HealthStream (HSTM) 10-Q 26 Oct 23 2023 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2023	Oct. 23, 2023
Document Information [Line Items]
Entity Central Index Key	0001095565
Entity Registrant Name	HEALTHSTREAM INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	000-27701
Entity Incorporation, State or Country Code	TN
Entity Tax Identification Number	62-1443555
Entity Address, Address Line One	500 11th Avenue North, Suite 1000
Entity Address, City or Town	Nashville
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37203
City Area Code	615
Local Phone Number	301-3100
Title of 12(b) Security	Common Stock (Par Value $0.00)
Trading Symbol	HSTM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		30,285,335

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 44,123	$ 46,023
Marketable securities	27,691	7,885
Accounts receivable, net of allowance for doubtful accounts of $710 and $544 at September 30, 2023 and December 31, 2022, respectively	30,195	36,730
Accounts receivable - unbilled	4,610	5,980
Prepaid royalties, net of amortization	10,755	9,071
Other prepaid expenses and other current assets	9,505	8,688
Total current assets	126,879	114,377
Property and equipment, net of accumulated depreciation of $23,441 and $20,280 at September 30, 2023 and December 31, 2022, respectively	13,536	15,483
Capitalized software development, net of accumulated amortization of $121,235 and $105,025 at September 30, 2023 and December 31, 2022, respectively	39,711	37,118
Operating lease right of use assets, net	20,806	22,759
Goodwill	191,039	192,398
Deferred tax assets	383	383
Deferred commissions	29,460	28,344
Non-marketable equity investments	4,188	4,518
Other assets	472	808
Total assets	498,050	497,741
Current liabilities:
Accounts payable	3,519	7,290
Accrued expenses	20,980	25,011
Accrued royalties	6,862	5,443
Deferred revenue	83,221	79,469
Total current liabilities	114,582	117,213
Deferred tax liabilities	15,324	17,996
Deferred revenue, noncurrent	2,740	2,937
Operating lease liability, noncurrent	21,016	23,321
Other long-term liabilities	2,142	2,210
Shareholders’ equity:
Common stock, no par value, 75,000 shares authorized; 30,590 and 30,579 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	254,950	254,832
Retained earnings	88,535	80,213
Accumulated other comprehensive loss	(1,239)	(981)
Total shareholders’ equity	342,246	334,064
Total liabilities and shareholders’ equity	498,050	497,741
Customer-Related Intangible Assets [Member]
Current assets:
Intangible Assets, Net	56,715	61,269
Other Intangible Assets [Member]
Current assets:
Intangible Assets, Net	$ 14,861	$ 20,284

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) shares in Thousands, $ / shares in Thousands, $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Accounts Receivable, Allowance for Credit Loss, Current	$ 710	$ 544
Accumulated amortization on property and equipment	23,441	20,280
Accumulated amortization on capitalized software development	$ 121,235	$ 105,025
Common stock, shares authorized (in shares)	75,000	75,000
Common stock, shares issued (in shares)	30,590	30,579
Common stock, shares outstanding (in shares)	30,590	30,579
Common stock, par value (in dollars per share)	$ 0	$ 0
Customer-Related Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 54,919	$ 48,552
Other Intangible Assets [Member]
Accumulated amortization on intangible assets	$ 17,138	$ 12,818

Condensed Consolidated Statemen

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues, net	$ 70,339	$ 67,285	$ 208,482	$ 198,290
Operating costs and expenses:
Cost of revenues (excluding depreciation and amortization)	23,587	23,374	71,010	67,606
Product development	10,901	11,476	33,610	32,470
Sales and marketing	11,290	11,365	34,324	32,652
Other general and administrative expenses	9,295	9,096	27,223	27,856
Depreciation and amortization	10,403	9,592	30,550	28,334
Total operating costs and expenses	65,476	64,903	196,717	188,918
Operating income	4,863	2,382	11,765	9,372
Other income, net	590	2,543	1,329	2,945
Income before income tax provision	5,453	4,925	13,094	12,317
Income tax provision	1,586	1,259	2,471	2,675
Net income	$ 3,867	$ 3,666	$ 10,623	$ 9,642
Net income per share:
Basic (in dollars per share)	$ 0.13	$ 0.12	$ 0.35	$ 0.31
Diluted (in dollars per share)	$ 0.13	$ 0.12	$ 0.35	$ 0.31
Weighted average shares of common stock outstanding:
Basic (in shares)	30,683	30,570	30,653	30,672
Diluted (in shares)	30,769	30,662	30,734	30,717
Dividends declared per share (in dollars per share)	$ 0.025	$ 0	$ 0.075	$ 0

