HSTM

Image source: The Motley Fool. Monday, Aug. 3, 2026 at 9:00 a.m. ET Head of Investor Relations and Corporate Communications - Mollie Condra Chief Executive Officer and Chairman - Robert A. Frist, Jr. Chief Financial Officer and Senior Vice President of Finance and Accounting - Scotty Roberts Operator: Good morning, ladies and gentlemen, and welcome to HealthStream's Second Quarter 2026 Earnings Conference Call. At this time, I'd like to inform you that this conference is being recorded. I will now turn the conference over to Ms. Mollie Condra, Head of Investor Relations and Corporate Communications. Please go ahead, Ms. Condra. Mollie Condra: Okay. Thank you. Good morning, and thank you for joining us today to discuss our second quarter 2026 results. Also on the conference call with me today is Robert A. Frist, Jr., CEO and Chairman of HealthStream; and Scotty Roberts, CFO and Senior Vice President of Finance and Accounting. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that involve risks and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements. Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the company's filings with the SEC, including Forms 10-K, 10-Q and our earnings release. Additionally, we may reference certain non-GAAP financial measures related to the company's past and future expected performance on this call. The most directly comparable GAAP financial metrics and reconciliations are included in the earnings release that we issued yesterday. So with that start, I'll now turn the call over to CEO, Bobby Frist. Robert Frist: Good morning, everyone. Welcome to our second quarter 2026 earnings call. We do have a lot to discuss, as always, and it's fun when we can start with strong financial growth that we delivered during the quarter. So I'll dive into some of the numbers. The quarter included record-setting revenues of $83.7 million, up 12.5% year-over-year and record-setting adjusted EBITDA, which was $20.6 million, up 16.9% year-over-year. Operating income also grew 41.4% year-over-year. Based on our performance for the first half of the year, we increased our expectations for revenue and adjusted EBITDA for the full year 2026 and our financial guidance. Remind you of a strong cash balance of $66.7 million and untapped line of credit and no long-term debt, we do remain well positioned to pursue M&A opportunities as they arise and other capital deployment strategies that we believe will benefit shareholders. Our successful execution and financial performance in the first half of the year is allowing us to invest more aggressively in key areas than we had planned at the outset of the year. We believe these investments, which I'll speak to throughout today's call, will help broaden our reach into healthcare and help us deliver long-term growth in the future. This investment strategy is a primary reason we are slightly trimming net income guidance for 2026. The first area of investment I want to highlight is our career networks. Our career networks help healthcare organizations find the most qualified and competent employees while helping individual healthcare professionals develop and navigate their careers. Remember, HealthStream is already helping healthcare organizations develop, retain, engage, credential and schedule the healthcare workforce. So our career networks provide another dimension to our capabilities, that of finding the best employees. We are now investing in personnel, approving 15 new positions beyond our original budget to develop our career networks, and they include a nice mix of sales, operations and support for this growing part of our business. Career network applications such as myClinicalExchange, help us do this by interfacing directly with students as they prepare for their first job in healthcare. Already, we are seeing some of our largest and most progressive customers utilize myClinicalExchange to help them find the best students for clinical internships and rotations to develop those individuals in ways that make their transition to practice more efficient and effective and to help ensure that they are able to successfully hire those students upon graduation. By moving upstream into the nursing and medical student market, HealthStream is beginning to help our customers solve their staffing problems and improve the quality and readiness of these new hires. myClinicalExchange, one of our 3 career networks, grew 29% in the quarter versus the same period last year, which gives us confidence that we're on the right track with this investment strategy, again, incremental to our original budget plans at the beginning of the year. So to summarize, and due to the strength of the first half performance, we have decided electively to increase our investment in our career networks and added 15 new positions that we're rapidly hiring and onboarding. So we expect them to begin contributing during the second half of the year. But also we'll have the new payroll, new expenses. As we look ahead, we continue to monitor a number of external factors that may influence the operating environment for both HealthStream and our customers. Several of our larger hospital system customers have described headwinds associated with the expiration of the enhanced ACA premium tax credits at the end of last year. A few have also noted future Medicaid reimbursement pressure related to the One Big Beautiful Bill Act. We'll continue to track these developments, including any spending impact they may have on our customers. To date, because of how we're positioned, we have not seen a negative impact on our business. And that's partially because our solutions are specifically designed to help health systems save money associated with their operations. So we'll continue to focus on enabling our customers to operate more efficiently regardless of the macroeconomic conditions. And I think that's why our solutions are well-positioned even in this tighter money environment for our customers. As a reminder, in the last couple of calls, I outlined 4 reasons why HealthStream sees significant opportunities in the rapidly evolving AI landscape. As AI continues to advance, we're even more confident in each of these reasons that we've articulated in the past. So let me reiterate them. First, our healthcare user base continues to grow. Unlike industries that may experience seat compression from AI, healthcare employment is largely projected and expected to remain a major source of job growth in our country, with nurses, our largest user base for HealthStream at the center of that trend. We believe AI will help caregivers spend more time with patients and less time on administrative work. And so just a general characterization is that we see a lot of job growth in healthcare and particularly in the nursing base. Second, our data remains a key differentiator. As we enter the AI area and the era, our enterprise applications serve as systems of record for learning, credentialing and scheduling, while our career networks generate proprietary workforce data. NurseGrid alone now reaches approximately 1 in 5 U.S. nurses, providing valuable insight into the nurses' preferences and work life. Third, our HealthStream platform is designed to incorporate AI as a core capability and assets such as our hStream ID and our expanding API footprint provide foundational infrastructure to support AI-driven innovation across healthcare workforce technology. We already, for example, have over 780 registered users of our developer portal, building dozens of customer-built applications and integrations using our API. I think this is solid footing for the AI-driven future. Fourth, our ecosystem brings these advantages together. Thousands of healthcare organizations, millions of caregivers, dozens of industry partners and more than 30 years of expertise create a differentiated platform that is difficult to replicate. While AI cannot create an ecosystem like ours, we believe it can make that ecosystem even more valuable. Before we go further in the call, and I turn it over to Scotty, I want to summarize for those of you new to the HealthStream story, kind of a business overview, the business description. So for anyone new to the story, first and foremost, HealthStream is a healthcare technology company dedicated to finding, developing, retaining, engaging, credentialing and scheduling the healthcare workforce through technology solutions, each of which we believe are becoming more valuable because of the interoperability they are achieving through our hStream technology platform. The company holds 21 patents on its innovative products, which have been awarded over 40 Brandon Hall Awards. Historically, we sell our solutions on a subscription basis under contracts that average 3 to 5 years in length, which makes our revenues recurring and predictable. In fact, 97% of our revenues are subscription-based. We are profitable, have no interest-bearing debt and report a strong cash balance of $66.7 million at the end of the second quarter of 2026. The strong cash balance allows us to allocate capital to product development, M&A, share repurchases and dividends. We are solely focused on healthcare and more specifically, the healthcare workforce and those preparing to enter it. The 12.6 million healthcare professionals and nursing students in the United States comprise the core total addressable market for our solutions. Later in the call today, I'll describe some of the exciting developments in each of our areas of learning, credentialing and scheduling primarily. But first, let's turn the mic over to Scotty Roberts, our CFO, who will provide a more detailed discussion of the financial metrics for the second quarter of 2026, along with further comments about how we view our financial outlook for the remainder of 2026. Scotty, I'll turn it over to you. Scott Roberts: All right. Thank you, Bobby, and good morning, everyone. I'll go ahead and dive into the numbers for the quarter. Our revenues were a record of $83.7 million and were up 12.5%. Operating income was $8.3 million, which was up 41.4%. Net income was $6.7 million, up 23.8%. Earnings per share was $0.23 per share, up from $0.18 per share, and adjusted EBITDA was also a record, coming in at $20.6 million and was up 16.9%. Our revenues increased by $9.3 million or 12.5% and were $83.7 million compared to $74.4 million in the prior year. Revenues from subscription products were up $8 million or 11.2% and professional service revenues were up $1.3 million or 52.6%. Let me touch on the revenue growth drivers for the quarter. First, our core subscription solutions continued to provide solid growth. With an organic revenue growth rate of 8.3%, led by products like CredentialStream, which grew by 14%; ShiftWizard, which grew by 30%, our Competency Suite product grew by 12% and myClinicalExchange grew by 29%. In addition to the growth in our core subscription products, I want to point out that approximately $2 million of our revenue came from a contract that contains contingent fees. It's a contract that we acquired back in 2020 as part of our acquisition of ANSOS. And from an accounting perspective, the $2 million of revenue was recognized as a cumulative catch-up in accordance with ASC 606 and resulted from the resolution of previously constrained estimates of variable consideration under the customer's contract. Approximately $1.2 million of the $2 million catch-up was recorded as subscription revenue and $0.8 million was recorded as professional services revenue. To provide a little more plain English explanation around this, the $2 million of revenue that I just mentioned was associated with shared cost savings that we helped one of our customers achieve in the first half of the year. We do not have any other contracts that contain this type of contingent payments and do not consider this revenue to be recurring in nature. The third component of our growth was the Virsys12 and MissionCare Collective acquisitions that we completed in the fourth quarter of 2025. Our inorganic revenue growth rate was 4.2% in the second quarter. Together, these 2 acquisitions contributed $3.1 million in revenue in the second quarter. Lastly, revenues from our legacy credentialing and scheduling products, excluding the impact of the $2 million catch-up, approximated $7.4 million of our second quarter revenues and declined by $1.3 million or 15% compared to the second quarter of last year as we continue our efforts to migrate customers from those solutions. Our remaining performance obligations were $685 million as of the end of the second quarter, which compares to $618 million for the same period of last year. We expect approximately 40% of the remaining performance obligations will be converted to revenue over the next 12 months and that 68% will be converted to revenue over the next 24 months. Gross margin was 65.3% compared to 64.6% in the prior year quarter. This improvement was primarily related to the growth in revenues, including contributions from the recent acquisitions and revenue catch-up I just described and was partially offset by higher labor, software, royalties and hosting costs. Operating expenses, excluding cost of revenues, increased by 10.1% or $4.2 million. Product development increased by $1.5 million or 12.5%. Sales and marketing increased by $1.7 million or 14.3% and depreciation and amortization increased by $0.4 million or 3.8%. And lastly, our G&A costs increased by $0.6 million or 8.6%. Net income for the second quarter was $6.7 million and was up 23.8% over the prior year. And finally, our adjusted EBITDA improved to a record of $20.6 million and was up 16.9%, and adjusted EBITDA margin was 24.6% compared to 23.7% last year. Now let's review the balance sheet and cash flows. Our cash and investment balances were $66.7 million compared to $66.5 million last quarter. And during the second quarter, we paid $8.4 million for capital expenditures, returned $1 million to shareholders through our dividend program and repurchased $2.6 million of our common stock under the share repurchase program that we announced in March of 2026. In addition, we made $0.8 million of minority investments in companies that we expect to leverage our ecosystem and platform and paid $0.4 million in earn-outs associated with the prior acquisition. Some of the growth investments that Bobby mentioned in the first half of the call are geared towards making our hStream technology platform more extensible to companies, including those that we invest in, can begin to build on our platform in ways that benefit everyone involved. It was another good quarter of collections efficiency for us as days sales outstanding were 38 days for the quarter compared to 35 days in the prior year second quarter. And from a cash flow perspective, on a year-to-date basis, our cash flows from operations were $40.6 million, which is up from $32.1 million last year or a 26% increase. Free cash flow was $24.7 million compared to $14.2 million last year, which is up 73%. And our capital expenditures were $8.4 million this quarter compared to $9 million last year's second quarter. Ending the quarter with $66.7 million of cash and investments, free cash flows and no debt, we are well positioned to deploy capital to improve shareholder value. As a reminder, we maintain a disciplined approach to capital allocation and how we prioritize our use of capital. Our utmost priority is making organic investments back into the business, which is evident by our annual capital expenditure and R&D plans. The second is pursuing acquisition opportunities, which we have a long track record of executing. The third is returning a portion of profits back to shareholders in the form of cash dividends. And the fourth priority is that our Board may authorize share repurchase programs. Yesterday, as announced in our earnings release, our Board of Directors declared a quarterly cash dividend of $0.035 per share to be paid on August 28 to holders of record on August 17. Also in March of 2026, our Board of Directors authorized a $10 million share repurchase program. And during the second quarter, we repurchased $2.6 million of our common stock under this share repurchase program, and we currently have $5.7 million remaining. This program will terminate on the earlier of September 12, 2026, or when the maximum dollar amount under the program has been expended. We may suspend or discontinue making purchases under the program at any time. Now let me turn over to our financial expectations for '26, which we updated yesterday. We expect consolidated revenues to range between $327 million and $332 million. The bottom of the new range is now above the midpoint of our previous guidance range and the new range equates to a growth rate between 7.5% and 9.2% over 2025. We expect our net income range to be between $19.5 million and $22.2 million, adjusted EBITDA to range between $74 million and $78 million and capital expenditures to range between $31 million and $34 million. Consistent with our previous guidance, we expect lower revenue growth rates in the second half of the year versus the first half due in part to the acquisitions that we completed in 2025. We expect our revenue growth rate for the third quarter will be approximately 8%. We expect adjusted EBITDA margin will approximate 22% for the third quarter. Our adjusted EBITDA for the first half of the year was very strong, which was partially due to the $2 million of revenue catch-up in the second quarter. And for the second half of the year, our forecast assumes higher operating expenses compared to the first half of the year, higher trade show costs and higher professional service fees. As Bobby discussed earlier, we're also planning to expand our product development and sales and marketing efforts in our career network solutions. And those solutions include myCNAjobs, myClinicalExchange and NurseGrid. We're also investing more aggressively with regard to our hStream technology platform. These guidance expectations do not include the impact of any acquisitions or dispositions that we may complete during the year, gains or losses from changes in the fair value of nonmarketable equity investments or contingent consideration or impairment of long-lived assets that we may complete during the year. So that wraps up my portion of the call this morning. Thanks for your time, and I'll now turn it back over to Bobby for some more updates. Robert Frist: Thanks, Scotty. Increasingly, our customers view HealthStream as a partner for solutions across their entire enterprise rather than a single application or a single point solution, as we say. That broader view is showing up in what customers buy and how they buy it. This is where our bundling strategies are beginning to take hold. Stronger go-to-market curation among our solutions allows customers to purchase product bundles designed to manage end-to-end clinical workflows. Our conferencing suite is a good example of this. We are beginning -- we are also beginning to sell market-specific bundles that are tailored to meet unique needs of different types of healthcare organizations. We call these our market bundles. They are designed for areas such as post-acute care, physician offices and ambulatory surgery centers. I'll say a bit more about how each of these 2 bundling strategies work. When customers purchase a subscription to our Competency Suite, all of their applicable employees gain unlimited access to the content and applications in that bundle. This gives customers a more complete, more economical solution while simplifying what would otherwise be a series of separate piecemeal purchasing decisions. We saw continued momentum in the quarter with Competency Suite. Revenue is up approximately 12% over the same period last year, and it remains one of our largest revenue drivers within our Workforce Development business. That brings us to market bundles. At HealthStream, we want to be positioned to serve all types of healthcare organizations, and we believe that our market bundles can help us do just that. We recognize that the mix of solutions a large health system requires may be different than what a smaller long-term care facility needs. That is why we are beginning to build out our market bundles for the skilled nursing space, the long-term care space and small hospitals often called critical access hospitals. For example, our critical access bundle combines software and content into a single decision rather than several incremental ones, giving smaller facilities a more complete set of applications at a better price per unit. In the second quarter, we saw uptake in these market bundles with new critical access, skilled nursing and long-term care customers signing on for these market bundles. Earlier in the call, I mentioned more aggressive investment in growth initiatives. Part of that investment is to bolster and expand our sales team in order to get these product and market bundles more widely adopted. To do this, we've already started hiring more sales representatives because we believe that increase in sales coverage is likely to result in future revenues over time. Switching gears. On Wednesday of last week, we electively filed an 8-K disclosing a cybersecurity incident, the investigation of which is ongoing. Rather than reading that disclosure to you, I'll simply direct you to that filing. I'll reiterate our statement that we do not believe any customer-facing systems such as our platforms or applications were accessed or compromised. Additionally, we have not experienced any interruption in our product service or service delivery to customers or to our business operations. Based on what we know, I also want to reiterate that we do not anticipate this incident to have a material impact on our financial results. All right. Let's get back to our business updates, beginning with an update about how we are becoming a platform company through our emerging hStream technology platform. The reporting and analytics layer of our hStream platform is known as Insights. Insights made real tangible progress in the quarter. I'm really proud of the teams that have been building this part of our platform. It's really starting to show its capabilities. Insights made real tangible progress in the quarter, largely because of the work we've done to ensure that our individual applications are now feeding their data into a common Snowflake-powered data lake. Once the data is in one place, our developers can then create standard data sets, standard reports, often using new AI tools and then customers can use the Insights infrastructure to do everyday standard reporting, build their own customer reports and turn that data into action through live analytics dashboards. What makes this strategically important is that it only becomes more valuable as more of our applications participate, and that is exactly what we're seeing. Insights, our reporting application or pillar of our platform, now spans 7 of our applications, including Learning Center, Learning Experience, ShiftWizard, several quality and compliance and clinical development solutions. In its first full year, active users of Insights grew from 100 to more than 2,600, and we expect the catalog to continue expanding meaningfully as additional products, including CredentialStream in the upcoming quarter, Policy Manager, Workforce Validate to come online in the next 2 quarters. So it's really exciting to watch all of our data get pushed into