NASHVILLE, Tenn.--(BUSINESS WIRE)--
HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning and
research solutions for the healthcare industry, announced today results
for the first quarter ended March 31, 2011 and provided revised guidance
for 2011.
Highlights:
-
Revenues of $18.5 million in the first quarter of 2011, up 25% over
the first quarter of 2010
-
Operating income of $2.6 million in the first quarter of 2011, up 81%
over the first quarter of 2010
-
Net income of $1.5 million, up 89% from net income of $807,000 in the
first quarter of 2010, and earnings per share (EPS) of $0.07 per share
in the first quarter of 2011, up 75% from EPS of $0.04 per share in
the first quarter of 2010
-
Adjusted EBITDA of $3.8 million in the first quarter of 2011, up 28%
from $3.0 million in the first quarter of 2010
-
Global launch of SimCenter™ & SimStore™ announced at the International
Meeting of Simulation in Healthcare
-
HealthStream acquires 50% stake in Advanced Video System (AVS)
product, which will serve as the foundation for SimView™, the
debriefing component of SimCenter™
Financial Results:
First Quarter 2011 Compared to First Quarter 2010
Revenues for the first quarter of 2011 increased $3.7 million, or 25
percent, to $18.5 million, compared to $14.8 million for the first
quarter of 2010. Revenues for HealthStream Learning and HealthStream
Research grew by 26 percent and 22 percent, respectively, over the prior
year first quarter.
Revenues from HealthStream Learning increased by $2.7 million, or 26
percent, when compared to the first quarter of 2010. Revenues from our
Internet-based subscription products increased by $2.9 million over the
prior year quarter, and were comprised of revenue increases from the
HealthStream Learning Center® (HLC) of $1.1 million and from courseware
subscriptions of $1.8 million. Revenues from Internet-based subscription
products increased 30 percent over the prior year quarter due to a
higher number of subscribers and more courseware consumption by
subscribers. Revenues associated with custom courseware development
decreased $223,000 from the prior year quarter.
Revenues from HealthStream Research increased by $984,000, or 22
percent, when compared to the first quarter of 2010. Revenues from
Patient Insights™ surveys—our survey research product that generates
recurring revenues—increased by $936,000, or 28 percent, when compared
to the first quarter of 2010. Revenues from other surveys, which are
conducted on annual or bi-annual cycles increased by approximately
$49,000, or four percent, when compared to the first quarter of 2010.
Cost of revenues (excluding depreciation and amortization) approximated
38 percent of revenues for the first quarter of 2011 compared to 37
percent of revenues for the first quarter of 2010. In the aggregate, all
other operating expenses increased by $916,000, or 12 percent, over the
prior year first quarter.
Operating income for the first quarter of 2011 increased by 81 percent
to $2.6 million compared to $1.4 million for the first quarter of 2010,
primarily resulting from the strong revenue growth mentioned above.
Net income for the first quarter of 2011 was $1.5 million, or 89% above
net income of $807,000 in the first quarter of 2010. Earnings per share
were $0.07 per share (diluted) in the first quarter of 2011, an increase
of 75% over $0.04 per share (diluted), for the first quarter of 2010.
Adjusted EBITDA (which we define as net income before interest, income
taxes, share-based compensation, and depreciation and amortization) was
$3.8 million for the first quarter of 2011, an increase of 28 percent
when compared to $3.0 million for the first quarter of 2010.
Reconciliation of this calculation to measures under U.S. generally
accepted accounting principles is attached to this release.
Other Financial Indicators
At March 31, 2011, the Company had cash and related interest receivable
and investments in marketable securities of $22.7 million, compared to
$23.7 million at December 31, 2010 and $13.1 million at March 31, 2010.
Capital expenditures totaled $4.8 million for the first quarter of 2011,
including $3.5 million in cash for a 50 percent acquisition in Laerdal
Medical's Advanced Video System (AVS) product, along with $1.3 million
for other capital expenditures and capitalized software development.
These uses of cash were partially offset by cash generated from
operations.
Our days sales outstanding (DSO), which we calculate by dividing the
accounts receivable balance, excluding unbilled and other receivables,
by average daily revenues for the quarter, approximated 63 days for the
first quarter of 2011 compared to 71 days for the first quarter of 2010.
