HCAT - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Health Catalyst, Inc. Q4 2020 Earnings Conference Call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference to your speaker today, Adam Brown. Please go ahead, sir.

Adam Brown

XX, to of earnings XXXX, XXXX which on welcome the call both and ended quarter fourth and December afternoon, Health conference Catalyst's for of Good XXXX. the full-year My name is Brown. Adam analysis president vice relations planning senior the for of Catalyst. I'm Health and investor financial and officer; me call executive with Hunt, our Burton, our is And Bryan Dan chief on chief the and financial officer. as the Form our results are the our both issued at today, in X-K which can press related ir.healthcatalyst.com. our to found of well be disclosure available in complete Investor SEC, of A of Relations furnished as our release on section website

As be call available is call. today's a conclusion the recorded, of the reminder, and will following a replay being

provisions XXXX During Reform our Securities our statements we our the forward-looking and the be pandemic and of trends, the of of of regarding today upon statements operations, general should call, performance on our make rates, date. subsequent any and the harbor Act of as as views Litigation representing will of as safe based the conversion and results on current relied are pipeline expectations anticipated pursuant COVID-XX impact forward-looking views strategies business of not Private the These business. management's to

Dan Burton

thank you, this afternoon. who Thank and you has Adam, everyone to joined us

on the are to I commentary begin XXXX quarter. fourth-quarter from with will fourth-quarter some share other and our the full-year call financial We highlights excited our along XXXX financial results. performance, today's with

of First, macroeconomic with financial backdrop. let our performance, especially me share the in light I that pleased am

when highlight technology XX% the $XX.X our acquisition. the of am excluding these that loss which $XX.X growth was happy impact our year of I quarterly over million, million. Our revenue would represents was and the and of midpoint QX Vitalware guidance. XXXX XX% I exceeded recent our a was that XXXX Likewise, growth to results report EBITDA total year $X.X million, QX revenue adjusted

the to quarter highlights transition of and full the some from additional year. let Now, me

strategic of You company's our growth, with categories our scale. objective each categories. and that earnings measure of these results three previous from discuss recall calls, we improvement, quarterly our in you we'll will primary performance in And

category, first our sustaining improvements studies. and industry-leading examples first customer measurable share while enable case on massive, engagement. improvement, evaluating The is of for recently our customers I to published satisfaction improvements from ability will focused two newly documented

improvement with one our of customers, first The from and financial recovery vignette work journey their supporting operational our highlights to COVID-XX.

improvement and the our customers and leveraging their do to that meaningful you'll latter of current customers' the note, back COVID-XX And response. services some widened improvement. have work focus our leveraging target revenue on are and examples cost-related demonstrates focus outside technology While to to highlight both analytics as

ambulatory the optimize Community financial for in operations statements, ambulatory and Health productivity income Network metrics, analytics ambulatory solutions, our solution recovery First, setting including understand economic measures, COVID-XX and its to costing, and and leveraged DOS in telehealth. our data-informed future ambulatory million its revenue leveraging access performance, indicators revenue, Community retain data. plan rapid cycle for contracting improve by health, and shift Network, Health supported a and than outpatient more These insights ambulatory to growth performance of payer services, $XX.X

Billings and highlight initial and from of our revenue Clinic at data-informed various $X.X at of outside Billings COVID-XX. operations. a and Next, let identify work its to to Billings in recent led The optimize me improvement a million their solution reduction insights efforts the utilized denials. sources understand improvement denials its new

the ongoing the XXXX, a while system existing as future. respond to would continues the this that will organizations coming strain our commentary COVID-XX pandemic. we healthcare customers healthcare on be as objective cases, well rollout strategic perspective past under also which the anticipate as reiterate healthcare COVID-XX experiences the is strain national growth growth, our continued I months experience In we new near relationships. in over I Likewise, To ongoing start, given anticipate coupled to define logistics. next as growth providers category, adding on customer deepening will vaccine significant with category environment Our in we comment QX

continue effectively they to unprecedented focus this supporting time. manage successfully We through to customers on our ensure

optimization. encouraged meaningful pandemic chain We equipped as in respond also efficacy, supply feel including broader provider evidence prepared we the becoming logistics, healthcare planning, that the and is areas ongoing to and treatment better witnessed operational ecosystem capacity to

Lastly, early we progress of accelerated signs feel we on vaccination see optimistic efforts. as

a platform of segment. our additional technology detail customer existing COVID-XX in some note, crucial components our the foundational term, with our response, our of more pandemic. share seen which analytics overall about than has in usage I'll are the the to perspective usage pandemic, an technology continued COVID-XX since onset increase data Next, applications, of onset increase. XX% the Since starting our our on relationships the of customers' near of Of have particular

COVID-XX which full-year prior percent, retention retention performance. achieved see usage retention XXX% our years. we as number we technology significantly retention on with was our with across full-year full-year retention the performance, that our we professional we XXXX, a technology than financial in base, our XXXX and on services consistent QX high coming on financial shared member levels dollar-based which shared than improvement on on the operational general is toward said, both in more robust our technology in focusing as a dollar-based the the to lower our expect XXXX In XXXX dollar-based a to in XXX% imposed to end robust, last XXXX rate well XXX%. mid-XXs engaged historical work. professional have services meaningfully performance On basis, work, we of in line recovery earnings to of segment, XXX% call. led continue with basis, call, XXXX team earnings the of high increase XXXX, go-forward expectations COVID-XX That our what Given the continued performance dollar-based the services throughout our in go-forward customers On we've professional expect historical meaningful of consistent stronger be remain to clinical, strain a our by engagement

likely will still strain to of in in XXXX the this we first area historical half However, levels. relative some experience

a both was Finally, for for DOS services, customers technology XXX%. retention full-year combined professional dollar-based and basis our XXXX on

to transition commentary providing me addition. with anticipated context, XXXX on DOS subscription added first-half COVID-XX, let the entering we XXXX QX on lower a meaningfully shared additional nine and as originally DOS reminder, additions customers, new number customer anticipated of performance a provide than new of To full-year the was Now, we call. our as some result earnings some the year. new our XXXX, subscription for in line customer net Overall,

we significantly see second effectively a operating we adjusting the healthcare As to were commercial-grade with COVID-XX half entered robust XXXX, more the new for need environment, highlighting of pleased this to organizations data an customers suited solution. given is increased which analytics, financial imposed and analytics to on well Likewise, showed revenue cost-optimization and our the pandemic, address. the strain focus prospective by solution

shorter-term On the other to purchasing systems as health their COVID-XX it some financial some near-term in more uncertainty, hand, decisions. create cautious make continues