one unified data lake tied to one unified reporting architecture. It's allowing large system customers and small ones to create really unique insights into the data coming off multiple of our applications through one data lake and one set of access tools that are part of the platform. So really excited about our progress there. Let's move on to our learning solutions, which are demonstrating the power of our ecosystem. We continue to see customers consolidate learning purchases instead of just running isolated point solutions. This is helping drive larger contract values for our solutions like our Resuscitation Suite, where we closed a deal with over $10 million of total order value in the quarter, Competency Suite, where we closed a $5 million total order value deal and Quality OB, where we closed a $1.5 million plus total order value deal. So it feels like some of the deals are getting bigger and they're more inclusive and they leverage our platform and technologies in new and exciting ways. More importantly, it is helping our customers understand the strategic value of consolidating their purchases with HealthStream as we transition into a platform to handle all of their clinical workforce needs. These types of transformations do not happen overnight, which is why we have been investing in our solutions and our platform strategy for the last many years. And while we are accelerating investment as results begin to manifest in terms of customer benefit and company growth. Let's move on to credentialing. Revenues from sales of our flagship credentialing product, we call CredentialStream were up approximately 14% in the second quarter compared to the same quarter last year. We also saw growth meaningful -- from meaningful competitive takeouts, systems that are standardizing all of their facilities on to CredentialStream and the additional purchase of modules like Enroll, which allows customers to manage their enrollment processing directly through CredentialStream instead of through separate nonintegrated system. I'm also pleased that we saw some conversions from our legacy credentialing solutions into CredentialStream. Conversion from legacy solutions, particularly older versions of legacy solutions is something we plan to focus on more as we move into next year. Let's move on to scheduling, where our core product, ShiftWizard, revenues were up approximately 30% in the second quarter versus second quarter of the previous year. Two large health system go-lives during the quarter, together representing approximately $1.7 million in combined new order value or contract value reflect our expanding ability to implement ShiftWizard at scale within complex multi-facility healthcare organizations. As in prior quarters, our largest ShiftWizard wins were once again competitive takeouts of a horizontally focused competitor that serves multiple industries rather than healthcare specifically. And our sales leaders continue to attribute these wins to customers recognizing that scheduling and staffing clinicians is simply different from scheduling a labor pool for retail or factory shifts. Stepping back from the quarterly results for a moment, I'd like to recognize something that reflects the day-to-day work of our teams rather than a single quarter's numbers. This past quarter, G2 named ShiftWizard a leader in medical staff scheduling and our learning management system, ComplyQ and SafetyQ and Jane were all recognized among the top performers in healthcare learning management on G2's latest report. Across our full portfolio, HealthStream now ranks #1 in 5 separate G2 categories and holds an overall grid leader designation as based entirely on the feedback from people who use our solutions every day. It's a good reminder that the work of our teams that they do to serve these organizations and the clinical workforce is resonating in a very tangible way, and we're grateful to our customers for continuing to tell us so. And now I want to close with the same reminder I share with you every quarter. If you're interested in a profitable, highly recurring revenue healthcare technology company that expects to deliver growth, then HealthStream may be the right investment for you. If you're interested in a company whose core user base, the clinical healthcare workforce is expanding faster than any other sector of the job market, then maybe HealthStream is the right investment for you. If you like a company whose software serves as a system of record on behalf of healthcare customers, then HealthStream may be a company for you. If you favor ecosystems over point solutions, then maybe HealthStream is the right investment for you. For all of these reasons, HealthStream is positioned for another exciting year helping the nation's top health systems find, develop, schedule, credential, onboard and retain this growing healthcare workforce. Maybe HealthStream is the right investment for you. I'll now turn it over to the operator to begin the Q&A session. Matthew Hewitt: Congratulations on the strong quarter. A couple of questions. First, obviously, you announced several competitive wins across the portfolio of applications. I'm just curious what's driving that? Is this maybe a heightened focus by the customers to kind of get to that one throat to choke? Is it because you have the better platform versus maybe a legacy platform that you've displaced? Just any color that you can provide on the competition side. Robert Frist: Well, it's a little bit of all those things, of course. I think a little bit of our bundling strategy, I feel like it's starting to take hold. We're able to put more products together. They're more interoperable. We're able to get better unit pricing, but for more complete solutions under larger contracts. I do think our products are advancing their capabilities. The platform itself essentially powers up the applications and gives them new capabilities. And I talked today about the Insights reporting. It's really just a different experience if a large enterprise has access to all of the core data sets from all of the myriad of our applications that they've licensed access to in one data lake. And so they're just -- I think our customers are starting to hopefully view the shift from buying several independent nondisconnected or stand-alone point solutions distinguishing that from investing in a platform technology that they're starting to wake up and see like, oh, wow, if I use the myClinicalExchange network and we also use the learning system from HealthStream, all that data now goes into kind of a mix and match reporting engine that gives incredible flexibility to gain insights about your workforce. So that's an example as that platform pillar of reporting and analytics matures and customers wake up instead of getting a set of canned reports that are separate and distinct, they can now relate data across applications through our Insights reporting and analytics platform, bringing information about students that applied that are now being onboarded in the learning system, for example, so you can now track people better across time and look at onboarding efficiency is maybe a good example of the blend of data across the students as they become professionals and take jobs in organizations. Again, the data from both those applications pushed the same data lake allows you to create more insightful use of that data. So the maturity of the platform, the bundling strategy, I think, are 2 contributors to the access we're getting to the buy-in. We're also doing a better job of assembling our products for specific market verticals, and that's part of the market bundles we talked about. So it's not just bundling the other more products, it's more products that are kind of filtered for each clinical setting environment, which I think we're just getting a little better at curating our product sets into these bundles for specific markets. I think that may be helping as well. Thanks for the question. I hope that helped answer. Matthew Hewitt: It did. And maybe as a follow-up, and that was kind of a little bit of a lead in, but you noted the long-term care market this morning. I feel like a lot of times we get focused on the hospital environment, given the size and the opportunity there. But in the long-term care market, it's a little bit different. It's a little more fragmented, smaller facilities, those types of things. Where do you sit from a penetration standpoint? Where do you see that as maybe a driver or an opportunity as we look out over the coming years? Robert Frist: Matt, it's a great question. I think we -- in our slide deck for investors, we've kind of aggregated the number of people working across these clinical settings. We haven't broken out market share per setting yet. We're starting to -- actually our Board asked us to do a lot more work on that at our upcoming -- our next Board meeting. And so maybe that's something we can follow up on. We've aggregated into this kind of this demand circle about 12.5 million or 12.6 million healthcare workers. A little more than half of those are in the acute care settings, as you know, and then spread across the other settings like -- but where we're seeing traction now, the skilled nursing market, which if you think about it kind of structurally the most similar to the acute care market. But we're also seeing some traction ironically in the smaller critical access hospitals. And again, I think the bundles are helping there. So I don't have any specific numbers for you. I would say we have a footprint in each of those markets, long-term care, skilled nursing, home health. We see expanding -- some expanding footprint in home health, the critical access hospitals. I view those as kind of 4. We now have market bundles for each of those and beginning to get better at messaging those into the market. So they are more fragmented. They come in smaller pieces. So it's a slightly different structure to the sales organization to achieve market share in there, a little bit more of the inside, outside tag-team sales force, less traveling, of course, more phone and Webex work to communicate with those smaller customers. The contracts are smaller, but what's important, I think, as we think about the total market as those 12 million people, they have a lifetime value of each person. And so one may be working in skilled nursing facility, but find themselves a few years later moving into a bigger city and working in an acute care hospital. And in our new model, this platform approach allows us to track them kind of horizontally across their career as they move between jobs and they land in different places that have the HealthStream platform. So I'm talking about some of our kind of platform benefits as we try to get more specific in how we penetrate those verticals. Of the verticals we mentioned or the segments -- market segments, we're seeing good uptake right now and skilled nursing is probably the one that has the most uptake as opposed to long-term care. But we have a good strong footprint in long-term care as well. Dustin Scaringe: This is Dustin on the line for Ryan. Regarding your guidance update, just wondering if that now includes the $2 million catch-up? Or was that kind of previously in the guide? And also, did that flow through directly to the bottom line? Or were there some expenses associated with that? Robert Frist: Scotty, I'll let you address that first. Scott Roberts: Yes, yes, yes. So the $2 million that we saw come through in the second quarter was incremental to our previous expectations. So it's now flowed through our updated revenue guidance for the full year. And then from its impact on kind of profitability for the second quarter, it was meaningfully impactful. So just a small cost to kind of realize that revenue. So you could probably flow most of it to the profitability line items from an EBITDA perspective, for sure. Richard Close: Congratulations on the results. I jumped on late, so I apologize. Did you guys talk about the legacy revenue impact in the quarter? I just want to do that from a housekeeping to begin with. Scott Roberts: Yes, Richard, it was I think, $7.4 million of revenue in the second quarter, which is down $1.3 million or 15% versus the same period last year. Richard Close: Okay. Okay. That's good. Just wanted to cover that in a public forum to get that number. Okay. So questions. Bobby, you talked about some larger contract values. And I just want to put them in a little bit of perspective. You mentioned a $10 million one, I think a $5 million contract value. So are those different like terms of contracts in terms of length? Maybe you could like talk about, is the annualized revenue coming through with respect to these larger contracts? Or is that more extended timelines? Robert Frist: Generally, they're kind of bigger bundles over longer periods of time. So they're bigger strategic commitments to our company, which we're excited about. But you're right to point out that the terms on those are sometimes 4 years or more. And so that's the total contract value, which is kind of a bigger number because there's usually more in the bundle. But it's also -- typically, they tend to be a little bit longer-term agreement. And then as far as coming to revenue, it just depends on the mix of what's in that bundle. The first one we called out, which was the biggest number was for resuscitation competitive win. And then that revenue tends to come in a little faster, but has a little lower gross margin because of the partnership and the royalties associated with our Resuscitation Suites that we take to market. So it's exciting. They're bigger. It's kind of a system-level commitment in that case. We can usually get to the revenue a little faster in that particular case. And so in those ways, it's good. And -- but on the negative side, it has a little lower gross margin because it involves content products, which have royalties. The second bundle we mentioned, I think, was a Competency Suite, which was another great example of -- historically, that would have been 5 separate sales of kind of products that are in this Competency Suite now. And so the value of the contract gets bigger, and I think in that case, $5 million because it includes several of our products in that bundle, which I think is going to help with both -- I mean, it's a little longer sales process because it's a bigger financial commitment, and it is a multiyear agreement. But it takes the decision down to like one decision instead of 6 separate decisions over many years. They just say, "Is HealthStream have the right tool set to develop the competency of our clinical workforce." So if the answer to that is yes, then it's a bigger commitment, but it's the mix of the products instead of picking one tool and then adding another tool a year later and then another tool. It's all bundled together into the Competency Suite. And so again, bigger contract value over more time. But I think it's going to help with renewal rates over time, too, because what would happen is you'd sell 4 or 5 point solutions over 4 or 5 years, and they would get to the bigger contract value. But as each of those separate contracts for one of the components of the suite came up for renewal, they would adjust it based on actual utilization. And so some of it adjust up or down if they subscribe for too many or they used it less than they expected. And now I think in these bundles, it's kind of all or none, like you get your phone and you don't use all the features of the phone, but you don't give any of them back. You keep the phone. And so I think the bundles ultimately will also help with renewal rates. I hope that answers. But yes, bigger deals, typically bundles and over a longer term period. So the NOV, we call the contract order value, the new order value is the total 5-year value or 4-year value of those contracts. Richard Close: Okay. That's great. And then just clarification, when you were talking about CredentialStream, you said sales up 14% in the second quarter, I believe the number was. Is that new bookings? And I just want to -- because when you talked about ShiftWizard... Robert Frist: Yes, yes. That's the revenue that's coming in from implementations of contracts. So that's not necessarily sales. That's the revenue as it's materializing. It was up 14%. The revenue was up, which means kind of contract go-lives. We're taking customers live and that's adding to the total revenue of that product. Richard Close: Okay. That's perfect. Just wanted to clarify because ShiftWizard, you said 30% revenue. Is the 14% year-over-year growth? Robert Frist: I believe that's -- Scotty will clarify. I believe that is year-over-year growth, and I think that's also true of the ShiftWizard number, which is year-over-year growth. There's a couple of bigger, as we mentioned in the script, the bigger ShiftWizard accounts went live. And so that starts to turn into revenue rec. And then the result of that was a 30% year-over-year revenue growth quarter to prior year quarter. And so I think that's the same format for the credentialing. Scotty, can you verify? Scott Roberts: Yes, that's exactly right, Bobby. And those are the growth rates for the second quarter of the prior year second quarter. Richard Close: Perfect. I just wanted to make sure apples and not -- or apples and oranges there. So good to be on the right page there. And then my last question, I guess, is with respect to ShiftWizard and those larger system go-lives, is that relatively new in terms of seeing the success with larger systems that like ShiftWizard is ready for prime time in these larger accounts now? Because that's something that I know you've gotten questions on over the last couple of years. Robert Frist: Yes. We're definitely feeling better about it. I mean I made that statement. I said that I thought that these -- I mean, they're not huge, huge systems, but they're definitely larger, more complex multi-facility systems. And so we did comment that I think that it does reflect our expanding ability to service at scale, more complex multi-facility health systems. So I think that's good news. I don't know if it's ready when you say prime time. I mean there are a few giant systems. And we have some larger implementations now. And I just -- I think we're -- the product is maturing, and we're getting more capabilities on the board, which I think makes a broader audience possible for that set of applications. Richard Close: Okay. Can I slip one more in or? Robert Frist: Yes, yes, sure. Richard Close: Okay. With respect to the Insights that you talked about and making tangible progress there, the data lake and Snowflake. Is that a revenue contributor? Do you charge for all of that? Or what's the revenue model there? Or is it more like ROI, making the client understand they're getting the ROI out of all your products? Robert Frist: Yes, yes, it's a little of all those. So there is an Insights+ buy-up. And there are -- so there are things to buy there. There's an analytics tool set that's more advanced that you purchase. And so if you want to take full advantage of this, there are things you purchase. And so it does grow revenue. The Insights and there's Insights and then there's Insights+ and there's kind of an analytics framework. And so there are some buy-ups there, and we're selling them very well. But what's really cool is when you -- if you license 2 or 3 of our applications, and we've mentioned about 5 of them now that are participating in the Insights infrastructure, you literally can go in and you see the data sets presented as check boxes from each of our applications on one screen. And so you go in and say, "Okay, I want to see the tenure of students on myClinicalExchange that we happen to also then onboard." So they were students doing rotations. A year later, we onboarded them as employees, and we did some learning and training and transition to practice training. And now we want to pull together that as a longitudinal review of how students were selected and onboarded and trained and ready to work. That was really, really, really difficult a year ago. And now you can literally just go in and you -- because we've talked myClinicalExchange for the students is on the hStream ID. A lot of our large health systems have used the hStream ID as a sign-on model. And so when that's the case, those data sets are not just available in one environment, they're also relatable. And so now you can ask questions of the data, these growing data sets. I think that's very much more indicative of being a platform company where, hey, yes, the IT staff at these larger health systems are realizing that we're a data partner now. Like if you think about learning systems bought in HR and they generate these little reports for HR about compliance training, for example. But now you go in and you can literally configure data across 5 of our applications to one set of reports. And it just -- it opens up the ability to view us as a platform-level data partner in the journey of managing your workforce. So we have several more applications. We'll go online with Insights reporting. The other thing it does is it allows us to refactor older applications. So the reporting engines of the older applications can start to retire as the data lake and the Insights reporting framework manifests. And so if you think about it, one of the complexities of all of our dozens of applications is managing the data, reporting on it and getting people kind of custom reports on each point solution. Well, now you just subscribe to Insights platform and you start to build your own reports. We can help you with that. Custom, you can schedule them. There's just so much more you can do with the data now that we're in Snowflake. And that manifests in the tool sets customers can use to extract, maneuver and analyze the data coming across dozens of applications in one unified environment. o it's one of our 10 pillars of our platform was this data aggregation, data analytics. And so yes, it should enhance revenue. It will have our customers view us more as a platform. It will lower our refactoring costs as we modernize each application as we move them to the reporting Insights platform. So we're not kind of managing all these separate reporting environments. So I think it has benefits for everyone, and we're super excited to report our progress there. Vincent Colicchio: Yes. Most of my questions were asked. Bobby, I'm curious, the payer side and the credentialing business, how is that performing? And what's the pipeline look like there? Robert Frist: Yes. We've had a good couple -- the wins -- the payer side are fewer and bigger wins. And so the good news is we've had one of those. We're targeting another one in the second half of the year. They take longer, but they're bigger contracts and some of these payers are bigger than health systems. So they're coming. Our acquisition of Virsys12 has given us a more complete tool set to offer to the payers around credentialing. And so we're excited. It's early, early. We're just half a year into it, but strengthening our positioning there. And I feel like there's a good pipeline, but they are kind of more like, I guess, you'd say in the old parlance of kind of whale hunting, you're developing relationships that take time to develop. But when you win them, they're bigger, and we did have a nice win in the first half of the year. Vincent Colicchio: And then lastly, how are price accelerators taking hold? Any pushback there or are things going smoothly? Robert Frist: Steady as she goes. All the core products now as a standard part of the renewals include pricing escalators. And so that took a while to roll out, change our legal templates, educate our sales team to roll it out, and we did it kind of in steps over 2 years. But now essentially every contract renewal includes. That's related to the core 3 application suites includes accelerators or -- they're kind of inflationary level. They're not big, but they're nice consistent drivers, and we find the market accepting of them as a component. And in many ways, it helps them plan better, so they don't get to the end of a 4-year renewal and have a big price jump. They've kind of moved along with kind of inflation. And so it helps them budget better their renewals, I think. So ironically, I think it's going to help smooth over renewals when people get the end of contracts because there won't be these big kind of pricing adjustments that we're trying to get. We will have steadily grown to a higher price. Robert Frist: Thank you, everyone, for participating in the call, especially our nearly 1,150 employees who are making all this happen. It's my privilege to report on their progress. We look forward to reporting the next quarter. And remember, if you're an analyst, we were very careful to talk about -- we don't want to get overexcited. We had a great solid quarter. We're celebrating it, but we also had a few things like the $2 million onetime revenue rec, and we are increasing our investments. So we were very careful to emphasize that as you look at our second half guidance, take it seriously. As you rebuild your models, we think we've done our best to be accurate in how we plan to increase investments which will result in a little lower net income. But again, we're upping our revenue forecast and upping our several components as providing guidance. So be careful, listen to our guidance as always, we try to make it as strong as accurate as we can. Thanks to our employees. We'll see you guys on the next call. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Before you buy stock in HealthStream, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and HealthStream wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $399,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,374,595!* Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 215% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 10, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends HealthStream. The Motley Fool has a disclosure policy. HealthStream (HSTM) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: Record-setting revenues of $83.7 million, up 12.5% year-over-year. Operating Income: $8.3 million, up 41.4% year-over-year. Net Income: $6.7 million, up 23.8% year-over-year. Earnings Per Share: $0.23 per share, up from $0.18 per share in the prior year. Adjusted EBITDA: Record-setting $20.6 million, up 16.9% year-over-year, with a margin of 24.6%. Gross Margin: 65.3%, compared to 64.6% in the prior year quarter. Subscription Revenue: Up $8 million or 11.2%. Professional Services Revenue: Up $1.3 million or 52.6%. Organic Revenue Growth Rate: 8.3%. Inorganic Revenue Growth Rate: 4.2%. Product Revenue Growth: CredentialStream grew 14%, ShiftWizard grew 30%, Competency Suite grew 12%, and myClinicalExchange grew 29%. Cash and Investments: $66.7 million at the end of the second quarter. Cash Flows from Operations (Year-to-Date): $40.6 million, up 26% from $32.1 million last year. Free Cash Flow (Year-to-Date): $24.7 million, up 73% from $14.2 million last year. Capital Expenditures: $8.4 million in the second quarter. Remaining Performance Obligations: $685 million as of the end of the second quarter. Dividend: Quarterly cash dividend of $0.035 per share declared. Share Repurchase: Repurchased $2.6 million of common stock in the second quarter. Warning! GuruFocus has detected 8 Warning Signs with MD. Is HSTM fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Record-setting revenues of $83.7 million, up 12.5% year-over-year, and record adjusted EBITDA of $20.6 million, up 16.9%. Strong organic revenue growth of 8.3%, led by products like CredentialStream (up 14%), ShiftWizard (up 30%), and myClinicalExchange (up 29%). Increased full-year 2026 revenue and adjusted EBITDA guidance due to strong first-half performance. Healthy balance sheet with $66.7 million in cash, no long-term debt, and strong free cash flow of $24.7 million, up 73% year-to-date. Growing adoption of bundled solutions, including a $10 million Resuscitation Suite deal and a $5 million Competency Suite deal, indicating larger contract values and strategic customer commitments. Legacy credentialing and scheduling products declined 15% year-over-year as customers migrate to newer solutions, impacting revenue. Net income guidance for 2026 was slightly trimmed due to increased investments in career networks and platform development. The $2 million revenue catch-up from a contingent fee contract is non-recurring, and the company expects lower revenue growth in the second half of the year. Customers face headwinds from the expiration of enhanced ACA premium tax credits and potential Medicaid reimbursement pressure, which could impact spending. A cybersecurity incident was disclosed, and while not expected to be material, the investigation is ongoing and could pose risks. Q: What is driving the recent competitive wins across the portfolio, and is this due to a customer preference for a single platform provider? A: Robert Frist, CEO and Chairman, attributes the wins to a combination of factors: the success of the bundling strategy, which offers more interoperable products at better unit pricing; the maturation of the hStream platform, which provides a unified data lake for insights; and improved curation of product sets for specific market verticals. This makes HealthStream a more compelling platform partner than a collection of point solutions. Q: Can you provide more detail on the $2 million revenue catch-up in the quarter and its impact on guidance? A: Scotty Roberts, CFO, confirmed that the $2 million in revenue, related to a contingent fee contract from the 2020 ANSOS acquisition, was incremental to previous expectations and has been incorporated into the updated full-year revenue guidance. He noted that most of this revenue flowed directly to the bottom line, as there was minimal cost associated with realizing it. Q: How should we interpret the larger contract values you mentioned, such as the $10 million and $5 million deals? A: Robert Frist explained that these larger contracts represent total contract value over longer terms (typically 4+ years) and are the result of selling bigger bundles of products. This strategy simplifies the customer's decision-making process, moving from multiple separate purchases to one larger, strategic commitment. He noted that while this can lengthen the sales cycle, it is expected to improve renewal rates over time. Q: Is the 14% growth in CredentialStream and 30% growth in ShiftWizard a reflection of new bookings or recognized revenue? A: Robert Frist clarified that these figures represent year-over-year revenue growth, which materializes as contracts go live and implementations are completed. The strong ShiftWizard growth was specifically attributed to two large, multi-facility health system go-lives during the quarter, reflecting the product's expanding ability to operate at scale. Q: What is the revenue model for the new Insights platform, and how does it contribute to the business? A: Robert Frist stated that while there are premium buy-ups like "Insights+" that generate revenue, the primary value is strategic. By aggregating data from multiple applications into a single Snowflake-powered data lake, it positions HealthStream as a platform-level data partner. This enhances customer stickiness, enables more sophisticated analytics, and helps lower internal refactoring costs as older reporting engines are retired. Q: How is the company's performance in the long-term care and skilled nursing markets, and what is the penetration strategy? A: Robert Frist noted that while the company has a footprint in each of these fragmented markets, the skilled nursing segment is currently seeing the most uptake. The strategy involves using "market bundles" tailored for specific verticals like critical access hospitals and skilled nursing, and employing a different sales structure (inside/outside tag-team) to efficiently reach these smaller customers. Q: How is the credentialing business performing on the payer side, and what does the pipeline look like? A: Robert Frist described the payer side as having "fewer and bigger wins" with longer sales cycles. The company secured a significant win in the first half of the year and is targeting another in the second half. The acquisition of Virsys12 has strengthened their toolset for this market, and they are encouraged by the current pipeline. Q: How are price escalators being received by customers, and are there any signs of pushback? A: Robert Frist indicated that the rollout of price escalators has been "steady as she goes." They are now a standard part of contract renewals for core products and are set at inflationary levels. He noted that customers accept them and that they actually help customers budget more effectively by avoiding large price jumps at the end of a contract term. Q: Can you provide the specific revenue impact from legacy credentialing and scheduling products in the quarter? A: Scotty Roberts confirmed that revenue from legacy credentialing and scheduling products, excluding the $2 million catch-up, was $7.4 million in the second quarter, a decline of $1.3 million or 15% year-over-year, as the company continues its migration efforts to newer solutions like CredentialStream. Q: What is the company's capital allocation strategy given its strong cash position? A: Scotty Roberts reiterated the disciplined approach: first, investing organically back into the business (R&D and capex); second, pursuing acquisitions; third, returning capital to shareholders via dividends; and fourth, executing share repurchases. In Q2, the company paid $1 million in dividends and repurchased $2.6 million in stock under its $10 million program, leaving $5.7 million remaining. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in HealthStream, Inc.? Here are five stocks we like better. HealthStream reported record Q2 results: Revenue rose 12.5% year over year to $83.7 million, while adjusted EBITDA increased 16.9% to a record $20.6 million. Growth was driven by core subscription products and recent acquisitions, along with a nonrecurring $2 million revenue catch-up payment. The company raised its 2026 revenue outlook to $327 million–$332 million and adjusted EBITDA guidance to $74 million–$78 million, but lowered its net-income outlook as it increases spending on career networks, product development and the hStream platform. HealthStream ended the quarter with $66.7 million in cash and investments, no long-term debt and strong operating cash flow. Management said a recently disclosed cybersecurity incident has not disrupted operations or compromised customer-facing systems, though the investigation remains ongoing. HealthStream (NASDAQ:HSTM) reported record second-quarter revenue and adjusted EBITDA for 2026, citing growth in core subscription products, contributions from recent acquisitions and a one-time revenue catch-up tied to customer cost savings. The healthcare workforce technology company also raised its full-year revenue and adjusted EBITDA outlook while modestly lowering its net-income guidance as it increases investments in growth initiatives. Revenue for the quarter rose 12.5% year over year to $83.7 million. Operating income increased 41.4% to $8.3 million, while net income grew 23.8% to $6.7 million, or $0.23 per share, compared with $0.18 per share a year earlier. Adjusted EBITDA reached a record $20.6 million, up 16.9%, and adjusted EBITDA margin expanded to 24.6% from 23.7%. → SpaceX’s First Earnings Report Could Decide Whether Shorts or Bulls Have Control Chief Financial Officer Scotty Roberts said subscription revenue increased $8 million, or 11.2%, while professional-services revenue rose $1.3 million, or 52.6%. The company reported 8.3% organic revenue growth, led by CredentialStream, which grew 14%; ShiftWizard, which grew 30%; Competency Suite, which grew 12%; and myClinicalExchange, which grew 29%. Second-quarter results also included approximately $2 million in revenue from a contract containing contingent fees that HealthStream acquired in its 2020 acquisition of ANSOS. Roberts said the amount reflected shared cost savings achieved by a customer during the first half of the year and was recognized as a cumulative catch-up under accounting rules after previously constrained estimates were resolved. → Financials Hit Record Highs as the AI Trade Unravels—Can They Keep Leading? Of the $2 million catch-up, approximately $1.2 million was recorded as subscription revenue and $0.8 million as professional-services revenue. Roberts said HealthStream has no other contracts with this type of contingent payment and does not view the revenue as recurring. During the question-and-answer session, he said the payment was incremental to prior expectations and had a meaningful impact on second-quarter profitability, with only a small associated cost. HealthStream’s fourth-quarter 2025 acquisitions of Virsys12 and MissionCare Collective contributed $3.1 million in second-quarter revenue, representing 4.2% inorganic growth. Meanwhile, revenue from legacy credentialing and scheduling products, excluding the catch-up payment, totaled approximately $7.4 million and declined 15%, or $1.3 million, as the company continues to migrate customers to newer offerings. → Why Rare Earth Processing Could Be the Real 2027 Opportunity Remaining performance obligations totaled $685 million at quarter-end, up from $618 million a year earlier. HealthStream expects to recognize about 40% of those obligations as revenue during the next 12 months and 68% over the next 24 months. For full-year 2026, HealthStream now expects revenue of $327 million to $332 million, representing growth of 7.5% to 9.2% over 2025. Roberts said the bottom end of the revised range exceeds the midpoint of the company’s previous guidance. Net income is expected to range from $19.5 million to $22.2 million. Adjusted EBITDA is expected to range from $74 million to $78 million. Capital expenditures are expected to range from $31 million to $34 million. The company expects lower revenue growth in the second half than in the first half, partly due to the timing of its 2025 acquisitions. Third-quarter revenue growth is expected to be approximately 8%, with adjusted EBITDA margin around 22%. Roberts said the second-half forecast assumes higher operating expenses, including trade-show costs, professional-services fees, expanded career-network sales and product-development efforts, and increased investment in the hStream technology platform. Chief Executive Officer Robert Frist Jr. said those planned investments are the primary reason HealthStream trimmed its net-income outlook despite stronger first-half performance. HealthStream is adding 15 positions beyond its original budget to support career networks, including sales, operations and support roles. Frist said the company is investing in the segment to help healthcare organizations find and develop prospective employees earlier in their careers. myClinicalExchange, which connects with students preparing for healthcare roles, grew 29% during the quarter. Frist said HealthStream’s career-network offerings include myCNAjobs, myClinicalExchange and Nursegrid. Nursegrid reaches approximately one in five U.S. nurses, according to Frist. The company also said it has more than 780 registered users of its developer portal building dozens of customer applications and integrations through its APIs. The company continued to expand its hStream platform’s reporting and analytics capabilities through its Insights product. Frist said seven applications now feed data into a Snowflake-powered common data lake, allowing customers to access standard reports, custom reports and analytics dashboards across products. Active Insights users increased from 100 to more than 2,600 in its first full year, he said. HealthStream expects CredentialStream to join the Insights infrastructure in the upcoming quarter, followed by Policy Manager and Workforce Validate over the next two quarters. Frist said Insights and its higher-tier Insights+ offering can contribute revenue, while the shared reporting infrastructure could also reduce costs associated with maintaining separate reporting environments in older applications. Frist said customers are increasingly viewing HealthStream as an enterprise partner rather than a collection of point solutions. The company is pursuing product bundles designed around clinical workflows and market-specific bundles for settings such as post-acute care, physician offices, ambulatory surgery centers, skilled nursing, long-term care and critical-access hospitals. During the quarter, HealthStream closed learning-related contracts with total order values exceeding $10 million for Resuscitation Suite, $5 million for Competency Suite and $1.5 million for Quality OB. Frist said larger contracts generally include broader bundles and longer terms, often four years or more. He added that Resuscitation Suite revenue may be recognized more quickly but carries lower gross margin because of partner royalties. In scheduling, two large health-system ShiftWizard go-lives represented approximately $1.7 million in combined new order value. Frist said the implementations reflect an expanding ability to serve more complex, multi-facility health systems. He also said the company’s larger ShiftWizard wins continued to involve competitive takeouts from horizontally focused scheduling providers. HealthStream ended the quarter with $66.7 million in cash and investments, no long-term debt and an untapped credit line. Year-to-date operating cash flow increased 26% to $40.6 million, while free cash flow rose 73% to $24.7 million. During the quarter, the company spent $8.4 million on capital expenditures, paid $1 million in dividends, repurchased $2.6 million of common stock and made $0.8 million in minority investments. Its board declared a quarterly cash dividend of $0.035 per share, payable Aug. 28 to shareholders of record on Aug. 17. HealthStream had $5.7 million remaining under its $10 million share-repurchase authorization, which expires Sept. 12, 2026, unless fully used earlier. Frist also addressed a cybersecurity incident disclosed in an 8-K filing the prior week. He said the investigation remains ongoing, but HealthStream does not believe customer-facing systems, platforms or applications were accessed or compromised. The company has not experienced an interruption in customer service or business operations and does not anticipate a material financial impact from the incident, based on information available at the time of the call. HealthStream, Inc is a Nashville, Tennessee–based provider of workforce development and learning management solutions for healthcare organizations. Since its founding in 1990, the company has focused on helping hospitals, clinics and other care providers streamline staff training, ensure regulatory compliance and monitor employee performance. HealthStream's platform integrates online courses, skill competency assessments and credential management tools to support workforce readiness across the healthcare continuum. The company's core offerings include a learning management system (LMS) designed specifically for clinical and nonclinical personnel, a competency management suite that tracks skill acquisition and validation, and a content library featuring evidence-based clinical and compliance training modules. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "HealthStream Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

