Health Catalyst’s third quarter results were met with a positive market reaction as the company delivered revenue above Wall Street expectations despite flat year-over-year performance. Management attributed the quarter’s outcome to solid execution in the Technology segment, which saw continued demand for its applications, and progress in improving gross margins through cost controls and operational changes. CEO Dan Burton highlighted that new client additions and successful client case studies, such as Temple University Health System’s $7.5 million in savings, underscored the real-world impact of its solutions. Management also noted ongoing efforts to optimize the business through restructuring less profitable service contracts and a disciplined approach to capital allocation.
Is now the time to buy HCAT? Find out in our full research report (it’s free for active Edge members).
Health Catalyst (HCAT) Q3 CY2025 Highlights:
- Revenue: $76.32 million vs analyst estimates of $75.01 million (flat year on year, 1.7% beat)
- Adjusted EPS: $0.06 vs analyst estimates of $0.07 (in line)
- Adjusted Operating Income: -$614,000 vs analyst estimates of -$9.53 million (-0.8% margin, 93.6% beat)
- Revenue Guidance for Q4 CY2025 is $73.5 million at the midpoint, below analyst estimates of $74.81 million
- EBITDA guidance for the full year is $41 million at the midpoint, above analyst estimates of $40.24 million
- Operating Margin: -22.9%, down from -17.9% in the same quarter last year
- Market Capitalization: $160.2 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Health Catalyst’s Q3 Earnings Call
- Jared Haas (William Blair) asked about the delayed Ignite migration timeline and why some clients remain on the legacy DOS platform. CEO Dan Burton and President Ben Albert explained that client flexibility and competing priorities drive the slower pace, with most clients expected to migrate by 2026.
- Jessica Tassan (Piper Sandler) sought a detailed breakdown of technology revenue between new client wins and retention, as well as expectations for sequential tech revenue growth. Management clarified that app layer growth and new client additions offset migration-related headwinds, while one-time revenues impacted quarter-to-quarter trends.
- Elizabeth Anderson (Evercore ISI) questioned the impact of one-time revenues and the timeline for returning to positive growth amid customer challenges. CFO Jason Alliger quantified the nonrecurring items, while Burton and Albert discussed pipeline trends and the focus on cost management solutions for 2026.
- Richard Close (Canaccord Genuity) probed the rationale behind migration flexibility and how Health Catalyst ranks among hospital IT priorities, especially regarding AI readiness. Management responded that DOS remains valuable for core data needs, enabling clients to leverage AI without immediate migration, and highlighted ongoing AI product investments.
- Daniel Grosslight (Citi) asked whether Health Catalyst would consider ROI-based revenue models for technology solutions. President Ben Albert indicated openness to such models if client data supports measurable outcomes, especially as application adoption expands.
Catalysts in Upcoming Quarters
Our analysts will be watching (1) the pace and client response to the Ignite migration flexibility, (2) sustained margin improvement from operational restructuring and broader adoption of AI, and (3) the degree to which new applications in cost management and ambulatory intelligence drive client wins and revenue mix. Execution in retaining and expanding key client relationships will also be instrumental.
Health Catalyst currently trades at $2.27, down from $2.90 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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