Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38993 | |
Entity Registrant Name | HEALTH CATALYST, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-3337483 | |
Entity Address, Address Line One | 3165 Millrock Drive #400 | |
Entity Address, City or Town | Salt Lake City | |
Entity Address, State or Province | UT | |
Entity Address, Postal Zip Code | 84121 | |
City Area Code | 801 | |
Local Phone Number | 708-6800 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | HCAT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 38,008,474 | |
Entity Central Index Key | 0001636422 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Current assets: | |||
Cash and cash equivalents | $ 60,965 | $ 18,032 | |
Short-term investments | 143,595 | 210,245 | |
Accounts receivable, net | [1] | 35,367 | 27,570 |
Deferred costs | 493 | 937 | |
Prepaid expenses and other assets | 9,439 | 7,455 | |
Total current assets | 249,859 | 264,239 | |
Property and equipment, net | 3,943 | 4,295 | |
Intangible assets, net | 31,753 | 25,535 | |
Operating lease right-of-use assets | 3,105 | 3,787 | |
Goodwill | 18,419 | 3,694 | |
Other assets | 1,678 | 810 | |
Total assets | 308,757 | 302,360 | |
Current liabilities: | |||
Accounts payable | 2,736 | 3,622 | |
Accrued liabilities | 6,830 | 8,944 | |
Acquisition-related consideration payable | [1] | 3,107 | 2,192 |
Deferred revenue | [1] | 35,454 | 30,653 |
Operating lease liabilities | 2,301 | 2,806 | |
Total current liabilities | 50,428 | 48,217 | |
Long-term debt | 48,485 | 48,200 | |
Acquisition-related consideration payable, net of current portion | [1] | 0 | 1,860 |
Deferred revenue, net of current portion | 1,356 | 1,459 | |
Operating lease liabilities, net of current portion | 1,375 | 1,654 | |
Contingent consideration liability | 2,666 | 0 | |
Other liabilities | 326 | 326 | |
Total liabilities | 104,636 | 101,716 | |
Commitments and contingencies (Note 14) | |||
Stockholders’ equity: | |||
Preferred stock, $0.001 par value per share; 25,000,000 shares authorized as of March 31, 2020 and December 31, 2019; no shares issued and outstanding as of March 31, 2020 and December 31, 2019 | 0 | 0 | |
Common stock, $0.001 par value per share; 500,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 37,838,276 and 36,678,854 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively | 38 | 37 | |
Additional paid-in capital | 832,167 | 811,049 | |
Accumulated deficit | (628,123) | (610,514) | |
Accumulated other comprehensive income | 39 | 72 | |
Total stockholders’ equity | 204,121 | 200,644 | |
Total liabilities and stockholders’ equity | $ 308,757 | $ 302,360 | |
[1] | Includes amounts attributable to related party transactions. See Note 16 for further details. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 37,838,276 | 36,678,854 |
Common stock, shares outstanding (in shares) | 37,838,276 | 36,678,854 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Revenue: | |||
Revenue | [1] | $ 45,116 | $ 35,213 |
Cost of revenue, excluding depreciation and amortization: | |||
Total cost of revenue, excluding depreciation and amortization | 24,068 | 17,326 | |
Operating expenses: | |||
Sales and marketing | 13,487 | 10,473 | |
Research and development | 13,088 | 10,022 | |
General and administrative | 9,701 | 6,174 | |
Depreciation and amortization | 2,877 | 2,312 | |
Total operating expenses | 39,153 | 28,981 | |
Loss from operations | (18,105) | (11,094) | |
Loss on extinguishment of debt | 0 | (1,670) | |
Interest and other expense, net | (621) | (945) | |
Net loss before income taxes | (18,726) | (13,709) | |
Income tax (benefit) provision | (1,236) | 11 | |
Net loss | (17,490) | (13,720) | |
Less: accretion of redeemable convertible preferred stock | 0 | 64,015 | |
Net loss attributable to common stockholders | $ (17,490) | $ (77,735) | |
Net loss per share attributable to common stockholders, basic and diluted (in USD per share) | $ (0.47) | $ (16.21) | |
Weighted-average number of shares used in calculating net loss per share attributable to common stockholders, basic and diluted (in shares) | 37,108,998 | 4,795,195 | |
Technology | |||
Revenue: | |||
Revenue | [1] | $ 24,699 | $ 20,148 |
Cost of revenue, excluding depreciation and amortization: | |||
Total cost of revenue, excluding depreciation and amortization | 7,906 | 6,752 | |
Professional services | |||
Revenue: | |||
Revenue | [1] | 20,417 | 15,065 |
Cost of revenue, excluding depreciation and amortization: | |||
Total cost of revenue, excluding depreciation and amortization | $ 16,162 | $ 10,574 | |
[1] | Includes amounts attributable to related party transactions. See Note 16 for further details. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net Loss | $ (17,490) | $ (13,720) |
Other comprehensive income (loss): | ||
Change in unrealized gain (loss) on investments | (3) | 3 |
Change in foreign currency translation adjustment | (30) | 0 |
Comprehensive loss | $ (17,523) | $ (13,717) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Impact of adopting the current expected credit loss standard | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated DeficitImpact of adopting the current expected credit loss standard | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Dec. 31, 2018 | 22,713,694 | ||||||
Beginning balance at Dec. 31, 2018 | $ 409,845 | ||||||
Preferred Stock | |||||||
Issuance of Series F redeemable convertible preferred stock, net of issuance costs of $115 (in shares) | 437,787 | ||||||
Issuance of Series F redeemable convertible preferred stock, net of issuance costs of $115 | $ 12,073 | ||||||
Accretion of redeemable convertible preferred stock | $ 64,015 | ||||||
Ending balance (in shares) at Mar. 31, 2019 | 23,151,481 | ||||||
Ending balance at Mar. 31, 2019 | $ 485,933 | ||||||
Beginning balance (in shares) at Dec. 31, 2018 | 4,779,356 | ||||||
Beginning balance at Dec. 31, 2018 | (374,768) | $ 5 | $ 0 | $ (374,772) | $ (1) | ||
Common Stock | |||||||
Exercise of stock options (in shares) | 94,558 | ||||||
Exercise of stock options | 808 | 808 | |||||
Stock-based compensation | 1,656 | 1,656 | |||||
Accretion of redeemable convertible preferred stock | (64,015) | (2,464) | (61,551) | ||||
Net Loss | (13,720) | (13,720) | |||||
Other comprehensive income (loss) | 3 | 3 | |||||
Ending balance (in shares) at Mar. 31, 2019 | 4,873,914 | ||||||
Ending balance at Mar. 31, 2019 | $ (450,036) | $ 5 | 0 | (450,043) | 2 | ||
Beginning balance (in shares) at Dec. 31, 2019 | 0 | ||||||
Beginning balance at Dec. 31, 2019 | $ 0 | ||||||
Ending balance (in shares) at Mar. 31, 2020 | 0 | ||||||
Ending balance at Mar. 31, 2020 | $ 0 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 36,731,632 | 36,678,854 | |||||
Beginning balance at Dec. 31, 2019 | $ 200,644 | $ (119) | $ 37 | 811,049 | (610,514) | $ (119) | 72 |
Common Stock | |||||||
Exercise of stock options (in shares) | 1,048,760 | 1,048,760 | |||||
Exercise of stock options | $ 9,046 | $ 1 | 9,045 | ||||
Stock-based compensation | 8,741 | 8,741 | |||||
Issuance of common stock for acquisition consideration (in shares) | 110,662 | ||||||
Issuance of common stock for acquisition consideration | 3,332 | 3,332 | |||||
Accretion of redeemable convertible preferred stock | 0 | ||||||
Net Loss | (17,490) | (17,490) | |||||
Other comprehensive income (loss) | $ (33) | (33) | |||||
Ending balance (in shares) at Mar. 31, 2020 | 37,838,276 | 37,838,276 | |||||
Ending balance at Mar. 31, 2020 | $ 204,121 | $ 38 | $ 832,167 | $ (628,123) | $ 39 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Issuance costs | $ 182 |
Shares of redeemable convertible preferred stock | |
Issuance costs | $ 115 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities | ||
Net loss | $ (17,490) | $ (13,720) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,877 | 2,312 |
Loss on extinguishment of debt | 0 | 1,670 |
Amortization of debt discount and issuance costs | 285 | 144 |
Investment discount and premium amortization | (6) | (83) |
Gain on sale of property and equipment | (2) | (11) |
Stock-based compensation expense | 8,741 | 1,656 |
Deferred tax benefit | (1,280) | 0 |
Change in fair value of contingent consideration liability | (359) | 0 |
Other | (2) | 0 |
Change in operating assets and liabilities: | ||
Accounts receivable, net | (7,284) | (557) |
Deferred costs | 444 | (109) |
Prepaid expenses and other assets | (2,244) | (185) |
Operating lease right-of-use assets | 682 | 130 |
Accounts payable, accrued liabilities, and other liabilities | (4,283) | (382) |
Deferred revenue | 3,936 | 4,012 |
Operating lease liabilities | (784) | (101) |
Net cash used in operating activities | (16,769) | (5,224) |
Cash flows from investing activities | ||
Purchases of property and equipment | (506) | (689) |
Proceeds from the sale of property and equipment | 6 | 14 |
Purchase of short-term investments | 0 | (30,726) |
Proceeds from the sale and maturity of short-term investments | 66,653 | 3,147 |
Purchase of intangible assets | (758) | (402) |
Acquisition of business, net of cash acquired | (15,249) | 0 |
Net cash provided by (used in) investing activities | 50,146 | (28,656) |
Cash flows from financing activities | ||
Proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs | 0 | 12,073 |
Proceeds from exercise of stock options | 9,046 | 808 |
Proceeds from employee stock purchase plan | 1,289 | 0 |
Payment of SVB line of credit and mezzanine loan | 0 | (21,821) |
Proceeds from credit facilities, net of debt issuance costs | 0 | 47,169 |
Payments of acquisition-related consideration | (748) | (390) |
Payments of deferred offering costs | 0 | (182) |
Net cash provided by financing activities | 9,587 | 37,657 |
Effect of exchange rate changes | (31) | 0 |
Net increase in cash and cash equivalents | 42,933 | 3,777 |
Cash and cash equivalents at beginning of period | 18,032 | 28,431 |
Cash and cash equivalents at end of period | 60,965 | 32,208 |
Supplemental disclosures of non-cash investing and financing information | ||
Redeemable convertible preferred stock accretion | 0 | 64,015 |
Deferred offering costs included in accounts payable and accrued liabilities | 427 | 1,066 |
Purchase of intangible assets included in accounts payable and accrued liabilities | 132 | 1,114 |
Purchase of property and equipment included in accounts payable and accrued liabilities | 77 | 20 |
Supplemental disclosures of cash flow information related to leases | ||
Cash paid for operating lease liabilities in operating cash flows | 843 | 778 |
Operating lease right-of-use assets obtained in exchange for operating lease obligations | $ 0 | $ 581 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Nature of operations Health Catalyst, Inc. (Health Catalyst) was incorporated under the laws of Delaware in September 2011. We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises a cloud-based data platform, analytics software, and professional services expertise. Our customers, which are primarily healthcare providers, use our Solution to manage their data, derive analytical insights to operate their organization, and produce measurable clinical, financial, and operational improvements. Basis of presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the applicable regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2019 included in our Annual Report on Form 10-K. Interim Unaudited Condensed Consolidated Financial Statements Our accompanying interim condensed consolidated balance sheet as of March 31, 2020, the interim condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019, our interim condensed consolidated statements of redeemable convertible preferred stock and stockholders' equity (deficit) for the three months ended March 31, 2020 and 2019, and our interim condensed consolidated statements of cash flows for the three months ended March 31, 2020 and 2019 are unaudited. Our condensed consolidated balance sheet as of December 31, 2019 was derived from audited financial statements, but does not include all disclosures required by GAAP. Our interim unaudited condensed consolidated financial statements have been prepared on a basis consistent with our annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company's financial position, its operations and cash flows for the periods presented. The historical results are not necessarily indicative of future results, and the results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year or any other period. Initial Public Offering On July 29, 2019, we closed our initial public offering of common stock (IPO) in which we issued and sold 8,050,000 shares (inclusive of the underwriters’ over-allotment option to purchase 1,050,000 shares, which was exercised on July 25, 2019) of common stock at $26.00 per share. We received net proceeds of $194.6 million after deducting underwriting discounts and commissions and before deducting offering costs of $4.6 million. Upon the closing of our IPO, all shares of our outstanding redeemable convertible preferred stock converted into 23,151,481 shares of common stock on a one-for-one basis. Stock Split On July 10, 2019, we effected a 1-for-2 reverse stock split of our capital stock. We have adjusted all references to share and per share amounts in the accompanying condensed consolidated financial statements and notes to reflect the reverse stock split. Principles of consolidation Our condensed consolidated financial statements include the accounts of Health Catalyst and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, provisions for expected credit losses, useful lives of property and equipment, capitalization and estimated useful life of internal-use software and other intangible assets, fair value of financial instruments, deferred tax assets, stock-based compensation, contingent consideration, and tax uncertainties. Actual results could differ from those estimates. Segment reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is evaluated by the chief operating decision maker (the CODM) in assessing performance and making decisions regarding resource allocation. We operate our business in two operating segments that also represent our reportable segments. Our segments are (1) technology and (2) professional services. The CODM uses Adjusted Gross Profit (defined as revenue less cost of revenue that excludes depreciation, amortization, stock-based compensation expense, and certain other operating expenses) as the measure of our profit. Net loss per share Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. Net loss attributable to common stockholders is computed as net loss less accretion of redeemable convertible preferred stock. Diluted net loss per share attributable to common stockholders is calculated by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, stock options, restricted stock units (RSUs), and purchase rights committed under the employee stock purchase plan are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as the effect is antidilutive. Prior to our IPO, we computed basic and diluted net loss per share in conformity with the two-class method required for participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to holders of common stock. Redeemable convertible preferred stock and common stock were considered participating securities for purposes of this calculation. However, the two-class method did not impact the net loss per common share attributable to common stockholders as we were in a loss position for each of the periods presented and the redeemable convertible preferred stockholders did not have a contractual obligation to participate in losses. Revenue recognition We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) . We derive our revenues primarily from technology subscriptions and professional services. We determine revenue recognition by applying the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy the performance obligation. We recognize revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Technology revenue Technology revenue primarily consists of subscription fees charged to customers for access to use our technology. We provide customers access to our technology through either an all-access or limited-access, modular subscription. The majority of our subscription arrangements are cloud-based and do not provide customers the right to take possession of the technology or contain a significant penalty if the customer were to take possession of the technology. Revenue from cloud-based subscriptions is recognized ratably over the contract term beginning on the date that the service is made available to the customer. Most of our subscription contracts have up to a three-year term, of which the vast majority are terminable after one year upon 90 days’ notice. Subscriptions that allow the customer to take software on-premise without significant penalty are treated as time-based licenses. These arrangements generally include access to technology, access to unspecified future products, and maintenance and support. Revenue for upfront access to our technology library is recognized at a point in time when the technology is made available to the customer. Revenue for access to unspecified future products included in time-based license subscriptions is recognized ratably over the contract term beginning on the date that the access is made available to the customer. We also have certain perpetual license arrangements. Revenue from these arrangements is recognized at a point in time upon delivery of the software. Technology revenue also includes maintenance and support revenue which generally includes bug fixes, updates, and support services. Revenue related to maintenance and support is recognized over the contract term beginning on the date that the service is made available to the customer. Professional services revenue Professional services revenue primarily includes data and analytics services, domain expertise services, outsourcing services, and implementation services. Professional services arrangements typically include a fee for making full-time equivalent (FTE) services available to our customers on a monthly basis. FTE services generally consist of a blend of analytic engineers, analysts, and data scientists based on the domain expertise needed to best serve our customer. Professional services are typically considered distinct from the technology offerings and revenue is generally recognized as the service is provided using the “right to invoice” practical expedient. Contracts with multiple performance obligations Many of our contracts include multiple performance obligations. We account for performance obligations separately if they are capable of being distinct within the context of the contract. In these circumstances, the transaction price is allocated to separate performance obligations on a relative standalone selling price basis. We determine