Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 29, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
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 | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,729,363 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 82,793 | $ 82,010 |
Marketable securities | 67,690 | 66,976 |
Accounts receivable, net of allowance for doubtful accounts of $367 and $303 at March 31, 2016 and December 31, 2015, respectively | 32,389 | 36,348 |
Accounts receivable - unbilled | 1,416 | 1,998 |
Prepaid royalties, net of amortization | 15,063 | 14,036 |
Other prepaid expenses and other current assets | 6,371 | 8,169 |
Total current assets | 205,722 | 209,537 |
Property and equipment, net | 12,170 | 12,471 |
Capitalized software development, net of accumulated amortization of $26,002 and $24,130 at March 31, 2016 and December 31, 2015, respectively | 14,074 | 13,955 |
Goodwill | 85,253 | 83,073 |
Intangible assets, net of accumulated amortization of $10,285 and $8,685 at March 31, 2016 and December 31, 2015, respectively | 54,366 | 55,966 |
Non-marketable equity investments | 3,596 | 3,640 |
Other assets | 612 | 927 |
Total assets | 375,793 | 379,569 |
Current liabilities: | ||
Accounts payable | 1,385 | 4,616 |
Accrued royalties | 9,821 | 9,053 |
Accrued liabilities | 8,731 | 7,003 |
Accrued compensation and related expenses | 1,659 | 3,308 |
Deferred revenue | 62,038 | 65,098 |
Total current liabilities | 83,634 | 89,078 |
Deferred tax liabilities | 4,763 | 4,763 |
Deferred revenue, noncurrent | 4,192 | 4,350 |
Other long term liabilities | $ 1,060 | $ 1,058 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Common stock, no par value, 75,000 shares authorized; 31,724 and 31,647 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | $ 279,066 | $ 278,799 |
Retained earnings | 3,092 | 1,591 |
Accumulated other comprehensive loss | (14) | (70) |
Total shareholders' equity | 282,144 | 280,320 |
Total liabilities and shareholders' equity | $ 375,793 | $ 379,569 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts, net | $ 367 | $ 303 |
Accumulated amortization on capitalized software development | 26,002 | 24,130 |
Accumulated amortization on intangible assets | $ 10,285 | $ 8,685 |
Common stock, no par value | ||
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 31,724,000 | 31,647,000 |
Common stock, shares outstanding | 31,724,000 | 31,647,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Revenues, net | $ 54,078 | $ 47,156 |
Operating costs and expenses: | ||
Cost of revenues (excluding depreciation and amortization) | 22,900 | 20,193 |
Product development | 7,018 | 4,646 |
Sales and marketing | 8,557 | 7,347 |
Other general and administrative expenses | 7,976 | 6,927 |
Depreciation and amortization | 5,140 | 3,253 |
Total operating costs and expenses | 51,591 | 42,366 |
Operating income | 2,487 | 4,790 |
Other income, net | 18 | 9 |
Income before income tax provision | 2,505 | 4,799 |
Income tax provision | 1,004 | 2,077 |
Net income | $ 1,501 | $ 2,722 |
Earnings per share: | ||
Basic | $ 0.05 | $ 0.10 |
Diluted | $ 0.05 | $ 0.10 |
Weighted average shares of common stock outstanding: | ||
Basic | 31,666 | 27,703 |
Diluted | 31,970 | 28,068 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 1,501 | $ 2,722 |
Other comprehensive income, net of taxes: | ||
Unrealized gain on marketable securities | 56 | 21 |
Total other comprehensive income | 56 | 21 |
Comprehensive income | $ 1,557 | $ 2,743 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] |
Beginning balance at Dec. 31, 2015 | $ 280,320 | $ 278,799 | $ 1,591 | $ (70) |
Beginning balance, shares at Dec. 31, 2015 | 31,647 | 31,647 | ||
Net income | $ 1,501 | 1,501 | ||
Comprehensive income | 56 | 56 | ||
Stock based compensation | 500 | $ 500 | ||
Common stock issued under stock plans, net of shares withheld for employee taxes | (233) | $ (233) | ||
Common stock issued under stock plans, net of shares withheld for employee taxes, shares | 77 | |||
Ending balance at Mar. 31, 2016 | $ 282,144 | $ 279,066 | $ 3,092 | $ (14) |
Ending balance, shares at Mar. 31, 2016 | 31,724 | 31,724 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
OPERATING ACTIVITIES: | ||
Net income | $ 1,501 | $ 2,722 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 5,140 | 3,253 |
Stock based compensation expense | 500 | 409 |
Provision for doubtful accounts | 90 | 7 |
Loss on non-marketable equity investments | 43 | 3 |
