Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 26, 2015 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | HSTM | |
Entity Registrant Name | HEALTHSTREAM INC | |
Entity Central Index Key | 1,095,565 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,645,933 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 67,441 | $ 81,995 |
Marketable securities | 77,367 | 38,973 |
Accounts receivable, net of allowance for doubtful accounts of $330 and $331 at September 30, 2015 and December 31, 2014, respectively | 33,124 | 33,167 |
Accounts receivable - unbilled | 2,054 | 1,678 |
Prepaid royalties, net of amortization | 13,976 | 13,030 |
Deferred tax assets | 1,063 | 354 |
Other prepaid expenses and other current assets | 6,649 | 5,414 |
Total current assets | 201,674 | 174,611 |
Property and equipment: | ||
Equipment | 30,286 | 25,133 |
Leasehold improvements | 6,301 | 5,860 |
Furniture and fixtures | 5,135 | 4,554 |
Property and equipment, gross | 41,722 | 35,547 |
Less accumulated depreciation and amortization | (29,875) | (26,105) |
Total, property and equipment | 11,847 | 9,442 |
Capitalized software development, net of accumulated amortization of $22,380 and $18,114 at September 30, 2015 and December 31, 2014, respectively | 13,768 | 12,706 |
Goodwill | 84,000 | 41,914 |
Intangible assets, net of accumulated amortization of $17,811 and $13,834 at September 30, 2015 and December 31, 2014, respectively | 58,018 | 14,795 |
Non-marketable equity investments | 3,658 | 1,757 |
Other assets | 1,752 | 2,037 |
Total assets | 374,717 | 257,262 |
Current liabilities: | ||
Accounts payable | 2,251 | 4,753 |
Accrued royalties | 8,004 | 9,255 |
Accrued liabilities | 7,672 | 7,224 |
Accrued compensation and related expenses | 2,615 | 2,311 |
Deferred revenue | 64,931 | 53,716 |
Total current liabilities | 85,473 | 77,259 |
Deferred tax liabilities, noncurrent | 5,829 | 5,838 |
Deferred revenue, noncurrent | 3,893 | 3,657 |
Other long term liabilities | $ 766 | $ 2,649 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, no par value, 75,000 shares authorized; 31,646 and 27,677 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | $ 279,023 | $ 174,926 |
Accumulated deficit | (220) | (7,030) |
Accumulated other comprehensive loss | (47) | (37) |
Total shareholders' equity | 278,756 | 167,859 |
Total liabilities and shareholders' equity | $ 374,717 | $ 257,262 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts, net | $ 330 | $ 331 |
Accumulated amortization on capitalized software development | 22,380 | 18,114 |
Accumulated amortization on intangible assets | $ 17,811 | $ 13,834 |
Common stock, no par value | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 31,646,000 | 27,677,000 |
Common stock, shares outstanding | 31,646,000 | 27,677,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 53,835 | $ 44,525 | $ 153,136 | $ 125,351 |
Operating costs and expenses: | ||||
Cost of revenues (excluding depreciation and amortization) | 23,126 | 19,115 | 65,752 | 54,778 |
Product development | 6,195 | 4,211 | 16,654 | 12,052 |
Sales and marketing | 8,377 | 7,585 | 26,052 | 21,783 |
Other general and administrative expenses | 7,173 | 6,058 | 20,851 | 16,651 |
Depreciation and amortization | 4,639 | 2,815 | 12,148 | 7,938 |
Total operating costs and expenses | 49,510 | 39,784 | 141,457 | 113,202 |
Income from operations | 4,325 | 4,741 | 11,679 | 12,149 |
Other income (expense), net | 28 | 49 | (7) | 117 |
Income before income tax provision | 4,353 | 4,790 | 11,672 | 12,266 |
Income tax provision | 1,739 | 1,354 | 4,862 | 4,519 |
Net income | $ 2,614 | $ 3,436 | $ 6,810 | $ 7,747 |
Earnings per share: | ||||
Basic | $ 0.08 | $ 0.12 | $ 0.23 | $ 0.28 |
Diluted | $ 0.08 | $ 0.12 | $ 0.23 | $ 0.28 |
Weighted average shares of common stock outstanding: | ||||
Basic | 31,643 | 27,605 | 29,527 | 27,542 |
Diluted | 32,029 | 28,047 | 29,905 | 27,999 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 2,614 | $ 3,436 | $ 6,810 | $ 7,747 |
Other comprehensive income, net of taxes: | ||||
Unrealized gain (loss) on marketable securities | 31 | (13) | (10) | 10 |
Total other comprehensive income (loss) | 31 | (13) | (10) | 10 |
Comprehensive income | $ 2,645 | $ 3,423 | $ 6,800 | $ 7,757 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] |
Beginning balance at Dec. 31, 2014 | $ 167,859 | $ 174,926 | $ (7,030) | $ (37) |
Beginning balance, shares at Dec. 31, 2014 | 27,677 | 27,677 | ||
Net income | $ 6,810 | 6,810 | ||
Comprehensive loss | (10) | (10) | ||
Issuance of common stock | 98,014 | $ 98,014 | ||
Issuance of common stock, shares | 3,870 | |||
Stock based compensation | 2,787 | $ 2,787 | ||
Stock donated to Company | 0 | $ 0 | 0 | 0 |
Stock donated to Company, shares | (54) | |||
Tax benefits from equity awards | 3,721 | $ 3,721 | ||
Common stock issued under stock plans, net of shares withheld for employee taxes | (425) | $ (425) | ||
Common stock issued under stock plans, net of shares withheld for employee taxes, shares | 153 | |||
Ending balance at Sep. 30, 2015 | $ 278,756 | $ 279,023 | $ (220) | $ (47) |
Ending balance, shares at Sep. 30, 2015 | 31,646 | 31,646 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES: | ||
Net income | $ 6,810 | $ 7,747 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 12,148 | 7,938 |
Deferred income taxes | 123 | 4,519 |
Stock based compensation expense | 2,787 | 1,222 |
Excess tax benefits from equity awards | (3,721) | 129 |
Provision for doubtful accounts | 184 | 170 |
Loss on non-marketable equity investments | 98 | 34 |
Other | 938 | 1,082 |
Changes in operating assets and liabilities: | ||
Accounts and unbilled receivables | 2,649 | (1,891) |
Prepaid royalties | (946) | (3,975) |
Other prepaid expenses and other current assets | (595) | (260) |
Other assets | 288 | 79 |
Accounts payable | (2,501) | (1,511) |
Accrued royalties | (1,251) | (1,814) |
Accrued liabilities and accrued compensation and related expenses and other long-term liabilities | 3,082 | 288 |
Deferred revenue | 5,426 | 14,918 |
Net cash provided by operating activities | 25,519 | 28,675 |
INVESTING ACTIVITIES: | ||
