Health Catalyst (HCAT) Earnings Preview: Can Revenue Growth Outpace EPS Headwinds?

Health Catalyst (NASDAQ:HCAT), a provider of cloud-based healthcare analytics solutions, is set to report Q1 2025 earnings after market close tomorrow, May 7th. Investors will scrutinize whether the company can sustain its revenue growth trajectory while navigating persistent EPS challenges. With the stock hovering near $4.08—down 2.6% year-to-date—the upcoming report could influence its valuation narrative amid mixed analyst sentiment and strategic partnerships.

Key Expectations for Q1 2025

Analysts project $79.17 million in revenue, reflecting a 5.9% year-on-year increase compared to Q1 2024’s $73.87 million. This growth aligns with Health Catalyst’s focus on expanding its Ignite data platform, which integrates healthcare data systems for clinical and financial decision-making. However, the EPS estimate of $0.01 marks a significant improvement from Q1 2024’s loss of ($0.20) but remains under pressure: analysts have downgraded EPS expectations twice in the past 30 days, with the consensus dropping from $0.07 to $0.01 since early April.

Recent Performance and Catalysts

Health Catalyst’s Q4 2023 results hinted at uneven progress. While revenue rose 1.8% to $75.08 million, exceeding estimates, the company reported a $118.15 million net loss for the trailing twelve months. The stock’s underperformance—down 31% from its 52-week high of $9.24—has left it trading at a P/E ratio of -3.02, reflecting skepticism around its path to profitability.

A strategic partnership with Microsoft, announced April 29th, aims to accelerate AI adoption in healthcare analytics. This could bolster Health Catalyst’s competitive edge against rivals like Palantir (PLTR) and Commvault Systems (CVLT), which reported 39% and 23% revenue growth, respectively, in Q1 2025. The Microsoft tie-up may also help Health Catalyst justify its average analyst price target of $8.23, a 102% premium to current levels.

Analyst Sentiment and Risks

Despite the partnership optimism, analysts remain cautious. Brokerages like Citigroup and Wells Fargo have trimmed price targets, citing execution risks and historical volatility—Health Catalyst has missed revenue estimates in 3 of the past 8 quarters. Meanwhile, insider selling adds to concerns: key executives, including COO Daniel Lesueur, sold over $225,000 in shares in Q1 2025, signaling potential skepticism at leadership levels.

What to Watch for Tomorrow

1. Revenue Growth Consistency: Confirm whether Q1’s 5.9% growth holds amid sector-wide demand for healthcare analytics.
2. EPS Guidance: Assess if the lowered $0.01 estimate reflects temporary pressures or structural challenges.
3. AI Adoption Metrics: Listen for updates on the Microsoft partnership’s impact on client adoption and long-term margins.
4. Insider Activity Context: Evaluate whether recent sales reflect personal financial decisions or broader confidence issues.

Conclusion: A Risk-Adjusted Opportunity?

Health Catalyst faces a pivotal moment. While its $8.23 average price target implies significant upside, investors must weigh near-term EPS risks against long-term AI-driven growth. The Microsoft partnership offers a credible catalyst, but the stock’s current valuation hinges on whether Q1 results can stabilize the earnings narrative.

If HCAT exceeds lowered EPS expectations and reaffirms its full-year $334 million revenue guidance, the stock could rebound toward its average target. However, a miss or weak guidance could amplify downside pressure, given its already discounted valuation. For now, the Moderate Buy consensus suggests investors should focus on execution against its AI roadmap—while remaining wary of leadership’s insider selling.

In short, Health Catalyst’s earnings tomorrow will test whether its technology-driven strategy can bridge the gap between modest revenue growth and elusive profitability. The stakes are high for a stock trading near multi-year lows.