The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements, the accompanying notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those forward-looking statements below. Factors that could cause or contribute to those differences include, but are not limited to, those identified below and those discussed in the sections titled “Risk Factors” and “Special Note Regarding Forward-looking Statements.” Overview We are a leading provider of data and analytics technology and services to healthcare organizations. Our Solution comprises our cloud-based data platforms, software analytics applications, and professional services expertise. Our clients, 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. We envision a future where all healthcare decisions are data-informed. Highlights from the three and six months ended June 30, 2026 and 2025 included: •We recognized total revenue of $70.5 million and $80.7 million for the three months ended June 30, 2026 and 2025, respectively, and $141.2 million and $160.1 million for the six months ended June 30, 2026 and 2025, respectively. The decrease in revenue was primarily due to our exit of certain lower margin TEMS arrangements and churn related to the migration from DOS to Ignite. •We incurred net losses of $40.5 million and $41.0 million for the three months ended June 30, 2026 and 2025, respectively, and $151.6 million and $64.7 million for the six months ended June 30, 2026 and 2025, respectively. The increased net losses in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 are largely driven by $122.5 million in goodwill impairment in 2026, which was primarily due to overall declines in our stock price and market capitalization, as well as the Vitalware held for sale accounting, which required an impairment analysis of the goodwill allocated to the retained technology reporting unit. •Our Adjusted EBITDA was $9.9 million and $9.3 million for the three months ended June 30, 2026 and 2025, respectively, and $19.1 million and $15.6 million for the six months ended June 30, 2026 and 2025, respectively. See the section titled “Key Financial Measures—Reconciliation of Non-GAAP Financial Measures” below for more information about Adjusted EBITDA, including the limitations of such measure and a reconciliation to net loss, the most directly comparable measure calculated in accordance with GAAP. See the section titled “Key Factors Affecting Our Performance” for more information about important opportunities and challenges related to our business. Macroeconomic Environment and Strategic Operating Plan Ongoing macroeconomic challenges (including high levels of inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, and regional or global conflicts (including the conflicts in the Middle East)) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally. These factors have disrupted the normal operations of many businesses, including our business. These factors have also placed the national healthcare system under significant operational and budgetary strain. The extent and duration of the impacts from these factors is uncertain, and we expect that continued impacts will continue to have a negative effect upon our clients, business and results of operations, and financial condition. 48 The health system end market, in particular, has experienced meaningful financial strain over the past several years. We are encouraged that, in general, the operating margins of our health system end market improved in recent years. However, the implications of many policy developments around Medicaid and research funding reductions, as well as implications of the evolving tariff landscape have had and continue to have a negative impact on our business. On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the OBBBA) into law, which is projected to reduce federal Medicaid spending by nearly $1 trillion over 10 years and will create additional financial strain for many of our clients and prospective clients. As a result, certain sales cycles have elongated and some opportunities, such as opportunities in Life Sciences, have pushed, which negatively impacted our 2025 bookings achievement and our expectations for revenue in 2026. We continue to anticipate that a higher proportion of our gross bookings will come from our existing client base as compared to historical levels. This expectation is driven by our belief that many existing clients that have already realized a strong financial return on investment (ROI), and are aligned on a long-term partnership framework, will be more receptive to expansion conversations, as compared to discussions with prospective clients. We have collected data internally that shows we are more than twice as effective at selling into organizations where we have an existing relationship compared to those where there is no prior relationship, which gives us additional confidence in our ability to drive cross-selling within our broad client base. We benefit from a highly recurring revenue model, in which greater than 90% of our revenue is recurring in nature, and a high level of technology revenue predictability. Client contracts often include built-in, contractual technology revenue escalators and often include locked in terms for three to five years. As previously described, within our professional services segment, a subset of clients have reduced the number of FTEs engaged in their initiatives, while in the technology segment, we have experienced down-sell and churn particularly related to the migration from DOS to Ignite. As of May 11, 2026, we had been notified of $12.5 million of DOS-to-Ignite migration downsell and churn, and estimated approximately $52 million of potentially at risk ARR across 2026 and 2027. We are focused on trying to retain this at risk ARR though dedicated account plans tailored to each client’s needs. Even among clients who have given notice on the infrastructure layer, we expect a number of clients will continue to use our application solutions going forward even after transitioning to their own infrastructure. As we referenced in the past, we expect to be generally through churn pressure associated with the DOS to Ignite migration by the end of 2027. We believe healthcare is at an inflection point, due to financial pressure on health systems, including eroding margins, shifting payor mix, and rising labor costs. In this environment, we believe healthcare providers are seeking a partner who can help them reduce costs, improve clinical quality, and grow consumer relationships, while delivering meaningful outcomes. Healthcare data infrastructure has increasingly commoditized. We believe durable advantage lives in the intelligence built on top of it, and that our advantage rests on our improvement data and content, as well as our expertise, including healthcare-specific and change management expertise. We aim to continue to manage the business with a focus on operating efficiency, while balancing targeted investments to support disciplined growth and retention initiatives that we expect will benefit future results. Moving forward our focus is building a technology business that wins in the market, operating with efficiency and discipline, and investing in our AI-enabled intelligence that differentiates our solutions. In April 2026, we announced Project Nexus, a strategic initiative designed to fundamentally transform our operating model and advance each of these priorities. The Vitalware Transaction (as defined below), which is part of Project Nexus, provided us with the ability to fully repay all obligations under our Credit Agreement and we believe gives us flexibility to make targeted investments in our core business. While these investments have created near-term pressure on our net loss and Adjusted EBITDA, we believe they better position the business. 49 We are focused on margin expansion as part of our transformation to streamline operations and optimize our cost structure, including engaging an advisor to help us assess revenue and cost optimization opportunities. Our priorities going forward will include strengthening and simplifying our commercial engine to drive technology ARR bookings, working to improve retention through more predictable migrations and clearer client value realization, and increasing efficiency and reducing time to value by eliminating operational complexity and scaling work through automation and global resources. We also plan to better leverage our intellectual property, combining our data foundation with the expertise, content, and AI-enabled solutions that differentiates our solutions to allow us to solve healthcare's most pressing problems. We will continue to refine this strategic operating plan. Vitalware Transaction and Debt Repayment On July 31, 2026 (the Vitalware Closing Date), we completed the previously announced disposition of all of the equity interests of Vitalware, LLC, through which we conducted our Vitalware business (the Vitalware Business), to Med-Metrix, LLC (Med-Metrix) (the Vitalware Transaction). On the Vitalware Closing Date, we received from Med-Metrix the payment of an aggregate base purchase price of $147 million, subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. Concurrently with the closing of the Vitalware Transaction, on the Vitalware Closing Date, we used the net cash proceeds received from the Vitalware Transaction, together with cash on hand, to voluntarily repay in full all outstanding obligations under a Credit Agreement, dated as of July 16, 2024, among Health Catalyst, as the borrower, the several lenders party thereto, and Silver Point Finance, LLC, as administrative agent for the lenders (as modified, amended, restated, amended and restated, or supplemented from time to time prior to the Vitalware Closing Date, the Credit Agreement), which resulted in the termination of the Credit Agreement and the simultaneous release in full of all liens thereunder. 