HealthStream Reports Robust Q3 Growth and Sets Sights on Future Expansion

image

HealthStream Reports Robust Q3 Growth and Sets Sights on Future Expansion

HealthStream (HSTM), a provider of workforce and provider solutions for the healthcare sector, demonstrated strong performance in the third quarter of 2024. The company reported a record revenue of $73.1 million, a 3.9% increase over the previous year. Net income rose by 48% to $5.7 million, with adjusted EBITDA reported at $17.7 million. HealthStream's CEO, Bobby Frist, highlighted growth across all major financial metrics and the expansion of sales channels targeting 12.3 million healthcare professionals and nursing students in the U.S.

The company announced a quarterly cash dividend of $0.08 per share and maintained a strong cash balance of $94.9 million with no debt. Despite a slight downward revision in revenue expectations due to customer consumption delays, HealthStream remains optimistic about its growth trajectory and future product innovation plans.

Key Highlights:

  • HealthStream reported a record third-quarter revenue of $73.1 million and a 48% increase in net income to $5.7 million.
  • The company is expanding its reach to healthcare professionals and nursing students.
  • CredentialStream and ShiftWizard applications saw significant revenue growth of 34% and 17%, respectively.
  • HealthStream announced a quarterly cash dividend of $0.08 per share and maintains a strong debt-free balance sheet.
  • The company revised its full-year revenue guidance to between $290 million and $292 million due to customer consumption delays.
  • HealthStream is focusing on growth opportunities and addressing legacy application losses.

Company Outlook:

  • Revenue for the year is forecasted to be between $290 million and $292 million, with net income expected between $18.5 million and $19.5 million.
  • Adjusted EBITDA is estimated to be between $66 million and $67.5 million, with capital expenditures projected between $28 million and $30 million.
  • The company plans for growth of 7% to 10% over the next three years, anticipating organic growth of about 4% for the current year.

Declining Points:

  • Delay in consumption by a major customer led to a slight downward revision in revenue expectations.
  • Legacy applications are experiencing losses, negatively impacting growth by approximately $2 million.

Rising Points:

  • HealthStream's CredentialStream and ShiftWizard applications continue to attract new contracts and increase revenue.
  • The company's hStream technology platform and new partnerships like Verisys aim to enhance credentialing solutions and expand market reach.
  • The NurseGrid application exceeded 600,000 monthly active users and saw significant growth in e-commerce sales.

Missed Targets:

  • The company's annual growth is forecasted to be slightly under target at about 4% due to challenges with legacy applications.

Q&A Highlights:

  • CEO Bobby Frist discussed the successful launch of a new reporting tool and the modern tech stack that will enhance the company's product offerings.
  • Plans for small, non-material add-on deals to support existing business lines in the next few quarters were mentioned.
  • The company is preparing for future transitions away from legacy products and stabilizing its customer base to manage losses.

HealthStream's third-quarter performance underscores its commitment to innovation and growth in the healthcare sector. With a strong financial position and strategic initiatives to expand its product range and market presence, the company appears well-positioned to continue its upward trajectory. Investors and stakeholders can anticipate further developments and in-depth discussions at the Investor Day scheduled for early 2024.