HCAT - Earnings call transcript Q2 2022

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Health Catalyst, Incorporated Second Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] At this time, I'd like to turn the conference over to Mr. Brown. Adam begin. please Sir,

Adam Brown

Senior welcome And quarter Catalyst's on of name is Analysis our I'm XXXX. and and Burton, Investor for Planning Dan me Financial June conference on the My and the Brown. Adam second XXXX, Health is President to afternoon, of earnings found our in Chief our press Chief Relations of Executive Catalyst. Health the the results for call Officer. XX, section our on Vice with complete as Good can disclosure Bryan which call SEC, Investor available ended be our X-K of today, Officer; issued website Financial of in related our A release Hunt, both as ir.healthcatalyst.com. furnished at are Relations and well which Form the to

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

Actual subsequent Act provisions strategies, XX-Q safe XXXX During will as Private in outlook. and the today management's May and Securities XXXX, today's pipeline views XXXX on with forward-looking or to with high disclaim COVID-XX the on filed pursuant call, the the QX our We of SEC. date. statements any any XX, risk QX may that Reform the factors our operations, Form our the business. XXXX refer should statements Form pandemic our we make forward-looking the obligation Please of general of filed rates impact for based XX-Q of to be and forward-looking of statements and of and of not regarding update SEC for as be our harbor representing relied materially as views are to will Litigation on any results differ. upon environment results the our anticipated expectations These business and performance inflationary trends, conversion the current

non-GAAP me of prepared investors. the over Dan let their questions. financial is his then information that, in then his prepared call We measures With financial to Bryan Dan additional GAAP for will provide to Bryan and measures your reconciliation will also release. take A and turn most Dan? refer will comparable to these to provided subsequently remarks. provide measures press certain remarks, non-GAAP our to

Dan Burton

guidance Thank that Adam. you has outperformed at And joined XXXX revenue this that the our who QX happy thank I our of us to adjusted you, XXXX am the everyone to QX EBITDA of our range top range. high our and in guidance came end afternoon. share end

QX adjusted in the are that, While our outlook we are release pleased down revenue this we disappointed EBITDA these results, as are referenced full year. for we with we our and earnings revising afternoon,

of Although first bookings impacting prepared to to a remarks I I will moment dynamics my take spend performance, the how market our context. commenting are the end set broader our majority on want

that As data we position to I and continue technology have public services confidence analytics in have leader and improvement. ongoing entered our fourth our the company, market year as drive as in measurable a

Likewise, we with market our the are its strong of an committed customer sheet commercial-grade adoption us and and environment, is ROI-centric be and balance deep financial macroeconomic to engaged members, proposition, and in data Our our early leader a technology team that leave relationships, discipline. still we operating long-term our committed analytics well-positioned value industry navigate challenging services. in as to

us and in to growth on full-year is let main we our positive to our macroeconomic ability impacted end drivers me by beyond. walk pressure our reassess the our EBITDA that confident are XXXX while drive such, adjusted through outlook. that, With growth near-term three the As meaningful, market, in caused

leading to without end experiencing in costs labor a have they in pressure. which margin significant realized financial system health meaningful and substantial is revenue, currently in supply our First, increases market commensurate strain, increase

As a materially dollar-based metrics. new and sales additions anticipated, than both cycles our retention bookings and was result, customer elongated our first-half lower our impacting our achievement have

through seen rates. first Importantly, of material the robust on a not a have half win our impact negative XXXX, maintained pipeline and we have

However, organizations are reevaluate as their is healthcare delaying we situation. they that observed near-term have many decisions what financial given purchasing budgets

the Additionally, are Professional few cut an translated in near-term Services to shorter-term FTEs their we has Health this to instances, initiatives. segment, number meet spend effort Within Catalyst a back of trimming engaged modestly experiencing subset in our with a customers, customers budget their in reducing of requirements.

XXXX significant as when their in prospects in some COVID-XX exercises. rebudgeting of While characterize Catalyst many of and to half application In what our we and this in challenges selling small as purchasing first worked of their we near-term modular decisions the in half lowering mostly their first many they has translated segment, related environment XXXX similar customers would the ways, Technology resulted spend. and reducing analytics pausing spend Health a subset to the of to economic experienced the with through customers customers

Just Health the customers as we Catalyst orientation of XXXX, choose expand with time, meaningful over will, relationships the provide pandemic then relationships. worst their aspects expansion customers financial we those saw with through to in our believe our our in opportunities and partnership stay for future COVID-XX long-term

is outlook The second our DOS driver loss of enterprise revised of the customer. large XXXX a

especially historical certainly And extremely based base. high, customer gross as among customer-specific we customer our enterprise a with is was our event this DOS this retention isolated believe While customers, event. existing an has our on been unfortunate, reminder, engagement

cost driven of customer in pressure. context, recent after by function significant onset was to analytics their savings light COVID-XX decision pandemic. shortly this As needs was financial bring their customer's the This of near-term added the in-house primarily

in that better from we learn and to taken could steps have active improve. We to implementation value, performed have also experience our and this and acknowledge we time

experienced an trend not have we customers. Importantly, this as overall from our feedback

engagement to revised outlook to adjacent Twistle decision the investments XXXX our continuing our of driver solution. sciences to relates third in our outside life The our of market provide pause patient

sciences sciences investment over dollars years revenue The a believe we to few adjacency data within last is there a life to end forecast continue XXXX that the robust our long-term no previously our longer has as not leverage we accounted as meaningfully in million achieve. for market, expect to opportunity had few our the played we out While life forecasted. asset

Additionally, road DOS with a investment progress core subscription loss customers, it of values. our will drive in profitability continued low few focus, allowing will and including believe efforts reallocate our each result us prioritize decision of a bolster ARR map. relatively concentrate core product toward toward subset the strategic on to our We value this operational proposition, this to

building data the life technology use this possibility invest keeping in life open to continue analytics core with and future mind, reinvestment market. sciences we sciences in As in of cases infrastructure we infrastructure, are the

responding to commentary pressure to of challenging and on XXXX, near-term topline are the plan. we half second a Moving proactively macroeconomic with focused, prioritized environment on the operating

meaningful focus greater operations investment First, expanding I enable This delivery delivery This focusing as previously, market, as reducing strategically in areas. continued other and as we operating would adjacent in operating leverage. in savings operational our to levels pausing sciences our functions. offshore capabilities well enabling our emphasize mentioned our further investment includes, expense that certain also are the life includes

