Goodwill hit reshapes Health Catalyst (Nasdaq: HCAT) Q1 2026 results
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Health Catalyst, Inc. reported first quarter 2026 results showing lower revenue but stronger non-GAAP profitability alongside a major accounting charge. Total revenue was $70.8 million, down 11% from $79.4 million a year earlier, with gross margin improving to 39% from 36%.
The company recorded a sizeable $95.5 million goodwill impairment in its Technology reporting unit, driving a GAAP net loss of $111.0 million, or $1.53 per share, compared with a $23.7 million loss in 2025. Excluding non-cash and non-recurring items, Adjusted EBITDA rose 46% to $9.1 million and adjusted net income was $1.2 million, or $0.02 per diluted share.
Management issued guidance for 2026, expecting full-year revenue of $260–$265 million and Adjusted EBITDA of $30–$33 million, and highlighted a strategic reset of its operating model and ongoing migration from DOS to Ignite, which may cause some client churn and down-sell.
Positive
- None.
Negative
- None.
Insights
Large goodwill impairment and revenue decline offset stronger adjusted profitability.
Health Catalyst posted Q1 2026 revenue of $70.8M, down 11% year over year, with technology and professional services both lower. GAAP results were dominated by a $95.5M goodwill impairment in the Technology reporting unit, pushing net loss to $111.0M.
On a non-GAAP basis, performance improved: Adjusted Gross Margin reached 51% and Adjusted EBITDA rose 46% to $9.1M. Adjusted Net Income was $1.2M, or $0.02 per diluted share. Operating cash flow strengthened to $18.5M, and cash and cash equivalents increased to $59.9M with $49.0M of short-term investments.
Guidance for Q2 2026 calls for revenue of $68–$70M and Adjusted EBITDA of $9–$10M; full-year 2026 guidance is revenue of $260–$265M and Adjusted EBITDA of $30–$33M. Management also discloses potential ARR at risk from the DOS to Ignite migration, expecting some churn and down-sell in 2026–2027, although they aim to retain a portion through targeted initiatives.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q1 2026 revenue: $70.8M
Q1 2026 net loss: $111.0M
Goodwill impairment: $95.5M
+5 more
8 metrics
Q1 2026 revenue
$70.8M
Total revenue for the three months ended March 31, 2026; down 11% year over year
Q1 2026 net loss
$111.0M
GAAP net loss for the three months ended March 31, 2026
Goodwill impairment
$95.5M
Impairment of goodwill in the Technology reporting unit in Q1 2026
Adjusted EBITDA Q1 2026
$9.1M
Non-GAAP Adjusted EBITDA for the three months ended March 31, 2026; up 46% year over year
Cash and cash equivalents
$59.9M
Cash and cash equivalents balance as of March 31, 2026
Short-term investments
$49.0M
Short-term investments as of March 31, 2026
2026 revenue guidance
$260–$265M
Full-year 2026 total revenue outlook provided by the company
2026 Adjusted EBITDA guidance
$30–$33M
Full-year 2026 Adjusted EBITDA outlook
Key Terms
Adjusted EBITDA, goodwill impairment, restructuring costs, Acquisition-related costs, net, +2 more
6 terms
Adjusted EBITDA financial
"Adjusted EBITDA was $9,137 ... and 46% year over year"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
goodwill impairment financial
"Impairment of goodwill was recognized as a result of impairment indicators"
Goodwill impairment occurs when a company’s valued reputation or brand strength, known as goodwill, is found to be worth less than previously recorded on its financial statements. This usually happens when the company's performance declines or market conditions change, signaling that the expected benefits from acquisitions or brand value are no longer as strong. It matters to investors because it can indicate that a company's assets are less valuable than initially thought, potentially affecting its overall financial health.
restructuring costs financial
"Restructuring costs include severance and other team member costs from workforce reductions"
Restructuring costs are the immediate expenses a company incurs when reorganizing operations, such as closing facilities, laying off staff, breaking leases, or consolidating divisions. Investors care because these upfront outlays can lower short-term profits but may reduce future running costs or improve efficiency—like paying to renovate a house to make it cheaper to maintain—so they signal whether near-term earnings are being affected and what benefits might follow.
