Executive Summary / Key Takeaways

• Strategic Reorientation for Growth: Definitive Healthcare is actively transforming its operational and go-to-market strategies, focusing on four pillars: differentiated data, seamless integrations, customer success, and digital engagement, to counteract macroeconomic pressures and return to consistent revenue growth.
• Stabilizing Performance with Profitability: Despite a 4% year-over-year revenue decline to $60 million in Q3 2025, the company exceeded its Adjusted EBITDA guidance, reaching $18.9 million (32% margin), demonstrating strong cost discipline and the scalable nature of its business model.
• Differentiated Data as a Core Moat: The company's proprietary SaaS platform, leveraging unique reference and affiliation data, is a key competitive advantage, with ongoing investments in new claims data sources and advanced analytics enhancing its value proposition and driving higher customer retention for integrated clients.
• Cautious Outlook with Sequential Improvement: Management projects a full-year 2025 revenue decline of 5% to $239-$240 million, with Adjusted EBITDA of $68-$69 million (28-29% margin), anticipating moderating year-over-year revenue decreases and sequential growth in subscription revenues through the latter half of the year.
• Competitive Landscape and Operational Focus: Definitive Healthcare competes by emphasizing data quality and service over price, particularly against integrated software platforms and smaller, price-focused solutions. Its strategic initiatives aim to deepen customer relationships and expand market reach through enhanced integrations and digital activation.

The Foundation of Healthcare Intelligence: Definitive Healthcare's Strategic Pivot

Definitive Healthcare Corp. (NASDAQ: DH), founded in 2011 by Jason Krantz, established itself with a clear mission: to provide comprehensive healthcare commercial intelligence through a multi-tenant software-as-a-service (SaaS) platform. This platform, which combines proprietary and public data sources, offers critical insights across the entire healthcare continuum, aiding customers from product development to sales and marketing execution. The company's journey, including its 2019 acquisition by Advent and subsequent Initial Public Offering in 2021, has seen continuous expansion of its intelligence modules, analytics, and data sources.

The company's core technological differentiator lies in its ability to aggregate and master complex healthcare data. Its leading reference and affiliation data, built from primary research, government sources, and third-party claims data, provides a 360-degree view of prospective buyers. This approach offers a significant advantage over claims-derived and model data alone, which often fail to capture a substantial percentage of facilities. The Definitive Healthcare ID (DHID) serves as a unique token, enabling customers to match and append various data sources, including their own first-party data, to create sophisticated master files and hierarchies. This capability is crucial for generating highly accurate insights, particularly for medical device marketing needs and identifying key opinion leaders. The company's strategic investments in modern data science and partnerships, such as bringing on new claims data sources in Q3 2025 and planning another for Q4 2025 to exceed historical levels, underscore its commitment to maintaining this data quality advantage.

Definitive Healthcare operates in a competitive landscape, facing both large, integrated software platforms like IQVIA Holdings Inc. (IQV) and Oracle Corporation (ORCL) (via its Health Division), as well as specialized cloud-based providers such as Veeva Systems Inc. (VEEV), and smaller, price-focused point solutions. Against integrated platforms, Definitive Healthcare asserts its right to win with significantly better, differentiated data, offering more agile and specialized solutions compared to the often more complex systems of larger rivals. For instance, a medical device company recently chose Definitive Healthcare due to its superior insights into affiliation hierarchies within integrated delivery networks, which its previous provider lacked. While IQVIA boasts a broader global reach and end-to-end services, and Veeva excels in life sciences-specific cloud technology, Definitive Healthcare's strength lies in its focused, healthcare-specific intelligence modules and its emphasis on data accuracy and service over price. The company believes that competing on quality and service is a long-term strategy that maximizes shareholder value, even if it occasionally loses customers to lower-cost alternatives, some of whom later return.

Operational Evolution and Financial Performance

The company's strategic responses are anchored in four key pillars: differentiated data, data delivery and integrations, driving customer success, and innovation through digital engagement. These pillars are designed to address recent challenges, including macroeconomic headwinds that have led to elongated deal cycles, more stringent approval processes, and heightened customer churn, particularly among smaller customers and in the Life Sciences market. The 10-Q document, filed on November 6, 2025, provides the latest insights into these dynamics.

In the third quarter of 2025, Definitive Healthcare reported total revenue of $60 million, a 4% decrease year-over-year. Subscription revenues, which constitute approximately 97% of total revenue, declined 4% year-over-year to $58.2 million, though they showed sequential stabilization in absolute dollars and a 2-point trajectory improvement over the prior quarter. Professional services revenue, while a smaller component, showed modest growth, increasing to $1.824 million from $1.800 million in Q3 2024. For the nine months ended September 30, 2025, total revenue decreased 5% to $179.987 million from $189.914 million in the prior year period.

Despite top-line pressures, Definitive Healthcare demonstrated strong expense discipline. Adjusted EBITDA for Q3 2025 reached $18.9 million, representing a robust 32% margin, exceeding the high end of guidance by $2 million. This was partly aided by approximately $2.5 million in cost savings, including a $1.5 million one-time benefit from a data contract renegotiation and a $1 million net cost reduction from replacing a data source. However, the adjusted gross profit margin remained roughly flat at 82% year-over-year, reflecting the impact of revenue decline on a largely fixed cost structure. The company anticipates a decrease in gross profit margin for the full year 2025 due to expanding data sources and expected revenue declines.

