Definitive Healthcare Corp

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report and with our audited Consolidated Financial Statements, “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report and with our audited Consolidated Financial Statements, “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Form 10-K.

Previous wording

Definitive Healthcare is a leading provider of healthcare commercial intelligence. Our solutions are designed to provide accurate and comprehensive information on healthcare providers and their activities to help our customers optimize everything from product development to go-to-market planning and sales and marketing execution. Delivered through our software as a service (“SaaS”) platform, our intelligence has become important to the commercial success of our approximately 2,800 customers as of March 31, 2024. We generally define a customer as a company that maintains one or more active paid subscriptions to our platform.

Current wording

Definitive Healthcare is a leading provider of healthcare commercial intelligence. Our solutions are designed to provide accurate and comprehensive information on healthcare providers and their activities to help our customers optimize everything from product development to go-to-market planning and sales and marketing execution. Delivered through our software as a service (“SaaS”) platform, our intelligence has become important to the commercial success of our approximately 2,600 customers as of June 30, 2024. We generally define a customer as a company that maintains one or more active paid subscriptions to our platform.

Previous wording

Our customers include biopharmaceutical and medical device companies, healthcare information technology companies, healthcare providers, and other diversified companies, such as staffing firms, commercial real estate firms, financial institutions, and other organizations seeking commercial success in the attractive but complex healthcare ecosystem. Within these organizations, our platform is leveraged by a broad set of functional groups, including sales, marketing, clinical research & product development, strategy, talent acquisition, and physician network management. We offer access to our platform on a subscription basis, and we generate substantially all of our revenue from subscription fees.

Current wording

We sell into three end markets: Life Sciences, Provider, and Diversified. Life Sciences is made up of biopharmaceutical and medical device companies; Providers are the healthcare providers; and Diversified includes healthcare information technology companies and other organizations seeking commercial success in the attractive but complex healthcare ecosystem such as staffing firms, commercial real estate firms, and financial institutions. Within these organizations, our platform is leveraged by a broad set of functional groups, including sales, marketing, clinical research and product development, strategy, talent acquisition, and physician network management. We offer access to our platform on a subscription basis, and we generate substantially all of our revenue from subscription fees.

Previous wording

We were founded in 2011 by our Executive Chairman and current Interim Chief Executive Officer, Jason Krantz. Mr. Krantz founded the company to provide healthcare commercial intelligence that enables companies that compete within or sell into the healthcare ecosystem to make better, informed decisions and be more successful. Over time, we have expanded our platform with new intelligence modules, innovative analytics, workflow capabilities, and additional data sources.

Current wording

We were founded in 2011 by our Executive Chairman, Jason Krantz. Mr. Krantz founded the company to provide healthcare commercial intelligence that enables companies that compete within or sell into the healthcare ecosystem to make better, informed decisions and be more successful. Over time, we have expanded our platform with new intelligence modules, innovative analytics, workflow capabilities, and additional data sources.

Previous wording

On January 16, 2024, the Company completed the purchase of assets comprising the Carevoyance business line of H1 Insights, Inc., a product that helps medical technology (“MedTech”) customers to improve segmentation, targeting, and prospect engagement for $13.7 million, subject to closing adjustments. The initial accounting for the business combination is incomplete as a result of the timing of the acquisition. Refer to Note 2. Acquisitions for further information.

Current wording

On January 16, 2024, we completed the purchase of assets comprising the Carevoyance business line of H1 Insights, Inc., a product that helps medical technology (“MedTech”) customers improve segmentation, targeting, and prospect engagement for $13.7 million, subject to closing adjustments. The initial accounting for the business combination is incomplete as a result of the timing of the acquisition. Refer to Note 2. Acquisitions for further information.

Previous wording

During the first quarter of 2024, we committed to a restructuring plan intended to reduce operating costs, improve operating margins, and continue advancing our ongoing commitment to profitable growth (the “2024 Restructuring Plan”). The 2024 Restructuring Plan provided for a reduction of the Company’s current workforce by approximately 150 people. During the three months ended March 31, 2024, we incurred restructuring and related charges of $7.2 million, consisting primarily of severance payments, employee benefits, and related cash expenses. These charges were recognized within Transaction, integration, and restructuring expenses in our unaudited condensed consolidated statements of operations. We expect to incur additional restructuring and related charges associated with the 2024 Restructuring Plan of $0.5 million during the second quarter of 2024, consisting of severance payments, employee benefits, and related cash expenses. We expect the 2024 Restructuring Plan will be substantially complete by the end of the second quarter of 2024.

