Company Announcements

Health Catalyst Reports Fourth Quarter and Year End 2023 Results

Source: GlobeNewswire
Health Catalyst Reports Fourth Quarter and Year End 2023 Results

SOUTH JORDAN, Utah., Feb. 22, 2024 (GLOBE NEWSWIRE) -- Health Catalyst, Inc. ("Health Catalyst," Nasdaq: HCAT), a leading provider of data and analytics technology and services to healthcare organizations, today reported financial results for the quarter and year ended December 31, 2023.

“For the full year 2023, I am pleased to share that we achieved strong performance across our business, including total revenue of $295.9 million, with this result beating the midpoint of our most recent guidance, and Adjusted EBITDA of $11.0 million, with this result in line with the midpoint of our most recent guidance. Additionally, I am pleased by our meaningful 2023 Adjusted EBITDA margin progress relative to 2022, and I am excited that we anticipate material year-over-year Adjusted EBITDA growth again in 2024, at a rate of approximately 125%+,” said Dan Burton, CEO of Health Catalyst.

“Additionally, in connection with our annual planning process, we are enacting multiple Leadership level changes. First, Bryan Hunt will be transitioning from CFO to a Strategic Advisor role, effective March 1, 2024. I would like to express my heartfelt gratitude to Bryan for his countless contributions to Health Catalyst’s growth and success over the last ten years, including his service as our CFO, helping us navigate through a global pandemic, record high inflation, and a period of tremendous financial pressure for our health system clients. Bryan has been an extraordinary leader and partner to me and to our Board of Directors, and we are grateful for his dedication, professionalism and commitment to the company and its mission. I am also pleased to share that Jason Alger will begin as Health Catalyst’s CFO, effective March 1, 2024. Jason has been with Health Catalyst for more than ten years, having contributed significantly during that time, including most recently as our Chief Accounting Officer. Prior to joining Health Catalyst, Jason held various roles at Ernst & Young. My fellow board members and I, along with our finance organization, have the utmost confidence in and respect for Jason. Also, effective March 1, 2024, Dan LeSueur will be promoted to Health Catalyst’s Chief Operating Officer role, with responsibilities spanning both our Technology and Professional Services business units. Dan brings a wealth of experience to this role, having had leadership responsibility across many functions during his twelve years at Health Catalyst, most recently as the Senior Vice President and General Manager of our Professional Services Business Unit. I am thrilled to have someone with Dan’s breadth and depth of expertise to lead this important strategic function as Health Catalyst continues on its maturation path, focusing on operational excellence to enable scalable growth and profitability.”

Financial Highlights for the Three and Twelve Months Ended December 31, 2023
Key Financial Measures

 Three Months Ended
December 31,
 Year over Year Change
 Twelve Months Ended
December 31,
 Year over Year Change
  2023   2022    2023   2022  
GAAP Financial Measures:(in thousands, except percentages)
  (in thousands, except percentages)
  
Technology revenue$47,100  $44,664  5% $187,583  $176,288  6%
Professional services revenue$27,984  $24,498  14% $108,355  $99,948  8%
Total revenue$75,084  $69,162  9% $295,938  $276,236  7%
Loss from operations$(32,785) $(36,745) 11% $(126,897) $(140,005) 9%
Net loss$(30,312) $(35,782) 15% $(118,147) $(137,403) 14%
Non-GAAP Financial Measures:(1)           
Adjusted Technology Gross Profit$31,388  $30,725  2% $127,744  $122,284  4%
Adjusted Technology Gross Margin 67%  69%    68%  69%  
Adjusted Professional Services Gross Profit$3,305  $4,325  (24)% $16,316  $23,565  (31)%
Adjusted Professional Services Gross Margin 12%  18%    15%  24%  
Total Adjusted Gross Profit$34,693  $35,050  (1)% $144,060  $145,849  (1)%
Total Adjusted Gross Margin 46%  51%    49%  53%  
Adjusted EBITDA$1,352  $(603) 324% $11,021  $(2,487) 543%

________________________

(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.

Other Key Metrics

 As of December 31,
 2023 2022 2021
DOS Subscription Clients        109  98  90 
      
 Year Ended December 31,
 2023 2022 2021
Dollar-based Retention Rate        100% 100% 112%
         

Financial Outlook

Health Catalyst provides forward-looking guidance on total revenue, a GAAP measure, and Adjusted EBITDA, a non-GAAP measure.

