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What changed in Health Catalyst, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Health Catalyst, Inc.'s 2023 and 2024 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 2024 report.

+580 added−511 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-22)

Top changes in Health Catalyst, Inc.'s 2024 10-K

580 paragraphs added · 511 removed · 403 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

99 edited+28 added−26 removed76 unchanged
Biggest changeWe 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 owners • 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 owners • 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 have a deep, long-term commitment to healthcare improvement • I stick to the task until the job is completed • I lead a balanced, healthy life that enables me to sustain my pace • I am willing to contribute more than my fair share to a project • I make personal sacrifices, as needed, to get the work done • I recognize that not every part of my job will be fun Humility • I listen first • I serve others without looking for recognition • My first assumption with others is positive intent • 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 often acknowledge others for their contributions • I frequently express gratitude and appreciation to those around me • I empower others to do their best and give proper credit to others 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 bets 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.
Biggest changeWe 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.
This focus enables team members to become highly engaged in fulfilling our mission to be the catalyst for massive, measurable, data-informed improvement in healthcare. This deep team member engagement in our mission leads team members to build world-class data and analytics technology and to provide industry-leading expertise.
This focus enables team members to become highly engaged in fulfilling our mission to be the catalyst for massive, measurable, data-informed healthcare improvement. This deep team member engagement in our mission leads team members to build world-class data and analytics technology and to provide industry-leading expertise.
Comprehensive charge capture solution that efficiently manages hospital charge capture processes, detects compliance issues, and minimizes revenue leakage resulting from under- and over-charging, late or missing coding, mismatched charges and supplies, and a wide range of chargemaster-related issues. • Price transparency (Hospital Price Index).
A comprehensive charge capture solution that efficiently manages hospital charge capture processes, detects compliance issues, and minimizes revenue leakage resulting from under- and over-charging, late or missing coding, mismatched charges and supplies, and a wide range of chargemaster-related issues. • Price transparency (Hospital Price Index).
Our professional services experts combine industry-leading talent across multiple domain areas with a deep working knowledge of our technology to help our clients achieve a faster time-to-value and drive more meaningful and sustainable measurable improvements. Our services expertise can be provided as a supplement to our clients’ existing teams or as an outsourced function for our clients.
Our professional services experts combine industry-leading talent across multiple domain areas with a deep working knowledge of our technology to help our clients achieve a faster time-to-value and drive more meaningful and sustainable measurable improvements. Our expertise can be provided as a supplement to our clients’ existing teams or as an outsourced function for our clients.
Corporate practice of medicine and fee-splitting laws In many states, there are laws that that prohibit business entities, such as us, from providing professional medical services or directly employing or otherwise exercising control over professional judgment or medical decisions by physicians or other licensed healthcare professionals (such activities generally referred to as the “corporate practice of medicine”).
Corporate practice of medicine and fee-splitting laws In many states, there are laws that prohibit business entities, such as us, from providing professional medical services or directly employing or otherwise exercising control over professional judgment or medical decisions by physicians or other licensed healthcare professionals (such activities generally referred to as the “corporate practice of medicine”).
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.
Our analytics applications are further enhanced by a broad range of analytics accelerators, which are pre-built, configurable data models with customizable visualizations that can be tailored to specific client needs. • Services expertise. Our world-class team consists of both analytics experts, such as data analysts, data engineers, and data scientists, and domain experts, such as healthcare administrators, physicians, and nurses.
Our applications are further enhanced by a broad range of analytics accelerators, which are pre-built, configurable data models with customizable visualizations that can be tailored to specific client needs. • Expertise. Our world-class team consists of both analytics experts, such as data analysts, data engineers, and data scientists, and domain experts, such as healthcare administrators, physicians, and nurses.
In the United States, numerous state and federal laws and regulations, including data breach notification laws, health information privacy laws, and consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information and could apply to our operations or the operations of our clients.
In the United States, numerous state and federal laws and regulations, including data breach notification laws, health information privacy and security laws, and consumer protection laws and regulations, govern the collection, use, disclosure, and protection of health-related and other personal information and could apply to our operations or the operations of our clients.
Item 1. Business Overview We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data and analytics platform, software applications, and professional services expertise.
Item 1. Business Overview We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data and analytics platform, software applications, and expertise.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. 18 Table of Contents • The federal civil and criminal false claims laws, such as the federal False Claims Act, and civil monetary penalties laws impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things: knowingly presenting, or causing to be presented, to a federal government healthcare program, claims for payment that are false or fraudulent; making, using or causing to be made or used, a false statement or record material to payment of a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
A person or entity does not need to have actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it to have committed a violation. • The federal civil and criminal false claims laws, such as the federal False Claims Act, and civil monetary penalties laws impose criminal and civil penalties and authorize civil whistleblower or qui tam actions, against individuals or entities for, among other things: knowingly presenting, or causing to be presented, to a federal government healthcare program, claims for payment that are false or fraudulent; making, using or causing to be made or used, a false statement or record material to payment of a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay money to the federal government.
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, 2023, 2022, and 2021.
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.
The open and flexible nature of DOS makes it highly scalable, which allows us to deliver additional analytics applications on top of DOS with limited incremental costs. We expect the benefits of our operating model and cost structure to generate operating leverage in our business. Unique and differentiated culture focused on team member engagement.
The open and flexible nature of Ignite makes it highly scalable, which allows us to deliver additional analytics applications on top of Ignite with limited incremental costs. We expect the benefits of our operating model and cost structure to generate operating leverage in our business. Unique and differentiated culture focused on team member engagement.
We have developed the capabilities to turn these insights into actions by connecting our analytics into the workflow systems, such as an electronic health record (EHR). Clients may directly access our DOS platform or may indirectly access DOS through use of modular components of DOS or other parts of our Solution that leverage DOS.
We have developed the capabilities to turn these insights into actions by connecting our analytics into the workflow systems, such as an electronic health record (EHR). Clients may directly access our platform or may indirectly access our platform through use of modular components of Ignite or other parts of our Solution that leverage Ignite.
Our relationship with a new client oftentimes starts through the use of targeted software analytics applications and services to pinpoint and achieve a single measurable clinical, financial, or operational improvement. As we deliver measurable improvements, trust builds, and our clients engage with us more broadly and purchase additional applications and services.
Our relationship with a new client oftentimes starts through the use of targeted applications and services to pinpoint and achieve a single measurable clinical, financial, or operational improvement. As we deliver measurable improvements, trust builds, and our clients engage with us more broadly and purchase additional applications and services.
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.
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.
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 DOS platform to scale and consolidate both data assets and best-of-breed applications.
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.
Moreover, private individuals have the ability to bring actions on behalf of the U.S. government under the federal False Claims Act as well as under the false claims laws of several states. • HIPAA also contains a provision that imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program (including private payors) or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items, or services.
Moreover, private individuals have the ability to bring actions on behalf of the U.S. government under the federal False Claims Act as well as under the false claims laws of several states. • The Health Insurance Portability and Accountability Act of 1996 (HIPAA) also contains a provision that imposes criminal and civil liability for knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program (including private payors) or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items, or services.
Because our DOS platform is open and we partner with our clients, we are able to identify new opportunities for further improvements and leverage that insight with other clients across our core market to develop new analytics applications and services offerings.
Because our Ignite platform is open and we partner with our clients, we are able to identify new opportunities for further improvements and leverage that insight with other clients across our core market to develop new analytics applications and services offerings.
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. 21 Table of Contents Export controls .
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. Export controls .
Our team is comprised of over 1,000 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 services expertise: • Data engineering services.
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.
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. 23 Table of Contents
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
We believe that competing point solutions vendors will have difficulty in 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, and ERS.
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.
Our clients, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organizations, and produce measurable clinical, financial, and operational improvements. The core elements of our Solution include: • DOS data platform.
Our clients, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organizations, and produce measurable clinical, financial, and operational improvements. The core elements of our Solution include: • Ignite Data & Analytics Platform.
As of December 31, 2023, 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 2037, 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, 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.
Some pre-amendment devices are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially distributed. 20 Table of Contents Post-market regulation - After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Some pre-amendment devices are unclassified, but are subject to the FDA’s premarket notification and clearance process in order to be commercially distributed. Post-market regulation - After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
We are committed to fair compensation and opportunity in our workplace. 22 Table of Contents Pay equity We are committed to ensuring our team members receive equal pay for equal work. We establish components and ranges of compensation based on market and benchmark data.
We are committed to fair compensation and opportunity in our workplace. Pay equity We are committed to ensuring our team members receive equal pay for equal work. We establish components and ranges of compensation based on market and benchmark data.
We were formerly known as HQC Holdings, Inc. In March 2017, we changed our name to Health Catalyst, Inc. Our principal executive offices are located at 10897 South River Front Parkway #300, South Jordan, Utah 84095, and our telephone number is (801) 708-6800.
We were formerly known as HQC Holdings, Inc. In March 2017, we changed our name to Health Catalyst, Inc. Our principal executive offices are located at 10897 South River Front Parkway #300, South Jordan, Utah 84095, and our telephone number is (855) 309-6800.
These include KLAS Overall Customer Satisfaction Scores that have historically been among the highest in the peer group, as well as Chilmark Research and others. We recognized early on that healthcare organizations need purpose-built technology products and services to support data-driven insights, and have spent more than a decade building and commercializing our healthcare-specific Solution.
These include KLAS Overall Customer Satisfaction Scores that have often historically been among the highest in the peer group, among others. We recognized early on that healthcare organizations need purpose-built technology products and services to support data-driven insights and have spent more than a decade building and commercializing our healthcare-specific Solution.
In total, we have been recognized 87 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, Chilmark Research, and others.
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.
Help clients ingest data sources and provide consulting around DOS best practice and strategy around leveraging new DOS features. • Analytics engineering services. Partner with clients to generate meaningful insights produced from Health Catalyst technology that lead improvement efforts. Guides best practice and training. • Implementation services. Implement and configure DOS 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. Implement and configure Ignite and analytics applications. • Data science services.
DOS has been uniquely designed and purpose-built to handle the complex, ever-evolving nature of healthcare-specific data and analytics. This includes healthcare-specific terminology, data governance, meta-data management, and analytics. By creating healthcare-specific data models to organize industry-specific data, we enable faster and more repeatable analytics and insights.
