Financial Performance - Revenues for Q4 2024 increased by $3.7 million, or 5.2%, to $74.2 million compared to Q4 2023[3] - Operating income for Q4 2024 was $4.7 million, up 10.2% from $4.3 million in Q4 2023[4] - Net income for Q4 2024 was $4.9 million, up 6.5% from $4.6 million in Q4 2023[6] - Adjusted EBITDA for Q4 2024 was $16.2 million, up 1.3% from $16.0 million in Q4 2023[7] - Full-year 2024 revenues were $291.6 million, an increase of 4.5% from $279.1 million in 2023[9] - Full-year 2024 operating income increased by 32.9% to $21.3 million compared to $16.0 million in 2023[9] - HealthStream reported Q4 2024 revenues of $74,235,000, a 2.3% increase from $70,580,000 in Q4 2023[31] - For the full year 2024, revenues reached $291,646,000, up 4.5% from $279,063,000 in 2023[31] - Adjusted EBITDA for Q4 2024 was $16,179,000, compared to $15,975,000 in Q4 2023, reflecting a 1.3% increase[37] - HealthStream's net income for the full year 2024 was $20,007,000, a 31.2% increase from $15,213,000 in 2023[31] Cash and Assets - HealthStream's total assets increased to $510,766,000 as of December 31, 2024, compared to $499,942,000 at the end of 2023[33] - Cash and cash equivalents rose to $59,469,000 in Q4 2024, up from $40,333,000 in Q4 2023[35] - Deferred revenue as of December 31, 2024, was $84,227,000, slightly up from $83,623,000 in 2023[33] Dividends - The board declared a quarterly cash dividend of $0.031 per share, reflecting a 10.7% increase over the previous quarter's dividend[10] - The company declared dividends of $0.028 per share in Q4 2024, compared to $0.025 per share in Q4 2023[31] Acquisitions - The company completed acquisitions of Total Clinical Placement System and The Clinical Hub, with purchase prices of up to $1.65 million and $0.6 million, respectively[11] Future Guidance - Guidance for 2025 includes projected revenues of $302.0 million to $307.0 million and adjusted EBITDA of $70.0 million to $74.0 million[19] - The company provided a 2025 financial outlook with projected adjusted EBITDA between $70,000,000 and $74,000,000[39] Risks and Forward-Looking Statements - The company highlighted potential risks and uncertainties affecting future results, including economic conditions and geopolitical instability[40] - The company filed its Annual Report on Form 10-K for the year ended December 31, 2023, on February 26, 2024, detailing various risks[40] - Forward-looking statements are based on management's beliefs and assumptions, which may not be realized[40] - The company cautioned against placing undue reliance on forward-looking statements, as many factors are beyond its control[40] - HealthStream's management emphasized the importance of understanding the risks associated with their projections[40] - The company has no obligation to update or revise forward-looking statements after the date of the release[40] - The potential impact of inflationary conditions and changes in U.S. policy were noted as significant factors[40] - The press release includes a disclaimer regarding the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995[40] - HealthStream's quarterly cash dividend policy may be modified, suspended, or canceled based on the Board's discretion[40] Recognition - HealthStream's Learning Center was ranked 1 in healthcare software by G2, highlighting the success of its platform strategy[12]

Company Performance - HealthStream (HSTM) shares have increased by 12.4% over the past month, reaching a new 52-week high of $33.09 [1] - Year-to-date, the stock has gained 20.4%, compared to 28.5% for the Zacks Computer and Technology sector and 20.1% for the Zacks Internet - Services industry [1] Earnings and Revenue - HealthStream has consistently exceeded earnings consensus estimates, reporting EPS of $0.19 against a consensus of $0.12 in the last earnings report on October 21, 2024 [2] - For the current fiscal year, HealthStream is projected to achieve earnings of $0.63 per share on revenues of $290.96 million, reflecting a 26% increase in EPS and a 4.26% increase in revenues [3] - The next fiscal year is expected to see earnings of $0.64 per share on revenues of $306.45 million, indicating a year-over-year change of 2.12% in EPS and 5.32% in revenues [3] Valuation Metrics - HealthStream currently trades at a valuation of 51.9X current fiscal year EPS estimates, significantly higher than the peer industry average of 21.4X [7] - On a trailing cash flow basis, the stock trades at 14.5X compared to the peer group's average of 10.5X, with a PEG ratio of 4.33 [7] - The stock has a Value Score of C, a Growth Score of A, and a Momentum Score of D, resulting in a VGM Score of B [6] Zacks Rank - HealthStream holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, which aligns with the recommendation for investors to select stocks with Zacks Rank of 1 (Strong Buy) or 2 (Buy) [8] Industry Comparison - The Internet - Services industry is performing well, ranking in the top 16% of all industries, providing favorable conditions for both HealthStream and its peer, Upwork Inc. (UPWK) [11] - Upwork Inc. has also shown strong performance, with a Zacks Rank of 2 (Buy) and a projected EPS of $1.13 on revenues of $759.04 million for the current fiscal year [10]

