HealthStream Announces Third Quarter 2025 Results

NASHVILLE, Tenn.--( BUSINESS WIRE)--HealthStream, Inc. (the "Company") (Nasdaq: HSTM), a leading healthcare technology platform company for workforce solutions, announced today results for the third quarter ended September 30, 2025.

Third Quarter 2025

Fourth Quarter 2025 Event:

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:

Third Quarter 2025 Compared to Third Quarter 2024

Revenues for the third quarter of 2025 increased by $3.4 million, or 4.6%, to $76.5 million, compared to $73.1 million for the third quarter of 2024. Subscription revenues increased by $4.0 million, or 5.7%, and professional services revenues decreased by $0.6 million compared to the third quarter of 2024.

Operating income was $7.6 million for the third quarter of 2025, up 16.5% from $6.5 million in the third quarter of 2024. The improvement in operating income was primarily attributable to increased revenues, sublease income associated with our sublease that commenced during the second quarter of 2025, and lower stock-based compensation. These improvements were partially offset by higher expenses to support investments in several areas of the business, primarily in our platform and SaaS applications, resulting in higher labor costs, higher cloud hosting and third-party software costs, and increased amortization of capitalized software costs.

Net income was $6.1 million in the third quarter of 2025, up 6.3% from $5.7 million in the third quarter of 2024, and EPS was $0.20 per share (diluted) in the third quarter of 2025, up from $0.19 per share (diluted) in the third quarter of 2024.

Adjusted EBITDA was $19.1 million for the third quarter of 2025, up 7.9% from $17.7 million in the third quarter of 2024.

At September 30, 2025, the Company had cash, cash equivalents, and marketable securities of $92.6 million. The Company does not have any outstanding indebtedness from borrowed money. Capital expenditures incurred during the third quarter of 2025 were $7.8 million.

Year-to-Date 2025 Compared to Year-to-Date 2024

For the nine months ended September 30, 2025, revenues were $224.4 million, an increase of 3.2% over revenues of $217.4 million for the first nine months of 2024. Operating income for the first nine months of 2025 increased by 7.4% to $17.8 million, compared to $16.6 million for the first nine months of 2024. The increase in operating income was primarily attributable to higher revenues, sublease income associated with our sublease that commenced during the second quarter of 2025, lower bad debt expense, and lower share-based compensation expense, partially offset by higher expenses to support investments in several areas of the business, primarily in our platform and SaaS applications, resulting in higher labor costs, higher cloud hosting and third-party software costs, and increased amortization of capitalized software. Net income for the first nine months of 2025 increased to $15.8 million, compared to $15.1 million for the first nine months of 2024. Earnings per share were $0.52 per share (diluted) for the first nine months of 2025, compared to $0.50 per share (diluted) for the first nine months of 2024. Adjusted EBITDA increased by 4.6% to $52.9 million for the first nine months of 2025, compared to $50.6 million for the first nine months of 2024.

Other Business Updates

On May 8, 2025, the Company announced a share repurchase program approved by the Board of Directors under which the Company was authorized to repurchase up to $25.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under a Rule 10b5-1 plan, through privately negotiated transactions, or otherwise. During the three and nine months ended September 30, 2025, the Company repurchased 255,833 shares and 905,786 shares of common stock at an aggregate fair value of $6.9 million and $25.0 million, respectively. This share repurchase program is no longer in effect as the maximum dollar amount under the program was expended during the three months ended September 30, 2025, as referenced above.

On October 8, 2025, the Company acquired all the equity of Virsys12, LLC, a healthcare technology company that offers payers and health plans an innovative provider data management suite used for onboarding, credentialing, and network management, for $13.0 million in cash, subject to a post-closing working capital adjustment, plus up to an additional $4.0 million in cash which may be paid contingent upon the performance of Virsys12, LLC, during a three-year period following the closing. This acquisition expands HealthStream's existing provider data management and credentialing solution for payers and health plan enterprises, called Network by HealthStream TM, launched 14 months ago, which is part of our broader, market-leading Credentialing application suite.

