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HealthStream Announces First Quarter 2016 Results
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Revenues of
$54.1 million in the first quarter of 2016, up 15% from$47.2 million in the first quarter of 2015 -
Operating income of
$2.5 million in the first quarter of 2016, down 48% from$4.8 million in the first quarter of 2015 -
Net income of
$1.5 million in the first quarter of 2016, down 45% from$2.7 million in the first quarter of 2015, and earnings per share (EPS) of$0.05 per share (diluted) in the first quarter of 2016, compared to$0.10 per share (diluted) in the first quarter of 2015 -
Adjusted EBITDA1 of
$8.1 million in the first quarter of 2016, down 4% from$8.4 million in the first quarter of 2015
Financial Results:
First Quarter 2016 Compared to First Quarter 2015
Revenues for the first quarter of 2016 increased by
Revenues from our HealthStream Workforce Solutions segment increased by
Revenues from our HealthStream Patient Experience Solutions segment
approximated
Revenues from our HealthStream Provider Solutions segment increased by
Generally accepted accounting principles (GAAP) require companies to
write down beginning balances of acquired deferred revenue balances as
part of "fair value" accounting as defined by GAAP. During the first
quarter of 2016,
Operating income was
Net income was
Adjusted EBITDA (which we define as net income before interest, income
taxes, share-based compensation, and depreciation and amortization)
decreased by four percent to
At
1 Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to net income and disclosure regarding why we believe Adjusted EBITDA provides useful information to investors is included later in this release.
Other Business Updates
At
Annualized revenue per implemented subscriber for Workforce Solutions
We view the metric, "Annualized Revenue per Implemented Subscriber for our Workforce Solutions" ("Workforce ARIS"), as one of several measures of our progress in growing the value of our customer base. Workforce ARIS represents the quarter's revenue from our subscription-based solutions, annualized, then divided by the quarter's average total number of implemented subscribers. Our subscription-based solutions include subscriptions to our platform applications, plus courseware/content subscriptions.
For the first quarter of 2016, HealthStream's Workforce ARIS was
Financial Outlook for 2016
For 2016, we anticipate that consolidated revenues will grow 8 to 12 percent as compared to 2015. We anticipate that revenue growth in our Workforce Solutions segment will be in the two to six percent range and approximately eight to 12 percent in our Patient Experience Solutions segment. We anticipate our Provider Solutions segment's revenue to grow 80 to 84 percent as compared to 2015.
Revenues from ICD-10 readiness training, which were approximately
We anticipate operating income for 2016 to increase between 10 and 14 percent as compared to 2015.
We anticipate that capital expenditures will be between
The aforementioned guidance does not include the impact from any acquisitions that we may complete during 2016.
Chief Executive Officer
A conference call with
Use of Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income, non-GAAP revenue, and adjusted EBITDA, which are used by management in analyzing the Company's financial results and ongoing operational performance.
In order to better assess the Company's financial results, management believes that net income before interest, income taxes, share-based compensation, depreciation and amortization ("adjusted EBITDA") is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for non-cash and non-operating items. We believe that adjusted EBITDA is also used by many investors to assess the Company's results from current operations. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as a measure of financial performance under GAAP. Because adjusted EBITDA is not a measurement determined in accordance with GAAP, it is susceptible to varying calculations. Accordingly, adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.
In recent years, the Company has acquired businesses whose net tangible assets include deferred revenue. In accordance with GAAP reporting requirements, following the completion of any such acquisition, the Company may record a write-down of deferred revenue to fair value as defined in GAAP. If the Company is required to record a write-down of deferred revenue, it may result in lower recognized revenue, operating income, and net income in subsequent periods.
