Now let me highlight some additional items from the quarter. You will recall from our previous earnings calls that we measure our company’s performance in the 3 strategic objective categories of improvement, growth and scale. And we’ll discuss our quarterly results with you in each of these categories. The first category improvement is focused on evaluating our ability to enable our clients to realize massive, measurable improvements while also maintaining industry-leading client and team member engagement. Let me begin by sharing an example of a client improvement from a recently published case study. The Queen’s Health System recognized the need to improve its patient flow in order to increase its system’s capacity, provide more cost-effective care, and maintain its financial stability.

Prolonged length of stay was creating capacity constraints, impeding Queen’s ability to meet patient demands for care and negatively impacting its patient experience. Supported by our DOS data platform and a robust suite of analytics applications, including our patient flow Explorer accelerator, along with our tech-enabled managed services, Queen’s established a dedicated team focused on capacity management. The team at Queen’s then leveraged DOS in our patient flow Explorer technology to better understand its demand and capacity, identify patient flow improvement opportunities and quantify the value of the improvement efforts. Likewise, our tech-enabled managed services supported Queen’s clinical quality improvement and advanced analytics adoption.

Through the use of our software and services, along with a widespread focus on process improvement, Queen’s has improved its systems capacity management effectiveness, decreased its length of stay, increased its ability to serve more patients and improved its overall patient experience. These improvements reduced Queen’s cost by $22 million over the course of 15 months, the results of an 8.4% relative reduction in length of stay, while its patients were able to spend approximately 19,000 more days at home. Additionally, Queen’s simultaneously increased its inpatient admissions, generating an additional $1.9 million in new revenue in under 1 year. This improvement case study is an important example of how our technology and tech-enabled managed services offerings work together.

Queen’s and others benefit from the synergy of this integration with Health Catalyst uniquely able to provide both offerings, delivering a clear ROI to our clients. Also in the improvement category, we have been fortunate to receive several additional external recognitions related to our technology and to our team member engagement. First, we are excited that our Vitalware chargemaster management software solution, a revenue cycle analytics technology we acquired in 2020, was recently ranked best-in-class for 2024. This marks the fifth year that the vital CDM solution has achieved this distinction for the class organization, validating our meaningful investment in this mission-critical technology that provides near-term hard dollar ROI. Next, we are pleased to share that we have recently been recognized for several team member engagement awards including placement on Newsweek’s America’s greatest places to work for diversity in 2024 list, Fortune’s Best Workplaces for Women 2023 list, the National Association for Business Resource’s 2023 best and brightest companies to work for in the nation list and the Salt Lake Tribune’s Top Workplaces list.

Additionally, we were thrilled to have several Health Catalyst team members honored as part of the recent 2023 Women of Color STEM awards. Our next strategic objective category is growth, which includes expanding existing client relationships and beginning new client relationships. First, let me provide some commentary on our 2023 bookings performance. At a summary level, we are encouraged to see continued progress relative to our growth-related performance, especially in the second half of 2023 as our end market began to see financial improvements. Our net new DOS subscription client additions in 2023 was 11, in line with our expectations both in number of net additions and an average ARR per new client. Our 2023 dollar-based retention rate was 100%.

As previously shared, this performance was below our forecasted range of 102% to 110%, primarily due to the delay with a few larger enabled managed services expansion opportunities. As a reminder, these tech-enabled managed services opportunities tend to be more challenging to precisely forecast the timing of deal signing, given the size of the relationships, the relatively small number of opportunities in a given quarter and the complexities associated with the rebadging of health system team members such as the need for client board-level approvals. That said, despite the contract start date being more challenging the forecast as compared to our typical DOS contracts, once these relationships are contracted, we benefit meaningfully from long-term locked-in sizable contracts that strategically align us at the highest levels of our clients leadership across both technology and managed services.

Our clients are asking us to provide these tech-enabled managed services because they recognize the clear hard dollar ROI that we provide by offering integrated technology and services. We are pleased to share that one of these tech-enabled managed services chart abstraction opportunities originally projected to sign in late 2023 has just signed, though the revenue recognition for this opportunity won’t begin until midyear. Likewise, we are encouraged to see continued progression in our pipeline, including tech-enabled managed services opportunities and anticipate additional contract signings in the next few months. I will provide additional commentary on these opportunities when I share our 2024 bookings expectations. Next, related to our current growth operating environment, consistent with what we have shared recently.

