HealthStream Acquires Health Care Compliance Strategies; Creates Comprehensive Compliance Solution for Healthcare Providers
NASHVILLE, Tenn.--(BUSINESS WIRE)--
HealthStream, Inc. (NASDAQ: HSTM), a leading provider of workforce
development and research / patient experience solutions for the
healthcare industry, today announced that it has acquired Health Care
Compliance Strategies, Inc. (HCCS), a Jericho, New York-based company
focused on interactive and engaging online compliance training for
healthcare organizations. HealthStream adds to its workforce development
solutions with a comprehensive curriculum of premium courseware and an
outstanding application for managing conflicts of interest disclosures,
along with a team of professionals with extensive industry experience
and thought leadership in healthcare compliance.
Healthcare is one of the most highly regulated industries in the U.S.
and the number of regulations continues to grow, which results in
growing demands for compliance training. HealthStream has long been the
leading provider of workforce development solutions in healthcare, which
has included its OSHA & accreditation compliance training in U.S.
hospitals with its 3.7 million subscribers to its platform. With its
added capabilities, courseware, and expertise from the acquisition of
HCCS, HealthStream now has a comprehensive compliance solution—with a
full continuum of services and training programs that addresses the
broad range of compliance priorities.
"HealthStream is a perfect fit for HCCS to further support development
of the healthcare workforce," said Ben Diamond, president, HCCS. "We are
both focused on providing exceptional compliance solutions that, in
turn, help to improve patient outcomes and promote compliance with
ethical, legal, and accreditation guidelines. HealthStream has pioneered
compliance solutions in healthcare and we are excited to play a role in
building their robust compliance offering."
Through the acquisition of HCCS, HealthStream adds a comprehensive
curriculum of premium compliance courseware and training programs, which
include several bundled offerings—like the Quality Improvement Suite,
Workplace Compliance Suite, General Compliance Suite, and the Research
Compliance Suite. HCCS' courses use fast, rich content, with full motion
video and interactivity. Examples of the diverse compliance topics in
HCCS' courseware include HIPAA Compliance, Bioterrorism & Disaster
Preparation, Patient Rights, Reducing Medication Errors, and Health Plan
Compliance. Helping organizations comply with the training requirements
of Corporate Integrity Agreements (CIAs) is another specialty area of
HCCS that adds to HealthStream's overall compliance solution strategy.
HealthStream's workforce development solutions are also expanded with
HCCS' SaaS-based application for tracking potential conflicts of
interest disclosures, known as the COI-SMART system. Cumbersome manual
processes are automated with COI-SMART as the system tracks and manages
potential conflicts of interest among hospitals' physicians, executives,
and other healthcare professionals. Correspondingly, courses are also
offered in "Conflicts of Interest and Research Misconduct." COI-SMART
will be offered on a subscription basis to healthcare organizations,
adding another powerful, healthcare-specific application, which will be
integrated with HealthStream's workforce development platform.
HealthStream's comprehensive compliance solution will be offered
primarily to corporate compliance officers in hospitals, who represent
an increasingly important role in healthcare organizations. At this
time, 98 percent of healthcare organizations have a corporate compliance
officer (CCO) with a staff, on average, of three full-time employees.
The Health Care Compliance Association now has over 9,000 active
members. Alongside the growing number of federal and state regulatory
requirements, the industry-wide focus on improving patient safety has
further contributed to the importance of compliance programs in
healthcare organizations. The addition of HCCS brings a sales team
dedicated to this channel, which will be immediately expanded to cover
HealthStream's 10 sales regions.
"I would like to extend a warm welcome to HCCS' clients and employees,"
said Robert A. Frist, Jr., chief executive officer, HealthStream.
"Providing OSHA & accreditation compliance solutions to healthcare
organizations has been a core offering for HealthStream for over a
decade and we are excited to expand the scope of our solutions in this
important area. HCCS' premium content and thought leadership add
important dimensions to our compliance solution strategy."