standalone selling prices based on the observable price a good or service is sold for separately when available. In cases where standalone selling prices are not directly observable, based on information available, we utilize the expected cost plus a margin, adjusted market assessment, or residual estimation method. We consider all information available including our overall pricing objectives, market conditions, and other factors, which may include customer demographics and the types of users. Standalone selling prices are not directly observable for our all-access and limited-access technology arrangements, which are composed of cloud-based subscriptions, time-based licenses, and perpetual licenses. For these technology arrangements, we use the residual estimation method due to a limited number of standalone transactions and/or prices that are highly variable. Variable consideration We have also entered into at-risk and shared savings arrangements with certain customers whereby we receive variable consideration based on the achievement of measurable improvements which may include cost savings or performance against metrics. For these arrangements, we estimate revenue using the most likely amount that we will receive. Estimates are based on our historical experience and best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. Due to the nature of our arrangements, certain estimates may be constrained until the uncertainty is further resolved. Contract balances Contract assets resulting from services performed prior to invoicing customers are recorded as unbilled accounts receivable and are presented on our condensed consolidated balance sheets in aggregate with accounts receivable. Unbilled accounts receivable generally become billable at contractually specified dates or upon the attainment of contractually defined milestones. As of March 31, 2020 and December 31, 2019, the unbilled accounts receivable included in accounts receivable on our condensed consolidated balance sheets was $2.3 million and $2.9 million, respectively. We record contract liabilities as deferred revenue when cash payments are received or due in advance of performance. Deferred revenue primarily relates to the advance consideration received from the customer. As of March 31, 2020 and December 31, 2019, the total of current and non-current deferred revenue on our condensed consolidated balance sheets was $36.8 million and $32.1 million, respectively. Cost of revenue, excluding depreciation and amortization Cost of technology revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, contractor costs, and salary and related personnel costs for our cloud services and support teams. Cost of professional services revenue primarily consists of salary and related personnel costs, travel-related costs, and independent contractor costs. Cost of revenue excludes costs related to depreciation and amortization. We defer certain costs to fulfill a contract when the costs are expected to be recovered, are directly related to in-process contracts and enhance resources that will be used in satisfying performance obligations in the future. These deferred fulfillment costs primarily consist of employee compensation incurred as part of the implementation of new contracts. As of March 31, 2020 and December 31, 2019, we had deferred contract fulfillment costs of $0.5 million and $0.9 million, respectively. Cash and cash equivalents We consider all highly liquid investments purchased with a remaining maturity of three months or less at the time of acquisition to be cash equivalents. Short-term investments Our investment policy limits investments to highly-rated instruments that mature in less than 12 months. We classify our short-term investments as available for sale. Accounts receivable Accounts receivable are non-interest bearing and are recorded at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collections. We adopted ASU 2016-13 effective January 1, 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates, which results in earlier recognition of credit losses. The allowance for doubtful accounts is based on our estimate of expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition, and our expectations of changes in macro-economic conditions, including the current COVID-19 pandemic, that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. As of March 31, 2020 and December 31, 2019, we had an allowance for doubtful accounts of $0.6 million and $0.4 million, respectively. Property and equipment Property and equipment are stated at historical cost less accumulated depreciation. Repairs and maintenance costs that do not extend the useful life or improve the related assets are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows: Computer equipment 2-3 years Furniture and fixtures 3 years Leasehold improvements Lesser of lease term or estimated useful life Computer software 2-3 years Capitalized internal-use software costs 3 years When there are indicators of potential impairment, we evaluate the recoverability of the carrying values by comparing the carrying amount of the applicable asset group to the estimated undiscounted future cash flows expected to be generated by the asset group over the remaining life of the primary long-lived asset in that group plus any residual value. If the carrying amount of the asset group exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized based on the amount by which the carrying value of the long-lived assets exceeds the fair value of those assets. We did not incur any long-lived impairment charges for the three months ended March 31, 2020 and 2019. Intangible assets Intangible assets include developed technologies, customer relationships, customer contracts, and trademarks that were acquired in business combinations and asset acquisitions. Intangible assets also include the purchase of third-party computer software. The intangible assets are amortized using the straight-line method over the assets’ estimated useful lives. The estimated useful life of each asset category is as follows: Developed technologies 2-10 years Customer relationships and contracts 6 years Computer software licenses 2-5 years Trademarks 2 years Goodwill We record goodwill as the difference between the aggregate consideration paid for a business combination and the fair value of the identifiable net tangible and intangible assets acquired. Goodwill is assessed for impairment annually or more frequently if indicators of impairment are present or circumstances suggest that impairment may exist. As of January 1, 2020, we adopted ASU 2017-04, which simplifies the goodwill impairment test by eliminating the second step from the goodwill impairment test. The first step of the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, the goodwill of the reporting unit is not considered impaired. If the carrying amount of the reporting unit exceeds its fair value, we would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. There was no impairment of goodwill for the three months ended March 31, 2020 and 2019. Business combinations We account for an acquisition as a business combination if we obtain control of a business. Assets and liabilities acquired in a business combination generally are recorded at fair value and any associated acquisition costs are expensed as incurred in general and administrative expenses. Advertising costs All advertising costs are expensed as incurred. We recorded advertising costs of $0.6 million and $0.6 million for the three months ended March 31, 2020 and 2019, respectively. Development costs and internal-use software For technology products that are developed to be sold externally, we determined that technological feasibility is reached shortly before the products are ready for general release. Any costs associated with software development between the time technological feasibility is reached and general release are inconsequential. We capitalize certain development costs incurred in connection with our internal-use software. These capitalized costs are primarily related to the software platforms that are hosted by us and accessed by our customers on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred as research and development costs. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. Stock-based compensation Stock-based awards, including stock options and RSUs, are measured and recognized in our condensed consolidated financial statements based on the fair value of the award on the grant date. For awards subject to performance conditions, we record expense when the performance condition becomes probable. We record forfeitures of stock-based awards as the actual forfeitures occur. We estimate the fair value of stock option awards on the grant date using the Black-Scholes option pricing model. We have issued two types of employee stock-based awards, standard and two-tier. Our standard stock-based awards vest solely on a service-based condition. For these awards, we recognize stock-based compensation expense on a straight-line basis over the vesting period. Two-tier employee stock-based awards, contain both a service-based condition and performance condition, defined as the earlier of (i) an acquisition or change in control of the company or (ii) upon the occurrence of an initial public offering by the Company. A change in control event and effective registration event are not deemed probable until consummated; accordingly, no expense is recorded related to two-tier stock-based awards until the performance condition becomes probable of occurring. Awards that contain both service-based and performance conditions are recognized using the accelerated attribution method once the performance condition is probable of occurring. The service-based condition is generally a service period of four years. Stock-based compensation expense related to purchase rights issued under the 2019 Health Catalyst Employee Stock Purchase Plan (ESPP) is based on the Black-Scholes option-pricing model fair value of the estimated number of awards as of the beginning of the offering period. Stock-based compensation expense is recognized using the straight-line method over the offering period. The compensation expense for non-employees is recognized, without changes in the fair value of the award, in the same period and in the same manner as though we had paid cash for the services, which is typically the vesting period of the respective award. Income taxes Deferred income tax balances are accounted for using the asset and liability method and reflect the effects of temporary differences between the financial reporting and tax bases of our assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered. In addition, deferred tax assets and liabilities are recorded for net operating loss (NOL) and credit carryforwards. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. We use a two-step approach to recognize and measure uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained upon audit. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. We do not accrue interest and penalties related to unrecognized tax benefits within the provision for income taxes because we have NOLs. Significant judgment is required to evaluate uncertain tax positions. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We evaluate our uncertain tax positions on a regular basis and evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, such as the Tax Cuts and Jobs Act of 2017, correspondence with tax authorities during the course of an audit, and effective settlement of audit issues. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and results of operations. Fair value of financial instruments The carrying amounts reported in our condensed consolidated balance sheets for cash, receivables, accounts payable, and current accrued expenses approximate fair values because of the immediate or short-term maturity of these financial instruments. The carrying value of acquisition-related consideration payable, operating lease liabilities, and long-term debt approximate fair value based on interest rates available for debt with similar terms at March 31, 2020 and December 31, 2019. Money market funds and short-term investments are measured at fair value on a recurring basis. Our contingent consideration liability is measured at fair value on a recurring basis based primarily on significant inputs not observable in the market. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1- Quoted prices in active markets for identical assets or liabilities. • Level 2- Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3- Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. All of our financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, we use a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application, and corroborative information. Our contingent consideration liability is categorized as a Level 3 fair value measurement because we estimate projections during the earn out period utilizing various potential pay-out scenarios. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, operating lease liabilities, and operating lease liabilities, net of current portion in our condensed consolidated balance sheets. We have adopted the short-term lease recognition exemption policy. All of our leasing commitments are classified either as operating leases or otherwise qualify as short-term leases with lease terms of 12 months or less. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease contracts do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease executory costs. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the applicable option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We do not have lease agreements that contain non-lease components, which generally would be accounted for separately. Accounting pronouncements adopted Goodwill impairment In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350) , that simplifies how an entity is required to test goodwill for impairment by eliminating the second step of the impairment test. The first step measures a goodwill impairment loss by comparing the fair value of a reporting unit to the carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the carrying amount of goodwill is reduced by the excess reporting unit carrying amount up to the carrying amount of the goodwill. We adopted ASU 2017-04 as of January 1, 2020. The guidance applies to our reporting requirements in performing goodwill impairment testing; however, the adoption of this guidance did not have an impact on our condensed consolidated financial statements and related disclosures. Fair value measurements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information prospectively, including the ranges used to develop significant unobservable inputs for Level 3 fair value measurements, and modifies some disclosure requirements. We adopted ASU 2018-13 as of January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Credit losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , which required the measurement and recognition of expected credit losses for certain financial instruments, which includes our accounts receivable and available-for-sale debt securities. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates, which results in earlier recognition of credit losses. We adopted ASU 2016-13 effective January 1, 2020. The adoption of the standard did not have a material impact on our condensed consolidated financial statements. The adoption adjustment was recorded to accumulated deficit, as seen in our condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity. Implementation Costs Incurred in a Cloud Computing Arrangement In August 2018, the FASB issued ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . ASU 2018-15 aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. We prospectively adopted ASU 2018-15 effective January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Recent accounting pronouncements not yet adopted Accounting for income taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impacts o |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations On February 21, 2020, we acquired Able Health, Inc. (Able Health) , a leading software-as-a-service provider of quality and regulatory measurement tracking and reporting to healthcare providers and risk-bearing entities, in a transaction accounted for as a business combination . The acquisition consideration transferred was $21.5 million and was comprised of net cash consideration of $15.2 million, Health Catalyst common shares with a fair value of $3.3 million, and contingent consideration based on achievement of Able Health specified incremental customer billings for the year ending December 31, 2020, with an initial fair value of $3.0 million. The acquisition consideration is subject to certain working capital escrow adjustments. The purchase resulted in Health Catalyst acquiring 100% ownership in Able Health. We believe this acquisition will strengthen Health Catalyst’s Quality and Regulatory Measures capabilities. An additional 179,392 shares of our common stock subject to restriction agreements, or restricted shares, were issued pursuant to the terms of the acquisition agreement and 60,000 restricted stock units were issued in connection with the acquisition agreement. The value of these restricted shares and restricted stock units will be recognized as post-combination stock-based compensation expense over their respective vesting terms. The vesting of the restricted shares is subject to one year of continuous service by the applicable team members and shall vest on the one-year anniversary of the acquisition closing date and t he service-based condition for the restricted stock units issued pursuant to the terms of the acquisition agreement is satisfied over two years with a 50% cliff vesting period of one year and ratable quarterly vesting thereafter. Refer to Note 12 for additional details related to our stock-based compensation. The fair value measurement of contingent consideration that may be payable to Able Health’s former stockholders and the measurement of the acquired Able Health assets and assumed liabilities are determined based on estimates and assumptions that are judgmental in nature, including the timing and amount of projected future cash flows and market-participant discount rates reflecting risks inherent in the future cash flows. Given the recent nature of the Able Health acquisition closing date and the March 31, 2020 reporting date, such measurements are preliminary and subject to measurement period adjustments under GAAP, as we complete our analysis of information that is available or obtainable as of the acquisition date that impacts the fair value and other acquisition date recognition and measurement purchase price