Ladies and gentlemen, thank you for standing by, and welcome to the Health Catalyst, Inc. Q4 2020 Earnings Conference Call. [Operator instructions] Please be advised that today's conference is being recorded. [Operator instructions] I would now like to hand the conference to your speaker today, Adam Brown. Please go ahead, sir.

Good afternoon, and welcome to Health Catalyst's earnings conference call for the fourth quarter of 2020 and the full-year 2020, both of which ended on December 31, 2020. My name is Adam Brown. I'm the senior vice president of investor relations and financial planning and analysis for Health Catalyst. And with me on the call is Dan Burton, our chief executive officer; and Bryan Hunt, our chief financial officer. A complete disclosure of our results can be found in our press release issued today, as well as in our related Form 8-K furnished to the SEC, both of which are available on the Investor Relations section of our website at ir.healthcatalyst.com. As a reminder, today's call is being recorded, and a replay will be available following the conclusion of the call. During the call, we will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding trends, strategies the impact of the COVID-19 pandemic on our business and results of operations, our pipeline conversion rates, and our general anticipated performance of the business. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date.

Thank you, Adam, and thank you to everyone who has joined us this afternoon. We are excited to share our fourth-quarter and full-year 2020 financial performance, along with the other highlights from the quarter. I will begin today's call with some commentary on our fourth-quarter 2020 financial results. First, let me share that I am pleased with our financial performance, especially in light of the macroeconomic backdrop. Our Q4 2020 total revenue was $53.3 million, and our adjusted EBITDA was a loss of $4.7 million. I am happy to report that these results exceeded the midpoint of our quarterly guidance. Likewise, I would highlight that our Q4 2020 technology revenue was $32.3 million, which represents 43% growth year over year and 24% growth when excluding the impact of the recent Vitalware acquisition. Now, let me transition to some of the additional highlights from the quarter and full year. You will recall from our previous earnings calls, that we measure our company's performance in three primary strategic objective categories of improvement, growth, and scale. And we'll discuss our quarterly results with you in each of these categories. The first category, improvement, is focused on evaluating our ability to enable massive, measurable improvements for our customers while sustaining industry-leading satisfaction and engagement. I will first share two examples of recently documented customer improvements from newly published case studies. The first improvement vignette highlights our work with one of our customers, supporting their journey to financial and operational recovery from COVID-19. While the latter demonstrates that some customers have widened their focus and are back to leveraging our technology and services to do meaningful improvement work outside of the COVID-19 response. And as you'll note, both examples highlight customers' current focus on leveraging our analytics to target revenue and cost-related improvement. First, Community…

Thank you, Dan. Before diving into our quarterly and full-year financial results, I want to echo Dan's sentiment and say that I am pleased with our fourth-quarter and full-year 2020 results, especially in light of the macroeconomic backdrop and the COVID-19 pandemic. I will now comment on our strategic objective category of scale. For the fourth quarter of 2020, we generated $53.3 million in total revenue. As Dan mentioned, this represents an outperformance relative to the midpoint of our guidance, and it represents an increase of 22% year over year. For the full-year 2020, our total revenue was $188.8 million, also representing 22% growth year over year. Technology revenue for Q4 2020 was $32.3 million, representing 43% growth year over year. Excluding the contribution from our recent Vitalware acquisition, our technology revenue for Q4 2020 was $28.1 million, representing 24% growth relative to the same period last year. This year-over-year growth was driven primarily by recurring revenue from new customer additions and from existing customers paying higher technology access fees as a result of contractual built-in escalators. For the full-year 2020, technology revenue was $110.5 million, representing 32% year-over-year growth. Professional services revenue for Q4 2020 was $21 million, representing flat performance relative to the same period last year. This performance is consistent with our expectations shared on our last earnings call and is primarily due to our services being provided to new DOS subscription customers, offset by lower professional services, dollar-based retention achieved in 2020 relative to historical performance, along with lower implementation revenue. For the full-year 2020, our professional services revenue was $78.4 million, representing 10% year-over-year growth. Total adjusted gross margin for the fourth-quarter 2020 was 52.2%. This represents an increase of approximately 100 basis points year over year. For the full-year 2020, total adjusted gross margin…

Thanks, Bryan. I'll conclude my commentary by thanking our committed and highly engaged team members. These teammates and colleagues have been dedicated to our mission and to our health system customers as they have effectively responded to the pandemic. I'm grateful for these teammates for their central contributions to our mission and growth during one of the most challenging years we've ever experienced. And with that, I'll turn the call back to the operator for questions.

