Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 27, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Trading Symbol | 'HSTM | ' |
Entity Registrant Name | 'HEALTHSTREAM INC | ' |
Entity Central Index Key | '0001095565 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 27,634,449 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $64,927 | $59,537 |
Marketable securities | 51,495 | 48,659 |
Accounts receivable, net of allowance for doubtful accounts of $269 and $211 at September 30, 2014 and December 31, 2013, respectively | 28,177 | 25,314 |
Accounts receivable -unbilled | 1,938 | 1,392 |
Prepaid royalties, net of amortization | 12,832 | 8,857 |
Other prepaid expenses and other current assets | 3,566 | 3,365 |
Total current assets | 162,935 | 147,124 |
Property and equipment: | ' | ' |
Equipment | 23,850 | 21,631 |
Leasehold improvements | 5,856 | 5,521 |
Furniture and fixtures | 4,341 | 3,854 |
Property and equipment, gross | 34,047 | 31,006 |
Less accumulated depreciation and amortization | -25,040 | -21,968 |
Total, property and equipment | 9,007 | 9,038 |
Capitalized software development, net of accumulated amortization of $16,884 and $13,910 at September 30, 2014 and December 31, 2013, respectively | 12,303 | 11,077 |
Goodwill | 42,654 | 35,746 |
Intangible assets, net of accumulated amortization of $13,179 and $11,389 at September 30, 2014 and December 31, 2013, respectively | 15,450 | 8,870 |
Other assets | 984 | 739 |
Total assets | 243,333 | 212,594 |
Current liabilities: | ' | ' |
Accounts payable | 799 | 2,311 |
Accrued royalties | 6,622 | 8,435 |
Accrued liabilities | 11,762 | 5,503 |
Accrued compensation and related expenses | 1,727 | 1,614 |
Deferred tax liabilities, current | 224 | 181 |
Deferred revenue | 53,303 | 38,168 |
Total current liabilities | 74,437 | 56,212 |
Deferred tax liabilities, noncurrent | 5,437 | 6,173 |
Deferred revenue, noncurrent | 1,507 | ' |
Other long term liabilities | 710 | 776 |
Commitments and contingencies | ' | ' |
Shareholders' equity: | ' | ' |
Common stock, no par value, 75,000 shares authorized; 27,634 and 27,327 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 170,940 | 166,888 |
Accumulated deficit | -9,677 | -17,424 |
Accumulated other comprehensive loss | -21 | -31 |
Total shareholders' equity | 161,242 | 149,433 |
Total liabilities and shareholders' equity | $243,333 | $212,594 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ' | ' |
Allowance for doubtful accounts, net | $269 | $211 |
Accumulated amortization on capitalized software development | 16,884 | 13,910 |
Accumulated amortization on intangible assets | $13,179 | $11,389 |
Common stock, no par value | ' | ' |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 27,634,000 | 27,327,000 |
Common stock, shares outstanding | 27,634,000 | 27,327,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenues, net | $44,525 | $33,659 | $125,351 | $95,224 |
Operating costs and expenses: | ' | ' | ' | ' |
Cost of revenues (excluding depreciation and amortization) | 19,115 | 14,092 | 54,778 | 39,483 |
Product development | 4,211 | 3,210 | 12,052 | 8,594 |
Sales and marketing | 7,585 | 5,888 | 21,783 | 16,538 |
Other general and administrative expenses | 6,058 | 4,551 | 16,651 | 13,640 |
Depreciation and amortization | 2,815 | 2,039 | 7,938 | 5,812 |
Total operating costs and expenses | 39,784 | 29,780 | 113,202 | 84,067 |
Income from operations | 4,741 | 3,879 | 12,149 | 11,157 |
Other income, net | 49 | 46 | 117 | 121 |
Income before income tax provision | 4,790 | 3,925 | 12,266 | 11,278 |
Income tax provision | 1,354 | 1,629 | 4,519 | 4,620 |
Net income | $3,436 | $2,296 | $7,747 | $6,658 |
Earnings per share: | ' | ' | ' | ' |
Basic | $0.12 | $0.08 | $0.28 | $0.25 |
Diluted | $0.12 | $0.08 | $0.28 | $0.24 |
Weighted average shares of common stock outstanding: | ' | ' | ' | ' |
Basic | 27,605 | 27,085 | 27,542 | 26,716 |
Diluted | 28,047 | 27,735 | 27,999 | 27,598 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income | $3,436 | $2,296 | $7,747 | $6,658 |
Other comprehensive income, net of taxes: | ' | ' | ' | ' |
Unrealized gain (loss) on marketable securities | -13 | 6 | 10 | -47 |
Total other comprehensive income (loss) | -13 | 6 | 10 | -47 |
Comprehensive income | $3,423 | $2,302 | $7,757 | $6,611 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) (USD $) | Total | Common Stock [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] |
In Thousands | ||||
Beginning balance at Dec. 31, 2013 | $149,433 | $166,888 | ($17,424) | ($31) |
Beginning balance, shares at Dec. 31, 2013 | 27,327 | 27,327 | ' | ' |
Net income | 7,747 | ' | 7,747 | ' |