Company Performance - HealthStream (HSTM) shares have increased by 9.3% over the past month, reaching a new 52-week high of $31.7 [1] - Year-to-date, the stock has gained 16.1%, outperforming the Zacks Computer and Technology sector (29.4%) and the Zacks Internet - Services industry (24.8%) [1] Earnings and Revenue - HealthStream has consistently exceeded earnings expectations, reporting EPS of $0.19 against a consensus estimate of $0.12 in its last earnings report on October 21, 2024 [2] - For the current fiscal year, the company is projected to achieve earnings of $0.63 per share on revenues of $290.96 million, reflecting a 26% increase in EPS and a 4.26% increase in revenues [3] - The next fiscal year forecasts earnings of $0.64 per share on revenues of $306.45 million, indicating a year-over-year change of 2.12% in EPS and 5.32% in revenues [3] Valuation Metrics - HealthStream's current valuation metrics show a Price-to-Earnings (P/E) ratio of 50.1X for the current fiscal year, which is higher than the peer industry average of 33.1X [7] - The stock trades at a trailing cash flow basis of 14X compared to the peer group's average of 10.8X, and has a PEG ratio of 4.17 [7] Zacks Rank and Style Scores - HealthStream holds a Zacks Rank of 2 (Buy) due to favorable earnings estimate revisions from analysts [8] - The company has a Value Score of C, a Growth Score of A, and a Momentum Score of C, resulting in a combined VGM Score of B [6] Industry Comparison - The Internet - Services industry is performing well, ranking in the top 26% of all industries, providing a favorable environment for both HealthStream and its peer, Alphabet Inc. (GOOG) [12] - Alphabet Inc. also has a Zacks Rank of 2 (Buy) and has shown strong earnings performance, beating consensus estimates by 15.85% last quarter [11]

Group 1: Stocks Added to Zacks Rank 1 (Strong Buy) List - HealthStream, Inc. (HSTM) has seen a 12.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Matson, Inc. (MATX) has experienced a 9.3% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Orla Mining Ltd. (ORLA) has recorded a 13.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Moody's Corporation (MCO) has seen a 5.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Southwest Airlines Co. (LUV) has experienced a significant 195.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Financial Performance - Revenues of $73.1 million in Q3 2024, up 3.9% from $70.3 million in Q3 2023[48] - Operating income of $6.5 million in Q3 2024, up 33.6% from $4.9 million in Q3 2023[48] - Net income of $5.7 million in Q3 2024, up 48.0% from $3.9 million in Q3 2023[48] - Adjusted EBITDA of $17.7 million in Q3 2024, up 9.0% from $16.2 million in Q3 2023[48] - Revenues increased by $8.9 million, or 4%, to $217.4 million for the nine months ended September 30, 2024, compared to $208.5 million for the same period in 2023[67] - Net income for the nine months ended September 30, 2024, was $15.1 million, compared to $10.6 million for the same period in 2023, with diluted EPS increasing from $0.35 to $0.50[73] - Adjusted EBITDA rose to $50.6 million for the nine months ended September 30, 2024, compared to $45.3 million for the same period in 2023[73] Revenue Breakdown - Subscription revenues increased by $2.5 million, or 4%, to $69.9 million in Q3 2024[59] - Professional services revenues increased by $0.3 million, or 11%, to $3.2 million in Q3 2024[59] - Subscription revenues rose by $9.1 million, or 5%, while professional services revenues declined by $0.2 million, or 3%[67] Expenses and Costs - Product development expenses increased by $1.2 million, or 11%, to $12.1 million in Q3 2024[60] - Cost of revenues increased by $1.8 million, or 3%, to $72.8 million, with cost of revenues as a percentage of total revenues decreasing from 34% to 33%[67] - Product development expenses increased by $2.6 million, or 8%, to $36.2 million, representing 17% of total revenues[68] - Other general and administrative expenses decreased by $0.8 million, or 9%, to $8.5 million in Q3 2024[61] Cash Flow and Capital Expenditures - Net cash provided by operating activities decreased by $3.7 million to $46.5 million, primarily due to a $3.6 million increase in income tax payments[81] - Net cash used in investing activities was $25.9 million, a decrease from $47.2 million in the prior year, with significant investments in marketable securities and capitalized software development[82] - Capital expenditures were $6.8 million for Q3 2024, compared to $6.7 million for Q3 2023[54] Shareholder Returns and Dividends - The Company announced a share repurchase program with authorization to purchase up to $10.0 million of outstanding shares, repurchasing a total of 404,188 shares at an aggregate fair value of $8.9 million, averaging $22.07 per share[85] - The Board declared a quarterly