Other | 339 | 225 |
Changes in operating assets and liabilities: | ||
Accounts and unbilled receivables | 4,451 | 1,049 |
Prepaid royalties | (1,027) | (1,945) |
Other prepaid expenses and other current assets | 789 | 278 |
Other assets | 314 | (277) |
Accounts payable | (1,879) | (2,849) |
Accrued royalties | 768 | (774) |
Accrued liabilities and accrued compensation and related expenses and other long-term liabilities | (2,099) | 25 |
Deferred revenue | (3,218) | 6,881 |
Net cash provided by operating activities | 5,712 | 9,007 |
INVESTING ACTIVITIES: | ||
Business combinations, net of cash acquired | (88,075) | |
Proceeds from sale of long-lived assets | 975 | |
Proceeds from maturities of marketable securities | 40,916 | 9,165 |
Purchases of marketable securities | (41,912) | (7) |
Payments to acquire equity method investments | (1,000) | |
Payments associated with capitalized software development | (1,990) | (2,023) |
Purchases of property and equipment | (2,685) | (2,313) |
Net cash used in investing activities | (4,696) | (84,253) |
FINANCING ACTIVITIES: | ||
Proceeds from exercise of stock options | 55 | 247 |
Proceeds from borrowings under revolving line of credit facility | 28,000 | |
Payment of earn-outs related to business combinations | (19) | |
Taxes paid related to net settlement of equity awards | (288) | (213) |
Net cash (used in) provided by financing activities | (233) | 28,015 |
Net increase (decrease) in cash and cash equivalents | 783 | (47,231) |
Cash and cash equivalents at beginning of period | 82,010 | 81,995 |
Cash and cash equivalents at end of period | $ 82,793 | $ 34,764 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
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 S-X. The balance sheet at December 31, 2015 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, 2015 (included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2016). Recently Adopted Accounting Standards The Company has adopted Accounting Standards Update (“ASU”) 2015-16, Business Combinations (Topic 805) |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | 2. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) In March 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Sub Topic 825-10) |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
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 three months ended March 31, 2016 and 2015, the Company recorded a provision for income taxes of approximately $1.0 million and $2.1 million, respectively. The Company’s effective tax rate for the three months ended March 31, 2016 and 2015 was 40.1% and 43.3%, 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. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | 4. STOCK BASED COMPENSATION The Company has stock awards outstanding under two stock incentive plans, the Company’s 2010 Stock Incentive Plan and the Company’s 2000 Stock Incentive Plan, as amended. 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 three months ended March 31, 2016, the Company issued 103,210 RSUs, subject to service-based vesting, with a weighted average grant date fair value of $20.20 per share, measured based on the closing fair market value of the Company’s stock on the date of grant. During the three months ended March 31, 2015, the Company issued 73,500 RSUs, subject to service-based vesting, with a weighted average grant date fair value of $25.59 per share, measured 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 granted 30,000 performance-based RSUs, the vesting of which is contingent upon meeting certain performance criteria over a five year period. The measurement date of these performance-based RSUs is determined on an annual basis when the requisite performance criteria is established. The measurement date for 8,750 of these performance-based RSUs was established during the three months ended September 30, 2015. In addition, the measurement date for 5,000 of these performance-based RSUs was established during the three months ended March 31, 2016 with a grant-date fair value of $20.20 per share, measured based on the closing fair market value of the Company’s stock on the established date of grant. The performance criteria for the remaining 16,250 performance-based RSUs has not yet been determined and will be established on an annual basis in 2017, 2018 and 2019, as applicable; therefore, the measurement date cannot be determined until the performance criteria has been established. Total stock based compensation expense recorded for the three months ended March 31, 2016 and 2015, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended March 31, 2016 2015 Cost of revenues (excluding depreciation and amortization) $ 40 $ 23 Product development 58 46 Sales and marketing 62 53 Other general and administrative 340 287 Total stock based compensation expense $ 500 $ 409 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
