I have seen some comments on recent IPO Health Catalyst. Jim Cramer talked about it on Mad Money last night.


It will be interesting to see if they can keep accelerating revenue when they announce earnings on August 22nd. From their S-1 - Most recent quarter saw 70% YoY growth while slightly increasing margins to just over 50%. This is a market cap under $2B. Not sure where Cramer is getting his 6 times sales number. Looks like it is trading at over 10 times sales, if you are going by Year End 2018. Still, it may not be as lofty as some of the other SaaS companies followed on this board.

Here is the overview of the company from the prospectus. “We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises a cloud-based data platform, analytics software, and professional services expertise. Our customers, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements. We envision a future where all healthcare decisions are data informed.”

I would love to hear the boards take on this company. Seems like one that you could buy and hold for a long time.



Cramer mentioned slow down in growth rate, correct? He mentioned another one LVGO, which showed growth acceleration last Q, from ~120%? to 157%.


Thanks for the reply Klay. Correct, it is a slow down from the previous quarter, however, it is an acceleration Quarter over Quarter. I think it is important to see what was done in the prior year and how that compares to 2019.

Maybe I am thinking about it incorrectly - that’s just the way I see it. It is good to get different perspectives.


I wish I could give you a full run down, but I can’t. I took a very small position afew days ago after reading Bert’s favorable write up on HCAT. This was intended to make me pay close attention. So far the position has worked out favorably, but my follow up research has not yet been performed. My bad.

Hi all,

This is my first contribution, having followed this board for 8 months or so. I tried to base this write-up on Saul’s post titled “How I pick a company to invest in.” I’d appreciate any feedback on the content/organization of this post.

How I found the company: I became interested in HCAT after reading Bert’s positive take
(https://seekingalpha.com/article/4279470-health-catalyst-usi…). The information below came from the S-1: https://ir.healthcatalyst.com/static-files/d21a5834-f566-41e…

Brief Description: Healthcare’s wasted spending problem is well-known to everyone. This has led to a change from fee-for-service based model to a value-focused model. A key part of value-based care is, intuitively, identifying which aspects of care are providing the most value! Although healthcare has access to massive amounts of data, the industry has not capitalized on it via improved data analytics. HCAT provides a platform (data-operating system: DOS) that enables clients to integrate and organize their data, in addition to using massive data-set HCAT has already collected. Within this platform, HCAT offers different analytics applications to help clients identify performance. Finally, HCAT offers a professional service, which is a team of analytics/data experts to help clients use the technology in-person. Revenue is divided into technology (ie. software as a service) and professional services, both of which are billed on a recurring-basis. HCAT’s strategy to increase revenue moving forward is “land and expand,” similar to other companies on this board.

Moat: The moat appears to be two-fold: superior performance and the DOS integration platform. Superior performance was evaluated via KLAS, Chilmark Research, and Blackbook reviews. Unfortunately, I don’t have access to these, so I’m not sure how meaningful this really is.

The DOS platform appears to be the key competitive moat, although I don’t fully understand the implications of it. Bert’s thoughts are: “HCAT has advantages based on the technology of its platform but most importantly has specific advantages based on its healthcare domain expertise.” To me this means that HCAT’s advantage is that their DOS platform and analytics were built specifically to handle healthcare-specific data and use-cases, in addition to their ever-expanding database set. It’s unclear how sustainable this moat is, and I’d appreciate insight from those who understand the tech better than me.

Revenue: The following table is my calculations of quarter/quarter and year/year revenue increases. The June 2019 data is based on preliminary results published in the S-1. Since these results were published in July (after the end of the quarter), I expect them to be similar to the upcoming results announced on August 22nd. I used the high end of their estimates for June 30 2019 data. The green highlight denotes the first quarter that included Medicity revenues. The revenue accounted for by Medicity for June 2019 quarter wasn’t announced, so I used the median of the prior 3 quarters (6.2 million). The S-1 stated that Medicity revenue would remain flat or decline, so I felt this was a reasonable assumption.

PLEASE NOTE, the revenue table is in the following post, as I couldn’t get the formatting to work.

After the Medicity acquisition, tech and total revenue when up significantly, even after excluding medicity-specific revenues. Per the S-1: “We expect technology revenue growth rates in the second half of 2019 to be lower than the first half of 2019 as we experienced significantly higher technology revenue in the second half of 2018 than the first half of 2018 due to (a) the acquisition of Medicity in June 2018 and (b) perpetual license revenue in the third quarter of 2018 that will not recur.” However, since this large increase, q/q revenue increases have been inconsistent, and the yr/yr comparisons are propped up by large jump after the Medicity acquisition.