learning relates event-driven platform and to continue investment quality, machine platform, value including and we enablement, services our acquisition investments our that scalability. are our our data recent and investment continuing extensible embedded data faster processing. focus enable our strategic on data with AI providing strong capabilities, to Related made modern we greater to data and scalability, data a customers in and elastic time-to-value, I analytics to to time focus will a continue offerings. to it focus to On highlight technology will unified model. an market-leading have capabilities, Next, to position investments on as enhanced on several ROI to meaningful enablement, and continue has data And stilt-like ourselves architecture as high-value compute, would plug-and-play make through and and

enable of to decisions more data clients platform analytics and capabilities quickly and All data measurably use more data-informed to effectively improve. these make and our

we systems Empowerment such believe pressure in and Financial our financial as financial a the also a prioritizing tech-enabled we clear ROI, are that currently suite, investments Suite, and health services. facing, applications our have outsourced services are population that Given health

timelines these these rates pressure. encouraged the half prioritizing XXXX, In improvement to there conversion we in offerings first are to anticipate be We conversations of half and rates to solutions ongoing relative an prospective market our will we amount second we the year, responses near-term end meaningful though pipeline. in the will of strain some see our financial and given our are clients, to the in pipeline current of our likely positive continue on and conversion with see

share implications updates XXXX let comments of for Next, second half the and a these me the on of beyond. few

Bryan detail. full-year XXXX our cover We more are revenue which in will outlook, lowering

our enable is lower revision only guidance we revenue EBITDA balance plan operating as to the to leverage. continued quickly operating Importantly, have impacted however, adjusted and forecast the our adjusted minimally guidance relative growth

as improvement in anticipate compared in positive expectations. bookings of our specific points XXXX, of we the and realize revenue similar performance materially bookings do net EBITDA Even XXXX our single-digits. and And terms anticipate are realizing by mid-to-high-XXs growth through XXXX annual be expecting basis though dollar-based our profitability XXXX, new combination we to of subscription cost we today, retention In in to and XXXX a we we namely in XXXX the anticipate optimization. lower impacted XXXX in additions improvement sharing adjusted a not lower outlook profile now be mid-to-high margin our as this We DOS are with committed guidance XXX our be that in to previous EBITDA focus the and related are will that continued improvement. to aim adjusted growth approximately operational in XXXX will XXXX rate will outlook,

our beyond challenging, EBITDA acknowledge that evolving is remain look market plus. our we in of we the our that ability adjusted As to end long-term and remains achieve XX% and macro target XXXX confident environment

time that related to of achieve free as market we us enter board our providing flow which program target positive has beginning We realization allows share a in having as set ability public the free IPO, of allows the we investment adjusted to today, our also year fourth to million directors margin XXXX. our outstanding are a authorized and midterm let of up to leadership our our demonstrated $XX and generation. me our On and the maintain out of company a cash target us EBITDA still EBITDA this differentiation long-term a adjusted meaningful while believe at flow margin breakeven cash XX% make shares. timeline of now repurchase share of Additionally, repurchase strategic level required topic, our to

a that our options for evaluated position for strong to in value we our conviction of company's corporate of our share level value meaningful full to program cash we with of high allowing create would flow our repurchase finance As year long-term informed XXXX, our of our determined generation shares path subset current the cash by recognition and repurchase us prices stock. of do our shares not share a the opportunistically view shareholders by that free match the

cash the overall ability sheet maintain opportunistic utilize Given our program the conduct M&A. balance, to size we to repurchase also balance of relative our the future to

both in Health M&A to will We be evaluation for Catalyst. our compelling and strategically requiring continue process, be disciplined acquisitions financially to

and While M&A additional strategy. to ongoing against anticipate less to offerings, to disconnect market M&A continue current believe our drive the valuations and execution long-term and and term, focus will our between in our the contribute near public market given we likely is we private dynamics intention

Bryan, company Before updates I few second a call also let over quarter. of to couple the share me turn from positive a to the moments take

XXth team to because results, focus continue In percentile the to maintain XXth utilize organization, our levels. member Gallup our overall ranking overall We, consistently on of member our and team engagement, six team engagement member we and in team that primary, engagement measure a engagement that service I'd team, a leadership central providing between building recent achieve a prioritized team strategic many percentile. member XXth score to and center continues place team we for Approximately team members been as months every of our in has and measurable flywheel, years the First, achieved engagement in that latest the level highlight foundational recognize member scores. the software an the the improvement. industry-leading like massive, contributions our customers the most pattern we make our engagement. in This to members' enable engagement expertise

prioritization power Organization. towards solutions, to have satisfaction we KLAS of record industry-leading improvement in encouraged Second, and and as meaningful results been see our our another costing, These by encouraging measured of Gallup focus. levels are the customer confirmation recently KLAS

realized publishing our billion studies celebrated of improvements we, $X.X a in studies a small these customer result fraction published Catalyst. a improvements XXX positively our impacted. Additionally, measurable documented measurable of that as partnership validated of XXXth These case represent case And the Health improvement million with in customer-approved XXX June, and company, lives as have X.X total customers case study. a have their

have additions. announced are publicly of recent two excited to we Lastly, customer our

happy robust expertise care to am to new goals. them technology professional population offering our variation that their to Health support reduce health their will with leverage our their to with I quality improve clinical outcomes, First, services LifePoint our toward overall efforts relationship share allow in of their and drive along

effectively care, platform expertise more health operational along we're our pleased to their leverage Next, that our and personalized and their Akron experiences value-based share efficiency in population data improve patient in compete Children's to Hospital services professional marketplace. will create software with outcomes,

opportunity to relationships that the industry-leading two highlight healthcare With are of serve have over the call serve Bryan? enables believe proposition importance organizations. leading offering that, turn these We solution, new our our of our me healthcare and Bryan. across ecosystem. us to the the these we breadth to effectively let clients honored to value the And

Bryan Hunt

Dan. Thank you,

primarily relative to customers our representing growth of was year-over-year. access quarter of fees generated million, the from guidance, $XX.X existing of year-over-year. million new Professional a July to represents from Technology our year was technology it the on total of Services XX% total increase for outperformance in This paying growth an growth first decrease for same as customer relative XXXX. the $XX.X as QX XXXX X, acquisition of contractual, represents revenue escalators, revenue. year-over-year that higher well relative Twistle built-in $XX.X revenue XX% XXXX, second recurring representing of from the and For as a closed second we X% and XXXX of midpoint period million, revenue quarter This X% result driven an was additions, by last the quarter to XXXX.

