HealthStream Inc. (HSTM) reported its financial results for the third quarter of 2024, with net income of $18.4 million, or $0.028 per diluted share, compared to $16.6 million, or $0.025 per diluted share, in the same period last year. Revenue increased 22.4% to $144.9 million, driven by growth in subscription services and professional services. The company’s gross margin expanded to 75.0% from 72.9% in the prior-year period, while operating expenses increased 15.1% to $56.7 million. As of September 30, 2024, HealthStream had cash and cash equivalents of $30.4 million and a debt balance of $75.0 million. The company also declared a quarterly dividend of $0.025 per share, payable on November 15, 2024.
HealthStream Reports Solid Q3 2024 Results, Sees Continued Growth Amid Macroeconomic Challenges
HealthStream, a leading provider of cloud-based healthcare workforce and patient experience solutions, has reported its financial results for the third quarter of 2024. The company saw a 4% increase in revenues compared to the same period last year, driven by strong growth in its subscription services business. Despite ongoing macroeconomic headwinds, HealthStream delivered solid profitability and cash flow, positioning the company for continued success.
Financial Highlights
For the third quarter of 2024, HealthStream reported the following key financial metrics:
Metric | Q3 2024 | Q3 2023 | % Change |
---|---|---|---|
Revenues, net | $73.1 million | $70.3 million | +4% |
Net Income | $5.7 million | $3.9 million | +48% |
Earnings per Share (diluted) | $0.19 | $0.13 | +46% |
Adjusted EBITDA | $17.7 million | $16.2 million | +9% |
The company’s subscription services revenue, which accounts for 96% of total revenues, grew 4% year-over-year, while professional services revenue increased 11%. HealthStream’s focus on its subscription-based business model continues to drive consistent growth and profitability.
Navigating Macroeconomic Challenges
HealthStream acknowledged that the U.S. economy has faced various challenges, including inflationary pressures, elevated interest rates, and uncertain geopolitical conditions. These factors have adversely impacted the company and its healthcare industry customers, leading to increased labor, supply chain, capital, and other expenditures.
Despite these headwinds, HealthStream has remained agile and responsive to the evolving market environment. The company continues to closely monitor developments related to COVID-19 and other public health events, and is prepared to adapt its operating approaches as needed.
Operational Highlights
HealthStream’s business is centered around its hStream technology platform, which enables the company to deliver a suite of integrated workforce and patient experience solutions to its healthcare organization customers. This “One HealthStream” approach has allowed the company to leverage its applications and technologies more efficiently, driving improved outcomes for its clients.
Key operational highlights during the quarter include:
Outlook and Strategic Priorities
Looking ahead, HealthStream remains cautiously optimistic about its future prospects, despite the ongoing macroeconomic challenges. The company’s strong balance sheet, with $57.5 million in cash and cash equivalents and $37.4 million in marketable securities, provides a solid foundation for weathering the current environment and pursuing strategic growth initiatives.
HealthStream’s key strategic priorities include:
Continued Investment in the hStream Platform: The company will maintain its focus on enhancing the capabilities and integration of the hStream platform, leveraging its single platform approach to drive greater value for customers.
Expansion of the Customer Base: HealthStream will continue to target new healthcare organizations, both in the U.S. and internationally, to expand its customer reach and market share.
Selective Acquisitions and Partnerships: The company may pursue strategic acquisitions or investments to complement its existing offerings and accelerate growth, while maintaining a disciplined approach to capital allocation.
Dividend Program: HealthStream’s Board of Directors has approved a quarterly cash dividend program, demonstrating the company’s confidence in its long-term financial position and commitment to returning capital to shareholders.
Conclusion
HealthStream’s solid third-quarter performance, marked by revenue growth, improved profitability, and strong cash flow, underscores the resilience of its business model and the value proposition of its integrated workforce and patient experience solutions. Despite the challenging macroeconomic environment, the company remains well-positioned to navigate the current landscape and continue its trajectory of sustainable growth. By leveraging its hStream platform, expanding its customer base, and selectively pursuing strategic opportunities, HealthStream is poised to capitalize on the evolving needs of the healthcare industry and deliver long-term value for its shareholders.