cash dividend of $0.025 per share for the year ended December 31, 2023, increasing to $0.028 per share starting February 19, 2024[86] Financial Position and Strategy - The company reported working capital of $35.1 million as of September 30, 2024, up from $11.8 million at the end of 2023, primarily due to increased cash and cash equivalents[84] - The Company believes existing cash, cash equivalents, and marketable securities will be sufficient for working capital needs, new product development, dividend payments, and potential share repurchases for at least the next 12 months[87] - The growth strategy includes acquiring businesses or making strategic investments, with potential cash or stock consideration, which may dilute earnings per share[89] - As of September 30, 2024, the Company had no outstanding debt and $94.9 million in cash and investments, with a hypothetical 10% decrease in interest rates potentially reducing annual interest income by $0.4 million[91] Risk Factors - The Company is exposed to foreign currency risks related to revenue and operating expenses in currencies other than the US dollar, including Canadian, New Zealand, and Australian dollars[92] - The investment policy focuses on highly rated securities to minimize principal loss risk, with strategic investments primarily in healthcare technology companies[93] Internal Controls - There were no changes in internal control over financial reporting during the third quarter of 2024 that materially affected the Company's controls[97] - The Company did not have any share repurchase program in effect during the three months ended September 30, 2024[98]

Financial Data and Key Metrics Changes - The company reported record quarterly revenues of $73.1 million, an increase of 3.9% year-over-year from $70.3 million [24] - Adjusted EBITDA reached $17.7 million, up 9% from the previous year, with an adjusted EBITDA margin of 24.2% compared to 23.1% last year [24][27] - Net income increased by 48% to $5.7 million, with earnings per share rising from $0.13 to $0.19 [24] Business Line Data and Key Metrics Changes - Revenues from the CredentialStream application grew by 34% year-over-year, driven by new customer acquisitions and migrations from legacy systems [16] - ShiftWizard revenues increased by 17% compared to the prior year, with notable new contracts from Grady Health System and Memorial Health [21] - The HealthStream Learning Center's new Insights Plus solution generated over $2 million in bookings in the first three quarters of the year, with a pipeline nearly 6x the bookings of predecessor products [9][10] Market Data and Key Metrics Changes - The company is expanding into new markets, including nursing schools and healthcare professionals, with a focus on direct sales to these segments [5][38] - The NurseGrid app, which includes learning capabilities, has grown to over 600,000 monthly active users, significantly increasing engagement [39] - Revenues from My Clinical Exchange increased by 11% year-over-year, facilitating over 285,000 clinical rotations [42] Company Strategy and Development Direction - The company is focused on enhancing its hStream technology platform to improve interoperability among its application suites [6][34] - A new partnership with Verisys Corporation aims to address the health plan market, providing a combined solution for managing network provider data [36] - The company is implementing pricing escalators in contracts to drive revenue growth, a shift from its historical pricing strategy [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the sales pipeline, indicating strong expectations for Q4 and early 2025 [52] - The company is addressing challenges related to legacy applications while focusing on new product launches to drive growth [50] - Management noted that customer spending is showing signs of improvement, which could positively impact future revenue growth [51] Other Important Information - The company ended the quarter with a strong cash balance of $94.9 million and no interest-bearing debt, providing flexibility for strategic investments [28][30] - A quarterly cash dividend of $0.08 per share was declared, reflecting the company's commitment to returning value to shareholders [30] Q&A Session Summary Question: What can drive faster revenue growth? - Management highlighted the importance of new product traction and reducing attrition from legacy applications as key factors for improving growth rates [47][50] Question: Is there improvement in customer spending? - Management confirmed that the sales pipeline looks strong, indicating potential for improved customer spending in the near future [52][53] Question: How is the company managing the rollout of new products? - Management is focused on creating cohesive messaging around the hStream platform and its capabilities, with plans for a more robust positioning strategy in the future [58][62]

