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HealthStream Announces Second Quarter 2021 Results


 

HealthStream, Inc. (Nasdaq: HSTM), a leading provider of workforce and provider solutions for the healthcare industry, announced results for the second quarter ended June 30, 2021.

  • Revenues of $64.8 million in the second quarter of 2021, up 7% from $60.6 million in the second quarter of 2020, more than offsetting a $9.7 million decline in legacy resuscitation revenues.
  • Operating income of $3.4 million in the second quarter of 2021, down 20% from $4.3 million in the second quarter of 2020.
  • Net income of $2.4 million in the second quarter of 2021, down 29% from $3.4 million in the second quarter of 2020.
  • Earnings per share (EPS) of $0.08 per share (diluted) in the second quarter of 2021 compared to $0.11 per share (diluted) in the second quarter of 2020.
  • Adjusted EBITDA1 of $14.5 million in the second quarter of 2021, up 20% from $12.1 million in the second quarter of 2020.

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:

Second Quarter 2021 Compared to Second Quarter 2020

Revenues for the second quarter of 2021 increased by $4.3 million, or seven percent, to $64.8 million, compared to $60.6 million for the second quarter of 2020.

Revenues from our Workforce Solutions segment were $52.2 million for the second quarter of 2021, an increase of 7% compared to $48.9 million for the second quarter of 2020. The workforce segment achieved this seven percent growth, while overcoming a $9.7 million decline in revenues from the legacy resuscitation business. Revenues from recent acquisitions and growth in other solutions more than offset the lost legacy resuscitation revenues. In addition, workforce revenues also benefited from a $0.5 million increase in professional services revenues, primarily associated with recently acquired businesses.

Revenues from our Provider Solutions segment were $12.7 million for the second quarter of 2021, compared to $11.7 million for the second quarter of 2020. This revenue growth of $1.0 million was primarily attributable to subscription revenues.

Generally accepted accounting principles (GAAP) require companies to write down beginning balances of acquired deferred revenue as part of "fair value" accounting. During the second quarter of 2021, HealthStream reported a reduction of $1.2 million to revenue and operating income and a reduction of $950,000 to net income as a result of deferred revenue write-downs from recent acquisitions. During the second quarter of 2020, HealthStream reported a reduction of $140,000 to revenue and operating income and a reduction of $100,000 to net income as a result of deferred revenue write-downs from acquisitions.

Operating income was $3.4 million for the second quarter of 2021 compared to $4.3 million from the second quarter of 2020. The decrease in operating income was primarily attributable to higher operating expenses and amortization, primarily associated with businesses acquired over the past year.

Net income was $2.4 million in the second quarter of 2021, down 29 percent from $3.4 million in the second quarter of 2020, and EPS was $0.08 per share (diluted) in the second quarter of 2021, compared to $0.11 per share (diluted) for the second quarter of 2020.

Adjusted EBITDA was $14.5 million for the second quarter of 2021, up 20 percent from $12.1 million in the second quarter of 2020.

At June 30, 2021, the Company had cash and cash equivalents and marketable securities of $55.1 million. Capital expenditures incurred during the second quarter of 2021 were $6.9 million.

Year-to-Date 2021 Compared to Year-to-Date 2020

For the first six months of 2021, revenues were $128.3 million, an increase of five percent over revenues of $122.1 million for the first six months of 2020. Operating income for the first six months of 2021 decreased by 42 percent to $6.7 million, compared to $11.5 million for the first six months of 2020. The decrease in operating income was primarily attributable to the $3.4 million one-time favorable contractual adjustment to royalty expense resulting in a reduction to cost of revenues in the first quarter of 2020. Also contributing to the decrease are higher operating expenses primarily associated with acquisitions completed over the past year. Partially offsetting these declines in operating income was a $1.0 million non-recurring, non-cash benefit during the first quarter of 2021 related to the reduction of paid time off (PTO) expense resulting from modifications to the Company's PTO policy. Net income for the first six months of 2021 decreased to $4.7 million, compared to $10.5 million for the first six months of 2020. Earnings per share were $0.15 per share (diluted) for the first six months of 2021, compared to $0.33 per share (diluted) for the first six months of 2020. Adjusted EBITDA increased by 17 percent to $28.1 million for the first six months of 2021, compared to $24.0 million for the first six months of 2020.

Other Business Updates

At June 30, 2021, we had approximately 4.52 million contracted subscriptions to hStream™, our Platform-as-a-Service technology. hStream technology enables healthcare organizations and their respective workforces to easily connect to and gain value from the growing HealthStream ecosystem of applications, tools, and content.

 
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