HealthStream(HSTM) - 2025 Q2 - Quarterly Results

Earnings Release Overview HealthStream announced its second quarter 2025 results, highlighting key financial achievements and capital allocation activities Second Quarter 2025 Key Highlights HealthStream announced record quarterly revenues and significant year-over-year increases across key financial metrics for Q2 2025, alongside capital allocation activities including share repurchases and a quarterly dividend declaration Second Quarter 2025 Financial Highlights (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Growth (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Revenues | $74.4 | $71.6 | 4.0% | | Operating Income | $5.9 | $4.4 | 33.4% | | Net Income | $5.4 | $4.2 | 29.3% | | Diluted EPS | $0.18 | $0.14 | N/A | | Adjusted EBITDA | $17.6 | $15.8 | 11.3% | - The Board of Directors authorized a share repurchase program on May 8, 2025, to repurchase up to $25.0 million of outstanding common stock, with $18.1 million repurchased during the second quarter[7] - A quarterly cash dividend of $0.031 per share was declared, payable on August 29, 2025[7] CEO Commentary CEO Robert A. Frist, Jr. highlighted the strong financial performance in the second quarter of 2025, including record quarterly revenues, and expressed confidence in HealthStream's solutions to continue aiding healthcare organizations in achieving greater workflow efficiencies - CEO Robert A. Frist, Jr. noted record quarterly revenues of $74.4 million, up four percent year-over-year, and stated that HealthStream's solutions are well-positioned to help healthcare organizations achieve greater workflow efficiencies[15] Financial Performance Analysis This section provides a detailed analysis of HealthStream's financial performance for Q2 and year-to-date 2025, including revenue, profitability, and financial position Second Quarter 2025 Results HealthStream reported strong Q2 2025 financial results with revenue growth primarily driven by subscription services, and significant improvements in operating income, net income, and EPS due to increased revenues, sublease income, and lower bad debt expense, partially offset by higher investment-related expenses Revenue Performance Total revenues for Q2 2025 increased by 4.0% year-over-year to $74.4 million, setting a new company record, primarily driven by a 4.2% increase in subscription revenues Q2 2025 Revenue Breakdown (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Change (Millions) | Growth (%) | | :-------------------- | :----------------- | :----------------- | :---------------- | :--------- | | Total Revenues | $74.4 | $71.6 | $2.8 | 4.0% | | Subscription Revenues | N/A | N/A | $2.9 | 4.2% | | Professional Services | N/A | N/A | ($0.1) | N/A | Profitability and EPS Operating income surged by 33.4%, net income by 29.3%, and diluted EPS by 28.6% in Q2 2025, benefiting from revenue growth, sublease income, and reduced bad debt expense, despite increased investments in platform and SaaS applications Q2 2025 Profitability and EPS (YoY) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | Growth (%) | | :---------------- | :----------------- | :----------------- | :--------- | | Operating Income | $5.9 | $4.4 | 33.4% | | Net Income | $5.4 | $4.2 | 29.3% | | Diluted EPS | $0.18 | $0.14 | 28.6% | - The improvement in operating income was primarily attributable to increased revenues, sublease income, and lower bad debt expense, partially offset by higher expenses for investments in platform and SaaS applications[4] Year-to-Date 2025 Results For the first six months of 2025, HealthStream reported modest year-over-year increases across key financial metrics, with revenues up 2.5%, operating income up 1.6%, and Adjusted EBITDA up 2.8%, driven by similar factors as the quarterly results Year-to-Date 2025 Financial Performance (YoY) | Metric | YTD 2025 (Millions) | YTD 2024 (Millions) | Growth (%) | | :---------------- | :------------------ | :------------------ | :--------- | | Revenues | $147.9 | $144.3 | 2.5% | | Operating Income | $10.3 | $10.1 | 1.6% | | Net Income | $9.7 | $9.4 | N/A | | Diluted EPS | $0.32 | $0.31 | N/A | | Adjusted EBITDA | $33.8 | $32.9 | 2.8% | - The increase in year-to-date operating income was primarily due to higher revenues, sublease income, and lower bad debt expense, partially offset by increased expenses for platform and SaaS application investments[9] Financial Position and Capital Expenditures As of June 30, 2025, HealthStream maintained a strong liquidity position with $90.6 million in cash, cash equivalents, and marketable securities, and no