HSTM - Earnings call transcript Q3 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HealthStream, Incorporated Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Vice confidence Communications. President like today, your now Condra, Mollie Investor would hand to the speaker I Relations and go-ahead madam. Please

Mollie Condra

today and conference Senior call Thank for me CFO are quarter morning. and good Frist, with HealthStream; results. to Jr., and A. us Roberts, CEO XXXX the you, third of discuss Vice in Thank Also, President. Robert our Chairman and joining you Scotty

statements that call regarding to like by you may start projected future contain forward-looking conference of to risks forward-looking the in events I that would also statements. those results performance future that reminding materially the could and involve this from actual the differ HealthStream and cause uncertainties

materially from forward-looking contained these filings the the are risks with those company's other in concerning including XX-Q. could and and differ Forms cause XX-K SEC, that statements Information to factors the results

this So, time, the Bobby to turn Frist. at call I’ll over

Robert Frist

everyone. earnings our Mollie. to third Good you, XXXX morning quarter Thank Welcome call.

in the quarter with cash with a Adjusted operations last quarter Our record-low cash sheet. from third over million, up up line outstanding a same Supported approximately ended sales by expectations we year. and of days quarter quarter and over our balance X% revenues last third EBITDA the XXX year. flows X% were same was the strong performance balance expectations with so strong

coming company to move higher being calls. introduced discussed previous designed To three the transitions years. margin, updates updates. fully results, with in All transitions I’m a so operational dive today, to we business are towards financial some that elaborate on In a the Scotty of and more regards will three more profitable minute, to going to I with us into in provide start want

into We’re what a described journey. I about as XX-month months nine

all XX% about and about steady on pleased progress we’re these we’re migrations we’re nine months these I’m of transitions. to and report through making So,

of the Verity PaaS these increased resuscitation level platform support XX% we over the our expect SaaS XXXX. to continue contracted to added in During last or new accounts cross progress on subscriptions migration we we We our subscriptions quarter, time If the quarter, strategy. and XX% gross margin XX offering. hStream for three and this new new at transitions, for we example, XXX,XXX by approximately to

So, margin transitions expect that line kind to we’re of we see of to of excited middle next the the in some year. gross by those playoff start

let's So, at a each look little detail. one in more

American to sales our the program Skills and new transitioned Suite year. efforts and Red Cross products earlier resuscitation launched resuscitation legacy have we includes Innosonian program which First, our from Resuscitation the marketing offering, this

those the declining there year-end XXXX we no products Since sequentially expect and products, continue of revenue are new each quarter from legacy resuscitation XXXX. sales through legacy throughout to

products. the resuscitation we’re XXXX So, in throughout revenues sequential on legacy declines projecting

our anticipate legacy products. an our is little we Specifically, the about be resuscitation of in the resuscitation legacy XX.X than XXX,XXX zero first in on but approximately forecast at revenues quarter, bit from fourth additional decline products products quarter million. anticipate million legacy to we This a to thought from We us last revenues XXXX. had quarter puts new lower XX.X to

healthcare life reminder, highly adaptive is demonstrating life healthcare certification skills. updated support solutions to an program professionals. proficiency driven Suite professionals basic support, a brings offers Red resuscitation support As and It advanced pediatric of Cross successfully It curriculum. new comprised life-saving and the life development of advanced competency-based knowledge Resuscitation to competency

professionals the and live first fact, certification the the In accounts for several healthcare program. achieved through is have program

additional an January we quarter, launch, at that XXth new that third announced additional pleased just six accounts, during and we the first XX announced on accounts we just launch had the quarter. and quarter. In history year report second had the XX we resuscitation I'm account this strong quarter, so accounts And XX new in to momentum sales offering. of our in back new of of looking