Adjusted Gross Margin financial
"Adjusted Gross Margin is our Adjusted Gross Profit divided by our revenue"
Adjusted gross margin is a measure of how much profit a company makes from its sales after accounting for certain expenses or one-time costs, but before deducting other operating expenses. It helps investors see the company's core profitability more clearly by removing factors that might distort the usual profit picture, similar to a runner measuring their speed without considering obstacles or weather. This metric provides a clearer view of the company's ongoing financial health.
DOS to Ignite migration financial
"our DOS to Ignite migration expectations, and our financial outlook for the second quarter"
Earnings Snapshot
Revenue: $70.8M · Guidance included
Quarter ended March 31, 2026
Revenue
$70.8M
-11% YoY
Net loss
$111.0M
-368% YoY
Adjusted EBITDA
$9.1M
+46% YoY
Guidance
For Q2 2026, revenue $68–$70M and Adjusted EBITDA $9–$10M; for full-year 2026, revenue $260–$265M and Adjusted EBITDA $30–$33M.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________
FORM 8-K
__________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 11, 2026
__________________________________________________________
(Exact name of registrant as specified in its charter)
________________________________________________________________
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of principal executive offices, including zip code)
(801 ) 708-6800
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
______________________________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||||||||||||
________________________________________________________
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 ((§240.12b-2 of this chapter).
Emerging growth 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. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 11, 2026, Health Catalyst, Inc. (the “Company”) issued a press release relating to its financial results for the quarter ended March 31, 2026. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The foregoing information (including Exhibit 99.1 attached hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
99.1* | Health Catalyst, Inc. press release for quarterly financial results, dated May 11, 2026 | |||||||
| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document) | |||||||
* Furnished herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HEALTH CATALYST, INC. | ||||||||
Date: May 11, 2026 | By: | /s/ Jason Alger | ||||||
| Jason Alger | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 99.1
Health Catalyst Reports First Quarter 2026 Results
SALT LAKE CITY, UT, May 11, 2026 — Health Catalyst, Inc. (“Health Catalyst,” Nasdaq: HCAT), a healthcare intelligence company designed to accelerate measurable improvement for health systems, today reported financial results for the quarter ended March 31, 2026.
“We delivered solid first quarter results, with revenue and adjusted EBITDA exceeding expectations,” said Ben Albert, Chief Executive Officer of Health Catalyst. “More importantly, this quarter we took the first decisive step toward transforming our operating model and aligning the company around its highest-conviction technology opportunities. This is not a short-term cost exercise. It is a strategic reset designed to build a more focused, durable Health Catalyst capable of meeting the opportunity in front of us. I am confident in the leadership team and board we have assembled to build the intelligence-driven technology company healthcare needs.”
Financial Highlights for the Three Months Ended March 31, 2026
Key Financial Measures
________________________
| Three Months Ended March 31, | Year over Year Change | ||||||||||||||||
| 2026 | 2025 | ||||||||||||||||
GAAP Financial Measures: | (in thousands, except percentages, unaudited) | ||||||||||||||||
| Total revenue | $ | 70,756 | $ | 79,413 | (11)% | ||||||||||||
Gross profit | $ | 27,726 | $ | 28,659 | (3)% | ||||||||||||
Gross margin | 39 | % | 36 | % | |||||||||||||
| Net loss | $ | (111,026) | $ | (23,742) | (368)% | ||||||||||||
Non-GAAP Financial Measures:(1) | |||||||||||||||||
Adjusted Gross Profit | $ | 36,439 | $ | 39,048 | (7)% | ||||||||||||
Adjusted Gross Margin | 51 | % | 49 | % | |||||||||||||
| Adjusted EBITDA | $ | 9,137 | $ | 6,279 | 46% | ||||||||||||
(1) These measures are not calculated in accordance with generally accepted accounting principles in the United States (GAAP). See the accompanying "Non-GAAP Financial Measures" section below for more information about these financial measures, including the limitations of such measures, and for a reconciliation of each measure to the most directly comparable measure calculated in accordance with GAAP.
Financial Outlook
Health Catalyst provides forward-looking guidance on total revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP measure.
