HealthStream(HSTM) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section covers HealthStream's Q1 2025 unaudited financial statements, management's analysis, market risks, and internal controls Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for HealthStream, Inc., including balance sheets, income statements, comprehensive income statements, statements of shareholders' equity, and cash flow statements, along with their accompanying notes. These statements provide a snapshot of the company's financial position and performance for the three months ended March 31, 2025, and comparative periods Condensed Consolidated Balance Sheets (Unaudited) This section presents the company's financial position, assets, liabilities, and equity, for Q1 2025 and year-end 2024 | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | ASSETS | | | | Cash and cash equivalents | $77,289 | $59,469 | | Marketable securities | $36,030 | $37,748 | | Total current assets | $169,718 | $153,122 | | Total assets | $524,036 | $510,766 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Deferred revenue | $102,009 | $84,227 | | Total current liabilities | $125,861 | $115,693 | | Total shareholders' equity | $362,808 | $359,355 | | Total liabilities and shareholders' equity | $524,036 | $510,766 | - Total assets increased by $13.27 million from December 31, 2024, to March 31, 2025, primarily driven by an increase in cash and cash equivalents[9] - Deferred revenue (current) saw a significant increase of $17.78 million, indicating growth in future service obligations[9] Condensed Consolidated Statements of Income (Unaudited) This section details the company's Q1 2025 revenues, operating income, and net income, compared to the prior year | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Revenues, net | $73,485 | $72,760 | | Total operating costs and expenses | $69,107 | $67,070 | | Operating income | $4,378 | $5,690 | | Income before income tax provision | $5,248 | $6,543 | | Income tax provision | $916 | $1,316 | | Net income | $4,332 | $5,227 | | Net income per share (Basic) | $0.14 | $0.17 | | Net income per share (Diluted) | $0.14 | $0.17 | | Dividends declared per share | $0.031 | $0.028 | - Net revenues increased by 1.0% year-over-year, while operating income decreased by 23.1% and net income decreased by 17.1%[10] - Diluted EPS decreased from $0.17 to $0.14, a 17.6% decline year-over-year[10] Condensed Consolidated Statements of Comprehensive Income (Unaudited) This section details comprehensive income components, including net income and other items, for Q1 2025 and the prior-year period | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net income | $4,332 | $5,227 | | Foreign currency translation adjustments | $49 | $(476) | | Unrealized loss on marketable securities | $(19) | $(5) | | Total other comprehensive income (loss) | $30 | $(481) | | Comprehensive income | $4,362 | $4,746 | - Comprehensive income decreased by 8.1% year-over-year, primarily due to a decrease in net income, despite a positive shift in foreign currency translation adjustments[12] Condensed Consolidated Statement of Shareholders' Equity (Unaudited) This section outlines changes in shareholders' equity, including common stock, retained earnings, and comprehensive income, for Q1 2025 | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Common Stock Amount | $252,466 | $252,432 | | Retained Earnings | $112,361 | $108,972 | | Accumulated Other Comprehensive (Loss)/Income | $(2,019) | $(2,049) | | Total Shareholders' Equity | $362,808 | $359,355 | - Total shareholders' equity increased by $3.45 million from December 31, 2024, to March 31, 2025, driven by net income and stock-based compensation, partially offset by dividends[14] - Dividends declared on common stock were $0.031 per share in Q1 2025, up from $0.028 per share in Q1 2024[14] Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents cash flows from operating, investing, and financing activities for Q1 2025, compared to the prior-year period | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $27,074 | $20,938 | | Net cash used in investing activities | $(7,248) | $(7,120) | | Net cash used in financing activities | $(2,013) | $(1,704) | | Net increase in cash and cash equivalents | $17,820 | $12,074 | | Cash and cash equivalents at end of period | $77,289 | $52,407 | - Net cash provided by operating activities increased by $6.14 million (29.3%) year-over-year, primarily due to strong cash receipts from customers[16][82] - Net cash used in investing activities slightly increased by $0.13 million, with higher payments for capitalized software development and property and equipment[16][83] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations and disclosures for the financial statements, covering accounting policies and key financial items 1. OVERVIEW AND BASIS OF PRESENTATION HealthStream, Inc. provides