Definitive Healthcare Corp. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Good afternoon, and thank you for joining us to review Definitive Healthcare's financial results.

Joining me on today's call are Kevin Coop, our Chief Executive Officer, and Casey Heller, our Chief Financial Officer. Before we begin, I'd like to remind you that today's discussion may include forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. These statements include, among others, statements about our market opportunity, future performance, growth and financial guidance, the benefits of our data and healthcare commercial intelligence solutions, our competitive position, customer behavior, adoption, growth, renewals and retention, planned investments and operating strategy, value creation for customers and shareholders, and the expected impact of macroeconomic conditions on our business, customers, and the healthcare industry.

Forward-looking statements are based on our current expectations and assumptions as of today and are subject to risks and uncertainties that could cause actual results to differ materially. For more information, please refer to the cautionary statement in today's earning release, as well as the risk factors and other information included in our filings with the SEC, including our most recent Form 10-K and Form 10-Q. You should not place undue reliance on forward-looking statements, and Definitive Healthcare undertakes no obligation to update them except as required by law. During the call, we may also discuss certain non-GAAP financial measures. Reconciliation to the most directly comparable GAAP measures, along with related definitions and limitations, are included in today's earnings release and investor presentation, each of which is available on the investor relations section of our website.

For any forward-looking non-GAAP measures, the earnings release also explains why quantitative reconciliation is not available without unreasonable efforts and identifies the relevant unavailable items. With that, I'll turn the call over to Kevin.

Kevin? Thank you, Jonathan, and thanks to all of you for joining us this afternoon to review Definitive Healthcare's second quarter 2026 financial results.

On today's call, I'll provide highlights from our second quarter performance and give an update on our progress against our key strategic priorities for this year. Let me begin by reviewing our financial results for the second quarter, which were in line or exceeded the guidance ranges on both the top and bottom line. Total revenue was $55.2 million, down 9% year-over-year. Adjusted EBITDA was $14.6 million, representing a margin of 26%, which was modestly above the high end of our guidance. We continue to do an effective job of managing expenses while investing in our core growth initiatives. We continue to generate solid cash flow, delivering approximately $50 million of unlevered free cash flow for the trailing 12 months.

In general, we are successfully tracking against the targets we set forth at the beginning of the year. Our diversified and provider businesses continue to be further along in returning to growth. Importantly, these end markets represent over 60% of our revenue, and the improvement in these segments represents a critical foundation to build upon in the coming quarters. The response in our life sciences segment has been slower. We are encouraged by signs that the changes we are making to the business are positively impacting this segment, but it is taking longer to have the full impact we are targeting. We remain confident we will see a more meaningful benefit from these changes over time. Our confidence that growth can be improved comes from several important proof points. First and foremost, it is the improvement in our net dollar retention rate.

It was once again up several points year-over-year on a trailing 12-month basis in Q2. This is the second consecutive quarter of year-over-year improvement and puts us in strong position to sustain it for the full year. We're starting to see improvement in life sciences as our biopharma segment had the strongest new business quarter in three years outside of Q4. Included amongst those wins were four important win-back customers that had left Definitive Healthcare prior to the start of 2025. The win backs are reinforcement to our belief that ultimately, data quality and superior service will drive longer term value for our customers over price alone. We have been pleased to see that this is not only in our life sciences segment, we are continuing to see win backs across our other end markets as well.

A good example this quarter was a six-figure, three-year win back in our diversified business. The customer left us at the end of last year for a lower cost competitor, having concluded that they no longer needed access to our full data set. Over the following months, our team stayed engaged, and when a business leader came back to explore a subscription for a single team, that conversation grew into a six-figure enterprise agreement. This win reinforces a reoccurring theme. Even customers who believed that an alternative would be just good enough come to recognize that the cost of an inferior data set outweighs the savings. Again, this is an important validation of the business value our data and products deliver for our customers and reinforce that our focus on data quality and service rather than price was the right path.

Our conviction that we are focused on the right things remains strong and that those areas of focus are responding. Importantly, these are areas all within our control. I would now like to provide an update on our operational progress against our four key strategic pillars. As a reminder, these pillars are data differentiation, integrations, customer success, and innovation. Let me begin with data differentiation. Data is at the heart of our value proposition, and we continue to invest in sourcing new proprietary data types and to extend our lead in our core reference and affiliation datasets. We are also increasingly leveraging AI to increase the velocity of our data collection and quality assurance.

We are introducing a new estimation methodology, ACE 3.0, that applies modern data science and machine learning to help address the industry-wide challenge of incomplete claims coverage. We expanded our practice location data to more than 4.4 million verified provider locations, improving the precision and recency our customers can rely on for territory planning, outreach, and segmentation. This differentiation is showing up in our wins. In the quarter, we added a major financial services institution in our diversified business, whose tax-exempt markets team needed a reliable way to monitor health system consolidation, affiliations, and organizational hierarchies. They selected Definitive Healthcare for our differentiated reference and affiliation data delivered through an automated monthly feed directly into their existing workflows, choosing us over a competitor they evaluated earlier in the process.

We also won a competitive claims deal in the behavioral health market, where our coverage and the combination of claims with our reference and affiliation data separated us from other vendors. Our second pillar is seamless integrations. Basically making it as fast and simple as possible for customers to access our data alongside their other systems they rely on is a critical aspect of delivering value and building durable relationships. Our data continues to show that customers who integrate Definitive Healthcare directly into their systems of record and insight use us more often, which makes us a stickier, more strategic part of their operations and strengthens our renewal rates over time. We have continued to accelerate the time to integrate. Compared to the second quarter of last year, we completed over 50% more integrations year-over-year, while also reducing the time to integrate by more than 50%.

Good illustration this quarter was an early renewal and expansion with a large diversified account, where adding our Salesforce embedded connector for their enterprise healthcare team turned a manual list-driven process into a workflow native experience and expanded their annual commitment to us. Also, in collaboration with a top-tier biopharma partner, we successfully launched a native integration that embeds our key opinion leader intelligence data directly into the Veeva Vault CRM, which is used widely by life sciences, clinical, and medical affairs teams, a capability we can now extend to additional pharma clients as they adopt that platform. Turning to our third pillar, customer success, we continue to see the benefit of aligning all functional teams that support the customer journey into a unified commercial organization.