Utah-based Health Catalyst has Borrowed $125 Million from a New Credit Facility Worth up to $225 Million

South Jordan, Utah-based Health Catalyst (NASDAQ:HCAT) has just closed a five-year credit facility of up to $225 million and has drawn-down an initial term loan of $125 million.

According to the news release announcing the financing, Silver Point Finance* is the financier of this credit facility, and it "... provid(es) customized financing solutions to middle-market companies across a broad range of industries."

Health Catalyst says that initial $125 million borrowing "... together with cash on hand, will be used (1) to refinance (the company's) existing convertible notes, which mature in 2025, at any time at or prior to maturity, and (2) for working capital and general corporate purposes."

From a legal standpoint, of the remaining $100 million available in the credit facility,

• Up to $40 million may be drawn within 6 months of the closing date (16 July 2024), while
• Health Catalyst may choose to initiate an additional draw-down at any time within 18 months following the 16 July 2024 closing date,

subject, of course, to certain terms and conditions.

In other words, based upon my reading of the news release and the accompanying Form 8-K the company filed with the U.S. Securities and Exchange Commission, Health Catalyst can essentially choose to access the remaining $100 million in the new credit facility at any time.

{NOTE: Certain terms about the interest rates and conditions associated with this new credit facility are outlined in the Form 8-K referenced above.}

According to Jason Alger, Health Catalyst's Chief Financial Officer:

"This financing represents a dynamic, flexible solution that allows (us) to refinance existing debt and fund growth initiatives in a non-dilutive way. Additionally, we believe that the structure of the financing, in particular the delayed draw feature, allows us to continue to pursue and finance our acquisition strategy as we continue to work on improving EBITDA and increasing our cashflow."

A Brief Overview of Health Catalyst

As noted in the news release announcing this new credit facility, Health Catalyst defines itself as "... a leading provider of data and analytics technology and services to healthcare organizations committed to being the catalyst for massive, measurable, data-informed healthcare improvement."

Since its launch in 2008 in the midst of the Great Recession, Health Catalyst has focused on helping its healthcare clients "... make data-informed decisions and realize measurable clinical, financial, and operational improvements ..." by leveraging the company's cloud-based data platform, analytics software applications, and its professional services expertise.

As noted in the above graphic found on page 12 of the company's 2024 Annual Report (for the year ended 31 December 2023), Health Catalyst believes that helping its clients drive measurable improvements in healthcare outcomes is driven by its

1. Data and Analytics Platform (DOS), the company's healthcare-specific, open, flexible, scalable and self-service platform for analytics, app development and interoperability;
2. Analytics Applications, applications built on top of Health Catalyst's DOS that allow it and its clients to generate meaningful insights across
   — Clinical & Quality data,
   — Population Health data, and
   — Financial & Operational data; and its
3. Services and Improvement Expertise, personnel-driven consulting services driven and provided by Health Catalyst employees.

Health Catalyst's solutions are currently empowered by trillions of datapoints gathered from over 100 million patient data records, as the company counts

• 109 healthcare provider organizations as DOS Subscription Clients, and
• Over 525 other clients, most of which are also Software-as-a-Service subscription clients.

Some of Health Catalyst's current healthcare provider clientele include

• Allina Health,
• AlohaCare,
• Carle Health,
• Children’s Hospital of Orange County,
• Community Health Network,
• INTEGRIS Health,
• Lifepoint Health,
• Mass General Brigham,
• Queen's Health System,
• Steward Health Care,
• Temple University Health System,
• UnityPoint Health, and
• UPMC,

to name a few.

Besides healthcare providers and provider networks (such as those noted above), Health Catalyst's client base also includes

• Academic medical centers,
• Integrated delivery networks,
• Community hospitals,
• large physician practices,
• Accountable Care Organizations (ACOs),
• Health information exchanges,
• Health insurers, and other
• Risk-bearing entities.

According to the company's 2024 Annual Report (ended 31 December 2023), Health Catalyst generated

• $296 million in revenue in fiscal 2023,
• At a net loss of $118 million.

The company went public in July 2019, raising $182 million in the process, giving it a valuation (at the time) of ~$1.5 billion.

As of market close last Friday (19 July 2024), Health Catalyst's stock closed at a price of $7.26/share of common stock, giving it a market capitalization of just under $430 million, roughly 1/4th of its initial valuation.

Then again, that's a fraction of its all-time high of $58.15/share achieved three years ago on 06 July 2021, shortly before the company announced a secondary offering to sell ~4.25 million shares of common stock at $53.00/share.

* — AUTHOR'S NOTE: Silver Point Finance is the direct lending business of Silver Point Capital, "... a global credit investing firm that oversees the management of approximately $31 billion in investable capital."

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