With the these conversion to unique rates encouraged pipeline dynamics with of at half XXXX play, we to progress XXXX. second-half see second were similar our

pre-pandemic anticipate more performance data performance, will pandemic we rollout the XXXX, much we XXXX, addition for analytics second net historic in we commercial-grade subscription highlighting somewhat of and DOS with operational for experienced what line be related to solution. to the a need of mid-teens. new half in Similar likely continued forward end-market in the by XXXX, the robust anticipate distraction COVID-XX vaccine and offset to Moving

on longer-term impact of to Moving the COVID-XX.

serve industry's potentially pre-pandemic and rollout pandemic tailwind As on let On begin normalcy, vaccine data will share a to analytics, to feel to and the related XXXX, we note, customer and the the return me the engagement. we overall our some significantly the toward optimistic an progress adoption patchwork solution homegrown replace commercial-grade of as highlighting of end need in comments of through a the data for systems. analytics that

related technology, the were customer scores Our distinction year see we customer product in are receive central through pleased the scores, chargemaster highlight was in organization. And our Vital-CDM new the accomplish analytics addition recently to front, the at the our industry. And our some revenue highest despite class that to base. management overall third been ranked share a acquisition, to product, to customer this our related to our Vitalware have we ability the to our marks in technology on a existing the recent to mission, this that high, our news satisfaction have customer This achieved best-in-class pleased and row has from grow XXXX. for product especially our the expand the pandemic, cases, remained relationships satisfaction

development Catalyst serves as Health Ferris Directors. would Catalyst Dr. I has announce like of XXXX, X, that Board the of the He the who our been General effective served the March Ferris, forward. chief on currently board Dr. board chair executive XXXX. on in Lastly, board past to the will observer officer Organization, Tim the its Fraser serve who I appointed will Fraser to service to of his contributions seven joined in are continue Bullock, succeed instrumental company a as the our growth significant member. experience since deeply and grateful XXXX grateful and for to been and to Fraser as am chair from has has an to as XXXX. role in over served his benefit as years we insights chair. guiding board his our His Physicians since moving continue Massachusetts has to and Health leadership

helps at appreciate excitement Ferris's appointment. over I that, alignment the heartfelt will turn am operating next significant the our he challenges during me Next, and to phase Bryan. And unique Bryan? to journey organizations. to company's this his principles. let express I our perspective healthcare increasingly add for Ferris's call most Dr. us mission, Dr. that attributes, me let of value cultural my as grateful our continue significant our anticipate With facing

Bryan Hunt

Dan. you, Thank

light results, Before diving Dan's of objective and backdrop the pandemic. strategic and that COVID-XX financial and pleased full-year especially say I the am our to and our comment results, XXXX with I macroeconomic category scale. quarterly full-year want I of will on now our sentiment in into echo fourth-quarter

of we in generated million the revenue. $XX.X XXXX, fourth total For quarter

the As XX% our outperformance over year increase year. guidance, Dan an of it relative mentioned, and an this to of represents represents midpoint

For million, growth was XXXX, representing QX year the XX% over XX% $XX.X also representing year. full-year over revenue $XXX.X for revenue million, XXXX was total our year year. Technology growth

XX% technology last revenue customer growth $XX.X same recurring of and as from to paying representing was higher contribution our revenue This existing relative by built-in the acquisition, for driven additions a was period customers primarily XXXX technology contractual the year-over-year fees from year. escalators. million, recent from access growth QX our Excluding new Vitalware result

provided technology same consistent flat XXXX, year. This last being retention services our performance earnings customers, XXXX is $XXX.X new revenue. last professional million, to is primarily relative lower XXXX QX on due our period performance Professional was our relative services, year-over-year shared along million, and the with achieved for lower the $XX performance, historical For was dollar-based by expectations representing revenue revenue DOS growth. call full-year in subscription to implementation services offset representing XX% to with to

full-year XXXX was was fourth-quarter revenue growth. the $XX.X points gross margin our basis XX.X%. approximately This over increase Total XX% adjusted For of the year. XXX professional year-over-year XXXX, an year million, for services representing represents

For partially increase points from in centers Microsoft to paying total compared commensurate our portion This points third-party a the mainly relative margin adjusted approximately continued period XX.X%, year-over-year to was our without to the costs with headwinds the by of of hosting driven basis segment, of by a year. fees escalators associated the in Azure. technology higher was last customer base gross increase XX.X%, same transitioning access XX full-year decrease existing gross contractual an XXXX performance offset basis a margin data technology XXXX. adjusted customers costs, built-in cloud-hosted XXXX, was technology In to QX due roughly XXX

some segment technology the the an our margin approximately mix mentioned result mainly points professional basis XXX gross on of shift In retention, adjusted points as XXXX, QX, in the year basis to XX.X%, full-year was delivered. as dollar-based services COVID-XX was previously our relative increase the the professional decrease was year-over-year of services year. over our the of same services impact For decrease in This adjusted XXX a last margin year. services period approximately professional of gross XX.X%, professional well

operating margin gross point the an services QX were adjusted XXX million. approximately total In year expenses year. XXXX, XX.X%, over basis For full-year $XX.X adjusted representing XXXX, our professional decrease was

expenses As compares to QX of operating XX% favorably a XX%, adjusted total XXXX. which revenue, in percentage were

were expenses $XXX.X full-year the total operating For XXXX, adjusted million.