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

last operating decline call. XXXX, with we million. adjusted the $XX.X expenses QX is line our In quarter-over-quarter shared on expectations total earnings in were This

the by driven revenue along the of expenses, without in of timing EBITDA total As was in Adjusted in that adjusted $X now anticipate XX.X%. was of adjusted a percentage commensurate delays second with XXXX. expenses operating XXXX. performance revenue, of expenses of XXXX top half increase quarter a positive EBITDA performance our in guidance some will outperformance comparing this strong end XXXX million, relative guidance adjusted million gain $X.X of second in and non-headcount we mainly QX the the the to favorably This beating quarterly to occur EBITDA an were QX with

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

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

notes a million related Also, of $XX KPI million. of As $XXX $XXX.X Ninja payments and recent as a the cash of is component reminder, of the to cash of our outstanding amount currently acquisitions the net liability principal XXXX carrying value the reflective million balance convertible our note, a is first half and our two amount face approximately ARMUS. is of

EBITDA to losses million it million and adjusted between and expect total and XXXX, million revenue we of EBITDA million the between full As $X and $X and losses and between between financial for million. expect $X quarter relates our $XX.X for we $XXX.X $X revenue $XX.X third adjusted guidance XXXX, year the million million. million $XXX.X total now And

has our dollar-based financial low Dan by additional XXs, our dynamics me let Year-to-date, details been retention in Now, expectations the and bookings shared, DOS XXXX of rate a related to the driven guidance. few including FTE base. the scoped a a large trimming reducing our enterprise loss and technology across services modular more narrowly contract, customer a spend, professional customers modest of subset their of subset provide

XXXX remainder to of value. full-year we customers the we of new will low high remarks, implies the additions customers, Professional new both XXXX, In to XXXX. subscription ARR rate, the subscription customer this lower retention Technology full to sciences Dan's first anticipate the with for performance now improve, expected which life especially in Consistent wind-down recurring subscription terms expect few a considering single-digits was added than that with inclusive Services of half bookings mid-to-high-XXs. the our net DOS year when the that range our for our in be the we of year In average be previous mid dollar-based DOS our anticipate and few our expectation, now DOS net We expectations. a of

the little Services than segment expect in now segment by and for revenue grow Technology our a In digits. terms mid-single to XX% we grow Professional of the less full-year year-over-year XXXX the growth segment, to

revenue both Technology of a anticipate we Professional terms and decline Services that percentage points few QX sequentially. revenue expectations, will revenue our In

This the range retention $X per some over XXs DOS highlighted and million inclusive quarterly in items more percent reductions by application with dynamic accounted analytics customer dollar-based revenue Technology with low for the large little previously, year-to-date, along the customers' a Technology is Dan spend. enterprise in driven quarter, being loss our that of modular our

related deferred that related revenue there project not approximately in to in for an accounted million of $X revenue was Technology will that catch-up reoccur to outsized implementation a the Additionally, segment, QX. QX

by performance, team primarily Services Professional retention Professional is The sequential dollar-based back customers, first-half Services of members. third their trim on quarter usage our driven decline revenue our average, where

of gross to terms gross our that margin in high margin, anticipated next Services yet Professional as for XX% segment, Next, will have utilization with lower staffing adjusted In will to Professional adjusted our Technology of our XXs in second Services gross that we two the the continue driven not anticipate revenue rebalanced mainly we be half downward anticipate adjusted margin levels our by the in approximately now quarters. decline XXXX, the rates forecast. revised

Additionally, the delivered is year. this pressure of by of second anticipated services driven Professional in the Services margin mix be the to half

shared as operating the we in for certain $X operating consistent and last in year. non-headcount well quarter approximately third sales to marketing expenses, with especially the our the on call, our timing expense, our million throughout what of as seasonality we continue other Summit, expenses expect Healthcare in-quarter Analytics Lastly, accounts earnings and of related which to

not enter I some prepared although anticipate to savings the XXXX. conclude the will plan we initiatives our my end efficiencies toward the Dan? of we that and completed operating be until as into referenced cost that, savings of updated remarks. Lastly, drive XXXX, prioritized will will With QX Dan pertaining cost

Dan Burton

recognize that, for team to continued commitment, the operator challenging the in back macroeconomic even to thank I I will members Thanks, And Bryan. like circumstances. conclusion, turn with our engagement, for dedication In engaged call their questions. highly and and would

Operator

comes instructions] line from from of J.P. first [Operator or Our question the Anne Samuel Morgan. comment

Anne Samuel

there was Hi. Was maybe lost, rationale did just customer or to for taking Thanks the on maybe they of was? you contract? was them a a just a of for you it it how color on hoping the that bit color deciding little little on. nonrenewal what provide the And could move question. break a I big bit enterprise

Dan Burton

address that to Annie. happy thing, Yes,

a team-related there the DOS elements added one that able from was do as during the specific platform. was pandemic. the of actions of any client remarks, actual it mentioned implementation this a early those we happened to So, challenges recent And enterprise implementation have were of stages prepared some the sort there. large couple of we in the learned the delays faced during in And that being And we in-person implementation that result and we data of pandemic, that as subscription relates the a to not COVID-XX delays the as process. of

partnering financial get other to one it it delays data ability Health our we in the being than a the and was the the the than with in First, position to And measurable took impact longer normally from ROI ROI challenge. takes to the important platform Catalyst delays and sunset up part that use data of sunset running homegrown and and a infrastructure ability and associated longer analytics data improvements to drive data anticipated get an perspective. is of the to to infrastructure also then with

savings us. has homegrown unfortunate and retired the savings an been system, That to so, relationship. to way the the health isolated and get for pressures some where that into hadn't they to then to the from came financial client system and the decision the made we're ending point another was we through And of realized gotten from incident, we'd yet as this learn the striving experience. It certainly

subscription little As Bryan a client the remarks, of that mentioned of a contract. in the a over this in million value the $X is prepared quarter terms represented

Bryan Hunt

size, you which $X is right, over That's Technology as yeah. to value, of the little in think roughly add Annie, that, on could for of a of million Dan, so it just ARR And side. about the terms to us, most

this that It's and the up toward XX base. is a a of upon option that us. decided a in-house was kind essentially, point, to customer material to there. top shift So, to as Dan's for they And it nonrenewal customer customer across came getting enterprise our

Anne Samuel

hoping M&A? thank color. then decision was business, versus you repurchase program just that What And share could went what a That's you. Okay, that? to I talk into doing decision? catalyzed the in initiate about helpful the And maybe investing

Dan Burton

Absolutely.

