Health Catalyst, Inc.HCAT
Health Catalyst, Inc. Fair Value Disclosure
Fair Value of Financial Instruments
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 were as follows (in thousands):
| December 31, 2025 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Money market funds | $ | 45,062 | $ | — | $ | — | $ | 45,062 | |||||||||||||||
| U.S. treasury notes | 37,487 | — | — | 37,487 | |||||||||||||||||||
| Commercial paper | — | 7,431 | — | 7,431 | |||||||||||||||||||
| Contingent consideration liabilities | — | — | (250) | (250) | |||||||||||||||||||
| Total | $ | 82,549 | $ | 7,431 | $ | (250) | $ | 89,730 | |||||||||||||||
Assets measured at fair value on a recurring basis as of December 31, 2024 were as follows (in thousands):
| December 31, 2024 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Money market funds | $ | 186,872 | $ | — | $ | — | $ | 186,872 | |||||||||||||||
| U.S. treasury notes | 177,199 | — | — | 177,199 | |||||||||||||||||||
| Commercial paper | — | 13,941 | — | 13,941 | |||||||||||||||||||
| Corporate bonds | — | 9,601 | — | 9,601 | |||||||||||||||||||
| Total | $ | 364,071 | $ | 23,542 | $ | — | $ | 387,613 | |||||||||||||||
There were no transfers between Level 1 and Level 2 of the fair value measurement hierarchy during the years ended December 31, 2025 and 2024.
Convertible senior notes
On April 14, 2025, we fully settled the principal amount of the convertible senior notes in cash. As of December 31, 2024, the estimated fair value of our convertible senior notes, with aggregate principal totaling $230.0 million, was $227.5 million. We estimate the fair value based on quoted market prices in an inactive market on the last trading day of the reporting period (Level 2). These convertible senior notes were recorded at face value less unamortized debt discount and transaction costs on our consolidated balance sheets. Refer to Note 10—Debt for further information.
Nonrecurring fair value measurements
We recorded impairment charges of $6.9 million, $2.2 million, and $4.1 million during the years ended December 31, 2025, 2024 and 2023, respectively, related to the impairment of ROU assets, leasehold improvements, and furniture and fixtures associated with recently subleased office space. These impairment charges were derived from the difference between the carrying value and the fair value of the relevant asset groups. The fair value of these asset groups was estimated using a discounted cash flow analysis of the subleased space and included certain unobservable (Level 3) inputs, including the anticipated future sublease terms and rates. Refer to Note 9—Leases for further information.
We recorded goodwill impairment charges totaling $105.4 million during the year ended December 31, 2025. The impairment charges were derived from the difference between the carrying value and the fair value of our reporting units. The fair value of these reporting units was estimated using an income and market-based approach and included certain unobservable (Level 3) inputs. We also recorded intangible asset impairment charges of $4.8 million during the year ended December 31, 2025. The intangible asset impairment charges were derived from the difference between the carrying value and the fair value of the relevant asset group. The fair value of the asset group was estimated using an income and market-based approach and included certain unobservable (Level 3) inputs. Refer to Note 4—Goodwill and Intangibles for further information.
Level 3 fair value measurements
The Upfront acquisition consideration included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets for Upfront during an earn-out period that ends on December 31, 2026. The Upfront contingent consideration is capped at $33.4 million and will be paid 63% in equity and 37% in cash to the extent achieved. We value Upfront’s expected contingent consideration and the corresponding liability using the Monte Carlo simulation valuation model using a distribution of potential outcomes of potential pay-out scenarios.
The outstanding contingent consideration liability is categorized as Level 3 fair value measurement and is remeasured as of each reporting period. The aggregate intrinsic value of the revenue-based earn-out contingent consideration liability is zero based on a point estimate of our internal forecasting of the ultimate earn-outs that will be earned as of December 31, 2025. The recurring Level 3 fair value measurements of the contingent consideration liability includes the other following significant inputs as of December 31, 2025:
| Valuation Method | Market Price of Revenue Risk | Revenue Volatility | Expected Term (years) | Risk-free interest rate | ||||||||||||||||||||||||||||
Revenue-based earn-out liabilities | Monte Carlo | 12% | 40% | 1 | 3.7% | |||||||||||||||||||||||||||
The following table sets forth a summary of the changes in the estimated fair value of the contingent consideration liabilities, which are measured at fair value on a recurring basis using significant unobservable inputs (Level 3) (in thousands):
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | |||||
Balance as of December 31, 2024 | $ | — | |||
Acquisition-date contingent consideration liability from Upfront acquisition (see Note 2) | 7,313 | ||||
Change in fair value of contingent consideration liability | (7,063) | ||||
Balance as of December 31, 2025 | $ | 250 | |||
The Lumeon and Carevive acquisition consideration also included an initial estimate for contingent consideration based on certain revenue-based earn-out performance targets during an earn-out period that ended on June 30, 2025. The revenue-based earn-out performance targets were not met and no earn-out payments were made related to these acquisitions.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 28, 2020 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.