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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-Q

________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-38993

HEALTH CATALYST, INC.

(Exact name of registrant as specified in its charter)

________________


Delaware						45-3337483
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

10897 South River Front Parkway #300

South Jordan UT 84095

(Address of principal executive offices, including zip code)

(801) 708-6800

(Registrant’s telephone number, including area code)

________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, par value $0.001 per share

HCAT

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated Filer

☒

Emerging growth company

☐

Non-accelerated Filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 31, 2025, the Registrant had 70,373,625 shares of common stock outstanding.

HEALTH CATALYST, INC.

Table of Contents


		Page
Part I. Financial Information
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	6
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	7
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2025 and 2024 (unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2025 and 2024 (unaudited)	10
	Notes to the Condensed Consolidated Financial Statements (unaudited)	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	74
Item 4.	Controls and Procedures	75
Part II. Other Information
Item 1.	Legal Proceedings	77
Item 1A.	Risk Factors	77
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	116
Item 5.	Other Information	116
Item 6.	Exhibits	117
	Signatures

Special Note Regarding Forward-looking Statements

As used in this Quarterly Report on Form 10-Q, unless expressly indicated or the context otherwise requires, references to “Health Catalyst,” “we,” “us,” “our,” “the Company,” and similar references refer to Health Catalyst, Inc. and its consolidated subsidiaries. This Quarterly Report on Form 10-Q, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements are only predictions based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions, including those relating to future events or our future financial performance and financial guidance. These forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions, generally relate to future events or our future financial or operating performance. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “target,” “project,” or “contemplate,” the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of expectations, projections, plans, strategy, intentions, or future results of operations or financial performance. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about our:

•ability to attract new clients and retain and expand our relationships with existing clients;

•ability to expand our service offerings, develop new platform features, and rollout and migrate existing DOS clients to our new platform, Health Catalyst Ignite;

•future financial performance, including trends in revenue, costs of revenue, gross margin, operating expenses, and cost structure;

•ability to compete successfully in competitive markets;

•ability to respond to rapid technological changes;

•expectations and management of future growth and strategic changes;

•ability to enter new markets and manage our expansion efforts, particularly internationally;

•ability to attract and retain highly-qualified employees, whom we refer to as team members;

•ability to effectively and efficiently protect our brand;

•ability to timely scale and adapt our infrastructure;

•ability to maintain, protect, and enhance our intellectual property and not infringe upon others’ intellectual property;

•ability to successfully identify, acquire, and integrate companies and assets;

•expectations regarding our key financial metrics; and

•expectations regarding the impact of any macroeconomic challenges (including high inflationary and/or high interest rate environments, uncertainty with tariffs, cuts in Medicaid and research funding, or market volatility and measures taken in response thereto), the tight labor market and any natural disasters or new public health crises, on our business and results of operations.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in this Quarterly Report on Form 10-Q and other documents that may be filed by us from time to time with the Securities and Exchange Commission (the SEC). Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements and you should not place undue reliance on our forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.

You should read this Quarterly Report on Form 10-Q in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2024, included in our Annual Report on Form 10-K.

Summary of Risk Factors

•We operate in a highly competitive industry, and if we are not able to compete effectively, our business and results of operations will be harmed.

•We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans as well as cost reduction and restructuring initiatives.

•If we fail to effectively manage our growth and organizational change, our business and results of operations could be harmed.

•Macroeconomic challenges (including high inflationary and/or high interest rate environments, uncertainty with tariffs, cuts in Medicaid and research funding, or market volatility and measures taken in response thereto), the tight labor market, and any natural disasters or new public health crises could harm our business, results of operations, and financial condition.

•If we do not continue to innovate and provide services that are useful to clients and users, we may not remain competitive, and our revenue and results of operations could suffer.

•Our business could be adversely affected if our clients are not satisfied with our cloud-based data platform, software analytics applications, and expertise (our Solution).

•If our existing clients do not continue or renew their contracts with us, renew at lower fee levels, or decline to purchase additional technology and services from us, it could have a material adverse effect on our business, financial condition, and results of operations.

•Our business and operations may suffer in the event of information technology system failures, cyberattacks, or deficiencies in our cybersecurity.

•Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition.

•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 results of operations have fluctuated in the past and may continue to fluctuate significantly, and if we fail to meet the expectations of securities analysts or investors, our stock price and the value of an investment in our common stock could decline substantially.

•Our term loan facility exposes us to interest rate risks, contains covenants and other provisions that restrict our ability to take certain actions, and may limit our ability to operate or grow our business in the future.

•Our pricing may change over time and our ability to efficiently price our Solution will affect our results of operations and our ability to attract or retain clients.

•If our Solution fails to provide accurate and timely information, or if our content or any other element of our Solution is associated with faulty clinical decisions or treatment, we could be exposed to litigation, investigations or have liability to clients, clinicians, patients, or others, which could adversely affect our results of operations.

•We rely on third-party providers, including Microsoft Azure, for computing infrastructure, network connectivity, and other technology-related services needed to deliver our Solution. Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability.

•We rely on Internet infrastructure, bandwidth providers, data center providers, other third parties, and our own systems for providing our Solution to our users, and any failure or interruption in the services provided by these third parties or our own systems could expose us to litigation, potentially require us to issue credits to our clients, and negatively impact our relationships with users or clients, adversely affecting our brand and our business.

•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.

Part I. Financial Information

Item 1. Financial Statements

HEALTH CATALYST, INC.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)


	As of June 30,		As of December 31,
	2025		2024
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	50,712	$	249,645
Short-term investments	46,626		142,355
Accounts receivable, net(1)	68,378		57,182
Prepaid expenses and other assets	14,860		16,468
Total current assets	180,576		465,650
Property and equipment, net	33,399		29,394
Intangible assets, net	98,346		86,052
Operating lease right-of-use assets	12,345		12,058
Goodwill	286,095		259,759
Other assets	5,419		6,016
Total assets	$	616,180	$	858,929
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,940	$	11,433
Accrued liabilities	17,367		26,340
Deferred revenue(1)	67,011		53,281
Operating lease liabilities	3,878		3,614

Current portion of long-term debt	1,627		231,182
Total current liabilities	98,823		325,850
Long-term debt, net of current portion	151,401		151,178
Deferred revenue, net of current portion	329		249
Operating lease liabilities, net of current portion	15,883		16,291
Contingent consideration liabilities	2,145		—
Other liabilities	52		154
Total liabilities	268,633		493,722
Commitments and contingencies (Note 15)


Stockholders’ equity:
Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of June 30, 2025 and December 31, 2024	—		—
Common stock, $0.001 par value per share, and additional paid-in capital; 500,000,000 shares authorized as of June 30, 2025 and December 31, 2024; 70,267,429 and 64,043,799 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively	1,596,707		1,552,714

Accumulated deficit	(1,251,392)		(1,186,672)
Accumulated other comprehensive income (loss)	2,232		(835)
Total stockholders’ equity	347,547		365,207
Total liabilities and stockholders’ equity	$	616,180	$	858,929

__________________

(1) Includes amounts attributable to related party transactions. See Note 17 for further details.

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue(1):
Technology	$	52,876	$	47,635	$	104,358	$	94,601
Professional services	27,845		28,267		55,776		56,024
Total revenue	80,721		75,902		160,134		150,625
Cost of revenue, excluding depreciation and amortization:
Technology	18,352		16,067		35,917		31,382
Professional services	24,128		23,993		49,741		47,195
Total cost of revenue, excluding depreciation and amortization	42,480		40,060		85,658		78,577
Operating expenses:
Sales and marketing	13,206		12,745		27,944		31,803
Research and development	12,392		13,884		27,578		28,755
General and administrative	8,284		14,363		22,446		28,927
Depreciation and amortization	12,684		10,657		25,004		21,182
Goodwill impairment	28,769		—		28,769		—
Total operating expenses	75,335		51,649		131,741		110,667
Loss from operations	(37,094)		(15,807)		(57,265)		(38,619)

Interest and other (expense) income, net	(3,803)		2,361		(7,159)		4,699
Loss before income taxes	(40,897)		(13,446)		(64,424)		(33,920)
Income tax provision	81		70		296		183
Net loss	$	(40,978)	$	(13,516)	$	(64,720)	$	(34,103)


Net loss per share, basic and diluted	$	(0.59)	$	(0.23)	$	(0.94)	$	(0.58)

Weighted-average shares outstanding used in calculating net loss per share, basic and diluted	69,626		59,304		69,092		58,948

__________________

(1) Includes amounts attributable to related party transactions. See Note 17 for further details.

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Net loss	$	(40,978)	$	(13,516)	$	(64,720)	$	(34,103)

Other comprehensive income (loss):
Change in net unrealized losses on available for sale investments	(4)		(38)		(78)		(168)
Change in foreign currency translation adjustment	2,096		—		3,145		(27)
Comprehensive loss	$	(38,886)	$	(13,554)	$	(61,653)	$	(34,298)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


		Three Months Ended June 30, 2025
	Common Stock and Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income		Total Stockholders’ Equity
		Shares			Amount
Balance as of March 31, 2025		69,481,638	$	1,587,085		$	(1,210,414)	$	140	$	376,811
Vesting of restricted stock units		472,888	—			—		—		—
Issuance of common stock under employee stock purchase plan		312,903	1,003			—		—		1,003


Stock-based compensation		—	8,619			—		—		8,619

Net loss		—	—			(40,978)		—		(40,978)
Other comprehensive income		—	—			—		2,092		2,092
Balance as of June 30, 2025		70,267,429	$	1,596,707		$	(1,251,392)	$	2,232	$	347,547


		Three Months Ended June 30, 2024
	Common Stock and Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
		Shares			Amount
Balance as of March 31, 2024		58,956,132	$	1,495,091		$	(1,137,757)	$	(124)	$	357,210
Vesting of restricted stock units and restricted shares		449,272	—			—		—		—
Issuance of common stock under employee stock purchase plan		263,482	1,431			—		—		1,431
Exercise of stock options		17,702	110			—		—		110
Stock-based compensation		—	9,221			—		—		9,221
Issuance of common stock related to acquisition		388,590	2,584			—		—		2,584
Net loss		—	—			(13,516)		—		(13,516)
Other comprehensive loss		—	—			—		(38)		(38)
Balance as of June 30, 2024		60,075,178	$	1,508,437		$	(1,151,273)	$	(162)	$	357,002

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


		Six Months Ended June 30, 2025
	Common Stock and Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
		Shares			Amount
Balance as of December 31, 2024		64,043,799	$	1,552,714		$	(1,186,672)	$	(835)	$	365,207
Vesting of restricted stock units		1,453,745	—			—		—		—
Issuance of common stock under employee stock purchase plan		312,903	1,003			—		—		1,003
Exercise of stock options		—	—			—		—		—
Stock-based compensation		—	16,406			—		—		16,406
Repurchase of common stock		(1,103,601)	(5,000)			—		—		(5,000)
Issuance of common stock related to acquisition		5,560,583	31,584			—		—		31,584
Net loss		—	—			(64,720)		—		(64,720)
Other comprehensive income		—	—			—		3,067		3,067
Balance as of June 30, 2025		70,267,429	$	1,596,707		$	(1,251,392)	$	2,232	$	347,547


		Six Months Ended June 30, 2024
	Common Stock and Additional Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
		Shares			Amount
Balance as of December 31, 2023		58,295,491	$	1,484,056		$	(1,117,170)	$	33	$	366,919
Vesting of restricted stock units and restricted shares		1,106,851	—			—		—		—
Issuance of common stock under employee stock purchase plan		263,482	1,431			—		—		1,431
Exercise of stock options		20,764	130			—		—		130
Stock-based compensation		—	20,236			—		—		20,236
Issuance of common stock related to acquisition		388,590	2,584			—		—		2,584
Net loss		—	—			(34,103)		—		(34,103)
Other comprehensive loss		—	—			—		(195)		(195)
Balance as of June 30, 2024		60,075,178	$	1,508,437		$	(1,151,273)	$	(162)	$	357,002

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)(unaudited)


	Six Months Ended June 30,
	2025		2024
Cash flows from operating activities
Net loss	$	(64,720)	$	(34,103)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense	15,866		19,804
Depreciation and amortization	25,004		21,182
Impairment of long-lived assets	—		2,200
Non-cash operating lease expense	1,484		1,434
Amortization of debt discount, issuance costs, and deferred financing costs	2,089		759
Investment discount and premium accretion	(933)		(3,148)
Provision for expected credit losses	1,110		3,438
Deferred tax provision	(157)		16
Change in fair value of contingent consideration liabilities	(5,168)		—
Goodwill impairment	28,769		—
Other	(784)		12
Change in operating assets and liabilities:
Accounts receivable, net	(10,633)		2,047

Prepaid expenses and other assets	2,468		1,922
Accounts payable, accrued liabilities, and other liabilities	(12,638)		(2,380)
Deferred revenue	11,423		501

Operating lease liabilities	(1,897)		(1,806)
Net cash (used in) provided by operating activities	(8,717)		11,878

Cash flows from investing activities
Proceeds from the sale and maturity of short-term investments	143,208		158,200
Purchase of short-term investments	(46,760)		(50,197)
Acquisition of businesses, net of cash acquired	(41,114)		(18,659)
Capitalization of internal-use software	(10,086)		(6,287)
Purchases of property and equipment	(440)		(498)
Purchase of intangible assets	(296)		(365)
Proceeds from the sale of property and equipment	25		7
Net cash provided by investing activities	44,537		82,201

Cash flows from financing activities


Proceeds from employee stock purchase plan	1,003		1,431
Repurchase of common stock	(5,000)		—
Repayment of debt	(230,814)		—
Proceeds from exercise of stock options	—		130
Net cash (used in) provided by financing activities	(234,811)		1,561
Effect of exchange rate changes on cash and cash equivalents	58		(21)


Net (decrease) increase in cash and cash equivalents	(198,933)		95,619


Cash and cash equivalents at beginning of period	249,645		106,276
Cash and cash equivalents at end of period	$	50,712	$	201,895


Supplemental disclosures of non-cash investing and financing information
Common stock issued in connection with acquisitions	$	31,584	$	2,584
Stock-based compensation capitalized as internal-use software	540		432
Purchase of property and equipment included in accounts payable	31		105
Capitalized internal-use software included in accounts payable and accrued liabilities	262		216

Operating lease right-of-use assets obtained in exchange for operating lease obligations	951		—

The accompanying notes are an integral part of these condensed consolidated financial statements.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. Description of Business and Summary of Significant Accounting Policies

Nature of operations

Health Catalyst, Inc. (Health Catalyst) was incorporated under the laws of Delaware in September 2011. 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.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and the applicable regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2024 included in our Annual Report on Form 10-K.

Interim unaudited condensed consolidated financial statements

The accompanying interim condensed consolidated balance sheet as of June 30, 2025, the interim condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024, the interim condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2025 and 2024, our interim condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2025 and 2024, and our interim condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 are unaudited. Our condensed consolidated balance sheet as of December 31, 2024 was derived from audited financial statements, but does not include all disclosures required by GAAP. Our interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with our annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected for the full year or any other period.