Together, healthcare from continuum million these new off many months and mix offering. are through care, therefore, these of contact the first including signed not hospitals We're nine licenses. XX.X in of totaled of facilities new their the are expecting from contracts contacts our product resuscitation for value These order contributions for new because running resuscitation transitioning accounts material the financial legacy from across of these customers. year, XXXX XX customers a and over

more believe have encouraged support approved a specifically market's new legacy and and reception the this are in offering more To and more solution solid innovative, area. effective cost-efficient by the than we've recruiting We sales is we sales to solutions. resuscitation that representatives pipeline new that,

So, area us. investment that’s an for of

adoption SaaS-based platform for managing to of In health in new transition platform. our XXXX, and organizations. involves launch privileging new SaaS-based Second quarter migration of the we first the Verity, Verity announced and our credentialing

XXXX, XX% week contracted Verity customer over for new grew per average, As rate the approximate were of This quarter customers. that end XXX to the third third four quarter. means accounts platform of customers new the contracted during on the over

filled So, momentum customers. an signing our technology our both and it’s to customers exciting the new platform, brand-new time building around migrate as we

privileging and brand the So, the into advantage they're and that taking balance XXX are built customers customers a new, the of nice technologies are also platform. of migrating

customers platform progress of migrations new history Given successfully legacy customers. improve and of to sales of anticipate terms the in migrating existing and of we the quality solutions, new high continued our

that accomplish. journey is fully years one several So, the migration to requires

The want third – to about the talk transition about. that talked I third we’ve and

essential activity technology the and some an evolving the Again, platform, ecosystem. it’s The effective but third active behind and new HealthStream powered by our are new in powers technology it’s hStream transition nascent, solutions involves platform and to hStream all our customers working that the of technology. directly machines is upgrading the which

from quarter. million approximately third the subscriptions approximately and the the XXX,XXX functionality new are enabling HealthStream some at X.XX Learning even XXXX. second committees of HealthStream service up at end such added as subscriptions of in cumulative our applications most of established the up system. That's to subscriptions In quarter X.XX our bringing hStream platform end total we quarter, contracted million the third The of the

HealthStream have who the now to using of our positive reception to upgraded extension MyTeam center. upgrade exceeded with new again, Initial an of XX,XXX known managers HealthStream the to interface and Learning the MyTeam. has over as hStream XXX MyTeam actively expectations be Learning manager center continues enjoy is old an And advanced technology. organizations capabilities across customers

hStream, new a legacy when to in upgrades their Learning the So, HealthStream they capabilities applications, customer center. older get

path adopt customers center So, Learning for HealthStream it’s MyTeam. way an and when the upgrade exciting

couple excited about the and over quarters, two the So, we’re we progress of years expect to in specifically. see hStream next continued adoption of the last

I to them want we’ve concept three to the We journeys. remind want will anyone six business these these described months. that be everyone or next or perception don't have multi-year finished done the that transitions, in as

I into through see we’re and we the nine months, within these one months of that financial benefits a migrations or XX-month transitions take months. minus may fact, by bulk these saying the over and think XX kind transition, In XX years, be it coming a the each of we'll to three but of opened little plus course

all it’s work to our take we’re into of are the again, years the not it’s migrations, are are not a through. to months understand short-term these encouraged to returns. XX-month nine us couple that want characterization, you going way we’re precise, a these Again, things but But we by Again, journey. that early

As of CFO Scotty Senior as and President appointed February. service we as Roberts our Interim in September, following announced Board since CFO Directors his Vice our

at CFO. the the leader. as excited to accounting operations, of experience and team him makes as company’s talented brings top reporting have including we’re He’s to He financial Scotty serving serving executive So, competent our and and in HealthStream finance. company's addition public, strong executive. an XX financial years a all exceptionally

third At this it quarter turn financial his detailed to rest time, year He’s metrics into Scotty a bit of guidance. going for a also for over give to of of us to in little XXXX. look the the the I’ll a provide outlook more the

