage and interruption from cyberattacks, “phishing” attacks, computer viruses and malware (e.g., ransomware), natural disasters, terrorism, war, telecommunication and electrical failures, employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
Despite the implementation of security measures, our information technology systems and those of our clients, contractors, consultants, and collaborators are vulnerable to attack, damage and interruption from cyberattacks, “phishing” attacks, computer viruses and malware (e.g., ransomware), natural disasters, terrorism, war, telecommunication and electrical failures, employee theft or misuse, human error, fraud, denial or degradation of service attacks, “bugs” sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization.
Any claims or litigation could cause us to incur significant expenses and, whether or not successfully asserted against us, could require that we pay substantial damages, ongoing royalty or license payments, or settlement fees, prevent us from offering our Solution or using certain technologies, require us to re-engineer all or a portion of our platform, or require that we comply with other unfavorable terms.
Any claims or litigation could cause us to incur significant expenses and, whether or not successfully asserted against us, could require that we pay substantial damages, ongoing royalty or license payments, or settlement fees, prevent us from offering our Solution or using certain technologies, require us to re-engineer all or a portion of our Solution, or require that we comply with other unfavorable terms.
In addition, on July 16, 2024, we entered into the Credit Agreement, which provides for a five-year term loan facility (the Term Loan Facility) in an aggregate principal amount of up to $225 million, consisting of an initial term loan in the aggregate principal amount of $125 million, which was funded in full at closing, and a delayed draw term loan facility in the aggregate principal amount of $100 million, which was undrawn as of the closing.
On July 16, 2024, we entered into the Credit Agreement, which provides for a five-year term loan facility (the Term Loan Facility) in an aggregate principal amount of up to $225 million, consisting of an initial term loan in the aggregate principal amount of $125 million, which was funded in full at closing, and a delayed draw term loan facility in the aggregate principal amount of $100 million, which was undrawn as of the closing.
Between January 1, 2020 and January 31, 2025, we acquired Able Health, Healthfinch, Vitalware, Twistle, ARMUS, KPI Ninja, ERS, Carevive, Lumeon, Intraprise and Upfront. We may have difficulty cross-selling our Solution to acquired clients, and we may have difficulty integrating, or incur integration-related costs associated with, newly acquired team members.
Between January 1, 2020 and March 31, 2025, we acquired Able Health, Healthfinch, Vitalware, Twistle, ARMUS, KPI Ninja, ERS, Carevive, Lumeon, Intraprise, and Upfront. We may have difficulty cross-selling our Solution to acquired clients, and we may have difficulty integrating, or incur integration-related costs associated with, newly acquired team members.
The terms of many open-source licenses have not been interpreted by U.S. courts, and, as a result, there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our Solution. 41 Table of Contents We employ third-party licensed software and software components for use in or with our Solution, and the inability to maintain these licenses or the presence of errors in the software we license could limit the functionality of our Solution and result in increased costs or reduced service levels, which would adversely affect our business.
The terms of many open-source licenses have not been interpreted by U.S. courts, and, as a result, there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to commercialize our Solution. 42 Table of Contents We employ third-party licensed software and software components for use in or with our Solution, and the inability to maintain these licenses or the presence of errors in the software we license could limit the functionality of our Solution and result in increased costs or reduced service levels, which would adversely affect our business.
Despite these precautions, the allocations of responsibility and limitations of liability set forth in our contracts may not be enforceable, be binding upon patients, or otherwise protect us from liability for damages. 31 Table of Contents Furthermore, general liability and errors and omissions insurance coverage and medical malpractice liability coverage may not continue to be available on acceptable terms or may not be available in sufficient amounts to cover one or more large claims against us.
Despite these precautions, the allocations of responsibility and limitations of liability set forth in our contracts may not be enforceable, be binding upon patients, or otherwise protect us from liability for damages. 32 Table of Contents Furthermore, general liability and errors and omissions insurance coverage and medical malpractice liability coverage may not continue to be available on acceptable terms or may not be available in sufficient amounts to cover one or more large claims against us.
Our amended and restated bylaws include an exclusive forum provision that provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative action or proceeding brought on our behalf; • any action asserting a breach of fiduciary duty owed to us or our stockholders by any of our current or former directors, officers or other employees; • any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; or • any action that is governed by the internal affairs doctrine and asserts a claim against us or any of our current or former directors, officers or other employees or stockholders.
Our amended and restated bylaws include an exclusive forum provision that provides that the Court of Chancery of the State of Delaware will be the exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: • any derivative action or proceeding brought on our behalf; • any action asserting a breach of fiduciary duty owed to us or our stockholders by any of our current or former directors, officers or other employees; • any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation, or our amended and restated bylaws; or 55 Table of Contents • any action that is governed by the internal affairs doctrine and asserts a claim against us or any of our current or former directors, officers or other employees or stockholders.
We expect to derive a significant portion of our revenue from the renewal of existing client contracts and sales of additional technology and services to existing clients. As part of our growth strategy, for instance, we have recently focused on expanding our Solution among current clients, including Solutions with a more limited operating history such as TEMS.
We expect to derive a significant portion of our revenue from the renewal of existing client contracts and sales of additional technology and services to existing clients. As part of our growth strategy, for instance, we have recently focused on expanding our Solution among current clients, including Solutions with a more limited operating history.
Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. 37 Table of Contents Risks Related to Data and Intellectual Property Failure by our clients to obtain proper permissions and waivers may result in claims against us or may limit or prevent our use of data, which could harm our business.
Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. 38 Table of Contents Risks Related to Data and Intellectual Property Failure by our clients to obtain proper permissions and waivers may result in claims against us or may limit or prevent our use of data, which could harm our business.
We may not be able to successfully complete these growth initiatives, strategies, operating plans, and cost reduction and restructuring initiatives, and realize all of the benefits, including growth targets and cost savings, that we expect to achieve or it may be more costly to do so than we anticipate.
We may not be able to successfully complete these growth initiatives, strategies, operating plans, and cost reductions and restructuring initiatives, and realize all of the benefits, including growth targets and cost savings, that we expect to achieve or it may be more costly to do so than we anticipate.
We face competition from industry-agnostic analytics companies, electronic health records (EHR) companies, such as Epic Systems and Oracle Health, point solution vendors, and healthcare organizations that perform their own analytics. These competitors include large, well-financed, and technologically sophisticated entities.
We face competition from industry-agnostic analytics companies, electronic health record (EHR) companies, such as Epic Systems and Oracle Health, point solution vendors, and healthcare organizations that perform their own analytics. These competitors include large, well-financed, and technologically sophisticated entities.
If these trends continue, we cannot assure you that we will be able to continue to maintain or expand our client base, negotiate contracts with acceptable terms, or maintain our current pricing structure, and our revenue may decrease. 25 Table of Contents General reductions in expenditures by healthcare organizations, or reductions in such expenditures within market segments that we serve, could have similar impacts with regard to our Solution.
If these trends continue, we cannot assure you that we will be able to continue to maintain or expand our client base, negotiate contracts with acceptable terms, or maintain our current pricing structure, and our revenue may decrease. 26 Table of Contents General reductions in expenditures by healthcare organizations, or reductions in such expenditures within market segments that we serve, have and could have further similar impacts with regard to our Solution.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
Even if identified, we may be unable to adequately investigate or remediate incidents or breaches due to attackers increasingly using tools and techniques – including AI – that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.
For example, the 2023 Restructuring Plan, the 2025 Restructuring Plan and other restructurings may result in attrition beyond our intended reduction in force or may adversely impact our ability to recruit and hire qualified personnel in the future.
For example, the 2023 Restructuring Plan, the January 2025 Restructuring Plan, the August 2025 Restructuring Plan, and other restructurings may result in attrition beyond our intended reduction in force or may adversely impact our ability to recruit and hire qualified personnel in the future.
If our net revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
If our total revenue or results of operations fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially.
Our failure to secure, protect, and enforce our intellectual property rights could adversely affect our brand and our business. We may be sued by third parties for alleged infringement of their proprietary rights or misappropriation of intellectual property. There is considerable patent and other intellectual property development activity in our industry.
Our failure to secure, protect, and enforce our intellectual property rights could adversely affect our brand and our business. 43 Table of Contents We may be sued by third parties for alleged infringement of their proprietary rights or misappropriation of intellectual property. There is considerable patent and other intellectual property development activity in our industry.
Any default under the Indenture or the Credit Agreement could also lead to a default under our future indebtedness and could have a material adverse effect on our business, results of operations, and financial condition.
Any default under the Credit Agreement could also lead to a default under our future indebtedness and could have a material adverse effect on our business, results of operations, and financial condition.
This transition has increased and we anticipate it will continue to increase the cost of hosting our technology and negatively impact our technology gross margin. Such migrations are risky and may cause disruptions to our Solution, service outages, downtime, or other problems and may increase our costs.
This transition has increased and we anticipate it will continue to increase the cost of hosting our technology and negatively impact our technology gross margin in the near term. Such migrations are risky and may cause disruptions to our Solution, service outages, downtime, or other problems and may increase our costs.
In addition, the terms of any future credit facility or financing we obtain may contain, terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, common stockholders may only receive a ROI if the market price of our common stock increases.
In addition, the terms of any future credit facility or financing we obtain may contain, terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, common stockholders may only receive a return on investment if the market price of our common stock increases.
If we fail to satisfy the expectations of investors, employees, and other stakeholders, or, if our initiatives are not executed as planned, our reputation and business, operating results, and financial condition could be adversely impacted. Item 1B. Unresolved Staff Comments None. 58 Table of Contents
If we fail to satisfy the expectations of investors, employees, and other stakeholders, or, if our initiatives are not executed as planned, our reputation and business, operating results, and financial condition could be adversely impacted. Item 1B. Unresolved Staff Comments None.
Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition, and results of operations. The healthcare regulatory and political framework is uncertain and evolving.
Any of these sanctions could result in higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition, and results of operations. 48 Table of Contents The healthcare regulatory and political framework is uncertain and evolving.
While we do not believe that we have experienced any significant system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could adversely affect our ability to attract new clients, cause existing clients to elect to not renew their subscriptions, result in reputational damage, or subject us to third-party lawsuits, regulatory fines, mandatory disclosures, or other action or liability, which could adversely affect our results of operations.
While we do not believe that we have experienced any significant system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could adversely affect our ability to attract new clients, cause existing clients to elect to not renew their subscriptions, result in reputational damage, or subject us to lawsuits (including class actions), regulatory fines, mandatory disclosures, or other action or liability, which could adversely affect our results of operations.
The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. These outages and delays could reduce the level of Internet usage as well as the availability of the Internet to us for delivery of our Internet-based services.
The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the future. 41 Table of Contents These outages and delays could reduce the level of Internet usage as well as the availability of the Internet to us for delivery of our Internet-based services.
In addition, changes in tax and trade laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect our tax position. 49 Table of Contents Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual effective tax rate.
In addition, changes in tax and trade laws, treaties or regulations, or their interpretation or enforcement, have become more unpredictable and may become more stringent, which could materially adversely affect our tax position. Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual effective tax rate.
Factors that may affect our ability to sell additional technology and services include, but are not limited to, the following: • the price, performance, and functionality of our Solution; • the availability, price, performance, and functionality of competing solutions; • our ability to develop and sell complementary technology and services; • the stability, performance, and security of our hosting infrastructure and hosting services; • our ability to continuously deliver measurable improvements; • health systems’ demand for professional services to augment their internal data analytics function; • changes in healthcare laws, regulations, or trends; • the business environment of our clients and, in particular, our clients’ financial performance and headcount reductions by our clients; and • the impact of macroeconomic challenges, including the impact of high inflationary and/or high interest rate environments, new tariffs, market volatility and measures taken in response thereto, the tight labor market, and the impact of any natural disasters or public health emergencies upon our clients.
Factors that may affect our ability to sell additional technology and services include, but are not limited to, the following: • the price, performance, and functionality of our Solution; • the availability, price, performance, and functionality of competing solutions; • our ability to develop and sell complementary technology and services; • the stability, performance, and security of our hosting infrastructure and hosting services; • our ability to continuously deliver measurable improvements; • health systems’ demand for professional services to augment their internal data analytics function; • changes in healthcare laws, regulations, or trends; • the business environment of our clients and, in particular, our clients’ financial performance and headcount reductions by our clients; and • the impact of macroeconomic challenges, including the impact of high inflationary and/or high interest rate environments, tariffs, cuts in Medicaid and research funding, market volatility and measures taken in response thereto, the tight labor market, any natural disasters or public health emergencies, and regional or global conflicts (including the conflicts in the Middle East) upon our clients.
We expect that future contracts will contain similar provisions. If any of our contracts with our clients are terminated, we may not be able to recover all fees due under the terminated contract and we will lose future revenue from that client, which may adversely affect our results of operations.
If any of our contracts with our clients are terminated, we may not be able to recover all fees due under the terminated contract and we will lose future revenue from that client, which may adversely affect our results of operations.