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 months ended March 31, 2016 and 2015 (in thousands, except per share data): Three Months Ended 2016 2015 Numerator: Net income $ 1,501 $ 2,722 Denominator: Weighted-average shares outstanding 31,666 27,703 Effect of dilutive shares 304 365 Weighted-average diluted shares 31,970 28,068 Basic earnings per share $ 0.05 $ 0.10 Diluted earnings per share $ 0.05 $ 0.10 |
Marketable Securities
Marketable Securities | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities | 6. MARKETABLE SECURITIES At March 31, 2016 and December 31, 2015, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): March 31, 2016 Adjusted Unrealized Unrealized Fair Level 2: Certificates of deposit $ 1,000 $ — $ — $ 1,000 Corporate debt securities 51,562 4 (20 ) 51,546 Government-sponsored enterprise debt securities 15,142 3 (1 ) 15,144 Total $ 67,704 $ 7 $ (21 ) $ 67,690 December 31, 2015 Adjusted Unrealized Unrealized Fair Level 2: Certificates of deposit $ 1,000 $ — $ — $ 1,000 Corporate debt securities 66,046 — (70 ) 65,976 Total $ 67,046 $ — $ (70 ) $ 66,976 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 March 31, 2016, the Company does not consider any of its marketable securities to be other than temporarily impaired. During the three months ended March 31, 2016 and 2015, 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 | 3 Months Ended |
Mar. 31, 2016 | |
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 $90.3 million in cash (taking into account a working capital adjustment and amounts due to the seller as of March 31, 2016). 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 statements of income for such periods. 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 Consideration due to the seller 2,180 Cash held in escrow 6,750 Total consideration $ 90,309 The following table summarizes the fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 54 Accounts receivable, net 3,052 Prepaid assets 546 Property and equipment 200 Deferred tax assets 2,523 Goodwill 43,798 Intangible assets 47,200 Accounts payable and accrued liabilities (1,085 ) Deferred revenue (5,979 ) Preliminary net assets acquired $ 90,309 The excess of purchase price over the fair values of net tangible and intangible assets has been recorded as goodwill. The fair values of tangible and identifiable intangible assets, deferred tax assets, deferred revenue, and other liabilities are based on management’s estimates and assumptions. Included in the assets and liabilities assumed is an estimated indemnification asset of $300,000 and a contingent liability of $700,000, both of which 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. During the three months ended March 31, 2016, the Company received notice of an indemnification claim from the former owners of HLS pursuant to the terms of the membership purchase agreement. The terms of such agreement required the Company to indemnify such owners for incremental taxes incurred as the result of the structure of the acquisition, which had favorable tax aspects to the Company. Although the validity and the amount of such claim have not been agreed to by the Company, the Company recorded a measurement period adjustment in relation to the claim that increased goodwill by approximately $2.2 million during the three months ended March 31, 2016. This additional goodwill will be deductible for U.S. income tax purposes when any amounts underlying the indemnification claim are paid. Accordingly, the measurement period adjustment has no effect on current period or prior period earnings. The goodwill balance excluding such measurement period adjustment 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 $15.0 million to an estimated fair value of $6.0 million. The $9.0 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 components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands): Fair Useful Customer relationships $ 42,600 13 years Developed technology 3,700 5 years Trade names 900 6 years Total 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 