Ignite has been uniquely designed and purpose-built to handle the complex, ever-evolving nature of healthcare-specific data and analytics. This includes healthcare-specific terminology, data governance, meta-data management, and analytics. By creating healthcare-specific data models to organize industry-specific data, Ignite enables faster and more repeatable analytics and insights.
Our services are comprised of data and analytics services, domain expertise and education services, Tech-enabled Managed Services (TEMS), and implementation services. Our services team members leverage our technology to help our clients shorten time-to-value and achieve sustainable measurable improvements.
Our services include data and analytics services, domain expertise, education services, Tech-Enabled Managed Services (TEMS), and implementation services. Our services team members leverage our technology to help our clients shorten time-to-value and achieve sustainable measurable improvements.
Our clients benefit from our technology innovation and expertise which allows them to avoid the significant time, financial resources, and technical proficiency they would need to invest to build related capabilities in-house.
Our clients benefit from our technology innovation and expertise which enables them to avoid the significant time, financial resources, and technical proficiency they would need to invest to build similar capabilities in-house.
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 DOS Subscription Clients. • Add new analytics applications and services offerings.
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.
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; 17 Table of Contents • 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.
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 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 FDA has broad regulatory compliance and enforcement powers.
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.
Team Members and Culture We currently employ more than 1,300 team members. We believe 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 1,500 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.
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. • Pop health strategy (Value Optimizer).
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 ).
The majority of our clients who are not DOS Subscription Clients are technology clients resulting from our business acquisitions and are also generally on subscription contracts. 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. 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.
We have used this process to build several new software applications through our history, and we will continue to invest in product development, particularly at the analytics applications layer of our technology stack. • Grow our addressable market through additional healthcare business segment adjacencies.
We have used this process to build several new software applications through our history, and we will continue to invest in product development, particularly at the analytics applications layer of our technology stack.
Combining this pioneering technique with our data asset of more than one hundred million patient records, our clients systematically uncover opportunities for actionable interventions. We have organized our analytics applications into robust sets of applications that generate meaningful insights for improvement in key areas: Clinical & Quality, Population Health Management, and Financial & Operational.
Combining this pioneering technique with our data asset of more than one hundred million patient records, our clients systematically uncover opportunities for actionable interventions. We have organized our applications into robust sets of applications that generate meaningful insights for improvement in key areas: Clinical Improvement, Revenue & Cost Improvement, Ambulatory Operations, Measures & Registries, and Data & Analytics.
ONC continues to modify and refine these standards. 19 Table of Contents 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.
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.
Clinical & Quality • Patient safety (Patient Safety Monitor). Trigger-based surveillance system enabled by DOS. This application monitors patient-level data and applies machine learning algorithms to help clinicians predict whether a patient is currently at risk for a safety event so that the patient’s clinicians can intervene as they deem necessary to prevent harm events. • Clinical accelerators.
This application monitors patient-level data and applies machine learning algorithms to help clinicians predict whether a patient is currently at risk for a safety event so that the patient’s clinicians can intervene as they deem necessary to prevent harm events. • EMR embedded Insights (Embedded Refills).
Allows for a comprehensive, quantified view of potential financial improvement opportunities within a value-based care arrangement. These insights help population health leaders optimize their value-based care strategy and make population health efforts profitable. • Patient engagement (Twistle).
A solution that provides a comprehensive, quantified view of potential financial improvement opportunities within a value-based care arrangement. These insights help population health leaders optimize their value-based care strategy and make population health efforts profitable. • Ambulatory management (Ambulatory Suite).
Pre-built clinical data models and customizable visualizations that leverage the broad set of integrated data stored within our DOS platform for a specific analytic use-case. We believe these help clients achieve a much faster time-to-value solution compared to building an analytic model from the ground up . Population Health Management • Care management (Care Flow).
Pre-built clinical data models and customizable visualizations that leverage the broad set of integrated data stored within our platform for a specific analytic use case, helping our clients achieve a much faster time-to-value solution compared to building an analytic model from the ground up. Revenue & Cost Improvement • Revenue improvement and chargemaster analytics (VitalCDM).
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. This is evidenced by a continued increase in improvements achieved by our clients over time.
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.
Based on client feedback and needs, we focus our efforts on developing new products, functionality, applications, and core technologies and further enhancing the usability, functionality, reliability, performance, and flexibility of our Solution.
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.
We believe these arrangements can increase team member’s ownership, satisfaction and productivity, as well as enable us to hire from a broader, more diverse pool of talent.
For many years, we have enabled team members to have flexible work arrangements, including a large percentage of remote team members. We believe these arrangements can increase team member’s ownership, satisfaction and productivity, as well as enable us to hire from a broader, more diverse pool of talent.
Our team members, who strive to uphold our values and live our mission every day, are at the forefront of cultivating and spreading this culture across the healthcare organizations that we serve. This continuous interaction across the entire Health Catalyst community creates a cycle that further reinforces our culture and fuels our growth.
Our team members, who strive to uphold our values and live our mission every day, are at the forefront of cultivating and spreading this culture across the healthcare organizations that we serve.
We work closely in collaboration with many key stakeholders including chief executive officers, chief financial officers, chief information officers, chief technology officers, population health teams, and IT teams among others.
Today, we help executives, administrators, clinicians, and technicians in hundreds of hospitals and thousands of clinics. We work closely in collaboration with many key stakeholders including chief executive officers, chief financial officers, chief information officers, chief technology officers, population health teams, and IT teams among others.
We believe there are significant applications for our Solution outside of our core market, as evidenced by our early efforts to expand into certain international markets. 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 acquisitions and partnerships.
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.
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.
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.
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.
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.
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. 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.
Clients who have recently contracted with us have already started achieving measurable improvements, while longer-standing clients have seen the number of annual improvements meaningfully grow. We serve the majority of our clients through a subscription-based contract model. As of December 31, 2023, we served 109 DOS Subscription Clients and over 525 other clients.
This is evidenced by a continued increase in improvements achieved by our clients over time. Clients who have recently contracted with us have already started achieving measurable improvements, while longer-standing clients have seen the number of annual improvements meaningfully grow. We serve the majority of our clients through a subscription-based contract model.
The Data Operating System (DOS) is a healthcare-specific, cloud-based, open, flexible, scalable and self-service platform for analytics, app development and interoperability that provides clients a single comprehensive environment to integrate and organize data from their disparate software systems.
Ignite is a healthcare-specific, cloud-based, open, flexible, scalable and self-service ecosystem for analytics, app development and interoperability that provides clients a single comprehensive environment to integrate and organize data from their disparate software systems. Ignite optimizes and adapts industry-agnostic technologies, bridging gaps to ensure that they meet the unique requirements of healthcare data and healthcare organizations.
Revenue workflow optimization and analytics solution that organizes, displays, and manages all chargemaster data within one connected solution, enabling hospital billing departments to operate more transparently, price strategically, and present an accurate bill or claim with consistency. We believe this technology is proven to create more accurate reimbursement, increase operational efficiency, and minimize compliance risk. • Labor productivity (PowerLabor).
A revenue workflow optimization and analytics solution that organizes, displays, and manages all chargemaster data within one connected solution, enabling hospital billing departments to operate more transparently, price strategically, and present an accurate bill or claim with consistency. • Revenue integrity and auditing (VitalIntegrity).
These analytics applications allow our clients to pinpoint opportunities for measurable improvement across their entire enterprise and are employed by a broad range of users from healthcare executives to front-line clinicians providing care. We developed this suite of analytics applications over the last several years based on thoughtful measurement of the most critical analytics needs faced by our clients.
These applications enable our clients to pinpoint opportunities for measurable improvement across their entire enterprise and are employed by a broad range of users from healthcare executives to front-line clinicians providing care.
We have an attractive operating model due to the recurring nature of the vast majority of our revenue and the scalability of our DOS platform and analytics applications. Our recurring revenue subscription model provides a high degree of revenue visibility.
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.
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. Provide agile development workshops, continued data architecture and ETL support, documentation and training, measure reporting efficiency, and prioritization and staff augmentation. • Data governance 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. 15 Table of Contents • Analytics strategy services.
These diversity and inclusion efforts spearheaded by our Chief People Officer and our six affinity groups in partnership with hundreds of our team members focus on diversity and inclusion in our workforce, in our workplace and in healthcare.
These inclusion efforts—spearheaded by our Chief People Officer and our six affinity groups in partnership with hundreds of our team members—focus on inclusion and belonging in our workforce, in our workplace, and in healthcare. We continue to focus on inclusive recruitment and hiring practices to source talent and mitigate potential bias throughout the hiring process.
Diversity and inclusion We are committed to fostering a culture of inclusion and belonging, and to building a diverse workforce to drive innovation and collective growth, which we believe is critical to our success. We continue to formalize and invest in our diversity and inclusion initiatives as further described on the ESG website listed above.
Inclusion and Belonging We are committed to fostering a culture of inclusion and belonging, and to building a workforce to drive innovation and collective growth, which we believe is critical to our success.
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 plan to opportunistically pursue entry into and expansion within international markets. • Expand within our current client base. We intend to deepen and expand the relationships we have with our existing client base.
We plan to opportunistically pursue entry into and expansion within international markets. • Expand within our current client base. We intend to deepen and expand the relationships we have with our existing client base.
Activity-based costing software application that leverages clinical and operational data from DOS to calculate a true cost of clinical processes and patients on the most granular level.
A solution that enables hospitals to address pricing transparency, including complex requirements of the price transparency mandate. • Activity-based costing (PowerCosting). An activity-based costing application that leverages clinical and operational data from our platform to calculate a true cost of clinical processes and patients on the most granular level.
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, 2023, we had more than 1,300 team members, almost all of whom are located in the United States. We have not experienced any work stoppages, and we consider our team member relations to be good.
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.
Our healthcare-specific, open, flexible, scalable, and self-service DOS platform, advanced analytics applications, and services expertise guide our clients to greater levels of digital maturity, enabling clinical, financial, and operational improvements. The diagram below illustrates the three layers of our comprehensive Solution.
Our healthcare-specific, open, flexible, scalable, and self-service Ignite Data and Analytics platform, applications, and expertise guide our clients to greater levels of analytics maturity, enabling clinical, financial, and operational improvements. The diagram below illustrates our five core areas of differentiated client value and the offerings within each of those focus areas.