allocation amounts. The following table summarizes the acquisition-date fair value of consideration transferred and the identifiable assets purchased and liabilities assumed as part of our acquisition of Able Health (in thousands): Assets acquired: Accounts receivable $ 633 Prepaid expenses and other assets 57 Developed technologies 7,500 Customer relationships 600 Trademarks 100 Total assets acquired 8,890 Less liabilities assumed: Accounts payable and other current liabilities 91 Deferred revenue 762 Net deferred tax liabilities 1,280 Total liabilities assumed 2,133 Total assets acquired, net 6,757 Goodwill 14,725 Total consideration transferred, net of cash acquired $ 21,482 The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include customer relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of six years, three years, and two years, respectively. The resulting goodwill from the Able Health acquisition was fully allocated to the technology reporting unit and is not deductible for income tax purposes. We expensed $0.9 million of acquisition transaction costs as incurred that are included in general and administrative expense in our condensed consolidated statements of operations. Pro forma financial information has not been presented for this acquisition as the impact to our condensed consolidated financial statements was not material. The amount of revenue attributable to the acquired business of Able Health that has been included in our condensed consolidated statement of operations subsequent to the February 21, 2020 acquisition date through March 31, 2020 is $0.4 million. Income (loss) information for Able Health after the acquisition date through March 31, 2020 is not presented as the Able Health business was integrated into our operations immediately following the acquisition and is impracticable to quantify. |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Disaggregation of revenue The following table represents Health Catalyst’s revenue disaggregated by type of arrangement (in thousands): Three Months Ended March 31, 2020 2019 Recurring technology $ 24,699 $ 20,148 Professional services 20,417 15,065 Total revenue $ 45,116 $ 35,213 Deferred revenue includes advance customer payments and billings in excess of revenue recognized. For the three months ended March 31, 2020 and 2019, 33% and 36%, respectively, of the revenue recognized was included in deferred revenue at the beginning of the period. Transaction price allocated to the remaining performance obligations |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets We operate our business in two operating segments that also represent our reporting units. Our reporting units are organized based on our technology and professional services. We have not incurred any goodwill impairment charges. Goodwill by reporting unit is as follows (in thousands): As of As of 2020 2019 Technology $ 17,637 $ 2,912 Professional services 782 782 Total goodwill $ 18,419 $ 3,694 As of March 31, 2020, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 43,629 $ (17,922) $ 25,707 Customer relationships and contracts 4,764 (2,964) 1,800 Computer software licenses 7,283 (3,141) 4,142 Trademarks 200 (96) 104 Total intangible assets $ 55,876 $ (24,123) $ 31,753 As of December 31, 2019, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 36,129 $ (16,548) $ 19,581 Customer relationships and contracts 4,164 (2,773) 1,391 Computer software licenses 7,114 (2,576) 4,538 Trademarks 100 (75) 25 Total intangible assets $ 47,507 $ (21,972) $ 25,535 The increase in goodwill and intangible assets is primarily due to our acquisition of Able Health. Intangible assets are amortized using the straight-line method over the estimated useful lives. Amortization expense of acquired intangible assets was $2.2 million and $1.5 million for the three months ended March 31, 2020, and 2019, respectively. Amortization expense for intangible assets is included in depreciation and amortization in our condensed consolidated statements of operations. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and Equipment Property and equipment consisted of the following (in thousands): As of As of 2020 2019 Computer equipment $ 8,108 $ 7,951 Leasehold improvements 2,309 2,234 Furniture and fixtures 1,031 1,030 Capitalized internal-use software costs 1,944 1,866 Computer software 972 972 Capital lease equipment 37 37 Total property and equipment 14,401 14,090 Less: accumulated depreciation (10,458) (9,795) Property and equipment, net $ 3,943 $ 4,295 Our long-lived assets are located in the United States. Depreciation expense totaled $0.7 million and $0.8 million for the three months ended March 31, 2020 and 2019, respectively. Depreciation expense includes amortization of assets recorded under a capital lease and the amortization of capitalized internal-use software costs. |
Short-term Investments
Short-term Investments | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term Investments | Short-term Investments Our investment policy limits investments to highly-rated instruments that mature in less than 12 months. We classify our short-term investments as available for sale. Available-for-sale securities are recorded on our condensed consolidated balance sheets at fair market value and any unrealized gains or losses are reported as part of other comprehensive loss on our condensed consolidated statements of comprehensive loss. We determine realized gains or losses on the sales of investments through the specific identification method and record such gains or losses as part of interest and other expense, net on our condensed consolidated statements of operations. We did not have realized gains or losses on investments during the three months ended March 31, 2020 and 2019. We measure the fair value of investments on a recurring basis. Accrued interest receivables related to our available-for-sale securities of $0.6 million and $0.9 million as of March 31, 2020 and December 31, 2019 were included within prepaid expenses and other assets on our condensed consolidated balance sheets. The following table summarizes, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis (in thousands) as of March 31, 2020: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents Short-term Investments Money market funds $ 58,487 $ — $ — $ 58,487 $ 58,487 $ — U.S. Treasury notes 34,098 232 — 34,330 — 34,330 Commercial paper 11,727 — — 11,727 — 11,727 Corporate bonds 57,605 — (140) 57,465 — 57,465 Asset-backed securities 40,094 — (21) 40,073 — 40,073 Total $ 202,011 $ 232 $ (161) $ 202,082 $ 58,487 $ 143,595 The following table summarizes, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis (in thousands) as of December 31, 2019: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents Short-term Investments Money market funds $ 17,175 $ — $ — $ 17,175 $ 17,175 $ — US treasury notes 58,130 34 — 58,164 — 58,164 Commercial paper 46,973 — — 46,973 — 46,973 Corporate bonds 64,978 27 (5) 65,000 — 65,000 Asset-backed securities 40,090 18 — 40,108 — 40,108 Total $ 227,346 $ 79 $ (5) $ 227,420 $ 17,175 $ 210,245 On a quarterly basis we evaluate unrealized losses on our available-for-sale debt securities and the related accrued interest receivables to determine whether a decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. We do not intend to sell investments that are in an unrealized loss position and it is not likely that we will be required to sell any investments before recovery of their amortized cost basis. As of March 31, 2020 and December 31, 2019, there were no material unrealized losses due to credit-related factors. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 were as follows (in thousands): March 31, 2020 Level 1 Level 2 Level 3 Total Money market funds $ 58,487 $ — $ — $ 58,487 U.S. Treasury notes 34,330 — — 34,330 Commercial paper — 11,727 — 11,727 Corporate bonds — 57,465 — 57,465 Asset-backed securities — 40,073 — 40,073 Contingent consideration — — (2,666) (2,666) Total $ 92,817 $ 109,265 $ (2,666) $ 199,416 Assets measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Money market funds $ 17,175 $ — $ — $ 17,175 U.S. Treasury notes 58,164 — — 58,164 Commercial paper — 46,973 — 46,973 Corporate bonds — 65,000 — 65,000 Asset-backed securities $ — $ 40,108 $ — $ 40,108 Total $ 75,339 $ 152,081 $ — $ 227,420 As of December 31, 2019, there were no liabilities measured at fair value on a recurring basis. There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2020 and 2019. The Able Health acquisition consideration includes an estimate for contingent consideration of up to 145,036 shares of our common stock that will be issued if certain incremental billing targets for Able Health are met during an earn-out period that ends on December 31, 2020. The resulting contingent consideration liability is categorized as a Level 3 fair value measurement because we estimate projections during the earn-out period utilizing various potential pay-out scenarios. For the contingent consideration liability, we value the expected contingent consideration and the corresponding liability using the Monte Carlo method based on estimates of potential pay-out scenarios. Probabilities were applied to each potential scenario and the resulting values were discounted using a rate that considers weighted average cost of capital as well as a specific risk premium associated with the riskiness of the earn-out itself, the related projections, and volatility in the fair value of our common stock. The contingent consideration liability is classified as a component of non-current liabilities in our consolidated balance sheets as the contingent consideration will be settled in shares of our common stock. Changes to the contingent consideration liability are reflected as part of general and administrative expense in our consolidated statements of operations. Changes to the unobservable inputs could have a material impact on our condensed consolidated financial statements. The following table sets forth a summary of the changes in the estimated fair value of the contingent consideration liability, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance at December 31, 2019 $ — Contingent consideration liability from Able Health acquisition (see note 2) 3,025 Change in fair value of contingent consideration liability (359) Balance at March 31, 2020 $ 2,666 |
Accrued liabilities
Accrued liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued liabilities | Accrued liabilities As of March 31, 2020 and December 31, 2019, accrued liabilities consisted of the following (in thousands): As of As of 2020 2019 Accrued compensation and benefit expenses $ 3,806 $ 4,278 Other accrued expenses 3,024 4,666 Total accrued liabilities $ 6,830 $ 8,944 |
Credit Facilities
Credit Facilities | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Credit Facilities | Credit Facilities As of March 31, 2020, our term credit facilities consisted of the following, excluding unamortized debt discount and issue costs of $1.5 million (in thousands): Balance Remaining Capacity Interest Rate Basis Rate OrbiMed term loan $ 50,000 $ 30,000 10.00% Higher of LIBOR plus 7.5% and 10.0% SVB revolving line of credit — 5,000 3.75% Prime plus 0.50% Total credit facilities 50,000 $ 35,000 Less: Current portion of credit facilities — Credit facilities, less current portion $ 50,000 As of December 31, 2019, our term credit facilities consisted of the following, excluding unamortized debt discount and issue costs of $1.8 million (in thousands): Balance Remaining Capacity Interest Rate Basis Rate OrbiMed term loan $ 50,000 $ 30,000 10.00% Higher of LIBOR plus 7.5% and 10.0% SVB revolving line of credit — 5,000 5.25% Prime plus 0.50% Total credit facilities 50,000 $ 35,000 Less: Current portion of credit facilities — Credit facilities, less current portion $ 50,000 OrbiMed term loan On February 6, 2019, we entered into a debt financing agreement with OrbiMed Royalty Opportunities II, LP (OrbiMed) where we obtained an $80.0 million senior term loan commitment, with $50.0 million available and up to an additional $30.0 million contingently available on or prior to March 31, 2020 (the Delayed Draw Commitment). We paid $2.4 million in fees related to the establishment of the OrbiMed term loan and incurred $0.3 million in debt issuance costs. The Delayed Draw Commitment is contingent upon our achievement of minimum levels of technology revenues ranging from technology revenues for the latest 12 months of at least $60.0 million to borrow up to $10.0 million, to a minimum of $80.0 million in technology revenues to borrow between $25.0 million and $30.0 million. The contractual interest rate of the OrbiMed term loan is the higher of LIBOR plus 7.5% and 10.0%. Interest payments are required at the end of each month and monthly installment payments on principal begin in February 2023 and will be based on the then outstanding principal balance divided by 12. The maturity date of the OrbiMed term loan is February 6, 2024. Upon the payment of all or any portion of the principal amount on the OrbiMed term loan, we are required to pay an exit fee of 5% of the principal amount paid. This exit fee is being accreted as interest expense over the contractual term of the loan. If we elect to prepay portions of the principal balance prior to the 48-month anniversary of the closing date we would be required to pay a repayment premium ranging from 1% to 12% of the principal balance prepaid depending on the period in which the prepayment is made. Amounts borrowed under the OrbiMed term loan are secured by a first priority security interest in substantially all of our assets other than intellectual property. In the event of default, OrbiMed may accelerate amounts outstanding, terminate the credit facility, and foreclose on the collateral. The agreement also includes a financial covenant requiring the achievement of minimum trailing twelve-month revenue amounts as well as certain other financial and non-financial covenants. We were in compliance with these covenants under the terms of the OrbiMed term loan as of March 31, 2020. SVB revolving line of credit In June 2016, we signed a Loan and Security Agreement with Silicon Valley Bank (SVB) which established a revolving line of credit based on a formula amount. On February 6, 2019, we amended the Loan and Security Agreement with SVB which reduced the revolving line of credit to a current maximum of $5.0 million with an obligation to maintain a minimum of $5.0 million cash or cash equivalents on deposit with SVB to maintain the assurance of future credit availability. The line may be increased to $10.0 million upon request and approval by SVB. The maturity date of the revolving line of credit was amended to be February 6, 2021. |
Stockholders_ Equity (Deficit)
Stockholders’ Equity (Deficit) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders’ Equity (Deficit) | Stockholders’ Equity (Deficit) Amendment and Restatement of Certificate of Incorporation In connection with the IPO, the certificate of incorporation of Health Catalyst was amended and restated to, among other things, provide for the (i) authorization of 500,000,000 shares of common stock with a par value of $0.001 per share; (ii) authorization of 25,000,000 shares of undesignated preferred stock that may be issued from time to time; and (iii) establishment of a classified board of directors, divided into three classes, each of whose members will serve for staggered three-year terms. Preferred Stock Our board of directors has the authority, without further action by our stockholders, to issue up to 25,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, and privileges thereof, including voting rights. As of March 31, 2020 and December 31, 2019, no shares of this preferred stock were issued and outstanding. Common stock We had 500,000,000 shares of $0.001 par value common stock authorized, of which 37,838,276 and 36,731,632 shares were legally issued and outstanding as of March 31, 2020 and December 31, 2019, respectively. The shares legally issued and outstanding as of December 31, 2019 included 52,778 shares issued to former employees with notes determined to be substantively nonrecourse and, as such, for accounting purposes were not considered to be outstanding shares of common stock. These notes were repaid in full by the former employees during the three months ended March 31, 2020, and the shares issued are included in the outstanding shares of common stock for accounting purposes as of March 31, 2020. Each share of common stock has the right to one vote on all matters submitted to a vote of stockholders. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to prior rights of holders of all classes of stock outstanding having priority rights as to dividends. No dividends have been declared or paid on our common stock through March 31, 2020. |
Net Loss Per Share