Current wording

During the first quarter of 2024, we committed to a restructuring plan intended to reduce operating costs, improve operating margins, and continue advancing our ongoing commitment to profitable growth (the “2024 Restructuring Plan”). The 2024 Restructuring Plan provided for a reduction of the Company’s current workforce by approximately 150 people. During the three and six months ended June 30, 2024, we incurred restructuring and related charges of $0.6 million and $7.8 million, respectively, consisting primarily of severance payments, employee benefits, and related cash expenses. These charges were recognized within transaction, integration, and restructuring expenses in our unaudited condensed consolidated statements of operations. We do not expect to incur any additional material charges associated with the 2024 Restructuring Plan.

Previous wording

As part of the 2024 Restructuring Plan, we made significant changes to our go-to-market team that reduced overlay expenses, created a separate group and sales motion for our small and medium sized customers, and allocated more resources to our Enterprise Customers. These changes created disruptions to our sales efforts in the first quarter of 2024, impacting both new customer acquisition and, to a lesser extent, upsell to existing customers, which we expect will continue to impact our results in the second quarter of 2024.

Current wording

As part of the 2024 Restructuring Plan, we made significant changes to our go-to-market team that reduced overlay expenses, created a separate group and sales motion for our small and medium sized customers, and allocated more resources to our Enterprise Customers. These changes created disruptions to our sales efforts in the first half of 2024, impacting both new customer acquisition and upsell to existing customers, which we expect will continue to impact our results through the second half of 2024.

Previous wording

As a corporation with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, the Russia-Ukraine war, the evolving conflict in Israel and surrounding areas, global geopolitical tension and more recently, inflation and high interest rates, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, and related market uncertainty. We continuously monitor the direct and indirect impacts, and the potential for future impacts, of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape. While our revenue and earnings have historically been relatively predictable as a result of our subscription-based business model, the potential implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, introduce additional uncertainty.

Current wording

As a corporation with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, the Russia-Ukraine war, the conflict in Israel and surrounding areas, global geopolitical tension and more recently, inflation and high interest rates, volatility in the capital markets, liquidity concerns at, and failures of, banks and other financial institutions, and related market uncertainty. We continuously monitor the direct and indirect impacts, and the potential for future impacts, of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape. While our revenue and earnings have historically been relatively predictable as a result of our subscription-based business model, the potential implications of these macroeconomic events on our business, results of operations and overall financial position, particularly in the long term, introduce additional uncertainty.

Previous wording

Our current and prospective customers and their business spendings are impacted by difficult macroeconomic conditions to varying degrees and as a result, in some cases we are observing deal cycles lengthen for new and existing customers, in part as a result of more stringent approval processes, as well as a significant number of deferred purchasing decisions. We are also experiencing heightened customer churn. These trends have been particularly pronounced for smaller customers and in the life science and provider markets. This churn impacted our revenue growth in 2023 and in the first quarter of 2024, and we expect this will continue to impact our growth in 2024. Additionally, we are monitoring the impacts of data source disruption currently impacting the industry. We are continuing to evaluate these and other past and potential future direct and indirect impacts on our business and results of operations.

Current wording

Our current and prospective customers and their business spendings are impacted by difficult macroeconomic conditions to varying degrees and as a result, in some cases we are observing deal cycles lengthen for new and existing customers, in part as a result of more stringent approval processes, as well as a significant number of deferred purchasing decisions. We are also experiencing heightened customer churn. These trends have been particularly pronounced for smaller customers and in the Life Science and Provider markets. This churn impacted our revenue growth in 2023 and in the first half of 2024, and we expect this will continue to impact our growth in 2024. Additionally, we are monitoring the impacts of data source disruption currently impacting the industry. We are continuing to evaluate these and other past and potential future direct and indirect impacts on our business and results of operations.