We expect to continue to seek to acquire or invest in businesses, applications, services, or technologies that we believe could complement or expand our Solution, enhance our technical capabilities, or otherwise offer growth opportunities.
We may seek to acquire or invest in businesses, applications, services, or technologies that we believe could complement or expand our Solution, enhance our technical capabilities, or otherwise offer growth opportunities.
Although we have long-term contracts with many clients, these contracts may be terminated by the client (generally, subject to providing us with prior notice) before their term expires for convenience or for certain specified reasons, including changes in the regulatory landscape, loss of certain third-party licenses, or breach of our contractual obligations, including poor performance by us in areas that include repeated failures by us to provide specified levels of service over certain performance periods, or dissatisfaction with changes in our Solution, such as the deployment of Health Catalyst Ignite and the migration of existing clients utilizing our DOS Solution to Health Catalyst Ignite.
Although we have long-term contracts with many clients, these contracts may be terminated by the client (generally, subject to providing us with prior notice before their term expires) for convenience or for certain specified reasons, including changes in the regulatory landscape, loss of certain third-party licenses, breach of our contractual obligations, including poor performance by us in areas that include repeated failures by us to provide specified levels of service over certain performance periods, or dissatisfaction with changes in our Solution, such as the deployment of Health Catalyst Ignite and the migration of existing clients utilizing our DOS Solution to Health Catalyst Ignite. 30 Table of Contents We expect that future contracts will contain similar provisions.
Such reductions may result from, among other things, reduced governmental funding for healthcare; a decrease in the number of, or the market exclusivity available to, new drugs coming to market; or adverse changes in business or economic conditions affecting healthcare payors or providers, the pharmaceutical industry, or other healthcare companies that purchase our services (e.g., changes in the design of health plans).
Such reductions have and may further result from, among other things, reduced governmental funding for healthcare, cuts to government research funding, a decrease in the number of, or the market exclusivity available to, new drugs coming to market; or adverse changes in business or economic conditions affecting healthcare payors or providers, the pharmaceutical industry, or other healthcare companies that purchase our services (e.g., changes in the design of health plans).
Further, the sales cycle for a new Platform Client, which we estimate to typically be approximately one year, could lengthen, as we experienced in 2022 and 2023, resulting in a potentially longer delay between increasing operating expenses and the generation of corresponding revenue, if any.
Further, the sales cycle for a new platform client, which we historically have estimated to be approximately one year, could lengthen, as we experienced in 2022 and 2023, resulting in a potentially longer delay between increasing operating expenses and the generation of corresponding revenue, if any.
We may also fail to improve the gross margins of our business. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition, and results of operations would be adversely affected. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.
If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition, and results of operations would be adversely affected. Our failure to achieve or maintain profitability could negatively impact the value of our common stock.
As of December 31, 2024, we had net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $680.7 million and $571.6 million, respectively, which may be available to offset taxable income in the future, and which expire in various years beginning in 2032 for federal purposes if not utilized.
As of December 31, 2025, we had net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $787.8 million and $647.7 million, respectively, which may be available to offset taxable income in the future, and which expire in various years beginning in 2032 for federal purposes if not utilized.
Additionally, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, are unable to assert that our internal controls over financial reporting are effective, identify material weaknesses in our internal controls over financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock could be adversely affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
If in the future we have any material weaknesses, we may not detect errors on a timely basis and our financial statements may be materially misstated. 35 Table of Contents Additionally, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, are unable to assert that our internal controls over financial reporting are effective, identify material weaknesses in our internal controls over financial reporting, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our common stock could be adversely affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
If we do not continue to innovate and provide services that are useful to clients and users, we may not remain competitive, and our revenue and results of operations could suffer. The market for healthcare in the United States is in the early stages of structural change and is rapidly evolving, including towards a more value-based care model.
If we do not continue to innovate and provide services that are useful to clients and users, we may not remain competitive, and our revenue and results of operations could suffer. The market for healthcare in the United States is in the early stages of structural change and is rapidly evolving.
In such event, we would be required to hire other personnel to manage and operate our business, and there can be no assurance that we would be able to employ a suitable replacement for the departing individual, or that a replacement could be hired on terms that are favorable to us.
In such event, we would be required to hire other personnel to manage and operate our business, and there can be no assurance that we would be able to employ a suitable replacement for the departing individual, that a replacement could be hired on terms that are favorable to us, or that the transition between the departing individual and their replacement will be smooth or will not otherwise disrupt our business.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology companies; • actual or anticipated fluctuations in our net revenue or other operating metrics; • changes in the financial projections we provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; 53 Table of Contents • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits or investigations threatened or filed against us; • recruitment or departure of key personnel; and • other events or factors, including those resulting from macroeconomic challenges (including high inflationary and/or high interest rate environments), war, bank or financial institution failures, incidents of terrorism, public health crises, or responses to these events.
The market price of our common stock has decreased in recent periods, may be volatile, may further decline or fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • overall performance of the equity markets and/or publicly-listed technology and healthcare companies; • actual or anticipated fluctuations in our total revenue, Adjusted EBITDA or other operating metrics; • changes in the financial projections we provide to the public or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • lawsuits or investigations threatened or filed against us; • confidence in and recruitment or departure of key personnel and directors; and • other events or factors, including those resulting from macroeconomic challenges (including high inflationary and/or high interest rate environment, tariffs and cuts in Medicaid and research funding), war, regional or global conflicts (including the conflicts in the Middle East), bank or financial institution failures, incidents of terrorism, public health crises, political changes, or responses to these events.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our results of operations and resulting in a reduction in the trading price of our stock. We derive a significant portion of our revenue from our largest clients. The loss, termination, or renegotiation of any contract could negatively impact our results.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our results of operations and resulting in a reduction in the trading price of our stock. 34 Table of Contents We derive a significant portion of our revenue from our largest clients.
Recent macroeconomic challenges (including high inflationary and/or high interest rate environments, new tariffs, or market volatility and measures taken in response thereto), and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally and have disrupted the normal operations of many businesses, including our business.
Recent macroeconomic challenges (including high inflationary and/or high interest rate environments, uncertainty with tariffs, cuts in Medicaid and research funding, regional or global conflicts (including the conflicts in the Middle East), or market volatility and measures taken in response thereto), and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally and have disrupted the normal operations of many businesses, including our business.
Limitations of liability and disclaimers that purport to limit our liability for damages related to defects in our software or content which we may include in our subscription and services agreements may not be enforced by a court or other tribunal or otherwise effectively protect us from related claims. 27 Table of Contents In most cases, we maintain liability insurance coverage, including coverage for errors and omissions.
Limitations of liability and disclaimers that purport to limit our liability for damages related to defects in our software or content which we may include in our subscription and services agreements may not be enforced by a court or other tribunal or otherwise effectively protect us from related claims.
It is possible that new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies. 45 Table of Contents We may need to expend resources to adjust our Solution or services in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions.
It is possible that new laws and regulations will be adopted in the United States and in other non-U.S. jurisdictions, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI Technologies for our business, or require us to change the way we use AI Technologies in a manner that negatively affects the performance of our products, services, and business and the way in which we use AI Technologies.
If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above, our business and our results of operations will be adversely affected.
If we fail to address the risks and difficulties that we face, including those associated with the challenges listed above, our business and our results of operations will be adversely affected. 52 Table of Contents We may also fail to improve the gross margins of our business.
Macroeconomic challenges (including high inflationary and/or high interest rate environments, new tariffs, or market volatility and measures taken in response thereto), the tight labor market and any natural disasters or new public health crises could harm our business, results of operations, and financial condition.
Macroeconomic challenges (including high inflationary and/or high interest rate environments, uncertainty with tariffs, cuts in Medicaid and research funding, or market volatility and measures taken in response thereto), the tight labor market, any natural disasters or new public health crises, and regional or global conflicts (including the conflicts in the Middle East) could harm our business, results of operations, and financial condition.
While we have limited operating history selling Health Catalyst Ignite, we believe its sales cycle generally may be shorter than DOS.
Our point solution applications generally have a shorter sales cycle, and while we have limited operating history selling Health Catalyst Ignite, we believe its sales cycle generally may be shorter than DOS.
You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
Moreover, because of these fluctuations, comparing our results of operations on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
Courts can award damages, costs and attorneys’ fees related to violations of HIPAA in such cases. 43 Table of Contents While HIPAA does not create a private right of action allowing individuals to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for HIPAA violations, its standards have been used as the basis for a duty of care claim in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI.
We cannot predict with any certainty whether and to what degree the disruption caused by any natural disasters, new public health crises, the high inflationary environment, rising interest rates, new tariffs, market volatility and measures taken in response thereto, and reactions to any of the foregoing will continue and expect to face difficulty accurately predicting our internal financial forecasts.
We cannot predict with any certainty whether and to what degree the disruption caused by any natural disasters, new public health crises, regional or global conflicts (including the conflicts in the Middle East), the high inflationary environment, rising interest rates, tariffs (including uncertainty related to the implementation and enforceability thereof), cuts in Medicaid and research funding, market volatility and measures taken in response thereto, and reactions to any of the foregoing will continue and expect to face difficulty accurately predicting our internal financial forecasts.
However, it is possible that claims could exceed the amount of our applicable insurance coverage or that this coverage may not continue to be available on acceptable terms or in sufficient amounts.
In most cases, we maintain liability insurance coverage, including coverage for errors and omissions. However, it is possible that claims could exceed the amount of our applicable insurance coverage or that this coverage may not continue to be available on acceptable terms or in sufficient amounts.
For example, the increasing market share of EHR companies in data analytic services at hospital systems may cause our existing clients to terminate contracts with us in order to engage EHR companies to provide these services.
For example, the increasing market share of EHR companies in data analytic services, patient engagement and other parts of our Solution at healthcare providers may cause our existing clients to terminate contracts with us in order to engage EHR companies to provide these services.
We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our stock incentive plans.
Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders. We expect to issue additional capital stock in the future that will result in dilution to all other stockholders. We expect to grant equity awards to employees, directors, and consultants under our stock incentive plans.
For example, the federal civil False Claims Act prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, or knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim. 46 Table of Contents The government has prosecuted revenue cycle management service providers for causing the submission of false or fraudulent claims in violation of the False Claims Act.
For example, the federal civil False Claims Act prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, to the U.S. federal government, claims for payment or approval that are false or fraudulent, or knowingly making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim.
This may be confusing to investors and result in damage to our reputation, which may harm our business. 34 Table of Contents Additionally, the proper design and assessment of internal controls over financial reporting are subject to varying interpretations, and, as a result, application in practice may evolve over time as new guidance is provided by regulatory and governing bodies and as common practices evolve.
Additionally, the proper design and assessment of internal controls over financial reporting are subject to varying interpretations, and, as a result, application in practice may evolve over time as new guidance is provided by regulatory and governing bodies and as common practices evolve.
We also had thirty-nine registered trademarks in the United States, Singapore, United Arab Emirates, and China. We also rely on copyright and trademark laws, trade secret protection, and confidentiality or license agreements with our employees, clients, partners, and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate.
We also rely on copyright and trademark laws, trade secret protection, and confidentiality or license agreements with our employees, clients, partners, and others to protect our intellectual property rights. However, the steps we take to protect our intellectual property rights may be inadequate.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state income tax purposes.
There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to reduce future income tax liabilities, including for state income tax purposes. 50 Table of Contents Certain provisions of the Tax Act (as defined below), as amended by the CARES Act, also limit the use of NOLs, as discussed further below.
Furthermore, we provide professional services to clients to support their use of our Solution and to achieve measurable clinical, financial, and operational improvements. 28 Table of Contents Any failure to maintain high-quality professional services, or a market perception that we do not maintain high-quality professional services, could harm our reputation, adversely affect our ability to sell our Solution to existing and prospective clients, and harm our business, results of operations, and financial condition.
Any failure to maintain high-quality professional services, or a market perception that we do not maintain high-quality professional services, could harm our reputation, adversely affect our ability to sell our Solution to existing and prospective clients, and harm our business, results of operations, and financial condition.
In addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost. 40 Table of Contents The reliability and performance of the Internet may be harmed by increased usage or by denial-of-service attacks.
The insurance coverage under our policies may not be adequate to compensate us for all losses that may occur. In addition, we cannot provide assurance that we will continue to be able to obtain adequate insurance coverage at an acceptable cost. The reliability and performance of the Internet may be harmed by increased usage or by denial-of-service attacks.
For example, the expense reduction measures taken in connection with the 2023 Restructuring Plan or 2025 Restructuring Plan may result in unintended consequences and costs, including costs associated with attrition beyond our intended reduction in force, a decrease in morale among team members following the completion of the 2023 Restructuring Plan or 2025 Restructuring Plan, adverse impacts in our ability to recruit and hire qualified personnel in the future, and the loss of institutional knowledge and expertise, which could result in losses in future periods or otherwise prevent us from realizing, in full or in part, the anticipated benefits and savings from the 2023 Restructuring Plan or 2025 Restructuring Plan.