Note: Bert did mention some seasonality in the numbers, with 4th quarter revenue generally being the highest. I don’t expect this to continue moving forward: per the S-1, these increases were due to meeting “performance-based revenue arrangements” which are “expected to become a smaller portion of revenue in future 4th quarters.”

Other key numbers:
Dollar based retention rate: 107% (year ending Dec 2018)
Recurring Revenue: 90% of total revenue (per S-1)
Gross Margins: Total revenue: 52% (quarter ending March 2019)
Technology Revenue: 67%
Professional Revenue: 32%
Adjusted EBITDA yr/yr: (9266) to (6680) for quarters ending Mar 2018/19 (28% improvement)
(8028) to (6400-5700) for quarters ending Jun 2018/19 (20-29% improvement)

Pros: Health-care specific platform+analytics
Large TAM (estimated at 8 billion, seems like an underestimate compare to vast amount of wasted medical spending)
Technology revenue is becoming larger part of total revenue, should lead to increased Gross margins

Cons: highly competitive field (S-1 lists IBM, epic, Microsoft, Mckesson), as well as small niche analytics company like livongo
Long sales cycle (11 months)
Lumpy revenue
Challenging yearly comparisons
Currently unprofitable

My take: While I like HCAT’s story and want to believe in the narrative, I’m fairly skeptical of the organic revenue growth, and nervous HCAT can’t maintain a high growth rate in the face of tougher quarterly comparisons. For instance, to maintain a 40% growth rate for Sept 2019 quarter, total revenues would have to reach 46015 (thousands), which seems like a stretch given the preliminary June 2019 results. Additionally, the secondary numbers (retention rate, gross margin, decreasing losses) are just ok, and don’t compare favorably to other stocks discussed on this board.

I plan on selling my 4% position this week as I am concerned about the organic growth rate. After this quarter, yearly comparisons will grow more challenging, since previous quarters will start to include Medi-citiy revenue. I am keeping the company on my watch-list, as the “story” of the company remains compelling to me. If HCAT crushes their preliminary numbers and finishes around 40000 (thousands), I would consider buying back in, as the growth story would be better intact.

Please note, this is my first independent company write-up, so as always, do your own research before considering investing in HCAT.


Date(year-quarter)     17-Mar 17-Jun    17-Sep	17-Dec	18-Mar	18-Jun	18-Sep	18-Dec	19-Mar	19-Jun
Tech revenue	       6836.0 7653.0	8223.0	8981.0	9451.0	10725.0	18283.0	18765.0	20148.0	20100.0
Quarterly increase (%)	      12.0	7.4	9.2	5.2	13.5	70.5	2.6	7.4	-0.2
Yearly increase (%)				        38.3	40.1	122.3	108.9	113.2	87.4
Tech-rev less Medicity 6836.0 7653.0	8223.0	8981.0	9451.0	10725.0	12083.0	12865.0	13848.0	13900.0
Quarterly increase (%)		12.0	7.4	9.2	5.2	13.5	12.7	6.5	7.6	0.4
Yearly increase (%)					38.3	40.1	46.9	43.2	46.5	29.6
Total Rev	16415.0	17542.0	17624.0	21500.0	20632.0	22990.0	32868.0	36084.0	35213.0	36800.0
Quarterly increase (%)		6.9	0.5	22.0	-4.0	11.4	43.0	9.8	-2.4	4.5
Yearly increase (%)					25.7	31.1	86.5	67.8	70.7	60.1
Total Rev Less Medicity	16415.0	17542.0	17624.0	21500.0	20632.0	22990.0	26668.0	30184.0	28915.0	30600.0
Quarterly increase (%)		6.9	0.5	22.0	-4.0	11.4	16.0	13.2	-4.2	5.8
Yearly increase (%)					25.7	31.1	51.3	40.4	40.1	33.1
Professional rev	9579.0	9889.0	9401.0	12519.0	11181.0	12265.0	14585.0	17319.0	15065.0	16800.0
Quarterly increase (%)		3.2	-4.9	33.2	-10.7	9.7	18.9	18.7	-13.0	11.5
Yearly increase (%)					16.7	24.0	55.1	38.3	34.7	37.0
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My apologies for turning this into 3 posts, the message board format is challenging. I realized my green font from the table didn’t go through. The Medicity acquisition occurred in early July 2018. As such, quarter ending September 2018 is the first that included Medicity revenues.