Previous wording

We plan to organically grow the number of customers that use our platform by increasing demand for our platform and penetrating our addressable market. Our results of operations and growth prospects will depend, in part, on our ability to attract new customers. We intend to drive new customer acquisition with our efficient go-to-market engine by continuing to invest in our sales and marketing efforts and developing new use cases for our platform. Customers generating more than $100,000 in Annual Recurring Revenue (“ARR”), which we refer to as “Enterprise Customers”, represent the majority of our ARR and are a key focus of our go-to-market programs. Our total customer count, which includes smaller customers, was approximately 2,800 as of March 31, 2024 compared with approximately 3,000 customers as of March 31, 2023. Though our total customer count has decreased as smaller customers have churned at disproportionately higher rates due to current macroeconomic conditions, our Enterprise Customer accounts have increased by 30 to 559 customers as of March 31, 2024 compared with 529 customers as of March 31, 2023. We have identified more than 100,000 potential customers across the healthcare ecosystem that we believe could benefit from our platform. Our ability to attract and acquire new customers is dependent on the strength of our platform and effectiveness of our go-to-market strategy, as well as macroeconomic factors and their impact on our potential customers’ business spending.

Current wording

We plan to organically grow the number of customers that use our platform by increasing demand for our platform and penetrating our addressable market. Our results of operations and growth prospects will depend, in part, on our ability to attract new customers. We intend to drive new customer acquisition with our efficient go-to-market engine by continuing to invest in our sales and marketing efforts and developing new use cases for our platform. Customers generating more than $100,000 in Annual Recurring Revenue (“ARR”), which we refer to as “Enterprise Customers”, represent the majority of our ARR and are a key focus of our go-to-market programs.

Previous wording

We believe there is a significant opportunity to generate additional revenue from our existing customer base of approximately 2,800 customers as of March 31, 2024.

Current wording

We believe there is a significant opportunity to generate additional revenue from our existing customer base of approximately 2,600 customers, as adjusted, as of June 30, 2024.

Previous wording

We seek to enhance our platform, data and business through internal development and through acquisitions of and investments in businesses that broaden and strengthen our platform. On January 16, 2024, we completed the purchase of assets comprising the Carevoyance business line of H1 Insights, Inc., a product that helps MedTech customers to improve segmentation, targeting, and prospect engagement. Acquisitions can result in transaction costs, amortization expenses and other adjustments as purchase accounting requires that all assets acquired and liabilities assumed be recorded at fair value on the acquisition date. Refer to Note 2. Acquisitions in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Current wording

We seek to enhance our platform, data and business through internal development and through acquisitions of and investments in businesses that broaden and strengthen our platform. During the six months ended June 30, 2024, we completed the purchase of assets comprising the Carevoyance business line of H1 Insights, Inc., a product that helps MedTech customers to improve segmentation, targeting, and prospect engagement. Acquisitions can result in transaction costs, amortization expenses and other adjustments as purchase accounting requires that all assets acquired and liabilities assumed be recorded at fair value on the acquisition date. Refer to Note 2. Acquisitions in the notes to our unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q for further details.

Previous wording

For the three months ended March 31, 2024, we derived approximately 97% of our revenue from subscription services and the remainder from professional services. Our subscription services consist primarily of subscription fees for access to our platform. Our subscription contracts typically have a term ranging from 1 to 3 years and are non-cancellable. We typically bill for services in advance annually, and we typically require payment at the beginning of each annual period. Our subscription revenue is recognized ratably over the contract term. Our professional services revenue typically is derived from non-recurring consulting services which are generally capable of being distinct and can be accounted for as separate performance obligations. Revenue related to these professional services is recognized at the time the services are performed.

Current wording

For the six months ended June 30, 2024, we derived approximately 97% of our revenue from subscription services and the remainder from professional services. Our subscription services consist primarily of subscription fees for access to our platform. Our subscription contracts typically have a term ranging from 1 to 3 years and are non-cancellable. We typically bill for services in advance annually, and we typically require payment at the beginning of each annual period. Our subscription revenue is recognized ratably over the contract term. Our professional services revenue typically is derived from non-recurring consulting services which are generally capable of being distinct and can be accounted for as separate performance obligations. Revenue related to these professional services is recognized at the time the services are performed.