Comprehensive income | 10 | ' | ' | 10 |
Issuance of common stock in acquisition | 2,247 | 2,247 | ' | ' |
Issuance of common stock in acquisition, shares | ' | 82 | ' | ' |
Stock based compensation | 1,222 | 1,222 | ' | ' |
Tax benefits from equity awards | -129 | -129 | ' | ' |
Common stock issued under stock plans, net of shares withheld for employee taxes | 712 | 712 | ' | ' |
Common stock issued under stock plans, net of shares withheld for employee taxes, shares | ' | 225 | ' | ' |
Ending balance at Sep. 30, 2014 | $161,242 | $170,940 | ($9,677) | ($21) |
Ending balance, shares at Sep. 30, 2014 | 27,634 | 27,634 | ' | ' |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
OPERATING ACTIVITIES: | ' | ' |
Net income | $7,747 | $6,658 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 7,938 | 5,812 |
Stock based compensation expense | 1,222 | 1,088 |
Deferred income taxes | 4,519 | 4,560 |
Excess tax benefits from equity awards | 129 | 72 |
Provision for doubtful accounts | 170 | 95 |
Loss on non-marketable equity investments | 34 | 30 |
Other | 1,082 | 1,163 |
Changes in operating assets and liabilities: | ' | ' |
Accounts and unbilled receivables | -1,891 | -7,312 |
Prepaid royalties | -3,975 | -4,509 |
Other prepaid expenses and other current assets | -260 | -908 |
Other assets | 79 | 26 |
Accounts payable | -1,511 | 792 |
Accrued royalties | -1,814 | 3,037 |
Accrued liabilities and accrued compensation and related expenses and other long-term liabilities | 288 | 703 |
Deferred revenue | 14,918 | 11,904 |
Net cash provided by operating activities | 28,675 | 23,211 |
INVESTING ACTIVITIES: | ' | ' |
Business combinations, net of cash acquired | -12,298 | -7,362 |
Proceeds from maturities of investments in marketable securities | 40,418 | 63,722 |
Proceeds from sales of investments in marketable securities | ' | 5,062 |
Purchases of investments in marketable securities | -44,324 | -67,634 |
Investments in non-marketable equity investments | -325 | -300 |
Payments associated with capitalized software development | -4,025 | -3,017 |
Purchases of property and equipment | -3,044 | -2,414 |
Net cash used in investing activities | -23,598 | -11,943 |
FINANCING ACTIVITIES: | ' | ' |
Proceeds from exercise of stock options | 872 | 3,057 |
Taxes paid related to net settlement of equity awards | -160 | -158 |
Excess tax benefits from equity awards | -129 | -72 |
Payment of earn-outs related to acquisitions | -270 | -357 |
Net cash provided by financing activities | 313 | 2,470 |
Net increase in cash and cash equivalents | 5,390 | 13,738 |
Cash and cash equivalents at beginning of period | 59,537 | 41,365 |
Cash and cash equivalents at end of period | 64,927 | 55,103 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ' | ' |
Issuance of common stock in connection with acquisition | $2,247 | $534 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
1. BASIS OF PRESENTATION | |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. All significant intercompany transactions have been eliminated in consolidation. Operating results for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. | |
The balance sheet at December 31, 2013 is consistent with the audited financial statements at that date but does not include all of the information and footnotes required by US GAAP for a complete set of financial statements. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2013 (included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 4, 2014). |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Changes and Error Corrections [Abstract] | ' |
Recent Accounting Pronouncements | ' |
2. RECENT ACCOUNTING PRONOUNCEMENTS | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company is currently reviewing this standard to assess the impact on its future consolidated financial statements. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management of the Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. The standard will be effective for the annual reporting period ending after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of the standard to have a material impact on the Company’s consolidated financial statements. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
3. INCOME TAXES | |
Income taxes are accounted for using the asset and liability method, whereby deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities measured at tax rates that will be in effect for the year in which the differences are expected to affect taxable income. | |
