Hi, everybody. Thank you so much. I'm very loud now. I hope I spoke you up. I'm Elizabeth Anderson. I'm the Health Care Services and Technology Analyst here at Evercore. Very excited to be joined by the Health Catalyst team, both Dan and Jason. So thank you, guys, for joining. Maybe to start off, one thing that's been very volatile and people always have lots of questions on is the hospital demand environment. You guys have been through probably a lifetime of cycles in the last five years, so to speak. So can you sort of level set where we are now in terms of the hospital demand environment and sort of what they're looking for?
Yeah, absolutely. So thank you, Elizabeth, for hosting us. It's great to be back with you and great conference today. Yes, the last five and a half years since Health Catalyst went public has been a harrowing roller coaster experience, no question, as it relates to the demand environment. The way I would classify the demand environment now that we're experiencing is really back to pre-pandemic levels. So it feels very healthy, very normal, and a lot like when we went public in 2019 before the pandemic and before the heavy inflation pressures that hit in 2022, 2023. We started to see that demand environment kind of coming back to a really strong, normal environment in late 2023 when inflation really started to come down and gave enough reassurance to our end market buyers in that next budget cycle to start thinking more like pre-pandemic levels.
And so for about a year now, we've seen that that pipeline dynamic feels a lot more normal. And we're seeing conversion rates and pipeline growth. And I think particularly on the new client side, we've seen a real uptick. And part of that uptick is driven by the end market just improving. Part of that uptick for us has been our next generation data platform, Ignite. It's just much more modular and flexible. And it's easier to get started with Health Catalyst. So on the new client side, that's something that we're experiencing. And one of the reasons we raised our guidance in terms of the new logos that we expect this year to be the best year in the company's history in terms of new logos.
On the existing client side, we are seeing a shift from where we were in 2022 and much of 2023 where there were such negative operating margins that our clients were experiencing that they really only were interested in talking about stuff that would deliver near-term cost savings, and that's where we saw a lot of overperformance in certain parts of our portfolio, like tech and human services, which delivers that cost savings. It also, for us, is the lowest margin part of our portfolio, so about a year ago, we were delighted to see the rest of the portfolio kind of opening back up, and this year, from a sales perspective, we've been able to focus a lot more on the highest profit parts of our portfolio, and we've seen overperformance in tech expansion with existing clients.
We're seeing that overperformance on the new client side, which tends towards skewing a little bit more towards tech versus services, so all in all, it feels like we're back to pre-pandemic levels, and that's a really good thing.
Yeah, now, that makes a ton of sense. Given your customers' booking budget cycles, I don't need to tell you, 2Q and 4Q are generally sort of bigger quarters in terms of bookings. How would you describe sort of the fourth quarter in terms of the bookings outlook and maybe the types of services if there's a change in that that people are interested in?
Yeah, we feel really good about it. Q2 and Q4 do tend to be the larger bookings quarters for us. We had a very good Q2. We were really pleased about that. And then we're tracking really well in Q4. There's always lots of wood to chop. And December seems to always be a really busy month all the way up till 11:59 P.M. on December 31. I expect this year to be no different. But I feel really good about the new client pipeline. I feel really good about our existing client pipeline and excited to see. And that was informing at our earnings call a little less than a month ago, that reiteration that we feel confident we're returning to that double-digit top-line growth that we've talked a lot about and profitable growth where we can maintain at least 50% EBITDA growth next year as well.
When I look at the stock price as of Monday and even more so the last two days, my goodness, we're not being valued as a double-digit top-line grower or a 50-plus% EBITDA grower. So we're excited to share that update at the next earnings call and then hopefully see that reflected in our share price.
Yep, now, that makes sense. And if we think about sort of what current customers or existing customers have been adding on, are there certain things that they have been sort of gravitated to, given that they probably already have some of your core portfolio offerings?
Yeah, we've been encouraged to see at the apps layer, which is our most profitable layer, certain apps performing really well. So in the finance category, our Vitalware solution just continues to be really, really strong. It's been recognized for many years as the industry-leading Chargemaster management solution. In RevCycle, it has a hard dollar ROI associated with it. And it just continues to perform really well. It also provides us with interesting adjacent cross-sell opportunities with another app in the financial category that's been a strong performer for us, which is PowerLabor and PowerCosting. Vitalware helps you on the revenue side. PowerLabor, PowerCosting helps you really on the cost side of the equation. But it's a similar buyer persona. It's all within the CFO's purview. So those have been performing really well.
