• Revenue: $72.8 million, up 6% year-over-year.

• Operating Income: $5.7 million, up 97% year-over-year.

• Net Income: $5.2 million, up 99% year-over-year.

• Earnings Per Share (EPS): $0.17, up from $0.09 year-over-year.

• Adjusted EBITDA: $17.1 million, up 24% year-over-year.

• Subscription Revenue: $70.2 million, accounting for 96% of total revenue.

• Gross Margin: Improved to 66.2% from 65.4% last year.

• Cash and Investments: $83.7 million, up from $71.1 million last quarter.

• Free Cash Flow: Improved by $1.1 million or 9% year-over-year.

• Annual Recurring Revenue (ARR) Growth: Example from a customer, up by 31% or approximately $100,000.

• Warning! GuruFocus has detected 6 Warning Signs with HSTM.

Release Date: April 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Good morning and congratulations on the strong start to the year. Maybe the first question, it appears that the employment situation at your customers, hospitals, healthcare systems is improving since last year. And as that occurs, how are you seeing that change the purchasing decisions, I think you spoke a little bit about how you're seeing, your customers are paying more attention to their workforce today than maybe they did pre-pandemic, but are you seeing them even starting to implement HealthStream applications and solutions right at the beginning with the onboarding process and are you seeing, I guess, a greater wallet share with those customers starting on day-1 versus upon renewals and downstream from that initial hire? A: I don't have to think through all that. There's a lot of different trends in purchasing and patterns. I think one of them is we've done a little better job of bundling some of our products into suites now that can result in a little higher order value. And I mentioned that competency suite sale as an add on earlier. The competency suite is an aggregation of two or three products that used to be sold individually, and now they're viewed as a more comprehensive tool set to develop the competencies of staff. And so, we're learning to position things in a little better way that's more consistent with the tailwinds I mentioned.

Q: That's really helpful. Thank you. And then maybe a separate question regarding the opioid course. Obviously, you know, it's nice to have a tailwind like that, a government mandated tailwind. How quickly are hospitals expected to implement that type of a course? And what could that mean? Is it a driver for this year or could it add 1% or 2% to revenues this year, just trying to think of how to factor that in? A: Couple of things here. And you pointed out rightly, this is a unique opportunity. So we don't want to get, I mean, it's exciting, right? We did $0.5 in the quarter, so if we can find a way to keep that rate up, and remember, that's direct to professional sales. So we don't necessarily see any institutional purchasing of that course or certainly not much. But the direct opportunity to get to a physician, who has a renewing license where this is a requirement, drove a $0.5 in sales in the quarter.

Q: This is Jared, on for Ryan Daniels. Bobby, you talked a little bit, I think, in the credentialing segment about a win with a payer. And I'm curious, I think that's relatively new. So just be curious to hear a little bit more as to how we should think about the opportunity with payer customers. And then specifically, it sounded like that was a blues plan, so I'm wondering if you see an opportunity here to further penetrate the network of blues plans nationwide. A: Well, okay. So first, we're excited you picked up on that. And, yes, it's a new type of customer for us. We think that our credential stream application and the way we built it might give unique benefits to that market segment over time, the way that it's been engineered to work and create data mobility, sometimes health plans are owned by health systems, and that might create some interoperability benefits that we see potentially in the future. So yes, it's an example of one exciting new development if you're in the sales team in that area. And we do think we have a unique set of capabilities in the app that could be beneficial to health plans.

Q: Bobby, another strong quarter for ShiftWizard. You added a few new clients. Curious if they were mostly, I assume they're mostly mid-market clients. And if that's correct, when may you be prepared to move up to larger enterprise clients? A: Well, we're working on that, I think you're right. I mean, generally that product is great. We have some good examples of big systems that are using it. But I think in general, the successes are coming in the mid-market right now and that's the focus of our sales team. So we continue to try to expand this capability and make it more relevant. We have ambition to integrate properties like NurseGrid, the app, to the ShiftWizard application, which would extend its functionality. And so, I think right now, though, for the next six to nine months, maybe even for the full year, the remainder of this year, our focus is at middle market.

Q: And one last one. Anything in the competitive market worth calling out since last quarter? A: Well, you know, no, I don't think anything particularly, I mean, everyone, including HealthStream is working on their AI strategies, so we see different approaches to that, you know,

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.