Great. Thanks for the questions. I guess maybe, Dan, I was trying to square a couple of the comments that you made. The first, just around likely seeing mid-teens DOS adds in '21, super encouraging to kind of see that getting back to what you guys were able to produce pre-pandemic. But then you also made some comments about anticipating continued end-market distraction through '21. So just trying to get a little bit more in the weeds on what you meant by that and kind of what you see as far as the distraction resulting in slower sales or slower implementations. Just trying to square those two comments would be great.

Yes. Thanks for the question, Bob. So at a net-net level, essentially, that overall guidance as it relates to the mid-teens in terms of net new DOS subscription clients, has a couple of puts and takes associated with it. So we wanted to highlight some of the challenging elements that we're still experiencing that you noted, Bob, as it relates to some subset of health systems are still in the midst of the pandemic response, they're still somewhat hesitant in some cases because of the uncertainty. On the flip side, there are some net positives as well, like a greater recognition of the need for a commercial-grade data and analytics platform. When we net out those puts and takes, what we would observe at an overarching level would be the pipeline dynamics that we're experiencing right now, after you net out those effects are about the size and about the pace of conversion that we experienced pre-pandemic levels. And that's where we landed on being comfortable with the guidance that we provided.

No, that's actually really helpful. And then maybe just one follow-up. Maybe, Bryan, you mentioned some upside from cross-sell. I want to make sure I understood which assets specifically you were talking about. And then I guess just more generally, if you think about even going back to Medicity and then more recently with Able and Vitalware and healthfinch. Just curious on the latest thoughts on the cross-sell opportunity. I know, obviously, those deals were done for the merits of -- in much ways, the merits of the assets, but there was also clearly a cross-sell component to it. Just any

Yes, absolutely. Thanks, Bob. So the commentary I made around cross-selling, to your question around which assets that relates to, relates to primarily our more recent 2020 acquisitions in kind of both directions. So an ability to cross-sell applications that we've acquired, for example, Vitalware and healthfinch to DOS subscription customers, and then also an ability to cross-sell DOS to those acquired customers on the app side. We're active in both of those areas and developing a pipeline there, both ways. So as I mentioned, that is reflected at a modest amount in our 2021 bookings color. And if we were to significantly kind of drive robust cross-selling there, that would represent upside to essentially both of our bookings metrics, our dollar-based retention metric potentially, and then also the new customer additions metric.

And I agree with that. I would just add, similar to what we've tried to do in the past as we think about forecasting is a strong desire to be data-informed in that process of building a forecast. And since we've only owned some of these assets for a few months now, like with the Vitalware acquisition, for example, we're still in early days and want more data to inform any updates to the forecast. And that's why the cross-sell that's included in the forecast is at a modest level. That is data-informed. And obviously, as always, we're working every day to try to outperform that forecast. But at this point, we didn't feel comfortable before we got more data about our cross-sell efforts to update the forecast.

Our next question comes from Ryan Daniels with William Blair.

Hey, guys. Good afternoon. This is Jared Haase in for Ryan. I guess, just first question from me. Bryan, I think you alluded to this in your prepared remarks, but it sounds like one of the key kind of investment areas is just around integration-related efforts. But I was hoping you can maybe call out any other kind of investment priorities for the year, either kind of in terms of adjacent markets or specific areas of the product? Just any color around investment priorities kind of beyond those integration efforts?

Yes, certainly. Thanks, Jared. So in terms of priorities in 2021, you mentioned the integration on the M&A side is a big part of that. One other area -- a couple of areas I would just call out. So one would be we're seeing continued emphasis from an end market perspective on an ability to drive financial optimization, things like revenue and cost optimization from a health organization standpoint. And so that's an area aligns with our Vitalware acquisition that we are continuing to focus on. The other area I would call out is related to the transition that we made with the President role recently, where we are trying to optimize our growth investments to be able to capitalize on this longer-term tailwind. The pandemic has highlighted of the importance of data and analytics. So I want to be able to support that effort, get ahead of that, and plan for the future that way.