HealthStream (HSTM) came out with quarterly earnings of $0.23 per share, beating the Zacks Consensus Estimate of $0.17 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +35.29%. A quarter ago, it was expected that this provider of internet-based educational and training content for health care professionals would post earnings of $0.16 per share when it actually produced earnings of $0.2, delivering a surprise of +25%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. HealthStream, which belongs to the Zacks Internet - Services industry, posted revenues of $83.73 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 3.28%. This compares to year-ago revenues of $74.4 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. HealthStream shares have added about 21.5% since the beginning of the year versus the S&P 500's gain of 9.4%. While HealthStream has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for HealthStream was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.18 on $81.78 million in revenues for the coming quarter and $0.74 on $326.9 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Services is currently in the bottom 24% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Zillow (Z), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This real estate website operator is expected to post quarterly earnings of $0.44 per share in its upcoming report, which represents a year-over-year change of +10%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Zillow's revenues are expected to be $759.49 million, up 16% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report HealthStream, Inc. (HSTM) : Free Stock Analysis Report Zillow Group, Inc. (Z) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NASHVILLE, Tenn., August 03, 2026--(BUSINESS WIRE)--HealthStream, Inc. (the "Company") (Nasdaq: HSTM), a leading healthcare technology platform company for clinical workforce solutions, today announced results for the second quarter ended June 30, 2026. Second Quarter 2026 Revenues of $83.7 million, up 12.5% from $74.4 million in the second quarter of 2025, setting a new Company record for quarterly revenue Operating income of $8.3 million, up 41.4% from $5.9 million in the second quarter of 2025 Net income of $6.7 million, up 23.8% from $5.4 million in the second quarter of 2025 Earnings per share (EPS) of $0.23 per share (diluted), up from $0.18 per share (diluted) in the second quarter of 2025 Adjusted EBITDA1 of $20.6 million, up 16.9% from $17.6 million in the second quarter of 2025 Board of Directors declared a quarterly cash dividend of $0.035 per share, payable on August 28, 2026 to holders of record on August 17, 2026 Financial Results: Second Quarter 2026 Compared to Second Quarter 2025 Revenues for the second quarter of 2026 increased by $9.3 million, or 12.5%, to $83.7 million, compared to $74.4 million for the second quarter of 2025. Subscription revenues increased by $8.0 million, or 11.2%, and professional services revenues increased by $1.3 million compared to the second quarter of 2025. Compared to the second quarter of 2025, revenue growth for the second quarter of 2026 was positively impacted by $3.1 million from our acquisitions of Virsys12 and MissionCare Collective completed during the fourth quarter of 2025 and $6.2 million from growth across our existing portfolio of solutions, of which $2.0 million related to the resolution of previously constrained estimates of variable consideration under a customer contract, which was recognized as a cumulative catch-up in accordance with ASC 606 during the second quarter of 2026. Operating income was $8.3 million for the second quarter of 2026, up 41.4% from $5.9 million in the second quarter of 2025. The improvement in operating income was primarily attributable to increased revenues and income associated with our sublease that commenced during the second quarter of 2025. These improvements were partially offset by higher expenses in the second quarter of 2026 including increased personnel costs, third-party software expenses, sales commissions, marketing, cloud hosting, royalties, and amortization expense from our fourth quarter 2025 acquisitions. Net income was $6.7 million in the second quarter of 2026, up 23.8% from $5.4 million in the second quarter of 2025, and EPS was $0.23 per share (diluted) in the second quarter of 2026, up from $0.18 per share (diluted) in the second quarter of 2025. Adjusted EBITDA was $20.6 million for the second quarter of 2026, up 16.9% from $17.6 million in the second quarter of 2025. At June 30, 2026, the Company had cash, cash equivalents, and marketable securities of $66.7 million. The Company does not have any outstanding indebtedness from borrowed money. Capital expenditures incurred during the second quarter of 2026 were $8.5 million. Year-to-Date 2026 Compared to Year-to-Date 2025 For the six months ended June 30, 2026, revenues were $164.9 million, an increase of 11.5% over revenues of $147.9 million for the first six months of 2025. Operating income for the first six months of 2026 increased by 54.2% to $15.8 million, compared to $10.3 million for the first six months of 2025. The increase in operating income was primarily attributable to higher revenues and income associated with our sublease that commenced during the second quarter of 2025, partially offset by higher expenses to support investments in several areas of the business, primarily in our platform and enterprise applications, resulting in higher labor costs, third-party software, royalties expense, cloud hosting, along with higher commissions expense. Net income for the first six months of 2026 increased to $12.6 million, compared to $9.7 million for the first six months of 2025. Earnings per share were $0.43 per share (diluted) for the first six months of 2026, compared to $0.32 per share (diluted) for the first six months of 2025. Adjusted EBITDA increased by 20.4% to $40.7 million for the first six months of 2026, compared to $33.8 million for the first six months of 2025. Other Business Updates On March 13, 2026, the Company announced a new share repurchase program approved by the Board of Directors under which the Company is authorized to repurchase up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company is authorized to make repurchases in the open market, including under Rule 10b5-1 plans, through privately negotiated transactions, or otherwise. This share repurchase program will terminate on the earlier of September 12, 2026 or when the maximum dollar amount under the plan is expended. During the three months ended June 30, 2026, the Company repurchased 90,131 shares of common stock at an aggregate fair value of $1.8 million under this authorization. Moreover, during the six months ended June 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization. Additionally, during the three months ended March 31, 2026, the Company repurchased 222,978 shares of common stock at an aggregate fair value of $5.0 million under its prior share repurchase program that was authorized on November 11, 2025. This program authorized the Company to repurchase up to $10.0 million of its outstanding shares of common stock and terminated during the three months ended March 31, 2026 when the maximum dollar amount under the program was expended. In the aggregate during the first six months of 2026, the Company repurchased 432,476 shares of common stock under the share repurchase programs described above on a collective basis at an aggregate fair value of $9.3 million, reflecting an average purchase of $21.50 per share (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022). On August 3, 2026, the Board of Directors approved a quarterly cash dividend under the Company's dividend policy of $0.035 per share, payable on August 28, 2026 to holders of record on August 17, 2026. Financial Outlook for 2026 The Company is updating its guidance for 2026 for the measures set forth below. The Company’s guidance for 2026, as set forth above, reflects the Company’s assumptions regarding, among other things, expectations for new sales and renewals, and assumes that general economic conditions do not deteriorate. This guidance does not include the impact of any future acquisitions or dispositions that we may complete during 2026, gains or losses from changes in the fair value of non-marketable equity investments or contingent consideration, or impairment of long-lived assets. Robert A. Frist, Jr., Chief Executive Officer, HealthStream, said, "In the second quarter of 2026, HealthStream delivered record revenue of $83.7 million, up 12.5%, and adjusted EBITDA of $20.6 million, up 16.9%, compared to the second quarter of 2025. This performance gives us the flexibility to continue investing in our hStream platform and products that we believe will drive durable, long-term growth as we build an even stronger ecosystem for the healthcare organizations and professionals we serve." A conference call with Robert A. Frist, Jr., Chief Executive Officer, Scott A. Roberts, Chief Financial Officer and Senior Vice President, and Mollie Condra, Head, Investor Relations and Communications, will be held on Tuesday, August 4, 2026, at 9:00 a.m. (ET). Participants may access the conference call live via webcast using this link: https://edge.media-server.com/mmc/p/jzehvmr3. To participate via telephone, please register in advance using this link: https://register-conf.media-server.com/register/BIe2f962877acd428995d6691d8adf91a5. A replay of the conference call and webcast will be archived on the Company’s website in the Investor Relations section under "Events & Presentations." Use of Non-GAAP Financial Measures This press release presents adjusted EBITDA, a non-GAAP financial measure 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, stock-based compensation, depreciation and amortization, impairments of long-lived assets, changes in fair value of contingent consideration, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments ("adjusted EBITDA") is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business. We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods. In addition, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets. 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, adjusted EBITDA is susceptible to varying calculations. Accordingly, adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies and has limitations as an analytical tool. Adjusted EBITDA should not be considered a substitute for, or superior to, measures of financial performance, which are prepared in accordance with GAAP. Investors are encouraged to review the reconciliations of adjusted EBITDA to net income (the most comparable GAAP measure), which is set forth below in this release. About HealthStream HealthStream (Nasdaq: HSTM) is the healthcare industry’s largest ecosystem of platform-delivered clinical workforce solutions that empowers healthcare professionals to do what they do best: deliver excellence in patient care. For more information about HealthStream, visit www.healthstream.com or call 615-301-3100. This press release includes certain forward-looking statements (statements other than solely with respect to historical fact), including statements regarding expectations for financial performance for 2026 and our quarterly dividend 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. The Company cautions that forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements, including as a result of negative economic conditions, changes in U.S. policy, adverse developments impacting the technology and healthcare industry, tariff and trade-related developments, inflationary pressures, geopolitical instability, and legal requirements and contractual restrictions which may affect the continuation of our quarterly cash dividend policy and the declaration and/or payment of dividends thereunder, which may be modified, suspended, or canceled in any manner and at any time that our Board may deem necessary or appropriate, as well as risks referenced in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026, and in the Company’s other filings with the Securities and Exchange Commission from time to time. Consequently, such forward-looking information should not be regarded as a representation or warranty or statement 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20260803745383/en/ Contacts Scott A. RobertsChief Financial Officer(615) [email protected] Media: Mollie Condra, Ph.D.Head, Investor Relations & Communications(615) [email protected]

NASHVILLE, Tenn., July 23, 2026--(BUSINESS WIRE)--HealthStream, Inc. (Nasdaq: HSTM), a leading healthcare technology platform company for clinical workforce solutions, announced today that it will host a conference call and webcast to discuss its second quarter 2026 financial results on Tuesday, August 4, 2026. The Company’s financial results for the second quarter 2026, ended June 30, 2026, will be released after the routine time for the close of the market on Monday, August 3, 2026. HealthStream’s second quarter 2026 earnings conference call will begin at 9:00 a.m. Eastern Time on Tuesday, August 4, 2026. Participants may access the conference call live via webcast using this LINK. To participate via telephone, please register in advance using this LINK. Upon registration, all telephone participants will receive a one-time confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. All participants are instructed to dial-in 15 minutes prior to the start time. A replay of the conference call and webcast will be archived on the Company's website for at least 30 days. About HealthStream HealthStream (Nasdaq: HSTM) is the healthcare industry’s largest ecosystem of platform-delivered clinical workforce solutions that empowers healthcare professionals to do what they do best: deliver excellence in patient care. For more information, visit http://www.healthstream.com or call 615-301-3100. This press release contains forward-looking statements that involve risks and uncertainties regarding HealthStream. This information has been 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. These forward-looking statements are based on a variety of assumptions that may not be realized, and which are subject to significant risks and uncertainties, including that the anticipated financial and strategic benefits of the acquisition may not be realized, as well as risks and uncertainties referenced from time to time in the Company’s filings with the Securities and Exchange Commission. View source version on businesswire.com: https://www.businesswire.com/news/home/20260723629764/en/ Contacts Mollie Condra, Ph.D.Head, Investor Relations &Corporate CommunicationsHealthStream(615) [email protected]

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. HealthStream’s updated analyst narrative centers on a higher fair value estimate, with the price target moving from US$30.50 to US$33.50, a change of about 9.8%. Street research has turned more mixed, as analysts lift targets ahead of earnings while keeping ratings in check. This raises the bar for how the company needs to perform. Read on to see what is driving this reset in expectations and how you can track the next phase of HealthStream’s evolving story. Stay updated as the Fair Value for HealthStream shifts by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on HealthStream. Canaccord has lifted its HealthStream price target twice in its recent research, most recently moving from US$24 to US$27. This reflects a higher assessment of what the shares could be worth over time. The firm updated its model ahead of earnings season. This indicates that its view on HealthStream’s valuation is being refreshed with newer assumptions on the business and sector backdrop. Despite the higher price target, Canaccord maintains a Hold rating on HealthStream, signaling a more balanced stance rather than a clearly positive call on the stock. Canaccord flags that expectations across the sector may already be elevated, so HealthStream may need a relatively clean quarter on execution to justify further upside in the share price. Do your thoughts align with the Bull or Bear Analysts? Perhaps you think there's more to the story. Head to the Simply Wall St Community to discover more perspectives! See how HealthStream's fair value stacks up across multiple valuation models — not just analyst targets. The fair value estimate for HealthStream has moved from US$30.50 to US$33.50, a change of about 9.8%. The assumed revenue growth has shifted from 5.91% to 5.41%. The net profit margin assumption has moved from 7.82% to 7.41%. The future P/E multiple has changed from 35.68x to 42.17x. The discount rate used in the model has adjusted from 8.31% to 8.05%. Narratives connect HealthStream’s business story to a set of concrete assumptions about revenue, earnings, and fair value that update as new information comes through. They help you see how shifting industry trends and company decisions feed into the numbers analysts are using. Head over to the Simply Wall St Community and follow the Narrative on HealthStream to stay up to date on: How the shift to digital healthcare, AI driven learning tools like HLX, and integrated workforce platforms is feeding into HealthStream’s recurring SaaS revenue story. The move away from legacy products toward applications such as CredentialStream and ShiftWizard, and what that means for subscription visibility and margins. Key risks around generative AI alternatives, tighter healthcare regulation, legacy product drag, rising competition, and industry consolidation that could challenge this outlook. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HSTM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Record Q1 results: HealthStream reported revenue of $81.2 million (up 10.5% YoY) and adjusted EBITDA of $20.1 million (up 24.1%), and reaffirmed full-year guidance of $323–330 million revenue, $73–77 million adjusted EBITDA and net income of $20.4–22.8 million. Acquisitions broaden market and add revenue: Virsys12 and MissionCare Collective contributed $3.4 million in Q1, expanding HealthStream into payer credentialing and career networks, and management still targets roughly $13 million of full-year contribution from the deals. Investing in growth, AI and shareholder returns: The company plans increased investment in career networks, sales hiring and AI (with Michael Collier promoted to lead operations and AI efforts), while ending the quarter with $66.5 million in cash and returning capital via $7.5 million of buybacks and a $0.035 quarterly dividend. Interested in HealthStream, Inc.? Here are five stocks we like better. HealthStream (NASDAQ:HSTM) reported record first-quarter 2026 financial results and reaffirmed its full-year outlook, citing continued momentum across core subscription products, contributions from recent acquisitions, and plans to step up investment in growth initiatives and artificial intelligence. CEO and Chairman Robert A. Frist Jr. said the company delivered “record-setting revenues of $81.2 million,” up 10.5% year over year. He also highlighted “record-setting adjusted EBITDA” of $20.1 million, up 24.1%, and noted operating income growth of 71.6% versus the prior-year period. → Roblox Stock Slides to New Low as Safety Changes Weigh on Outlook CFO Scotty Roberts detailed the quarter’s results, including operating income of $7.5 million, net income of $5.9 million (up 36.4%), and earnings per share of $0.20 compared with $0.14 a year earlier. Subscription revenues increased $7.6 million, or 10.7%, while professional services revenue rose $0.1 million, or 4.3%. Roberts said organic revenue growth was 5.8% in the quarter, with inorganic growth of 4.7% tied to the Virsys12 and MissionCare Collective acquisitions completed in the fourth quarter of 2025. → The Real SpaceX Play: 5 Chip Stocks Powering the IPO Before It Launches Roberts said the first quarter marked the first full quarter with both Virsys12 and MissionCare Collective operating as part of HealthStream, adding that “both post-acquisition integrations are progressing well.” The acquisitions contributed $3.4 million in first-quarter revenue, and Roberts said the company continues to see opportunities to “cross-sell and integrate their capabilities into the broader hStream platform.” Roberts said Virsys12 expands HealthStream into payer credentialing, which he characterized as a “meaningful expansion of our addressable market,” while myCNAjobs is “building momentum” connecting CNAs and home care providers with organizations seeking workers. In the Q&A, Roberts told analysts HealthStream was still targeting “around $13 million” of full-year contribution from the two acquisitions, despite first-quarter revenue running slightly ahead of that annualized pace. → 3 Emerging Markets ETFs to Maximize Exposure to High-Potential Countries HealthStream pointed to strong growth in several subscription products. Roberts said first-quarter subscription growth was supported by: CredentialStream revenue growth of 19% ShiftWizard revenue growth of 29% Competency Suite revenue growth of 17% Frist said customers are increasingly purchasing bundled subscriptions through the Competency Suite, which offers “unlimited use” for eligible employees and is geared toward clinical staff. He also said demand continued for the American Red Cross Resuscitation Suite, noting HealthStream deployed 18 updated courses aligned to new ILCOR science guidelines. He cited Cedars-Sinai Medical Center’s renewal and a 50% expansion in users. In credentialing, Frist said two of the company’s largest CredentialStream sales in the quarter were “significant expansions due to M&A and enterprise-wide standardization,” including customers replacing competitor solutions as they expanded. He also said Virsys12 contributed to one of the top three credentialing wins in the quarter as HealthStream begins expanding into the payer market. In scheduling, Frist said ShiftWizard’s top two deals again involved competitive takeouts from a “horizontally focused” competitor, which he attributed to demand for a healthcare-specific scheduling solution. In the Q&A, he said a “10,000 employee system” selected ShiftWizard during the quarter. Offsetting some growth, Roberts said revenue from legacy credentialing and legacy scheduling products was about $7.6 million in the quarter and declined roughly 16% year over year as HealthStream continues migrating customers to newer offerings. He said some of the decline reflects customers moving into CredentialStream and ShiftWizard, while “there’s still some attrition going on as well.” Gross margin improved to 65.8% from 65.3% a year earlier. In response to analyst questions, Roberts said he did not expect significant additional gross margin improvement, describing the first-quarter level as “probably a little bit ahead of where we expected to be” due to revenue mix and timing. He added that some longer-term initiatives, including moving to the cloud, could compress margins over time, though he said it was “a good ways in front of us to see how that plays out.” Roberts said adjusted EBITDA margin was 24.8% versus 22% in the prior-year quarter. Operating expenses excluding cost of revenues increased 5.3%, driven by higher product development and sales and marketing costs, while general and administrative expense declined due to an office sublease. HealthStream ended the quarter with $66.5 million in cash and investments, up from $57 million in the prior quarter, and Frist emphasized the company has no long-term debt and an untapped line of credit. Operating cash flow was $27.1 million, free cash flow was $19.7 million, and capital expenditures were $7.5 million. The company also returned capital to shareholders and invested in minority stakes. Roberts said HealthStream paid $1 million in dividends and repurchased $7.5 million of stock during the quarter under two board-authorized programs, and also made $1.8 million in minority investments. The board declared a quarterly cash dividend of $0.035 per share to be paid May 29 to holders of record on May 18. Roberts added the March 2026 $10 million repurchase program will terminate on the earlier of Sept. 12, 2026, or when fully utilized, and the company has continued repurchases into the second quarter. Management reaffirmed full-year 2026 guidance. Frist said HealthStream continues to expect: Revenue of $323 million to $330 million Net income of $20.4 million to $22.8 million Adjusted EBITDA of $73 million to $77 million Roberts added the company expects second-quarter revenue growth of approximately 9.5% and an adjusted EBITDA margin of about 23%, reflecting planned expenses beginning in Q2, including higher labor costs, higher marketing costs related to trade shows, and new technology investments. Frist said strong first-quarter performance is allowing HealthStream to increase investment “beyond our original plan,” particularly in career networks and AI. He said the company will add to its planned sales hiring, with an emphasis on building a larger sales organization for career networks starting in the first half of the year, particularly in Q2. He also outlined increased technology investment, especially in myClinicalExchange, describing it as a growing network-effect product serving students, schools, and healthcare organizations. Frist also said HealthStream has “meaningfully expanded” internal AI rollout, with broadening adoption and early productivity and quality benefits. In discussing AI’s impact on nursing, he pointed to “ambient listening” as an early use case that frees nurses to spend more time with patients, and said he continues to see demand for nurses outpacing supply for years. As part of leadership updates, Frist announced the promotion of Michael Collier to Chief Operating Officer and Executive Vice President, expanding his responsibilities to include enterprise operations and serving as executive sponsor of the company’s AI transformation. HealthStream, Inc is a Nashville, Tennessee–based provider of workforce development and learning management solutions for healthcare organizations. Since its founding in 1990, the company has focused on helping hospitals, clinics and other care providers streamline staff training, ensure regulatory compliance and monitor employee performance. HealthStream's platform integrates online courses, skill competency assessments and credential management tools to support workforce readiness across the healthcare continuum. The company's core offerings include a learning management system (LMS) designed specifically for clinical and nonclinical personnel, a competency management suite that tracks skill acquisition and validation, and a content library featuring evidence-based clinical and compliance training modules. The article "HealthStream Q1 Earnings Call Highlights" was originally published by MarketBeat.