Terms of the Transaction: HealthStream purchased the outstanding
equity of HCCS for approximately $13.0 million in cash, subject to a
post-closing working capital adjustment, and $2.4 million in shares of
HealthStream's common stock in a private placement. In addition, up to
an additional $750,000 in cash will be paid over a 12-month period
following closing, subject to the achievement of certain performance
Financial Information and Updated Financial Outlook for 2014:
HealthStream stated that HCCS revenues for the year ended December 31,
2013 were approximately $6.8 million.
HealthStream also stated that it will recognize transaction related
expenses of approximately $450,000 in its first quarter 2014 results
relating to the acquisition of HCCS in accordance with generally
accepted accounting principles (GAAP).
GAAP requires the write-down of the beginning balance of deferred
revenue to its fair value at the time of acquisition and HealthStream
will apply these fair value GAAP requirements to the HCCS transaction.
The Company also updated its financial outlook for 2014 to reflect the
estimated impact of the HCCS acquisition, including the estimate of the
write-down of deferred revenue.
We now anticipate that consolidated revenues will grow by 25 to 29
percent as compared to 2013, which revenue growth reflects the impact of
the deferred revenue write-down related to the HCCS acquisition. We
anticipate that revenue growth in the Workforce Development Solutions
segment, which will now include HCCS, to be in the 27 to 31 percent
range, also reflecting the impact of the deferred revenue write-down
related to the HCCS acquisition. We expect the Research/Patient
Experience Solutions segment's revenue to increase by approximately 18
to 22 percent, part of which growth includes revenues from the BLG
acquisition that we closed in September of 2013.
We anticipate that the Company's 2014 full-year operating income will
decrease between two and 11 percent over full year 2013 results. This
operating income estimated range includes between $2.5 million to $3.0
million related to the combined impact of the deferred revenue
write-down, amortization of acquired intangibles, incremental
investments in HCCS related sales, marketing, product development to
drive future growth, and approximately $450,000 of transaction costs. We
anticipate that our 2014 capital expenditures will be between $9.0
million and $12.0 million. Our revised guidance does not include the
impact from any other transactions that we may complete during 2014.
HealthStream (NASDAQ: HSTM) is dedicated to improving patient outcomes
through the development of healthcare organizations' greatest asset:
their people. Our unified suite of software-as-a-service (SaaS)
solutions are used by, collectively, approximately 3.7 million
healthcare employees in the U.S. for workforce development, talent
management, performance assessment, and managing simulation-based
education programs. Our research / patient experience solutions provide
valuable insight to healthcare providers to meet HCAHPS requirements,
engage their workforce, and enhance physician alignment. Based in
Nashville, Tennessee, HealthStream has additional offices in Laurel,
Maryland, Brentwood, Tennessee, and Pensacola, Florida. For more
information, visit http://www.healthstream.com
or call 800-933-9293.
This press release contains forward-looking statements that involve
risks and uncertainties regarding HealthStream. Investors are
cautioned that such results or events predicted in these statements may
differ materially from actual future events or results. This information
has been, or in the future may be, included in reliance on the "safe
harbor" provisions of the Private Securities Litigation Reform Act of
1995. Investors are cautioned that such results or events predicted in
these statements may differ materially from actual future events or
results. The Company's statements regarding the acquisition of HCCS are
subject to risks associated with the integration of its operations and
the Company's updated financial outlook for 2014, while presented with
numerical specificity, includes forward-looking statements which are
based on a variety of assumptions regarding the Company's operating
performance that may not be realized, and which are subject to
significant uncertainties and potential contingencies associated with
the Company's financial and accounting procedures and other matters
referenced from time to time in the Company's filings with the
Securities and Exchange Commission. Consequently, such forward-looking
information should not be regarded as a representation or warranty by
the Company that such projections will be realized.
Mollie Condra, Ph.D., 615-301-3237
Investor Relations & Communications
Source: HealthStream, Inc.
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