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Net income	$ 3,867	$ 3,666	$ 10,623	$ 9,642
Other comprehensive loss, net of taxes:
Foreign currency translation adjustments	(371)	(1,017)	(227)	(1,521)
Unrealized gain (loss) on marketable securities	21	3	(31)	(1)
Total other comprehensive loss	(350)	(1,014)	(258)	(1,522)
Comprehensive income	$ 3,517	$ 2,652	$ 10,365	$ 8,120

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Common Stock Including Additional Paid in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2021	31,327
Balance at Dec. 31, 2021	$ 270,791	$ 68,122	$ 106	$ 339,019
Net income	0	2,893	0	2,893
Comprehensive income (loss)	0	0	272	272
Stock-based compensation	$ 774	0	0	774
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	83
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (497)	0	0	(497)
Repurchase of common stock (in shares)	(892)
Repurchase of common stock	$ (19,889)	0	0	(19,889)
Balance (in shares) at Mar. 31, 2022	30,518
Balance at Mar. 31, 2022	$ 251,179	71,015	378	322,572
Balance (in shares) at Dec. 31, 2021	31,327
Balance at Dec. 31, 2021	$ 270,791	68,122	106	339,019
Net income				9,642
Comprehensive income (loss)				(1,522)
Balance (in shares) at Sep. 30, 2022	30,573
Balance at Sep. 30, 2022	$ 253,934	77,764	(1,416)	330,282
Balance (in shares) at Mar. 31, 2022	30,518
Balance at Mar. 31, 2022	$ 251,179	71,015	378	322,572
Net income	0	3,083	0	3,083
Comprehensive income (loss)	0	0	(780)	(780)
Stock-based compensation	$ 917	0	0	917
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	2
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (1)	0	0	(1)
Repurchase of common stock (in shares)	(159)
Repurchase of common stock	$ (3,143)	0	0	(3,143)
Balance (in shares) at Jun. 30, 2022	30,570
Balance at Jun. 30, 2022	$ 253,036	74,098	(402)	326,732
Issuance of common stock in acquisition (in shares)	209
Issuance of common stock in acquisition	$ 4,084	0	0	4,084
Net income	0	3,666	0	3,666
Comprehensive income (loss)	0	0	(1,014)	(1,014)
Stock-based compensation	$ 918	0	0	918
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	3
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (20)	0	0	(20)
Balance (in shares) at Sep. 30, 2022	30,573
Balance at Sep. 30, 2022	$ 253,934	77,764	(1,416)	330,282
Balance (in shares) at Dec. 31, 2022	30,579
Balance at Dec. 31, 2022	$ 254,832	80,213	(981)	334,064
Net income	0	2,623	0	2,623
Comprehensive income (loss)	0	0	(35)	(35)
Dividends declared on common stock ($0.025 per share)		(767)		(767)
Stock-based compensation	$ 945	0	0	945
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	103
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (791)	0	0	(791)
Balance (in shares) at Mar. 31, 2023	30,682
Balance at Mar. 31, 2023	$ 254,986	82,069	(1,016)	336,039
Balance (in shares) at Dec. 31, 2022	30,579
Balance at Dec. 31, 2022	$ 254,832	80,213	(981)	334,064
Net income				10,623
Comprehensive income (loss)				(258)
Balance (in shares) at Sep. 30, 2023	30,590
Balance at Sep. 30, 2023	$ 254,950	88,535	(1,239)	342,246
Balance (in shares) at Mar. 31, 2023	30,682
Balance at Mar. 31, 2023	$ 254,986	82,069	(1,016)	336,039
Net income	0	4,133	0	4,133
Comprehensive income (loss)	0	0	127	127
Dividends declared on common stock ($0.025 per share)	0	(767)	0	(767)
Stock-based compensation	$ 1,093	0	0	1,093
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	4
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (6)	0	0	(6)
Balance (in shares) at Jun. 30, 2023	30,686
Balance at Jun. 30, 2023	$ 256,073	85,435	(889)	340,619
Net income	0	3,867	0	3,867
Comprehensive income (loss)	0	0	(350)	(350)
Dividends declared on common stock ($0.025 per share)	0	(767)	0	(767)
Stock-based compensation	$ 1,038	0	0	1,038
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)	3
Common stock issued under stock plans, net of shares withheld for employee taxes	$ (20)	0	0	(20)
Repurchase of common stock (in shares)	(99)
Repurchase of common stock	$ (2,141)	0	0	(2,141)
Balance (in shares) at Sep. 30, 2023	30,590
Balance at Sep. 30, 2023	$ 254,950	$ 88,535	$ (1,239)	$ 342,246