Principles of consolidation

The condensed consolidated financial statements include the accounts of Health Catalyst and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, reserves for expected credit losses, useful lives of property and equipment, capitalization and estimated useful life of internal-use software, impairment assessments of goodwill, intangible assets, and other long-lived assets, fair value of financial instruments, deferred tax assets, stock-based compensation, contingent consideration, the period of benefit for deferred contract acquisition costs, the incremental borrowing rate used for operating leases, and tax uncertainties. Actual results could differ significantly from those estimates.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Segment reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is evaluated by our Chief Executive Officer, who we have concluded is our chief operating decision maker (CODM) in assessing performance and making decisions regarding resource allocation. We operate our business in two operating segments that also represent our reportable segments. Our segments are (1) technology and (2) professional services.

The CODM is regularly provided with and uses Adjusted Gross Profit as the measure of our profit used to assess performance and allocate resources between the two operating segments. This measure is utilized during our budgeting and forecasting process to assess profitability and enable decision making regarding strategic initiatives, capital investments, and personnel across our two operating segments. Refer to Note 18-Segments for additional details.

Net loss per share

Basic net loss per share is calculated by dividing net loss by the weighted average number of shares of common stock outstanding. Diluted net loss per share is calculated by giving effect to all potentially dilutive common stock equivalents outstanding for the period, including shares issuable as acquisition-related contingent consideration, when dilutive. For purposes of this calculation, stock options, restricted stock units (RSUs), performance-based restricted stock units (PRSUs), convertible senior notes, restricted shares, and purchase rights committed under the employee stock purchase plan are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as the effect is anti-dilutive.

Revenue recognition

We derive our revenue primarily from technology subscriptions and professional services. We determine revenue recognition by applying the following steps:

•Identification of the contract, or contracts, with a client;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, we satisfy the performance obligation.

We recognize revenue net of any taxes collected from clients and subsequently remitted to governmental authorities.

Technology revenue

Technology revenue primarily consists of subscription fees charged to clients for access to use our technology. We provide clients access to our technology through either an all-access or limited-access, modular subscription.

The majority of our subscription arrangements are cloud-based and do not provide clients the right to take possession of the technology or contain a significant penalty if the client were to take possession of the technology. Revenue from cloud-based subscriptions is recognized ratably over the contract term beginning on the date that the service is made available to the client. Our subscription contracts generally have a three- or five-year term, of which many are terminable after one year upon 90 days’ notice.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Subscriptions that allow the client to take software on-premise without significant penalty are treated as time-based licenses. These arrangements generally include access to technology, access to unspecified future products, and maintenance and support. Revenue for upfront access to our technology library is recognized at a point in time when the technology is made available to the client. 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.

Professional services revenue

Professional services revenue primarily includes data and analytics services, domain expertise services, Tech-enabled Managed Services, and implementation services. Professional services arrangements typically include a fee for making full-time equivalent (FTE) services available to our clients on a monthly basis. FTE services generally consist of a blend of analytic engineers, analysts, and data scientists based on the domain expertise needed to best serve our clients. Professional services are typically considered distinct from the technology offerings and revenue is generally recognized as the service is provided using the “right to invoice” practical expedient.

Contracts with multiple performance obligations

Many of our contracts include multiple performance obligations. We account for performance obligations separately if they are capable of being distinct within the context of the contract. In these circumstances, the transaction price is allocated to separate performance obligations on a relative standalone selling price basis. We determine standalone selling prices based on the observable price a good or service is sold for separately when available. In cases where standalone selling prices are not directly observable, based on information available, we utilize the expected cost plus a margin, adjusted market assessment, or residual estimation method. We consider all information available including our overall pricing objectives, market conditions, and other factors, which may include client demographics and the types of users.

Standalone selling prices are not directly observable for our all-access and limited-access technology arrangements, which are composed of cloud-based subscriptions, time-based licenses, and perpetual licenses. For these technology arrangements, we generally use the residual method due to a limited number of standalone transactions and/or prices that are highly variable.

Variable consideration

We have also entered into at-risk and shared savings arrangements with certain clients whereby we receive variable consideration based on the achievement of measurable improvements that may include cost savings or performance against metrics. For these arrangements, we estimate revenue using the most likely amount that we will receive. Estimates are based on our historical experience and best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. Due to the nature of our arrangements, certain estimates may be constrained until the uncertainty is further resolved.

Contract balances

Contract assets resulting from services performed prior to invoicing clients are recorded as unbilled accounts receivable and are presented on the consolidated balance sheets in aggregate with accounts receivable. Unbilled accounts receivable generally become billable at contractually specified dates or upon the attainment of contractually defined milestones.

We record contract liabilities as deferred revenue when cash payments are received or due in advance of performance. Deferred revenue includes advance consideration received from the client and billings in excess of revenue recognized.

Refer to Note 16-Contract Balances and Remaining Performance Obligations for additional details.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Deferred costs

We capitalize sales commissions and associated fringe costs, such as benefits and payroll taxes, paid to direct sales personnel and other incremental costs of obtaining contracts with clients, provided we expect to recover those costs. We determine that costs should be deferred based on our sales compensation plans when the commissions are incremental and would not have occurred absent the client contract. As of June 30, 2025 and December 31, 2024, $1.7 million and $2.1 million, respectively, of deferred contract acquisition costs are expected to be amortized within the next 12 months and are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of June 30, 2025 and December 31, 2024, the remaining $2.7 million and $2.9 million, respectively, of deferred contract acquisition costs are included in non-current other assets.

Commissions paid upon the initial acquisition of a contract are amortized on a straight-line basis over an estimated period of benefit of four years. Amortization is recognized on a straight-line basis commensurate with the pattern of revenue recognition. The period of benefit was estimated by considering factors such as estimated average client life, the rate of technological change in our subscription service, and the impact of competition in our industry. As our average client life significantly exceeded the rate of change in our technology, we concluded that the rate of change in the technology underlying our subscription service was the most significant factor in determining the period of benefit for which the asset relates. In evaluating the rate of change in our technology, we considered the competition in our industry, our commitment to continuous innovation, and the frequency of product, platform, and technology updates. We determined that the impact of competition in our industry is reflected in the period of benefit through the rate of technological change. Amortization of deferred contract acquisition costs was $0.8 million and $0.6 million for the three months ended June 30, 2025 and 2024, respectively, and $1.6 million and $1.3 million for the six months ended June 30, 2025 and 2024, respectively, and is included within sales and marketing expense in the condensed consolidated statements of operations.

We defer certain costs to fulfill a contract when the costs are expected to be recovered, are directly related to in-process contracts, and enhance resources that will be used in satisfying performance obligations in the future. These deferred fulfillment costs primarily consist of employee compensation incurred as part of the implementation of new contracts. Amortization of deferred fulfillment costs is included within cost of revenue in the condensed consolidated statements of operations. We periodically review these deferred costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. There were no impairment losses related to deferred costs recorded during the periods presented.

Cost of revenue, excluding depreciation and amortization

Cost of technology revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, license and revenue share fees, contractor costs, and salary and related personnel costs for our cloud services and support teams. Cost of professional services revenue primarily consists of salary and related personnel costs, travel-related costs, and independent contractor costs. Cost of revenue in the interim condensed consolidated statements of operations excludes costs related to depreciation and amortization.

Cash and cash equivalents

We consider all highly liquid investments purchased with a remaining maturity of three months or less at the time of acquisition to be cash equivalents.

Short-term investments

Our investment policy limits investments to highly-rated instruments. We classify and account for our short-term investments as available for sale securities as we may sell these securities at any time for use in our current operations or for other purposes, even prior to maturity. As a result, we classify our short-term investments, including securities with contractual maturities beyond 12 months, within current assets in the condensed consolidated balance sheets.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Accounts receivable

Accounts receivable are non-interest bearing and are recorded at the original invoiced amount less an allowance for credit losses based on the probability of future collections. Our allowance is based on our estimate of expected credit losses for outstanding trade accounts receivables and unbilled receivables.

We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, client payment patterns, the establishment of specific reserves for clients in an adverse financial condition, and our expectations of changes in macroeconomic conditions, including high interest rates and high inflation, that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for credit losses each reporting period. The following table presents a rollforward of the allowance for credit losses (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Allowance for credit losses at the beginning of period	$	3,000	$	6,500	$	4,200	$	4,105
Provision for expected credit losses	300		1,033		1,110		3,438
Less: Write-offs, net of recoveries	—		(933)		(2,010)		(943)
Allowance for credit losses at the end of period	$	3,300	$	6,600	$	3,300	$	6,600

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets and operating lease liabilities in our condensed consolidated balance sheets. We have adopted the short-term lease recognition exemption policy. All of our leasing commitments are classified either as operating leases or otherwise qualify as short-term leases with lease terms of 12 months or less.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As our lease contracts do not have a readily determinable implicit rate, we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of lease payments. The incremental borrowing rate is the estimated rate incurred to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment.

The operating lease ROU asset also includes any lease payments made and excludes lease executory costs. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the applicable option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable costs related to our leased office space, such as maintenance and utilities based on actual usage, are not included in the measurement of right-of-use assets and lease liabilities, but are expensed as incurred.

Property and equipment

Property and equipment are stated at historical cost less accumulated depreciation. Repairs and maintenance costs that do not extend the useful life or improve the related assets are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows:


Computer equipment			2-3 years
Furniture and fixtures			3-5 years
Leasehold improvements			Lesser of lease term or estimated useful life

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)


Computer software			2-5 years
Capitalized internal-use software costs			2-5 years

When there are indicators of potential impairment, we evaluate the recoverability of the carrying values by comparing the carrying amount of the applicable asset group to the estimated undiscounted future cash flows expected to be generated by the asset group over the remaining useful life of the primary asset, plus any terminal value, in the asset group. If the carrying amount of the asset group exceeds those estimated future net cash flows, an impairment charge is recognized based on the amount by which the carrying value of the long-lived assets exceeds the fair value of the assets.

Intangible assets

Intangible assets include developed technologies, client relationships, client contracts, and trademarks that were acquired in business combinations and asset acquisitions. Intangible assets also include the purchase of third-party computer software. The intangible assets are amortized using the straight-line method over the assets’ estimated useful lives. The estimated useful life of each asset category is as follows:


Developed technologies			3-10 years
Client relationships and contract backlog			2-7 years
Computer software licenses			1-5 years
Trademarks			1-5 years

Goodwill

We operate our business in two operating segments that also represent our reporting units. Our reporting units are organized based on our technology and professional services. 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. Goodwill includes the know-how of the assembled workforce, the ability of the workforce to further improve technology and product offerings, client relationships, and the expected cash flows resulting from these efforts. Goodwill may also include expected synergies resulting from the complementary strategic fit these businesses bring to existing operations. Goodwill is assessed for impairment annually on October 31 or more frequently if indicators of impairment are present or circumstances suggest that impairment may exist.

Our first step in the goodwill impairment test is a qualitative analysis of factors that could be indicators of potential impairment. Judgment in the assessment of qualitative factors of impairment may include changes in business climate, market conditions, or other events impacting the reporting unit. Next, if a quantitative analysis is necessary, we compare the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit, which requires management to use significant judgment and estimation. The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the reporting units, as well as the sensitivity of the respective fair values to the underlying significant assumptions. Typical methods to derive the fair value of reporting units include using the income or market approaches.

The significant assumptions used to form the basis of the estimates include, among others, the selection of valuation methodologies, estimates of expected revenue, including revenue growth rates, and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, and the selection of appropriate market comparable companies. Many of these significant assumptions are forward-looking and could be affected by future economic and market conditions. If a quantitative analysis is necessary, we typically engage the assistance of a valuation specialist in concluding on fair value measurements in connection with determining the fair values of our reporting units. If the carrying amount of the reporting unit exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

We recorded goodwill impairment of $28.8 million during the three months ended June 30, 2025. Refer to Note 4-Goodwill and Intangible Assets for additional details.

Business combinations

The results of businesses acquired in a business combination are included in our condensed consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business generally being recorded at their estimated fair value on the acquisition date. Any excess consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed is recognized as goodwill.

We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination in order to record the tangible and intangible assets acquired and liabilities assumed based on our best estimate of fair value. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue and cash flows, discount rates, and selection of comparable companies. Significant estimation is required in determining the fair value of the client-related intangible assets and technology-related intangible assets. The significant estimation is primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of these intangible assets, as well as the sensitivity of the respective fair values to the underlying significant assumptions. We typically use the income approach or cost approach to measure the fair value of intangible assets. The significant assumptions used to form the basis of the estimates included the number of engineer hours required to develop technology, expected revenue including revenue growth rates, rate and timing of obsolescence, royalty rates and earnings before interest, taxes, depreciation and amortization (EBITDA) margin used in the estimate for client relationships, and backlog. Many of these significant assumptions were forward-looking and could be affected by future economic and market conditions. We engage the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of material assets acquired and liabilities assumed in a business combination.

For the three months ended June 30, 2025 and 2024, we expensed $1.1 million and $2.1 million of transaction costs associated with business combinations, respectively. For the six months ended June 30, 2025 and 2024, we expensed $2.6 million and $2.5 million of transaction costs associated with business combinations, respectively. The costs were expensed as incurred and are included in general and administrative expense in our condensed consolidated statements of operations.

Contingent consideration liabilities

Our acquisition consideration in business combinations may include an estimate for contingent consideration that will be paid if certain earn-out performance targets are met. The resulting contingent consideration liabilities are categorized as a Level 3 fair value measurement because we estimate projections during the earn-out period utilizing unobservable inputs, including various potential pay-out scenarios based on billings and revenue-related earn-out targets. Changes to the unobservable inputs could have a material impact on our condensed consolidated financial statements. We generally value the expected contingent consideration and the corresponding liabilities using the Monte Carlo method or Black-Scholes model based on estimates of potential payment scenarios. Probabilities are applied to each potential scenario and the resulting values are discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the earn-out itself, the related projections, projected payment dates, and volatility in the fair value of our common stock. The fair value of the contingent consideration is remeasured each reporting period.

As applicable, the portion of the contingent consideration liabilities that will be settled in shares of our common stock is classified as a component of non-current liabilities along with the portion to be paid in cash more than 12 months from the reporting date in our condensed consolidated balance sheets, while the portion to be paid in cash within 12 months is classified as a component of current liabilities. Changes in the contingent consideration liabilities are reflected as part of general and administrative expense in our condensed consolidated statements of operations.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Advertising costs

All advertising costs are expensed as incurred. For the three months ended June 30, 2025 and 2024, we incurred $0.5 million and $0.3 million of advertising costs, respectively, and $1.4 million and $3.7 million for the six months ended June 30, 2025 and 2024, respectively.