Net Loss Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts): Three Months Ended March 31, 2020 2019 Numerator: Net loss attributable to common stockholders $ (17,490) $ (77,735) Denominator: Weighted-average number of shares used in calculating net loss per share attributable to common stockholders, basic and diluted 37,108,998 4,795,195 Net loss per share attributable to common stockholders, basic and diluted $ (0.47) $ (16.21) During the three months ended March 31, 2020 and 2019, we incurred net losses and, therefore, the effect of our stock options, restricted stock units, purchase rights committed or shares issued under our employee stock purchase plan, restricted shares, common stock warrants, and redeemable convertible preferred stock (as converted) were not included in the calculation of diluted net loss per share attributable to common stockholders as the effect would be anti-dilutive. The following table contains share totals with a potentially dilutive impact: As of March 31, 2020 2019 Redeemable convertible preferred stock — 23,151,481 Common stock options 6,640,662 8,185,942 Restricted stock units 2,145,968 — Employee stock purchase plan 87,107 — Restricted shares 179,392 — Common stock warrants — 255,336 Total potentially dilutive securities 9,053,129 31,592,759 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-Based Compensation In 2011, our board of directors adopted the Health Catalyst, Inc. 2011 Stock Incentive Plan (2011 Plan), which provided for the direct award, sale of shares, and granting of RSUs and options for our common stock to our directors, team members, or consultants. In connection with our IPO, our board of directors adopted the 2019 Stock Option and Incentive Plan (2019 Plan). The 2019 Plan provides flexibility to our compensation committee to use various equity-based incentive awards as compensation tools to motivate our workforce, including the grant of incentive and nonstatutory stock options, restricted and unrestricted stock, RSUs, and stock appreciation rights to our directors, team members, or consultants. We have initially reserved 2,756,607 shares of our common stock (2,500,000 under the 2019 Plan and 256,607 shares under the 2011 Plan that were available immediately prior to the IPO registration date). The 2019 Plan provides that the number of shares reserved available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2020, by 5% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser number of shares as determined by our compensation committee. As of January 1, 2020, there were an additional 1,836,581 shares reserved for issuance under the 2019 Plan. As of March 31, 2020 and December 31, 2019, there were 13,109,459 and 11,272,878 shares authorized for grant, respectively, and 2,662,138 and 2,309,370 shares available for grant, respectively, under the 2019 Plan and 2011 Plan (collectively the ‘Stock Incentive Plan’). All options were granted with an exercise price determined by the board of directors that was equal to the estimated fair value of our common stock at the date of grant, based on the information known on the date of grant. Subject to certain exceptions defined in the Stock Incentive Plan related to an employee’s termination, options generally expire on the tenth anniversary of the applicable grant date. We have issued two types of employee stock-based awards, standard and two-tier. Our standard stock-based awards vest solely on a service-based condition. For these awards, we recognize stock-based compensation based on the grant date fair value of the awards and recognize that cost using the straight-line method over the requisite service period of the award. Two-tier employee stock-based awards contain both a service-based condition and performance condition, defined as the earlier of (i) an acquisition or change in control of the company or (ii) upon the occurrence of our initial public offering. A change in control event and effective registration event are not deemed probable until consummated; accordingly, no expense is recorded related to two-tier stock-based awards until the performance condition becomes probable of occurring. Awards which contain both service-based and performance conditions are recognized using the accelerated attribution method once the performance condition is probable of occurring. The service-based condition is generally a service period of four years. Upon closing our IPO, we recorded cumulative share-based compensation expense using the accumulated attribution method for two-tier employee stock-based awards for which the service condition had been satisfied at that date. The fair value of options, which vest in accordance with service schedules, is estimated on the date of grant using the Black-Scholes option pricing model. Prior to our IPO, the absence of an active market for our common stock required us to estimate the fair value of our common stock for purposes of granting stock-based awards, including stock options and RSUs, and for determining stock-based compensation expense for the periods presented. We obtained contemporaneous third-party valuations to assist in determining the estimated fair value of our common stock. These contemporaneous third-party valuations used the methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation . Expected volatilities are based on historical volatilities of comparable companies when our own historical volatility is not available for a sufficient time period. The expected term of the options is based on the simplified method outlined in the SEC Staff accounting guidance, under which we estimate the term as the average of the option’s contractual term and the option’s weighted average vesting period. The risk-free rate represents the yield on U.S. Treasury bonds with maturity equal to the expected term of the granted option. We account for forfeitures as they occur. All standard stock-based awards outstanding at March 31, 2020 and December 31, 2019 are expected to vest according to their specific schedules. The measurement date for non-employee awards is the date of grant. The compensation expense for non-employees is recognized, without changes in the fair value of the award, in the same period and in the same manner as though we had paid cash for the services, which is typically the vesting period of the respective award. The following two tables summarize our total stock-based compensation expense by award type and where the stock-based compensation expense was recorded in our consolidated statements of operations (in thousands): Three Months Ended March 31, 2020 2019 Options $ 2,542 $ 1,656 Restricted stock units 5,117 — Employee stock purchase plan 492 — Restricted shares 590 — Total stock-based compensation $ 8,741 $ 1,656 Three Months Ended March 31, 2020 2019 Cost of revenue $ 992 $ 181 Sales and marketing 3,182 783 Research and development 1,882 222 General and administrative 2,685 470 Total stock-based compensation $ 8,741 $ 1,656 Stock Options There were no stock options granted during the three months ended March 31, 2020. The fair value of our prior year option grants was estimated at the grant date using the Black-Scholes option-pricing model based on the following weighted average assumptions: Three Months Ended March 31, 2019 Expected volatility 44.5% Expected term (in years) 6.3 Risk-free interest rate 2.5% Expected dividends — A summary of the share option activity under the 2019 Plan for the three months ended March 31, 2020, is as follows: Time-Based Option Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding at January 1, 2020 7,847,716 $ 10.67 Options exercised (1,048,760) 8.63 Options cancelled/forfeited (158,294) 11.40 Outstanding at March 31, 2020 6,640,662 $ 10.98 7.3 $ 107,935,288 Vested and expected to vest as of March 31, 2020 6,640,662 $ 10.98 7.3 $ 107,935,288 Vested and exercisable as of March 31, 2020 3,762,413 $ 9.91 6.4 $ 65,160,129 The aggregate intrinsic value of stock options exercised was $35.2 million for the three months ended March 31, 2020. The total grant-date fair value of stock options vested during the three months ended March 31, 2020 was $4.2 million. As of March 31, 2020, approximately $13.3 million of unrecognized compensation expense related to our stock options is expected to be recognized over a remaining weighted-average period of 2.2 years. The options exercised for accounting purposes during the three months ended March 31, 2020 include 52,778 of shares issued to former employees with notes determined to be substantively nonrecourse, which were repaid in full during the period. Restricted Stock Units The service-based condition for RSUs is generally satisfied over four years with a 25% cliff vesting period of one year and ratable quarterly vesting thereafter. The following table sets forth the outstanding RSUs and related activity for the three months ended March 31, 2020: Restricted Stock Units Weighted Average Grant Date Fair Value Unvested and outstanding at January 1, 2020 503,861 $ 37.57 RSUs granted 1,655,232 33.61 RSUs forfeited (13,125) 36.12 Unvested and outstanding at March 31, 2020 2,145,968 $ 34.52 As of March 31, 2020, we had $66.9 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a remaining weighted-average period of 3.5 years. Employee Stock Purchase Plan In connection with our IPO in July 2019, our board of directors adopted the ESPP and a total of 750,000 shares of common stock were initially reserved for issuance under the ESPP. The number of shares of common stock available for issuance under the ESPP will be increased on the first day of each calendar year beginning January 1, 2020 and each year thereafter until the ESPP terminates. The number of shares of common stock reserved and available for issuance under the ESPP shall be cumulatively increased by the least of (i) 750,000 shares, (ii) one percent of the number of shares of common stock issued and outstanding on the immediately preceding December 31, and (iii) such lesser number of shares of common stock as determined by the ESPP Administrator. As of January 1, 2020, there were an additional 367,316 shares reserved for issuance under the ESPP. The ESPP generally provides for six-month offering periods, the exception being the first offering period. The offering periods generally start on the first trading day after June 30 and December 31 of each year. The ESPP permits participants to elect to purchase shares of common stock through fixed percentage contributions from eligible compensation during each offering period, not to exceed 15% of the eligible compensation a participant receives during an offering period or accrue at a rate which exceeds $25,000 of the fair value of the stock (determined on the option grant date(s)) for each calendar year. A participant may purchase the lowest of (a) a number of shares of common stock determined by dividing such participant’s accumulated payroll deductions on the exercise date by the option price, (b) 2,500 shares; or (c) such other lesser maximum number of shares as shall have been established by the Administrator in advance of the offering period. Amounts deducted and accumulated by the participant will be used to purchase shares of common stock at the end of each offering period. The purchase price of the shares will be 85% of the lower of the fair value of common stock on the first trading day of each offering period or on the purchase date, except for the first offering period, for which the purchase price will be 85% of the lower of (i) the IPO price or (ii) the fair value of common stock on the purchase date. Participants may end their participation at any time during an offering period and will be paid their accumulated contributions that have not been used to purchase shares of common stock. Participation ends automatically upon termination of employment. The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes model with the following assumptions for the current offering period: Three Months Ended March 31, 2020 Expected volatility 54.9% Expected term (in months) 6 Risk-free interest rate 1.6% Expected dividends — As of March 31, 2020, a total of 87,107 shares were issuable to employees based on ESPP contribution elections and unrecognized ESPP compensation cost was $0.4 million, which is expected to be recognized over the remaining portion of the current offering period during the three months ending June 30, 2020. As of March 31, 2020, 982,550 shares are available for future issuance under the ESPP. Restricted Shares As part of the Able Health acquisition that closed on February 21, 2020, 179,392 shares of our common stock were issued pursuant to the terms of the acquisition agreement and are a stock-based compensation arrangement subject to a restriction agreement. The vesting of those shares is subject to one year of continuous service by the applicable team members and shall vest on the one-year anniversary of the acquisition closing date. As of March 31, 2020, we had $4.8 million of unrecognized stock-based compensation expense related to outstanding restricted shares expected to be recognized over a weighted average period of 0.8 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that arise during the period. Each quarter, we update our estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, we make a cumulative adjustment in such period. The quarterly tax provision and the estimate of our annual effective tax rate are subject to variation due to several factors, including variability in our loss before income taxes, the mix of jurisdictions to which such income or loss relates, changes in how we conduct business, and tax law developments. For the three months ended March 31, 2020 and 2019, our estimated effective tax rate was 6.6% and (0.1)%, respectively. The variations between our estimated effective tax rate and the U.S. statutory rate are primarily due to our full valuation allowance. We consider all available evidence to evaluate the recovery of deferred tax assets, including historical levels of income, legislative developments, and risks associated with estimates of future taxable income. We have provided a full valuation allowance for our net deferred tax assets as of March 31, 2020 and December 31, 2019, due to the uncertainty surrounding the future realization of such assets and the cumulative losses we have generated. The income tax benefit of $1.2 million recorded for the three months ended March 31, 2020, is primarily related to the discrete deferred tax benefit attributable to the release of a portion of the valuation allowance during the quarter. The release of valuation allowance is attributable to the acquisition of Able Health, which resulted in deferred tax liabilities that, upon acquisition, allowed us to recognize certain deferred tax assets of $1.3 million that had previously been offset by a valuation allowance. We recognize tax benefits from uncertain tax positions when it is more likely than not, based on the technical merits, that the position will be sustained upon examination. We believe that we have provided adequate reserves for income tax uncertainties in all open tax years. We do not anticipate material changes in the total amount of our unrecognized tax benefits within 12 months of the reporting date. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. Changes in tax laws or rates are accounted for in the period of enactment. We are continuing to analyze these legislative developments and believe that the income tax provisions of the CARES Act do not have a significant impact on our current taxes, deferred taxes, or uncertain tax positions. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Lease commitments We lease office space and certain equipment under operating leases that expire between 2020 and 2031. The terms of the leases provide for rental payments on a graduated scale, options to renew the leases (one to five years), landlord incentives or allowances, and periods of free rent. During the three months ended March 31, 2020, we entered into a lease for office space in South Jordan, Utah, that will become our new company headquarters. This new lease for office space is intended to replace our current headquarters in Salt Lake City, Utah, the lease for which expires December 31, 2020. This new lease has not yet commenced, but will require future lease payments of approximately $31.7 million with a non-cancelable lease term of 11 years, excluding renewal options, that are not yet recorded on our condensed consolidated balance sheets. Lease payments will be required beginning January 1, 2021, however, we expect the accounting lease commencement date for this initial portion of the lease financial reporting purposes to begin in the second or third quarter of 2020. According to the terms of this new lease agreement, our leased square footage will expand between 2022 and 2023 resulting in approximately $2.8 million of additional required future lease payments. We shall have the right to sublease all, or a portion, of this leased office space provided that certain terms and conditions are met. Litigation Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. We are involved in legal proceedings from time to time that arise in the normal course of business. As of March 31, 2020 and December 31, 2019, there were no significant outstanding claims against us. |
Deferred Revenue and Performanc
Deferred Revenue and Performance Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition and Deferred Revenue [Abstract] | |
Deferred Revenue and Performance Obligations | Revenue Disaggregation of revenue The following table represents Health Catalyst’s revenue disaggregated by type of arrangement (in thousands): Three Months Ended March 31, 2020 2019 Recurring technology $ 24,699 $ 20,148 Professional services 20,417 15,065 Total revenue $ 45,116 $ 35,213 Deferred revenue includes advance customer payments and billings in excess of revenue recognized. For the three months ended March 31, 2020 and 2019, 33% and 36%, respectively, of the revenue recognized was included in deferred revenue at the beginning of the period. Transaction price allocated to the remaining performance obligations |
Related Parties
Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties We have entered into arrangements with a customer where a member of the customer’s management is currently a member of our board of directors. An executive of a Partners HealthCare affiliate has served on our board of directors since January 2018. We recognized revenue from this related party of $0.7 million and $0.7 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, we had receivables from this related party of $0.4 million and $0.6 million, respectively, and deferred revenue with this related party of $0.3 million and $0.5 million, respectively. As of March 31, 2020 and December 31, 2019, we also had acquisition-related consideration payable to this related party for a prior year asset acquisition. This asset acquisition occurred prior to this entity becoming a related party. The acquisition-related consideration payable to this related party was $1.2 million and $1.2 million as of March 31, 2020 and December 31, 2019, respectively. We have also entered into revenue arrangements with customers that are also our investors. None of these customers hold a significant amount of ownership in our equity interests. |
Segments
