0001636422-26-000066
SEC filingQ1 revenue declined 10.9% to $70.8M due to strategic exits from lower-margin TEMS arrangements and professional services churn, while operating loss widened significantly to -$106.5M primarily from increased depreciation and amortization expenses.
Health Catalyst reported Q1 2026 revenue of $70.8 million, down 10.9% from $79.4 million in the prior year quarter. This decline was primarily due to the company's strategic exit of certain lower-margin Technology Enablement and Managed Services (TEMS) arrangements and churn in some full-time equivalent (FTE)-based professional services contracts. These moves reflect a deliberate shift away from less profitable revenue streams to support long-term margin improvement, even as health systems face labor and supply cost inflation without matching revenue growth, creating end-market margin pressure.
Operating income swung to a larger loss of -$106.5 million from -$20.2 million year-over-year, a -427.9% change that drove the operating margin to -150.5%. The technology gross margin decrease was negatively impacted by increased intangible amortization from recent acquisitions and higher depreciation of capitalized internal-use software costs. Depreciation and amortization expenses stem from ongoing capital investments in fixed assets, definite-lived intangibles, and internal-use software. These non-cash charges explain much of the operating loss expansion, underscoring the financial impact of prior growth investments amid current revenue headwinds.
Net income reflected a -$111.0 million loss, worsening from -$23.7 million (-367.6% YoY), with diluted EPS at -$1.53 compared to -$0.35. This progression aligns with the broader operating challenges, where fixed cost leverage suffered from lower revenue without offsetting expense reductions in the period.