Development costs and internal-use software

For technology products that are developed to be sold externally, we determined that technological feasibility is reached shortly before the products are ready for general release. Any costs associated with software development between the time technological feasibility is reached and general release are inconsequential. We capitalize certain development costs incurred in connection with our internal-use software. These capitalized costs are primarily related to the software platforms that are hosted by us and accessed by our clients on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred as research and development costs. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use.

We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life with amortization included in depreciation and amortization expense in our condensed consolidated statements of operations.

Stock-based compensation

Stock-based awards, including stock options, RSUs, PRSUs, and restricted shares are measured and recognized in our condensed consolidated financial statements based on the fair value of the award on the grant date or, when applicable, the modification date. The grant date fair value of our stock-based awards is typically determined using the market closing price of our common stock on the date of grant; however, we also consider whether any adjustments are required when the market closing price does not reflect certain material non-public information that we know but is unavailable to marketplace participants on the date of grant. 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. Each reporting period we evaluate the probability of achieving the performance criteria, estimate the number of shares that are expected to vest, and adjust the related compensation expense accordingly. For awards subject to market conditions, we estimate the fair value as of the grant date using a Monte Carlo simulation valuation model which requires the use of various assumptions, including historic stock price volatility and risk-free interest rates as of the valuation date corresponding to the length of time remaining in the performance period. Stock-based compensation expense for awards with market conditions is recognized over the requisite service period using the accelerated attribution method and is not reversed if the market condition is not met.

Stock-based compensation expense related to purchase rights issued under the 2019 Health Catalyst Employee Stock Purchase Plan (ESPP) is based on the Black-Scholes option-pricing model fair value of the estimated number of awards as of the beginning of the offering period. Stock-based compensation expense is recognized using the straight-line method over the offering period.

The measurement date for non-employee awards is the date of grant. The compensation expense for non-employees is recognized, without changes in the fair value of the award, in the same period and in the same manner as though we had paid cash for the services, which is typically the vesting period of the respective award.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Restructuring costs

We define restructuring costs as expenses directly associated with restructuring activities. Such costs include severance and related tax and benefit expenses from workforce reductions, impairment of discontinued capitalized software projects, and other miscellaneous charges. We record team member-related severance costs when there is a substantive plan in place and the related costs are probable and estimable. For one-time termination benefits for team members (i.e., no substantive plan or future service requirement), the cost is recorded when the terms of the one-time termination benefits are communicated to the impacted team members and the amount can be reasonably estimated.

Income taxes

Deferred income tax balances are accounted for using the asset and liability method and reflect the effects of temporary differences between the financial reporting and tax bases of our assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered. In addition, deferred tax assets and liabilities are recorded for net operating loss (NOL) and tax credit carryforwards.

A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets.

We use a two-step approach to recognize and measure uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained upon audit. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement.

We do not currently accrue interest and penalties related to unrecognized tax benefits within the provision for income taxes because the impact would be immaterial due to our net operating losses and tax credit carryforwards. Significant judgment is required to evaluate uncertain tax positions.

Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We evaluate our uncertain tax positions on a regular basis and evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of an audit, and effective settlement of audit issues. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and results of operations.

Fair value of financial instruments

The carrying amounts reported in our condensed consolidated balance sheets for cash, receivables, accounts payable, and current accrued expenses approximate fair values because of the immediate or short-term maturity of these financial instruments. The carrying value of operating lease liabilities and convertible senior notes approximate fair value based on interest rates available for debt with similar terms at June 30, 2025 and December 31, 2024. Money market funds and short-term investments are measured at fair value on a recurring basis.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

•Level 1- Quoted prices in active markets for identical assets or liabilities.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

•Level 2- Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3- Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

All of our financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, we use a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application, and corroborative information. Our contingent consideration liabilities are categorized as a Level 3 fair value measurement because we estimate projections during the earn out period utilizing various potential pay-out scenarios.

Foreign currency

The functional currency of our international subsidiaries is generally their local currency. We translate these subsidiaries’ financial statements into U.S. dollars using month-end exchange rates for assets and liabilities and average exchange rates for revenue and expenses. We record translation gains and losses in accumulated other comprehensive loss in stockholders’ equity. We record foreign exchange gains and losses in interest and other expense, net. Our net foreign exchange gains and losses were not material for the periods presented.

Recent accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted. This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We are currently evaluating the provision of this ASU to determine the impact it may have on our consolidated financial statements and related disclosures, and we expect additional disclosures upon adoption.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

2. Business Combinations

The business acquisitions discussed below are included in our results of operations from the date of acquisition.

2025 Acquisition

Upfront Healthcare Services

On January 22, 2025, we acquired Upfront Healthcare Services, Inc. (Upfront), a next-generation patient engagement platform provider. We accounted for the acquisition of Upfront as a business combination. The acquisition consideration transferred was $80.0 million and was comprised of estimated net cash consideration of $41.1 million, shares of our common stock with an aggregate acquisition-date fair value of $31.6 million, and contingent consideration based on certain earn-out performance targets for Upfront during an earn-out period ending on December 31, 2026, with an aggregate acquisition-date fair value of $7.3 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Upfront.

An additional 106,196 shares of our common stock subject to restriction agreements (restricted shares) were issued pursuant to the terms of the acquisition agreement. The value of these restricted shares is recognized as acquisition stock-based compensation expense on a straight-line basis over the vesting term. Refer to Note 13-Stock-Based Compensation for additional details related to our stock-based compensation.

The following table summarizes the acquisition-date fair value of consideration transferred and the identifiable assets purchased and liabilities assumed as part of our acquisition of Upfront (in thousands):


Assets acquired:
Accounts receivable, net	$	1,544
Prepaid expenses and other assets	655
Property and equipment, net	114
Right-of-use assets	288
Developed technology	16,400
Client relationships	11,700
Trademarks	600
Total assets acquired	31,301
Less liabilities assumed:
Accrued and other current liabilities	1,558
Deferred revenue	2,352
Operating lease liability	284

Total liabilities assumed	4,194
Total assets acquired, net	27,107
Goodwill	52,912
Total consideration transferred, net of cash acquired	$	80,019

The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include client relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of six years, three years, and three years, respectively. The resulting goodwill from the Upfront acquisition was fully allocated to the technology reporting unit and is not deductible for income tax purposes.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The preliminary allocation of the consideration transferred is subject to potential adjustments. Balances subject to adjustment are primarily tax-related matters, including the tax basis of assets acquired and liabilities assumed. During the measurement period, we may record adjustments to the provisional amounts recognized in our initial accounting for the acquisition. We expect the allocation of the consideration transferred to be final within the measurement period (up to one year from the acquisition date). There were no measurement period adjustments recorded during the three months ended June 30, 2025.

The amount of revenue attributable to the acquired business of Upfront was not material to our condensed consolidated statement of operations for the three and six months ended June 30, 2025. Income (loss) information for Upfront after the acquisition date through June 30, 2025 is not presented as the Upfront business was integrated into our operations immediately following the acquisition and is impracticable to quantify.

In addition to the purchase price, we agreed to make retention bonuses in an aggregate amount of up to $1.1 million in cash payments and the issuance of up to approximately 151,148 restricted shares to certain Upfront management team members, a portion of which is variable based upon the achievement of earn-out performance targets. The retention bonuses are recorded as post-combination compensation expense and adjusted out of our purchase price consideration. During the six months ended June 30, 2025, we recognized compensation expense of $0.9 million and stock-based compensation expense of $0.5 million related to these retention bonuses and 86,975 of the restricted shares that vested.

Unaudited Pro Forma Financial Information

The following table reflects our unaudited pro forma combined results of operations for the three and six months ended June 30, 2025 and 2024 as if the acquisition of Upfront had taken place on January 1, 2024 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)

Pro forma net loss	$	(45,950)	$	(13,283)	$	(69,014)	$	(40,759)

The unaudited pro forma information is presented for informational purposes only and is not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2024 or to project potential results as of any future date or for any future periods. The unaudited pro forma information, including adjustments, are based upon available information and certain assumptions that we believe are reasonable. Pro forma revenue has not been presented for the Upfront acquisition as the impact to our condensed consolidated financial statements was not material.

The nature and amount of material, nonrecurring pro forma adjustments directly attributable to the Upfront acquisition which are included in the pro forma net loss, as applicable, are summarized as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Amortization of acquired intangible assets	$	—	$	(1,904)	$	(438)	$	(3,808)
Acquisition-related costs, net	(4,212)		5,168		(1,921)		4,307

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

2024 Acquisitions

Intraprise Health, LLC

On November 8, 2024, we acquired Intraprise Health, LLC (Intraprise), a leading provider of data and analytics technology and security services to healthcare organizations. We accounted for the acquisition of Intraprise as a business combination. The acquisition consideration transferred was $44.9 million and was comprised of net cash consideration of $25.4 million and shares of our common stock with an aggregate acquisition-date fair value of $19.5 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Intraprise.


Assets acquired:
Accounts receivable, net	$	1,344
Prepaid expenses and other assets	118

Client relationships	12,400
Developed technology	4,200
Trademarks	300
Total assets acquired	18,362
Less liabilities assumed:

Accrued and other current liabilities	199
Deferred revenue	2,877


Total liabilities assumed	3,076
Total assets acquired, net	15,286
Goodwill	29,598
Total consideration transferred, net of cash acquired	$	44,884

The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include enterprise client relationships, small and medium business client relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of seven years, three years, three years, and three years, respectively. The resulting goodwill from the Intraprise acquisition was allocated $23.7 million to the technology reporting unit and $5.9 million to the professional services reporting unit, and $21.5 million of acquired goodwill is deductible for income tax purposes.

Lumeon Ltd.

On August 1, 2024, we acquired Lumeon Ltd. (Lumeon), a digital health company dedicated to helping provider organizations mend broken care coordination processes through automated care orchestration. We accounted for the acquisition of Lumeon as a business combination. The acquisition consideration transferred was $39.8 million and was comprised of estimated net cash consideration of $36.2 million, shares of our common stock with an aggregate acquisition-date fair value of $2.9 million, and contingent consideration based on certain earn-out performance targets for Lumeon during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.7 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Lumeon.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)


Assets acquired:
Accounts receivable, net	$	967
Prepaid expenses and other assets	795
Property and equipment, net	165
Client relationships	3,700
Developed technology	11,400
Trademarks	1,300
Total assets acquired	18,327
Less liabilities assumed:

Accrued and other current liabilities	1,131
Deferred revenue	1,759


Total liabilities assumed	2,890
Total assets acquired, net	15,437
Goodwill	24,393
Total consideration transferred, net of cash acquired	$	39,830

The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include client relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of seven years, four years, and five years, respectively. The resulting goodwill from the Lumeon acquisition was fully allocated to the technology reporting unit and is not deductible for income tax purposes.

Carevive Systems, Inc.

On May 24, 2024, we acquired Carevive Systems, Inc. (Carevive), a leading oncology-focused health technology company centered on understanding and improving the experience of patients with cancer. We accounted for the acquisition of Carevive as a business combination. Oncology providers and life science researchers use Carevive’s flagship platform and/or Carevive data in routine clinical practice for treatment care planning, clinical trial screening, care coordination, remote patient monitoring, and/or post-treatment care. The acquisition consideration transferred was $22.1 million and was comprised of estimated net cash consideration of $18.6 million, shares of our common stock with an aggregate acquisition-date fair value of $2.6 million, and contingent consideration based on certain earn-out performance targets for Carevive during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.9 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Carevive.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)


Assets acquired:
Accounts receivable, net	$	96
Prepaid expenses and other assets	64

Client relationships	2,700
Developed technology	4,800
Trademarks	300
Total assets acquired	7,960
Less liabilities assumed:

Accrued and other current liabilities	1,389
Deferred revenue	76


Total liabilities assumed	1,465
Total assets acquired, net	6,495
Goodwill	15,643
Total consideration transferred, net of cash acquired	$	22,138

The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include client relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of seven years, four years, and three years, respectively. The resulting goodwill from the Carevive acquisition was fully allocated to the technology reporting unit and is not deductible for income tax purposes.

2024 Acquisitions Unaudited Pro Forma Financial Information

The following table reflects our unaudited pro forma combined results of operations for the years ended December 31, 2024 and 2023 as if the acquisitions of Intraprise, Carevive, and Lumeon had taken place on January 1, 2023 (in thousands):


	Year Ended December 31,
	2024		2023
	(unaudited)

Pro forma net loss	$	(80,035)	$	(153,606)

The unaudited pro forma information is presented for informational purposes only and is not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2023 or to project potential results as of any future date or for any future periods. The unaudited pro forma information, including adjustments, are based upon available information and certain assumptions that we believe are reasonable. Pro forma revenue has not been presented for these 2024 acquisitions as the impact to our condensed consolidated financial statements was not material.

The nature and amount of material, nonrecurring pro forma adjustments directly attributable to these acquisitions which are included in the pro forma net loss, as applicable, are summarized as follows (in thousands):


	Year Ended December 31,
	2024		2023
	(unaudited)
Amortization of acquired intangible assets	$	(5,715)	$	(8,748)
Acquisition-related costs, net	9,122		(2,235)

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

3. Revenue

Disaggregation of Revenue

The following table represents Health Catalyst’s revenue disaggregated by type of arrangement (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Recurring technology	$	52,876	$	47,635	$	104,358	$	94,601

Professional services	27,845		28,267		55,776		56,024
Total revenue	$	80,721	$	75,902	$	160,134	$	150,625

Revenue related to contracts with clients located in the United States was 96.4% and 97.9% for the three months ended June 30, 2025 and 2024, respectively, and 96.2% and 97.9% for the six months ended June 30, 2025, and 2024, respectively.

4. Goodwill and Intangible Assets

During the three months ended June 30, 2025, we performed an impairment analysis of our long-lived assets and goodwill and concluded there were no events or changes in circumstances that indicated that the carrying value of the long-lived assets may not be recoverable. However, we did identify indicators of goodwill impairment, including overall declines in our stock price and market capitalization, as well as a downward revision of our future revenue forecast and concluded that a triggering event had occurred that required an interim quantitative goodwill impairment assessment of our professional services and technology reporting units.

The fair value of the reporting units were based upon weightings of the income approach and a market-based approach. The income approach utilizes a discounted cash flow analysis. The market-based approach utilizes comparable public company information, key valuation multiples, and considers a market control premium associated with cost synergies and other cash flow benefits that arise from obtaining control over a reporting unit, and guideline transactions, when applicable. The significant assumptions used in these approaches include revenue growth rates, profit margins, projected future cash flows, and discount rates under the income approach as well as valuation multiples derived from comparable public trading companies under the market-based approach.

Based on our interim impairment test of goodwill, it was determined that the fair values of our technology and professional services reporting units were below their respective carrying values as of June 30, 2025, and we recorded a total non-cash goodwill impairment charge of $28.8 million. The goodwill impairment charges were recorded as a separate line item in our condensed consolidated statements of operations.