50 Key Financial Measures We regularly review a number of measures, including the following key financial measures, to manage our business and evaluate our operating performance compared to that of other companies in our industry: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 GAAP Financial Measures: (in thousands, except percentages) (in thousands, except percentages) Total revenue $ 70,487 $ 80,721 $ 141,243 $ 160,134 Gross profit $ 27,856 $ 30,333 $ 55,582 $ 58,992 Gross margin 40 % 38 % 39 % 37 % Net loss $ (40,537) $ (40,978) $ (151,563) $ (64,720) Non-GAAP Financial Measures: Adjusted Gross Profit $ 35,837 $ 39,964 $ 72,276 $ 79,012 Adjusted Gross Margin 51 % 50 % 51 % 49 % Adjusted EBITDA $ 9,919 $ 9,344 $ 19,056 $ 15,623 We monitor the key measures set forth in the preceding table to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine team member incentives. This year we will also report on total full-year bookings on an annual basis as a new, simplified operating metric, which includes all new bookings for annual recurring revenue and non-recurring revenue. We discuss Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA in more detail below. Reconciliation of non-GAAP financial measures In addition to our results determined in accordance with GAAP, we believe certain non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Gross Margin, and Adjusted EBITDA, are useful in evaluating our operating performance. For example, we exclude stock-based compensation expense because it is non-cash in nature and excluding this expense provides meaningful supplemental information regarding our operational performance and allows investors the ability to make more meaningful comparisons between our operating results and those of other companies. We use this non-GAAP financial information to evaluate our ongoing operations, as a component in determining employee bonus compensation, and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. 51 Adjusted Gross Profit and Adjusted Gross Margin Gross profit is a GAAP financial measure that is calculated as revenue less cost of revenue, including depreciation and amortization of capitalized software development costs and acquired technology. We calculate gross margin as gross profit divided by our revenue. Adjusted Gross Profit is a non-GAAP financial measure that we define as gross profit, adjusted for (i) depreciation and amortization, (ii) stock-based compensation, (iii) acquisition-related costs, net, and (iv) restructuring costs, as applicable. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors as they eliminate the impact of certain non-cash expenses and allow a direct comparison of these measures between periods without the impact of non-cash expenses and certain other non-recurring operating expenses. We present both of these measures for our technology and professional services business. We believe these non-GAAP financial measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics generally eliminate the effects of certain items that may vary from company to company for reasons unrelated to overall profitability. The following is a reconciliation of our Adjusted Gross Profit and Adjusted Gross Margin, in total and for technology and professional services, to gross profit and gross margin, the most directly comparable financial measures calculated in accordance with GAAP for the three months ended June 30, 2026 and 2025. Three Months Ended June 30, 2026 (in thousands, except percentages) Technology Professional Services Total Revenue $ 48,795 $ 21,692 $ 70,487 Cost of revenue, excluding depreciation and amortization (18,188) (17,439) (35,627) Amortization of intangible assets, cost of revenue (3,730) — (3,730) Depreciation of property and equipment, cost of revenue (3,274) — (3,274) Gross profit 23,603 4,253 27,856 Gross margin 48 % 20 % 40 % Add: Amortization of intangible assets, cost of revenue 3,730 — 3,730 Depreciation of property and equipment, cost of revenue 3,274 — 3,274 Stock-based compensation 72 345 417 Restructuring costs(1) 296 264 560 Adjusted Gross Profit $ 30,975 $ 4,862 $ 35,837 Adjusted Gross Margin 63 % 22 % 51 % ___________________ (1)Restructuring costs include severance and other team member costs from workforce reductions and restructuring. For additional details, refer to Note 20-Restructuring Costs in our condensed consolidated financial statements. 52 Three Months Ended June 30, 2025 (in thousands, except percentages) Technology Professional Services Total Revenue $ 52,876 $ 27,845 $ 80,721 Cost of revenue, excluding depreciation and amortization (18,352) (24,128) (42,480) Amortization of intangible assets, cost of revenue (4,857) — (4,857) Depreciation of property and equipment, cost of revenue (3,051) — (3,051) Gross profit 26,616 3,717 30,333 Gross margin 50 % 13 % 38 % Add: Amortization of intangible assets, cost of revenue 4,857 — 4,857 Depreciation of property and equipment, cost of revenue 3,051 — 3,051 Stock-based compensation 295 1,194 1,489 Acquisition-related costs, net(1) 33 56 89 Restructuring costs(2) — 145 145 Adjusted Gross Profit $ 34,852 $ 5,112 $ 39,964 Adjusted Gross Margin 66 % 18 % 50 % ___________________ (1)Acquisition-related costs, net include deferred retention expenses attributable to the Upfront, Intraprise, ARMUS and KPI Ninja acquisitions. For additional details refer to notes 1 and 3 in our condensed consolidated financial statements. (2)Restructuring costs include severance and other team member costs from workforce reductions and restructuring. For additional details, refer to Note 20-Restructuring Costs in our condensed consolidated financial statements. Technology gross margin decreased from 50% for the three months ended June 30, 2025 to 48% for the three months ended June 30, 2026. Adjusted Technology Gross Margin decreased from 66% for the three months ended June 30, 2025 to 63% for the three months ended June 30, 2026. These technology gross margin and Adjusted Technology Gross Margin year-over-year decreases were mainly driven by costs associated with migrating a subset of DOS clients to Health Catalyst Ignite and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition. We expect technology gross margin and Adjusted Technology Gross Margin to decline in the near term, primarily due to the Vitalware Transaction and additional costs associated with the ongoing migrations to Health Catalyst Ignite and Ninja Universe. Professional services gross margin increased from 13% for the three months ended June 30, 2025 to 20% for the three months ended June 30, 2026. Adjusted Professional Services Gross Margin increased from 18% for the three months ended June 30, 2025 to 22% for the three months ended June 30, 2026. These professional services gross margin and Adjusted Professional Services Gross Margin year-over-year increases were primarily driven by lower utilization rates in our professional services organization in the prior period and due to our exit of certain lower margin Tech-Enabled Managed Services (TEMS) arrangements. Our professional services are comprised of data and analytics services, domain expertise services, TEMS, and implementation services. The delivery mix among all of our services in a given period can lead to fluctuations in our professional services gross margin and Adjusted Professional Services Gross Margin. Total gross margin increased from 38% for the three months ended June 30, 2025 to 40% for the three months ended June 30, 2026. Total Adjusted Gross Margin also increased from 50% for the three months ended June 30, 2025 to 51% for the three months ended June 30, 2026. We expect total Adjusted Gross Margin to decline in the near term primarily due to the Vitalware Transaction and additional costs associated with the ongoing migrations to Health Catalyst Ignite and Ninja Universe. 53 The following is a reconciliation of our Adjusted Gross Profit and Adjusted Gross Margin, in total and for technology and professional services, to gross profit and gross margin, the most directly comparable financial measures calculated in accordance with GAAP, for the six months ended June 30, 2026 and 2025. Six Months Ended June 30, 2026 (in thousands, except percentages) Technology Professional Services Total Revenue $ 98,263 $ 42,980 $ 141,243 Cost of revenue, excluding depreciation and amortization (35,471) (35,449) (70,920) Amortization of intangible assets, cost of revenue (7,920) — (7,920) Depreciation of property and equipment, cost of revenue (6,821) — (6,821) Gross profit 48,051 7,531 55,582 Gross margin 49 % 18 % 39 % Add: Amortization of intangible assets, cost of revenue 7,920 — 7,920 Depreciation of property and equipment, cost of revenue 6,821 — 6,821 Stock-based compensation 190 894 1,084 Acquisition-related costs, net(1) 1 6 7 Restructuring costs(2) 296 566 862 Adjusted Gross Profit $ 63,279 $ 8,997 $ 72,276 Adjusted Gross Margin 64 % 21 % 51 % ___________________ (1)Acquisition-related costs, net include final deferred retention expenses attributable to the KPI Ninja acquisition. For additional details, see Notes 1 and 3 in our condensed consolidated financial statements. (2)Restructuring costs include severance and other team member costs from workforce reductions and restructuring. For additional details, refer to Note 20-Restructuring Costs in our condensed consolidated financial statements. Six Months Ended June 30, 2025 (in thousands, except percentages) Technology Professional Services Total Revenue $ 104,358 $ 55,776 $ 160,134 Cost of revenue, excluding depreciation and amortization (35,917) (49,741) (85,658) Amortization of intangible assets, cost of revenue (9,453) — (9,453) Depreciation of property and equipment, cost of revenue (6,031) — (6,031) Gross profit 52,957 6,035 58,992 Gross margin 51 % 11 % 37 % Add: Amortization of intangible assets, cost of revenue 9,453 — 9,453 Depreciation of property and equipment, cost of revenue 6,031 — 6,031 Stock-based compensation 514 2,196 2,710 Acquisition-related costs, net(1) 107 176 283 Restructuring costs(2) 401 1,142 1,543 Adjusted Gross Profit $ 69,463 $ 9,549 $ 79,012 Adjusted Gross Margin 67 % 17 % 49 % ___________________ (1)Acquisition-related costs, net include deferred retention expenses attributable to the Upfront, Intraprise, ARMUS and KPI Ninja acquisitions. For additional details refer to notes 1 and 3 in our condensed consolidated financial statements. 