of As of EBITDA the operating loss XX%, loss adjusted the adjusted full-year a midpoint compares XXXX driven to EBITDA technology XX% favorably by was strong in million total previously. of an exceeding million, which to revenue, percentage result and guidance performance revenue our comparing and This mentioned favorably quarter $X.X in XXXX. XXXX. of of $X.X in adjusted gross margin the were expenses was QX Adjusted mainly fourth a EBITDA

loss adjusted full-year which adjusted to the our million, EBITDA XXXX, million in For an favorably $XX.X EBITDA of compared loss of was a XXXX. $XX.X

in of XX.X number loss XXXX QX was share $X.XX. loss approximately net calculating used million adjusted shares weighted Our in adjusted per shares. share was net average QX The in per

loss shares. full-year was The adjusted the net used was loss per share in net average number XXXX, our approximately calculating share For weighted of in adjusted $X.XX. million XX.X shares per XXXX

balance the and quarter equivalents, compared year-end short-term investments cash, cash fourth with $XXX of XXXX. the We $XXX ended to million at Turning sheet. million to XXXX of

portion amount a issued of of of term related conversion loan, unamortized feature XXXX, proceeds in $XX.X the $X.X million, million of reminder, April of issuance after to costs to outstanding the we an debt deducting discount a extinguish we the and notes a convertible unamortized used placement $XXX and million. principal private As the with

December the XXXX, of of As net liability XX, notes component is million. the $XXX of the convertible amount carrying

it our relates As financial to guidance.

we revenue million. will million and And XXXX, $XX $X.X $XX adjusted revenue between for total $XX and $X.X between million. million. losses provide expect million adjusted I first million. million our And detail EBITDA some $XXX.X quarter of between the full-year between related total $XX.X And now losses For additional and the to expect million and we $XXX.X EBITDA guidance. XXXX,

roughly full-year growth similar to the by our services segment. XXXX revenue and rates anticipate professional full-year corresponding be we rates revenue, to growth on First, technology

anticipate it we relates mostly contribution of in revenue As of XX millions revenue, inclusive Vitalware in the remaining the XXXX, to revenue low technology deferred writedown.

Vitalware technology lapse XXXX, of acquisition year-over-year end XXXX. in reminder, of a and our the QX QX revenue August will the growth the at As impacting rates

dollar-based retention in dollar-based expect with our as line to retention, levels to relates mentioned, it technology of Dan XXX% continued historical we As expectations, robust XXX%.

expect be metric than we in this side, the that we XXXX, our first full-year performance, to the On XXXX some experience performance to levels. but likely on still services professional XXXX significantly the relative stronger will of half historical strain

to likely it relates anticipate performance, customer net with XXXX from cross-selling subscription historical our a acquisitions, it in pre-pandemic additions, to in DOS line among as are performance develop to mid-teens. base new customer we relates our the pipeline. As And continuing we

and upside subscription cross-selling P&L a our DOS any assumes customer would to be of metrics. forecast XXXX cross-selling. XXXX. level Our realized moderate mostly impact And Robust would represent retention dollar-based new in

expect Moving gross XXs. on to to adjusted margin high expectations for the remain we technology XXXX, in

adjusted quarterly margins COVID-related services XXXX. services professional can in margin and on of for gross our on to we fluctuate While XXs resulting continue performed. experience Overall, the full-year strain, expect on in mix depending gross some to the basis, a the rates utilization

to basis. anticipate Lastly, a we continue for EBITDA adjusted entering breakeven EBITDA, adjusted on XXXX run-rate

XXXX note related of that that by our acquisitions, As will categories. it the categories beginning with of relates $X beginning mainly integration integration would guidance, amount having in a we million moderate overlap to of expense like our acquisition-related to operating expect and I of subside we to XXXX in million EBITDA anticipate the XXXX. expense $X investment by realizing anticipate to And associated expense XXXX. in efficiencies This these is we

Catalyst enabling best prepared that, timeline. acting for Importantly, our the way consistent longer bias EBITDA our cultural us while efforts unprecedented members. I strategy made allow the and adjusted interest than team our strong to pandemic, given with to of efficiency each would of our toward in to principles, M&A conclude that remarks. attributes of operating an otherwise, will With intentional my with extend still breakeven in decision This Dan? are is reach consistent the we we integration the for have Health a midst with they

Dan Burton

mission I'm for during instructions] Goldman colleagues I'll the operator turn and teammates the to the And Bryan. Thanks, to to growth call I'll comes these health grateful years pandemic. challenging Jones engaged commentary to our responded our [Operator the highly they been one committed effectively to and conclude questions. with team line my the contributions and first as by we've Robert question system and of ever Our members. for of that, our thanking teammates our from dedicated have back with for central These mission experienced. their have customers most Sachs.

Robert Jones

the Great. Dan, guess of questions. trying you I maybe, made. Thanks I square was for couple a comments that to the

see were continued what The comments to to also first, made 'XX. just you mid-teens some that likely in seeing getting around anticipating to kind pre-pandemic. super of guys end-market about then But encouraging adds able produce distraction back DOS through 'XX, you

more to in of in that trying what little you as weeds or far sales meant So you get resulting what kind bit see the by the as slower and just slower a implementations. on distraction

two great. Just trying square to would be comments those

Dan Burton

the question, for Thanks Yes. Bob.

that relates in net a new it. and of couple overall mid-teens at net-net takes So puts guidance DOS level, has it as associated with essentially, to the subscription terms a clients, of

highlight still uncertainty. relates challenging still of So you response, some cases the we're are experiencing it in of to some the wanted of pandemic that some Bob, because the that midst of as the in elements they're subset hesitant somewhat still health systems we noted, to

puts net be On an we commercial-grade and overarching as need greater analytics the data we recognition platform. for level takes, what and side, are that's like positives a the observe of we of experiencing size pace we net on levels. landed with provided. guidance now, about that that comfortable being conversion And where the pipeline the we that right the there we're some about a the well, net flip you after those would effects would are dynamics out When at those out and pre-pandemic experienced