Okay. Yes, that makes sense. And then I guess a follow-up to that last point you made, Bryan, as well as to Bob's question earlier. So I appreciate the idea that you're seeing kind of some headwinds and tailwinds that sort of net out to the outlook of mid-teens net client adds this year, which is kind of consistent with what your normal expectations had been. So as the headwinds of that equation kind of alleviates and we get back to normal post-pandemic, should we think then about those tailwinds as giving you potential to exceed mid-teens net new clients going forward? Or is that still the reasonable target once we get to that normalized environment?

Yes. Thanks for that question, Jared. I think our focus right now is on getting through the pandemic in 2021. And we do continue to see those puts and takes playing out certainly in the first half of 2021. And we want to remain nimble and keep our ear to the ground as we understand more and as we gather more data. We don't feel like we're in a good position to provide anything beyond our 2021 guidance that we shared other than just to reiterate that long-term view that we continue to feel confident in, in that 20-plus percent growth cadence on an annual basis. And we are certainly working every day to find ways to accelerate the adoption of data and analytics in the healthcare ecosystem, but that's probably where we feel comfortable stopping at this point.

Our next question comes from Sandy Draper with Truist Securities.

Hi. Thanks. This is Stan on for Sandy. A couple of quick questions. First, were any of the nine client additions this year a function of cross-sells, or were they all net new?

Some modest cross-sell activity that was inclusive in there. Although I would mention and note that the commentary that Bryan gave about the overall pipeline activity in the first half of 2020 being slower than what we had normally experienced pre-pandemic was also true in the cross-sell space. So at a similar level, there was an impact in the first half. And at a similar level in the second half, we saw an uptick in the pipeline dynamics that felt a lot more like pre-pandemic levels.

Got it. And then maybe a quick one here on -- I know it's a fluid situation, but curious, are there any plans to resume more face-to-face activities for the sales force? And kind of how are you thinking about that?

Yes. We're monitoring the situation like the rest of the planet right now. And we are encouraged to see an acceleration in the rate of vaccinations in the U.S., in particular, but also elsewhere. We are anxious to see that continue. And as that vaccination rate accelerates and represents a larger proportion of the overall population, we think that will lead to increased travel, particularly for the year, and increased usage of our offices, the potential of reopening the offices for those who are vaccinated and taking other precautions as well. But at this point, we're still early in that process.

And the other thing I would add, Stan, to that is just given the nature of our sales cycle and the duration of our sales cycle of approximately a year, we were fairly well equipped to adapt to a virtual sales environment, just given the number of touchpoints that we typically had that were often not in person in our sales cycle. And so feel good about our ability to adapt and continue in that type of environment as well.

Our next question comes from Sean Wieland with Piper Sandler.

Hi. It's Jess on for Sean. Thank you for taking the question. So we were hoping to just understand a little bit about where Able Health, either as it was acquired or in the products that you have since developed, where it fits into the risk adjustment process? Is it a tool for prospective or retrospective? And if you could just help us understand who you're competing with there and how you're thinking about intending regulatory submission changes. And then any evolving competitive landscape with change getting acquired by United?

Yes, absolutely, Jess. Thank you for the question. So when we acquired Able Health, just about a year ago, the primary element that we were most excited about is the strength that they would bring around the process of submitting measures to regulatory bodies in the broader context of quality improvement and population health as well. And they had already built automated steps in that process that are normally quite manual and quite labor-intensive. And so the place in which we've integrated that capability is really within the broader population health category, which includes so much of the work around measures reporting. And the infrastructure that that enables is that better, faster, more accurate, and often a more cost-effective way through automation and through the use of technology of submitting those required measures to regulatory bodies and also using those measures to understand our improvement efforts, our quality, and our population health capabilities. That was an important component of an overarching population health offering that we wanted to make sure that we could offer in a compelling way. We've combined that with another acquisition with regards to healthfinch, which brought us another important capability in the pop health space and otherwise, around the closing the loop when we have insights, when we're submitting measures, when we're reporting out our performance, being able to close the loop at the point of care is also really critical to influencing making better decisions, for example, in the care of patients and healthfinch brings that component of the capability. When you combine that with some of our care management in pop health foundations capabilities, we're really excited about that portfolio that we can offer up, all powered by DOS at the data platform layer, to really enable us to be competitive and differentiated in what we can offer. And as you know, companies that offer components of a population health solution, and they range from very, very large companies to very small companies. We also have capabilities more in the revenue cycle space that have been bolstered by our Vitalware acquisition. And that broad space is more the broad space that change healthcare, for example, would operate within. And yet, even within that space, what we offer is quite distinct and different from what they were focused on in the rev cycle space. Our chargemaster solution, there isn't a competitive product that the change offered or that Optum offers either. But rather, it's a complement to some of the other work that they do.