outstanding indebtedness. Capital expenditures for the second quarter were $9.2 million - Cash, cash equivalents, and marketable securities totaled $90.6 million as of June 30, 2025[8] - The Company does not have any outstanding indebtedness from borrowed money[8] - Capital expenditures incurred during the second quarter of 2025 were $9.2 million[8] Capital Allocation and Corporate Actions This section details HealthStream's capital allocation strategies, including its share repurchase program and quarterly cash dividend declarations Share Repurchase Program HealthStream's Board authorized a $25.0 million share repurchase program, under which $18.1 million was repurchased in Q2 2025, and the program was completed in July with an additional $6.9 million in repurchases - The Board of Directors authorized a share repurchase program on May 8, 2025, to repurchase up to $25.0 million of outstanding common stock[10] - $18.1 million in shares were repurchased during the second quarter of 2025 pursuant to this authorization[10] - The program was completed in July by repurchasing shares valued at $6.9 million, exhausting the maximum dollar amount[10] Quarterly Cash Dividend The Board of Directors declared a quarterly cash dividend of $0.031 per share, payable on August 29, 2025, to shareholders of record on August 18, 2025 - A quarterly cash dividend of $0.031 per share was approved by the Board of Directors on August 4, 2025[11] - The dividend is payable on August 29, 2025, to holders of record on August 18, 2025[11] Financial Outlook for 2025 HealthStream updated its full-year 2025 guidance, raising the expected net income range while maintaining revenue, Adjusted EBITDA, and capital expenditure projections. The guidance excludes impacts from potential acquisitions/dispositions or changes in non-marketable equity investments Full Year 2025 Guidance | Metric | Low (Millions) | High (Millions) | Previous Net Income Guidance (Millions) | | :-------------------- | :------------- | :-------------- | :-------------------------------------- | | Revenue | $297.5 | $303.5 | N/A | | Net Income | $19.5 | $22.4 | $18.6 to $21.0 | | Adjusted EBITDA | $68.5 | $72.5 | N/A | | Capital Expenditures | $31.0 | $34.0 | N/A | - The updated guidance for 2025 reflects the Company's assumptions regarding new sales and renewals[14] - This consolidated guidance does not include the impact of any acquisitions or dispositions, gains or losses from changes in fair value of non-marketable equity investments, or impairment of long-lived assets[14] Conference Call Information HealthStream will host a conference call on Tuesday, August 5, 2025, at 9:00 a.m. (ET) to discuss the results, with webcast and telephone access details provided. A replay will be archived on the company's website - A conference call will be held on Tuesday, August 5, 2025, at 9:00 a.m. (ET)[16] - Participants can access the live conference call via webcast or by registering for telephone access[16] - A replay of the conference call and webcast will be archived on the Company's website in the Investor Relations section[16] Non-GAAP Financial Measures This section defines HealthStream's non-GAAP financial measures, primarily Adjusted EBITDA, and provides reconciliations to comparable GAAP measures for transparency Definition and Rationale HealthStream utilizes Adjusted EBITDA, a non-GAAP financial measure, to evaluate its operating performance by adjusting net income for certain non-cash and non-operating items, believing it provides a useful and comparable view of the underlying business - Adjusted EBITDA is defined as net income before interest, income taxes, stock-based compensation, depreciation and amortization, and changes in fair value of non-marketable equity investments[17] - Management believes Adjusted EBITDA is useful for evaluating ongoing operating performance and comparing performance between periods, as it adjusts for certain GAAP accounting, non-cash, and/or non-operating items[17] - Adjusted EBITDA is a non-GAAP measure and should not be considered a substitute for, or superior to, GAAP measures, and may not be comparable to similarly titled measures of other companies[18][19] Reconciliation of Adjusted EBITDA HealthStream provides detailed reconciliations of Adjusted EBITDA to net income for both the reported quarterly and year-to-date periods, as well as for the full-year 2025 financial outlook, to ensure transparency with GAAP measures Quarterly and Year-to-Date Reconciliation This section presents the reconciliation of GAAP net income to Adjusted EBITDA for the three and six months ended June 