HealthStream (HSTM) 10-Q 31 Jul 17 2017 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 27, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q2
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		31,886,772

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 54,551	$ 49,634
Marketable securities	61,142	53,540
Accounts receivable, net of allowance for doubtful accounts of $1,188 and $863 at June 30, 2017 and December 31, 2016, respectively	37,149	44,805
Accounts receivable- unbilled	2,684	2,581
Prepaid royalties, net of amortization	16,954	18,183
Other prepaid expenses and other current assets	9,306	8,694
Total current assets	181,786	177,437
Property and equipment, net of accumulated depreciation of $23,938 and $20,527 at June 30, 2017 and December 31, 2016, respectively	10,263	10,245
Capitalized software development, net of accumulated amortization of $36,501 and $31,787 at June 30, 2017 and December 31, 2016, respectively	18,346	16,310
Goodwill	109,765	109,765
Non-marketable equity investments	3,271	3,276
Other assets	773	603
Total assets	397,775	396,000
Current liabilities:
Accounts payable and accrued expenses	14,552	13,267
Accrued royalties	11,210	13,161
Deferred revenue	67,133	68,542
Total current liabilities	92,895	94,970
Deferred tax liabilities	4,446	5,968
Deferred revenue, noncurrent	6,471	7,859
Other long term liabilities	1,339	1,095
Commitments and contingencies
Shareholders' equity:
Common stock, no par value, 75,000 shares authorized; 31,887 and 31,748 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively	281,570	280,813
Retained earnings	11,090	5,346
Accumulated other comprehensive loss	(36)	(51)
Total shareholders' equity	292,624	286,108
Total liabilities and shareholders' equity	397,775	396,000
Customer-Related Intangible Assets [Member]
Current assets:
Intangible assets, net	63,202	66,446
Other Intangible Assets [Member]
Current assets:
Intangible assets, net	$ 10,369	$ 11,918

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Allowance for doubtful accounts, net	$ 1,188	$ 863
Accumulated amortization on property and equipment	23,938	20,527
Accumulated amortization on capitalized software development	$ 36,501	$ 31,787
Common stock, no par value
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	31,887,000	31,748,000
Common stock, shares outstanding	31,887,000	31,748,000
Customer-Related Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 14,783	$ 11,539
Other Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 6,456	$ 4,906

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Revenues, net	$ 61,481	$ 54,793	$ 121,351	$ 108,871
Operating costs and expenses:
Cost of revenues (excluding depreciation and amortization)	26,375	22,622	52,651	45,522
Product development	7,041	7,244	13,640	14,263
Sales and marketing	10,159	9,001	20,993	17,558
Other general and administrative expenses	8,520	8,529	16,460	16,505
Depreciation and amortization	6,531	5,081	12,918	10,221
Total operating costs and expenses	58,626	52,477	116,662	104,069
Operating income	2,855	2,316	4,689	4,802
Other income, net	165	109	295	127
Income before income tax provision	3,020	2,425	4,984	4,929
Income tax provision	754	1,022	1,432	2,026
Net income	$ 2,266	$ 1,403	$ 3,552	$ 2,903
Earnings per share:
Basic	$ 0.07	$ 0.04	$ 0.11	$ 0.09
Diluted	$ 0.07	$ 0.04	$ 0.11	$ 0.09
Weighted average shares of common stock outstanding:
Basic	31,876	31,736	31,825	31,701
Diluted	32,229	32,071	32,166	32,021

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 2,266	$ 1,403	$ 3,552	$ 2,903
Other comprehensive income, net of taxes:
Unrealized gain on marketable securities	13		15	56
Total other comprehensive income	13		15	56
Comprehensive income	$ 2,279	$ 1,403	$ 3,567	$ 2,959

Condensed Consolidated Stateme6

Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 6 months ended Jun. 30, 2017 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]
Beginning balance at Dec. 31, 2016	$ 286,108	$ 280,813	$ 5,346	$ (51)
Beginning balance, shares at Dec. 31, 2016	31,748	31,748
Cumulative effect of accounting change	$ 2,192		2,192
Net income	3,552		$ 3,552
Comprehensive income (loss)	15			$ 15
Stock based compensation	$ 919	$ 919
Stock based compensation , shares	0	0	0	0
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (162)	$ (162)
Common stock issued under stock plans, net of shares withheld for employee taxes, shares		139
Ending balance at Jun. 30, 2017	$ 292,624	$ 281,570	$ 11,090	$ (36)
Ending balance, shares at Jun. 30, 2017	31,887	31,887

