0001437749-24-023484 | 10-Q | XBRL Viewer

Note 1 - Overview and Basis of Presentation	6 Months Ended
Jun. 30, 2024
Notes to Financial Statements
Business Description and Basis of Presentation [Text Block]	1. OVERVIEW AND BASIS OF PRESENTATION *Company Overview* HealthStream provides primarily Software-as-a-Service ("SaaS") based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting the people who deliver patient care. The Company is focused on helping individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs. The Company also provides its solutions to nursing schools and nursing students. The Company is organized and operated according to its One HealthStream approach, with its hStream technology platform at the center of that approach. Increasingly, SaaS-based applications in the Company's diverse ecosystem of solutions utilize the Company's proprietary hStream technology platform to enhance the value proposition for customers by creating interoperability with and among other applications. As used in this Quarterly Report on Form 10-Q (“Form 10-Q”), “HealthStream,” “Company,” “we,” “us,” and “our” mean HealthStream, Inc. and its subsidiaries, unless the context indicates otherwise. *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 intercompany transactions have been eliminated in consolidation. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The Condensed Consolidated Balance Sheet at December 31, 2023 was derived from the audited Consolidated 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 Notes thereto for the year ended December 31, 2023 (included in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2024).

Note 1 - Overview and Basis of Presentation

6 Months Ended

Jun. 30, 2024

Business Description and Basis of Presentation [Text Block]

1. OVERVIEW AND BASIS OF PRESENTATION

Company Overview

HealthStream provides primarily Software-as-a-Service ("SaaS") based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting the people who deliver patient care. The Company is focused on helping individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs. The Company also provides its solutions to nursing schools and nursing students.

The Company is organized and operated according to its One HealthStream approach, with its hStream technology platform at the center of that approach. Increasingly, SaaS-based applications in the Company's diverse ecosystem of solutions utilize the Company's proprietary hStream technology platform to enhance the value proposition for customers by creating interoperability with and among other applications. As used in this Quarterly Report on Form 10-Q (“Form 10-Q”), “HealthStream,” “Company,” “we,” “us,” and “our” mean HealthStream, Inc. and its subsidiaries, unless the context indicates otherwise.

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 intercompany transactions have been eliminated in consolidation. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The Condensed Consolidated Balance Sheet at December 31, 2023 was derived from the audited Consolidated 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 Notes thereto for the year ended December 31, 2023 (included in the Company's Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2024).

Note 3 - Revenue Recognition and Sales Commissions (Tables)

6 Months Ended

Jun. 30, 2024

Notes Tables

Disaggregation of Revenue [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2024*		*2023*		*2024*		*2023*
Subscription services	$	69,013	$	66,506	$	139,218	$	132,521
Professional services		2,543		2,692		5,098		5,623
Total revenues, net	$	71,556	$	69,198	$	144,316	$	138,144

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 46,131	$ 40,333
Marketable securities	36,869	30,800
Accounts receivable, net of allowance for doubtful accounts of $978 and $781 at June 30, 2024 and December 31, 2023, respectively	31,801	34,346
Accounts receivable - unbilled	4,394	4,100
Prepaid royalties, net of amortization	9,043	10,202
Prepaid software maintenance and subscriptions	7,754	7,397
Other prepaid expenses and other current assets	3,120	3,032
Total current assets	139,112	130,210
Property and equipment, net of accumulated depreciation of $21,423 and $19,503 at June 30, 2024 and December 31, 2023, respectively	11,880	13,005
Capitalized software development, net of accumulated amortization of $139,063 and $127,009 at June 30, 2024 and December 31, 2023, respectively	41,540	40,643
Operating lease right of use assets, net	18,842	20,114
Goodwill	190,968	191,379
Deferred commissions	31,377	31,700
Non-marketable equity investments	4,053	4,134
Other assets	611	726
Total assets	499,555	499,942
Current liabilities:
Accounts payable	5,805	7,465
Accrued expenses	15,004	22,717
Accrued royalties	4,187	4,556
Deferred revenue	86,887	83,623
Total current liabilities	111,883	118,361
Deferred tax liabilities	15,568	16,132
Deferred revenue, noncurrent	1,891	2,169
Operating lease liability, noncurrent	18,780	20,247
Other long-term liabilities	2,219	2,281
Shareholders’ equity:
Common stock, no par value, 75,000 shares authorized; 30,408 and 30,298 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	250,368	249,075
Retained earnings	100,063	92,368
Accumulated other comprehensive loss	(1,217)	(691)
Total shareholders’ equity	349,214	340,752
Total liabilities and shareholders’ equity	499,555	499,942
Customer-Related Intangible Assets [Member]
Current assets:
Intangible Assets, Net	50,569	54,742
Other Intangible Assets [Member]
Current assets:
Intangible Assets, Net	$ 10,603	$ 13,289

