NASHVILLE, Tenn.--(BUSINESS WIRE)--
HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning and
research solutions for the healthcare industry, announced today results
for the third quarter ended September 30, 2011.
Highlights:
-
Revenues of $20.6 million in the third quarter of 2011, up 24% over
the third quarter of 2010
-
Operating income of $2.7 million in the third quarter of 2011, up 59%
over the third quarter of 2010
-
Net income of $1.8 million, up 126% from net income of $796,000 in the
third quarter of 2010, and earnings per share (EPS) of $0.08 per share
(diluted) in the third quarter of 2011, up 100% from EPS of $0.04 per
share (diluted) in the third quarter of 2010
-
Adjusted EBITDA of $4.4 million in the third quarter of 2011, up 46%
from $3.0 million in the third quarter of 2010
-
J. Edward Pearson named senior vice president & chief operating officer
Financial Results:
Third Quarter 2011 Compared to Third Quarter 2010
Revenues for the third quarter of 2011 increased $4.0 million, or 24
percent, to $20.6 million, compared to $16.6 million for the third
quarter of 2010. Revenues for HealthStream Learning and HealthStream
Research grew by 28 percent and 14 percent, respectively, over the prior
year third quarter.
Revenues from HealthStream Learning increased by $3.3 million, or 28
percent, when compared to the third quarter of 2010. Revenues from our
Internet-based subscription products increased by approximately $3.2
million over the prior year quarter, and were comprised of revenue
increases from the HealthStream Learning Center® (HLC) of $1.1 million
and from courseware subscriptions of $2.0 million. Revenues from
Internet-based subscription products increased 29 percent over the prior
year quarter due to a higher number of subscribers and more courseware
consumption by subscribers. Revenues associated with custom courseware
development decreased $251,000 from the prior year quarter.
SimVentures—as a new entity recognizing its first revenues from new
products in the second quarter of 2011—delivered $321,000 in revenues in
the third quarter of 2011.
Revenues from HealthStream Research increased by $724,000, or 14
percent, when compared to the third quarter of 2010. Revenues from
Patient Insights™ surveys—a survey research product that generates
recurring revenues—increased by $949,000, or 26 percent, when compared
to the third quarter of 2010. Revenues from other surveys, which are
conducted on annual or bi-annual cycles, decreased by approximately
$225,000, or 15 percent, when compared to the third quarter of 2010.
Cost of revenues (excluding depreciation and amortization) approximated
38 percent of revenues for both the third quarter of 2011 and 2010. In
the aggregate, all other operating expenses increased by $1.4 million,
or 16 percent, over the prior year third quarter.
Operating income for the third quarter of 2011 increased by 59 percent
to $2.7 million, compared to $1.7 million for the third quarter of 2010,
primarily resulting from the strong revenue growth mentioned above.
Net income for the third quarter of 2011 was $1.8 million, or 126
percent above net income of $796,000 in the third quarter of 2010.
Earnings per share were $0.08 per share (diluted) in the third quarter
of 2011, an increase of 100 percent, over $0.04 per share (diluted) for
the third quarter of 2010.
Adjusted EBITDA (which we define as net income before interest, income
taxes, share-based compensation, and depreciation and amortization) was
$4.4 million for the third quarter of 2011, an increase of 46 percent
when compared to $3.0 million for the third quarter of 2010. Adjusted
EBITDA is a non-GAAP financial measure. A reconciliation of Adjusted
EDITDA to net income is included in this release.
Year-to-Date 2011 Compared to Year-to-Date 2010
For the first nine months of 2011, revenues were $60.2 million, an
increase of 25 percent over revenues of $48.1 million in the first nine
months of 2010. Operating income for the first nine months of 2011
improved by 53 percent to $8.4 million, compared to $5.4 million for the
first nine months of 2010. Net income for the first nine months of 2011
increased by 75 percent to $5.2 million, compared to $3.0 million for
the first nine months of 2010. Earnings per share for the first nine
months of 2011 increased by 69 percent to $0.22 per share (diluted),
compared to $0.13 per share (diluted) for the first nine months of 2010.