March 31, 2015 are as follows (in thousands): Total revenues $ 342 Net loss $ (163 ) The following unaudited pro forma financial information summarizes the combined results of operations of the Company and HLS as though the companies were combined as of January 1, 2014 (in thousands, except per share data): Three Months Ended 2016 2015 Total revenues $ 55,033 $ 51,609 Net income $ 2,073 $ 3,944 Basic earnings per share $ 0.07 $ 0.14 Diluted earnings per share $ 0.07 $ 0.14 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 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 the transaction 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 months ended March 31, 2016 and 2015 combines the historical results of the Company and HLS for the three months ended March 31, 2016 and 2015, and the pro forma adjustments listed above. Goodwill The changes in the carrying amount of goodwill for the three months ended March 31, 2016 are as follows (in thousands): Workforce Patient Experience Provider Total Balance at January 1, 2016 $ 12,336 $ 24,154 $ 46,583 $ 83,073 Acquisition of HealthLine Systems, LLC — — 2,180 2,180 Balance at March 31, 2016 $ 12,336 $ 24,154 $ 48,763 $ 85,253 During the three months ended March 31, 2016, the Company recorded approximately $2.2 million of additional goodwill in relation to the March 2015 acquisition of HealthLine Systems, LLC. Such amount relates to the measurement period adjustment previously discussed under the above caption “ HealthLine Systems |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2016 | |
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, 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 months ended March 31, 2016 and 2015 (in thousands). Three Months Ended Revenues, net: 2016 2015 Workforce $ 41,316 $ 37,594 Patient Experience 7,964 7,987 Provider 4,798 1,575 Total revenues, net $ 54,078 $ 47,156 Three Months Ended Income from operations: 2016 2015 Workforce $ 10,405 $ 10,749 Patient Experience (656 ) 326 Provider (166 ) 136 Unallocated (7,096 ) (6,421 ) Total income from operations $ 2,487 $ 4,790 Segment assets * March 31, December 31, Workforce $ 78,956 $ 82,375 Patient Experience 33,303 34,902 Provider 101,133 100,948 Unallocated 162,401 161,344 Total assets $ 375,793 $ 379,569 * 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 | 3 Months Ended |
Mar. 31, 2016 | |
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 and a $5.0 million letter of credit 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 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 March 31, 2016, the Company was in material compliance with all covenants. There were no balances outstanding on the Revolving Credit Facility as of or during the three months ended March 31, 2016. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) Revenue Recognition In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718) In March 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Sub Topic 825-10) |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards The Company has adopted Accounting Standards Update (“ASU”) 2015-16, Business Combinations (Topic 805) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 months ended March 31, 2016 and 2015, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended March 31, 2016 2015 Cost of revenues (excluding depreciation and amortization) $ 40 $ 23 Product development 58 46 Sales and marketing 62 53 Other general and administrative 340 287 Total stock based compensation expense $ 500 $ 409 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 months ended March 31, 2016 and 2015 (in thousands, except per share data): Three Months Ended 2016 2015 Numerator: Net income $ 1,501 $ 2,722 Denominator: Weighted-average shares outstanding 31,666 27,703 Effect of dilutive shares 304 365 Weighted-average diluted shares 31,970 28,068 Basic earnings per share $ 0.05 $ 0.10 Diluted earnings per share $ 0.05 $ 0.10 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Fair Value of Available for Sale Marketable Securities | At March 31, 2016 and December 31, 2015, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): March 31, 2016 Adjusted Unrealized Unrealized Fair Level 2: Certificates of deposit $ 1,000 $ — $ — $ 1,000 Corporate debt securities 51,562 4 (20 ) 51,546 Government-sponsored enterprise debt securities 15,142 3 (1 ) 15,144 Total $ 67,704 $ 7 $ (21 ) $ 67,690 December 31, 2015 Adjusted Unrealized Unrealized Fair Level 2: Certificates of deposit $ 1,000 $ — $ — $ 1,000 Corporate debt securities 66,046 — (70 ) 65,976 Total $ 67,046 $ — $ (70 ) $ 66,976 |