SaaS-based applications for healthcare organizations, focusing on learning, clinical development, credentialing, and scheduling needs, utilizing its hStream technology platform. The financial statements are unaudited, prepared under US GAAP for interim reporting, and reflect a consolidated enterprise approach managed by the CEO - HealthStream's core business is providing Software-as-a-Service (SaaS) applications to healthcare organizations to improve business and clinical outcomes[17][55] - The company operates under a 'One HealthStream' approach, centered on its proprietary hStream technology platform to enhance interoperability and customer value[18][56] - The CEO, as the chief operating decision maker, uses consolidated net income and functional expenses to manage operations and assess performance[21] 2. RECENT ACCOUNTING PRONOUNCEMENTS HealthStream adopted ASU 2023-07 (Segment Reporting) effective January 1, 2024, retrospectively. The company is evaluating ASU 2023-09 (Income Taxes) for adoption in 2025 and ASU 2024-03 (Expense Disaggregation Disclosures) for adoption in 2026/2027 - ASU 2023-07, Segment Reporting, was adopted effective January 1, 2024, using a retrospective method, requiring new disclosures for reportable segment expenses[23] - ASU 2023-09, Income Taxes, requiring disaggregated tax rate reconciliation and income taxes paid by jurisdiction, is effective for fiscal years beginning after December 15, 2024, and HealthStream will adopt it for the annual period ending December 31, 2025[24] - ASU 2024-03, Expense Disaggregation Disclosures, is effective for fiscal years beginning after December 15, 2026, and the company is currently evaluating its impact[25] 3. REVENUE RECOGNITION HealthStream recognizes revenue based on a five-step model when control of goods or services is transferred. Subscription services remain the dominant revenue source, accounting for 96% of total revenues. The company expects to recognize approximately $613 million from remaining performance obligations, with 40% within the next 12 months | Revenue Source | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Percentage Change | | :----------------- | :------------------------------------------ | :------------------------------------------ | :---------------- | | Subscription services | $70,789 | $70,205 | 1% | | Professional services | $2,696 | $2,555 | 6% | | Total revenues, net | $73,485 | $72,760 | 1% | - Subscription services constituted 96% of total revenues for both periods[67] - Approximately $613 million of revenue is expected from remaining performance obligations, with 40% recognized over the next 12 months[28] 4. INCOME TAXES The company accounts for income taxes using the asset and liability method. The effective tax rate for the three months ended March 31, 2025, was 17%, a decrease from 20% in the prior year, reflecting statutory rates, state and foreign taxes, permanent differences, and discrete tax items - The effective tax rate for the three months ended March 31, 2025, was 17%, down from 20% in the same period of 2024[31][74] - The income tax provision decreased to $0.9 million in Q1 2025 from $1.3 million in Q1 2024[10][74] 5. SHAREHOLDERS' EQUITY HealthStream declared a quarterly cash dividend of $0.031 per share for Q1 2025 and subsequently for Q2 2025. The company also detailed stock option and restricted share unit (RSU) activity, with total unrecognized compensation expense for RSUs at $7.9 million as of March 31, 2025 - A quarterly cash dividend of $0.031 per share was declared and paid on March 21, 2025, and another for May 30, 2025[32][87] Restricted Share Unit Activity (Three Months Ended March 31, 2025) | Metric | Number of RSUs (in thousands) | Weighted Average Grant Date Fair Value | | :-------------------------- | :---------------------------- | :----------------------------------- | | Outstanding at beginning of period | 571 | $24.54 | | Granted | 87 | $32.55 | | Vested | (127) | $22.93 | | Forfeited | (53) | $25.35 | | Outstanding at end of period | 478 | $26.35 | - Total unrecognized compensation expense related to non-vested RSUs was $7.9 million as of March 31, 2025, with a weighted average expense recognition period of 2.4 years[36] 6. EARNINGS PER SHARE Basic and diluted earnings per share are calculated based on net income and weighted-average shares outstanding. For Q1 2025, both basic and diluted EPS were $0.14, a decrease from $0.17 in Q1 2024 | Metric | Three Months Ended March 31, 2025 (in thousands, except per share data) | Three Months Ended March 31, 2024 (in thousands, except per share data) | | :----------------------------------- | :---------------------------------------------------------------- | :---------------------------------------------------------------- | | Net income | $4,332 | $5,227 | | Weighted-average shares outstanding (Basic) | 30,444 | 30,313 | | Weighted-average diluted