Robert Jones

I helpful. talking were about. some and upside cross-sell. generally, from you And maybe which about assets really back Maybe, want specifically going sure mentioned I one more then with Able you more recently you actually follow-up. just then healthfinch. and Medicity to I guess just then make that's understood And and even if to think No, Bryan, Vitalware

the those merits also it. Just the thoughts were on latest much for assets, know, to obviously, in there ways, of the a the component merits curious of cross-sell deals done on clearly cross-sell but was I opportunity. -- the

Just any

Bryan Hunt

Thanks, Bob. absolutely. Yes,

question cross-selling, to assets in to, both I more that our commentary recent acquisitions XXXX primarily around around kind of your the to relates relates directions. made So which

and those to healthfinch both developing Vitalware app So both to acquired, to we've those active the for cross-sell on customers there, acquired cross-sell an to ability side. customers, ability We're and ways. DOS that applications also and subscription DOS an example, areas of then a in pipeline

So as bookings to reflected kind upside to metric. our new of significantly I color. modest and And that our is would of robust both additions mentioned, cross-selling metric at were if bookings metrics, amount drive a also essentially dollar-based retention then potentially, that we there, our in customer represent XXXX the

Dan Burton

that's at efforts as we And this any more outperform a is the obviously, the the data similar forecast. always, And But data-informed. to in didn't to that example, to for I to for data-informed with point, to to modest that. included in forecast. every we since a our I forecast about and tried the some owned at level. before these now, a past more we've to we've comfortable think forecasting still That the about want agree acquisition, working that's is what got that add, months as updates forecast. of few just be with like we're to cross-sell is try inform Vitalware process do building day a why update only And cross-sell data we're would desire the of early we feel in strong And assets days in forecast.

Operator

with William Our from Blair. comes next question Daniels Ryan

Unidentified Analyst

priorities any you markets or any Jared either year, from to kind I of guys. integration-related around Bryan, Good other prepared around guess, for I adjacent like of kind investment Ryan. the investment this one of integration efforts? the just I key for efforts. terms kind alluded priorities is it But of areas color the product? you Haase first think those beyond call in but question is specific me. in of maybe investment hoping out kind just was in your remarks, of sounds afternoon. of Hey, areas can Just This

Bryan Hunt

Yes, certainly. Thanks, Jared.

M&A couple integration One a So of in just in the big a would area on -- XXXX, is of areas priorities mentioned you part other the side I call of that. terms out.

continued an to financial ability cost things would market like emphasis health optimization, organization on an one end optimization and from So from standpoint. seeing be we're drive revenue a perspective

acquisition that to an that's area continuing focus we on. so Vitalware And aligns with are our

I importance are pandemic longer-term transition to The to is made President where capitalize optimize recently, would the be tailwind. has the growth our trying investments data the with to out role and other of that area this call we highlighted The related able to on analytics. we of

that want way. for ahead effort, get So I able to be that, the that and of to plan future support

Unidentified Analyst

Bryan, Okay. that Yes, then a makes point follow-up guess sense. I earlier. last to as that to well as made, And you Bob's question

this the that of tailwinds with to appreciate of seeing I of adds net sort which what kind had year, headwinds So of kind expectations client your outlook consistent been. normal that and idea net is the some mid-teens you're out

as net normal the that reasonable to Or to environment? should clients exceed we still get think of you equation target then giving back that mid-teens those forward? we new the kind going post-pandemic, that to of headwinds about tailwinds and get as is alleviates we So normalized potential once

Dan Burton

that for Yes. Thanks question, Jared.

we in right don't now of focus want first ear probably the and at data XXXX. are certainly and comfortable ecosystem, where in, our certainly as We guidance adoption the than and is to to like view this gather working understand accelerate other position data. every long-term in and anything good a more point. And we feel the percent on stopping we're takes day to we to keep growth to continue find we think half that reiterate puts basis. shared an feel provide we we analytics our remain to And that healthcare of nimble the as just annual we beyond our that's feel in on in that more but to ground continue that ways pandemic XXXX. playing the cadence XX-plus in out getting And do I XXXX those through confident to see we

Operator

next Our Draper Truist from comes with Securities. question Sandy

Unidentified Analyst

Thanks. questions. quick Hi. Sandy. for on This Stan of A is couple

any client net new? a all year nine or First, the this function were of they of additions cross-sells, were

Dan Burton

activity there. that inclusive modest was in cross-sell Some

I note would we cross-sell the mention space. Bryan was commentary activity and slower what in overall in pre-pandemic being the half true about that Although that the normally the gave of had experienced also XXXX first pipeline than

So at a similar pre-pandemic level, there was the lot uptick an impact in an in dynamics level felt the in the first like half. more second pipeline And at that a similar saw we a levels. half,

Unidentified Analyst

fluid Got then how on it. And of any thinking force? it's there a more but kind are for face-to-face -- curious, here And are know that? you maybe activities resume situation, plans about I the quick one to a sales

Dan Burton

the also monitoring rest U.S., right particular, We're vaccinations like situation rate in in now. in Yes. are but of acceleration the the planet see an the of elsewhere. the encouraged And we to

offices, and vaccinated and offices those point, this as early taking increased increased at vaccination to who other are year, We in process. that But that overall of precautions to reopening a well. the rate and that particularly lead population, of think larger usage we're for And accelerates still potential represents anxious we will see continue. are for the the the as travel, that of proportion our

Bryan Hunt

cycle typically sales to And environment, of our our would equipped of cycle. a person just year, adapt fairly were to Stan, add, well that had in that we sales sales to our and I duration the of that given of the other approximately touchpoints we often a nature number the just in were not given cycle sales virtual thing is the

type ability good as well. adapt feel that and in to so our environment And continue about of

Operator

Sean from comes Sandler. question Wieland with Piper next Our

Unidentified Analyst

Hi. question. It's you Jess Thank for taking the on for Sean.

fits So in you're we getting process? there or if it were little with you a was how you're United? changes. hoping acquired where competitive it us and Health, since submission could about landscape who to bit as products the or any into intending the Able understand it tool And have Is And just for by acquired prospective adjustment thinking you then with developed, regulatory that just help risk competing change a either understand about where evolving retrospective?