Business combinations, net of cash acquired | (88,075) | (12,298) |
Proceeds from maturities of marketable securities | 38,440 | 40,418 |
Purchases of marketable securities | (77,774) | (44,324) |
Payments to acquire equity method investments | (1,000) | (325) |
Payments to acquire cost method investments | (1,000) | |
Payments associated with capitalized software development | (5,329) | (4,025) |
Purchases of property and equipment | (6,012) | (3,044) |
Net cash used in investing activities | (140,750) | (23,598) |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock | 98,014 | |
Proceeds from exercise of stock options | 328 | 872 |
Proceeds from borrowings under revolving line of credit facility | 28,000 | |
Repayments under revolving line of credit facility | (28,000) | |
Payment of earn-outs related to business combinations | (633) | (270) |
Excess tax benefits from equity awards | 3,721 | (129) |
Taxes paid related to net settlement of equity awards | (753) | (160) |
Net cash provided by financing activities | 100,677 | 313 |
Net (decrease) increase in cash and cash equivalents | (14,554) | 5,390 |
Cash and cash equivalents at beginning of period | 81,995 | 59,537 |
Cash and cash equivalents at end of period | $ 67,441 | 64,927 |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of common stock in connection with business combination | $ 2,247 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
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 The balance sheet at December 31, 2014 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, 2014 included in the Company’s Annual Report on Form 10-K (the “Form 10-K”), filed with the Securities and Exchange Commission on February 27, 2015, and our Current Report on Form 8-K filed on May 18, 2015 (the “Form 8-K”) to retrospectively reflect for the periods included in the Form 10-K the addition of HealthStream Provider Solutions as a new reporting segment of the Company which occurred during the first quarter of 2015. The Form 8-K did not modify our previously reported financial statements for the periods included in the Form 10-K other than the change in business segment presentation. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2015 | |
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) Revenue Recognition |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014, the Company recorded a provision for income taxes of approximately $4.9 million and $4.5 million, respectively. The Company’s effective tax rate for the nine months ended September 30, 2015 and 2014 was 41.7% and 36.8%, 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 nine 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. During the nine months ended September 30, 2015, the Company recorded a reduction of approximately $1.8 million to the liability for gross unrecognized tax benefits, resulting from the filing of a change in tax accounting method with the IRS for tangible property and deferred revenue. Of this total reduction, approximately $115,000 had an impact on the effective tax rate for the third quarter of 2015. The remaining balance for gross unrecognized tax benefits was approximately $308,000 as of September 30, 2015. |
Stock Based Compensation
Stock Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
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, restricted share units (RSUs), and other stock awards. During the nine months ended September 30, 2015, the Company issued 80,355 RSUs, subject to service-based vesting, with a weighted average grant date fair value of $25.56 per share and issued 49,310 stock awards, with a weighted average grant date fair value of $30.42 per share. These measurements were based on the closing fair market value of the Company’s stock on the date of grant. During the nine months ended September 30, 2014, the Company issued 70,080 RSUs, subject to service-based vesting, with a weighted average grant date fair value of $28.71 per share. This measurement was based on the closing fair market value of the Company’s stock on the date of grant. During the three months ended September 30, 2015, the Company issued 30,000 performance-based RSUs, the vesting of which is contingent upon meeting certain performance criteria over a five year period. The measurement date for 8,750 of these performance- based RSUs was established with a grant-date fair value of $23.40, measured based on the closing fair market value of the Company’s stock on the date of grant. The performance criteria for the remaining 21,250 performance-based RSUs will be established on an annual basis; therefore, the measurement date cannot be determined until the performance criteria is established. Total stock based compensation expense recorded for the three and nine months ended September 30, 2015 and 2014, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Cost of revenues (excluding depreciation and amortization) $ 29 $ 23 $ 790 $ 62 Product development 55 53 514 150 Sales and marketing 61 69 486 172 Other general and administrative 295 243 997 838 Total stock based compensation expense $ 440 $ 388 $ 2,787 $ 1,222 Stock Awards During June 2015, the Company’s Chief Executive Officer (“CEO”), Robert A. Frist, Jr., entered into an agreement with the Company pursuant to which he contributed 54,241 of his personally owned shares of HealthStream, Inc. common stock to the Company, without any consideration paid to him. In connection with this contribution, the Company approved the grant of 49,310 shares of HealthStream, Inc. common stock to over 600 employees who were not otherwise eligible to receive equity awards and had at least one year of service with the Company. The Company recognized approximately $1.5 million of stock based compensation expense for these stock awards during the three months ended June 30, 2015 based on the closing fair market value of the Company’s stock on the date of the Company’s approval of these grants. In connection with these equity awards, effective in the second quarter of 2015, the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes, and remitted the cash to the appropriate taxing authorities. The total shares withheld were 17,279, and were based on the value of the stock awards on the date of the Company’s approval of these grants, as determined by the Company’s closing stock price on that date. Total payments related to the employees’ tax obligations to taxing authorities for these stock awards were approximately $526,000 and are reflected as a financing activity within the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015. These share withholdings had the effect of share repurchases by the Company as they reduced and retired the number of shares otherwise issuable as a result of the stock awards and did not represent an expense to the Company. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