During the nine months ended September 30, 2014 and 2013, the Company recorded a provision for income taxes of approximately $4.5 million and $4.6 million respectively. The Company’s effective tax rate for the nine months ended September 30, 2014 and 2013 was 36.8% and 41.0%, respectively. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, and the effect of various permanent tax differences. During the three months ended September 30, 2014, the Company recognized approximately $670,000 of tax benefits primarily from research and development tax credits, which resulted in a lower effective tax rate for both the three and nine months ended September 30, 2014. |
Stock_Based_Compensation
Stock Based Compensation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Stock Based Compensation | ' | ||||||||||||||||
4. STOCK BASED COMPENSATION | |||||||||||||||||
The Company maintains two stock incentive plans. The Company accounts for its stock based compensation plans using the fair-value based method for costs related to share-based payments, including stock options and restricted share units (RSUs). During the nine months ended September 30, 2014, the Company issued 70,080 RSUs with a weighted average grant date fair value of $28.71 per share, measured based on the closing fair market value of the Company’s stock on the date of grant. During the nine months ended September 30, 2013, the Company issued 80,250 RSUs with a weighted average grant date fair value of $22.02 per share, measured based on the closing fair market value of the Company’s stock on the date of grant. | |||||||||||||||||
Total stock based compensation expense recorded for the three and nine months ended September 30, 2014 and 2013, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Cost of revenues (excluding depreciation and amortization) | $ | 23 | $ | 22 | $ | 62 | $ | 61 | |||||||||
Product development | 53 | 45 | 150 | 124 | |||||||||||||
Sales and marketing | 69 | 45 | 172 | 124 | |||||||||||||
Other general and administrative | 243 | 266 | 838 | 779 | |||||||||||||
Total stock based compensation expense | $ | 388 | $ | 378 | $ | 1,222 | $ | 1,088 | |||||||||
Earnings_Per_Share
Earnings Per Share | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Earnings Per Share | ' | ||||||||||||||||
5. EARNINGS PER SHARE | |||||||||||||||||
Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of potentially dilutive common and common equivalent shares outstanding during the period. Common equivalent shares are composed of incremental common shares issuable upon the exercise of stock options and restricted share units subject to vesting. The dilutive effect of common equivalent shares is included in diluted earnings per share by application of the treasury stock method. The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect, was approximately 41,000 and 6,000 for the three months ended September 30, 2014 and 2013, respectively, and approximately 93,000 and 92,000 for the nine months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 3,436 | $ | 2,296 | $ | 7,747 | $ | 6,658 | |||||||||
Denominator: | |||||||||||||||||
Weighted-average shares outstanding | 27,605 | 27,085 | 27,542 | 26,716 | |||||||||||||
Effect of dilutive shares | 442 | 650 | 457 | 882 | |||||||||||||
Weighted-average diluted shares | 28,047 | 27,735 | 27,999 | 27,598 | |||||||||||||
Basic earnings per share | $ | 0.12 | $ | 0.08 | $ | 0.28 | $ | 0.25 | |||||||||
Diluted earnings per share | $ | 0.12 | $ | 0.08 | $ | 0.28 | $ | 0.24 | |||||||||
Marketable_Securities
Marketable Securities | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||||||||||||||
Marketable Securities | ' | ||||||||||||||||
6. MARKETABLE SECURITIES | |||||||||||||||||
At September 30, 2014 and December 31, 2013, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): | |||||||||||||||||
September 30, 2014 | |||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||
Cost | Gains | Losses | Value | ||||||||||||||
Level 2: | |||||||||||||||||
Certificates of deposit | $ | 6,271 | $ | — | $ | — | $ | 6,271 | |||||||||
Corporate debt securities | 45,245 | 2 | (23 | ) | 45,224 | ||||||||||||
Subtotal | 51,516 | 2 | (23 | ) | 51,495 | ||||||||||||
Total | $ | 51,516 | $ | 2 | $ | (23 | ) | $ | 51,495 | ||||||||
December 31, 2013 | |||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||
Cost | Gains | Losses | Value | ||||||||||||||
Level 2: | |||||||||||||||||
Certificates of deposit | $ | 2,260 | $ | — | $ | — | $ | 2,260 | |||||||||
Corporate debt securities | 46,430 | — | (31 | ) | 46,399 | ||||||||||||
Subtotal | 48,690 | — | (31 | ) | 48,659 | ||||||||||||
Total | $ | 48,690 | $ | — | $ | (31 | ) | $ | 48,659 | ||||||||
