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HealthStream Announces Fourth Quarter & Full-Year 2017 Results
Fourth Quarter 2017
-
Revenues of
$62.8 million in the fourth quarter of 2017, up 7% from$58.7 million in the fourth quarter of 2016 -
Operating income of
$1.1 million in the fourth quarter of 2017, compared to operating loss of$0.5 million in the fourth quarter of 2016 -
Net income of
$3.9 million in the fourth quarter of 2017, up from net loss of$0.3 million in the fourth quarter of 2016, and earnings per share (EPS) of$0.12 per share (diluted) in the fourth quarter of 2017, compared to loss per share (diluted) of$(0.01) in the fourth quarter of 2016 -
Adjusted EBITDA1 of
$8.4 million in the fourth quarter of 2017, up 37% from$6.1 million in the fourth quarter of 2016
Full-Year 2017
-
Revenues of
$247.7 million in 2017, up 10% from$226.0 million in 2016 -
Operating income of
$9.8 million in 2017, up 76% from$5.6 million in 2016 -
Net income of
$10.0 million in 2017, up 166% from$3.8 million in 2016, and EPS of$0.31 per share (diluted) in 2017, compared to$0.12 per share (diluted) in 2016 -
Adjusted EBITDA1 of
$37.9 million in 2017, up 27% from$29.9 million in 2016
2018 Events
-
Patient Experience (PX) business segment divested on
February 12, 2018 for$65.5 million in cash; 2017 and 2016 results presented in this release include the results of the PX business -
Board of Directors declared special dividend of approximately
$32.5 million , or$1.00 per share, from proceeds of divestiture of PX business, payable onApril 3, 2018 to shareholders of record onMarch 6, 2018 -
CIO
Jeff Doster resigns from the Company, effectiveMarch 30, 2018 ; he will contract to ensure a smooth transition, working with the Company’s CTO and COO
Financial Results:
Fourth Quarter 2017 Compared to Fourth Quarter 2016
Revenues for the fourth quarter of 2017 increased by
Revenues from our HealthStream Workforce Solutions segment, which are
primarily subscription-based, were approximately
| 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. |
Revenues from our HealthStream Provider Solutions segment were
approximately
Revenues from our HealthStream Patient Experience (PX) Solutions segment
were approximately
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 fourth
quarter of 2017,
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)
increased by 37 percent to
At
Full-Year 2017 Compared to Full-Year 2016
For 2017, revenues were
At
2018 Events
On
On
Financial Outlook for 2018
As previously disclosed, the Company adopted the new revenue recognition
standard (ASC 606), utilizing the modified retrospective approach
effective
Beginning with our financial statements for the quarter ending March 31,
2018, the historical financial results of the PX business for periods
prior to the closing of this transaction will be reflected in the
Company’s consolidated financial statements as discontinued operations.
Accordingly, this financial outlook does not include (a) the gain on the
sale of our Patient Experience business, which we completed on
For 2018 we anticipate that consolidated revenues will increase six to eight percent as compared to 2017. We anticipate that revenue growth in our Workforce Solutions segment will be in the four to six percent range and our Provider Solutions segment to grow 10 to 20 percent when compared to 2017.
We anticipate operating income for 2018 to increase between 20 and 30 percent as compared to 2017.
We anticipate that capital expenditures will be approximately
This guidance does not include the impact of any acquisitions that we may complete during 2018.
“HealthStream’s full-year 2017 metrics reflect a solid year of growth
with revenues up 10 percent, operating income up 76 percent, and
adjusted EBITDA up 27 percent—while we added a net of 217,000 new
contracted subscribers to our workforce platform,” said
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, 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 useful to 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 by 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 operating income and non-GAAP net income, which in each 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 any acquired business is deferred and typically recognized over a one-to-two year period following the completion of an 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 had not been written down to fair value.