Condensed Consolidated Statem_4

Condensed Consolidated Statements of Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended				9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Dividends declared per share (in dollars per share)	$ 0.025	$ 0.025	$ 0.025	$ 0	$ 0.075	$ 0

Condensed Consolidated Statem_5

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES:
Net income	$ 10,623,000	$ 9,642,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	30,550,000	28,334,000
Stock-based compensation	3,076,000	2,609,000
Amortization of deferred commissions	8,467,000	7,826,000
Provision for credit losses	675,000	400,000
Deferred income taxes	(2,634,000)	1,225,000
Gain on sale of fixed assets	0	(25,000)
Loss on non-marketable equity investments	330,000	621,000
Change in fair value of non-marketable equity investments	(45,000)	(3,596,000)
Other	(603,000)	30,000
Changes in operating assets and liabilities:
Accounts and unbilled receivables	(7,230,000)	(2,273,000)
Prepaid royalties	(1,684,000)	(106,000)
Other prepaid expenses and other current assets	(817,000)	709,000
Deferred commissions	(9,583,000)	(10,192,000)
Other assets	336,000	219,000
Accounts payable and accrued expenses	(736,000)	942,000
Accrued royalties	1,419,000	572,000
Deferred revenue	3,554,000	1,597,000
Net cash provided by operating activities	50,158,000	43,080,000
INVESTING ACTIVITIES:
Business combinations, net of cash acquired	(6,621,000)	(4,009,000)
Proceeds from maturities of marketable securities	19,000,000	7,025,000
Purchases of marketable securities	(38,235,000)	(5,601,000)
Payments associated with capitalized software development	(19,552,000)	(17,392,000)
Proceeds from sale of fixed assets	0	26,000
Proceeds from sale of non-marketable equity investments	45,000	3,494,000
Purchases of property and equipment	(1,854,000)	(1,570,000)
Net cash used in investing activities	(47,217,000)	(18,027,000)
FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards	(817,000)	(518,000)
Repurchases of common stock	(1,648,000)	(23,137,000)
Payment of cash dividends	(2,301,000)	0
Net cash used in financing activities	(4,766,000)	(23,655,000)
Effect of exchange rate changes on cash and cash equivalents	(75,000)	(46,000)
Net (decrease) increase in cash and cash equivalents	(1,900,000)	1,352,000
Cash and cash equivalents at beginning of period	46,023,000	46,905,000
Cash and cash equivalents at end of period	$ 44,123,000	$ 48,257,000

Note 1 - Overview and Basis of

Note 1 - Overview and Basis of Presentation	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Business Description and Basis of Presentation [Text Block]	1. OVERVIEW AND BASIS OF PRESENTATION Company Overview HealthStream primarily provides Software-as-a-Service ("SaaS") based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting the people who deliver patient care. We are focused on helping healthcare organizations meet their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, scheduling, and provider credentialing, privileging, and enrollment needs. The Company is organized and operated according to our One HealthStream approach, with our hStream technology platform at the center of that approach. Increasingly, SaaS based applications in our diverse ecosystem of solutions utilize our proprietary hStream technology platform to enhance their value proposition by creating interoperability with and among other applications. As used in this Report, “HealthStream,” “Company,” “we,” “us,” and “our” mean HealthStream, Inc. and its subsidiaries, unless the context indicates otherwise. 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 10 not three nine September 30, 2023 not may December 31, 2023. The Condensed Consolidated Balance Sheet at December 31, 2022 not December 31, 2022 10 February 28, 2023). Consolidated Segment Information Our business is managed and organized around a single platform strategy, also referred to as our One HealthStream approach. At the center of this single platform strategy is our hStream technology platform. By facilitating interoperability among our applications, as well as third As indicated in the Company’s Annual Report on Form 10 December 31, 2022, February 28, 2023, January 1, 2023, As the result of these developments, the Company determined that Workforce Solutions and Provider Solutions were no January 1, 2023, no two January 1, 2023, 10 three nine September 30, 2023. 2022 10