Previous wording

As part of the 2024 Restructuring Plan, we made significant changes to our go-to-market team that reduced overlay expenses, created a separate group and sales motion for our small and medium sized customers, and allocated more resources to our Enterprise Customers. These changes disrupted our sales efforts in the first quarter of 2024. Although subscription renewals were in line with expectations, upsells, new business, and professional services, inclusive of transactional services and one-time consulting arrangements, were more heavily impacted than anticipated. Based on these impacts, we expect our revenue growth in the second quarter and full year 2024 to be slower than in the same periods in the prior year.

Current wording

As part of the 2024 Restructuring Plan, we made significant changes to our go-to-market team that reduced overlay expenses, created a separate group and sales motion for our small and medium sized customers, and allocated more resources to our Enterprise Customers. These changes disrupted our sales efforts in the first half of 2024, coupled with continued macroeconomic headwinds and sales execution challenges in the second quarter. Although subscription renewals were in line with expectations, upsells, new business, and professional services, inclusive of transactional services and one-time consulting arrangements, were more heavily impacted than anticipated. Based on these impacts, we expect our revenue to decline in the second half of 2024 compared with the same periods in the prior year.

Previous wording

At the beginning of 2023, additional third-party data sources were rolled out to our customers, which resulted in, and is expected to continue to result in, an increase in cost of revenue, including amortization.

Current wording

During 2023, additional third-party data sources, inclusive of sources obtained through the acquisition of Populi in July 2023, were rolled out to our customers, which resulted in, and is expected to continue to result in, an increase in cost of revenue, including amortization.

Previous wording

While we expect our overall gross profit to increase for 2024 due to anticipated revenue growth, our gross margin is expected to modestly decrease due to the expansion of data sources, as described above, and costs associated with the acquisitions of Populi and Carevoyance.

Current wording

We expect that gross profit margin for 2024 will continue to be impacted by the expansion of data sources, as described above, and costs associated with the acquisitions of Populi and Carevoyance, in addition to the anticipated second half 2024 revenue decline discussed above.

Previous wording

Transaction, integration, and restructuring expenses. Transaction, integration, and restructuring expenses are costs directly associated with various acquisition and integration activities we have undertaken, primarily accounting and legal due diligence, and consulting and advisory fees, as well as expenses related to our restructuring plans.

Current wording

Transaction, integration, and restructuring expenses. Transaction, integration, and restructuring expenses are costs directly associated with various acquisition, integration, and consolidation activities we have undertaken, primarily accounting and legal due diligence, and consulting and advisory fees, as well as expenses related to our restructuring plans and office consolidations.

Previous wording

Operating expenses increased $7.1 million, or 12%, during the three months ended March 31, 2024 compared with the same period in the prior year. The increase to operating expense as compared to the prior-year period was primarily due to:

Current wording

Operating expenses, which include a goodwill impairment charge of $363.6 million during the three months ended June 30, 2024 (refer to Note 7. Goodwill and Intangible Assets for further details), increased $358.2 million, or 579%, during the three months ended June 30, 2024 compared with the same period in the prior year. The increase to operating expense as compared to the prior-year period was primarily due to the goodwill impairment charge, as well as:

Previous wording

A decrease in sales and marketing expense of $1.7 million for the three months ended March 31, 2024, primarily due to lower personnel costs, including stock-based compensation expense, resulting from the 2024 Restructuring Plan;

Current wording

A decrease in sales and marketing expense of $3.2 million for the three months ended June 30, 2024, primarily due to lower personnel costs, including stock-based compensation expense, resulting from the 2024 Restructuring Plan;

Previous wording

Benefit from income taxes was $0.8 million for the three months ended March 31, 2024 compared to $0.7 million in the comparable prior year period. There were no individually significant drivers that contributed to the change.

Current wording

A decrease in product development expense of $0.1 million for the three months ended June 30, 2024. There were no individually significant drivers that contributed to the change from the comparable period in the prior year;

Previous wording

A decrease in depreciation and amortization expense of $0.3 million for the three months ended March 31, 2024, primarily due to the full amortization of a database intangible asset during the third quarter of 2023; and

Current wording

A decrease in depreciation and amortization expense of $0.3 million for the three months ended June 30, 2024, primarily driven by certain customer relationship intangible assets utilizing economic consumption amortization methods with lower amortization in the current period; and

Previous wording

Revenue increased $4.3 million, or 7%, in the three months ended March 31, 2024 compared with the same period in the prior year, due to higher subscription revenue of $3.3 million and higher professional services revenue of $1.0 million. Approximately $1.8 million of the overall increase in revenue was driven primarily by the addition of new customers during the first quarter of 2024, while $2.5 million of the increase was the result of net growth from customers that existed prior to the start of the first quarter of 2024.