The carrying amounts reported in the condensed consolidated balance sheet approximate the fair value based on quoted market prices or alternative pricing sources and models utilizing market observable inputs. As of September 30, 2014, the Company does not consider any of its marketable securities to be other than temporarily impaired. During the nine months ended September 30, 2014 and 2013, the Company did not reclassify any material items out of accumulated other comprehensive income to net income. All investments in marketable securities are classified as a current asset on the balance sheet because the underlying securities mature within one year from the balance sheet date. |
Business_Combination
Business Combination | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
Business Combination | ' | ||||||||||||
7. BUSINESS COMBINATION | |||||||||||||
On March 3, 2014, the Company acquired all of the stock of Health Care Compliance Strategies, Inc. (HCCS), a Jericho, New York based company that specializes in healthcare compliance solutions and services. The Company acquired HCCS to further advance its suite of workforce development solutions, including its offering of compliance solutions. The consideration paid for HCCS consisted of approximately $12.8 million in cash (taking into account a working capital adjustment) and 81,614 shares of our common stock. The Company may make additional payments of up to $750,000, contingent upon the achievement of certain performance milestones within one year post-closing. The Company incurred approximately $515,000 in transaction costs associated with the acquisition, of which $365,000 were incurred during the nine months ended September 30, 2014 and $150,000 were incurred during the year ended December 31, 2013. The transaction costs were recorded in other general and administrative expenses in the condensed consolidated statement of income. In allocating the purchase price, the Company has preliminarily recorded approximately $6.9 million of goodwill, $8.4 million of identifiable intangible assets, $2.4 million of tangible assets, and $2.1 million of liabilities. The goodwill balance is primarily attributed to assembled workforce, additional market opportunities of HCCS’s compliance solutions, and expected synergies from integrating HCCS’s products into our platform. The goodwill balance is deductible for U.S. income tax purposes. The allocation of purchase price is preliminary and may be subject to change within the measurement period of one year from the acquisition date. The primary area of the preliminary purchase price allocation that is not finalized includes goodwill associated with final working capital adjustments. The net tangible assets include deferred revenue, which was adjusted down from a book value at the acquisition date of $3.2 million to an estimated fair value of $1.7 million. The $1.5 million write-down of deferred revenue will result in lower revenues than would have otherwise been recognized for such services. The results of operations for HCCS have been included in the Company’s condensed consolidated financial statements from the date of acquisition, and are also included in the HealthStream Workforce Development Solutions segment. | |||||||||||||
During the second quarter of 2014, the Company determined the presentation of contingent consideration payments, or earn-outs, in connection with business combinations should be classified as a financing activity within the statement of cash flows. The Company previously classified such payments as an operating activity within the statement of cash flows. The Company has adjusted the statement of cash flows for the nine-month period ended September 30, 2013 and will adjust the statement of cash flows for the year ended December 31, 2013 when those financial statements are presented comparatively for the corresponding periods in 2014. The Company considers the adjustments to all aforementioned periods to be immaterial corrections of errors. | |||||||||||||
The effect of the immaterial adjustments on the consolidated statement of cash flows for the respective periods listed below is as follows (in thousands): | |||||||||||||
Previously | Adjustments | Adjusted | |||||||||||
Reported | |||||||||||||
Net cash provided by operating activities, three months ended March 31, 2013 | $ | 3,855 | $ | 45 | $ | 3,900 | |||||||
Net cash provided by financing activities, three months ended March 31, 2013 | 742 | (45 | ) | 697 | |||||||||
Net cash provided by operating activities, six months ended June 30, 2013 | 11,041 | 318 | 11,359 | ||||||||||
Net cash provided by financing activities, six months ended June 30, 2013 | 1,524 | (318 | ) | 1,206 | |||||||||