Image source: The Motley Fool. Tuesday, May 5, 2026 at 9 a.m. ET Chief Executive Officer — Robert A. Frist Chief Financial Officer — Scott Alexander Roberts Need a quote from a Motley Fool analyst? Email [email protected] Robert A. Frist: Good morning, everyone. We do have a lot to cover this morning, and I will ask Scotty and Mollie to be on guard in case I have a cough. I am still working off a bit of a cold. That is my issue. I am going to get through it, though. Just in case, Mollie, be ready. Alright. Well, good morning, everyone. It is our first quarter 2026 earnings call. We have a lot to go over, starting with the strong financial growth we delivered in the quarter, which included record-setting revenues of $81.2 million, up 10.5% year-over-year, and record-setting adjusted EBITDA, which just pushed through $20 million to $20.1 million, up 24.1% year-over-year. Operating income grew 71% year-over-year. The strong performance in Q1 is allowing us to increase investment beyond our original plan, including in growth initiatives related to our current products, new products on the horizon, and accelerated use of AI. I am going to talk about some of those investments towards the end of my section. We are reaffirming our 2026 full-year guidance and continue to anticipate revenue between $323 million and $330 million, net income between $20.4 million and $22.8 million, and adjusted EBITDA between $73 million and $77 million. Our strong cash balance of $66.5 million and untapped line of credit and no long-term debt continue to position us well to take advantage of M&A opportunities as they arise, as well as other capital deployment strategies that we believe will benefit our shareholders. As a reminder, last quarter I described four reasons why HealthStream, Inc. sees real opportunity in today’s rapidly expanding AI environment. As AI continues to develop, I am pleased to reaffirm our increasing belief in each of those four reasons today. First, our healthcare user base continues to expand. Unlike companies facing seat compression from AI agents, healthcare keeps hiring and keeps growing. Roughly one quarter of all new U.S. jobs over the next decade is projected to come from the healthcare industry, and nurses, our largest user base, are leading that growth. AI is not expected to reduce demand for nurses. If anything, it should free them to spend more time with patients and less time documenting. Second, our data profile remains a meaningful differentiator. Our customers utilize our enterprise applications as a system of record for managing their learning, credentialing, and scheduling programs. The data in these applications serves as a source of truth for our customers as they carry out their operations. I believe they will use that source of truth in training their own AI. Third, in addition to the data profile, our career networks, which is going to be an area of investment, generate proprietary individual-level data that we believe is valuable for finding, developing, retaining, and engaging the healthcare workforce. NurseGrid alone, for example, now reaches roughly one in five U.S. nurses, telling us where, when, and for whom they want to work. Fourth, our hStream platform is built to incorporate AI as a core element rather than bolting it on. Platform elements like the hStream ID, which we have talked about extensively in the past, and our growing API footprint serve as essential infrastructure to help enable AI-driven innovation in healthcare workforce technology. Our ecosystem ties it all together. Millions of caregivers, thousands of healthcare organizations, and dozens of industry partners combined with more than 30 years of domain experience, and the hStream technology platform creates something difficult to replicate. AI cannot manufacture an ecosystem like HealthStream, Inc.’s, but it can enhance it, and our ecosystem can enhance AI in what we believe will be a virtuous loop of value creation for our customers and investors alike. Building on that foundation, I am pleased to share that we have meaningfully expanded our internal role of AI across the company and are making great progress. Adoption is broadening across teams. Our employees are putting these tools to work in their day-to-day, and we are encouraged by the early productivity and quality benefits we are already seeing. It is still early days in terms of realizing the benefits of AI, and with driving innovation as one of our company’s six constitutional values, I believe our employees are on the front foot of ensuring that HealthStream, Inc. is an innovator in this promising area. Before we go further in our call, I want to briefly summarize our business for the benefit of anyone who is new to the HealthStream, Inc. story, and I hope there are lots of you on the call today. First and foremost, HealthStream, Inc. is a healthcare technology company dedicated to developing, credentialing, and scheduling the healthcare workforce through technology solutions, each of which is becoming more valuable because of the interoperability they are achieving through our hStream technology platform. We have also started to open our sales channels directly to healthcare professionals and nursing students through our three career networks. These help nurses, CNAs, and students throughout their career journey. The company holds 20 patents for its innovative products, which have been awarded over 40 Brandon Hall awards. Historically, we sell our solutions on a subscription basis under contracts that average three to five years in length, which makes our revenues recurring and predictable. In fact, 97% of our revenues are subscription-based. We are profitable, have no interest-bearing debt, and reported a strong cash balance of $66.5 million at the end of the first quarter of 2026. This strong cash balance allows us to allocate capital to product development, M&A, share repurchases, and dividends. We are solely focused on healthcare and, more specifically, the healthcare workforce and those preparing to enter it. The 12 million to 12.5 million healthcare professionals and nursing students in the United States comprise the core total addressable market for our solutions. At this time, I will turn it over to Scott Alexander Roberts. We will turn our attention to our financials and hear a report from Scott. Scott, take a look at the first quarter of 2026 and give us your financial outlook. Scott Alexander Roberts: Alright. Thanks, Bobby, and good morning, everyone. I will be happy to cover our financial results for the first quarter with you this morning. For the first quarter, our revenues were a record $81.2 million, which was up 10.5%. Operating income was $7.5 million and was up 71.6%. Net income was $5.9 million, up 36.4%. Earnings per share came in at $0.20 per share, which is up from $0.14 per share, and adjusted EBITDA was also a new record of $20.1 million, which was up 24.1%. Our revenues increased by $7.7 million, or 10.5%, to $81.2 million compared to $73.5 million in the prior year. Revenues from subscription products were up $7.6 million, or 10.7%, while professional services revenues were up $0.1 million, or 4.3%. Our organic revenue growth rate was 5.8%, and the inorganic growth rate was 4.7% in the first quarter. Inorganic revenues are associated with the Verisys (Versus)12 and MissionCare Collective acquisitions that we completed in 2025. The first quarter of 2026 is the first full quarter with both operating as part of HealthStream, Inc. I am pleased to report that both post-acquisition integrations are progressing well. Verisys (Versus)12 is extending our reach into payer credentialing, a meaningful expansion of our addressable market, and MyCNAjobs is building momentum connecting CNAs and home care providers with the organizations that need them. Together, these two acquisitions contributed $3.4 million in revenue in the first quarter, and we continue to see compelling opportunities to cross-sell and integrate capabilities into the broader HealthStream, Inc. platform. In addition to the revenue contributions from these two recent acquisitions, our core business was supported by strong subscription growth performance from CredentialStream, which grew by 19%, and ShiftWizard, which grew by 29%. Revenues from our legacy credentialing and legacy scheduling products approximated $7.6 million of our first quarter revenues and declined by 16% compared to the first quarter of last year, as we continue our efforts to migrate customers from those solutions. Our remaining performance obligations were $687 million as of the end of the first quarter compared to $613 million for the same period of last year. We expect approximately 39% of the remaining performance obligations will be converted to revenue over the next 12 months and that 67% will be converted over the next 24 months. Gross margin was 65.8% compared to 65.3% in the prior-year quarter, and this improvement was primarily related to the growth in revenues, including contributions from the recent acquisitions. Operating expenses, excluding cost of revenues, increased by 5.3%, or $2.3 million. Product development increased by $1.6 million, or 12.9%. Sales and marketing increased by $0.8 million, or 6.7%. Depreciation and amortization increased by $0.6 million, or 5.7%, while G&A expenses declined by $0.7 million, or 7.7%. These operating expense increases were partially impacted by the recent acquisitions, while the G&A expense decline resulted from our office sublease. To wrap up, our net income was $5.9 million and was up 36.4% over the prior year, and adjusted EBITDA improved to a record high of $20.1 million and was up 24.1%, and the adjusted EBITDA margin was 24.8% compared to 22% last year. We ended the quarter with cash and investment balances of $66.5 million compared to $57 million last quarter. During the first quarter, we paid $7.5 million for capital expenditures, returned $1 million to shareholders through our dividend program, and repurchased $7.5 million of our common stock under the share repurchase programs that we announced in November 2025 and March 2026. In addition, we made $1.8 million of minority investments in companies that we expect to leverage our ecosystem and our platform. Our days sales outstanding were 39 days for the first quarter compared to 37 days in the prior-year first quarter. Our objective is to maintain our DSO in the 40–45 day range or better, and I am pleased with our continued progress in this area. Cash flows from operations came in at $27.1 million for both the current year and the prior-year first quarter. Cash flows were partially impacted by the minor increase in DSO that I just mentioned, as well as higher payments for sales commissions following the strong bookings that we achieved in the fourth quarter of last year. Our free cash flow was $19.7 million, which is up from $18.2 million from last year, an increase of 7.9%. Our capital expenditures came in at $7.5 million compared to $8.8 million last year. Ending the quarter with $66.5 million of cash and investments, strong free cash flows, and no debt, we are well positioned to deploy capital to improve our shareholder value. As a reminder, we maintain a disciplined approach to capital allocation and how we prioritize our use of capital. Our utmost priority is making organic investments back into the business, which is evident by our annual capital expenditure and R&D plans. The second is pursuing acquisition opportunities, which we have a long track record of executing. The third is returning a portion of profits back to shareholders in the form of cash dividends, and our fourth priority is that our Board may authorize share repurchase programs. Yesterday, as announced in our earnings release, our Board of Directors declared a quarterly cash dividend of $0.035 per share to be paid on May 29, 2026, to holders of record on May 18, 2026. During the first quarter, we made share repurchases of $7.5 million under two Board-authorized share repurchase programs. We repurchased the remaining $5 million under a $10 million share repurchase program that was authorized by the Board of Directors in November 2025, and in March 2026, the Board authorized a new $10 million repurchase program. We made $2.5 million of repurchases under this plan during the first quarter, and we have continued to make repurchases during the second quarter. This program will terminate on the earlier of September 12, 2026, or when the maximum dollar amount under the program has been expended. We may suspend or discontinue making purchases under the program at any time. I will finish up this morning by just recapping our financial outlook for 2026, which we are reiterating as previously announced in February. We continue to expect our consolidated revenues to range between $323 million and $330 million, net income to range between $20.4 million and $22.8 million, adjusted EBITDA to range between $73 million and $77 million, and capital expenditures to range between $31 million and $34 million. For the second quarter, we expect our revenue growth rate will approximate 9.5% and adjusted EBITDA margin will approximate 23%. Consistent with our operating budget for the year, we have several planned operating expenses that will begin in the second quarter, including higher labor costs, higher marketing costs from trade shows, sponsorship, and attendance, and new technology investments to support our infrastructure, among others. In addition, our strong performance in the first quarter provides us with additional capacity to accelerate investments towards several initiatives such as our career networks. These guidance expectations do not include the impact of any acquisitions or dispositions that we may complete during the year, gains or losses from changes in the fair value of non-marketable equity investments or contingent consideration, or impairment of long-lived assets that we may complete during the year. That is all I have for today. Thanks for your time this morning. Bobby, I will go ahead and turn the call back over to you for some more updates. Robert A. Frist: Thank you, Scotty. I am going to start this section of the call as I usually do with some business updates that highlight successes we have achieved in the learning, credentialing, and scheduling areas, along with updates on our career networks. Starting with the learning product family, which includes the Competency Suite, many customers are increasingly taking advantage of the opportunity to purchase a bundle of several of our most popular workforce applications and content libraries, which we call the Competency Suite. Customers purchase a subscription to the Competency Suite for all of their applicable employees, particularly the clinical staff, which comes with unlimited use. We saw strong momentum of this product in the first quarter with a 17.3% increase in revenues achieved. Our American Red Cross Resuscitation Suite continues to be in demand by customers. In the first quarter, we provided the marketplace with 18 updated courses, which included education content in our BLS, ALS, and PALS programs. The updated content was deployed simultaneously across the entire customer network in a single day, all aligned to the new ILCOR science guidelines. Among the sales successes we had in Q1 with the Resuscitation Suite was a decision by Cedars-Sinai Medical Center to renew and expand their number of users by 50%. They also informed us that the expansion will be beneficial as they have been named the official medical provider to the 2028 LA Olympic and Paralympic Games. That is super exciting for our teams as well. Now let us move to credentialing, where our flagship product CredentialStream continued its strong momentum in the first quarter. Revenues from sales of CredentialStream in the first quarter were up approximately 19% over the same quarter last year. One thing we love to see is our customers growing along with us, and some of our customers meaningfully expanded through M&A last year. In fact, two of our largest CredentialStream sales in the quarter were significant expansions due to M&A and enterprise-wide standardization on CredentialStream. We take it as a strong vote of confidence when our customers trust and rely on CredentialStream so much as the system of record that they choose to stop using solutions from our competitors and standardize on CredentialStream when they expand their operations. We are dedicated to repaying that vote of confidence by helping these customers improve their operating results by reducing the time it takes to onboard, enroll, credential, and privilege their physicians. There is a significant economic benefit when a health system can show demonstrable improvement in the time to revenue on these physicians. We believe our software plays an essential role in getting that outcome. Verisys (Versus)12, which we recently acquired in order to expand our market share and product offering and expertise in the payer credentialing space, also delivered one of our top three credentialing wins in the quarter. We are still in the earlier phases of our expansion to the payer market, and we are pleased to see Verisys (Versus)12 already contributing to that effort. Let us move to scheduling, where our core product ShiftWizard continues to deliver strong revenue growth, with first-quarter revenues up approximately 29% versus the first quarter of the previous year. It continues to be our top-performing product in our scheduling application suite. Our top two ShiftWizard deals in the quarter were once again takeouts of a competitor that is horizontally focused instead of solely focused on healthcare. Our sales leaders attribute these wins to the fact that our growing ShiftWizard customer base is increasingly touting the value of the healthcare-specific solution that ShiftWizard provides. When the rubber hits the road, scheduling and staffing clinicians is simply different than scheduling a labor pool for retail or factory shifts, and the market is taking note of that. Now let us turn to our career networks. They include My Clinical Exchange, NurseGrid, and MyCNAjobs. Importantly, career networks directly benefit both individual healthcare professionals as well as the health organizations seeking to employ and engage them. For individuals, HealthStream, Inc. Career Networks serve as a career catalyst through every stage of their pre-professional and professional journey. Last year alone, My Clinical Exchange connected over 364 thousand nursing and allied health students to clinical placements. NurseGrid, the number one app for nurses in the Apple App Store, engaged over 683 thousand monthly active users. MyCNAjobs connected approximately 70% of America’s direct care workforce in the home caregiver space. In doing so, these solutions guided caregivers through every stage of their career journey, helping them discover their path, build meaningful professional relationships, access focused learning, and advance to what is next in their career. For healthcare organizations, our career networks provide employers with direct access to the largest, most engaged audience of nurses and caregivers through targeted recruitment, development pathways, and in-app promotion. My Clinical Exchange served as the first touch point for helping over 715 health organizations and over 1.9 thousand schools seeking to place nurses and allied health students into clinical rotations. NurseGrid was utilized by nurses in approximately 37 thousand unique clinical sites as NurseGrid users manage their professional calendars and engagement across those sites. Finally, MyCNAjobs helped over 8 thousand healthcare organizations access our home caregiver and CNA community to promote work and learning opportunities. Today, the usage of our Career Networks has created over 450 thousand hStream IDs, and counting, among students, nurses, and allied health workers. In aggregate, Career Networks contributed approximately $3.78 million in the quarter. While this is modest compared to the company’s total revenue, we believe that the growth potential, differentiation, and diversification of Career Networks make them an important area for incremental investment. We are already rolling some of the profits from the quarter’s outperformance into new sales hires for this area, the Career Networks, to scale the three solutions. I am pleased to announce the promotion of Michael Collier to Chief Operating Officer and Executive Vice President. In this expanded role, Michael will lead enterprise operations across HealthStream, Inc., including customer experience, corporate development and M&A, implementations, legal, human resources, and other critical areas. He also serves as executive sponsor of the company’s AI transformation, driving AI readiness across operational teams. Since joining HealthStream, Inc. in 2011, Michael has been instrumental in our growth, including leading more than two dozen successful acquisitions. We look forward to his continued leadership in this expanded capacity. Before we move on, I want to remind our shareholders and investors that our annual shareholders meeting is scheduled to take place virtually on Thursday, May 28, 2026, at 2:00 PM Central. Notifications of the meeting and access to the proxy statement, 10-K, and shareholder letter were sent out on April 13, 2026. We encourage you to vote your shares and participate in the future of our company. I will close with the same reminder I share with you every quarter. If you are interested in a recurring-revenue, profitable, healthcare technology company that expects to deliver growth, then HealthStream, Inc. may be the right investment for you. If you are interested in a company whose core user base, the clinical health workforce, is expanding faster than any other sector in the job market, then maybe HealthStream, Inc. is the right investment for you. If you like a company whose software serves as a system of record on behalf of healthcare customers, then HealthStream, Inc. may be a company for you. If you favor ecosystems over point solutions, then maybe HealthStream, Inc. is the right investment for you. For all these reasons, HealthStream, Inc. is positioned for another exciting year helping the nation’s top health systems find, develop, credential, schedule, onboard, and retain the growing healthcare workforce. Maybe HealthStream, Inc. is the right investment for you. I will turn it over to the operator to begin the Q&A session. Thank you. Operator: We will now open the call for questions. To ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by. Our first question today is from Matthew Gregory Hewitt with Craig-Hallum Capital Group. Your line is open. Matthew Gregory Hewitt: Good morning, team, and congratulations on the strong start to the year. Maybe first up, obviously a nice pop in gross margin. It sounds like the acquisitions were aiding in that. Should we anticipate a little bit more lift here in Q2? And longer term, how could that play out? Are you anticipating annual improvement in gross margins or is it more about driving operating leverage as you go forward? Robert A. Frist: Scotty, I will let you take that one to start us. Scott Alexander Roberts: Yes. Really, Matt, no significant expectation of improvement in gross margin. I think the 65.8% we delivered in Q1 was a little bit ahead of where we expected to be in the quarter, and it is just revenue mix. We got a little bit of improvement in revenue in the first quarter from a variety of things. Some of it is timing that we anticipated to come in, in, say, Q2 or Q3, that kind of moved forward in the year. Some of that is early activations from customers that we had sold in, say, Q4, and some consumption-based revenue, things like that we pulled forward. So we got a little bit of improvement in margin because of that. Some of our ambitions for moving to the cloud could compress margins a little bit over time as we make some of those transitions, but that is still a good ways in front of us to see how that plays out. That is just something that is on our to-do list for this year, to begin this year anyway. Matthew Gregory Hewitt: Got it. And then maybe a question for