So, as in financially and with value an that profitability with leadership and view represents us several feel a of a is our the board view $XXX reduce strong balance our our has thought view likewise, between and in company to a program continue that tried we the and exists pursue our shares disconnect a a good cash million M&A use and capital team, that some strong strategy we cash and last manner strategically as the since a progression in a very an equivalents. we leave the capital that like about dilution sheet reflects years positive of shares of ending occurred we that second a as as and have updated quarter the sheet from balance landscape $XX have the the establishment to believe one M&A environment with these the that do value ability And of intrinsic still that's disciplined as very to therefore, of the a IPO. things and the current of repurchase as well. And disciplined of we to and the benefit over toward comfortable share we updated up with free million to modest cash range flows, of

slower by perspective, make we were also strength we from we really to authorization have that elements, as to sheet fact some have we I and the for room our balance a continue think, share to a board growth meaningful that informed meaningful that and those even make And need the progress. such, environment near-term a in to confidence the that continue ability, in repurchase. So, profitability receive of progress the profitability really

Anne Samuel

great That's you. Thank color.

Bryan Hunt

Anne. Thanks

Dan Burton

Anne. Thanks

Operator

you. Thank

comes or next Our the line question of William from Haase Jared comment from Blair.

Jared Haase

think point my for taking I of the supply just about questions. the change with that and thinking And just these Because for about strain sort the kind of seeing curious, are here and I what the end outlook. sticking I lot first workforce I maybe labor guess detailed question. Good issues that in I'm revised afternoon. appreciate you're market? thanks all financial commentary guess, a of chain.

I now quarters. of a of those for couple lot have been a present think

your And so, QX the in new it guess the or outlook? And maybe but I'm has sort that that to market was just being it's saw what heavy with of your more possible, of to in curious kind selling season. led I do you incremental revision of

those a little But bit hear were curious impacts So, first. during those pronounced that around any just conversations. just to thoughts more

Dan Burton

Jared. share thoughts, happy Yes, few a to

that. been anticipate. that a So, us with system is strong XXXX, one of was to a health that most was of actually, But influenced that's there of for year the were for fairly clients. into dynamics interesting And factors observe health to couple that our our coming combination hard were system robust XXXX clients and it financially a of factors

by Thank know hearing way, can Perfect. we go. typing, if There are you. others on go background. in keyboard mute. We the don't the some I

that hard factors So, to coming there were a couple XXXX of anticipate. into were

perspective. of any is when an to And we perspective. a higher much when on many was when QX the were side cost pressure, operating were increases and in noise costs the still much that was modest. labor more first system put they the really health the our had started with as spike the they into material higher the financial result, keyboard for margin came also of that the to into on of a the really the revenue We're fact and try half and discovered background, financially to One late which negative measures from impact health the that as with COVID-XX, variant these meaningful was through were from of starting observation the year clients struggling that a adjust Omicron way. fact supplies the a along clients them our underwater financial clients systems. of impact were performance find mitigating to likewise, that of focus discussions them there by place for better in inflationary prospective of sense our in And hearing annual much that That's

And being is about clients work from to we reality of more of through. their Jared, in underwater dialogue so, hear our us when late how QX with a a that trying really, to perspective started to having way and pressure adjust to financial

is pressures time, some anecdotal research And improving to are that circumstances financial that starting think suggests evidence. and We're the to appears are take gradual some systems' financial I improvement. seeing that but that is observation can that health subside. more there Our be third-party a

that our sensitive we've well. be projections XXXX to think moving for we a as tried the so, and perspective from bookings' second as into to half And about

Bryan Hunt

add to financial Jared, near-term ROI, outsourced marketing offerings, offerings, and as and the things that to we're those emphasize and cycle well of of remarks, cost Dan from that, Financial speak investing as of opportunities Dan also, savings labor solution and near-term kind more ROI development offerings Jared, like our deemphasizing, Suite, and customers to services some population plan areas prepared to part thinking updated the we're continuing where but we're operating and our on around mentioned a a more of that for standpoint our speak and as Just and include so that savings. toward our can offerings offer our Empowerment some prospects. And health revenue financial sales

type way areas in will emphasize those a in we'll end be So, we spend prioritized our of continue way, in move with forward this market a that that environment. to disciplined as

Jared Haase

to environment? assume your slower expectation getting of kind to predicated in does kind Or maybe a believe, later of then of on that in I by to the some while for of that Is you to guess to underlying a just back free be continue time? context. certain that of of these And growth quick And and for headwinds there little of me. growth one at the XXXX, you normalized the I in longer-term appreciate add for bit that Is I range? used a it all wanted getting point around a back I organic an XX% to a of follow-up it for EBITDA kind Thanks. some persist commentary that flow maybe that. was little Is target. cash assumption there? predicated just gave you Thank the sort

Dan Burton

Yes, great questions, Jared.

as that through. time to that made some system health take of their facing clients was commitment, So, an with that realization work financial pressures will these it and way our we some understanding are

today, which XX-plus Now the that not of but trajectory, to kind it perspective take back in that recognizing free of ramp may is crosses And growth are from some ways a perspective. that time changing and perspective from a occur commitment that cash long-term that spectrum commitment past an growth that flow shared we've we're to may trajectory. that ramp EBITDA in a up a growth our percent perspective across we of

commitment we organic dependent scenario. it's that flow positive and that achieve growth can any of of that than even perspective growth in not cash free – be We're XX% a long-term making scenario XX-plus So, that margin growth on percent. long-term specific EBITDA percentage growth lower

Bryan Hunt

we based will in do Jared, systems' P&L to giving of continues did growth And range revenue XXXX situation we our kind generally, our recurring the just updated bookings specific health share next improve. because which XXXX, in And expectation rolls to that this on impact prepared model few we're financial not factors that yet Dan, for on expect performance to which so expect an a on as add the a on to year, including rate into our that, next remarks, that, bookings we'd there are XXXX play year. into there improve to

But point a trough year, Dan as Dan's up. of So, And our profile. expect a ramp back terms as to we we But know, ramp mentioned, a to expect to do hard determine to growth toward view said, ramp, that continue growth macroeconomic in revenue rate. you point, XXXX is on bit as exact environments. you little low long-term the generally to based that

Jared Haase

Thanks again the for color. all

Dan Burton

Thank you.

Bryan Hunt

Thanks Jared.