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 The following table sets forth the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Numerator: Net income $ 2,614 $ 3,436 $ 6,810 $ 7,747 Denominator: Weighted-average shares outstanding 31,643 27,605 29,527 27,542 Effect of dilutive shares 386 442 378 457 Weighted-average diluted shares 32,029 28,047 29,905 27,999 Basic earnings per share $ 0.08 $ 0.12 $ 0.23 $ 0.28 Diluted earnings per share $ 0.08 $ 0.12 $ 0.23 $ 0.28 |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | 6. MARKETABLE SECURITIES At September 30, 2015 and December 31, 2014, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): September 30, 2015 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Certificates of deposit $ 6,298 $ — $ — $ 6,298 Corporate debt securities 71,116 5 (52 ) 71,069 Subtotal 77,414 5 (52 ) 77,367 Total $ 77,414 $ 5 $ (52 ) $ 77,367 December 31, 2014 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Certificates of deposit $ 6,278 $ — $ — $ 6,278 Corporate debt securities 32,732 — (37 ) 32,695 Subtotal 39,010 — (37 ) 38,973 Total $ 39,010 $ — $ (37 ) $ 38,973 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, 2015, the Company does not consider any of its marketable securities to be other than temporarily impaired. During the nine months ended September 30, 2015 and 2014, the Company did not reclassify any 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 Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | 7. BUSINESS COMBINATIONS HealthLine Systems On March 16, 2015, the Company acquired all of the membership interests of HealthLine Systems, LLC (HLS), a San Diego, California based company that specializes in credentialing, privileging, call center, and quality management solutions for the healthcare industry. The acquisition of HLS enables the Company to provide a comprehensive solution set for healthcare provider credentialing, privileging, enrollment, referral, onboarding, and analytics in support of HealthStream’s approach to talent management for healthcare organizations. The consideration paid for HLS consisted of approximately $88.1 million in cash (taking into account an estimated closing working capital adjustment). The Company incurred approximately $1.3 million in transaction costs associated with the acquisition, of which $965,000 were incurred during the three months ended March 31, 2015 and $329,000 were incurred during the year ended December 31, 2014. The transaction costs were recorded in other general and administrative expenses in the condensed consolidated statement of income. The results of operations for HLS have been included in the Company’s condensed consolidated financial statements from the date of acquisition, and are also included in the HealthStream Provider Solutions segment. A summary of the purchase price is as follows (in thousands): Cash paid at closing $ 81,379 Cash held in escrow 6,750 Total consideration paid $ 88,129 The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 54 Accounts receivable, net 3,167 Prepaid assets 746 Property and equipment 200 Deferred tax assets 2,586 Goodwill 42,086 Intangible assets 47,200 Accounts payable and accrued liabilities (1,885 ) Deferred revenue (6,025 ) Preliminary net assets acquired $ 88,129 The excess of preliminary purchase price over the preliminary fair values of net tangible and intangible assets will be recorded as goodwill. The preliminary fair values of tangible and identifiable intangible assets, deferred tax assets, deferred revenue, and other liabilities are based on management’s estimates and assumptions. The preliminary fair values of assets acquired and liabilities assumed are considered preliminary and are based on the information that was available at the time of the acquisition. The preliminary fair values of assets acquired and liabilities assumed are subject to change during the measurement period (up to one year from the acquisition date) as we finalize the valuation of these items. Included in the preliminary assets and liabilities is an estimated indemnification asset of $500,000 and a contingent liability of $1.5 million, both are associated with tax liabilities. The contingent liability is measured based on management’s estimate of a range of probable outcomes. The goodwill balance is primarily attributed to the assembled workforce, additional market opportunities from offering HLS’s products, and expected synergies from integrating HLS with other products or other combined functional areas within the Company. The goodwill balance is deductible for U.S. income tax purposes. The net tangible assets include deferred revenue, which was preliminarily adjusted down from a book value at the acquisition date of $15.1 million to an estimated fair value of $6.0 million. The preliminary $9.1 million write-down of deferred revenue will result in lower revenues than would have otherwise been recognized for such services. The following table sets forth the preliminary components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands): Preliminary fair Useful life Customer relationships $ 42,600 13 years Developed technology 3,700 5 years Trade names 900 6 years Total preliminary intangible assets subject to amortization $ 47,200 The amounts of revenue and operating income (loss) of HLS included in the Company’s condensed