Business Combinations (Tables)
Business Combinations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Summary of Purchase Price | A summary of the purchase price is as follows (in thousands): Cash paid at closing $ 81,379 Consideration due to the seller 2,180 Cash held in escrow 6,750 Total consideration $ 90,309 |
Summary of Fair Value of Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands): Cash $ 54 Accounts receivable, net 3,052 Prepaid assets 546 Property and equipment 200 Deferred tax assets 2,523 Goodwill 43,798 Intangible assets 47,200 Accounts payable and accrued liabilities (1,085 ) Deferred revenue (5,979 ) Preliminary net assets acquired $ 90,309 |
Components of Identifiable Intangible Assets and Estimated Useful Lives | The following table sets forth the components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands): Fair Useful Customer relationships $ 42,600 13 years Developed technology 3,700 5 years Trade names 900 6 years Total 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 March 31, 2015 are as follows (in thousands): Total revenues $ 342 Net loss $ (163 ) The following unaudited pro forma financial information summarizes the combined results of operations of the Company and HLS as though the companies were combined as of January 1, 2014 (in thousands, except per share data): Three Months Ended 2016 2015 Total revenues $ 55,033 $ 51,609 Net income $ 2,073 $ 3,944 Basic earnings per share $ 0.07 $ 0.14 Diluted earnings per share $ 0.07 $ 0.14 |
Changes in the Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three months ended March 31, 2016 are as follows (in thousands): Workforce Patient Experience Provider Total Balance at January 1, 2016 $ 12,336 $ 24,154 $ 46,583 $ 83,073 Acquisition of HealthLine Systems, LLC — — 2,180 2,180 Balance at March 31, 2016 $ 12,336 $ 24,154 $ 48,763 $ 85,253 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 months ended March 31, 2016 and 2015 (in thousands). Three Months Ended Revenues, net: 2016 2015 Workforce $ 41,316 $ 37,594 Patient Experience 7,964 7,987 Provider 4,798 1,575 Total revenues, net $ 54,078 $ 47,156 |
Business Segment Information Based on Net Income from Operations | Three Months Ended Income from operations: 2016 2015 Workforce $ 10,405 $ 10,749 Patient Experience (656 ) 326 Provider (166 ) 136 Unallocated (7,096 ) (6,421 ) Total income from operations $ 2,487 $ 4,790 |
Business Segment Information Based on Assets | Segment assets * March 31, December 31, Workforce $ 78,956 $ 82,375 Patient Experience 33,303 34,902 Provider 101,133 100,948 Unallocated 162,401 161,344 Total assets $ 375,793 $ 379,569 * 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 ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Income tax provision | $ 1,004 | $ 2,077 |
Effective tax rate | 40.10% | 43.30% |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Detail) | 3 Months Ended | ||
Mar. 31, 2016Incentive_Plan$ / sharesshares | Sep. 30, 2015shares | Mar. 31, 2015$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of incentive plans | Incentive_Plan | 2 | ||
RSUs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share units issued | 103,210 | 73,500 | |
Weighted average grant date fair value, restricted share unit | $ / shares | $ 20.20 | $ 25.59 | |
Performance-Based RSUs [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Restricted share units issued | 30,000 | ||
Weighted average grant date fair value, restricted share unit | $ / shares | $ 20.20 | ||
Restricted share units vesting period | 5 years | ||
Restricted share units grant date established | 5,000 | 8,750 | |
Restricted share units grant date remaining | 16,250 |
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 | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock based compensation expense | $ 500 | $ 409 |
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 | 40 | 23 |
Product Development [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock based compensation expense | 58 | 46 |
Sales and Marketing [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock based compensation expense | 62 | 53 |
Other General and Administrative [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Total stock based compensation expense | $ 340 | $ 287 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Total number of common equivalent shares excluded from the calculations of diluted earnings per share | 85,000 | 13,000 |