Scotty Roberts

morning. good and Bobby, Thanks,

are the third [Technical quarter As and the results financial unless a comparisons discussion Difficulty]. against prior-year of continuing operations reminder, our are only today for

income financial X.X operations was highlights million. third to Income as from up million. the XX.X for X.X to Our Revenues down to million. are XX% up continuing was follows. were Operating quarter X% XX%

continuing per in year. from was $X.XX up to X% compared million. per prior diluted adjusted share, were EPS the share to diluted XX.X continuing operations Our operations from $X.XX And EBITDA

Now, million XX let’s Revenues our results review for the from were up totaled detail. and more Solutions in the our year. prior segment quarter X% over third Workforce

organic in These from expected subscription experienced offset content our platform the topline growth our were quarter, Providigm the acquisition. from benefited decline and business. an by the partially we also revenues, resuscitation improvements legacy During and

prior the year-over-year of rate XX%. we’ve X.X resuscitation million from million, million nine million decreased of XX.X revenues year. first in products XX $XX.X growth legacy or The this compared and Through a with XX% to these months were recognized year, revenues of the by

One sold of of resuscitation in the backfilling XX new marketing averaging the offering in resuscitation five our products our the Since for declining revenue of of over new most January length. year, opportunities is offering. launch legacy total contracts the years selling and by with of this from we’ve contract million value

organically Providigm brought grew million Workforce revenues revenues quarter. Revenues legacy products during and acquisition the resuscitation X%. from the rate the the X.X other by from Providigm growth This of products in excludes acquisition and

from were and XX% grew last or by million the were Revenue or Revenues license new client platform is to of Services from our revenues down up subscription XX%. services coming XXX,XXX year, Solutions and were subscriptions segment Provider revenues sales Provider professional million X%. Compared implementations. Solution primarily and Professional for XX.X while X.X growth Verity

replaced to because the declining improved Our by products, being to improvement margins margin gross products. is revenue This prior which occurred resuscitation contributions our in higher other legacy XX.X% low-margin from the from year. XX.X%, the of of some compared

out levels, XX% over over improvement years we should year, three show the have between over to ranged our XX%. margins historical past we As the begin and look gross anticipate next which

that mentioned. We can are there drivers centered three profile, Bobby improve areas transition believe which the key our gross around are margin

to first margin our improvement offering. our new decline in the for resuscitation resuscitation is customers from The to margin legacy and products lower opportunity ability convert

the the growth our platform hStream. new of Verity and is is the adoption continued solution; Second of third

We our in improve to are successful XX% to we anticipate gross to-date. with over as this have margins transitions We XXXX been XXXX. by these time

development marketing are which were office expenses due Our earlier compared our sales year as this with by the expenses the from by acquisition, Providigm XX%, depreciation G&A of operating incremental corporate following increased Product relocation associated well expenses increased The increased X%; categories. the in and XX% the last expenses depreciation by expenses, staffing levels, higher as operating higher expenses to to by XX%; cost increased growth and up revenues, amortization year. of XX%. X%; operating were and excluding across up

grew EBITDA quarter. X% to adjusted Although $XX.X operating from by our income declined the in million third million prior by XX%, $XX.X

let’s the sheet review and flows. Now, balance cash

cash Our increase capital and XX cash to operations approximately from from and and in of investment quarter year, XX.X generated million. incremental Cash year-to-date from collections increased million ended This was prior XX%. XXX and increase the lower working by flows million compared flows cash the year-to-date to balances million DSO, improved operations. million XX.X XXX an improved our at resulted and

XX Our of compared low DSO for the prior year. the days third quarter XX in was record a days,

approximately deployment, million brings we expenditures year expenditures which to our during million. the incurred XX capital for For quarter, capital of X.X the capital

ended active as We support we the the and cash strong investments facility, maintain two our As balance in we with by investments credit million and development including Providigm activities. which business a of completed XX capital, million XXX practice, access and minority business of an indicated matter quarter and development this earlier pipeline acquisition year. to sheet line a

guidance. from Solution Workforce Provider and anticipate financial and range will and and revenues XX consolidated XX million. segment between from revenues let’s million Now, Solution million our segment between We to XXX XXX million ranging million XXX the between ranging that revenues XXX turn with million the

impact We approximate year XX% the for incurred annual guidance to complete to the and effective during other the that We are the million XX.X that the non-GAAP range capital to which tax second of during increasing million grant may anticipate to XX range be XX%. include income stock acquisitions quarter. operating income expenditures be any guidance and million $X.X million, our million to This XXXX. million rate range operating guidance income does expense XX we between excludes XX.X our XX.X will and not