consolidated statement of income from the date of acquisition of March 16, 2015 to the period ending September 30, 2015 are as follows (in thousands): Total revenues $ 5,351 Operating loss $ (1,899 ) The following unaudited pro forma financial information summarizes the combined results of operations of the Company and HLS, which was significant for purposes of the unaudited pro forma financial information disclosure, as though the companies were combined as of January 1, 2014 (in thousands, except per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Total revenues $ 55,741 $ 47,844 $ 161,954 $ 133,181 Net income $ 3,760 $ 3,139 $ 10,599 $ 5,602 Basic earnings per share $ 0.12 $ 0.11 $ 0.36 $ 0.20 Diluted earnings per share $ 0.12 $ 0.11 $ 0.35 $ 0.20 These unaudited pro forma combined results of operations include certain adjustments arising from the acquisition such as adjustment for amortization of intangible assets, depreciation of property and equipment, fair value adjustments of acquired deferred revenue balances, and interest expense associated with borrowings under a revolving credit facility by the Company to partially fund the acquisition. The pro forma combined results for three and nine months ended September 30, 2014 include nonrecurring adjustments of $0.8 million and $3.8 million, respectively, which reduce net income due to the revaluation of HLS’s historic deferred revenue to fair value. The unaudited pro forma combined results of operations is for informational purposes only and is not indicative of what the Company’s results of operations would have been had such transactions occurred at the beginning of the period presented or to project the Company’s results of operations in any future period. The unaudited pro forma financial information for the three and nine months ended September 30, 2015 and 2014 combines the historical results of the Company and HLS for the three and nine months ended September 30, 2015 and 2014 and the pro forma adjustments listed above. Health Care Compliance Strategies 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 post-closing working capital adjustment) and 81,614 shares of our common stock. The Company made an additional payment of $750,000 during the second quarter of 2015, 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 year ended December 31, 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 consolidated statements of income. In allocating the purchase price, the Company recorded approximately $6.2 million of goodwill, $8.4 million of identifiable intangible assets, $2.6 million of tangible assets, $625,000 of deferred tax assets, and $2.7 million of liabilities. Included in the recorded liabilities was an accrual for contingent consideration of approximately $600,000. 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 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 consolidated financial statements from the date of acquisition, and are also included in the HealthStream Workforce Development Solutions segment. Goodwill The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands): Workforce Patient Experience Provider Total Balance at January 1, 2015 $ 12,336 $ 24,154 $ 5,424 $ 41,914 Acquisition of HLS — — 42,086 42,086 Balance at September 30, 2015 $ 12,336 $ 24,154 $ 47,510 $ 84,000 |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segments | 8. BUSINESS SEGMENTS The Company provides services to healthcare organizations and other members within the healthcare industry. The Company’s services are focused on the delivery of workforce development products and services (HealthStream Workforce Solutions), survey and research services (HealthStream Patient Experience Solutions), and provider credentialing, privileging, call center and enrollment products and services (HealthStream Provider Solutions). 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, 2015 and 2014 (in thousands). Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenues, net: Workforce $ 41,092 $ 35,203 $ 118,488 $ 98,311 Patient Experience 8,792 8,237 25,545 23,719 Provider 3,951 1,085 9,103 3,321 Total revenues, net $ 53,835 $ 44,525 $ 153,136 $ 125,351 Three Months Ended Nine Months Ended 2015 2014 2015 2014 Income from operations: Workforce $ 10,386 $ 9,707 $ 29,789 $ 25,930 Patient Experience 807 285 1,737 610 Provider (852 ) 104 (1,638 ) 625 Unallocated (6,016 ) (5,355 ) (18,209 ) (15,016 ) Total income from operations $ 4,325 $ 4,741 $ 11,679 $ 12,149 September 30, 2015 December 31, 2014 Segment assets * Workforce $ 82,029 $ 81,116 Patient Experience 34,358 34,536 Provider 101,626 10,976 Unallocated 156,704 130,634 Total assets $ 374,717 $ 257,262 * 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. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 9. DEBT Revolving Credit Facility The Company maintains a Loan Agreement (the “Revolving Credit Facility”) with SunTrust Bank (“SunTrust”) in the aggregate principal amount of $50.0 million, which matures on November 24, 2017. Under the Revolving Credit Facility, the Company may borrow up to $50.0 million, which includes a $5.0 million swing line subfacility, as well as an accordion feature that allows the Company to increase the Revolving Credit Facility by a total of up to $25.0 million, subject to securing additional commitments from existing lenders or new lending institutions. The Revolving Credit Facility includes a $5.0 million letter of credit subfacility. The obligations under the Revolving Credit Facility are guaranteed by each of the Company’s subsidiaries. At the Company’s election, the borrowings under the Revolving Credit Facility bear interest at either (1) a rate per annum equal to the highest of SunTrust’s prime rate or 0.5% in excess of the Federal Funds Rate or 1.0% in excess of one-month LIBOR (the “Base Rate”), plus an applicable margin, or (2) the one, two, three, or six-month per annum LIBOR for deposits in the applicable currency (the “Eurocurrency Rate”), as selected by the Company, plus an applicable margin. The applicable margin for Eurocurrency Rate loans depends on the Company’s funded