These non-GAAP financial measures should not be considered 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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HEALTHSTREAM, INC. Condensed Consolidated Statements of Income (In thousands, except per share data) |
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| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||||
| Revenues | $ | 62,758 | $ | 58,737 | $ | 247,662 | $ | 225,974 | ||||||||||
| Operating expenses: | ||||||||||||||||||
| Cost of revenues (excluding depreciation and amortization) |
26,618 |
26,224 |
106,000 |
96,634 |
||||||||||||||
| Product development | 7,270 | 7,373 | 27,899 | 28,897 | ||||||||||||||
| Sales and marketing | 11,805 | 11,160 | 42,915 | 39,004 | ||||||||||||||
| Other general and administrative | 9,142 | 8,270 | 34,765 | 33,665 | ||||||||||||||
| Depreciation and amortization | 6,794 | 6,231 | 26,283 | 22,207 | ||||||||||||||
| Total operating expenses | 61,629 | 59,258 | 237,862 | 220,407 | ||||||||||||||
| Operating income (loss) | 1,129 | (521 | ) | 9,800 | 5,567 | |||||||||||||
| Other income, net | 265 | 116 | 733 | 581 | ||||||||||||||
| Income (loss) before income taxes | 1,394 | (405 | ) | 10,533 | 6,148 | |||||||||||||
| Income tax (benefit) provision | (2,554 | ) | (94 | ) | 529 | 2,393 | ||||||||||||
| Net income (loss) | $ | 3,948 | $ | (311 | ) | $ | 10,004 | $ | 3,755 | |||||||||
| Net income per share: | ||||||||||||||||||
| Net income (loss) per share, basic | $ | 0.12 | $ | (0.01 | ) | $ | 0.31 | $ | 0.12 | |||||||||
| Net income (loss) per share, diluted | $ | 0.12 | $ | (0.01 | ) | $ | 0.31 | $ | 0.12 | |||||||||
| Weighted average shares outstanding: | ||||||||||||||||||
| Basic | 31,902 | 31,743 | 31,861 | 31,721 | ||||||||||||||
| Diluted | 32,236 | 31,743 | 32,196 | 32,068 | ||||||||||||||
|
HEALTHSTREAM, INC. Condensed Consolidated Balance Sheets (In thousands) |
||||||||||
| December 31, | December 31, | |||||||||
| 2017 |
2016(1) |
|||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 84,768 | $ | 49,634 | ||||||
| Marketable securities | 46,350 | 53,540 | ||||||||
| Accounts and unbilled receivables, net | 43,451 | 47,386 | ||||||||
| Prepaid and other current assets | 25,159 | 26,877 | ||||||||
| Total current assets | 199,728 | 177,437 | ||||||||
| Capitalized software development, net | 18,697 | 16,310 | ||||||||
| Property and equipment, net | 8,992 | 10,245 | ||||||||
| Goodwill and intangible assets, net | 179,114 | 188,129 | ||||||||
| Other assets | 4,543 | 3,879 | ||||||||
| Total assets | $ | 411,074 | $ | 396,000 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable, accrued and other liabilities | $ | 32,112 | $ | 26,428 | ||||||
| Deferred revenue | 68,954 | 68,542 | ||||||||
| Total current liabilities | 101,066 | 94,970 | ||||||||
| Deferred tax liabilities | 1,926 | 5,968 | ||||||||
| Deferred revenue, non-current | 6,302 | 7,859 | ||||||||
| Other long-term liabilities | 1,610 | 1,095 | ||||||||
| Total liabilities | 110,904 | 109,892 | ||||||||
| Shareholders’ equity: | ||||||||||
| Common stock | 282,666 | 280,813 | ||||||||
| Accumulated other comprehensive loss | (38 | ) | (51 | ) | ||||||
| Retained earnings | 17,542 | 5,346 | ||||||||
| Total shareholders’ equity | 300,170 | 286,108 | ||||||||
| Total liabilities and shareholders' equity | $ | 411,074 | $ | 396,000 | ||||||
| (1) | Derived from audited financial statements contained in the Company’s filing on Form 10-K for the year ended December 31, 2016. |
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HEALTHSTREAM, INC. Condensed Consolidated Statements of Cash Flows (In thousands) |
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| Year Ended | ||||||||||
| December 31, | December 31, | |||||||||
| 2017 | 2016 | |||||||||
| Operating activities: | ||||||||||
| Net income | $ | 10,004 | $ | 3,755 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Depreciation and amortization | 26,283 | 22,207 | ||||||||