Our next question comes from Elizabeth Anderson with Evercore.

Hey, guys. I was wondering if you could talk about any changes to the professional services as we come out of the pandemic. Are there anything in terms of what people are looking for or sort of duration of work or anything to sort of think about on that side?

Yes. Thank you for the question, Elizabeth. So one of the elements that we observed early in the pandemic at a pronounced level and it's still the case, but at a more muted level, is a shift in the kind of services that our clients wanted us to perform away from more traditional improvement work, clinical improvement work, especially, as well as some operational improvement work and focus specifically on pandemic response. So that was a dramatic shift that we experienced a year ago into the spring and early summer. We've seen that more traditional clinical improvement work ramp back up, as well as other improvement work, financial and operational. And as Bryan mentioned, the pandemic has also influenced a more keen focus on the financial performance of the health system. And so we find ourselves doing more revenue-oriented work or cost structure work that is all data-informed and also aided by some of our recent acquisitions. So the services work has shifted some. I would also share that there are some components of what we're able to offer in terms of tech-enabled services that are able to automate certain processes that would otherwise be very labor-intensive and manual. And the Able Health measures example that I provided just a minute ago as one example, also the work of chart abstraction is another example where we've seen an increase in activity there and interest -- and there's a services component to that, as well as a technology component to that. So we have seen some mix shift elements that have occurred. I would share that we're seeing more of that mix shift back to pre-pandemic levels, and we're seeing an uptick in some of those pre-pandemic areas of clinical improvement work, seeing an increase. But we also wouldn't be surprised to see some of these other areas of focus continue at a robust level moving forward as well.

Yes. Another thing I would add, Elizabeth to that is in terms of the core -- one of our key kind of differentiators on the services side is, one, our team member engagement and focus and ability to kind of attract and retain real experts in the field of certain domains and analytics and provide that expertise to our client base that may have some more difficulty in recruiting that type of talent. And so I think that core kind of value prop were acting as a supplement to our customer teams and the services side is intact.

Got it. That's very helpful. And then just maybe on a more sort of block and tackling type of question. There was a change, obviously, in 2020 in your CapEx, I was looking at it as a percent of sales, for example. Well, how are you thinking about CapEx going forward?

Yes, good question. So there was a change in terms of CapEx primarily related to actually an office build-out that we're working on for our headquarters, there was an uptick there. There will be some additional CapEx in 2021 related to that leasehold improvement in office build-out. And then once that's done, it would more normalize to a similar level as a percentage of revenue to what we've seen in the past. So no major changes there other than that more one-time CapEx.

Our next question comes from Stephanie Davis with SVB Leerink.

Hey, guys. Congrats on the quarter. Thank you for taking my question. I was looking to move back from earlier in the pandemic when you introduced the DOS light solution and here about maybe what kind of revenue opportunity you have converting those clients to a full suite of solutions.

Sure. Yes. So we accelerated some of our work due to the pandemic around trying to take what we had partially developed around a DOS light offering. And we did take that work and offer up some pandemic-specific help and support. And we still had some other specific use cases where you could start smaller with a lighter version of DOS and then be able to expand over time. We did see some pipeline movement in 2020, especially in the second half of 2020, and we did see some modest contribution to the net new DOS subscription clients from the light version, but we're still really early in that process. That would represent, to your point, some opportunity for dollar-based net retention or expansion with those situations where a client starts at a lower price point. But we're still early, and we still have more to go from a pipeline perspective. It's still a long sales cycle, even right now. And some of that may be influenced by the pandemic, and we'll learn more this year about how that sales cycle is impacted by a lighter version of DOS. But we're encouraged to see some pipeline momentum there, and I think we'll learn a lot more in 2021.

