Welcome to the Health Catalyst third 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 time permits, we kindly ask that you limit yourself to one question. If you have any follow-up, please re-enter the queue. So others can hear your questions clearly, we ask that you 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.

Good afternoon, and welcome to Health Catalyst's earnings call for the third quarter of 2026. Stephanie Sinclair, Senior Vice President of Finance and Investor Relations. With me today are Simeon Kohl, our President and 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 and our related form 8K furnished to the SEC, both of which are available on the website. A replay of this call will be available afterwards. Today's call includes four looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including about our financial outlook, expectations for the fourth quarter and full year 2026, client migrations and client retention, future growth and strategic priorities, Our ability to strengthen our foundation, our ability to achieve profitable revenue growth and deliver returns to shareholders' bookings, the impact of the VITA award divestiture, and the general anticipated performance of our business. These forward-looking statements reflect management reviews as of today and should not be relied upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statement or outlook. We will also discuss non-dap financial information is presented for supplemental purposes only, has limitations as an analytical tool, and should not be considered in isolation, Thank you, Stephanie, and good afternoon, everyone.

Earlier this afternoon, we reported third quarter revenue of $56.3 million and adjusted EBITDA of $779,000, both above the high end of our guidance ranges of $55 to $56 million and $0 to $500,000 respectively. Given our performance year-to-date and with Project Nexus cost reductions on track, we are reaffirming our full-year revenue adjusted EBITDA outlook. Design to fundamentally transform our operating model and deliberately reposition our business. Before turning the call over to Jason for details on our financial performance and outlook, I'd like to share my initial perspectives on health catalysts, what attracted me to this opportunity, and the priorities that will guide our decisions and actions. As Stephanie mentioned, I joined in mid-September, and over these first several weeks, I've spent considerable time connecting with our leaders, and many of you. Those conversations have reinforced many of the reasons I was excited to join Health Catalyst. Health Catalyst has deep healthcare measurable outcomes. Our data and analytics technology Thank you. Thank you. Thank you. We also have a stronger financial foundation following the vitalware divestiture and the retirement of our credit facility. We are debt-free with approximately $79 million in cash, giving us increased flexibility as we move forward. So my view is straightforward. I believe Health Catalyst has meaningful assets and a compelling long-term opportunity, and our immediate priority is to strengthen the foundation of the business. At the same time, there are areas where we can do better, and client retention is the most important. Our ability to retain and grow existing client relationships is a top priority. We are approaching it with urgency and a focus on sustained improvement. My experience at Performant gave me the opportunity to build and lead a healthcare business through considerable challenges and difficult decisions, which ultimately supported Performance Journey towards increased profitable growth. Along the way, we made deliberate choices about where to invest, how to differentiate, and how to create sustainable value for clients and shareholders. The circumstances here are different, but many of those same principles apply and need retention. We must do more to preserve our client relationships and the revenue they represent. That starts with gaining a better understanding of what clients need, Thank you for joining us today. Offering greater flexibility in how they deploy our solutions and aligning our modernization efforts with their priorities. We deliver with technology and deployment options that work best for them. We're focused on building stronger relationships with our clients, staying close to their priorities, and working across the organization to deliver the value they expect from us. Retention is foundational to everything else we want to accomplish. It's difficult to build sustainable, profitable growth when we're continually replacing lost revenue. As we've said before, we expect to be generally through the migration-related churn headwinds by the end of 2027. Second, greater costs on building durable, profitable revenue that creates lasting value for our clients and attractive returns for our shareholders. That requires aligning our cost base with the revenue we can support today and investing with discipline and opportunities for future growth. We're sharpening our understanding of the economics across the business to identify where we generate attractive returns, where performance needs to improve, and where investment can create the most value. That insight will guide how we allocate resources, improve efficiency, and strengthen our financial foundation to support future growth. We will act with both urgency and care. Third, let's conflict on simplifying how we operate and how we present our capabilities to clients and prospects. Over the years, Health Catalyst has developed and acquired a broad portfolio of technology, data, and healthcare expertise. We have an opportunity to bring those strengths together more effectively, making it easier for clients to understand the value we offer, adopt our solutions, and expand their relationships with us. As healthcare organizations work to improve clinical outcomes, lower costs, and deliver better consumer experience, I believe our combined capabilities position us well to help them achieve those goals. Our immediate opportunity is to make better use of what we already have across the portfolio and helping clients realize more value for market capabilities. Making our solution easier to deploy alongside clients' existing technology can also reduce barriers to adoption and broaden our market. Fourth, more consistent execution. We have talented people throughout Health Catalyst, and we need to translate that talent into more consistent results. That requires clear priorities, shared accountability, stronger coordination across functions, and reliable information to guide our decisions. We're establishing a more disciplined operating cadence and bringing our product, engineering, and client-facing teams into closer alignment so we can execute as one priorities reinforce one another. Stronger retention can make our revenue more predictable and durable, Greater cost alignment can strengthen profitability and our ability to invest in products that meet clients' evolving needs. A simpler, more integrated approach to help clients get more value from our partnership and more consistent execution helps to drive a more reliable, high-quality delivery. Together, we believe these priorities lay the foundation for a more profitable, predictable business positioned for sustainable growth. We're also realistic about where we stand today and the work required to improve our purpose, improve commercial effectiveness, and unlock more value from the capabilities we already have. We're making disciplined decisions grounded in those opportunities with growth and investment tied to where we believe we can create clear client value and generate attractive returns. I also want to be clear about what you should expect from me and our leadership team. Transparency about our progress and our challenges, discipline in how we invest, and accountability for the commitments we make. Financial results will ultimately be the most important measure of our success, and we want to give you better visibility into what drives them. We're evaluating a focused set of measures to help you assess our progress and we'll share more of that work advances. We also benefit from a board with deep experience in healthcare delivery, technology, and business transformation at Kami Rella. I appreciate the perspective and active engagement of our entire board as we move these priorities forward. Let me close with this. I'm still early in my tenure, and we have important decisions ahead. We won't have every answer immediately, and meaningful improvement will require sustained execution, but I'm encouraged by our combination of healthcare expertise, technology and data assets, and trusted relationships with organizations tackling the most difficult challenges in healthcare. Our responsibility is to bring those strengths together with greater discipline and accountability, and to earn your confidence through results.