The improvement in DSO resulted from stronger cash collections from
customers during the current quarter.
Line of Credit Increase and Availability Expansion
On March 30, 2011, HealthStream signed an amendment to its line of
credit with SunTrust Bank, increasing the availability under the line of
credit from $15.0 million to $20.0 million and extending its
availability to July 2012. The updated line of credit eliminates the
current minimum interest rate floor of three percent. The interest rate
is now equal to LIBOR plus a margin determined in accordance with a
pricing grid, which interest rate may or may not be below the previous
minimum of three percent. Other terms and conditions as well as the
financial tests and covenants that the Company is required to meet under
the line of credit remain unchanged from those specified under the
previous arrangement. As of March 31, 2011, HealthStream did not have
any balances outstanding under its $20.0 million line of credit.
HealthStream Learning Update
HealthStream supports healthcare organizations in delivering quality
patient care, creating safer hospitals, meeting regulatory training
requirements, and developing professional skills through our innovative
learning solutions. To this end, we provide a range of learning
solutions—delivered via a software-as-a-service (SaaS) model—that
include: the HLC—our Internet-based learning platform, a wide range of
professional, clinical, and regulatory courseware subscriptions, an
online authoring/self-publishing tool, and learning activities for
healthcare professionals sponsored by pharmaceutical and medical device
companies.
At March 31, 2011, approximately 2,400,000 healthcare professionals were
fully implemented to use our Internet-based HLC for training and
education. Revenue recognition commences when a contract is fully
implemented. This number is up from approximately 2,043,000 at March 31,
2010. The total number of contracted subscribers at March 31, 2011 was
approximately 2,523,000, up from approximately 2,136,000 at March 31,
2010. "Contracted subscribers" include both the 2,400,000 subscribers
already implemented and the 123,000 subscribers in the process of
implementation.
Customers representing approximately 100 percent of subscribers that
were up for renewal did renew in the first quarter of 2011, while our
renewal rate based on the annual contract value was approximately 105
percent. Our renewal rates reflect the addition of subscribers compared
to previously contracted amounts combined with any pricing adjustments
that may occur at renewal. The renewal rates for the first quarter of
2011 compare to a subscriber renewal rate of 100 percent and an annual
contract value renewal rate of 109 percent during the first quarter of
2010.
On January 24, 2011, HealthStream announced—through our collaborative
arrangement, SimVentures, with Laerdal Medical—the global launch of
SimCenter™ at the International Meeting for Simulation in Healthcare
(IMSH) held in New Orleans, Louisiana. SimCenter is an innovative
simulation management platform designed specifically for healthcare
organizations to manage their simulation initiatives. The increased
focus on patient safety has stimulated a booming interest in healthcare
training through simulation. We expect to make all components of
SimCenter available to customers during 2011.
Also at IMSH, we announced that—together with our SimVentures partner,
Laerdal Medical—we are collaborating with leading medical simulation
centers and key opinion leaders to provide a wide variety of simulation
content. Each of these leading developers has been given access to
SimDeveloper™, a newly launched software developer's toolkit, to prepare
and upload simulation scenarios that will be available through
SimStore™, a newly launched application. SimDeveloper and SimStore are
both components of SimCenter. SimStore has over 1,000 scenarios
available on an exclusive basis to sample and purchase online from www.simstore.com.
On March 30, 2011, HealthStream announced that we acquired a 50 percent
stake in Laerdal Medical's Advanced Video System (AVS), a product that
enables users of advanced patient simulators to easily capture
simulation video, audio, data logs, and "patient" responses, creating a
powerful debriefing tool to optimize learning. Healthcare providers and
educators, worldwide, have embraced AVS, with over 1,000 units deployed
in leading simulation centers to support their debriefing sessions
following simulation-based learning. The debriefing system is now
jointly owned through SimVentures. The AVS will be enhanced in 2011,
rebranded as SimView™, and fully integrated with SimCenter™.
HealthStream Research Update
We support healthcare organizations with research solutions that provide
valuable insight about patients' experiences, workforce engagement,
physician relations, and community perceptions of hospital services.