54 (2)Restructuring costs include severance and other team member costs from workforce reductions and restructuring. For additional details, refer to Note 20-Restructuring Costs in our condensed consolidated financial statements. Technology gross margin decreased from 51% for the six months ended June 30, 2025 to 49% for the six months ended June 30, 2026. Adjusted Technology Gross Margin decreased from 67% for the six months ended June 30, 2025 to 64% for the six months ended June 30, 2026. These technology gross margin and Adjusted Technology Gross Margin year-over-year decreases were primarily driven by continued costs associated with migrating a subset of Platform Clients to Health Catalyst Ignite, and Ninja Universe deployment costs incurred prior to the commencement of revenue recognition, partially offset by existing clients paying higher technology access fees from contractual, built-in escalators, without a corresponding increase in hosting costs. We expect technology gross margin and Adjusted Technology Gross Margin to decline in the near term, primarily due to the Vitalware Transaction and additional costs associated with the ongoing migrations to Health Catalyst Ignite and Ninja Universe. Professional services gross margin increased from 11% for the six months ended June 30, 2025 to 18% for the six months ended June 30, 2026. Adjusted Professional Services Gross Margin increased from 17% for the six months ended June 30, 2025 to 21% for the six months ended June 30, 2026. These professional services gross margin and Adjusted Professional Services Gross Margin year-over-year increases were primarily driven by lower utilization rates in our professional services organization in the prior period and our exit of certain lower margin TEMS arrangements. The majority of our professional services revenue is generated from data and analytic services and domain expertise services, which are the highest gross margin professional services we provide. The delivery mix among all of our services in a given period can lead to fluctuations in our Adjusted Professional Services Gross Margin. Total gross margin increased from 37% for the six months ended June 30, 2025 to 39% for the six months ended June 30, 2026. Total Adjusted Gross Margin increased from 49% for the six months ended June 30, 2025 to 51% for the six months ended June 30, 2026. We expect total Adjusted Gross Margin to decline in the near term primarily due to the Vitalware Transaction and additional costs associated with the ongoing migrations to Health Catalyst Ignite and Ninja Universe. Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted for (i) interest and other expense, net, (ii) income tax provision, (iii) depreciation and amortization, (iv) stock-based compensation, (v) acquisition-related costs, net, including the change in fair value of contingent consideration liabilities for potential earn-out payments, (vi) restructuring costs, (vii) goodwill impairment, and (viii) non-recurring lease-related charges, as applicable. We view acquisition-related expenses when applicable, such as transaction costs (including third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations) and changes in the fair value of contingent consideration liabilities for potential earn-out payments that are directly related to business combinations, as costs that are unpredictable, dependent upon factors outside of our control, and are not necessarily reflective of operational performance during a period. We believe that excluding restructuring costs, impairment of goodwill and intangible assets, and non-recurring lease-related charges, as applicable, allows for more meaningful comparisons between operating results from period to period as these are separate from the core activities that arise in the ordinary course of our business and are not part of our ongoing operations. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and a comparison with our past financial performance, and is useful in evaluating our operating performance compared to that of other companies in our industry, as this metric generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance. 55 Our Adjusted EBITDA improved year-over-year as a result of our revenue growth and cost reduction initiatives as well as the timing of some non-headcount expenses. We expect Adjusted EBITDA to be negatively impacted by the Vitalware Transaction and our Adjusted EBITDA may fluctuate from quarter to quarter as a result of the timing of non-recurring revenue and the seasonality of certain operating costs. Excluding the impact of the Vitalware Transaction, we expect annual Adjusted EBITDA to continue to improve in the long-term. The following is a reconciliation of our Adjusted EBITDA to net loss, the most directly comparable financial measure calculated in accordance with GAAP for the three and six months ended June 30, 2026 and 2025. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) (in thousands) Net loss $ (40,537) $ (40,978) $ (151,563) $ (64,720) Add: Interest and other expense, net 3,742 3,803 7,877 7,159 Income tax provision 315 81 729 296 Depreciation and amortization 10,979 12,684 23,094 25,004 Stock-based compensation 2,709 8,323 6,479 15,866 Acquisition-related costs, net(1) 1,958 (3,720) 4,395 (691) Restructuring costs(2) 3,706 382 5,497 3,940 Goodwill impairment(3) 27,047 28,769 122,548 28,769 Adjusted EBITDA $ 9,919 $ 9,344 $ 19,056 $ 15,623 __________________ (1)Acquisition-related costs, net include third-party fees associated with due diligence, deferred retention expenses, post-acquisition restructuring costs incurred as part of business combinations, and changes in fair value of contingent consideration liabilities for potential earn-out payments. During the three and six months ended June 30, 2025, the fair value of the contingent consideration related to the Upfront acquisition earnout decreased, resulting in a net reduction in expense. For additional details refer to Notes 1, 3, and 8 in our condensed consolidated financial statements. (2)Restructuring costs include severance and other team member costs from workforce reductions, as well as legal and advisory fees related to shareholder activism defense costs regarding our former CEO’s retirement and transition in the first quarter of 2026 and significant board of director refreshment that are non-recurring and outside the ordinary course of our business. For additional details, refer to Notes 1 and 20 in our condensed consolidated financial statements. (3)Goodwill impairment was recognized as a result of impairment indicators and quantitative tests indicating the fair values of the following were below the carrying values: (i) Technology reporting unit as of June 4, 2026 and March 31, 2026, and (ii) the Technology reporting unit and the Professional Services reporting unit as of June 30, 2025. 56 Key Factors Affecting Our Performance We believe that our future growth, success, and performance are dependent on many factors, including those set forth below. While these factors present significant opportunities for us, they also represent the challenges that we must successfully address in order to grow our business and improve our results of operations. •Impact of challenging macroeconomic environment, including high inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, regional or global conflicts (including the conflicts in the Middle East), the tight labor market or the market volatility and measures taken in response thereto. Ongoing macroeconomic challenges (including the high levels of inflation, high interest rates, uncertainty with tariffs, cuts in Medicaid and research funding, regional or global conflicts (including conflicts in the Middle East), or market volatility and measures taken in response thereto) and the tight labor market continue to adversely affect workforces, organizations, governments, clients, economies, and financial markets globally, leading to an economic downturn and increased market volatility. These challenges have also disrupted the normal operations of many businesses, including ours. Our health system end market recently experienced meaningful financial strain from significant inflation. In particular, the health system end market experienced increases in labor and supply costs without a commensurate increase in revenue, leading to significant margin