| Share-based compensation | 1,852 | 1,968 | ||||||||
| Excess tax benefits from equity awards | -- | (217 | ) | |||||||
| Deferred income taxes | (2,045 | ) | 1,786 | |||||||
| Provision for doubtful accounts | 1,813 | 640 | ||||||||
| Loss (gain) on equity method investments | 5 | (121 | ) | |||||||
| Other | 505 | 1,026 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts and unbilled receivables | 1,125 | (6,079 | ) | |||||||
| Prepaid and other assets | 1,615 | (5,164 | ) | |||||||
| Accounts payable, accrued and other liabilities | 6,361 | 1,487 | ||||||||
| Deferred revenue | (806 | ) | 2,946 | |||||||
| Net cash provided by operating activities | 46,712 | 24,234 | ||||||||
| Investing activities: | ||||||||||
| Business combinations, net of cash acquired | -- | (55,255 | ) | |||||||
| Proceeds from sale of long-lived assets | -- | 975 | ||||||||
| Changes in marketable securities | 6,794 | 12,430 | ||||||||
| Payments to acquire cost method investments | (500 | ) | -- | |||||||
| Purchases of property and equipment | (6,017 | ) | (5,085 | ) | ||||||
| Payments associated with capitalized software development | (11,856 | ) | (9,721 | ) | ||||||
| Net cash used in investing activities | (11,579 | ) | (56,656 | ) | ||||||
| Financing activities: | ||||||||||
| Proceeds from exercise of stock options | 413 | 145 | ||||||||
| Excess tax benefits from equity awards | -- | 217 | ||||||||
| Taxes paid related to net settlement of equity awards | (412 | ) | (316 | ) | ||||||
| Net cash provided by financing activities | 1 | 46 | ||||||||
| Net increase (decrease) in cash and cash equivalents | 35,134 | (32,376 | ) | |||||||
| Cash and cash equivalents at beginning of period | 49,634 | 82,010 | ||||||||
| Cash and cash equivalents at end of period | $ | 84,768 | $ | 49,634 | ||||||
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Reconciliation of GAAP to Non-GAAP Financial Measures(1) (In thousands) |
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| Three Months Ended December 31, |
Year Ended December 31, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||||||
| GAAP net income (loss) | $ | 3,948 | $ | (311 | ) | $ | 10,004 | $ | 3,755 | |||||||||||
| Interest income | (287 | ) | (156 | ) | (870 | ) | (574 | ) | ||||||||||||
| Interest expense | 35 | 26 | 131 | 102 | ||||||||||||||||
| Income tax (benefit) provision | (2,554 | ) | (94 | ) | 529 | 2,393 | ||||||||||||||
| Share-based compensation expense | 493 | 452 | 1,852 | 1,968 | ||||||||||||||||
| Depreciation and amortization | 6,794 | 6,231 | 26,283 | 22,207 | ||||||||||||||||
| Adjusted EBITDA | $ | 8,429 | $ | 6,148 | $ | 37,929 | $ | 29,851 | ||||||||||||
| GAAP operating income (loss) | $ | 1,129 | $ | (521 | ) | $ | 9,800 | $ | 5,567 | |||||||||||
| Add: deferred revenue write-down | 82 | 1,261 | 1,621 | 3,838 | ||||||||||||||||
| Non-GAAP operating income | $ | 1,211 | $ | 740 | $ | 11,421 | $ | 9,405 | ||||||||||||
| GAAP net income (loss) | $ | 3,948 | $ | (311 | ) | $ | 10,004 | $ | 3,755 | |||||||||||
| Add: deferred revenue write-down, net of tax | 233 | 902 | 1,295 | 2,345 | ||||||||||||||||
| Non-GAAP net income | $ | 4,181 | $ | 591 | $ | 11,299 | $ | 6,100 | ||||||||||||
| (1) | This press release contains certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income, and adjusted EBITDA, which are used by management in analyzing its financial results and ongoing operational performance. |
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 2018, that involve risks and uncertainties regarding
View source version on businesswire.com: http://www.businesswire.com/news/home/20180220006400/en/
Source:
HealthStream, Inc.
Gerard M. Hayden, Jr., 615-301-3163
Chief
Financial Officer
ir@healthstream.com
or
Media:
Mollie
Condra, Ph.D., 615-301-3237
Vice President,
Investor Relations
& Communications
mollie.condra@healthstream.com