For the first quarter of 2024, we expect:

  • Total revenue between $72.5 million and $76.5 million, and
  • Adjusted EBITDA between $2.0 million and $4.0 million

For the full year of 2024, we expect:

  • Total revenue between $304 million and $312 million, and
  • Adjusted EBITDA between $24 million and $26 million

We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for 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

The company will host a conference call to review the results today, Thursday, February 22, 2024 at 5:00 p.m. E.T. The conference call can be accessed by dialing (800) 267-6316 for U.S. participants, or (203) 518-9783 for international participants, and referencing conference ID “HCAT Q423.” 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 is a leading provider of data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable, data-informed healthcare improvement. Its clients leverage the cloud-based data platform — powered by data from more than 100 million patient records and encompassing trillions of facts — as well as its analytics software and professional services expertise to make data-informed decisions and realize measurable clinical, financial, and operational improvements. Health Catalyst envisions a future in which all healthcare decisions are data informed.

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 and our CEO's social media accounts, 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 and our financial outlook for Q1 and fiscal year 2024. 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; (v) macroeconomic challenges (including high inflationary and/or high interest rate environments, or market volatility caused by bank failures and measures taken in response thereto) and any new public health crisis; and (vi) 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 September 30, 2023 that was filed with the SEC on November 6, 2023 and the Annual Report on Form 10-K for the year ended December 31, 2023 expected to be filed with the SEC on or about February 22, 2024. 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 December 31,
  2023   2022 
Assets   
Current assets:   
Cash and cash equivalents$106,276  $116,312 
Short-term investments 211,452   247,178 
Accounts receivable, net 60,290   47,970 
Prepaid expenses and other assets 15,379   16,335 
Total current assets 393,397   427,795 
Property and equipment, net 25,712   25,928 
Operating lease right-of-use assets 13,927   16,658 
Intangible assets, net 73,384   92,189 
Goodwill 190,652   185,982 
Other assets 4,742   3,734 
Total assets$701,814  $752,286 
Liabilities and stockholders’ equity   
Current liabilities:   
Accounts payable$6,641  $4,424 
Accrued liabilities 23,282   19,691 
Deferred revenue 55,753   54,961 
Operating lease liabilities 3,358   3,434 
Total current liabilities 89,034   82,510 
Convertible senior notes 228,034   226,523 
Deferred revenue, net of current portion 77   105 
Operating lease liabilities, net of current portion 17,676   18,017 
Other liabilities 74   121 
Total liabilities 334,895   327,276 
Commitments and contingencies   
Stockholders’ equity:   
Preferred stock, $0.001 par value per share and additional paid-in capital; 25,000,000 shares authorized and no shares issued and outstanding as of December 31, 2023 and 2022              
Common stock, $0.001 par value per share, and additional paid-in capital; 500,000,000 shares authorized as of December 31, 2023 and 2022; 58,295,491 and 55,261,922 shares issued and outstanding as of December 31, 2023 and 2022, respectively         1,484,056   1,424,681 
Accumulated deficit         (1,117,170)  (999,023)
Accumulated other comprehensive income (loss)         33   (648)
Total stockholders’ equity          366,919   425,010 
Total liabilities and stockholders’ equity        $701,814  $752,286 
        


Condensed Consolidated Statements of Operations
(in thousands, except per share data, unaudited)

 Three Months Ended
December 31,
 Twelve Months Ended
December 31,
  2023   2022   2023   2022 
Revenue:     
Technology$47,100  $44,664  $187,583  $176,288 
Professional services 27,984   24,498   108,355   99,948 
Total revenue 75,084   69,162   295,938   276,236 
Cost of revenue, excluding depreciation and amortization:       
Technology(1)(2)(3) 16,719   14,747   62,474   56,642 
Professional services(1)(2)(3) 27,857   23,359   101,631   86,407 
Total cost of revenue, excluding depreciation and amortization 44,576   38,106   164,105   143,049 
Operating expenses:       
Sales and marketing(1)(2)(3) 17,271   20,373   67,321   87,514 
Research and development(1)(2)(3) 20,288   19,614   72,627   75,680 
General and administrative(1)(2)(3)(4)(5) 15,430   16,150   76,559   61,701 
Depreciation and amortization 10,304   11,664   42,223   48,297 
Total operating expenses 63,293   67,801   258,730   273,192 
Loss from operations (32,785)  (36,745)  (126,897)  (140,005)
Loss on extinguishment of debt           
Interest and other expense, net 2,616   1,022   9,106   (1,678)
Loss before income taxes (30,169)  (35,723)  (117,791)  (141,683)
Income tax provision (benefit)(2) 143   59   356   (4,280)
Net loss$(30,312) $(35,782) $(118,147) $(137,403)
Net loss per share, basic$(0.53) $(0.66) $(2.09) $(2.56)
Net loss per share, diluted$(0.53) $(0.66) $(2.09) $(2.63)
Weighted-average shares outstanding used in calculating net loss per share, basic 57,476   54,496   56,418   53,722 
Weighted-average shares outstanding used in calculating net loss per share, diluted 57,476   54,496   56,418   54,080 