Current wording

Revenue increased $7.1 million, or 6%, in the six months ended June 30, 2024 compared with the same period in the prior year, due to higher subscription revenue of $6.0 million and higher professional services revenue of $1.1 million. Approximately $5.5 million of the overall increase in revenue was driven by the addition of new customers in 2024, while $1.6 million of the increase was the result of net growth from customers that existed prior to the start of 2024.

Previous wording

Cost of revenue increased $1.2 million, or 10%, in the three months ended March 31, 2024 compared with the same period in the prior year. This increase was driven primarily by a $1.6 million increase in hosting fees and data subscription costs as a result of expanded customer usage of our platform and the Populi acquisition, partially offset by a decrease of $0.4 million in employee and other costs driven primarily by the restructuring plan we committed to during the third quarter of 2023.

Current wording

Cost of revenue increased $3.3 million, or 14%, in the six months ended June 30, 2024 compared with the same period in the prior year. This increase was driven primarily by a $3.0 million increase in hosting fees and data subscription costs as a result of expanded customer usage of our platform and the Populi acquisition and an increase of $0.3 million in amortization expense resulting from new data purchases. Moderate increases in other costs were offset by a slight decrease in personnel costs driven primarily by the 2024 Restructuring Plan.

Previous wording

An increase in product development expense of $0.2 million for the three months ended March 31, 2024. There were no individually significant drivers that contributed to the change from the comparable period in the prior year;

Current wording

An increase in product development expense of $0.1 million for the six months ended June 30, 2024. There were no individually significant drivers that contributed to the change from the comparable period in the prior year;

Previous wording

An increase in general and administrative expense of $2.8 million for the three months ended March 31, 2024, primarily due to increased stock-based compensation expense resulting from new equity grants in the current year and the acceleration of certain shares in connection with the departure of an executive-level employee, partially offset by savings resulting from lower franchise taxes and relief from sales tax exposure, including penalties and interest, resulting from voluntary disclosure agreements, and lower professional service fees;

Current wording

An increase in general and administrative expense of $1.7 million for the six months ended June 30, 2024, primarily due to increased stock-based compensation expense resulting from new equity grants in the current year and the acceleration of certain shares in connection with the departure of executive-level employees and increased fees and severance costs associated with a strategic transition initiative separate from our 2024 Restructuring Plan. These increases were partially offset by relief from sales tax exposure during the year, including penalties and interest, resulting from voluntary disclosure agreements, and lower professional service fees;

Previous wording

An increase in transaction, integration and restructuring expenses of $5.9 million for the three months ended March 31, 2024, due primarily to costs associated with the restructuring plan we committed to in the first quarter of 2024.

Current wording

An increase in transaction, integration, and restructuring expenses of $5.2 million for the six months ended June 30, 2024, due primarily to costs associated with the 2024 Restructuring Plan and the impairment of assets resulting from the consolidation of certain leased office facilities, partially offset by costs incurred in the second quarter of 2023 associated with the Populi acquisition that did not repeat in the current period.

Previous wording

Total other income, net was $2.8 million for the three months ended March 31, 2024 compared to total other expense, net of $4.4 million in the same period in the prior year. The overall change was primarily attributable to a $2.3 million TRA liability remeasurement gain in the first quarter of 2024, driven by future realizability of tax attributes payable under the TRA, compared with a $3.6 million TRA liability remeasurement loss in the comparable prior year period. Interest income earned from our short-term investments also increased by $1.1 million to $3.9 million in the first quarter of 2024 compared with $2.8 million in the comparable prior year period.

Current wording

Total other income, net was $44.3 million for the six months ended June 30, 2024 compared to total other expense, net of $5.4 million in the same period in the prior year. The overall change was primarily attributable to a $44.0 million TRA liability remeasurement gain in the first half of 2024, primarily driven by the impairment of goodwill, as well as changes in future realizability of tax attributes payable under the TRA, compared with a $4.7 million TRA liability remeasurement loss in the comparable prior year period. Interest income earned from our short-term investments also increased by $1.2 million to $7.6 million in the first half of 2024 compared with $6.4 million in the comparable prior year period.

