Shares of healthcare data analytics firm Health Catalyst (NASDAQ: HCAT) are trading significantly lower today, down over 20% at the time of writing. What's behind this sharp decline, and what does it mean for the company's future?
The catalyst for the sell-off appears to be a disappointing earnings report and gloomy outlook from the company. In its Q2 2025 results, Health Catalyst met revenue expectations but slashed its full-year guidance, citing "multi-year headwinds" that are proving too challenging to overcome. This news has prompted several Wall Street analysts to downgrade the stock and slash their price targets.
Headwinds Mounting for Health Catalyst
According to CNBC, Health Catalyst's Q2 revenue of $80.7 million was in line with estimates, but its Q3 guidance of $75 million fell well short of the $85 million analysts were expecting. The company also lowered its full-year revenue outlook from $335 million to $310 million, a 7.5% reduction.
What this really means is that Health Catalyst is facing significant operational challenges that are hampering its ability to grow. As MarketWatch reports, the company cited "lower net revenue retention, customer churn, and reduced conversions of in-year bookings to revenue" as the key factors behind the guidance cut.
Analysts Sour on Health Catalyst's Prospects
In the wake of this news, several Wall Street firms have downgraded Health Catalyst's stock and slashed their price targets. For example, Cantor Fitzgerald moved the stock to "Neutral" from "Overweight" and cut its price target by over 55% to $4.00. Stifel, meanwhile, maintained a "Hold" rating but reduced its target from $8.00 to $5.50.
The bigger picture here is that Health Catalyst is facing significant headwinds that are calling into question its long-term growth prospects. While the company's technology and solutions remain in demand, it appears to be struggling with execution and customer retention. Investors will be watching closely to see if management can turn things around in the coming quarters.