Core Insights - HealthStream (HSTM) reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.12 per share, and showing an increase from $0.13 per share a year ago, resulting in an earnings surprise of 58.33% [1] - The company generated revenues of $73.1 million for the quarter ended September 2024, which was below the Zacks Consensus Estimate by 0.59%, but an increase from $70.34 million year-over-year [1] - HealthStream has surpassed consensus EPS estimates in all four of the last quarters, while it has only topped revenue estimates once in the same period [1] Earnings Outlook - The future performance of HealthStream's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [2][3] - Current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $74.55 million, and for the current fiscal year, it is $0.56 on revenues of $292.39 million [4] Industry Context - The Internet - Services industry, to which HealthStream belongs, is currently ranked in the top 29% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [5] - TrueCar (TRUE), another company in the same industry, is expected to report a quarterly loss of $0.03 per share, reflecting a year-over-year change of +40%, with revenues projected at $45.86 million, up 11.4% from the previous year [5]

Financial Performance - Revenues for Q3 2024 were $73.1 million, a 3.9% increase from $70.3 million in Q3 2023[2] - Operating income rose to $6.5 million, up 33.6% from $4.9 million in Q3 2023[3] - Net income increased to $5.7 million, a 48.0% rise from $3.9 million in Q3 2023[4] - Earnings per share (EPS) for Q3 2024 were $0.19, compared to $0.13 in Q3 2023[4] - Adjusted EBITDA for Q3 2024 was $17.7 million, up 9.0% from $16.2 million in Q3 2023[4] - Year-to-date revenues for 2024 reached $217.4 million, a 4.3% increase over $208.5 million in the same period of 2023[5] - Revenues for Q3 2024 reached $73,095,000, a 3.4% increase from $70,339,000 in Q3 2023[15] - Net income for Q3 2024 was $5,725,000, compared to $3,867,000 in Q3 2023, representing a 47.9% increase[15] - Operating income for Q3 2024 increased to $6,498,000, up from $4,863,000 in Q3 2023, a growth of 33.5%[15] - Adjusted EBITDA for Q3 2024 was $17,702,000, an increase from $16,245,000 in Q3 2023, representing an 8.9% growth[18] Future Projections - The company expects 2024 revenue guidance between $290.0 million and $292.0 million[8] - Projected net income for 2024 is estimated to be between $18.5 million and $19.5 million[8] - Adjusted EBITDA is expected to range from $66,000,000 to $67,500,000 for 2024[19] - Interest income is anticipated to be between $(3,700,000) and $(3,800,000)[19] - Income tax provision is estimated at $5,400,000 to $5,700,000[19] - Stock-based compensation expense is projected to be between $4,400,000 and $4,500,000[19] - Depreciation and amortization expenses are expected to be in the range of $41,300,000 to $41,500,000[19] Cash and Equity - Cash and cash equivalents at the end of Q3 2024 were $57,489,000, up from $40,333,000 at the end of 2023, a 42.5% increase[16] - Total assets as of September 30, 2024, were $502,831,000, compared to $499,942,000 at the end of 2023, showing a modest growth[16] - The total shareholders' equity increased to $355,481,000 as of September 30, 2024, compared to $340,752,000 at the end of 2023, a growth of 4.3%[16] - Net cash provided by operating activities for the nine months ended September 30, 2024, was $46,500,000, down from $50,158,000 for the same period in 2023[17] Dividends - The company declared a quarterly cash dividend of $0.028 per share, payable on November 15, 2024[6] - The company declared dividends of $0.028 per share in Q3 2024, up from $0.025 per share in Q3 2023[15] Risks and Uncertainties - The company cautions that forward-looking statements involve risks and uncertainties that may affect actual results[20] - The quarterly cash dividend policy may be modified, suspended, or canceled based on the Board's discretion[20] - The company emphasizes that many factors influencing future results are beyond its control[20] - Management's views reflected in forward-looking statements are only valid as of the date of the report[20]

Core Viewpoint - HealthStream (HSTM) is currently viewed as a better value opportunity compared to Zscaler (ZS) based on various financial metrics and rankings [1]. Group 1: Zacks Rank and Earnings Outlook - HealthStream has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Zscaler, which has a Zacks Rank of 3 (Hold) [3]. - The improvement in earnings outlook for HSTM is noted to be stronger than that of ZS [3]. Group 2: Valuation Metrics - HSTM has a forward P/E ratio of 49.54, while ZS has a higher forward P/E of 55.91 [5]. - The PEG ratio for HSTM is 4.13, compared to ZS's PEG ratio of 7.30, indicating HSTM's expected earnings growth is more favorable [5]. - HSTM's P/B ratio stands at 2.43, significantly lower than ZS's P/B ratio of 22.17, suggesting HSTM is more aligned with its book value [6]. Group 3: Value Grades - Based on the analysis of various valuation metrics, HSTM holds a Value grade of B, while ZS has a Value grade of D, reinforcing HSTM's position as the superior value option [6].