The other area I would highlight at the apps layer that's really come back as operating margins have improved is the clinical improvement category, the pop health category, where in the time of really high inflation, that was an underperforming area where folks just said, we don't have the budget. We've got to hunker down, and that's really come back this year, and we're seeing demand for our patient engagement care management solutions, some of which were recently acquired in Lumeon and in Carevive. And that's been encouraging to see.
Got it. And have you seen a change in the broader competitive landscape? Certain of your competitors maybe had a ton of funding. And then Cerner didn't survive the last couple of years quite as nicely as you guys did. Has that really changed? Are customers really focused on the financial viability of their vendors? I would think so. And I think that would be to your advantage as well. But maybe talk to us sort of if that's come into sort of any of the decision-making as well.
It has. And I think particularly the apps layer, you've got a ton of startups, about 1,000 startups that are each doing something, in our opinion, quite good and interesting in many cases, solving one use case. But most all of them are not going to make it on their own as independent companies. The TAM isn't large enough. They're only solving one use case. And there are a lot of concerns that our end market clients have about partnering with a really small company. That's one of the reasons why we believe we should continue to be a consolidator, where we find those diamonds out there that have a great solution to an important problem that's in one of our five swim lanes. So we have five areas of focus. We're going to stick to those five swim lanes.
There are hundreds of startups that kind of fit within those swim lanes. When we acquire one of those companies and then we wrap around it our infrastructure, which includes our security infrastructure, which is a big concern for many of our clients, it's really reassuring for them. We integrate it with our platform, which is another benefit. It simplifies their relationship management. Most of our clients want to consolidate with two or three really key strategic long-term partners. We're honored to be one of those. That's where I think that that competitive landscape is favoring us. We try to keep our ear to the ground. We ask clients to be a sourcing partner for us when we think about M&A and consolidation. When they see an app that's really cool, that is solving a problem really well, we want them to tell us.
That informs our M&A. The most recent example that we announced is Intraprise Health. They, like Vitalware, have been rated by KLAS as the industry leader in that specific part of security that they operate in, which is in certification. They give us this beachhead in a must-have area, which is security. It fits within our infrastructural area of focus. We're always asked about security anyway by the CIO and the CISO. This gives us an extender, a natural adjacency, where we can help our clients have a secure infrastructure, a certified infrastructure, in addition to making sure that we're providing that security infrastructure as well.
That makes a ton of sense. One question I've heard from a lot recently is, obviously, as you talked about your core customers doing better financially over the last year. Some of that has been driven by increased utilization across different categories: Medicare, you can think of Medicaid, et cetera. How do we think about go forward? If people are worried, OK, utilization is peaking in terms of growth and might just settle out and stabilize or might go down a bit. Some hospitals might have different payment structures given some of the new potential Trump administration policies about Medicaid and the exchanges. How do we think about the potential impact if people are sort of trying to figure out how those changes could impact your business?
Yeah, great questions, so there are always puts and takes. There are always headwinds and tailwinds, and I think we're all kind of studying and trying to understand what the impact of the new administration will be, how that will all play out. Our assessment is we see more tailwinds than headwinds, and the single biggest tailwind, if it plays out this way, that in many ways could overwhelm all the other factors, is the macro environment. When we went through the difficulty of 2022, 2023, it was really inflation that drove the huge labor cost increases, the huge supply cost increase, and kind of overwhelmed a lot of other factors, like utilization or other factors. When that came down, when inflation improved in 2023, it was overwhelmingly positive, and you look at the factors that move operating margin.
And that's something that we focus a lot on, is how is our end market client base doing from an operating margin perspective? They, on average, crossed over into break-even to positive territory starting about a year ago. And the labor cost and the supply cost was the primary driver of that. Certainly, utilization and some of the other factors, the regulatory factors, play in on the margins. Utilization is very, very important. But we're not seeing huge swings in that regard. But the labor cost and supplies cost coming down from 10%, 11%, 12% year over year to 3%, 2.5%, that's a huge impact. And that was the single biggest factor that really moved the industry from, say, a negative 3% operating margin to now, if you look at the Kaufman Hall reports, it's more in that 3%, 4% level, which is really a pre-pandemic level of performance.