Changes in the carrying amount of goodwill by reporting unit for the six months ended June 30, 2025 were as follows (in thousands):


	Technology		Professional Services		Total



Balance as of December 31, 2024	$	253,090	$	6,669	$	259,759
Upfront acquisition	52,912		—		52,912
Foreign currency translation adjustments	2,193		—		2,193
Goodwill impairment	(22,100)		(6,669)		(28,769)
Balance as of June 30, 2025	$	286,095	$	—	$	286,095

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

As of June 30, 2025, intangible assets consisted of the following (in thousands):


	Cost		Accumulated Amortization		Net
	(unaudited)
Developed technologies	$	141,329	$	(102,116)	$	39,213
Client relationships and contracts	120,683		(64,885)		55,798
Computer software licenses	11,431		(10,440)		991
Trademarks	5,393		(3,049)		2,344
Total intangible assets	$	278,836	$	(180,490)	$	98,346

Amortization expense of acquired intangible assets was $9.0 million and $7.5 million for the three months ended June 30, 2025 and 2024, respectively, and $17.8 million and $14.8 million for the six months ended June 30, 2025 and 2024, respectively. Amortization expense for intangible assets is included in depreciation and amortization in our condensed consolidated statements of operations. We have not incurred any intangible asset impairment charges for the three and six months ended June 30, 2025 and 2024.

As of December 31, 2024, intangible assets consisted of the following (in thousands):


	Cost		Accumulated Amortization		Net
Developed technologies	$	124,109	$	(93,611)	$	30,498
Client relationships and contracts	108,824		(57,020)		51,804
Computer software licenses	11,149		(9,503)		1,646
Trademarks	4,694		(2,590)		2,104
Total intangible assets	$	248,776	$	(162,724)	$	86,052

5. Property and Equipment

Property and equipment consisted of the following (in thousands):


	As of June 30,		As of December 31,
	2025		2024
	(unaudited)
Computer equipment	$	10,353	$	10,309
Leasehold improvements	8,473		8,456
Furniture and fixtures	3,798		3,757
Capitalized internal-use software costs	56,867		46,143
Computer software	111		111

Total property and equipment	79,602		68,776
Less: accumulated depreciation	(46,203)		(39,382)
Property and equipment, net	$	33,399	$	29,394

Our long-lived assets are primarily located in the United States. Depreciation expense totaled $3.6 million and $3.1 million for the three months ended June 30, 2025 and 2024, respectively, and $7.2 million and $6.4 million for the six months ended June 30, 2025 and 2024, respectively. Depreciation expense includes the amortization of capitalized internal-use software costs.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

There was no impairment of long-lived assets during the six months ended June 30, 2025. During the six months ended June 30, 2024, we impaired $2.2 million of leasehold improvements related to our corporate office space designated for subleasing. Refer to Note 9-Leases for additional details.

We capitalized $5.2 million and $3.6 million of internal-use software costs for the three months ended June 30, 2025 and 2024, respectively, and $10.7 million and $6.4 million for the six months ended June 30, 2025 and 2024, respectively. We incurred $3.0 million and $2.3 million of capitalized internal-use software cost amortization expense for the three months ended June 30, 2025 and 2024, respectively, and $5.9 million and $4.7 million for the six months ended June 30, 2025 and 2024, respectively.

6. Short-term Investments

We classify our short-term investments as available for sale. Available-for-sale securities are recorded on our condensed consolidated balance sheets at fair market value and any unrealized gains or losses are reported as part of other comprehensive loss on the condensed consolidated statements of comprehensive loss. We determine realized gains or losses on the sales of investments through the specific identification method and record such gains or losses as part of interest and other expense, net on the condensed consolidated statements of operations. We did not have any material realized gains or losses on investments during the three and six months ended June 30, 2025 and 2024. We measure the fair value of investments on a recurring basis.

The following table summarizes, by major security type, our cash equivalents that are measured at fair value on a recurring basis as of June 30, 2025 (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash equivalents		Short-term Investments
	(unaudited)
Money market funds	$	44,371	$	—	$	—	$	44,371	$	44,371	$	—
U.S. treasury notes	34,555		—		(1)		34,554		—		34,554
Commercial paper	13,560		—		(3)		13,557		1,484		12,072


Total	$	92,486	$	—	$	(4)	$	92,482	$	45,855	$	46,626

The following table summarizes, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis as of December 31, 2024 (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash equivalents		Short-term Investments
Money market funds	$	186,872	$	—	$	—	$	186,872	$	186,872	$	—
U.S. treasury notes	177,129		70		—		177,199		58,386		118,813
Commercial paper	13,940		1		—		13,941		—		13,941
Corporate bonds	9,598		3		—		9,601		—		9,601

Total	$	387,539	$	74	$	—	$	387,613	$	245,258	$	142,355

The following table presents the contractual maturities of our short-term investments as of June 30, 2025 and December 31, 2024 (in thousands):


	As of June 30, 2025				As of December 31, 2024
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(unaudited)
Due within one year	$	46,630	$	46,626	$	142,294	$	142,355

Total	$	46,630	$	46,626	$	142,294	$	142,355

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Accrued interest receivables related to our available-for-sale securities of $0.4 million and $0.6 million as of June 30, 2025 and December 31, 2024, respectively, were included within prepaid expenses and other assets on our condensed consolidated balance sheets.

On a quarterly basis we evaluate unrealized losses on our available-for-sale debt securities and the related accrued interest receivables to determine whether a decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. We do not intend to sell investments that are in an unrealized loss position and it is not likely that we will be required to sell any investments before recovery of their amortized cost basis. As of June 30, 2025 and December 31, 2024, there were no material unrealized losses due to expected credit loss-related factors.

7. Fair Value of Financial Instruments

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 were as follows (in thousands):


	June 30, 2025
	Level 1		Level 2		Level 3		Total
	(unaudited)
Money market funds	$	44,371	$	—	$	—	$	44,371
U.S. Treasury notes	34,554		—		—		34,554
Commercial paper	—		13,557		—		13,557

Contingent consideration liabilities	—		—		(2,145)		(2,145)
Total	$	78,925	$	13,557	$	(2,145)	$	90,337

Assets measured at fair value on a recurring basis as of December 31, 2024 were as follows (in thousands):


	December 31, 2024
	Level 1		Level 2		Level 3		Total
Money market funds	$	186,872	$	—	$	—	$	186,872
U.S. Treasury notes	177,199		—		—		177,199
Commercial paper	—		13,941		—		13,941
Corporate bonds	—		9,601		—		9,601


Total	$	364,071	$	23,542	$	—	$	387,613

There were no transfers between Level 1 and Level 2 of the fair value measurement hierarchy during the three and six months ended June 30, 2025 and 2024.

Convertible senior notes

On April 14, 2025, we fully settled the principal amount of the convertible senior notes in cash. As of December 31, 2024, the estimated fair value of our convertible senior notes, with aggregate principal totaling $230.0 million, was $227.5 million. We estimated the fair value based on quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). These convertible senior notes were recorded at face value less unamortized debt discount and transaction costs on our condensed consolidated balance sheets. Refer to Note 10—Debt for further information.

Nonrecurring fair value measurements

We recorded no impairment charges related to the impairment of ROU assets and leasehold improvements associated with office space designated for subleasing during the three and six months ended June 30, 2025 and zero and $2.2 million for the three and six months ended June 30, 2024, respectively.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

These impairment charges were derived from the difference between the carrying value and the fair value of the relevant asset groups. The fair value of these asset groups was estimated using a discounted cash flow analysis of the office space designated for subleasing and included certain unobservable (Level 3) inputs, including the anticipated future sublease terms and rates.

Level 3 fair value measurements

The Upfront acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets for Upfront during an earn-out period that ends on December 31, 2026. The Upfront contingent consideration is capped at $33.4 million and will be paid 63% in equity and 37% in cash to the extent achieved. We value Upfront’s expected contingent consideration and the corresponding liability using the Monte Carlo simulation valuation model using a distribution of potential outcomes of potential pay-out scenarios.

The Lumeon and Carevive acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets during an earn-out period that ended on June 30, 2025. The revenue-based earn-out performance targets were not met and no earn-out payments were made related to these acquisitions.

The outstanding contingent consideration liabilities are categorized as Level 3 fair value measurements and are remeasured as of each reporting period. The aggregate intrinsic value of the revenue-based earn-out contingent consideration liabilities is zero based on a point estimate of our internal forecasting of the ultimate earn-out that will be earned and our closing stock price as of June 30, 2025. The recurring Level 3 fair value measurements of the contingent consideration liabilities include the other following significant inputs used during the three months ended June 30, 2025:

Valuation Method

Market Price of Revenue Risk

Revenue Volatility

Expected Term (years)

Risk-free interest rate

(unaudited)

Revenue-based earn-out liabilities

Monte Carlo

12.0%

45%

1.5

3.8%

The following table sets forth a summary of the changes in the estimated fair value of the contingent consideration liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(unaudited)
Balance as of December 31, 2024	$	—
Acquisition-date contingent consideration liability from Upfront acquisition (see Note 2)	7,313
Change in fair value of contingent consideration liabilities	(5,168)

Balance as of June 30, 2025	$	2,145

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

8. Accrued Liabilities

As of June 30, 2025 and December 31, 2024, accrued liabilities consisted of the following (in thousands):


	As of June 30,		As of December 31,
	2025		2024
	(unaudited)
Accrued compensation and benefit expenses	$	5,916	$	11,655
Interest payable	3,474		4,803
Restructuring liabilities(1)	70		—
Other accrued liabilities	7,907		9,882
Total accrued liabilities	$	17,367	$	26,340

__________________

(1)Restructuring liabilities include severance and other team member costs from workforce reductions. For additional details, refer to Note 19 in these condensed consolidated financial statements.

9. Leases

We lease office space under operating leases that expire between the third quarter of 2025 and the second quarter of 2034. The terms of the leases provide for rental payments on a graduated scale, options to renew the leases (one to five years), landlord incentives or allowances, and periods of free rent. We subleased portions of our corporate headquarters to various sublessees with subleases commencing at various dates between 2021 and 2024.

Components of lease expense (income) are summarized as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Operating lease expense	$	787	$	666	$	1,556	$	1,294
Short-term lease expense	164		31		319		64
Sublease income	(519)		(339)		(1,019)		(654)
Total	$	432	$	358	$	856	$	704

We also incur immaterial variable costs related to our leased office space, such as maintenance and utilities based on actual usage, which are not included in the measurement of right-of-use assets and lease liabilities, but are expensed as incurred.

During the six months ended June 30, 2025, we did not recognize any impairment charges related to our leases. During the six months ended June 30, 2024, we identified asset impairment indicators for multiple of our corporate office spaces designated for subleasing. We performed a recoverability test of the relevant asset group, comprised of operating lease ROU and other related assets, and determined that the carrying value of this asset group was not fully recoverable. As a result, we measured and recognized total impairment charges of $2.2 million during the six months ended June 30, 2024, representing the amount by which the carrying value exceeded the estimated fair value of this asset group. The impairment charges were recorded as part of general and administrative expense in our condensed consolidated statements of operations. During the six months ended June 30, 2024, $1.5 million of the impairment charge was allocated to ROU assets and the remaining $0.7 million was allocated to leasehold improvements.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

10. Debt

Debt consisted of the following as of June 30, 2025 and December 31, 2024 (in thousands):


	June 30, 2025		December 31, 2024
	(unaudited)
Variable interest rate term loan maturing 2029	$	161,574	$	162,388
2.50% convertible senior notes due 2025	—		230,000
Total Principal Outstanding	161,574		392,388
Less: Unamortized discount and issuance costs	(8,546)		(10,028)
Net carrying amount	153,028		382,360
Less: Current portion of long-term debt	(1,627)		(231,182)
Long-term debt, net of current portion	$	151,401	$	151,178

Components of interest expense are summarized as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Contractual interest expense	$	4,665	$	1,453	$	10,534	$	2,903
Amortization of debt discount and issuance costs	579		380		1,477		759
Amortization of deferred financing costs	543		—		1,092		—
Total	$	5,787	$	1,833	$	13,103	$	3,662

Maturity of Debt

As of June 30, 2025, we are subject to required principal payments and debt maturity as follows (in thousands):


	Contractual Maturity
Fiscal year:	(unaudited)

2025	813
2026	1,627
2027	1,627
2028	1,627
2029	155,880
Total debt maturities	161,574
Less: Unamortized debt discount and issuance costs	(8,546)
Net carrying amount	$	153,028

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). 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.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

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. 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, in each case, subject to satisfaction of certain conditions, including a minimum liquidity threshold and a maximum recurring revenue/leverage ratio. 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.

The deferred financing costs related to the delayed draw facility, including the directly attributable debt discount, have been capitalized to other assets on our condensed consolidated balance sheets, and amortized to interest expense in the condensed consolidated statement of operations, in each case over the respective terms.

Borrowings under the initial term loan bear interest at a rate per annum equal to the secured overnight financing rate (SOFR) plus 6.5%. Commencing with the quarter ended 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.

We expect to use the net proceeds from the initial term loan, together with cash on hand, (i) to repurchase, repay, and/or pay amounts of cash due upon conversion of any or all of the Notes at any time on or prior to the maturity thereof and (ii) for working capital and general corporate purposes. We expect to use the proceeds from the delayed draw term loan facility, if any, to fund our inorganic growth strategy through permitted acquisitions (including deferred purchase price or similar arrangements related thereto) and to pay fees, costs, and expenses in connection therewith.

We are required to prepay the term loans upon the occurrence of certain events, and we may voluntarily prepay the term loans, in whole or in part, at any time, subject to certain notice requirements and prepayment amounts. Prior to July 16, 2028, such mandatory prepayments or voluntary prepayments are subject to a prepayment premium ranging from 1.0% to 3.0% plus a make whole amount depending on the year of such prepayment. Our obligations under the Credit Agreement and the other loan documents are required to be guaranteed by all of our present and future domestic and foreign subsidiaries, subject to certain exceptions (Guarantors). All obligations under the Credit Agreement and the other loan documents are secured by a first priority perfected lien on, and security interest in, substantially all of our and our Guarantor’s present and future assets, subject to certain exceptions.

The Credit Agreement contains various representations and warranties, affirmative covenants, and negative covenants, including covenants that restrict our and our subsidiaries’ ability to take certain actions including, among other things and subject to certain exceptions, the incurrence of debt, the granting of liens, engaging in mergers and other fundamental changes, the making of investments, entering into transactions with affiliates, the payment of dividends and other restricted payments, the prepayment of other indebtedness and the sale of assets. We are also required to comply with a minimum liquidity threshold, a maximum recurring revenue-based leverage ratio, and a maximum EBITDA-based leverage ratio.

The Credit Agreement also includes various events of default, including, among others: non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations or warranties, cross-default to other material indebtedness, bankruptcy and insolvency events, invalidity or impairment of security interests or invalidity of loan documents, certain ERISA events, unsatisfied or unstayed judgments and change of control. Upon the occurrence of an event of default, the administrative agent and the lenders may declare all outstanding obligations immediately due and payable and take such other actions as set forth in the Credit Agreement and the related loan documents, including proceeding against the collateral securing such borrowings.