As Simeon noted, third quarter revenue and adjusted EBITDA both came in above the high end of our guided ranges. One item to keep in mind, third quarter results include one full month of vitalware in July before the divestiture closed on July 31st. Let me walk through the details on the third quarter. Total revenue was $56.3 million against our guided range of $55 million to $56 million. Technology revenue was $40.7 million, and professional services revenue was $15.6 million. We continue to make progress on both as possible. Clients achieve value sooner when implementations move fast, and we benefit from quicker revenue recognition. One client went live on our embedded product in about 75 days after signing. and they've reported that 86% of prescriptions are now completed within 24 hours with call volume down 80% in the most recent week. Adjusted gross margin was 44.3% compared to 52.6% in the prior year period. Adjusted technology gross margin was 60.6%, consistent with the trend we discussed last call, 7%, because services revenue declined faster than our delivery costs, and elevated internal benefits costs related to medical claims created an additional headwind. We anticipated the professional services margin pressure in the second half and have begun aligning delivery costs with our current contracts. Adjusted operating expenses were $24.1 million or 43% of revenue compared to $28.1 million or 37% of revenue in the prior year period. Project Nexus savings are tracking the plan, but investments in our team and higher than year reduction. The internal benefits costs related to medical plans were approximately $1.6 million greater and expectation across the business this quarter with about half in cost of revenue and half in operating expenses. Adjusted EBITDA was $779,000 above our guided range of breakeven to $500,000. Adjusted net loss per share was negative 3 cents on a weighted average share count of $75.4 million. Cash equivalents and short-term investments and no debt. We expect cash to decline modestly in the fourth quarter, mainly from the timing of vendor payments, including a large prepayment for hosting infrastructure, partly offset by client billings that typically benefit the fourth and first quarters. Turning to guidance, we're reaffirming our full year 2026 revenue and adjusted EBITDA outlook. We expect total revenue of $246 million to $249 million and adjusted EBITDA of $18 million to $18.5 million. That implies an adjusted EBITDA loss in the $3 million consistent with the full year range we provided last quarter. The fourth quarter is our first full quarter without vitalware and it reflects the trend dynamics we've discussed this year and seasonally higher medical claims expense. The full removal of vital wear in Q4 versus one month in Q3 drives the majority of the adjusted EBITDA decrease quarter over quarter. For the full year, we continue to expect overall adjusted gross margin below 50%. With adjusted technology gross margin in the low 60s, and adjusted professional services gross margin in the low-financy migration-related churn pressure that is generally in line with the framework we previously disclosed. We are listening closely to clients and focusing on the outcomes they need rather than the infrastructure decisions they face. We are engaging well ahead of renewal to identify and address potential risks. We believe continued innovation in our technology Designed around how clients operate is the most durable way to strengthen those relationships. We continue to see new bookings and expansion within our existing client base. And we now expect to exceed the high end of our 22 million to 26 million bookings target for the year. Consistent with our focus on durable, profitable revenue, we're being deliberate about the revenue we pursue. For example, an interoperability relationship with a large health information exchange client that was not profitable terminates at the end of 2026. These decisions are taken lightly, but they're necessary in focusing on durable, profitable relationships. We're managing the business with urgency and cash discipline, with close scrutiny of every dollar we spend. We know confidence is earned through execution, and we're focused on delivering. With that, operator, we'll open the call for questions.

At this time, if you have a question or comment, please press star 1 on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star 2. Again, we kindly ask that you limit yourself to one question and that you pick up your handset when posing your questions to provide optimal sound quality. Thank you. And once again, if you do have a question, you may press star 1 on your telephone keypad. And at this time, I'm showing no questions in queue. I will now turn the meeting back to Simeon Kohl for additional or closing remarks.

Simeon Kohl Thank you, operator. No questions before we close here. I just want to thank our team members for their Thank you. This concludes today's Health Catalyst third quarter 2026 earnings conference call. Please disconnect your line at this time and have a wonderful day.