Industry-agnostic analytics companies that help healthcare organizations develop homegrown solutions include IBM, Snowflake, Microsoft, Tableau CRM, and Qlik. EHR companies include Cerner Systems and Epic Systems. Point solution companies include Optum Analytics, Premier, Arcadia.io, Strata Decision Technology, Craneware, Innovaccer, and Intersystems.
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.
Transition from voluntary under-reporting to proactive prevention using data-driven triggers. • Cost accounting services. Expert analysis of fine-grain activity-based costing methods and cost-saving improvement opportunities. • Population health and value-based care services. Organizational transformation services to enhance abilities to take on cost risk for patient populations. • Abstraction data submission services.
Organizational readiness assessments and opportunity analysis. Clinical pathways, best practices, and protocol implementation. Lean methodology and clinical variation reduction recommendations. • Patient safety services. Transition from voluntary under-reporting to proactive prevention using data-driven triggers. • Cost accounting services. Expert analysis of fine-grain activity-based costing methods and cost-saving improvement opportunities. • Population health and value-based care services.
Data and analytics platform - the Data Operating System (DOS) The DOS platform is a healthcare-specific, open, flexible, scalable, and self-service data and analytics platform that allows our clients to integrate and organize their disparate data sources to enable insights across clinical, financial, and operational objectives.
Data and analytics platform - Health Catalyst Ignite TM Data and Analytics Health Catalyst Ignite is a healthcare-specific, open, flexible, scalable, and self-service data and analytics platform that enables our clients to generate insights across clinical, financial, and operational objectives.
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.
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.
Our software analytics applications are generally built on top of our data platform and are designed to analyze the most common problems our clients face across Clinical & Quality, Population Health, and Financial & Operational use cases.
Our software analytics applications are generally built on top of our Ignite platform and are designed to analyze the most common problems our clients face across five focus areas: Clinical Improvement, Revenue & Cost Improvement, Ambulatory Operations, Measures & Registries, and Data & Analytics.
We also offer annual continuing education reimbursement to allow team members to be continuous learners and seek new challenges. Flexible work environment We help our team members succeed by providing flexibility in where and how they work. For many years, we have enabled team members to have flexible work arrangements, including a large percentage of remote team members.
We offer extensive onboarding and regular training programs to prepare our team members at all levels for career progression and individual development. We also offer annual continuing education reimbursement to allow team members to be continuous learners and seek new challenges. Flexible work environment We help our team members succeed by providing flexibility in where and how they work.
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).
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).
We have achieved DOS Subscription Client growth in part due to strong client retention and client referrals. This is evidenced by our positive Dollar-based Retention Rates for DOS Subscription Clients of 100%, 100%, and 112% for the years ended December 31, 2023, 2022, and 2021, respectively.
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.
Growth and development We invest significant resources to develop talent and actively foster a learning culture where team members are empowered to drive their personal and professional growth. We offer extensive onboarding and regular training programs to prepare our team members at all levels for career progression and individual development.
We are committed to legally compliant methods for advancing inclusion and belonging efforts. Growth and development We invest significant resources to develop talent and actively foster a learning culture where team members are empowered to drive their personal and professional growth.
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 February 2024 we will hold our annual Healthcare Analytics Summit (HAS), an event showcasing data-informed improvements in healthcare.
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.
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. The information on our website is not incorporated by reference into this Annual Report on Form 10-K.
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.
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.
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.
Healthcare patient engagement SaaS technology that, among other uses, helps automate patient-centered, personalized, multi-channel communication between care teams and patients that aims to transform the patient experience, drive better care outcomes, and reduce healthcare costs. Financial & Operational • Activity-based costing (PowerCosting).
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).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeMoreover, our stock price may be based on expectations of our future performance that may be unrealistic or that may not be met. 28 Table of Contents Some 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; • 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, market volatility caused by bank failures and measures taken in response thereto, and public health crises, such as the COVID-19 pandemic, 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; • 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.
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.
For example, the expense reduction measures taken in connection with the 2023 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, 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.
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.
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 DOS 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 platform, or require that we comply with other unfavorable terms.
There is an increasing focus from certain investors, employees, and other stakeholders concerning corporate responsibility, specifically related to environmental, social, and governance factors. Some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibility are inadequate.
There is an increasing focus from certain investors, employees, and other stakeholders concerning corporate responsibility, specifically related to environmental, social, and governance factors. In addition, some investors may use these factors to guide their investment strategies and, in some cases, may choose not to invest in us if they believe our policies relating to corporate responsibility are inadequate.
From time to time, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes.
From time to time, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to our common stock and/or purchasing or selling our common stock or our other securities in secondary market transactions prior to the maturity of the Notes.
Our future success depends in part on not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, including so-called non-practicing entities, may own or claim to own intellectual property relating to our Solution.
Our future success depends in part on not infringing upon the intellectual property rights of others. Our competitors, as well as a number of other entities and individuals, including so-called non-practicing entities (NPEs), may own or claim to own intellectual property relating to our Solution.
We expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection, and information security in the United States, including the CCPA and CPRA, and we cannot yet determine the impact such laws, regulations, and standards may have on our business.
We expect that there will continue to be new proposed laws, regulations, and industry standards concerning privacy, data protection, and information security in the United States, including the CCPA, and we cannot yet determine the impact such laws, regulations, and standards may have on our business.
Noteholders will have the right to require us to repurchase all or a portion of their notes at 100% of the principal amount of Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date, upon the occurrence of certain events.
Noteholders have the right to require us to repurchase all or a portion of their notes at 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date, upon the occurrence of certain events.
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. 54 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. 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.
Further, the sales cycle of certain Solutions with a more limited operating history, such as TEMS, can be more difficult to predict and, at times, longer than our typical sales cycle.
Further, the sales cycles of certain Solutions with a more limited operating history, such as TEMS, can be more difficult to predict and, at times, longer than our typical sales cycle.
For example, the 2023 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 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 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. 24 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. 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.
Further, larger revenue opportunities that include portions of our Solution with less operating history could cause our growth to become less predictable and/or choppier relative to prior periods.
Further, revenue opportunities that include portions of our Solution with less operating history could cause our growth to become less predictable and/or choppier relative to prior periods.
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. 26 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. 27 Table of Contents In most cases, we maintain liability insurance coverage, including coverage for errors and omissions.
Furthermore, we provide professional services to clients to support their use of our Solution and to achieve measurable clinical, financial, and operational improvements. 27 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.
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.
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; 53 Table of Contents • 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 • 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.
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. 55 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. 58 Table of Contents
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including, but not limited to: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting systems, operations, and personnel of the acquired business; • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; 32 Table of Contents • difficulty converting the clients of the acquired business onto our DOS platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired business; • diversion of management’s attention from other business concerns; • adverse effects on our existing business relationships with business partners and clients as a result of the acquisition; • the potential loss of key employees; • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition.
We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including, but not limited to: • inability to integrate or benefit from acquired technologies or services in a profitable manner; • unanticipated costs or liabilities associated with the acquisition; • difficulty integrating the accounting systems, operations, and personnel of the acquired business; • difficulties and additional expenses associated with supporting legacy products and hosting infrastructure of the acquired business; • difficulty converting the clients of the acquired business onto our Ignite platform and contract terms, including disparities in the revenue, licensing, support, or professional services model of the acquired business; • diversion of management’s attention from other business concerns; • adverse effects on our existing business relationships with business partners and clients as a result of the acquisition; • the potential loss of key employees; • use of resources that are needed in other parts of our business; and • use of substantial portions of our available cash to consummate the acquisition.
Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability. Our Solution is generally hosted from and use computing infrastructure provided by third parties, including Microsoft Azure and other computing infrastructure service providers.
Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability. Our Solution is generally hosted from and uses computing infrastructure provided by third parties, including Microsoft Azure and other computing infrastructure service providers.
As of December 31, 2023, we had filed applications for a number of patents, and we have fourteen issued U.S. patents, four issued Canadian patents, one issued Great Britain patent, and one issued European patent, as well as one utility patent application pending in the United States.
As of December 31, 2024, we had filed applications for a number of patents, and we have fourteen issued U.S. patents, four issued Canadian patents, one issued Great Britain patent, and one issued European patent, as well as one utility patent application pending in the United States.
If we do not use the net proceeds that we received in our IPO, the Note Offering, and our Secondary Public Equity Offering effectively, our business, results of operations, and financial condition could be harmed. 51 Table of Contents Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders.
If we do not use the net proceeds that we received in our IPO, the Note Offering, and our Secondary Public Equity Offering effectively, our business, results of operations, and financial condition could be harmed. Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders.
Many of the companies with which we compete for management personnel have greater financial and other resources than we do. We have not entered into term-based employment agreements with our executive officers. 33 Table of Contents All of our employees are “at-will” employees, and their employment can be terminated by us or them at any time, for any reason.
Many of the companies with which we compete for management personnel have greater financial and other resources than we do. We have not entered into term-based employment agreements with our executive officers. All of our employees are “at-will” employees, and their employment can be terminated by us or them at any time, for any reason.
There is a risk that in the future, one or more of these individuals could receive a call to serve in a full-time capacity for the church, which has already occurred, including with our former Chief Operating Officer, Paul Horstmeier, stepping down from his role effective March 31, 2023.
There is a risk that in the future, one or more of these individuals could receive a call to serve in a full-time capacity for the church, which has already occurred, including with our former Chief Operating Officer, Paul Horstmeier, who stepped down from his role of Chief Operating Officer effective March 31, 2023.
Further, from January 1, 2021, companies have had to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. 42 Table of Contents The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
Further, from January 1, 2021, companies have had to comply with the GDPR and also the UK GDPR, which, together with the amended UK Data Protection Act 2018, retains the GDPR in UK national law. The UK GDPR mirrors the fines under the GDPR, e.g., fines up to the greater of €20 million (£17.5 million) or 4% of global turnover.
For these reasons, we may not be able to utilize a material portion of our NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our results of operations and financial condition. 47 Table of Contents Comprehensive tax reform legislation could adversely affect our business and financial condition.
For these reasons, we may not be able to utilize a material portion of our NOLs, even if we attain profitability, which could potentially result in increased future tax liability to us and could adversely affect our results of operations and financial condition. Comprehensive tax reform legislation could adversely affect our business and financial condition.
To the extent that we are deemed to have enabled such activities, we could be subject to fines and penalties imposed by the U.S. Department of Justice or the FTC and be required to curtail or terminate the services that permitted such collusion. • FCPA and foreign anti-bribery laws .