Note 6 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2024

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	*Three Months Ended June 30,*				*Six Months Ended June 30,*
	*2024*		*2023*		*2024*		*2023*
Numerator:
Net income	$	4,168	$	4,133	$	9,394	$	6,756
Denominator:
Weighted-average shares outstanding		30,401		30,684		30,357		30,638
Effect of dilutive shares		125		91		115		79
Weighted-average diluted shares		30,526		30,775		30,472		30,717

Net income per share:
Basic	$	0.14	$	0.13	$	0.31	$	0.22
Diluted	$	0.14	$	0.13	$	0.31	$	0.22

Note 2 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

2. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires disclosures of significant reportable segment expenses that are regularly provided to the chief operating decision maker and other segment items on an interim and annual basis. Entities with a single reportable segment will also be required to apply the disclosure requirements in ASU 2023-07 on an interim and annual basis. ASU 2023-07 will be effective for the Company for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to provide disclosure of disaggregated information in the entity’s tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

Note 3 - Revenue Recognition and Sales Commissions 1 (Details Textual) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Accounts Receivable, Credit Loss Expense (Reversal)	$ 1,600	$ 200	$ 1,802	$ 371
Contract with Customer, Liability, Revenue Recognized	47,200	43,600	65,200	62,100
Revenue, Remaining Performance Obligation, Amount	$ 538,000		$ 538,000
Revenue, Remaining Performance Obligation, Percentage	43.00%		43.00%
Amortization of Deferred Sales Commissions	$ 3,000	$ 2,800	$ 5,956	$ 5,464

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Dividends declared per share (in dollars per share)	$ 0.028	$ 0.028	$ 0.025	$ 0.025	$ 0.056	$ 0.05

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2024	Jul. 22, 2024
Document Information [Line Items]
Entity Central Index Key	0001095565
Entity Registrant Name	HEALTHSTREAM INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2024
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity File Number	000-27701
Entity Incorporation, State or Country Code	TN
Entity Tax Identification Number	62-1443555
Entity Address, Address Line One	500 11th Avenue North, Suite 1000
Entity Address, City or Town	Nashville
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37203
City Area Code	615
Local Phone Number	301-3100
Title of 12(b) Security	Common Stock (Par Value $0.00)
Trading Symbol	HSTM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,408,110

Note 5 - Shareholders' Equity - Dividend Policy (Details)	6 Months Ended
	Jun. 30, 2024 USD ($) $ / shares
Dividends, amount per share (in dollars per share) \| $ / shares	$ 0.056
Dividends, cash outlay \| $	$ 1,700,000
O 2024 Q1 Dividends [Member]
Dividends, declaration date	Feb. 19, 2024
Dividends, amount per share (in dollars per share) \| $ / shares	$ 0.028
Dividends Payable, Date of Record	Mar. 11, 2024
Dividends, cash outlay \| $	$ 849,000
O 2024 Q2 Dividends [Member]
Dividends, declaration date	Apr. 22, 2024
Dividends, amount per share (in dollars per share) \| $ / shares	$ 0.028
Dividends Payable, Date of Record	May 06, 2024
Dividends, cash outlay \| $	$ 851,000