Net cash provided by operating activities, nine months ended September 30, 2013 | 22,854 | 357 | 23,211 | ||||||||||
Net cash provided by financing activities, nine months ended September 30, 2013 | 2,827 | (357 | ) | 2,470 | |||||||||
Net cash provided by operating activities, year ended December 31, 2013 | 26,283 | 771 | 27,054 | ||||||||||
Net cash provided by financing activities, year ended December 31, 2013 | 6,876 | (771 | ) | 6,105 | |||||||||
Net cash provided by operating activities, three months ended March 31, 2014 | 9,189 | 5 | 9,194 | ||||||||||
Net cash provided by financing activities, three months ended March 31, 2014 | 297 | (5 | ) | 292 |
Business_Segments
Business Segments | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Business Segments | ' | ||||||||||||||||
8. BUSINESS SEGMENTS | |||||||||||||||||
The Company primarily provides services to healthcare organizations and other members within the healthcare industry. The Company’s services are primarily focused on the delivery of workforce development products and services (HealthStream Workforce Development Solutions), as well as survey and research services (HealthStream Research/Patient Experience Solutions). The accounting policies of the segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. | |||||||||||||||||
The Company measures segment performance based on operating income before income taxes and prior to the allocation of certain corporate overhead expenses, interest income, interest expense, and depreciation. The Unallocated component below includes corporate functions, such as accounting, human resources, legal, investor relations, administrative, and executive personnel, depreciation, a portion of amortization, and certain other expenses, which are not currently allocated in measuring segment performance. The following is the Company’s business segment information as of and for the three and nine months ended September 30, 2014 and 2013 (in thousands). | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Workforce Development | $ | 36,288 | $ | 26,574 | $ | 101,632 | $ | 74,841 | |||||||||
Research/Patient Experience | 8,237 | 7,085 | 23,719 | 20,383 | |||||||||||||
Total net revenue | $ | 44,525 | $ | 33,659 | $ | 125,351 | $ | 95,224 | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Income from operations | |||||||||||||||||
Workforce Development | $ | 9,811 | $ | 7,355 | $ | 26,555 | $ | 21,685 | |||||||||
Research/Patient Experience | 285 | 755 | 610 | 1,964 | |||||||||||||
Unallocated | (5,355 | ) | (4,231 | ) | (15,016 | ) | (12,492 | ) | |||||||||
Total income from operations | $ | 4,741 | $ | 3,879 | $ | 12,149 | $ | 11,157 | |||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||
Segment assets * | |||||||||||||||||
Workforce Development | $ | 82,795 | $ | 60,013 | |||||||||||||
Research/Patient Experience | 34,478 | 34,727 | |||||||||||||||
Unallocated | 126,060 | 117,854 | |||||||||||||||
Total assets | $ | 243,333 | $ | 212,594 | |||||||||||||
* | Segment assets include accounts and unbilled receivables, prepaid and other current assets, other assets, capitalized software development, certain property and equipment, and intangible assets. Cash and cash equivalents and marketable securities are not allocated to individual segments, and are included within Unallocated. A significant portion of property and equipment assets are included within Unallocated. |
Recent_Accounting_Pronouncemen1
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Changes and Error Corrections [Abstract] | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | ' |
RECENT ACCOUNTING PRONOUNCEMENTS | |
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016, and early adoption is not permitted. The Company is currently reviewing this standard to assess the impact on its future consolidated financial statements. | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40); Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which requires management of the Company to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern. The standard will be effective for the annual reporting period ending after December 15, 2016, with early adoption permitted. The Company does not expect the adoption of the standard to have a material impact on the Company’s consolidated financial statements. | |
Stock_Based_Compensation_Table
Stock Based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Stock Based Compensation Expense Recorded in Condensed Consolidated Statements of Income | ' | ||||||||||||||||
