View Filing Data

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2012	Apr. 23, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	HEALTHSTREAM INC
Entity Central Index Key	0001095565
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,108,635

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 24,268	$ 76,904
Marketable securities - short-term	61,284	6,552
Accounts receivable, net of allowance for doubtful accounts of $149 and $149 at March 31, 2012 and December 31, 2011, respectively	16,324	16,014
Accounts receivable - unbilled	1,046	1,316
Deferred tax assets, current	4,140	5,080
Prepaid royalties, net of amortization	1,859	3,409
Other prepaid expenses and other current assets	1,980	1,804
Total current assets	110,901	111,079
Property and equipment:
Equipment	16,472	16,362
Leasehold improvements	4,193	4,170
Furniture and fixtures	2,642	2,545
Property and equipment gross	23,307	23,077
Less accumulated depreciation and amortization	(17,078)	(16,990)
Total Property and Equipment	6,229	6,087
Marketable securities - long-term	6,002	5,996
Capitalized software development, net of accumulated amortization of $8,982 and $8,344 at March 31, 2012 and December 31, 2011, respectively	8,302	7,940
Goodwill	21,147	21,147
Intangible assets, net of accumulated amortization of $9,148 and $8,930 at March 31, 2012 and December 31, 2011, respectively	1,739	1,957
Other assets	31	31
Total assets	154,351	154,237
Current liabilities:
Accounts payable	1,426	2,585
Accrued liabilities	3,904	5,492
Accrued compensation and related expenses	672	1,612
Deferred revenue	24,233	22,759
Total current liabilities	30,235	32,448
Deferred tax liabilities, noncurrent	323	323
Other long term liabilities	620	551
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, 75,000 shares authorized; 26,098 and 25,896 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	155,247	154,409
Accumulated deficit	(32,067)	(33,487)
Accumulated other comprehensive loss	(7)	(7)
Total shareholders' equity	123,173	120,915
Total liabilities and shareholders' equity	$ 154,351	$ 154,237

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Allowance for doubtful accounts receivable	$ 149	$ 149
Accumulated amortization on capitalized software	8,982	8,344
Accumulated amortization on intangible assets	$ 9,148	$ 8,930
Common stock, no par value
Common stock, shares authorized	75,000	75,000
Common stock, shares issued	26,098	26,098
Common stock, shares outstanding	25,896	25,896

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Condensed Consolidated Statements of Income [Abstract]
Revenues, net	$ 23,674	$ 18,506
Operating costs and expenses:
Cost of revenues (excluding depreciation and amortization)	9,575	7,070
Product development	1,869	1,786
Sales and marketing	5,536	3,508
Other general and administrative expenses	2,819	2,542
Depreciation and amortization	1,534	1,043
Total operating costs and expenses	21,333	15,949
Income from operations	2,341	2,557
Other income (expense), net	19	20
Income before income tax provision	2,360	2,577
Income tax provision	940	1,051
Net income	$ 1,420	$ 1,526
Earnings per share:
Basic	$ 0.05	$ 0.07
Diluted	$ 0.05	$ 0.07
Weighted average shares of common stock outstanding:
Basic	25,999	21,837
Diluted	27,335	22,969

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Statement of Income and Comprehensive Income [Abstract]
Net income	$ 1,420	$ 1,526
Other comprehensive income, net of taxes:
Unrealized gain on marketable securities		4
Total other comprehensive income		4
Comprehensive income	$ 1,420	$ 1,530

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

This element represents Other Comprehensive Income or Loss, Net of Tax, for the period. Includes deferred gains or losses on qualifying hedges, unrealized holding gains or losses on available-for-sale securities, minimum pension liability, and cumulative translation adjustment. While for technical reasons this element has no balance attribute, the default assumption is a credit balance consistent with its label.

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+ Details

- Definition

Appreciation or loss in value (before reclassification adjustment) of the total of unsold securities during the period being reported on, net of tax. Reclassification adjustments include: (1) the unrealized holding gain (loss), net of tax, at the date of the transfer for a debt security from the held-to-maturity category transferred into the available-for-sale category. Also includes the unrealized gain (loss) at the date of transfer for a debt security from the available-for-sale category transferred into the held-to-maturity category; (2) the unrealized gains (losses) realized upon the sale of securities, after tax; and (3) the unrealized gains (losses) realized upon the write-down of securities, after tax.