In addition, if we fail to successfully integrate new team members or fail to effectively manage organizational changes, it could harm our culture, business, financial condition and results of operations. 37 Table of Contents For example, the expense reduction measures taken in connection with the 2023 Restructuring Plan, January 2025 Restructuring Plan or August 2025 Restructuring Plan may result in unintended consequences and costs, including costs associated with attrition beyond our intended reduction in force, a decrease in morale among team members following the completion of the 2023 Restructuring Plan, January 2025 Restructuring Plan, or August 2025 Restructuring Plan, adverse impacts in our ability to recruit and hire qualified personnel in the future, and the loss of institutional knowledge and expertise, which could result in losses in future periods or otherwise prevent us from realizing, in full or in part, the anticipated benefits and savings from the 2023 Restructuring Plan, January 2025 Restructuring Plan, or August 2025 Restructuring Plan.
Further, it is not possible for us to predict the duration or magnitude of the adverse results of natural disasters, new public health crises, and macroeconomic challenges (including high inflationary and/or high interest rate environments, and new tariffs), and their effects on our business, results of operations, or financial condition at this time.
Further, it is not possible for us to predict the duration or magnitude of the adverse results of natural disasters, public health crises, regional or global conflicts (including the conflicts in the Middle East), and macroeconomic challenges (including the high inflationary and/or high interest rate environments, tariffs (including uncertainty related to the implementation and enforceability thereof) and cuts in Medicaid and research funding), and their effects on our business, results of operations, or financial condition at this time.
Alternatively, if a court were to find the choice of forum provision which will be contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. 57 Table of Contents General Risks Changes in accounting principles may cause previously unanticipated fluctuations in our financial results, and the implementation of such changes may impact our ability to meet our financial reporting obligations.
Alternatively, if a court were to find the choice of forum provision which will be contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
Additional compliance investment and potential business process changes may be required. Similar laws have passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States.
Additional compliance investment and potential business process changes may be required. Similar laws have been enacted in other states, reflecting a trend toward more stringent privacy legislation in the United States.
Subject to the February 2025 executive order ceasing enforcement of the FCPA, the FCPA makes it illegal for U.S. persons, including U.S. companies, and their subsidiaries, directors, officers, employees, and agents, to promise, authorize or make any corrupt payment, or otherwise provide anything of value, directly or indirectly, to any foreign official, any foreign political party or party official, or candidate for foreign political office to obtain or retain business. 48 Table of Contents To the extent it is enforced, violations of the FCPA can also result in violations of other U.S. laws, including anti-money laundering, mail and wire fraud, and conspiracy laws.
Subject to the February 2025 executive order ceasing enforcement of the FCPA, the FCPA makes it illegal for U.S. persons, including U.S. companies, and their subsidiaries, directors, officers, employees, and agents, to promise, authorize or make any corrupt payment, or otherwise provide anything of value, directly or indirectly, to any foreign official, any foreign political party or party official, or candidate for foreign political office to obtain or retain business.
We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans, as well as cost reduction and restructuring initiatives. We are continually executing a number of growth initiatives, strategies, and operating plans designed to enhance our business, as well as some cost reduction and restructuring initiatives.
We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans, as well as cost reduction and restructuring initiatives.
Our agreements with third-party computing infrastructure service providers may not entitle us to service level credits that correspond with those we offer to our clients. 39 Table of Contents Any changes in third-party service levels at our computing infrastructure service providers, or any related disruptions or performance problems with our Solution, could adversely affect our reputation and may damage our clients’ data, information and/or stored files, result in lengthy interruptions in our services, or result in potential losses of client data.
Any changes in third-party service levels at our computing infrastructure service providers, or any related disruptions or performance problems with our Solution, could adversely affect our reputation and may damage our clients’ data, information and/or stored files, result in lengthy interruptions in our services, or result in potential losses of client data.
However, historically, the FDA has exercised enforcement discretion for certain low-risk software functions, and has issued several guidance documents outlining its approach to the regulation of software as a medical device. 47 Table of Contents In addition, the 21st Century Cures Act amended the FDCA to exclude from the definition of “medical device” certain medical-related software, including software used for administrative support functions at a healthcare facility, software intended for maintaining or encouraging a healthy lifestyle, software designed to store electronic health records, software for transferring, storing, or displaying medical device data or in vitro diagnostic data, and certain clinical decision support software.
In addition, the 21st Century Cures Act amended the FDCA to exclude from the definition of “medical device” certain medical-related software, including software used for administrative support functions at a healthcare facility, software intended for maintaining or encouraging a healthy lifestyle, software designed to store electronic health records, software for transferring, storing, or displaying medical device data or in vitro diagnostic data, and certain clinical decision support software.
As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations, and financial condition.
As a result of the complexity involved in complying with the rules and regulations applicable to public companies, our management’s attention may be diverted from other business concerns, which could harm our business, results of operations, and financial condition. We may need to hire more employees in the future or engage outside consultants, which will increase our operating expenses.
We may not grow at the rates we historically have achieved or at all, even if our key metrics may indicate growth. We have experienced periods of significant growth, including in the last five years. At times, our growth has moderated. Future revenue may not grow at the same rates experienced during times of significant growth or may decline.
We may not grow at the rates we historically have achieved or at all, even if our key metrics may indicate growth. We have experienced periods of significant growth during our operating history. At times, our growth has moderated and contracted, including in recent periods.
As a result, we may not have enough available cash or be able to obtain financing at the time we are required to make payments owed under the Notes and/or the Term Loan Facility.
Since inception, our business has generated net losses, and we may continue to incur significant losses. As a result, we may not have enough available cash or be able to obtain financing at the time we are required to make payments owed under the Term Loan Facility.
Any failure or perceived failure by us to comply with international, federal or state laws or regulations, industry standards, or other legal obligations, or any actual or suspected security incident, whether or not resulting in unauthorized access to, or acquisition, release, or transfer of personally identifiable information or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines, and penalties or adverse publicity and could cause our clients to lose trust in us, which could have an adverse effect on our reputation and business.
Future laws, regulations, standards, and other obligations, and changes in the interpretation of existing laws, regulations, standards, and other obligations could impair our or our clients’ ability to collect, use, or disclose information relating to consumers, which could decrease demand for our Solution, increase our costs, and impair our ability to maintain and grow our client base and increase our revenue. 46 Table of Contents Any failure or perceived failure by us to comply with international, federal or state laws or regulations, industry standards, or other legal obligations, or any actual or suspected security incident, whether or not resulting in unauthorized access to, or acquisition, release, or transfer of personally identifiable information or other data, may result in governmental enforcement actions and prosecutions, private litigation, fines, and penalties or adverse publicity and could cause our clients to lose trust in us, which could have an adverse effect on our reputation and business.
The timing, pricing, and sizes of these repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions.
The timing, pricing, and sizes of these repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions. The Share Repurchase Plan could affect the price of our common stock, increase volatility, and diminish our cash reserves.
If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. 42 Table of Contents Negative publicity related to a decision by us to initiate such enforcement actions against a client or former client, regardless of its accuracy, may adversely impact our other client relationships or prospective client relationships, harm our brand and business, and could cause the market price of our common stock to decline.
Negative publicity related to a decision by us to initiate such enforcement actions against a client or former client, regardless of its accuracy, may adversely impact our other client relationships or prospective client relationships, harm our brand and business, and could cause the market price of our common stock to decline.
We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management, operational, and financial resources. In addition, if we fail to successfully integrate new team members or fail to effectively manage organizational changes, it could harm our culture, business, financial condition and results of operations.
If we fail to effectively manage our growth and organizational change, our business and results of operations could be harmed. We have experienced, and may continue to experience, rapid growth and organizational change, which has placed, and may continue to place, significant demands on our management, operational, and financial resources.
A security breach of another significant provider of cloud-based solutions may also negatively impact the demand for our Solution. 38 Table of Contents Our Solution is dependent on our ability to source data from third parties, and such third parties could take steps to block our access to data, or increase fees or impose fees for such access, which could impair our ability to provide our Solution, limit the effectiveness of our Solution, or adversely affect our financial condition and results of operations.
Our Solution is dependent on our ability to source data from third parties, and such third parties could take steps to block our access to data, or increase fees or impose fees for such access, which could impair our ability to provide our Solution, limit the effectiveness of our Solution or adversely affect our financial condition and results of operations.
In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ stock prices. Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance. In the past, stockholders have filed securities class action litigation following periods of market volatility.
In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ and healthcare companies’ stock prices. Often, their stock prices have fluctuated in ways unrelated or disproportionate to the companies’ operating performance.
Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock. 56 Table of Contents Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us.
Our ability to satisfy our debt obligations will depend on market conditions and our future performance, which is subject to economic, financial, competitive, and other factors, including those described in these risk factors, many of which are beyond our control.
We may not use the cash proceeds from the Term Loan Facility in an optimally productive and profitable manner. Our ability to satisfy our debt obligations will depend on market conditions and our future performance, which is subject to economic, financial, competitive, and other factors, including those described in these risk factors, many of which are beyond our control.
Historically, we have relied on a limited number of clients for a significant portion of our total revenue and accounts receivable. Our three largest clients during 2024 comprised 5.5%, 4.4%, and 3.9% of our revenue, or 13.8% in the aggregate. Our three largest clients during 2023 comprised 5.5%, 3.6%, and 3.5% of our revenue, or 12.6% in the aggregate.
The loss, termination, or renegotiation of any contract could negatively impact our results. Historically, we have relied on a limited number of clients for a significant portion of our total revenue and accounts receivable. Our three largest clients during 2025 comprised 5.7%, 4.4%, and 3.5% of our revenue, or 13.6% in the aggregate.
Case law from the Court of Justice of the European Union (CJEU) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis.
Case law from the Court of Justice of the European Union (CJEU) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis. 45 Table of Contents We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators.
The SEC recently adopted final climate change disclosure regulation that, if it survives the litigation it is currently subject to, will require us to make certain disclosures that may be costly for our company. We are currently evaluating this regulation to determine its impact on us.
For example, increasingly there are disclosure regulations focused on environmental, social and sustainability matters. The SEC recently adopted final climate change disclosure regulation that, if it survives the litigation it is currently subject to, will require us to make certain disclosures that may be costly for our company.
There are severe penalties for violating the FCPA. In addition, the Company may also be subject to other non-U.S. anti-corruption or anti-bribery laws, such as the U.K. Bribery Act 2010.
To the extent it is enforced, violations of the FCPA can also result in violations of other U.S. laws, including anti-money laundering, mail and wire fraud, and conspiracy laws. There are severe penalties for violating the FCPA. In addition, the Company may also be subject to other non-U.S. anti-corruption or anti-bribery laws, such as the U.K. Bribery Act 2010.
In the event of a default on our debt obligations, we may be required to repurchase the Notes, amounts owed under our Term Loan Facility may be accelerated, and assets serving as collateral under our Term Loan Credit Facility may be subject to foreclosure.
Further, any repayment of our debt with equity would dilute the ownership interests of our existing stockholders. In the event of a default on our debt obligations, amounts owed under our Term Loan Facility may be accelerated, and assets serving as collateral under our Term Loan Credit Facility may be subject to foreclosure.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

8 edited+1 added−2 removed13 unchanged
Biggest changeKey elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • an information security team principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls, and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, including incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers, suppliers, and vendors based upon our assessment of their criticality to our operations and respective risk profile.
Biggest changeKey elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material risks from cybersecurity threats to our critical systems and information; • an information security team principally responsible for managing (i) our cybersecurity risk assessment processes, (ii) our security controls, and (iii) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security processes; • cybersecurity awareness training of our employees, including incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a third-party risk management process for key service providers, suppliers, and vendors based upon our assessment of their criticality to our operations and respective risk profile. 57 Table of Contents We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Our third-party certifications for certain Solutions include a HITRUST Common Security Framework certification (which includes standards from frameworks such as HIPAA, ISO, EU, GDPR, NIST, and PCI to provide risk-based certification for companies in the healthcare supply chain) and a Statement on Standards for Attestation Engagements 18 (SSAE 18) System and Organization Control (SOC) 2 report that evaluates our security program.
Our third-party certifications for certain Solutions include a HITRUST Common Security Framework certification (which includes standards from frameworks such as HIPAA, ISO, EU, GDPR, NIST, and PCI to provide risk-based certification for companies in the healthcare supply chain) and a Statement on Standards for Attestation Engagements 18 (SSAE 18) System and Organization Control (SOC) 2 report that evaluates our security program, and a HIPAA security risk assessment.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across our risk management program to other legal, compliance, strategic, operational, and financial risk areas.
See “Risk Factors—Risks Related to Data and Intellectual Property” for additional information about the risks to our business associated with a breach or compromise to our information technology systems. 59 Table of Contents Cybersecurity Governance Our board of directors (Board) oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
See “Risk Factors—Risks Related to Data and Intellectual Property” for additional information about the risks to our business associated with a breach or compromise to our information technology systems. Cybersecurity Governance Our board of directors (Board) oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
The company’s current CISO has more than two decades of IT leadership experience and holds several relevant IT and healthcare specific certifications including CISSP, CISM, CRISC, CCSK and CCSP, and has a Bachelor of Science in Computer Information Systems and a Master of Science in Medical Informatics.