debt leverage ratio and varies from 1.50% to 2.00%. The applicable margin for Base Rate loans depends on the Company’s funded debt leverage ratio and varies from 0.50% to 1.50%. Commitment fees and letter of credit fees are also payable under the Revolving Credit Facility. Principal is payable in full at maturity on November 24, 2017, and there are no scheduled principal payments prior to maturity. The Company is required to pay a commitment fee ranging between 20 and 30 basis points per annum of the average daily unused portion of the Revolving Credit Facility, depending on the Company’s funded debt leverage ratio. The purpose of the Revolving Credit Facility is for general working capital needs, permitted acquisitions (as defined in the Loan Agreement), and for stock repurchase and/or redemption transactions that the Company may authorize. The Revolving Credit Facility contains certain covenants that, among other things, restrict additional indebtedness, liens and encumbrances, changes to the character of the Company’s business, acquisitions, asset dispositions, mergers and consolidations, sale or discount of receivables, creation or acquisitions of additional subsidiaries, and other matters customarily restricted in such agreements. In addition, the Revolving Credit Facility requires the Company to meet certain financial tests, including, without limitation: • a funded debt leverage ratio (consolidated debt/consolidated EBITDA) of not greater than 3.0 to 1.0; and • an interest coverage ratio (consolidated EBITDA/consolidated interest expense) of not less than 3.0 to 1.0. As of September 30, 2015, the Company was in material compliance with all covenants. There were no balances outstanding on the Revolving Credit Facility as of September 30, 2015. During the three months ended June 30, 2015, the Company repaid approximately $28.0 million of balances previously outstanding under the Revolving Credit Facility from proceeds received in the Company’s public offering of 3,869,750 shares which closed on May 28, 2015. The weighted average interest rate was 1.68% for borrowings under Revolving Credit Facility during the nine months ended September 30, 2015. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 10. RELATED PARTY TRANSACTIONS During the three months ended June 30, 2015, the Company’s CEO, Robert A. Frist, Jr., entered into an agreement with the Company pursuant to which he contributed 54,241 of his personally owned shares of HealthStream, Inc. common stock to the Company, without any consideration paid to him. In connection with this contribution, the Company approved the grant of 49,310 shares of common stock to over 600 employees, with a fair market value of approximately $1.5 million. Mr. Frist contributed 4,931 of the contributed shares noted above to take into account the estimated Company costs, such as administrative expenses and employer payroll taxes associated with the grants. (See Note 4). |
Recent Accounting Pronounceme18
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
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) Revenue Recognition |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Cost of revenues (excluding depreciation and amortization) $ 29 $ 23 $ 790 $ 62 Product development 55 53 514 150 Sales and marketing 61 69 486 172 Other general and administrative 295 243 997 838 Total stock based compensation expense $ 440 $ 388 $ 2,787 $ 1,222 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
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, 2015 and 2014 (in thousands, except per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Numerator: Net income $ 2,614 $ 3,436 $ 6,810 $ 7,747 Denominator: Weighted-average shares outstanding 31,643 27,605 29,527 27,542 Effect of dilutive shares 386 442 378 457 Weighted-average diluted shares 32,029 28,047 29,905 27,999 Basic earnings per share $ 0.08 $ 0.12 $ 0.23 $ 0.28 Diluted earnings per share $ 0.08 $ 0.12 $ 0.23 $ 0.28 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Fair Value of Available for Sale Marketable Securities | At September 30, 2015 and December 31, 2014, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): September 30, 2015 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Certificates of deposit $ 6,298 $ — $ — $ 6,298 Corporate debt securities 71,116 5 (52 ) 71,069 Subtotal 77,414 5 (52 ) 77,367 Total $ 77,414 $ 5 $ (52 ) $ 77,367 December 31, 2014 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Certificates of deposit $ 6,278 $ — $ — $ 6,278 Corporate debt securities 32,732 — (37 ) 32,695 Subtotal 39,010 — (37 ) 38,973 Total $ 39,010 $ — $ (37 ) $ 38,973 |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Summary of Purchase Price | A summary of the purchase price is as follows (in thousands): Cash paid at closing $ 81,379 Cash held in escrow 6,750 Total consideration paid $ 88,129 |
Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 54 Accounts receivable, net 3,167 Prepaid assets 746 Property and equipment 200 Deferred tax assets 2,586 Goodwill 42,086 Intangible assets 47,200 Accounts payable and accrued liabilities (1,885 ) Deferred revenue (6,025 ) Preliminary net assets acquired $ 88,129 |
Components of Identifiable Intangible Assets and Estimated Useful Lives | The following table sets forth the preliminary components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands): Preliminary fair Useful life Customer relationships $ 42,600 13 years Developed technology 3,700 5 years Trade names 900 6 years Total preliminary intangible assets subject to amortization $ 47,200 |
Summary of Unaudited Proforma Financial Information | The amounts of revenue and operating income (loss) of HLS included in the Company’s condensed consolidated statement of income from the date of acquisition of March 16, 2015 to the period ending September 30, 2015 are as follows (in thousands): Total revenues $ 5,351 Operating loss $ (1,899 ) The following unaudited pro forma financial information summarizes the combined results of operations of the Company and HLS, which was significant for purposes of the unaudited pro forma financial information disclosure, as though the companies were combined as of January 1, 2014 (in thousands, except per share data): Three Months Ended Nine Months Ended 2015 2014 2015 2014 Total revenues $ 55,741 $ 47,844 $ 161,954 $ 133,181 Net income $ 3,760 $ 3,139 $ 10,599 $ 5,602 Basic earnings per share $ 0.12 $ 0.11 $ 0.36 $ 0.20 Diluted earnings per share $ 0.12 $ 0.11 $ 0.35 $ 0.20 |
Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in thousands): Workforce Patient Experience Provider Total Balance at January 1, 2015 $ 12,336 $ 24,154 $ 5,424 $ 41,914 Acquisition of HLS — — 42,086 42,086 Balance at September 30, 2015 $ 12,336 $ 24,154 $ 47,510 $ 84,000 |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Business Segment Information Based on Net Revenues | The following is the Company’s business segment information as of and for the three and nine months ended September 30, 2015 and 2014 (in thousands). Three Months Ended Nine Months Ended 2015 2014 2015 2014 Revenues, net: Workforce $ 41,092 $ 35,203 $ 118,488 $ 98,311 Patient Experience 8,792 8,237 25,545 23,719 Provider 3,951 1,085 9,103 3,321 Total revenues, net $ 53,835 $ 44,525 $ 153,136 $ 125,351 |
Business Segment Information Based on Net Income from Operations | Three Months Ended Nine Months Ended 2015 2014 2015 2014 Income from operations: Workforce $ 10,386 $ 9,707 $ 29,789 $ 25,930 Patient Experience 807 285 1,737 610 Provider (852 ) 104 (1,638 ) 625 Unallocated (6,016 ) (5,355 ) (18,209 ) (15,016 ) Total income from operations $ 4,325 $ 4,741 $ 11,679 $ 12,149 |
Business Segment Information Based on Assets | September 30, 2015 December 31, 2014 Segment assets * Workforce $ 82,029 $ 81,116 Patient Experience 34,358 34,536 Provider 101,626 10,976 Unallocated 156,704 130,634 Total assets $ 374,717 $ 257,262 * 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 Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision | $ 1,739,000 | $ 1,354,000 | $ 4,862,000 | $ 4,519,000 |
Effective tax rate | 41.70% | 36.80% | ||
Income tax benefits from research and development tax credits | $ 670,000 | |||
Reduction of gross unrecognized tax benefits | $ (1,800,000) | |||
Gross unrecognized tax benefits | 308,000 | 308,000 | ||
Unrecognized tax benefits that would affect effective tax rate | $ 115,000 | $ 115,000 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jun. 30, 2015USD ($)Employeesshares | Sep. 30, 2015USD ($)$ / sharesshares | Jun. 30, 2015USD ($)shares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Incentive_Plan$ / sharesshares | Sep. 30, 2014USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of incentive plans | Incentive_Plan | 2 | |||||
Stock based compensation expense | $ | $ 440,000 | $ 388,000 | $ 2,787,000 | $ 1,222,000 | ||
RSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of common shares granted to employees | 80,355 | 70,080 | ||||
Weighted average grant date fair value, restricted share unit | $ / shares | $ 25.56 | $ 28.71 | ||||
Performance-Based RSUs [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of common shares granted to employees | 30,000 | |||||
Weighted average grant date fair value, restricted share unit | $ / shares | $ 23.40 | |||||
Restricted share units vesting period | 5 years | |||||
Restricted share units grant date established | 8,750 | |||||
Restricted share units grant date remaining | 21,250 | |||||
Stock Awards [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of common shares granted to employees | 49,310 | |||||
Weighted average grant date fair value, restricted share unit | $ / shares | $ 30.42 | |||||
Number of employees eligible to receive common stock | Employees | 600 | |||||
Minimum eligible period of service required for the employees to receive common stock | 1 year | |||||
Stock based compensation expense | $ | $ 1,500,000 | |||||
Common stock issued under stock plans, number of shares withheld | 17,279 | |||||
Total payments to taxing authorities for stock awards | $ | $ 526,000 | |||||
Stock Awards [Member] | Chief Executive Officer [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of common shares granted to employees | 49,310 | |||||
Number of common stock contributed | 54,241 |
Stock Based Compensation - Stoc
Stock Based Compensation - Stock Based Compensation Expense Recorded in Condensed Consolidated Statements of Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock based compensation expense | $ 440 | $ 388 | $ 2,787 | $ 1,222 |
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 | 29 | 23 | 790 | 62 |
Product Development [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock based compensation expense | 55 | 53 | 514 | 150 |
Sales and Marketing [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock based compensation expense | 61 | 69 | 486 | 172 |
Other General and Administrative [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Total stock based compensation expense | $ 295 | $ 243 | $ 997 | $ 838 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Total number of common equivalent shares excluded from the calculations of diluted earnings per share | 26,000 | 41,000 | 13,000 | 93,000 |
Earnings Per Share - Computatio
Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator: | ||||
Net income | $ 2,614 | $ 3,436 | $ 6,810 | $ 7,747 |
Denominator: | ||||
Weighted-average shares outstanding | 31,643 | 27,605 | 29,527 | 27,542 |
Effect of dilutive shares | 386 | 442 | 378 | 457 |
Weighted-average diluted shares | 32,029 | 28,047 | 29,905 | 27,999 |
Basic earnings per share | $ 0.08 | $ 0.12 | $ 0.23 | $ 0.28 |
Diluted earnings per share | $ 0.08 | $ 0.12 | $ 0.23 | $ 0.28 |
Marketable Securities - Fair Va
Marketable Securities - Fair Value of Available for Sale Marketable Securities (Detail) - Level 2 [Member] - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | $ 77,414 | $ 39,010 |
Available for sale securities, Unrealized Gains | 5 | |
Available for sale securities, Unrealized Losses | (52) | (37) |
Available for sale securities, Fair Value | 77,367 | 38,973 |
Certificates of Deposit [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | 6,298 | 6,278 |
