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HealthStream Announces Fourth Quarter & Full-Year 2021 Results
Fourth Quarter 2021
-
Our CEO contributed
$2.4 million of his personally ownedHealthStream stock to the Company in order to facilitate the grant of 86,494 shares of common stock to over 1,000 employees under our 2016 Omnibus Incentive Plan, which resulted in a corresponding$2.4 million charge for stock-based compensation and related expenses in the fourth quarter -
Revenues of
$64.3 million , up 4% from$61.8 million in the fourth quarter of 2020 -
Operating loss of
$0.5 million , down from operating income of$1.1 million in the fourth quarter of 2020, which comparison was negatively impacted in the amount of$2.4 million by the charge in the fourth quarter of 2021 associated with the stock grant to employees referenced above -
Net loss of
$0.4 million , down from net income of$0.9 million in the fourth quarter of 2020, which comparison was negatively impacted in the amount of$1.9 million by the charge in the fourth quarter of 2021 associated with the stock grant to employees referenced above -
Loss per share (EPS) of
$0.01 per share (diluted), compared to income of$0.03 per share (diluted) in the fourth quarter of 2020, which was negatively impacted in the amount of$0.06 per share during the fourth quarter of 2021 associated with the stock grant to employees referenced above -
Adjusted EBITDA1 of
$12.0 million , up 12% from$10.7 million in the fourth quarter of 2020 -
Authorized a share repurchase program to repurchase up to
$20.0 million of outstanding shares of common stock onNovember 30, 2021 , with shares valued at approximately$5.1 million purchased in the fourth quarter -
Completed the acquisition of
Rievent Technologies, LLC , aVirginia -based healthcare technology company, onDecember 1, 2021 for approximately$4.0 million in cash
Full-Year 2021
-
Revenues of
$256.7 million , up 5% from$244.8 million in 2020 -
Operating income of
$8.1 million , down 49% from$15.8 million in 2020 -
Net income of
$5.8 million , down 59% from$14.1 million in 2020 -
Earnings per share (EPS) of
$0.18 per share (diluted) in 2021, compared to$0.44 per share (diluted) in 2020 -
Adjusted EBITDA of
$52.7 million , representing a Company record for full year adjusted EBITDA, up 15% from$46.0 million in 2020
2022 Event
-
Terry Allison Rappuhn joined Board of Directors onJanuary 11, 2022
1 Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to net income and disclosure regarding why we believe adjusted EBITDA provides useful information to investors is included later in this release.
Financial Results:
Fourth Quarter 2021 Compared to Fourth Quarter 2020
Revenues for the fourth quarter of 2021 increased by
Revenues from our Workforce Solutions segment were
Revenues from our Provider Solutions segment were
Generally accepted accounting principles (GAAP) require companies to write down beginning balances of acquired deferred revenue as part of “fair value” accounting as defined by GAAP. During the fourth quarter of 2021,
As announced on
Operating loss was
Net loss was
Adjusted EBITDA was
At
Full-Year 2021 Compared to Full-Year 2020
For 2021, revenues were
Other Business Updates
At
On
On
Addition to Board of Directors
On
Financial Outlook for 2022
The Company is providing guidance for 2022 for the measures set forth below, including adjusted EBITDA, a non-GAAP financial measure as defined later in this release. For a reconciliation of projected adjusted EBITDA to projected net income (the most comparable GAAP measure) for 2022, see the table included on page 10 of this release.
|
|
|
Full Year 2022 Guidance |
|||||||||
|
Revenue |
|
Low |
|
|
|
|
High |
|
|
||
|
Workforce Solutions |
|
$ |
214.5 |
|
- |
|
|
$ |
218.0 |
|
million |
|
Provider Solutions |
|
|
53.0 |
|
- |
|
|
|
55.0 |
|
million |
|
Consolidated |
|
$ |
267.5 |
|
- |
|
|
$ |
273.0 |
|
million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA1 |
|
$ |
50.0 |
|
- |
|
|
$ |
53.5 |
|
million |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures |
|
$ |
26.0 |
|
- |
|
|
$ |
29.0 |
|
million |
|
|
|
1 Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of projected adjusted EBITDA to projected net income (the most comparable GAAP measure) is included later in this release. |
The Company’s guidance for 2022 as set forth above reflects the Company’s assumptions regarding, among other things, the COVID-19 pandemic as noted below and increased expenses in 2022 compared to 2021 associated with growth in staffing levels, lower employee turnover, and the resumption of employee travel. This consolidated guidance does not include the impact of any acquisitions that we may complete during 2022.
The Company’s financial guidance assumes that public health conditions associated with the pandemic and general economic conditions (including conditions impacting healthcare organizations) do not deteriorate during 2022.