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
OPERATING ACTIVITIES:
Net income	$ 3,552	$ 2,903
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,918	10,221
Stock based compensation expense	919	1,004
Provision for doubtful accounts	523	240
Deferred income taxes	416	932
Loss on non-marketable equity investments	5	76
Other	264	607
Changes in operating assets and liabilities:
Accounts and unbilled receivables	7,029	(5,722)
Prepaid royalties	1,228	794
Other prepaid expenses and other current assets	(610)	(1,123)
Other assets	(170)	552
Accounts payable and accrued expenses	1,717	(2,806)
Accrued royalties	(1,951)	(919)
Deferred revenue	(2,796)	(6,474)
Net cash provided by operating activities	23,044	285
INVESTING ACTIVITIES:
Business combinations, net of cash acquired		(3,141)
Proceeds from sale of long-lived assets		975
Proceeds from maturities of marketable securities	41,010	65,639
Purchases of marketable securities	(48,861)	(71,220)
Payments associated with capitalized software development	(6,238)	(4,303)
Purchases of property and equipment	(3,876)	(3,234)
Net cash used in investing activities	(17,965)	(15,284)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options	230	94
Taxes paid related to net settlement of equity awards	(392)	(302)
Net cash used in financing activities	(162)	(208)
Net increase (decrease) in cash and cash equivalents	4,917	(15,207)
Cash and cash equivalents at beginning of period	49,634	82,010
Cash and cash equivalents at end of period	$ 54,551	$ 66,803

Basis of Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2017
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 condensed consolidated balance sheet at December 31, 2016 has been derived from the audited consolidated financial statements at that date (certain amounts in the 2016 balance sheet have been reclassified to conform to the 2017 presentation) but does not include all of the information and footnotes required by US GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended December 31, 2016 (included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 27, 2017).

Recent Accounting Pronouncement

Recent Accounting Pronouncements	6 Months Ended
	Jun. 30, 2017
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	2. RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards Recently Adopted The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, Accounting Standards Not Yet Adopted In May 2014, the 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 2016-01, Financial Instruments – Overall (Sub Topic 825-10)

Income Taxes

Income Taxes	6 Months Ended
	Jun. 30, 2017
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 June 30, 2017 and 2016, the Company recorded a provision for income taxes of approximately $754,000 and $1.0 million, respectively. During the six months ended June 30, 2017 and 2016, the Company recorded a provision for income taxes of approximately $1.4 million and $2.0 million, respectively. The Company’s effective tax rate for the six months ended June 30, 2017 and 2016 was 28.7% and 41.1%, respectively. During the six months ended June 30, 2017, the Company recorded excess tax benefits of approximately $419,000 as a component of the provision for income taxes. 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	6 Months Ended
	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock Based Compensation	4. STOCK BASED COMPENSATION The Company has stock awards outstanding under three stock incentive plans, the Company’s 2016 Omnibus Incentive Plan, the 2010 Stock Incentive Plan, and the 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 six months ended June 30, 2017, the Company issued 86,727 RSUs, subject to service-based vesting, with a weighted average grant date fair value of $23.54 per share, measured based on the closing fair market value of the Company’s stock on the date of grant. During the six months ended June 30, 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. Total stock based compensation expense recorded for the three and six months ended June 30, 2017 and 2016, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended Six Months Ended 2017 2016 2017 2016 Cost of revenues (excluding depreciation and amortization) $ 30 $ 35 $ 63 $ 76 Product development 75 70 145 127 Sales and marketing 73 65 137 127 Other general and administrative 300 335 574 674 Total stock based compensation expense $ 478 $ 505 $ 919 $ 1,004

Earnings Per Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2017
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 six months ended June 30, 2017 and 2016 (in thousands, except per share data): Three Months Ended Six Months Ended 2017 2016 2017 2016 Numerator: Net income $ 2,266 $ 1,403 $ 3,552 $ 2,903 Denominator: Weighted-average shares outstanding 31,876 31,736 31,825 31,701 Effect of dilutive shares 353 335 341 320 Weighted-average diluted shares 32,229 32,071 32,166 32,021 Basic earnings per share $ 0.07 $ 0.04 $ 0.11 $ 0.09 Diluted earnings per share $ 0.07 $ 0.04 $ 0.11 $ 0.09