For the second quarter of 2026, we expect:
•Total revenue of $68 million to $70 million, and
•Adjusted EBITDA of $9 million to $10 million.
For the full year of 2026, we expect:
•Total revenue of $260 million to $265 million, and
•Adjusted EBITDA of $30 million to $33 million.
We have not provided forward-looking guidance for net loss, the most directly comparable GAAP measure to Adjusted EBITDA, and therefore have not reconciled guidance for Adjusted EBITDA to net loss, because there are items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably forecasted.
Quarterly Conference Call Details
We will host a conference call to review the results today, Wednesday, May 11, 2026, at 5:00 p.m. E.T. The conference call can be accessed by dialing (800) 343-5172 for U.S. participants, or (203) 518-9856 for international participants, and referencing conference ID “HCATQ126.” A live audio webcast will be available online at https://ir.healthcatalyst.com/. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.
About Health Catalyst
Health Catalyst, Inc. (Nasdaq: HCAT) is a healthcare intelligence company that accelerates measurable improvement for health systems across cost, clinical, and consumer performance. Backed by deep domain expertise, proprietary AI-driven technology, and $2.8 billion in documented outcomes, Health Catalyst helps health systems move from data to confident, measurable action.
Available Information
Our investors and others should note that we announce material information to the public about our company, products and services, and other matters related to our company through a variety of means, including our website (https://www.healthcatalyst.com/), our investor relations website (https://ir.healthcatalyst.com/), press releases, SEC filings, public conference calls, and social media, including our (https://www.linkedin.com/company/healthcatalyst) and our CEO’s social media accounts such as LinkedIn (https://www.linkedin.com/in/ben-albert-0a763b1/), in order to achieve broad, non-exclusionary distribution of information to the public and to comply with our disclosure obligations under Regulation FD.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth, our growth strategies, our strategic priorities, our DOS to Ignite migration expectations, and our financial outlook for the second quarter and full year 2026. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.
Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment, and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key clients or partners, clients reducing or eliminating their spend with us, client churn or down-selling in connection with the migration to Ignite or otherwise; (v) fluctuations in our project-based, non-recurring revenue, (vi) macroeconomic challenges (including high inflationary and/or high interest rate environments, tariffs, or market volatility and measures taken in response thereto), natural disasters or any new public health crises, and regional or global conflicts (including in the Middle East); and (vii) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to the Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026, expected to be filed with the SEC on or about May 11, 2026, and the Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data, unaudited)
| As of March 31, | As of December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 59,864 | $ | 50,814 | |||||||
| Short-term investments | 48,959 | 44,918 | |||||||||
| Accounts receivable, net | 59,146 | 59,128 | |||||||||
| Prepaid expenses and other assets | 14,343 | 14,447 | |||||||||
| Total current assets | 182,312 | 169,307 | |||||||||
| Property and equipment, net | 34,935 | 33,838 | |||||||||
| Intangible assets, net | 69,332 | 77,678 | |||||||||
| Operating lease right-of-use assets | 6,255 | 6,640 | |||||||||
| Goodwill | 113,251 | 209,073 | |||||||||
| Other assets | 6,117 | 6,107 | |||||||||
| Total assets | $ | 412,202 | $ | 502,643 | |||||||
Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 11,694 | $ | 9,363 | |||||||
| Accrued liabilities | 20,825 | 18,697 | |||||||||
| Deferred revenue | 69,736 | 56,107 | |||||||||
| Operating lease liabilities | 3,731 | 3,779 | |||||||||
| Current portion of long-term debt | 1,627 | 1,627 | |||||||||