On November 3, 2025, the Board of Directors approved a quarterly cash dividend under the Company's dividend policy of $0.031 per share, payable on November 28, 2025 to holders of record on November 17, 2025.

Financial Outlook for 2025

The Company is updating its guidance for 2025 for the measures set forth below. For a reconciliation of projected adjusted EBITDA, a non-GAAP financial measure defined later in this release, to projected net income (the most comparable GAAP measure) for 2025, see the table included on page nine of this release.

Full Year 2025 Guidance

Low

High

Revenue 1

299.5

301.5

million

Net Income 2

20.3

21.5

million

Adjusted EBITDA 3

69.5

71.5

million

Capital Expenditures 4

33.0

34.0

million

1 Previous expected Revenue guidance range was $297.5 to $303.5 million.

The Company’s guidance for 2025, as set forth above, reflects the Company’s assumptions regarding, among other things, expectations for new sales and renewals. This guidance does not include the impact of any future acquisitions or dispositions that we may complete during 2025, gains or losses from changes in the fair value of non-marketable equity investments, or impairment of long-lived assets.

“In the third quarter of 2025, HealthStream delivered record quarterly revenues of $76.5 million and record quarterly adjusted EBITDA of $19.1 million,” said Robert A. Frist, Jr., Chief Executive Officer, HealthStream. “We are excited that our hStream platform is starting to create new business and social network opportunities in connecting two constituencies: individual healthcare professionals and organizations that employ them.”

A conference call with Robert A. Frist, Jr., Chief Executive Officer, Scott A. Roberts, Chief Financial Officer and Senior Vice President, and Mollie Condra, Head, Investor Relations and Communications, will be held on Tuesday, November 4, 2025, at 9:00 a.m. (ET). Participants may access the conference call live via webcast using this link: https://edge.media-server.com/mmc/p/d4fjwuse. To participate via telephone, please register in advance using this link: https://register-conf.media-server.com/register/BI3ab58fbd4817439992404078877d07d6. A replay of the conference call and webcast will be archived on the Company’s website in the Investor Relations section under “Events & Presentations.”

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 before interest, income taxes, stock-based compensation, depreciation and amortization, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments (“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/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business. We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods. In addition, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered as a measure 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 has 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 HealthStream

HealthStream (Nasdaq: HSTM) is the healthcare industry’s largest ecosystem of platform-delivered workforce solutions that empowers healthcare professionals to do what they do best: deliver excellence in patient care. For more information about HealthStream, visit www.healthstream.com or call 615-301-3100.

HEALTHSTREAM, INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Revenues, net

76,474

73,095

224,355

217,411

Operating costs and expenses:

Cost of revenues (excluding depreciation and amortization)

26,507

24,470

78,357

72,825

Product development

12,107

12,100

36,228

36,208

Sales and marketing

12,143

11,497

36,101

34,676

General and administrative

7,330

8,457

23,396

26,325

Depreciation and amortization

10,820

10,073

32,441

30,779

Total operating costs and expenses

68,907

66,597

206,523

200,813

Operating income

7,567

6,498

17,832

16,598

Interest income

788

1,007

2,676

2,856

Other expense, net

(103

)

(26

)

(141

)

(134

)

Income before income tax provision

8,252

7,479

20,367

19,320

Income tax provision

2,166

1,754

4,559

4,202

Net income

6,086

5,725

15,808

15,118

Net income per share:

Basic

0.20

0.19

0.52

0.50

Diluted

0.20

0.19

0.52

0.50

Weighted average shares of common stock outstanding:

Basic

29,688

30,409

30,151

30,374

Diluted

29,811

30,590

30,283

30,512

Dividends declared per share

0.031

0.028

0.093

0.084

HEALTHSTREAM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 30,

December 31,

2025

2024

ASSETS

Current assets:

Cash and cash equivalents

53,544

59,469

Marketable securities

39,047

37,748

Accounts and unbilled receivables, net

33,722

35,322

Prepaid and other current assets

21,261

20,583

Total current assets

147,574

153,122

Capitalized software development, net

45,699

43,370

Property and equipment, net

11,143

10,741

Operating lease right of use assets, net

15,667

17,453

Goodwill and intangible assets, net

236,992

246,768

Other assets

42,855

39,312

Total assets

499,930

510,766

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable, accrued, and other liabilities