In connection therewith, this release presents below non-GAAP revenues, non-GAAP operating income, and non-GAAP net income, which in each such case reflects the corresponding GAAP figures adjusted to exclude the impact of the deferred revenue write-down associated with fair value accounting for acquired businesses as referenced above. Management believes that the presentation of these non-GAAP financial measures assists investors in understanding the Company's performance between periods excluding the impact of this deferred revenue write-down and provides a useful measure of the ongoing performance of the Company. Both on a quarterly and year-to-date basis, the revenue for the acquired business is deferred and typically recognized over a one to two year period following the completion of any particular acquisition, so our GAAP revenues for this one to two year period will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value.
These non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP financial measures, which are set forth below in this release.
About
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| Condensed Consolidated Statements of Income | ||||||||
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Three Months Ended
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2016 |
2015 |
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| Revenues | $ | 54,078 | $ | 47,156 | ||||
| Operating expenses: | ||||||||
| Cost of revenues (excluding depreciation and amortization) | 22,900 | 20,193 | ||||||
| Product development | 7,018 | 4,646 | ||||||
| Sales and marketing | 8,557 | 7,347 | ||||||
| Other general and administrative | 7,976 | 6,927 | ||||||
| Depreciation and amortization | 5,140 | 3,253 | ||||||
| Total operating expenses | 51,591 | 42,366 | ||||||
| Operating income | 2,487 | 4,790 | ||||||
| Other income, net | 18 | 9 | ||||||
| Income before income taxes | 2,505 | 4,799 | ||||||
| Income tax provision | 1,004 | 2,077 | ||||||
| Net income | $ | 1,501 | $ | 2,722 | ||||
| Net income per share: | ||||||||
| Net income per share, basic | $ | 0.05 | $ | 0.10 | ||||
| Net income per share, diluted | $ | 0.05 | $ | 0.10 | ||||
| Weighted average shares outstanding: | ||||||||
| Basic | 31,666 | 27,703 | ||||||
| Diluted | 31,970 | 28,068 | ||||||
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| Condensed Consolidated Balance Sheets | |||||||||||
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2016 |
2015(1) |
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| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 82,793 | $ | 82,010 | |||||||
| Marketable securities | 67,690 | 66,976 | |||||||||
| Accounts and unbilled receivables, net | 33,805 | 38,346 | |||||||||
| Prepaid and other current assets | 21,434 | 22,205 | |||||||||
| Total current assets | 205,722 | 209,537 | |||||||||
| Capitalized software development, net | 14,074 | 13,955 | |||||||||
| Property and equipment, net | 12,170 | 12,471 | |||||||||
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139,619 | 139,039 | |||||||||
| Other assets | 4,208 | 4,567 | |||||||||
| Total assets | $ | 375,793 | $ | 379,569 | |||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable, accrued and other liabilities | $ | 21,596 | $ | 23,980 | |||||||
| Deferred revenue | 62,038 | 65,098 | |||||||||
| Total current liabilities | 83,634 | 89,078 | |||||||||
| Deferred tax liabilities, non-current | 4,763 | 4,763 | |||||||||
| Deferred revenue, noncurrent | 4,192 | 4,350 | |||||||||
| Other long-term liabilities | 1,060 | 1,058 | |||||||||
| Total liabilities | 93,649 | 99,249 | |||||||||
| Shareholders' equity: | |||||||||||
| Common stock | 279,066 | 278,799 | |||||||||
| Comprehensive loss | (14 | ) | (70 | ) | |||||||
| Retained earnings | 3,092 | 1,591 | |||||||||
| Total shareholders' equity | 282,144 | 280,320 | |||||||||
| Total liabilities and shareholders' equity | $ | 375,793 | $ | 379,569 | |||||||
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(1) |
Derived from audited financial statements contained in the
Company's filing on Form 10-K for the year ended |
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| Condensed Consolidated Statements of Cash Flows | ||||||||||