To the extent that we are deemed to have enabled such activities, we could be subject to fines and penalties imposed by the U.S. Department of Justice or the FTC and be required to curtail or terminate the services that permitted such collusion. • Foreign Corrupt Practices Act (FCPA) and foreign anti-bribery laws .
Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states' attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content. 41 Table of Contents • State data protection laws .
Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states' attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content. • State data protection laws .
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; • 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. 50 Table of Contents In addition, extreme price and volume fluctuations in the stock markets have affected and continue to affect many technology companies’ stock prices.
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.
We also had twenty-eight 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 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.
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.
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.
For example, we have experienced, and expect that we will continue to experience, seasonality in the number of new clients that subscribe to our Solution; specifically, new clients (DOS Subscription Clients in particular) tend to subscribe to our Solution at higher rates in the second and fourth quarters of the year.
For example, we have experienced, and expect that we will continue to experience, seasonality in the number of new clients that subscribe to our Solution; specifically, new clients (Platform Clients in particular) tend to subscribe to our Solution at higher rates in the second and fourth quarters of the year.
Further, it is not possible for us to predict the duration or magnitude of the adverse results of public health crises, and macroeconomic challenges (including the high inflationary and/or high interest rate environments), 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, 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.
To operate without interruption, both we and our service providers must guard against: • damage from fire, power loss, and other natural disasters; • communications failures; • software and hardware errors, failures, and crashes; 37 Table of Contents • security breaches, computer viruses, ransomware, and similar disruptive problems; and • other potential interruptions.
To operate without interruption, both we and our service providers must guard against: • damage from fire, power loss, and other natural disasters; • communications failures; • software and hardware errors, failures, and crashes; • security breaches, computer viruses, ransomware, and similar disruptive problems; and • other potential interruptions.
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.
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.
The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as health-related data or other sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we operate.
The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as health-related data or other sensitive information, could greatly increase our cost of providing our products and services or even prevent us from offering certain services in jurisdictions that we operate. • AI Technologies: In addition, we use AI Technologies in our business.
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 the high inflationary and/or high interest rate environments, market volatility caused by bank failures and measures taken in response thereto, and the impact of any natural disasters or public health emergencies, such as the COVID-19 pandemic, 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, 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.
Department of Health and Human Services’ ONC and the Centers for Medicare and Medicaid Services promulgated final rules to support access, exchange, and use of electronic health information (EHI), referred to as the Final Rule.
Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC) and the Centers for Medicare and Medicaid Services promulgated final rules to support access, exchange, and use of electronic health information (EHI), referred to as the Final Rule.
We cannot predict with any certainty whether and to what degree the disruption caused by any new public health crisis, the high inflationary environment, rising interest rates, market volatility caused by bank failures 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, 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 face competition from industry-agnostic analytics companies, EHR companies, such as Epic Systems and Cerner, 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 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 have experienced significant net losses since inception, we expect to incur losses in the future, and we may not be able to generate sufficient revenue to achieve and maintain profitability. We have incurred significant net losses in the past, including net losses of $118.1 million and $137.4 million in the years ended December 31, 2023 and 2022, respectively.
We have experienced significant net losses since inception, we expect to incur losses in the future, and we may not be able to generate sufficient revenue to achieve and maintain profitability. We have incurred significant net losses in the past, including net losses of $69.5 million and $118.1 million in the years ended December 31, 2024 and 2023, respectively.
We had an accumulated deficit of $1,117.2 million as of December 31, 2023. We expect our costs will increase over time as we continue to invest to grow our business and build relationships with clients, develop our Solution, develop new solutions, and operate as a public company.
We had an accumulated deficit of $1,186.7 million as of December 31, 2024. We expect our costs will increase over time as we continue to invest to grow our business and build relationships with clients, develop our Solution, develop new solutions, and operate as a public company.
On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025, pursuant to an Indenture dated April 14, 2020, with U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers (the Notes).
On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due April 15, 2025 (unless earlier converted, redeemed, or repurchased), pursuant to an Indenture dated April 14, 2020, with U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers (the Notes).
Further, the sales cycle for a new DOS Subscription Client, which we estimate to typically be approximately one year, could lengthen, as we started to experience in 2022, 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 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.
As of December 31, 2023, we had net operating loss (NOL) carryforwards for federal and state income tax purposes of approximately $602.6 million and $505.5 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, 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.
We launched operations in 2008 and we acquired Able Health, Healthfinch, Vitalware, Twistle, ARMUS, KPI Ninja, and ERS between February 2020 and October 2023. Our limited operating history, in particular with respect to the businesses we have recently acquired, makes it difficult to effectively assess or forecast our future prospects.
We launched operations in 2008 and we acquired Able Health, Healthfinch, Vitalware, Twistle, ARMUS, KPI Ninja, ERS, Carevive, Lumeon, Intraprise and Upfront between February 2020 and January 2025. Our limited operating history, in particular with respect to the businesses we have recently acquired, makes it difficult to effectively assess or forecast our future prospects.
If our sales cycle lengthens, as we started to experience in 2022, or we invest substantial resources pursuing unsuccessful sales opportunities, our results of operations and growth would be harmed.
If our sales cycle lengthens, as we experienced in 2022 and 2023, or we invest substantial resources pursuing unsuccessful sales opportunities, our results of operations and growth would be harmed.
Recent macroeconomic challenges (including the high inflationary and/or high interest rate environments), 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, 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.
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.
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.
Our national cloud-based network allows us access to cost and pricing data for a large number of providers in most regional markets, as well as to the contracted rates for third-party payors.
Examples of such regulatory schema include: • Antitrust laws . Our national cloud-based network allows us access to cost and pricing data for a large number of providers in most regional markets, as well as to the contracted rates for third-party payors.
Our historical results may not be indicative of future performance. 34 Table of Contents Our ability to execute on our existing sales pipeline, create additional sales pipelines, and expand our client base depends on, among other things, the attractiveness of our Solution relative to those offered by our competitors, our ability to demonstrate the value of our existing and future services, and our ability to attract and retain a sufficient number of qualified sales and marketing leadership and support personnel.
Our ability to execute on our existing sales pipeline, create additional sales pipelines, and expand our client base depends on, among other things, the attractiveness of our Solution relative to those offered by our competitors, our ability to demonstrate the value of our existing and future services, and our ability to attract and retain a sufficient number of qualified sales and marketing leadership and support personnel.
On April 8, 2020, concurrently with the pricing of our $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), we entered into privately negotiated capped call transactions (Base Capped Calls) with certain financial institutions (the option counterparties).
On April 8, 2020, concurrently with the pricing of our Notes, in a private placement to qualified institutional buyers exempt from registration under the Securities Act (Note Offering), we entered into privately negotiated capped call transactions (Base Capped Calls) with certain financial institutions (the option counterparties).
We have limited experience in acquiring other businesses. If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations, and technologies successfully, or effectively manage the combined business following the acquisition.
If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations, and technologies successfully, or effectively manage the combined business following the acquisition.
We anticipate that this transition will increase the cost of hosting our technology and negatively impact our technology gross margin. 36 Table of Contents 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. Such migrations are risky and may cause disruptions to our Solution, service outages, downtime, or other problems and may increase our costs.
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 2023 comprised 5.5%, 3.6%, and 3.5% of our revenue, or 12.6% in the aggregate. Our three largest clients during 2022 comprised 4.1%, 3.7%, and 3.4% of our revenue, or 11.2% in the aggregate.
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.
You should not rely on an investment in our common stock to provide dividend income. We have never declared or paid any dividends on our capital stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
We have never declared or paid any dividends on our capital stock. We intend to retain any earnings to finance the operation and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
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.
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.
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 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.
We began repurchasing shares of common stock under this program during the third quarter of 2022 and had $29.8 million available to purchase under the Share Repurchase Plan as of December 31, 2023.
We repurchased shares of common stock under this program during the third quarter of 2022 and first quarter of 2023. There were no repurchases made during 2024 and we had $29.8 million available to purchase under the Share Repurchase Plan as of December 31, 2024.
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.
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.
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.
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.
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.
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.
We do not believe we 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. 43 Table of Contents However, nonetheless, in addition to direct enforcement action against us, if our advisory services or our Solution offered to clients are associated with action by clients that is determined or alleged to be in violation of these laws and regulations, it is possible that an enforcement agency would also try to hold us liable and, as a result of such attempt to hold us liable, our results of operations and financial condition may be negatively impacted, even if we are ultimately found not liable.
However, nonetheless, in addition to direct enforcement action against us, if our advisory services or our Solution offered to clients are associated with action by clients that is determined or alleged to be in violation of these laws and regulations, it is possible that an enforcement agency would also try to hold us liable and, as a result of such attempt to hold us liable, our results of operations and financial condition may be negatively impacted, even if we are ultimately found not liable.
During 2020 we acquired Able Health, Healthfinch, and Vitalware, during 2021 we acquired Twistle, during 2022 we acquired ARMUS and KPI Ninja, and during 2023 we acquired ERS. 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 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.
If our acquisitions do not yield expected returns or fair value estimates deteriorate, we may be required to take charges to our results of operations based on this impairment assessment process, which could adversely affect our results of operations.
If our acquisitions do not yield expected returns or fair value estimates deteriorate, we may be required to take charges to our results of operations based on this impairment assessment process, which could adversely affect our results of operations. 35 Table of Contents Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our results of operations.
Macroeconomic challenges (including high inflationary and/or high interest rate environments, or market volatility caused by bank failures and measures taken in response thereto) and any new public health crisis could harm our business, results of operations, and financial condition.
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.
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.
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.
The failure to comply with these certification requirements could result in the loss of certification, which could restrict our Solution offerings and cause us to lose clients. 46 Table of Contents Risks Related to Tax Regulation Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar transactional taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
Risks Related to Tax Regulation Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar transactional taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations.
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.
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.
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.
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.
Our results of operations are likely to fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our common stock could decline.
Our results of operations are likely to fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our common stock could decline. Moreover, our stock price may be based on expectations of our future performance that may be unrealistic or that may not be met.
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’ 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.
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. 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.
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.
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.
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.
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.
Risks Related to Ownership of Our Common Stock Risks Related to an Investment in Our Securities We have a limited operating history in an evolving industry which makes it difficult to evaluate our current business future prospects and increases the risk of your investment.
