With Another Planned Acquisition, Health Catalyst is at it Again, This Time for $86 Million to $119.4 Million

However, it was Health Catalyst's "hidden in plain sight" financial projections from a just released Investor Presentation that really caught my attention.

Less than one month after it announced its $43 million acquisition of Intraprise Health, South Jordan, Utah-based Health Catalyst (NASDAQ:HCAT) has announced it will spend upwards of $119.4 million to acquire Upfront Healthcare Services of Chicago, Illinois.

To be clear, Health Catalyst did not disclose in its news release financial terms of its Upfront acquisition. It did, however, do so in its filing with the U.S. Securities and Exchange Commission.

Specifically, in its Form 8-K filing with the SEC about the acquisition, Health Catalyst disclosed that Upfront shareholders will receive ~$86 million in cash and stock to be acquired.

That split is

• "~$41.5 million in cash, net of cash on hand" and
• "~5,753,814 shares of newly issued shares of Health Catalyst common stock."

Additionally, the Form 8-K further explained that if Upfront is able to achieve "certain performance targets" by 31 December 2026 (performance targets not specified in the filing), its shareholders will receive an additional "Earn-Out" performance bonus of ~$33.4 million cash and stock, consisting of

• ~$12.5 million in cash, and
• ~$20.875 million payable in shares Health Catalyst common stock.

The Health Catalyst news release describes Upfront as "... a next-generation patient engagement platform provider ... (with) technology (that) analyzes clinical, sociodemographic, and patient-reported data to digitally guide patients to the care they need, helping care providers reengage patients, promote appointment attendance, streamline scheduling and referrals, and improve care transitions."

In describing the benefits of the Upfront acquisition, Health Catalyst CEO Dan Burton said:

"Fostering improved patient engagement and satisfaction is critical, and by adding Upfront to Health Catalyst's existing portfolio, we can better support our clients in their efforts to optimize access, improve care transitions, and close care gaps."

Financial Projection Tidbits from Health Catalyst's Investor Presentation at the J.P. Morgan 2025 Healthcare Conference

Buried within its Form 8-K filing noted above, however, Health Catalyst shared a copy of the Investor Presentation it planned to share this week during the 43rd annual J.P. Morgan Healthcare Conference held in San Francisco, California (January 13—16).

And it was these "hidden in plain sight" financial projections that really caught my attention.

But before touching on that info, however, perhaps a brief introduction.

For readers not familiar with Health Catalyst, the company defines itself in its most recent Annual Report (ended 31 December 2023) as the creator and provider of "... a cloud-based data and analytics platform, (with) software applications, and professional services expertise ... (crafted for) clients, which are primarily healthcare providers ... to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements."

Health Catalyst further declares powerfully in its 2023 Form 10-K:

"We envision a future where all healthcare decisions are data-informed."

As noted in my 22 July 2024 Utah Money Watch writeup about the company,

"(Health Catalyst's) solutions are currently empowered by trillions of datapoints gathered from over 100 million patient data records."

With this approach, Health Catalyst had $296 million in revenue in 2023 with Earnings Before Income Taxes, Depreciation and Amortization of $11 million.

Those results were up from 2022 when its revenue was $176 million and its EBITDA was -$84.4 million

With this perspective as background, the company's presentation for the J.P. Morgan conference provides a comprehensive, deep-dive into Health Catalyst's business model and offerings.

What I found particularly interesting, however, were Health Catalyst's financial projections.

Specifically, as noted in the slide shown above from the Investor Presentation that Health Catalyst shared this week during J.P. Morgan's 2025 Healthcare Conference, Health Catalyst's 2024 Preliminary Results are projected at

• Revenue of $305.7 million to $306.7 million, with
• An overall Adjusted EBITDA of $26.1 million,

completely in-line with its prior forecasts.

Looking into the future, in 2025, the company is targeting

• Revenue of ~$335 million (~10% growth), with
• An overall Adj. EBITDA of ~$39 million, which would represent a massive 49% jump in EBITDA on a Year-over-Year basis.

But, projecting out even further, Health Catalyst's financial targets for 2028 are

• A revenue target of ~$500 million, and
• An Adj. EBITDA target of ~$100 million.

In other words, if Health Catalyst's projections are relatively accurate, that would mean

• A 2025 through 2028 Compounded Annual Growth Rate (CAGR) of over 15% for revenue growth, versus recent revenue growth of roughly 10% per year), and

For the same time frame, Health Catalyst is projecting its 2025 through 2028 EBITDA CAGR will hit a stunning 36%.

Yes, that means annual EBITDA growing 36% per year for three straight years.

Personally, those are very impressive numbers.

Can it achieve such results? Clearly, I don't know.

But if doable, I would not be surprised to see Health Catalyst's valuation more than triple before 2029.

That said,

Health Catalyst will be an interesting company to watch over the years ahead.

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