Available for sale securities, Fair Value | 6,298 | 6,278 |
Corporate Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | 71,116 | 32,732 |
Available for sale securities, Unrealized Gains | 5 | |
Available for sale securities, Unrealized Losses | (52) | (37) |
Available for sale securities, Fair Value | $ 71,069 | $ 32,695 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 15 Months Ended | 24 Months Ended | |||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2015 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||||||||||
Purchase price allocation for goodwill | $ 84,000,000 | $ 84,000,000 | $ 41,914,000 | $ 41,914,000 | ||||||
HealthLine Systems LLC [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Acquisition date of assets | Mar. 16, 2015 | |||||||||
Consideration paid for acquisition in cash | $ 88,129,000 | |||||||||
Transaction costs associated with the acquisition | $ 965,000 | 329,000 | $ 1,300,000 | |||||||
Preliminary purchase price allocation measurement period | 1 year | |||||||||
Net tangible assets include deferred revenue book value at acquisition date | 15,100,000 | $ 15,100,000 | ||||||||
Net tangible assets include deferred revenue estimated fair value | 6,025,000 | 6,025,000 | ||||||||
Write-down of deferred revenue | 9,100,000 | |||||||||
Estimated indemnification asset | 500,000 | 500,000 | ||||||||
Contingent liability | 1,500,000 | 1,500,000 | ||||||||
Net income | 3,760,000 | $ 3,139,000 | 10,599,000 | $ 5,602,000 | ||||||
Purchase price allocation for goodwill | 42,086,000 | $ 42,086,000 | ||||||||
HealthLine Systems LLC [Member] | Fair Value Adjustment to Deferred Revenue[Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Net income | $ (800,000) | $ (3,800,000) | ||||||||
Health Care Compliance Strategies, Inc. [Member] | ||||||||||
Business Acquisition [Line Items] | ||||||||||
Acquisition date of assets | Mar. 3, 2014 | |||||||||
Consideration paid for acquisition in cash | $ 12,800,000 | |||||||||
Transaction costs associated with the acquisition | $ 365,000 | $ 150,000 | $ 515,000 | |||||||
Net tangible assets include deferred revenue book value at acquisition date | 3,200,000 | 3,200,000 | ||||||||
Net tangible assets include deferred revenue estimated fair value | 1,700,000 | 1,700,000 | ||||||||
Write-down of deferred revenue | $ 1,500,000 | |||||||||
Consideration paid for acquisition in shares | 81,614 | |||||||||
Payments related to achievement of certain performance milestones | $ 750,000 | |||||||||
Contingent upon achievement of certain financial targets and business outcome, term | 1 year | |||||||||
Purchase price allocation for goodwill | 6,200,000 | $ 6,200,000 | ||||||||
Purchase price allocation for identifiable intangible assets | 8,400,000 | 8,400,000 | ||||||||
Purchase price allocation for net tangible assets | 2,600,000 | 2,600,000 | ||||||||
Purchase price allocation for liabilities | 2,700,000 | 2,700,000 | ||||||||
Purchase price allocation for deferred tax assets | 625,000 | 625,000 | ||||||||
Accrual for contingent consideration | $ 600,000 | $ 600,000 |
Business Combinations - Summary
Business Combinations - Summary of Purchase Price (Detail) - HealthLine Systems LLC [Member] $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Business Acquisition [Line Items] | |
Total consideration paid | $ 88,129 |
Cash Paid at Closing [Member] | |
Business Acquisition [Line Items] | |
Total consideration paid | 81,379 |
Cash Held in Escrow [Member] | |
Business Acquisition [Line Items] | |
Total consideration paid | $ 6,750 |
Business Combinations - Summa32
Business Combinations - Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||
Goodwill | $ 84,000 | $ 41,914 |
HealthLine Systems LLC [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 54 | |
Accounts receivable, net | 3,167 | |
Prepaid assets | 746 | |
Property and equipment | 200 | |
Deferred tax assets | 2,586 | |
Goodwill | 42,086 | |
Intangible assets | 47,200 | |
Accounts payable and accrued liabilities | (1,885) | |
Deferred revenue | (6,025) | |
Preliminary net assets acquired | $ 88,129 |
Business Combinations - Compone
Business Combinations - Components of Identifiable Intangible Assets and Estimated Useful Lives (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Preliminary intangible assets subject to amortization | $ 47,200 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Preliminary intangible assets subject to amortization | $ 42,600 |
Estimated useful lives | 13 years |
Developed Technology [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Preliminary intangible assets subject to amortization | $ 3,700 |
Estimated useful lives | 5 years |
Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Preliminary intangible assets subject to amortization | $ 900 |
Estimated useful lives | 6 years |
Business Combinations - Summa34
Business Combinations - Summary of Unaudited Proforma Financial Information (Detail) - HealthLine Systems LLC [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Acquisition [Line Items] | ||||
Total revenues | $ 5,351 | |||
Operating loss | (1,899) | |||
Total revenues | $ 55,741 | $ 47,844 | 161,954 | $ 133,181 |
Net income | $ 3,760 | $ 3,139 | $ 10,599 | $ 5,602 |
Basic earnings per share | $ 0.12 | $ 0.11 | $ 0.36 | $ 0.20 |
Diluted earnings per share | $ 0.12 | $ 0.11 | $ 0.35 | $ 0.20 |
Business Combinations - Changes
Business Combinations - Changes In Carrying Amount of Goodwill (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Goodwill [Line Items] | |
Beginning Balance | $ 41,914 |
Acquisition of HLS | 42,086 |
Ending Balance | 84,000 |
Workforce [Member] | |
Goodwill [Line Items] | |
Beginning Balance | 12,336 |
Ending Balance | 12,336 |
Patient Experience [Member] | |
Goodwill [Line Items] | |
Beginning Balance | 24,154 |
Ending Balance | 24,154 |
Provider [Member] | |
Goodwill [Line Items] | |
Beginning Balance | 5,424 |
Acquisition of HLS | 42,086 |
Ending Balance | $ 47,510 |
Business Segments - Business Se
Business Segments - Business Segment Information Based on Net Revenues and Net Income from Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues, net | ||||