That's the single biggest factor that I think is causing our pipeline performance to be really strong and giving CFOs, in particular, the confidence to move forward with investments.
OK, now, that makes sense. One thing you guys have been talking about recently is sort of the increased demand on the health information exchanges and international customers. What's driving that acceleration in growth?
Yeah, those are exciting, for sure, for us. And let me take each one individually. So with health information exchanges, it's interesting. We've been investing in that space. And we've acquired some capabilities. So KPI Ninja was a recent acquisition that was focused in the health information exchange space. Going back six years, we acquired Medicity. That was one of our first acquisitions, which is also focused in health information exchange. And then we've been investing in Ignite. Those three components in combination, Medicity, Ignite, and then KPI Ninja, we found is just we've put it together in a way that what we have to offer is just really compelling. It's market-leading. And our win rate has been going up in the health information exchange space. We like that space because it is a very complex data space. It's very hard to win in HIEs.
If you think about a health information exchange, it's not one entity. It's a member-based group that serves usually a whole state, like the state of Wisconsin or the state of Colorado or multiple states, and everyone that is a health care provider in that space, it could be clinics, it could be hospitals, and the exchange of data between all of those organizations is what you've got to manage. That's very complex. It's also very sticky, so once you are that backbone, and that's really what we are, we're the data and analytics backbone for a statewide HIE, you're not going to rip that out. That's a permanent part of the infrastructure, and there are very few companies that can handle that data complexity, and that is one of the reasons why, on the other side of this, those implementations do take longer.
And that's something that we've shared, is this isn't like a normal Ignite implementation, where we're working with one health system. We're providing this infrastructure for over 100 organizations in most cases. And so that leads to a little bit of a lag in the revenue recognition because the implementation takes longer. But it's very sticky. We really like it long term. And international is the second category that you mentioned. That's less of a factor. We've really seen a lot of wins in the HIE space. But we did have one large win internationally that, for different reasons, is also more complex. And that one is also an implementation that will take a little bit longer. But we're really pleased with the growth in both of those categories.
Nice.
Yeah, and just one comment, Elizabeth, on those HIE contracts is that they can be larger contracts. Our typical Ignite average range is around $400,000-$1 million. We can see in these HIE contracts that they do exceed that million-dollar amount. And as Dan mentioned, the implementation timeline can be a bit longer. Our typical Ignite implementation is a couple to a few months. These HIE implementations can be six months plus to fully deploy the platform. And so we do expect that ramp in revenue to take a little bit longer than what we'd typically see.
OK, now, that's helpful context.
Thank you, Jason. I've been hogging all the questions. Sorry about that.
That's no worries. Maybe I'll ask one about the 4Q guidance. I'll put this through to Jason. So obviously, you guys have increased conviction about this return to double-digit growth. We've heard you talk about this multiple times. And if you go to the high end of your implied 4Q guidance range, it looks like you could maybe even get there this quarter. So if we think about the puts and takes and sort of the potential risks to achieving that in 2025 or even the fourth quarter, or some of the potential sources of upside that are more tentative out there but could drive further upside, how do we think about those two sort of upside and downside factors for the fourth quarter and into next year?
Yeah, yeah, we do have a little bit of a wider range as we approach the fourth quarter. Part of that reason is related to the international and HIE deployments. We're running up against those deployments, and once they are deployed, they will begin to ramp into revenue. As well as on the professional services side, as we've mentioned on previous calls, we have seen a bit of a shift to more project-based professional services revenue. Those contracts can have delivery milestones, and those delivery milestones can trigger lumps of revenue to happen at a point in time. We do have a list of deliveries that we're running up against for year-end. We'll work closely with our clients on the right timing to complete those deliveries.
And that can make a difference as to where we fall within that revenue range based on the number of deliveries that are completed this year. Anything that you'd add, Dan?
Well said. The only thing I would add would be with those implementations, those HIE implementations and international, there's no question that the revenue is going to get recognized. It's just exactly when precisely. What will be the end of Q4 will be early in 2025. That dynamic just reinforces that we continue, however that plays out, to have a lot of confidence in that return to double-digit top-line growth in 2025. We think that's the focus of that should be the focus, that top-line growth and the bottom-line growth for shareholders. As you know, Elizabeth, I'm a large shareholder in the company. And that's been a focus for me, for us. We're really excited to be in a position to kind of share that update early next year. And then certainly, our perspective is the company today is not being valued as a double-digit top-line grower.