| Total current liabilities | 107,613 | 89,573 | |||||||||
| Long-term debt, net of current portion | 151,738 | 151,624 | |||||||||
| Deferred revenue, net of current portion | 227 | 410 | |||||||||
| Operating lease liabilities, net of current portion | 13,482 | 14,208 | |||||||||
| Contingent consideration liabilities, net of current portion | 156 | 250 | |||||||||
| Other liabilities | 841 | 798 | |||||||||
| Total liabilities | 274,057 | 256,863 | |||||||||
| Stockholders’ equity: | |||||||||||
Preferred stock, $0.001 par value per share; 25,000,000 shares authorized and no shares issued and outstanding as of March 31, 2026 and December 31, 2025 | — | — | |||||||||
Common stock, $0.001 par value per share, and additional paid-in capital; 500,000,000 shares authorized as of March 31, 2026 and December 31, 2025; 73,748,666 and 72,027,332 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively | 1,612,808 | 1,608,840 | |||||||||
| Accumulated deficit | (1,475,672) | (1,364,646) | |||||||||
Accumulated other comprehensive income | 1,009 | 1,586 | |||||||||
| Total stockholders’ equity | 138,145 | 245,780 | |||||||||
Total liabilities and stockholders’ equity | $ | 412,202 | $ | 502,643 | |||||||
Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue: | |||||||||||
| Technology | $ | 49,468 | $ | 51,482 | |||||||
| Professional services | 21,288 | 27,931 | |||||||||
| Total revenue | 70,756 | 79,413 | |||||||||
Cost of revenue, excluding depreciation and amortization: | |||||||||||
Technology(1)(2)(3) | 17,283 | 17,565 | |||||||||
Professional services(1)(2)(3) | 18,010 | 25,613 | |||||||||
| Total cost of revenue, excluding depreciation and amortization | 35,293 | 43,178 | |||||||||
| Operating expenses: | |||||||||||
Sales and marketing(1)(2)(3) | 10,585 | 14,738 | |||||||||
Research and development(1)(2)(3) | 9,779 | 15,186 | |||||||||
General and administrative(1)(2)(3) | 13,960 | 14,162 | |||||||||
| Depreciation and amortization | 12,115 | 12,320 | |||||||||
Impairment of goodwill | 95,501 | — | |||||||||
| Total operating expenses | 141,940 | 56,406 | |||||||||
| Loss from operations | (106,477) | (20,171) | |||||||||
Interest and other expense, net | (4,135) | (3,356) | |||||||||
| Loss before income taxes | (110,612) | (23,527) | |||||||||
| Income tax provision | (414) | (215) | |||||||||
| Net loss | $ | (111,026) | $ | (23,742) | |||||||
Net loss per share, basic and diluted | $ | (1.53) | $ | (0.35) | |||||||
Weighted-average shares outstanding used in calculating net loss per share, basic and diluted | 72,593 | 68,552 | |||||||||
_______________
(1)Includes stock-based compensation expense as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Stock-Based Compensation Expense: | (in thousands) | ||||||||||
Cost of revenue, excluding depreciation and amortization: | |||||||||||
| Technology | $ | 118 | $ | 219 | |||||||
| Professional services | 549 | 1,002 | |||||||||
| Sales and marketing | 796 | 2,162 | |||||||||
| Research and development | 590 | 1,133 | |||||||||
| General and administrative | 1,717 | 3,027 | |||||||||
| Total | $ | 3,770 | $ | 7,543 | |||||||
(2) Includes acquisition-related costs, net, as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Acquisition-related costs, net: | (in thousands) | ||||||||||
Cost of revenue, excluding depreciation and amortization: | |||||||||||
| Technology | $ | 1 | $ | 74 | |||||||
| Professional services | 6 | 120 | |||||||||
| Sales and marketing | 3 | 498 | |||||||||
| Research and development | 6 | 167 | |||||||||
| General and administrative | 2,421 | 2,170 | |||||||||
| Total | $ | 2,437 | $ | 3,029 | |||||||
(3) Includes restructuring costs as follows:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Restructuring costs: | (in thousands) | ||||||||||
Cost of revenue, excluding depreciation and amortization: | |||||||||||
| Technology | $ | — | $ | 401 | |||||||
| Professional services | 302 | 997 | |||||||||
| Sales and marketing | 109 | 352 | |||||||||
| Research and development | 100 | 1,672 | |||||||||
| General and administrative | 1,280 | 136 | |||||||||
| Total | $ | 1,791 | $ | 3,558 | |||||||
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
| Three Months Ended March 31, | |||||||||||
2026 | 2025 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net loss | $ | (111,026) | $ | (23,742) | |||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