Revenues, net | $ 53,835 | $ 44,525 | $ 153,136 | $ 125,351 |
Income (loss) from operations | ||||
Income (loss) from operations | 4,325 | 4,741 | 11,679 | 12,149 |
Operating Segments [Member] | Workforce [Member] | ||||
Revenues, net | ||||
Revenues, net | 41,092 | 35,203 | 118,488 | 98,311 |
Income (loss) from operations | ||||
Income (loss) from operations | 10,386 | 9,707 | 29,789 | 25,930 |
Operating Segments [Member] | Patient Experience [Member] | ||||
Revenues, net | ||||
Revenues, net | 8,792 | 8,237 | 25,545 | 23,719 |
Income (loss) from operations | ||||
Income (loss) from operations | 807 | 285 | 1,737 | 610 |
Operating Segments [Member] | Provider [Member] | ||||
Revenues, net | ||||
Revenues, net | 3,951 | 1,085 | 9,103 | 3,321 |
Income (loss) from operations | ||||
Income (loss) from operations | (852) | 104 | (1,638) | 625 |
Unallocated [Member] | ||||
Income (loss) from operations | ||||
Income (loss) from operations | $ (6,016) | $ (5,355) | $ (18,209) | $ (15,016) |
Business Segments - Business 37
Business Segments - Business Segment Information Based on Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 374,717 | $ 257,262 |
Operating Segments [Member] | Workforce [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 82,029 | 81,116 |
Operating Segments [Member] | Patient Experience [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 34,358 | 34,536 |
Operating Segments [Member] | Provider [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 101,626 | 10,976 |
Unallocated [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 156,704 | $ 130,634 |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended |
Jun. 30, 2015 | Sep. 30, 2015 | |
Line of Credit Facility [Line Items] | ||
Repayment of balances outstanding on the revolving credit facility | $ 28,000,000 | |
SunTrust Bank [Member] | ||
Line of Credit Facility [Line Items] | ||
Description of the Line of credit facility Covenant | A funded debt leverage ratio (consolidated debt/consolidated EBITDA) of not greater than 3.0 to 1.0 and an interest coverage ratio (consolidated EBITDA/consolidated interest expense) of not less than 3.0 to 1.0. | |
SunTrust Bank [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Commitment fee paid per annum | 30.00% | |
SunTrust Bank [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Commitment fee paid per annum | 20.00% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | ||
Line of Credit Facility [Line Items] | ||
Aggregate principal amount of loan agreement | $ 50,000,000 | |
Maturity date of Loan agreement | Nov. 24, 2017 | |
Maximum borrowing capacity under credit facility | $ 50,000,000 | |
Increase in revolving credit facility | $ 25,000,000 | |
Line of Credit Facility, Interest Rate During Period | 1.68% | |
Interest rate under credit facility | The borrowings under the Revolving Credit Facility bear interest at either (1) a rate per annum equal to the highest of SunTrust’s prime rate or 0.5% in excess of the Federal Funds Rate or 1.0% in excess of one-month LIBOR (the “Base Rate”), plus an applicable margin, or (2) the one, two, three, or six-month per annum LIBOR for deposits in the applicable currency (the “Eurocurrency Rate”), as selected by the Company, plus an applicable margin. The applicable margin for Eurocurrency Rate loans depends on the Company’s funded debt leverage ratio and varies from 1.50% to 2.00%. The applicable margin for Base Rate loans depends on the Company’s funded debt leverage ratio and varies from 0.50% to 1.50% | |
Principal payments prior to maturity | $ 0 | |
Balances outstanding on the revolving credit facility | 0 | |
Repayment of balances outstanding on the revolving credit facility | $ 28,000,000 | |
Shares issued during period, public offering | 3,869,750 | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Swingline Sub Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity under credit facility | 5,000,000 | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Letter of Credit Subfacility [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing capacity under credit facility | $ 5,000,000 | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Federal Funds Effective Swap Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Interest Rate During Period | 0.50% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Line of Credit Facility, Interest Rate During Period | 1.00% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Maximum [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum total leverage ratio | 300.00% | |
Interest coverage ratio | 300.00% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Maximum [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Applicable margin for loans | 1.50% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Maximum [Member] | Eurodollar [Member] | ||
Line of Credit Facility [Line Items] | ||
Applicable margin for loans | 2.00% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Minimum [Member] | ||
Line of Credit Facility [Line Items] | ||
Maximum total leverage ratio | 100.00% | |
Interest coverage ratio | 100.00% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Minimum [Member] | Base Rate [Member] | ||
Line of Credit Facility [Line Items] | ||
Applicable margin for loans | 0.50% | |
Revolving Credit Facility [Member] | SunTrust Bank [Member] | Minimum [Member] | Eurodollar [Member] | ||
Line of Credit Facility [Line Items] | ||
Applicable margin for loans | 1.50% |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($)Employeesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Related Party Transaction [Line Items] | |||||
Stock based compensation expense | $ | $ 440 | $ 388 | $ 2,787 | $ 1,222 | |
Chief Executive Officer [Member] | |||||
Related Party Transaction [Line Items] | |||||
Number of common stock contributed | 54,241 | ||||
Number of common shares granted to employees | 49,310 | ||||
Number of employees eligible to receive common stock | Employees | 600 | ||||
Stock based compensation expense | $ | $ 1,500 | ||||
Common stock unissued shares treated as expense | 4,931 |