This insight, in turn, provides data-driven roadmaps for organizational
and workforce development—which can be achieved through HealthStream's
learning solutions. Our primary research solutions include Patient
Insights™, Employee Insights™, Physician Insights™, and Community
Insights™ surveys that deliver insight, analysis, and industry
benchmarks to healthcare organizations.
During the first quarter of 2011, HealthStream Research added several
new healthcare organization customers, including Baptist Health Care. In
January 2011, we announced that HealthStream Research has been selected
by Pensacola, Florida-based Baptist Health Care, a nationally recognized
pioneer of performance excellence in healthcare, to advance their
patient-centered culture by adopting HealthStream's research solutions.
In particular, HealthStream's Patient Insights™ (HCAHPS), Physician
Insights™, and Employee Insights™ survey solutions will be utilized over
the next three years by Baptist Health Care and their 6,000 employees
working across four hospitals, five ancillary healthcare providers, and
the Baptist Leadership Group—a consulting practice owned by Baptist
Health Care. Among our existing research customers, 26 renewed their
contracts in the first quarter for multiple survey products, while 45
chose to contract for more research services to add to their current
services received from HealthStream Research.
Financial Expectations
The Company is updating its guidance for 2011. We now anticipate that
2011 consolidated revenues will grow between 20 percent and 23 percent
over 2010. Learning segment revenues, which also include SimVentures and
AVS/SimView, the recently announced addition to SimVentures, are
expected to increase between 24 and 27 percent over the prior year. We
anticipate that Research revenues will grow between 13 percent and 17
percent over last year.
We anticipate that operating expenses will grow between 19 percent and
22 percent when compared to the Company's full year 2010 levels. These
categories include cost of revenues, product development, sales and
marketing, depreciation and amortization, and other general and
administrative expense.
We expect operating income will grow between 25 percent and 28 percent
for the full year of 2011 over 2010.
We expect our effective book income tax rate for 2011 to be between 41
percent and 42 percent. Actual tax payments will be substantially less
than our income tax provision as we continue to utilize our federal and
state net operating loss carry-forwards. As of December 31, 2010, the
Company had approximately $25 million of federal and $20 million of
state net operating losses available to offset taxable income.
We expect that total capital expenditures will be approximately $9.5
million for the full year of 2011, which includes the $3.5 million
investment in the AVS product made during the first quarter, along with
expenses for hardware, software and capitalized software development for
new features, enhancements, content development, and additional office
space.
Robert A. Frist, Jr., chief executive officer, commented, "Results from
the first quarter of 2011 are compelling, with an 89 percent increase in
net income and a 75 percent increase in diluted earnings per share over
the first quarter of 2010—and continued leveraged growth, evidenced by a
year-over-year increase in quarterly revenues of 25 percent while
operating income was up 81 percent over the same time period."
"Alongside our solid financial performance in the first quarter, we are
excited about the global launch of SimCenter™, an innovative simulation
management platform that HealthStream and Laerdal Medical are
introducing to the industry," said Frist. "I believe this new platform
is a groundbreaking solution that offers healthcare organizations
worldwide an opportunity to make the adoption and use of
simulation-based learning more accessible and easy. One of the initial
ways this will happen is through SimStore™, the first global marketplace
that connects simulation users with exclusive, best-in-class simulation
content. I look forward to reporting new developments with regard to
SimCenter later in 2011."
A conference call with Robert A. Frist, Jr., chief executive officer,
Gerard M. Hayden, Jr., senior vice president and chief financial
officer, and Mollie Condra, associate vice president of communications,
research, and investor relations will be held on Tuesday, April 26, 2011
at 9:00 a.m. (EST). To listen to the conference, please dial
877-647-2842 (no conference ID needed) if you are calling within the
domestic U.S. or Canada. If you are an international caller, please dial
914-495-8564 (no conference ID needed). The conference may also be
accessed by going to http://ir.healthstream.com/events.cfm
for the simultaneous Webcast of the call, which will subsequently be
available for replay. The replay telephone numbers are 800-642-1687
(conference ID #61726945) for U.S. and Canadian callers and 706-645-9291
(conference ID #61726945) for international callers.