Other Financial Indicators
At September 30, 2011, the Company had cash and related interest
receivable of $30.3 million, compared to $26.5 million at June 30, 2011
and $21.4 million at September 30, 2010. Capital expenditures totaled
$2.3 million for the third quarter of 2011. These uses of cash were
partially offset by cash generated from operations.
Our days sales outstanding (DSO), which we calculate by dividing the
accounts receivable balance, excluding unbilled and other receivables,
by average daily revenues for the quarter, approximated 59 days for the
third quarter of 2011 compared to 54 days for the second quarter of 2011
and 61 days for the third quarter of 2010.
HealthStream Learning Update
HealthStream supports healthcare organizations in delivering quality
patient care, creating safer hospitals, meeting regulatory training
requirements, and developing professional skills through our innovative
learning solutions. To this end, we provide a range of learning
solutions—delivered via a software-as-a-service (SaaS) model—that
include: the HLC—our Internet-based learning platform, a wide range of
professional, clinical, and regulatory courseware subscriptions, an
online authoring/self-publishing tool, and learning activities for
healthcare professionals sponsored by pharmaceutical and medical device
companies.
At September 30, 2011, approximately 2,536,000 healthcare professionals
were fully implemented to use our Internet-based HLC for training and
education. This number is up from approximately 2,175,000 fully
implemented users at September 30, 2010. The total number of contracted
subscribers at September 30, 2011 was approximately 2,653,000, up from
approximately 2,365,000 at September 30, 2010. "Contracted subscribers"
include both the 2,536,000 subscribers already implemented and the
117,000 subscribers in the process of implementation.
Customers representing approximately 88 percent of subscribers that were
up for renewal renewed in the third quarter of 2011, while our renewal
rate based on the annual contract value was approximately 94 percent.
Our renewal rates reflect the addition of subscribers compared to
previously contracted amounts combined with any pricing adjustments that
may occur at renewal. The renewal rates for the third quarter of 2011
compare to a subscriber renewal rate of 100 percent and an annual
contract value renewal rate of 106 percent during the third quarter of
2010.
During the third quarter of 2011, HealthStream's distribution agreement
with Laerdal Medical for HeartCode® products was renewed through
December 2014. The HeartCode offering includes Basic Life Support,
Advanced Cardiac Life Support, and Pediatric Advanced Life Support
online courseware—all of which are American Heart Association products.
In addition, the renewed agreement designates HealthStream as the
exclusive hosting and delivery provider through December 2014 for these
products. As the exclusive hosting and delivery provider, HealthStream
will be compensated for the direct or indirect sale of any HeartCode
courseware to any end users.
In September 2011, HealthStream launched the Talent Management Academy,
a program that offers valuable resources to healthcare providers to
better manage employee performance and competencies within their
respective organizations. The program serves as a hub of thought-leading
expertise provided through webinars, white papers, blogs, social media
tools, and a collaborative community. Over 300 healthcare professionals
have already participated in HealthStream's Talent Management Academy.
On March 6-9, 2012, HealthStream's customer Summit 2012 will be held in
Nashville, Tennessee. At this event, workshops, sessions, and
presentations focused on the sharing of best practices for developing
the healthcare workforce will be offered to HealthStream's healthcare
organization clients. The Summit provides us with another venue to
connect with our customers to learn more about their learning and
research needs, while offering one-on-one time to explore new
opportunities to support their organizations.
HealthStream Research Update
We support healthcare organizations with research solutions that provide
valuable insight about patients' experiences, workforce engagement,
physician relations, and community perceptions of hospital services.
This insight, in turn, provides data-driven roadmaps for organizational
and workforce development—which can be achieved through HealthStream's
learning solutions. Our primary research solutions include Patient
Insights™, Employee Insights™, Physician Insights™, and Community
Insights™ surveys that deliver insight, analysis, and industry
benchmarks to healthcare organizations.
During the third quarter of 2011, HealthStream Research added several
new healthcare organization customers, including Habersham Medical
Center, Prairie Lakes Healthcare System, Saint Mary's Health System, and
Garden County Health Services. Among our existing research customers, 25
renewed their contracts in the third quarter, while 54 chose to contract
for more research services to add to their current services received
from HealthStream Research.