Financial Performance - Operating income increased to $4.4 million in Q2 2024, up 10.1% from $4.0 million in Q2 2023[84] - Earnings per share (EPS) rose to $0.14 (diluted) in Q2 2024, up from $0.13 (diluted) in Q2 2023[84] - Adjusted EBITDA reached $15.8 million for Q2 2024, up 3.3% from $15.3 million in Q2 2023[106] - Net income increased to $4.2 million in Q2 2024, up 0.8% from $4.1 million in Q2 2023[106] - Revenues grew to $71.6 million in Q2 2024, up 3.4% from $69.2 million in Q2 2023[106] - Subscription revenues increased by $2.5 million (4%) in Q2 2024, partially offset by a $0.1 million decline in professional services revenues[112] - Subscription services revenue increased by 4% to $69.013 million in 2024 compared to $66.506 million in 2023[113] - Total revenues increased by 3% to $71.556 million in 2024 from $69.198 million in 2023[113] - Adjusted EBITDA increased to $32.9 million for the six months ended June 30, 2024, compared to $29.1 million in the same period in 2023[122] Expenses and Costs - Cost of revenues increased by $0.1 million (1%) to $23.7 million in Q2 2024, primarily due to higher software and cloud hosting costs[91] - Sales and marketing expenses rose by $0.1 million (1%) to $11.4 million in Q2 2024, driven by increased marketing and travel expenses[93] - Depreciation and amortization expense increased by $0.2 million (1%) to $10.4 million in Q2 2024, mainly due to higher amortization of capitalized software[94] - Product development expenses increased by 9% to $12.1 million in Q2 2024, representing 17% of revenues[115] - Cost of revenues increased by 2% to $48.4 million for the six months ended June 30, 2024[118] Capital and Investments - Capital expenditures were $6.7 million in Q2 2024, compared to $6.2 million in Q2 2023[109] - Net cash used in investing activities decreased to $19.0 million for the six months ended June 30, 2024, from $43.3 million in the same period in 2023[127] - Working capital increased to $27.2 million at June 30, 2024, from $11.8 million at December 31, 2023[128] - The company repurchased 404,188 shares at an aggregate fair value of $8.9 million under the share repurchase program[129] - The company's cash and investment balances were $83.0 million at June 30, 2024, with potential interest income impact of $0.4 million from a hypothetical 10% decrease in interest rates[160] - The company has an investment portfolio including strategic investments in early-stage healthcare technology companies, which could lead to volatility in its Consolidated Financial Statements due to market price changes and impairments[175] Growth Strategy and Risks - The company's growth strategy includes acquiring businesses or making strategic investments to complement or enhance its business, potentially using cash, stock, or a combination of both[172] - The issuance of stock for acquisitions or capital raising could have a dilutive effect on earnings per share and adversely affect the stock price[172] - The company's international operations face risks from currency fluctuations, which could increase costs, and it may consider foreign currency hedging contracts in the future[174] Financial Covenants and Compliance - The company's revolving credit facility has financial covenants setting a maximum leverage ratio of outstanding debt to adjusted EBITDA and an interest coverage ratio of adjusted EBITDA to interest expense[172] - As of June 30, 2024, the company was in compliance with all covenants under its revolving credit facility[172] Tax and Other Provisions - Income tax provision increased to $1.1 million in Q2 2024, with an effective tax rate of 21% compared to 8% in Q2 2023[116]