Operator

you. Thank

from or Elizabeth Our comes next line comment from [Indiscernible] Evercore. Anderson question of the

Elizabeth Anderson

question. you much so Thank for the

have more customer some color mentioned your that fingertips, you of sort you. I sort retention you how number do how ex customers this the if Could And dollar-based services one on sort know impacting? are or of like that's loss? at rethinking little been they bit cutting through You provide generally working number of you a but have don't with

Dan Burton

the Yes, question, Elizabeth. thanks for

then, to you'd first add to speak specific any and Bryan, the I'll well. So, like commentary if as item,

broadly, of modular clients have services, to that little subscription with that we of robust. side deep an seen of a some prepared continue bit then terms whom And number But long-standing clients this among those remarks, and trimming requesting have of solutions, the clients. temporary back So, more to our our FTEs very for subscription mentioned as in DOS technology to seen on pressure. the are our clients, from be some regards mentioned in of our we financial more enterprise during many of to we more both enterprise-wide modular of benefit elevated the more in with the have our relationships continues as we remarks, trimming back prepared we time

is the one As of were Services half us we prepared that we category but those compared number remarks, and not to little committed previously, outside earlier, our clients. subscription churn similar the DOS we're some Services with the mentioned which of client And difference seeing Catalyst a the is as bit base XXXX. that broad long are between enterprise deeply always known Professional more client discounts Health reduction clients we've enterprise subscription as side. trimming space term as DOS where in the we a referenced broader XXXX now back then client mentioned in we quite first a in that haven't offering that different technology is in seeing that the Professional we've from on any modular reminds to other they're space, among one more And pressure been under ways perspective, of our

Bryan Hunt

Elizabeth enterprise our XXX% about last shared, of that, in high-XXs about retention then impact we you rates to And customers to mid- and retention that as to a year. retention XXX% could the add our rate. customer in a to to for to DOS retention been XXXX the is that think our The to just your on impact higher And as across little few points, DOS you be services. of rate think enterprise question, technology our dollar-based overall so, the for expectation range, that than the if kind rate, have historically,

particular. difference Dan tech in kind more that of side, And would on the the side, be FTEs. trimming the of of our the and type there in And usage average, just terms a kind modular on exercises the of services customers so pullback the kind on is of mentioning of re-budgeting

Elizabeth Anderson

changing now. you temporary super that would done, not gave are right of something people just not you're like heard to you B, that height I COVID Got It's helpful. that it. or discount pricing the in you you sort that time, A, the That's is unlike that, contemplate? in something you, reduction in guys that obviously but not that COVID, of is FTEs, And a

Dan Burton

It's not.

Bryan Hunt

Yes. we ramp flexibility, enable on where as And it usage know, Elizabeth, customers side and up the you us. still ramp can FTE is their down a that little especially – bit services with

And of the that's bit team we're our a of of on little terms just so, usage what more is, members. in average, so seeing trimming

Elizabeth Anderson

you. Thank Got it.

Dan Burton

Elizabeth. Thanks,

Operator

you. Thank

Davis, of Our is Stephanie Securities. Davis or from open. next question the line comment Ms. your SVB comes line from

Stephanie Davis

at that. well, you. look to Thank comment Open a as

So, of of we've kind been Tale because Two Cities. A I'm curious

the Or systems a finish everything macro macro reason your closes very of that this a of has a large getting line? some in backdrop wins call You CFO-facing were intra-quarter, in it Was the once? there for these but this the a at was Was solutions? any just number all been kind last-minute large across had of sprint very there comment coincidence muted. greater need or

Dan Burton

comments/questions, great insightful Yes, Stephanie, question.

we this So, to factors. is were still small of a a as couple be there data-informed, you I know, think and And try end.

time were customer years like, were multiyear a consistent very particular a multiple to LifePoint informed terms were that to wins that a And over-extrapolate. discussions within in hard services our helpful economic with they true, a consistent enterprise this navigate conversation are see had we example, to solutions. that with dollar familiar near-term are our through them experiencing relates however, each of contemplating help believe, interoperability strained appreciate been that's large in with and to very cycles It them our announced LifePoint. that we with some as frame. ROI we've that also relationship partnership interest long-term particularly And that's components we it them, is subscription some wasn't be was DOS and think, been specific theme of don't for more through seemed health And did, And having that financially for a them. different larger multiyear discussions we particular that what what some so, been deep want of relationship. that we that clients. contract our But a the But a to of systems of to environment. also, of the them through with And we've actually recent But with solution fact them with to desire opportunities strive today. a was have do I to providing I

Stephanie Davis

to for environment? to focus need do your the that Or does you different another cut what current a a on backdrop rebadge project of around? to the mind, some area is of macro push from folks in back that with to So, one it as philosophy headcount? sort Is more possible and

Dan Burton

Yes.

years we've be our to – doing we over to Stephanie, to It our keep you focus, relationship impacted central careful know, do management care about and our you members and ways to with sciences that strive like our life all doesn't from about always as with very that imagine, to members members, So, continue perspective, we on team find might cost perspective, a and decision focus a thoughtful can cost that team with prioritize relationship example, But a members. that. team team pause deeply as and a continue relationship tried team Catalyst work the to to many for we Health members. the out business,

Bryan's position, then through slowing example, near-term I my were to in to have just help in well. to So, there near position in the it consistent we there space, many our forecasted enabling some components as for and also pressure, this utilization continue of remarks, would and our can we right example. in levels reduced members as but be ways terms financial rather team utilization our example, in bridge below some backfills. an with grow And to into us we clients' plan flexible the where likewise, our for a voluntarily a be relates the us taken could though teammates. moving have perspective to just make than with experiencing years investments And rates keep I'm which other for term are of consistent R&D the the that's for our approach in prepared be even able Professional a to have from then we near-term where a with right little forward that Services voluntarily to layoff compensation

trying those take. that So, the to we're of are actions some

Stephanie Davis

Good management awesome. Thank you, guys. top, starts That's the from right?

Dan Burton

Stephanie. Thanks,

Bryan Hunt

Thanks, Stephanie.

Operator

Thank you.

comment the James. comes of question from from or next Ransom Raymond Our John line

line Your open. is

John Ransom

Hey, can you hear me?

Dan Burton

Yes.

John Ransom

phone I'm sorry, I had out. dig to my

under from the hospital. what's Hospitals So, me curious to distress. they've been just is the not least now pause know at

more. think or Do the like happened So, now year why halting? Because they of burn-off a are seems this have ago it's you this should money? COVID

ago? year So, different now than that's what's happening a

Dan Burton

months question, conversations six even better three And that the with It's weeks feels been that that have have the are data most here over last understand I is of different it the exploring And ago, in to month for us. resonated kind executives to why points to John. great try than salient C-suite example. with now a

And support elements funds. some COVID-related the coming off from elements John, what So, meaningful were form system hard government, out specific were robustness robust the example, your that of for one, there in of point, federal to anticipate, a health turned for most that of of be to really our of clients. one hard was the to to XXXX forecast pretty

