We’re now three times our size from a revenue perspective. We’ve shifted from meaningful negative EBITDA to meaningful positive EBITDA. And we’re excited, as we think forward to the next number of years that will continue to mature as more of a grown-up company that has meaningful predictability, has meaningful consistency. Now, what we didn’t anticipate in 2019 was that within seven or eight months of going public, we would have a global once-in-a-century pandemic to deal with. So that was interesting, and it’s massive, and disproportionate impact on our end market in healthcare and healthcare providers, in particular. And so that would be followed by a very brief respite in 2021. And then an incredibly disruptive and challenging financial environment due to the inflation impacts in 2022, 2023, that really hit our health system end market really, really hard.
And for the vast majority of that time in 2022 and in most of 2023, the average health system operating income was negative. And so that was a very difficult time for our end market, and by extension, for us to work our way through. I’m really proud of the fact that that we found a way to continue to support our clients through all of those difficulties over the past five years, the COVID difficulties, the inflation-related difficulties. And we’re certainly encouraged, as we mentioned in our prepared remarks, to see some of that financial pressure subsiding and the end market operating environment improving. We’re also grateful to be at greater size and scale as a company, with over $300 million of projected revenue at the midpoint point of our guidance this year, and meaningful and growing fast EBITDA margin expansion.
And those are all difficult things to enable. And we’re excited about that opportunity. Now, through all of those difficulties, I think one of the difficulties that we also faced was the need to shift our mix in our portfolio of solutions, especially when the financial pressure was greatest to those parts of our portfolio that offered near-term cost savings in hard dollar terms. And that’s where we’ve found that in the back half of 2022 through much of 2023. A lot of our growth and expansion came through tech-enabled managed services, which are fantastic offerings for our clients but they’re lower margin as well. But during that time, there was less appetite for new technology opportunities. And yet, we’re grateful now, especially starting in the latter part of 2023 and in through Q1 to the present to see as that end market improves, more of an appetite, more of an openness to our full portfolio.
And that does inform our expectation, as we have shared, that we will see a reacceleration in our growth back to double-digit growth from a bookings perspective this year and from a revenue perspective in 2025. And we’re excited to develop that discipline and that consistency of execution to be able to do that, while also continuing to execute well around our profitability expansion. Those are hard things to do, those are grown-up things to do. And we’ll have to work every day to enable that to occur. But I’m certainly encouraged to see that our clients remain loyal to Health Catalyst. They’re excited about the next-generation of our technology offerings. There’s more of an openness and appetite for the technology components of our solution now than there was, particularly during the financial pressures.
And those are all reasons why I have personally been a meaningful buyer of shares, why I’m grateful to be one of the largest shareholders of the company, and why I’m really bullish and optimistic for the future. Anything you’d add, Jason?
Jason Alger: Yeah. So the one thing that I would add, and this is reiterating some of what Dan mentioned is, one lesson learned is the importance of being able to be agile and really meet our clients, where they are. We have went through some challenging macroeconomic times. And I’m grateful that we did have an offering that could support our clients through those times and allow for financial savings and hard-dollar ROI identification. So we’ve seen some swings on the pendulum, where at times we were attacked-focused, at times we were more service-focused. Moving into 2024, we are taking a bit more of a balanced approach. We’re focused on profitable growth, but also focused on our TEMS offering and being thoughtful around growing through TEMS as well.
John Ransom: Yeah, that — I’ve been doing this job a long time. That might have been the longest answer I’ve ever gotten, but it was a good one. It was worthwhile. And I promise I didn’t skip this in advance, so that was a great answer. So my other question is — you’ve hit on this a little bit, but as you think about the end market healing, you look at companies selling into the hospital space and they hit this inevitable top line growth that mirrors the growth of their end market, and you can think of all the mature vendors and some of our public to sell into the hospital industry. And then you also look at HCIT. And HCIT companies or software companies tend to hit the wall at $300 million of revenue, according to McKinsey or somebody.
But how do you — when you think about the long term, how do you avoid falling into the trap of either just growing at the rate of your end market or also just hitting the wall as a software company that — and I don’t really frankly understand the gravity of what $300 million is the number. But I’m just curious if you’ve thought about that? And just how do you, long term, avoid those two traps? Thanks.
Daniel Burton: Yeah. Great question, John. So I’ll try to be a little more brief in this answer. But that was an opportunity for reflection over the last five years, so I appreciate you asking me the first question. So as it relates to the end market and us moving forward as a company, I think implied in your question is what is it that gives us confidence that we will see a reacceleration, from single-digit percentage growth to double-digit growth like we’ve forecasted as we shared in our most recent earnings call. I think there’s a few dynamics that really help us. First, remember that we provide both technology and services, and it’s a relatively large proportion of both. And so we see meaningful growth opportunities from a technology perspective, we also see meaningful growth opportunities from a services perspective, and tech-enabled managed services kind of blend both.
And part of what we’ve seen is, as our end market continues to need to drive more and more efficiency, there also is a trend line of consolidation to fewer and fewer vendors that are strategic partners. And those fewer vendors do have the opportunity to continue to grow at a faster pace than the industry as they consolidate and provide more to these existing clients. And there have been examples like that. Epic is a good example of that, where they have continued to grow even though they’re at around $4 billion of revenue and yet they’re still growing at a double-digit pace because their client partners are choosing to consolidate and do more with Epic. We see a similar pattern with our client base, where they’re choosing to do more and more with Health Catalyst.
And one example of that is the amount that our clients who choose to add tech-enabled managed services to the overall solution set spend about four times as much with Health Catalyst; around $8 million-plus with Health Catalysts per year versus our overall DOS subscription client average. That’s a pattern that we believe will continue really meaningfully. One of the elements that certainly came out as a silver lining to our experience during the difficulties of 2022 and 2023 was that our tech-enabled managed services offering and our ability to offer that hard-dollar guaranteed savings that’s right in the contract is really important. It’s really needed by our clients, and it continues to be a really meaningful part of our pipeline. And we’ve learned that we can consistently execute against a playbook that enables us to build a profitable business in offering that out that.
That makes us more and more strategic partner to our clients. It gives us tremendous growth opportunity where we’re not talking about just barely outpacing the industry growth, but in many cases, as we’ve announced some of these tech-enabled managed services deals, these are a doubling of the size of the relationship, or a tripling in the size of the relationship. And there’s more and more need that we don’t believe will go away over the next few decades for health systems to become more and more efficient. And we’re getting better and better at delivering against those efficiency oriented solutions. So that to us, represents a really meaningful long-term opportunity that plays to the strength of our technology value proposition, as well as our willingness to do the managed services activity that put us right down in the trenches with our clients to reinforce that we are one of those that shortlist a really strategic partners.
And I think that will provide many, many years of double-digit percentage growth opportunity for Health Catalyst.
Operator: We go next now to Daniel Grosslight with Citi.
Daniel Grosslight: Hey. This is one we saw for Daniel. Just had a question on how should we think about the cadence of tech margins as you migrate clients to the new system? Thanks.
Daniel Burton: Yeah, great question. I’ll share a few thoughts, and then, Jason, please add anything as well. So as in all things, there are puts and there are takes. In the near term, as Jason shared in the prepared remarks, there are some near-term migration expenses that we have incorporated into our 2024 operating plan. And that will be part of the next couple of years, as we migrate the vast majority of our existing clients onto the Ignite platform, so that’s a negative. However, that’s offset. And one of the reasons why even with some of those incremental migration costs you’ve seen our technology gross margins essentially stay flat, is that the underlying profile from a gross margin perspective of our next-gen Ignite platform is a higher gross margin profile.
