Health Catalyst (NASDAQ:HCAT) executives used the company’s fourth-quarter and full-year 2025 earnings call to outline a leadership transition, discuss the financial impact of continued restructuring and platform migrations, and preview changes to how the company will communicate performance metrics going forward.
Leadership transition and strategic review
CEO Ben Albert, who said he stepped into the role last month following Dan Burton’s departure as CEO and from the board, told investors he has conducted a “comprehensive review” of the business and intends to run the company with greater focus and execution discipline. Albert said the company has already tightened leadership responsibilities, including appointing general managers to lead the interoperability and cybersecurity businesses and transitioning the chief commercial officer role to an internal successor. He added that the company has opened searches for both a chief operating officer and a chief marketing officer.
When asked directly whether the strategic review includes the possibility of selling the company, Albert said management is “turning over every rock” to position the company for shareholder value, but did not provide a yes-or-no answer. He said the company is “just in an assessment mode” and focused on “driving value.”
Full-year and fourth-quarter 2025 results
Chief Financial Officer Jason Alger reported full-year 2025 revenue of $311.1 million and Adjusted EBITDA of $41.4 million. In the fourth quarter, total revenue was $74.7 million, down from $79.6 million in the prior-year period, with technology revenue of $51.9 million and professional services revenue of $22.8 million.
Alger attributed the year-over-year decline in quarterly revenue primarily to lower professional services revenue, citing reductions in FTE service offerings and the company’s exit from “unprofitable pilot ambulatory TAMS arrangements.” For the full year, total revenue grew 1% year over year, driven by a 7% increase in technology revenue to $208.3 million, while professional services revenue declined 8% as the company prioritized margin improvement and resource efficiency.
Profitability metrics improved on an adjusted basis. Adjusted gross margin in the fourth quarter was 53.5%, up from 46.6% a year earlier. For the full year, adjusted gross margin was 51.1%, including technology gross margin of 67.4% and professional services gross margin of 18.3%. Alger said these results reflected restructuring benefits, partially offset by migration-related cost headwinds.
Adjusted operating expenses were $26.2 million in Q4, or 35% of revenue, compared with $29.2 million (37% of revenue) in Q4 2024. For the full year, adjusted operating expenses were $117.7 million, or 38% of revenue, down from $123.4 million (40% of revenue) in 2024. Alger attributed the change to restructuring actions, disciplined headcount management, and tighter discretionary spending control. Adjusted operating expenses also declined by roughly $2 million sequentially versus Q3 2025, which he said reflected the full-quarter benefit of earlier actions including workforce optimization, professional services contract restructuring, and operating efficiency initiatives.
On a GAAP basis, Alger noted the company incurred $110.2 million of impairment charges on goodwill and intangible assets during 2025, which he said were driven primarily by a decrease in the company’s consolidated market capitalization and revisions to its forecast, “and not a write-down of any specific acquisition.” He said these charges were a main driver of GAAP net loss widening to $178 million in 2025 from $69.5 million in 2024.
Adjusted EBITDA was $13.8 million in Q4 2025, up from $7.9 million a year earlier. Adjusted EBITDA for the full year was $41.4 million, which Alger said represented 59% year-over-year growth. The company reported adjusted net income per share of $0.08 for Q4 and $0.19 for the full year, with weighted average shares of approximately 71.0 million for Q4 and 69.9 million for the year.
Health Catalyst ended 2025 with approximately $96 million of cash equivalents and short-term investments and $161 million of term loan debt outstanding.
Bookings, retention, and demand environment
Alger said the company ended 2025 with 32 net new logos, above its target of 30 but below its initial expectation of 40. He said these net new logos had average ARR plus non-recurring revenue near the midpoint of a $300,000 to $700,000 range. Tech plus TAMS dollar-based retention finished the year at 93%.
In discussing demand, Albert said the company’s assessment in Q4 indicated providers are under increased pressure, with “profitability pockets” eroding, payer mix shifting toward more Medicare patients, and commercial payments not rising at the same pace. He said Health Catalyst is seeing activity particularly around cost and labor management, while also citing ongoing demand tied to clinical quality.
Albert and Alger were also questioned about retention dynamics. Alger said the company generally does not lose enterprise relationships entirely and that pressure is concentrated on the “data platform infrastructure” component, which can lead to downselling. He said clients typically elect to keep the company’s applications, including integrated applications, even when platform infrastructure downselling occurs.
Ignite migration, DOS-related pressure, and outlook
Management highlighted ongoing pressure tied to migrations from the DOS platform to Ignite. Alger said Q1 2026 revenue is expected to decline compared with Q4 2025 due to three primary drivers:
- A roughly $2 million reduction in “TEMS-related revenue” due to downselling and further exits from certain lower-margin TEMS arrangements
- Approximately $1.5 million of revenue decline tied to DOS-to-Ignite migration-related “data platform pressure”
- Approximately $1.5 million decrease in non-recurring revenue, driven primarily by timing of project completions or certain renewals
For Q1 2026, the company guided to total revenue of $68 million to $70 million and Adjusted EBITDA of $7 million to $8 million.
Alger said the company has made “substantial progress” migrating DOS clients to Ignite, but still has work ahead. He said that across 2026 and 2027, the company has been notified of roughly $12.5 million in DOS-related ARR downsell and churn. Additionally, he said the company estimates $52 million in DOS-related ARR may be subject to negotiation in 2026 and 2027, including $35 million estimated to be data platform infrastructure ARR. Alger said data platform infrastructure is where the company is seeing the highest degree of pressure, though the company expects to retain application relationships with clients.
On timing, Alger said he expects about 75% of the $12.5 million notified downsell/churn to impact 2026, with more of the impact occurring around midyear and into the second half of 2026.
Albert said that at the data platform infrastructure level, clients may consider cross-industry technology solutions depending on strategy, but he argued they still need Health Catalyst’s expertise, IP, and applications on top of that infrastructure. Alger said that after 2027, the company would expect to “generally be through” the data platform infrastructure migration headwinds.
Guidance approach and planned metric changes
Albert said the company is not yet in a position to provide annual guidance because management’s ongoing strategic and operational review could have a significant impact on financial results. The company provided only Q1 revenue and Adjusted EBITDA guidance and said it plans to return with full-year revenue and Adjusted EBITDA guidance no later than the Q1 earnings call in May.
Albert also said Health Catalyst plans to simplify how it communicates its business model and performance, including offering a “new set of bookings and retention metrics” that are easier to understand and more directly aligned with execution.
Alger said the company has invested in migration-related personnel and contractors and is adding R&D investments in AI and India, which he said could create “near-term financial pain,” but are intended to support cost structure improvement in the second half of the year and beyond.
About Health Catalyst (NASDAQ:HCAT)
Health Catalyst (NASDAQ: HCAT) is a healthcare data and analytics technology company founded in 2008 and headquartered in Salt Lake City, Utah. The company went public in 2019 and has since focused on delivering a unified data platform that helps healthcare organizations aggregate and analyze clinical, financial and operational information.
The core of Health Catalyst’s offering is the Data Operating System (DOS), a modular data management platform that integrates disparate data sources—from electronic health records to claims and patient-generated data—into a single analytics environment.