The company’s current CISO has more than two decades of IT leadership experience and holds several relevant IT and healthcare specific certifications including CISSP, CISM, CICISO, CRISC, CISA, CCSK and CCSP, and has a Bachelor of Applied Arts in Computer Information Systems and a Master of Science in Medical Informatics.
Assessing, identifying and managing cybersecurity related risks are integrated into our overall enterprise risk management process. Cybersecurity related risks are included in the risk universe that the enterprise risk management function evaluates to assess top risks to the enterprise on an annual basis.
Additionally, for certain offerings we maintain ISO 27001 and 9001 certifications. Assessing, identifying and managing cybersecurity related risks are integrated into our overall risk management process. Cybersecurity related risks are included in the risk universe that the enterprise risk management function evaluates to assess top risks to the enterprise on an annual basis.
The broader Information Security team’s accredited industry certifications include Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), Certified in Risk and Information Systems Control (CRISC), Certified Information Systems Auditor (CISA), Certificate of Cloud Security Knowledge (CCSK), Certified Cloud Security Professional (CCSP), and Blue Team Level II.
The broader Information Security team’s accredited industry certifications include Certified Information Systems Security Professional (CISSP), Certified Chief Information Security Officer,Certified Information Security Manager (CISM), Certified in Risk and Information Systems Control (CRISC), Certified Information Systems Auditor (CISA), Certificate of Cloud Security Knowledge (CCSK), Certified Cloud Security Professional (CCSP), and Blue Team Level II, Certified CyberDefender, GIAC Certified Incident Handler, GIAC Certified Forensic Analyst, GIAC Web Application Penetration Tester, CompTIA CySA+, Comptia PenTest+, Comptia Secuirty+, Certified Ethical Hacker.
Our cybersecurity team reports to our Audit Committee quarterly on information security and cybersecurity matters, or as needed. Our Audit Committee has oversight responsibility for our data security practices and we believe the Audit Committee has the requisite skills and visibility into the design and operation of our data security practices to fulfill this responsibility effectively.
Our Audit Committee has oversight responsibility for our data security practices, including oversight of management’s implementation of our cybersecurity risk management program, and we believe the Audit Committee has the requisite skills and visibility into the design and operation of our data security practices to fulfill this responsibility effectively.
Removed
Our cybersecurity risk management program includes a cybersecurity incident response plan, which outlines the steps to be followed from incident detection to mitigation, recovery, and notification, including notifying functional areas (e.g., legal and compliance), as well as senior leadership and the board of directors, as appropriate.
Added
Our cybersecurity team reports to our Audit Committee quarterly on information security and cybersecurity matters, or where it deems appropriate, including with respect to any cybersecurity incidents it considers to be significant or potentially significant.
Removed
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also lease offices elsewhere for sales, research and development, professional services, and other personnel, including offices in Minneapolis, Minnesota and Hyderabad, India. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
Biggest changeWe believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations. 58 Table of Contents
Item 2. Properties Our principal executive offices are located in South Jordan, Utah where we lease facilities totaling approximately 128,037 square feet under a lease agreement that expires on December 31, 2031, of which 74,354 square feet is currently subleased. We use this facility for administration, sales and marketing, technology and development, and professional services.
Item 2. Properties Our principal executive offices are located in South Jordan, Utah where we lease facilities totaling approximately 128,037 square feet under a lease agreement that expires on December 31, 2031, of which 88,164 square feet is currently subleased. We use this facility for administration, sales and marketing, technology and development, and professional services.
Added
We also lease offices elsewhere for sales, research and development, professional services, and other personnel, including offices in Minneapolis, Minnesota and Hyderabad, India.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeFor information regarding a recent legal proceeding that was dismissed with prejudice on June 20, 2023, refer to Note 16, “Contingencies” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 60 Table of Contents PART II
Biggest changeFor information regarding a recent legal proceeding that was dismissed with prejudice on June 20, 2023, refer to Note 16— “Contingencies” to the Consolidated Financial Statements in Item 8, which is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 59 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph set forth below compares the cumulative total return to stockholders on our common stock relative to the cumulative total returns of the S&P 500 Index and Nasdaq Healthcare Index through December 31, 2024. All values assume a $100 initial investment and data for the S&P 500 and Nasdaq Healthcare indices assume reinvestment of dividends.
Biggest changeThe graph set forth below compares, for the five-year period ended December 31, 2025, the total cumulative stockholder return on the Company’s common stock, with the total cumulative return of the NASDAQ Healthcare Index, and the S&P 500 Index.
Holders of record As of December 31, 2024, there were 143 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Holders of record As of December 31, 2025, there were 167 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Issuer purchases of equity securities None. Item 6. [Reserved] 62 Table of Contents
Issuer purchases of equity securities None. Item 6. [Reserved] 61 Table of Contents
Securities authorized for issuance under equity compensation plans The information required by this item with respect to our equity compensation plans is incorporated by reference in our proxy statement for the 2025 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the year ended December 31, 2024. 61 Table of Contents Stock performance graph The following performance graph and related information is “furnished” and shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act and Regulation 14A under the Exchange Act nor shall such information be incorporated by reference into any filing of Health Catalyst, Inc. under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference in such filing.
The Form 10-K/A will be filed with the SEC within 120 days of the year ended December 31, 2025. 60 Table of Contents Stock performance graph The following performance graph and related information is “furnished” and shall not be deemed to be “soliciting material” or “filed” for purposes of Section 18 of the Exchange Act and Regulation 14A under the Exchange Act nor shall such information be incorporated by reference into any filing of Health Catalyst, Inc. under the Exchange Act or the Securities Act, except to the extent we specifically incorporate it by reference in such filing.
Company/Index 12/31/2019 (1) Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Health Catalyst, Inc. $ 100 $ 125 $ 114 $ 31 $ 27 $ 20 S&P 500 $ 100 $ 116 $ 148 $ 119 $ 148 $ 182 Nasdaq Healthcare $ 100 $ 130 $ 125 $ 100 $ 106 $ 105 __________________ (1) Base period Unregistered Sales of Equity Securities and Use of Proceeds Unregistered sales of equity securities During the year ended December 31, 2024, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Company/Index 12/31/2020 (1) Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Dec 31, 2025 Health Catalyst, Inc. $ 100 $ 91 $ 24 $ 21 $ 16 $ 5 S&P 500 $ 100 $ 127 $ 102 $ 127 $ 157 $ 182 Nasdaq Healthcare $ 100 $ 96 $ 77 $ 82 $ 81 $ 99 __________________ (1) Base period Unregistered Sales of Equity Securities and Use of Proceeds Unregistered sales of equity securities During the year ended December 31, 2025, we did not issue or sell any unregistered securities not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
Total cumulative stockholder return assumes $100 invested at the beginning of the period and data for the S&P 500 and Nasdaq Healthcare indices assume reinvestment of dividends. The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our common stock.
Removed
Dividend policy We do not intend to pay cash dividends in the foreseeable future.
Added
Dividend policy We do not intend to pay cash dividends in the foreseeable future. Securities authorized for issuance under equity compensation plans The information required by this item with respect to our equity compensation plans is incorporated by reference in our Form 10-K/A in lieu of our proxy statement for the 2026 Annual Meeting of Stockholders.
Added
Measurement points include the last trading day of each of the Company’s fiscal years ended December 31, 2020, 2021, 2022, 2023, 2024, and 2025, as well as the last trading day of the second quarter during each of the last five years.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe do not expect the tax provisions of the IRA to have a material impact on our consolidated financial statements. 76 Table of Contents Results of Operations The following tables set forth our consolidated results of operations data and such data as a percentage of total revenue for each of the periods indicated: Year Ended December 31, 2024 2023 2022 (in thousands) Revenue: Technology $ 194,852 $ 187,583 $ 176,288 Professional services 111,732 108,355 99,948 Total revenue 306,584 295,938 276,236 Cost of revenue, excluding depreciation and amortization shown below: Technology (1)(2)(3) 67,812 62,474 56,642 Professional services (1)(2)(3) 97,993 101,631 86,407 Total cost of revenue, excluding depreciation and amortization 165,805 164,105 143,049 Operating expenses: Sales and marketing (1)(2)(3) 54,387 67,321 87,514 Research and development (1)(2)(3) 57,950 72,627 75,680 General and administrative (1)(2)(3)(4)(5) 56,817 76,559 61,701 Depreciation and amortization 41,431 42,223 48,297 Total operating expenses 210,585 258,730 273,192 Loss from operations (69,806) (126,897) (140,005) Interest and other income (expense), net 637 9,106 (1,678) Loss before income taxes (69,169) (117,791) (141,683) Income tax provision (benefit) 333 356 (4,280) Net loss $ (69,502) $ (118,147) $ (137,403) __________________ (1) Includes stock-based compensation expense, as follows: Year Ended December 31, 2024 2023 2022 Stock-Based Compensation Expense: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 1,700 $ 1,866 $ 2,058 Professional services 6,041 7,369 8,230 Sales and marketing 12,120 20,982 28,082 Research and development 7,696 11,213 12,938 General and administrative 12,571 14,326 20,796 Total $ 40,128 $ 55,756 $ 72,104 (2) Includes acquisition-related costs, net, as follows: Year Ended December 31, 2024 2023 2022 Acquisition-related costs, net: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 320 $ 273 $ 351 Professional services 433 391 655 Sales and marketing 791 697 1,894 Research and development 703 787 3,045 General and administrative 7,817 3,609 (1,051) Total $ 10,064 $ 5,757 $ 4,894 77 Table of Contents (3) Includes restructuring costs, as follows: Year Ended December 31, 2024 2023 2022 Restructuring costs: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 79 $ 496 $ 229 Professional services 181 1,832 1,139 Sales and marketing 449 2,415 3,023 Research and development 443 3,337 3,410 General and administrative 936 742 624 Total $ 2,088 $ 8,822 $ 8,425 (4) Includes litigation costs, as follows: Year Ended December 31, 2024 2023 2022 Litigation costs: (in thousands) General and administrative $ — $ 21,279 $ — (5) Includes non-recurring lease-related charges, as follows: Year Ended December 31, 2024 2023 2022 Non-recurring lease-related charges: (in thousands) General and administrative $ 2,200 $ 4,081 $ 3,798 Year Ended December 31, 2024 2023 2022 Revenue: Technology 64 % 63 % 64 % Professional services 36 37 36 Total revenue 100 100 100 Cost of revenue, excluding depreciation and amortization shown below: Technology 22 21 21 Professional services 32 34 31 Total cost of revenue, excluding depreciation and amortization 54 55 52 Operating expenses: Sales and marketing 18 23 32 Research and development 19 25 27 General and administrative 19 26 22 Depreciation and amortization 14 14 18 Total operating expenses 70 88 99 Loss from operations (24) (43) (51) Interest and other income (expense), net 1 3 (1) Loss before income taxes (23) (40) (52) Income tax provision (benefit) — — (2) Net loss (23) % (40) % (50) % 78 Table of Contents Discussion of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Revenue: Technology $ 194,852 $ 187,583 $ 7,269 4 % Professional services 111,732 108,355 3,377 3 % Total revenue $ 306,584 $ 295,938 $ 10,646 4 % Percentage of revenue: Technology 64 % 63 % Professional services 36 % 37 % Total 100 % 100 % Total revenue was $306.6 million for the year ended December 31, 2024, compared to $295.9 million for the year ended December 31, 2023, an increase of $10.6 million, or 4%.