Note 7 - Marketable Securities - Fair Value of Available for Sale Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Adjusted Cost	$ 36,867	$ 30,791
Unrealized Gains	4	10
Unrealized Losses	(2)	(1)
Fair Value	36,869	30,800
US Treasury Securities [Member] \| Fair Value, Inputs, Level 2 [Member]
Adjusted Cost	36,867	30,791
Unrealized Gains	4	10
Unrealized Losses	(2)	(1)
Fair Value	$ 36,869	$ 30,800

Note 3 - Revenue Recognition and Sales Commissions 2 (Details Textual)	Jun. 30, 2024
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-07-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	12 months

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ / shares in Thousands, $ in Thousands	Jun. 30, 2024	Dec. 31, 2023
Accounts receivable, allowance for credit loss, current	$ 978	$ 781
Accumulated amortization on property and equipment	21,423	19,503
Accumulated amortization on capitalized software development	$ 139,063	$ 127,009
Common stock, shares authorized (in shares)	75,000	75,000
Common stock, shares issued (in shares)	30,408	30,298
Common stock, shares outstanding (in shares)	30,408	30,298
Common stock, par value (in dollars per share)	$ 0	$ 0
Customer-Related Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 61,107	$ 57,095
Other Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 17,084	$ 16,603

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2022	30,579
Balance at Dec. 31, 2022	$ 254,832	$ 80,213	$ (981)	$ 334,064
Net income	0	2,623	0	2,623
Comprehensive loss	0	0	(35)	(35)
Dividends declared on common stock	0	(767)	0	(767)
Stock-based compensation	$ 945	0	0	945
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	103
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (791)		0	(791)
Balance (in shares) at Mar. 31, 2023	30,682
Balance at Mar. 31, 2023	$ 254,986	82,069	(1,016)	336,039
Balance (in shares) at Dec. 31, 2022	30,579
Balance at Dec. 31, 2022	$ 254,832	80,213	(981)	334,064
Net income				6,756
Comprehensive loss				92
Balance (in shares) at Jun. 30, 2023	30,686
Balance at Jun. 30, 2023	$ 256,073	85,435	(889)	340,619
Balance (in shares) at Mar. 31, 2023	30,682
Balance at Mar. 31, 2023	$ 254,986	82,069	(1,016)	336,039
Net income	0	4,133	0	4,133
Comprehensive loss	0	0	127	127
Dividends declared on common stock	0	(767)	0	(767)
Stock-based compensation	$ 1,093	0	0	1,093
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	4
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (6)		0	(6)
Balance (in shares) at Jun. 30, 2023	30,686
Balance at Jun. 30, 2023	$ 256,073	85,435	(889)	$ 340,619
Balance (in shares) at Dec. 31, 2023	30,298			30,298
Balance at Dec. 31, 2023	$ 249,075	92,368	(691)	$ 340,752
Net income	0	5,227	0	5,227
Comprehensive loss	0	0	(481)	(481)
Dividends declared on common stock	0	(849)	0	(849)
Stock-based compensation	$ 1,060	0	0	1,060
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	100
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (855)		0	(855)
Balance (in shares) at Mar. 31, 2024	30,398
Balance at Mar. 31, 2024	$ 249,280	96,746	(1,172)	$ 344,854
Balance (in shares) at Dec. 31, 2023	30,298			30,298
Balance at Dec. 31, 2023	$ 249,075	92,368	(691)	$ 340,752
Net income				9,394
Comprehensive loss				$ (526)
Balance (in shares) at Jun. 30, 2024	30,408			30,408
Balance at Jun. 30, 2024	$ 250,368	100,063	(1,217)	$ 349,214
Balance (in shares) at Mar. 31, 2024	30,398
Balance at Mar. 31, 2024	$ 249,280	96,746	(1,172)	344,854
Net income	0	4,168	0	4,168
Comprehensive loss	0	0	(45)	(45)
Dividends declared on common stock	0	(851)	0	(851)
Stock-based compensation	$ 1,094	0	0	1,094
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	10
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (6)		0	$ (6)
Balance (in shares) at Jun. 30, 2024	30,408			30,408
Balance at Jun. 30, 2024	$ 250,368	$ 100,063	$ (1,217)	$ 349,214