As of June 30, 2025, we were in compliance with all covenants under the Credit Agreement.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Convertible senior notes

On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025 (Notes), in a private placement to qualified institutional buyers exempt from registration under the Securities Act (Note Offering). The net proceeds from the issuance of the Notes were approximately $222.5 million, after deducting the initial purchasers’ discounts and offering expenses payable by us. The Notes were governed by an indenture (the Indenture) between us, as the issuer, and U.S. Bank National Association, as trustee. The Notes were our senior, unsecured obligations and accrued interest payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020, at a rate of 2.50% per year. In connection with the Note Offering, we entered into privately negotiated capped call transactions (Capped Calls) with certain option counterparties, which had initial cap prices of $42.00 per share, subject to certain adjustments. The Notes had a maturity date of April 15, 2025, unless earlier converted, redeemed, or repurchased.

On April 14, 2025, we repaid in full the outstanding principal and accrued interest on the Notes, in the aggregate principal amount of $230.0 million. The Capped Calls expired concurrently with the repayment in full of the outstanding principal and accrued interest on the Notes.

11. Stockholders’ Equity

Preferred stock

Our board of directors has the authority, without further action by our stockholders, to issue up to 25,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, and privileges thereof, including voting rights. As of June 30, 2025 and December 31, 2024, no shares of this preferred stock were issued and outstanding.

Common stock

We had 500,000,000 shares of common stock, par value $0.001 per share, authorized, of which 70,373,625 and 64,043,799 shares were legally issued and outstanding as of June 30, 2025 and December 31, 2024, respectively. The shares legally issued and outstanding as of June 30, 2025 included 106,196 shares issued pursuant to acquisition agreements, which were subject to a restriction agreement and were unvested, and as such, for accounting purposes they were not considered to be outstanding common stock shares. Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to prior rights of holders of all classes of stock outstanding having priority rights as to dividends. No dividends have been declared or paid on our common stock through June 30, 2025.

Share repurchase plan

During the third quarter of 2022, our board of directors authorized a share repurchase program to repurchase up to $40.0 million of our outstanding shares of common stock (Share Repurchase Plan). During the six months ended June 30, 2025, we repurchased and retired 1,103,601 shares of our common stock for $5.0 million at an average purchase price of $4.51 per share. There were no shares repurchased during the six months ended June 30, 2024. The total remaining authorization for future shares of common stock repurchases under our Share Repurchase Plan is $24.8 million as of June 30, 2025.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

12. Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Net loss per share, basic and diluted
Numerator:
Net loss	$	(40,978)	$	(13,516)	$	(64,720)	$	(34,103)
Denominator:
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted	69,625,540		59,303,791		69,091,777		58,947,653
Net loss per share, basic and diluted	$	(0.59)	$	(0.23)	$	(0.94)	$	(0.58)

During the three and six months ended June 30, 2025 and 2024, we incurred net losses and, therefore, the effect of our stock options, restricted stock units, performance-based restricted stock units, convertible senior notes, employee stock purchase plan, and restricted shares were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive.

The calculation of diluted net loss per share does not include the effect of the following potentially outstanding shares of common stock. The effects of these potentially outstanding shares were not included in the calculation of diluted net loss per share when the effect would have been anti-dilutive:


	As of June 30,
	2025	2024
	(unaudited)
Common stock options	1,011,809	1,081,901
Restricted stock units	5,190,758	4,089,192
Performance-based restricted stock units	2,672,798	525,677
Shares related to convertible senior notes(1)	—	7,516,331

Restricted shares	106,196	—
Shares issuable as acquisition-related contingent consideration(2)	—	—
Total potentially dilutive securities	8,981,561	13,213,101

_________________________

(1)On April 14, 2025, we fully settled the principal amount of the convertible senior notes in cash with no issuance of shares of our common stock. In connection with the offering of our convertible senior notes, we entered into Capped Calls with initial caps on the conversion price of $42.00 per share, which are excluded from the calculation of diluted earnings per share in all periods presented, as they would be antidilutive.

(2)The Upfront acquisition includes contingent consideration based on certain recurring revenue-based earn-out performance targets for Upfront during an earn-out period that ends on December 31, 2026. The Upfront contingent consideration is capped and will be paid in a combination of equity and cash to the extent achieved. If the earn-out were to be fully achieved, we would be required to issue approximately 2.7 million shares of common stock related to this acquisition in early 2027. There were no anti-dilutive shares issuable as acquisition-related contingent consideration presented as of June 30, 2025 in the table above as the amounts presented above are calculated based on the earn-out achieved and the estimated number of shares that would be issuable if the outstanding acquisition-related contingent consideration liabilities were to be settled as of that date.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

13. Stock-Based Compensation

In 2011, our board of directors adopted the Health Catalyst, Inc. 2011 Stock Incentive Plan (2011 Plan), which provided for the direct award, sale of shares, and granting of RSUs and options for our common stock to our directors, team members, or consultants. In connection with our initial public offering (IPO), our board of directors adopted the 2019 Stock Option and Incentive Plan (2019 Plan). The 2019 Plan provides flexibility to our compensation committee to use various equity-based incentive awards as compensation tools to motivate our workforce, including the grant of incentive and non-statutory stock options, restricted and unrestricted stock, RSUs, and stock appreciation rights to our directors, team members, or consultants.

We initially reserved 2,756,607 shares of our common stock (2,500,000 under the 2019 Plan and 256,607 shares under the 2011 Plan) that were available immediately prior to the IPO registration date. The 2019 Plan provides that the number of shares reserved available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2020, by 5% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser number of shares as determined by our compensation committee. As of January 1, 2025, there were an additional 3,202,189 shares reserved for issuance under the 2019 Plan. As of June 30, 2025 and December 31, 2024, there were 26,846,400 and 23,644,211 shares authorized for grant, respectively, and 2,331,302 and 4,288,278 shares available for grant under the 2019 and 2011 Plan (collectively, the Stock Incentive Plan), respectively.

The following two tables summarize our total stock-based compensation expense by award type and where the stock-based compensation expense was recorded in our condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Restricted stock units	$	5,928	$	8,067	$	11,453	$	16,410
Performance-based restricted stock units	2,048		637		3,213		850
Employee stock purchase plan	245		262		529		562
Restricted shares	102		—		671		1,969
Options	—		—		—		13
Total stock-based compensation	$	8,323	$	8,966	$	15,866	$	19,804


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Cost of revenue	$	1,489	$	1,740	$	2,710	$	3,437
Sales and marketing	2,542		2,452		4,704		6,442
Research and development	1,316		1,676		2,449		3,520
General and administrative	2,976		3,098		6,003		6,405
Total stock-based compensation	$	8,323	$	8,966	$	15,866	$	19,804

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Stock options

There were no stock options granted during the six months ended June 30, 2025 or 2024. A summary of the share option activity under the 2019 Plan for the six months ended June 30, 2025, is as follows:


	Time-Based Option Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value
	(unaudited)
Outstanding at January 1, 2025	1,053,251	$	11.99

Options cancelled/expired	(41,442)	10.67
Outstanding at June 30, 2025	1,011,809	$	12.04	2.7	$	—
Vested and expected to vest as of June 30, 2025	1,011,809	$	12.04	2.7	$	—
Vested and exercisable as of June 30, 2025	1,011,809	$	12.04	2.7	$	—

The aggregate intrinsic value of stock options exercised was less than $0.1 million for the six months ended June 30, 2024 and there were no stock options exercised during the six months ended June 30, 2025. All of our outstanding stock options are fully vested and there is no longer any related unrecognized compensation expense.

Restricted stock units (RSUs)

The service-based condition for RSUs is generally satisfied over three or four years with a cliff vesting period of one year and quarterly vesting thereafter. The following table sets forth the outstanding RSUs and related activity for the six months ended June 30, 2025:


	Restricted Stock Units	Weighted Average Grant Date Fair Value
	(unaudited)
Unvested and outstanding at January 1, 2025	3,505,406	$	11.49
RSUs granted	3,396,364	4.91
RSUs vested	(1,219,877)	11.87
RSUs forfeited	(491,135)	8.63
Unvested and outstanding at June 30, 2025	5,190,758	$	7.22

During the six months ended June 30, 2025 and 2024, we granted RSUs with a weighted-average grant date fair value of $4.91 and $8.56, respectively, which represents the weighted-average closing price of our common stock on the grant date. The total grant date fair value of RSUs vested during the six months ended June 30, 2025 and 2024 was $14.5 million and $18.5 million, respectively.

As of June 30, 2025, we had $33.4 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 2.2 years.

Performance-based restricted stock units (PRSUs)

2025 PRSUs

During the six months ended June 30, 2025, certain named executive officers and other leadership team members were granted executive PRSUs with a three-year measurement period that include service conditions, performance conditions, and market conditions.

The vesting of these PRSUs will be determined based on market-based targets for total shareholder return (TSR) achievement (weighted 25%) and financial performance targets for revenue growth rate achievement (weighted 25%) and Adjusted EBITDA margin achievement (weighted 50%).

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

These PRSUs may vest in an amount up to the amount granted, subject to satisfaction of the pre-established targets. The number of PRSUs that will vest for the 2025, 2026, and 2027 vesting periods will be calculated as follows: (i) the market/performance achievement for the applicable vesting period, multiplied by (ii) approximately 33.33% of the PRSUs for each of the 2025, 2026, and 2027 vesting periods, each rounded to the nearest whole share.

During the six months ended June 30, 2025, we also granted PRSUs to certain employees that included both service conditions and performance conditions related to company-wide goals. These PRSUs will vest to the extent the applicable performance conditions are achieved for the year ending December 31, 2025, and if the individual employee continues to provide services to us through the vesting date of March 1, 2026. The number of PRSUs that will ultimately vest from these 2025 PRSU grants can range from 0% to 100% of the original amount granted depending on our performance during 2025 against the pre-established targets.

2024 PRSUs

During the six months ended June 30, 2024, certain named executive officers and other leadership team members were granted executive PRSUs with a three-year measurement period that include service conditions, performance conditions, and market conditions. The vesting of these PRSUs will be determined based on market-based targets for TSR achievement (weighted 25%) and financial performance targets for revenue growth rate achievement (weighted 25%) and Adjusted EBITDA margin achievement (weighted 50%). These PRSUs may vest in an amount up to the amount granted, subject to satisfaction of the pre-established targets. The number of PRSUs that will vest for the 2024, 2025, and 2026 vesting periods will be calculated as follows: (i) the market/performance achievement for the applicable vesting period, multiplied by (ii) approximately 33.33% of the PRSUs for each of the 2024, 2025, and 2026 vesting periods, each rounded to the nearest whole share.

2023 PRSUs

During the six months ended June 30, 2023, certain named executive officers and other leadership team members were granted executive PRSUs with a three-year measurement period that include service conditions, performance conditions, and market conditions. The vesting of these PRSUs will be determined based on market-based targets for TSR achievement and financial performance targets for revenue growth rate achievement and Adjusted EBITDA margin achievement. Each of the three market and performance targets are weighted equally and these PRSUs may vest in an amount up to the amount granted, subject to satisfaction of the pre-established targets. The number of PRSUs that will vest in 2023, 2024, and 2025 will be calculated as follows: (i) the market/performance achievement for the applicable vesting period, multiplied by (ii) approximately 33.33% of the PRSUs for each of the 2023, 2024, and 2025 vesting periods, each rounded to the nearest whole share.

The fair value of the market-based tranches included in the executive PRSUs were estimated on the date of grants using the Monte Carlo simulation valuation model with the following assumptions for the six months ended June 30, 2025 and 2024:


	Six Months Ended June 30, 2025	Six Months Ended June 30, 2024

	(unaudited)
Expected volatility	71.6%	65.5%
Expected term (in years)	1-3	1-3
Risk-free interest rate	4.16% - 4.23%	4.33% - 4.91%
Expected dividends	—	—

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The following table sets forth the outstanding PRSUs, including executive PRSUs with market-based tranches, and related activity for the six months ended June 30, 2025:


	Performance-based Restricted Stock Units	Weighted Average Grant Date Fair Value
	(unaudited)
Unvested and outstanding at January 1, 2025	524,313	$	9.90
PRSUs granted	2,407,823	4.98
PRSUs vested	(146,893)	9.84
PRSUs forfeited	(112,445)	7.46
Unvested and outstanding at June 30, 2025	2,672,798	$	5.57

During the six months ended June 30, 2025 and 2024, we granted PRSUs with a weighted-average grant date fair value of $4.98 and $9.45, respectively, which represents the weighted-average closing price of our common stock on the grant date for performance-based tranches and the estimated grant date fair value using a Monte Carlo simulation valuation model for market-based tranches.

The total grant date fair value of PRSUs vested during the six months ended June 30, 2025 and 2024 was $1.4 million and $0.6 million, respectively. As of June 30, 2025, we had $7.7 million of unrecognized stock-based compensation expense related to outstanding PRSUs expected to be recognized over a remaining weighted-average period of 1.1 years.

Employee stock purchase plan

In connection with our IPO in July 2019, our board of directors adopted the ESPP and a total of 750,000 shares of common stock were initially reserved for issuance under the ESPP. The number of shares of common stock available for issuance under the ESPP will be increased on the first day of each calendar year beginning January 1, 2020 and each year thereafter until the ESPP terminates. The number of shares of common stock reserved and available for issuance under the ESPP shall be cumulatively increased by the least of (i) 750,000 shares, (ii) one percent of the number of shares of common stock issued and outstanding on the immediately preceding December 31, and (iii) such lesser number of shares of common stock as determined by the ESPP Administrator. As of January 1, 2025, the number of shares of common stock available for issuance under the ESPP increased by 640,437 shares.

The ESPP generally provides for six-month offering periods. The offering periods generally start on the first trading day after June 30 and December 31 of each year. The ESPP permits participants to elect to purchase shares of common stock through fixed percentage contributions from eligible compensation during each offering period, not to exceed 15% of the eligible compensation a participant receives during an offering period or accrue at a rate which exceeds $25,000 of the fair value of the stock (determined on the option grant date(s)) for each calendar year.

A participant may purchase the lowest of (i) a number of shares of common stock determined by dividing such participant’s accumulated payroll deductions on the exercise date by the option price, (ii) 2,500 shares, or (iii) such other lesser maximum number of shares as shall have been established by the ESPP Administrator in advance of the offering period. Amounts deducted and accumulated by the participant will be used to purchase shares of common stock at the end of each offering period.

The purchase price of the shares will be 85% of the lower of the fair value of common stock on the first trading day of each offering period or on the purchase date. Participants may end their participation at any time during an offering period and will be paid their accumulated contributions that have not been used to purchase shares of common stock. Participation ends automatically upon termination of employment.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The fair value of the purchase right for the ESPP option component is estimated on the date of grant using the Black-Scholes model with the following assumptions for the three months ended June 30, 2025 and 2024:


	Six Months Ended June 30,
	2025	2024
	(unaudited)
Expected volatility	75.2%	55.5%
Expected term (in months)	6	6
Risk-free interest rate	4.25%	5.24%
Expected dividends	—	—

During the six months ended June 30, 2025, we issued 312,903 shares under the ESPP, with a weighted-average purchase price of $3.20. Total cash proceeds from the purchase of shares under the ESPP during the six months ended June 30, 2025 were $1.0 million. As of June 30, 2025, 1,929,537 shares were available for future issuance under the ESPP.