We can provide no assurance as to the financial stability or viability of any option counterparty. 52 Table of Contents Risks Related to Ownership of Our Common Stock Risks Related to an Investment in Our Securities We have a limited operating history in an evolving industry which makes it difficult to evaluate our current business future prospects and increases the risk of your investment.
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.
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.
Even if the markets in which we compete meet the size estimates and growth forecasts, our business may not grow at similar rates, or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties.
Even if the markets in which we compete meet the size estimates and growth forecasts, our business may not grow at similar rates, or at all.
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.
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 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.
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.
In addition, upon a default by any option counterparty, we may suffer adverse tax consequences and dilution with respect to our common stock. We can provide no assurance as to the financial stability or viability of any option counterparty.
In addition, upon a default by any option counterparty, we may suffer adverse tax consequences and dilution with respect to our common stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur cybersecurity risk management program includes: • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • 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 controls; • cybersecurity awareness training of our employees, 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 service providers, suppliers, and vendors that have access to our critical systems and information.
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.
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 committee has the requisite skills and visibility into the design and operation of our data security practices to fulfill this responsibility effectively.
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.
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, 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, CRISC, CCSK and CCSP, and has a Bachelor of Science in Computer Information Systems and a Master of Science in Medical Informatics.
Our cybersecurity program is led by our Chief Information Security Officer and includes a team of cybersecurity and security compliance professionals. The cybersecurity program is further strengthened through support of our General Counsel and Chief Compliance and Data Privacy Officer. Our legal and cybersecurity teams work closely together to support and bolster our cybersecurity program.
Our cybersecurity program is led by our Chief Information Security Officer (CISO) and includes a team of cybersecurity and security compliance professionals. The cybersecurity program is further strengthened through support of our General Counsel and Chief Compliance and Data Privacy Officer. Our legal and cybersecurity teams work closely together to support and bolster our cybersecurity program.
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. 56 Table of Contents Cybersecurity Governance Our board of directors 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. 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.
Our management team’s experience includes more than 75 years of combined IT experience, 35 of which are focused specifically on Information Security.
Our Information Security team’s experience includes more than 75 years of combined IT experience, 35 of which are focused specifically on Information Security.
From time to time, Board members receive presentations on cybersecurity topics from our Chief Information Security Officer (CISO), internal cybersecurity team or external experts as part of the Board’s continuing education on topics that impact public companies.
From time to time, Board members receive presentations on cybersecurity topics from our CISO, internal cybersecurity team or external experts as part of the Board’s continuing education on topics that impact public companies.
The broader Information Security team’s accredited industry certifications include Certified Information Systems Security Professional (CISSP), Certified Information Security Manager (CISM), 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 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.
Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.
Our management team takes steps to stay informed about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment.
Our management team, including our Chief Information Security Officer and Chief Compliance and Data Privacy Officer, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
Our management team, including our CISO, is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.
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. Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant cyberattack will not occur.
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant cyberattack will not occur.
Added
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 changeItem 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 54,399 square feet is currently subleased. We use this facility for administration, sales and marketing, technology and development, and professional services.
Biggest changeItem 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 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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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. 57 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. 60 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 between July 25, 2019 (the date our common stock commenced trading) through December 31, 2023. All values assume a $100 initial investment at market close on July 25, 2019.
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.
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 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the year ended December 31, 2023. 58 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.
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.
Holders of record As of December 31, 2023, there were 128 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, 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.
Issuer purchases of equity securities None. Item 6. [Reserved] 59 Table of Contents
Issuer purchases of equity securities None. Item 6. [Reserved] 62 Table of Contents
Company/Index Jul 25, 2019 (1) Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Health Catalyst, Inc. $ 100 $ 89 $ 111 $ 101 $ 27 $ 24 S&P 500 $ 100 $ 108 $ 125 $ 159 $ 128 $ 159 Nasdaq Healthcare $ 100 $ 114 $ 149 $ 143 $ 114 $ 122 __________________ (1) Base period Unregistered Sales of Equity Securities and Use of Proceeds Unregistered sales of equity securities During the year ended December 31, 2023, 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 12/31/2019 (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.
Removed
The initial public offering price of our common stock, which had a closing stock price of $39.17 on July 25, 2019, was $26.00 per share. Data for the S&P 500 and Nasdaq Healthcare indices assume reinvestment of dividends.

Item 7. Management's Discussion & Analysis

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

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Biggest changeResults 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, 2023 2022 2021 (in thousands) Revenue: Technology $ 187,583 $ 176,288 $ 147,718 Professional services 108,355 99,948 94,208 Total revenue 295,938 276,236 241,926 Cost of revenue, excluding depreciation and amortization shown below: Technology (1)(2)(3) 62,474 56,642 47,516 Professional services (1)(2)(3) 101,631 86,407 76,838 Total cost of revenue, excluding depreciation and amortization 164,105 143,049 124,354 Operating expenses: Sales and marketing (1)(2)(3) 67,321 87,514 75,027 Research and development (1)(2)(3) 72,627 75,680 62,733 General and administrative (1)(2)(3)(4)(5) 76,559 61,701 85,934 Depreciation and amortization 42,223 48,297 37,528 Total operating expenses 258,730 273,192 261,222 Loss from operations (126,897) (140,005) (143,650) Interest and other income (expense), net 9,106 (1,678) (16,458) Loss before income taxes (117,791) (141,683) (160,108) Income tax provision (benefit) 356 (4,280) (6,898) Net loss $ (118,147) $ (137,403) $ (153,210) __________________ (1) Includes stock-based compensation expense, as follows: 72 Table of Contents Year Ended December 31, 2023 2022 2021 Stock-Based Compensation Expense: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 1,866 $ 2,058 $ 2,063 Professional services 7,369 8,230 8,047 Sales and marketing 20,982 28,082 22,698 Research and development 11,213 12,938 10,213 General and administrative 14,326 20,796 22,124 Total $ 55,756 $ 72,104 $ 65,145 (2) Includes acquisition-related costs, net, as follows: Year Ended December 31, 2023 2022 2021 Acquisition-related costs, net: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 273 $ 351 $ 61 Professional services 391 655 127 Sales and marketing 697 1,894 592 Research and development 787 3,045 901 General and administrative 3,609 (1,051) 26,248 Total $ 5,757 $ 4,894 $ 27,929 (3) Includes restructuring costs, as follows: Year Ended December 31, 2023 2022 2021 Restructuring costs: (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 496 $ 229 $ — Professional services 1,832 1,139 — Sales and marketing 2,415 3,023 — Research and development 3,337 3,410 — General and administrative 742 624 — Total $ 8,822 $ 8,425 $ — (4) Includes litigation costs, as follows: Year Ended December 31, 2023 2022 2021 Litigation costs: (in thousands) General and administrative $ 21,279 $ — $ — (5) Includes non-recurring lease-related charges, as follows: Year Ended December 31, 2023 2022 2021 Non-recurring lease-related charges: (in thousands) General and administrative $ 4,081 $ 3,798 $ 1,800 73 Table of Contents Year Ended December 31, 2023 2022 2021 Revenue: Technology 63 % 64 % 61 % Professional services 37 36 39 Total revenue 100 100 100 Cost of revenue, excluding depreciation and amortization shown below: Technology 21 21 20 Professional services 34 31 32 Total cost of revenue, excluding depreciation and amortization 55 52 52 Operating expenses: Sales and marketing 23 32 31 Research and development 25 27 26 General and administrative 26 22 36 Depreciation and amortization 14 18 16 Total operating expenses 88 99 109 Loss from operations (43) (51) (61) Interest and other income (expense), net 3 (1) (7) Loss before income taxes (40) (52) (68) Income tax provision (benefit) — (2) (3) Net loss (40) % (50) % (65) % 74 Table of Contents Discussion of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Revenue: Technology $ 187,583 $ 176,288 $ 11,295 6 % Professional services 108,355 99,948 8,407 8 % Total revenue $ 295,938 $ 276,236 $ 19,702 7 % Percentage of revenue: Technology 63 % 64 % Professional services 37 36 Total 100 % 100 % Total revenue was $295.9 million for the year ended December 31, 2023, compared to $276.2 million for the year ended December 31, 2022, an increase of $19.7 million, or 7%.
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%.
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, (vi) litigation costs, (vii) restructuring costs, and (viii) non-recurring lease-related charges.
Investing activities Net cash provided by investing activities for the year ended December 31, 2023 of $20.3 million was primarily due to the sale and maturity of short-term investments of $336.8 million, reduced by the purchases of short-term investments of $290.8 million.
Net cash provided by investing activities for the year ended December 31, 2023 of $20.3 million was primarily due to the sale and maturity of short-term investments of $336.8 million, reduced by the purchases of short-term investments of $290.8 million.
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 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. 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.
KPI Ninja, Inc. On February 24, 2022, we acquired KPI Ninja, a leading provider of interoperability, enterprise analytics, and value-based care solutions based in Lincoln, Nebraska. KPI Ninja is known for its powerful capabilities, flexible configurations, and comprehensive applications designed to fulfill the promise of data-driven healthcare.
On February 24, 2022, we acquired KPI Ninja, a leading provider of interoperability, enterprise analytics, and value-based care solutions based in Lincoln, Nebraska. KPI Ninja is known for its powerful capabilities, flexible configurations, and comprehensive applications designed to fulfill the promise of data-driven healthcare.
As previously described, within our professional services segment, a subset of clients have reduced the number of FTEs engaged in their initiatives, while in the technology segment, a subset of modular clients and smaller DOS platform clients have lowered their application and analytics spend.
As previously described, within our professional services segment, a subset of clients have reduced the number of FTEs engaged in their initiatives, while in the technology segment, a subset of modular clients and smaller Platform Clients have lowered their application and analytics spend.
We expect that these investments in our DOS platform will provide additional capabilities for our clients as well as improve our ability to drive cost efficiencies in our hosting and support costs per client over time.
We expect that these investments in our Platform will provide additional capabilities for our clients as well as improve our ability to drive cost efficiencies in our hosting and support costs per client over time.
However, in the medium-term, we will incur some migration costs associated with deploying the updated architecture across DOS platform clients, resulting in a headwind for our Technology Gross Margin. The primary costs incurred to deliver our professional services are the salaries, benefits, and other headcount-related costs of our team members.
However, in the near-to-medium-term, we will incur some migration costs associated with deploying the updated architecture across Platform Clients, resulting in a headwind for our Technology Gross Margin. The primary costs incurred to deliver our professional services are the salaries, benefits, and other headcount-related costs of our team members.