That would was of organizations, very forecasted high, the year-over-year significant without supplies and which year to double-digit most percentage think, the have may occurred. XXXX they little costs the QX The XXXX the XXXX hit these that system in had commensurate coming And clients which in So, included, time and same robust the time P&L something the to financial and Omicron a not really most way at government have cases, in extent health labor in number I with significance in early having that in were a in off similar then, that of sort occurred XXXX. realize that in XXXX. they process actually it didn't of the and from subsidies underwater, really a the for late system clients we are support for health of until the level hit component. that then ours acuity increases a spike And was costs QX. of existed that to deeply work

but breakeven going is some operating and they get seeing started many that QX, have we take frames time. really are clients And that some make to an QX than the working progressing time. a financial realization to take was from realization better say, quite it's time and with not those community, our we're need were wow, earlier, margin. above And back financial to health where that of was the system still in water, perspective. progress to we're and it's clients above sort clients need terms when health and to of we our get adjustments operating certainly, system the margin health the here Progress some hitting of but breakeven the we as above June and into to to of sense, May mentioned going the where So to July the prospective importance conversations back make in of adjustments late with started

Suite, like make some dollar example, tech-enabled outsourcing, like of those can now. support to components wanted be been our to some helpful initiatives, where solutions they the some to then reemphasize our the a willing so, Financial sensitive with deliver what now. clients doing of try and to relationship of And that. that hard with are right we're and near-term receive initiatives, Empowerment sure they long-term take components view why that's back We to to meet delay and of we've the of be to we ROI more that what our right for also need them to they And need trimming

John Ransom

So, plan XXXX. in are budgets you when the they the capital rhythm about think of fall – hospital

do So, constraints? be XXXX it's and strings probably think there'll the of you purse that we're before the informed at of – overly really QX landscape? XXXX loosen reality looking the bearish or an – XXXX be reading decisions they will It's probably by is

Dan Burton

going some got think on it's here, some to tell. I Well, takes you've hard John. and And puts

I XXXX, on negative greater July the financial June, realization, side, margins. time and pressure I was in of there lot there early said, May, a frame like think, operating So, lot that in negative is a of a the

At better meaningful And also so, time, appreciation improvement. seeing same health systems have for that. a they're the

will that's terms of some in taking a to prepared time that's be XXXX. they so, to headwinds budgeting will second exactly we're trying And hard the why that some positive be will to There be where decision-making. XXXX for how better to bit half. It's factor this we work likely play a little do out. inform some about might in in that predict its factor But to headwinds that think there way And wanted for impact through.

Bryan Hunt

expect add in we improvement XXXX. are to as Just would there where some specific well to to that, us elements

and focused management half, implementation time as customers. event. view added mentioned, recently highly So, for enterprise for DOS isolated our project an contract large example, that we we first had the we loss like in the do We're on frames

next benefit that should on be so, us And expect its year. to we own a wouldn't

it improvement seeing to expecting take XXXX. we're so, some in what point, Dan's XXXX time, but to bookings in And compared we're can

Dan Burton

I point, that add. to And John, would

John Ransom

Yes.

Dan Burton

XXXX than We better be bookings' would to half. first anticipate second half performance of

some As that to we mentioned watching to in gathering We're and show data XXXX our prepared understand likely remarks, more level. a anticipate improvement. detailed would at additional

John Ransom

for system than a assume They're is hospital contract. the LifePoint the one organization. bigger last would I contract better me. much So, typical

So, if didn't maybe LifePoint, that's push. we loss contemplate said this we we but a that DOS didn't contemplate

assumption going what's part. – on and my on so, And that's an

into in a that's the activity is on basically of existing going also being the what's clients just factored in So, rest your guide? commentary your your degradation among

Dan Burton

there. couple a thoughts so, of Yes,

relationship large that they're there assessment with LifePoint relationship the that's would and with and LifePoint excited are the a We that a we're about agree health beginning large system. certainly

that so, of some and put about of is we them And made comments Bryan that with. that the large the churn experienced same exciting kind that client in category as recently

general agree would assessment. that I with So,

would be are we to the those on seen other deep Health And as trimming little relationship technology modular piece a I the on would share bit have around back mostly just clients trimming like we and bit back see financial we health and expansion that their then focused think that of that a XXXX less side, Catalyst. services in that of XXXX, in we context detail the little improves, as we'll robust. opportunity that some components of really our those back. financial we like did of COVID-XX. come after the clients and worst strong relationships the anticipate, But health And in would experienced remain more system will side, much

John Ransom

comments. Right. the Thanks appreciate I much. so

Dan Burton

Thanks, John.

Bryan Hunt

John. Thanks,

Operator

you. Thank

Piper Sandler. from Jessica Our question Tassan from next comment or line comes of the

open. is line Your

Jessica Tassan

the sales to how know, about base, to the or the compensation curious respect Dan, revised, organization organization the or just of structure guidance I'm if and end sales some better guys your you your tepid within customer suit comments kind at with or have the to of all? revised market, changed the strategy

Dan Burton

for you thank Jess. Yes, the question,

as both charges components So, understand sure the with generate doing mentioned, labor, we're outsourcing that's guarantee with that example, revenue certain the our on management making side, savings and to the short need near-term budgeted relatively paid of best management should a clients. costing dollar regards Vitalware them, possible we're specific managing a of our in are the chargemaster tech-enabled that of and of around using Financial that then the one for clients period in cost near these within tech-enabled solution prospective the both we're our that to time components power with solutions that power dollar And And conversations prioritizing term, savings them traction. like through that side that as to we we through the for all focusing, we're of be another with we're budget outsourcing where capturing with chart cost deeply utilizing clients, how we're outsourcing, our seeing acquisition. really we hard large functions Empowerment And we those for that we're the ROI and using way. hard can with Suite, deliver from emphasizing solution includes and the clients as

to And on we're those so, our teams. and provide to we support that are to that account shifting We're clients, client with them our sales shift. teams and trying make focusing messages

Bryan Hunt

success Jess, directly Dan's point, more we're kind there. more to Another functions tied earlier of where and reemphasizing and account scope what year management a we modular that what seeing kind and less – focusing traditional do technology we're tied on sales but of of to to comments the to change, more it's customer force bit focused the Dan's of to or is pullback components our on part and side little is narrowly our some trimming team, actually this

drive focusing enterprise across our we measure and including customer kind reemphasizing customers, and improvement track we than some and base. smaller those so, drive of and are progress DOS And how of are typical that can all on

future. be focus that of a that drive big to to forward the so, piece customer And going ensure in expansion will net success that continue we

Jessica Tassan

Got more me. it. then two guess quick I That's quick – And for ones two ones just helpful. or

existing should XXXX? lower just new per think for sort expansion into in sort is signed revenue quarters average – addition about customers, think we the being recurring yes, maybe annual within maybe about several that As And the your to new as next net we revenue or like of the even then moderating just customer or adds? of

Dan Burton

Yes.