Bobby. comments, concludes turn I my That to call now will the and over back

Robert Frist

Scotty. you, Thank

our thing three Staff into Services, In an is go that of few make several that we Association integrates a script. of the the interesting some NAMSS One Before conference, today Q&A, to in Medical – new or of the and transitions that’s demonstrating pieces like Philadelphia, that’s there earlier remarks. new a I’d unique mentioned happening National actually business is convergence we story. at yesterday innovative technology closing we’re

Red and Cross being platform with the records It’s Verity of automated new credentialing hospitals certification the the integration medical demonstrated. through is staff

So, successfully complete of is certification Red integration their now, of That paperwork. certification hours credentialing through medical when time healthcare the an record with the their the professionals and Verity officers' transferred Cross requirements, system. staff automatically saves

into issue between in is transferred into automatically our made Solutions transaction our platform a an to hStream example, and used when segments Verity the which and manikins, complete, Workforce development bridge hStream. technology, so, is the the The possible Provider via new to for is business results program and credential, The is certification platform. login of that

credentialing would that medical to credential of up floor it in system, physical completes for now manual into shows on in very platforms. a to this history and the certification processes, and Verity have the the staff even data the live the as and the officers faxed of manikin, today that enter acquire officers credentialing long someone demonstrating certificate on again, pops we’re the sometimes exhibit And is copy asking the and research these

medical So, used Verity manikins, process platform the very managed. the the as where leverage into network exciting from technology flowing the of its credentialing demonstrated the of a credential for credentialing it’s is of at learning the of into That's being login its services. conference – hStream the NAMSS to a the and platform essentially some staff the to

So, an HealthStream for exhibit being many as on of about interesting and incorporates that really what’s and exciting floor well-received I elements think it’s bridge it's new the the today.

that services, continuum care we approximately market now a and facilities; addressable continuum in define care, healthcare health and defined including market. million offices; post-acute facilities. comprised and approximately of space care million broadly employees which including X.X As These employees employees. reminder, We announced includes acute physician million care first health more ambulatory year, X.X the human professionals, of at including as our the are of services, nursing skilled XX.X behavioral

growth With an greater expanded comes opportunities. market

a provider new we a is October. well-positioned space. care XX,XXX the employees, example, announced With Medline alliance global in over solution post-acute continuum Medline care distributor particularly strong with For strategic across a that’s of in healthcare with the and foothold

compliance the settings. Medline, programs, these development our HealthStream’s and champion professional drive new development Through essentials development will in workforce and compliance program and and with clinical programs program, expand alliance companies specialized requirements including a meet clinical those

first We’ve number of as created and signed contracts partnership. been a a our already the of have seen result Medline new opportunities new

So, as continuum us these defined take to into we’re them solutions have markets them. help we’ve the excited

pre-conference where will Verity is XX quarter, Group of collaborate annual fourth peers, clients Solutions welcome our Arizona, Provider This the which second opportunities are kick-off be on Special over we the [Thrive Verity the look in November now In will XX, team. with We event, also Scottsdale, weeks and on XXXX], which about to learning this offered forward and XX. held from National to where in connect, we’ll three anticipate User clients and learn clients leaders XXX exciting will event and Conference. November attendance. thought can in in be the

ground the we It’s launched program launched May, responsibility we to within. call work and and Streaming work contribute excited about – by employees. serve program, which to we’re communities developed up, from new social This opportunities In was we and the corporate Good. we we the our and

life in office and Cancer American on Capitol our new a Society, this that event an we supporting event week relay Society. of outside held and report funds for to cause. for are the raise pleased exciting Cancer our focused Nashville, HealthStream View first to For hosted the worthy corporate we I’m American awareness last year, for