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| Year Ended | ||||||||||
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2016 |
2015 |
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| Operating activities: | ||||||||||
| Net income | $ | 1,501 | $ | 2,722 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 5,140 | 3,253 | ||||||||
| Share-based compensation | 500 | 409 | ||||||||
| Provision for doubtful accounts | 90 | 7 | ||||||||
| Loss on equity method investments | 43 | 3 | ||||||||
| Other | 339 | 225 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts and unbilled receivables | 4,451 | 1,049 | ||||||||
| Prepaid and other assets | 76 | (1,944 | ) | |||||||
| Accounts payable, accrued and other liabilities | (3,210 | ) | (3,598 | ) | ||||||
| Deferred revenue | (3,218 | ) | 6,881 | |||||||
| Net cash provided by operating activities | 5,712 | 9,007 | ||||||||
| Investing activities: | ||||||||||
| Business combinations, net of cash acquired | -- | (88,075 | ) | |||||||
| Proceeds from sale of long-lived assets | 975 | -- | ||||||||
| Changes in marketable securities | (996 | ) | 9,158 | |||||||
| Investments in non-marketable equity investments | -- | (1,000 | ) | |||||||
| Purchases of property and equipment | (2,685 | ) | (2,313 | ) | ||||||
| Payments associated with capitalized software development | (1,990 | ) | (2,023 | ) | ||||||
| Net cash used in investing activities | (4,696 | ) | (84,253 | ) | ||||||
| Financing activities: | ||||||||||
| Borrowings under revolving credit facility | -- | 28,000 | ||||||||
| Proceeds from exercise of stock options | 55 | 247 | ||||||||
| Taxes paid related to net settlement of equity awards | (288 | ) | (213 | ) | ||||||
| Payment of earn-outs related to acquisitions | -- | (19 | ) | |||||||
| Net cash (used in) provided by financing activities | (233 | ) | 28,015 | |||||||
| Net increase (decrease) in cash and cash equivalents | 783 | (47,231 | ) | |||||||
| Cash and cash equivalents at beginning of period | 82,010 | 81,995 | ||||||||
| Cash and cash equivalents at end of period | $ | 82,793 | $ | 34,764 | ||||||
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Reconciliation of GAAP to Non-GAAP Financial Measures(1) |
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Three Months Ended
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2016 |
2015 |
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| GAAP net income | $ | 1,501 | $ | 2,722 | |||||||||
| Interest income | (98 | ) | (55 | ) | |||||||||
| Interest expense | 25 | 43 | |||||||||||
| Income tax provision | 1,004 | 2,077 | |||||||||||
| Share-based compensation expense | 500 | 409 | |||||||||||
| Depreciation and amortization | 5,140 | 3,253 | |||||||||||
| Adjusted EBITDA | $ | 8,072 | $ | 8,449 | |||||||||
| GAAP revenues | $ | 54,078 | $ | 47,156 | |||||||||
| Add: deferred revenue write-down | 955 | 578 | |||||||||||
| Non-GAAP revenues | $ | 55,033 | $ | 47,734 | |||||||||
| GAAP operating income | $ | 2,487 | $ | 4,790 | |||||||||
| Add: deferred revenue write-down | 955 | 578 | |||||||||||
| Non-GAAP operating income | $ | 3,442 | $ | 5,368 | |||||||||
| GAAP net income | $ | 1,501 | $ | 2,722 | |||||||||
| Add: deferred revenue write-down, net of tax | 572 | 328 | |||||||||||
| Non-GAAP net income | $ | 2,073 | $ | 3,050 | |||||||||
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(1) |
This press release contains certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income, non-GAAP revenue, and adjusted EBITDA, which are used by management in analyzing its financial results and ongoing operational performance. |
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This press release includes certain forward-looking statements
(statements other than solely with respect to historical fact),
including statements regarding expectations for the financial
performance for 2016 that involve risks and uncertainties regarding
View source version on businesswire.com: http://www.businesswire.com/news/home/20160425006353/en/
Chief
Financial Officer
ir@healthstream.com
or
Media:
Vice President, Investor Relations
mollie.condra@healthstream.com
Source:
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