shares | 30,587 | 30,418 | | Net income per share (Basic) | $0.14 | $0.17 | | Net income per share (Diluted) | $0.14 | $0.17 | - Approximately 105,000 common equivalent shares were excluded from diluted EPS calculations in Q1 2025 due to their anti-dilutive effect, compared to 176,000 in Q1 2024[38] 7. MARKETABLE SECURITIES The company's marketable securities, primarily U.S. treasury securities, are classified as available-for-sale and are held with the intent to recover their amortized cost basis. Their fair value decreased slightly from $37.7 million at December 31, 2024, to $36.0 million at March 31, 2025 | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :----------------------------- | :----------------------------- | | Fair Value of U.S. treasury securities | $36,030 | $37,748 | | Adjusted Cost | $36,028 | $37,726 | | Unrealized Gains | $5 | $24 | | Unrealized Losses | $(3) | $(2) | - All marketable securities are classified as current assets, maturing within one year[40] 8. DEBT HealthStream maintains an unsecured Revolving Credit Facility of up to $50.0 million, maturing on October 6, 2026. The facility is for general working capital, acquisitions, and stock repurchases. As of March 31, 2025, there were no outstanding balances, and the company was in compliance with all covenants - The company has a $50.0 million Revolving Credit Facility, with an accordion feature allowing an increase of up to $25.0 million, maturing on October 6, 2026[42] - The Revolving Credit Facility is unsecured and intended for general working capital, permitted acquisitions, and stock repurchase/redemption transactions[43][46] - As of March 31, 2025, there were no outstanding balances on the Revolving Credit Facility, and the company was in compliance with all financial covenants[48][92] 9. SUBSEQUENT EVENT On May 8, 2025, HealthStream's Board of Directors approved a new share repurchase program, authorizing the repurchase of up to $25 million of common stock. This program will terminate by May 31, 2026, or when the maximum amount is expended - A new share repurchase program was approved on May 8, 2025, authorizing the repurchase of up to $25 million of common stock[49][90][113] - Repurchases can be made in the open market, including under a Rule 10b5-1 plan, and are subject to market conditions and applicable securities laws[49][51][90][113] - The program will terminate on the earlier of May 31, 2026, or when the maximum dollar amount has been expended[51][90][113] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on HealthStream's financial condition and results of operations for the three months ended March 31, 2025, compared to the prior year. It includes a business overview, recent developments, key financial metrics, and a detailed comparison of revenue and expense line items, along with a reconciliation of non-GAAP financial measures and an analysis of liquidity and capital resources Special Cautionary Notice Regarding Forward‑Looking Statements This section advises readers that the report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially. It emphasizes that undue reliance should not be placed on these statements and refers to risk factors in the 2024 Form 10-K - The report contains forward-looking statements, which are predictive in nature and involve known and unknown risks and uncertainties[52][53] - Readers are cautioned not to place undue reliance on these statements and should consider risk factors outlined in the 2024 Form 10-K[53][54] Business Overview HealthStream provides SaaS-based applications for healthcare organizations, focusing on learning, clinical development, credentialing, and scheduling, all managed under a 'One HealthStream' single platform strategy. Key financial metrics for Q1 2025 showed a 1.0% revenue increase but declines in operating income, net income, and adjusted EBITDA. The company also subleased a portion of its office space to optimize workforce performance - HealthStream offers SaaS applications to healthcare organizations, aiming to improve business and clinical outcomes by supporting patient care providers[55] - The company's strategy is a 'One HealthStream' approach, centered on its hStream technology platform to integrate applications and enhance customer value[56] Q1 2025 Significant Financial Metrics | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (%) | | :------------------ | :-------------------- | :-------------------- | :--------- | | Revenues | $73.5 | $72.8 | 1.0% | | Operating income | $4.4 | $5.7 | -23.1% | | Net income | $4.3 | $5.2 | -17.1% | | EPS (diluted) | $0.14 | $0.17 | -17.6% | | Adjusted EBITDA | $16.2 | $17.1 | -5.0% | - HealthStream entered an agreement to sublease a portion of its Nashville office space, expecting to record approximately $2.3 million in sublease income in 2025 and $3.2 million annually thereafter[58][60] Recent Developments Macroeconomic