Previous wording

We present “Adjusted EBITDA” as a measure of our operating performance. EBITDA is defined as earnings before (i) debt-related costs, including interest expense, (ii) interest income, (iii) income taxes, and (iv) depreciation and amortization. Management further adjusts EBITDA in its presentation of Adjusted EBITDA to exclude (i) other (income) expense, (ii) equity-based compensation, (iii) transaction, integration, and restructuring expenses, and (iv) other non-core items. We exclude these items because they are by nature non-cash, non-recurring, and/or unrelated to our core operations, and therefore we do not believe them to be representative of ongoing operational performance. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by management and our board of directors to assess the profitability of our operations. We believe these metrics provide useful measures to investors to assess our operating performance and in measuring the profitability of our operations on a consolidated level.

Current wording

We present “Adjusted EBITDA” as a measure of our operating performance. EBITDA is defined as earnings before (i) debt-related costs, including interest expense, (ii) interest income, (iii) income taxes, and (iv) depreciation and amortization. Management further adjusts EBITDA in its presentation of Adjusted EBITDA to exclude (i) other (income) expense, (ii) equity-based compensation, (iii) transaction, integration, and restructuring expenses, (iv) goodwill impairments, and (v) other non-core items. We exclude these items because they are by nature non-cash, non-recurring, and/or unrelated to our core operations, and therefore we do not believe them to be representative of ongoing operational performance. Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA and Adjusted EBITDA Margin are key metrics used by management and our board of directors to assess the profitability of our operations. We believe these metrics provide useful measures to investors to assess our operating performance and in measuring the profitability of our operations on a consolidated level.

Previous wording

Transaction and integration expenses primarily represent legal, accounting, and consulting expenses and fair value adjustments for contingent consideration related to our acquisitions. Restructuring expenses relate to the 2024 Restructuring Plan and those we committed to during the first and third quarters of 2023.

Current wording

Transaction and integration expenses primarily represent legal, accounting, and consulting expenses and fair value adjustments for contingent consideration related to our acquisitions. Restructuring expenses relate to the 2024 Restructuring Plan and those we committed to during the first and third quarters of 2023, as well as impairment and restructuring charges related to office closures, relocations, and consolidations.

Previous wording

Other non-core items represent expenses driven by events that are typically by nature one-time, non-operational, and/or unrelated to our core operations. These expenses are comprised of non-core legal and regulatory costs isolated to unique and extraordinary litigation, legal and regulatory matters that are not considered normal and recurring business activity, including sales tax accrual charges inclusive of penalties and interest for sales taxes that we may have been required to collect from customers in 2024 and in certain previous years, and other non-recurring legal and regulatory matters. Other non-core items also include non-recurring consulting fees associated with our 2024 Restructuring Plan, as well as professional fees related to financing, capital structure changes, and other non-recurring costs.

Current wording

Other non-core items represent expenses driven by events that are typically by nature one-time, non-operational, and/or unrelated to our core operations. These expenses are comprised of non-core legal and regulatory costs isolated to unique and extraordinary litigation, legal and regulatory matters that are not considered normal and recurring business activity, including sales tax accrual adjustments inclusive of penalties and interest for sales taxes that we may have been required to collect from customers in 2024 and in certain previous years, and other non-recurring legal and regulatory matters. Other non-core items also include non-recurring consulting fees and severance costs associated with strategic transition initiatives, as well as professional fees related to financing, capital structure changes, and other non-recurring costs.

Previous wording

As of March 31, 2024, we had $106.0 million of cash and cash equivalents, $189.2 million of short-term investments, and $74.4 million available under our revolving credit facility. Our principal sources of liquidity are cash and cash equivalents and short-term investments on hand, primarily from our IPO and follow-on offering, as well as the cash flows we generate from operations. Our principal uses of liquidity have been and are expected to continue to be primarily for investment in long-term growth of the business through capital expenditures and acquisitions, including the acquisition of Carevoyance in January 2024, as well as debt services (see Note 9. Long-Term Debt for further details) and distributions to members of Definitive OpCo.