Overview We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data platform, software analytics applications, and professional services expertise. Our clients, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements.
Overview We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data platform, applications, and expertise. Our clients, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements.
Revenue for access to unspecified future products included in time-based license subscriptions is recognized ratably over the contract term beginning on the date that the access is made available to the client. 80 Table of Contents Professional services revenue Professional services revenue primarily includes data and analytics services, domain expertise services, TEMS, and implementation services.
Revenue for access to unspecified future products included in time-based license subscriptions is recognized ratably over the contract term beginning on the date that the access is made available to the client. 84 Table of Contents Professional services revenue Professional services revenue primarily includes data and analytics services, domain expertise services, TEMS, and implementation services.
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 DOS subscription contracts have built-in annual escalators for technology access fees.
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.
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 1,300 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. We currently employ more than 1,500 team members.
The historical and go-forward revenue growth profiles of these businesses may vary from our core DOS Subscription Clients, which can positively or negatively impact our overall growth rate. For example, Medicity clients have generated a lower dollar-based retention rate than DOS Subscription 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 generated a lower dollar-based retention rate than Platform Clients and we expect declining revenue from Medicity clients in the foreseeable future.
After we demonstrate measurable improvements, we work with our clients to expand the utilization of our Solution to other use cases or enterprise-wide. The average sales cycle for a new DOS Subscription Client is estimated to be approximately one year, but that timeline can vary materially.
After we demonstrate measurable improvements, we work with our clients to expand the utilization of our Solution to other use cases or enterprise-wide. The average sales cycle for a new Platform Client is estimated to be approximately one year, but that timeline can vary materially.
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 DOS Subscription 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.
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 year ended December 31, 2023.
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.
The expense is recognized straight-line over the vesting period for awards with a service condition. The accelerated attribution method is used for PRSUs. We record forfeitures of stock-based awards as the actual forfeitures occur. For awards subject to performance conditions, we record expense when the performance condition becomes probable.
The expense is recognized straight-line over the vesting period for awards with a service condition. The accelerated attribution method is used for PRSUs. We record forfeitures of stock-based awards as the actual forfeitures occur. 86 Table of Contents For awards subject to performance conditions, we record expense when the performance condition becomes probable.
Over the past few years, we have invested in growth infrastructure by adding to our sales operations and marketing teams, which are built to help us scale over the long term. 62 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. 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.
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 presented below.
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.
The growth in revenue was primarily due to revenue from new clients, including clients of our recent acquired entities, and existing clients paying higher technology access fees from contractual, annual escalators. • For the years ended December 31, 2023, 2022, and 2021, we incurred net losses of $118.1 million, $137.4 million, and $153.2 million, respectively. • For the years ended December 31, 2023, 2022, and 2021, our Adjusted EBITDA was $11.0 million, $(2.5) million, and $(11.2) million, respectively.
The growth in revenue was primarily due to revenue from new clients, including clients of our recent acquired entities, and existing clients paying higher technology access fees from contractual, annual escalators. • For the years ended December 31, 2024, 2023, and 2022, we incurred net losses of $69.5 million, $118.1 million, and $137.4 million, respectively. • For the years ended December 31, 2024, 2023, and 2022, our Adjusted EBITDA was $26.1 million, $11.0 million, and $(2.5) million, respectively.
A discussion regarding our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 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 28, 2023.
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.
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. 82
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
For example, Medicity clients have generated a lower Dollar-based Retention Rate than DOS Subscription Clients and we expect flat to declining revenue from Medicity clients in the foreseeable future.
For example, Medicity clients have generated a lower Dollar-based Retention Rate than Platform Clients and we expect flat to declining revenue from Medicity clients in the foreseeable future.
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.
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.
We expect Adjusted EBITDA to continue to improve going forward, although it may fluctuate from quarter to quarter as a result of the timing of non-recurring revenue and the seasonality of certain operating costs, including costs related to our HAS event, which we plan to hold next during the first quarter of 2024.
We generally expect Adjusted EBITDA to continue to improve going forward, although it may fluctuate from quarter to quarter as a result of the timing of non-recurring revenue and the seasonality of certain operating costs, including costs related to our HAS event, which we plan to hold next during the third quarter of 2025.
See “Key Factors Affecting Our Performance” for more information about important opportunities and challenges related to our business. 60 Table of Contents Challenging Macroeconomic Environment 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 “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.
The 2023 Restructuring Plan increased our research and development expenses in the fourth quarter of 2023 due to severance costs, but we expect that the reduction in headcount will reduce future, ongoing research and development expenses.
The 2023 Restructuring Plan increased our research and development expenses in the fourth quarter of 2023 until midway through 2024 due to severance costs, but we expect that the reduction in headcount will reduce future, ongoing research and development expenses.
For the years ended December 31, 2023, 2022, and 2021, technology revenue represented 63%, 64%, and 61% of total revenue, respectively, and professional services revenue represented 37%, 36%, and 39% of total revenue, respectively. Technology revenue. Technology revenue primarily consists of subscription fees charged to clients for access to use our data platform and analytics applications.
For the years ended December 31, 2024, 2023, and 2022, technology revenue represented 64%, 63%, and 64% of total revenue, respectively, and professional services revenue represented 36%, 37%, and 36% of total revenue, respectively. Technology revenue. Technology revenue primarily consists of subscription fees charged to clients for access to use our Platform and analytics applications.
Non-cash charges primarily consisted of $55.8 million in stock-based compensation, $42.2 million in depreciation and amortization, and $4.1 million in impairment of long-lived assets, reduced by $9.7 million of investment discount accretion. For the year ended December 31, 2022, net cash used in operating activities was $35.3 million, which included a net loss of $137.4 million.
For the year ended December 31, 2023, net cash used in operating activities was $33.1 million, which included a net loss of $118.1 million. Non-cash charges primarily consisted of $55.8 million in stock-based compensation, $42.2 million in depreciation and amortization, and $4.1 million in impairment of long-lived assets, reduced by $9.7 million of investment discount accretion.
The $9.1 million of payments in excess of the acquisition date fair value to settle the cash-based portion of contingent consideration liabilities was included in the net cash used in operating activities.
The $3.2 million of payments in excess of the acquisition date fair value to settle the cash-based portion of contingent consideration liabilities was included in the net cash used in operating activities.
We present both of these measures for our technology and professional services business. 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.
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.
The health system end market, in particular, is experiencing meaningful financial strain, in which it has realized significant increases in labor and supply costs without a commensurate increase in revenue, leading to a deterioration in operating margins across many of our clients and prospective clients.
The health system end market, in particular, has experienced meaningful financial strain over the last few years, in which it has realized significant increases in labor and supply costs without a commensurate increase in revenue, leading to a deterioration in operating margins across many of our clients and prospective clients.
Liquidity and Capital Resources As of December 31, 2023, we had cash, cash equivalents, and short-term investments of $317.7 million, which were held for working capital and other general corporate purposes, which may include acquisitions and strategic transactions.
Liquidity and Capital Resources As of December 31, 2024, we had cash, cash equivalents, and short-term investments of $392.0 million, which were held for working capital and other general corporate purposes, which may include acquisitions and strategic transactions.
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 DOS client base, as well as upsells to our over 525 other more modular non-DOS clients.
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.
Our Adjusted EBITDA improved year-over-year as a result of our revenue growth and cost reduction initiatives as well as the timing of some non-headcount expenses, including the change in timing of our HAS event.
Our Adjusted EBITDA improved year-over-year as a result of our revenue growth and cost reduction initiatives as well as the timing of some non-headcount expenses.
Highlights from the years ended December 31, 2023, 2022, and 2021 include: • For the years ended December 31, 2023, 2022, and 2021, our total revenue was $295.9 million, $276.2 million, and $241.9 million, respectively.
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.
The acquisition consideration transferred was comprised of net cash consideration of $11.4 million. The ERS shareholders also received Health Catalyst common shares subject to revesting that are accounted for as post-acquisition stock-based compensation. ARMUS Corporation On April 29, 2022, we acquired ARMUS, a clinical registry development and data management technology company based in Foster City, California.
The ERS shareholders also received Health Catalyst common shares subject to revesting that are accounted for as post-acquisition stock-based compensation. ARMUS Corporation On April 29, 2022, we acquired ARMUS, a clinical registry development and data management technology company based in Foster City, California.
We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses, as well as certain other non-recurring operating expenses, and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses.
We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses, as well as certain other non-recurring operating expenses. We present both of these measures for our technology and professional services business.
Other Clients that do not meet the definition of a DOS Subscription Client, which are primarily legacy Medicity, Able Health, Healthfinch, Vitalware, Twistle, KPI Ninja, ARMUS, and ERS 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, and Intraprise clients, are not included in the Dollar-Based Retention Rate metrics.
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.
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.
The following is a reconciliation of our Adjusted EBITDA to net loss, the most directly comparable financial measure calculated in accordance with GAAP, for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 (in thousands) Net loss $ (118,147) $ (137,403) $ (153,210) Add: Interest and other (income) expense, net (9,106) 1,678 16,458 Income tax provision (benefit) 356 (4,280) (6,898) Depreciation and amortization 42,223 48,297 37,528 Stock-based compensation 55,756 72,104 65,145 Acquisition-related costs, net (1) 5,757 4,894 27,929 Litigation costs (2) 21,279 — — Restructuring costs (3) 8,822 8,425 — Non-recurring lease-related charges (4) 4,081 3,798 1,800 Adjusted EBITDA $ 11,021 $ (2,487) $ (11,248) __________________ (1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments.
The following is a reconciliation of our Adjusted EBITDA to net loss, the most directly comparable financial measure calculated in accordance with GAAP, for the years ended December 31, 2024, 2023, and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Net loss $ (69,502) $ (118,147) $ (137,403) Add: Interest and other (income) expense, net (637) (9,106) 1,678 Income tax provision (benefit) 333 356 (4,280) Depreciation and amortization 41,431 42,223 48,297 Stock-based compensation 40,128 55,756 72,104 Acquisition-related costs, net (1) 10,064 5,757 4,894 Litigation costs (2) — 21,279 — Restructuring costs (3) 2,088 8,822 8,425 Non-recurring lease-related charges (4) 2,200 4,081 3,798 Adjusted EBITDA $ 26,105 $ 11,021 $ (2,487) __________________ (1) Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments.