Restricted shares issued in connection with business combinations

As part of the Upfront acquisition that closed on January 22, 2025, 106,196 shares of our common stock were issued pursuant to the terms of the acquisition agreement and were considered a stock-based compensation arrangement subject to a restriction agreement. The vesting of these shares is subject to eighteen months of continuous service with cliff vesting. In addition we entered into certain management retention bonus agreements that may result in the issuance of up to approximately 151,148 restricted shares of common stock to certain Upfront management team members, a portion of which is variable based upon the achievement of earn-out performance targets. The retention bonuses are recorded as post-combination compensation expense. During the six months ended June 30, 2025, 86,975 of these retention bonus restricted shares vested.

As part of the ERS acquisition that closed on October 2, 2023, 175,901 shares of our common stock were issued pursuant to the terms of the acquisition agreement and were considered a stock-based compensation arrangement subject to a restriction agreement. The vesting of those shares was originally subject to eighteen months of continuous service with cliff vesting. However, due to workforce reductions made as part of the 2023 Restructuring Plan, the ERS restricted shares were fully vested in February 2024, resulting in an acceleration of the related stock-based compensation expense.

As part of the KPI Ninja acquisition that closed on February 24, 2022, 356,919 shares of our common stock were issued pursuant to the terms of the acquisition agreement and were considered a stock-based compensation arrangement subject to a restriction agreement. The vesting of those shares was subject to continuous service with 25% vesting upon each six-month anniversary of the acquisition close date, with the final vesting date as of February 24, 2024.

As of June 30, 2025, we had $0.4 million of unrecognized stock-based compensation expense related to outstanding restricted shares expected to be recognized over a weighted-average period of 1.1 years.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

14. Income Taxes

The tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period.

The quarterly tax provision and the estimate of our annual effective tax rate are subject to variation due to several factors, including variability in our loss before income taxes, the mix of jurisdictions to which such income or loss relates, changes in how we conduct business, and tax law developments. For the six months ended June 30, 2025 and 2024, our estimated effective tax rate was (0.2)% and (0.5)%, respectively. The variations between our estimated effective tax rate and the U.S. statutory rate are primarily due to our full valuation allowance.

We consider all available evidence to evaluate the recovery of deferred tax assets, including historical levels of income, legislative developments, and risks associated with estimates of future taxable income. We have provided a full valuation allowance for our net deferred tax assets as of June 30, 2025 and December 31, 2024, due to the uncertainty surrounding the future realization of such assets and the cumulative losses we have generated.

We recognize tax benefits from uncertain tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. We believe that we have provided adequate reserves for income tax uncertainties in all open tax years. We do not anticipate material changes in the total amount of our unrecognized tax benefits within 12 months of the reporting date.

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the OBBBA) into law. The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA includes provisions providing current deductibility of certain property additions, limitations on interest deductions based on a tax EBITDA framework, and current deductibility of domestic research and development costs. These provisions are generally effective beginning in 2025, and we currently anticipate they will partially defer our income tax payments in future years and will not have a material impact on our effective tax rate. We will continue to review the OBBBA tax provisions to assess impacts to our condensed consolidated financial statements and will reflect any impact in the period of enactment.

15. Commitments and Contingencies

Litigation

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

We are involved in legal proceedings from time to time that arise in the normal course of business. In the opinion of management, such routine claims and lawsuits are not significant, and we do not expect them to have a material adverse effect on our business, financial condition, results of operations, or liquidity. There were no charges recorded during the three and six months ended June 30, 2025 and 2024.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

16. Contract Balances and Performance Obligations

As of June 30, 2025 and December 31, 2024, the unbilled accounts receivable included in accounts receivable on our consolidated balance sheets was $8.7 million and $11.8 million, respectively.

As of June 30, 2025 and December 31, 2024, the total of current and non-current deferred revenue on our consolidated balance sheets was $67.3 million and $53.5 million, respectively. Deferred revenue includes advance client payments and billings in excess of revenue recognized. For the three months ended June 30, 2025 and 2024, 47% and 44%, respectively, of the revenue recognized was included in deferred revenue at the beginning of the period. For the six months ended June 30, 2025 and 2024, 26% and 28%, respectively, of the revenue recognized was included in deferred revenue at the beginning of the period.

Most of our technology and professional services contracts have a three- or five-year term, of which many are terminable after one year upon 90 days’ notice. For arrangements that do not allow the client to cancel within one year or less, we expect to recognize $252.3 million of revenue on unsatisfied performance obligations as of June 30, 2025. We expect to recognize approximately 70% of the remaining performance obligations over the next 24 months, with the balance recognized thereafter.

17. Related Parties

We have entered into arrangements with a client, Carle Health, and a member of the client’s executive leadership team serves on our board of directors. We recognized revenue from this related party of $4.5 million and $4.1 million for the three months ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, we recognized $8.9 million and $8.2 million of revenue from this related party, respectively. As of June 30, 2025 and December 31, 2024, we had receivables from this related party of $0.1 million and $2.2 million, respectively, and deferred revenue with this related party of $1.0 million and $0.1 million, respectively.

We have revenue arrangements with clients that are also our investors. None of these clients hold a significant amount of ownership in our equity interests.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

18. Segments

We operate our business in two operating segments that also represent our reportable segments. Our business is organized based on our technology offerings and professional services. Accordingly, our segments are:

•Technology – Our technology segment (Technology) includes our data platform, analytics applications, and support services and generates revenue primarily from contracts that are cloud-based subscription arrangements, time-based license arrangements, and maintenance and support fees; and

•Professional Services – Our professional services segment (Professional Services) is generally the combination of analytics, implementation, strategic advisory, outsource, and improvement services to deliver expertise to our clients to more fully configure and utilize the benefits of our Technology offerings.

Revenues and cost of revenue generally are directly attributed to our segments. All segment revenue is from our external clients. Asset and other balance sheet information at the segment level is not reported to our CODM.

The CODM is regularly provided with and reviews revenue and Adjusted Gross Profit by operating segment. The CODM uses Adjusted Gross Profit as the primary measure of our profit used to assess performance and allocate resources between the two operating segments. Adjusted Cost of Revenue is a significant segment expense that is easily computable by subtracting segment Adjusted Gross Profit from segment revenue. Adjusted Gross Profit and Adjusted Cost of Revenue are non-GAAP financial measures, have limitations as analytical tools, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

The reconciliation between reportable segment Adjusted Gross Profit to consolidated loss before income tax is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(unaudited)				(unaudited)
Adjusted Gross Profit
Technology	$	34,852	$	32,063	$	69,463	$	64,223
Professional Services	5,112		5,740		9,549		11,899
Total reportable segments Adjusted Gross Profit	39,964		37,803		79,012		76,122
Less Adjusted Gross Profit reconciling items:
Stock-based compensation	(1,489)		(1,740)		(2,710)		(3,437)
Acquisition-related costs, net(1)	(89)		(221)		(283)		(377)
Restructuring costs	(145)		—		(1,543)		(260)
Less other reconciling items:
Sales and marketing	(13,206)		(12,745)		(27,944)		(31,803)
Research and development	(12,392)		(13,884)		(27,578)		(28,755)
General and administrative	(8,284)		(14,363)		(22,446)		(28,927)
Depreciation and amortization	(12,684)		(10,657)		(25,004)		(21,182)
Goodwill impairment	(28,769)		—		(28,769)		—

Interest and other income (expense), net	(3,803)		2,361		(7,159)		4,699
Loss before income taxes	$	(40,897)	$	(13,446)	$	(64,424)	$	(33,920)

____________________

(1)Acquisition-related costs, net include deferred retention expenses attributable to the Lumeon, Carevive, ARMUS, and KPI Ninja acquisitions.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Revenue, Adjusted Cost of Revenue, and Adjusted Gross Profit by operating segment were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025			2024
	(unaudited)				(unaudited)
Technology:
Revenue	$	52,876	$	47,635	$	104,358		$	94,601
Adjusted Cost of Revenue(1)	18,024		15,572		34,895			30,378
Adjusted Gross Profit	$	34,852	$	32,063	$	69,463		$	64,223

Professional Services:
Revenue	$	27,845	$	28,267	$	55,776	0	$	56,024
Adjusted Cost of Revenue(2)	22,733		22,527		46,227			44,125
Adjusted Gross Profit	$	5,112	$	5,740	$	9,549		$	11,899

____________________

(1)Technology Adjusted Cost of Revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, license and revenue share fees, contractor costs, and salary and related personnel costs for our cloud services and support teams. Technology Adjusted Cost of Revenue excludes depreciation, amortization, stock-based compensation, acquisition-related costs, net, and restructuring costs.

(2)Professional Services Adjusted Cost of Revenue primarily consists 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. Professional Services Adjusted Cost of Revenue excludes stock-based compensation, acquisition-related costs, net, and restructuring costs.

19. Restructuring Costs

January 2025 Restructuring Plan

During the six months ended June 30, 2025, our board of directors authorized a reduction of our global workforce as part of a restructuring plan intended to optimize our cost structure and focus our investment of resources in key priority areas to align with strategic changes (January 2025 Restructuring Plan).

As part of the January 2025 Restructuring Plan, we reduced headcount throughout both our professional services and technology segments. The restructuring costs primarily related to severance and other team member costs from workforce reductions.

Restructuring liabilities related to the January 2025 Restructuring Plan are included as a component of accrued liabilities on our condensed consolidated balance sheets. The following table summarizes our current year restructuring-related activities, including costs incurred, cash payments, and the resulting liability balances (in thousands):


	Restructuring Liabilities
	(unaudited)
Balance as of December 31, 2024	$	—
Severance and other restructuring costs	3,558
Cash payments	(2,919)
Balance as of March 31, 2025	$	639
Severance and other restructuring costs	381
Cash payments	(950)
Balance as of June 30, 2025	$	70

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes our January 2025 Restructuring Plan costs by financial statement line item for the six months ended June 30, 2025 (in thousands), of which less than $0.4 million related to the three months ended June 30, 2025:


	Six Months Ended June 30, 2025
	Total Severance and Other Team Member Costs
	(unaudited)
Cost of revenue, excluding depreciation and amortization:
Technology	$	401
Professional services	1,142
Sales and marketing	352
Research and development	1,908
General and administrative	136
Total	$	3,939

Our restructuring activities as part of the January 2025 Restructuring Plan were substantially complete by June 30, 2025. However, we expect additional restructuring costs associated with the August 2025 Restructuring Plan beginning in the third quarter of 2025. For further details refer to Note 20.

2023 Restructuring Plan

During the quarter and year ended December 31, 2023, our board of directors authorized a reduction of our global workforce as part of a restructuring plan intended to optimize our cost structure and focus our investment of resources in key priority areas to align with strategic changes (2023 Restructuring Plan).

As part of the 2023 Restructuring Plan, we significantly reduced headcount throughout both our professional services and technology segments, including among our senior leadership team. The restructuring costs primarily related to severance and other team member costs from workforce reductions and impairment of a discontinued capitalized internal-use software project. As of December 31, 2024, the related restructuring liabilities were completely settled through cash outlays made to impacted team members.

The following table summarizes our 2023 Restructuring Plan costs by financial statement line item for the six months ended June 30, 2024 (in thousands).


	Six Months Ended June 30, 2024
	Severance and Other Team Member Costs		Impairment Charges(1)		Total
	(unaudited)
Cost of revenue, excluding depreciation and amortization:
Technology	$	79	$	—	$	79
Professional services	181		—		181
Sales and marketing	449		—		449
Research and development	443		—		443
General and administrative	936		—		936
Total	$	2,088	$	—	$	2,088

2023 Restructuring Plan final, cumulative charges incurred through December 31, 2024	$	8,240	$	615	$	8,855

____________________

(1)Consists of impairment of a discontinued internal-use software project as part of the 2023 Restructuring Plan.

HEALTH CATALYST, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

20. Subsequent Events

August 2025 Restructuring Plan

On August 5, 2025, our board of directors authorized a reduction of our global workforce as part of a restructuring plan intended to optimize our cost structure and focus our investment of resources in key priority areas to align with strategic changes (the August 2025 Restructuring Plan). Restructuring initiatives under the August 2025 Restructuring Plan are under evaluation, which may affect the amount and expected timing of restructuring costs and associated payments. We expect that the August 2025 Restructuring Plan will reduce our global workforce by approximately 9% during the third quarter of 2025, primarily focused on R&D and sales and marketing, and our restructuring activities are expected to continue to a lesser extent during the fourth quarter of 2025 and may continue into 2026. We expect to incur charges of at least $4.5 million in connection with the August 2025 Restructuring Plan, primarily related to severance and other team member costs from workforce reductions. The estimated expense reduction and charges that we expect in connection with, or as a result of, the August 2025 Restructuring Plan, are subject to a number of assumptions, and actual results may differ materially.

We may also incur additional costs not currently contemplated due to unanticipated events that may occur as a result of, or that are associated with, the August 2025 Restructuring Plan.

One Big Beautiful Bill Act

On July 4, 2025, the United States enacted the OBBBA, which includes a broad range of tax reform provisions and significant reductions in the funding of the Medicaid program. While this event has no effect on the financial results for the three and six months ended June 30, 2025, we are currently evaluating the impact of the new legislation and will reflect any required adjustments in our third quarter financial results. Refer to Note 14-Income Taxes for additional details related to the relevant tax reform provisions.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, the accompanying notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those forward-looking statements below. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-looking Statements.”

Overview

We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data platforms, 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. We envision a future where all healthcare decisions are data-informed.

Highlights from the three and six months ended June 30, 2025 and 2024 included:

•We recognized total revenue of $80.7 million and $75.9 million for the three months ended June 30, 2025 and 2024, respectively, and $160.1 million and $150.6 million for the six months ended June 30, 2025 and 2024, respectively. The growth in revenue was primarily due to revenue from new clients, including acquired relationships, and revenue expansion from existing clients.

•We incurred net losses of $41.0 million and $13.5 million for the three months ended June 30, 2025 and 2024, respectively, and $64.7 million and $34.1 million for the six months ended June 30, 2025 and 2024, respectively. The increased net losses in 2025 compared to 2024 are largely driven by $28.8 million in goodwill impairment.

•Our Adjusted EBITDA was $9.3 million and $7.5 million for the three months ended June 30, 2025 and 2024, respectively, and $15.6 million and $10.9 million for the six months ended June 30, 2025 and 2024, respectively. See the section titled “Key Financial Metrics—Reconciliation of Non-GAAP Financial Measures” below for more information about Adjusted EBITDA, including the limitations of such measure and a reconciliation to net loss, the most directly comparable measure calculated in accordance with GAAP.