pressure. We are also continuing to monitor the implications of any policy developments around Medicaid and research funding reductions, including the OBBBA, which has and could continue to negatively impact our end market, as well as implications of the evolving tariff landscape. These uncertainties in our end market have caused and could cause further potential delays in client decisions, which has and could continue to negatively affect our business and results of operations. •Add new clients. We believe our ability to increase our client base will enable us to drive growth. Our potential client base is generally in the early stages of data and analytics adoption and maturity. We expect to further penetrate the market over time as potential clients invest in commercial data and analytics solutions. As one of the first data platform and analytics vendors focused specifically on healthcare organizations, we have an early-mover advantage and strong brand awareness. Our clients are large, complex organizations who typically have long procurement cycles, which, as a result, may lead to challenges with adding new clients. •Leverage recent product and services offerings to drive expansion. We believe that our ability to expand within our client base will enable us to drive growth. Over the last few years, we have developed and deployed several new analytics applications and intend to launch new applications in the future. Because we are in the early stages of certain of our applications’ lifecycles and maturity, we do not have enough information to know the impact on revenue growth by upselling these applications and associated services to current and new clients. •Impact of acquisitions. We have acquired multiple companies over the last few years, including Medicity in June 2018, Able Health in February 2020, Healthfinch in July 2020, Vitalware in September 2020 (which we divested in connection with the Vitalware Transaction on July 31, 2026), Twistle in July 2021, KPI Ninja in February 2022, ARMUS in April 2022, ERS in October 2023, Carevive in May 2024, Lumeon in August 2024, Intraprise in November 2024, and Upfront in January 2025. The historical and go-forward revenue growth profiles of these businesses may vary from our core Solutions, which can positively or negatively impact our overall growth rate. For example, Medicity clients have generated a lower revenue retention rate and we have experienced and expect declining revenue from Medicity clients in the foreseeable future. As we integrate the teams acquired via our recent acquisitions, we have also incurred integration-related costs and duplicative costs that could impact our operating cost profile in the near term. •Changing revenue mix. Our technology and professional services offerings have materially different gross margin profiles. While our professional services offerings help our clients achieve measurable improvements and make them stickier, they have lower gross margins than our technology revenue. 57 For the six months ended June 30, 2026, our technology revenue and professional services revenue represented 70% and 30% of total revenue, respectively. Changes in our percentage of revenue attributable to Technology and Professional Services would impact future gross margin and Adjusted Gross Margin. Furthermore, changes within the types of professional services we offer over time can have a material impact on our Adjusted Professional Services Gross Margin, impacting our future gross margin and Total Adjusted Gross Margin. See “Reconciliation of Non-GAAP Financial Measures” above for more information. •Migration to Health Catalyst Ignite. We are in the process of migrating our DOS clients to Ignite. These migrations have and will continue to result in higher cost of technology revenue, which has and will negatively impact Adjusted Technology Gross Margin. We experienced retention pressure in 2025 and the first half of 2026 due to the ongoing migration efforts, and we expect to face similar pressure through the remainder of 2026 and 2027. An Ignite migration can take a variety of forms, including a client's migration from our DOS platform to the Ignite platform, the incorporation of Ignite componentry into a specific Solution that is deployed to all clients using that Solution, or our deeming a Solution using our latest technology to be part of Ignite (our latest technology) because we do not plan to devote additional professional service or R&D resources to adding Ignite componentry to the Solution. There may be instances in which we expect the client to remain on our legacy technology for the foreseeable future. We anticipate making meaningful progress on the Ignite migrations in 2026 and to generally be through the churn pressure associated with migrations by the end of 2027, with some clients choosing to remain on DOS. We are committed to providing more flexibility and meeting clients where they are with the goal of improving client experience and retention of at-risk annual recurring revenue. •Vitalware Transaction. In connection with Project Nexus, we determined that the Vitalware Business was not part of our planned core business going forward. The Vitalware Transaction provides us with flexibility to focus on our core business of driving measurable improvement for health systems across cost, clinical, and consumer performance. Though the proceeds from the Vitalware Transaction, together with cash on hand, were used to voluntarily repay in full all outstanding obligations under the Credit Agreement, which significantly reduces interest expense, we expect that our future total revenue, gross profit, net income (loss), Adjusted Gross Profit, and Adjusted EBITDA will be negatively impacted due to the disposition of this high margin business. 58 Recent Acquisitions and Dispositions Vitalware Transaction On the Vitalware Closing Date, we completed the previously announced Vitalware Transaction pursuant to which we received from Med-Metrix an aggregate base purchase price of $147 million in cash, subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. Concurrently with the closing of the Vitalware Transaction, on the Vitalware Closing Date, we used the net cash proceeds received from the Vitalware Transaction, together with cash on hand, to voluntarily repay in full all outstanding obligations under the Credit Agreement, which resulted in the termination of the Credit Agreement and simultaneous release in full of all liens thereunder. Upfront Healthcare, Inc. On January 22, 2025, we acquired Upfront Healthcare Services, Inc. (Upfront), a next-generation patient engagement platform provider. We accounted for the acquisition of Upfront as a business combination. The acquisition consideration transferred was $80.0 million and was comprised of estimated net cash consideration of $41.1 million, shares of our common stock with an aggregate acquisition-date fair value of $31.6 million, and contingent consideration based on certain earn-out performance targets for Upfront during an earn-out period ending on December 31, 2026, with an aggregate acquisition-date fair value of $7.3 million, that, if achieved, would be paid 62.5% in common stock and 37.5% in cash. Certain Upfront shareholders also received shares of our common stock subject to revesting that are accounted for as post-acquisition stock-based compensation. The purchase resulted in Health Catalyst acquiring 100% ownership in Upfront. Components of Our Results of Operations Revenue We derive our revenue from sales of technology and professional services. For the three months ended June 30, 2026 and 2025, technology revenue represented 69% and 66% of total revenue, respectively, and professional services revenue represented 31% and 34% of total revenue, respectively. For the six months ended June 30, 2026 and 2025, technology revenue represented 70% and 65% of total revenue, respectively, and professional services revenue represented 30% and 35% of total revenue, respectively. We expect our near-term revenue growth to be negatively impacted by policy developments around Medicaid and research funding reductions, which has and will likely continue to create additional financial strain for many of our clients and prospective clients. We also expect near-term headwinds to revenue, including a reduction in technology revenue from the Vitalware Transaction, a reduction in TEMS revenue due to down-selling and our exit from certain lower-margin TEMS arrangements, a reduction in technology revenue related to migrating DOS clients to Health Catalyst Ignite, and the timing of non-recurring revenue driven by the timing of project completions. Technology revenue. Technology revenue primarily consists of subscription fees charged to clients for access to use our Platform and analytics applications. We provide clients access to our technology through either an all-access or limited-access, modular subscription. Most of our subscription contracts are cloud-based and generally have a three- or five-year term, of which many are terminable after one year upon 90 days’ notice. The majority of our platform subscription contracts have built-in annual escalators for technology access fees. Also included in technology revenue is the maintenance and support we provide, which generally includes updates and support services. Professional services revenue. Professional services revenue primarily includes analytics services, domain expertise services, TEMS, and implementation services. Professional services arrangements typically include a fee for making FTE services available to our clients on a monthly basis or a fixed fee for a scope of work. FTE services generally consist of a blend of analytic engineers, analysts, and data scientists based on the domain expertise needed to best serve our clients. 