Our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses, including due to restructuring initiatives. Research and development.
Our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. 75 Table of Contents Research and development.
We have acquired multiple companies over the last few years, including Medicity in June 2018, Able Health in February 2020, Healthfinch in July 2020, Vitalware in September 2020, Twistle in July 2021, KPI Ninja in February 2022, ARMUS in April 2022, and ERS in October 2023.
We have acquired multiple companies over the last few years, including Medicity in June 2018, Able Health in February 2020, Healthfinch in July 2020, Vitalware in September 2020, Twistle in July 2021, KPI Ninja in February 2022, ARMUS in April 2022, ERS in October 2023, Carevive in May 2024, Lumeon in August 2024, Intraprise in November 2024, and Upfront in January 2025.
Technology revenue was $187.6 million, or 63% of total revenue, for the year ended December 31, 2023, compared to $176.3 million, or 64% of total revenue, for the year ended December 31, 2022.
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.
Income tax benefit Income tax benefit 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.
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.
Refer to Note 10 of our consolidated financial statements for additional details regarding the private offering of the Notes and the Capped Calls. 78 Table of Contents Cash Flows The following table summarizes our cash flows for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash used in operating activities $ (33,080) $ (35,270) $ (23,123) Net cash provided by (used in) investing activities 20,293 (39,021) (139,678) Net cash provided by (used in) financing activities 2,730 (2,613) 264,084 Effect of exchange rate changes on cash and cash equivalents 21 (11) (10) Net (decrease) increase in cash and cash equivalents $ (10,036) $ (76,915) $ 101,273 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” 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.
We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses.
We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses. We present both of these measures for our technology and professional services business.
Our average subscription revenue for net new DOS Subscription Clients signed in the year ended December 31, 2023 (new 2023 DOS Subscription Clients), was toward the low end of the average expected range of $500,000 to $1,500,000, driven primarily by greater demand of stand-alone DOS module components, such as Healthcare.AI, which resulted in subscription revenue that is significantly lower than subscription revenue derived from a contract that includes access to all of the DOS platform components and analytic applications.
Our average ARR and non-recurring revenue for net new Platform Clients signed in the year ended December 31, 2024 (new 2024 Platform Clients), was toward the low end of the historical average expected range of $400,000 to $1,000,000, driven primarily by Platform module components, such as Healthcare.AI, that result in ARR that is significantly lower than ARR derived from a contract that includes access to all of the Platform components and analytic applications.
This average ARR range is comprised of new 2023 DOS Subscription Clients with (i) subscription revenue in the expected average range or significantly above the expected average range driven by the size of the client organization and the bundle of technology and services included in their subscription and (ii) subscription revenue meaningfully below the low-end of the expected range driven by sales of stand-alone DOS module components, which provided greater deal certainty in a more challenging macroeconomic environment, and which we believe will provide an opportunity to expand our relationship with these DOS Subscription Clients in the future.
This average ARR and non-recurring revenue range is comprised of new 2024 Platform Clients with (i) ARR and non-recurring revenue in the expected average range or significantly above the expected average range driven by the size of the client organization and the bundle of technology and services included in their subscription and (ii) ARR and non-recurring revenue meaningfully below the low-end of the expected range driven by stand-alone Platform module components, which we believe may provide an opportunity to expand our relationship with these Platform Clients in the future.
This decrease was primarily due to certain intangible assets from our business combinations becoming fully amortized. Depreciation and amortization expense as a percentage of revenue decreased from 17% in the year ended December 31, 2022 to 14% in the year ended December 31, 2023.
This decrease was primarily due to certain intangible assets from our business combinations becoming fully amortized. Depreciation and amortization expense as a percentage of revenue remained constant at 14% for the years ended December 31, 2024, and 2023.
We continue to proactively respond to the challenging macroeconomic environment with a strategic operating plan that emphasizes our offerings and go-to-market approach in the areas where we have the most competitive differentiation and where clients are most likely to achieve measurable financial and operational ROI both in the near term and over time. 61 Table of Contents We believe this focus will enable us to move forward in a position of continued competitive and financial strength.
We continue to proactively respond to the challenging macroeconomic environment with a strategic operating plan that emphasizes our offerings and go-to-market approach in the areas where we have the most competitive differentiation and where clients are most likely to achieve measurable financial and operational ROI both in the near term and over time.
We expect cost of technology revenue as a percentage of technology revenue to fluctuate and potentially increase in the near term, primarily due to additional costs associated with transitioning a small number of clients from on-premise to Microsoft Azure and the migration of clients to the next iteration of our DOS platform. Cost of professional services revenue.
We expect cost of technology revenue as a percentage of technology revenue to fluctuate and potentially increase in the near term, primarily due to additional costs associated with transitioning a small number of clients from on-premise deployments to Microsoft Azure-hosted environments and migrating clients to Health Catalyst Ignite. Cost of professional services revenue.
These factors have disrupted the normal operations of many businesses, including our business. These factors have also placed the national healthcare system under significant operational and budgetary strain, and will likely continue to do so in the near term.
These factors have disrupted the normal operations of many businesses, including our business. These factors have also placed the national healthcare system under significant operational and budgetary strain.
The following is a reconciliation of revenue to our Adjusted Gross Profit and Adjusted Gross Margin in total and for technology and professional services for the years ended December 31, 2023, 2022, and 2021: 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) Gross profit, excluding depreciation and amortization 125,109 6,724 131,833 Add: 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 Gross margin, excluding depreciation and amortization 67 % 6 % 45 % Adjusted Gross Margin 68 % 15 % 49 % __________________ (1) Acquisition-related costs, net include 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 includes deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
Year Ended December 31, 2022 (in thousands, except percentages) Technology Professional Services Total Revenue $ 176,288 $ 99,948 $ 276,236 Cost of revenue, excluding depreciation and amortization (56,642) (86,407) (143,049) Gross profit, excluding depreciation and amortization 119,646 13,541 133,187 Add: Stock-based compensation 2,058 8,230 10,288 Acquisition-related costs, net (1) 351 655 1,006 Restructuring costs (2) 229 1,139 1,368 Adjusted Gross Profit $ 122,284 $ 23,565 $ 145,849 Gross margin, excluding depreciation and amortization 68 % 14 % 48 % Adjusted Gross Margin 69 % 24 % 53 % __________________ (1) Acquisition-related costs, net includes deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions. 70 Table of Contents Year Ended December 31, 2022 (in thousands, except percentages) Technology Professional Services Total Revenue $ 176,288 $ 99,948 $ 276,236 Cost of revenue, excluding depreciation and amortization (56,642) (86,407) (143,049) Amortization of intangible assets, cost of revenue (22,832) — (22,832) Depreciation of property and equipment, cost of revenue (7,413) — (7,413) Gross profit 89,401 13,541 102,942 Gross margin 51 % 14 % 37 % Add: Amortization of intangible assets, cost of revenue 22,832 — 22,832 Depreciation of property and equipment, cost of revenue 7,413 — 7,413 Stock-based compensation 2,058 8,230 10,288 Acquisition-related costs, net (1) 351 655 1,006 Restructuring costs (2) 229 1,139 1,368 Adjusted Gross Profit $ 122,284 $ 23,565 $ 145,849 Adjusted Gross Margin 69 % 24 % 53 % __________________ (1) Acquisition-related costs, net includes deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
Our 2023 net new DOS Subscription Clients had a lower average starting annual recurring revenue (ARR) as compared to historical levels.
Our 2024 net new Platform Clients had a lower average starting annual recurring revenue (ARR) and non-recurring revenue as compared to historical levels.
While we have seen that this financial strain has continued to pressure health system budgets, we have continued to hear a strong acknowledgement that our offering includes solutions that directly reduce health systems’ current financial pressure, especially related to the segments of our offering that have a clear, near-term financial ROI, such as our TEMS offering, our Financial Empowerment technology suite, and some components of our Population Health technology suite.
While we have seen that this financial strain has continued to pressure health system budgets, we have continued to hear a strong acknowledgement that our offering includes solutions that directly reduce health systems’ financial pressure, especially related to the segments of our offering that have a clear, near-term financial return on investment (ROI).
The primary costs incurred to deliver our technology are hosting fees and headcount-related costs associated with our cloud services and support teams. Hosting fees are related to providing our technology through a cloud-based environment hosted primarily by Microsoft Azure. However, we also have deployed DOS on-premise to a small number of clients.
The primary costs incurred to deliver our technology are hosting fees and headcount-related costs associated with our cloud services and support teams. Hosting fees are related to providing our technology through a cloud-based environment hosted primarily by Microsoft Azure.
The acquisition consideration transferred was $21.4 million and was comprised of net cash consideration of $18.5 million and Health Catalyst common shares with a fair value of $2.9 million, net of shares subject to revesting that are accounted for as post-acquisition stock-based compensation. Twistle, Inc. On July 1, 2021 , we acquired Twistle, Inc.
The acquisition consideration transferred was $9.4 million and was comprised of net cash consideration of $9.3 million and shares of Health Catalyst common stock with a fair value of $0.1 million, net of shares subject to revesting that are accounted for as post-acquisition stock-based compensation. KPI Ninja, Inc.
The year-over-year result was mainly driven by continued costs associated with transitioning a portion of our client base to Azure-hosted environments, as well as from costs associated with migrating a subset of our client base to our multi-tenant, Snowflake and Databricks-enabled data platform environment, partially offset by existing clients paying higher technology access fees from contractual, built-in escalators, without a corresponding increase in hosting costs.
The year-over-year result was mainly driven by continued costs associated with transitioning a portion of our client base to Azure-hosted environments, as well as from costs associated with migrating Platform Clients to Health Catalyst Ignite, and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, partially offset by existing clients paying higher technology access fees from contractual, built-in escalators, without a corresponding increase in hosting costs.
Dollar-based Retention Rate Year Ended December 31, 2023 2022 2021 Dollar-based Retention Rate 100 % 100 % 112 % 64 Table of Contents We calculate our Dollar-based Retention Rate as of a period end by starting with the sum of the technology and professional services ARR from our DOS Subscription 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 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).
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. 63 Table of Contents We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance.
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.
While there will be a headwind to gross margin from these TEMS in the near term, we believe this model will benefit our mid and long-term Adjusted EBITDA and profitability targets due to improved direct margin on these services over time, our ability to drive operating leverage with lower relative incremental operating expense investment required, and the fact that these contracts typically result in long-term technology subscription contract renewals or expansions.