Current wording

As of June 30, 2024, we had $120.9 million of cash and cash equivalents, $175.6 million of short-term investments, and $74.4 million available under our revolving credit facility. Our principal sources of liquidity are cash and cash equivalents and short-term investments on hand, primarily from our IPO and follow-on offering, as well as the cash flows we generate from operations. Our principal uses of liquidity have been, and are expected to continue to be, primarily for investment in long-term growth of the business through capital expenditures, acquisitions, and repurchases of our Class A Common Stock, as well as debt services (see Note 9. Long-Term Debt for further details) and distributions to members of Definitive OpCo.

Previous wording

Net cash provided by operating activities was $16.6 million during the three months ended March 31, 2024, primarily as a result of a net loss of $12.7 million, offset by non-cash charges of $29.5 million. The non-cash charges were primarily comprised of equity compensation costs of $15.6 million, amortization of intangible assets of $12.1 million, amortization of deferred contract costs of $3.7 million, and a gain on remeasurement of the TRA of $2.3 million. The net decrease in operating assets and liabilities of $0.2 million for the three months ended March 31, 2024 was primarily driven by cash outflows resulting from lower accounts payable, accrued expenses, and other liabilities, collectively, of $8.2 million, an increase in deferred contract costs of $2.7 million, an increase in prepaid expenses and other assets of $1.4 million, and a $0.6 million payment of contingent consideration. These factors were almost entirely offset by an increase in deferred revenue of $9.7 million due to the timing of billings and cash received in advance of revenue recognition for subscription services, and a decrease in accounts receivable of $3.0 million.

Current wording

Net cash provided by operating activities was $30.6 million during the six months ended June 30, 2024, primarily as a result of a net loss of $318.9 million, offset by non-cash charges of $356.5 million. The non-cash charges were primarily comprised of a $363.6 million goodwill impairment charge recorded during the second quarter of 2024, equity compensation costs of $24.4 million, amortization of intangible assets of $24.3 million, amortization of deferred contract costs of $7.5 million, and a gain on remeasurement of the TRA of $44.0 million. The net decrease in operating assets and liabilities of $6.9 million for the six months ended June 30, 2024 was primarily driven by cash outflows resulting from lower accounts payable, accrued expenses, and other liabilities, collectively, of $10.3 million, an increase in deferred contract costs of $5.7 million, an increase in prepaid expenses and other assets of $4.3 million, and a decrease in deferred revenue of $1.3 million due to the timing of billings and cash received in advance of revenue recognition for subscription services. These factors were partially offset by and a decrease in accounts receivable of $15.2 million.

Previous wording

Cash used in investing activities during the three months ended March 31, 2024 was $24.0 million, driven primarily by $83.8 million in purchases of short-term investments and $13.7 million in cash paid for the acquisition of Carevoyance, net of cash acquired, partially offset by $73.6 million in maturities of short-term investments.

Current wording

Cash used in investing activities during the six months ended June 30, 2024 was $9.1 million, driven primarily by $123.9 million in purchases of short-term investments and $13.5 million in cash paid, net of cash acquired, for the acquisition of Carevoyance in the first quarter of 2024, partially offset by $129.1 million in maturities of short-term investments.

Previous wording

Cash used in financing activities during the three months ended March 31, 2024 was $17.2 million, driven by payments of $7.0 million under the TRA, taxes paid related to the net share settlement of equity awards of $5.8 million, repayments of the 2021 Term Loan (as defined below) of $3.4 million, and payments of contingent consideration of $1.0 million.

Current wording

Cash used in financing activities during the six months ended June 30, 2024 was $31.3 million, driven by payments of $7.0 million under the TRA, payments of $7.0 million for repurchases of our Common Stock, repayments of the 2021 Term Loan (as defined below) of $6.9 million, taxes paid related to the net share settlement of equity awards of $6.8 million, distribution payments to members of $2.7 million, and payments of contingent consideration of $1.0 million.

Previous wording

The 2021 Term Loan is subject to annual amortization of principal, payable in equal quarterly installments on the last day of each fiscal quarter, commencing on the Initial Amortization Date, equal to approximately 2.5% per annum of the principal amount of the term loans in the first year and second year after the Initial Amortization Date and approximately 5.0% per annum of the principal amount of the term loans in the third year, fourth year, and fifth year after the Initial Amortization Date. A balloon payment of approximately $220.0 million will be due at maturity. There was $254.4 million outstanding on the 2021 Term Loan at March 31, 2024.