| Stock-based compensation expense | 3,770 | 7,543 | |||||||||
| Depreciation and amortization | 12,115 | 12,320 | |||||||||
| Non-cash operating lease expense | 625 | 735 | |||||||||
| Amortization of debt discount, issuance costs, and deferred financing costs | 633 | 1,208 | |||||||||
| Investment discount and premium accretion | (227) | (914) | |||||||||
| Provision for expected credit losses | 555 | 810 | |||||||||
| Deferred tax provision | 44 | 67 | |||||||||
Impairment of goodwill | 95,501 | — | |||||||||
| Other | 229 | (292) | |||||||||
| Change in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | (591) | (6,067) | |||||||||
| Prepaid expenses and other assets | (33) | 764 | |||||||||
| Accounts payable, accrued liabilities, and other liabilities | 4,407 | (7,196) | |||||||||
| Deferred revenue | 13,452 | 15,988 | |||||||||
| Operating lease liabilities | (943) | (944) | |||||||||
| Net cash provided by operating activities | 18,511 | 280 | |||||||||
| Cash flows from investing activities | |||||||||||
| Proceeds from the sale and maturity of short-term investments | 21,000 | 143,208 | |||||||||
| Purchase of short-term investments | (24,915) | — | |||||||||
| Acquisition of businesses, net of cash acquired | — | (41,122) | |||||||||
| Capitalization of internal-use software | (4,604) | (4,661) | |||||||||
Purchase of property and equipment | (338) | (670) | |||||||||
Purchase of intangibles | (553) | — | |||||||||
| Proceeds from the sale of property and equipment | 4 | 7 | |||||||||
| Net cash (used in) provided by investing activities | (9,406) | 96,762 | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from employee stock purchase plan | 403 | 695 | |||||||||
| Repurchase of common stock | — | (5,000) | |||||||||
| Repayment of debt | (407) | (407) | |||||||||
| Net cash used in financing activities | (4) | (4,712) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (51) | (7) | |||||||||
| Net increase in cash and cash equivalents | 9,050 | 92,323 | |||||||||
| Cash and cash equivalents at beginning of period | 50,814 | 249,645 | |||||||||
| Cash and cash equivalents at end of period | $ | 59,864 | $ | 341,968 | |||||||
Non-GAAP Financial Measures
To supplement our financial information presented in accordance with GAAP, we believe certain non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Gross Margin, Adjusted EBITDA, Adjusted Cost of Revenue, Adjusted Operating Expenses, Adjusted Net Income, and Adjusted Net Income per share, basic and diluted, 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 reconciliation of our Adjusted Gross Profit and Adjusted Gross Margin, in total and for technology and professional services, to gross profit and gross margin, the most directly comparable financial measures calculated in accordance with GAAP for the three months ended March 31, 2026 and 2025.
| Three Months Ended March 31, 2026 | |||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||
| Technology | Professional Services | Total | |||||||||||||||
| Revenue | $ | 49,468 | $ | 21,288 | $ | 70,756 | |||||||||||
| Cost of revenue, excluding depreciation and amortization | (17,283) | (18,010) | (35,293) | ||||||||||||||
| Amortization of intangible assets, cost of revenue | (4,190) | — | (4,190) | ||||||||||||||
| Depreciation of property and equipment, cost of revenue | (3,547) | — | (3,547) | ||||||||||||||
Gross profit | 24,448 | 3,278 | 27,726 | ||||||||||||||
Gross margin | 49 | % | 15 | % | 39 | % | |||||||||||
| Add: | |||||||||||||||||
Amortization of intangible assets, cost of revenue | 4,190 | — | 4,190 | ||||||||||||||
Depreciation of property and equipment, cost of revenue | 3,547 | — | 3,547 | ||||||||||||||
| Stock-based compensation | 118 | 549 | 667 | ||||||||||||||
Acquisition-related costs, net(1) | 1 | 6 | 7 | ||||||||||||||
Restructuring costs(2) | — | 302 | 302 | ||||||||||||||
| Adjusted Gross Profit | $ | 32,304 | $ | 4,135 | $ | 36,439 | |||||||||||
| Adjusted Gross Margin | 65 | % | 19 | % | 51 | % | |||||||||||
(1)Acquisition-related costs, net include deferred retention expenses attributable to the KPI Ninja acquisition. For additional details refer to Notes 1 and 2 in our condensed consolidated financial statements.
