Definitive Healthcare Corp. (NASDAQ: DH) shares plummeted 23.58% in pre-market trading on Friday, following the company's disappointing fourth-quarter 2024 earnings results and a lowered outlook for 2025, reflecting ongoing challenges with customer retention and elevated churn rates.

The healthcare data and analytics provider reported a 6% year-over-year decline in total revenue to $62.3 million for Q4 2024, citing difficulties in retaining customers and high churn rates, particularly in the life sciences sector. Adjusted EBITDA fell 12% year-over-year to $17.5 million, reflecting the impact of declining revenue.

Notably, Definitive Healthcare experienced a decrease in its enterprise customer base, with a reduction of 21 year-over-year and 11 quarter-over-quarter. Net dollar retention, a key metric for customer retention and expansion, stood at 90% for enterprise customers and 85% overall, indicating continued struggles with churn.

Looking ahead, the company provided guidance for Q1 2025 revenue to decline 10% to 13% year-over-year, citing ongoing pressure on renewals. For the full year 2025, Definitive Healthcare expects revenue to drop 5% to 9% compared to 2024, with an adjusted EBITDA margin guidance of 26% to 28%.

While the company is taking measures to improve customer retention and value delivery, such as aligning compensation incentives, enhancing master data management capabilities, and focusing on digital activation efforts, these initiatives are expected to take longer than initially anticipated to have a full impact on the business.