Health Catalyst downgraded to In Line from Outperform at Evercore ISI

Evercore ISI downgraded Health Catalyst (HCAT) to In Line from Outperform with a price target of $4, down from $6. Despite the pullback in the company’s valuation year-to-date, it faces potential headwinds both in 2025 and beyond that warrant a more cautious view on both Health Catalyst’s revenue and EBITDA outlooks, the analyst tells investors in a research note. Evercore believes Street estimates are not capturing the impact of the company’s not profitable ambulatory TEMS pilot. Health Catalyst is exiting this pilot, which should help EBITDA in the second half of 2025, but there is “some choppiness” in Q1 related to timing, Evercore contends. The firm also sees potential headwinds later in 2025 and 2026 from potentially lower Medicaid coverage weighing on margins as well as the potential impact from higher medical supply and pharmaceutical dispensing costs given the recently updated tariffs.