Segments | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segments | Segments We operate our business in two operating segments that also represent our reportable segments. Our business is organized based on our technology offerings and professional services. Accordingly, our segments are: • Technology - Our technology segment (Technology) includes our data platform, analytics applications and support services. Technology generates revenues primarily from contracts that are cloud-based subscription arrangements, time-based license arrangements, and maintenance and support fees; and • Professional Services - Our professional services segment (Professional Services) is generally the combination of data and analytics, domain expertise, outsourcing, and implementation services to deliver expertise to our customers to more fully configure and utilize the benefits of our Technology offerings. Revenues and cost of revenues generally are directly attributed to our segments. All segment revenues are from our external customers. Asset and other balance sheet information at the segment level is not reported to our Chief Operating Decision Maker. Segment revenue and Adjusted Gross Profit for the three months ended March 31, 2020 and 2019 were as follows (in thousands): Three Months Ended March 31, 2020 2019 Revenue Technology $ 24,699 $ 20,148 Professional Services 20,417 15,065 Total $ 45,116 $ 35,213 Three Months Ended March 31, 2020 2019 Adjusted Gross Profit Technology $ 16,969 $ 13,429 Professional Services 5,071 4,747 Total reportable segments Adjusted Gross Profit 22,040 18,176 Less Adjusted Gross Profit reconciling items: Stock-based compensation (992) (181) Post-acquisition restructuring costs (1) — (108) Less other reconciling items: Sales and marketing (13,487) (10,473) Research and development (13,088) (10,022) General and administrative (9,701) (6,174) Depreciation and amortization (2,877) (2,312) Debt extinguishment costs — (1,670) Interest and other expense, net (621) (945) Net loss before income taxes $ (18,726) $ (13,709) ____________________ (1) Post-acquisition restructuring costs included in the Adjusted Gross Profit reconciliation above relate to severance charges following the acquisition of Medicity. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Convertible Senior Notes On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025 (the Notes), in a private placement to qualified institutional buyers exempt from registration under the Securities Act (the Note Offering). The net proceeds from the issuance of the Notes were approximately $222.5 million, after deducting the initial purchasers’ discounts and estimated issuance costs. The Notes are governed by an indenture (the Indenture) between us, as the issuer, and U.S. Bank National Association, as trustee. The Notes are our senior, unsecured obligations and will accrue interest payable semiannually in arrears on April 15 and October 15 of each year, beginning on October 15, 2020, at a rate of 2.50% per year. The Notes will mature on April 15, 2025, unless earlier converted, redeemed, or repurchased. The Indenture does not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness, or the issuance or repurchase of securities by us or any of our subsidiaries. We may not redeem the notes prior to April 20, 2023. On or after April 20, 2023, we may redeem, for cash, all or portion of the notes, at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which we provide notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes. A holder may convert all or any portion of its Notes at its option, subject to certain conditions and during certain periods, into cash, shares of our common stock or a combination of cash and shares of our common stock, with the form of consideration determined at our election. Note holders will have the right to require us to repurchase all or a portion of their notes at 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the repurchase date, upon the occurrence of certain events. The conversion rate is initially 32.6797 shares of our common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $30.60 per share of our common stock). Given the recent timing of the closing of the Notes, we have not yet finalized the accounting, including the estimated fair value of the separate liability and equity components. Capped Calls On April 8, 2020, concurrently with the pricing of the Notes, we entered into privately negotiated capped call transactions (Base Capped Calls) with certain option counterparties. In addition, in connection with the initial purchasers’ exercise in full of their option to purchase additional Notes, on April 9, 2020, we entered into additional capped call transactions (the Additional Capped Calls, and, together with the Base Capped Calls, the Capped Calls) with each of the option counterparties. We used approximately $21.6 million of the net proceeds from the Note Offering to pay the cost of the Capped Calls. The Capped Calls have initial cap prices of $42.00 per share, subject to certain adjustments. The Capped Calls are expected generally to reduce the potential dilution to our common stock upon any conversion of Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to the cap price. The Capped Calls are separate transactions that we entered into with the option counterparties, and are not part of the terms of the Notes. As the Capped Call transactions are considered indexed to our own stock and are considered equity classified, they will be recorded in stockholders’ equity and will not be accounted for as derivatives. The cost incurred in connection with the Capped Calls will be recorded as a reduction to additional paid-in capital on our condensed consolidated balance sheets. Extinguishment of OrbiMed term loan In addition, on April 14, 2020, we used $57.0 million of proceeds from the Note Offering to prepay in full all outstanding indebtedness, including prepayment penalties, under our Credit Agreement (the Credit Agreement) with OrbiMed, dated February 6, 2019, as amended, and terminate the Credit Agreement, which had provided us with a term loan of up to $80.0 million due on February 6, 2024, at an interest rate of the higher of LIBOR plus 7.5% and 10.0%. We currently estimate that there will be a loss on debt extinguishment of approximately $8.5 million recorded during the three months ended June 30, 2020, including approximately $1.5 unamortized debt discounts and issuance costs related to the OrbiMed term loan and $7.0 million of repayment fees. Extinguishment of SVB revolving line of credit On April 8, 2020, we entered into a Pay-Off Letter Agreement with SVB, pursuant to which we paid to SVB immaterial termination costs, representing all amounts due and owing under the Amended and Restated Loan and Security Agreement (the Loan Agreement), dated as of October 6, 2017, with SVB, in exchange for, among other things, (i) full discharge of all of our obligations under the Loan Agreement; and (ii) release of security interests and other liens granted to or held by SVB as a security for our obligations. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation Our accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and the applicable regulations of the U.S. Securities and Exchange Commission (SEC) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2019 included in our Annual Report on Form 10-K. |
Principles of consolidation | Principles of consolidation Our condensed consolidated financial statements include the accounts of Health Catalyst and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. |
Use of estimates | Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates, including those related to revenue recognition, provisions for expected credit losses, useful lives of property and equipment, capitalization and estimated useful life of internal-use software and other intangible assets, fair value of financial instruments, deferred tax assets, stock-based compensation, contingent consideration, and tax uncertainties. Actual results could differ from those estimates. |
Segment reporting | Segment reporting Operating segments are identified as components of an enterprise about which separate discrete financial information is evaluated by the chief operating decision maker (the CODM) in assessing performance and making decisions regarding resource allocation. We operate our business in two operating segments that also represent our reportable segments. Our segments are (1) technology and (2) professional services. The CODM uses Adjusted Gross Profit (defined as revenue less cost of revenue that excludes depreciation, amortization, stock-based compensation expense, and certain other operating expenses) as the measure of our profit. |
Net loss per share | Net loss per share Basic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding. Net loss attributable to common stockholders is computed as net loss less accretion of redeemable convertible preferred stock. Diluted net loss per share attributable to common stockholders is calculated by giving effect to all potentially dilutive common stock equivalents outstanding for the period. For purposes of this calculation, stock options, restricted stock units (RSUs), and purchase rights committed under the employee stock purchase plan are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as the effect is antidilutive. Prior to our IPO, we computed basic and diluted net loss per share in conformity with the two-class method required for participating securities. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to holders of common stock. Redeemable convertible preferred stock and common stock were considered participating securities for purposes of this calculation. However, the two-class method did not impact the net loss per common share attributable to common stockholders as we were in a loss position for each of the periods presented and the redeemable convertible preferred stockholders did not have a contractual obligation to participate in losses. |
Revenue recognition | Revenue recognition We recognize revenue in accordance with Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606) . We derive our revenues primarily from technology subscriptions and professional services. We determine revenue recognition by applying the following steps: • Identification of the contract, or contracts, with a customer; • Identification of the performance obligations in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligations in the contract; and • Recognition of revenue when, or as, we satisfy the performance obligation. We recognize revenue net of any taxes collected from customers and subsequently remitted to governmental authorities. Technology revenue Technology revenue primarily consists of subscription fees charged to customers for access to use our technology. We provide customers access to our technology through either an all-access or limited-access, modular subscription. The majority of our subscription arrangements are cloud-based and do not provide customers the right to take possession of the technology or contain a significant penalty if the customer were to take possession of the technology. Revenue from cloud-based subscriptions is recognized ratably over the contract term beginning on the date that the service is made available to the customer. Most of our subscription contracts have up to a three-year term, of which the vast majority are terminable after one year upon 90 days’ notice. Subscriptions that allow the customer to take software on-premise without significant penalty are treated as time-based licenses. These arrangements generally include access to technology, access to unspecified future products, and maintenance and support. Revenue for upfront access to our technology library is recognized at a point in time when the technology is made available to the customer. Revenue for access to unspecified future products included in time-based license subscriptions is recognized ratably over the contract term beginning on the date that the access is made available to the customer. We also have certain perpetual license arrangements. Revenue from these arrangements is recognized at a point in time upon delivery of the software. Technology revenue also includes maintenance and support revenue which generally includes bug fixes, updates, and support services. Revenue related to maintenance and support is recognized over the contract term beginning on the date that the service is made available to the customer. Professional services revenue Professional services revenue primarily includes data and analytics services, domain expertise services, outsourcing services, and implementation services. Professional services arrangements typically include a fee for making full-time equivalent (FTE) services available to our customers on a monthly basis. FTE services generally consist of a blend of analytic engineers, analysts, and data scientists based on the domain expertise needed to best serve our customer. Professional services are typically considered distinct from the technology offerings and revenue is generally recognized as the service is provided using the “right to invoice” practical expedient. Contracts with multiple performance obligations Many of our contracts include multiple performance obligations. We account for performance obligations separately if they are capable of being distinct within the context of the contract. In these circumstances, the transaction price is allocated to separate performance obligations on a relative standalone selling price basis. We determine standalone selling prices based on the observable price a good or service is sold for separately when available. In cases where standalone selling prices are not directly observable, based on information available, we utilize the expected cost plus a margin, adjusted market assessment, or residual estimation method. We consider all information available including our overall pricing objectives, market conditions, and other factors, which may include customer demographics and the types of users. Standalone selling prices are not directly observable for our all-access and limited-access technology arrangements, which are composed of cloud-based subscriptions, time-based licenses, and perpetual licenses. For these technology arrangements, we use the residual estimation method due to a limited number of standalone transactions and/or prices that are highly variable. Variable consideration We have also entered into at-risk and shared savings arrangements with certain customers whereby we receive variable consideration based on the achievement of measurable improvements which may include cost savings or performance against metrics. For these arrangements, we estimate revenue using the most likely amount that we will receive. Estimates are based on our historical experience and best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. Due to the nature of our arrangements, certain estimates may be constrained until the uncertainty is further resolved. Contract balances Contract assets resulting from services performed prior to invoicing customers are recorded as unbilled accounts receivable and are presented on our condensed consolidated balance sheets in aggregate with accounts receivable. Unbilled accounts receivable generally become billable at contractually specified dates or upon the attainment of contractually defined milestones. As of March 31, 2020 and December 31, 2019, the unbilled accounts receivable included in accounts receivable on our condensed consolidated balance sheets was $2.3 million and $2.9 million, respectively. We record contract liabilities as deferred revenue when cash payments are received or due in advance of performance. Deferred revenue primarily relates to the advance consideration received from the customer. As of March 31, 2020 and December 31, 2019, the total of current and non-current deferred revenue on our condensed consolidated balance sheets was $36.8 million and $32.1 million, respectively. Cost of revenue, excluding depreciation and amortization Cost of technology revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, contractor costs, and salary and related personnel costs for our cloud services and support teams. Cost of professional services revenue primarily consists of salary and related personnel costs, travel-related costs, and independent contractor costs. Cost of revenue excludes costs related to depreciation and amortization. We defer certain costs to fulfill a contract when the costs are expected to be recovered, are directly related to in-process contracts and enhance resources that will be used in satisfying performance obligations in the future. These deferred fulfillment costs primarily consist of employee compensation incurred as part of the implementation of new contracts. As of March 31, 2020 and December 31, 2019, we had deferred contract fulfillment costs of $0.5 million and $0.9 million, respectively. |
Cash and cash equivalents | Cash and cash equivalents We consider all highly liquid investments purchased with a remaining maturity of three months or less at the time of acquisition to be cash equivalents. |
Short-term investments | Short-term investmentsOur investment policy limits investments to highly-rated instruments that mature in less than 12 months. We classify our short-term investments as available for sale. |
Accounts receivable | Accounts receivableAccounts receivable are non-interest bearing and are recorded at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collections. We adopted ASU 2016-13 effective January 1, 2020. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates, which results in earlier recognition of credit losses. The allowance for doubtful accounts is based on our estimate of expected credit losses for outstanding trade accounts receivables. We determine expected credit losses based on historical write-off experience, an analysis of the aging of outstanding receivables, customer payment patterns, the establishment of specific reserves for customers in an adverse financial condition, and our expectations of changes in macro-economic conditions, including the current COVID-19 pandemic, that may impact the collectability of outstanding receivables. We reassess the adequacy of the allowance for doubtful accounts each reporting period. |
Property and equipment | Property and equipment Property and equipment are stated at historical cost less accumulated depreciation. Repairs and maintenance costs that do not extend the useful life or improve the related assets are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The estimated useful life of each asset category is as follows: Computer equipment 2-3 years Furniture and fixtures 3 years Leasehold improvements Lesser of lease term or estimated useful life Computer software 2-3 years Capitalized internal-use software costs 3 years |
Intangible assets | Intangible assets Intangible assets include developed technologies, customer relationships, customer contracts, and trademarks that were acquired in business combinations and asset acquisitions. Intangible assets also include the purchase of third-party computer software. The intangible assets are amortized using the straight-line method over the assets’ estimated useful lives. The estimated useful life of each asset category is as follows: Developed technologies 2-10 years Customer relationships and contracts 6 years Computer software licenses 2-5 years Trademarks 2 years |
Goodwill | Goodwill We record goodwill as the difference between the aggregate consideration paid for a business combination and the fair value of the identifiable net tangible and intangible assets acquired. Goodwill is assessed for impairment annually or more frequently if indicators of impairment are |
Business combinations | Business combinations |
Advertising cost | Advertising costs |