you, Bobby, since you addressed it in your prepared remarks. You spoke to how AI is expected to drive increasing efficiencies with nurses. What do you think will be the downstream effect of that? Will that allow them more time to care for patients? Will that allow more time for them to work on their training and education? From a hospital’s perspective, if nurses are becoming more efficient, maybe they do not need to hire as many. I am just trying to think what the downstream effects of AI adoption by the nursing group would be. Thank you. Robert A. Frist: Overall, we see a shortage of nurses, and we see the early successes of the deployment of AI in our customer base around ambient listening, and ambient listening definitely frees up more time for the nurses and caregivers to spend with patients, which I think is greatly appreciated by all patients, and helps the health systems put a more friendly face on their adoption of technology. I think the early use and adoption is in areas that will directly impact the patient experience in a positive way. As far as demand for nurses goes, every report that I read seems to indicate that there is far more demand than there will be supply for the next five years plus. I do not see fewer caregivers. I see more, and a better opportunity to be more in the care delivery. We view that as an opportunity to be a close ally to all those health systems. We continue to expand the value that we provide with these career networks, helping health systems not just develop and retain the ones they have through our learning capabilities, but now helping find, identify, and match new talent for them to employ. We are servicing more of the continuum of the workforce need at a time of great need for more workforce. We think we are well positioned with the mixture of our product sets to be a great ally to these health systems. Matthew Gregory Hewitt: That is great. Thank you. Operator: Thanks for your questions. Our next question is from Richard Collamer Close with Canaccord Genuity. Your line is open. Richard Collamer Close: Hi. Just, Scotty, maybe a question on the revenue dollars, $3.4 million acquired revenue. Is it okay to annualize that to get the $13.6 million expected contribution from the acquisitions this year? I am just trying to get a sense of the organic growth that is embedded in the annual guidance. Scott Alexander Roberts: I believe our expectation, we mentioned this on last quarter’s call, was for the two acquisitions. We were targeting around $13 million for the full year. So maybe the annualization of Q1 might be slightly ahead of that $13 million, but I think $13 million is where we would still forecast it to. Richard Collamer Close: Okay. Great. That is helpful. Thanks for the reminder there. And you have been providing some commentary on the legacy license drag in the past. I am just curious if there is any update in terms of what the impact there was in the first quarter? Scott Alexander Roberts: One thing we did disclose this quarter was the amount of revenue from those legacy applications in the quarter. It was around $7.6 million. The decrease was around 16%–17% versus the first quarter of last year. We tried to give a little more color on the magnitude of that bucket of revenue relative to our consolidated revenue and also this continued rate of decline. We continue to look for opportunities to migrate those customers to the new applications. We do see some trade-offs there in that decline. Some of that is moving into CredentialStream and ShiftWizard, but there is still some attrition going on as well. Richard Collamer Close: Okay. And then I guess my final question: clearly, if you annualize the first quarter EBITDA, it gets you above the high end of the annual range. I appreciate you calling out investments. Maybe a little bit more detail on those investments and the timing of them. Is it spread out throughout the year? I am trying to better understand what the cadence of EBITDA will be from Q2 through Q4. Robert A. Frist: Let me start, and then Scotty can add some color. First, the first area of investment we looked at was the sales organization. We had a budgeted plan as we ended the year to hire the sales organization, and specifically, we have decided after this Q1 performance that we are going to add to that original plan. Even more specifically, in the Career Networks area, we think the products warrant a stronger and bigger sales organization, so we are going to go ahead and start building that in the first half of the year, particularly in Q2. From a timing standpoint, we are going to post some new positions in the sales area around our Career Networks and try to hire them. Second, the area is a high-growth area for us, and to keep it current, we are going to increase our planned investments in the technology infrastructure specifically around My Clinical Exchange. We have some work to do there. That was an acquired product originally. We have continued to enhance it. This will give us a chance to enhance it even faster and expand it. The constituent base for that is growing rapidly, and we want to make sure that it meets the needs of that expanding market. We have had some unique opportunities present in the market where we think we are well positioned against some competitors there, and now is the time to invest in both the sales organization and the technical infrastructure for that category of product. More specifically within Career Networks, for My Clinical Exchange we are putting more into the tech stack as well. Remember, that software has three constituent audiences: the students are a user, the nursing schools are a user, and the healthcare organizations are a user. It is a network-effect piece of software that has a market effect as the school adopts it, the hospitals in the region adopt it, and that gets the students to use it as well. There is a lot to do technologically, and we are going to increase our rate of investment in that tech stack. Richard Collamer Close: Is that front-loaded into the second quarter, or is all that spread out? Robert A. Frist: Part will be spread out and will include a mixture of CapEx and OpEx to enhance the platform and the application suite. The sales team will be as fast as we can hire and onboard them. We already have several open positions in the sales team we are trying to fill, so we are using some outside recruitment to go faster there, as well as our incredible internal teams to find the talent we need to staff it up. I would like to see that be front-half loaded on the sales organization so that we might get some back-half benefits. Certainly, we will get benefit early next year, but salespeople take a little bit of time to ramp up and get productive in closing deals. Richard Collamer Close: Alright. Thank you. Operator: Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our next question comes from Vincent Alexander Colicchio from Barrington Research. Your line is open. Vincent Alexander Colicchio: Hey, Bobby. What differentiated ShiftWizard in the competitive takeout wins? Were any of the wins involving large enterprises with ShiftWizard in the quarter? Robert A. Frist: We did have some larger wins on a relative basis. They are not massive systems, but a 10 thousand-employee system went with ShiftWizard in the quarter. That was a huge win. We are seeing more of the larger to medium-sized—call them medium-large, not the supersized—health systems make that decision. That was nice to see a couple of wins there. In general, as I mentioned on the call, the vertical-specific nature of the software is more appropriate for this environment. We have a great long-term vision for the software as well. We are starting to outline a little bit more of that in some of the work we are doing to integrate our Career Networks with our scheduling systems, which is not done yet, but I think we are getting some excitement around the future direction of where we are going with this platform—integrating both our applications and, hopefully, also our Career Networks. Vincent Alexander Colicchio: Can you give us an update on your bundling effort in the small hospital market, and somewhat related, how is the Competency Suite doing in that part of the market? Robert A. Frist: In the smallest market, we are seeing a little bit of uptake. We created several market bundles specific to the skilled nursing space, the long-term care space, and the small hospital spaces, often called critical access hospitals. We are seeing some uptake. We are investing in the sales team there and getting some good bundle selling. We are pleased. The bigger bundles, as you pointed out, the Competency Suite, are really helping drive growth. I like adding the users of those smaller clinics because we are an ecosystem. We want all these healthcare professionals, because they may change jobs over time. We want them in our network, even at the small hospitals. But the revenue growth is coming from the bundling of the Competency Suite to the mid-market and bigger health systems. We are seeing uptake in the Resuscitation Suite when we see a medium to large health system switch to the Red Cross solution. The revenue growth contributions are coming from the mid-market and above. The small markets are very important to us. We are getting much better at both having the appropriate mix of products for them, and we view the market holistically. A clinician in an urban or rural market is important to have in our network, as well as the nurses in these rural centers, because they are mobile over their careers. We think of it as servicing the totality of the healthcare workforce, not just the urban centers. Vincent Alexander Colicchio: Thanks for all the color. Nice quarter. Robert A. Frist: Thank you. Operator: I am showing no further questions at this time. I would now like to turn it back to CEO, Robert A. Frist, for closing remarks. Robert A. Frist: Thank you, everyone, and especially to our little over 1.1 thousand employees who are delivering these great results. We have an exciting year in front of us and look forward to reporting the next earnings report here in another 90 days or so. We will see you throughout the quarter. Operator: Thank you for your participation in today’s conference. This does conclude the program, and you may now disconnect. Before you buy stock in HealthStream, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and HealthStream wasn’t one of them. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends HealthStream. The Motley Fool has a disclosure policy. HealthStream (HSTM) Q1 2026 Earnings Transcript was originally published by The Motley Fool

Image source: The Motley Fool. Tuesday, February 24, 2026 at 9:00 a.m. ET Chief Executive Officer — Robert Frist Chief Financial Officer — Scott Roberts Senior Vice President, Investor Relations and Communications — Mollie Condra Robert Frist: Thank you, Mollie. Good morning, everyone, and welcome to our fourth quarter and full year 2025 earnings call. We do have a lot to talk about this morning, and there are several topics. We'll definitely cover the topic of the emerging landscape with AI. We're going to talk about our financial performance for the quarter and the full year. We'll go through some business and product updates at the end and turn it back over to you guys for questions. So nothing like the numbers first. Let's just kind of jump in. We finished the full year 2025 with revenues up 4.3% and adjusted EBITDA up 7.5% year-over-year. For the fourth quarter, revenues were up 7.4% and adjusted EBITDA was up 16.4% year-over-year. And then looking forward to 2026, probably the reason we're all on the call today, we expect HealthStream to show continued growth in each of the areas where we provide financial guidance as we anticipate revenue between $323 million and $330 million. Net income between $20.4 million and $22.8 million and adjusted EBITDA between $73 million and $77 million. These guidance ranges do not include any acquisitions we may complete during the year, though our strong cash balance of $57 million, untapped line of credit and no long-term debt position us well to take advantage of M&A opportunities as they arise. Later in the call today, I'm going to describe some of the exciting developments on our application suites, which we've talked about for years and our rather newer career networks, which we'll cover in a little bit of detail, the newest at the end of the call. But first, I want to talk a little bit about how HealthStream is positioned relative to the emerging context of AI and which trends we think or categories of trends we think help favorably position us in that landscape. There's 4 categories I'm going to kind of discuss that are really more broadly positioning categories. So we talk about relative strength to others as we enter this massive period of change. First category because there's this concept of this SaaS Armageddon or SaaS Apocalypse is to think about how AI might affect our end users. And so this first category is talking about the expansion of the health care user base. I think unlike companies that fear seat compression due to AI agents minimizing the number of their human subscribers, our user base of health care providers is expanding. In fact, the number of health care providers is projected to increase significantly in the coming years, particularly in the nursing workforce, which is our greatest strength as a company. In January of 2026 alone, health care accounted for approximately 82,000 of the 130,000 new jobs added in the U.S. According to the Bureau of Labor Statistics, that trend will continue with roughly 1/4 of all new jobs in the U.S. economy over the next decade being in health care. On average, hospitals hired 13,600 net new personnel each month in 2025, and nurses continue to be a strong component of this growth. From 2020 to 2024, registered nurses increased 9.4% overall, while nurse practitioners increased 38.5% according to BLS. So this first trend translates into expanded opportunities for growth in our user base. And I just think fundamentally, there's lots of areas of the market where there's lots of white papers, projections, futurists are saying those jobs may be eliminated. And I think in our market, we're just not seeing those kind of projections. What we're seeing our projections of shortages and projections of increasing demand. And so at our core is the health care workforce and at its core is the nursing workforce. And so we think that with our acute focus on that workforce pool, we have a relatively strong position as we enter the projections of how change, how dynamic of change will -- AI will impose on our marketplace. In fact, when we think about it, the positive dimension of AI in our workspace is I believe that AI will enhance the roles of nurses. It will make them more human and have more contact with patients as some of their paperwork and other functions get automated. And so kind of in a great irony though this is one of the skills jobs that I think survives the apocalypse and in fact, is enhanced by allowing the millions of nurses in our country to spend more time by the bedside with patients instead of less. So that's the first trend I want to talk about. The second is our data profile. And I think everybody has to get a grip around companies and organizations data profile. And I think that can be broken into 2 categories. The first is thinking about the role of the software plays for the organizations it serves. And I think for several of our solutions, our systems serve as the system of record, kind of a foundational source of truth. For example, in the learning space, we have an authoritative position maintaining the horizontal and longitudinal learning records of millions of health workers over decades. And that strength of position as a system of record positions us well for the future of AI. AI is increasingly used to drive efficiencies and develop insights. The systems of record on which AI relies are becoming increasingly important. In terms of learning and compliance, I feel confident that we serve as a system of record for more health care organizations than any other company. Customers value having a single system of record for the whole of their learning program because it allows them to easily store, report and gain actionable insights into the development and assessment of their workforce, whether that is in the form of the use of AI or other tools. Traditionally, the data feeding into the learning system of record was generated solely from the use of one of our SaaS applications, such as the HLC, the HealthStream Learning Center. That continues to be the case. But encouragingly, we're also seeing customers push other learning records they have into their HealthStream system of record. They are accomplishing this through our learning API, which, of course, is included in their hStream subscription. So all that to say is just to reinforce that some of our core systems do serve as a system of record on behalf of our customers. And I think in a relative positioning world, I'd rather be there than just be a point solution. In terms of physician credentialing, our customers often refer to us as a single source of truth. And this means that we maintain the system of record status of which key functions such as physician enrollment and privilege granting, those functions originate and are maintained and spin off of our system of record. So whether it is for Learning or Credentialing, HealthStream's customers trust us to maintain secure, reliable and organized systems of record on their behalf. If AI is to make a true impact in health care, we believe and our company believes and I believe they -- it will need to rely on these systems of record going forward. The second component of data, if you think about a data profile when you enter this world of change is trying to determine whether an organization is an aggregator of kind of publicly available data or their originator of unique data about their customers and customer organizations, what is their relative data position. And I would say through our career networks, which we'll talk more about at the end, students, professionals like nurses, CNAs that interface directly with HealthStream for a variety of reasons, whether it's to find their first clinical rotation in a hospital as they're graduating or find their next shift or they're socializing with colleagues. These interactions create that access to this proprietary data that I would call original data. You take our virally growing NurseGrid career network, for example. It's adding about 2,000 new nurses a week and now has over 670,000 monthly active users. That's a staggering 1 out of 5 nurses in the U.S. using NurseGrid. And they tell us who they like to work with, who they like to work for, when they want to work, how much monetary incentive will persuade them to pick up an extra shift. HealthStream is originating this proprietary data. And more importantly, we're using it to the mutual benefit of the individuals who provide it and the organizations that want to employ them. By connecting individuals with employers to help both realize their goals, health care itself improves. Everyone knows that AI requires data to be effective, and we believe that the data we are originating can be among the most valuable and beneficial for managing the health care workforce. That brings me to the third category, which is our platform and our platform strategy. We call it our hStream Platform. Essentially, for over 5 years, we've been working diligently underneath the scenes and behind the scenes, investing in the creation of our platform. This is distinguished from our group of SaaS applications. The platform is a series of capabilities, of which, by the way, AI is one of the 10 core elements of the hStream Platform that allows interoperability and allows our SaaS applications to behave more like an ecosystem than separate distinct SaaS applications. And we're also, through this platform, able to connect to the backbone of these career networks. And so it's really an interesting kind of ecology that's evolving around the platform that we've built. So I just want to remind you that the platform strategy we have is an advancing strategy. It puts us in a more primary situation with our customers as they use the APIs of the platform, the data of the platform, the data services of the platform. The interoperability they can enjoy between the different applications creates more of an ecology effect instead of just stand-alone kind of workflows that we're excited about. And so for example, one of the core elements of the platform is the hStream ID, which is a fundamental building block needed to drive interoperability and innovation in the health care workforce technology we're building. So what we observe is the number of APIs from the platform, their utilization by customers and industry partners [Technical Difficulty] Mollie Condra: Okay. This is Mollie Condra. I'm going to pick up and finish off this section for Bobby while we figure out what's going on. I apologize for that. We were leading up to the fourth category, which is our ecosystem. And with that, you can have a great business vertical, a great data profile or a great platform. You can even have all 3. But if you don't bring them together at scale to form an ecosystem, then it really doesn't create durable value. There are many dimensions to HealthStream's business, all of which work together to form a whole that is greater than its individual parts. Something that AI cannot create is an ecosystem of millions of individual caregivers, like those choosing NurseGrid or myCNAjobs, the thousands of health care organizations, like those using our SaaS application suites and dozens of industry partners like the American Red Cross and world-class health care organizations. Combining those elements with our 30-plus years of experience and our hStream platform architecture, and you have something that's difficult to replicate. The organic life of such a thriving ecosystem is not something that AI can simply code, but it's something that AI can enhance and something that can turn and enhance AI. At least that's our strong belief. Now before we go further on the call, I want to briefly summarize our business for the benefit of anyone who's new to the HealthStream story. And this is something we do every quarter. First and foremost, keep in mind that HealthStream is a health care technology company dedicated to developing, credentialing and scheduling the health care workforce through SaaS-based applications, each of which are becoming more valuable because of the interoperability they are achieving through our hStream technology platform. We've also started to open our sales channels directly to health care professionals and nursing students through our 3 career networks for helping nurses, CNAs, and students throughout their career journey. The company holds 20 patents for its innovative products, which have been awarded over 40 Brandon Hall awards. Historically, we sell our solutions on a subscription basis under contracts that average 3 to 5 years in length, which makes our revenues recurring and predictable. In fact, 96% of our revenues are subscription-based. So we are profitable. We have no interest-bearing debt, and we reported a strong cash balance of $57 million at the end of the fourth quarter of 2025. This strong cash balance allows us to allocate capital to product development, to M&A, share repurchases and dividends, all of which we've done in the fourth quarter. We are solely focused on health care and more specifically, the health care workforce of those preparing to enter it. The 12.6 million health care professionals and nursing students in the United States comprise the core total addressable market for our solutions. So at this time, right now, we're going to turn our attention back to our results in this call. And Scotty Roberts, our CFO, will provide a more detailed discussion of the financial metrics in the fourth quarter and full year 2025, along with further comments about how we view our financial outlook for 2026. So I'll turn it over