HealthStream(HSTM) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides HealthStream's unaudited condensed consolidated financial statements and management's analysis for Q1 2021 Item 1. Financial Statements This section presents HealthStream's unaudited condensed consolidated financial statements and related notes for Q1 2021 and prior periods Condensed Consolidated Balance Sheets (Unaudited) This section presents the unaudited condensed consolidated balance sheets for HealthStream, Inc. as of March 31, 2021, and December 31, 2020 Condensed Consolidated Balance Sheets (Unaudited) - Key Figures (in thousands USD) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Total current assets | $114,977 | $114,725 | | Total assets | $501,682 | $500,313 | | Total current liabilities | $116,906 | $119,442 | | Total shareholders' equity | $336,805 | $334,062 | | Total liabilities and shareholders' equity | $501,682 | $500,313 | - Total assets increased slightly from $500.3 million at December 31, 2020, to $501.7 million at March 31, 2021. Total shareholders' equity also saw a modest increase from $334.1 million to $336.8 million[9] Condensed Consolidated Statements of Income (Unaudited) This section presents the unaudited condensed consolidated statements of income for the three months ended March 31, 2021, and 2020 Condensed Consolidated Statements of Income (Unaudited) - Key Figures (in thousands USD, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues, net | $63,468 | $61,572 | | Total operating costs and expenses | $60,168 | $54,328 | | Operating income | $3,300 | $7,244 | | Net income | $2,291 | $7,092 | | Net income per share (Diluted) | $0.07 | $0.22 | - Net revenues increased by 3% year-over-year, from $61.6 million in Q1 2020 to $63.5 million in Q1 2021. However, operating income decreased by 54% and net income decreased by 68% due to higher operating costs and expenses in 2021 and a one-time contractual adjustment in 2020[12] Condensed Consolidated Statements of Comprehensive Income (Unaudited) This section presents the unaudited condensed consolidated statements of comprehensive income for the three months ended March 31, 2021, and 2020 Condensed Consolidated Statements of Comprehensive Income (Unaudited) - Key Figures (in thousands USD) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $2,291 | $7,092 | | Total other comprehensive income (loss) | $234 | $(145) | | Comprehensive income | $2,525 | $6,947 | - Comprehensive income decreased significantly from $6.9 million in Q1 2020 to $2.5 million in Q1 2021, primarily driven by the decrease in net income, despite a positive shift in other comprehensive income from a loss to a gain[14] Condensed Consolidated Statement of Shareholders' Equity (Unaudited) This section presents the unaudited condensed consolidated statement of shareholders' equity for the three months ended March 31, 2021 Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - Key Figures (in thousands USD) | Metric | Balance at Dec 31, 2020 | Balance at Mar 31, 2021 | | :-------------------------------- | :---------------------- | :---------------------- | | Total Shareholders' Equity | $334,062 | $336,805 | | Net income | N/A | $2,291 | | Stock based compensation | N/A | $616 | | Common stock issued under stock plans, net | N/A | $(399) | - Total shareholders' equity increased from $334.1 million at December 31, 2020, to $336.8 million at March 31, 2021, primarily due to net income and stock-based compensation, partially offset by common stock issued under stock plans[16] Condensed Consolidated Statements of Cash Flows (Unaudited) This section presents the unaudited condensed consolidated statements of cash flows for the three months ended March 31, 2021, and 2020 Condensed Consolidated Statements of Cash Flows (Unaudited) - Key Figures (in thousands USD) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $19,104 | $6,116 | | Net cash used in investing activities | $(9,660) | $(19,904) | | Net cash used in financing activities | $(411) | $(10,279) | | Net increase (decrease) in cash and cash equivalents | $8,782 | $(24,113) | | Cash and cash equivalents at end of period | $45,348 | $107,425 | - Net cash provided by operating activities significantly increased to $19.1 million in Q1 2021 from $6.1 million in Q1 2020. Net cash used in investing activities decreased, and net cash used in financing activities also decreased substantially, leading to a net increase in cash and cash equivalents in Q1 2021 compared to a decrease in Q1 2020[19] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed notes explaining the basis of presentation, revenue