Dan Burton

absolutely, question. Yes, Jess. you Thank for the

So we improvement they just of submitting about most excited Able about we around acquired the ago, year that would the a the are already primary population and that to health And the measures that bring automated when element steps built had is well. strength as were normally Health, regulatory that bodies they process labor-intensive. and quality manual of process quite in broader in context quite

those When really have also that through really the required to know, you in we the the healthfinch, care includes very insights, for companies. so And population with regulatory around bodies we and really powered what important our healthfinch in compelling offering way by making a management also the component which better, to example, reporting. broader platform which to more faster, large measures, they integrated with our which companies those we're submitting as can health much differentiated capabilities. be category, DOS components capabilities, very, within of capability health more to the that that when the enable measures so combined that and is efforts, was layer, could the of important capability. small place health the you us improvement that and we're an that enables point companies the and loop to work of in with foundations our an offer. and of that that we've when we offer that performance, is can we some of we overarching competitive and decisions, brings of to around another combine cost-effective health critical That measures automation care sure accurate, range And And that through to the quality, better another close pop often from to health reporting infrastructure a in of is our make use all being regards technology that and influencing offer wanted to the a otherwise, pop at health very excited our in closing capability measures really about loop understand patients brought offer using acquisition when population able space in way. We've at population up, and care us population data portfolio out the submitting solution, component the we're that of of

capabilities And healthcare, broad offer the revenue focused have they that have more even what change our distinct space. by more the in on space is we different yet, space within. for acquisition. that cycle space And cycle from been We that example, that space, were also within what in bolstered broad rev quite Vitalware operate and the would is

Our there product it's isn't that the to of other But a that offers either. solution, or rather, that they a the do. work some complement offered chargemaster competitive Optum change

Operator

Our Elizabeth Evercore. next comes question Anderson from with

Elizabeth Anderson

you services in wondering of anything the to professional people to was I anything guys. Hey, there if looking about as out we sort changes side? talk or of terms could Are pandemic. on sort of duration come what or work think for of about the any are that of

Dan Burton

Yes. for Elizabeth. question, the Thank you

more traditional improvement of our pandemic from as response. wanted work clients shift focus more operational and us it's observed pandemic services one muted level of the So the at specifically on in well level, but a to clinical a still in the kind work, improvement especially, and the case, early away is we at some a perform elements that as pronounced work, improvement that

keen So as a has We've as work experienced that and spring of into financial ramp Bryan year that ago influenced the other financial more early traditional pandemic a that work, improvement and focus seen the more performance system. also the And health clinical as shift well back on up, was improvement the mentioned, summer. we a operational. dramatic

work work by so revenue-oriented acquisitions. aided more find or ourselves And we recent data-informed doing cost is and all structure of that also our some

component another is example, well to offer So the of that provided seen -- shifted that able Health in would automate otherwise components the example ago work also share are component to that, and where I a and to what that that also minute and an example Able interest services we've the processes able there's services are very one And as technology increase work terms some has manual. I be a would abstraction some. a activity to in just labor-intensive there as tech-enabled that. there services of chart measures certain we're as of

well. shift So those in that seeing improvement see seen wouldn't forward of would of a we these of we're to share also some back continue seeing we pre-pandemic seeing of levels, to and some that moving mix increase. elements at uptick have focus I But an areas more we're some occurred. other that as surprised be level robust have of shift mix an clinical areas work, pre-pandemic

Bryan Hunt

Yes.

type of our differentiators experts kind of is, talent. would the of may and ability thing is Another in to I add, expertise and some difficulty that one to base Elizabeth services analytics on of kind key that in terms our real attract retain and the that core engagement certain that and client recruiting domains field provide member -- side the focus and in our to of of team one, more have

so to customer I value teams the think our kind is that services supplement were of as acting prop a side intact. and And core

Elizabeth Anderson

a for Got are just how a Well, at it. on sales, That's you and very was question. And example. then going There block as CapEx, looking of sort of maybe a was XXXX in in I CapEx about your thinking it tackling type forward? of change, helpful. obviously, more percent

Dan Burton

good Yes, question.

our uptick leasehold improvement a XXXX in then So we've of headquarters, for revenue percentage there that seen the related to change there. terms in some similar would more a that's to an on office was to was office we're additional will primarily actually of it that there an build-out. level build-out be CapEx in CapEx There done, past. related a in what once normalize as And to working

no there major than So that changes more one-time other CapEx.

Operator

Davis comes Stephanie next from SVB Our question Leerink. with

Stephanie Davis

about I what Congrats quarter. full have you for of a looking and to to guys. kind was of back revenue my in on solutions. Hey, suite clients pandemic here DOS move converting earlier those maybe taking the you Thank introduced light the question. the from solution you opportunity when

Dan Burton

Yes. Sure.

over light our work up pandemic-specific cycle, process. what pandemic version, net around some we partially a did from of to to point. DOS that That in situations for due It's start really we're the lower movement around able some new we those you opportunity contribution long could with did still lighter go We still now. expand in help especially we're modest subscription client still would we with your time. and half represent, some more But point, smaller a accelerated we DOS still and the of have to expansion price we the pipeline cases had where and to use then some version specific but in sales and XXXX, still some other early So developed And dollar-based offer net some where see and pipeline to of at that see work a take offering. the be had early, XXXX, DOS even clients did And support. we trying light right take retention starts to or a second a a from perspective.