Note 4 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
Note 4 - Income Taxes (Details Textual) - USD ($)	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Tax Expense (Benefit)	$ 1,132,000	$ 367,000	$ 2,448,000	$ 885,000
Effective Income Tax Rate Reconciliation, Percent			21.00%	12.00%
Income Tax Expense (Benefit), Discrete Adjustments			$ 14,000	$ (500,000)
Reserve for Uncertain Tax Position			200,000	200,000
Income Tax Expense (Benefit), Stock-based Awards			$ (100,000)	(100,000)
Income Tax Expense (Benefit), State Appointment Change				$ (600,000)

Note 8 - Debt (Details Textual) - Revolving Credit Facility [Member] - Truist Bank [Member] - USD ($) $ in Thousands	Oct. 06, 2023	Jun. 30, 2024
Debt Instrument, Covenant, Maximum Funded Debt Leverage Ratio	3
Debt Instrument, Covenant, Interest Coverage Ratio	3
Long-Term Line of Credit, Total		$ 0
Minimum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.20%
Third Amendment [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 50,000
Line of Credit Facility, Increased Facility Size Due to Accordion Feature	$ 25,000
Third Amendment [Member] \| Fed Funds Effective Rate Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Third Amendment [Member] \| Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.10%
Third Amendment [Member] \| Base Rate [Member] \| Minimum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	0.50%
Third Amendment [Member] \| Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] \| Maximum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	1.50%
Third Amendment [Member] \| Swing Line Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5,000
Third Amendment [Member] \| Letter of Credit Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5,000

Note 6 - Earnings Per Share (Details Textual) - shares	3 Months Ended		6 Months Ended
Note 6 - Earnings Per Share (Details Textual) - shares	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	155,000	225,000	166,000	246,000

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
OPERATING ACTIVITIES:
Net income	$ 9,394	$ 6,756
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	20,706	20,148
Stock-based compensation	2,154	2,038
Amortization of deferred commissions	5,956	5,464
Provision for credit losses	1,802	371
Deferred income taxes	(542)	(490)
Loss on equity method investments	82	241
Other	(746)	(342)
Changes in operating assets and liabilities:
Accounts and unbilled receivables	(449)	(1,460)
Prepaid royalties	1,158	(810)
Other prepaid expenses and other current assets	(1,211)	(2,408)
Deferred commissions	(5,632)	(5,830)
Other assets	116	315
Accounts payable and accrued expenses	(8,912)	(2,835)
Accrued royalties	(370)	(207)
Deferred revenue	2,985	1,618
Net cash provided by operating activities	27,389	25,489
INVESTING ACTIVITIES:
Business combinations, net of cash acquired	0	(6,621)
Proceeds from maturities of marketable securities	29,196	10,000
Purchases of marketable securities	(34,526)	(31,983)
Proceeds from sale of non-marketable equity investments	765	0
Payments associated with capitalized software development	(13,552)	(13,309)
Purchases of property and equipment	(914)	(1,382)
Net cash used in investing activities	(19,031)	(43,295)
FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards	(861)	(797)
Payment of cash dividends	(1,700)	(1,534)
Net cash used in financing activities	(2,561)	(2,331)
Effect of exchange rate changes on cash and cash equivalents	1	(81)
Net increase (decrease) in cash and cash equivalents	5,798	(20,218)
Cash and cash equivalents at beginning of period	40,333	46,023
Cash and cash equivalents at end of period	$ 46,131	$ 25,805

Insider Trading Arrangements	3 Months Ended	6 Months Ended
Insider Trading Arrangements	Jun. 30, 2024	Jun. 30, 2024
Insider Trading Arr Line Items
Material Terms of Trading Arrangement [Text Block]		Item 5. Other Information None. Without limiting the generality of the foregoing, during the three months ended June 30, 2024, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement,” or any “non-Rule 10b-5 trading arrangement,” as such terms are defined in Item 408 of Regulation S-K.
Rule 10b5-1 Arrangement Adopted [Flag]	false
Non-Rule 10b5-1 Arrangement Adopted [Flag]	false
Rule 10b5-1 Arrangement Terminated [Flag]	false
Non-Rule 10b5-1 Arrangement Terminated [Flag]	false