Note 2 - Revenue Recognition an

Note 2 - Revenue Recognition and Sales Commissions	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Revenue from Contract with Customer [Text Block]	2. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those goods or services. Revenue is recognized based on the following five • Identification of the contract with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation The following table represents revenues disaggregated by revenue source (in thousands). Sales taxes are excluded from revenues. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Subscription services $ 67,473 $ 64,067 $ 199,993 $ 188,613 Professional services 2,866 3,218 8,489 9,677 Total revenues, net $ 70,339 $ 67,285 $ 208,482 $ 198,290 For the three September 30, 2023 2022 nine September 30, 2023 2022 Deferred revenue represents contract liabilities that are recorded when cash payments are received or are due in advance of our satisfaction of performance obligations. During the three September 30, 2023 2022 nine September 30, 2023 2022, September 30, 2023 44% Sales Commissions Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recorded amortization of deferred commissions of approximately $3.0 million and $2.8 million for the three September 30, 2023 2022 nine September 30, 2023 2022,

Note 3 - Income Taxes

Note 3 - Income Taxes	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Income Tax Disclosure [Text Block]	3. 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. The Company computes its interim period provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. During the three September 30, 2023 2022 nine September 30, 2023 2022, The Company’s effective tax rate was 19% and 22% for the nine September 30, 2023 2022 nine September 30, 2023 nine September 30, 2022

Note 4 - Shareholders' Equity

Note 4 - Shareholders' Equity	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Equity [Text Block]	4. SHAREHOLDERS EQUITY Dividends on Common Stock On February 20, 2023, first nine September 30, 2023, Dividend Payment Date Dividend Declaration Date Dividend Per Share Record Date Cash Outlay April 28, 2023 February 20, 2023 $ 0.025 April 17, 2023 $ 767,000 June 23, 2023 April 24, 2023 0.025 June 12, 2023 767,000 September 29, 2023 July 24, 2023 0.025 September 18, 2023 767,000 Total dividends $ 0.075 $ 2,301,000 Additionally, o n October 23, 2023, fourth December 22, 2023 December 11, 2023 Stock-Based Compensation The Company has stock awards outstanding under its 2016 2022 nine September 30, 2023 nine September 30, 2022 During the nine September 30, 2023 five 2023, 2024, 2025, 2026, 2027, first 2023 first 2023 not 2024, 2025, 2026, 2027, During the nine September 30, 2022, five 2022, 2023, 2024, 2025, 2026, second 2023 first 2023 not 2024, 2025, 2026, Total stock-based compensation expense recognized in the Condensed Consolidated Statements of Income is as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenues (excluding depreciation and amortization) $ 50 $ 44 $ 149 $ 126 Product development 188 151 542 428 Sales and marketing 131 98 374 283 Other general and administrative 669 625 2,011 1,772 Total stock-based compensation expense $ 1,038 $ 918 $ 3,076 $ 2,609 Share Repurchase Plan On September 13, 2023, March 31, 2024, three September 30, 2023, September 30, 2023 three September 30, 2023.