Marketable Securities

Marketable Securities	6 Months Ended
	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Marketable Securities	6. MARKETABLE SECURITIES At June 30, 2017 and December 31, 2016, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): June 30, 2017 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Corporate debt securities $ 51,081 $ 1 $ (35 ) $ 51,047 Government-sponsored enterprise debt securities 10,097 — (2 ) 10,095 Total $ 61,178 $ 1 $ (37 ) $ 61,142 December 31, 2016 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Corporate debt securities $ 44,486 $ — $ (50 ) $ 44,436 Government-sponsored enterprise debt securities 9,105 1 (2 ) 9,104 Total $ 53,591 $ 1 $ (52 ) $ 53,540 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 June 30, 2017, the Company does not consider any of its marketable securities to be other than temporarily impaired. During the six months ended June 30, 2017 and 2016, 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 Combination

Business Combination	6 Months Ended
	Jun. 30, 2017
Business Combinations [Abstract]
Business Combination	7. BUSINESS COMBINATION Morrisey Associates, Inc. On August 8, 2016, Echo, Inc. (“Echo”), a wholly owned subsidiary of the Company, acquired all of the outstanding stock of Morrisey Associates, Inc. (“MAI”), a Chicago, Illinois based company that provides credentialing and privileging software to healthcare organizations. The acquisition of MAI allows the Company to expand its credentialing and privileging product offerings and solutions to healthcare organizations. The consideration paid for MAI consisted of approximately $48.0 million in cash, which the Company funded with cash on hand, and was not subject to any post-closing working capital or similar adjustment. The Company incurred approximately $953,000 in transaction costs, all of which were incurred during the year ended December 31, 2016. The transaction costs were recorded in other general and administrative expenses in the condensed consolidated statements of income. The results of operations for MAI have been included in the Company’s 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 $ 44,120 Cash held in escrow 3,880 Total consideration paid $ 48,000 The following table summarizes the fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands): Accounts receivable, net $ 3,402 Prepaid royalties and other prepaid assets 187 Property and equipment 75 Deferred tax assets 1,507 Goodwill 20,467 Intangible assets 27,400 Accounts payable and accrued liabilities (1,031 ) Deferred revenue (4,007 ) Net assets acquired $ 48,000 The excess purchase price over the fair values of net tangible and intangible assets was recorded as goodwill. The fair values of tangible and identifiable intangible assets, deferred revenue, and other liabilities assumed were based on management’s estimates and assumptions. The goodwill balance was primarily attributed to the assembled workforce, additional market opportunities from offering MAI’s products, and expected synergies from integrating MAI with other products or other combined functional areas within the Company. The goodwill balance will be 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 $8.8 million to an estimated fair value of $4.0 million. The $4.8 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 value Useful life Customer relationships $ 21,400 13 years Developed technology 5,400 5 years Trade name 600 6 years Total intangible assets subject to amortization $ 27,400 The following unaudited pro forma financial information summarizes the combined results of operations of the Company and MAI as though the companies were combined as of January 1, 2015 (in thousands, except per share data): Three Months Ended Six Months Ended 2017 2016 2017 2016 Total revenues $ 61,930 $ 58,205 $ 122,515 $ 115,691 Net income $ 2,603 $ 1,735 $ 4,357 $ 3,488 Basic earnings per share $ 0.08 $ 0.06 $ 0.14 $ 0.11 Diluted earnings per share $ 0.08 $ 0.05 $ 0.14 $ 0.11 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, and fair value adjustments of acquired deferred revenue balances. 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 and six months ended June 30, 2017 and 2016 combines the historical results of the Company and MAI for the three and six months ended June 30, 2017 and 2016, taking into account the pro forma adjustments listed above.

Business Segments

Business Segments	6 Months Ended
	Jun. 30, 2017
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 and six months ended June 30, 2017 and 2016 (in thousands). Three Months Ended Six Months Ended 2017 2016 2017 2016 Revenues, net: Workforce Solutions $ 44,256 $ 40,157 $ 87,958 $ 81,473 Patient Experience Solutions 8,562 8,968 16,464 16,932 Provider Solutions 8,663 5,668 16,929 10,466 Total revenues, net $ 61,481 $ 54,793 $ 121,351 $ 108,871 Three Months Ended Six Months Ended 2017 2016 2017 2016 Operating income: Workforce Solutions $ 8,563 $ 9,242 $ 17,308 $ 19,647 Patient Experience Solutions 328 (134 ) 71 (791 ) Provider Solutions 523 445 (77 ) 279 Unallocated (6,559 ) (7,237 ) (12,613 ) (14,333 ) Total operating income $ 2,855 $ 2,316 $ 4,689 $ 4,802 June 30, December 31, Segment assets * Workforce Solutions $ 89,136 $ 96,323 Patient Experience Solutions 35,116 35,988 Provider Solutions 150,046 155,011 Unallocated 123,477 108,678 Total assets $ 397,775 $ 396,000 * 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	6 Months Ended
	Jun. 30, 2017
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 June 30, 2017, 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 or six months ended June 30, 2017.