Biggest changeThese provisions are generally effective beginning in 2025, and we anticipate they will partially defer our income tax payments in future years and will not have a material impact on our effective tax rate in the near-term. 76 Table of Contents Results of Operations The following tables set forth our consolidated results of operations data and such data as a percentage of total revenue for each of the periods indicated: Year Ended December 31, 2025 2024 2023 (in thousands) Revenue: Technology $ 208,277 $ 194,852 $ 187,583 Professional services 102,859 111,732 108,355 Total revenue 311,136 306,584 295,938 Cost of revenue, excluding depreciation and amortization shown below: Technology (1)(2)(3) 69,741 67,812 62,474 Professional services (1)(2)(3) 89,720 97,993 101,631 Total cost of revenue, excluding depreciation and amortization 159,461 165,805 164,105 Operating expenses: Sales and marketing (1)(2)(3) 52,477 54,387 67,321 Research and development (1)(2)(3) 49,770 57,950 72,627 General and administrative (1)(2)(3)(4)(5) 49,559 56,817 76,559 Depreciation and amortization 50,500 41,431 42,223 Impairment of goodwill and intangible assets 110,223 — — Total operating expenses 312,529 210,585 258,730 Loss from operations (160,854) (69,806) (126,897) Interest and other (expense) income, net (16,404) 637 9,106 Loss before income taxes (177,258) (69,169) (117,791) Income tax provision 716 333 356 Net loss $ (177,974) $ (69,502) $ (118,147) __________________ (1) Includes stock-based compensation expense, as follows: Year Ended December 31, 2025 2024 2023 Stock-Based Compensation Expense: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 822 $ 1,700 $ 1,866 Professional services 3,653 6,041 7,369 Sales and marketing 7,866 12,120 20,982 Research and development 3,743 7,696 11,213 General and administrative 10,928 12,571 14,326 Total $ 27,012 $ 40,128 $ 55,756 (2) Includes acquisition-related costs, net, as follows: Year Ended December 31, 2025 2024 2023 Acquisition-related costs, net: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 120 $ 320 $ 273 Professional services 208 433 391 Sales and marketing 421 791 697 Research and development 366 703 787 General and administrative (3,201) 7,817 (2,316) Total $ (2,086) $ 10,064 $ (168) 77 Table of Contents (3) Includes restructuring costs, as follows: Year Ended December 31, 2025 2024 2023 Restructuring costs: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 837 $ 79 $ 496 Professional services 1,792 181 1,832 Sales and marketing 2,505 449 2,415 Research and development 3,317 443 3,337 General and administrative 1,262 936 742 Total $ 9,713 $ 2,088 $ 8,822 (4) Includes litigation costs, as follows: Year Ended December 31, 2025 2024 2023 Litigation costs: (in thousands) General and administrative $ — $ — $ 21,279 (5) Includes non-recurring lease-related charges, as follows: Year Ended December 31, 2025 2024 2023 Non-recurring lease-related charges: (in thousands) General and administrative $ 6,900 $ 2,200 $ 4,081 Year Ended December 31, 2025 2024 2023 Revenue: Technology 67 % 64 % 63 % Professional services 33 36 37 Total revenue 100 100 100 Cost of revenue, excluding depreciation and amortization shown below: Technology 22 22 21 Professional services 29 32 34 Total cost of revenue, excluding depreciation and amortization 51 54 55 Operating expenses: Sales and marketing 17 18 23 Research and development 16 19 25 General and administrative 16 19 26 Depreciation and amortization 17 14 15 Impairment of goodwill and intangible assets 35 — — Total operating expenses 101 70 89 Loss from operations (52) (24) (44) Interest and other (expense) income, net (5) 1 3 Loss before income taxes (57) (23) (41) Income tax provision — — — Net loss (57) % (23) % (41) % 78 Table of Contents Discussion of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, 2025 2024 $ Change % Change (in thousands, except percentages) Revenue: Technology $ 208,277 $ 194,852 $ 13,425 7 % Professional services 102,859 111,732 (8,873) (8) % Total revenue $ 311,136 $ 306,584 $ 4,552 1 % Percentage of revenue: Technology 67 % 64 % Professional services 33 % 36 % Total 100 % 100 % Total revenue was $311.1 million for the year ended December 31, 2025, compared to $306.6 million for the year ended December 31, 2024, an increase of $4.6 million, or 1%.
In the past, we have referred to this metric as DOS Subscription Clients and Platform Subscription Clients. Platform Clients have historically been defined as clients who directly or indirectly access our platform via a technology subscription contract. Direct access to our platform has included access to our DOS platform, Ignite platform, or Ninja Universe.
In the past, we referred to this metric as DOS Subscription Clients and Platform Subscription Clients. Platform Clients have historically been defined as clients who directly or indirectly access our platform via a technology subscription contract. Direct access to our platform has included access to our DOS platform, Ignite platform, or Ninja Universe.
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, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.
We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period.
We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period.
Investing activities Net cash used in investing activities for the year ended December 31, 2024 of $22.9 million was primarily due to the purchases of short-term investments of $168.3 million, offset by the sale and maturity of short-term investments of $242.1 million.
Net cash used in investing activities for the year ended December 31, 2024 of $22.9 million was primarily due to the purchases of short-term investments of $168.3 million, offset by the sale and maturity of short-term investments of $242.1 million.
The historical and go-forward revenue growth profiles of these businesses may vary from our core Platform Clients, which can positively or negatively impact our overall growth rate. For example, Medicity clients have generated a lower dollar-based retention rate than Platform Clients and we expect declining revenue from Medicity clients in the foreseeable future.
The historical and go-forward revenue growth profiles of these businesses may vary from our core Platform Clients, which can positively or negatively impact our overall growth rate. For example, Medicity clients have generally generated a lower dollar-based retention rate than Platform Clients and we expect declining revenue from Medicity clients in the foreseeable future.
Dollar-based Retention Rate - Legacy Definition Year Ended December 31, 2024 2023 2022 Dollar-based Retention Rate (legacy) 100 % 100 % 100 % Historically we have calculated our legacy Dollar-based Retention Rate as of a period end by starting with the sum of the technology and professional services ARR from our Platform Clients as of the date 12 months prior to such period end (prior period ARR).
Dollar-based Retention Rate - Legacy Definition Year Ended December 31, 2024 2023 Dollar-based Retention Rate (legacy) 100 % 100 % Historically we have calculated our legacy Dollar-based Retention Rate as of a period end by starting with the sum of the technology and professional services ARR from our Platform Clients as of the date 12 months prior to such period end (prior period ARR).
As we integrate the teams acquired via our recent acquisitions, we have also incurred integration-related costs and duplicative costs that could impact our operating cost profile in the near term. • Changing revenue mix . Our technology and professional services offerings have materially different gross margin profiles.
As we integrate the teams acquired via our more recent acquisitions, we have also incurred integration-related costs and duplicative costs that could impact our operating cost profile in the near term. • Changing revenue mix . Our technology and professional services offerings have materially different gross margin profiles.
App Clients that do not meet the definition of a Platform Client, which are primarily legacy Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, ERS, Carevive, Lumeon, and Intraprise clients, are not included in the Dollar-Based Retention Rate metrics.
App Clients that do not meet the definition of a Platform Client, which are primarily legacy Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, ERS, Carevive, Lumeon, Intraprise, and Upfront clients, are not included in the Dollar-Based Retention Rate metrics.
We expect Adjusted Technology Gross Margin to fluctuate and potentially decline in the near term, primarily due to additional costs associated with the ongoing transition of Platform Clients to Health Catalyst Ignite and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, which typically begins six months or more following contract signing.
We expect technology gross margin and Adjusted Technology Gross Margin to fluctuate and potentially decline in the near term, primarily due to additional costs associated with the ongoing transition of DOS clients to Health Catalyst Ignite and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, which typically begins six months or more following contract signing.
Dollar-based Retention Rate - New Definition Year Ended December 31, 2024 Dollar-based Retention Rate (Tech + TEMS) 102 % We calculate our Dollar-based Retention Rate as of a period end by starting with the sum of the technology and Tech-Enabled Managed Services (TEMS) ARR from our Platform Clients as of the date 12 months prior to such period end (prior period ARR ).
Dollar-based Retention Rate - New Definition Year Ended December 31, 2025 2024 Dollar-based Retention Rate (Tech + TEMS) 93 % 102 % We calculate our Dollar-based Retention Rate as of a period end by starting with the sum of the technology and Tech-Enabled Managed Services (TEMS) ARR from our Platform Clients as of the date 12 months prior to such period end (prior period ARR ).
Accordingly, beginning in 2025, Platform Clients will be defined as: (i) all Platform Clients as of December 31, 2024 under our historical definition (i.e., these clients will be included in our Platform Client count going forward until they cease to have an active subscription as of the end of the period), and (ii) going forward in 2025 and beyond, any technology client that signs contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
Accordingly, as of January 1, 2025, we defined Platform Clients as: (i) all Platform Clients as of December 31, 2024 under our historical definition (i.e., these clients will be included in our Platform Client count going forward until they cease to have an active subscription as of the end of the period), and (ii) as of January 1, 2025, any technology client that signs contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
Year Ended December 31, 2023 (in thousands, except percentages) Technology Professional Services Total Revenue $ 187,583 $ 108,355 $ 295,938 Cost of revenue, excluding depreciation and amortization (62,474) (101,631) (164,105) Amortization of intangible assets, cost of revenue (18,742) — (18,742) Depreciation of property and equipment, cost of revenue (9,089) — (9,089) Gross profit 97,278 6,724 104,002 Gross margin 52 % 6 % 35 % Add: Amortization of intangible assets, cost of revenue 18,742 — 18,742 Depreciation of property and equipment, cost of revenue 9,089 — 9,089 Stock-based compensation 1,866 7,369 9,235 Acquisition-related costs, net (1) 273 391 664 Restructuring costs (2) 496 1,832 2,328 Adjusted Gross Profit $ 127,744 $ 16,316 $ 144,060 Adjusted Gross Margin 68 % 15 % 49 % __________________ (1) Acquisition-related costs, net includes deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
Year Ended December 31, 2023 (in thousands, except percentages) Technology Professional Services Total Revenue $ 187,583 $ 108,355 $ 295,938 Cost of revenue, excluding depreciation and amortization (62,474) (101,631) (164,105) Amortization of intangible assets, cost of revenue (18,742) — (18,742) Depreciation of property and equipment, cost of revenue (9,089) — (9,089) Gross profit 97,278 6,724 104,002 Gross margin 52 % 6 % 35 % Add: Amortization of intangible assets, cost of revenue 18,742 — 18,742 Depreciation of property and equipment, cost of revenue 9,089 — 9,089 Stock-based compensation 1,866 7,369 9,235 Acquisition-related costs, net (1) 273 391 664 Restructuring costs (2) 496 1,832 2,328 Adjusted Gross Profit $ 127,744 $ 16,316 $ 144,060 Adjusted Gross Margin 68 % 15 % 49 % __________________ (1) Acquisition-related costs, net include deferred retention expenses attributable to the ARMUS, KPI Ninja, and Twistle acquisitions.
The total remaining authorization for future shares of common stock repurchases under our Share Repurchase Plan is $29.8 million as of December 31, 2024. Convertible senior notes On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025 (the Notes), pursuant to an Indenture dated April 14, 2020, with U.S.
The total remaining authorization for future shares of common stock repurchases under our Share Repurchase Plan is $24.8 million as of December 31, 2025. Convertible senior notes On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025 (the Notes), pursuant to an Indenture dated April 14, 2020, with U.S.
Over the past few years, we have invested in growth infrastructure and our sales operations and marketing teams are built to help us scale over the long term. 65 Table of Contents We have demonstrated a consistent track record of innovation through research and development over time as evidenced by our new product features and new product offerings.
Over the past few years, we have invested in growth infrastructure and our sales operations and marketing teams are built to help us scale over the long term. We have demonstrated a consistent track record of innovation through research and development over time as evidenced by our new product features and new product offerings.
Additionally, with our increased focus on driving expansion within our existing client base through our TEMS offering, we believe that our sales and marketing infrastructure is positioned well to generate meaningful leverage and growth within our services offerings without the need for the same level of incremental investment as in prior years.
Additionally, with our increased focus on driving expansion within our existing client base, we believe that our sales and marketing infrastructure is positioned well to generate meaningful leverage and growth within our services offerings without the need for the same level of incremental investment as in prior years.
Platform Clients are defined as: (i) all Platform Clients as of December 31, 2024 under our historical definition (formerly referred to as DOS Subscription Clients, which we also referred to as Platform Subscription Clients), and (ii) going forward in 2025 and beyond, any technology client that signs contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
Platform Clients are defined as: (i) all Platform Clients as of December 31, 2024 under our historical definition (formerly referred to as DOS Subscription Clients, which we also referred to as Platform Subscription Clients), and (ii) as of January 1, 2025, any technology client that signs contracts with at least $100,000 of incremental total ARR and non-recurring revenue in a given calendar year, inclusive of clients that come through acquisition if we first begin recognizing revenue for the client post-acquisition and that total ARR and non-recurring revenue exceeds $100,000 in that calendar year, so long as such client maintains an active subscription as of the end of the period.
We derive substantially all of our revenue through subscriptions for use of our technology and professional services on a recurring basis. In 2024, greater than 90% of our total revenue was recurring in nature.
We derive substantially all of our revenue through subscriptions for use of our technology and professional services on a recurring basis. In 2025, greater than 90% of our total revenue was recurring in nature.
This expectation is driven by our belief that many existing clients that have already realized a strong ROI, and are aligned on a long-term partnership framework, will be more receptive to expansion conversations, as compared to discussions with prospective clients.
This expectation is driven by our belief that many existing clients that have already realized a strong financial return on investment (ROI), and are aligned on a long-term partnership framework, will be more receptive to expansion conversations, as compared to discussions with prospective clients.
As it relates to TEMS, we define this cohort of clients as Platform Clients who subscribe to a Tech-Enabled Managed Services contract with the exception of our pilot ambulatory TEMS offering related to specific ambulatory services agreements, which we expect to sunset in 2025 and which will be excluded from Dollar-Based Retention Rate calculations in prior, current and future periods.
As it relates to TEMS, we define this cohort of clients as Platform Clients who subscribe to a Tech-Enabled Managed Services contract with the exception of our pilot ambulatory TEMS offering related to specific ambulatory services agreements, which we sunset in 2025 and which is excluded from Dollar-Based Retention Rate calculations in prior, current and future periods.