Note 5 - Earnings Per Share

Note 5 - Earnings Per Share	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Earnings Per Share [Text Block]	5. EARNINGS PER SHARE Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of potentially dilutive common and common equivalent shares outstanding during the period. Common equivalent shares are composed of incremental common shares issuable upon the exercise of stock options and RSUs subject to vesting. The dilutive effect of common equivalent shares is included in diluted earnings per share by application of the treasury stock method. The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect or contingent performance conditions, was approximately 340,000 and 205,000 for the three September 30, 2023 2022 nine September 30, 2023 2022, The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income $ 3,867 $ 3,666 $ 10,623 $ 9,642 Denominator: Weighted-average shares outstanding 30,683 30,570 30,653 30,672 Effect of dilutive shares 86 92 81 45 Weighted-average diluted shares 30,769 30,662 30,734 30,717 Net income per share: Basic $ 0.13 $ 0.12 $ 0.35 $ 0.31 Diluted $ 0.13 $ 0.12 $ 0.35 $ 0.31

Note 6 - Marketable Securities

Note 6 - Marketable Securities	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]	6. The fair value of marketable securities, which were all classified as available for sale and which the Company does not September 30, 2023 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 2: U.S. treasury securities $ 27,720 $ 4 $ (33 ) $ 27,691 Total $ 27,720 $ 4 $ (33 ) $ 27,691 December 31, 2022 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 2: U.S. treasury securities $ 7,882 $ 3 $ — $ 7,885 Total $ 7,882 $ 3 $ — $ 7,885 The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate fair value based on quoted market prices or alternative pricing sources and models utilizing market observable inputs. As of September 30, 2023 not one

Note 7 - Business Combinations

Note 7 - Business Combinations	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Business Combination Disclosure [Text Block]	7. BUSINESS COMBINATIONS On December 31, 2022 , nine September 30, 2023,

Note 8 - Debt

Note 8 - Debt	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Debt Disclosure [Text Block]	8. Revolving Credit Facility On October 28, 2020, November 24, 2014 October 28, 2023. 9 October 6, 2023, Under the Revolving Credit Facility, the Company was permitted to borrow up to $65.0 million, which included a $5.0 million swingline sub-facility and a $5.0 million letter of credit sub-facility, as well as an accordion feature that allowed 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. At the Company’s election, the borrowings under the Revolving Credit Facility would bear interest at either ( 1 one 2 six October 28, 2023, no The Revolving Credit Facility contained certain covenants that, among other things, restricted 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 required the Company to meet certain financial tests, including, without limitation: • a funded debt leverage ratio (consolidated debt/consolidated EBITDA) of not 1.0; • an interest coverage ratio (consolidated EBITDA/consolidated interest expense) of not 1.0. As of September 30, 2023 three nine September 30, 2023 HEALTHSTREAM, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 9 - Subsequent Event

Note 9 - Subsequent Event	9 Months Ended
	Sep. 30, 2023
Notes to Financial Statements
Subsequent Events [Text Block]	9. On October 6, 2023, November 24, 2014, may October 6, 2026. The Company's obligations under the New Revolving Credit Facility are unsecured. In addition, if the Company forms or acquires any domestic subsidiaries, the loans and other obligations under the New Revolving Credit Facility will be guaranteed by such domestic subsidiaries. At the Company’s election, the borrowings under the New Revolving Credit Facility, other than the swingline loans, bear interest at either ( 1 one one 2 The initial applicable margin for base rate loans is 0.50% and the initial applicable margin SOFR loans is 1.50%. The applicable margins will be adjusted quarterly, in each case two 2 Principal is payable in full at maturity on October 6, 2026, no three three In addition, the New Revolving Credit Facility requires the Company to meet certain financial tests, including, without limitation: • a funded debt leverage ratio of not 1.0; • an interest coverage ratio of not 1.0. In addition, the New Revolving Credit Facility contains certain customary affirmative and negative 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.

Note 2 - Revenue Recognition _2

Note 2 - Revenue Recognition and Sales Commissions (Tables)	9 Months Ended
	Sep. 30, 2023
Notes Tables
Disaggregation of Revenue [Table Text Block]	Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Subscription services $ 67,473 $ 64,067 $ 199,993 $ 188,613 Professional services 2,866 3,218 8,489 9,677 Total revenues, net $ 70,339 $ 67,285 $ 208,482 $ 198,290