Recent Accounting Pronounceme17

Recent Accounting Pronouncements (Policies)	6 Months Ended
	Jun. 30, 2017
Accounting Changes and Error Corrections [Abstract]
Accounting Standards Recently Adopted	Accounting Standards Recently Adopted The Company has adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment,
Accounting Standards Not Yet Adopted	Accounting Standards Not Yet Adopted In May 2014, the 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 2016-01, Financial Instruments – Overall (Sub Topic 825-10)

Stock Based Compensation (Table

Stock Based Compensation (Tables)	6 Months Ended
	Jun. 30, 2017
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 six months ended June 30, 2017 and 2016, which is recorded in the condensed consolidated statements of income, is as follows (in thousands): Three Months Ended Six Months Ended 2017 2016 2017 2016 Cost of revenues (excluding depreciation and amortization) $ 30 $ 35 $ 63 $ 76 Product development 75 70 145 127 Sales and marketing 73 65 137 127 Other general and administrative 300 335 574 674 Total stock based compensation expense $ 478 $ 505 $ 919 $ 1,004

Earnings Per Share (Tables)

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2017
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 six months ended June 30, 2017 and 2016 (in thousands, except per share data): Three Months Ended Six Months Ended 2017 2016 2017 2016 Numerator: Net income $ 2,266 $ 1,403 $ 3,552 $ 2,903 Denominator: Weighted-average shares outstanding 31,876 31,736 31,825 31,701 Effect of dilutive shares 353 335 341 320 Weighted-average diluted shares 32,229 32,071 32,166 32,021 Basic earnings per share $ 0.07 $ 0.04 $ 0.11 $ 0.09 Diluted earnings per share $ 0.07 $ 0.04 $ 0.11 $ 0.09

Marketable Securities (Tables)

Marketable Securities (Tables)	6 Months Ended
	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Fair Value of Available for Sale Marketable Securities	At June 30, 2017 and December 31, 2016, the fair value of marketable securities, which were all classified as available for sale, included the following (in thousands): June 30, 2017 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Corporate debt securities $ 51,081 $ 1 $ (35 ) $ 51,047 Government-sponsored enterprise debt securities 10,097 — (2 ) 10,095 Total $ 61,178 $ 1 $ (37 ) $ 61,142 December 31, 2016 Adjusted Cost Unrealized Unrealized Fair Value Level 2: Corporate debt securities $ 44,486 $ — $ (50 ) $ 44,436 Government-sponsored enterprise debt securities 9,105 1 (2 ) 9,104 Total $ 53,591 $ 1 $ (52 ) $ 53,540

Business Combination (Tables)

Business Combination (Tables)	6 Months Ended
	Jun. 30, 2017
Business Combinations [Abstract]
Summary of Purchase Price	A summary of the purchase price is as follows (in thousands): Cash paid at closing $ 44,120 Cash held in escrow 3,880 Total consideration paid $ 48,000
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): Accounts receivable, net $ 3,402 Prepaid royalties and other prepaid assets 187 Property and equipment 75 Deferred tax assets 1,507 Goodwill 20,467 Intangible assets 27,400 Accounts payable and accrued liabilities (1,031 ) Deferred revenue (4,007 ) Net assets acquired $ 48,000
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 value Useful life Customer relationships $ 21,400 13 years Developed technology 5,400 5 years Trade name 600 6 years Total intangible assets subject to amortization $ 27,400
Summary of Unaudited ProForma Financial Information	The following unaudited pro forma financial information summarizes the combined results of operations of the Company and MAI as though the companies were combined as of January 1, 2015 (in thousands, except per share data): Three Months Ended Six Months Ended 2017 2016 2017 2016 Total revenues $ 61,930 $ 58,205 $ 122,515 $ 115,691 Net income $ 2,603 $ 1,735 $ 4,357 $ 3,488 Basic earnings per share $ 0.08 $ 0.06 $ 0.14 $ 0.11 Diluted earnings per share $ 0.08 $ 0.05 $ 0.14 $ 0.11