So is it safe to say that's not baked into the outlook at all, but it could be a source of upside?

Perhaps similar to the cross-sell commentary that at a modest level, we've included some elements in the forecast. But because we're early and we like to be data-informed, we didn't go beyond a modest level in the forecast.

Of course. And then just one quick one on the kind of selling environment. You guys have talked about 2020 is a very challenged year, but you still grow -- you grew in the double digits. Are there any sales tactics or thoughts that you would want to bring from the pandemic world into the post-pandemic sales force at Health Catalyst?

Yes, absolutely. So I think we've all learned that you can do a lot of things virtually that maybe we didn't think we could, and that was certainly true in the sales process, both on the new client side, which I would have intuitively thought was maybe the hardest place to make progress. We still saw that we could make meaningful progress moving forward from a pipeline conversion perspective, virtually. And then secondly, with existing clients, we certainly saw a little bit to Bryan's earlier comments that my goodness, there's a lot we can do to be a really effective partner, including thinking, about talking about ways we can expand our relationships all through virtual discussions. And so I think a lot of that will carry over beyond the pandemic and could be encouraging. But again, we also had a lot of challenges related to the pandemic that were headwinds as well. So it's a little bit challenging for us to opine too far until we kind of get past the pandemic, but those were some of the highlights that felt like they could be positive well beyond the pandemic as well.

And I would just add, Stephanie, to your point on the 2020 growth. We appreciate those comments. One other point I'd add is we are fortunate to have that recurring revenue business model, which gives us a lot of visibility to that in year revenue. And so we did mention at the onset of the pandemic that given the nature of our recurring revenue model, we could see a more muted impact on 2020 revenue growth just given that visibility that we had in year from prior-year sales.

Our next question comes from Richard Close with Canaccord.

Great. Thanks for the questions and congratulations during a challenging year. I wanted to go back a couple of years to the Medicity acquisition. And obviously, 2020 had its challenges with COVID and whatnot. But just wanted to revisit Medicity and what you're thinking about in terms of that customer base and the opportunity to upsell them? And any just update in and around that. I think originally, they had 100 customers and then you really thought about it as maybe 60 were sort of in the sweet spot for Health Catalyst's upsell potentially?

Yes. Thank you for the question, Richard. So what I would share with regards to Medicity is that we've seen the Medicity performance play out largely as we had forecasted. And we tried to be data-informed in the way we thought about the forecast that has included in 2020, some contribution from cross-sell from the Medicity client base. It's also important to note that as we shared when we were a newly public company, we were fortunate to have a situation where the consideration that we paid was very minimal. And as such, for that acquisition to be positive from a financial perspective, we anticipated a modest set of contributions, and we've realized those. So we feel good about that. At a broader level, I think the concept of the cross-sell was something that Medicity helped us better understand and certainly informed our later acquisitions of Able Health, healthfinch, and Vitalware and, in many ways, start to have the opportunity to have those conversations in both directions that Bryan talked about. And we continue to believe that that bidirectional cross-sell is a very meaningful opportunity for us, one that we've built in at a modest level, at a moderate level in 2021, but we're certainly working to build an infrastructure and cross-sell that becomes very significant, and we're hopeful that that perhaps over time, we might outperform that forecasted element that's already included in 2021. And as such, that outperformance would represent some upside.

Our next question comes from John Ransom with Raymond James.

Hi there. We've seen the public hospital companies report pretty darn good fourth-quarter numbers. And with all the support from CARES Act and advanced funding and electives coming back there, pretty good shape. Would you say that that picture translates to the kind of large ITs that you deal with? Are they actually in pretty good financial shape on balance relative to what we might have thought in the dark days of April 2020?