Total stock based compensation expense recorded for the three and nine months ended September 30, 2014 and 2013, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Cost of revenues (excluding depreciation and amortization) | $ | 23 | $ | 22 | $ | 62 | $ | 61 | |||||||||
Product development | 53 | 45 | 150 | 124 | |||||||||||||
Sales and marketing | 69 | 45 | 172 | 124 | |||||||||||||
Other general and administrative | 243 | 266 | 838 | 779 | |||||||||||||
Total stock based compensation expense | $ | 388 | $ | 378 | $ | 1,222 | $ | 1,088 | |||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Earnings Per Share [Abstract] | ' | ||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | ' | ||||||||||||||||
The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2014 and 2013 (in thousands, except per share data): | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income | $ | 3,436 | $ | 2,296 | $ | 7,747 | $ | 6,658 | |||||||||
Denominator: | |||||||||||||||||
Weighted-average shares outstanding | 27,605 | 27,085 | 27,542 | 26,716 | |||||||||||||
Effect of dilutive shares | 442 | 650 | 457 | 882 | |||||||||||||
Weighted-average diluted shares | 28,047 | 27,735 | 27,999 | 27,598 | |||||||||||||
Basic earnings per share | $ | 0.12 | $ | 0.08 | $ | 0.28 | $ | 0.25 | |||||||||
Diluted earnings per share | $ | 0.12 | $ | 0.08 | $ | 0.28 | $ | 0.24 | |||||||||
Marketable_Securities_Tables
Marketable Securities (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||||||||||||||
Fair Value of Available for Sale Marketable Securities | ' | ||||||||||||||||
At September 30, 2014 and December 31, 2013, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): | |||||||||||||||||
September 30, 2014 | |||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||
Cost | Gains | Losses | Value | ||||||||||||||
Level 2: | |||||||||||||||||
Certificates of deposit | $ | 6,271 | $ | — | $ | — | $ | 6,271 | |||||||||
Corporate debt securities | 45,245 | 2 | (23 | ) | 45,224 | ||||||||||||
Subtotal | 51,516 | 2 | (23 | ) | 51,495 | ||||||||||||
Total | $ | 51,516 | $ | 2 | $ | (23 | ) | $ | 51,495 | ||||||||
December 31, 2013 | |||||||||||||||||
Adjusted | Unrealized | Unrealized | Fair | ||||||||||||||
Cost | Gains | Losses | Value | ||||||||||||||
Level 2: | |||||||||||||||||
Certificates of deposit | $ | 2,260 | $ | — | $ | — | $ | 2,260 | |||||||||
Corporate debt securities | 46,430 | — | (31 | ) | 46,399 | ||||||||||||
Subtotal | 48,690 | — | (31 | ) | 48,659 | ||||||||||||
Total | $ | 48,690 | $ | — | $ | (31 | ) | $ | 48,659 | ||||||||
Business_Combination_Tables
Business Combination (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Business Combinations [Abstract] | ' | ||||||||||||
The Effect of the Immaterial Adjustments on the Consolidated Statement of Cash Flows for the Respective Periods | ' | ||||||||||||
The effect of the immaterial adjustments on the consolidated statement of cash flows for the respective periods listed below is as follows (in thousands): | |||||||||||||
Previously | Adjustments | Adjusted | |||||||||||
Reported | |||||||||||||
Net cash provided by operating activities, three months ended March 31, 2013 | $ | 3,855 | $ | 45 | $ | 3,900 | |||||||
Net cash provided by financing activities, three months ended March 31, 2013 | 742 | (45 | ) | 697 | |||||||||
Net cash provided by operating activities, six months ended June 30, 2013 | 11,041 | 318 | 11,359 | ||||||||||
Net cash provided by financing activities, six months ended June 30, 2013 | 1,524 | (318 | ) | 1,206 | |||||||||
Net cash provided by operating activities, nine months ended September 30, 2013 | 22,854 | 357 | 23,211 | ||||||||||
Net cash provided by financing activities, nine months ended September 30, 2013 | 2,827 | (357 | ) | 2,470 | |||||||||
Net cash provided by operating activities, year ended December 31, 2013 | 26,283 | 771 | 27,054 | ||||||||||
Net cash provided by financing activities, year ended December 31, 2013 | 6,876 | (771 | ) | 6,105 | |||||||||
Net cash provided by operating activities, three months ended March 31, 2014 | 9,189 | 5 | 9,194 | ||||||||||
Net cash provided by financing activities, three months ended March 31, 2014 | 297 | (5 | ) | 292 |
Business_Segments_Tables
Business Segments (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Segment Reporting [Abstract] | ' | ||||||||||||||||
Business Segment Information Based on Net Revenues and Net Income from Operations | ' | ||||||||||||||||
The following is the Company’s business segment information as of and for the three and nine months ended September 30, 2014 and 2013 (in thousands). | |||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues | |||||||||||||||||
