HealthStream(US:HSTM)2019-02-25 21:31Acquisitions and Divestitures - The company acquired Performance Management Services, Inc. in June 2016, Nursing Registry Consultants Corporation in July 2016, MAI in August 2016, and Providigm, LLC in January 2019[38]. - The company divested its Patient Experience business for $65.2 million in cash, impacting its operational segments[295]. - The Company divested its PX business to Press Ganey for $65.2 million in cash, resulting in a net gain of $19.0 million after tax[367]. Financial Performance - Total revenues for the year ended December 31, 2018, were $231.6 million, an increase of 7.5% from $214.9 million in 2017[283]. - Operating income for 2018 was $15.5 million, up 64.5% from $9.4 million in 2017[283]. - Net income for 2018 reached $32.2 million, significantly higher than $10.0 million in 2017, representing a 221.8% increase[283]. - Basic net income per share for 2018 was $1.00, compared to $0.31 in 2017, reflecting a substantial growth[283]. - Total current assets increased to $241.4 million in 2018 from $199.7 million in 2017, marking a growth of 20.9%[281]. - Total assets as of December 31, 2018, were $441.9 million, up from $411.1 million in 2017, indicating a 7.5% increase[281]. - Total shareholders' equity rose to $318.9 million in 2018, compared to $300.2 million in 2017, an increase of 6.2%[281]. - The company reported a gain on the sale of discontinued operations amounting to $29.5 million in 2018[283]. - Net income for the year ended December 31, 2018, was $32.217 million, a significant increase from $10.004 million in 2017[292]. - The company reported a net cash increase of $49.553 million for the year, compared to an increase of $35.134 million in 2017[292]. Revenue Recognition and Accounting Standards - The company adopted a new revenue recognition method in 2018 due to the implementation of Accounting Standards Update No. 2014-09[266]. - The company recognized revenues based on a five-step model, ensuring compliance with ASC 606 effective January 1, 2018[296]. - The adoption of ASC 606 resulted in a net revenue increase of $740,000 for the year ended December 31, 2018, with reported revenues of $231,616,000[349]. - Deferred revenue, current, increased to $70,796,000 as of December 31, 2018, compared to $66,061,000 prior to ASC 606 adoption, indicating a rise of approximately 11.5%[349]. Employee and Workforce Information - As of December 31, 2018, the company had 119 sales personnel in HealthStream Workforce Solutions and 33 in Provider Solutions, all carrying sales quotas[40]. - The marketing team consisted of 38 employees as of December 31, 2018, conducting various promotional programs including trade shows and telemarketing campaigns[41]. - The Workforce Solutions operations team had 319 employees focused on customer support and product development, while the Provider Solutions operations team had 194 employees[42]. - The company employed 757 full-time and 33 part-time employees as of December 31, 2018, highlighting its workforce size[74]. Cash and Investment Position - As of December 31, 2018, the company had cash and investment balances approximating $168.8 million[255]. - Cash and cash equivalents increased to $134.3 million in 2018 from $84.8 million in 2017, a growth of 58.5%[281]. - The company’s cash and cash equivalents at the end of the period were $134.321 million, up from $84.768 million at the beginning[292]. - A hypothetical 10% decrease in interest rates would lead to an annualized decrease in interest income from cash and investments by approximately $365,000[255]. Compliance and Regulatory Environment - The company is recognized as an accredited provider of Continuing Medical Education (CME) by the Accreditation Council for Continuing Medical Education (ACCME)[58]. - The company has a strong commitment to compliance with FDA and FTC regulations, which could impact its advertising and promotional strategies[66]. - The company is subject to evolving privacy and security laws that may increase operational costs and impact business[50]. Market Position and Competition - The company competes with major firms like Cornerstone OnDemand, Oracle, and SAP in the healthcare education delivery market[46]. - The company believes its Workforce Solutions provide a competitive advantage through a wide assortment of courseware and applications on a single platform[47]. Assets and Liabilities - The company maintained effective internal control over financial reporting as of December 31, 2018, based on COSO criteria[272]. - The company is exposed to market risk from changes in interest rates but does not face foreign currency exchange rate risk or commodity price risk[255]. - The company’s investment policy focuses on investing in highly rated securities to minimize principal loss risk[256]. - The carrying amount of liabilities related to discontinued operations was $9.320 million as of December 31, 2017[371]. - Total deferred tax assets decreased from $8,556,000 in 2017 to $4,018,000 in 2018, while net deferred tax liabilities increased from $(45,000) in 2017 to $10,923,000 in 2018[384]. Stock and Compensation - The aggregate intrinsic value for stock options at the end of 2018 was $245,000, with 19 options outstanding[388]. - The company had approximately 1.1 million shares of unissued common stock reserved for future stock incentive grants under the 2016 Plan as of December 31, 2018[386]. - Total stock-based compensation expense for the year ended December 31, 2018 was $1,777,000, slightly up from $1,736,000 in 2017[392]. - The company realized approximately $540,000 of excess tax benefits related to stock-based awards during the year ended December 31, 2018[392]. Future Commitments and Expenses - Future rental payment commitments under non-cancelable operating leases total approximately $43.3 million as of December 31, 2018[404]. - Total rent expense under operating leases was approximately $7.4 million for the year ended December 31, 2018, compared to $6.6 million in 2017[403]. - The expected future annual amortization expense for identifiable intangible assets totals $59.378 million, with the highest expense of $8.792 million expected in 2019[365].