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

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023  2022  2023  2022
Stock-Based Compensation Expense:(in thousands) (in thousands)
Cost of revenue, excluding depreciation and amortization:       
Technology        $458 $495 $1,866 $2,058
Professional services         1,687  2,148  7,369  8,230
Sales and marketing         4,933  7,157  20,982  28,082
Research and development         2,536  3,295  11,213  12,938
General and administrative         3,397  5,653  14,326  20,796
Total        $13,011 $18,748 $55,756 $72,104

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

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023  2022  2023  2022 
Acquisition-related costs, net:(in thousands) (in thousands)
Cost of revenue, excluding depreciation and amortization:       
Technology        $65 $84 $273 $351 
Professional services         93  146  391  655 
Sales and marketing         393  337  697  1,894 
Research and development         200  687  787  3,045 
General and administrative         1,904  452  3,609  (1,051)
Income tax benefit               (4,533)
Total        $2,655 $1,706 $5,757 $361 
        

(3) Includes restructuring costs, as follows:

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023  2022  2023  2022
Restructuring costs:(in thousands) (in thousands)
Cost of revenue, excluding depreciation and amortization:       
Technology        $484 $229 $496 $229
Professional services         1,398  892  1,832  1,139
Sales and marketing         1,210  1,464  2,415  3,023
Research and development         3,051  1,153  3,337  3,410
General and administrative         624  188  742  624
Total        $6,767 $3,926 $8,822 $8,425

(4) Includes litigation costs, as follows:

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023  2022  2023  2022
Litigation costs:(in thousands) (in thousands)
General and administrative        $ $ $21,279 $

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

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023  2022  2023  2022
Non-recurring lease-related charges:(in thousands) (in thousands)
General and administrative        $1,400 $98 $4,081 $3,798
            


Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)

 Year Ended December 31,
  2023   2022 
Cash flows from operating activities   
Net loss$(118,147) $(137,403)
Adjustments to reconcile net loss to net cash used in operating activities:   
Stock-based compensation expense 55,756   72,104 
Depreciation and amortization 42,223   48,297 
Investment (discount accretion) and premium amortization (9,720)  (2,236)
Impairment of long-lived assets 4,081   5,023 
Non-cash operating lease expense 2,990   3,231 
Provision for expected credit losses 1,821   691 
Amortization of debt discount and issuance costs 1,511   1,500 
Deferred tax provision (benefit) 8   (4,523)
Change in fair value of contingent consideration liabilities    (4,668)
Payment of acquisition-related contingent consideration    (3,234)
Other 67   (145)
Change in operating assets and liabilities:   
Accounts receivable (13,663)  788 
Prepaid expenses and other assets 164   (478)
Accounts payable, accrued liabilities, and other liabilities 4,868   (4,702)
Deferred revenue (1,487)  (5,997)
Operating lease liabilities (3,552)  (3,518)
Net cash used in operating activities (33,080)  (35,270)
Cash flows from investing activities   
Proceeds from the sale and maturity of short-term investments 336,801   315,171 
Purchase of short-term investments (290,836)  (308,961)
Capitalization of internal use software (11,957)  (12,987)
Acquisition of businesses, net of cash acquired (11,392)  (27,846)
Purchases of property and equipment (1,236)  (2,167)
Purchase of intangible assets (1,118)  (2,260)
Proceeds from the sale of property and equipment 31   29 
Net cash provided by (used in) investing activities 20,293   (39,021)
Cash flows from financing activities   
Proceeds from employee stock purchase plan 3,588   3,153 
Repurchase of common stock (1,808)  (8,393)
Proceeds from exercise of stock options 950   3,969 
Payments of acquisition-related consideration    (1,342)
Net cash provided by (used in) financing activities 2,730   (2,613)
Effect of exchange rate changes on cash and cash equivalents 21   (11)
Net decrease in cash and cash equivalents (10,036)  (76,915)
    