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 | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Numerator: | ||
Net income | $ 1,501 | $ 2,722 |
Denominator: | ||
Weighted-average shares outstanding | 31,666 | 27,703 |
Effect of dilutive shares | 304 | 365 |
Weighted-average diluted shares | 31,970 | 28,068 |
Basic earnings per share | $ 0.05 | $ 0.10 |
Diluted earnings per share | $ 0.05 | $ 0.10 |
Marketable Securities - Fair Va
Marketable Securities - Fair Value of Available for Sale Marketable Securities (Detail) - Level 2 [Member] - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | $ 67,704 | $ 67,046 |
Available for sale securities, Unrealized Gains | 7 | |
Available for sale securities, Unrealized Losses | (21) | (70) |
Available for sale securities, Fair Value | 67,690 | 66,976 |
Certificates of Deposit [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | 1,000 | 1,000 |
Available for sale securities, Fair Value | 1,000 | 1,000 |
Corporate Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | 51,562 | 66,046 |
Available for sale securities, Unrealized Gains | 4 | |
Available for sale securities, Unrealized Losses | (20) | (70) |
Available for sale securities, Fair Value | 51,546 | $ 65,976 |
Government-sponsored Enterprises Debt Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available for sale securities, Adjusted Cost | 15,142 | |
Available for sale securities, Unrealized Gains | 3 | |
Available for sale securities, Unrealized Losses | (1) | |
Available for sale securities, Fair Value | $ 15,144 |
Business Combinations - Additio
Business Combinations - Additional Information (Detail) - HealthLine Systems LLC [Member] - USD ($) | 3 Months Ended | 12 Months Ended | 15 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||||
Acquisition date of assets | Mar. 16, 2015 | |||
Consideration paid for acquisition in cash | $ 90,309,000 | |||
Transaction costs associated with the acquisition | $ 965,000 | $ 329,000 | $ 1,300,000 | |
Adjustment to goodwill | 2,200,000 | |||
Estimated indemnification asset | 300,000 | |||
Contingent liability | 700,000 | |||
Net tangible assets include deferred revenue book value at acquisition date | 15,000,000 | |||
Net tangible assets include deferred revenue estimated fair value | 5,979,000 | |||
Write-down of deferred revenue | $ 9,000,000 |
Business Combinations - Summary
Business Combinations - Summary of Purchase Price (Detail) - HealthLine Systems LLC [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Business Acquisition [Line Items] | |
Total consideration | $ 90,309 |
Cash Paid at Closing [Member] | |
Business Acquisition [Line Items] | |
Total consideration | 81,379 |
Consideration Due to the Seller [Member] | |
Business Acquisition [Line Items] | |
Total consideration | 2,180 |
Cash Held in Escrow [Member] | |
Business Acquisition [Line Items] | |
Total consideration | $ 6,750 |
Business Combinations - Summa31
Business Combinations - Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||
Goodwill | $ 85,253 | $ 83,073 |
Intangible assets | 47,200 | |
HealthLine Systems LLC [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 54 | |
Accounts receivable, net | 3,052 | |
Prepaid assets | 546 | |
Property and equipment | 200 | |
Deferred tax assets | 2,523 | |
Goodwill | 43,798 | |
Intangible assets | 47,200 | |
Accounts payable and accrued liabilities | (1,085) | |
Deferred revenue | (5,979) | |
Preliminary net assets acquired | $ 90,309 |
Business Combinations - Compone
Business Combinations - Components of Identifiable Intangible Assets and Estimated Useful Lives (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets subject to amortization | $ 47,200 |
Customer Relationships [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets subject to amortization | $ 42,600 |
Estimated useful lives | 13 years |
Developed Technology [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets subject to amortization | $ 3,700 |
Estimated useful lives | 5 years |
Trade Names [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Total intangible assets subject to amortization | $ 900 |
Estimated useful lives | 6 years |
Business Combinations - Summa33
Business Combinations - Summary of Unaudited ProForma Financial Information (Detail) - HealthLine Systems LLC [Member] - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition [Line Items] | ||
Total revenues | $ 342 | |