To some degree, we deserve that. We're not growing at that pace today. When we return to that double-digit top-line growth, we're excited to see an appropriate adjustment in the share price as well.
That makes sense. As we were talking, you guys have talked about Ignite in various parts of some of your prior answers. What do you think have been the biggest learnings from your first set of Ignite integrations and rollouts?
Yeah, well, one learning is we love Ignite. It is helping us with new client ads because it's more modular, more flexible. And it's a great technology architecture for the next five years plus for our clients. And the feedback in terms of the architecture, the architectural strategy has been really, really positive. So that's one learning that we feel really good about. And we're excited about the stickiness of that decision to migrate to this platform. It's probably a five-year decision that our clients are making. So that's really good. We're also encouraged to see from a technical implementation perspective that standing up the Ignite environment is something we can do quickly and we're getting better and better at.
I think one of the dynamics that's challenging but good is that it's natural when you're making a migration to kind of step back and think, do a little bit of spring cleaning. Like, wow, we built all these visualizations on the old platform for this particular initiative or this particular project. It's like, do we still need 50 of them? Or are 10 the right number moving forward? That's really good work to do. It's not technical work. It's more strategy work. But it takes a little while. And so one of the things we're having to figure out is how do we enable our clients to do that good reflective work and clean things up but not have it slow down our migration process? And I think we're learning some things along those lines.
One of the dynamics is if they want to go through spring cleaning before we're ready to shut down the old environment, then we and they are incurring costs for both environments, and we don't get that margin uplift that we've talked about of 10 points, so I think one of our learnings is let's get it all migrated and then do the spring cleaning, and we'll shut down the old environment. We'll get the migration done more quickly, and then absolutely, we can go through more of a services exercise to step back, look at all those visualizations, clean it up, and that is one of the reasons why our services non-recurring initiative-based or project-based contracts have also overperformed this year. Some of that is this reflective spring cleaning work that's great. That tends to be a little bit higher margin in our services portfolio, and it's good work.
It's good work to be done. We just don't want it to slow down the migration process, and I think we've learned kind of how to do that. We're on track. We've shared this should be about a two-year time horizon, and we're tracking well towards that. Anything you'd add, Jason?
Yeah, the only thing I would add, and this is something that we are excited about with Ignite, is the level of modularity and flexibility that this new platform has, and this becomes very apparent as we're in conversations with potential new clients, and they're asking questions around, hey, how can you address this very specific use case in a very affordable manner? We can look at Ignite and really skinny down our infrastructure footprint to be able to get that client in the door where from there we would have the ability to land and then expand with additional applications, so it does give us a great entry point with new clients.
Now, that makes sense. And then if we think about what I was hearing you say on the margin side, so maybe that gross margin outlook as we think about 2025 is maybe a little bit like flattened down on the tech side, but then sort of offsets on the professional services. Or do I not have that quite characterized correctly?
Yeah, so there will be puts and takes. But I think when we think about our overall gross margin as a company, one of the positives is we are seeing our tech businesses growing faster than our services business. So the mix shifting more towards tech, I think, gives you an overall uplift.
But on top of the Ignite, yes.
Yeah. So that's an encouraging trend. And I think in 2025, as we share guidance, you'll see more of that, that tech is really the growth driver of the company. So mix is one element that is a tailwind for gross margin. Then within each category, I think we see some tailwinds that we're excited about, but then modulating that a little bit. On the tech side, one of the tailwinds is that 10-point uplift in terms of the Ignite gross margin versus the DOS gross margin. But that's tempered by migration costs. And so I would expect our tech gross margin to kind of be in the flat range until we kind of get through the migration process. And then I think you'll see the tech component or the Ignite component of our tech gross margin pushing up the overall gross margin.
We've shared a longer-term gross margin profile that takes us from where we are in the mid- to high 60s%, probably to the mid 70s% over time. Our apps layer continues to perform at that 80-plus% gross margin level. And so any expansion in our app sales, which certainly from an acquisition perspective, we've got more and more to cross-sell as we acquire more app layer capabilities, should lead to growth in the apps space. So we like where we're headed as it relates to the tech gross margin. As it relates to services gross margin, we do see some tailwinds there as well. So one of the tailwinds is we're kind of getting through the first phase of some large TEMS relationships. Those relationships start really low on the gross margins line, as low as 0%.
