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On Thursday, BTIG analysts revised the price target for Health Catalyst Inc. (NASDAQ:HCAT) shares, reducing it to $10 from the previous $13, while maintaining a Buy rating on the stock. The adjustment follows Health Catalyst’s fourth-quarter earnings report, which was released on Wednesday, after the market closed. The stock, currently trading at $4.94, sits near its 52-week low of $4.75, having declined over 40% in the past year. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, with 8 additional real-time insights available to subscribers.
Health Catalyst posted fourth-quarter revenue of $79.6 million, a 6% year-over-year increase, aligning closely with BTIG and consensus estimates of $78.9 million and $79.7 million, respectively. The company’s adjusted EBITDA for the quarter saw a significant jump of 485% year-over-year to $7.9 million, compared to BTIG’s estimate of $8.2 million and the consensus of $7.8 million. The company maintains a healthy liquidity position with a current ratio of 1.41, though InvestingPro data shows it operates with moderate debt levels and a gross profit margin of 46.17%.
Despite these gains, Health Catalyst’s service adjusted gross margin for the quarter was reported at 13.5%, falling short of BTIG’s anticipated 18.5%. The company has been phasing out some lower-margin ambulatory Technology-Enabled Management Services (TEMS) agreements, which is expected to contribute to an improvement in both Service and Technology adjusted gross margins as the year progresses.
For fiscal year 2025, Health Catalyst reaffirmed its guidance, which was initially provided in January. The company anticipates revenue to be around $335 million, which is slightly below the consensus estimate of $336.8 million. The EBITDA guidance for 2025 has been slightly raised to approximately $41 million from the previously guided $39 million. InvestingPro analysis indicates net income is expected to grow this year, with analysts projecting profitability. Discover comprehensive valuation metrics and 10+ additional exclusive insights with InvestingPro’s detailed research report.
The first-quarter EBITDA guidance for 2025 is set at around $4 million, which is notably lower than the consensus estimate of approximately $8.8 million. The company notes that it will take time to deploy certain technology engagements, and the impact of lower-margin TEMS deals will diminish over the course of the year. Management emphasized on the earnings call that demand is improving, deployment visibility is fairly high, and earnings are expected to strengthen throughout the year despite near-term pressure on adjusted gross margins due to the transition to Ignite and the impact of ambulatory TEMS deals.
In other recent news, Health Catalyst Inc. reported its fourth-quarter 2024 financial results, revealing an earnings miss with an EPS of -$0.33, contrary to the forecasted $0.07. The company’s revenue for the quarter was $79.6 million, slightly below the expected $80.68 million. Despite the earnings miss, Health Catalyst experienced a 4% year-over-year growth in total revenue for 2024, reaching $370 million, with a significant adjusted EBITDA growth of 137% to $26 million. The company has set a revenue target of $335 million for 2025, with anticipated technology revenue growth of 13% and an adjusted EBITDA of $41 million.
Additionally, Health Catalyst has completed the acquisition of UPFRONT Healthcare, which is expected to contribute to revenue and profit growth. The company’s strategic shift to the Ignite platform is highlighted as a significant development, with expectations of improved client adoption and operational efficiencies. Analyst firms have not provided specific upgrades or downgrades, but the company has communicated confidence in its growth trajectory, particularly in its technology segment. Health Catalyst’s CEO, Dan Burton, emphasized the strategic advantage of the Ignite platform, describing it as "better, faster, and cheaper" than previous offerings.
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