of couple thoughts there. a So,

the we a to rate and that dollar-based as forecasted mid- the XXs. are, we retention prepared than remarks, lower is would in expecting we the high So, what originally for year have seeing mentioned

over side. clients. the couple of believe that get like But near would of we existing relationship where that continue that so, pressure, years through financial clients on time. that's just expand with our we to what are them to see our as we're did And we We to regards expect their the client impact term, a ago, do existing kind in seeing

of additions some and client new than averages mentioned was our in actually some cases. large earlier, fairly the new as recent larger our side, were client historical On

expect net thinking for remarks lowered terms differently this of about starting in in on in $X.X million historically communicated low back in range suggest point new bookings translate from XXXX being we into that growth will then Would growth the XXXX rather we've will we've talked So, new clients XXXX the that the point about. relationship you low a number plus in and perspective a year. us, share that second DOS and I profile of half a we for don't – client subscription a prepared the did of the up point that toward beyond or think perspective then of will which P&L side. a from would building But longer-term what sort that be new

Bryan Hunt

adds, And to we did half DOS mention, Jess, in subscription terms half. of the first second net new compared

half. the in a we So, added few first

in few second-half net. a the expect We

the have were of sciences they sciences the half fairly testing a subscription ARR impact that back use net few year, the certain DOS there side. customers we a DOS DOS life new However, the low wind we life subscribers will down are will value is life will where for in sciences – add. in kind functionality DOS our that and cases customer of There those subscription in

modeling as to the out, of half kind did that well of you as want we back think the about So, point year-end.

Jessica Tassan

helpful. Thank guys. That's it. got you, Okay,

Dan Burton

Thanks, Jess.

Bryan Hunt

Thanks, Jess.

Operator

you. Thank

Our open. or Close Genuity. Richard line of comment Mr. your Canaccord from from line comes question next the is Close,

Richard Close

questions. the for thanks Yes,

said or I are or back. a the of to the two? of talking dropping maybe to pipeline, or people answer think for John's degree questions. just the just I'm come or curious respect to if out waiting a With still you your delays one some of follow-up John's and you guys. to questions warm to dropped still are they Just can you you people quantify quarter expect that are out one

Dan Burton

Sure, Richard.

opposed So, as out. dropping more like it to delays feels

at example, that is but more there year. folks for would to still So, opportunity the And that's than that to today, case and expect delaying, a we're begin if experiencing. be expand larger the it are first the is to of our was pipeline or relationship, you what

a rates. the mentioned decisions. clients remarks, degradation prospective we in frames our we are which As elongation win clients But prepared seen in haven't an we the and in time making are seeing within

Richard Close

Okay. And customer. big respect rollout there LifePoint obviously, with in on bit within of a to a talk that footprint? timeline LifePoint, terms little Can you the about the

Dan Burton

Yes.

investments relationship, new modern So, take case, focused can made of. rollout platform. we've as that excited data relationship. the that we're as we that advantage about We're are there LifePoint, advantage of the client data of the of robust our of about taking excited start then they in a some And the well relationship we on really very at will rollout architecture the is typically that with

there to us, to the already progress a focus follow level. we've with time we and the been the data we're we're seeing significant our to for as improvement the to some has time that to ability and of of specific value in platform, platform that the heels about other excited we're initiatives So, real data on a value also use quickly get the at variation and pop reduction implementation relates have clinical excited but started it cases health and

Bryan Hunt

a standpoint, to Richard. from add that to financial Just

delay signed ramp is Services will there contract go-live ramp QX, Technology continue the From standpoint, signing that up a Professional QX, the have a the and So, revenue from in of to customer to platform. into in we QX. to started typically

So, we don't will expect much start QX contribution that the beyond. and side, QX on but Technology into

Richard Close

And I'm I big it I Or hospitals start? bang? – or interested like XX-some-odd in curious. think Is more mean, is a like Okay. it I staggered guess something. Just a it's like

Dan Burton

latter. think, I of more Yes, the

an infrastructure data a from perspective focused level. at we're enterprisewide So,

focused data ingesting enterprisewide cases then we're so, we're contemplating And that use areas. focus also that can the sources from on feed few first most more that are systemwide

Richard Close

thank you. Okay,

Dan Burton

bet. You

Bryan Hunt

Richard. Thanks,

Operator

you. Thank

or Mr. from is Grosslight comes open. question the next Citi. from Our your comment of Grosslight, line Daniel line

Daniel Grosslight

question. the taking for Thanks Hi.

added a if more provide high you mentioned I first the half. be And in expect bookings can to mid us help but about the half cadence? you around Curious half? you should few versus sciences goes you You assume versus in we just second more can that. half, few little still life expect you year, cadence second expect for you much to a a off, into XQ? those the the have color Do this the now XQ the first clients single-digit more if know think in rolling how

Dan Burton

some from second-half it clients. think, we subscription effect, those of will sciences perspective, clients Daniel, thinking right, a replacing life first-half, be new given about few DOS of you're sciences, I that life Yes, with in a that those

add half to what we'll in in experienced gross clients are the and first forecasting expecting that we more new second the relative We half.

to QX, in our previously, have QX. mentioned relates QX or heavily weighted seasonality QX some as sales and QX QX it do and As being we've processes more we than with typically

Bryan Hunt

opportunities Yes, customers. great that's in do kind as what upcoming talk QX, our Healthcare Analytics with expect. from our we'd well prospects, for late-stage And to as serve as of we Summit, and a does Daniel, new opportunity us September, generate have in that feedback hear

important that to catalyst point more QX point get of we Dan's be kind will season. So, as material kind touch an and of selling into the

Daniel Grosslight

Yes, makes sense.

$X.X much not clients mentioned guess assumption more most new I that we a bundles, guess you're new it with starting seeing in to models. opt right? not for point you of changing model kind for an skinny the the of that financial see the much, seems behind degradation what's like shouldn't or just modular pitch But the the like from It I expect seems adds. Is Dan, that's given the easier guys. given shift And million starting all-you-can-eat And modular any it you that point pressures. seem Okay. would the would for that most to

Dan Burton

our about pipeline portion Daniel, our pipeline portion you're right, modular more version, version, a see lighter see And a more I I a focus Yes, thinking an But a level. it reasons large that. it's think the enterprisewide on are of few still of that for question. more bit there a we think good at focus while that little we small

for a The smaller required the with is relationship light Health much go and actual to begin a with more cost deeper on the the can can starting the one While hand, substantial often, use relationship be investment against into in the more Health ROI point savings deeper when you Catalyst. And run you with with the near-term version. Catalyst that's cases upfront savings relationship.

being so, our inclined in that think we are those those we of reasons are pipeline of propositions. elements see all why and towards factored either And value

Bryan Hunt

is terms them, that we're most size seeing, can of they near-term so kind the is important so earlier ROI the of relationship, Daniel, necessarily in to in shifts prospects a shift more for what the more commentary, but focus near-term focus what is on what of from more And terms the Yes. financial not of Dan's generate.

types So, that outsourced costing, our DOS-type both solutions we we emphasize those are as for of offer. Revenue services well trying solutions, enterprise more prospects, offerings. labor solutions, cycle, as for to the

Daniel Grosslight

for Thanks the sense. color, Makes guys.