Commenting on 2021 results,
“I believe HealthStream’s operational metrics may be equally insightful indicants of our progress. Cumulatively, over five million subscriptions have been contracted for our hStream technology platform; approximately 400,000
A conference call with
Use of Non-GAAP Financial Measures
This press release presents adjusted EBITDA, a non-GAAP financial measure used by management in analyzing the Company’s financial results and ongoing operational performance. In order to better assess the Company’s financial results, management believes that net income excluding the impact of the deferred revenue write-downs associated with fair value accounting for acquired businesses and before interest, income taxes, stock-based compensation, depreciation and amortization, changes in fair value of non-marketable equity investments, the de-recognition of non-cash expense resulting from the PTO expense reduction in the first quarter of 2021, and the resolution of a mutual disagreement related to various elements of a past partnership which resulted in a reduction to cost of sales in the first quarter of 2020 (“adjusted EBITDA”) is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash and non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business. We also believe that adjusted EBITDA is useful to many investors to assess the Company’s ongoing operating performance and to compare the Company's operating performance between periods. In addition, beginning in 2021, executive bonuses are based on the achievement of adjusted EBITDA targets.
As noted above, the definition of adjusted EBITDA includes an adjustment for the impact of the deferred revenue write-downs associated with fair value accounting for acquired businesses. Following the completion of any acquisition by the Company, the Company must record the acquired deferred revenue at fair value as defined in GAAP, which may result in a write-down of deferred revenue. If the Company is required to record a write-down of deferred revenue, it may result in lower recognized revenue, operating income, and net income in subsequent periods. Revenue for any such acquired business is deferred and is typically recognized over a one-to-two-year period following the completion of any particular acquisition, so our GAAP revenues for this one-to-two-year period will not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. Management believes that including an adjustment in the definition of adjusted EBITDA for the impact of the deferred write-downs associated with fair value accounting for acquired businesses provides useful information to investors because the deferred revenue write-down recognized in periods after an acquisition may, given the nature of this non-cash accounting impact, cause our GAAP financial results during such periods to not fully reflect our underlying operating performance and thus adjusting for this amount may assist in comparing the Company’s results of operations between periods.
Adjusted EBITDA is a non-GAAP financial measures and should not be considered as measures of financial performance under GAAP. Because adjusted EBITDA is not a measurement determined in accordance with GAAP, adjusted EBITDA is susceptible to varying calculations. Accordingly, adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies and have limitations as an analytical tool.
This non-GAAP financial measure should not be considered a substitute for, or superior to, measures of financial performance, which are prepared in accordance with GAAP. Investors are encouraged to review the reconciliations of adjusted EBITDA to net income (the most comparable GAAP measure), which is set forth below in this release.
About
|
Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) |
||||||||||||||||
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
Revenues, net |
|
$ |
64,338 |
|
|
$ |
61,818 |
|
|
$ |
256,712 |
|
|
$ |
244,826 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues (excluding depreciation and amortization) |
|
|
22,979 |
|
|
|
22,736 |
|
|
|
91,033 |
|
|
|
89,332 |
|
|
Product development |
|
|
11,454 |
|
|
|
8,815 |
|
|
|
41,659 |
