Health Catalyst, Inc · NASDAQ:HCAT
Health Catalyst — J.P. Morgan Healthcare Conference 2024
45 slides from Health Catalyst's conference presentation, Jan 8, 2024
Slide 1: Overview Presentation January 2024
© Health Catalyst. Confidential and Proprietary. Overview Presentation January 2024
Slide 2: Forward-looking statements
© Health Catalyst. Confidential and Proprietary. This presentation and the accompanying oral presentation, if any, contain forward-looking statements. All statements other than statements of historical fact contained in this presentation, including statements as to future results of operations and f
Slide 3: Health Catalyst Overview
© Health Catalyst. Confidential and Proprietary. Health Catalyst Overview 3 Integrate data in a flexible, open, and scalable platform Deliver insights on how to measurably improve Enable and accelerate data- informed improvement Comprehensive Solution Data Platform 1 Analytics Applications 2 Service
Slide 4: Our mission and company strategy flywheel
© Health Catalyst. Confidential and Proprietary. Our mission is to be the catalyst for massive, measurable, data-informed healthcare improvement Our flywheel represents how we accomplish our mission—our company strategy Engagement Attract, develop, and retain world-class team members by being a best
Slide 5: Investment Highlights
© Health Catalyst. Confidential and Proprietary. Investment Highlights 5 Recognized industry leader in healthcare data & analytics Comprehensive solution: data platform, analytics applications & services expertise Measurable clinical, financial & operational improvements World-class team member enga
Slide 6: We Solve the Key Problems Facing Healthcare Today
© Health Catalyst. Confidential and Proprietary. We Solve the Key Problems Facing Healthcare Today 6 Waste & Financial Pressure ▪ A volume-based US healthcare reimbursement model with $1 trillion/year of waste (1) continues to put pressure on providers’ operating margins ▪ This has led insurers to c
Slide 7: Blue Chip Client Base
© Health Catalyst. Confidential and Proprietary. Blue Chip Client Base >520 clients(1) include academic medical centers, integrated delivery networks, community hospitals, large physician practices, ACOs, health information exchanges, health insurers, and other risk-bearing entities (1) 2022 figure;
Slide 8: Externally-Validated Industry Leadership
© Health Catalyst. Confidential and Proprietary. Externally-Validated Industry Leadership Broad Recognition Chilmark Healthcare Analytics Report(1) 2019 Highest Client Satisfaction KLAS Evangelism Score(2) HIT Average Vendor Product Grade Market Grade Allscripts B+ B Arcadia A- A- Athenahealth B+ B+
Slide 9: Comprehensive Solution for Data-informed Improvement
© Health Catalyst. Confidential and Proprietary. Comprehensive Solution for Data-informed Improvement Services and Improvement Expertise: Analytical, clinical, financial, and operational experts facilitate and accelerate measurable improvement Tech-Enabled Managed Services (Chart Abstraction, Analyt
Slide 10: Investment in Next-Generation Data Platform
© Health Catalyst. Confidential and Proprietary. Meaningful Investment in the Scalability, Modularity and Flexibility of Our Next-Generation Data Platform Best-in-class standardized platforms complimented by best-in-class open platforms 10 Best-in-class standardized platforms Best-in-class open plat
Slide 11: Next-Generation Data Platform: Highlights
© Health Catalyst. Confidential and Proprietary. 11 Next-Generation Data Platform: Highlights
Slide 12: Next-Generation Data Platform: Architecture
Next-Generation Data Platform: Architecture © Health Catalyst. Confidential and Proprietary. 12
Slide 13: Tailwinds
© Health Catalyst. Confidential and Proprietary. Tailwinds • Health Catalyst will continue to differentiate itself by leveraging cross-industry technologies and layering them on top of healthcare-specific content for end markets • Anticipate AI integration will increasingly play a role in tech enabl
Slide 14: Leveraging Healthcare.AI
© Health Catalyst. Confidential and Proprietary. Leveraging Healthcare.AI DOS Platform Module High-Value Analytics Enables Users to See What Is Right In Front Of Them 14 • 96% of people draw meaningfully erroneous insights • Improve >10x with Healthcare.AI • True of analysts through board of directo
Slide 15: Highly Differentiated, Comprehensive Solution
© Health Catalyst. Confidential and Proprietary. Highly Differentiated, Comprehensive Solution 15 Comprehensive solution guiding our clients to greater levels of digital maturity, enabling clinical, financial, and operational improvements 2 3 Consulting Highly specialized Unable to sustain recommend
Slide 16: Clients' Realized Improvements Accelerate Over Time
© Health Catalyst. Confidential and Proprietary. Clients’ Realized Improvements Accelerate Over Time, Reinforcing Decisions to Renew and Expand 16 $1.5B 5.4M 2.9M More client-approved measurable healthcare improvements lives positively impacted care gaps closed Together with our clients, celebrating
Slide 17: A Health Catalyst Success Story: Tech-Enabled Managed Services
© Health Catalyst. Confidential and Proprietary. A Health Catalyst Success Story Tech-Enabled Managed Services Improves Quality, Reduces Costs, and Optimizes Engagement As the financial and operational burden of reporting quality measurement in healthcare continues to increase, systems such as Banne
Slide 18: Carle Health: Long-term Partnership Expansion
© Health Catalyst. Confidential and Proprietary. 18 Carle Health: Long-term, Significant Partnership Expansion Five-year Deal Signed in Dec 2022, Worth Up to ~$80M Over the Life of the Contract “Carle Health is excited to announce this novel partnership with Health Catalyst. When combined with our o
Slide 19: World-class Team Member Engagement
© Health Catalyst. Confidential and Proprietary. 19 World-class Team Member Engagement Health Catalyst benefits from highly-engaged team members with low turnover rates, which enables client satisfaction, renewal, and expansion Consistently Recognized as One of the “Best Places to Work” 2015 – Q3 20
Slide 20: Experienced and Visionary Management Team
Dave Ross Chief Technology Officer Tenure at Health Catalyst: 3 years Daniel Burton Chief Executive Officer and Director Tenure at Health Catalyst: 12 years Bryan Hunt Chief Financial Officer Tenure at Health Catalyst: 10 years Holly Rimmasch Chief Clinical Officer Tenure at Health Catalyst: 12 year
Slide 21: The Health Catalyst Operating Principles
© Health Catalyst. Confidential and Proprietary. The Health Catalyst Operating Principles The principles that govern our daily interactions Improvement • We are deeply committed to enabling our clients to achieve and sustain measurable clinical, financial, and operational improvements • We nurture d
Slide 22: The Health Catalyst Cultural Attributes
© Health Catalyst. Confidential and Proprietary. The Health Catalyst Cultural Attributes The attributes we prioritize in our hiring, retention, and promotion Continuous Learner • I can learn from anyone • I love to learn, and I am a lifelong student • I recognize my mistakes and correct them quickly
Slide 23: Multiple Strategic Levers to Drive Durable, Long-Term Growth
© Health Catalyst. Confidential and Proprietary. Multiple Strategic Levers to Drive Durable, Long-Term Growth 23 Grow our overall client base 98 DOS subscription clients(2) amidst ~1,200 potential clients → ~8% penetration Cross-sell DOS to hundreds of application-specific clients & cross-sell appli
Slide 24: Preliminary 2023 Financial Updates & Forward-Looking Commentary
© Health Catalyst. Confidential and Proprietary. Preliminary 2023 Financial Updates & Forward-Looking Commentary 24 • Preliminary Q4 2023 Total Revenue results above guidance midpoint (range of $70.1M to $75.1M) • Preliminary Q4 2023 Adjusted EBITDA results at or above guidance midpoint (range of $0
Slide 25: Highly Attractive Operational and Financial Model
© Health Catalyst. Confidential and Proprietary. Highly Attractive Operational and Financial Model Poised for Growth Reacceleration and Profitability Long-term Revenue Growth Target Improving gross margin >90% (1) Recurring Revenue 20%+ (2) Long-term Growth Target 100%-112% (3) Dollar-based Retentio
Slide 26: Clients, Revenue and Dollar-Based Retention
© Health Catalyst. Confidential and Proprietary. 46 126 130 >350 >440 >520 34 50 65 74 90 9812 76 65 >300 >350 >425 2017 2018 2019 2020 2021 2022 Other DOS Subscription108% 107% 109% 102% 112% 100% 2017 2018 2019 2020 2021 2022 26 (1) Excludes impact of Medicity acquisition, which occurred on June 2
Slide 27: Technology Gross Margin Expansion
© Health Catalyst. Confidential and Proprietary. High Engagement, Satisfaction & Expansion Leads to Technology Gross Margin Expansion 27 41 % 48 % 52 % 50 % 53 % 53 % 50 % 64 % 66 % 67 % 68 % 69 % 69 % 69 % 24 % 29 % 35 % 25 % 27 % 24 % 16 % 2017 2018 2019 2020 2021 2022 Q1-Q3 2023 Total Adjusted Gr
Slide 28: Tech-enabled Managed Services Contract Structure
© Health Catalyst. Confidential and Proprietary. Our Tech-enabled Managed Services arrangements include long-term contracts (~5 years) for both Tech and Pro Services, which create loyal client relationships. These deals are typically large & require limited incremental Opex, which drives Adj. EBITDA
Slide 29: Long Term Target Model (Non-GAAP)
© Health Catalyst. Confidential and Proprietary. 2019 (IPO year) 2020 2021 2022 Q1-Q3 2023 Long-Term Goals(3) Total Revenue Growth 38% 22% 28% 14% 7% 20%+ Adj. Gross Margin(1) 52% 50% 53% 53% 50% Operating Expenses(2) S&M as % of Revenue 28% 22% 21% 20% 15% R&D as % of Revenue 27% 24% 21% 20% 19% G&
Slide 30: Appendix
© Health Catalyst. Confidential and Proprietary. Appendix
Slide 31: Healthcare Success: Proven Methodology
© Health Catalyst. Confidential and Proprietary. Healthcare Success: Proven Methodology 31 Identify Variation and Generate Actionable Analytics Insights2 Quantify and Communicate Value4 Apply Expertise to Drive Sustainable Improvements3 ExpansionVolume Labor Supply Chain OtherPayment Population Heal
Slide 32: Comprehensive Solution for Data-informed Improvement (TAM)
© Health Catalyst. Confidential and Proprietary. Services Expertise (~$3bn TAM) 3 Enable and accelerate data-informed improvement with the assistance of analytical, clinical, financial, and operational experts Analytics Applications (~$3bn TAM) 2 Deliver insights on how to measurably improve through
Slide 33: Strong Balance Sheet, Share Repurchase Program and Insider Purchases
© Health Catalyst. Confidential and Proprietary. Strong Balance Sheet & High Confidence in our Outlook / Profitability Levels Leading to Share Repurchase Program and Insider Purchases Share Repurchase Program • Dan Burton (CEO & Director): ~$6M(1) • Duncan Gallagher (Director): ~$175K Insider Purcha
Slide 34: Allina Health: $33M+ in Quality & Operations Improvements
© Health Catalyst. Confidential and Proprietary. Allina Health: High-Value Data & Analytics Drive $33M+ in Quality & Operations Improvements Data-Driven Insights and Measurable Results Key Opportunities Identified Length of stay | Readmissions | Supply costs Key Improvements ▪ $33M+ in positive marg
Slide 35: Carle Health & Health Alliance: $10M+ in Population Health Opportunities
© Health Catalyst. Confidential and Proprietary. Carle Health & Health Alliance: Solution Uncovers $10M+ in Population Health Opportunities Data-Driven Insights and Measurable Results Key Opportunities Identified Cost, utilization, and performance metrics across 10 key population health areas, inclu
Slide 36: MultiCare Health System: $75M+ in Annual Revenue
© Health Catalyst. Confidential and Proprietary. MultiCare Health System: Operational and Charge Capture Improvements Help Realize $75M+ in Annual Revenue Data-Driven Insights and Measurable Results Key Opportunities Identified Charge capture | Contribution margins | Length of stay Key Improvements
Slide 37: INTEGRIS: Healthcare.AI Drives Executive Alignment
© Health Catalyst. Confidential and Proprietary. INTEGRIS: Healthcare.AI Helps Drive Executive Alignment and Decision-making Data-Driven Insights and Measurable Results Key Opportunities Identified Value-based care measures performance | Patient safety targeted mortality and readmissions (e.g., seps
Slide 38: Historical M&A Transactions
© Health Catalyst. Confidential and Proprietary. Historical M&A Transactions 38 $120 ~$105 Transaction value amount (1) $mm 2019 2020 20212018 Health Catalyst IPO M&A Strategy • Ability to integrate and scale software applications on top of DOS platform • Broadens value proposition to existing and n
Slide 39: How We Engage With Our Clients
© Health Catalyst. Confidential and Proprietary. How We Engage With Our Clients All-Access Option 1 Includes subscription access to DOS and all Analytics Applications Based on client size and data footprint; includes annual price escalators Includes opportunity to upsell additional applications Incl
Slide 40: Single Question Requires Integrated Data from Multiple Source Systems
© Health Catalyst. Confidential and Proprietary. A Single Clinical, Financial, or Operational Question Often Requires Integrated Data from Multiple Source Systems DOS: ingests, integrates and organizes data sources Data platform Data sources Use cases Financial Operational How do I reduce my hip and
Slide 41: Sepsis Example: Data from Multiple Source Systems
© Health Catalyst. Confidential and Proprietary. A typical problem facing a healthcare organization most often requires data from multiple source systems: Sepsis example Question? EMR (Epic, Cerner, Meditech) How many cases of sepsis did we have last year? Benchmarking (Truven, UHC, Touchstone) Is o
Slide 42: Customer's Path to Greater Digital Maturity
© Health Catalyst. Confidential and Proprietary. (1) Healthcare Analytics Adoption Model created by Health Catalyst’s former CTO Dale Sanders; HIMSS was granted a creative commons copyright, which they call HIMSS Analytics Adoption Model for Analytics Maturity (AMAM) https://www.himssanalytics.org/a
Slide 43: Adjusted Gross Profit Reconciliation
© Health Catalyst. Confidential and Proprietary. Year Ended 31-Dec-2020 (in thousands, except percentages) Technology Professional Services Total Revenue $110,467 $78,378 $188,845 Cost of Revenue, Excluding Depreciation and Amortization ($35,604) ($62,473) ($98,077) Gross Profit, Excluding Depreciat
Slide 44: Adjusted EBITDA Reconciliation
© Health Catalyst. Confidential and Proprietary. 9 Months Ended September 30, Year Ended December 31, (in thousands) 2023 2022 2022 2021 2020 2019 2018 2017 Net loss ($87,835) ($101,621) ($137,403) ($153,210) ($115,017) ($60,096) ($61,984) ($47,035) Add: Interest and other expense, net ($6,490) $2,7
Slide 45: Adjusted Operating Expenses Reconciliation
© Health Catalyst. Confidential and Proprietary. 9 Months Ended September 30, Year Ended December 31, (in thousands) 2023 2022 2022 2021 2020 2019 2018 2017 Operating expenses $195,437 $205,391 $273,192 $261,222 $186,893 $134,461 $112,817 $74,979 Less: Depreciation and amortization ($31,919) ($36,63
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