recognition, income taxes, and other financial statement items 1. BASIS OF PRESENTATION This note describes the basis for preparing the unaudited condensed consolidated financial statements in accordance with US GAAP and Form 10-Q - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with US GAAP for interim financial information and Form 10-Q instructions, including normal recurring accruals. Operating results for Q1 2021 are not indicative of the full year[20] 2. REVENUE RECOGNITION AND SALES COMMISSIONS This note details the company's revenue recognition policies and disaggregates revenues by business segment for the reported periods Revenues Disaggregated by Source (in thousands USD) | Business Segments | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------------ | :-------------------------------- | :-------------------------------- | | Workforce Solutions | $51,247 | $49,824 | | Provider Solutions | $12,221 | $11,748 | | Total revenues, net | $63,468 | $61,572 | - The Company expects to recognize approximately $446 million of revenue from remaining performance obligations, with about 46% recognized over the next 12 months. Amortization of deferred commissions was $2.1 million in Q1 2021 and $2.2 million in Q1 2020[24][26] 3. INCOME TAXES This note provides information on the income tax provision and effective tax rates for the three months ended March 31, 2021, and 2020 Income Tax Provision and Effective Tax Rate (in thousands USD) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Income tax provision | $922 | $1,858 | | Effective tax rate | 29% | 21% | - The effective tax rate increased to 29% in Q1 2021 from 21% in Q1 2020, primarily due to discrete tax expense related to purchase accounting adjustments and a state tax rate change in 2021, compared to a tax benefit from a non-taxable acquisition in 2020[28] 4. SHAREHOLDERS' EQUITY This note details changes in shareholders' equity, including stock-based compensation and the company's share repurchase program Stock Based Compensation Expense (in thousands USD) | Expense Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenues | $20 | $7 | | Product development | $102 | $81 | | Sales and marketing | $65 | $49 | | Other general and administrative | $429 | $413 | | Total stock based compensation expense | $616 | $550 | - Total stock-based compensation expense increased to $616,000 in Q1 2021 from $550,000 in Q1 2020. The Company's share repurchase program, authorized for up to $30.0 million, expired on March 12, 2021, with no repurchases occurring in Q1 2021[31][32] 5. EARNINGS PER SHARE This note provides the calculation of basic and diluted earnings per share for the three months ended March 31, 2021, and 2020 Earnings Per Share (in thousands USD, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $2,291 | $7,092 | | Weighted-average shares outstanding (Basic) | 31,504 | 32,334 | | Weighted-average diluted shares | 31,526 | 32,357 | | Net income per share (Basic) | $0.07 | $0.22 | | Net income per share (Diluted) | $0.07 | $0.22 | - Diluted EPS decreased to $0.07 in Q1 2021 from $0.22 in Q1 2020, reflecting the lower net income for the period. Approximately 148,000 common equivalent shares were excluded from diluted EPS calculations in Q1 2021 due to anti-dilutive effects or contingent performance conditions[33][34] 6. MARKETABLE SECURITIES This note details the fair value of marketable securities, classified as available for sale, as of March 31, 2021, and December 31, 2020 Marketable Securities Fair Value (in thousands USD) | Category | March 31, 2021 Fair Value | December 31, 2020 Fair Value | | :-------------------- | :-------------------------- | :--------------------------- | | Cash | $45,348 | $31,558 | | Time deposits | $5,022 | $10,021 | | Corporate debt securities | $5,600 | $4,915 | | Total | $55,970 | $46,494 | - The fair value of marketable securities, classified as available for sale, increased to $56.0 million at March 31, 2021, from $46.5 million at December 31, 2020. All marketable securities are classified as current assets[35][36] 7. BUSINESS COMBINATIONS This note provides details on recent acquisitions, including NurseGrid, ShiftWizard, ANSOS Staff Scheduling, myClinicalExchange, and ComplyALIGN - The Company completed several acquisitions: NurseGrid (March 2020), ShiftWizard (October 2020), ANSOS Staff Scheduling (December 2020), myClinicalExchange (December 2020), and ComplyALIGN (January 2021). These acquisitions primarily enhance the Workforce Solutions segment[37][41][45][52][53] Goodwill and Intangible Assets from Key Acquisitions (in thousands USD) | Acquisition | Goodwill | Intangible Assets | | :---------- | :------- | :---------------- | | NurseGrid | $21,085 | $1,845 | | ShiftWizard | $19,307 | $12,660 | | ANSOS | $36,963 | $32,440 | - Goodwill increased by $2.7 million in Q1 2021, including a $1.7 million measurement period adjustment for ANSOS, $0.6 million from ComplyALIGN, and $0.4 million from currency translation[54] 8. BUSINESS SEGMENTS This note presents financial information disaggregated by the Workforce Solutions and Provider Solutions business segments Business Segment Performance (in thousands USD) | Metric | Segment | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------- | :------------------ | :-------------------------------- | :-------------------------------- | | Revenues, net | Workforce Solutions | $51,247 | $49,824 | | | Provider Solutions | $12,221 | $11,748 | | Operating income | Workforce Solutions | $9,027 | $13,370 | | | Provider Solutions | $2,055 | $1,197 | | Segment assets (Mar 31, 2021) | Workforce Solutions | $267,993 | $270,924 (Dec 31, 2020) | | | Provider Solutions | $136,926 | $140,490 (Dec 31, 2020) | - Workforce Solutions revenues increased 3% YoY, while Provider Solutions revenues increased 4% YoY. Workforce Solutions operating income decreased significantly, whereas Provider Solutions operating income nearly doubled[58] 9. DEBT This note describes the company's revolving credit facility and confirms compliance with all debt covenants - The Company has a $65.0 million Revolving Credit Facility, maturing October 28, 2023, with no outstanding balances as of March 31, 2021. The facility is for general working capital, permitted acquisitions, and stock repurchases, and the Company was in compliance with all covenants[59][61][64] 10. NON-MARKETABLE EQUITY INVESTMENTS This note provides the aggregate carrying amount and adjustments for non-marketable equity investments - The aggregate carrying amount of non-marketable equity investments was $3.9 million as of March 31, 2021, and December 31, 2020. The Company has recorded cumulative net downward adjustments of $0.1 million to the carrying value of these investments[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's detailed analysis of HealthStream's financial condition, operational results, and liquidity for Q1 2021 Special Cautionary Notice Regarding Forward‑Looking Statements This section warns readers about forward-looking statements, emphasizing inherent risks and uncertainties that may cause actual results to differ - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. Readers are cautioned not to place undue reliance on these statements and to consider risk factors outlined in the 2020 Form 10-K[67][68][69] Business Overview This section provides an overview of HealthStream's SaaS-based healthcare solutions and key financial metrics for Q1 2021 - HealthStream provides SaaS-based workforce and provider solutions for healthcare organizations, focusing on talent management, compliance, and credentialing. As of March 31, 2021, the company had approximately 4.34 million contracted subscriptions to its hStream™ Platform-as-a-Service technology[70] Significant Financial Metrics for Q1 2021 (in millions USD, except EPS) | Metric | Q1 2021 | Q1 2020 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Revenues | $63.5 | $61.6 | 3% | | Operating income | $3.3 | $7.2 | -54% | | Net income | $2.3 | $7.1 | -68% | | Diluted EPS | $0.07 | $0.22 | -68% | | Adjusted EBITDA | $13.6 | $11.9 | 14% | Impact of and Response to COVID-19 Pandemic This section discusses the negative impact of the COVID-19 pandemic on revenues and earnings, and the company's operational adjustments - The COVID-19 pandemic has negatively impacted HealthStream's revenues in Q1 2021 and is expected to continue affecting revenue and earnings due to delayed or postponed sales cycles and reduced bookings/renewals. Operating expenses benefited from a $1.2 million reduction in travel-related costs in Q1 2021[74][75] - The company continues to monitor customer ability to pay, implement solutions, and renew contracts, noting modest increases in Days Sales Outstanding (DSO) in Q1 2021. All employees have been working remotely since March 2020[77][79] Key Business Metrics This section highlights key operational and financial metrics, including hStream subscriptions and Adjusted EBITDA, for Q1 2021 Key Business Metrics (in millions USD, except subscriptions) | Metric | Q1 2021 | Q1 2020 | Change (%) | | :-------------------- | :------ | :------ | :--------- | | Revenues, net | $63.5 | $61.6 | 3% | | Operating Income | $3.3 | $7.2 | -54% | | Adjusted EBITDA | $13.6 | $11.9 | 