Net loss | (163) | |
Total revenues | 55,033 | $ 51,609 |
Net income | $ 2,073 | $ 3,944 |
Basic earnings per share | $ 0.07 | $ 0.14 |
Diluted earnings per share | $ 0.07 | $ 0.14 |
Business Combinations - Changes
Business Combinations - Changes In Carrying Amount of Goodwill (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Goodwill [Line Items] | |
Goodwill, beginning balance | $ 83,073 |
Goodwill, ending balance | 85,253 |
HealthLine Systems LLC [Member] | |
Goodwill [Line Items] | |
Goodwill acquired | 2,180 |
Goodwill, ending balance | 43,798 |
Workforce [Member] | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 12,336 |
Goodwill, ending balance | 12,336 |
Patient Experience [Member] | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 24,154 |
Goodwill, ending balance | 24,154 |
Provider [Member] | |
Goodwill [Line Items] | |
Goodwill, beginning balance | 46,583 |
Goodwill, ending balance | 48,763 |
Provider [Member] | HealthLine Systems LLC [Member] | |
Goodwill [Line Items] | |
Goodwill acquired | $ 2,180 |
Business Segments - Business Se
Business Segments - Business Segment Information Based on Net Revenues and Operating Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues, net | ||
Revenues, net | $ 54,078 | $ 47,156 |
Income from operations | ||
Income from operations | 2,487 | 4,790 |
Operating Segments [Member] | Workforce [Member] | ||
Revenues, net | ||
Revenues, net | 41,316 | 37,594 |
Income from operations | ||
Income from operations | 10,405 | 10,749 |
Operating Segments [Member] | Patient Experience [Member] | ||
Revenues, net | ||
Revenues, net | 7,964 | 7,987 |
Income from operations | ||
Income from operations | (656) | 326 |
Operating Segments [Member] | Provider [Member] | ||
Revenues, net | ||
Revenues, net | 4,798 | 1,575 |
Income from operations | ||
Income from operations | (166) | 136 |
Unallocated [Member] | ||
Income from operations | ||
Income from operations | $ (7,096) | $ (6,421) |
Business Segments - Business 36
Business Segments - Business Segment Information Based on Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 375,793 | $ 379,569 |
Operating Segments [Member] | Workforce [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 78,956 | 82,375 |
Operating Segments [Member] | Patient Experience [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 33,303 | 34,902 |
Operating Segments [Member] | Provider [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | 101,133 | 100,948 |
Unallocated [Member] | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 162,401 | $ 161,344 |
Debt - Additional Information (
Debt - Additional Information (Detail) - SunTrust Bank [Member] | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Line of Credit Facility [Line Items] | |
Description of 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. |
Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Commitment fee paid per annum | 0.20% |
Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Commitment fee paid per annum | 0.30% |
Revolving Credit Facility [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 |
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 |
Revolving Credit Facility [Member] | Swingline Sub Facility [Member] | |
Line of Credit Facility [Line Items] | |
Maximum borrowing capacity under credit facility | 5,000,000 |
Revolving Credit Facility [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] | 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] | Base Rate [Member] | |
Line of Credit Facility [Line Items] | |
Line of Credit Facility, Interest Rate During Period | 1.00% |
Revolving Credit Facility [Member] | Minimum [Member] | |
Line of Credit Facility [Line Items] | |
Interest coverage ratio | 300.00% |
Revolving Credit Facility [Member] | Minimum [Member] | Base Rate [Member] | |
Line of Credit Facility [Line Items] | |
Applicable margin for loans | 0.50% |
Revolving Credit Facility [Member] | Minimum [Member] | Eurodollar [Member] | |
Line of Credit Facility [Line Items] | |
Applicable margin for loans | 1.50% |
Revolving Credit Facility [Member] | Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Maximum total leverage ratio | 300.00% |
Revolving Credit Facility [Member] | Maximum [Member] | Base Rate [Member] | |
Line of Credit Facility [Line Items] | |
Applicable margin for loans | 1.50% |
Revolving Credit Facility [Member] | Maximum [Member] | Eurodollar [Member] | |
Line of Credit Facility [Line Items] | |
Applicable margin for loans | 2.00% |