Shares of Definitive Healthcare Corp. (DH) plummeted by 5.1% on Wednesday, following the company's disappointing Q3 2024 earnings report and cautious outlook for the remainder of the year.

In the third quarter, Definitive Healthcare reported a 4% year-over-year decline in total revenue to $62.7 million, missing analysts' expectations. Adjusted EBITDA also dipped 5% to $20.6 million, though the adjusted EBITDA margin remained consistent at 33%. Adjusted net income came in at $15.4 million, or $0.10 per diluted share.

While the company introduced new product enhancements and maintained a strong cash position of over $305 million to support growth initiatives, several concerning factors weighed on its performance. Total customer count fell by around 200 year-over-year, with the company shedding seven enterprise customers quarter-over-quarter. Churn rates remained elevated, particularly in the life sciences segment, impacting renewal rates and overall revenue.

During the earnings call Q&A session, Definitive Healthcare's management acknowledged the ongoing challenges in the life sciences sector, noting that the company primarily engages with customers in later-stage clinical trials, leading to a delayed impact from market improvements. The company's focus remains on reducing churn to return to growth, leveraging its business model's attractive economics.

Looking ahead, Definitive Healthcare provided a cautious outlook, projecting Q4 2024 revenue to decline by 7% to 9% year-over-year, with adjusted EBITDA margin expected to be in the range of 26% to 28%. While the company expects sequential revenue growth in the second half of 2025, it anticipates a contraction in adjusted EBITDA margin compared to 2024 due to continued revenue volatility and fixed costs.