Cash and cash equivalents at beginning of period 116,312   193,227 
Cash and cash equivalents at end of period$106,276  $116,312 
        

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 Net Income (Loss), and Adjusted Net Income (Loss) 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. 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

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization, adding back stock-based compensation, acquisition-related costs, net, and 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 certain other non-recurring operating 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. The following is a reconciliation of revenue, the most directly comparable GAAP financial measure, to Adjusted Gross Profit, for the three and twelve months ended December 31, 2023 and 2022:

 Three Months Ended December 31, 2023
 (in thousands, except percentages)
 Technology Professional Services Total
Revenue$47,100  $27,984  $75,084 
Cost of revenue, excluding depreciation and amortization (16,719)  (27,857)  (44,576)
Gross profit, excluding depreciation and amortization 30,381   127   30,508 
Add:     
Stock-based compensation 458   1,687   2,145 
Acquisition-related costs, net(1) 65   93   158 
Restructuring costs(2) 484   1,398   1,882 
Adjusted Gross Profit$31,388  $3,305  $34,693 
Gross margin, excluding depreciation and amortization 65%  %  41%
Adjusted Gross Margin 67%  12%  46%

___________________

(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS and KPI Ninja acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions.

 Three Months Ended December 31, 2022
 (in thousands, except percentages)
 Technology Professional Services Total
Revenue        $44,664  $24,498  $69,162 
Cost of revenue, excluding depreciation and amortization (14,747)  (23,359)  (38,106)
Gross profit, excluding depreciation and amortization 29,917   1,139   31,056 
Add:     
Stock-based compensation 495   2,148   2,643 
Acquisition-related costs, net(1) 84   146   230 
Restructuring costs(2) 229   892   1,121 
Adjusted Gross Profit$30,725  $4,325  $35,050 
Gross margin, excluding depreciation and amortization 67%  5%  45%
Adjusted Gross Margin 69%  18%  51%

___________________
(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions.

 Twelve Months Ended December 31, 2023
 (in thousands, except percentages)
 Technology Professional Services Total
Revenue$187,583  $108,355  $295,938 
Cost of revenue, excluding depreciation and amortization (62,474)  (101,631)  (164,105)
Gross profit, excluding depreciation and amortization 125,109   6,724   131,833 
Add:     
Stock-based compensation 1,866   7,369   9,235 
Acquisition-related costs, net(1) 273   391   664 
Restructuring costs(2) 496   1,832   2,328 
Adjusted Gross Profit$127,744  $16,316  $144,060 
Gross margin, excluding depreciation and amortization 67%  6%  45%
Adjusted Gross Margin 68%  15%  49%

___________________
(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions.

 Twelve Months Ended December 31, 2022
 (in thousands, except percentages)
 Technology Professional
Services
 Total
Revenue$176,288  $99,948  $276,236 
Cost of revenue, excluding depreciation and amortization (56,642)  (86,407)  (143,049)
Gross profit, excluding depreciation and amortization 119,646   13,541   133,187 
Add:     
Stock-based compensation 2,058   8,230   10,288 
Acquisition-related costs, net(1) 351   655   1,006 
Restructuring costs(2) 229   1,139   1,368 
Adjusted Gross Profit$122,284  $23,565  $145,849 
Gross margin, excluding depreciation and amortization 68%  14%  48%
Adjusted Gross Margin 69%  24%  53%

__________________
(1) Acquisition-related costs, net include deferred retention expenses following the ARMUS, KPI Ninja, and Twistle acquisitions.
(2) Restructuring costs include severance and other team member costs from workforce reductions.