The company's liquidity remains solid, with $108.30 million in cash and cash equivalents and $77.60 million in short-term investments as of September 30, 2025. It also has $49.70 million available under its Revolving Credit Facility.

Cash flow from operations for the trailing 12 months was approximately $51 million, with an unlevered free cash flow conversion rate of 73% from Adjusted EBITDA, impacted by higher-than-normal capital expenditures in late 2024 and early 2025. These capital expenditures, which increased by $10.90 million to $12.30 million for the nine months ended September 30, 2025, were primarily directed towards software, data assets, and internal-use software development, reflecting strategic investments in its technological roadmap.

The company also actively manages its capital structure, having repaid $75.60 million of its term loan and repurchased 13.90 million shares of Class A Common Stock for $49.50 million during the nine months ended September 30, 2025.

A significant non-cash event in Q1 2025 was a $176.5 million goodwill impairment charge, triggered by declines in market capitalization. This, along with a $7.10 million TRA liability remeasurement loss in Q3 2025 due to tax law updates, highlights the sensitivity of the company's financial reporting to market conditions and regulatory changes.

Strategic Initiatives and Future Outlook

Definitive Healthcare's strategic pillars are designed to drive a return to growth. The focus on data delivery and integrations is paramount, as customers who integrate the company's data directly into their systems exhibit approximately 10 points higher retention rates. The company is adapting to market needs by offering flexible integration options, from direct software access to APIs and advanced analytics support, enabling deeper embedding into customer workflows. A notable example is a diversified market customer who expanded their commitment to over $1 million, citing Definitive Healthcare's API integration into their sales force deployment as essential for accelerating revenue growth.

Customer success is being enhanced through a consistent, repeatable, and proactive engagement process. This includes streamlining operations, creating an analytics and data science center of excellence, integrating customer success and value delivery teams, and revamping compensation incentives. These efforts aim to ensure customers rapidly derive value from their investments, particularly through a "higher-touch service-enabled delivery model" for Life Sciences clients with more intensive data requirements.

In innovation and digital engagement, Definitive Healthcare is expanding its capabilities to automatically operationalize insights. This includes partnerships like the one with LiveRamp (RAMP), which makes Definitive Healthcare's data available in the LiveRamp marketplace for marketers to self-serve healthcare audience segments. The company is also actively expanding its agency presence, having signed 8 new agencies in Q3 2025, with 15 contracted and 6 activating campaigns as of Q2 2025. Direct sales support for digital activation is also gaining traction, exemplified by a large teaching hospital expanding its commitment from a 5-figure test to a mid-6-figure campaign. These initiatives aim to leverage the accuracy and veracity of Definitive Healthcare's data to drive better targeting and higher ROI for customer advertising efforts.

Management's outlook for the remainder of 2025 reflects a prudent yet confident approach. For Q4 2025, the company expects revenue between $59 million and $60 million, representing a 4% to 5% year-over-year decrease. Adjusted EBITDA is projected to be $16 million to $17 million, with a margin of 27% to 29%. For the full year 2025, Definitive Healthcare has raised the midpoint of its guidance, now expecting revenue of $239 million to $240 million, a 5% decline year-over-year. Adjusted EBITDA is projected to be $68 million to $69 million, with a margin of 28% to 29%, and adjusted net income between $34 million and $35 million, translating to an EPS of $0.23 to $0.24.

The company anticipates that year-over-year revenue decreases will moderate as the year progresses, with Q2 benefiting from a full quarter of revenue from a strategic data partnership and subsequent quarters having easier year-over-year comparisons. Management also expects a "modest decline" in net dollar retention for 2025 compared to 2024, primarily due to upsell pressures in life sciences, but anticipates an improvement in gross dollar retention. The expectation of a sequential step-down in subscription revenues from Q4 to Q1 into 2026 is also a key consideration for investors.

Conclusion

Definitive Healthcare is at a pivotal juncture, actively addressing macroeconomic headwinds and internal operational challenges through a focused strategic transformation. The company's core investment thesis rests on the enduring value of its differentiated healthcare commercial intelligence, underpinned by a robust SaaS platform and unique data assets. By prioritizing data quality, enhancing integration capabilities, deepening customer relationships, and expanding into digital engagement, Definitive Healthcare is building a more resilient and growth-oriented business model.

While the path to consistent top-line growth may take longer than initially anticipated, the company's commitment to operational efficiency and profitability is evident in its ability to exceed EBITDA guidance and maintain solid cash flow generation. The strategic investments in technology and customer-centric initiatives are designed to improve retention and unlock new revenue streams. Investors should closely monitor the effectiveness of these strategic pivots, particularly the impact on renewal rates in the critical December and January periods, and the successful scaling of digital activation partnerships, as these will be key indicators of Definitive Healthcare's ability to capitalize on its foundational strengths and achieve sustainable long-term value creation.