Note 4 - Shareholders' Equity (

Note 4 - Shareholders' Equity (Tables)	9 Months Ended
	Sep. 30, 2023
Notes Tables
Dividends Declared [Table Text Block]	Dividend Payment Date Dividend Declaration Date Dividend Per Share Record Date Cash Outlay April 28, 2023 February 20, 2023 $ 0.025 April 17, 2023 $ 767,000 June 23, 2023 April 24, 2023 0.025 June 12, 2023 767,000 September 29, 2023 July 24, 2023 0.025 September 18, 2023 767,000 Total dividends $ 0.075 $ 2,301,000
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]	Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenues (excluding depreciation and amortization) $ 50 $ 44 $ 149 $ 126 Product development 188 151 542 428 Sales and marketing 131 98 374 283 Other general and administrative 669 625 2,011 1,772 Total stock-based compensation expense $ 1,038 $ 918 $ 3,076 $ 2,609

Note 5 - Earnings Per Share (Ta

Note 5 - Earnings Per Share (Tables)	9 Months Ended
	Sep. 30, 2023
Notes Tables
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Numerator: Net income $ 3,867 $ 3,666 $ 10,623 $ 9,642 Denominator: Weighted-average shares outstanding 30,683 30,570 30,653 30,672 Effect of dilutive shares 86 92 81 45 Weighted-average diluted shares 30,769 30,662 30,734 30,717 Net income per share: Basic $ 0.13 $ 0.12 $ 0.35 $ 0.31 Diluted $ 0.13 $ 0.12 $ 0.35 $ 0.31

Note 6 - Marketable Securities

Note 6 - Marketable Securities (Tables)	9 Months Ended
	Sep. 30, 2023
Notes Tables
Debt Securities, Available-for-Sale [Table Text Block]	September 30, 2023 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 2: U.S. treasury securities $ 27,720 $ 4 $ (33 ) $ 27,691 Total $ 27,720 $ 4 $ (33 ) $ 27,691 December 31, 2022 Adjusted Cost Unrealized Gains Unrealized Losses Fair Value Level 2: U.S. treasury securities $ 7,882 $ 3 $ — $ 7,885 Total $ 7,882 $ 3 $ — $ 7,885

Note 2 - Revenue Recognition _3

Note 2 - Revenue Recognition and Sales Commissions 1 (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Accounts Receivable, Credit Loss Expense (Reversal)	$ 300,000	$ 44,000	$ 675,000	$ 400,000
Contract with Customer, Liability, Revenue Recognized	42,200,000	39,900,000	76,000,000	67,900,000
Revenue, Remaining Performance Obligation, Amount	$ 511,000,000		$ 511,000,000
Revenue, Remaining Performance Obligation, Percentage	44%		44%
Amortization of Deferred Sales Commissions	$ 3,000,000	$ 2,800,000	$ 8,467,000	$ 7,826,000

Note 2 - Revenue Recognition _4

Note 2 - Revenue Recognition and Sales Commissions 2 (Details Textual)	Sep. 30, 2023
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period (Month)	12 months

Note 2 - Revenue Recognition _5

Note 2 - Revenue Recognition and Sales Commissions - Revenues Disaggregated By Revenue Source (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenues	$ 70,339	$ 67,285	$ 208,482	$ 198,290
Subscription Services [Member]
Revenues	67,473	64,067	199,993	188,613
Professional Services [Member]
Revenues	$ 2,866	$ 3,218	$ 8,489	$ 9,677

Note 3 - Income Taxes (Details

Note 3 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Expense (Benefit)	$ 1,586,000	$ 1,259,000	$ 2,471,000	$ 2,675,000
Effective Income Tax Rate Reconciliation, Percent			19%	22%
Income Tax Expense (Benefit), Discrete Adjustments			$ (100,000)	$ (16,000)
Income Tax Expense (Benefit), State Appointment Change			(600,000)
Income Tax Expense (Benefit), Stock-based Awards			(100,000)	100,000
Reserve for Uncertain Tax Position			$ 300,000	300,000
Income Tax Expense (Benefit), Merger				(300,000)
Income Tax Expense, Non Taxable Gain				300,000
Effective Income Tax Rate Reconciliation, Change in Fair Value of Noncontrolling Interest, Amount				900,000
Effective Income Tax Rate Reconciliation, Change in Estimated Tax Credits, Amount				$ (100,000)