Recent Accounting Pronouncements See “Description of Business and Summary of Significant Accounting Policies” in Note 1 to our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information. 87 Table of Contents
Recent Accounting Pronouncements See “Description of Business and Summary of Significant Accounting Policies” in Note 1 to our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is presented below.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 is presented below.
Our clients are large, complex organizations who typically have long procurement cycles, which, as a result, may lead to challenges with adding new Platform Clients. • Leverage recent product and services offerings to drive expansion. We believe that our ability to expand within our client base will enable us to drive growth.
Our clients are large, complex organizations who typically have long procurement cycles, which, as a result, may lead to challenges with adding new Platform Clients. 72 Table of Contents • Leverage recent product and services offerings to drive expansion. We believe that our ability to expand within our client base will enable us to drive growth.
See “Reconciliation of Non-GAAP Financial Measures” above for more information. • Migration to Health Catalyst Ignite. We are in the process of migrating our Platform Clients from our DOS platform to Health Catalyst Ignite. These transitions have and will continue to result in higher cost of technology revenue, which will negatively impact Adjusted Technology Gross Margin.
See “Reconciliation of Non-GAAP Financial Measures” above for more information. • Migration to Health Catalyst Ignite. We are in the process of migrating our DOS clients to Ignite. These migrations have and will continue to result in higher cost of technology revenue, which will negatively impact Adjusted Technology Gross Margin.
Many of these significant assumptions are forward-looking and could be affected by future economic and market conditions. When a quantitative analysis is necessary, we typically engage the assistance of valuation specialists in concluding on fair value measurements in connection with determining the fair values of our reporting units.
Many of these significant assumptions are forward-looking and could be affected by future economic and market conditions. If a quantitative analysis is necessary, we typically engage the assistance of a valuation specialist in concluding on fair value measurements in connection with determining the fair values of our reporting units.
The proceeds from the delayed draw term loan facility, if any, will be used to fund our inorganic growth strategy through permitted acquisitions (including deferred purchase price or similar arrangements related thereto) and to pay fees, costs, and expenses in connection therewith. Refer to “Note 10-Debt” of our consolidated financial statements for additional details regarding the Credit Agreement.
We used proceeds from the delayed draw term loan facility to fund our inorganic growth strategy through permitted acquisitions (including deferred purchase price or similar arrangements related thereto) and to pay fees, costs, and expenses in connection therewith. Refer to “Note 10—Debt” of our consolidated financial statements for additional details regarding the Credit Agreement.
We then calculated the sum of the ARR from these same clients as of the current period end (Current period ARR). As shown above, under the updated Dollar-based Retention Rate definition, the result was 102% in 2024.
We then calculated the sum of the ARR from these same clients as of the current period end (Current period ARR). 67 Table of Contents As shown above, under the updated Dollar-based Retention Rate definition, the result was 102% in 2024.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our prior year Form 10-K filed on February 22, 2024.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is included under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our prior year Form 10-K filed on February 26, 2025.
We believe that excluding restructuring costs, litigation costs, and non-recurring lease-related charges allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations.
We believe that excluding restructuring costs, litigation costs, impairment of goodwill and intangible assets, and non-recurring lease-related charges, as applicable, allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations.
Given how fundamental our platform is to our Solution and because the vast majority of our total revenue is derived from Platform Clients, we believe our Platform Client count is a strong indicator of our market penetration and the growth of our business. For 2025, we have updated the name and definition of this key metric to Platform Clients.
Given how fundamental our platform is to our Solution and because the vast majority of our total revenue is derived from Platform Clients, we believe our Platform Client count is a strong indicator of our market penetration and the growth of our business. Beginning January 1, 2025, we updated the name and definition of this key metric to Platform Clients.
Sales and marketing expenses primarily include salary and related personnel costs for our sales, marketing, and account management teams, lead generation, marketing events, including our HAS, marketing programs, and outside contractor costs associated with the sale and marketing of our offerings.
Sales and marketing expenses primarily include salary and related personnel costs for our sales, marketing, and account management teams, lead generation, marketing events, including our Healthcare Analytics Summit, marketing programs, and outside contractor costs associated with the sale and marketing of our offerings.
Since inception, we have financed our operations primarily from the proceeds we received through private sales of equity securities, payments received from clients under technology and professional services arrangements, borrowings under our loan and security agreements, our IPO, the Note Offering, and the Secondary Public Equity Offering.
Since inception, we have financed our operations primarily from the proceeds we received through private sales of equity securities, payments received from clients under technology and professional services arrangements, borrowings under our loan and security agreements (including our Credit Agreement described below), our IPO, the Note Offering, and the Secondary Public Equity Offering.
See “Key Business Metrics and Non-GAAP Financial Measures” below for more information about our Platform Clients. App Clients generally include technology clients and other clients from historical acquisitions and typically operate under subscription contracts. As of December 31, 2024, 2023, and 2022, we had 130, 109, and 98 Platform Clients with active subscriptions, respectively.
See “Key Business Metrics and Non-GAAP Financial Measures” below for more information about our Platform Clients. App Clients generally include technology clients and other clients from historical acquisitions and typically operate under subscription contracts. As of December 31, 2025, 2024, and 2023, we had 162, 130, and 109 Platform Clients, respectively.
We benefit from a highly recurring revenue model, in which greater than 90% of our revenue is recurring in nature, and a high level of technology revenue predictability, especially within our Platform Clients whose contracts, when sold as a bundle with our analytics applications, often have built-in, contractual technology revenue escalators.
We benefit from a highly recurring revenue model, in which greater than 90% of our revenue is recurring in nature, and a high level of technology revenue predictability, especially within our Platform Clients whose contracts, when sold as a bundle with our analytics applications, often have built-in, contractual technology revenue escalators and are often locked in for three to five years.
Our income tax provision consists of current and deferred taxes for U.S. federal, state, and foreign income taxes. As we have a full valuation allowance on our net deferred tax assets, our income tax provision typically consists primarily of minimal state and foreign income taxes, which is the case for the years ended December 31, 2024 and 2023.
As we have a full valuation allowance on our net deferred tax assets, our income tax provision typically consists primarily of minimal state and foreign income taxes, which is the case for the years ended December 31, 2025 and 2024.
As discussed further in “Key Business Metrics and Non-GAAP Financial Measures” below, we are shifting from what we formerly called DOS Subscription Clients to Platform Clients, and what we formerly referred to as other clients to App Clients, which include all other clients that are not Platform Clients.
As discussed further in “Key Business Metrics and Non-GAAP Financial Measures” below, as of January 1, 2025, we shifted from what we formerly called DOS Subscription Clients to Platform Clients, and what we formerly referred to as other clients to App Clients, which include all other clients that are not Platform Clients.
Sales and marketing expense as a percentage of total revenue decreased from 23% in the year ended December 31, 2023 to 18% in the year ended December 31, 2024.
Sales and marketing expense as a percentage of total revenue decreased from 18% in the year ended December 31, 2024 to 17% in the year ended December 31, 2025.
We believe that excluding restructuring costs, litigation costs, and non-recurring lease-related charges allows for more meaningful comparisons between operating results from period to period as this is separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations.
We believe that excluding litigation costs, restructuring costs, impairment of goodwill and intangible assets, and non-recurring lease-related charges, as applicable, allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations.
The acquisition consideration transferred was $39.8 million and was comprised of net cash consideration of $36.2 million, shares of Health Catalyst common stock with a fair value of $2.9 million, and contingent consideration based on certain earn-out performance targets for Lumeon during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.7 million.
The acquisition consideration transferred was $39.8 million and was comprised of net cash consideration of $36.2 million, shares of our common stock with an aggregate acquisition date fair value of $2.9 million, and contingent consideration based on certain earn-out performance targets for Lumeon during an earn-out period that ended on June 30, 2025, with an acquisition-date fair value of $0.7 million.
The acquisition consideration transferred was $22.1 million and was comprised of net cash consideration of $18.6 million, shares of Health Catalyst common stock with a fair value of $2.6 million, and contingent consideration based on certain earn-out performance targets for Carevive during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.9 million.
The acquisition consideration transferred was $22.1 million and was comprised of net cash consideration of $18.6 million, shares of our common stock with an aggregate acquisition date fair value of $2.6 million, and contingent consideration based on certain earn-out performance targets for Carevive during an earn-out period that ended on June 30, 2025, with an acquisition-date fair value of $0.9 million.
Research and development expense as a percentage of revenue decreased from 25% in the year ended December 31, 2023 to 19% in the year ended December 31, 2024.
Research and development expense as a percentage of revenue decreased from 19% in the year ended December 31, 2024 to 16% in the year ended December 31, 2025.
This operating leverage primarily stems from the fact that we already have an existing relationship with the client, inclusive of having invested in client success initiatives and having provided account management services to the client since the beginning of our contractual relationship.
This operating leverage primarily stems from the fact that we already have an existing relationship with the client, inclusive of having invested in client success initiatives since the beginning of our contractual relationship.
While our professional services offerings help our clients achieve measurable improvements and make them stickier, they have lower gross margins than our technology revenue. In 2024, our technology revenue and professional services revenue represented 64% and 36% of total revenue, respectively.
While our professional services offerings help our clients achieve measurable improvements and make them stickier, they have lower gross margins than our technology revenue. In 2025, our technology revenue and professional services revenue represented 67% and 33% of total revenue, respectively.
Cost of professional services revenue consists primarily of costs related to delivering our team’s expertise in analytics, strategic advisory, improvement, and implementation services. These costs primarily include salary and related personnel costs, travel-related costs, and outside contractor costs. The 2023 Restructuring Plan has reduced our ongoing cost of professional services revenue.
Cost of professional services revenue. Cost of professional services revenue consists primarily of costs related to delivering our team’s expertise in analytics, strategic advisory, improvement, and implementation services. These costs primarily include salary and related personnel costs, travel-related costs, and outside contractor costs.
We provide clients access to our technology through either an all-access or limited-access, modular subscription. Most of our subscription contracts are cloud-based and generally have a three or five-year term, of which many are terminable after one year upon 90 days’ notice. The vast majority of our Platform Client subscription contracts have built-in annual escalators for technology access fees.
Most of our subscription contracts are cloud-based and generally have a three- or five-year term, of which many are terminable after one year upon 90 days’ notice. The vast majority of our Platform Client subscription contracts have built-in annual escalators for technology access fees.
Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs and tax credits may also be limited under similar provisions of state law.
Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs and tax credits may also be limited under similar provisions of state law. On July 4, 2025, President Trump signed the OBBBA into law.
Highlights from the years ended December 31, 2024, 2023, and 2022 include: • For the years ended December 31, 2024, 2023, and 2022, our total revenue was $306.6 million, $295.9 million, and $276.2 million, respectively.
Highlights from the years ended December 31, 2025, 2024, and 2023 include: • For the years ended December 31, 2025, 2024, and 2023, our total revenue was $311.1 million, $306.6 million, and $295.9 million, respectively.
See “Reconciliation of Non-GAAP Financial Measures” below for information regarding the limitations of using our Adjusted Gross Profit and Adjusted Gross Margin as financial measures and for a reconciliation of revenue to our Adjusted Gross Profit, the most directly comparable financial measure calculated in accordance with GAAP.
See “Reconciliation of Non-GAAP Financial Measures” below for information regarding the limitations of using our Adjusted EBITDA as a financial measure and for a reconciliation of our net loss to Adjusted EBITDA, the most directly comparable financial measure calculated in accordance with GAAP.
The technology revenue growth was primarily from new Platform Clients, revenue from existing clients paying higher technology access fees from contractual, annual escalators, and new offerings of expanded support services partially offset by elevated churn levels.
The technology revenue increase was primarily related to growth from new and acquired clients, revenue from existing clients paying higher technology access fees from contractual, annual escalators, and new offerings of expanded support services, partially offset by elevated churn levels primarily from the migration of DOS clients to Ignite.
Financial Measures and Key Business Metrics We regularly review a number of metrics, including the following key financial measures, to manage our business and evaluate our operating performance compared to that of other companies in our industry: Year Ended December 31, 2024 2023 2022 GAAP Financial Measures: (in thousands, except percentages) Total revenue $ 306,584 $ 295,938 $ 276,236 Gross profit $ 114,503 $ 104,002 $ 102,942 Gross margin 37 % 35 % 37 % Net loss $ (69,502) $ (118,147) $ (137,403) Non-GAAP Financial Measures: Adjusted Gross Profit $ 149,533 $ 144,060 $ 145,849 Adjusted Gross Margin 49 % 49 % 53 % Adjusted EBITDA $ 26,105 $ 11,021 $ (2,487) We monitor the key financial measures set forth in the preceding table to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine team member incentives.