conditions, including inflation, high interest rates, and geopolitical tensions, continue to challenge the healthcare industry and HealthStream's customers. These conditions, coupled with potential government funding cuts and policy changes, are causing delays in purchasing and non-renewals of elective products, adversely impacting the company's business and results of operations - Challenging macroeconomic conditions, including inflationary pressures, elevated interest rates, and geopolitical tensions, are impacting the healthcare industry[61][62] - Government cuts, reimbursement rate reductions, and policy uncertainties in healthcare are causing delays in purchasing and non-renewals of elective products and services among customers[61][62] - These conditions have adversely affected, and may continue to impact, HealthStream's business and results of operations[62] Key Financial Metrics Management uses several key financial metrics to manage the business, including net revenues, net income, adjusted EBITDA, and capital expenditures. Revenues increased slightly to $73.5 million, while net income and adjusted EBITDA decreased. Capital expenditures rose to $8.8 million, reflecting investment in product development Key Financial Metrics (Three Months Ended March 31) | Metric | 2025 (in millions) | 2024 (in millions) | Change (%) | | :-------------------- | :----------------- | :----------------- | :--------- | | Revenues, net | $73.5 | $72.8 | 1.0% | | Net Income | $4.3 | $5.2 | -17.3% | | Adjusted EBITDA | $16.2 | $17.1 | -5.3% | | Capital Expenditures | $8.8 | $7.8 | 12.8% | - Adjusted EBITDA is a non-GAAP measure used by management to evaluate operating performance and for incentive bonuses, reflecting net income adjusted for certain GAAP accounting, non-cash, and non-operating items[65][78] - Capital expenditures increased, indicating continued investment in software and content development[65] Critical Accounting Policies and Estimates There have been no changes in HealthStream's critical accounting policies and estimates from those reported in its 2024 Form 10-K - No changes have occurred in the company's critical accounting policies and estimates since the 2024 Form 10-K[64] Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024 This section details the year-over-year changes in HealthStream's revenues and operating expenses for the first quarter. While total revenues saw a modest 1% increase, driven by subscription and professional services growth, this was partially offset by reductions from legacy applications, perpetual license sales, and customer bankruptcies. Operating costs generally increased, leading to a decline in operating income and net income Revenues, net Total revenues increased by 1% year-over-year, driven by subscription and professional services, despite legacy application impacts | Revenue Source | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Change (%) | | :----------------- | :--------------------- | :--------------------- | :--------- | | Subscription services | $70,789 | $70,205 | 1% | | Professional services | $2,696 | $2,555 | 6% | | Total revenues, net | $73,485 | $72,760 | 1% | - Total revenues increased by $0.7 million (1%) year-over-year[66] - Revenue growth was negatively impacted by a $1.7 million reduction from legacy applications, $0.9 million from perpetual license sales, and $0.6 million from customer bankruptcies, offset by $3.9 million growth across the solution portfolio[66] Cost of Revenues (excluding Depreciation and Amortization) Cost of revenues increased 4% to $25.5 million, driven by software, cloud hosting, and labor, reaching 35% of revenues - Cost of revenues increased by $0.9 million (4%) to $25.5 million in Q1 2025, representing 35% of revenues, up from 34% in Q1 2024[67] - The increase was primarily due to higher costs for software and cloud hosting, and increased labor costs, partially offset by a decrease in royalties[67] Product Development Product development expenses remained flat at $12.0 million, decreasing as a percentage of revenues from 17% to 16% - Product development expenses remained flat at $12.0 million for both Q1 2025 and Q1 2024[68] - As a percentage of revenues, product development decreased from 17% in Q1 2024 to 16% in Q1 2025[68] Sales and Marketing Sales and marketing expenses increased 3% to $12.1 million, driven by labor and commissions, rising to 17% of revenues - Sales and marketing expenses increased by $0.3 million (3%) to $12.1 million in Q1 2025, primarily due to higher labor costs and sales commissions[69] - As a percentage of revenues, sales and marketing increased from 16% in Q1 2024 to 17% in Q1 2025[69] General and Administrative General and administrative expenses increased 4% to $8.7 million, due to labor and software, reaching 12% of revenues - General and administrative expenses increased by $0.4 million (4%) to $8.7 million in