Dan Burton

Thanks, Daniel.

Bryan Hunt

you. Thank

Operator

you. Thank

next from Our line BTIG. your comes is line the Larsen, Mr. comment question of David or Larsen open. from

Unidentified Analyst

regarding for for lot there initiatives? care I management, I etc., for question in This a Hello. your, But value-based to my would you is of on demand like Aaron know solutions costing. to space? offering in Thank specifically mentioned terms Ninja, had Dave. revenue the in question. taking care that a spending additional KPI are your what solutions, then about solutions? you're M&A, hospital I Twistle, these And cycle value-based new labor on customers you targeting guess, your you add Thanks. are

Dan Burton

Yes, great question, Aaron.

rather a as are would broadly and delays Not bit system pleased see we're to the we clients based more new delaying, of canceling, are more are dynamic much postponing, But solutions, So, pleased a they I solutions, that demand think with to to pipelines I it that pressure but also on are that first, a meaningful facing. in time pipeline our so prospective we're that. select. are have are that continued demand. those relates they some little And health taking continue characterize our to areas and new they we for financial similar that seeing there clients

our we private we we the question, of intend in and still At mentioned includes time, there second from we variety are space. as value-based it mentioned do M&A keep care areas persistent disconnects stay and to ground, very tend potential an relates continuing to some the between market market ear interest, the perspective, a previously, As of remarks, that disciplined. And across we expectations. valuation do prepared same financially – we're to and the do in our discussions public

organizations also, to earnings our we so, shared is cognizant ensure last last our I've shared the plenty of of there half integrate what fortunate offer. years, as do portfolio really two in We've been those and that of can benefit us all to are for acquired the we're enabling call, And clients we've we over and we six from solutions deeply to that. that a and full

and the we So, there We're do the M&A remarks, focus to And is the us to that pleased lot we work robustness of term, to in is term we set near that prepared do. have, activity for our to there contribute anticipate M&A that's long with do lots us of the work have, a in will still of shared to the wouldn't as for why, continue solution but portfolio that we believe our strategy. we in there. plenty of

Unidentified Analyst

helpful. That's very

quick a Just follow-up.

you in compensation to increases hiring or you're that measures sort environment, the of of Do hire this terms impacted of taking your retain employees your tight any business. foresee In potential know that I more Professional Services business? to other

Dan Burton

Yes.

freezes a I on maintain So, we there focus or downsizing. softening this we're members team team on focus hiring that cycles layoffs labor many our and observing, companies change environment their is, what and And our the through is announcing or members in with and now companies part right And engagement. business their many think yet some engagement. of our seeing are doesn't

cycle, similar they're this for fraction increases progress. against And listen doing This members. in well. to experiencing. next the make their that seen to our to And some do relates for remarks, areas needing we it And to meaningful we inflationary maintain keep as they year, of as team to members members to that back our cycle, salary our certainly commitments prepared our And have example, this we that mentioned in helpful midst already in actually We've ability rates, reduction averages. the the pull were included through that. engagement a of as salary planning so team a to profitability in we're of scores prioritize we and planning last continue actions base and them. the permanent like July. an as a turnover compensation and And that for team even competitive, pleased all up we We increases important there. of meaningful the of We anticipate focus first environment even we in elements to us. elements the were still in we try XXth base really we're But foil remain see most high industry going that's streamline increase was so competition and our a percentile helped half members are going our the to carefully prioritize to those to that to team

that keep so, a to we'll highly member way. team from and our engaged base, there. And greatly focus it benefited we want We've keep

Bryan Hunt

We our talent and base to diversify pools. also member continue, Aaron, team

as have with Ninja So, KPI cost acquisition, and terms our to continue an driving leverage pools a deliver of in well is And variety talent as a Dan's part talent globe of across efficiencies continue of build to in an kind continued kind to of profitability, office point, is to that we the India. to from our and of do now pool, engagements, utilize R&D customer standpoint. strategy on to and

Unidentified Analyst

you. Thank helpful. Very

Dan Burton

Thanks, Aaron.

Operator

you. Thank

Our next line question or Guggenheim Chandrasekhar from the comment of Partners. comes Rohan from

open, is line Your sir.

Rohan Chandrasekhar

as intelligently quarter my providers your for did see first would taking market way provide prop you materially Since had to guidance. as mentioned one. but thanks get to conditions a value way call, that question. market market and Hey, end you operate a challenging efficiently? then, the In the just I help hopeful to or more reiterated worse, the were –

Dan Burton

Yes, Rohan. great question,

later the and yet. impact QX pressure clients. as C-suite their pressures So, where system of in some as operating it the clients That I where really category a happened I was executives mentioned call, we margins quarter previously, deeper that there in would at still in as at our of health deep the a characterize having I financial more of these think recognition first with on not material were positive the were financial the recognition conversations

us, as pressures those make budget cuts around progress of conversations to financial the relates in QX. for near-term need starting late to So, came more it and really

for well observing the financial recognition of now system performance the just but actual August, health some expansion as that that the we're takes sometimes where July, financially clients time time, recognition we Now as to in June, improving opportunities, our see took is that pressure in into it some translate out for playing example.

point, And is And to so, have near-term where, financial still we're dollar that are that. there that And your second we to is need for there. sensitive hard our we focus, recognizing shifted focusing solutions. that

health but our among clients going actual continue services, of to those at Financial occurring and to seeing And on that's prospective our see that clients some are is relative We tech-enabled lagging interest do improvement the in somewhat and areas those system follow-up items Empowerment improvement now for example. clients. meaningful financially we're

Rohan Chandrasekhar

Thanks Have for night. good the color. a

Dan Burton

Thanks Rohan. bet. You

Operator

back the to the like for closing this Thank you. I'm queue remarks. to showing management in no time. over any turn I'd at additional questions conference

Dan Burton

in you touch attention. to so we And Thanks Thank opportunity updates the appreciate and your much. you and to time for forward the all with look we keeping share future. in

Operator

This and thank program. for you conference. in Ladies gentlemen the today’s participating concludes

a wonderful may disconnect. have now day. Everyone You

Health Catalyst (HCAT) 7 Aug 222022 Q2 Earnings call transcript