Workforce Development | $ | 36,288 | $ | 26,574 | $ | 101,632 | $ | 74,841 | |||||||||
Research/Patient Experience | 8,237 | 7,085 | 23,719 | 20,383 | |||||||||||||
Total net revenue | $ | 44,525 | $ | 33,659 | $ | 125,351 | $ | 95,224 | |||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Income from operations | |||||||||||||||||
Workforce Development | $ | 9,811 | $ | 7,355 | $ | 26,555 | $ | 21,685 | |||||||||
Research/Patient Experience | 285 | 755 | 610 | 1,964 | |||||||||||||
Unallocated | (5,355 | ) | (4,231 | ) | (15,016 | ) | (12,492 | ) | |||||||||
Total income from operations | $ | 4,741 | $ | 3,879 | $ | 12,149 | $ | 11,157 | |||||||||
Business Segment Information Based on Assets | ' | ||||||||||||||||
September 30, 2014 | December 31, 2013 | ||||||||||||||||
Segment assets * | |||||||||||||||||
Workforce Development | $ | 82,795 | $ | 60,013 | |||||||||||||
Research/Patient Experience | 34,478 | 34,727 | |||||||||||||||
Unallocated | 126,060 | 117,854 | |||||||||||||||
Total assets | $ | 243,333 | $ | 212,594 | |||||||||||||
* | Segment assets include accounts and unbilled receivables, prepaid and other current assets, other assets, capitalized software development, certain property and equipment, and intangible assets. Cash and cash equivalents and marketable securities are not allocated to individual segments, and are included within Unallocated. A significant portion of property and equipment assets are included within Unallocated. |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Income tax provision | $1,354,000 | $1,629,000 | $4,519,000 | $4,620,000 |
Effective tax rate | ' | ' | 36.80% | 41.00% |
Income tax benefits from research and development tax credits | $670,000 | ' | ' | ' |
Stock_Based_Compensation_Addit
Stock Based Compensation - Additional Information (Detail) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Number of incentive plans | 2 | ' |
RSUs [Member] | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Restricted share units issued | 70,080 | 80,250 |
Weighted average grant date fair value, restricted share unit | $28.71 | $22.02 |
Stock_Based_Compensation_Stock
Stock Based Compensation - Stock Based Compensation Expense Recorded in Condensed Consolidated Statements of Income (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' |
Total stock based compensation expense | $388 | $378 | $1,222 | $1,088 |
Cost of Revenues (Excluding Depreciation and Amortization) [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' |
Total stock based compensation expense | 23 | 22 | 62 | 61 |
Product Development [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' |
Total stock based compensation expense | 53 | 45 | 150 | 124 |
Sales and Marketing [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' |
Total stock based compensation expense | 69 | 45 | 172 | 124 |
Other General and Administrative [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ' | ' | ' | ' |
Total stock based compensation expense | $243 | $266 | $838 | $779 |
Earnings_Per_Share_Additional_
Earnings Per Share - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Total number of common equivalent shares excluded from the calculations of diluted earnings per share | 41,000 | 6,000 | 93,000 | 92,000 |
Earnings_Per_Share_Computation
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Numerator: | ' | ' | ' | ' |
Net income | $3,436 | $2,296 | $7,747 | $6,658 |
Denominator: | ' | ' | ' | ' |
Weighted-average shares outstanding | 27,605 | 27,085 | 27,542 | 26,716 |
Effect of dilutive shares | 442 | 650 | 457 | 882 |
Weighted-average diluted shares | 28,047 | 27,735 | 27,999 | 27,598 |
Basic earnings per share | $0.12 | $0.08 | $0.28 | $0.25 |
Diluted earnings per share | $0.12 | $0.08 | $0.28 | $0.24 |
Marketable_Securities_Fair_Val
Marketable Securities - Fair Value of Available for Sale Marketable Securities (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available for sale securities, Fair Value | $51,495 | $48,659 |
Level 2 [Member] | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available for sale securities, Adjusted Cost | 51,516 | 48,690 |
Available for sale securities, Unrealized Gains | 2 | ' |
Available for sale securities, Unrealized Losses | -23 | -31 |
Available for sale securities, Fair Value | 51,495 | 48,659 |
Level 2 [Member] | Certificates of Deposit [Member] | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available for sale securities, Adjusted Cost | 6,271 | 2,260 |
Available for sale securities, Unrealized Gains | 0 | ' |
Available for sale securities, Unrealized Losses | 0 | ' |
Available for sale securities, Fair Value | 6,271 | 2,260 |