Business Segments (Tables)

Business Segments (Tables)	6 Months Ended
	Jun. 30, 2017
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 six months ended June 30, 2017 and 2016 (in thousands). Three Months Ended Six Months Ended 2017 2016 2017 2016 Revenues, net: Workforce Solutions $ 44,256 $ 40,157 $ 87,958 $ 81,473 Patient Experience Solutions 8,562 8,968 16,464 16,932 Provider Solutions 8,663 5,668 16,929 10,466 Total revenues, net $ 61,481 $ 54,793 $ 121,351 $ 108,871
Business Segment Information Based on Operating Income	Three Months Ended Six Months Ended 2017 2016 2017 2016 Operating income: Workforce Solutions $ 8,563 $ 9,242 $ 17,308 $ 19,647 Patient Experience Solutions 328 (134 ) 71 (791 ) Provider Solutions 523 445 (77 ) 279 Unallocated (6,559 ) (7,237 ) (12,613 ) (14,333 ) Total operating income $ 2,855 $ 2,316 $ 4,689 $ 4,802
Business Segment Information Based on Assets	June 30, December 31, Segment assets * Workforce Solutions $ 89,136 $ 96,323 Patient Experience Solutions 35,116 35,988 Provider Solutions 150,046 155,011 Unallocated 123,477 108,678 Total assets $ 397,775 $ 396,000 * Segment assets include accounts and unbilled receivables, prepaid and other current assets, other assets, capitalized software development, certain property and equipment, and intangible assets. Cash and cash equivalents and marketable securities are not allocated to individual segments, and are included within Unallocated. A significant portion of property and equipment assets are included within Unallocated.

Recent Accounting Pronounceme23

Recent Accounting Pronouncements - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2017USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of accounting change	$ 2,192
Accounting Standards Update 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of accounting change	$ 2,192

Income Taxes - Additional Infor

Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Income tax provision	$ 754,000	$ 1,022,000	$ 1,432,000	$ 2,026,000
Effective tax rate			28.70%	41.10%
Excess tax benefits			$ 419,000

Stock Based Compensation - Addi

Stock Based Compensation - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017Incentive_Plan$ / sharesshares	Jun. 30, 2016$ / sharesshares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of incentive plans | Incentive_Plan	3
RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted share units issued | shares	86,727	103,210
Weighted average grant date fair value, restricted share unit | $ / shares	$ 23.54	$ 20.20

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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	$ 478	$ 505	$ 919	$ 1,004
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	30	35	63	76
Product Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	75	70	145	127
Sales and Marketing [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	73	65	137	127
Other General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Total stock based compensation expense	$ 300	$ 335	$ 574	$ 674

Earnings Per Share - Additional

Earnings Per Share - Additional Information (Detail) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Total number of common equivalent shares excluded from the calculations of diluted earnings per share	30,500	21,250	87,000	53,000

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		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net income	$ 2,266	$ 1,403	$ 3,552	$ 2,903
Denominator:
Weighted-average shares outstanding	31,876	31,736	31,825	31,701
Effect of dilutive shares	353	335	341	320
Weighted-average diluted shares	32,229	32,071	32,166	32,021
Basic earnings per share	$ 0.07	$ 0.04	$ 0.11	$ 0.09
Diluted earnings per share	$ 0.07	$ 0.04	$ 0.11	$ 0.09

Marketable Securities - Fair Va

Marketable Securities - Fair Value of Available for Sale Marketable Securities (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Fair Value	$ 61,142	$ 53,540
Level 2 [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Adjusted Cost	61,178	53,591
Available for sale securities, Unrealized Gains	1	1
Available for sale securities, Unrealized Losses	(37)	(52)
Available for sale securities, Fair Value	61,142	53,540
Level 2 [Member] | Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Adjusted Cost	51,081	44,486
Available for sale securities, Unrealized Gains	1
Available for sale securities, Unrealized Losses	(35)	(50)
Available for sale securities, Fair Value	51,047	44,436
Level 2 [Member] | Government-Sponsored Enterprises Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, Adjusted Cost	10,097	9,105
Available for sale securities, Unrealized Gains		1
Available for sale securities, Unrealized Losses	(2)	(2)
Available for sale securities, Fair Value	$ 10,095	$ 9,104

