Health Catalyst Stock

Health Catalyst, Inc. is a leading provider of data and analytics technology and services to healthcare organizations. The company's Solution comprises its cloud-based data and analytics platform, software applications, and professional services expertise. The company's clients, which are primarily healthcare providers, use its Solution to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements.

The Health Catalyst Flywheel

The company accomplishes its mission with each of its clients by following a process and strategy it calls the Health Catalyst Flywheel (the Flywheel). This process includes delivering on the three components of the company's Solution: data and analytics platform, applications, and expertise, which together drive measurable improvements.

The company consistently focuses on its operating principles and cultural attributes, as well as its mission and Flywheel (collectively, the Health Catalyst Way), which it reviews in all new hire orientations, company-wide meetings, and board of directors' meetings. Furthermore, the company regularly measures its team member engagement and adjusts its practices based on team member feedback. The company has demonstrated an elite, consistent level of team member engagement over time as demonstrated by a 94th to 99th percentile ranking, as measured by Gallup. The company will continue to emphasize the Health Catalyst Way, including its operating principles and cultural attributes.

Business Overview

The company's clients, which are primarily healthcare providers, use its Solution to manage their data, derive analytical insights to operate their organizations, and produce measurable clinical, financial, and operational improvements.

The core elements of the company's Solution include:

DOS Data Platform: The Data Operating System (DOS) is a healthcare-specific, cloud-based, open, flexible, scalable and self-service platform for analytics, app development and interoperability that provides clients a single comprehensive environment to integrate and organize data from their disparate software systems. The company's DOS platform has been built with modern technology and is deeply embedded with healthcare domain knowledge, enabling a broad range of analytics. The DOS platform has amassed one of the largest and most comprehensive data assets of its kind, which enables the company to deliver differentiated insights to the company's clients.

Analytics Applications: The company's software analytics applications are generally built on top of its data platform and are designed to analyze the most common problems its clients face across Clinical & Quality, Population Health, and Financial & Operational use cases. These analytics applications allow the company's clients to pinpoint opportunities for measurable improvement across their entire enterprise and are employed by a broad range of users from healthcare executives to front-line clinicians providing care. The company developed this suite of analytics applications over the last several years based on thoughtful measurement of the most critical analytics needs faced by its clients. The company's analytics applications are further enhanced by a broad range of analytics accelerators, which are pre-built, configurable data models with customizable visualizations that can be tailored to specific client needs.

Services Expertise: The company's world-class team consists of both analytics experts, such as data analysts, data engineers, and data scientists, and domain experts, such as healthcare administrators, physicians, and nurses. The company's services are comprised of data and analytics services, domain expertise and education services, Tech-enabled Managed Services (TEMS), and implementation services. The company's services team members leverage its technology to help its clients shorten time-to-value and achieve sustainable measurable improvements. Examples of the services expertise the company provides include opportunity analysis and prioritization, data governance, data modeling and analysis, quality and process improvement strategy, cost accounting, data abstraction, and population health strategies. The company's approach to integrate data, analytics, and expertise into a holistic Solution is differentiated and parts of its Solution have historically been recognized as among the best in the industry by multiple third parties, including KLAS, Chilmark Research, and others.

The company has generated over 1,600 documented, client-verified improvements across clinical, financial, and operational domains. Each of these documented improvements is highly valuable to its clients, enabling them to realize substantial clinical improvements, financial savings, or operational efficiencies. As it delivers measurable improvements, trust builds, and the company's clients engage with it more broadly and refer new business. This is evidenced by a continued increase in improvements achieved by its clients over time.