14% | | hStream Subscriptions | 4.34 | 3.40 | 27.6% | - hStream subscriptions grew by 27.6% to 4.34 million as of March 31, 2021, indicating growth in the customer base for its Platform-as-a-Service technology[88] Critical Accounting Policies and Estimates This section outlines the company's critical accounting policies and estimates, with no reported changes from the prior fiscal year - The Company's critical accounting policies include revenue recognition, accounting for income taxes, software development costs, goodwill, intangibles, other long-lived assets, and allowance for doubtful accounts. No changes were reported from the 2020 Form 10-K[89] Impact on Comparability of Operating Results This section explains factors affecting the comparability of Q1 2021 operating results, including acquisitions and specific non-cash adjustments - Comparability of Q1 2021 results to Q1 2020 is affected by five acquisitions completed between March 2020 and January 2021, which increased revenues and operating expenses. Revenues from legacy resuscitation products declined significantly from $11.2 million in Q1 2020 to $1.8 million in Q1 2021[91][92] - Operating results were also impacted by a $1.0 million non-cash reduction to paid time off (PTO) expense in Q1 2021 and a $3.4 million non-cash contractual adjustment to royalty expense in Q1 2020[92] Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020 This section provides a detailed comparative analysis of HealthStream's revenues, costs, and expenses for Q1 2021 versus Q1 2020 Revenues, net This section analyzes the net revenues by business segment, highlighting growth drivers for Workforce Solutions and Provider Solutions Revenues by Business Segment (in thousands USD) | Business Segment | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | Workforce Solutions | $51,247 | $49,824 | 3% | | Provider Solutions | $12,221 | $11,748 | 4% | | Total revenues, net | $63,468 | $61,572 | 3% | - Workforce Solutions revenue growth was driven by recent acquisitions and other workforce solutions, offsetting declines from legacy resuscitation products. Provider Solutions revenue growth was due to new VerityStream subscriptions and professional services[93][94] Cost of Revenues (excluding Depreciation and Amortization) This section analyzes the cost of revenues, excluding depreciation and amortization, and factors impacting its change Cost of Revenues (excluding Depreciation and Amortization) (in thousands USD) | Metric | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | Cost of revenues | $21,237 | $20,359 | 4% | | % of revenues | 33% | 33% | 0% | - Cost of revenues increased by $0.8 million, or 4%, but remained 33% of revenues for both periods. Q1 2021 was favorably impacted by a $0.2 million PTO expense reduction, while Q1 2020 benefited from a $3.4 million one-time contractual adjustment to royalty expense[95] Product Development This section analyzes product development expenses, highlighting increases due to acquisitions and development efforts Product Development Expenses (in thousands USD) | Metric | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | Product development | $9,361 | $7,468 | 25% | | % of revenues | 15% | 12% | 3% | - Product development expenses increased by $1.9 million, or 25%, primarily due to recent acquisitions and increased development efforts in Workforce Solutions. Provider Solutions saw a decrease due to increased capitalized labor for internally developed software[98][99] Sales and Marketing This section analyzes sales and marketing expenses, noting decreases due to lower commissions and reduced travel costs Sales and Marketing Expenses (in thousands USD) | Metric | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | Sales and marketing | $8,924 | $9,188 | -3% | | % of revenues | 14% | 15% | -1% | - Sales and marketing expenses decreased by $0.3 million, or 3%, mainly due to lower sales commissions from declining legacy resuscitation revenues and reduced travel expenses due to COVID-19[100][101] Other General and Administrative Expenses This section analyzes other general and administrative expenses, highlighting increases from acquisitions and personnel costs Other General and Administrative Expenses (in thousands USD) | Metric | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | Other G&A expenses | $11,493 | $9,864 | 17% | | % of revenues | 18% | 16% | 2% | - Other general and administrative expenses increased by $1.6 million, or 17%, primarily due to expenses associated with recent acquisitions and increases in personnel and professional services costs in the unallocated corporate