Development cost and internal-use software | Development costs and internal-use software For technology products that are developed to be sold externally, we determined that technological feasibility is reached shortly before the products are ready for general release. Any costs associated with software development between the time technological feasibility is reached and general release are inconsequential. We capitalize certain development costs incurred in connection with our internal-use software. These capitalized costs are primarily related to the software platforms that are hosted by us and accessed by our customers on a subscription basis. Costs incurred in the preliminary stages of development are expensed as incurred as research and development costs. Once an application has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the software is substantially complete and ready for its intended use. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized costs are recorded as part of property and equipment. Maintenance and training costs are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life. |
Stock-based compensation | Stock-based compensation Stock-based awards, including stock options and RSUs, are measured and recognized in our condensed consolidated financial statements based on the fair value of the award on the grant date. For awards subject to performance conditions, we record expense when the performance condition becomes probable. We record forfeitures of stock-based awards as the actual forfeitures occur. We estimate the fair value of stock option awards on the grant date using the Black-Scholes option pricing model. We have issued two types of employee stock-based awards, standard and two-tier. Our standard stock-based awards vest solely on a service-based condition. For these awards, we recognize stock-based compensation expense on a straight-line basis over the vesting period. Two-tier employee stock-based awards, contain both a service-based condition and performance condition, defined as the earlier of (i) an acquisition or change in control of the company or (ii) upon the occurrence of an initial public offering by the Company. A change in control event and effective registration event are not deemed probable until consummated; accordingly, no expense is recorded related to two-tier stock-based awards until the performance condition becomes probable of occurring. Awards that contain both service-based and performance conditions are recognized using the accelerated attribution method once the performance condition is probable of occurring. The service-based condition is generally a service period of four years. Stock-based compensation expense related to purchase rights issued under the 2019 Health Catalyst Employee Stock Purchase Plan (ESPP) is based on the Black-Scholes option-pricing model fair value of the estimated number of awards as of the beginning of the offering period. Stock-based compensation expense is recognized using the straight-line method over the offering period. The compensation expense for non-employees is recognized, without changes in the fair value of the award, in the same period and in the same manner as though we had paid cash for the services, which is typically the vesting period of the respective award. |
Income taxes | Income taxes Deferred income tax balances are accounted for using the asset and liability method and reflect the effects of temporary differences between the financial reporting and tax bases of our assets and liabilities using enacted tax rates expected to apply when taxes are actually paid or recovered. In addition, deferred tax assets and liabilities are recorded for net operating loss (NOL) and credit carryforwards. A valuation allowance is provided against deferred tax assets unless it is more likely than not that they will be realized based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. We use a two-step approach to recognize and measure uncertain income tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained upon audit. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. We do not accrue interest and penalties related to unrecognized tax benefits within the provision for income taxes because we have NOLs. Significant judgment is required to evaluate uncertain tax positions. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We evaluate our uncertain tax positions on a regular basis and evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, such as the Tax Cuts and Jobs Act of 2017, correspondence with tax authorities during the course of an audit, and effective settlement of audit issues. |
Fair value of financial instruments | Fair value of financial instruments The carrying amounts reported in our condensed consolidated balance sheets for cash, receivables, accounts payable, and current accrued expenses approximate fair values because of the immediate or short-term maturity of these financial instruments. The carrying value of acquisition-related consideration payable, operating lease liabilities, and long-term debt approximate fair value based on interest rates available for debt with similar terms at March 31, 2020 and December 31, 2019. Money market funds and short-term investments are measured at fair value on a recurring basis. Our contingent consideration liability is measured at fair value on a recurring basis based primarily on significant inputs not observable in the market. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1- Quoted prices in active markets for identical assets or liabilities. • Level 2- Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3- Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. All of our financial instruments are valued using quoted prices in active markets or based on other observable inputs. For Level 2 securities, we use a third-party pricing service which provides documentation on an ongoing basis that includes, among other things, pricing information with respect to reference data, methodology, inputs summarized by asset class, pricing application, and corroborative information. Our contingent consideration liability is categorized as a Level 3 fair value measurement because we estimate projections during the earn out period utilizing various potential pay-out scenarios. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, operating lease liabilities, and operating lease liabilities, net of current portion in our condensed consolidated balance sheets. We have adopted the short-term lease recognition exemption policy. All of our leasing commitments are classified either as operating leases or otherwise qualify as short-term leases with lease terms of 12 months or less. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our lease contracts do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. The operating lease ROU asset also includes any lease payments made and excludes lease executory costs. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise the applicable option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. We do not have lease agreements that contain non-lease components, which generally would be accounted for separately. |
Accounting pronouncements | Accounting pronouncements adopted Goodwill impairment In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350) , that simplifies how an entity is required to test goodwill for impairment by eliminating the second step of the impairment test. The first step measures a goodwill impairment loss by comparing the fair value of a reporting unit to the carrying amount. If the carrying amount of the reporting unit exceeds its fair value, the carrying amount of goodwill is reduced by the excess reporting unit carrying amount up to the carrying amount of the goodwill. We adopted ASU 2017-04 as of January 1, 2020. The guidance applies to our reporting requirements in performing goodwill impairment testing; however, the adoption of this guidance did not have an impact on our condensed consolidated financial statements and related disclosures. Fair value measurements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates certain disclosure requirements for fair value measurements for all entities, requires public entities to disclose certain new information prospectively, including the ranges used to develop significant unobservable inputs for Level 3 fair value measurements, and modifies some disclosure requirements. We adopted ASU 2018-13 as of January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Credit losses In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , which required the measurement and recognition of expected credit losses for certain financial instruments, which includes our accounts receivable and available-for-sale debt securities. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates, which results in earlier recognition of credit losses. We adopted ASU 2016-13 effective January 1, 2020. The adoption of the standard did not have a material impact on our condensed consolidated financial statements. The adoption adjustment was recorded to accumulated deficit, as seen in our condensed consolidated statements of redeemable convertible preferred stock and stockholders’ equity. Implementation Costs Incurred in a Cloud Computing Arrangement In August 2018, the FASB issued ASU 2018-15, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract . ASU 2018-15 aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. We prospectively adopted ASU 2018-15 effective January 1, 2020. The adoption of this standard did not have a material impact on our condensed consolidated financial statements and related disclosures. Recent accounting pronouncements not yet adopted Accounting for income taxes In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes , which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the impacts of the provisions of this standard on our condensed consolidated financial statements and related disclosures. Reference rate reform In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting . The update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) contract modifications on financial reporting, caused by reference rate reform. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. We are still evaluating the impact, but do not expect the adoption of the standard to have a material impact on our condensed consolidated financial statements and related disclosures. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of property and equipment, useful life | The estimated useful life of each asset category is as follows: Computer equipment 2-3 years Furniture and fixtures 3 years Leasehold improvements Lesser of lease term or estimated useful life Computer software 2-3 years Capitalized internal-use software costs 3 years Property and equipment consisted of the following (in thousands): As of As of 2020 2019 Computer equipment $ 8,108 $ 7,951 Leasehold improvements 2,309 2,234 Furniture and fixtures 1,031 1,030 Capitalized internal-use software costs 1,944 1,866 Computer software 972 972 Capital lease equipment 37 37 Total property and equipment 14,401 14,090 Less: accumulated depreciation (10,458) (9,795) Property and equipment, net $ 3,943 $ 4,295 |
Schedule of intangible asset, useful life | The estimated useful life of each asset category is as follows: Developed technologies 2-10 years Customer relationships and contracts 6 years Computer software licenses 2-5 years Trademarks 2 years As of March 31, 2020, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 43,629 $ (17,922) $ 25,707 Customer relationships and contracts 4,764 (2,964) 1,800 Computer software licenses 7,283 (3,141) 4,142 Trademarks 200 (96) 104 Total intangible assets $ 55,876 $ (24,123) $ 31,753 As of December 31, 2019, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 36,129 $ (16,548) $ 19,581 Customer relationships and contracts 4,164 (2,773) 1,391 Computer software licenses 7,114 (2,576) 4,538 Trademarks 100 (75) 25 Total intangible assets $ 47,507 $ (21,972) $ 25,535 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Schedule of recognized identified assets acquired and liabilities assumed | The following table summarizes the acquisition-date fair value of consideration transferred and the identifiable assets purchased and liabilities assumed as part of our acquisition of Able Health (in thousands): Assets acquired: Accounts receivable $ 633 Prepaid expenses and other assets 57 Developed technologies 7,500 Customer relationships 600 Trademarks 100 Total assets acquired 8,890 Less liabilities assumed: Accounts payable and other current liabilities 91 Deferred revenue 762 Net deferred tax liabilities 1,280 Total liabilities assumed 2,133 Total assets acquired, net 6,757 Goodwill 14,725 Total consideration transferred, net of cash acquired $ 21,482 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of revenue disaggregated by type of arrangement | The following table represents Health Catalyst’s revenue disaggregated by type of arrangement (in thousands): Three Months Ended March 31, 2020 2019 Recurring technology $ 24,699 $ 20,148 Professional services 20,417 15,065 Total revenue $ 45,116 $ 35,213 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill by reporting unit | Goodwill by reporting unit is as follows (in thousands): As of As of 2020 2019 Technology $ 17,637 $ 2,912 Professional services 782 782 Total goodwill $ 18,419 $ 3,694 |
Schedule of intangible assets | The estimated useful life of each asset category is as follows: Developed technologies 2-10 years Customer relationships and contracts 6 years Computer software licenses 2-5 years Trademarks 2 years As of March 31, 2020, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 43,629 $ (17,922) $ 25,707 Customer relationships and contracts 4,764 (2,964) 1,800 Computer software licenses 7,283 (3,141) 4,142 Trademarks 200 (96) 104 Total intangible assets $ 55,876 $ (24,123) $ 31,753 As of December 31, 2019, intangible assets consisted of the following (in thousands): Gross Accumulated Amortization Net Developed technologies $ 36,129 $ (16,548) $ 19,581 Customer relationships and contracts 4,164 (2,773) 1,391 Computer software licenses 7,114 (2,576) 4,538 Trademarks 100 (75) 25 Total intangible assets $ 47,507 $ (21,972) $ 25,535 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | The estimated useful life of each asset category is as follows: Computer equipment 2-3 years Furniture and fixtures 3 years Leasehold improvements Lesser of lease term or estimated useful life Computer software 2-3 years Capitalized internal-use software costs 3 years Property and equipment consisted of the following (in thousands): As of As of 2020 2019 Computer equipment $ 8,108 $ 7,951 Leasehold improvements 2,309 2,234 Furniture and fixtures 1,031 1,030 Capitalized internal-use software costs 1,944 1,866 Computer software 972 972 Capital lease equipment 37 37 Total property and equipment 14,401 14,090 Less: accumulated depreciation (10,458) (9,795) Property and equipment, net $ 3,943 $ 4,295 |
Short-term Investments (Tables)
Short-term Investments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash equivalents and short-term investments measured at fair value | The following table summarizes, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis (in thousands) as of March 31, 2020: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents Short-term Investments Money market funds $ 58,487 $ — $ — $ 58,487 $ 58,487 $ — U.S. Treasury notes 34,098 232 — 34,330 — 34,330 Commercial paper 11,727 — — 11,727 — 11,727 Corporate bonds 57,605 — (140) 57,465 — 57,465 Asset-backed securities 40,094 — (21) 40,073 — 40,073 Total $ 202,011 $ 232 $ (161) $ 202,082 $ 58,487 $ 143,595 The following table summarizes, by major security type, our cash equivalents and short-term investments that are measured at fair value on a recurring basis (in thousands) as of December 31, 2019: Amortized Cost Unrealized Gains Unrealized Losses Fair Value Cash equivalents Short-term Investments Money market funds $ 17,175 $ — $ — $ 17,175 $ 17,175 $ — US treasury notes 58,130 34 — 58,164 — 58,164 Commercial paper 46,973 — — 46,973 — 46,973 Corporate bonds 64,978 27 (5) 65,000 — 65,000 Asset-backed securities 40,090 18 — 40,108 — 40,108 Total $ 227,346 $ 79 $ (5) $ 227,420 $ 17,175 $ 210,245 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair value, assets measured on recurring basis | Assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 were as follows (in thousands): March 31, 2020 Level 1 Level 2 Level 3 Total Money market funds $ 58,487 $ — $ — $ 58,487 U.S. Treasury notes 34,330 — — 34,330 Commercial paper — 11,727 — 11,727 Corporate bonds — 57,465 — 57,465 Asset-backed securities — 40,073 — 40,073 Contingent consideration — — (2,666) (2,666) Total $ 92,817 $ 109,265 $ (2,666) $ 199,416 Assets measured at fair value on a recurring basis as of December 31, 2019 were as follows (in thousands): December 31, 2019 Level 1 Level 2 Level 3 Total Money market funds $ 17,175 $ — $ — $ 17,175 U.S. Treasury notes 58,164 — — 58,164 Commercial paper — 46,973 — 46,973 Corporate bonds — 65,000 — 65,000 Asset-backed securities $ — $ 40,108 $ — $ 40,108 Total $ 75,339 $ 152,081 $ — $ 227,420 |
Liabilities measured on recurring basis, unobservable input reconciliation | The following table sets forth a summary of the changes in the estimated fair value of the contingent consideration liability, which is measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands): Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Balance at December 31, 2019 $ — Contingent consideration liability from Able Health acquisition (see note 2) 3,025 Change in fair value of contingent consideration liability (359) Balance at March 31, 2020 $ 2,666 |
Accrued liabilities (Tables)
Accrued liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | As of March 31, 2020 and December 31, 2019, accrued liabilities consisted of the following (in thousands): As of As of 2020 2019 Accrued compensation and benefit expenses $ 3,806 $ 4,278 Other accrued expenses 3,024 4,666 Total accrued liabilities $ 6,830 $ 8,944 |
Credit Facilities (Tables)
Credit Facilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of term credit facilities | As of March 31, 2020, our term credit facilities consisted of the following, excluding unamortized debt discount and issue costs of $1.5 million (in thousands): Balance Remaining Capacity Interest Rate Basis Rate OrbiMed term loan $ 50,000 $ 30,000 10.00% Higher of LIBOR plus 7.5% and 10.0% SVB revolving line of credit — 5,000 3.75% Prime plus 0.50% Total credit facilities 50,000 $ 35,000 Less: Current portion of credit facilities — Credit facilities, less current portion $ 50,000 As of December 31, 2019, our term credit facilities consisted of the following, excluding unamortized debt discount and issue costs of $1.8 million (in thousands): Balance Remaining Capacity Interest Rate Basis Rate OrbiMed term loan $ 50,000 $ 30,000 10.00% Higher of LIBOR plus 7.5% and 10.0% SVB revolving line of credit — 5,000 5.25% Prime plus 0.50% Total credit facilities 50,000 $ 35,000 Less: Current portion of credit facilities — Credit facilities, less current portion $ 50,000 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of the calculation of basic and diluted net loss per share attributable to common stockholders | The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share amounts): Three Months Ended March 31, 2020 2019 Numerator: Net loss attributable to common stockholders $ (17,490) $ (77,735) Denominator: Weighted-average number of shares used in calculating net loss per share attributable to common stockholders, basic and diluted 37,108,998 4,795,195 Net loss per share attributable to common stockholders, basic and diluted $ (0.47) $ (16.21) |