The company serves the majority of its clients through a subscription-based contract model. As of December 31, 2023, the company served 109 DOS Subscription Clients and over 525 other clients. The majority of the company's clients who are not DOS Subscription Clients are technology clients resulting from its business acquisitions and is also generally on subscription contracts. The company's clients include academic medical centers, integrated delivery networks, community hospitals, large physician practices, Accountable Care Organizations (ACOs), health information exchanges, health insurers, and other risk-bearing entities. Example clients include Allina Health, AlohaCare, Carle Health, Children's Hospital of Orange County, Community Health Network, INTEGRIS Health, Lifepoint Health, Mass General Brigham, Queen's Health System, Steward Health Care, Temple University Health System, UnityPoint Health, and UPMC.

Growth Strategies

The company focuses on multiple channels, as well as its collaborative company culture, results in high levels of sustainable growth. The key elements of the company's strategy are to grow its overall client base; expand within its current client base; add new analytics applications and services offerings; grow its addressable market through additional healthcare business segment adjacencies; and selectively pursue acquisitions and partnerships.

Solution

The company's Solution empowers its clients to run a data-informed business. The company's healthcare-specific, open, flexible, scalable, and self-service DOS platform, advanced analytics applications, and services expertise guide its clients to greater levels of digital maturity, enabling clinical, financial, and operational improvements.

Data and Analytics Platform - the Data Operating System (DOS)

The DOS platform is a healthcare-specific, open, flexible, scalable, and self-service data and analytics platform that allows the company's clients to integrate and organize their disparate data sources to enable insights across clinical, financial, and operational objectives. It serves as a digital backbone, allowing clients to extract data from transactional source systems, combine disparate data sets into a unified source of truth, and query the dataset directly. DOS is a cloud-based technology that the company primarily provides through Microsoft Azure. In order to enable more advanced feature development and functionality, the company is in the process of migrating the small number of remaining on-premise DOS clients to Microsoft Azure. Additionally, the company is investing in its DOS platform's development of single-instance, multi-tenant architecture, as well as enhanced elastic compute capabilities supported by Snowflake and Databricks database technologies.

DOS has been uniquely designed and purpose-built to handle the complex, ever-evolving nature of healthcare-specific data and analytics. This includes healthcare-specific terminology, data governance, meta-data management, and analytics. By creating healthcare-specific data models to organize industry-specific data, the company enables faster and more repeatable analytics and insights. The company has developed the capabilities to turn these insights into actions by connecting its analytics into the workflow systems, such as an electronic health record (EHR). Clients may directly access the company's DOS platform or may indirectly access DOS through use of modular components of DOS or other parts of its Solution that leverage DOS. Certain components of DOS may be sold on a standalone basis, including Healthcare.AI, Pop Analyzer, IDEA, and other DOS platform components. The vast majority of the company's DOS Subscription Clients' contracts include access to all attributes and components of DOS.

Differentiating Attributes of DOS include:

Data Warehouse: The company's innovative architecture has a proven track record of agility and adaptability to new rules, vocabularies, and data content. The company's open and self-service platform enables database-level querying and custom analytics use-cases.

Source Connectors: The company's DOS platform is designed to quickly ingest data from the numerous systems and siloed data sources its clients possess. The company has prebuilt connectors to the most common transactional software systems used by healthcare organizations. The DOS data management console enables clients to manage robust Extract Transform Load (ETL) processes and scheduling.

Cloud-Based: Modern cloud-based architecture is secure and scalable. Being cloud-based enables quicker product iteration and innovation.

Reusable Data Logic: The company updates hundreds of registries, value sets, and measure logic regularly. This reusable healthcare data content enables clients to achieve analytic value more quickly than leveraging homegrown or cross-industry products and services.

Machine Learning: Embedded within DOS are machine learning algorithms that the company's clients can leverage for predictive analytics. Clients can also build their own machine learning data pipelines within DOS.

Terminology Services: By standardizing the complex language used to code entries in various health records and clinical systems, DOS facilitates decision support, consistent reporting, and analytics and interoperability.

Expert Data Collections: A combination of the company's expert healthcare data model and suite of curated data collections tuned to general and specific healthcare solutions helps its clients build a sustainable data management system for the future needs of healthcare.