About HealthStream
HealthStream (NASDAQ: HSTM) is a leading provider of research and
learning solutions for the healthcare industry, transforming insight
into action to deliver outcomes-based results for healthcare
organizations. Through HealthStream's learning solutions—which have been
contracted by over 2.5 million hospital-based healthcare
professionals—healthcare organizations create safer environments for
patients, increase clinical competencies of their workforces, and
facilitate the rapid transfer of the latest knowledge and technologies.
Through our research products, executives from healthcare organizations
gain valuable insight about patients' experiences, workforce challenges,
physician relations, and community perceptions of their services. Based
in Nashville, Tennessee, HealthStream has two satellite offices. For
more information about HealthStream's learning and research solutions,
visit www.healthstream.com
or call us at 800-933-9293.
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HEALTHSTREAM, INC.
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Summary Financial Data
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|
(In thousands, except per share data)
|
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|
|
|
|
|
|
Three Months Ended
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|
|
|
March 31,
|
|
|
|
2011
|
|
2010
|
|
Revenues
|
|
$
|
18,506
|
|
$
|
14,837
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Cost of revenues (excluding depreciation and amortization)
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|
|
7,070
|
|
|
5,462
|
|
|
Product development
|
|
|
1,786
|
|
|
1,526
|
|
|
Sales and marketing
|
|
|
3,508
|
|
|
2,961
|
|
|
Other general and administrative
|
|
|
2,542
|
|
|
2,086
|
|
|
Depreciation and amortization
|
|
|
1,043
|
|
|
1,390
|
|
|
Total operating expenses
|
|
|
15,949
|
|
|
13,425
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
2,557
|
|
|
1,412
|
|
|
Other income (expense), net
|
|
|
20
|
|
|
(8
|
)
|
|
Income before income taxes
|
|
|
2,577
|
|
|
1,404
|
|
|
Income tax provision
|
|
|
1,051
|
|
|
597
|
|
|
Net income
|
|
$
|
1,526
|
|
$
|
807
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
Net income per share, basic
|
|
$
|
0.07
|
|
$
|
0.04
|
|
|
Net income per share, diluted
|
|
$
|
0.07
|
|
$
|
0.04
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|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
21,837
|
|
|
21,676
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|
|
Diluted
|
|
|
22,969
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|
|
22,130
|
|
|
|
|
|
|
|
|
|
|
|
|
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HealthStream, Inc.
|
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Condensed Consolidated Balance Sheets
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(In thousands)
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|
|
|
|
|
|
|
|
|
|
|
March 31,
|
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December 31,
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|
|
|
2011
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|
2010 (1)
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|
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ASSETS
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|
|
|
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Current assets:
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|
|
|
|
|
|
Cash and related interest receivable
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$
|
14,392
|
|
|
$
|
18,004
|
|
|
|
Investments in marketable securities
|
|
|
8,262
|
|
|
|
5,703
|
|
|
|
Accounts and unbilled receivables, net (2)
|
|
|
14,458
|
|
|
|
12,383
|
|
|
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Prepaid and other current assets
|
|
|
4,091
|
|
|
|
4,744
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|
|
|
Deferred tax assets, current
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|
|
3,437
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|
|
|
3,437
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|
|
|
Total current assets
|
|
|
44,640
|
|
|
|
44,271
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|
|
|
|
|
|
|
|
|
|
Capitalized software feature enhancements, net
|
|
|
7,981
|
|
|
|
4,333
|
|
|
|
Property and equipment, net
|
|
|
4,225
|
|
|
|
3,825
|
|
|
|
Goodwill and intangible assets, net
|
|
|
23,758
|
|
|
|
23,991
|
|
|
|
Deferred tax assets, non-current
|
|
|
4,295
|
|
|
|
5,347
|
|
|
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Other assets
|
|
|
191
|
|
|
|
244
|
|
|
|
Total assets
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|
$
|
85,090
|
|
|
$
|
82,011
|
|
|
|
|
|
|
|
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LIABILITIES AND SHAREHOLDERS' EQUITY
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|
|
|