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+ Details

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 3 months ended Mar. 31, 2012 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Accumulated Deficit	Accumulated Other Comprehensive (Loss)
Beginning balance at Dec. 31, 2011	$ 120,915	$ 154,409	$ (33,487)	$ (7)
Beginning balance, shares at Dec. 31, 2011		25,896
Net income	1,420		1,420
Other comprehensive income
Stock based compensation expense	242	$ 242
Exercise of stock options, shares		202
Exercise of stock options	596	$ 596
Ending balance at Mar. 31, 2012	$ 123,173	$ 155,247	$ (32,067)	$ (7)
Ending balance, shares at Mar. 31, 2012		26,098

- Definition

This element represents the amount of recognized equity-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized). Alternate captions include the words "stock-based compensation".

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
OPERATING ACTIVITIES:
Net income	$ 1,420	$ 1,526
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,534	1,043
Stock based compensation expense	242	190
Deferred income taxes	940	1,051
Changes in operating assets and liabilities:
Accounts and unbilled receivables	(40)	(2,075)
Prepaid royalties	1,550	741
Other prepaid expenses and other current assets	(232)	(186)
Other assets	146	91
Accounts payable	(1,160)	(1,000)
Accrued liabilities and accrued compensation and related expenses and other long-term liabilities	(2,460)	(1,180)
Deferred revenue	1,474	3,342
Net cash provided by operating activities	3,414	3,543
INVESTING ACTIVITIES:
Proceeds from maturities of investments in marketable securities	3,500	2,135
Purchases of investments in marketable securities	(58,383)	(4,728)
Payments associated with capitalized software development	(1,000)	(4,086)
Purchases of property and equipment	(763)	(708)
Net cash used in investing activities	(56,646)	(7,387)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options	596	199
Payments on capital lease obligations		(2)
Net cash provided by financing activities	596	197
Net decrease in cash and cash equivalents	(52,636)	(3,647)
Cash and cash equivalents at beginning of period	76,904	17,868
Cash and cash equivalents at end of period	$ 24,268	$ 14,221

Basis of Presentation

3 Months Ended

Mar. 31, 2012

Basis of Presentation and Collaborative Arrangement [Abstract]

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. All significant intercompany transactions have been eliminated in consolidation. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The balance sheet at December 31, 2011 is consistent with the audited financial statements at that date but does not include all of the information and footnotes required by US GAAP for a complete set of financial statements. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2011 (included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 28, 2012).

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

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-URI http://asc.fasb.org/subtopic&trid=2209116

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-Name Accounting Standards Codification
-Topic 272
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-Paragraph 3
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-Name Accounting Standards Codification
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-URI http://asc.fasb.org/subtopic&trid=2122150

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-Name Accounting Standards Codification
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 720
-SubTopic 15
-URI http://asc.fasb.org/subtopic&trid=2122524

Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 275
-SubTopic 10
-URI http://asc.fasb.org/subtopic&trid=2134480

Reference 16: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS140-4/FIN46(R)-8
-Paragraph 8, C1, C7
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

2. INCOME TAXES

Income taxes are accounted for using the asset and liability method, whereby deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities measured at tax rates that will be in effect for the year in which the differences are expected to affect taxable income.

During the three months ended March 31, 2012 and 2011, the Company recorded a provision for income taxes of $940,000 and $1.1 million, respectively. The Company’s effective tax rate for the three months ended March 31, 2012 and 2011 was 39.8% and 40.8%, respectively. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, and the effect of various immaterial permanent tax differences.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
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-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Stock Based Compensation

3 Months Ended

Mar. 31, 2012

Stock Based Compensation [Abstract]

STOCK BASED COMPENSATION

3. STOCK BASED COMPENSATION

The Company maintains two stock incentive plans. The Company accounts for its stock based compensation plans using the fair-value based method for costs related to share-based payments, including stock options and restricted share units. During the three months ended March 31, 2012, the Company issued 69,950 restricted share units with a grant date fair value of $23.00 per share, measured based on the closing fair market value of the Company’s stock on the date of grant. During the three months ended March 31, 2011, the Company granted 219,750 stock options with a weighted average grant date fair value of $3.51. The fair value of stock options granted during the three months ended March 31, 2011 was estimated using the Black Scholes option pricing model, with the assumptions as follows:


	Three Months Ended March 31, 2011
Risk-free interest rate		2.37	%
Expected dividend yield		0.0	%
Expected life		5 years
Expected forfeiture rate		5	%
Volatility		50	%

Total stock based compensation expense recorded for the three months ended March 31, 2012 and 2011, which is recorded in the condensed consolidated statements of income, is as follows (in thousands):


	Three Months Ended March 31,
	2012		2011
Cost of revenues (excluding depreciation and amortization)	$	10	$	11
Product development		34		40
Sales and marketing		38		48
Other general and administrative		160		91

Total stock based compensation expense	$	242	$	190

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

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-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

Earning Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

EARNING PER SHARE

4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income for the period by the weighted average number of common and common equivalent shares outstanding during the period. Common equivalent shares, composed of incremental common shares issuable upon the exercise of stock options and restricted share units subject to vesting are included in diluted earnings per share only to the extent these shares are dilutive. Common equivalent shares are dilutive when the average market price during the period exceeds the exercise price of the underlying shares. The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect, was approximately 0.2 million and 0.3 million for the three months ended March 31, 2012 and 2011, respectively.