And then they migrate towards 25% gross margins in year three, four, five of the contract. And so we had a big year in 2022, a big year in 2023 of new TEMS deals. We're now a year or two into those deals. That means gross margins are going to go up. And we're not signing a ton of those new TEMS deals. So there's not quite as much in that really low gross margin profile. The last tailwind, I think, on ProServices is those non-recurring ProServices contracts that we're signing. We're overperforming there this year. Those tend to be higher gross margin relative to certainly those first few years of TEMS deals. So all of that likely provides some tailwind to our services gross margin. There are some calendar year-specific items.
Like Q4, there are some benefits costs that kind of hit our services gross margin in the near term. So you'll see a little bit of headwind in the near term. But then that'll bounce back in Q1. And I think throughout next year, you'll see some tailwinds on the ProServices side. Anything you'd add, Jason?
Yeah, yeah, the only thing I would add as Dan was covering is we really like the Ignite margin profile. We do expect that margin profile to be around 70% compared to DOS, which is around 60%. Our apps, of course, are 80% plus. But in the near term, we do expect a bit of a headwind related to migration costs, duplicate hosting costs. We're striving to be as efficient as possible as we're working through those migrations. That's where the spring cleaning that Dan mentioned is really important to get through that during the planning phase. Whereas we actually work through the migration, we're really migrating the exact visualizations and reports that the client will be using moving forward.
When you're talking about the sort of incremental 4Q costs in professional services, that's sort of like in line with prior 4Q types of situations? Or is there anything you would call out that this year is a little bit different on that front?
Yeah, the one thing that I would call out is we do see a little bit of pressure in 4Q compared to the other quarters in our benefits expense. We do typically see a bit of an uptick in things like medical claims costs that do impact 4Q and cause a little bit of pressure on that gross margin number for professional services.
That makes sense. So maybe talking a little bit more about OpEx. That's another area you've continued to outperform. And considering the number of tuck-ins that you've been doing, how do we think about R&D costs over the next year? Is that a function of continuing to scale through growth? Or do you sort of see incremental opportunities where that's not the right way to think about that?
Yeah, we see meaningful operating leverage with regards to R&D. And I think there's a couple of factors there that I would highlight. And then Jason, please add anything. One factor is we're through the large Ignite investment. And that was a big multi-year push to kind of get that new version. That's kind of an every five-year kind of thing. So I think we've got a few years of leverage there because we're through most of the Ignite R&D expense. A second area of R&D leverage is offshore. So we're moving more and more of our R&D to our India office. It's our fastest growing office. And there's just meaningful operating leverage and savings there. The third lever that we see is as it relates to our acquisitions.
So, one of the elements that we see often that we really like about an app layer acquisition is first, they've often built a really technically elegant solution and spent a lot on R&D doing it. And so we see a lot of R&D leverage after we bring in that acquisition. Their technology is often in really good shape. And we can solve certain things just by virtue of having a data and analytics infrastructure that they no longer need to invest in from an R&D perspective. So we really like the R&D leverage from these app layer acquisitions. And that's a third lever, a third operating leverage opportunity for us within the R&D category. We see, by the way, sales and marketing leverage. That's really meaningful too. But you didn't ask about that. So that's it for R&D. Anything else you would offer, Jason?
Yeah, just one comment on that second lever that you mentioned, Dan, around utilization of our office in India. We've been very impressed by the talent that we're able to acquire at our India office. As we think about backfills on positions and new hires, that is our typical first stop to go to on those new hires and backfills.
OK, yeah, no, that was my next question before we're hitting on sales and marketing expense. What is the total India opportunity? And I guess some of that would be in COGS and then some of that's in R&D. And I understand there's probably a multi-year timeline to sort of realizing that.
Yeah, it is both. There's a COGS opportunity and an R&D opportunity, and we're excited about both. The acquisition of KPI Ninja, which I mentioned a few minutes ago, has really helped us and strengthened us in the HIE space, also helped us with a presence in India. Their largest office was in India in Hyderabad, and it's given us a base of operations to expand, and we've, I think, about tripled the size of that office since the acquisition of KPI Ninja. We're well over 100 team members there, and I expect that to continue to be our fastest growth area. I expect in a few years we'll have several hundred team members in the India office, and we focused a lot on building that right. As you know, we care a ton about team member engagement. It's at the center of our flywheel.