Cancer it's are see employees Good our having Company-wide, of impact the program start behalf and and Society. participating in communities American is this to on to Streaming in local gratifying positive

our events. of XXX be congratulate all to programs, involved our be actively to So, new all responsibility I and excited social couldn’t our and program. about these want initial encourage more with employees We employees nearly

I’d over questions At time, investor turn this from community. the like for

Operator

first you. [Operator Instructions] Daniels comes Ryan William with Thank from Our question Blair.

now is open. line Your

Ryan Daniels

follow-up of the and clients reopening clients your perhaps good had rate the solutions, to on at are of as the have a question. converting let’s months Yes, those next HealthStream kind off solution new legacy? to how running conversions Bobby, opportunity XX for So, back those the the roll-off? sales or versus determine morning, taking many the are for that resuscitation legacy solution, sales to actually what’s look with capture guys. you Thanks over legacy you those the say

Robert Frist

we Ryan, Yes, reported haven’t that.

I the new really was acutely in and accounts of from competitive make in and nice both good program, Resuscitation well-balanced Cross mix. the XX metric maintain we that. so our legacy course, about our as we felt hunt, to blend a we watching, necessarily the with conversion to partners our need brand Remember, the fourth we’re QR we – not of the maintain a and partnerships that’s account, a to entities think but the partner, have sell the conversion fairly but want with represent is of a Red and We’re do customers don’t And all sure quarter disclosed new It’s for rate, healthy Suite relationship [indiscernible] and helping American market also team well. we aware dynamic.

Ryan Daniels

think nursing November, requirements, the or the CMS last some quarter for Okay, and requirements that’s year mandated, of participation fair. I in they know homes. the And then, had I kick

the to in a over signings been the because So, that [indiscernible] with of you few Or of already is next new new conditions kind month expect actually start partnership, tandem demand? participation that the do Medline that weeks? in so put or contract meet much of in a place of

Scotty Roberts

Scotty. This is

I have in is think the some of the although penalties of enforcements for the customers most our of changes or kick product have couple by they that years, past of the abacus done you some another that the expectation won’t government, of and that know, so. regulation, the in were adopted mandated in year

And so, products picture don’t [indiscernible] approach occur. will runway there that of customers for be little you will to I but them, more to to our think think this gives that I a us indicated try kind

Ryan Daniels

low very cash sheet the as healthy any know, just any uses know, then, And thoughts so I the $XXX million the free Okay. you on deployment? nearly strong on you cash capital again, know, forward with you and flow building up year-end? know, going is Thanks. of especially with, thoughts balance potential it towards reaches, here DSOs

Robert Frist

to minority I tried in acquisitions. we’re up. investments year that the did including mean constantly trying examining acquisition We earlier one and active script in the all maintain of an complete we sorts, communicate Yes. and to that even pipeline we team we're and

we We weren’t have few bids better. made prevailing where acquisitions a on

kind opportunities we we’re our that So, an also in to program it's know of And for we growth. active inorganic investing limits. again, find

content Also, deployment capital increase. development, of organic investments, though our growth minority

we finished capital our towards and allocations content development. program a As our Board, with plan we’re our development just increasing five-year

and three we’re gotten of So, results vertically a data fully where we platform pretty product excited in content about chosen and that. kind we we’ve own We’ve have all invest pieces. where great integrated to

Ryan Daniels

Right.

Robert Frist

the in lot building, the resuscitation we’ve programs a has of So, a or to, example, There’s complementary that that investment, Red suite capital and employment development. for what I or solutions guess we’re built slight that program to I’ll uptick are around call built. Cross probably we content see

that So, as about we’re excited well.

and capital active into we’re best activity deploy and and to so, do to M&A increased programming. thoughtfully an pipeline, And investments, our minority the overall, investment content have capital going

Ryan Daniels

for great. color. Okay, Thanks the

Operator

Matt And Hewitt question Craig-Hallum you. with next our Capital. from Thank comes

now open. Your line is

Matt Hewitt

the questions. Good morning. taking you for Thank

Robert Frist

morning. Good

Scotty Roberts

Good morning.