Note 4 - Shareholders' Equity_2

Note 4 - Shareholders' Equity (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended						9 Months Ended
	Oct. 23, 2023	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 13, 2023
Common Stock, Dividends, Per Share, Declared (in dollars per share)		$ 0.025	$ 0.025	$ 0.025	$ 0			$ 0.075	$ 0
Stock Repurchased During Period, Value		$ 2,141				$ 3,143	$ 19,889
Payments for Repurchase of Common Stock								$ 1,648	$ 23,137
September 2023 Share Repurchase Program [Member]
Stock Repurchase Program, Authorized Amount										$ 10,000
Stock Repurchased During Period, Shares (in shares)		99,090
Stock Repurchased During Period, Value		$ 2,100
Stock Repurchased Average Price per Share (in dollars per share)		$ 21.60
Stock Repurchased, Accrued Expense		$ 500						$ 500
Payments for Repurchase of Common Stock		$ 1,600
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)								128,942	140,473
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)								$ 23.61	$ 20.31
Performance Based Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)								138,000	91,042
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period (Year)								5 years	5 years
Share Based Compensation Arrangement By Share Based Payment Award Incremental Performance Percentage Year One								15%	15%
Share Based Compensation Arrangement By Share Based Payment Award Incremental Performance Percentage Year Two								20%	20%
Share Based Compensation Arrangement By Share Based Payment Award Incremental Performance Percentage Year Three								20%	20%
Share Based Compensation Arrangement By Share Based Payment Award Incremental Performance Percentage Year Four								20%	20%
Share Based Compensation Arrangement By Share Based Payment Award Incremental Performance Percentage Year Five								25%	25%
Performance Based Restricted Stock Units (RSUs) [Member] | Two Thousand Twenty Three Performance [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)								20,700	18,210
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share)								$ 26.25	$ 26.25
Performance Based Restricted Stock Units (RSUs) [Member] | Not Based on 2023 Performance [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)								117,300	59,178
Subsequent Event [Member]
Common Stock, Dividends, Per Share, Declared (in dollars per share)	$ 0.025
Dividends Payable, Date to be Paid	Dec. 22, 2023
Dividends Payable, Date of Record	Dec. 11, 2023

Note 4 - Shareholders' Equity -

Note 4 - Shareholders' Equity - Dividend Policy (Details)	9 Months Ended
	Sep. 30, 2023 USD ($) $ / shares
Dividends, amount per share (in dollars per share) | $ / shares	$ 0.075
Dividends, cash outlay | $	$ 2,301,000
First Quarter Dividends [Member]
Dividends, declaration date	Feb. 20, 2023
Dividends Payable, Date to be Paid	Apr. 28, 2023
Dividends, amount per share (in dollars per share) | $ / shares	$ 0.025
Dividends Payable, Date of Record	Apr. 17, 2023
Dividends, cash outlay | $	$ 767,000
Second Quarter Dividends [Member]
Dividends, declaration date	Apr. 24, 2023
Dividends Payable, Date to be Paid	Jun. 23, 2023
Dividends, amount per share (in dollars per share) | $ / shares	$ 0.025
Dividends Payable, Date of Record	Jun. 12, 2023
Dividends, cash outlay | $	$ 767,000
Third Quarter Dividends [Member]
Dividends, declaration date	Jul. 24, 2023
Dividends Payable, Date to be Paid	Sep. 29, 2023
Dividends, amount per share (in dollars per share) | $ / shares	$ 0.025
Dividends Payable, Date of Record	Sep. 18, 2023
Dividends, cash outlay | $	$ 767,000

Note 4 - Shareholders' Equity_3

Note 4 - Shareholders' Equity - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Stock-based compensation expense	$ 1,038	$ 918	$ 3,076	$ 2,609
Cost of Sales [Member]
Stock-based compensation expense	50	44	149	126
Product Development [Member]
Stock-based compensation expense	188	151	542	428
Selling and Marketing Expense [Member]
Stock-based compensation expense	131	98	374	283
General and Administrative Expense [Member]
Stock-based compensation expense	$ 669	$ 625	$ 2,011	$ 1,772

Note 5 - Earnings Per Share (De

Note 5 - Earnings Per Share (Details Textual) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	340,000	205,000	278,000	217,000

