HealthStream announces Q4 & full-year 2023 results

HealthStream, Inc. announced results for the fourth quarter and full-year ended December 31, 2023.

Fourth quarter 2023

• Revenues of $70.6 million, up 3% from $68.5 million in the fourth quarter of 2022
• Operating income of $4.3 million, up 38% from $3.1 million in the fourth quarter of 2022
• Net income of $4.6 million, up 87% from $2.5 million in the fourth quarter of 2022
• Earnings per share (EPS) of $0.15 per share (diluted), up from $0.08 per share (diluted) in the fourth quarter of 2022
• Adjusted EBITDA¹ of $16.0 million, up 17% from $13.6 million in the fourth quarter of 2022
• Board of Directors has declared a quarterly cash dividend of $0.028 per share, an increase of 12% over the previous quarter’s dividend of $0.025 per share

Full-year 2023

• Revenues of $279.1 million, up 5% from $266.8 million in 2022
• Operating income of $16.0 million, up 29% from $12.4 million in 2022
• Net income of $15.2 million, up 26% from $12.1 million in 2022
• Earnings per share (EPS) of $0.50 per share (diluted) in 2023, compared to $0.39 per share (diluted) in 2022
• Adjusted EBITDA of $61.3 million, up 15% from $53.4 million in 2022

Financial results:
Fourth quarter 2023 compared to fourth quarter 2022
Revenues for the fourth quarter of 2023 increased by $2.1 million, or three percent, to $70.6 million, compared to $68.5 million for the fourth quarter of 2022. Subscription revenues increased $2.6 million, or four percent, and professional services revenues declined by $0.5 million.

Operating income was $4.3 million for the fourth quarter of 2023, up 38% from $3.1 million for the fourth quarter of 2022. The improvement in operating income was primarily attributable to the growth in revenues, a reduction in labor costs, and an increase in labor capitalized for software development activities. Partially offsetting these improvements were higher costs for software, cloud hosting, sales commissions, and bad debt, and an increase in amortization associated with capitalized software. Other income during the fourth quarter of 2023 included a $0.4 million gain associated with the sale of a company in which we owned a minority equity interest.

Net income was $4.6 million in the fourth quarter of 2023, up 87% from $2.5 million in the fourth quarter of 2022, and EPS was $0.15 per share (diluted) in the fourth quarter of 2023, up from $0.08 per share (diluted) for the fourth quarter of 2022.

Adjusted EBITDA was $16.0 million for the fourth quarter of 2023, up 17 percent from $13.6 million in the fourth quarter of 2022.

At December 31, 2023, the Company had cash and cash equivalents and marketable securities of $71.1 million. Capital expenditures incurred during the fourth quarter of 2023 were $7.2 million.

Full-Year 2023 compared to full-year 2022
For 2023, revenues were $279.1 million, an increase of five percent from revenues of $266.8 million for 2022. Operating income for 2023 increased by 29 percent to $16.0 million, compared to $12.4 million for 2022. The increase in operating income was primarily attributable to higher revenues and an increase in capitalized labor associated with software development activities. Operating income was also impacted by higher amortization, software, cloud hosting, commissions, royalties, travel, and bad debt expenses, as well as severance charges incurred during 2023 in connection with the Company’s restructuring under a single platform strategy. Net income for 2023 was $15.2 million, compared to $12.1 million for 2022. Earnings per share were $0.50 per share (diluted) for 2023, compared to $0.39 per share (diluted) for 2022. Adjusted EBITDA increased by 15 percent to $61.3 million for 2023, compared to $53.4 million for 2022.

Other business updates
As of December 31, 2023, we had approximately 5.79 million contracted subscriptions to hStream, our Platform-as-a-Service technology, which characterizes our single platform approach. By establishing interoperability, the hStream platform enables healthcare organizations and their respective workforces to easily connect to and gain value from the growing HealthStream ecosystem of applications, tools, and content.

On September 13, 2023, the Company announced a share repurchase program approved by the Company’s Board of Directors under which the Company is authorized to repurchase of up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company has repurchased shares valued at $8.9 million through December 31, 2023, with $6.8 million repurchased during the fourth quarter. The share repurchase program is scheduled to terminate on the earlier of March 31, 2024 or when the maximum dollar amount has been expended. The share repurchase program does not require the Company to acquire any amount of shares and may be suspended, discontinued, or terminated at any time.

On February 19, 2024, the Board approved a quarterly cash dividend under the Company’s dividend policy of $0.028 per share, reflecting an increase of 12% over the previous quarter’s dividend of $0.025 per share. The dividend is payable on March 22, 2024 to holders of record on March 11, 2024.

Financial outlook for 2024
The Company is providing guidance for 2024 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 2024, see the table included on page nine of this release.

The Company’s guidance for 2024 as set forth above reflects the Company’s assumptions regarding, among other things, expectations for new sales and renewals, and assumes that general economic conditions, including inflationary pressures, do not deteriorate. This consolidated guidance does not include the impact of any acquisitions that we may complete during 2024, gains or losses from changes in the fair value of minority investments, or impairment of long-lived assets.

Commenting on fourth quarter & full-year 2023 results, Robert A. Frist, Jr., Chief Executive Officer, HealthStream, said, “Our financial performance for full-year 2023 was strong. Compared to the prior year, in 2023 our revenues were up five percent, adjusted EBITDA was up 15 percent, operating income was up 29 percent, and net income was up 26 percent. Based on our projections and guidance, I believe we will set new records again in 2024.”

“In 2023, we expanded our addressable market to include the nation’s nursing schools and their one million nursing students. Powered by advances in our hStream platform, we also launched new e-commerce capabilities, enabling us to make direct sales to physicians, nurses, and nursing students—where we saw early positive results. These exciting developments attest to the unique value proposition that HealthStream is delivering to customers.”
MB Bureau