While health system operating margins continue to be challenged relative to longer-term historical levels, we are encouraged to see operating margins steadily improving in recent months. We anticipate this will be a tailwind related to our bookings metrics in 2024 and beyond. With this backdrop, I will now share some perspectives on our anticipated 2024 bookings achievement levels, supported by the continued improvement in the operating environment of our end market, we anticipate meaningful improvement in both of our bookings metrics relative to our 2023 performance. First, as it relates to our net new DOS subscription client additions, we anticipate achievement of mid-teens net new DOS client additions. As we have seen our end market improve, we have begun to strategically allocate more of our growth resources toward new client and cross-selling efforts with a focus on technology, especially with the benefit of our next-generation modular data platform.

We anticipate this emphasis will support our focus on sustained profitable growth as these higher-margin client relationships contribute more meaningfully to adjusted EBITDA starting in year 1. We expect the average ARR per net new DOS subscription client added to increase in 2024 as compared to 2023, driven by a small portion of DOS light client adds relative to 2023. Next, as it relates to our 2024 dollar-based retention rate, we anticipate achievement between 104% and 110%. For the tech-enabled managed services deals that moved from Q4 2023, as I just mentioned, one of those opportunities just recently signed, and others continue to be in our pipeline, and we assume these deals will contribute to our improved 2024 dollar-based retention rate range I just shared.

Likewise, consistent with 2023, we expect professional services dollar-based retention achievement to be higher than technology, driven by larger tech-enabled managed services expansion pipeline opportunities. In addition to our perspectives on 2024 bookings, Bryan will share our 2024 P&L guidance later in our prepared remarks. I am encouraged by these projections, especially as they relate to our continued progress on profitability. We are also pleased to introduce a few new midterm and longer-term financial targets as well as to provide updates relative to our previously shared financial targets. First, as it relates to our 2025 revenue growth, we anticipate 10% to 15% year-over-year growth. This expectation is supported by our 2024 bookings expectations.

Next, we now anticipate that our 2025 adjusted EBITDA margin will be between 10% and 12%, a positive update relative to our prior expectations. We are encouraged by our anticipated ability to meaningfully increase profitability, while driving robust revenue growth across both technology and professional services. On a related note, as we have considered our mid and long-term planning, one view that we find helpful is an estimated business unit adjusted EBITDA margin for each of our technology and professional services business units. Along these lines, we perform a high-level allocation of our operating expenses by business unit, assigning R&D to our technology segment and SG&A across our technology and professional services segments. This view helps us in our planning process as we evaluate our relative investment in each business unit at the long-term drivers of shareholder value.

In 2025, we expect our technology business unit to have an approximately 20% adjusted EBITDA margin and for our professional services business unit to have a slightly positive adjusted EBITDA margin. Lastly, related to 2025, we expect our adjusted free cash flow to be meaningfully positive, a testament to our growth, operating leverage, and financial discipline. Next, we are pleased to share a few updates relative to our longer-term financial targets. First, we anticipate annual revenue of $500 million plus in 2028 with greater than 55% of this revenue coming from our Technology business unit. Next, we expect our adjusted EBITDA will be $100 million plus in 2028. As we forecast the business unit margin of this 2028 adjusted EBITDA target, we expect our technology business unit to have an approximately 30% adjusted EBITDA margin, which when combined with the expected annual revenue growth of our technology business unit of 10-plus percent per year, would make our Technology business unit a Rule of 40 business.

We expect our Professional Services business unit to have an approximately 10% adjusted EBITDA margin. We are pleased to establish these meaningful milestones related to both total revenue and total adjusted EBITDA for 2028 and are encouraged by our team members’ focus and dedication to achieving these targets. Lastly, in the growth category, I would like to highlight our upcoming 10th annual Healthcare Analytics Summit, inclusive of our annual user conference. This year’s conference, which will be held next week, represents a meaningful investment in new client and existing client relationship development. It also affords Health Catalyst another opportunity to provide thought leadership within the healthcare data and analytics ecosystem, while carefully listening to our clients and prospects as we further cultivate and deepen those relationships.

We anticipate approximately 1,000 attendees this year, primarily composed of existing and prospective Health Catalyst clients and other healthcare industry leaders and innovators. I also wanted to take the opportunity to highlight our excitement related to our next-generation data platform. As we have shared previously, we have made a meaningful investment in the next generation of our data platform software, allowing for significant increases in its scalability and modularity enabled by cross-industry technologies such as Snowflake and Databricks. We anticipate this investment will enable best-in-class technology to support existing client relationships and prospective client sales processes, while also supporting technology gross margin expansion over the medium term.