learn that And lighter the how pandemic, may I to think is of more and in pipeline But a encouraged lot this by year some by DOS. more learn there, a we'll sales see we'll cycle momentum influenced some version of and XXXX. we're impacted that be about

Stephanie Davis

could not the to safe say into a it source but is upside? outlook at of it So that's all, be baked

Dan Burton

we the be level, the and to data-informed, the commentary because early modest to level go similar a beyond Perhaps some a in that elements at But forecast. like we cross-sell in modest we've forecast. included we're didn't

Stephanie Davis

on quick Of of the selling one then course. And kind just one environment.

sales from grew still world have there bring guys but sales would any force grow in talked want -- you Catalyst? pandemic post-pandemic or you a the digits. the into double the thoughts to that year, challenged You at Are about is Health tactics very you XXXX

Dan Burton

absolutely. Yes,

both earlier moving there's that can intuitively you we we including about can the forward I We and the that new So still hardest was didn't thought could I the have could, was saw in which learned would of maybe all we've think think side, that true certainly maybe progress. do on lot that sales virtually things a to all client process, we we place to goodness, And from saw meaningful perspective, a we comments make little really relationships that through we certainly discussions. virtually. secondly, thinking, conversion be Bryan's our my do with clients, lot a to ways expand then a effective pipeline virtual can talking progress bit partner, about existing a make

pandemic of the think challenges over also the pandemic I had that related will encouraging. headwinds well. lot a as that so But to were of carry a again, we be and could lot And beyond

little be us beyond too until bit highlights challenging of were could opine it's pandemic, get but a well. far for to like the some well positive the as pandemic past of they kind So we those felt the that

Bryan Hunt

comments. growth. your And we model, recurring those are in I business to is point XXXX which I'd have We fortunate lot on Stephanie, revenue a appreciate just other that add point to would add, revenue. visibility the that gives One of year us to

on so visibility just we the see year the given from of that the we that had model, revenue XXXX sales. muted And revenue of mention onset impact growth did could prior-year a our in that at recurring given pandemic we nature more

Operator

with comes from Richard Our Canaccord. next question Close

Richard Close

just about that its I challenging Great. But for of and to thinking them? update that. questions base the in you're years during and the back And couple And obviously, to challenges Medicity opportunity COVID any what year. and go just Thanks terms revisit with had acquisition. the to Medicity whatnot. of customer a upsell in and wanted a wanted to XXXX around congratulations and

XXX maybe as and for about upsell I were you of sort think they customers the then XX in Catalyst's Health really it originally, sweet potentially? thought had spot

Dan Burton

question, the Yes. Thank you for Richard.

paid Medicity to share we we were that largely for the in minimal. company, play the modest have forecast the newly contributions, to data-informed we've a It's to that we acquisition base. So way we included the about in that a public from that we perspective, realized forecasted. would such, we've as of And be the anticipated and with note were where has shared XXXX, positive we a as Medicity when had tried seen as those. client a situation I to very important consideration financial contribution Medicity be is also cross-sell to that we what fortunate from from performance regards set thought out some was And we

we've might we significant, believe represent And broader opportunity in about. Able something very At both to certainly to of Vitalware So the outperform we're to in about that but meaningful understand built we're and XXXX. our and, one that hopeful element very build a moderate that certainly many already becomes at infrastructure Bryan modest concept think have later the cross-sell and the of Health, level a we some that bidirectional talked level, directions conversations time, is good helped outperformance forecasted better a at level, that's informed us, included and I that and feel over would XXXX, working us in that that start was perhaps that Medicity that. as ways, an we for cross-sell healthfinch, that that to in opportunity continue such, cross-sell And in a have those acquisitions upside.

Operator

question from comes Our with James. Raymond Ransom next John

John Ransom

pretty large relative that public there, hospital fourth-quarter back picture the they balance report good We've say on you funding that Act with shape deal might to pretty and in numbers. and the electives we of And good seen to advanced dark you shape. the support what good kind companies April Would there. Hi coming Are all the with? darn CARES ITs from have of in translates XXXX? actually days pretty financial thought that

Dan Burton

Yes. Thanks for the question, John.

year, they May crisis really in much better the April, perhaps exception, were spectrum an in would the that seen March, we that with certainly, agree clients now are decades. client our facing base, a that condition So they with were of our where financial they last in across statement existential than of hadn't

supports then. elements your characterize in other where to So back our with to has that a funding were Act spectrum I the combined volumes particular, still observing better associated CARES helpful. the procedures, and we been And electric off client we're base would and than with very across get performance. the we're of certainly comments, ability

regards health as to side at you of look with a bit described some we what some perhaps traded what would experience. clients end our on systems. just characterize the have of more positive publicly That's We the high like little the that

early have to they're also that they summer, were they're systems electric while in off in back still spring a pre-pandemic of better health not the number than We procedures. and much volumes

a XX%, For were, than XX%, the XX-plus spring and example, But late down where volumes percent. where that's down better XX%. cases, lot some we're are X%, in summer. In some we early

a pandemic expose today. that different needed existential that for stimulus that Catalyst about the example, patchwork that of so to infrastructure be side And experienced stimulus, in better summer. stimulus of than to help, a especially And of would we an be prepared there's building have early level as the Health only kind the the urgency believe infrastructure on And really talks future that for we be we responses. pandemic-type think future for helpful can clear could think we we that of out urgency a when last forward, I but there's funding spring another want round to and that very

Bryan Hunt

an there on is operating add focus organizations end addition other continued in be our said well I standpoint. treatment add, putting rollout agree health that, that on situation to I One COVID improved that of through would XXXX, vaccine in dynamic terms would will as financial an another thing which distraction and and operational the adds from for Dan, just market. what I you with