Yes. Thanks for the question, John. So certainly, we would agree with the statement that across the spectrum of our client base, perhaps with that exception, our clients are in a much better financial condition now than they were in March, April, May of last year, where they were really facing an existential crisis that they hadn't seen in decades. So we're certainly better off than where we were then. And to your comments, the CARES Act and other supports and funding elements combined with the ability to get back the volumes associated with electric procedures, in particular, has been very helpful. I would characterize across our client base that we're still observing a spectrum of performance. We have some clients that perhaps look a little bit more like what you just described on the positive side with regards to some of the publicly traded health systems. That's at the high end of what we would characterize as our experience. We also have a number of health systems that while they're much better off than they were in the spring and early summer, they're still not back to pre-pandemic volumes in electric procedures. For example, some are down 5%, 10%, 15%. But that's a lot better than where we were, where volumes in the late spring and early summer. In some cases, we're down 80%, 90-plus percent. And so when we think forward, for example, about talks of another stimulus, we would want to be clear on the Health Catalyst side that we believe that can be very helpful in especially building out an infrastructure to be better prepared for the future for future pandemic-type responses. And there's a needed infrastructure that the pandemic expose that we really only have as a patchwork today. And I think that stimulus funding could help, but there's a different level of urgency to that round of stimulus than the existential kind of urgency that we experienced last spring and early summer.

One other thing I would add, Dan, I agree with what you said in terms of the improved financial situation for our end market. I would just add as well that in addition to that, there is an operational distraction and focus that health organizations will be putting on continued COVID treatment and on vaccine rollout through 2021, which adds another dynamic from an operating standpoint.

Maybe one more thing I agree with that also, John, that I would add would be just the two puts and takes that we mentioned in our prepared remarks that on the positive side, we are seeing more and more health systems acknowledge and understand the need for a commercial-grade data and analytics infrastructure that helps. On the flip side, we still observe hesitation in terms of budgeting processes that because we're still in the pandemic, we're not all the way through from a vaccination perspective, there's still this hesitancy to make more meaningful, larger commitments. And so there are puts and takes that we think will play out over the next six months, in particular, before we perhaps return to a little bit more normalcy.

Okay. And then, thank you, my other question is -- I'm just thinking about the remote work dynamic. And it's challenging enough to sell or resume if you will, but have you been able to bridge all the collaboration and product development work while working remotely. And have you seen any -- I mean, there's no external evidence that your innovation has slowed. But are there any challenges you're seeing with collaboration and product innovation without having people in the room?

Thanks for that question. That's an interesting one. If I were to characterize the innovation that came out of 2020, I would characterize us as accelerating innovation, mostly surrounding the pandemic. And we were enabled to virtually collaborate at a very significant level of clients and what to build on top of the flexible data platform to be responsive to a very dynamic situation, and there were some great innovations that came out of that process. And though it seems perhaps counterintuitive in a way we've never had more collaboration with our clients than we did in 2020. It was to be sure, very exhausting on all counts across our team member base and our clients. And I don't know that I've ever seen the healthcare ecosystem feel more collectively exhausted in many ways. And so we've got to be cognizant of that, but there were some great innovative breakthroughs that came through that process, and that all was really enabled through a virtual set of interactions. But we were helped by the fact that before the pandemic, most of our interactions on the product development side and even on the services side were virtual. And so we didn't have a heavy face-to-face business model even before the pandemic, and that probably made it a little bit easier for us to pivot really effectively in the midst of the pandemic.

The other thing I would add to that, Dan, in terms of focus on innovation as well, Dan referenced that our 2020 acquisitions, while there is work to do to integrate those acquisitions into our broader portfolio of technology solutions, that does provide us with opportunity for further innovation. As we do that, we're -- and Dan referenced one of those innovation opportunities with the Able Health and healthfinch combination that we're working through. So exciting innovation opportunities there with our recent acquisitions.

Our next question comes from David Grossman with Stifel.

Thank you. Sorry to ask kind of a more detailed financial question on the guidance. And maybe if you could just dodge me. And when I look at it, the 1Q sequential revenue growth looks, I think, consistent with last year, which looked pretty strong to me relative to the cadence of 2020 bookings, which seem to be weaker in the first half and picked up in the back half of the year. And then, on the other hand, the sequential growth thereafter for the balance of the year is probably a little more modest than I would have expected with again that cadence of bookings growth. So I guess, first, am I missing something obvious here? And if not, is it just you've got pretty good visibility on the first quarter unless so as the year goes on. So you're being a little more conservative? Or is there something else going on here that I may not be seeing?