Text Processing: Enables the extraction of additional data trapped in various unstructured text. The ability to gather insight from clinical notes remains an area of untapped healthcare intelligence with tremendous potential.

Real-Time Streaming and Interoperability: Near or real-time data streaming from the source all the way to the expression of that data through DOS, supporting both transaction-level exchange of data and analytic processing.

Big Data: Ability to access, organize, and analyze massive and unique, structured and unstructured, data sets allows the company to drive differentiated analytic insights for the company's clients.

Reporting (Pop Insights): Enables users to add clinical, financial, and operational measures in an executive dashboard format. Measures are trended over time and updated on a near real-time basis from DOS. Users can customize information, share it with others, and set their own alerts and notifications. As a result, executives and their teams are empowered to take control of the data deluge to plan, prioritize improvement projects, create alignment among groups, strategize the best products and services, and communicate decisions more effectively.

Benchmarking (Touchstone): Uses artificial intelligence to proactively identify where a client is performing relative to benchmark sets composed of proprietary and publicly-available data, and subsequently recommends and prioritizes opportunities for improvement.

AI (Healthcare.AI): Transformational suite of healthcare-specific, self-service AI products distinguished by capabilities in analytics integration, predictive modeling, retrospective comparisons, and prescriptive optimization.

Analytics (Pop Analyzer): Enables non-SQL writers like clinicians and administrators to dynamically author, manage, view, and publish pre-built and custom population ruleset definitions using a drag-and-drop interface. Rulesets can be published as a registry, leveraged across the DOS platform, and augmented with summary metrics using its tools. These registries can be used for internal quality improvement and research efforts or for reporting to external organizational registries.

Data entry (IDEA): Collects custom sets of data for instant entry into DOS.

Services and Improvement Expertise

The company provides a range of high-value-add professional services to help its clients implement and maximize the value of its Solution. The company's professional services experts combine industry-leading talent across multiple domain areas with a deep working knowledge of its technology to help its clients achieve a faster time-to-value and drive more meaningful and sustainable measurable improvements. The company's services expertise can be provided as a supplement to its clients' existing teams or as an outsourced function for its clients. The company's team consists of over 1,000 analytics experts and domain experts, including several nationally-recognized healthcare and analytics leaders.

The company's domain experts provide services across a range of specialties, including:

Infrastructure, Data, and Analytics Services Expertise:

Data Engineering Services: Help clients ingest data sources and provide consulting around DOS best practice and strategy around leveraging new DOS features.

Analytics Engineering Services: Partner with clients to generate meaningful insights produced from Health Catalyst technology that lead improvement efforts. Guides best practice and training.

Implementation Services: Implement and configure DOS and analytics applications.

Data Science Services: Work with client teams to apply scientific methods, processes, algorithms, and systems to ask and answer questions using data. In addition, build software tools to enable self-service capabilities for clients.

Analytics Strategy Services: Provide agile development workshops, continued data architecture and ETL support, documentation and training, measure reporting efficiency, and prioritization and staff augmentation.

Data Governance Services: Offer advisory services related to leveraging clients' unique, strategic data assets, managing data access and security, and establishing cross-functional governance structures.

Tech-Enabled Managed Services: Managed services solution that enables healthcare organizations to boost efficiencies, capabilities, and savings-and optimize employee experience-through outsourcing specific functions, such as data abstraction or analytics, to Health Catalyst. In many cases, this solution includes re-badging existing health system team members within the applicable functional area as Health Catalyst team members.

Healthcare Domain Expertise

Quality and Process Improvement Strategy: Organizational readiness assessments and opportunity analysis. Clinical pathways, best practices, and protocol implementation. Lean methodology and clinical variation reduction recommendations.

Patient Safety Services: Transition from voluntary under-reporting to proactive prevention using data-driven triggers.

Cost Accounting Services: Expert analysis of fine-grain activity-based costing methods and cost-saving improvement opportunities.

Population Health and Value-Based Care Services: Organizational transformation services to enhance abilities to take on cost risk for patient populations.

Abstraction Data Submission Services: Support in collecting quality and regulatory information and submitting it to various associations.

Health Catalyst University - Educational Services: Hands-on courses, programs, and customizable training opportunities to provide the company's clients with knowledge, practical skills, and take-home tools needed to drive improvement efforts.

Clients

The company's clients comprise academic medical centers, integrated delivery networks, community hospitals, large physician practices, ACOs, health information exchanges, health insurers, and other risk-bearing entities. The company helps executives, administrators, clinicians, and technicians in hundreds of hospitals and thousands of clinics. The company works closely in collaboration with many key stakeholders including chief executive officers, chief financial officers, chief information officers, chief technology officers, population health teams, and IT teams among others.

Sales and Marketing

The company markets and sells its services to healthcare organizations primarily in the United States and it opportunistically markets and sells in other countries and regions. The company's dedicated sales team identifies healthcare organizations that would benefit from its Solution. The company's sales team works closely with its subject matter experts to foster long-term relationships with its clients' and sales prospects' leadership teams. In February 2024, the company will hold its annual Healthcare Analytics Summit (HAS), an event showcasing data-informed improvements in healthcare.

Research and Development

The company's research and development expenses were $72.6 million for the year ended December 31, 2023.

Intellectual Property

As of December 31, 2023, the company had fourteen issued U.S. patents, four issued Canadian patents, one issued Great Britain patent, and one issued European patent, which expire between 2026 and 2037, as well as one utility patent application pending in the United States.

The company has registered Health Catalyst and its flame design logo as trademarks in the United States and certain other jurisdictions. The company is the registered holder of a variety of domain names that include Health Catalyst and similar variations.

Competition

The company's primary competitors are industry-agnostic analytics companies, EHR companies, point solution vendors, and healthcare organizations that perform their own analytics using homegrown solutions. Industry-agnostic analytics companies that help healthcare organizations develop homegrown solutions include IBM, Snowflake, Microsoft, Tableau CRM, and Qlik. EHR companies include Cerner Systems and Epic Systems. Point solution companies include Optum Analytics, Premier, Arcadia.io, Strata Decision Technology, Craneware, Innovaccer, and Intersystems.

Government Regulation

The company's cybersecurity program is led by its chief information security officer and includes a team of cybersecurity and security compliance professionals. The program is further strengthened through support of the company's General Counsel and Chief Compliance and Data Privacy Officer. These two teams work closely together to support and bolster the company's cybersecurity program. The program incorporates industry-standard frameworks (including third-party certification), policies, and practices designed to protect the privacy and security of the company's sensitive information. The company's third-party certifications for certain offerings include a HITRUST Common Security Framework certification (which includes standards from frameworks, such as HIPAA, ISO, EU, GDPR, NIST, and PCI to provide risk-based certification for companies in the healthcare supply chain) and a Statement on Standards for Attestation Engagements 18 (SSAE 18) System and Organization Control (SOC) 2 report that evaluates its security program.

The company's patient safety organization (PSO) is certified by the Agency for Healthcare Research and Quality (AHRQ), an agency of the Department of Health and Human Services (HHS). The company's patient safety organization (PSO) is certified by the Agency for Healthcare Research and Quality (AHRQ), an agency of the Department of Health and Human Services (HHS).

The company's subsidiaries in the United Kingdom, India, Singapore, the United Arab Emirates, and Australia are subject to additional regulations by the Governments of the United Kingdom, India, Singapore, the United Arab Emirates, and Australia, respectively, as well as their respective subdivisions.

History

The company was founded in 2008. The company was incorporated under the laws of Delaware in 2011. It was formerly known as HQC Holdings, Inc. and changed its name to Health Catalyst, Inc. in 2017.