Q2 2026 Health Catalyst Inc Earnings Call Transcript
Key Points
- Health Catalyst Inc (HCAT) exceeded the high end of its Q2 2026 revenue guidance and met the midpoint of its adjusted EBITDA guidance.
- The company completed the divestiture of VitalWare, using proceeds to fully repay its credit facility debt, resulting in a debt-free balance sheet.
- The debt repayment eliminates approximately $19 million in annual GAAP interest expense, improving financial flexibility.
- Project Nexus is on track, with adjusted operating expenses down to 37% of revenue from 38% year-over-year, and the company expects to exceed its original cost savings target.
- The company maintains a strong cash position, ending Q2 with $103.4 million in cash and short-term investments, and pro forma cash of $82 million with zero debt.
- Health Catalyst Inc (HCAT) faces significant revenue headwinds from the DOS to IGNITE platform migration, with $12.5 million in notified ARR downsell and churn, and $52 million in additional at-risk ARR.
- The company's adjusted technology gross margin declined to 63% from 66% year-over-year due to migration costs and deployment expenses.
- Full-year 2026 adjusted gross margin is expected to be below 50%, impacted by the removal of VitalWare's higher-margin business and ongoing migration costs.
- The company anticipates exiting the year with services revenue closer to $55 million annually, at the lower end of its prior range, as clients bring managed services work in-house.
- Q3 2026 guidance is weak, with adjusted EBITDA expected to be breakeven to $500,000, reflecting continued investment and migration-related cost pressures.
Please stand by. Your meeting is about to begin.
Welcome to the Health Catalyst Second Quarter 2026 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation.
If you would like to ask a question at that time, please press *1 on your telephone keypad.
If at any point your question has been answered, you may remove yourself from the queue by pressing *2. To get to as many questions as we have time for, we do kindly ask that you please limit yourself to one question.
If you do have a follow-up, please re-enter the queue.
So others can hear your questions clearly, we also ask that you please pick up your handset for best sound quality.
Lastly, if you should require operator assistance, please press *0. I would now like to turn the call over to Stephanie St. Clair, Senior Vice President of Finance and Investor Relations. Please go ahead, ma'am.
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