See the section titled “Key Factors Affecting Our Performance” for more information about important opportunities and challenges related to our business.

Macroeconomic Environment and Strategic Operating Plan

Recent macroeconomic challenges (including high levels of inflation, high interest rates, uncertainty with tariffs, and cuts in Medicaid and research funding) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally. 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 extent and duration of the impacts from these factors is uncertain, and we expect that continued impacts would have a negative effect upon our clients, business and results of operations, and financial condition.

The health system end market, in particular, has experienced meaningful financial strain over the last few years. We were encouraged that, in general, the operating margins of our health system end market improved in 2024 and the first half of 2025 relative to 2022 and 2023. However, the implications of any policy developments around Medicaid and research funding reductions, as well as implications of the evolving tariff landscape have had a negative impact on our business.

On July 4, 2025, President Trump signed the OBBBA into law, which is projected to reduce federal Medicaid spending by nearly $1 trillion over 10 years and will create additional financial strain for many of our clients and prospective clients. As a result, certain sales cycles have elongated and some opportunities, such as opportunities in Life Sciences, have pushed, which has negatively impacted our year-to-date bookings achievement and our expectations for revenue in the second half of 2025. We have also seen that the aggregated average total ARR and non-recurring revenue for net new Platform Clients trended lower in the second quarter of 2025 compared to the first quarter of 2025 and was below the midpoint of the $300,000 to $700,000 aggregated average total ARR and non-recurring revenue range. We anticipate this trend may continue in the near term, primarily driven by the funding cuts previously mentioned.

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. This expectation is driven by our belief that many existing clients that have already realized a strong financial return on investment (ROI), and are aligned on a long-term partnership framework, will be more receptive to expansion conversations, as compared to discussions with prospective clients. We have collected data internally that shows we are more than twice as effective at selling into organizations where we have an existing relationship compared to those where there is no prior relationship, which gives us additional confidence in our ability to drive cross-selling within our broad client base.

We benefit from a highly recurring revenue model, in which greater than 90% of our revenue is recurring in nature, and a high level of technology revenue predictability, especially within our Platform Clients whose contracts, when sold as a bundle with our analytics applications, often have built-in, contractual technology revenue escalators and are often locked in for three to five years.

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 will continue to monitor migrations from DOS to Ignite, and we continue to make progress on the migration efforts. We have observed that clients have a few options as part of this migration. These options include expanding their relationship and spend by purchasing additional applications and services; experiencing immediate savings while maintaining the same functionality through a price reduction as part of the migration; or maintaining existing spend and realizing improvement in operations and functionality from the enhanced capabilities of Ignite. Over the course of the next few years, we anticipate our clients will continue to fall along the spectrum of these three options; however, in recent months and in the near-term due to the overall macroeconomic challenges and uncertainty, including the funding reductions primarily related to Medicaid and research funding, an increasing number of clients are opting for, and we anticipate many will opt for, a price reduction as part of the migration to Ignite resulting in lower overall spend.

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 believe this focus will enable us to move forward in a position of continued competitive and financial strength. We will continue to refine this strategic operating plan and are continuing to make investments in research and development, primarily in enhancing the capabilities within Health Catalyst Ignite, in order to maintain our position as a provider of a market-leading data platform and applications over the long term.

Key Financial Metrics

We regularly review a number of metrics, including the following key financial metrics, to manage our business and evaluate our operating performance compared to that of other companies in our industry:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
GAAP Financial Measures:	(in thousands, except percentages)						(in thousands, except percentages)
Total revenue	$	80,721		$	75,902		$	160,134		$	150,625
Gross profit	$	30,333		$	28,806		$	58,992		$	58,127
Gross margin	38		%	38		%	37		%	39		%
Net loss	$	(40,978)		$	(13,516)		$	(64,720)		$	(34,103)
Non-GAAP Financial Measures:




Adjusted Gross Profit	$	39,964		$	37,803		$	79,012		$	76,122
Adjusted Gross Margin	50		%	50		%	49		%	51		%
Adjusted EBITDA	$	9,344		$	7,522		$	15,623		$	10,899

We monitor the key metrics set forth in the preceding table to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine team member incentives. We discuss Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA in more detail below.

Reconciliation of non-GAAP financial measures

In addition to our results determined in accordance with GAAP, we believe certain non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA, are useful in evaluating our operating performance. For example, we exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance and allows investors the ability to make more meaningful comparisons between our operating results and those of other companies. We use this non-GAAP financial information to evaluate our ongoing operations, as a component in determining employee bonus compensation, and for internal planning and forecasting purposes.

We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business.

Adjusted Gross Profit and Adjusted Gross Margin

Gross profit is a GAAP financial measure that is calculated as revenue less cost of revenue, including depreciation and amortization of capitalized software development costs and acquired technology. We calculate gross margin as gross profit divided by our revenue. Adjusted Gross Profit is a non-GAAP financial measure that we define as gross profit, adjusted for (i) depreciation and amortization, (ii) stock-based compensation, (iii) acquisition-related costs, net, and (iv) restructuring costs, as applicable. 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 present both of these measures for our technology and professional services business. We believe these non-GAAP financial 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 following is a calculation of our gross profit and gross margin and a reconciliation of gross profit and gross margin, the most directly comparable financial measures calculated in accordance with GAAP, to our Adjusted Gross Profit and Adjusted Gross Margin in total and for technology and professional services for the three months ended June 30, 2025 and 2024.


	Three Months Ended June 30, 2025
	(in thousands, except percentages)
	Technology			Professional Services			Total
Revenue	$	52,876		$	27,845		$	80,721
Cost of revenue, excluding depreciation and amortization	(18,352)			(24,128)			(42,480)
Amortization of intangible assets, cost of revenue	(4,857)			—			(4,857)
Depreciation of property and equipment, cost of revenue	(3,051)			—			(3,051)
Gross profit	26,616			3,717			30,333
Gross margin	50		%	13		%	38		%
Add:
Amortization of intangible assets, cost of revenue	4,857			—			4,857
Depreciation of property and equipment, cost of revenue	3,051			—			3,051
Stock-based compensation	295			1,194			1,489
Acquisition-related costs, net(1)	33			56			89
Restructuring costs(2)	—			145			145
Adjusted Gross Profit	$	34,852		$	5,112		$	39,964
Adjusted Gross Margin	66		%	18		%	50		%

___________________

(1)Acquisition-related costs, net include deferred retention expenses attributable to the Upfront, Intraprise, ARMUS, and KPI Ninja acquisitions.

(2)Restructuring costs include severance and other team member costs from workforce reductions. For additional detail, refer to Note 19-Restructuring Costs in our condensed consolidated financial statements.


	Three Months Ended June 30, 2024
	(in thousands, except percentages)
	Technology			Professional Services			Total
Revenue	$	47,635		$	28,267		$	75,902
Cost of revenue, excluding depreciation and amortization	(16,067)			(23,993)			(40,060)
Amortization of intangible assets, cost of revenue	(4,583)			—			(4,583)
Depreciation of property and equipment, cost of revenue	(2,453)			—			(2,453)
Gross profit	24,532			4,274			28,806
Gross margin	51		%	15		%	38		%
Add:
Amortization of intangible assets, cost of revenue	4,583			—			4,583
Depreciation of property and equipment, cost of revenue	2,453			—			2,453
Stock-based compensation	391			1,349			1,740
Acquisition-related costs, net(1)	104			117			221

Adjusted Gross Profit	$	32,063		$	5,740		$	37,803
Adjusted Gross Margin	67		%	20		%	50		%

___________________

(1)Acquisition-related costs, net include deferred retention expenses attributable to the ARMUS and KPI Ninja acquisitions.

Technology gross margin decreased from 51% for the three months ended June 30, 2024 to 50% for the three months ended June 30, 2025. Adjusted Technology Gross Margin decreased from 67% for the three months ended June 30, 2024 to 66% for the three months ended June 30, 2025. This year-over-year result was mainly driven by continued costs associated with transitioning a portion of our client base to Azure-hosted environments, costs associated with migrating a subset of 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.

We expect Adjusted Technology Gross Margin to fluctuate and potentially decline in the near term, primarily due to additional costs associated with the ongoing transition of Platform Clients to Health Catalyst Ignite and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, which typically begins six months or more following contract signing. The potential decline is also attributable to a small subset of our clients reducing their software analytics application costs, which tend to be higher margin offerings.

Professional services gross margin decreased from 15% for the three months ended June 30, 2024 to 13% for the three months ended June 30, 2025. Adjusted Professional Services Gross Margin decreased from 20% for the three months ended June 30, 2024 to 18% for the three months ended June 30, 2025, primarily due to lower utilization rates in our professional services organization, timing of certain one-time revenue items that we anticipate will occur later in 2025, and increased costs related to pilot ambulatory operations TEMS, which we are planning to exit. Our professional services are comprised of data and analytics services, domain expertise services, Tech-enabled Managed Services (TEMS), and implementation services. The majority of our professional services revenue is generated from data and analytic services and domain expertise services, which are the highest gross margin professional services we provide. The delivery mix among all of our professional services in a given period can lead to fluctuations in our Adjusted Professional Services Gross Margin.

Total gross margin remained constant at 38% for the three months ended June 30, 2025 and 2024. Total Adjusted Gross Margin also remained constant at 50% for the three months ended June 30, 2025 and 2024. We expect total Adjusted Gross Margin to fluctuate in the near term, but improve over the long term, primarily due to a mix shift to a greater proportion of technology revenue, as well as anticipated improvement in technology and professional services gross margins over time.


	Six Months Ended June 30, 2025
	(in thousands, except percentages)
	Technology			Professional Services			Total
Revenue	$	104,358		$	55,776		$	160,134
Cost of revenue, excluding depreciation and amortization	(35,917)			(49,741)			(85,658)
Amortization of intangible assets, cost of revenue	(9,453)			—			(9,453)
Depreciation of property and equipment, cost of revenue	(6,031)			—			(6,031)
Gross profit	52,957			6,035			58,992
Gross margin	51		%	11		%	37		%
Add:
Amortization of intangible assets, cost of revenue	9,453			—			9,453
Depreciation of property and equipment, cost of revenue	6,031			—			6,031
Stock-based compensation	514			2,196			2,710
Acquisition-related costs, net(1)	107			176			283
Restructuring costs(2)	401			1,142			1,543
Adjusted Gross Profit	$	69,463		$	9,549		$	79,012
Adjusted Gross Margin	67		%	17		%	49		%

___________________

(1)Acquisition-related costs, net include deferred retention expenses attributable to the Upfront, Intraprise, ARMUS, and KPI Ninja acquisitions.


	Six Months Ended June 30, 2024
	(in thousands, except percentages)
	Technology			Professional Services			Total
Revenue	$	94,601		$	56,024		$	150,625
Cost of revenue, excluding depreciation and amortization	(31,382)			(47,195)			(78,577)
Amortization of intangible assets, cost of revenue	(8,954)			—			(8,954)
Depreciation of property and equipment, cost of revenue	(4,967)			—			(4,967)
Gross profit	49,298			8,829			58,127
Gross margin	52		%	16		%	39		%
Add:
Amortization of intangible assets, cost of revenue	8,954			—			8,954
Depreciation of property and equipment, cost of revenue	4,967			—			4,967
Stock-based compensation	756			2,681			3,437
Acquisition-related costs, net(1)	169			208			377
Restructuring costs(2)	79			181			260
Adjusted Gross Profit	$	64,223		$	11,899		$	76,122
Adjusted Gross Margin	68		%	21		%	51		%

___________________

(1)Acquisition-related costs, net include deferred retention expenses attributable to the ARMUS and KPI Ninja acquisitions.

Technology gross margin decreased from 52% for the six months ended June 30, 2024 to 51% for the six months ended June 30, 2025. Adjusted Technology Gross Margin decreased from 68% for the six months ended June 30, 2024 to 67% for the six months ended June 30, 2025. This 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 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.

We expect Adjusted Technology Gross Margin to fluctuate and potentially decline in the near term, primarily due to additional costs associated with the ongoing transition of Platform Clients to Health Catalyst Ignite and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, which typically begins six months or more following contract signing. The potential decline is also attributable to a small subset of App Clients reducing their software analytics application costs, which tend to be higher margin offerings.

Professional services gross margin decreased from 16% for the six months ended June 30, 2024 to 11% for the six months ended June 30, 2025. Adjusted Professional Services Gross Margin remained flat at 21% for the six months ended June 30, 2024 as compared to the six months ended June 30, 2025, primarily due to lower utilization rates in our professional services organization, timing of certain one-time revenue items that we anticipate will occur later in 2025, and increased costs related to pilot ambulatory operations TEMS, which we are planning to exit. Our professional services are comprised of data and analytics services, domain expertise services, TEMS, and implementation services. The majority of our professional services revenue is generated from data and analytic services and domain expertise services, which are the highest gross margin professional services we provide. The delivery mix among all of our services in a given period can lead to fluctuations in our Adjusted Professional Services Gross Margin.

Total gross margin decreased from 39% for the six months ended June 30, 2024 to 37% for the six months ended June 30, 2025. Total Adjusted Gross Margin decreased from 51% for the six months ended June 30, 2024 and 2024 to 49% for the six months ended June 30, 2025. We expect total Adjusted Gross Margin to fluctuate in the near term, but improve over the long term, primarily due to a mix shift to a greater proportion of technology revenue as well as anticipated improvement in technology and professional services gross margins over time.

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, (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, (vi) restructuring costs, (vii) goodwill impairment, and (viii) non-recurring lease-related charges. We view acquisition-related expenses when applicable, such as transaction costs and changes in the fair value of contingent consideration liabilities that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs, and non-recurring lease-related charges allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

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. We generally expect annual 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.

The following is a reconciliation of our net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024.


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)				(in thousands)
Net loss	$	(40,978)	$	(13,516)	$	(64,720)	$	(34,103)
Add:
Interest and other expense (income), net	3,803		(2,361)		7,159		(4,699)

Income tax provision	81		70		296		183
Depreciation and amortization	12,684		10,657		25,004		21,182
Stock-based compensation	8,323		8,966		15,866		19,804
Acquisition-related costs, net(1)	(3,720)		3,431		(691)		4,244

Restructuring costs(2)	382		275		3,940		2,088
Goodwill impairment(3)	28,769		—		28,769		—
Non-recurring lease-related charges(4)	—		—		—		2,200
Adjusted EBITDA	$	9,344	$	7,522	$	15,623	$	10,899

__________________

(1)Acquisition-related costs, net include 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.

(2)Restructuring costs include severance and other team member costs from workforce reductions. For additional details, refer to Note 19 in our condensed consolidated financial statements.

(3)Goodwill impairment was recognized as a result of impairment indicators and a quantitative test indicating the fair values of the Technology and the Professional Services reporting units were below their respective carrying values as of June 30, 2025. For additional details, refer to Note 4 in our condensed consolidated financial statements.