Financial Measures and Key Business Metrics We regularly review a number of metrics, including the following key financial measures, to manage our business and evaluate our operating performance compared to that of other companies in our industry: Year Ended December 31, 2025 2025 2024 2023 GAAP Financial Measures: (in thousands, except percentages) Total revenue $ 311,136 $ 306,584 $ 295,938 Gross profit $ 120,356 $ 114,503 $ 104,002 Gross margin 39 % 37 % 35 % Net loss $ (177,974) $ (69,502) $ (118,147) Non-GAAP Financial Measures: Adjusted Gross Profit $ 159,107 $ 149,533 $ 144,060 Adjusted Gross Margin 51 % 49 % 49 % Adjusted EBITDA $ 41,408 $ 26,105 $ 11,021 We monitor the key financial measures set forth in the preceding table to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine team member incentives.
From the beginning, our Solution has been focused on enabling our mission: to be the catalyst for massive, measurable, data-informed healthcare improvement. We currently employ more than 1,500 team members.
From the beginning, our Solution has been focused on enabling our mission: to be the catalyst for massive, measurable, data-informed healthcare improvement. As of December 31, 2025, we employ more than 1,200 team members.
Our primary uses of cash from operating activities are for employee-related expenses, marketing expenses, and technology costs. For the year ended December 31, 2024, net cash provided by operating activities was $14.6 million, which included a net loss of $69.5 million.
Our primary uses of cash from operating activities are for employee-related expenses, marketing expenses, and technology costs. For the year ended December 31, 2025, net cash provided by operating activities was $0.7 million, which included a net loss of $178.0 million.
This cohort of technology and TEMS ARR from our Platform Clients represents the majority of our ARR as of December 31, 2024. As noted, our Dollar-based Retention Rate Key Metric excludes App Clients who are not Platform Clients, including clients added through acquisition, as the go-forward technology revenue growth profiles of these businesses may vary from our core Platform Clients.
As noted, our Dollar-based Retention Rate Key Metric excludes App Clients who are not Platform Clients, including clients added through acquisition, as the go-forward technology revenue growth profiles of these businesses may vary from our core Platform Clients.
General and administrative Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) General and administrative $ 56,817 $ 76,559 $ (19,742) (26) % Percentage of total revenue 19 % 26 % General and administrative expenses were $56.8 million for the year ended December 31, 2024, compared to $76.6 million for the year ended December 31, 2023, a decrease of $19.7 million, or 26%.
General and administrative Year Ended December 31, 2025 2024 $ Change % Change (in thousands, except percentages) General and administrative $ 49,559 $ 56,817 $ (7,258) (13) % Percentage of total revenue 16 % 19 % General and administrative expenses were $49.6 million for the year ended December 31, 2025, compared to $56.8 million for the year ended December 31, 2024, a decrease of $7.3 million, or 13%.
Recent macroeconomic challenges (including the high levels of inflation and high interest rates, new tariffs or market volatility and measures taken in response thereto) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally, leading to an economic downturn and increased market volatility.
Recent macroeconomic challenges (including the high levels of inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, regional or global conflicts (including conflicts in the Middle East), or market volatility and measures taken in response thereto) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally, leading to an economic downturn and increased market volatility.
Because of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for our net deferred tax assets, including net operating loss carryforwards (NOLs) and tax credits related primarily to research and development.
Income tax provision Income tax provision consists of U.S. federal, state, and foreign income taxes. Because of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for our net deferred tax assets, including net operating loss carryforwards (NOLs) and tax credits related primarily to research and development.
These options include expanding their relationship and spend by purchasing additional applications and services; experiencing immediate savings while maintaining the same functionality through a price reduction as part of the migration; or maintaining existing spend and realizing improvement in operations and functionality from the enhanced capabilities of Ignite.
These options include expanding their relationship and spend by purchasing additional applications and services; experiencing immediate savings while maintaining similar functionality through a price reduction as part of the migration; maintaining existing spend and realizing improvement in operations and functionality from the enhanced capabilities of Ignite; or exercising flexibility to stay on DOS or parts of DOS in the near-to-medium term.
As of December 31, 2024, we had federal and state NOLs of $680.7 million and $571.6 million, respectively, which will begin to expire for federal and state tax purposes in 2032 and 2025, respectively.
As of December 31, 2025, we had federal and state NOLs of $787.8 million and $647.7 million, respectively, which will begin to expire for federal and state tax purposes in 2032 and 2026, respectively.
These investing cash outflows were partially offset by the sale and maturity of short-term investments of $315.2 million, reduced by the purchases of short-term investments of $309.0 million. 83 Table of Contents Financing activities Net cash provided by financing activities for the year ended December 31, 2024 of $151.7 million was primarily the result of $152.3 million of proceeds related to our Credit Agreement and drawing on the delayed draw facility, net of issuance costs, $2.4 million in proceeds from our ESPP and $0.2 million in stock option exercise proceeds, reduced by $2.2 million for the payment of deferred financing costs and $1.0 million in debt repayments.
Net cash provided by financing activities for the year ended December 31, 2024 of $151.7 million was primarily the result of $152.3 million of proceeds related to our Credit Agreement and drawing on the delayed draw facility, net of issuance costs, $2.4 million in proceeds from our ESPP and $0.2 million in stock option exercise proceeds, reduced by $2.2 million for the payment of deferred financing costs and $1.0 million in debt repayments.
(3) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other miscellaneous charges. For additional details, refer to Note 11 in our consolidated financial statements. (4) Non-recurring lease-related charges includes lease-related impairment charges for the subleased portion of our corporate headquarters.
(3) Restructuring costs include severance and other team member costs from workforce reductions and restructuring, impairment of discontinued capitalized software projects, and other miscellaneous charges. For additional details, refer to Note 11 in our consolidated financial statements.
The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the reporting units, as well as the sensitivity of the respective fair values to the underlying significant assumptions. We typically use the income or market approach to measure the fair value of reporting units.
The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the reporting units, as well as the sensitivity of the respective fair values to the underlying significant assumptions. Typical methods to derive the fair value of reporting units include using the income or market approaches.
If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the carrying amount of the reporting unit exceeds its fair value, we would recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.
If the carrying amount of the reporting unit exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.
Cost of professional services revenue was $98.0 million for the year ended December 31, 2024, compared to $101.6 million for the year ended December 31, 2023, a decrease of $3.6 million, or 4%.
Cost of professional services revenue was $89.7 million for the year ended December 31, 2025, compared to $98.0 million for the year ended December 31, 2024, a decrease of $8.3 million, or 8%.
See “Key Factors Affecting Our Performance” for more information about important opportunities and challenges related to our business. 63 Table of Contents Macroeconomic Environment and Strategic Operating Plan Recent macroeconomic challenges (including high levels of inflation and high interest rates) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally.
See the section titled “Key Factors Affecting Our Performance” for more information about important opportunities and challenges related to our business. 62 Table of Contents Macroeconomic Environment and Strategic Operating Plan Recent macroeconomic challenges (including high levels of inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, and regional or global conflicts (including the conflicts in the Middle East)) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally.
See “Reconciliation of Non-GAAP Financial Measures” below for more information about Adjusted EBITDA, including the limitations of Adjusted EBITDA and a reconciliation to the most directly comparable measure calculated in accordance with GAAP.
See the section titled “Financial Measures and Key Business Metrics—Reconciliation of Non-GAAP Financial Measures” below for more information about Adjusted EBITDA, including the limitations of such measure and a reconciliation to net loss, the most directly comparable measure calculated in accordance with GAAP.
Technology revenue was $194.9 million, or 64% of total revenue, for the year ended December 31, 2024, compared to $187.6 million, or 63% of total revenue, for the year ended December 31, 2023.
Technology revenue was $208.3 million, or 67% of total revenue, for the year ended December 31, 2025, compared to $194.9 million, or 64% of total revenue, for the year ended December 31, 2024.
As of December 31, 2024, we served over 900 App Clients compared to over 525 other clients as of December 31, 2023. The increase in other clients from December 31, 2023 to App Clients as of December 31, 2024 was primarily due to our 2024 acquisitions.
As of December 31, 2025, we served over 1,000 App Clients compared to over 900 other clients as of December 31, 2024. The increase in other clients from December 31, 2024 to App Clients as of December 31, 2025 was primarily due to the 2025 Upfront acquisition.
We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a 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. 66 Table of Contents See “Reconciliation of Non-GAAP Financial Measures” below for information regarding the limitations of using our Adjusted EBITDA as a financial measure and for a reconciliation of our net loss to Adjusted EBITDA, the most directly comparable financial measure calculated in accordance with GAAP.
We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a 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.
We believe the higher number of net new Platform Clients was driven by an improved end market, an improved and more modular platform product in Ignite and its platform components, which can be sold on a standalone basis or easily bundled with applications, and a lower average starting price point, which removes barriers to entry for many health systems. 67 Table of Contents For 2025, while health systems are on a spectrum of financial stability and improvement, we are encouraged to see that average health system operating margins did improve in 2024 compared to 2023 and 2022.
We believe the higher number of net new Platform Clients was driven by an improved end market, an improved and more modular platform product in Ignite and its platform components, which can be sold on a standalone basis or easily bundled with applications, and a lower average starting price point, which removes barriers to entry for many health systems.
Given the variety of ways to access our platform and the mix of specific technology Solutions included in a subscription contract, average total ARR and non-recurring revenue for net new Platform Clients can greatly vary, particularly with our new definition of this metric.
There are some clients that became Platform Clients before 2025 with total ARR and non-recurring revenue of less than $100,000. 66 Table of Contents Given the variety of ways to access our platform and the mix of specific technology Solutions included in a subscription contract, average total ARR and non-recurring revenue for net new Platform Clients can greatly vary, particularly with our recently updated definition of this metric.
With respect to other near-term implications of the challenging macroeconomic environment, we continue to anticipate that a higher proportion of our gross bookings will come from our existing client base as compared to historical levels, inclusive of upsells to both our Platform Client base, as well as upsells to our over 900 App Clients.
We continue to anticipate that a higher proportion of our gross bookings will come from our existing client base as compared to historical levels, inclusive of upsells to both our Platform Client base, as well as upsells to our over 1,000 App Clients.
We have experienced and expect to continue to experience operational inefficiencies associated with managing multiple hosting providers, resulting in a headwind against Adjusted Technology Gross Margin. Additionally, we are in the process of migrating our Platform Client base to Health Catalyst Ignite.
Hosting fees are related to providing our technology through a cloud-based environment hosted primarily by Microsoft Azure. We have experienced and expect to continue to experience operational inefficiencies associated with managing multiple hosting providers, resulting in a headwind against Adjusted Technology Gross Margin. Additionally, we are in the process of migrating our DOS clients base to Health Catalyst Ignite.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) litigation costs, (vii) restructuring costs, and (viii) non-recurring lease-related charges.
Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other (income) expense, net, (ii) income tax provision (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities for potential earn-out payments, (vi) litigation costs, (vii) restructuring costs, (viii) impairment of goodwill and intangible assets, and (ix) non-recurring lease-related charges, as applicable.
Research and development Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Research and development $ 57,950 $ 72,627 $ (14,677) (20) % Percentage of total revenue 19 % 25 % Research and development expenses were $58.0 million for the year ended December 31, 2024, compared to $72.6 million for the year ended December 31, 2023, a decrease of $14.7 million, or 20%.
Research and development Year Ended December 31, 2025 2024 $ Change % Change (in thousands, except percentages) Research and development $ 49,770 $ 57,950 $ (8,180) (14) % Percentage of total revenue 16 % 19 % Research and development expenses were $49.8 million for the year ended December 31, 2025, compared to $58.0 million for the year ended December 31, 2024, a decrease of $8.2 million, or 14%.
Refer to “Note 10-Debt” of our consolidated financial statements for additional details regarding the private offering of the Notes and the Capped Calls. 82 Table of Contents Cash Flows The following table summarizes our cash flows for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by (used in) operating activities $ 14,559 $ (33,080) $ (35,270) Net cash (used in) provided by investing activities (22,902) 20,293 (39,021) Net cash provided by (used in) financing activities 151,746 2,730 (2,613) Effect of exchange rate changes on cash and cash equivalents (34) 21 (11) Net increase (decrease) in cash and cash equivalents $ 143,369 $ (10,036) $ (76,915) Operating activities Our largest source of operating cash flows is cash collections from our clients for technology and professional services arrangements.
Refer to Note 10—Debt to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional details regarding maturity of the Notes. 82 Table of Contents Cash flows The following table summarizes our cash flows for the years ended December 31, 2025, 2024, and 2023: Year Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ 731 $ 14,559 $ (33,080) Net cash provided by (used in) investing activities 36,193 (22,902) 20,293 Net cash (used in) provided by financing activities (235,782) 151,746 2,730 Effect of exchange rate changes on cash and cash equivalents 27 (34) 21 Net (decrease) increase in cash and cash equivalents $ (198,831) $ 143,369 $ (10,036) Operating activities Our largest source of operating cash flows is cash collections from our clients for technology and professional services arrangements.