(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.
| Three Months Ended March 31, 2025 | |||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||
| Technology | Professional Services | Total | |||||||||||||||
| Revenue | $ | 51,482 | $ | 27,931 | $ | 79,413 | |||||||||||
| Cost of revenue, excluding depreciation and amortization | (17,565) | (25,613) | (43,178) | ||||||||||||||
| Amortization of intangible assets, cost of revenue | (4,596) | — | (4,596) | ||||||||||||||
| Depreciation of property and equipment, cost of revenue | (2,980) | — | (2,980) | ||||||||||||||
| Gross profit | 26,341 | 2,318 | 28,659 | ||||||||||||||
| Gross margin | 51 | % | 8 | % | 36 | % | |||||||||||
| Add: | |||||||||||||||||
| Amortization of intangible assets, cost of revenue | 4,596 | — | 4,596 | ||||||||||||||
| Depreciation of property and equipment, cost of revenue | 2,980 | — | 2,980 | ||||||||||||||
| Stock-based compensation | 219 | 1,002 | 1,221 | ||||||||||||||
Acquisition-related costs, net(1) | 74 | 120 | 194 | ||||||||||||||
Restructuring costs(2) | 401 | 997 | 1,398 | ||||||||||||||
| Adjusted Gross Profit | $ | 34,611 | $ | 4,437 | $ | 39,048 | |||||||||||
| Adjusted Gross Margin | 67 | % | 16 | % | 49 | % | |||||||||||
(1)Acquisition-related costs, net include deferred retention expenses attributable to the Upfront, Intraprise, ARMUS and KPI Ninja acquisitions. For additional details refer to Notes 1 and 2 in our condensed consolidated financial statements.
(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.
Adjusted EBITDA
Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other expense, net, (ii) income tax provision, (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities for potential earn-out payments, (vi) restructuring costs, (vii) impairment of goodwill, and (viii) non-recurring lease-related charges, as applicable. We view acquisition-related expenses when applicable, such as transaction costs (including third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations) 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, impairment of goodwill and intangible assets, and non-recurring lease-related charges, as applicable, allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. 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. The following is a reconciliation of our Adjusted EBITDA to net loss, the most directly comparable financial measure calculated in accordance with GAAP, for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Net loss | $ | (111,026) | $ | (23,742) | |||||||
| Add: | |||||||||||
Interest and other expense, net | 4,135 | 3,356 | |||||||||
| Income tax provision | 414 | 215 | |||||||||
| Depreciation and amortization | 12,115 | 12,320 | |||||||||
| Stock-based compensation | 3,770 | 7,543 | |||||||||
Acquisition-related costs, net(1) | 2,437 | 3,029 | |||||||||
Restructuring costs(2) | 1,791 | 3,558 | |||||||||
Impairment of goodwill(3) | 95,501 | — | |||||||||
| Adjusted EBITDA | $ | 9,137 | $ | 6,279 | |||||||
(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. For additional details refer to Notes 1, 2 and 7 in our condensed consolidated financial statements.
(2)Restructuring costs include severance and other team member costs from workforce reductions, as well as legal and advisory fees related to shareholder activism defense costs regarding our former CEO’s retirement and transition in the first quarter of 2026 and significant board of director refreshment that are non-recurring and outside the ordinary course of our business. For additional details, refer to Note 19 in our condensed consolidated financial statements.
(3)Impairment of goodwill was recognized as a result of impairment indicators and quantitative tests indicating the fair value of the Technology reporting unit was below the carrying value as of March 31, 2026. For additional details, refer to Note 4 in our condensed consolidated financial statements.