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2012 and 2011 (in thousands, except per share data):


	Three Months Ended March 31,
	2012		2011
Numerator:
Net income	$	1,420	$	1,526

Denominator:
Weighted-average shares outstanding		25,999		21,837
Effect of dilutive shares		1,336		1,132

Weighted-average diluted shares		27,335		22,969


Basic earnings per share	$	0.05	$	0.07

Diluted earnings per share	$	0.05	$	0.07

Marketable Securities

3 Months Ended

Mar. 31, 2012

Marketable Securities [Abstract]

MARKETABLE SECURITIES

5. MARKETABLE SECURITIES

At March 31, 2012 and December 31, 2011, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands):


	March 31, 2012
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value
Level 1:
Mutual funds	$	5,011	$	12	$	—		$	5,023

Level 2:
Corporate debt securities		16,171		—		(7	)		16,164
U.S. government securities		46,111		1		(13	)		46,099

Subtotal		62,282		1		(20	)		62,263

Total	$	67,293	$	13	$	(20	)	$	67,286


	December 31, 2011
	Adjusted Cost		Unrealized Gains		Unrealized Losses			Fair Value
Level 1:
Mutual funds	$	2,504	$	—	$	—		$	2,504

Level 2:
Corporate debt securities		2,038		—		(1	)		2,037
U.S. government securities		8,013		—		(6	)		8,007

Subtotal		10,051		—		(7	)		10,044

Total	$	12,555	$	—	$	(7	)	$	12,548

The carrying amounts reported in the condensed consolidated balance sheet approximate the fair value based on quoted market prices or alternative pricing sources and models utilizing market observable inputs. The maturities of the Company’s long-term marketable securities are less than two years. As of March 31, 2012, the Company does not consider any of its marketable securities to be other than temporarily impaired.

Business Segments

3 Months Ended

Mar. 31, 2012

Business Segments [Abstract]

BUSINESS SEGMENTS

6. BUSINESS SEGMENTS

The Company primarily provides services to healthcare organizations and other members within the healthcare industry. The Company’s services are primarily focused on the delivery of education and training products and services (HealthStream Learning), as well as survey and research services (HealthStream Research). The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2011.

The Company measures segment performance based on operating income before income taxes and prior to the allocation of certain corporate overhead expenses, interest income, interest expense, and depreciation. The following is the Company’s business segment information as of and for the three months ended March 31, 2012 and 2011 (in thousands).


	Three Months Ended March 31,
	2012			2011
Revenues
Learning	$	17,798		$	12,987
Research		5,876			5,519

Total net revenue	$	23,674		$	18,506

Income from operations
Learning	$	4,757		$	4,267
Research		279			327
Unallocated		(2,695	)		(2,037	)

Total income from operations	$	2,341		$	2,557


	March 31, 2012		December 31, 2011
Segment assets *
Learning	$	25,990	$	27,322
Research		25,743		26,088
Unallocated		102,618		100,827

Total assets	$	154,351	$	154,237

Segment assets include accounts and unbilled receivables, prepaid and other current assets, other assets, capitalized software development, certain property and equipment, and intangible assets. Cash and cash equivalents and marketable securities are not allocated to individual segments, and are included within Unallocated. A significant portion of property and equipment assets are included within Unallocated.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Collaborative Arrangement

3 Months Ended

Mar. 31, 2012

Basis of Presentation and Collaborative Arrangement [Abstract]

COLLABORATIVE ARRANGEMENT

7. COLLABORATIVE ARRANGEMENT

On June 23, 2010, the Company announced the formation of SimVentures ^TM, a collaborative arrangement between HealthStream and Laerdal Medical A/S (Laerdal Medical). The Company receives 50 percent of the profits or losses generated from this collaborative arrangement. For the three months ended March 31, 2012, the Company recorded approximately $0.4 million of revenues and $0.5 million of expenses related to the collaborative arrangement. For the three months ended March 31, 2011, the Company recorded no revenues and $0.1 million of expenses related to the collaborative arrangement. The Company also recorded approximately $0.4 million of capitalized software development for SimVentures during 2012.