We saw a Dollar-based Retention Rate of 100% for each of the years ended December 31, 2024, 2023, and 2022, respectively, based on our legacy definition. Under an updated Dollar-based Retention rate described in more detail in the "Key Business Metrics and Non-GAAP Financial Measures" section the rate was 102% for the year ended December 31, 2024.
We updated our definition of Dollar-based Retention Rate in early 2025, and, under an updated Dollar-based Retention Rate described in more detail in the section titled "Financial Measures and Key Business Metrics," the rate was 93% and 102% for the years ended December 31, 2025 and 2024, respectively.
For additional details refer to Note 9 in our consolidated financial statements. 72 Table of Contents Key Factors Affecting Our Performance We believe that our future growth, success, and performance are dependent on many factors, including those set forth below.
(5) Non-recurring lease-related charges include lease-related impairment charges for the subleased portion of our office space. For additional details refer to Note 9 in our consolidated financial statements. Key Factors Affecting Our Performance We believe that our future growth, success, and performance are dependent on many factors, including those set forth below.
We believe these non-GAAP measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics generally eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall profitability. 69 Table of Contents The following is a reconciliation of our Adjusted Gross Profit and Adjusted Gross Margin, in total and for technology and professional services, to gross profit and gross margin, the most directly comparable financial measures calculated in accordance with GAAP, for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 (in thousands, except percentages) Technology Professional Services Total Revenue $ 194,852 $ 111,732 $ 306,584 Cost of revenue, excluding depreciation and amortization (67,812) (97,993) (165,805) Amortization of intangible assets, cost of revenue (16,150) — (16,150) Depreciation of property and equipment, cost of revenue (10,126) — (10,126) Gross profit 100,764 13,739 114,503 Gross margin 52 % 12 % 37 % Add: Amortization of intangible assets, cost of revenue 16,150 — 16,150 Depreciation of property and equipment, cost of revenue 10,126 — 10,126 Stock-based compensation 1,700 6,041 7,741 Acquisition-related costs, net (1) 320 433 753 Restructuring costs (2) 79 181 260 Adjusted Gross Profit $ 129,139 $ 20,394 $ 149,533 Adjusted Gross Margin 66 % 18 % 49 % __________________ (1) Acquisition-related costs, net include deferred retention expenses attributable to the Lumeon, Carevive, ARMUS, and KPI Ninja acquisitions.
For additional details refer to Note 11 in our consolidated financial statements. 69 Table of Contents Year Ended December 31, 2024 (in thousands, except percentages) Technology Professional Services Total Revenue $ 194,852 $ 111,732 $ 306,584 Cost of revenue, excluding depreciation and amortization (67,812) (97,993) (165,805) Amortization of intangible assets, cost of revenue (16,150) — (16,150) Depreciation of property and equipment, cost of revenue (10,126) — (10,126) Gross profit 100,764 13,739 114,503 Gross margin 52 % 12 % 37 % Add: Amortization of intangible assets, cost of revenue 16,150 — 16,150 Depreciation of property and equipment, cost of revenue 10,126 — 10,126 Stock-based compensation 1,700 6,041 7,741 Acquisition-related costs, net (1) 320 433 753 Restructuring costs (2) 79 181 260 Adjusted Gross Profit $ 129,139 $ 20,394 $ 149,533 Adjusted Gross Margin 66 % 18 % 49 % __________________ (1) Acquisition-related costs, net include deferred retention expenses attributable to the Lumeon, Carevive, ARMUS, and KPI Ninja acquisitions.
Because of our vertical focus on the healthcare industry, we believe our sales and marketing resources can be deployed more efficiently than at horizontally-focused companies that provide technology and services to multiple industries.
The average sales cycle for a new platform client is estimated to be approximately one year, but that timeline can vary materially. Because of our vertical focus on the healthcare industry, we believe our sales and marketing resources can be deployed more efficiently than at horizontally-focused companies that provide technology and services to multiple industries.
Other Key Metrics We also regularly monitor and review the number of Platform Clients and Dollar-based Retention Rate as shown in the following tables: Platform Clients As of December 31, 2024 2023 2022 Platform Clients (1) 130 109 98 __________________ (1) We have updated the name and definition of this key metric to Platform Clients from DOS Subscription Clients to better reflect the deep, long-standing, multi-faceted relationships we strive to build with the entities we serve.
Platform Clients As of December 31, 2025 2024 2023 Platform Clients (1) 162 130 109 __________________ (1) Beginning in January 1, 2025, we have updated the name and definition of this key metric to Platform Clients from DOS Subscription Clients to better reflect the deep, long-standing, multi-faceted relationships we strive to build with the entities we serve.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

17 edited+1 added−7 removed19 unchanged
Biggest changeIn the future, an increasing portion of our international sales contracts may be denominated in local currencies. Additionally, as we expand our international operations a larger portion of our operating expenses will be denominated in local currencies. Therefore, fluctuations in the value of the U.S. dollar and foreign currencies may affect our results of operations when translated into U.S. dollars.
Biggest changeToday, our international sales contracts are generally denominated in U.S. dollars, while our international operating expenses are often denominated in local currencies. In the future, an increasing portion of our international sales contracts may be denominated in local currencies. Additionally, as we expand our international operations a larger portion of our operating expenses will be denominated in local currencies.
On July 16, 2024, we entered into the Credit Agreement consisting of a $125 million funded term loan and a delayed draw term loan facility in the aggregate principal amount of $100 million, which was undrawn as of the Closing Date. as of December 31, 2024, $37.7 million of the delayed draw term loan had been drawn upon.
On July 16, 2024, we entered into the Credit Agreement consisting of a $125 million funded term loan and a delayed draw term loan facility in the aggregate principal amount of $100 million, which was undrawn as of the Closing Date. As of December 31, 2025, $37.7 million of the delayed draw term loan had been drawn upon.
As of December 31, 2024 and 2023, a hypothetical 100 basis point change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio.
As of December 31, 2025 and 2024, a hypothetical 100 basis point change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio.
As of the time of this filing a hypothetical change in interest rates of 100 basis points would not have a material impact on the fair value of our outstanding debt. Foreign currency exchange risk Our reporting currency is the U.S. dollar, and the functional currency of our international subsidiaries is typically their local currency.
As of the time of this filing a hypothetical change in interest rates of 100 basis points would not have a material impact on the fair value of our outstanding debt. 87 Table of Contents Foreign currency exchange risk Our reporting currency is the U.S. dollar, and the functional currency of our international subsidiaries is typically their local currency.
The deferred financing costs related to the delayed draw facility, including the directly attributable debt discount, have been capitalized to other assets on our consolidated balance sheets, and amortized to interest expense in the consolidated statement of operations, in each case over the respective terms. 89 Table of Contents Borrowings under the initial term loan bear interest at a rate per annum equal to the secured overnight financing rate (SOFR) plus 6.5%.
The deferred financing costs related to the delayed draw facility, including the directly attributable debt discount, have been capitalized to other assets on our consolidated balance sheets, and amortized to interest expense in the consolidated statement of operations, in each case over the respective terms. 88 Table of Contents Borrowings under the initial term loan bear interest at a rate per annum equal to SOFR plus 6.5%.
Refer to Note 10-Debt of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our contractual obligations related to debt. Operating lease obligations We lease office space under operating leases that expire between 2025 and 2031.
Refer to Note 10—Debt of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our contractual obligations related to debt. Operating lease obligations We lease office space under operating leases that expire between 2026 and 2034.
Off-balance sheet arrangements As of December 31, 2024, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 90 Table of Contents
Off-balance sheet arrangements As of December 31, 2025, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 89 Table of Contents
Interest rate risk We had cash, cash equivalents, and short-term investments of $392.0 million and $317.7 million as of December 31, 2024 and 2023, respectively, which are held for working capital and other general corporate purposes, which may include acquisitions and strategic transactions. We do not make investments for trading or speculative purposes.
Interest rate risk We had cash, cash equivalents, and short-term investments of $95.7 million and $392.0 million as of December 31, 2025 and 2024, respectively, which are primarily held for working capital and other general corporate purposes, which may include acquisitions and strategic transactions. We do not make investments for trading or speculative purposes.
As of December 31, 2024, we had total future operating lease payment obligations of $23.7 million, with $3.6 million payable within the next 12 months. Refer to Note 9-Leases of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our operating lease obligations.
As of December 31, 2025, we had total future operating lease payment obligations of $21.0 million, with $3.8 million payable within the next 12 months. Refer to Note 9—Leases of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our operating lease obligations.
Purchase commitments As of December 31, 2024, we had $32.7 million of remaining non-cancelable contractual commitments related to our third-party cloud infrastructure agreements, under which we committed to spend an aggregate of at least $45.8 million between February 2023 and January 2028. We expect to fully consume these contractual commitments in the ordinary course of operations.
Purchase commitments As of December 31, 2025, we had $91.4 million of remaining non-cancelable contractual commitments related to our third-party cloud infrastructure agreements, under which we committed to spend an aggregate of at least $129.0 million between February 2023 and January 2030. We expect to fully consume these contractual commitments in the ordinary course of operations.
Restructuring liabilities During the year ended December 31, 2023, we initiated a restructuring plan to optimize our cost structure and focus our investment of resources in key priority areas to align with strategic changes. As of December 31, 2024, we had no restructuring liabilities payable within the next 12 months.
Restructuring liabilities During the year ended December 31, 2025, we initiated restructuring plans to optimize our cost structure and focus our investment of resources in key priority areas to align with strategic changes. As of December 31, 2025, we had $0.7 million in restructuring liabilities payable within the next 12 months.
We are considering the costs and benefits of initiating such a program and may in the future hedge balances and transactions denominated in currencies other than the U.S. dollar as we expand international operations. 88 Table of Contents Today, our international sales contracts are denominated in U.S. dollars or local currencies, while our international operating expenses are primarily denominated in local currencies.
Accordingly, we have not instituted a hedging program. We are considering the costs and benefits of initiating such a program and may in the future hedge balances and transactions denominated in currencies other than the U.S. dollar as we expand our international operations.
No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements. Convertible senior notes On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due in 2025.
No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements.
Our health system end market recently experienced meaningful financial strain from significant inflation with increases in labor and supply costs without a commensurate increase in revenue, leading to significant margin pressure. We are encouraged that, in general, the operating margins of our health system end market improved in 2024 relative to 2022 and 2023.
It has also disrupted the normal operations of many businesses, including ours. Our health system end market recently experienced meaningful financial strain from significant inflation with increases in labor and supply costs without a commensurate increase in revenue, leading to significant margin pressure.
However, it is possible that inflation could negatively impact clients in the future. If our costs, including labor costs, were to become subject to significant inflationary pressures on an ongoing basis, we may not be able to fully offset such higher costs by increasing fees for our Solution.
If our costs, including labor costs, were to become subject to significant inflationary pressures on an ongoing basis, we may not be able to fully offset such higher costs by increasing fees for our Solution. Our inability or failure to do so could harm our business, results of operations, or financial condition.
Inflation risk The recently high inflationary environment has adversely affected workforces, organizations, governments, clients, economies, and financial markets globally, leading to an economic downturn and increased market volatility. It has also disrupted the normal operations of many businesses, including ours.
Therefore, fluctuations in the value of the U.S. dollar and foreign currencies may affect our results of operations when translated into U.S. dollars. Inflation risk The recent high inflationary environment has adversely affected workforces, organizations, governments, clients, economies, and financial markets globally, leading to an economic downturn and increased market volatility.
We also have the option to draw up to an additional $60.0 million under the delayed draw facility within eighteen months after the Closing Date, subject to satisfaction of certain conditions, including a minimum liquidity threshold, and a maximum recurring revenue/leverage ratio.
We also had the option to draw up to an additional $60.0 million under the delayed draw facility within eighteen months after the Closing Date, but did not utilize this option.
Removed
On April 14, 2020, we issued $230.0 million in aggregate principal amount Convertible Senior Notes due 2025 (Notes), in a private placement to qualified institutional buyers exempt from registration under the Securities Act (Note Offering). The Notes have a fixed annual interest rate of 2.50%, and, therefore, we do not have economic interest rate exposure on the Notes.
Added
We are encouraged that, in general, the operating margins of our health system end market improved in 2024 and 2025 relative to 2022 and 2023. However, it is possible that inflation could negatively impact clients in the future.
Removed
However, the values of the Notes are exposed to interest rate risk. Generally, the fair value of our fixed interest rate Notes will increase as interest rates fall and decrease as interest rates rise. We carry the Notes as face value less unamortized discount on our Consolidated Balance Sheets, and we present the fair value for required disclosure purposes only.
Removed
Accordingly, we have not instituted a hedging program.
Removed
Our inability or failure to do so could harm our business, results of operations, or financial condition.
Removed
The Notes are senior, unsecured obligations and accrue interest payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020, at a rate of 2.50% per year. The Notes will mature on April 15, 2025, unless earlier converted, redeemed, or repurchased.
Removed
The Notes are convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, with the form of consideration determined at our election.
Removed
The conversion rate is initially 32.6797 shares of our common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $30.60 per share of our common stock).

Other HCAT 10-K year-over-year comparisons