|
|
|
32,305 |
|
|
Sales and marketing |
|
|
10,745 |
|
|
|
9,010 |
|
|
|
39,457 |
|
|
|
35,297 |
|
|
Other general and administrative expenses |
|
|
10,250 |
|
|
|
11,936 |
|
|
|
39,695 |
|
|
|
41,885 |
|
|
Depreciation and amortization |
|
|
9,370 |
|
|
|
8,184 |
|
|
|
36,813 |
|
|
|
30,189 |
|
|
Total operating costs and expenses |
|
|
64,798 |
|
|
|
60,681 |
|
|
|
248,657 |
|
|
|
229,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
|
(460 |
) |
|
|
1,137 |
|
|
|
8,055 |
|
|
|
15,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (loss) income, net |
|
|
(39 |
) |
|
|
(1 |
) |
|
|
(289 |
) |
|
|
2,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income tax provision |
|
|
(499 |
) |
|
|
1,136 |
|
|
|
7,766 |
|
|
|
17,823 |
|
|
Income tax (benefit) provision |
|
|
(112 |
) |
|
|
213 |
|
|
|
1,921 |
|
|
|
3,732 |
|
|
Net (loss) income |
|
$ |
(387 |
) |
|
$ |
923 |
|
|
$ |
5,845 |
|
|
$ |
14,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
0.19 |
|
|
$ |
0.44 |
|
|
Diluted |
|
$ |
(0.01 |
) |
|
$ |
0.03 |
|
|
$ |
0.18 |
|
|
$ |
0.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
31,520 |
|
|
|
31,552 |
|
|
|
31,534 |
|
|
|
31,960 |
|
|
Diluted |
|
|
31,520 |
|
|
|
31,594 |
|
|
|
31,618 |
|
|
|
31,989 |
|
|
Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
||||||||
|
|
|
|
|
|
|
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
46,905 |
|
|
$ |
36,566 |
|
|
Marketable securities |
|
|
5,041 |
|
|
|
9,928 |
|
|
Accounts and unbilled receivables, net |
|
|
34,920 |
|
|
|
46,100 |
|
|
Prepaid and other current assets |
|
|
19,979 |
|
|
|
22,131 |
|
|
Total current assets |
|
|
106,845 |
|
|
|
114,725 |
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized software development, net |
|
|
32,412 |
|
|
|
26,631 |
|
|
Property and equipment, net |
|
|
17,950 |
|
|
|
22,218 |
|
|
Operating lease right of use assets, net |
|
|
25,168 |
|
|
|
28,081 |
|
|
|
|
|
271,706 |
|
|
|
279,155 |
|
|
Deferred tax assets |
|
|
601 |
|
|
|
974 |
|
|
Deferred commissions |
|
|
24,012 |
|
|
|
19,907 |
|
|
Other assets |
|
|
8,059 |
|
|
|
8,622 |
|
|
Total assets |
|
$ |
486,753 |
|
|
$ |
500,313 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable, accrued and other liabilities |
|
$ |
26,534 |
|
|
$ |
38,266 |
|
|
Deferred revenue |
|
|
73,816 |
|
|
|
81,176 |
|
|
Total current liabilities |
|
|
100,350 |
|
|
|
119,442 |
|
|
Deferred tax liabilities |
|
|
18,146 |
|
|
|
14,523 |
|
|
Deferred revenue, non-current |
|
|
1,583 |
|
|
|
1,603 |
|
|
Operating lease liability, non-current |
|
|
26,178 |
|
|
|
28,479 |
|
|
Other long-term liabilities |
|
|
1,477 |
|
|
|
2,204 |
|
|
Total liabilities |
|
|
147,734 |
|
|
|
166,251 |
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
|
Common stock |
|
|
270,791 |
|
|
|
271,784 |
|
|
Accumulated other comprehensive income |
|
|
106 |
|
|
|
1 |
|
|
Retained earnings |
|
|
68,122 |
|
|
|
62,277 |
|
|
Total shareholders’ equity |
|
|
339,019 |
|
|
|
334,062 |
|
|
Total liabilities and shareholders' equity |
|
$ |
486,753 |
|
|
$ |
500,313 |
|
|
Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
||||||||
|
|
|
Year Ended |
|
|||||
|
|
|
|
|
|
|
|
||
|
|
|
2021 |
|
|
2020 |
|
||
|
Operating activities: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
5,845 |
|
|
$ |
14,091 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
36,813 |
|
|
|
30,189 |
|
|
Amortization of deferred commissions |
|
|
9,169 |
|
|
|
8,768 |
|
|
Stock-based compensation |
|
|
5,303 |
|
|
|
2,217 |
|
|
Deferred income taxes |
|
|
1,539 |
|
|
|
4,295 |
|
|
Provision for credit losses |
|
|
723 |
|
|
|
274 |
|
|
Loss on disposal of fixed assets |
|
|
21 |
|
|
|
— |
|
|
Loss on equity method investments |
|
|
462 |
|
|
|
51 |
|
|
Non-cash paid time off expense |
|
|
(1,011 |
) |
|
|
— |
|
|
Non-cash royalty expense |
|
|
— |
|
|
|
(3,440 |
) |
|
Change in fair value of non-marketable equity investments |
|
|
(279 |
) |
|
|
(1,181 |
) |
|
Other |
|
|
184 |
|
|
|
347 |
|
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts and unbilled receivables |
|
|
10,344 |
|
|
|
(2,992 |
) |
|
Deferred commissions |
|
|
(13,274 |
) |
|
|
(11,030 |
) |
|
Prepaid and other assets |
