Health Catalyst(US:HCAT)2020-11-11 04:09Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $47.2 million, with $46.3 million excluding the one-month contribution from the Vitalware acquisition, representing an 18% year-over-year increase [9][45] - Total technology revenue for Q3 2020 was $28 million, or $27.2 million excluding Vitalware, reflecting a 28% growth compared to the same period last year [10][46] - Adjusted gross margin for Q3 2020 was 50.7%, an increase of approximately 170 basis points from Q2 2020, but a decrease of about 300 basis points year-over-year [11][48] - Adjusted EBITDA for Q3 2020 was a loss of $6.4 million, an improvement from a loss of $8.4 million in Q3 2019 [11][52] - Cash and cash equivalents at the end of Q3 2020 were $275 million, up from $228 million at the end of 2019 [54] Business Line Data and Key Metrics Changes - Professional services revenue for Q3 2020 was $19.2 million, representing a 5% growth year-over-year, driven by services provided to new customers and expanded services with existing customers [47] - Adjusted gross margin for professional services was 25.1%, a decrease of approximately 1150 basis points year-over-year [50] Market Data and Key Metrics Changes - The company noted a 40% increase in the usage of foundational analytics applications since the onset of the COVID-19 pandemic [21] - The recurring revenue model accounts for over 90% of total revenue, which has helped mitigate the near-term impact of COVID-19 on top-line performance [20] Company Strategy and Development Direction - The company is focused on leveraging the COVID-19 pandemic as a tailwind for the adoption of data and analytics in healthcare [26][110] - Recent acquisitions, including Vitalware, Healthfinch, and Able Health, are expected to enhance the company's product offerings and market reach [28][99] - The introduction of a new President role aims to oversee growth functions and drive international expansion [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the healthcare provider ecosystem's preparedness to respond to ongoing pandemic challenges [18] - The company anticipates a slower revenue growth rate of approximately 20% in 2021 due to the impact of COVID-19 on 2020 bookings [60][61] - Management emphasized the importance of data and analytics in the current environment, which is expected to drive future growth [84][110] Other Important Information - The company announced leadership promotions, including Patrick Nelli to President and Bryan Hunt to Chief Financial Officer, effective January 1, 2021 [30][36] - The company plans to continue investing in M&A opportunities, leveraging its strong cash position [97] Q&A Session Summary Question: Thoughts on 2021 new DOS adds and pipeline performance - Management noted that the second half of 2020 pipeline performance is similar to pre-COVID levels, but the impact of COVID-19 on new customer additions is still a concern [68][71] Question: International expansion opportunities - The company signed its first Middle East customer and is cautiously optimistic about future international growth, though it may take time to see material impacts [73][74] Question: Margins and revenue growth dynamics - Management expects technology revenue to grow faster than professional services revenue, which will positively impact overall gross margins [76][77] Question: Contribution from recent acquisitions - Vitalware contributed approximately $900,000 in Q3 and is expected to contribute around $4 million in Q4, with a projected $20 million impact in 2021 [78][99] Question: Professional services revenue outlook - Management indicated that professional services dollar-based net retention is expected to be lower than historical levels due to COVID-19, but technology revenue retention remains strong [104][105] Question: Role in vaccine distribution - The company anticipates providing analytics support for vaccine distribution, leveraging existing infrastructure [89]