Current wording

The 2021 Term Loan is subject to annual amortization of principal, payable in equal quarterly installments on the last day of each fiscal quarter, commencing on the Initial Amortization Date, equal to approximately 2.5% per annum of the principal amount of the term loans in the first year and second year after the Initial Amortization Date and approximately 5.0% per annum of the principal amount of the term loans in the third year, fourth year, and fifth year after the Initial Amortization Date. A balloon payment of approximately $220.0 million will be due at maturity. There was $250.9 million outstanding on the 2021 Term Loan at June 30, 2024.

Previous wording

Financing obligations generally include repayment of principal amounts of the 2021 Term Loan, lease payments, and purchase obligations. There have been no material changes to our financing obligations during the three months ended March 31, 2024. Refer to Note 5. Leases and Note 14. Commitments and Contingencies in our Annual Report on Form 10-K filed with the SEC on February 28, 2024 for further information.

Current wording

Financing obligations generally include repayment of principal amounts of the 2021 Term Loan, lease payments, and purchase obligations. There have been no material changes to our financing obligations during the six months ended June 30, 2024. Refer to Note 5. Leases and Note 14. Commitments and Contingencies in our Annual Report on Form 10-K filed with the SEC on February 28, 2024 for further information.

Previous wording

The timing and the amount of any repurchased Class A Common Stock will be determined by our management based on its evaluation of market conditions and other factors. The repurchase program will be funded using our working capital. Any repurchased shares of Class A Common Stock will be retired. The repurchase program does not obligate us to acquire any particular amount of Class A Common Stock, and the repurchase program may be suspended or discontinued at any time at our discretion. As of May 7, 2024, no repurchases have been made pursuant to the repurchase program.

Current wording

The timing and the amount of any repurchased Class A Common Stock will be determined by our management based on its evaluation of market conditions and other factors. The repurchase program will be funded using our working capital. Any repurchased shares of Class A Common Stock will be retired. The repurchase program does not obligate us to acquire any particular amount of Class A Common Stock, and the repurchase program may be suspended or discontinued at any time at our discretion. As of June 30, 2024, 1,258,565 shares of Class A Common Stock have been repurchased under the repurchase program.

Previous wording

Capital expenditures decreased by $1.1 million to $0.3 million for the three months ended March 31, 2024 compared to $1.3 million for the same period in the prior year, primarily driven by lower spend on historical data purchases in the current year compared with the comparable prior year period.

Current wording

Capital expenditures decreased by $1.4 million to $0.7 million for the six months ended June 30, 2024 compared to $2.1 million for the same period in the prior year, primarily driven by lower spend on historical data purchases in the current year compared with the comparable prior year period.

Previous wording

Our unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts may differ from such estimated amounts, we believe such differences are not likely to be material. For additional detail regarding our critical accounting policies and estimates including business combinations, goodwill and indefinite-lived intangible assets, and income taxes, see our discussion for the year ended December 31, 2023 included in our 2023 Form 10-K. There have been no material changes to these policies or estimates as of March 31, 2024.

Current wording

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect reported amounts. The estimates and assumptions are based on historical experience and on other factors that we believe to be reasonable. Actual results may differ from those estimates. We review these estimates on a periodic basis to ensure reasonableness. Although actual amounts may differ from such estimated amounts, we believe such differences are not likely to be material. For additional detail regarding our critical accounting policies and estimates including business combinations, goodwill and indefinite-lived intangible assets, and income taxes, see our discussion for the year ended December 31, 2023 included in our 2023 Form 10-K. There have been no material changes to these policies or estimates as of June 30, 2024.

Previous wording

See new accounting pronouncements described under “—Adoption of Recently Issued Financial Accounting Standards” and “—Recently Issued Accounting Pronouncements Not Yet Adopted” within Note 1. Organization and Basis of Presentation in the Notes to the unaudited interim condensed consolidated financial statements.

Current wording

See new accounting pronouncements described under “—Adoption of Recently Issued Financial Accounting Standards” and “—Recently Issued Accounting Pronouncements Not Yet Adopted” within Note 1. Organization and Basis of Presentation in the Notes to the unaudited condensed consolidated financial statements.