Level 2 [Member] | Corporate Debt Securities [Member] | ' | ' |
Schedule of Available-for-sale Securities [Line Items] | ' | ' |
Available for sale securities, Adjusted Cost | 45,245 | 46,430 |
Available for sale securities, Unrealized Gains | 2 | ' |
Available for sale securities, Unrealized Losses | -23 | -31 |
Available for sale securities, Fair Value | $45,224 | $46,399 |
Business_Combination_Additiona
Business Combination - Additional Information (Detail) (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Business Acquisition [Line Items] | ' | ' |
Purchase price allocation for goodwill | $42,654,000 | $35,746,000 |
Net tangible assets include deferred revenue book value at acquisition date | 3,200,000 | ' |
Net tangible assets include deferred revenue estimated fair value | 1,700,000 | ' |
Write-down of deferred revenue | 1,500,000 | ' |
Health Care Compliance Strategies, Inc. [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Acquisition date of assets | 3-Mar-14 | ' |
Consideration paid for acquisition in cash | 12,800,000 | ' |
Consideration paid for acquisition in shares | 81,614 | ' |
Additional consideration paid for acquisition in cash | 750,000 | ' |
Contingent upon achievement of certain financial targets and business outcome, term | '1 year | ' |
Transaction costs associated with the HCCS acquisition | 515,000 | ' |
Transaction costs associated with the HCCS acquisition | 365,000 | 150,000 |
Purchase price allocation for goodwill | 6,900,000 | ' |
Purchase price allocation for identifiable intangible assets | 8,400,000 | ' |
Purchase price allocation for net tangible assets | 2,400,000 | ' |
Purchase price allocation for liabilities | $2,100,000 | ' |
Preliminary purchase price allocation measurement period | '1 year | ' |
Business_Combination_The_Effec
Business Combination - The Effect of the Immaterial Adjustments on the Consolidated Statement of Cash Flows for the Respective Periods (Detail) (USD $) | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Jun. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items] | ' | ' | ' | ' | ' | ' |
Net cash provided by operating activities | $9,194 | $3,900 | $11,359 | $28,675 | $23,211 | $27,054 |
Net cash provided by financing activities | 292 | 697 | 1,206 | 313 | 2,470 | 6,105 |
Previously Reported [Member] | ' | ' | ' | ' | ' | ' |
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items] | ' | ' | ' | ' | ' | ' |
Net cash provided by operating activities | 9,189 | 3,855 | 11,041 | ' | 22,854 | 26,283 |
Net cash provided by financing activities | 297 | 742 | 1,524 | ' | 2,827 | 6,876 |
Adjustments [Member] | ' | ' | ' | ' | ' | ' |
Schedule Of Condensed Consolidating Statement Of Cash Flows [Line Items] | ' | ' | ' | ' | ' | ' |
Net cash provided by operating activities | 5 | 45 | 318 | ' | 357 | 771 |
Net cash provided by financing activities | ($5) | ($45) | ($318) | ' | ($357) | ($771) |
Business_Segments_Business_Seg
Business Segments - Business Segment Information Based on Net Revenues and Net Income from Operations (Detail) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues | ' | ' | ' | ' |
Total net revenue | $44,525 | $33,659 | $125,351 | $95,224 |
Income from operations | ' | ' | ' | ' |
Total income from operations | 4,741 | 3,879 | 12,149 | 11,157 |
Operating Segments [Member] | Workforce Development [Member] | ' | ' | ' | ' |
Revenues | ' | ' | ' | ' |
Total net revenue | 36,288 | 26,574 | 101,632 | 74,841 |
Income from operations | ' | ' | ' | ' |
Total income from operations | 9,811 | 7,355 | 26,555 | 21,685 |
Operating Segments [Member] | Research/Patient Experience [Member] | ' | ' | ' | ' |
Revenues | ' | ' | ' | ' |
Total net revenue | 8,237 | 7,085 | 23,719 | 20,383 |
Income from operations | ' | ' | ' | ' |
Total income from operations | 285 | 755 | 610 | 1,964 |
Unallocated [Member] | ' | ' | ' | ' |
Income from operations | ' | ' | ' | ' |
Total income from operations | ($5,355) | ($4,231) | ($15,016) | ($12,492) |
Business_Segments_Business_Seg1
Business Segments - Business Segment Information Based on Assets (Detail) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Segment Reporting Information [Line Items] | ' | ' |
Total assets | $243,333 | $212,594 |
Operating Segments [Member] | Workforce Development [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Total assets | 82,795 | 60,013 |
Operating Segments [Member] | Research/Patient Experience [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Total assets | 34,478 | 34,727 |
Unallocated [Member] | ' | ' |
Segment Reporting Information [Line Items] | ' | ' |
Total assets | $126,060 | $117,854 |