Executive Personnel Announcement
On August 25, 2011, we announced the promotion of J. Edward Pearson,
senior vice president, to senior vice president & chief operating
officer (COO). In his new role, Mr. Pearson is responsible for
day-to-day operations throughout HealthStream—with executive oversight
of the Company's human resources, consulting, client services, research
operations, product management, and marketing departments. While his
previous position included serving as president of HealthStream's
research business, in his new role, Mr. Pearson's executive leadership
has been expanded to include all of the Company's products. Prior to his
joining HealthStream in June of 2006, Mr. Pearson served as president
and chief executive officer (CEO) of DigiScript, Inc., chief financial
officer (CFO) and executive vice president of Inforum, Inc., CFO of HIE,
Inc., CEO of empactHealth.com, and CEO of Medibuy.
HealthStream Recognition
In October of 2011, HealthStream was ranked #53 by Forbes
magazine in their list of "America's Best Small Companies," the only
company based in Tennessee to make the list. According to Forbes,
"the list features firms with remarkable sales and earnings growth." To
be considered for this list, companies must have been publicly traded
for at least a year, generate annual revenue between $5 million and $1
billion and boast a stock price no lower than $5 a share. The rankings
were based on earnings growth, sales growth and return on equity in the
past 12 months and over five years.
Financial Expectations
The Company is updating its guidance for 2011. We reiterate that we
expect 2011 consolidated revenues to grow between 22 percent and 24
percent over 2010. Learning segment revenues, which also include
SimVentures and AVS/SimView, the recently announced addition to
SimVentures, are expected to increase between 26 and 28 percent over the
prior year. We anticipate that Research revenues will grow between 13
percent and 15 percent over last year.
We anticipate that operating expenses will grow between 19 percent and
20 percent when compared to the Company's full year 2010 levels. These
categories include cost of revenues, product development, sales and
marketing, depreciation and amortization, and other general and
administrative expense.
We expect operating income to grow between 45 percent and 55 percent for
the full year of 2011 over 2010. While our organic growth contributed
significantly to our operating income in the third quarter of 2011, the
increase is also somewhat indicative of a lag we experienced in
executing our hiring plans in the third quarter. We anticipate better
fulfillment of our hiring plans in the fourth quarter and in 2012.
We expect our effective book income tax rate for 2011 to be between 39
percent and 40 percent. Actual tax payments will be substantially less
than our income tax provision as we continue to utilize our federal and
state net operating loss carry-forwards. As of September 30, 2011, the
Company had approximately $18 million of federal and $14 million of
state net operating losses available to offset taxable income.
We expect that total capital expenditures will be approximately $10.0
million for the full year of 2011, which includes the $3.5 million
investment in the AVS product made during the first quarter, along with
expenses for hardware, software and capitalized software development for
new features, enhancements, content development, and additional office
space.
Commenting on results, Robert A. Frist, Jr., chief executive officer of
HealthStream, said, "Year-over-year increases in quarterly revenues and
operating income of 24 percent and 59 percent, respectively, set the
Company on a strong path for continued growth. Quarterly net income, in
particular, was compelling at $1.8 million, which is up 126 percent over
the third quarter of 2010."
"The early indicators of our progress with SimVentures are positive.
Since the launch of SimStore in May 2011, the number of content partners
has grown from 15 to over 30. To date, products have been purchased
through SimStore from healthcare organizations that span seven
countries—including the U.S."
A conference call with Robert A. Frist, Jr., chief executive officer,
Gerard M. Hayden, Jr., senior vice president and chief financial
officer, and Mollie Condra, associate vice president of investor
relations and communications, will be held on Tuesday, October 25, 2011
at 9:00 a.m. (EDT). To listen to the conference, please dial
877-647-2842 (no conference ID needed) if you are calling within the
domestic U.S. or Canada. If you are an international caller, please dial
914-495-8564 (no conference ID needed). The conference may also be
accessed by going to http://ir.healthstream.com/events.cfm
for the simultaneous Webcast of the call, which will subsequently
be available for replay. The replay telephone numbers are 855-859-2056
(conference ID #19769232 for U.S. and Canadian callers and 404-537-3406
(conference ID #19769232) for international callers.