Q1 2025, mainly due to higher labor and software expenses, partially offset by lower facilities costs[70] - As a percentage of revenues, general and administrative expenses increased from 11% in Q1 2024 to 12% in Q1 2025[70] Depreciation and Amortization Depreciation and amortization expense increased 4% to $10.8 million, mainly from capitalized software amortization - Depreciation and amortization expense increased by $0.5 million (4%) to $10.8 million in Q1 2025, primarily due to increased amortization associated with capitalized software[71] Interest Income Interest income remained consistent at $0.9 million for both Q1 2025 and Q1 2024 - Interest income remained consistent at $0.9 million for both Q1 2025 and Q1 2024[72] Other Expense, Net Other expense, net, remained consistent at $0.1 million for both Q1 2025 and Q1 2024 - Other expense, net, remained consistent at $0.1 million for both Q1 2025 and Q1 2024[73] Income Tax Provision Income tax provision decreased to $0.9 million in Q1 2025, with the effective tax rate falling from 20% to 17% - Income tax provision decreased to $0.9 million in Q1 2025 from $1.3 million in Q1 2024[74] - The effective tax rate decreased to 17% in Q1 2025 from 20% in Q1 2024[74] Net Income Net income decreased 17.3% to $4.3 million, resulting in diluted EPS of $0.14, down from $0.17 prior year | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change (%) | | :------------------ | :-------------------- | :-------------------- | :--------- | | Net income | $4.3 | $5.2 | -17.3% | | EPS (diluted) | $0.14 | $0.17 | -17.6% | | Adjusted EBITDA | $16.2 | $17.1 | -5.3% | Reconciliation of Non-GAAP Financial Measures This section provides a reconciliation of adjusted EBITDA, a non-GAAP financial measure, to the most directly comparable GAAP measure, net income. Adjusted EBITDA is used by management to evaluate operating performance and for incentive compensation, as it adjusts for certain non-cash and non-operating items - Adjusted EBITDA is a non-GAAP financial measure used by management to analyze financial results and ongoing operational performance[77][78] - It is calculated as net income before interest, income taxes, stock-based compensation, depreciation and amortization, and changes in fair value of non-marketable equity investments[78] Adjusted EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------- | :------------------ | :------------------ | | GAAP net income | $4,332 | $5,227 | | Interest income | $(931) | $(904) | | Interest expense | $25 | $24 | | Income tax provision | $916 | $1,316 | | Stock-based compensation expense | $1,104 | $1,060 | | Depreciation and amortization | $10,755 | $10,336 | | Adjusted EBITDA | $16,201 | $17,059 | Liquidity and Capital Resources HealthStream's liquidity improved in Q1 2025, with net cash from operating activities increasing to $27.1 million, driven by strong cash receipts and reduced Days Sales Outstanding (DSO). The company maintains $77.3 million in cash and equivalents and $36.0 million in marketable securities, along with an unused $50.0 million revolving credit facility. A new $25 million share repurchase program was approved, and the company believes it has sufficient liquidity for future needs - Net cash provided by operating activities increased by $6.2 million to $27.1 million in Q1 2025, primarily due to strong cash receipts and a reduction in DSO from 46 to 37 days[82] - The company's primary liquidity sources include $77.3 million in cash and cash equivalents and $36.0 million in marketable securities as of March 31, 2025[85] - A $50.0 million revolving credit facility remains available with no outstanding borrowings, expiring October 6, 2026[86] - A new share repurchase program for up to $25 million was approved on May 8, 2025, to terminate by May 31, 2026[90] - Management believes existing cash, marketable securities, operating cash flow, and the credit facility are sufficient to meet anticipated working capital, product development, dividend payments, and capital expenditures for at least the next 12 months[91] Item 3. Quantitative and Qualitative Disclosures about Market Risk HealthStream is exposed to market risks from changes in interest rates, foreign currency fluctuations, and investment risks. While currently having no outstanding debt, future borrowings under its revolving credit facility would expose it to interest rate volatility. Foreign currency risk exists due to international operations, and investment risk stems from strategic investments in privately held companies, primarily in healthcare technology Interest Rate Risk The company faces interest rate risk from future borrowings; a 10% rate decrease would impact interest income by $0.4 million - The company had no outstanding debt as of March 31, 2025, but is exposed to interest rate risk from future borrowings under its revolving credit facility[94] - A hypothetical 