The initial deployments of our next-generation platform are going as planned, and we anticipate migrations of the majority of our existing DOS subscription clients over the next 2 to 3 years. Likewise, we anticipate that moving forward, our new client deployments will be in this next-generation architecture. Lastly, prior to turning the call over to Bryan and in connection with our annual planning process, I would like to share a few leadership and Board member updates. First, Bryan Hunt will be transitioning from CFO to a strategic adviser role, effective March 1st. I would like to express my heartfelt gratitude to Bryan for his countless contributions to Health Catalyst’s growth and success over the last 10 years, including his service as our CFO, helping us navigate through a global pandemic, record high inflation, and a period of tremendous financial pressure for our health system clients.

Bryan has been an extraordinary leader and partner to me and to the Board, and we are grateful for his dedication, professionalism, and commitment to the company and its mission. I’m also pleased to share that Jason Alger will begin as Health Catalyst’s CFO effective March 1st. Jason has been with Health Catalyst for more than 10 years, having contributed significantly during that time, including most recently as our Chief Accounting Officer. Prior to joining Health Catalyst, Jason held various roles at Ernst & Young. My fellow Board members and I, along with our finance organization, have the utmost confidence in and respect for Jason, and we look forward to more widely introducing him across our research analyst and investor base in the coming weeks.

Next, let me share that effective March 1st, Dan LeSueur is being promoted to Health Catalyst’s Chief Operating Officer Role, with responsibilities spanning both our technology and professional services business units. Dan brings a wealth of experience to this role, having had leadership responsibility across many functions during his 12 years at Health Catalyst, most recently as the Senior Vice President and General Manager of our Professional Services business unit. I am thrilled to have someone with Dan’s breadth and depth of experience and expertise to lead this important strategic function as Health Catalyst continues on its maturation path, focusing on operational excellence to enable scalable growth and profitability. Lastly, I want to take a moment to share my sincere gratitude for Mark Templeton for his service on our Board of Directors as he completes his Board service as of March 1st.

We were fortunate to have had Mark extend his Board service beyond his original commitment and Health Catalyst has benefited meaningfully from his service over the last nearly 4 years, including his leadership role as Chair of our Transactions Committee. With that, let me turn the call over to Bryan. Bryan?

Bryan Hunt: Thank you, Dan. Before diving into our quarterly financial results, I want to echo what Dan shared and say that I am pleased with our fourth quarter and full year 2023 performance. I will now comment on our strategic objective category of scale. For the fourth quarter of 2023, we generated $75.1 million in total revenue. This total represents an outperformance relative to the midpoint of our quarterly guidance and it is an increase of 9% year-over-year. For the full year 2023, our total revenue was $295.9 million, representing 7% growth year-over-year. Technology revenue for the fourth quarter of 2023 was $47.1 million, representing 5% growth year-over-year. This year-over-year growth was driven primarily by recurring revenue from new client additions and from existing clients paying higher technology access fees as a result of contractual built-in escalators.

For the full year 2023, technology revenue was $187.6 million, representing 6% year-over-year growth. Professional services revenue for Q4 2023 was $28 million, representing a 14% increase relative to the same period last year. This year-over-year performance was primarily due to revenue recognition from the tech-enabled managed services contracts that were signed at the end of Q4 2022 and the beginning of 2023. For the full year 2023, our professional services revenue was $108.4 million, representing 8% year-over-year growth. For the fourth quarter 2023, total adjusted gross margin was 46%, representing a decrease of approximately 450 basis points year-over-year. For the full year 2023, total adjusted gross margin was 49%, representing a decrease of approximately 410 basis points year-over-year.

In the Technology segment, our Q4 2023 adjusted technology gross margin was 67%, a decrease of approximately 210 basis points relative to the same period last year. This year-over-year performance was mainly driven by costs associated with migrating an additional subset of our client base to our multi-tenant Snowflake and Databricks enabled data platform environment. For the full year 2023, our adjusted technology gross margin was 68%, an approximately 130 basis point decrease year-over-year. In the Professional Services segment, our Q4 2023 adjusted professional services gross margin was 12%, representing a decrease of approximately 580 basis points year-over-year and an increase of approximately 30 basis points relative to Q3 2023. This quarterly performance was in-line with the expectations we shared on our last earnings call, and we continue to expect a several point increase to our adjusted professional services gross margin in Q1 2024, the result of our recent reduction enforced that primarily occurred late in the fourth quarter of 2023.