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 (benefit), (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the fair change in value of contingent consideration liabilities for potential earn-out payments, (vi) litigation costs, (vii) restructuring costs, 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, litigation costs, and non-recurring lease-related charges allows for more meaningful comparisons between operating results from period to period as this is 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 net loss, the most directly comparable GAAP financial measure, to Adjusted EBITDA, for the three and twelve months ended December 31, 2023 and 2022:

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023   2022   2023   2022 
 (in thousands) (in thousands)
Net loss$(30,312) $(35,782) $(118,147) $(137,403)
Add:       
Interest and other (income) expense, net (2,616)  (1,022)  (9,106)  1,678 
Income tax provision (benefit) 143   59   356   (4,280)
Depreciation and amortization 10,304   11,664   42,223   48,297 
Stock-based compensation 13,011   18,748   55,756   72,104 
Acquisition-related costs, net(1) 2,655   1,706   5,757   4,894 
Litigation costs(2)       21,279    
Restructuring costs(3) 6,767   3,926   8,822   8,425 
Non-recurring lease-related charges(4) 1,400   98   4,081   3,798 
Adjusted EBITDA$1,352  $(603) $11,021  $(2,487)

__________________
(1) 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. For additional details refer to Notes 1, 2, and 7 in our consolidated financial statements.
(2) Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Note 16 in our consolidated financial statements.
(3) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other miscellaneous charges. For additional details, refer to Note 11 in our consolidated financial statements.
(4) Non-recurring lease-related charges includes lease-related impairment charges for the subleased portion of our corporate headquarters. For additional details refer to Note 9 in our consolidated financial statements.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Share

Adjusted Net Income (Loss) is a non-GAAP financial measure that we define as net loss adjusted for (i) stock-based compensation, (ii) amortization of acquired intangibles, (iii) acquisition-related costs, net, including the deferred tax valuation allowance release from acquisitions, (iv) litigation costs, (v) restructuring costs, (vi) non-recurring lease-related charges, and (vii) non-cash interest expense related to our convertible senior notes. We believe Adjusted Net Income (Loss) 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 our net loss, the most directly comparable GAAP financial measure, to Adjusted Net Income (Loss), for the three and twelve months ended December 31, 2023 and 2022:

 Three Months Ended December 31, Twelve Months Ended December 31,
  2023   2022   2023   2022 
Numerator:(in thousands, except share and per share amounts)
Net loss$(30,312) $(35,782) $(118,147) $(137,403)
Add:       
Stock-based compensation 13,011   18,748   55,756   72,104 
Amortization of acquired intangibles 7,243   8,464   29,636   37,188 
Acquisition-related costs, net(1) 2,655   1,706   5,757   361 
Litigation costs(2)       21,279    
Restructuring costs(3) 6,767   3,926   8,822   8,425 
Non-recurring lease-related charges(4) 1,400   98   4,081   3,798 
Non-cash interest expense related to convertible senior notes 379   376   1,511   1,500 
Adjusted Net Income (Loss)$1,143  $(2,464) $8,695  $(14,027)
Denominator:       
Weighted-average number of shares used in calculating net loss per share, basic 57,476,187   54,496,128   56,418,397   53,721,702 
Non-GAAP weighted-average effect of dilutive securities 283,805      666,488    
Non-GAAP weighted-average number of shares used in calculating Adjusted Net Income (Loss) per share, diluted 57,759,992   54,496,128   57,084,885   53,721,702 
        
Adjusted Net Income (Loss) per share, basic$0.02  $(0.05) $0.15  $(0.26)
Adjusted Net Income (Loss) per share, diluted$0.02  $(0.05) $0.15  $(0.26)

______________
(1) 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, changes in fair value of contingent consideration liabilities for potential earn-out payments, and the deferred tax valuation allowance release from acquisitions. For additional details refer to Notes 1, 2, 7, and 15 in our consolidated financial statements.
(2) Litigation costs include costs related to litigation that are outside the ordinary course of our business. For additional details, refer to Note 16 in our consolidated financial statements.
(3) Restructuring costs include severance and other team member costs from workforce reductions, impairment of discontinued capitalized software projects, and other miscellaneous charges. For additional details, refer to Note 11 in our consolidated financial statements.
(4) Includes the lease-related impairment charge for the subleased portion of our corporate headquarters. For additional details refer to Note 9 in our consolidated financial statements.

Health Catalyst Investor Relations Contact:
Adam Brown
Senior Vice President, Investor Relations and FP&A
+1 (855) 309-6800
ir@healthcatalyst.com 

Health Catalyst Media Contact:
Tarah Neujahr Bryan
Chief Marketing Officer
media@healthcatalyst.com 


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