59 Deferred revenue Deferred revenue consists of client billings in advance of revenue being recognized from our technology and professional services arrangements. We primarily invoice our clients for technology arrangements annually or quarterly in advance. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue and the remaining portion is recorded as deferred revenue, net of current portion on our condensed consolidated balance sheets. Cost of revenue, excluding depreciation and amortization Cost of technology revenue. Cost of technology revenue primarily consists of costs associated with hosting and supporting our technology, including third-party cloud computing and hosting costs, license and revenue share fees, contractor costs, and salary and related personnel costs for our cloud services and support teams. We anticipate cost of technology revenue as a percentage of technology revenue will generally decrease over the long term. However, we expect cost of technology revenue as a percentage of technology revenue to fluctuate and potentially increase in the near term, primarily due to additional costs associated with migrating DOS clients to Health Catalyst Ignite and the impact of the Vitalware Transaction. Cost of professional services revenue. Cost of professional services revenue consists primarily of costs related to delivering our team’s expertise in analytics, strategic advisory, improvement, and implementation services. These costs primarily include salary and related personnel costs, travel-related costs, and outside contractor costs. The January 2025 Restructuring Plan, the August 2025 Restructuring Plan (together with the January 2025 Restructuring Plan, the 2025 Restructuring Plans), and restructuring activities related to Project Nexus together have reduced our ongoing cost of professional services revenue. Project Nexus has also increased cost of professional services revenue in the second quarter of 2026 due to severance costs, but, consistent with the impact of the 2025 Restructuring Plans, we expect the reduction in headcount will reduce future, ongoing cost of professional services revenue. Our cost of professional services revenue may fluctuate as a percentage of our revenue from period to period due to the timing and extent of non-recurring professional services arrangements. Operating expense Sales and marketing. Sales and marketing expenses primarily include salary and related personnel costs for our sales, marketing, and account management teams, lead generation, marketing events, including our Healthcare Analytics Summit, marketing programs, and outside contractor costs associated with the sale and marketing of our offerings. We plan to continue to invest in sales and marketing to grow our client base, expand in new markets, and increase our brand awareness. The trend and timing of sales and marketing expenses will depend in part on the timing of our expansion into new markets and marketing campaigns. Our sales and marketing expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses. Research and development. Research and development expenses primarily include salary and related personnel costs for our data platform and analytics applications teams, subscriptions, and outside contractor costs associated with the development of products. We have developed an open, flexible, and scalable data platform. We plan to continue to invest in research and development to develop new solutions and enhance our applications library. The January 2025 Restructuring Plan, the August 2025 Restructuring Plan, and restructuring activities related to Project Nexus increased our research and development expenses in the first quarter of 2025, third quarter of 2025, and second quarter of 2026 respectively, in each case due to severance costs. However, we expect that the reduction in headcount pursuant to these restructuring initiatives will reduce future, ongoing research and development expenses. Our research and development expenses may fluctuate as a percentage of revenue from period to period due to the nature, timing and extent of these expenses. 60 General and administrative. General and administrative expenses primarily include salary and related personnel costs for our legal, finance, people operations, IT, and other administrative teams, including certain executives. General and administrative expenses also include facilities, subscriptions, corporate insurance, outside legal, accounting, directors’ fees, and the change in fair value of contingent consideration liabilities. Our general and administrative expenses may fluctuate as a percentage of our revenue from period to period due to the timing and extent of these expenses, including due to restructuring initiatives. Depreciation and amortization. Depreciation and amortization expenses are primarily attributable to our capital investment and consist of fixed asset depreciation, amortization of intangibles considered to have definite lives, and amortization of capitalized internal-use software costs. Impairment of goodwill and intangible assets. Goodwill is assessed for impairment annually on October 31 or more frequently if indicators of impairment are present or circumstances suggest that impairment may exist. If the carrying amount of the reporting unit exceeds its fair value, we recognize a goodwill impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Long-lived assets, including intangible assets, are also tested for recoverability as indicators of impairment arise, and if the carrying amount of an asset group is deemed not recoverable, we recognize a long-lived asset impairment charge based on the asset group's fair value compared to its carrying amount. Interest and other expense, net Interest and other expense, net primarily consists of interest expense from our debt arrangements offset by income from our investment holdings. Interest expense is primarily attributable to the Credit Agreement and also includes the amortization of deferred financing costs related to our debt arrangements. We expect our future interest expense to decrease significantly due to the closing of the Vitalware Transaction, which allowed us to eliminate our outstanding term loan arrangements under the Credit Agreement. Income tax provision Income tax provision consists of U.S. federal, state, and foreign income taxes. Because of the uncertainty of the realization of the deferred tax assets, we have a full valuation allowance for our net deferred tax assets, including net operating loss carryforwards (NOLs) and tax credits related primarily to research and development. As of December 31, 2025, we had federal and state NOLs of $787.8 million and $647.7 million, respectively, which will begin to expire for federal and state tax purposes in 2032 and 2026, respectively. Our existing NOLs may be subject to limitations arising from ownership changes and, if we undergo an ownership change in the future, our ability to utilize our NOLs and tax credits could be further limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 and 383 of the Code. Our NOLs and tax credits may also be limited under similar provisions of state law. On July 4, 2025, President Trump signed the OBBBA into law. The OBBBA includes numerous changes to existing tax law including extending or making permanent certain business and international tax measures initially established under the 2017 Tax Cuts and Jobs Act, which were set to expire. The OBBBA includes provisions providing current deductibility of certain property additions, limitations on interest deductions based on a tax EBITDA framework, and current deductibility of domestic research and development costs. These provisions were generally effective beginning in 2025, and we anticipate they will partially defer our income tax payments in future years and will not have a material impact on our effective tax rate in the near-term. 61 Results of Operations The following tables set forth our condensed consolidated results of operations data and such data as a percentage of total revenue for each of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) (in thousands) Revenue: Technology $ 48,795 $ 52,876 $ 98,263 $ 104,358 Professional services 21,692 27,845 42,980 55,776 Total revenue 70,487 80,721 141,243 160,134 Cost of revenue, excluding depreciation and amortization shown below: Technology(1)(2)(3) 18,188 18,352 35,471 35,917 Professional services(1)(2)(3) 17,439 24,128 35,449 49,741 Total cost of revenue, excluding depreciation and amortization 35,627 42,480 70,920 85,658 Operating expenses: Sales and marketing(1)(2)(3) 10,360 13,206 20,945 27,944 Research and development(1)(2)(3) 11,026 12,392 20,805 27,578 General and administrative(1)(2)(3) 11,928 8,284 25,888 22,446 Depreciation and amortization 10,979 12,684 23,094 25,004 Goodwill impairment 27,047 28,769 122,548 28,769 Total operating expenses 71,340 75,335 213,280 131,741 Loss from operations (36,480) (37,094) (142,957) (57,265) Interest and other expense, net (3,742) (3,803) (7,877) (7,159) Loss before income taxes (40,222) (40,897) (150,834) (64,424) Income tax provision (315) (81) (729) (296) Net loss $ (40,537) $ (40,978) $ (151,563) $ (64,720) (1)Includes stock-based compensation expense, as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Stock-Based Compensation Expense: (in thousands) (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 72 $ 295 $ 190 $ 514 Professional services 345 1,194 894 2,196 Sales and marketing 613 2,542 1,409 4,704 Research and development 366 1,316 956 2,449 General and administrative 1,313 2,976 3,030 6,003 Total $ 2,709 $ 8,323 $ 6,479 $ 15,866 62 (2)Includes acquisition-related costs, net, as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Acquisition-related costs (benefit), net: (in thousands) (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ — $ 33 $ 1 $ 107 Professional services — 56 6 176 Sales and marketing — (57) 3 441 Research and development — 190 6 357 General and administrative 1,958 (3,942) 4,379 (1,772) Total $ 1,958 $ (3,720) $ 4,395 $ (691) (3)Includes restructuring costs, as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Restructuring costs: (in thousands) (in thousands) Cost of revenue, excluding depreciation and amortization: Technology $ 296 $ — $ 296 $ 401 Professional services 264 145 566 1,142 Sales and marketing 1,251 — 1,360 352 Research and development 1,490 237 1,590 1,909 General and administrative 405 — 1,685 136 Total $ 3,706 $ 382 $ 5,497 $ 3,940 63 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue: Technology 69 % 66 % 70 % 65 % Professional services 31 34 30 35 Total revenue 100 100 100 100 Cost of revenue, excluding depreciation and amortization shown below: Technology 26 23 25 22 Professional services 25 30 25 31 Total cost of revenue, excluding depreciation and amortization 51 53 50 53 Operating expenses Sales and marketing 15 16 15 17 Research and development 16 15 15 17 General and administrative 17 10 18 14 Depreciation and amortization 16 16 16 16 Goodwill impairment 38 36 87 19 Total operating expenses 102 93 151 83 Loss from operations (53) (46) (101) (36) Interest and other (expense) income, net (5) (5) (6) (5) Loss before income taxes (58) (51) (107) (41) Income tax provision — — (1) — Net loss (58) % (51) % (106) % (41) % Discussion of the Three Months Ended June 30, 2026 and 2025 Revenue Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Revenue: Technology $ 48,795 $ 52,876 $ (4,081) (8) % Professional services 21,692 27,845 (6,153) (22) % Total revenue $ 70,487 $ 80,721 $ (10,234) (13) % Percentage of revenue: Technology 69 % 66 % Professional services 31 34 Total 100 % 100 % Total revenue was $70.5 million for the three months ended June 30, 2026, compared to $80.7 million for the three months ended June 30, 2025, a decrease of $10.2 million, or 13%. Technology revenue was $48.8 million, or 69% of total revenue, for the three months ended June 30, 2026, compared to $52.9 million, or 66% of total revenue, for the three months ended June 30, 2025. 64 The technology revenue decrease was primarily related to elevated churn levels and down-sell related to DOS to Ignite migrations, partially offset by growth from new clients. Professional services revenue was $21.7 million, or 31% of total revenue, for the three months ended June 30, 2026, a decrease compared to $27.8 million, or 34% of total revenue, for the three months ended June 30, 2025. The professional services revenue decrease was primarily due to our exit of certain lower margin TEMS arrangements and churn of some FTE-based arrangements. Cost of revenue, excluding depreciation and amortization Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Cost of revenue, excluding depreciation and amortization: Technology $ 18,188 $ 18,352 $ (164) (1) % Professional services 17,439 24,128 (6,689) (28) % Total cost of revenue, excluding depreciation and amortization $ 35,627 $ 42,480 $ (6,853) (16) % Percentage of total revenue 51 % 53 % Cost of technology revenue, excluding depreciation and amortization, was $18.2 million for the three months ended June 30, 2026, compared to $18.4 million for the three months ended June 30, 2025, a decrease of $0.2 million, or 1%. The decrease was primarily due to a $1.9 million decrease in salary and related personnel costs primarily due to restructuring activities related to Project Nexus and the 2025 Restructuring Plans, including stock-based compensation, partially offset by a $1.4 million increase in cloud computing and hosting costs largely from the expanded use of Microsoft Azure to serve existing and new clients. Cost of professional services revenue was $17.4 million for the three months ended June 30, 2026 and $24.1 million for the three months ended June 30, 2025, a decrease of $6.7 million or 27.7%. The decrease was primarily due to a $6.7 million decrease in salary and related personnel costs, including stock-based compensation, primarily due to restructuring activities related to Project Nexus and the 2025 Restructuring Plans. Operating expenses Sales and marketing Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Sales and marketing $ 10,360 $ 13,206 $ (2,846) (22) % Percentage of total revenue 15 % 16 % Sales and marketing expenses were $10.4 million for the three months ended June 30, 2026, compared to $13.2 million for the three months ended June 30, 2025, a decrease of $2.8 million, or 22%. The decrease was primarily due to a $4.0 million decrease in salary and related personnel costs, including stock-based compensation, partially offset by a $1.3 million increase in severance costs related to our restructuring activities related to Project Nexus. Sales and marketing expense as a percentage of total revenue decreased from 16% in the three months ended June 30, 2025 to 15% in the three months ended June 30, 2026. 65 Research and development Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Research and development $ 11,026 $ 12,392 $ (1,366) (11) % Percentage of total revenue 16 % 15 % Research and development expenses were $11.0 million for the three months ended June 30, 2026, compared to $12.4 million for the three months ended June 30, 2025, a decrease of $1.4 million, or 11%. The decrease was primarily due to a $1.8 million decrease in salary and related personnel costs, including stock based compensation and a $0.7 million decrease in contractor and outside service provider fees, partially offset by a $1.3 million increase in severance costs related to our restructuring activities related to Project Nexus. Research and development expense as a percentage of revenue increased from 15% in the three months ended June 30, 2025 to 16% in the three months ended June 30, 2026. General and administrative Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) General and administrative $ 11,928 $ 8,284 $ 3,644 44 % Percentage of total revenue 17 % 10 % General and administrative expenses were $11.9 million for the three months ended June 30, 2026, compared to $8.3 million for the three months ended June 30, 2025, an increase of $3.6 million, or 44%. The increase is primarily due to the prior year expense being netted down by a $5.2 million decrease in fair value of contingent consideration liabilities related to the earn-out associated with the Upfront acquisition. There was also a $1.2 million increase in acquisition related costs. These increases were partially offset by a $1.9 million decrease in salary and related personnel costs, including stock based compensation. General and administrative expense as a percentage of revenue increased from 10% in the three months ended June 30, 2025 to 17% in the three months ended June 30, 2026. Depreciation and amortization Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Depreciation and amortization $ 10,979 $ 12,684 $ (1,705) (13) % Percentage of total revenue 16 % 16 % Depreciation and amortization expenses were $11.0 million for the three months ended June 30, 2026, compared to $12.7 million for the three months ended June 30, 2025, a decrease of $1.7 million, or 13%. This decrease was primarily due to certain intangible assets from past business combinations becoming fully amortized or impaired. Depreciation and amortization expense as a percentage of revenue remained flat at 16% in the three months ended June 30, 2025 and 2026. 66 Goodwill impairment During the three months ended June 30, 2026, in connection with the Vitalware Transaction, certain assets and liabilities representing the Vitalware Business met the held for sale criteria as of the date of the announcement of the transaction. Immediately prior to such classification, elements of the disposal group were evaluated for impairment under their respective models as required and no impairment adjustment was recorded. Following the allocation of goodwill to the disposal group, we evaluated the remaining technology reporting unit for goodwill impairment due to the triggering event created by the transaction. Based on this interim test of goodwill, the fair value of the remaining technology reporting unit was below its carrying value, resulting in the recognition of a goodwill impairment charge of $27.0 million. During the three months ended June 30, 2025, we observed overall declines in our stock price and market capitalization, which along with a downward revision of our future revenue forecast, led to our conclusion that an impairment triggering event had occurred and therefore we performed a quantitative goodwill impairment test that resulted in a non-cash goodwill impairment charge of $28.8 million. Interest and other expense, net Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Interest income $ 924 1,659 $ (735) (44) % Interest expense (4,645) (5,787) 1,142 (20) % Other income (expense) (21) 325 (346) (106) % Total interest and other (expense) income, net $ (3,742) $ (3,803) $ 61 (2) % Interest and other expense, net decreased $0.1 million, or 2%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This change is primarily due to a $1.1 million decrease in interest expense from the settlement of our convertible senior notes in April 2025, partially offset by a $0.7 million decrease in interest income on our short-term investments and cash equivalents. Income tax provision Three Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Income tax provision $ (315) $ (81) $ (234) 289 % Our income tax provision consists of current and deferred taxes for U.S. federal, state, and foreign income taxes. As we have a full valuation allowance on our net deferred tax assets, our income tax provision typically consists primarily of minimal state and foreign income taxes, which is the case for the three months ended June 30, 2026 and 2025. 