v3.26.1
Business Combinations
 3 Months Ended
Mar. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
The business acquisitions discussed below are included in our results of operations from the date of acquisition.
2025 Acquisition
Upfront Healthcare Services, 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. The purchase resulted in Health Catalyst acquiring 100% ownership in Upfront.
An additional 106,196 shares of our common stock subject to restriction agreements (restricted shares) were issued pursuant to the terms of the acquisition agreement. The value of these restricted shares is recognized as post-acquisition stock-based compensation expense on a straight-line basis over the vesting term. Refer to Note 13-Stock-Based Compensation for additional details related to our stock-based compensation.
The following table summarizes the acquisition-date fair value of consideration transferred and the identifiable assets purchased and liabilities assumed as part of our acquisition of Upfront (in thousands):
Assets acquired:
Accounts receivable, net
$1,544 
Prepaid expenses and other assets655 
Property and equipment, net
114 
Right-of-use assets288 
Developed technology16,400 
Client relationships11,700 
Trademarks600 
Total assets acquired31,301 
Less liabilities assumed:
Accrued and other current liabilities1,558 
Deferred revenue2,352 
Operating lease liability284 
Total liabilities assumed4,194 
Total assets acquired, net27,107 
Goodwill52,912 
Total consideration transferred, net of cash acquired$80,019 
The acquired intangible assets were valued utilizing either an income approach or a cost approach as deemed most applicable, and include client relationships, developed technology, and trademarks that will be amortized on a straight-line basis over their estimated useful lives of six years, three years, and three years, respectively. The resulting goodwill from the Upfront acquisition was fully allocated to the technology reporting unit and is not deductible for income tax purposes.
In addition to the purchase price, we agreed to make retention bonuses in an aggregate amount of up to $1.1 million in cash payments and the issuance of up to approximately 151,148 restricted shares to certain Upfront management team members, a portion of which is variable based upon the achievement of earn-out performance targets. The retention bonuses are recorded as post-combination compensation expense and adjusted out of our purchase price consideration. During the three months ended March 31, 2025, we recognized compensation expense of $0.9 million and stock-based compensation expense of $0.5 million related to these retention bonuses and 86,975 of the restricted shares that vested. There was no additional compensation expense, including stock-based compensation expense, recognized related to these retention bonuses during the three months ended March 31, 2026.
Unaudited Pro Forma Financial Information
The following table reflects our unaudited pro forma combined results of operations for the years ended December 31, 2025 and 2024 as if the acquisition of Upfront had taken place on January 1, 2024 (in thousands):
Year Ended December 31,
20252024
(unaudited)
Pro forma net loss$(183,745)$(83,747)
The unaudited pro forma information is presented for informational purposes only and is not intended to present actual results that would have been attained had the acquisition been completed as of January 1, 2024 or to project potential results as of any future date or for any future periods. The unaudited pro forma information, including adjustments, are based upon available information and certain assumptions that we believe are reasonable. Pro forma revenue has not been presented for the Upfront acquisition as the impact to our condensed consolidated financial statements was not material.
The nature and amount of material, nonrecurring pro forma adjustments directly attributable to the Upfront acquisition which are included in the pro forma net loss, as applicable, are summarized as follows (in thousands):
Year Ended December 31,
20252024
(unaudited)
Amortization of acquired intangible assets
$(438)$(7,617)
Acquisition-related costs, net
(4,158)6,143