About HealthStream
HealthStream (NASDAQ: HSTM) is a leading provider of research and
learning solutions for the healthcare industry, transforming insight
into action to deliver outcomes-based results for healthcare
organizations. Through HealthStream's learning solutions—which have been
contracted by over 2.6 million hospital-based healthcare
professionals—healthcare organizations create safer environments for
patients, increase clinical competencies of their workforces, and
facilitate the rapid transfer of the latest knowledge and technologies.
Through our research products, executives from healthcare organizations
gain valuable insight about patients' experiences, workforce challenges,
physician relations, and community perceptions of their services. Based
in Nashville, Tennessee, HealthStream has an additional office in
Baltimore, Maryland. For more information about HealthStream's learning
and research solutions, visit www.healthstream.com
or call us at 800-933-9293.
|
|
|
|
|
|
|
HEALTHSTREAM, INC.
|
|
Summary Financial Data
|
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
Revenues
|
|
$
|
20,618
|
|
|
$
|
16,616
|
|
|
$
|
60,175
|
|
$
|
48,114
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Cost of revenues (excluding depreciation and amortization)
|
|
|
7,915
|
|
|
|
6,274
|
|
|
|
22,623
|
|
|
17,643
|
|
|
Product development
|
|
|
1,946
|
|
|
|
1,750
|
|
|
|
5,644
|
|
|
4,999
|
|
|
Sales and marketing
|
|
|
3,810
|
|
|
|
3,358
|
|
|
|
11,674
|
|
|
9,369
|
|
|
Other general and administrative
|
|
|
2,782
|
|
|
|
2,401
|
|
|
|
8,009
|
|
|
6,885
|
|
|
Depreciation and amortization
|
|
|
1,471
|
|
|
|
1,143
|
|
|
|
3,868
|
|
|
3,769
|
|
|
Total operating expenses
|
|
|
17,924
|
|
|
|
14,926
|
|
|
|
51,818
|
|
|
42,665
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
2,694
|
|
|
|
1,690
|
|
|
|
8,357
|
|
|
5,449
|
|
|
Other income (expense)
|
|
|
(8
|
)
|
|
|
(5
|
)
|
|
|
8
|
|
|
(18
|
)
|
|
Income before income taxes
|
|
|
2,686
|
|
|
|
1,685
|
|
|
|
8,365
|
|
|
5,431
|
|
|
Income tax provision
|
|
|
890
|
|
|
|
889
|
|
|
|
3,213
|
|
|
2,481
|
|
|
Net income
|
|
$
|
1,796
|
|
|
$
|
796
|
|
|
$
|
5,152
|
|
$
|
2,950
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
Net income per share, basic
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
0.23
|
|
$
|
0.14
|
|
|
Net income per share, diluted
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
0.22
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
22,164
|
|
|
|
21,807
|
|
|
|
22,001
|
|
|
21,759
|
|
|
Diluted
|
|
|
23,495
|
|
|
|
22,511
|
|
|
|
23,272
|
|
|
22,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HealthStream, Inc.
