Health Catalyst Q2 Earnings Call Highlights

Health Catalyst Q2 revenue reached $70.5 million , above guidance, while adjusted EBITDA of $9.9 million landed at the high end of expectations. Operating expenses declined as Project Nexus savings began to take effect. Health Catalyst sold Vitalware and Med-Metrix for $147 million and used the proceeds to repay roughly $160 million of debt, leaving the company debt-free on a pro forma basis and reducing annual cash interest expense by approximately $16.5 million. The company lowered its 2026 outlook to $246 million-$249 million in revenue and $18 million-$18.5 million in adjusted EBITDA, citing the divestiture, customer migration-related churn, services pressure and continued investment in Ignite, AI and other technology initiatives.

Health Catalyst reported second-quarter 2026 revenue above the high end of its guidance range and adjusted EBITDA at the high end of its outlook, while outlining a strategic shift following the July 31 divestiture of its Vitalware and Med--Metrix businesses. Chief Executive Officer Ben Albert said the company’s second-quarter performance reflected progress under Project Nexus, an initiative aimed at simplifying operations, reducing costs and focusing investment on its core technology opportunities. He said the company is in the early stages of a multiyear transformation and continues to face revenue pressure tied to platform migrations and certain lower-margin services work.

For the quarter ended June 30, Health Catalyst reported total revenue of $70.5 million, exceeding its prior guidance range of $68 million to $70 million. Technology revenue was $48.8 million, while professional services revenue was $21.7 million. Adjusted gross margin was 51%, compared with 50% in the year-earlier period. Adjusted technology gross margin declined to 63% from 66%, which Chief Financial Officer Jason Alger attributed to costs associated with migrating customers to the Ignite platform and deployment costs incurred before revenue recognition begins. Adjusted professional services gross margin increased to 22% from 18% a year earlier. Adjusted operating expenses fell to $25.9 million, or 37% of revenue, from $30.6 million, or 38% of revenue, in the prior-year quarter. Alger said Project Nexus savings were partially reflected in the quarter, with the full quarterly run rate expected in the second half. Adjusted EBITDA totaled $9.9 million, at the high end of the company’s $9 million to $10 million guidance range. Adjusted net income per share was $0.04, based on a weighted-average share count of 74 million.

Health Catalyst completed the divestiture of Vitalware and Med-Metrix on July 31 for $147 million in total cash consideration. Net proceeds were $145.5 million after transaction costs, subject to customary adjustments. The company used the sale proceeds and cash on hand to fully repay approximately $160 million in credit-facility debt, including accrued interest and a prepayment premium. On a pro forma basis, assuming the transaction and debt repayment had occurred at quarter-end, Health Catalyst would have held about $82 million of cash equivalents and short-term investments and carried no debt, Alger said. Albert said Vitalware was a strong business but was outside the company’s highest-conviction technology opportunities. He added that the revenue-cycle-management market had become more competitive and that growing Vitalware would have required significant additional investment. Alger said the debt repayment is expected to eliminate approximately...