Yes. Thanks, David. Good question. I wouldn't say that you're missing anything obvious or big takeaway there. I think you kind of hit on it where there can be some variation in a quarter ahead revenue guidance and revenue performance, just based on timing of contract signings and the like. And so nothing major, I would call out at that point.

Okay. But there isn't anything nonrecurring necessarily, unusually nonrecurring in the first quarter. Is that correct?

No, nothing major. No, vast majority of our revenue base is recurring in nature. So I wouldn't say anything major from current standpoint.

Got it. Right. And maybe if I could just follow-up a question that was asked earlier, just about the services business, given what you experienced in the downdraft in demand during the pandemic for services and those resources, has it made you at all rethink that model at all that may make the services kind of content more accessible to more people? And what I'm thinking of is just broadening of the pyramid. And I know very much of your model is predicated on the expertise of the people that you provide. But I'm just wondering, just as the business scales as well, as you've gone through the pandemic, has that changed your thinking at all about how you want to leverage that business going forward?

Thanks for that question, David, an insightful question and something that we're watching and monitoring throughout 2021. We're not ready at this point to provide any changes to the long-term guidance we've provided as it relates to how we think about services, how we think about tech. It is informative to observe that in 2020, that was the first year where we saw some changes in the way that the tech business performed relative to the services business. And in many ways, we were really encouraged to see tech utilization so high with a bump up of about 50% in terms of utilization and very robust tech dollar-based retention as well. And then we are trying to be observant of some of the mix shifts that we observed in the pandemic, but also then have the benefit of data as we get through the pandemic, to understand which shifts might have been temporary in nature, which might be a little bit more permanent in nature. And I think as we work through that in 2021, we do plan to try to learn as we go. And then either reaffirm that we continue to feel comfortable with that long-term perspective that we've shared a couple of years ago as we were going public as a company or provide an update. But given that we're still in the midst of the pandemic, we wanted to provide ourselves with time and space to keep observing.

Our next question comes from Daniel Grosslight with Citi.

Hi, guys. Thanks for taking the question here. Maybe a bit of a bigger picture question on the competitive environment as you look forward to 2022 and beyond, particularly from nontraditional competitors. We've seen Google expand its relationship with Ascension. We've seen a consortium of hospitals form of true data to better utilize and monetize their data. Looking forward, how do you see that competitive environment shaping up, not just from your traditional competitors, but also the more nontraditional folks?

Yes. Thanks for the question, Daniel. We continue to believe that there's a role to play in terms of nontraditional non-healthcare-specific competitors, let's say, more across industry technology companies like you mentioned, Google, there are others as well. And we continue to be of the perspective that the innovations that are coming through those cross-industry technology companies should be leveraged, should be a part of the transformation that needs to take place in healthcare. And that's one of the reasons why we are continuing to benefit from our partnership with Microsoft, why we leveraged the Microsoft Azure environment as an incredibly scalable, robust technology environment from which to host our data platform. Likewise, we believe long term, there is great value at the healthcare level of the technology stack and the healthcare data level of the technology stack, where those who are 24/7 focused on healthcare have an important role to play and real differentiation to play in partnership with others that for a variety of reasons may choose not to operate up the tech stack when we get into more healthcare-specific investments and healthcare-specific content. That includes companies like Health Catalyst, where healthcare is all we do, and most of our technology investments have been data-oriented investments to ensure that content layer we're able to make sense of the data with our clients. And likewise, some consortia like what you mentioned with true data, we think we need more of that. And that's a real positive for the industry so that healthcare can benefit from clinically rich data that exists in these health system settings. These are places where the individuals that work there, spend all of their time focused on really understanding that healthcare data. That's also what we do. And we view the stewardship role that we play on behalf of our health system clients and their patients, as one where we can provide value-added through the technology and the capabilities at the data platform layer, the content, the data content layer, and the apps layers, to enable the use of that healthcare-specific, clinically rich content in a really effective way. And we're excited to play a role, and we believe we're differentiated in the capabilities that we can offer there. And they only come when you're dedicated to the healthcare space, and you spend 24/7 there. And likewise, we're excited to tap into partners and others, who have a role to play and contributions to make as well.