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
|
|
2011
|
|
2010(1)
|
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and related interest receivable
|
|
$
|
30,251
|
|
|
$
|
18,004
|
|
|
|
Investments in marketable securities
|
|
|
--
|
|
|
|
5,703
|
|
|
|
Accounts and unbilled receivables, net (2) |
|
|
14,258
|
|
|
|
12,383
|
|
|
|
Prepaid and other current assets
|
|
|
3,757
|
|
|
|
4,744
|
|
|
|
Deferred tax assets, current
|
|
|
3,437
|
|
|
|
3,437
|
|
|
|
Total current assets
|
|
|
51,703
|
|
|
|
44,271
|
|
|
|
|
|
|
|
|
|
|
Capitalized software feature enhancements, net
|
|
|
7,746
|
|
|
|
4,333
|
|
|
|
Property and equipment, net
|
|
|
6,134
|
|
|
|
3,825
|
|
|
|
Goodwill and intangible assets, net
|
|
|
23,322
|
|
|
|
23,991
|
|
|
|
Deferred tax assets, non-current
|
|
|
2,445
|
|
|
|
5,347
|
|
|
|
Other assets
|
|
|
85
|
|
|
|
244
|
|
|
|
Total assets
|
|
$
|
91,435
|
|
|
$
|
82,011
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable, accrued and other liabilities
|
|
$
|
6,924
|
|
|
$
|
8,006
|
|
|
|
Deferred revenue
|
|
|
20,488
|
|
|
|
16,740
|
|
|
|
Total current liabilities
|
|
|
27,412
|
|
|
|
24,746
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities
|
|
|
458
|
|
|
|
474
|
|
|
|
Total liabilities
|
|
|
27,870
|
|
|
|
25,220
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
98,844
|
|
|
|
97,227
|
|
|
|
Comprehensive loss
|
|
|
--
|
|
|
|
(5
|
)
|
|
|
Accumulated deficit
|
|
|
(35,279
|
)
|
|
|
(40,431
|
)
|
|
|
Total shareholders' equity
|
|
|
63,565
|
|
|
|
56,791
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
91,435
|
|
|
$
|
82,011
|
|
|
|
|
|
|
|
|
|
(1)
|
Derived from audited financial statements contained in the
Company's filing on Form 10-K for the year ended December 31, 2010.
|
|
(2)
|
Includes unbilled receivables of $1,117 and $1,314 and other
receivables of $20 and $14 at September 30, 2011 and December 31,
2010, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
Income before interest, taxes, share-based compensation,
depreciation and amortization, or adjusted EBITDA((1)):
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
Net income
|
|
$
|
1,796
|
|
|
$
|
796
|
|
|
$
|
5,152
|
|
|
$
|
2,950
|
|
|
|
Interest income
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(36
|
)
|
|
|
(11
|
)
|
|
|
Interest expense
|
|
|
13
|
|
|
|
10
|
|
|
|
35
|
|
|
|
31
|
|
|
|
Income tax provision
|
|
|
890
|
|
|
|
889
|
|
|
|
3,213
|
|
|
|
2,481
|
|
|
|
Share-based compensation expense
|
|
|
223
|
|
|
|
166
|
|
|
|
597
|
|
|
|
498
|
|
|
|
Depreciation and amortization
|
|
|
1,471
|
|
|
|
1,143
|
|
|
|
3,868
|
|
|
|
3,769
|
|
|
|
Adjusted EBITDA
|
|
$
|
4,388
|
|
|
$
|
3,000
|
|
|
$
|
12,829
|
|
|
$
|
9,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In order to better assess the Company's financial results,
management believes that income before interest, income taxes,
share-based compensation, depreciation and amortization ("adjusted
EBITDA") is an appropriate measure for evaluating the operating
performance of the Company at this stage in its life cycle because
adjusted EBITDA reflects net income adjusted for non-cash and
non-operating items. 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 generally
accepted accounting principles. Because adjusted EBITDA is not a
measurement determined in accordance with generally accepted
accounting principles, it is susceptible to varying calculations.
Accordingly, adjusted EBITDA, as presented, may not be comparable
to other similarly titled measures of other companies.
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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 2011 that involve risks and uncertainties regarding
HealthStream. These statements are based upon management's beliefs, as
well as assumptions made by and data currently available to management.
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 forward-looking statements are subject to
significant uncertainties and other risks referenced in the Company's
Annual Report on Form 10-K and in the Company's other 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. Many of the factors
that will determine the Company's future results are beyond the ability
of the Company to control or predict. Readers should not place undue
reliance on forward-looking statements, which reflect management's views
only as of the date hereof. The Company undertakes no obligation to
update or revise any such forward-looking statements.
HealthStream, Inc.
Gerard M. Hayden, Jr., 615-301-3163
Chief
Financial Officer
ir@healthstream.com
or
Media:
Mollie
Condra, Ph.D., 615-301-3237
Associate Vice President, Investor
Relations & Communications
mollie.condra@healthstream.com
Source: HealthStream, Inc.
News Provided by Acquire Media
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