Dan Burton

the and on infrastructure with one and would and more remarks health and I in are more for our that data that would positive that the puts need just analytics takes that commercial-grade two thing we be helps. more add mentioned Maybe the also, acknowledge understand side, I that systems seeing John, agree a we prepared

hesitation from meaningful, of pandemic, still the through still terms the way this hesitancy that the there's we're vaccination more perspective, we're not processes in side, still because a On all make we in budgeting larger to commitments. observe flip

play a particular, that and puts next the bit over months, out six think so And perhaps to takes are will normalcy. we return there little before we in more

John Ransom

able external development your will, has Okay. remote have that collaboration work innovation you're work evidence are having other without -- with to mean, it's challenges working just challenging And seeing if any there's thinking But and you people sell is remotely. thank product my And And bridge seen I to resume any or you innovation product about and been you room? all collaboration the the no you, while there slowed. I'm dynamic. in but then, -- have enough question the

Dan Burton

and of with great innovations process. did be our was And It we very our that innovation on clients base in Thanks of seen across level That's more responsive of XXXX. sure, clients virtually we collectively to If interesting seems many we've and exhausted came situation, characterize us of and at member And enabled the very collaborate to on to that were platform be collaboration as than healthcare that dynamic team to that to ecosystem significant out exhausting pandemic. more out there ever question. innovation, came were one. it though the the data in feel a never And that our I counterintuitive for an had all I've don't I a surrounding some perhaps clients. way I the XXXX, what would very a build to top flexible characterize in accelerating ways. counts know mostly were

helped fact was side cognizant and and product got of innovative even before but through But so of really that there interactions interactions. virtual. came breakthroughs most pandemic, that by our set development were that the were all great on be on of And enabled that through to we've that, we the services process, side the were the some a virtual

heavy bit face-to-face pandemic, really made pivot the business it didn't before pandemic. effectively of little a probably have and that the to midst us for so the model easier even a we And in

Bryan Hunt

is add further portfolio acquisitions, technology those innovation XXXX solutions, integrate as other broader thing I of work opportunity Dan, with into referenced to that, The would that acquisitions in does that Dan terms provide do for focus there innovation. us our of to well, on while our to

those opportunities -- the working Health we're we're do and and that that, through. healthfinch innovation Dan with of one Able referenced combination we As

opportunities innovation there exciting So with our recent acquisitions.

Operator

Grossman from comes question with Stifel. next David Our

David Grossman

you. Thank

bookings when growth And more picked more to with is to to Sorry that think, looks, in half maybe seem a of XXXX look it, little sequential growth balance probably which cadence consistent the which the of in year. for year if the pretty the kind with the relative weaker year, me other sequential I financial hand, last of the the just guidance. dodge the first back And And me. of could the would a detailed again expected have bookings, half on you to revenue XQ I be growth. at modest and the question cadence than of I on strong ask up then, looked thereafter

so here? I you've pretty So it year I goes the as not, got good just if guess, first, am something on. obvious missing visibility unless the first on is quarter And

a being little something you're Or I not conservative? be seeing? is there may So that here else going more on

Dan Burton

you're or Yes. Thanks, David. that anything wouldn't say Good question. big missing obvious I takeaway there.

can think it variation guidance some signings and ahead based of timing kind a just the I you on revenue of be revenue contract and quarter on hit there in like. where performance,

out at that And call so I major, nothing point. would

David Grossman

that Okay. unusually quarter. But nonrecurring correct? the Is there first isn't in nonrecurring necessarily, anything

Dan Burton

majority nothing is revenue nature. No, vast No, base our recurring of major. in

So current I standpoint. major anything from wouldn't say

David Grossman

of as given pyramid. the resources, expertise that the you in if want at thinking that that gone all well, to at more predicated services thinking pandemic the what services demand And may and I wondering, through the has on you just going changed just the is those business your as your scales of just about provide. the I'm broadening of model business services pandemic, leverage And I the people downdraft model all could maybe question it forward? is I'm that asked make know Right. just of And kind what the how just all has rethink in you've that very much you the accessible as to content of made Got a business, you follow-up But more it. people? earlier, for at was during about that experienced

Dan Burton

this And still in provide go. pandemic, years way watching to observe provide services as about either perspective provide space the that do not tech in that encouraged shifts any more point question, we changes to a XXXX, performed I observed tech ways, the we utilization dollar-based as but to first the so mix going have we've in at through also in to robust XXXX. changes about in were question XXXX, we to that bump relates were we with services, an the then how it the some that or And was couple we're midst XX% that continue which that But business. we then comfortable we of we're insightful And the relative that might shared nature, we have think many provided to might get It public of with think observing. with of saw that been as ourselves time through we and update. trying and in data David, we to up as terms feel be long-term throughout And that to ready very of to try well. really guidance to We're tech informative keep reaffirm think company pandemic, we little wanted nature. a utilization to given how of in the year shifts the that which we retention monitoring the of to and long-term we the a where pandemic, we in the as as an something high in understand tech. business some work as permanent we've is benefit be learn plan and for then of Thanks temporary see that bit are to ago a observant about

Operator

from question with Citi. Our comes Daniel next Grosslight

Daniel Grosslight

to question the better you Ascension. and We've and data XXXX Hi, of utilize to guys. Maybe particularly seen from consortium nontraditional We've forward form hospitals competitors. expand monetize a Thanks data. picture the taking as of a for beyond, its seen true bigger a question their competitive here. Google on relationship bit environment with of look

see not also just competitors, competitive Looking environment forward, that how from nontraditional your folks? you up, but shaping do the more traditional