Makes sense. And then direct contracting in Medicare is slated to start in April. I know one of your key constituencies is ACOs. But I'm curious if direct contracting, in particular, opens up a new market or a new client base for you among DCEs, particularly as we think about the build-out of your pop health modules.

Yes. We try to keep an eye on innovation, and that's a good example of innovation in the payer space, more broadly speaking. But there are new innovative models that are being enabled, which we think is a positive. And that's where while we have grown up, serving more traditional health systems, we're grateful that we have customer relationships in those new innovative risk-bearing entity spaces. And with, as you said, our increased focus on population health, bringing more and more components to bear, we feel like we have a more robust offering to offer up to this emerging segment of the market, and we intend to play in that segment of the market as well.

Our next question comes from Glen Santangelo with Guggenheim Securities. Glen, you may be on mute. Our next question comes from Sean Dodge with RBC Capital Markets.

Thanks. Maybe could you talk a little bit more about the recent partnership with Smarter Health? It's interesting because it's in a geography that you've historically not really focused on in Southeast Asia, and it's an end market that the payers that also beefed up thus far is that really better focus. Is this just a situation where you're licensing DOS? Or are you committing people to this too? And then anything you can share on the revenue model? Is there just some type of revenue share agreement related to that?

Yes. Thank you for that question, Sean. And we are excited to see some international traction. Singapore is one place where we have a team member base in Singapore, and we have had the opportunity to do some work there. Through some of that work, we were introduced to Smarter Health, and we're excited to work with them, as you said. The kind of relationship that we might have might be more akin to us providing technology to a partner that is then available on the ground to assist in the delivery and the use of that technology to measurably improve. It's a small starting relationship, consistent with what we've shared generally about our international and our general adjacent market investments, which have been modest and opportunistic and have followed a few specific guidelines around focusing our work, for example, in the English language and trying to make some other thoughtful decisions that allow us to grow modestly over time with a modest investment. And so we're encouraged by the progress but believe that will materialize more over the longer term.

And just to confirm what Dan said, Sean, you could think about it as a similar revenue model and contract model to a typical customer of ours.

Our next question comes from Iris Long with Berenberg Capital.

Hey, guys. Thanks for taking my question. So I have a few questions related to your customer adds and the cross-sell opportunity. So first, I'm wondering if you can disclose how many total customers you have as of the year-end? And trying to understand like how big the cross-sell opportunities can get to? And then secondly, I understand that the 2021 guidance embeds a modest assumption on cross-sell. But as we think about beyond 2021 as we get off of the pandemic and all the integrations are kind of completed, should we expect the cross-sell opportunity and the DOS customer adds to kind of accelerate?

Yes. Thank you for those questions, Iris. So on your first question, we now would share that with the addition of the nine net new DOS subscription clients, added to the 65 that we started the year with, we're now at 74 DOS net -- or net total DOS subscription clients. And as it relates to your second question, with regards to cross-sell, I think you're framing it in the right way that we try to be data-informed. As a result, we've added a modest assumption for the 2021 forecast. While we're also going to be investing meaningfully in those growth areas, inclusive of organizing around the President role so that we can be ready as we get through the pandemic for the opportunity to take advantage of some of those longer-term tailwinds that we believe are emerging in understanding the value of a commercial-grade data platform and analytics capabilities. We're also going to be working in 2021 on building a cross-sell infrastructure that we hope is robust. And we certainly hope to outperform. But when we share forecasts and guidance, we try to also be very disciplined and data-informed in that process.

Okay. Sorry, I wasn't clear in my first question, I guess. I'm wondering if you can disclose the total customers that you have.

Yes. Yes, good question, Iris. So in addition to the 74 DOS subscription customers, and you'll see this in our filings, we do have over 300 other customers which are primarily driven by the acquired customers from the recent 2020 acquisitions and the Medicity acquisition.

Okay. Got it. And then I have a quick follow-up on pricing. So we know that you gave out some discounts for professional services in 2020.

We are not. No. So we wrapped up that process, really, in the summer timeframe of last year. And so we've been now a number of months past that stage in the process at this point.

Showing no further questions in queue at this time, I'd like to turn the call back to Dan Burton for closing remarks.

Thank you, and thank you all for your interest in Health Catalyst. We appreciate it, and we look forward to continuing the dialogue in the months ahead. Take care, everyone.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.