Definitive Healthcare (NasdaqGS:DH) Q3 2025 Earnings Call November 06, 2025 05:00 PM ET Speaker2Welcome to Definitive Healthcare's Q3 2025 earnings call. Later, we will conduct a question-and-answer session. I will now like to turn the call over to your host. You may begin.Speaker1Good afternoon. Thank you for joining us today to review Definitive Healthcare's financial results. Joining me on the call today are Kevin Coop, Chief Executive Officer, and Casey Heller, CFO. During this call, we will make forwar ...

Economic Performance - In the past five years, five economic indicators in Pudong have surpassed the "trillion" mark, with three leading industries nearing half of the city's total [1] - By 2024, Pudong's GDP is projected to reach 1.78 trillion yuan, 1.34 times that of 2020, accounting for 32.9% of the city's total [2] - The total industrial output value is expected to be 1.32 trillion yuan, 1.27 times that of 2020, making up 33.6% of the city's total [2] - The total revenue from the service industry is anticipated to be 1.25 trillion yuan, 1.61 times that of 2020, representing 21.2% of the city's total [2] - The total import and export volume is projected to be 2.61 trillion yuan, 1.25 times that of 2020, accounting for 61.1% of the city's total [2] - Online retail sales are expected to reach 5.88 trillion yuan, 1.34 times that of 2020, making up 37.3% of the city's total [2] Industry Development - The three leading industries—integrated circuits, biomedicine, and artificial intelligence—achieved a scale of 832.3 billion yuan last year, accounting for 46% of the city's total, with an average annual growth rate of 11.7% over the past three years [3] - The proportion of strategic emerging industries in industrial output increased from 48.4% to 53.6% [2] Policy and Reform - Pudong has implemented three national strategic tasks with a landing rate of 93%, resulting in a series of innovative reforms and open results [4] - The "Systematic Opening Overall Plan" has seen 80 tasks largely implemented, with 77 pilot experiences replicated on a larger scale [4] - Key reforms include the first national pilot for importing remanufactured products and the implementation of localized management for imported medical device labels [4] Infrastructure and Urban Development - Pudong has invested 374.22 billion yuan in public welfare, maintaining a fiscal investment ratio of over 46% [6] - The "Five Rings" water system project aims to enhance ecological landscapes and urban functionality, covering an area of approximately 199.4 square kilometers and benefiting around 2.3 million residents [6] - The project includes the construction of new parks and green spaces, increasing the per capita park area to 13.4 square meters [6] Social Welfare and Community Development - The "Two Olds and One Village" renovation project has benefited 38,600 households, completing urban village transformations and improving living conditions [7]

Core Viewpoint - The establishment of a trusted data space in Guangzhou aims to enhance the integration and utilization of healthcare data, facilitating innovation in medical services and research while ensuring data privacy and security [1][2][3] Group 1: Data Products and Resources - The first batch of data products and high-quality datasets in Guangzhou includes five data products and 28 datasets related to various health conditions, such as pneumonia and liver cancer [1] - The projected outpatient volume for Guangzhou in 2024 is expected to reach 187 million, indicating significant potential in healthcare data resources [1] Group 2: Data Integration and Collaboration - The trusted data space connects hospitals, enterprises, and research institutions, establishing a data circulation mechanism to promote integrated governance and orderly flow of medical data [1][2] - Medical institutions are encouraged to share their data; for instance, a hospital has structured and anonymized seven specialized disease databases for integration into the trusted data space [2] Group 3: Data Utilization and Innovation - The trusted data space provides 100 petabytes of computing power to support algorithm training for hospitals, enabling innovation in general and specialized medical services [2] - Data from newborn jaundice cases is being utilized in collaboration with enterprises to validate and optimize algorithms for non-invasive jaundice testing [2] Group 4: Data Security and Privacy - The trusted data space implements privacy computing and audit mechanisms to ensure data does not leave the domain and its usage is traceable, addressing concerns about data misuse [2] - Each usage scenario requires a digital contract that specifies the purpose, permissions, and duration of data use, alleviating hospitals' concerns about potential data abuse [2] Group 5: Future Expansion Plans - The trusted data space currently covers 18 research hospitals in Guangzhou, with plans to expand its data resources and connect with at least 50 third-party data service providers and over 100 enterprises [3]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $59.2 million, down 7% year over year, but above the high end of guidance [5][21] - Adjusted EBITDA was $14.7 million, representing a 25% margin, which was well ahead of expectations [6][21] - Unlevered free cash flow for the trailing twelve months was $67.1 million, down 12% year over year, with a 91% conversion from adjusted EBITDA [27][28] Business Line Data and Key Metrics Changes - Subscription revenue declined 7% year over year, while Professional Services revenue grew by 9% in the quarter [23] - Adjusted gross profit was $47.1 million, down 11% from Q1 2024, with an adjusted gross profit margin of 79.5% [23] - Adjusted operating income was $12 million, down 35% from Q1 2024, with an adjusted EBITDA margin of 25% [26] Market Data and Key Metrics Changes - Renewal rates stabilized in Q1 at levels observed in the second half of 2024, but retention rates remain lower than desired [8][9] - New logo activity was solid across all end markets, indicating ongoing demand for differentiated actionable data [8] Company Strategy and Development Direction - The company is focusing on four strategic pillars: differentiated data, seamless integration, customer success, and digital engagement [9][18] - The goal is to improve retention rates and return to growth by enhancing the value proposition and performance across these areas [18] - The company is committed to managing costs while identifying additional ways to drive efficiencies [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational strategies despite economic uncertainties, aiming for sequential revenue growth in the near term [19] - The company is tightening its revenue guidance for 2025 to $234 million to $240 million, reflecting a 5% to 7% decline year over year [33] Other Important Information - The company repurchased approximately 5.6 million shares for a total of $21.2 million, leaving $77 million remaining under the existing authorization [29] - A goodwill impairment of $176.5 million was recorded due to stock price decline, which is a non-cash accounting charge [30] Q&A Session Summary Question: Can you elaborate on data integrations and their impact on retention? - Management indicated that data sharing and integration are crucial for enhancing customer retention, with a focus on facilitating data interactions through various platforms [37][39] Question: What is the agency strategy and its impact on the go-to-market motion? - The agency strategy is seen as applicable across all customer segments, aiming to leverage differentiated data to help customers activate their data effectively [41][43] Question: What is the expected timeframe for seeing growth inflection from operational changes? - Management expects to see signs of growth within the year as operational changes take effect, with a focus on aligning support functions and customer engagement [45][47] Question: How does the company plan to address churn and customer retention? - Management noted that while churn remains a challenge, stabilization is encouraging, and operational actions are expected to improve renewal rates later in the year [77][78] Question: What is the competitive environment like, especially against other pharma services companies? - Management acknowledged pressures in the Life Sciences sector due to macroeconomic factors but emphasized the company's focus on quality data as a competitive advantage [78][80]