Adjusted Cost of Revenue
Adjusted Cost of Revenue is a non-GAAP financial measure that we define as cost of revenue adjusted for (i) depreciation and amortization, (ii) stock-based compensation, (iii) acquisition-related costs, net, and (iv) restructuring costs, as applicable. We view these adjustments to allow 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. Adjusted Cost of Revenue is also computable by subtracting Adjusted Gross Profit from revenue. We believe Adjusted Cost of Revenue 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. The following is a reconciliation of Adjusted Cost of Revenue to our cost of revenue, the most directly comparable financial measure calculated in accordance with GAAP, for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
Cost of revenue, excluding depreciation and amortization | $ | 35,293 | $ | 43,178 | |||||||
Add: | |||||||||||
| Amortization of intangible assets, cost of revenue | 4,190 | 4,596 | |||||||||
| Depreciation of property and equipment, cost of revenue | 3,547 | 2,980 | |||||||||
Cost of revenue | 43,030 | 50,754 | |||||||||
Less: | |||||||||||
| Amortization of intangible assets, cost of revenue | (4,190) | (4,596) | |||||||||
| Depreciation of property and equipment, cost of revenue | (3,547) | (2,980) | |||||||||
| Stock-based compensation | (667) | (1,221) | |||||||||
Acquisition-related costs, net(1) | (7) | (194) | |||||||||
Restructuring costs(2) | (302) | (1,398) | |||||||||
Adjusted Cost of Revenue | $ | 34,317 | $ | 40,365 | |||||||
__________________
(1)Acquisition-related costs, net include deferred retention expenses incurred as part of business combinations.
(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.
Adjusted Operating Expenses
Adjusted Operating Expenses is a non-GAAP financial measure that we define as total operating expenses adjusted for (i) depreciation and amortization, (ii) stock-based compensation, (iii) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities for potential earn-out payments, (iv) impairment of goodwill, and (v) restructuring costs, as applicable. We view these adjustments to allow 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. We believe Adjusted Operating Expenses 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. The following is a reconciliation of Adjusted Operating Expenses to our total operating expenses, the most directly comparable financial measure calculated in accordance with GAAP, as well as a calculation of total operating expenses and Adjusted Operating Expenses as a percentage of total revenue, for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Total operating expenses | $ | 141,940 | $ | 56,406 | |||||||
| Less: | |||||||||||
Depreciation and amortization | (12,115) | (12,320) | |||||||||
| Stock-based compensation | (3,103) | (6,322) | |||||||||
Acquisition-related costs, net(1) | (2,430) | (2,835) | |||||||||
Impairment of goodwill(2) | (95,501) | — | |||||||||
Restructuring costs(3) | (1,489) | (2,160) | |||||||||
| Adjusted Operating Expenses | $ | 27,302 | $ | 32,769 | |||||||
Total operating expenses as a % of revenue | 201 | % | 71 | % | |||||||
Adjusted Operating Expenses as a % of revenue | 39 | % | 41 | % | |||||||
__________________
(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)Impairment of goodwill was recognized as a result of impairment indicators and quantitative tests indicating the fair values of the Technology reporting unit was below the carrying values as of March 31, 2026. For additional details, refer to Note 4 in our condensed consolidated financial statements.
(3)Restructuring costs include severance and other team member costs from workforce reductions, as well as legal and advisory fees related to shareholder activism defense costs regarding our former CEO’s retirement and transition in the first quarter of 2026 and significant board of director refreshment that are non-recurring and outside the ordinary course of our business. For additional details, refer to Note 19 in our condensed consolidated financial statements.
Adjusted Net Income and Adjusted Net Income Per Share
Adjusted Net Income is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) restructuring costs, (iv) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities, (v) impairment of goodwill, and (vi) non-cash interest expense related to debt facilities, as applicable. We believe Adjusted Net Income provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. The following is a reconciliation of Adjusted Net Income to our net loss, the most directly comparable financial measure calculated in accordance with GAAP, for the three months ended March 31, 2026 and 2025:
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Numerator: | (in thousands, except share and per share amounts) | ||||||||||
| Net loss | $ | (111,026) | $ | (23,742) | |||||||
Add: | |||||||||||
Stock-based compensation | 3,770 | 7,543 | |||||||||
| Amortization of acquired intangibles | 8,113 | 8,732 | |||||||||
Restructuring costs(1) | 1,791 | 3,558 | |||||||||
Acquisition-related costs, net(2) | 2,437 | 3,029 | |||||||||
Impairment of goodwill(3) | 95,501 | — | |||||||||
| Non-cash interest expense related to debt facilities | 633 | 1,208 | |||||||||
Adjusted Net Income | $ | 1,219 | $ | 328 | |||||||
| Denominator: | |||||||||||
| Weighted-average shares outstanding used in calculating net loss per share, basic and diluted, and Adjusted Net Income per share, basic | 72,593,210 | 68,552,084 | |||||||||
| Non-GAAP dilutive effect of stock-based awards | 622,525 | 225,507 | |||||||||
| Non-GAAP weighted-average shares outstanding used in calculating Adjusted Net Income per share, diluted | 73,215,735 | 68,777,591 | |||||||||
| Net loss per share, basic and diluted | $ | (1.53) | $ | (0.35) | |||||||
| Adjusted Net Income per share, basic and diluted | $ | 0.02 | $ | 0.01 | |||||||
______________
(1)Restructuring costs include severance and other team member costs from workforce reductions, as well as legal and advisory fees related to shareholder activism defense costs regarding our former CEO’s retirement and transition in the first quarter of 2026 and significant board of director refreshment that are non-recurring and outside the ordinary course of our business. For additional details, refer to Note 19 in our condensed consolidated financial statements.