We often provide a client with a near-term discount relative to their existing costs for the scope of the TEMS opportunity, and we drive incremental gross margin over time by leveraging our technology and know-how to make processes more efficient and reduce the client’s labor costs. 71 Table of Contents While there will be a headwind to gross margin from these TEMS in the near term, we believe this model will benefit our mid and long-term Adjusted EBITDA and profitability targets due to improved direct margin on these services over time, our ability to drive operating leverage with lower relative incremental operating expense investment required, and the fact that these contracts typically result in long-term technology subscription contract renewals or expansions.
Our clients are large, complex organizations who typically have long procurement cycles which may lead to declines in the pace of our new client additions, which also included small 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. • 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.
The technology revenue growth was primarily from new DOS Subscription Clients, acquired technology clients, revenue from existing clients paying higher technology access fees from contractual, annual escalators, and new offerings of expanded support services.
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.
Our primary uses of cash from operating activities are for employee-related expenses, marketing expenses, and technology costs. For the year ended December 31, 2023, net cash used in operating activities was $33.1 million, which included a net loss of $118.1 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, 2024, net cash provided by operating activities was $14.6 million, which included a net loss of $69.5 million.
As noted, our Dollar-based Retention Rate Key Metric excludes Other Clients who are not DOS Subscription Clients, including clients added through acquisition, as the go-forward technology revenue growth profiles of these businesses may vary from our core DOS Subscription Clients.
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.
The increase in Other Clients from 2022 to 2023 was primarily due to our acquisition of ERS. We derive substantially all of our revenue through subscriptions for use of our technology and professional services on a recurring basis. In 2023, 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 2024, greater than 90% of our total revenue was recurring in nature.
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).
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). We have the intent and ability to settle the Notes fully in cash upon the maturity date in April 2025.
Recent macroeconomic challenges (including the 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, leading to an economic downturn and increased market volatility. They have also disrupted the normal operations of many businesses, including ours.
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.
The increase was primarily due to a $3.8 million increase in cloud computing and hosting costs largely from the expanded use of Microsoft Azure to serve existing and new clients, a $1.7 million increase in license and revenue share fees, a $0.5 million increase in salary and related personnel costs.
The increase was primarily due to a $5.7 million increase in cloud computing and hosting costs largely from the expanded use of Microsoft Azure to serve existing and new clients, partially offset by a $0.5 million decrease in salary and related personnel costs, including stock-based compensation and restructuring costs.
Net cash used in investing activities for the year ended December 31, 2021 of $139.7 million was primarily due to purchases of short-term investments of $261.4 million, reduced by the sale and maturity of short-term investments of $186.9 million.
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.
The Notes will mature on April 15, 2025, unless earlier converted, redeemed, or repurchased. 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.
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.
Research and development Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Research and development $ 72,627 $ 75,680 $ (3,053) (4) % Percentage of total revenue 25 % 27 % Research and development expenses were $72.6 million for the year ended December 31, 2023, compared to $75.7 million for the year ended December 31, 2022, a decrease of $3.1 million, or 4%.
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%.
HAS was last held in September 2022 and will be held again in February 2024. Sales and marketing expense as a percentage of total revenue decreased from 32% in the year ended December 31, 2022 to 23% in the year ended December 31, 2023.
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.
This increase was primarily due to a $14.2 million increase in salary and related personnel costs from additional professional services headcount, including new TEMS headcount, a $1.4 million increase in contractor and outside service fees, and a $0.7 million increase in restructuring costs, which were partially offset by a $0.9 million decrease in stock-based compensation. 75 Table of Contents Operating Expenses Sales and marketing Year Ended December 31, 2023 2022 $ Change % Change (in thousands, except percentages) Sales and marketing $ 67,321 $ 87,514 $ (20,193) (23) % Percentage of total revenue 23 % 32 % Sales and marketing expenses were $67.3 million for the year ended December 31, 2023, compared to $87.5 million for the year ended December 31, 2022, a decrease of $20.2 million, or 23%.
This decrease was primarily due to a $1.5 million decrease in contractor and outside service fees, a $1.3 million decrease in stock-based compensation, and a $0.8 million decrease in salary and related personnel costs, including restructuring costs. 79 Table of Contents Operating Expenses Sales and marketing Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Sales and marketing $ 54,387 $ 67,321 $ (12,934) (19) % Percentage of total revenue 18 % 23 % Sales and marketing expenses were $54.4 million for the year ended December 31, 2024, compared to $67.3 million for the year ended December 31, 2023, a decrease of $12.9 million, or 19%.
Given how fundamental DOS is to our Solution and because the vast majority of our total revenue is derived from DOS Subscription Clients, we believe our DOS Subscription Client count is a representation of our market penetration and the growth of our business.
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.
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 2023, our technology revenue and professional services revenue represented 63% and 37% of total revenue, respectively. Changes in our percentage of revenue attributable to Technology and Professional Services would impact future Total Adjusted Gross Margin.
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.
We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expense in our consolidated statements of operations and comprehensive loss. 81 Table of Contents Goodwill We record goodwill as the difference between the aggregate consideration paid for a business combination and the fair value of the identifiable net tangible and intangible assets acquired.
Changes to the contingent consideration liabilities are reflected as part of general and administrative expense in our consolidated statements of operations. Goodwill We record goodwill as the difference between the aggregate consideration paid for a business combination and the fair value of the identifiable net tangible and intangible assets acquired.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

14 edited+16 added−2 removed13 unchanged
Biggest changeForeign currency exchange risk Our reporting currency is the U.S. dollar, and the functional currency of our international subsidiaries is typically their local currency. Our results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Indian Rupee and Singapore Dollar.
Biggest changeOur results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British Pound, Indian Rupee, and Singapore Dollar. Due to the relatively small size of our international operations to date, our foreign currency exposure has been fairly limited and not material to our business.
Refer to Note 11 of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our restructuring liabilities.
Refer to Note 11-Restructuring Costs of our audited consolidated financial statements included within Item 8 in this Annual Report on Form 10-K for more information regarding our restructuring liabilities.
As of December 31, 2023 and 2022, 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, 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.
Purchase commitments As of December 31, 2023, we had $41.5 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, 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.
As of December 31, 2023, we had total future operating lease payment obligations of $25.6 million, with $3.4 million payable within the next 12 months. Refer to Note 9 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, 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.
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, 2023, we had total restructuring liabilities of $2.4 million payable within the next 12 months.
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.
Off-balance sheet arrangements As of December 31, 2023, 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. 84
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
Refer to Note 10 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 these convertible senior notes. Operating lease obligations We lease office space under operating leases that expire between 2024 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 2025 and 2031.
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. Today, our international sales contracts are generally denominated in U.S. dollars, while our international operating expenses are often denominated in local currencies.
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.
We do not make investments for trading or speculative purposes. Our cash equivalents and short-term investments are subject to market risk due to changes in interest rates. Fixed-rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Our cash equivalents and short-term investments are subject to market risk due to changes in interest rates. Fixed-rate securities may have their market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.
Our inability or failure to do so could harm our business, results of operations, or financial condition. 83 Contractual Obligations and Commitments The contractual commitment amounts summarized below are associated with agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the transaction.
Contractual Obligations and Commitments The contractual commitment amounts summarized below are associated with agreements that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the transaction.
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.
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.
Our health system end market is currently experiencing meaningful financial strain from significant inflation with increases in labor and supply costs without a commensurate increase in revenue, leading to significant margin pressure.
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.
Our market risk exposure is primarily a result of fluctuations in interest rates but may include foreign currency exchange risk and inflation in the future. Interest rate risk We had cash, cash equivalents, and short-term investments of $317.7 million and $363.5 million as of December 31, 2023 and 2022, respectively, which are held for working capital purposes.
Our market risk exposure is primarily a result of fluctuations in interest rates but may include foreign currency exchange risk and inflation in the future.
Removed
Due to the relatively small size of our international operations to date, our foreign currency exposure has been fairly limited and not material to our business. Accordingly, we have not instituted a hedging program.
Added
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.
Removed
Although we are unable to determine the exact impact of inflation on our clients and on our business, we continue to monitor and assess the impact of inflationary pressures on our business operations.
Added
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.
Added
The maturity date of the term loans is July 16, 2029. The interest that accrues on outstanding principal of the term loans is payable in cash on a quarterly basis, which portion accrues at a floating rate equal to SOFR plus 6.5% per year.
Added
In the event that SOFR is unavailable, interest will accrue at a floating rate equal to the alternate base rate (as described in the Credit Agreement) plus 5.5% per year.
Added
Commencing with the quarter ending on December 31, 2024, we are required to make quarterly principal payments in an amount equal to 0.25% of the aggregate original principal amount, and the final maturity date of the term loans is July 16, 2029.
Added
In addition to the floating interest rate, we are required to pay a commitment fee on the unutilized commitments under the delayed draw facility ranging from 1.5% to 2.5% per year depending upon the year and the unutilized delayed draw term loan. Interest rate risk also reflects our exposure to movements in interest rates associated with our borrowings.
Added
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.
Added
Accordingly, we have not instituted a hedging program.
Added
Our inability or failure to do so could harm our business, results of operations, or financial condition.
Added
Credit Agreement On July 16, 2024 (the Closing Date), we entered into a credit agreement with Silver Point Finance, LLC, as administrative agent and collateral agent, and the lenders from time-to-time party thereto (the Credit Agreement).
Added
The Credit Agreement provides a five-year term loan facility in an aggregate principal amount of up to $225.0 million, consisting of an initial term loan of $125.0 million, which was funded in full on the Closing Date, and a delayed draw term loan facility in an aggregate principal amount of up to $100.0 million, which was undrawn as of the Closing Date.
Added
We had the option to draw up to $40.0 million under the delayed draw facility within six months after the Closing Date and on October 29, 2024, we drew an additional principal amount of $37.7 million.
Added
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.
Added
We are required to pay a commitment fee on the unutilized commitments under the delayed draw term loan facility ranging from 1.5% to 2.5% per year depending on the year and the amount of the unutilized delayed draw term loan.
Added
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%.
Added
Commencing with the quarter ending on December 31, 2024, we are required to make quarterly principal payments in an amount equal to 0.25% of the aggregate original principal amount. The final maturity date of the term loans is July 16, 2029.

Other HCAT 10-K year-over-year comparisons