Schedule of share totals with a potentially dilutive impact | The following table contains share totals with a potentially dilutive impact: As of March 31, 2020 2019 Redeemable convertible preferred stock — 23,151,481 Common stock options 6,640,662 8,185,942 Restricted stock units 2,145,968 — Employee stock purchase plan 87,107 — Restricted shares 179,392 — Common stock warrants — 255,336 Total potentially dilutive securities 9,053,129 31,592,759 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock-based compensation expense | The following two tables summarize our total stock-based compensation expense by award type and where the stock-based compensation expense was recorded in our consolidated statements of operations (in thousands): Three Months Ended March 31, 2020 2019 Options $ 2,542 $ 1,656 Restricted stock units 5,117 — Employee stock purchase plan 492 — Restricted shares 590 — Total stock-based compensation $ 8,741 $ 1,656 Three Months Ended March 31, 2020 2019 Cost of revenue $ 992 $ 181 Sales and marketing 3,182 783 Research and development 1,882 222 General and administrative 2,685 470 Total stock-based compensation $ 8,741 $ 1,656 |
Schedule of share-based payment award, stock options, valuation assumptions | The fair value of our prior year option grants was estimated at the grant date using the Black-Scholes option-pricing model based on the following weighted average assumptions: Three Months Ended March 31, 2019 Expected volatility 44.5% Expected term (in years) 6.3 Risk-free interest rate 2.5% Expected dividends — |
Schedule of information related to stock options | A summary of the share option activity under the 2019 Plan for the three months ended March 31, 2020, is as follows: Time-Based Option Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Outstanding at January 1, 2020 7,847,716 $ 10.67 Options exercised (1,048,760) 8.63 Options cancelled/forfeited (158,294) 11.40 Outstanding at March 31, 2020 6,640,662 $ 10.98 7.3 $ 107,935,288 Vested and expected to vest as of March 31, 2020 6,640,662 $ 10.98 7.3 $ 107,935,288 Vested and exercisable as of March 31, 2020 3,762,413 $ 9.91 6.4 $ 65,160,129 |
Schedule of outstanding RSUs and related activity | The following table sets forth the outstanding RSUs and related activity for the three months ended March 31, 2020: Restricted Stock Units Weighted Average Grant Date Fair Value Unvested and outstanding at January 1, 2020 503,861 $ 37.57 RSUs granted 1,655,232 33.61 RSUs forfeited (13,125) 36.12 Unvested and outstanding at March 31, 2020 2,145,968 $ 34.52 |
Schedule of the purchase right for the ESPP option assumptions | The fair value of the purchase right for the ESPP option is estimated on the date of grant using the Black-Scholes model with the following assumptions for the current offering period: Three Months Ended March 31, 2020 Expected volatility 54.9% Expected term (in months) 6 Risk-free interest rate 1.6% Expected dividends — |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment revenue | Segment revenue and Adjusted Gross Profit for the three months ended March 31, 2020 and 2019 were as follows (in thousands): Three Months Ended March 31, 2020 2019 Revenue Technology $ 24,699 $ 20,148 Professional Services 20,417 15,065 Total $ 45,116 $ 35,213 |
Schedule of segment adjusted gross profit | Three Months Ended March 31, 2020 2019 Adjusted Gross Profit Technology $ 16,969 $ 13,429 Professional Services 5,071 4,747 Total reportable segments Adjusted Gross Profit 22,040 18,176 Less Adjusted Gross Profit reconciling items: Stock-based compensation (992) (181) Post-acquisition restructuring costs (1) — (108) Less other reconciling items: Sales and marketing (13,487) (10,473) Research and development (13,088) (10,022) General and administrative (9,701) (6,174) Depreciation and amortization (2,877) (2,312) Debt extinguishment costs — (1,670) Interest and other expense, net (621) (945) Net loss before income taxes $ (18,726) $ (13,709) ____________________ (1) Post-acquisition restructuring costs included in the Adjusted Gross Profit reconciliation above relate to severance charges following the acquisition of Medicity. |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details) | Jul. 29, 2019USD ($)$ / sharesshares | Jul. 10, 2019 | Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) |
Subsidiary, Sale of Stock [Line Items] | |||||
Offering costs | $ 0 | $ 182,000 | |||
Redeemable convertible preferred stock converted into shares of common stock on a one for one basis (in shares) | shares | 23,151,481 | ||||
Stock split conversion ratio | 0.5 | ||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Unbilled accounts receivable | $ 2,300,000 | $ 2,900,000 | |||
Deferred Revenue | 36,800,000 | 32,100,000 | |||
Deferred contract fulfillment costs | 500,000 | 900,000 | |||
Allowance for doubtful accounts | 600,000 | $ 400,000 | |||
Long lived impairment charges | 0 | 0 | |||
Goodwill impairment | 0 | 0 | |||
Advertising expense | $ 600,000 | $ 600,000 | |||
Service period (in years) | 4 years | ||||
Stock Incentive Plan | Performance Shares | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Service period (in years) | 4 years | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued (in shares) | shares | 8,050,000 | ||||
Share price (in dollars per share) | $ / shares | $ 26 | ||||
Net proceeds after deducting underwriting discounts and commissions and before deducting estimated offering costs | $ 194,600,000 | ||||
Offering costs | $ 4,600,000 | ||||
Over-Allotment option | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Common stock issued (in shares) | shares | 1,050,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Property and Equipment Useful Life (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Computer equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Computer equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Computer software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 2 years |
Computer software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Capitalized internal-use software costs | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 3 years |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Schedule of Intangible Assets Useful Life (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Developed technologies | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 10 years |
Developed technologies | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 2 years |
Customer relationships and contracts | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 6 years |
Computer software licenses | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 5 years |
Computer software licenses | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 2 years |
Trademarks | |
Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life | 2 years |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Thousands | Feb. 21, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Business Acquisition [Line Items] | |||
Acquisition of business, net of cash acquired | $ 15,249 | $ 0 | |
Vest in year one | Restricted shares | |||
Business Acquisition [Line Items] | |||
Vesting percent | 100.00% | ||
Vest in year one | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting percent | 50.00% | ||
Vest in Q1 Year 2 | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting percent | 12.50% | ||
Vest in Q2 Year 2 | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting percent | 12.50% | ||
Vest in Q3 Year 2 | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting percent | 12.50% | ||
Vest in Q4 Year 2 | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting percent | 12.50% | ||
Able Health Inc | |||
Business Acquisition [Line Items] | |||
Consideration | $ 21,500 | ||
Acquisition of business, net of cash acquired | 15,200 | ||
Common shares issued in acquisition, at fair value | 3,300 | ||
Contingent consideration | $ 3,000 | ||
Interest acquired | 100.00% | ||
Number of restricted shares issued | 179,392 | ||
Acquisition transaction costs | $ 900 | ||
Revenue attributable to the acquired business | $ 400 | ||
Able Health Inc | Restricted shares | |||
Business Acquisition [Line Items] | |||
RSUs granted (in shares) | 60,000 | ||
Able Health Inc | Restricted Shares Pursuant To Acquisition Agreement | |||
Business Acquisition [Line Items] | |||
Vesting period | 2 years | ||
Developed technologies | Able Health Inc | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 3 years | ||
Customer relationships | Able Health Inc | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 6 years | ||
Trademarks | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 2 years | ||
Trademarks | Able Health Inc | |||
Business Acquisition [Line Items] | |||
Estimated useful life | 2 years |
Business Combinations - Schedul
Business Combinations - Schedule of Recognized Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Feb. 21, 2020 | Dec. 31, 2019 |
Less liabilities assumed: | |||
Goodwill | $ 18,419 | $ 3,694 | |
Able Health Inc | |||
Assets acquired: | |||
Accounts receivable | $ 633 | ||
Prepaid expenses and other assets | 57 | ||
Total assets acquired | 8,890 | ||
Less liabilities assumed: | |||
Accounts payable and other current liabilities | 91 | ||
Deferred revenue | 762 | ||
Net deferred tax liabilities | 1,280 | ||
Total liabilities assumed | 2,133 | ||
Total assets acquired, net | 6,757 | ||
Goodwill | 14,725 | ||
Total consideration transferred, net of cash acquired | 21,482 | ||
Able Health Inc | Developed technologies | |||
Assets acquired: | |||
Intangible assets | 7,500 | ||
Able Health Inc | Customer relationships | |||
Assets acquired: | |||
Intangible assets | 600 | ||
Able Health Inc | Trademarks | |||
Assets acquired: | |||
Intangible assets | $ 100 |
Revenue - Schedule of Revenue D
Revenue - Schedule of Revenue Disaggregated by Type of Arrangement (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Disaggregation of Revenue [Line Items] | |||
Revenue | [1] | $ 45,116 | $ 35,213 |
Recurring technology | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 24,699 | 20,148 | |
Professional services | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | [1] | $ 20,417 | $ 15,065 |
[1] | Includes amounts attributable to related party transactions. See Note 16 for further details. |
Revenue - Narrative (Details)
Revenue - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | UNITED STATES | ||
Disaggregation of Revenue [Line Items] | ||
Revenue related to contracts with customers (percentage) | 99.90% | 100.00% |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)segment | Mar. 31, 2019USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Number of operating segments | 2 | |
Number of reporting units | 2 | |
Amortization of intangible assets | $ | $ 2.2 | $ 1.5 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Goodwill by Reporting Unit (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Goodwill [Line Items] | ||
Goodwill | $ 18,419 | $ 3,694 |
Technology | ||
Goodwill [Line Items] | ||
Goodwill | 17,637 | 2,912 |
Professional Services | ||
Goodwill [Line Items] | ||
Goodwill | $ 782 | $ 782 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 55,876 | $ 47,507 |
Accumulated Amortization | (24,123) | (21,972) |
Net | 31,753 | 25,535 |
Developed technologies | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 43,629 | 36,129 |
Accumulated Amortization | (17,922) | (16,548) |
Net | 25,707 | 19,581 |
Customer relationships and contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 4,764 | 4,164 |
Accumulated Amortization | (2,964) | (2,773) |
Net | 1,800 | 1,391 |
Computer software licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 7,283 | 7,114 |
Accumulated Amortization | (3,141) | (2,576) |
Net | 4,142 | 4,538 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 200 | 100 |
Accumulated Amortization | (96) | (75) |
Net | $ 104 | $ 25 |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 14,401 | $ 14,090 |
Less: accumulated depreciation | (10,458) | (9,795) |
Property and equipment, net | 3,943 | 4,295 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 8,108 | 7,951 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 2,309 | 2,234 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,031 | 1,030 |
Capitalized internal-use software costs | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 1,944 | 1,866 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | 972 | 972 |
Capital lease equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment | $ 37 | $ 37 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 0.7 | $ 0.8 |
Short-term Investments (Details
Short-term Investments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Investments, Debt and Equity Securities [Abstract] | ||
Interest receivable | $ 600 | $ 900 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 202,011 | 227,346 |
Unrealized Gains | 232 | 79 |
Unrealized Losses | (161) | (5) |
Fair Value | 202,082 | 227,420 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 58,487 | 17,175 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 58,487 | 17,175 |
U.S. Treasury notes | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 34,098 | 58,130 |
Unrealized Gains | 232 | 34 |
Unrealized Losses | 0 | 0 |
Fair Value | 34,330 | 58,164 |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 11,727 | 46,973 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | 11,727 | 46,973 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 57,605 | 64,978 |
Unrealized Gains | 0 | 27 |
Unrealized Losses | (140) | (5) |
Fair Value | 57,465 | 65,000 |
Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 40,094 | 40,090 |
Unrealized Gains | 0 | 18 |
Unrealized Losses | (21) | 0 |
Fair Value | 40,073 | 40,108 |
Cash equivalents | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 58,487 | 17,175 |
Cash equivalents | Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 58,487 | 17,175 |
Cash equivalents | U.S. Treasury notes | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 0 |
Cash equivalents | Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 0 |
Cash equivalents | Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 0 |
Cash equivalents | Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 0 |
Short-term Investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 143,595 | 210,245 |
Short-term Investments | Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 0 | 0 |
Short-term Investments | U.S. Treasury notes | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 34,330 | 58,164 |
Short-term Investments | Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 11,727 | 46,973 |
Short-term Investments | Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 57,465 | 65,000 |
Short-term Investments | Asset-backed securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | $ 40,073 | $ 40,108 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - USD ($) | Feb. 21, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | $ 202,082,000 | $ 227,420,000 | |
Liabilities measured at fair value on recurring basis | 0 | ||
Able Health Inc | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Contingent consideration | $ (3,000,000) | ||
Shares issuable, contingent consideration (in shares) | 145,036 | ||
U.S. Treasury notes | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 34,330,000 | 58,164,000 | |
Commercial paper | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 11,727,000 | 46,973,000 | |
Corporate bonds | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 57,465,000 | 65,000,000 | |
Asset-backed securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 40,073,000 | 40,108,000 | |
Fair value, recurring | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Money market funds | 58,487,000 | 17,175,000 | |
Total | 199,416,000 | 227,420,000 | |
Fair value, recurring | Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Money market funds | 58,487,000 | 17,175,000 | |
Total | 92,817,000 | 75,339,000 | |
Fair value, recurring | Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Money market funds | 0 | 0 | |
Total | 109,265,000 | 152,081,000 | |
Fair value, recurring | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Money market funds | 0 | 0 | |
Total | (2,666,000) | 0 | |
Fair value, recurring | U.S. Treasury notes | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 34,330,000 | 58,164,000 | |
Fair value, recurring | U.S. Treasury notes | Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 34,330,000 | 58,164,000 | |
Fair value, recurring | U.S. Treasury notes | Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | U.S. Treasury notes | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | Commercial paper | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 11,727,000 | 46,973,000 | |
Fair value, recurring | Commercial paper | Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | Commercial paper | Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 11,727,000 | 46,973,000 | |
Fair value, recurring | Commercial paper | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | Corporate bonds | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 57,465,000 | 65,000,000 | |
Fair value, recurring | Corporate bonds | Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | Corporate bonds | Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 57,465,000 | 65,000,000 | |
Fair value, recurring | Corporate bonds | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Fair value, recurring | Asset-backed securities | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 40,073,000 | 40,108,000 | |
Contingent consideration | (2,666,000) | ||
Fair value, recurring | Asset-backed securities | Level 1 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | 0 | |
Contingent consideration | 0 | ||
Fair value, recurring | Asset-backed securities | Level 2 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 40,073,000 | 40,108,000 | |
Contingent consideration | 0 | ||
Fair value, recurring | Asset-backed securities | Level 3 | |||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Fair Value | 0 | $ 0 | |