Business Combination - Addition

Business Combination - Additional Information (Detail) - Morrisey Associates Inc [Member] - USD ($)	Aug. 08, 2016	Jun. 30, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Acquisition date of assets		Aug. 8, 2016
Consideration paid for acquisition in cash	$ 48,000,000
Transaction costs associated with the acquisition			$ 953,000
Net tangible assets include deferred revenue book value at acquisition date	8,800,000
Net tangible assets include deferred revenue fair value at acquisition date	4,000,000
Write-down of deferred revenue	$ 4,800,000

Business Combination - Summary

Business Combination - Summary of Purchase Price (Detail) - Morrisey Associates Inc [Member] $ in Thousands	Aug. 08, 2016USD ($)
Business Acquisition [Line Items]
Total consideration paid	$ 48,000
Cash Paid [Member]
Business Acquisition [Line Items]
Total consideration paid	44,120
Cash Held in Escrow [Member]
Business Acquisition [Line Items]
Total consideration paid	$ 3,880

Business Combination - Summar32

Business Combination - Summary of Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Aug. 08, 2016
Business Acquisition [Line Items]
Goodwill	$ 109,765	$ 109,765
Morrisey Associates Inc [Member]
Business Acquisition [Line Items]
Accounts receivable, net			$ 3,402
Prepaid royalties and other prepaid assets			187
Property and equipment			75
Deferred tax assets			1,507
Goodwill			20,467
Intangible assets			27,400
Accounts payable and accrued liabilities			(1,031)
Deferred revenue			(4,007)
Net assets acquired			$ 48,000

Business Combination - Componen

Business Combination - Components of Identifiable Intangible Assets and Estimated Useful Lives (Detail) - Morrisey Associates Inc [Member] $ in Thousands	Aug. 08, 2016USD ($)
Finite-Lived Intangible Assets [Line Items]
Total intangible assets subject to amortization	$ 27,400
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	13 years
Total intangible assets subject to amortization	$ 21,400
Developed Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	5 years
Total intangible assets subject to amortization	$ 5,400
Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Estimated useful lives	6 years
Total intangible assets subject to amortization	$ 600

Business Combination - Summar34

Business Combination - Summary of Unaudited Pro Forma Financial Information (Detail) - Morrisey Associates Inc [Member] - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Business Acquisition [Line Items]
Total revenues	$ 61,930	$ 58,205	$ 122,515	$ 115,691
Net income	$ 2,603	$ 1,735	$ 4,357	$ 3,488
Basic earnings per share	$ 0.08	$ 0.06	$ 0.14	$ 0.11
Diluted earnings per share	$ 0.08	$ 0.05	$ 0.14	$ 0.11

Business Segments - Business Se

Business Segments - Business Segment Information Based on Net Revenues and Operating Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenues, net:
Revenues, net	$ 61,481	$ 54,793	$ 121,351	$ 108,871
Operating income:
Operating income	2,855	2,316	4,689	4,802
Operating Segments [Member] | Workforce Solutions [Member]
Revenues, net:
Revenues, net	44,256	40,157	87,958	81,473
Operating income:
Operating income	8,563	9,242	17,308	19,647
Operating Segments [Member] | Patient Experience Solutions [Member]
Revenues, net:
Revenues, net	8,562	8,968	16,464	16,932
Operating income:
Operating income	328	(134)	71	(791)
Operating Segments [Member] | Provider Solutions [Member]
Revenues, net:
Revenues, net	8,663	5,668	16,929	10,466
Operating income:
Operating income	523	445	(77)	279
Unallocated [Member]
Operating income:
Operating income	$ (6,559)	$ (7,237)	$ (12,613)	$ (14,333)

Business Segments - Business 36

Business Segments - Business Segment Information Based on Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Segment Reporting Information [Line Items]
Total assets	$ 397,775	$ 396,000
Operating Segments [Member] | Workforce Solutions [Member]
Segment Reporting Information [Line Items]
Total assets	89,136	96,323
Operating Segments [Member] | Patient Experience Solutions [Member]
Segment Reporting Information [Line Items]
Total assets	35,116	35,988
Operating Segments [Member] | Provider Solutions [Member]
Segment Reporting Information [Line Items]
Total assets	150,046	155,011
Unallocated [Member]
Segment Reporting Information [Line Items]
Total assets	$ 123,477	$ 108,678

Debt - Additional Information (

Debt - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017USD ($)
SunTrust Bank [Member]
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.
SunTrust Bank [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Commitment fee paid per annum	0.30%
SunTrust Bank [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Commitment fee paid per annum	0.20%
Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Interest coverage ratio	300.00%
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
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] | SunTrust Bank [Member] | Swing Line 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%
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] | 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%