We just won our latest Health Catalyst India Award, being recognized. I think it came out today as one of the 100 best places to work in India in the technology space, and so we're going to continue to really try to attract and retain, as Jason said, really talented technical individuals and give them a great career path, and so we do see opportunities. Now, on the COGS side, clients have to be open to the offshore model, and it's interesting. There are still some clients that are kind of needing to come along there, but we're increasingly providing them with meaningful cost-related reasons to support the use of our offshore resources, and so I think we'll see more and more clients that become more and more open to that model of global delivery of the resources coming from lots of different parts of the world.
And that will certainly impact how quickly we could see some COGS advantages. On the R&D side, it's more up to us. And we're certainly accelerating the pace of that R&D by the ways that Jason mentioned in terms of having a default position when there's a backfill to backfill in India. For new projects, new initiatives, our default position is let's source that with team members that are in India as well.
Yep, now, that makes sense. And so currently, you can sort of serve both models. If I like the global operator, if I don't like the, you can just sort of a menu option.
You choose, and what we've been doing more and more over the last year is showcasing there is a cost difference, and so for clients that are saying, no, I just really want a U.S.-focused engagement, in the past, we said, OK, whatever works for you. Now we're saying, OK, that has a higher price tag associated with it, and so that's the consequence of that choice.
I was expecting you to say you took them on a trip to Hyderabad or something like that.
Well, we're going to do more and more of that. Because I think there is an education component just to showcase the level of talent and prowess there is, really significant. And tapping into that talent is a good idea.
Yep, now, that makes sense. And then maybe circling to what you were saying about sales and marketing, obviously, with the sort of return back to sort of double-digit growth, and you don't want to lose emphasis on that sort of sales and marketing efforts. So how do you kind of think about the balance between continuing to push on that top-line growth and then the scaling benefits you were just talking about?
Yeah, it's a great question. And this is something we are very excited about, that we've got an efficient sales motion both for new clients and for existing clients. So for new clients, adding a new Ignite logo when you have a huge existing client base of app layer clients can still be a very efficient sales motion. So it's actually an existing client expansion, even though we talk about it as a new logo, because they already have a VitalWare relationship with us or a Twistle relationship with us or one of the other acquisitions that we've done, ARMUS, ERS, et cetera. And so when we have an existing client relationship, we find our conversion rate is more than 2X what it is for a cold call. So it's a very efficient sales motion.
But we've got, as of the first of this year, over 500 existing app layer clients that don't yet have a platform. So there's a huge existing client base to tap into. And we can do that really efficiently with a really high conversion rate. So that helps on the new client side to be much more efficient than a traditional cold call, kind of a sales productivity metric. So that really helps us on the existing client side, on the new client side. And then on the existing client side, here again, we find that one really effective account executive can handle lots of different expansion opportunities, including an effectiveness in cross-selling new apps into our platform clients.
And so that's also a very efficient expansion motion that I think will enable us to see that return to double-digit top-line growth without as much required in terms of incremental sales and marketing spend. So we continue to believe we can provide operating leverage in the sales and marketing line over the next few years, even with that double-digit top-line growth.
OK, no, that's helpful. Maybe this is another point that you've sort of touched on, but maybe to sort of pull a thread further on that. You've obviously expanded more into cybersecurity via your recent acquisition of Intraprise. How involved were you sort of in terms of having an offering prior to that? And sort of how does this give you another sort of leg up in that space?
Yeah, we really like this acquisition. Much like the Vitalware acquisition, Intraprise gives us a beachhead in a specific subsegment of a must-have category for our clients, so with Vitalware, it was RevCycle, and the specific beachhead was Chargemaster Management, and with Vitalware, it was recognized as the best in the industry solution. Intraprise is also recognized as the best in the industry solution for one specific part of security, which is the certification process, so there's some important health care specific and tech specific certifications that provide reassurance to a client, whoever that client is, that there's a robust security infrastructure here, so for us at Health Catalyst, for over a decade, we've always been asked by our clients or potential clients, like, how robust is your security infrastructure for the data platform in particular, and it was a requirement that we need to be really robust there.