(4)Non-recurring lease-related charges include the lease-related impairment charge related to our corporate office space designated for subleasing. For additional details, refer to Note 9 in our condensed 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. While these factors present significant opportunities for us, they also represent the challenges that we must successfully address in order to grow our business and improve our results of operations.

•Impact of challenging macroeconomic environment, including high inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, the tight labor market or the market volatility and measures taken in response thereto. Recent macroeconomic challenges (including the high levels of inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, 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. These challenges have also disrupted the normal operations of many businesses, including ours. Our health system end market recently experienced meaningful financial strain from significant inflation. In particular, the health system end market experienced increases in labor and supply costs without a commensurate increase in revenue, leading to significant margin pressure. We are also continuing to monitor the implications of any policy developments around Medicaid and research funding reductions, including the recently passed OBBBA, which are negatively impacting our end market, as well as implications of the evolving tariff landscape. These uncertainties in our end market could cause potential delays in client decisions, which could negatively affect our business and results of operations.

•Add new clients. We believe our ability to increase our client base will enable us to drive growth. Our potential client base is generally in the early stages of data and analytics adoption and maturity. We expect to further penetrate the market over time as potential clients invest in commercial data and analytics solutions. As one of the first data platform and analytics vendors focused specifically on healthcare organizations, we have an early-mover advantage and strong brand awareness. 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. Over the last few years, we have developed and deployed several new analytics applications, including PowerCosting (formerly known as CORUS), PowerLabor, Touchstone, Patient Safety Monitor, Pop Analyzer (formerly known as Population Builder), Value Optimizer, and others. Because we are in the early stages of certain of our applications’ lifecycles and maturity, we do not have enough information to know the impact on revenue growth by upselling these applications and associated services to current and new clients.

•Impact of acquisitions. 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. 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. As we integrate the teams acquired via our recent acquisitions, we have also incurred integration-related costs and duplicative costs that could impact our operating cost profile in the near term.

•Changing revenue mix. Our technology and professional services offerings have materially different gross margin profiles. While our professional services offerings help our clients achieve measurable improvements and make them stickier, they have lower gross margins than our technology revenue.

For the six months ended June 30, 2025, our technology revenue and professional services revenue represented 65% and 35% of total revenue, respectively. Changes in our percentage of revenue attributable to Technology and Professional Services would impact future gross margin and Adjusted Gross Margin. Furthermore, changes within the types of professional services we offer over time can have a material impact on our Adjusted Professional Services Gross Margin, impacting our future gross margin and Total Adjusted Gross Margin. See “Reconciliation of Non-GAAP Financial Measures” above for more information.

•Migration to Health Catalyst Ignite. We are in the process of migrating our Platform Clients to Ignite. These migrations have and will continue to result in higher cost of technology revenue, which will negatively impact Adjusted Technology Gross Margin. As we move through the bulk of these migrations by mid-2026, we expect the relative Adjusted Technology Gross Margin headwind to diminish. Over time we anticipate that the migration to Ignite will benefit Adjusted Technology Gross Margin. An Ignite migration can take a variety of forms, including a client's migration from our DOS platform to the Ignite platform, the incorporation of Ignite componentry into a specific Solution that is deployed to all clients using that Solution, or our deeming a Solution using our latest technology to be part of Ignite (our latest technology) because we do not plan to devote additional professional service or R&D resources to adding Ignite componentry to the Solution. Some client migrations require us to devote resources (including R&D and/or professional services) to enable the migration. For example, long-standing clients' migration from the DOS platform to the Ignite platform is generally more resource intensive and more complex. We expect those complex migrations will generally take more time to complete and may be some of the last migrations we complete. Some migrations may also require re-contracting to enable a client's migration to Ignite, including due to different consumption-based pricing models. Other Solutions require very little to no company resources to enable the migration, including Solutions that we deem to be part of Ignite because the Solution is using our latest technology and we do not have current plans to devote resources to add Ignite componentry to the Solution. We consider an Ignite migration to be complete for a given client if (i) we do not anticipate any additional professional services or R&D resources required to enable the Ignite migration for the client, and (ii) we have no plans to re-contract with the client for the purpose of enabling its Ignite migration. There may be unique instances in which we and a client prefer for the client to remain on our legacy technology for the foreseeable future. In those limited instances, we would exclude the client from the denominator and numerator when calculating the percentage of completed Ignite migrations.

Recent Acquisitions

Upfront Healthcare, Inc.

On January 22, 2025, we acquired Upfront Healthcare Services, Inc. (Upfront), a next-generation patient engagement platform provider. We accounted for the acquisition of Upfront as a business combination. The acquisition consideration transferred was $80.0 million and was comprised of net cash consideration of $41.1 million, shares of our common stock with an aggregate acquisition-date fair value of $31.6 million, and contingent consideration based on certain earn-out performance targets for Upfront during an earn-out period ending on December 31, 2026, with an acquisition-date fair value of $7.3 million, that, if achieved, would be paid 62.5% in common stock and 37.5% in cash. Certain Upfront shareholders also received shares of our common stock subject to revesting that are accounted for as post-acquisition stock-based compensation. The purchase resulted in Health Catalyst acquiring 100% ownership in Upfront.

Intraprise Health, LLC.

On November 8, 2024, we acquired Intraprise Health, LLC. (Intraprise), a leading provider of data and analytics technology and services to healthcare organizations. We accounted for the acquisition of Intraprise as a business combination. The acquisition consideration transferred was $44.9 million and was comprised of net cash consideration of $25.4 million and shares of our common stock with an aggregate acquisition-date fair value of $19.5 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Intraprise.

Lumeon Ltd.

On August 1, 2024, we acquired Lumeon Ltd. (Lumeon), a digital health company dedicated to helping provider organizations mend broken care coordination processes through automated care orchestration. We accounted for the acquisition of Lumeon as a business combination. The acquisition consideration transferred was $39.8 million and was comprised of net cash consideration of $36.2 million, shares of our common stock with an aggregate acquisition-date fair value of $2.9 million, and contingent consideration based on certain earn-out performance targets for Lumeon during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.7 million. The purchase resulted in Health Catalyst acquiring 100% ownership in Lumeon.

Carevive Systems, Inc.

On May 24, 2024, we acquired Carevive Systems, Inc. (Carevive), a leading oncology-focused health technology company centered on understanding and improving the experience of patients with cancer. We accounted for the acquisition of Carevive as a business combination. The acquisition consideration transferred was $22.1 million and was comprised of net cash consideration of $18.6 million, shares of our common stock with an aggregate acquisition-date fair value of $2.6 million, and contingent consideration based on certain earn-out performance targets for Carevive during an earn-out period ending on June 30, 2025, with an acquisition-date fair value of $0.9 million. The purchase resulted in us acquiring 100% ownership in Carevive.

Components of Our Results of Operations

Revenue

We derive our revenue from sales of technology and professional services. For the three months ended June 30, 2025 and 2024, technology revenue represented 66% and 63% of total revenue, respectively, and professional services revenue represented 34% and 37% of total revenue, respectively. For the six months ended June 30, 2025 and 2024, technology revenue represented 65% and 63% of total revenue, respectively, and professional services revenue represented 35% and 37% of total revenue, respectively. We expect our near-term revenue growth to be negatively impacted by policy developments around Medicaid and research funding reductions, which will likely create additional financial strain for many of our clients and prospective clients.

Technology revenue. Technology revenue primarily consists of subscription fees charged to clients for access to use our Platform and analytics applications. 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. Also included in technology revenue is the maintenance and support we provide, which generally includes updates and support services.

Professional services revenue. Professional services revenue primarily includes analytics services, domain expertise services, TEMS, and implementation services. Professional services arrangements typically include a fee for making FTE services available to our clients on a monthly basis. FTE services generally consist of a blend of analytic engineers, analysts, and data scientists based on the domain expertise needed to best serve our clients.

Deferred revenue

Deferred revenue consists of client billings in advance of revenue being recognized from our technology and professional services arrangements. We primarily invoice our clients for technology arrangements annually or quarterly in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue and the remaining portion is recorded as deferred revenue, net of current portion on our condensed consolidated balance sheets.

Cost of revenue, excluding depreciation and amortization

Cost of technology revenue. Cost of technology revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, license and revenue share fees, contractor costs, and salary and related personnel costs for our cloud services and support teams.

We anticipate cost of technology revenue as a percentage of technology revenue will generally decrease over the long term. However, 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. 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 and the January 2025 Restructuring Plan have reduced our ongoing cost of professional services revenue. Our cost of professional services revenue may fluctuate as a percentage of our revenue from period to period due to the timing and extent of non-recurring professional services arrangements.

Operating expense

Sales and marketing. Sales and marketing expenses primarily include salary and related personnel costs for our sales, marketing, and account management teams, lead generation, marketing events, including our Healthcare Analytics Summit, marketing programs, and outside contractor costs associated with the sale and marketing of our offerings. We plan to continue to invest in sales and marketing to grow our client base, expand in new markets, and increase our brand awareness. The trend and timing of sales and marketing expenses will depend in part on the timing of our expansion into new markets and marketing campaigns. 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.

Research and development. Research and development expenses primarily include salary and related personnel costs for our data platform and analytics applications teams, subscriptions, and outside contractor costs associated with the development of products. We have developed an open, flexible, and scalable data platform. We plan to continue to invest in research and development to develop new solutions and enhance our applications library. The 2023 Restructuring Plan and January 2025 Restructuring Plan increased our research and development expenses in the first quarter of 2024 and first quarter 2025, respectively, due to severance costs, but we expect that the reduction in headcount will reduce future, ongoing research and development expenses. Our research and development expenses may fluctuate as a percentage of our revenue from period to period due to the nature, timing, and extent of these expenses.

General and administrative. General and administrative expenses primarily include salary and related personnel costs for our legal, finance, people operations, IT, and other administrative teams, including certain executives. General and administrative expenses also include facilities, subscriptions, corporate insurance, outside legal, accounting, directors’ fees, and the change in fair value of contingent consideration liabilities. Our general and administrative 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.

Depreciation and amortization. Depreciation and amortization expenses are primarily attributable to our capital investment and consist of fixed asset depreciation, amortization of intangibles considered to have definite lives, and amortization of capitalized internal-use software costs.

Goodwill impairment. Goodwill is assessed for impairment annually on October 31 or more frequently if indicators of impairment are present or circumstances suggest that impairment may exist. If the carrying amount of the reporting unit exceeds its fair value, we recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

Interest and other (expense) income, net

Interest and other (expense) income, net primarily consists of interest expense from our debt arrangements offset by income from our investment holdings. Interest expense is primarily attributable to the Convertible Senior Notes and Credit Agreement and also includes the amortization of deferred financing costs related to our debt arrangements.

Income tax provision

Income tax provision consists of U.S. federal, state, and foreign income taxes. Because of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for our net deferred tax assets, including net operating loss carryforwards (NOLs) and tax credits related primarily to research and development.

As of December 31, 2024, we had federal and state NOLs of $680.7 million and $571.6 million, respectively, which will begin to expire for federal and state tax purposes in 2032 and 2025, respectively. Our existing NOLs may be subject to limitations arising from ownership changes and, if we undergo an ownership change in the future, our ability to utilize our NOLs and tax credits could be further limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs and tax credits may also be limited under similar provisions of state law.

On July 4, 2025, President Trump signed the OBBBA into law. The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA includes provisions providing current deductibility of certain property additions, limitations on interest deductions based on a tax EBITDA framework, and current deductibility of domestic research and development costs. These provisions are generally effective beginning in 2025, and we currently anticipate they will partially defer our income tax payments in future years and will not have a material impact on our effective tax rate. We will continue to review the OBBBA tax provisions to assess impacts to our condensed consolidated financial statements and will reflect any impact in the period of enactment.

Results of Operations

The following tables set forth our condensed consolidated results of operations data and such data as a percentage of total revenue for each of the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
	(in thousands)				(in thousands)
Revenue:
Technology	$	52,876	$	47,635	$	104,358	$	94,601
Professional services	27,845		28,267		55,776		56,024
Total revenue	80,721		75,902		160,134		150,625
Cost of revenue, excluding depreciation and amortization shown below:
Technology(1)(2)(3)	18,352		16,067		35,917		31,382
Professional services(1)(2)(3)	24,128		23,993		49,741		47,195
Total cost of revenue, excluding depreciation and amortization	42,480		40,060		85,658		78,577
Operating expenses:
Sales and marketing(1)(2)(3)	13,206		12,745		27,944		31,803
Research and development(1)(2)(3)	12,392		13,884		27,578		28,755
General and administrative(1)(2)(3)(4)	8,284		14,363		22,446		28,927
Depreciation and amortization	12,684		10,657		25,004		21,182
Goodwill impairment	28,769		—		28,769		—
Total operating expenses	75,335		51,649		131,741		110,667
Loss from operations	(37,094)		(15,807)		(57,265)		(38,619)

Interest and other income (expense), net	(3,803)		2,361		(7,159)		4,699
Loss before income taxes	(40,897)		(13,446)		(64,424)		(33,920)
Income tax provision	81		70		296		183
Net loss	$	(40,978)	$	(13,516)	$	(64,720)	$	(34,103)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Stock-Based Compensation Expense:	(in thousands)				(in thousands)
Cost of revenue, excluding depreciation and amortization:
Technology	$	295	$	391	$	514	$	756
Professional services	1,194		1,349		2,196		2,681
Sales and marketing	2,542		2,452		4,704		6,442
Research and development	1,316		1,676		2,449		3,520
General and administrative	2,976		3,098		6,003		6,405
Total	$	8,323	$	8,966	$	15,866	$	19,804

(2)Includes acquisition-related costs, net, as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Acquisition-related costs (benefit), net:	(in thousands)				(in thousands)
Cost of revenue, excluding depreciation and amortization:
Technology	$	33	$	104	$	107	$	169
Professional services	56		117		176		208
Sales and marketing	(57)		523		441		587
Research and development	190		228		357		430
General and administrative	(3,942)		2,459		(1,772)		2,850
Total	$	(3,720)	$	3,431	$	(691)	$	4,244

(3)Includes restructuring costs, as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Restructuring costs:	(in thousands)				(in thousands)
Cost of revenue, excluding depreciation and amortization:
Technology	$	—	$	—	$	401	$	79
Professional services	145		—		1,142		181
Sales and marketing	—		—		352		449
Research and development	237		—		1,909		443
General and administrative	—		275		136		936
Total	$	382	$	275	$	3,940	$	2,088

(4)Includes non-recurring lease-related charges, as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Non-recurring lease-related charges:	(in thousands)				(in thousands)





General and administrative	$	—	$	—	$	—	$	2,200
Total	$	—	$	—	$	—	$	2,200


	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Revenue:
Technology	66	%	63	%	65	%	63	%
Professional services	34		37		35		37
Total revenue	100		100		100		100
Cost of revenue, excluding depreciation and amortization shown below:
Technology	23		21		22		21
Professional services	30		32		31		31
Total cost of revenue, excluding depreciation and amortization	53		53		53		52
Operating expenses
Sales and marketing	16

Health Catalyst, Inc. 10-Q