|
|
2,240 |
|
|
|
(700 |
) |
|
Accounts payable, accrued and other liabilities |
|
|
(8,101 |
) |
|
|
(3,548 |
) |
|
Deferred revenue |
|
|
(7,593 |
) |
|
|
(1,467 |
) |
|
Net cash provided by operating activities |
|
|
42,385 |
|
|
|
35,874 |
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
|
|
|
|
|
Business combinations, net of cash acquired |
|
|
(4,705 |
) |
|
|
(121,342 |
) |
|
Changes in marketable securities |
|
|
4,708 |
|
|
|
30,992 |
|
|
Proceeds from sale of non-marketable equity investments |
|
|
1,370 |
|
|
|
— |
|
|
Payments to acquire non-marketable equity investments |
|
|
(1,750 |
) |
|
|
(1,257 |
) |
|
Purchases of property and equipment |
|
|
(3,417 |
) |
|
|
(1,988 |
) |
|
Payments associated with capitalized software development |
|
|
(21,929 |
) |
|
|
(16,815 |
) |
|
Net cash used in investing activities |
|
|
(25,723 |
) |
|
|
(110,410 |
) |
|
|
|
|
|
|
|
|
|
|
|
Financing activities: |
|
|
|
|
|
|
|
|
|
Taxes paid related to net settlement of equity awards |
|
|
(1,182 |
) |
|
|
(435 |
) |
|
Repurchases of common stock |
|
|
(5,008 |
) |
|
|
(20,019 |
) |
|
Payment of cash dividends |
|
|
(19 |
) |
|
|
(40 |
) |
|
Net cash used in financing activities |
|
|
(6,209 |
) |
|
|
(20,494 |
) |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
(114 |
) |
|
|
58 |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
10,339 |
|
|
|
(94,972 |
) |
|
Cash and cash equivalents at beginning of period |
|
|
36,566 |
|
|
|
131,538 |
|
|
Cash and cash equivalents at end of period |
|
$ |
46,905 |
|
|
$ |
36,566 |
|
|
Reconciliation of GAAP to Non-GAAP Financial Measures(1) Operating Results Summary (In thousands) (Unaudited) |
||||||||||||||||
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
||||||||||
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
|
GAAP net (loss) income |
|
$ |
(387 |
) |
|
$ |
923 |
|
|
$ |
5,845 |
|
|
$ |
14,091 |
|
|
Deferred revenue write-down |
|
|
383 |
|
|
|
919 |
|
|
|
4,040 |
|
|
|
1,274 |
|
|
Interest income |
|
|
(15 |
) |
|
|
(74 |
) |
|
|
(80 |
) |
|
|
(993 |
) |
|
Interest expense |
|
|
33 |
|
|
|
19 |
|
|
|
132 |
|
|
|
96 |
|
|
Income tax (benefit) provision |
|
|
(112 |
) |
|
|
213 |
|
|
|
1,921 |
|
|
|
3,732 |
|
|
Stock-based compensation expense |
|
|
3,043 |
|
|
|
553 |
|
|
|
5,303 |
|
|
|
2,218 |
|
|
Depreciation and amortization |
|
|
9,370 |
|
|
|
8,184 |
|
|
|
36,813 |
|
|
|
30,189 |
|
|
Non-cash paid time off expense |
|
|
— |
|
|
|
— |
|
|
|
(1,011 |
) |
|
|
— |
|
|
Change in fair value of non-marketable equity investments |
|
|
(279 |
) |
|
|
— |
|
|
|
(279 |
) |
|
|
(1,181 |
) |
|
Non-cash royalty expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,440 |
) |
|
Adjusted EBITDA |
|
$ |
12,036 |
|
|
$ |
10,737 |
|
|
$ |
52,684 |
|
|
$ |
45,986 |
|
|
(1) This press release presents adjusted EBITDA, which is a non-GAAP financial measure used by management in analyzing its financial results and ongoing operational performance. |
||||||||||||||||
|
Reconciliation of GAAP to Non-GAAP Financial Measures Financial Outlook for 2022 (In thousands) (Unaudited) |
||||||||
|
|
|
Low |
|
|
High |
|
||
|
Net income |
|
$ |
6,600 |
|
|
$ |
8,600 |
|
|
Deferred revenue write-down |
|
|
400 |
|
|
|
400 |
|
|
Interest income |
|
|
(100 |
) |
|
|
(100 |
) |
|
Interest expense |
|
|
100 |
|
|
|
100 |
|
|
Income tax provision |
|
|
2,300 |
|
|
|
3,100 |
|
|
Stock-based compensation expense |
|
|
3,500 |
|
|
|
3,700 |
|
|
Depreciation and amortization |
|
|
37,200 |
|
|
|
37,700 |
|
|
Adjusted EBITDA |
|
$ |
50,000 |
|
|
$ |
53,500 |
|
This press release includes certain forward-looking statements (statements other than solely with respect to historical fact), including statements regarding expectations for financial performance for 2022 as well as the anticipated impact of the COVID-19 pandemic on our financial results, that involve risks and uncertainties regarding
View source version on businesswire.com: https://www.businesswire.com/news/home/20220221005404/en/
Chief Financial Officer
(615) 301-3182
ir@healthstream.com
Media:
Vice President,
Investor Relations &
Communications
(615) 301-3237
mollie.condra@healthstream.com
Source: