Health Catalyst (HCAT) risk factors, FY2025 10-K

Risks Related to Our Business and Industry

1. 01We operate in a highly competitive industry, and if we are not able to compete effectively, our business and results of operations will be harmed
2. 02Changes in the healthcare industry have and could further affect the demand for our Solution, cause our existing contracts to be terminated, and/or negatively impact the process of negotiating future contracts67% rewritten
3. 03We may be unable to successfully execute on our growth initiatives, business strategies, or operating plans, as well as cost reduction and restructuring initiatives44% rewritten
4. 04If we fail to provide effective professional services and high-quality client support, our business and reputation would suffer
5. 05Our sales cycles can be long and unpredictable, and our sales efforts require a considerable investment of time and expense. If our sales cycle lengthens or we invest substantial resources pursuing unsuccessful sales opportunities, our results of operations and growth would be harmed
6. 06Our Solution may not operate properly, which could damage our reputation, give rise to claims against us, or divert application of our resources from other purposes, any of which could harm our business and results of operations35% rewritten
7. 07If we are not able to maintain and enhance our reputation and brand recognition, our business and results of operations will be harmed
8. 08The market for healthcare in the United States is in the early stages of structural change and is rapidly evolving. Our success depends on our ability to keep pace with technological developments, satisfy increasingly sophisticated client and user requirements, and sustain market acceptanceNew
9. 09Our business could be adversely affected if our clients are not satisfied with our Solution
10. 10If our existing clients do not continue or renew their contracts with us, renew at lower fee levels, or decline to purchase additional technology and services from us, it could have a material adverse effect on our business, financial condition, and results of operations27% rewritten
11. 11Our results of operations have in the past fluctuated and may continue to fluctuate significantly, and if we fail to meet the expectations of securities analysts or investors, our stock price and the value of an investment in our common stock could decline substantiallyNew
12. 12Our pricing may change over time and our ability to efficiently price our Solution will affect our results of operations and our ability to attract or retain clients
13. 13If our Solution fails to provide accurate and timely information, or if our content or any other element of our Solution is associated with faulty clinical decisions or treatment, we could have liability to clients, clinicians, patients, or others, which could adversely affect our results of operations
14. 14Our increasing reliance on AI and machine learning technologies may expose us to significant risks, including development and deployment challenges, regulatory uncertainties, and potential third-party claims, which could adversely affect our reputation, business, results of operations, and financial conditionNew
15. 15Future litigation against us could be costly and time-consuming to defend and could result in additional liabilities
16. 16We derive a significant portion of our revenue from our largest clients. The loss, termination, or renegotiation of any contract could negatively impact our results
17. 17Because we generally recognize technology and professional services revenue ratably over the term of the contract for our services, a significant downturn in our business may not be reflected immediately in our results of operations, which increases the difficulty of evaluating our future financial performance
18. 18in the accuracy and completeness of our financial reports and the market price of our common stock could be adversely affectedNew
19. 19Because competition for our target employees is intense, we may not be able to attract and retain the highly skilled employees we need to support our continued growth
20. 20We depend on our senior management team, and the loss of one or more of our executive officers or key employees or an inability to attract and retain highly skilled employees could adversely affect our business38% rewritten
21. 21Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and teamwork fostered by our culture, which could harm our business
22. 22If we fail to effectively manage our growth and organizational change, our business and results of operations could be harmed
23. 23We may not grow at the rates we historically have achieved or at all, even if our key metrics may indicate growth
24. 24Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the markets in which we compete achieve the forecasted growth, our business may not grow at similar rates, or at all

Risks Related to Data and Intellectual Property

1. 25Failure by our clients to obtain proper permissions and waivers may result in claims against us or may limit or prevent our use of data, which could harm our business
2. 26Our business and operations may suffer in the event of information technology system failures, cyberattacks, or deficiencies in our cybersecurity20% rewritten
3. 27We rely on third-party providers, including Microsoft Azure, for computing infrastructure, network connectivity, and other technology-related services needed to deliver our Solution. Any disruption in the services provided by such third-party providers could adversely affect our business and subject us to liability
4. 28The reliability and performance of the Internet may be harmed by increased usage or by denial-of-service attacks. The Internet has experienced a variety of outages and other delays as a result of damages to portions of its infrastructure, and it could face outages and delays in the futureNew
5. 29Our business could be adversely impacted by changes in laws and regulations related to the Internet or changes in access to the Internet generally
6. 30Our Solution utilizes open-source software, and any failure to comply with the terms of one or more of these open-source licenses could adversely affect our business
7. 31Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand
8. 32We may be sued by third parties for alleged infringement of their proprietary rights or misappropriation of intellectual property

Risks Related to Healthcare and Data Privacy and Security Regulation

1. 33Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations, and financial condition49% rewritten
2. 34We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulatorsNew
3. 35Government regulation of healthcare creates risks and challenges with respect to our compliance efforts and our business strategies
4. 36If our arrangements with clinicians and other healthcare professionals are found to constitute the improper rendering of professional medical services or fee splitting under applicable state laws, our business, financial condition, and our ability to operate in those states could be adversely impacted
5. 37The FDA may modify its enforcement policies with respect to medical software products, and our software products may become subject to extensive regulatory requirements, which may increase the cost of conducting, or otherwise harm, our business
6. 38The healthcare regulatory and political framework is uncertain and evolving28% rewritten
7. 39Due to the particular nature of certain services we provide or the manner in which we provide them, we may be subject to additional government regulation and foreign government regulation

Risks Related to Tax Regulation

1. 40Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar transactional taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our results of operations
2. 41Unanticipated changes in our effective tax rate and additional tax liabilities, including as a result of our international operations or implementation of new tax rules, could harm our future results
3. 42Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations
4. 43Comprehensive tax reform legislation could adversely affect our business and financial condition

Risks Related to Our Indebtedness

1. 44Our indebtedness could adversely affect our financial condition and prevent us from fulfilling our existing or future debt obligations, and we may not generate sufficient cash flow from our business to pay our debt56% rewritten
2. 45Our Credit Agreement contains covenants and other provisions that restrict our ability to take certain actions and may limit our ability to operate or grow our business in the future
3. 46We are exposed to interest rate risks with regard to our Term Loan Facility and any future refinancing thereof

Risks Related to an Investment in Our Securities

1. 47We have experienced significant net losses since inception, we expect to incur losses in the future, and we may not be able to generate sufficient revenue to achieve and maintain profitability35% rewritten
2. 48We have a relatively limited operating history in an evolving industry which makes it difficult to evaluate our current business future prospects and increases the risk of your investment
3. 49The market price of our common stock has decreased in recent periods, may be volatile, and may further decline for many reasons, including reasons that are not related to our operating performance, and you may lose all or part of your investments27% rewritten
4. 50If securities or industry analysts do not continue to publish research, or publish inaccurate or unfavorable research, about our business, the price of our common stock and trading volume could decline
5. 51We cannot guarantee that the Share Repurchase Plan will be fully consummated or will enhance stockholder value, and share repurchases could affect the price of our common stock
6. 52Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans, or otherwise will dilute all other stockholders
7. 53The requirements of being a public company may strain our resources, divert management’s attention, and affect our ability to attract and retain executive management and qualified board members
8. 54We do not intend to pay dividends on our common stock and, consequently, the ability of common stockholders to achieve a return on investment will depend on appreciation, if any, in the price of our common stock
9. 55We could be subject to securities class action litigation

Risks Related to Our Charter and Bylaws

1. 56Provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current board of directors, and limit the market price of our common stock
2. 57Our amended and restated bylaws designate a state or federal court located within the State of Delaware as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us

General Risks

1. 58Changes in accounting principles may cause previously unanticipated fluctuations in our financial results, and the implementation of such changes may impact our ability to meet our financial reporting obligations22% rewritten
2. 59Economic uncertainties or downturns in the general economy or the industries in which our clients operate could disproportionately affect the demand for our Solution and negatively impact our results of operationsNew
3. 60Investors’ expectations of our performance relating to environmental, social, and governance factors may impose additional costs and expose us to new risksNew