For the full year 2023, our adjusted professional services gross margin was 15%, an approximately 850 basis point decrease year-over-year. In Q4 2023, adjusted total operating expenses were $33.3 million. As a percentage of revenue, adjusted total operating expenses were 44%, which compares favorably to 52% in Q4 2022. For the full year 2023, adjusted total operating expenses were $133 million. As a percentage of revenue, adjusted total operating expenses were 45%, which compares favorably to 54% in the full year 2022. Adjusted EBITDA in Q4 2023 was $1.4 million, in line with the midpoint of our guidance. For the full year 2023, our adjusted EBITDA was $11 million, which compared favorably to an adjusted EBITDA loss of $2.5 million in 2022.

Our adjusted basic net income per share in Q4 2023 was $0.02. The weighted average number of shares used in calculating adjusted basic net income per share in Q4 was approximately $57.5 million shares. For the full year 2023, our adjusted basic net income per share was $0.16, and the weighted average number of shares used in calculating adjusted basic net income per share was approximately 56.4 million shares. Turning to the balance sheet. We ended Q4 2023 with $317.7 million of cash, cash equivalents, and short-term investments compared to $347.7 million as of Q3 2023. In terms of liabilities, the face value of our outstanding convertible notes is a principal amount of $230 million due in 2025. As it relates to our financial guidance, for the first quarter of 2024, we expect total revenue between $72.5 million and $76.5 million, an adjusted EBITDA between $2 million and $4 million.

And for the full year 2024, we expect total revenue between $304 million and $312 million, an adjusted EBITDA between $24 million and $26 million. Now let me provide a few additional details related to our 2024 guidance. First, as it relates to our Q1 2024 expectations, we expect that our adjusted technology gross margin will be in the high 60s in the first quarter. In the Professional Services segment, we anticipate our Q1 2024 gross margin will be in the high teens, a several point improvement relative to Q4 2023, consistent with our expectations shared last quarter. Lastly, we anticipate our adjusted operating expenses will be roughly flat to slightly up compared to Q4 2023 with our sales and marketing increasing by $2 million to $3 million quarter-over-quarter, the result of our Healthcare Analytics Summit event and our research and development decreasing by a couple of million dollars sequentially, the result of our recent reduction in force.

Next, let me share a few additional details related to our full year 2024 guidance. First, our 2024 revenue growth expectations are impacted by our 2023 dollar-based retention rate achievement being lower than our prior expectations. Given the in-year 2024 revenue impact from the tech-enabled managed services deals that moved from Q4 2023 to 2024, we now anticipate our first half year-over-year total revenue growth to be lower and to ramp in the second half of 2024 as we benefit from these in-year 2024 bookings translating into second half revenue. Next, in terms of our adjusted gross margin, we expect our adjusted technology gross margin will be in the high 60s through 2024. We anticipate the built-in client-level technology gross margin expansion, mainly driven by contractual escalators, will be mostly offset by the headwinds from costs associated with migrating an additional subset of our client base to our multi-tenant Snowflake and Databricks enabled data platform environment.

Next, we anticipate our adjusted professional services gross margin will be in the high teens for the year, primarily driven by the mix of professional services, which will be comprised of a larger percentage of tech-enabled managed services, which start out at a low gross margin, but ramp up meaningfully over time. Next, we continue to anticipate material year-over-year operating leverage. This includes the expectation that our 2024 R&D expense will be lower on an absolute dollar basis relative to 2023 as we conclude a large portion of the investment we have been making in our next-generation Snowflake and Databricks enabled data platform. Additionally, we anticipate continuing to see operating leverage as a percentage of revenue across SG&A.

Next, we anticipate we will see a reduction in our stock-based compensation expense as a percentage of revenue by approximately 350 to 450 basis points in 2024 on our way to stock-based compensation expense as a percentage of revenue in the mid to high single digits in 2028. And lastly, we anticipate our adjusted free cash flow in 2024 will be approximately breakeven. With that, I will conclude my prepared remarks. Dan?

Dan Burton: Thanks, Bryan. In conclusion, I would like to recognize and thank our committed and mission-aligned clients and our highly engaged team members as well as express my excitement and optimism for the future. And with that, I will turn the call back to the operator for questions.

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