portion[102][103] Depreciation and Amortization This section analyzes depreciation and amortization expense, noting increases due to capitalized software and recent acquisitions Depreciation and Amortization Expense (in thousands USD) | Metric | Q1 2021 | Q1 2020 | Percentage Change | | :----------------- | :------ | :------ | :---------------- | | D&A expense | $9,153 | $7,449 | 23% | - Depreciation and amortization expense increased by $1.7 million, or 23%, mainly due to increased amortization associated with capitalized software and recent acquisitions[104] Other (Loss) Income, Net This section analyzes the shift in other (loss) income, net, from a gain in Q1 2020 to a loss in Q1 2021 Other (Loss) Income, Net (in thousands USD) | Metric | Q1 2021 | Q1 2020 | | :----------------- | :------ | :------ | | Other (loss) income, net | $(87) | $1,706 | - Other (loss) income, net, shifted from a $1.7 million income in Q1 2020 to an $87,000 loss in Q1 2021. This change was primarily due to a one-time $1.2 million gain from the NurseGrid acquisition in Q1 2020 and lower interest income in Q1 2021[105] Income Tax Provision This section analyzes the income tax provision and effective tax rate, highlighting factors influencing their changes Income Tax Provision and Effective Tax Rate (in millions USD) | Metric | Q1 2021 | Q1 2020 | | :----------------- | :------ | :------ | | Income tax provision | $0.9M | $1.9M | | Effective tax rate | 29% | 21% | - The income tax provision decreased to $0.9 million in Q1 2021 from $1.9 million in Q1 2020, while the effective tax rate increased to 29% from 21%. This was influenced by discrete tax expense in 2021 (purchase accounting, state tax rate change) and a tax benefit in 2020 (NurseGrid acquisition)[106][107] Net Income This section analyzes the decrease in net income and diluted EPS for Q1 2021 compared to Q1 2020 Net Income and EPS (in millions USD, except per share data) | Metric | Q1 2021 | Q1 2020 | | :----------------- | :------ | :------ | | Net income | $2.3 | $7.1 | | Diluted EPS | $0.07 | $0.22 | - Net income decreased to $2.3 million ($0.07 diluted EPS) in Q1 2021 from $7.1 million ($0.22 diluted EPS) in Q1 2020. The Q1 2020 figures were positively impacted by a one-time contractual adjustment of $2.6 million ($0.08 per diluted share)[108] Other Developments This section discusses the cessation of legacy resuscitation product revenues and the marketing of new resuscitation offerings - Revenues from legacy resuscitation products (HeartCode and RQI) under agreements with Laerdal effectively ceased at the end of 2020, contributing $1.8 million in Q1 2021 (down from $11.2 million in Q1 2020). The company expects de minimis revenue from these products in H2 2021[92][110] - A new agreement with RQI Partners (Laerdal and American Heart Association) provides for fees when HeartCode and RQI are delivered via HealthStream Learning Center, but these fees will not replace prior legacy agreement revenues[111] - HealthStream is actively marketing its new American Red Cross Resuscitation Suite, launched in 2019, and other simulation-based offerings, which are expected to yield higher margins than the legacy products[112] Reconciliation of Non-GAAP Financial Measures This section provides a reconciliation of GAAP net income to Adjusted EBITDA and explains revisions to its definition Adjusted EBITDA Reconciliation (in thousands USD) | Metric | Q1 2021 | Q1 2020 | | :-------------------------------- | :------ | :------ | | GAAP net income | $2,291 | $7,092 | | Deferred revenue write-down | $1,622 | $144 | | Interest income | $(18) | $(594) | | Interest expense | $32 | $25 | | Income tax provision | $922 | $1,858 | | Stock based compensation expense | $616 | $550 | | Depreciation and amortization | $9,153 | $7,449 | | Non-cash paid time off expense | $(1,011)| — | | Change in fair value of non-marketable equity investments | — | $(1,152)| | Non-cash royalty expense | — | $(3,440)| | Adjusted EBITDA | $13,607 | $11,932 | - Adjusted EBITDA increased by 14% to $13.6 million in Q1 2021 from $11.9 million in Q1 2020. The definition of Adjusted EBITDA was revised to include adjustments for non-cash paid time off expense and deferred revenue write-downs from acquisitions, as these are considered non-ordinary course or non-operating items[114][116][117][120] Liquidity and Capital Resources This section analyzes HealthStream's cash flows, liquidity position, and capital resources, including its revolving credit facility - Net cash provided by operating activities increased by $13.0 million to $19.1 million in Q1 2021, driven by higher cash collections. Days Sales