Dan Burton

Thanks question, for Daniel. Yes. the

more partnership XX/X host are value-added mentioned, there's These are what differentiation platform. and to and in view and long the continue our the level those that. believe clinically content, capabilities the and the with the for we a as health where who that rich there the on the data perspective their an to on platform real places behalf healthcare that so with technology in at consortia one data the And value like play that layer, and data need we're We their the healthcare of believe that's continue in others, true content. coming layers, say, our role who contributions may cross-industry healthcare content with technology across that And healthcare non-healthcare-specific content and rich industry the be tap robust clients. the clients mentioned we investments to investments place work that of the And Likewise, there, when through healthcare what have should That's the there term, not of can a have likewise, data, healthcare we stack Microsoft healthcare-specific, the great do, excited layer, stack in on competitors, ensure differentiated where space, way. really as healthcare we that time to technology healthcare-specific XX/X Health important healthcare. there. And leveraged through the reasons sense a use are capabilities you layer more role that technology into where play we're understanding can that scalable, and the get believe in content of individuals at data. well. technology real those to that play to to stack, effective all where And is you're of from to technology benefit we're play excited the data be part we environment to an are industry our of you of the Azure Google, and And exists data-oriented level needs our from companies of as you clinically make we we likewise, partnership into these the focused terms the choose our continuing that of some play of we're includes in the others environment the like That which a for investments we innovations should a more to been is up why to enable apps be a variety a And companies the do. operate healthcare-specific of really tech come of benefit provide that and also that we most and are role, to there. all to like able with nontraditional companies offer data to we Catalyst, why we from one they leveraged, transformation data we stewardship positive can spend as patients, to role system have settings. that health we system focused to and that's take reasons let's role spend And make technology incredibly dedicated others to only well. partners when of Microsoft, play we think

Daniel Grosslight

Makes as base particularly particular, your among But if contracting, new opens ACOs. health direct the key modules. curious build-out sense. contracting we a I know slated one DCEs, your start And pop is market direct client is a up new constituencies then April. for of to in in of about Medicare I'm think or you in

Dan Burton

in are we have new models relationships have components enabled, being bringing think And And this while in play more up feel segment increased our health robust in on innovation innovative serving of speaking. good keep bear, market, you those to to space, there and entity to the we're customer we of innovative positive. innovation, that try grateful the which an and We that's traditional more systems, is are on health, we But payer that's a example more the new focus of as offer more we risk-bearing have to offering said, like up, population a Yes. that broadly eye to grown we emerging as spaces. well. a and that more segment we market intend with, where

Operator

comes may Securities. from Guggenheim on Our Glen Santangelo Glen, question you with next mute. be

Our Dodge Sean next question comes Markets. from Capital with RBC

Glen Santangelo

to in you beefed Thanks. recent interesting a about focused Maybe really Asia, that the on Or committing agreement end an And revenue Smarter market on and there not some historically are Is with share could geography you talk far a a where can type because revenue partnership focus. better you is of it's model? you're then little just really It's licensing the too? situation payers just the you've bit that share people in more to also thus this related it's DOS? up that this that Health? that? Is Southeast anything

Dan Burton

some might more where Yes. to is introduced excited for to there. we're as base team work, time that one that technology small said. had use are modest Singapore, might modest Singapore and Thank and work with allow thoughtful in technology adjacent opportunity some to a around have a the that some us to a place work have The we've Smarter we example, to over the member make us starting you that consistent few modestly shared improve. delivery we and to general you with in of market see in with partner what on we measurably relationship, providing generally have is followed available and for a grow the focusing akin Through of a English do relationship we then have guidelines that kind we investment. assist Health, some be other them, ground that and our of to the decisions traction. question, were and have to been international excited Sean. language specific to about and opportunistic the to international which It's investments, trying our And work, our

And progress that encouraged so longer we're the more term. but will over materialize believe the by

Bryan Hunt

customer model ours. could Dan similar as what to about contract a model confirm to you a just it said, of Sean, revenue and And typical think

Operator

comes from Iris next Berenberg Capital. question with Our Long

Iris Long

for Hey, my taking question. guys. Thanks

few I customer So your adds have related to opportunity. the a questions and cross-sell

like I'm disclose understand we modest kind secondly, of integrations that off XXXX the year-end? can XXXX big we the should kind assumption about pandemic of total opportunities as opportunity on first, have customers the to get cross-sell we the cross-sell. And and embeds how beyond if then wondering adds are But expect accelerate? And can to a of and of DOS many as think you all guidance completed, the get customer So cross-sell understand to? the how you trying as I the

Dan Burton

for you questions, Yes. Thank those Iris.

now net would your share that at DOS subscription with So added year clients, nine on addition first we're now XX to net the framing relates try it way your the that the the to DOS we new started we XX question, with, of we in right be net subscription DOS -- And clients. to regards as think data-informed. I with cross-sell, you're or second it total question, the to that

modest a assumption a the forecast. result, XXXX we've for As added

take going be working hope XXXX of we While of disciplined we're the inclusive growth certainly very those try those analytics also organizing forecasts We're areas, around the can through the meaningfully investing data we process. and to in of some But we tailwinds a longer-term we believe a in cross-sell ready pandemic for capabilities. that also so to to also building data-informed understanding and that value we advantage commercial-grade share that robust. going on emerging hope President that opportunity of And get we platform as in are guidance, infrastructure be outperform. be and in when be role to the is to we

Iris Long

Okay.

customers Sorry, first have. wondering can I'm the you guess. total you that question, I wasn't clear if disclose I my in

Bryan Hunt

good Yes, Yes. question, Iris.

and see So and by acquired do the XXX XXXX which other recent are XX customers this over in filings, acquisitions addition we from DOS driven the primarily in our Medicity to have the customers you'll the subscription customers, acquisition.

Iris Long

then have follow-up on quick pricing. Got I Okay. And a it.

that XXXX. you know discounts we in out So professional for gave services some

Dan Burton

are not. We No.

of wrapped in year. that So we process, really, up summer the timeframe last

now point. been a we've number in process months stage at of that so past this And the

Operator

like to back the Burton this Showing I'd no Dan for turn remarks. call at further questions to closing queue time, in

Dan Burton

appreciate it, in interest ahead. continuing Take Thank we you, all your in you thank look to Catalyst. Health and the dialogue and forward for We months the care, everyone.

Operator

Thank gentlemen, conference this concludes Ladies and for you today’s participating. call.

disconnect. now may You

Health Catalyst (HCAT) 1 Mar 212020 Q4 Earnings call transcript