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|
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Current liabilities:
|
|
|
|
|
|
|
Accounts payable, accrued and other liabilities
|
|
$
|
5,803
|
|
|
$
|
8,002
|
|
|
|
Deferred revenue
|
|
|
20,083
|
|
|
|
16,740
|
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|
|
Capital lease obligations
|
|
|
3
|
|
|
|
4
|
|
|
|
Total current liabilities
|
|
|
25,889
|
|
|
|
24,746
|
|
|
|
|
|
|
|
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|
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Other long-term liabilities
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|
|
493
|
|
|
|
474
|
|
|
|
Total liabilities
|
|
|
26,382
|
|
|
|
25,220
|
|
|
|
|
|
|
|
|
|
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Shareholders' equity:
|
|
|
|
|
|
|
Common stock
|
|
|
97,616
|
|
|
|
97,227
|
|
|
|
Comprehensive loss
|
|
|
(2
|
)
|
|
|
(5
|
)
|
|
|
Accumulated deficit
|
|
|
(38,906
|
)
|
|
|
(40,431
|
)
|
|
|
Total shareholders' equity
|
|
|
58,708
|
|
|
|
56,791
|
|
|
|
|
|
|
|
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|
|
Total liabilities and shareholders' equity
|
|
$
|
85,090
|
|
|
$
|
82,011
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|
|
|
|
|
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(1)
|
Derived from audited financial statements contained in the
Company's filing on Form 10-K for the year ended December 31, 2010.
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(2)
|
Includes unbilled receivables of $1,411 and $1,314 and other
receivables of $13 and $14 at March 31, 2011 and December 31,
2010, respectively.
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|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Adjusted EBITDA
|
|
(In thousands, except per share data)
|
|
|
|
|
|
Income before interest, taxes, share-based compensation,
depreciation and amortization, or adjusted EBITDA(1):
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|
|
|
|
|
|
|
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Three Months Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2011
|
|
2010
|
|
|
Net income
|
|
$
|
1,526
|
|
|
$
|
807
|
|
|
|
Interest income
|
|
|
(22
|
)
|
|
|
(3
|
)
|
|
|
Interest expense
|
|
|
9
|
|
|
|
11
|
|
|
|
Income tax provision
|
|
|
1,051
|
|
|
|
597
|
|
|
|
Share-based compensation expense
|
|
|
190
|
|
|
|
163
|
|
|
|
Depreciation and amortization
|
|
|
1,043
|
|
|
|
1,390
|
|
|
|
Adjusted EBITDA
|
|
$
|
3,797
|
|
|
$
|
2,965
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1)
|
In order to better assess the Company's financial results,
management believes that income before interest, income taxes,
share-based compensation, depreciation and amortization ("adjusted
EBITDA") is an appropriate measure for evaluating the operating
performance of the Company at this stage in its life cycle because
adjusted EBITDA reflects net income adjusted for non-cash and
non-operating items. Adjusted EBITDA is also used by many
investors to assess the Company's results from current operations.
Adjusted EBITDA is a non-GAAP financial measure and should not be
considered as a measure of financial performance under generally
accepted accounting principles. Because adjusted EBITDA is not a
measurement determined in accordance with generally accepted
accounting principles, it is susceptible to varying calculations.
Accordingly, adjusted EBITDA, as presented, may not be comparable
to other similarly titled measures of other companies.
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|
|
|
|
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|
|
|
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|
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This press release includes certain forward-looking statements
(statements other than solely with respect to historical fact),
including statements regarding expectations for the financial
performance for 2011 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. Investors are cautioned that such results or events
predicted in these statements may differ materially from actual future
events or results. The forward-looking statements are subject to
significant uncertainties and other risks referenced in the Company's
Annual Report on Form 10-K and in the Company's other filings with the
Securities and Exchange Commission. Consequently, such forward-looking
information should not be regarded as a representation or warranty 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.
HealthStream, Inc.
Gerard M. Hayden, Jr., 615-301-3163
Chief
Financial Officer
ir@healthstream.com
or
Media:
Mollie
Condra, Ph.D., 615-301-3237
Associate Vice President,
Communications, Research & Investor Relations
mollie.condra@healthstream.com
Source: HealthStream, Inc.
News Provided by Acquire Media
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