30, 2025, and 2024, detailing the specific adjustments made Adjusted EBITDA Reconciliation (Q2 & YTD) | Metric | Q2 2025 (Thousands) | Q2 2024 (Thousands) | YTD 2025 (Thousands) | YTD 2024 (Thousands) | | :-------------------------- | :------------------ | :------------------ | :------------------- | :------------------- | | GAAP net income | $5,389 | $4,168 | $9,721 | $9,394 | | Interest income | (958) | (944) | (1,889) | (1,848) | | Interest expense | 25 | 25 | 50 | 49 | | Income tax provision | 1,478 | 1,132 | 2,393 | 2,448 | | Stock-based compensation | 836 | 1,094 | 1,940 | 2,154 | | Depreciation & amortization | 10,867 | 10,370 | 21,621 | 20,706 | | Adjusted EBITDA | $17,637 | $15,845 | $33,836 | $32,903 | 2025 Outlook Reconciliation This section provides the reconciliation of projected net income to projected Adjusted EBITDA for the full year 2025 guidance, detailing the anticipated adjustments 2025 Financial Outlook Reconciliation to Adjusted EBITDA | Metric | Low (Thousands) | High (Thousands) | | :-------------------------- | :-------------- | :--------------- | | Net income | $19,500 | $22,400 | | Interest income | (3,300) | (3,500) | | Interest expense | 100 | 100 | | Income tax provision | 5,200 | 6,000 | | Stock-based compensation | 4,000 | 4,300 | | Depreciation & amortization | 43,000 | 43,200 | | Adjusted EBITDA | $68,500 | $72,500 | About HealthStream HealthStream is a leading healthcare technology platform company that provides workforce solutions, empowering healthcare professionals and operating the industry's largest ecosystem of platform-delivered solutions for patient care excellence - HealthStream (Nasdaq: HSTM) is a leading healthcare technology platform company for workforce solutions[1][20] - It is the healthcare industry's largest ecosystem of platform-delivered workforce solutions[20] - The company's mission is to empower healthcare professionals to deliver excellence in patient care[20] Condensed Consolidated Financial Statements This section presents HealthStream's unaudited condensed consolidated statements of income, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Income This section presents the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2025, and 2024, detailing revenues, operating costs and expenses, operating income, and net income Condensed Consolidated Statements of Income (Selected Data, in thousands) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------------------------------ | :------ | :------ | :------- | :------- | | Revenues, net | $74,396 | $71,556 | $147,881 | $144,316 | | Total operating costs and expenses | $68,510 | $67,145 | $137,617 | $134,215 | | Operating income | $5,886 | $4,411 | $10,264 | $10,101 | | Net income | $5,389 | $4,168 | $9,721 | $9,394 | | Diluted Net income per share | $0.18 | $0.14 | $0.32 | $0.31 | | Dividends declared per share | $0.031 | $0.028 | $0.062 | $0.056 | Condensed Consolidated Balance Sheets This section provides the unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, outlining the company's assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total assets | $500,148 | $510,766 | | Total liabilities | $149,581 | $151,411 | | Total shareholders' equity | $350,567 | $359,355 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2025, and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | YTD 2025 | YTD 2024 | | :------------------------------------ | :------- | :------- | | Net cash provided by operating activities | $32,097 | $27,389 | | Net cash used in investing activities | ($18,399) | ($19,031) | | Net cash used in financing activities | ($21,086) | ($2,561) | | Net (decrease) increase in cash and cash equivalents | ($7,367) | $5,798 | | Cash and cash equivalents at end of period | $52,102 | $46,131 | Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, cautioning that actual results may differ materially due to various known and unknown risks and uncertainties, and the company undertakes no obligation to update these statements - The press release includes forward-looking statements regarding expectations for financial performance and dividend policy for 2025, which involve risks and uncertainties[31] - Actual results, performance, or achievements may be materially different from those expressed or implied by forward-looking statements due to factors such as negative economic conditions, changes in U.S. policy, adverse healthcare industry developments, and geopolitical instability[31] - Readers should not place undue reliance on forward-looking statements, and the Company undertakes no obligation to update or revise them[31]