Contingent consideration | $ (2,666,000) |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Schedule of Contingent Consideration (Details) - Contingent Consideration $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |
Balance at December 31, 2019 | $ 0 |
Contingent consideration liability from Able Health acquisition (see note 2) | 3,025 |
Change in fair value of contingent consideration liability | (359) |
Balance at March 31, 2020 | $ 2,666 |
Accrued liabilities (Details)
Accrued liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefit expenses | $ 3,806 | $ 4,278 |
Other accrued expenses | 3,024 | 4,666 |
Total accrued liabilities | $ 6,830 | $ 8,944 |
Credit Facilities - Narrative (
Credit Facilities - Narrative (Details) - USD ($) | Feb. 06, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | |||
Debt discount and issue costs | $ 1,800,000 | ||
OrbiMed Royalty Opportunities II, LP | Senior Term Loan | |||
Line of Credit Facility [Line Items] | |||
Debt discount and issue costs | $ 1,500,000 | ||
Amount borrowed | $ 80,000,000 | ||
Maximum borrowing capacity | 50,000,000 | ||
Additional borrowing capacity available | 30,000,000 | ||
Payments of financing costs | 2,400,000 | ||
Debt issuance costs | 300,000 | ||
Debt covenant on minimum requirement on technology revenue for 12 months to borrow 1 | 60,000,000 | ||
Debt covenant on minimum requirement on technology revenue for 12 months to borrow 2 | $ 80,000,000 | ||
Contractual interest rate- basis spread on variable rate | 10.00% | ||
Basis Rate | 10.00% | ||
Exit fee | 5.00% | ||
Debt prepayment term | 48 months | ||
Silicon Valley Bank | Loan and Security Agreement | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 5,000,000 | ||
Cash or cash equivalents on deposits | 5,000,000 | ||
Option to increase the maximum borrowing capacity | 10,000,000 | ||
Minimum | OrbiMed Royalty Opportunities II, LP | Senior Term Loan | |||
Line of Credit Facility [Line Items] | |||
Debt covenant borrowing capacity based on technology revenue | $ 25,000,000 | ||
Repayment premium (in percentage) | 1.00% | ||
Maximum | OrbiMed Royalty Opportunities II, LP | Senior Term Loan | |||
Line of Credit Facility [Line Items] | |||
Debt covenant borrowing capacity based on technology revenue | $ 10,000,000 | ||
Debt covenant borrowing capacity based on technology revenue | $ 30,000,000 | ||
Repayment premium (in percentage) | 12.00% | ||
LIBOR | OrbiMed Royalty Opportunities II, LP | Senior Term Loan | |||
Line of Credit Facility [Line Items] | |||
Contractual interest rate- basis spread on variable rate | 7.50% | 7.50% |
Credit Facilities - Schedule of
Credit Facilities - Schedule of Term Credit Facilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | ||
Total credit facilities | $ 50,000 | $ 50,000 |
Less: Current portion of credit facilities | 0 | 0 |
Credit facilities, less current portion | 50,000 | 50,000 |
Remaining Capacity | 35,000 | 35,000 |
OrbiMed term loan | ||
Line of Credit Facility [Line Items] | ||
Total credit facilities | 50,000 | 50,000 |
Remaining Capacity | $ 30,000 | $ 30,000 |
Interest Rate | 10.00% | 10.00% |
SVB revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Total credit facilities | $ 0 | $ 0 |
Remaining Capacity | $ 5,000 | $ 5,000 |
Interest Rate | 3.75% | 5.25% |
LIBOR | SVB revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Basis Rate | 7.50% | 7.50% |
Prime rate | SVB revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Basis Rate | 0.50% | 0.50% |
Minimum | SVB revolving line of credit | ||
Line of Credit Facility [Line Items] | ||
Basis Rate | 10.00% | 10.00% |
Stockholders_ Equity (Deficit)
Stockholders’ Equity (Deficit) - Narrative (Details) - $ / shares | 3 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2019 | Jul. 29, 2019 | Mar. 31, 2019 | |
Stockholders' Equity Note [Abstract] | ||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 | $ 0.001 | |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 | 25,000,000 | |
Term of board of director member | 3 years | |||
Preferred stock, shares issued (in shares) | 0 | 0 | ||
Preferred stock, shares outstanding (in shares) | 0 | 0 | ||
Common stock, shares issued (in shares) | 37,838,276 | 36,678,854 | ||
Common stock, shares outstanding (in shares) | 37,838,276 | 36,678,854 | ||
Shares issued to former employees with notes determined to be nonrecourse (in shares) | 52,778 | 52,778 | ||
Shares outstanding (in shares) | 37,838,276 | 36,731,632 | ||
Preferred stock, shares issued (in shares) | 37,838,276 | 36,731,632 |
Net Loss Per Share - Schedule o
Net Loss Per Share - Schedule of the Calculation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator: | ||
Net loss attributable to common stockholders | $ (17,490) | $ (77,735) |
Denominator: | ||
Weighted-average number of shares used in calculating net loss per share attributable to common stockholders, basic and diluted (in shares) | 37,108,998 | 4,795,195 |
Net loss per share attributable to common stockholders, basic and diluted (in USD per share) | $ (0.47) | $ (16.21) |
Net Loss Per Share - Schedule_2
Net Loss Per Share - Schedule of Share Totals with a Potentially Dilutive Impact (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 9,053,129 | 31,592,759 |
Redeemable convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 0 | 23,151,481 |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 6,640,662 | 8,185,942 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 2,145,968 | 0 |
Employee stock purchase plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 87,107 | 0 |
Restricted shares | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 179,392 | 0 |
Common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares with a potentially dilutive impact | 0 | 255,336 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) | Feb. 21, 2020 | Jul. 29, 2019 | Jul. 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period (in years) | 4 years | |||||
Shares issued to former employees with notes determined to be nonrecourse (in shares) | 52,778 | 52,778 | ||||
Able Health Inc | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of restricted shares issued | 179,392 | |||||
Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares exercised in period | $ 35,200,000 | |||||
Total grant-date fair value of stock options vested | 4,200,000 | |||||
Nonvested award options, unrecognized compensation expense | $ 13,300,000 | |||||
Nonvested awards, period for recognition | 2 years 2 months 12 days | |||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Nonvested awards, period for recognition | 3 years 6 months | |||||
Cliff vesting period | 4 years | |||||
Unrecognized stock-based compensation expense related to RSUs | $ 66,900,000 | |||||
Restricted stock units | Vest in year one | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 25.00% | |||||
Restricted stock units | Vest in Q1 Year 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q2 Year 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q3 Year 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q4 Year 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q1 Year 3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q2 Year 3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q3 Year 3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q4 Year 3 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q1 Year 4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q2 Year 4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q3 Year 4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Restricted stock units | Vest in Q4 Year 4 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 6.25% | |||||
Employee stock purchase plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized (in shares) | 750,000 | 87,107 | ||||
Percentage increase of the number of common stock shares (in percentage) | 1.00% | |||||
Shares available for grant (in shares) | 982,550 | 367,316 | ||||
Unrecognized stock-based compensation expense related to RSUs | $ 400,000 | |||||
ESPP share increase in period (in shares) | 750,000 | |||||
Employee stock purchase plan period | 6 months | |||||
Maximum employee subscription rate | 15.00% | |||||
Maximum purchase value during offering period | $ 25,000,000 | |||||
Denominator of lowest purchase of a participant (in shares) | 2,500 | |||||
Purchase price of common stock (in percentage) | 85.00% | |||||
Restricted shares | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Nonvested awards, period for recognition | 9 months 18 days | |||||
Cliff vesting period | 1 year | |||||
Unrecognized stock-based compensation expense related to RSUs | $ 4,800,000 | |||||
Restricted shares | Able Health Inc | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Service period (in years) | 1 year | |||||
Restricted shares | Vest in year one | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting percent | 100.00% | |||||
Stock Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized (in shares) | 2,756,607 | 13,109,459 | 11,272,878 | |||
Shares available for grant (in shares) | 2,662,138 | 2,309,370 | ||||
2011 Stock Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of additional shares authorized (in shares) | 256,607 | |||||
Percentage increase of the number of common stock shares (in percentage) | 5.00% | |||||
2019 Stock Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares authorized (in shares) | 2,500,000 | 1,836,581 |
Stock-Based Compensation - Effe
Stock-Based Compensation - Effect of Stock-based Compensation Expense on Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 8,741 | $ 1,656 |
Cost of revenue | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 992 | 181 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 3,182 | 783 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 1,882 | 222 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 2,685 | 470 |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 2,542 | 1,656 |
Restricted stock units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 5,117 | 0 |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 492 | 0 |
Restricted shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 590 | $ 0 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Assumptions (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Expected volatility | 44.50% |
Expected term (in years) | 6 years 3 months 18 days |
Risk-free interest rate | 2.50% |
Expected dividends | 0.00% |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Time-Based Option Shares | |
Outstanding at January 1, 2020 (in shares) | shares | 7,847,716 |
Options exercised (in shares) | shares | (1,048,760) |
Options cancelled/forfeited (in shares) | shares | (158,294) |
Outstanding at March 31, 2020 (in shares) | shares | 6,640,662 |
Vested and expected to vest as of March 31, 2020 | shares | 6,640,662 |
Vested and exercisable as of March 31, 2020 | shares | 3,762,413 |
Weighted Average Exercise Price | |
Outstanding, beginning balance (in USD per share) | $ / shares | $ 10.67 |
Options exercised (in USD per share) | $ / shares | 8.63 |
Options cancelled/forfeited (in USD per share) | $ / shares | 11.40 |
Outstanding, ending balance (in USD per share) | $ / shares | 10.98 |
Vested and expected to vest (in USD per share) | $ / shares | 10.98 |
Vested and exercisable (in USD per share) | $ / shares | $ 9.91 |
Option shares outstanding, Weighted Average Remaining Contractual Life in Years | 7 years 3 months 18 days |
Vested and expected to vest, Weighted Average Remaining Contractual Life in Years | 7 years 3 months 18 days |
Vested and exercisable, Weighted Average Remaining Contractual Life in Years | 6 years 4 months 24 days |
Option shares outstanding, Aggregate Intrinsic Value | $ | $ 107,935,288 |
Option shares vested and expected to vest, Aggregate Intrinsic Value | $ | 107,935,288 |
Option shares vested and exercisable, Aggregate Intrinsic Value | $ | $ 65,160,129 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Unit Activity (Details) - Restricted stock units | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Restricted Stock Units | |
Unvested and outstanding, beginning balance (in shares) | shares | 503,861 |
RSUs granted (in shares) | shares | 1,655,232 |
RSUs forfeited (in shares) | shares | (13,125) |
Unvested and outstanding, ending balance (in shares) | shares | 2,145,968 |
Weighted Average Grant Date Fair Value | |
Unvested and outstanding, beginning balance, grant date fair value (in USD per share) | $ / shares | $ 37.57 |
RSUs granted (in USD per share) | $ / shares | 33.61 |
RSUs forfeited (in USD per share) | $ / shares | 36.12 |
Unvested and outstanding, ending balance, grant date fair value (in USD per share) | $ / shares | $ 34.52 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of the Purchase Right for the ESPP Option Assumptions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 44.50% | |
Expected term (in months) | 6 years 3 months 18 days | |
Risk-free interest rate | 2.50% | |
Employee stock purchase plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility | 54.90% | |
Expected term (in months) | 6 months | |
Risk-free interest rate | 1.60% | |
Expected dividends | $ 0 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 6.60% | (0.10%) |
Income tax (benefit) provision | $ (1,236) | $ 11 |
Change in valuation allowance | $ 1,300 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future lease payments | $ 31.7 |
Lease term | 11 years |
Additional future lease payments | $ 2.8 |
Deferred Revenue and Performa_2
Deferred Revenue and Performance Obligations - Remaining Performance Obligation (Details) - Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | Mar. 31, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation (in percentage) | 85.00% |
Remaining performance obligation, period | 1 year |
Deferred Revenue and Performa_3
Deferred Revenue and Performance Obligations - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Product Information [Line Items] | ||
Percentage of revenue recognized was included in deferred revenue (in percentage) | 33.00% | 36.00% |
Revenue remaining performance obligation amount | $ 49.9 | |
Technology and professional services | ||
Product Information [Line Items] | ||
Service contract term | 3 years | |
Allowed termination period | 1 year | |
Notice required for termination | 90 days |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | ||
Related Party Transaction [Line Items] | ||||
Deferred revenue with related party | [1] | $ 0 | $ 1,860 | |
Board member | ||||
Related Party Transaction [Line Items] | ||||
Revenue recognized from related party | 700 | $ 700 | ||
Receivables from related party | 400 | 600 | ||
Acquisition-related consideration payable to related party | 1,200 | 1,200 | ||
Deferred revenue with related party | $ 300 | $ 500 | ||
[1] | Includes amounts attributable to related party transactions. See Note 16 for further details. |
Segments - Narrative (Details)
Segments - Narrative (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segments - Scheduled of Segment
Segments - Scheduled of Segment Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Revenue | [1] | $ 45,116 | $ 35,213 |
Technology | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Revenue | 24,699 | 20,148 | |
Professional Services | |||
Segment Reporting, Revenue Reconciling Item [Line Items] | |||
Revenue | $ 20,417 | $ 15,065 | |
[1] | Includes amounts attributable to related party transactions. See Note 16 for further details. |
Segments - Schedule of Segment
Segments - Schedule of Segment Adjusted Gross Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Less Adjusted Gross Profit reconciling items: | ||
Stock-based compensation | $ (8,741) | $ (1,656) |
Less other reconciling items: | ||
Sales and marketing | (13,487) | (10,473) |
Research and development | (13,088) | (10,022) |
General and administrative | (9,701) | (6,174) |
Depreciation and amortization | (2,877) | (2,312) |
Debt extinguishment costs | 0 | (1,670) |
Interest and other expense, net | (621) | (945) |
Net loss before income taxes | (18,726) | (13,709) |
Operating segments | ||
Adjusted Gross Profit | ||
Gross profit | 22,040 | 18,176 |
Operating segments | Technology | ||
Adjusted Gross Profit | ||
Gross profit | 16,969 | 13,429 |
Operating segments | Professional Services | ||
Adjusted Gross Profit | ||
Gross profit | 5,071 | 4,747 |
Segment reconciling items | ||
Less Adjusted Gross Profit reconciling items: | ||
Stock-based compensation | (992) | (181) |
Post-acquisition restructuring costs | 0 | (108) |
Less other reconciling items: | ||
Sales and marketing | (13,487) | (10,473) |
Research and development | (13,088) | (10,022) |
General and administrative | (9,701) | (6,174) |
Depreciation and amortization | (2,877) | (2,312) |
Debt extinguishment costs | 0 | (1,670) |
Interest and other expense, net | $ (621) | $ (945) |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 14, 2020USD ($)day$ / sharesshares | Feb. 06, 2019USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Apr. 30, 2020USD ($) | Apr. 08, 2020USD ($)$ / instrument | Dec. 31, 2019USD ($) |
Subsequent Event [Line Items] | |||||||
Loss on extinguishment of debt | $ 0 | $ (1,670,000) | |||||
Debt discount and issue costs | $ 1,800,000 | ||||||
Senior Term Loan | OrbiMed Royalty Opportunities II, LP | |||||||
Subsequent Event [Line Items] | |||||||
Amount borrowed | $ 80,000,000 | ||||||
Basis Rate | 10.00% | ||||||
Maximum borrowing capacity | $ 50,000,000 | ||||||
Contractual interest rate- basis spread on variable rate | 10.00% | ||||||
Debt discount and issue costs | $ 1,500,000 | ||||||
Repayment fee | 7.0 million | ||||||
Senior Term Loan | OrbiMed Royalty Opportunities II, LP | LIBOR | |||||||
Subsequent Event [Line Items] | |||||||
Contractual interest rate- basis spread on variable rate | 7.50% | 7.50% | |||||
Subsequent Event | Capped Call | Designated as Hedging Instrument | Cash Flow Hedging | |||||||
Subsequent Event [Line Items] | |||||||
Derivative amount | $ 21,600,000 | ||||||
Cap price (in dollars per instrument) | $ / instrument | 42 | ||||||
Subsequent Event | Senior Term Loan | OrbiMed Royalty Opportunities II, LP | |||||||
Subsequent Event [Line Items] | |||||||
Repayments of debt | $ 57,000,000 | ||||||
Loss on extinguishment of debt | $ 8,500,000 | ||||||
Convertible Notes Payable | Senior Notes Due 2025 | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Amount borrowed | $ 230,000,000 | ||||||
Basis Rate | 2.50% | ||||||
Proceeds from issuance of debt | $ 222,500,000 | ||||||
Debt instrument, convertible, threshold percentage of stock price trigger | 130.00% | ||||||
Threshold trading days | day | 20 | ||||||
Threshold consecutive trading days | day | 30 | ||||||
Redemption price, percentage | 100.00% | ||||||
Number of shares issuable in conversion (in shares0 | shares | 32.6797 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 30.60 |