We've invested in security for well over a decade. We maintain all of those certifications ourselves. Increasingly, the conversations that we've been having with the CIO and the CISO at our clients, it's always included the first part of that question, like, tell us about your security infrastructure, Health Catalyst, because if we're going to buy your data platform, you're going to be an important part of now our technology infrastructure. So are you really robust? And thankfully, we've had a really robust, strong infrastructure and a great track record there. There's a second part to the question that has really picked up this last year, which is, well, you're really good at this. We need to be better at this on our side, separate from the Health Catalyst part of the infrastructure. Is there anything you can do to help us?
And this is where it felt like an interesting acquisition opportunity, where Intraprise now allows us to say, yes, we can help you with that as well. And again, it's a narrow portion of security where we feel like we can own a beachhead. We can defend that beachhead. We really can be the best in the world at the certification process. And Intraprise takes what would otherwise be a very expensive manual process of getting certified and then staying certified. And it applies technology. It even applies, we just recently announced, this is our most recent AI use case, where you can really effectively use AI to anticipate where there might be recertification issues. So once a client becomes certified, a lot of the process of staying certified is making sure you're out in front of any potential vulnerabilities.
Intraprise's AI solution does a really nice job of anticipating where those vulnerabilities might exist, and you get there sooner before there's an issue. AI is better than a human manual process in doing that. We really like the application of technology. We already have relationships with the CIO and the CISO. We've already been talking about security as part of our infrastructure. Because of some very notable breaches that have happened over the last year, every CIO, every CISO is looking for ways to reassure their board, their members, their patients that they have a good, robust security infrastructure. Certification is an important part of that. We really like having this as a cross-sell opportunity.
Got it. And does that, it sounds like you have some people knocking at your door, pushing it. But does that require sort of a different sales and go-to-market opportunity? Or can that sort of still wrap up in what you were talking about before?
Very seamlessly wraps into what we've already got in place. And that's one thing we love about it. We already have the relationships with the CIO, CISO. We've already been talking about security. We've already demonstrated our own certification. It's a natural adjacency to talk about. How's your certification process going? And in most cases, it's not going that great. And it's either they're behind, they haven't been certified, or it's an expensive process. And now we have a solution that makes it better, faster, and cheaper.
Are there any other cybersecurity-related areas that also would sort of be a natural adjacency there?
There could be. There could be. And we like the area. It's a must-have area versus nice-to-have areas. Must-have is always better. And so we keep our ear to the ground. We always ask our clients for their own feedback on what are these must-have areas. Do you see any interesting startups that are doing something cool in this space? And that often informs our M&A pipeline.
That makes a lot of sense. In the two minutes we have remaining, I always like to ask people, what do you think the most misunderstood part of Health Catalyst is by investors?
Yeah, I love that question. So I think at a fundamental shareholder investor level, today, Health Catalyst is viewed as a low-growth company. It's valued as a low-growth company. And like we talked about earlier, Elizabeth, we deserve that to some degree. So last year and this year have been single-digit growth years. Every other year in the company's history has been a double-digit or triple-digit growth year. But as our end market really faced that inflation-based pressure, we had to adjust. And we had to only focus on certain parts of our portfolio. We've been saying now for about a year that the environment has shifted in a really positive direction. Our pipeline environment, the sales conversion rates have been really positive. And it feels like pre-pandemic levels. Now, that takes a little while for that to show up in the P&L. And we get it.
So it's going to show up next year. But I think right now, with the place that our stock trades at, we're clearly not being valued as a double-digit top-line grower with a really positive EBITDA growth trajectory, which next year will be in a 50% growth. This year, EBITDA is on track to grow 130% plus. So we're really meaningfully expanding from an EBITDA perspective. We're returning to that double-digit top-line growth. And it's being fueled by our tech business. And we're headed towards a tech business that will be well over a Rule of 30 business. And I don't think that is understood. And again, I think for good reason. It's not a Rule of 30 business today. But it will be next year if we stay on track and we deliver.
And that's where there's a really meaningful, positive, I think, shareholder value opportunity for those investors who believe what we're saying now in the near term, that you can see that really meaningful appreciation in that near term. And then over the next few years, having a company who's poised to see its EBITDA grow by 40% plus, over the next three years, should mean its stock should grow by 40% plus each year for the next few years. And that's a really attractive opportunity. I don't think that's fully understood or appreciated today. And we're excited to demonstrate through really good execution that that's who we are. And excited for shareholders to participate in that success and that upside.
It sounds like a good place to end. Thank you very much. Appreciate the time. Thanks so much for joining us.
Thank you, Elizabeth. Thank you, everyone.