(2)Acquisition-related costs, net includes third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments.
(3)Impairment of goodwill and intangible assets was recognized as a result of impairment indicators and quantitative tests indicating the fair values of the Technology reporting unit was below the carrying values as of March 31, 2026. For additional details, refer to Note 4 in our condensed consolidated financial statements.
DOS to Ignite Migration Potential Churn Analysis
The graphic below outlines our current expectations regarding annual recurring revenue (ARR) potentially at risk in connection with DOS to Ignite migration, as well as details regarding clients that have provided notice regarding churn or down-sell in connection with DOS to Ignite migration that will negatively impact ARR in 2026 and 2027. As described below, our current expectation is that we retain a portion of the potentially at-risk ARR and we expect a portion of the potentially at-risk ARR may churn or down-sell in 2026 and 2027, despite our efforts to retain those relationships. We view certain portions of this ARR to be likely to churn or down-sell; however, we have strategies and initiatives in place that aim to retain this ARR.
Health Catalyst Investor Relations Contact:
Stephanie St. Clair
Finance and Investor Relations, SVP
+1 (855)-309-6800
ir@healthcatalyst.com
Health Catalyst Media Contact:
Kathryn Larson
Director, Public Relations and Communications
media@healthcatalyst.com
FAQ
How did Health Catalyst (HCAT) perform financially in Q1 2026?
Health Catalyst reported Q1 2026 revenue of $70.8 million, down 11% year over year. A $95.5 million goodwill impairment contributed to a $111.0 million net loss, while Adjusted EBITDA improved to $9.1 million and adjusted net income reached $1.2 million.
What caused Health Catalyst’s large net loss in Q1 2026?
The $111.0 million Q1 2026 net loss was mainly driven by a $95.5 million goodwill impairment in the Technology reporting unit. This non-cash charge overshadowed operating improvements and higher Adjusted EBITDA, making GAAP results significantly weaker than the prior year quarter.
How did Health Catalyst’s non-GAAP metrics trend in Q1 2026?
Non-GAAP performance improved despite lower revenue. Adjusted Gross Margin increased to 51%, Adjusted EBITDA rose 46% to $9.1 million, and adjusted net income was $1.2 million, or $0.02 per diluted share, reflecting cost controls and add-backs for non-cash and non-recurring items.
What 2026 guidance did Health Catalyst (HCAT) provide?
For Q2 2026, Health Catalyst expects revenue of $68–$70 million and Adjusted EBITDA of $9–$10 million. For full-year 2026, it forecasts revenue of $260–$265 million and Adjusted EBITDA of $30–$33 million, based on its current operating plans and visibility.
What is Health Catalyst’s cash and debt position after Q1 2026?
As of March 31, 2026, Health Catalyst held $59.9 million in cash and cash equivalents and $49.0 million in short-term investments. Long-term debt totaled about $153.4 million, including current and non-current portions, providing liquidity alongside a leveraged capital structure.
How is the DOS to Ignite migration affecting Health Catalyst’s ARR?
The company highlights annual recurring revenue potentially at risk from migrating clients from DOS to Ignite. It expects some churn and down-sell in 2026 and 2027, though it aims to retain a portion of this ARR through specific client retention strategies and initiatives.