67 Discussion of the Six Months Ended June 30, 2026 and 2025 Revenue Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Revenue: Technology $ 98,263 $ 104,358 $ (6,095) (6) % Professional services 42,980 55,776 (12,796) (23) % Total revenue $ 141,243 $ 160,134 $ (18,891) (12) % Percentage of revenue: Technology 70 % 65 % Professional services 30 35 Total 100 % 100 % Total revenue was $141.2 million for the six months ended June 30, 2026, compared to $160.1 million for the six months ended June 30, 2025, a decrease of $18.9 million, or 12%. Technology revenue was $98.3 million, or 70% of total revenue, for the six months ended June 30, 2026, compared to $104.4 million, or 65% of total revenue, for the six months ended June 30, 2025. The technology revenue decrease was primarily related to elevated churn levels and down-sell related to DOS to Ignite migrations, partially offset by growth from new clients. Professional services revenue was $43.0 million, or 30% of total revenue, for the six months ended June 30, 2026, compared to $55.8 million, or 35% of total revenue, for the six months ended June 30, 2025. The professional services revenue decrease was primarily due to our exit of certain lower margin TEMS arrangements and churn of some FTE-based arrangements. Cost of revenue, excluding depreciation and amortization Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Cost of revenue, excluding depreciation and amortization: Technology $ 35,471 $ 35,917 $ (446) (1) % Professional services 35,449 49,741 (14,292) (29) % Total cost of revenue, excluding depreciation and amortization $ 70,920 $ 85,658 $ (14,738) (17) % Percentage of total revenue 50 % 53 % Cost of technology revenue, excluding depreciation and amortization, was $35.5 million for the six months ended June 30, 2026, compared to $35.9 million for the six months ended June 30, 2025, a decrease of $0.4 million, or 1%. The decrease was primarily due to a $4.1 million decrease in salary and related personnel costs, including stock-based compensation, partially offset by a $3.7 million increase in cloud computing and hosting costs largely from the expanded use of Microsoft Azure to serve existing and new clients. Cost of professional services revenue was $35.4 million for the six months ended June 30, 2026, compared to $49.7 million for the six months ended June 30, 2025, a decrease of $14.3 million, or 29%. This decrease was primarily due to a $13.9 million decrease in salary and related personnel costs including stock-based compensation and a $0.6 million decrease in severance costs associated with our restructuring activities. 68 Sales and marketing Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Sales and marketing $ 20,945 $ 27,944 $ (6,999) (25) % Percentage of total revenue 15 % 17 % Sales and marketing expenses were $20.9 million for the six months ended June 30, 2026, compared to $27.9 million for the six months ended June 30, 2025, a decrease of $7.0 million, or 25%. The decrease was primarily due to a $7.9 million decrease in ongoing salary and related personnel costs including stock-based compensation, partially offset by a $1.0 million increase in severance costs associated with our restructuring activities. Sales and marketing expense as a percentage of total revenue decreased from 17% in the six months ended June 30, 2025 to 15% in the six months ended June 30, 2026. Research and development Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Research and development $ 20,805 $ 27,578 $ (6,773) (25) % Percentage of total revenue 15 % 17 % Research and development expenses were $20.8 million for the six months ended June 30, 2026, compared to $27.6 million for the six months ended June 30, 2025, a decrease of $6.8 million, or 25%. The decrease was primarily due to a $4.1 million decrease in ongoing salary and related personnel costs, including stock-based compensation, a $1.9 million decrease in contractor and outside services fees, and a $0.3 million decrease in severance costs related to our restructuring activities. Research and development expense as a percentage of revenue decreased from 17% in the six months ended June 30, 2025 to 15% in the six months ended June 30, 2026. General and administrative Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) General and administrative $ 25,888 $ 22,446 $ 3,442 15 % Percentage of total revenue 18 % 14 % General and administrative expenses were $25.9 million for the six months ended June 30, 2026, compared to $22.4 million for the six months ended June 30, 2025, an increase of $3.4 million, or 15%. The increase is primarily due to the prior year expense being netted down by a $5.2 million decrease in fair value of contingent consideration liabilities related to the earn-out associated with the Upfront acquisition.. There was also a $2.0 million increase in acquisition related costs, and a $1.6 million increase in severance costs related to our restructuring activities. These increases were partially offset by a $4.2 million decrease in ongoing salary and related personnel costs, including stock-based compensation, and a $0.7 million decrease in occupancy related costs. General and administrative expense as a percentage of revenue increased from 14% in the six months ended June 30, 2025 to 18% in the six months ended June 30, 2026. 69 Depreciation and amortization Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Depreciation and amortization $ 23,094 $ 25,004 $ (1,910) (8) % Percentage of total revenue 16 % 16 % Depreciation and amortization expenses were $23.1 million for the six months ended June 30, 2026, compared to $25.0 million for the six months ended June 30, 2025, a decrease of $1.9 million, or 8%. This decrease was primarily due to certain intangible assets from past business combinations becoming fully amortized or impaired. Depreciation and amortization expense as a percentage of revenue remained flat at 16% in the six months ended June 30, 2025 and 2026. Goodwill impairment During the six months ended June 30, 2026, and 2025, we recorded impairment charges to goodwill as we observed overall declines in our stock price and market capitalization, which along with a downward revision of our future revenue forecast and Vitalware Transaction meeting the criteria for held for sale accounting, led to our conclusion that impairment triggering events had occurred and therefore we performed quantitative goodwill impairment tests that resulted in non-cash goodwill impairment charges of $122.5 million and $28.8 million, respectively. Interest and other expense, net Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Interest income $ 1,722 5,490 $ (3,768) (69) % Interest expense (9,387) (13,103) 3,716 (28) % Other income (expense) (212) 454 (666) (147) % Total interest and other (expense) income, net $ (7,877) $ (7,159) $ (718) 10 % Interest and other expense, net increased $0.7 million for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This change is primarily due to a $3.8 million decrease in interest income on our short-term investments and cash equivalents and a $0.7 million change in unrealized foreign currency exchange gain (loss) amounts, partially offset by a $3.7 million decrease in interest expense from the settlement of our convertible senior notes in April 2025. Income tax provision Six Months Ended June 30, 2026 2025 $ Change % Change (in thousands, except percentages) Income tax provision $ (729) $ (296) $ (433) 146 % Our income tax provision consists of current and deferred taxes for U.S. federal, state, and foreign income taxes. As we have a full valuation allowance on our net deferred tax assets, our income tax provision typically consists primarily of minimal state and foreign income taxes, which is the case for the six months ended June 30, 2026 and 2025. 70 Liquidity and Capital Resources As of June 30, 2026, we had cash, cash equivalents, and short-term investments of $103.4 million, which were held for working capital and other general corporate purposes, which may include, among other things, acquisitions and strategic transactions, such as share repurchases and debt reduction. Our cash equivalents and short-term investments are currently comprised of money market funds, but in the past have also commonly included U.S. treasury notes, commercial paper, corporate bonds, and U.S. agency securities. Since inception, we have financed our operations primarily from the proceeds we received through private sales of equity securities, payments received from clients under technology and professional services arrangements, borrowings under our loan and security agreements (including our Credit Agreement described below), our IPO, the Note Offering, and the Secondary Public Equity Offering (as defined below). Our future capital requirements will depend on many factors, including our pace of new client growth and expanded client relationships, technology and professional services renewal activity, and the timing and extent of spend to support the expansion of sales, marketing, development, share repurchases, and acquisition-related activities. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition would be adversely affected. We believe our existing cash, cash equivalents, and marketable securities will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months, though we may require additional capital resources in the future. Vitalware Transaction and Debt Extinguishment On the Vitalware Closing Date, we completed the previously announced disposition of our Vitalware Business, pursuant to which we received from Med-Metrix the payment of an aggregate base purchase price of $147 million, subject to customary adjustments for cash, indebtedness, net working capital and transaction expenses. Concurrently with the closing of the Vitalware Transaction, on the Vitalware Closing Date, we used the net cash proceeds received from the Vitalware Transaction, together with cash on hand, to voluntarily repay in full all outstanding obligations under the Credit Agreement, which resulted in the termination of the Credit Agreement and the simultaneous release in full of all liens thereunder. Credit Agreement We entered into the Credit Agreement on July 16, 2024 (the Closing Date). The Credit Agreement provides a five-year term loan facility in an aggregate principal amount of up to $225 million, consisting of an initial term loan in the aggregate principal amount of $125 million, which was funded on the Closing Date, and a delayed draw term loan facility in the aggregate principal amount of $100 million, which was undrawn on the Closing Date. We had the option to draw up to $40.0 million under the delayed draw facility within six months after the Closing Date and on October 29, 2024, we drew an additional principal amount of $37.7 million. We also had the option to draw up to an additional $60.0 million under the delayed draw facility within eighteen months after the Closing Date, but did not utilize this to draw down any additional debt. Borrowings under the Credit Agreement bear interest at a rate per annum equal to the secured overnight financing rate (SOFR) plus 6.5%. Commencing with the quarter ended December 31, 2024, we are required to make quarterly principal payments in an amount equal to 0.25% of the aggregate original principal amount. The final maturity date of the term loans is July 16, 2029.We used a portion of the net proceeds from the initial term loan together with cash on hand to repay in full the outstanding principal and accrued interest on our 2.50% Convertible Senior Notes due 2025 at maturity on April 14, 2025 and we expect to use the remaining net proceeds from the initial term loan for working capital and general corporate purposes. We used proceeds from the delayed draw term loan facility to fund our inorganic growth strategy through permitted acquisitions (including deferred purchase price or similar arrangements related thereto) and to pay fees, costs, and expenses in connection therewith. 71 As discussed above, in connection with the closing of the Vitalware Transaction, we voluntarily repaid in full all outstanding obligations under the Credit Agreement, using the net cash proceeds from the Vitalware Transaction together with cash on hand. The repayment in full of our obligations under the Credit Agreement resulted in the termination of the Credit Agreement and the simultaneous release in full of all liens thereunder. Refer to “Note 11—Debt” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding the Credit Agreement. Share repurchase plan During the third quarter of 2022, our board of directors authorized a share repurchase program to repurchase up to $40.0 million of our outstanding shares of common stock (Share Repurchase Plan). During the six months ended June 30, 2026, there were no shares repurchased. During the six months ended June 30, 2025, we repurchased and retired 1,103,601 shares of our common stock for $5.0 million at an average purchase price of $4.51 per share. The total remaining authorization for future shares of common stock repurchases under our Share Repurchase Plan is $24.8 million as of June 30, 2026. Convertible senior notes On April 14, 2020, we issued $230.0 million in aggregate principal amount of 2.50% Convertible Senior Notes due 2025, pursuant to an Indenture dated April 14, 2020, with U.S. Bank National Association, as trustee, in a private offering to qualified institutional buyers. We received net proceeds from the sale of the Notes of $222.5 million, after deducting the initial purchasers’ discounts and offering expenses payable by us. The Notes are senior, unsecured obligations and accrued 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 were fully repaid in cash at maturity on April 14, 2025. Refer to “Note 11—Debt” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional details regarding maturity of the Notes. Cash flows The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 (in thousands) Net cash provided by (used in) operating activities $ 18,786 $ (8,717) Net cash (used in) provided by investing activities (8,504) 44,537 Net cash (used in) financing activities (454) (234,811) Effect of exchange rate changes (53) 58 Net increase (decrease) in cash and cash equivalents $ 9,775 $ (198,933) Operating activities Our largest source of operating cash flows is cash collections from our clients for technology and professional services arrangements. Our primary uses of cash from operating activities are for employee-related expenses, marketing expenses, and technology costs. For the six months ended June 30, 2026, net cash provided by operating activities was $18.8 million, which included a net loss of $151.6 million. Non-cash adjustments primarily consisted of $122.5 million goodwill impairment charges, $23.1 million in depreciation and amortization, $6.5 million in stock-based compensation, and $1.0 million from the provision for expected credit losses. 72 For the six months ended June 30, 2025, net cash used in operating activities was $8.7 million, which included a net loss of $64.7 million. Non-cash adjustments primarily consisted of $25.0 million in depreciation and amortization, $15.9 million in stock-based compensation, $1.1 million from the provision for expected credit losses, offset by a $5.2 million change in the fair value of contingent consideration liabilities and $0.9 million in net interest income from the accretion of discounts on our short-term investments Investing activities Net cash used in investing activities for the six months ended June 30, 2026 of $8.5 million was primarily due to $46.1 million provided from the sale and maturity of short-term investments, reduced by $43.7 million in purchases of short-term investments and $9.4 million of capitalized internal-use software development costs. Net cash provided by investing activities for the six months ended June 30, 2025 of $44.5 million was primarily due to $143.2 million provided from the sale and maturity of short-term investments, reduced by $46.8 million in purchases of short-term investments, $41.1 million used in the acquisition of businesses, and $10.1 million of capitalized internal-use software development costs. Financing activities Net cash used in financing activities for the six months ended June 30, 2026 of $0.5 million was primarily due to $0.8 million used in the repayment of principal on our debt facilities, reduced by $0.4 in proceeds from our ESPP. Net cash used in financing activities for the six months ended June 30, 2025 of $234.8 million was primarily due to $230.8 million used in the repayment of principal on our debt facilities and $5.0 million of share repurchases, reduced by $1.0 million in proceeds from our ESPP. Off-Balance Sheet Arrangements As of June 30, 2026, we did not have any relationships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Critical accounting policies and estimates are those that we consider critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. Due to the high level of inflation, rising interest rates, and market volatility, amongst other factors, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions. We will continue to actively monitor the impact of the recent inflationary pressures, market volatility caused by bank failures, the challenging macroeconomic environment in general, and other factors on our estimates, including our expected credit losses, goodwill impairment assessments, and the fair value and/or recoverability of other assets. 73 There have been no material changes to our critical accounting policies and estimates as previously disclosed in our Annual Report on Form 10-K, filed with the SEC on March 12, 2026. See “Note 1—Description of Business and Summary of Significant Accounting Policies” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding the Company’s significant accounting policies. Contractual Obligations and Commitments There have been no material changes to the contractual obligations as disclosed in our Annual Report on Form 10-K, filed with the SEC on March 12, 2026. Recent Accounting Pronouncements See “Note 1—Description of Business and Summary of Significant Accounting Policies” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information regarding recently issued accounting pronouncements. 74