Health Catalyst Could Slump When Lockup Expires

When the 180-day lockup period for Health Catalyst Inc. (HCAT) expires on January 21, 2020, the company's pre-IPO shareholders and insiders may choose to sell more than 28 million shares in the secondary market. The number of currently-restricted shares dwarfs the 8 million shares currently trading pursuant to the IPO. Significant sales of currently-restricted stock could flood the secondary market and cause a sharp, short-term decline in share price.

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Source: S-1/A

Trading in Health Catalyst has been somewhat mixed during this six-month period, although the stock still has a return from IPO of more than 35%. The stock was priced at $26 and closed on its first day of trading at $39.17, for an increase of 50.7%. The shares climbed to a high of $48.63 on August 12 but then began a decline reaching $26.44 on October 9. The share price has recovered, and currently, the stock trades around $35-36.

Business Overview: Provider of a Data Operating System for the Healthcare Industry

Health Catalyst provides data and analytics technology products and services to the healthcare industry. Their solution is a cloud-based platform with analytics software. They also provide professional services expertise. They target healthcare providers, which utilize the Health Catalyst solution to manage data, mine for analytical insights, improve operational efficiency, and achieve measurable clinical, operational, and financial benefits.

Source: HCAT website

Health Catalyst uses a four-prong approach to provide these solutions to its clients. They include its data platform, analytics applications, services expertise, and engagement. The company calls this its Health Catalyst Flywheel.

Health Catalyst uses adaptive data architecture, which gives its data model flexibility and agility. Implementation typically takes several weeks versus months or years for conventional approaches to health industry data management. Their solution enables healthcare providers to identify trends, map plans, and make sustainable improvements by making process and organizational changes for greater efficiency.

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Disclosure: I am/we are short HCAT.

Disclaimer: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any ...

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