Outstanding (DSO) increased to 52 days in Q1 2021 from 44 days in Q1 2020[121] - Net cash used in investing activities decreased to $9.7 million in Q1 2021 from $19.9 million in Q1 2020, primarily due to lower spending on business combinations and marketable securities. Net cash used in financing activities decreased significantly to $0.4 million from $10.3 million, mainly due to no common stock repurchases in Q1 2021[122][123][124] - The Company's liquidity includes $45.3 million in cash and cash equivalents, $10.6 million in marketable securities, and an available $65.0 million revolving credit facility. Management believes these resources are sufficient for the next 12 months, including potential acquisitions[125][127][128] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details HealthStream's exposure to market risks, including interest rate, foreign currency, and investment risks Interest Rate Risk This section discusses the company's exposure to interest rate risk, particularly concerning future borrowings and investment income - The Company had no outstanding debt as of March 31, 2021, but may be subject to interest rate risk from future borrowings under its revolving credit facility. A hypothetical 10% decrease in interest rates would reduce annualized interest income from cash and investments by approximately $8,000[130] Foreign Currency Risk This section outlines HealthStream's exposure to foreign currency risks from international revenues and expenses - HealthStream is exposed to foreign currency risks from revenues and operating expenses denominated in Canadian, New Zealand, and Australian dollars. While increases/decreases in foreign-denominated revenue are often offset by corresponding changes in expenses, growing international operations could increase this risk. The company has not used hedging contracts to date[131][132] Investment Risk This section describes the company's investment policy and the risks associated with strategic equity investments - The Company's investment policy focuses on highly rated securities to minimize principal loss, with limits on credit exposure and portfolio maturity. Strategic investments in privately held, early-stage healthcare technology companies may introduce volatility due to market price changes, observable price changes, and impairments[134][135] Item 4. Controls and Procedures This section confirms the effectiveness of HealthStream's disclosure controls and reports on internal control changes for Q1 2021 Evaluation of Controls and Procedures This section confirms the effectiveness of HealthStream's disclosure controls and procedures as evaluated by management - HealthStream's CEO and Principal Financial Officer evaluated the effectiveness of disclosure controls and procedures as of March 31, 2021, concluding they were effective in ensuring timely and accurate reporting of information required under the Exchange Act[137] Changes in Internal Control over Financial Reporting This section reports that no material changes occurred in HealthStream's internal control over financial reporting during Q1 2021 - No changes in HealthStream's internal control over financial reporting occurred during Q1 2021 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[138] PART II. OTHER INFORMATION This section provides additional information including risk factors, equity security sales, and a list of exhibits Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's 2020 Form 10-K - There have been no material changes to the risk factors previously disclosed in the 2020 Form 10-K[139] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase program, which expired on March 12, 2021, with no repurchases in Q1 2021 - The share repurchase program, authorized for up to $30.0 million, expired on March 12, 2021. Under this program, the Company repurchased 957,367 shares for $20.0 million at an average price of $20.89 per share. No repurchases occurred during the three months ended March 31, 2021[140][142] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including bonus plans, stock election plans, and certifications - Exhibits include the 2021 Executive and Corporate Management Cash Incentive Bonus Plan, 2021 Provider Solutions Cash Incentive Bonus Plan, Directors Stock Election Plan, CEO and Principal Financial Officer Certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and various Inline XBRL documents[144] SIGNATURE This section provides the official signature confirming the filing of the report - The report was signed on April 29, 2021, by Scott A. Roberts, Chief Financial Officer, on behalf of HealthStream, Inc[146][148]