10% decrease in interest rates for invested balances ($113.3 million at March 31, 2025) would decrease annualized interest income by $0.4 million[94] Foreign Currency Risk HealthStream faces foreign currency risk from operations in Canadian, New Zealand, and Australian dollars, without hedging contracts - HealthStream faces foreign currency risks from revenues and operating expenses denominated in Canadian, New Zealand, and Australian dollars[95] - The company has not entered into foreign currency hedging contracts but may do so in the future as international operations grow[96] Investment Risk Investment policy focuses on highly rated securities, but strategic investments in private healthcare tech carry market and impairment risks - The company's investment policy focuses on highly rated securities to minimize principal loss, with limits on credit exposure and portfolio maturity[97] - Strategic investments in privately held, early-stage healthcare technology companies expose the company to volatility from market price changes, observable price changes, and impairments[98] Item 4. Controls and Procedures HealthStream's CEO and principal financial officer evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, concluding they were effective. There were no material changes in internal control over financial reporting during the first quarter of 2025 Evaluation of Controls and Procedures The CEO and principal financial officer concluded that disclosure controls and procedures were effective as of March 31, 2025 - The CEO and principal financial officer concluded that HealthStream's disclosure controls and procedures were effective as of March 31, 2025[100] Changes in Internal Control over Financial Reporting There were no material changes in internal control over financial reporting during the first quarter of 2025 - There were no material changes in HealthStream's internal control over financial reporting during the first quarter of 2025[101] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, other disclosures, and exhibits for the period Item 1. Legal Proceedings HealthStream reported no legal proceedings for the period - There are no legal proceedings to report[102] Item 1A. Risk Factors This section updates the risk factors, highlighting that macroeconomic conditions and uncertainties in the U.S. healthcare industry continue to adversely impact HealthStream's business. These include persistent inflation, high interest rates, potential government funding cuts, and policy changes, leading to reduced demand for elective solutions, increased pricing sensitivity, and delayed investment decisions among customers Risks Related to Our Business Model Macroeconomic conditions, including inflation, high interest rates, and potential government cuts, negatively impact demand and pricing for solutions - Macroeconomic conditions, including persistent inflationary pressures, elevated interest rates, and geopolitical tensions, continue to challenge the U.S. healthcare industry and HealthStream's business[104] - Potential government funding reductions, changes to Medicare/Medicaid, and tariffs on healthcare-related goods may increase costs for customers and reduce demand for HealthStream's products[106][107][108][109] - These conditions have led to decreased demand for elective solutions, increased pricing sensitivity, and delayed investment decisions among customers, adversely affecting financial results[105][111] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds HealthStream did not have any share repurchase program in effect or purchase any common stock during the three months ended March 31, 2025. However, a new $25 million share repurchase program was approved by the Board on May 8, 2025, set to expire by May 31, 2026 - No shares of common stock were purchased under a repurchase program during the three months ended March 31, 2025[112] - On May 8, 2025, the Board approved a new share repurchase program for up to $25 million of common stock, terminating by May 31, 2026[113] Item 5. Other Information No other material information was reported for the period, and no director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b-5 trading arrangements - No other material information was reported for the period[114] - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b-5 trading arrangements[114] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the 2025 Cash Incentive Bonus Plan, CEO and CFO certifications under Sarbanes-Oxley Act, and various Inline XBRL taxonomy extensions - Exhibits include the 2025 Cash Incentive Bonus Plan, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and Inline XBRL documents[115] SIGNATURE The report was duly signed on behalf of HealthStream, Inc. by Scott A. Roberts, Chief Financial Officer, on May 9, 2025 - The report was signed by Scott A. Roberts, Chief Financial Officer, on May 9, 2025[119]