AI-extracted from the 10-Q filed 2026-08-06 — Q2 FY2026 (quarter ended June 30, 2026). Every figure is machine-verified against the filing text on SEC EDGAR.
Q2 revenue declined 13% YoY to $70.5M amid DOS-to-Ignite migration churn and professional services wind-down, while $122.5M goodwill impairment and subsequent Vitalware divestiture for $147M enabled full debt repayment.
Biggest Revenue Drivers
Technology$48.8M-8% YoY
Elevated churn and down-sell related to DOS-to-Ignite migration, partially offset by growth from new clients.
Professional Services$21.7M-22% YoY
Exit of certain lower-margin Tech-Enabled Managed Services arrangements and churn of FTE-based arrangements.
Biggest Revenue Drivers
Total revenue: $70.5M-13% YoY
Technology$48.8M-8% YoY
Elevated churn and down-sell related to DOS-to-Ignite migration, partially offset by growth from new clients.
Professional Services$21.7M-22% YoY
Exit of certain lower-margin Tech-Enabled Managed Services arrangements and churn of FTE-based arrangements.
Largest Expense Items
Goodwill impairment$27.0MVs. $28.8M prior year
Recognized in Q2 2026 due to stock price decline and Vitalware held-for-sale classification triggering impairment test on technology reporting unit.
General and administrative$11.9M+44% YoY
Prior year benefited from $5.2M favorable change in fair value of Upfront contingent consideration; current year includes $1.9M acquisition-related costs.
Sales and marketing$10.4M-22% YoY
Decrease from lower salary and personnel costs due to restructuring, partially offset by $1.3M severance from Project Nexus.
Research and development$11.0M-11% YoY
Lower salary and contractor costs partially offset by $1.3M severance costs from Project Nexus restructuring.
Margins: Gross margin improved to 40% from 38% YoY, while Adjusted Gross Margin expanded to 51% from 50%. Technology Adjusted Gross Margin declined 3 points to 63% due to DOS-to-Ignite migration and deployment costs; Professional Services Adjusted Gross Margin improved 4 points to 22% from lower utilization and exit of low-margin TEMS arrangements. Near-term margin pressure expected from Vitalware divestiture and continued Ignite migration costs.
Watch Items from the Filing
$52M of at-risk ARR estimated across 2026-2027 related to DOS-to-Ignite migration, with $12.5M confirmed as of May 11, 2026. Management expects migration churn pressure through end of 2027.
Vitalware divestiture completed July 31, 2026, for $147M base price; expected $66M gain on sale in Q3 but ~$10M loss on debt extinguishment due to write-off of unamortized costs. High-margin Vitalware Business disposition will reduce future revenue and Adjusted EBITDA.
$122.5M goodwill impairment in H1 2026 (vs. $28.8M in H1 2025) reflects cumulative stock price decline and Vitalware held-for-sale allocation; technology reporting unit fair value fell below carrying value.
Professional services gross margin declined significantly YoY in absolute dollars despite margin % improvement, driven by $12.8M revenue decrease; delivery mix shift and TEMS exit limit upside from exiting lower-margin arrangements.
Medicaid funding cuts under One Big Beautiful Bill Act (signed July 2025) projected to reduce federal spending ~$1 trillion over 10 years; policy creates financial strain for health system clients and elongated sales cycles, particularly impacting Life Sciences opportunities.
AI-extracted and verified against SEC EDGAR filing text. Not investment advice.
Hoggard Green JillReporting ownerGrant or award · Jul 16, 2026
Llewelyn LindaChief People OfficerShares withheld for tax or exercise price · Jun 1, 2026
About Health Catalyst, Inc. (HCAT): stock profile, AI score and financials
Health Catalyst, Inc. (HCAT) stock profile, AI quality score, and SEC EDGAR financial data, a Technology sector company. 13F Pro's AI-powered ranking engine scores HCAT at 21.7/100 on a composite quality score built from its SEC filings, placing it at rank #2,726 of 2,925 stocks — the bottom half of the AI-ranked universe. Areas of concern include balance sheet strength (3.2) and institutional flow (5.5), which score below median versus the broader universe. Shareholder dilution risk is elevated at 17.2/100, reflecting ongoing share issuance or stock-based compensation. Based on the latest XBRL financial filings (Q2 2026), Health Catalyst, Inc. reports quarterly revenue of $70.5M, net income of $-40.5M, an operating margin of -51.7%. Top institutional holders of HCAT by reported 13-F value include First Light Asset Management, CDC Financial, Palogic Value Management, L.P., based on the most recent SEC filings. HCAT trades on the Nasdaq exchange and files with the SEC under CIK 1636422. 13F Pro's AI research platform runs 10 specialized AI analysts — value, growth, momentum, macro, and activist specialists — that debate HCAT daily and publish AI-generated analysis with cited SEC sources. The platform aggregates historical XBRL financial facts, 10-Q and 10-K filings, insider Form 4 transactions, and institutional 13-F holdings for Health Catalyst, Inc. directly from SEC EDGAR.