Health Catalyst's Q1 Earnings: Analysts Diverge on Outlook as Company Faces Demand Headwinds and Revenue Outperformance

Health Catalyst Inc HCAT reported Q1 sales of $73.87 million, up 22% Y/Y, beating the consensus of $71.24 million.

The company sees Q2 FY23 revenues of $70.3-$74.3 million versus a consensus of $72.78 million. For FY23, the company forecasts sales of $290-$295 million compared to the consensus of $293.29 million.

Raymond James is downgrading the stock to Market Perform from Strong Buy after an underwhelming 1Q23 print, accompanied by commentary suggesting demand headwinds will persist longer than originally thought. 

The analyst says a pull-forward of revenue recognition drove the revenue outperformance, and the bottom-line beat was a function of lower-than-expected non-headcount expenses. 

These "one-timers" are expected to reverse throughout the year's balance; thus, management reiterated its 2023 guidance, still expecting an adjusted EBITDA of $9-11 million, implying adj. EBITDA of ~$6 million for the remainder of the year, behind Street expectations of $8 million.

William Blair says the first quarter is solid, and the management has good visibility into 2023 guidance at this point.

The analyst continues to see a compelling value proposition for clients and says management's efforts to prioritize solutions in the portfolio that drive tangible, hard dollar return on investment should support stronger growth in the coming year. It reiterates Outperform.

Price Action: HCAT shares are down 20.30% at $9.53 on the last check Wednesday.