to you, Scotty. Robert Frist: Hi Scotty, Mollie. By the way, sorry, I didn't realize that dropped. So I was beautifully ad libbing on the script. But thank goodness, we had such a solid script. And Mollie, you jumped right in as needed. So fantastic. I just caught the last minute of your presentation. Nice job. We're fine. But I did do a lot of great ad libbing, which maybe people were grateful. I didn't go off script, at least those that helped develop it. So thank you, Mollie. And Scotty, we'll turn it over to you. I'll try to keep my iPad live, so I don't get cut off again. I'm not really sure where I dropped off. Sorry for that. I'll be available in the Q&A, and I'll pick it up in the last third as well. So Scotty, you're on. Scott Roberts: All right. Sounds good. Thanks, Mollie, and thanks, Bobby, and good morning, everyone. Before going over the financial results, I want to first point out several exciting events that took place during the fourth quarter. We completed 2 acquisitions, Virsys12 in October and MissionCare Collective in December. Our Board of Directors authorized a $10 million share repurchase program in November with $5 million of the repurchases made in the fourth quarter and the remainder was purchased in January. In December, our CEO contributed $3.8 million of his personally owned stock to the company in order to facilitate the grant of equity to company employees in recognition of their contributions to the company and to further align the interest of those employees with our shareholders. The accounting treatment of this Stock Grant resulted in $3.5 million of non-cash compensation expense and $0.3 million of employer taxes and administrative costs, which negatively impacted our financial results for the quarter. It's also worth noting that this Stock Grant resulted in no dilution of shares to any existing shareholders of the company other than our CEO. Now with that backdrop, let me go over the financial results for the fourth quarter. Unless otherwise noted, the comparisons will be against the same period of last year. Additionally, I'll reference certain non-GAAP comparisons to adjust for the impact of the CEO Stock Grant. Revenues were a record of $79.7 million and were up 7.4%. Operating income was $2.4 million and was down 48.8%. Net income was $2.5 million, down 48.1%. Earnings per share was $0.09 per share, down from $0.16 per share and adjusted EBITDA was $18.8 million and was up 16.4%. On a non-GAAP basis, our non-GAAP operating income was $6.2 million and was up 31.7%. Non-GAAP net income was $5.4 million and was up 9.5% and non-GAAP EPS was $0.18 per share, and it was up $0.02 per share. Our revenues increased by $5.5 million or 7.4% and were $79.7 million compared to $74.2 million in last year's fourth quarter. Revenues from subscription products were up $5.8 million or 8.2%, while professional services revenues were down $0.3 million or 11.6%. Our subscription revenue growth was supported by continued strong performance from our core solutions. With CredentialStream growing by 21%, ShiftWizard growing by 31% and Competency Suite growing by 27%. Now while a portion of the strong revenue growth in CredentialStream and ShiftWizard are from conversions from our legacy credentialing and scheduling applications, revenues from those legacy applications declined by 27% compared to last year. Revenues from the 2 acquisitions that we recently completed were $1.6 million in the quarter. In addition, revenue increases from the annual pricing escalators that we began introducing into new contracts last year also benefited the year-over-year growth. Moving on, our sales team finished the year with strong contract bookings, which led to an 11.2% increase in our remaining performance obligations, which were $691 million as of the end of the fourth quarter, and that compares to $621 million for the same period of last year. We expect that approximately 39% of the remaining performance obligations will be converted to revenue over the next 12 months and that 67% will be converted over the next 24 months. Gross margin was 63.8% compared to 66.2% in the prior year quarter, and gross margin was impacted by an increase in our cloud hosting costs and software licensing costs, which primarily come from the CredentialStream application and the hStream Platform. The gross margin was also impacted by the non-cash compensation expense associated with the CEO Stock Grant. This grant reduced gross margin by $1.3 million or approximately 170 basis points. Our operating expenses, excluding cost of revenues increased by 9% or $4 million, of which approximately $2.5 million of the increase was associated with the CEO Stock Grant. We also incurred over $600,000 in transaction costs associated with the 2 acquisitions that we completed in the fourth quarter. Net income was $2.5 million and was down 4 (sic) [ 48.1% ] from $4.9 million last year. Again, this decline was significantly influenced by the non-cash compensation expense from the CEO Stock Grant. On a non-GAAP basis, net income was $5.4 million and was up 9.5% from the $4.9 million last year. And finally, adjusted EBITDA came in at $18.8 million, which was up 16.4%, and our adjusted EBITDA margin was 23.6% compared to 21.8% last year. Switching to the balance sheet. We ended the quarter with cash and investment balances of $57 million, which compares to $92.6 million last quarter. And during the quarter, we deployed $35.1 million for acquisitions. We paid $6.8 million for capital expenditures. We returned $0.9 million to shareholders through our dividend program, and we repurchased $5 million of our common stock under the share repurchase program that we announced in November. Our Days Sales Outstanding remained steady at 35 days for the quarter, which marks the sixth consecutive quarter that DSO is at or below 40 days. For the year, our cash flows from operations were $63.3 million compared to $57.7 million in the prior year, which is an increase of 9.8%. Free cash flows were $31.1 million compared to $29.5 million last year, an increase of 5.5% and our capital expenditures were $32.2 million compared to $28.1 million last year, an increase of 14.3%. Ending the quarter with $57 million of cash and investments, free cash flows and no debt, we are well positioned to deploy capital to improve shareholder value. We maintain a disciplined approach to capital allocation and how we prioritize our use of capital. Our utmost priority is making organic investments back into the business, which is evident by our annual capital expenditure and R&D plans. The second is pursuing acquisition opportunities, which we have a long track record of executing. The third is returning a portion of profits back to shareholders in the form of cash dividends and our fourth priority is that our Board may authorize share repurchase programs. In regard to M&A investments, on October 8, we announced the acquisition of Virsys12, a health care technology company focused on payer credentialing. The consideration paid for Virsys12 consisted of $11.4 million in cash, taking into effect customary purchase price adjustments and a post-closing working capital adjustment. And up to an additional $4 million of cash consideration may be paid over a 3-year period following closing, contingent upon achievement of certain financial targets. And then on December 15, we announced the acquisition of MissionCare Collective, a health care workforce company primarily focused on connecting nonmedical caregivers and CNAs with job placement and numerous job-related programs. The consideration paid for MissionCare consisted of $24.6 million in cash and $4 million in our common stock, which also takes into effect customary purchase price adjustments and is subject to a post-closing working capital adjustment. And up to an additional $10 million of cash consideration may be paid over a 3-year period following closing, which is also contingent upon achievement of certain financial targets. In respect to our dividend program, yesterday, our Board of Directors declared a quarterly cash dividend of $0.035 per share to be paid on March 20 to holders of record on March 9. This represents a 12.9% increase over the previous quarterly cash dividend. In November of 2025, our Board of Directors authorized a $10 million share repurchase program, of which $5 million of share repurchases were made in the fourth quarter of 2025 and the remaining $5 million were made in January of 2026. Also in May of 2025, the Board authorized a $25 million share repurchase program that was completed in the third quarter of 2025. To recap the full year, we achieved $304.1 million of revenue, $18.3 million of net income, $21.2 million of non-GAAP net income and adjusted EBITDA of $71.8 million. We made $30 million in share repurchases. We paid $3.7 million in dividends to shareholders, deployed $39.1 million of capital on M&A and $32.2 million of capital expenditures. We remain focused on consistently growing the business both organically and inorganically while remaining disciplined with our capital allocation strategy. I'll go ahead and wrap up my portion of the call this morning by going over our financial outlook for 2026. We expect that consolidated revenues will range between $323 million and $330 million, which equates to a growth rate range of 6.2% to 8.5%. And to begin the year, we estimate that the fourth -- the first quarter revenue growth rate will be approximately 8%. We expect quarterly revenues to improve sequentially across the year with higher growth rates in the first half of the year than in the second half, which is primarily due to the timing of the 2025 acquisitions. We expect that inorganic revenues will be approximately $13 million for the year. We expect that net income will range between $20.4 million and $22.8 million, that adjusted EBITDA will range between $73 million and $77 million, that capital expenditures will range between $31 million and $34 million, and we expect that our effective tax rate will be approximately 22%. This guidance does not include the impact of any acquisitions or dispositions that we may complete during the year, any gains or losses from changes in the fair value of nonmarketable equity investments or contingent consideration or impairment of long-lived assets. In closing, I'm excited about the opportunities we have in front of us and have confidence in our ability to deliver on another solid year of financial performance while continuing to create value for our stakeholders. Thanks for your time again this morning, and I'll now turn the call back over to you, Bobby. Robert Frist: Thanks, Scotty. Well, let's see. Let's pick up here with the business updates at the last third year. So I'll start off as I usually do with some core business updates that cover our learning, credentialing and scheduling application suites. And then we'll talk about the newest career network, myCNAjobs. So let's start with the learning product family, which includes kind of a subset of what we call our competency suite. Many customers are increasingly taking advantage of the opportunity to purchase a bundle of several of our most popular workforce applications and content libraries, which we call the Competency Suite. Customer purchases -- the customers purchased a subscription to the Competency Suite for all of their employees, which comes in an unlimited use format. Key sales of the Competency Suite during the fourth quarter include some of the nation's top health care organizations like Intermountain Health, Northside Hospital and Dartmouth Health. We think about our credentialing area where our flagship product, CredentialStream, also finished the year strong in terms of new sales, expansion sales and importantly, conversions from legacy products. Revenues from sales of CredentialStream in the fourth quarter were up approximately 21% over the same quarter last year, and we saw growth of approximately 23% year-over-year. Our largest sale in the quarter was a result of our winning a highly competitive RFP. Our next largest sale came from a referral from our partner, Virsys12 and represented a competitive takeout because the customer loves our comprehensive solution, API integration capabilities from our platform and the use of cutting-edge data infrastructure that allows them to get greater insights faster, things their previous system could not deliver. Additionally, we are pleased that an existing health system customer decided to expand their CredentialStream access. As they standardize on the CredentialStream across all their facilities and also invested in our case review and performance metrics products. The quarter for CredentialStream was not only about sales success. As a result of infrastructure enhancements we made earlier in the year, CredentialStream delivered excellent system performance and high reliability, both of which were recognized and lauded by our customers. We are also pleased that some of our large legacy credentialing customers completed their conversion from EchoCredentialing and MSOW. For example, UPMC Health System, a major health system, and Sutter Health being notable among those that successfully transitioned to our CredentialStream application. Through CredentialStream, we're committed to helping those customers speed time to revenue for the physicians they onboard, which will improve their financial performance and ability to provide quality care. To conclude my update on our credentialing business, I will say that 2025 saw total revenue contribution from CredentialStream edge out total revenue contribution from all of our legacy credentialing products combined. As customers continue to see the value of CredentialStream, we expect this trend to continue and accelerate in 2026. Now let's move to scheduling, where our core product, ShiftWizard, continues to deliver strong revenue growth, with fourth quarter revenues from sales up approximately 31% versus the fourth quarter of the previous year and up 24% year-over-year. It continues to be our top-performing product in our scheduling application suite. And in 2025, revenue contribution from ShiftWizard was greater than revenue contribution from all legacy scheduling products combined. This, too, is a trend we expect to continue in 2026. ShiftWizard is a good example of how vertically focused health care-specific applications benefit customers in ways that generic horizontally focused solutions simply cannot. In fact, our 2 largest sales last quarter were takeouts of a major provider in both the horizontal provider, and both customers selected ShiftWizard because of the health care-specific advantages that it offers. For example, both customers identified that the ability to gain greater visibility into and control over managing and engaging their clinical workforce is something that differentiated ShiftWizard over and above even the best horizontal solutions. Scheduling and staffing clinicians is simply different than scheduling a labor pool for retail or factory shifts. Increasingly, the market is realizing this fact and choosing ShiftWizard as a result. On our last call, I introduced an exciting new area of focus for the company, our emerging career networks like NurseGrid for nurses and myClinicalExchange for students. Remember, career networks provide value directly to the individuals who deliver care. You can contrast that with our enterprise application suites, which provide value to health care organizations. Also made an important point on the last call that bears reiterating to really address the complex issues of today's health care workforce, we think that you have to have solutions for both individuals and for organizations. And here's the more important part. To really change the game, you have to connect both of them together through a common platform, and that's exactly what we're beginning to do at HealthStream. On December 15 of last year, we acquired MissionCare Collective, whose primary offering is myCNAjobs.com, which we're introducing as our newest career network. MyCNAjobs helps recruit and retain a large set of providers that includes home health aides, home care providers and CNAs, which are also incredibly in high demand. And we also expect, for example, in the CNAs, the demand for them to increase, particularly in the post and pre-acute markets. MyCNAjobs originates data directly from individual caregivers, enriches that data through proprietary technology and then utilizes that data to help pair those caregivers with health care organizations that want and need to hire them. Both the individual and the organization benefit as a result. As we get the individuals using myCNAjobs issued an hStream ID, they're better able to help manage their data and longitudinal record across both applications and employers. I want to close by giving you an example of how our customers are increasingly turning to HealthStream as they manage the entirety of a clinician's journey from nursing school to retirement and everything in between. It's my view that many of the smartest health systems, and I'll name a few, like HCA and Intermountain Health, are putting nurses at a center of their workforce strategy. In some cases, these health systems are doing things like launching their own nursing schools. That's how much demand there is for these nurses and how much they realize the need to develop their competence and upskill them. They're actually getting into the nursing schools themselves. They're also purchasing our competency suite at scale, and they're engaging with our career networks so they can officially recruit -- be efficient in the recruitment, the development and that transitional onboarding that they do between the career network and to full-time employment. And they use our software then to recruit, retain, develop and onboard that professional staff. It's my belief that other hospitals and health systems will look at these market leaders and see their extreme focus on this nursing workforce and their investment in it. And they'll see that it's generating a competitive advantage for these thought-leading and market-leading health systems like HCA and Intermountain Health and that HealthStream's solutions are a central part of helping them achieve that strategic focus. I want to remind everyone that if you're interested in a profitable recurring revenue health care technology company that expects to deliver growth, then maybe HealthStream is the right investment for you. If you're interested in a company whose core user base, the clinical health care workforce is expanding faster than any other sector in the job market, then maybe HealthStream is the right investment for you. If you like a company whose software serves as a system of record on behalf of health care customers, then maybe HealthStream is the right company for you to invest in. If you favor ecosystems over point solutions, then maybe HealthStream is the right investment for you. For all of these reasons, I believe HealthStream is positioned for another exciting year helping the nation's top health systems find, develop, credential, schedule, onboard efficiently and then retain this growing health care workforce. And I think that maybe if those are traits that you value in an emerging health care technology company, then HealthStream is the right investment for you. I'll now put it back over to the operator so we can begin our question and answer. Operator: [Operator Instructions] Our first question comes from Matt Hewitt from Craig-Hallum Capital Group. Matthew Hewitt: Maybe first up, MissionCare, I think you noted that the inorganic contribution to revenues this year is roughly $13 million. I'm just curious what the MissionCare margins look like. Were those similar? Or is there an opportunity there to maybe get those in line with the corporate average and so we could see some incremental margin lift over the course of the year and into next year? Robert Frist: It's a fair question, Matt, but we don't report margins on a per product line basis. We've talked about our blended gross margins. And you could see a little bit of compression of that. I don't think that was due to the acquisitions, though. It's just due to how we're investing. Some of our cost of goods are going up on some of our application suites, which we're working on right now. In fact, we're conducting an RFP to consolidate some of our growing expense of our hosting services where we keep our content and our highly engaged applications. So we generally only comment on margins, not at a product level. But look, I think all of our products are trying to push for higher margins than our legacy applications or our legacy business, I'll say, which includes the high cost of goods of royalties. And so in general, all of these software businesses, I think, have the potential to pull our blended gross margin up over time. Even though right now, we're experiencing a bit of a surge in costs and things like our hosting costs as we expand the utilization of our applications, which is great news, but we probably need to negotiate a little better on these -- some of these core services, the cost of goods underneath them as well. Matthew Hewitt: And then maybe a second question. Press release and in your prepared remarks talking quite a bit about AI and the impact that, that can have on the market, how you're more sticky. And I think during your prepared remarks, in particular, you talked about how some of your customers are actually pushing other records into the HealthStream platform. And I'm just curious, one, is that there's some M&A opportunities there with those other platforms that are now being pulled into your platform? And two, does that further highlight the stickiness of HealthStream, meaning that AI isn't going to displace HealthStream or your platforms, but rather it's a contributing factor and you should be able to not only weather any potential storm in the future, but quite frankly, survive better because of it. Robert Frist: Sure. What I tried to do is just give these categories where -- I mean, the world is changing, jobs are changing, business models are going to have to adapt. And there's definitely something real here to how AI changes everything. And so we first wouldn't say there's no threat to -- everything is, in my view, at risk of change and impact. That said on many key dimensions, you kind of have to think about how well a company is positioned in each of those types of positions. And I think this idea of being a system of record is an important concept to differentiate kind of long-term winners from losers. And so it's really encouraging for us to see our API libraries that are part of our hStream platform that our customers get access to, they're starting to use those APIs to push data from other third-party providers that's relevant to the system of record into our core datasets, which shows, again, it kind of emphasizes the difference between being a system of record and not being a system of record, being a point solution whose data is sucked into other systems of record. And so in several cases, like in our learning network, we see growing use of those import APIs, which means that they're saying, look, we would rather have our data on the learning journey about our workforce consolidated at the HealthStream platform level than spread across multiple systems or multiple point solutions. And so it's just one indicator of a relative strength of our company as we enter this ever-changing world that's changing at a really rapid pace. And so we can't say that we're going to conquer everything, but AI is a fundamental component of our 10 components of our hStream platform. So it's well in development. We are huge utilizers of the emerging AI tools ourselves in how we build our products more efficiently. And then on this one dimension, and we covered others, but on this one dimension of whether your software is a system of record or a point solution, we tend to lean towards being a system of record, which, by the way, is also true, for example, in our credentialing system. I think we made that point in the script as well. Although I'm not exactly sure where I got cut off on