Health Catalyst, Inc

Welcome to the Health Catalyst Second Quarter 2026 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. To get to as many questions as we have time for, we do kindly ask that you please limit yourself to one question. If you do have a follow-up, please re-enter the queue. So others can hear your questions clearly, we also ask that you please pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star zero. I would now like to turn the call over to Stephanie St. Clair, Senior Vice President of Finance and Investor Relations. Please go ahead, ma'am.

Stephanie St. Good afternoon and welcome to Health Catalyst Earnings Conference Call for the second quarter of 2026, which ended June 30th, 2026. My name is Stephanie St. Clair, Finance and Investor Relations Senior Vice President. With me on the call today are Ben Albert, our Chief Executive Officer, and Jason Alger, our Chief Financial Officer. A complete disclosure of our results can be found in our press release issued today, as well as in our related form 8K, furnished to the SEC, both of which are available on the investor relations section of our website at ir.healthcatalyst.com. As a reminder, today's call is being recorded, and a replay will be available following the conclusion of the call. During today's call, we will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including regarding our future growth and priorities, financial outlook and expectations for the third quarter and full year 2026, market conditions, AI initiatives, bookings, retention, operational priorities, strategic and restructuring initiatives, cost savings, debt elimination, The impact of the vital or divestiture and the general anticipated performance of our business. These forward-looking statements are based on management's current views and expectations as of today and should not be relied on as representing our views as of any subsequent date. We disclaim any allegation to update any forward-looking statements or outlook. Actual results may materially differ. Please refer to the risk factors in our most recent Form 10-K for the full year 2025 filed with the SEC on March 12, 2026 and our Form 10-Q for the second quarter of 2026 filed today. We will also refer to certain non-GAAP financial measures to provide additional information to investors. Non-GAAP financial information is presented for supplemental purposes only. as limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. A reconciliation of non-GAAP financial measures to the most comparable GAAP measures is provided in our press release. We will provide forward-looking guidance for certain non-GAAP financial measures in this earnings call and are not providing forward-looking guidance for the most directly comparable GAAP measures and therefore have not provided reconciliations because there are items that may impact the comparable gap measures that are not within our control or cannot be reasonably forecasted. With that, I'll turn the call over to Ben.

Thank you, Stephanie, and thank you to everyone for joining us today. We had a very productive second quarter, exceeding the high end of our revenue guidance and the midpoint of our adjusted EBITDA guidance. But the headline is that we closed the vital art divestiture on July 31st and fully repaid our credit facility debt. On our Q1 earnings call, I talked about simplifying our business, focusing on our highest conviction technology opportunities, and putting the right capital structure in place to execute. This is exactly that. It's the next step in the strategy I described three months ago. Let me walk through why we made this decision and what it means going forward. Then Jason will take you through the numbers. Vitalware is a strong business, but it sits outside our highest conviction technology opportunities. The RCM market has gotten more competitive, and we believe growing the business would have required significant incremental investment. We determined that we should focus and invest in our core business while transforming our balance sheets. The divestiture delivered immediate benefits. We used the proceeds plus cash on hand to retire roughly $160 million in credit facility debt and going forward eliminate approximately $19 million in annual GAAP interest expense based upon annualizing the first half of 2026. That's not just a cleaner balance sheet. It provides us with the time to get the fundamentals right. and the capacities to validate where our conviction is highest and invest behind it. Put simply, we are prioritizing the foundation for what we believe is durable, long-term transformation rather than chasing short-term results. As we have stated consistently, we will continue to operate with discipline and as it closes the vital word divestiture without expensive interest payments and restrictive debt covenants. One of our priorities is to stay in a strong cash position throughout our transformation. The restructuring, the divestiture, and the debt repayment are the same plan executed in sequence under Project Nexus, our strategic initiative designed to fundamentally transform our operating model and to deliberately reposition the business. As we consider what's happening in the market, health systems are under immense pressure. and many more. We believe our deep domain expertise and 18 years of improvement data position us well to address these pressing areas of need through our intelligence products pairing analytics and expertise with improvement agents to identify the biggest opportunities, prioritize where to act, and help execute. Each change can compound into sustainable improvement. We believe the result is what one client called a culture of improvement that converts into outcomes. Consistent with what we have said on prior calls, we'll continue the evaluation of our revenue outlook and expense structure and sharpen where our conviction is highest. We're not afraid to make difficult decisions and move quickly when needed. Before I hand it to Jason, I want to set expectations for what's ahead. We are early in a multi-year transformation, and we're continuing to evaluate the best path forward. Two things are true at the same time right now. One, we're hearing real enthusiasm about where we are headed, and we're deliberately investing in the products and the people needed to turn that enthusiasm into high conviction bets. and two, we're working through previously discussed revenue headwinds primarily related to our platform migration and some of the lower margin services work. We're prioritizing target investments in what we believe are our most promising opportunities, doing so in a measured, disciplined way that keeps us in a strong cash position while focusing on driving long-term shareholder value. While there is plenty of work ahead, we are making real progress. I would like to thank the Health Catalyst team and clients for their hard work and partnership. Together, we can have a tremendous impact on healthcare's biggest challenges. With that, I'll turn it over to Jason.