Note 5 - Earnings Per Share - C

Note 5 - Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Net income	$ 3,867	$ 4,133	$ 2,623	$ 3,666	$ 3,083	$ 2,893	$ 10,623	$ 9,642
Weighted-average shares outstanding (in shares)	30,683			30,570			30,653	30,672
Effect of dilutive shares (in shares)	86			92			81	45
Weighted-average diluted shares (in shares)	30,769			30,662			30,734	30,717
Net income per share:
Basic (in dollars per share)	$ 0.13			$ 0.12			$ 0.35	$ 0.31
Diluted (in dollars per share)	$ 0.13			$ 0.12			$ 0.35	$ 0.31

Note 6 - Marketable Securitie_2

Note 6 - Marketable Securities (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Other-than-temporary Impairment Loss, Debt Securities, Available-for-sale, Total	$ 0

Note 6 - Marketable Securitie_3

Note 6 - Marketable Securities - Fair Value of Available for Sale Marketable Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Adjusted Cost	$ 27,720	$ 7,882
Unrealized Gains	4	3
Unrealized Losses	(33)	0
Fair Value	27,691	7,885
US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Adjusted Cost	27,720	7,882
Unrealized Gains	4	3
Unrealized Losses	(33)	0
Fair Value	$ 27,691	$ 7,885

Note 7 - Business Combinations

Note 7 - Business Combinations (Details Textual) - Electronic Education Documentation System, LLC [Member] - USD ($)		9 Months Ended
	Dec. 31, 2022	Sep. 30, 2023
Payments to Acquire Businesses, Gross	$ 6,600,000
Business Combination, Consideration Transferred	$ 7,000,000
Goodwill, Purchase Accounting Adjustments		$ (1,300,000)
Customer Relationships [Member]
Finite-Lived Intangible Assets, Purchase Accounting Adjustments		2,000,000
Noncompete Agreements [Member]
Finite-Lived Intangible Assets, Purchase Accounting Adjustments		100,000
Developed Technology Rights [Member]
Finite-Lived Intangible Assets, Purchase Accounting Adjustments		(800,000)
Trade Names [Member]
Finite-Lived Intangible Assets, Purchase Accounting Adjustments		$ (20,000)

Note 8 - Debt (Details Textual)

Note 8 - Debt (Details Textual) - Revolving Credit Facility [Member] - Truist Bank [Member] - USD ($) $ in Thousands	Oct. 28, 2020	Sep. 30, 2023
Debt Instrument, Covenant, Maximum Funded Debt Leverage Ratio	3
Debt Instrument, Covenant, Interest Coverage Ratio	3
Long-Term Line of Credit, Total		$ 0
Minimum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.20%
Maximum [Member]
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.30%
Third Amendment [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 65,000
Line of Credit Facility, Increased Facility Size Due to Accordion Feature	$ 25,000
Third Amendment [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Third Amendment [Member] | Base Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	1%
Third Amendment [Member] | Base Rate [Member] | Minimum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	0.50%
Third Amendment [Member] | Base Rate [Member] | Maximum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	0.75%
Third Amendment [Member] | Eurodollar [Member] | Minimum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	1.50%
Third Amendment [Member] | Eurodollar [Member] | Maximum [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	1.75%
Third Amendment [Member] | Swing Line Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5,000
Third Amendment [Member] | Letter of Credit Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5,000

Note 9 - Subsequent Event (Deta

Note 9 - Subsequent Event (Details Textual) - Revolving Credit Facility [Member] - Truist Bank [Member] $ in Millions	Oct. 06, 2023 USD ($)	Oct. 28, 2020
Debt Instrument, Covenant, Maximum Funded Debt Leverage Ratio		3
Debt Instrument, Covenant, Interest Coverage Ratio		3
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 50
Line of Credit Facility, Increased Facility Size Due to Accordion Feature	$ 25
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.20%
Debt Instrument, Covenant, Maximum Funded Debt Leverage Ratio	3
Debt Instrument, Covenant, Interest Coverage Ratio	3
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member] | Fed Funds Effective Rate Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.50%
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member] | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member]
Debt Instrument, Basis Spread on Variable Rate	0.10%
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	1.50%
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member] | Base Rate [Member]
Line of Credit Facility, Percentage of Applicable Margin for Borrowings	0.50%
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member] | Swing Line Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5
Amended and Restated Revolving Credit Agreement [Member] | Subsequent Event [Member] | Letter of Credit Subfacility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	$ 5