the script, so I apologize for that, Matt. It looks like my device timed out and cut me out of the conference, and I was waxing poetic about these ideas and didn't catch that until the end. But anyway, I think -- thanks for the question. On that one dimension, I just would say companies should -- when you evaluate companies for their viability and strength as they enter this change that being a system of record is one characteristic of a long-term survivor and grower instead of one under assault. Operator: Our next question comes from Constantine Davides from Citizens. Constantine Davides: Maybe, Bobby, just a question on career network, that strategy. With something like myClinicalExchange that you've owned now for 5 years or so, just give me a sense for what interoperability features are resonating most with customers and prospects in terms of integration between that legacy type of solution and the rest of the platform? Robert Frist: Yes, sure. So first of all, it's not a legacy application. It's a growing -- the business has tripled since we bought it in terms of just absolute revenue. I think it's around $2 million we bought it. It's pushing over $6 million or $7 million now. And so the myClinicalExchange has grown, its revenue contribution and margins to the company. So it's an exciting growth area for the company. The second is exactly what you pointed out is what is the idea of the link between this career network for students in this case and say, HR at a health system using, say, our learning record. And so one little example of interoperability, which is happening today. We found when we surveyed those students that very few of them, less than 25% or 30%, felt that the hospitals where they were doing their rotations were properly addressing their career opportunities and say, "Hey, we see you're doing your rotation in a hospital. We'd love for you to take a full-time job with us when you graduate. And so in other words, there's a huge disconnect between the hospital operations and the clinical student doing a rotation at that hospital. And so what we did was we built a little widget that goes on a product called MyTeam, where all the managers are in our network. And so we have this application that's broadly used by managers. And we were able to tell them that today, 3 students were doing rotations on the second floor of their hospital, and they'll be there the next 5 hours, and here's their names and their backgrounds, go say hi to them. And so we're able to directly connect these clinical rotating students that was kind of there as a previously almost a side thought hospitals kind of put that under their operations. But now we've turned it into a recruiting opportunity. We're giving information that Bobby Frist is on the floor as doing their clinical rotation today, maybe go say hi to them. And we found that large health systems are attributing that simple flow of information across the transom from the student who enrolled in that rotation using the myClinicalExchange software to their arrival on the hospital where then kind of the resume pops up in the application, my team on a little widget and says, "Hey, there are 3 students a day at the hospital, go say hi to them. It will improve our odds of hiring on them when they actually graduate and become a professional. And so that's an example of using the data as a tool. And it's just a simple data flow, but that reminder, we see health systems taking advantage of that function feeling they have a competitive advantage on recruiting those students when they graduate. That's one example of the workflows that expand to become more ecology like, like there you're crossing from the SaaS world through the platform to the student enrollment world on myClinicalExchange. So I hope that one little example gives you an insight to how we're thinking, but it's just a manifestation of the data across this platform transom, which gives a competitive advantage to recruiting that student in the future. Constantine Davides: Just shifting gears a little bit to legacy product headwinds. I think you said legacy revenue was down 27% from the prior year in the quarter. How much legacy revenue is still left on the platform? And I guess, at what point do you start considering a sunsetting strategy is something that's viable? Like how low does revenue have to get for that to be in focus for you? Robert Frist: Yes. When we look at classifying legacy revenues, they are true legacy revenues, meaning they're on applications that we're no longer selling. And they're maintained and we allow our customers to renew on them. And they -- but we don't carry a quote on them. We don't sell them. And so they're effectively -- they maintain that legacy status. But they're supported. They're beloved applications. We do our best to keep customers happy on them until they decide to transition or our worst-case scenario, they leave for another solution in the market. And so that business, we were able to report the totality of the legacy portfolio in credentialing has been surpassed by the go-forward CredentialStream application. So at least in the credentialing space, if you take the total of all of our software tools, and the legacy revenues are combined across all the legacy applications, which are 2 or 3, they're now less than the revenue from CredentialStream. And that is also true in our scheduling business, where all the legacy businesses combined are less than the go-forward growing ShiftWizard revenue stream. And so we now have the majority of our work and growth is now on the go-forward application in both of those circumstances. Overall -- and this is a little tricky to provide this, but I'm going to go ahead and do it. Overall, our legacy revenues across the company and remember, these are good revenues. These are not -- legacy doesn't mean we don't want them. It just means that we're not selling any more of those products. And there's a good probability that those renew year-to- year and year. So this revenue stream could continue for a long time until it's either transitioned or lost. But approximately -- a little less -- around about 10% of our total revenues are in that bucket across the company. So we've now kind of scoped the size of that. And remember, it's important to remember that, that approximately, we'll just say a little bit over $30 million is desired revenue. Because we're calling it legacy, it doesn't mean it's not desired. It has a margin in most cases, has an EBITDA contribution. It's just not growing anymore, and we're waiting to encourage those customers to transition. And excitingly, in this quarter, we were able to talk about 2 very large credentialing customers that made that move, and we believe they're happy customers on CredentialStream, for example, we identified Sutter and I believe UPMC were successful migrations from that legacy category to, in that case, CredentialStream. So now we've kind of quantified it, but it's a tricky thing to quantify because, again, it doesn't mean that revenue is going away. It just means those products we're not selling anymore. And then you brought up the final question is, well, when do you start to force the decision? And we call that a sunset product. And in that bucket of revenue, a little over $30 million, we have not told those customers, and we have not picked a date to officially change it from legacy to a sunset product. And I would say, over the next few years, we'll evaluate that and certain of those products will achieve what I'll call sunset status. And at that point, customers have been notified of an end date when that technology will not be supported. So they need to start to plan and make a decision to move off of that legacy application. Again, we haven't done that yet, except in a few cases. And that's something we'll consider as the overall bucket of legacy becomes smaller and smaller. And by the way, it's getting much more compelling to move to the newer applications every day for reasons like we talked about that little widget, for example, that makes one application even more powerful. If you're on a legacy product, you're not getting the advances of the ecosystem that we're building that we mentioned in the earlier case. So I hope that helps kind of quantify it overall, scale it and scope it and tell our ambition with it. And again, that bucket of revenue is generally a happy set of customers that we're trying to maintain. We do product releases. We -- the customers there are in a good spot, but we want them to be in a better spot. We want them to migrate or transition or convert to the go-forward applications that are all plugged into the platform. Operator: Our next question comes from Ryan Daniels from William Blair. Ryan Daniels: Bobby, thanks for all the conversation on AI. I really appreciate that. A question for you in regards to that and a bit of a follow-up from an earlier one. You mentioned data origination is kind of a key competitive advantage because you can create that proprietary data. And I'm curious if that changes your capital deployment mentality at all, whether it's either via internal product development or how you look at the M&A markets to kind of go forward and create more of that proprietary data such that you can withstand any future AI headwinds? Robert Frist: It certainly does. Super exciting. As I mentioned, AI is one of the 10 core elements of our platform that we're developing. And so there's capital already going into that to make it a fundamental kind of capability set, a framework for deploying AI into our product sets. And several exciting products, enhancements, extensions where we're deploying capital are underway now. And we'll have to wait to reveal some of those directly, but I couldn't be more excited about some of the advances we're seeing. And specifically as it relates to data, we really are focused on trying to identify catalog, manage. And so investments are increasing in the area of kind of data management, data classification, data rights management across all of our network. And so yes, capital is flowing into that area. Yes, organizing our data. For example, one of our core tenets of our platform is to get all of our data from all of our 27 applications updated nightly into Snowflake and getting that organized and then, of course, getting all that data relevant to each other through the hStream ID, another core tenet of the platform is critical. So yes, capital is flowing to this area. Yes, we're trying to distinguish, which data is kind of aggregated data, which data is proprietary data, which data can lend competitive advantage in the long run, which data might train AI, for example. And I think in all cases, there's an increased emphasis and awareness of that from our Board to our operators. Ryan Daniels: And then maybe another one just on the AI marketplace. Again, very rational conversation of why you're relatively well positioned. But I'm curious, if you talk to your sales team, are they seeing any hesitation in the market either with longer-term contracts with the elevated pricing each year, the inflationary pricing or any pause in buying decisions as the market CTOs kind of look at all the potential AI solutions out there? Or is it generally still business as usual on your sales cadence? Robert Frist: Well, let's see. I would characterize our fourth quarter as exceptionally strong. In some areas, it was just fantastic. And just remember, there are product sets in there that are just incredibly unique as they blend technology, content, data analysis together to solve a real problem. For example, our partnership with the American Red Cross is thriving. We think we have a really great partner there and a great product set. It's an interesting solution set that meets essentially a compliance-oriented need. And there are several of our products that are doing really well that are a complicated blend of SaaS technology, data and benchmarking, reporting capabilities, physical. In this case, the Internet connects to these physical manikins that evaluate the skill and then branded high-quality scientifically valid content. And so in that case, we're seeing that product growing very nicely and well positioned for continued growth. So in the fourth quarter, we saw wins in each of these areas, including things like our American Red Cross Resuscitation Suite, but we also saw some system wins on our Competency Suite at scale. Some of our largest deals, I guess, I'd say, in our history were closed in the fourth quarter. So I think there's hesitancy in thinking through all this, and CTOs. We're doing our best to educate the market about the emergence of our platform this year and make us more relevant as a consolidator of services, not just a point solution here and a point solution there. I think there's more and more potential every quarter for us to position as a core consolidation platform. And yes, it has SaaS capabilities. And yes, those can be more rapidly built by competitors. But I think it is this interesting dynamic that we talked about of more ecology-like behavior than point solution or SaaS workflow behavior that we're seeing. So I hope that gives a little bit more color on it. Overall, I believe there's a tremendous amount of change coming to all businesses to almost all workforces. But on these 4 or 5 dimensions we talked about today, I think we're relatively well positioned to learn, iterate provide value and capitalize on the value people expect to get from AI as it advances. Operator: Our next question comes from John Pinney from Canaccord Genuity. Richard Close: Yes. This is Richard Close. Just a quick question, maybe a housekeeping, Scotty, to begin with. We jumped on late. And just curious whether you gave the acquisition contribution Virsys12 and MissionCare for the fourth quarter. And then just to clarify, you said $13 million from the acquisitions in the '26 guidance? Scott Roberts: Yes. So the -- I guess the fourth quarter impact for both acquisitions combined was $1.6 million. And then you're correct on the full year guide was $13 million. Richard Close: And then, Bobby, maybe just on the AI front to continue to go down that rabbit hole. I'm just curious if you can provide some examples in terms of how you guys are integrating Gen AI, agentic AI and into various offerings that you have. Again, I apologize, we got on late, if we missed that. Robert Frist: Yes. I think that road map will unfold in more detail over the course of the year. But needless to say, every one of our products has an AI road map. and really interesting and fascinating projects underway to take advantage of the benefits that we would expect from AI. And so the workflows are being automated. We have an agentic framework around some of our learning capabilities that we're working on. We have this concept of the quantification of self-using a vector analysis for some of the individual profiles in our system, making it kind of a tokenizable unit. There's just so many interesting things happening. And I think we'll let that road map unfold over the course of the year. But every product manager is required to have an AI framework and an AI road map and all of our developers are now using AI. And many of you probably follow this in the last 30 days, there have been significant enhancements in the tool sets people are using to build applications, which just gets us more excited because we can get to more of our vision faster if we use these tools properly. But like everybody, we're learning to use the tools. So there's an internal application of them, there's the external extension of them. And I think what I can say today is that of the 10 elements that we use to define the hStream platform, AI is one of the 10, and it has been for some time now. So we're not -- we're also not new to the idea of AI and how it's going to impact workflows and applications. And so I hope -- I don't know I just have to give a generic answer now that it's in our road maps. It's part of our kind of our DNA. It's part of how we're thinking. And we're doing our best to learn and stay on the curve with everyone else. And then we've talked about, of course, these categories of impacts kind of are we better positioned or less better positioned to take advantage of the changes coming. Richard Close: And then maybe just to expand on the AI front. Just I'm sure you're out in the market talking with various health system executives. And I'm just curious what their conversations with you is gleaning with respect to separate AI budgets versus looking for AI in -- you said the systems of record and whatnot. I'm just curious if you have any experiences that you can share on your -- the conversations you're having with clients and potential clients. Robert Frist: Yes. There's a lot of dimension to that. One is the CIOs of the country at these health systems are tired of having 400 point solutions. And so in that regard, if you're just a point solution and you're not a platform, I think there is a definite high degree of interest in moving to fewer platforms that work together than, say, as many as 400 point solutions. And this is true. If you ask a CIO of a health system, their software profile, I think they'll tell you they have 2 or 3 platform choices, EHR would be one choice where they pick between 1 of the 3 big ones. ERP would be another. And then they have 500 point solutions. So the first point of dialogue with, say, the executive suite, particularly the CIOs is, look, we need to make sense of these 500 point solutions. And I think that's exactly what HealthStream is trying to do with our hStream platform is take 3 or 4 of them that are core that are point solutions like scheduling, credentialing and learning and make them interoperable. And then we're bringing this other dimension, which is the second point is which problems are you solving for me? And if I have a nursing shortage, how are you helping me more efficiently onboard these nurses? How are you helping me move costs from those nurses from when they're employed to when they're pre-employed. And I think it's our theory of connecting this through the platform to these career networks that lets us have a business dialogue, not an AI dialogue, but a business dialogue about shortening the onboarding cycles and improving the value proposition of moving the cost from the health system, say, to the student period or getting the ready to work. This is a ready-to-work concept. So we're able to talk about business value propositions that are kind of universally the problems they're trying to solve, like with their labor pool size and the recruiting of nurses. And so our dialogue isn't so much about just whether your budget of AI is going to shift, it's about how you're going to consolidate point solutions and about whether the vendor standing in front of you, in this case, HealthStream can help solve a value proposition and do something more effectively. So I tend to lean into those. We can help onboard physicians more efficiently. We can help recruit nurses and find the future high-quality employees, the students that are going to be the best in your environment and help you match them. And so again, we just stick to the fundamentals of providing value to our customers on that journey. And then we can show how AI will facilitate those workflows. Richard Close: So would you characterize the environment as not necessarily clients or potential clients being distracted by AI that they're still focused on these key areas of business improvement? Robert Frist: I think the smart ones are. I don't know how to say it the other way. I mean, yes, I mean, obviously, even just through this call, everyone is trying to understand the implications and impact of AI. And HealthStream is in that group, all the CIOs we talk to are in that group. So yes, it's a lot of discussion on it. At the end of the day, I think the leading health systems are focused on the fundamentals of providing better patient care. And then they come back to the fundamental questions like, well, what is our cost of finding and developing a talented workforce and retaining them at the expense of our competitors. How do we have a better, higher-quality workforce. And so we keep trying to steer the conversation there and then show how all of the tools of HealthStream, including the unique dimensions like our career networks bring value to that equation. So just doubling down on the fundamental values that we provide is what we need to do. It doesn't mean that the dialogue isn't all consuming about the future -- the impact of AI. But like I said, health care is a local business. It's a service provision business. It's a hands-on nurses and doctors on patients business as is surgery. And here, I think AI is kind of an augmentation process instead of an automation or replacement. Now there are plenty of back-office functions and efficiencies that can be gained with AI, and there are certain roles that we expect fewer of them. But at its core, as I mentioned earlier, the nursing workforce is expected to grow. And I think they're going to grow and be more human through the use of AI. And those are the things that we talk to our customers about. Operator: Our next question comes from Vincent Colicchio from Barrington Research. Vincent Colicchio: Yes. Most of mine have been asked, Bobby, just perhaps if you could just talk about the price accelerators. It was nice to see the contribution for the year. Has this mechanism played out as expected? What are your thoughts there? Robert Frist: Vince, it's so good that it took us about 3 years to put escalators in place. And we know it was kind of an industry norm. We had always focused on our negotiations around volume, commitment and term. And we didn't have these built-in escalators. So it took us a while to design the contractual infrastructure, the deployment, train the sales organizations. But now it is the norm and it is the norm across software to include inflationary level price escalators in contracts. And it helps everybody strangely. It helps the customers because if you're on a contract for 4 or 5 years with those small escalators, you don't get hit with a big price increase necessarily when you renew. And so the escalators are kind of a smoothing function for budget planning. They're negotiated, but generally accepted. And I would say that every renewal and every contract now in all 3 of our major application suites include escalators in the contract. And so yes, we were excited to see that it started to impact us financially. And it is a slow roll because if we do 3- to 5-year contracts, that means, let's say, on average, every 4 years, a contract. Every 3.5 years of contract comes up for renewal. And then the escalator takes effect on the second year of the renewal, right? Because it comes in year 1 and then year 2. So as we go through renewals and as we include escalators, it's having kind of an impact, but it's a slow movement through these thousands of customers. But it's underway and every renewal includes an escalator. Operator: This concludes the question-and-answer session. I will now turn it back over to Robert Frist for closing remarks. Robert Frist: Thank you, everyone. I apologize for -- I was kind of head down and thinking about what I wanted to say, and I was telling this big story about AI. And I realized I looked up and my iPad had timed out. And I think Mollie Condra stepped in. Mollie, I know you did a great job. I hope we got all the questions done in Q&A. Thanks for listening. I look forward to reporting the next report. I'm proud of the contributions of 1,100 HealthStreamers in achieving these results. And we've got another tough year in front of us with full of opportunity and challenges, and we're ready to take it on. Thanks all. We'll see you on the next earnings call. Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Before you buy stock in HealthStream, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and HealthStream wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends HealthStream. The Motley Fool has a disclosure policy. HealthStream (HSTM) Q4 2025 Earnings Transcript was originally published by The Motley Fool