26,809

31,466

Deferred revenue

85,687

84,227

Total current liabilities

112,496

115,693

Deferred tax liabilities

19,671

14,596

Deferred revenue, noncurrent

1,289

1,655

Operating lease liability, noncurrent

15,292

17,366

Other long-term liabilities

1,989

2,101

Total liabilities

150,737

151,411

Shareholders’ equity:

Common stock

228,753

252,432

Accumulated other comprehensive loss

(1,532

)

(2,049

)

Retained earnings

121,972

108,972

Total shareholders’ equity

349,193

359,355

Total liabilities and shareholders' equity

499,930

510,766

HEALTHSTREAM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,

2025

2024

Operating activities:

Net income

15,808

15,118

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

32,441

30,779

Stock-based compensation

2,734

3,285

Amortization of deferred commissions

9,190

9,060

Deferred income taxes

5,055

(960

)

Provision for credit losses

568

2,027

Loss on equity method investments

150

Other

(1,146

)

(1,205

)

Changes in assets and liabilities:

Accounts and unbilled receivables

1,033

4,744

Prepaid and other assets

(12,061

)

(8,210

)

Accounts payable, accrued, and other liabilities

(4,739

)

(7,105

)

Deferred revenue

1,094

(1,183

)

Net cash provided by operating activities

50,127

46,500

Investing activities:

Purchases of marketable securities, net of proceeds

(148

)

(5,361

)

Proceeds from sale of non-marketable equity investments

—

765

Purchase of other investments

(1,500

)

—

Purchases of property and equipment

(3,481

)

(1,198

)

Payments associated with capitalized software development

(21,910

)

(20,107

)

Net cash used in investing activities

(27,039

)

(25,901

)

Financing activities:

Taxes paid related to net settlement of equity awards

(1,196

)

(932

)

Payment of cash dividends

(2,809

)

(2,551

)

Repurchases of common stock

(25,018

)

—

Net cash used in financing activities

(29,023

)

(3,483

)

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

(5,925

)

17,156

Cash and cash equivalents at beginning of period

59,469

40,333

Cash and cash equivalents at end of period

53,544

57,489

Reconciliation of GAAP to Non-GAAP Financial Measures (1)

Operating Results Summary

(In thousands)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2025

2024

2025

2024

GAAP net income

6,086

5,725

15,808

15,118

Interest income

(788

)

(1,007

)

(2,676

)

(2,856

)

Interest expense

Income tax provision

2,166

1,754

4,559

4,202

Stock-based compensation expense

794

1,131

2,734

3,285

Depreciation and amortization

10,820

10,073

32,441

30,779

Adjusted EBITDA

19,104

17,702

52,942

50,603

(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 2025

(In thousands)

(Unaudited)

Low

High

Net income

20,300

21,500

Interest income

(3,300

)

(3,400

)

Interest expense

100

Income tax provision

5,800

6,200

Stock-based compensation expense

3,500

3,700

Depreciation and amortization

43,100

43,400

Adjusted EBITDA

69,500

71,500

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 2025 and our quarterly dividend policy, that involve risks and uncertainties regarding HealthStream. These statements are based upon management’s beliefs, as well as assumptions made by and data currently available to management. This information has been, or in the future may be, included in reliance on the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions that forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements, including as a result of negative economic conditions, changes in U.S. policy, adverse developments impacting the healthcare industry, tariff and trade-related developments, inflationary pressures, geopolitical instability, and legal requirements and contractual restrictions which may affect continuation of our quarterly cash dividend policy and the declaration and/or payment of dividends thereunder, which may be modified, suspended, or canceled in any manner and at any time that our Board may deem necessary or appropriate, as well as risks referenced in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed on February 28, 2025, the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2025, filed on August 7, 2025, and in the Company’s other filings with the Securities and Exchange Commission from time to time. Consequently, such forward-looking information should not be regarded as a representation or warranty or statement by the Company that such projections will be realized. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. The Company undertakes no obligation to update or revise any such forward-looking statements.