Matt Hewitt

of couple a Just follow-ups.

have some market, the requirements the Medline, participation are meet your regarding I new mean much of regulations? obviously those but regulations Verity the how facilities these long-term that would platform internally? Is relationship to Or, they facilities you think something First, the care out currently attempting way, are with – is for that simpler trying options what a to I other do do there? that know,

Robert Frist

what’s position the all we Abacus And and into there’s just is with Abacus some not vertical. our is this which market and the we’re is we’re prepare which the competency, the and made platform, platform combining acquire platform, bundles example, – really kind like Providigm quality around in the quality of is content of came at – relating hypotheses audit seeing these to is them and management. new the mandate Providigm. these into process business together increased bundles for staff that Providigm Medline, long-standing happening helping now form Abacus us the under regulation And of which platform, we a acquisition Well, what content for which is one leader helps

vertical. so, very in the prominent they're And

do that differentiate otherwise? lot a they to to helped products for over competitors introduce are platform that us for These of that they I of more now, help the them. to products And market. years are overall a the they’ve tool example. guess the organizations, Abacus What offering complete There paper. competing a are their few offered pen and position kit have help them product those Medline, and by

There efficient pen are made needs offered well. products more of a of to there's HealthStream and market, displaced that as by and competitors the be traditional and paper lot kind into of educational competing

competitive customers. but be strongest think the with and market also us typical Medline. aligned in to landscape, are So, to going to they’re a the help these we the which these strongest we’re solutions, really proud think know, in you carry market they're We the

Matt Hewitt

Understood.

understand essentially bucket? some bit. there? a regarding will that said will, be shifting but, using fee, for RQI those I be to be legacy will to that a us that another is revenues you access at revenue basically be going for? resuscitation if platform, – then, point. are gears, zero you’ll zero, customers Because going that And you Okay. legacy a program, some think at little but going How there's going Just enter saying had know, to the help you fees the in so for as be still legacy you the be paying is the access XXXX accounted Or to roll-off, accounted there's your you legacy

Scotty Roberts

a another approximately Yes, and million] RQI agreement, legacy out we’ve of so, contracts winding products down you know own, communicated, announced so, which the stream, partners XX separate marketing legacy contracting upon is do [XX and sure. bucket, it revenue that on down. facilitate from our its We the revenue the that are we’ll will the customer and at growing, connectivity million learning and will selling hospitals its that's and which sales success wind on that be It's be kind fees choice access is based you know, and for agreement, own the XX but and of dependent where they and own platform, example. their with

RQI its organization events And that would that, that will maintain would partners. then, it’d And so, maintain using learning our right. works that which they to of call, very the sure solution, teams show pay contract, legacy our that, want sequence access in would us partners they and platform of because RQI contract older, but make and want they their fee, the is be benefits the revenue subset is and a so of a the help for with low for we – enjoying what customer ops be to but it would it customer the up an

partner, access contracting longer longer the products. as now, we RQI we longer no we’re partners. So, sell products, call it no That’s the on the we the products; market no for all the

Matt Hewitt

back then queue. Thank hop one into helpful. one and very you. last Maybe I’ll That’s Okay.

to year? Or the your maybe do of the conversion that that for way hStream the next very, ramp as launched expect Regarding previously. get XXXX product know, ramped and you to that fully that you very contracted of you quickly. in other get, QX and do XX%? slow of closer its going you quickly you last to XX% XXX%? Is subscriptions, Its rate almost reported numbers that subscriber How the on be you in implemented

Robert Frist

Yes. It should.

some and First kind kind of arbitrarily date picked, transitions of migrations, think that of I and three know, will articulated, January the go transitions, starting again, XX a start the months, just of January are and started XX of to as I each I’ve will though months, XX-month as even longer but three, within movements you bulk X characterize little all transitions completed are a and be X of think the something they than all, XXXX. the before

the we’re months in So, nine to transitions. XX-month

that years largely migrator are couple know, dependent would coming when I its left renewal. accounts this whether, you XXX,XXX up quarter, and or XXX,XXX in as for say on these So, are

so, couple of renewal you big high number. have be if coming And up might accounts for a a enterprise,

platform If product from the for of and step it's on customers is a and us. do benefits most learning step with would one, well. contracting and for as account obvious as system number. new the are they capabilities where renew renewal you renew other and upgrading the from and our old they’ll well you that hStream of sets and and then, kind remember operating of it we two, stay smaller up know, to them, bunch coming be accounts benefits some a then, kind for this into platforms, that, tangible subscriptions lower receiving extent their the is And And to choose know, old of contracts that include are hStream it

get They customers and months we’ll coming with MyTeam. this the There and this are that benefits we’re how But roll the out upgrade achieving migration. to can in to quarters articulating to them and we market. be that’s other hStream both

of three years. are You kind remember contracts average plus that

some will renewal for of come in the year, accounts a longer each term third so, up would renewals that. enter And

So, again, I think these about XX more months of and the we’ll be bulk migrations. to

Matt Hewitt

much. very you thank Alright, Understood.

Operator

question Richard from comes And with our Canaccord you. Close next Thank Genuity.

open. Your is line now

Richard Close

the for Thanks questions. Great.

gross on the middle on little of margins, year. a bit based your you’re by statements, Just obviously, next XX% targeting,

terms years? As long-term know, margins thought what maybe considering in that or the a what transitions you transitions? three of here, Have like you will be you you think be, think is out about may two about target these

Robert Frist

Richard. Okay,

from Now, the resuscitation I’ve touch I think Red resuscitation that growth because is guided in I there’s and Resuscitation that set. the kind Suite on year, program, beyond roll-off natural our products but this new you a follow-up Cross can of know, the newer never one the and of a product

feel say off So, cross My can XXXX, year, we think we’ll margin up you even next the think in products XX% drop I And this the much we’ll a then, of time expectation more gross like move sustainably. I we’d know, aggressive level. is margins. that, faster by as legacy QX the by see across gross that

but I'll it. it the past you know, more against give for new say thinking run, the it about ballpark all legacy to its to long QX and we’ve strategy we the just talk migrations, PaaS migration just and for so, at switch gross say – for all the I of now about XX% the of addition and you me at that kind should bit to some so even that I'll natural confidence know, together, and with the that you with we’ll into a you now revenues other And for think, that, caveat sense the – to in margins this SaaS those know, cross XXXX, be – Verity and approximation, we'll leave out future. gross looking now, all gives XX% we’re is margins for of by that But of to upside that this that, little migration way the the through

so the XXXX. of quarter the XX% by year, or next first XX% know third quarter You by

Richard Close

of, That's Thanks in line trending terms any in guidance expenses, development, are we quarter? with and that better most didn't quarter, then And considerably you’re hiring were and – do I led terms out marketing, know, how with great. G&A product in there. the that, there and items terms things – updated respect just the sales were in the did as operating much the you the in there recent then thoughts may of those anything or, there better expenses you what and all that to to along to lines maybe as know, you the for think be of know, on really call you Okay. you forecasting, to respect then, than insight operating

Robert Frist

Yes.

good question. a That’s bit. little a that about talk Let's

new a up workforce, the had in very plan. also we of plus but we’re new probably acquisition ambitious so through rest hiring our that just good adding organic third about of there actually, or the XX that, a talking so maybe some We did was of year, chunk or was the a net So, end so employees did company. XX call the started and before we a grow about the hiring net Providigm, of across that of people

as to did really growth our headcount. had some we achieve So, good in we planned

levels. higher modeling, guidance, had in our assumed even in However, and our then, we

to so, able we we outcome were had than resulted in hoped. outsized QX that And to in desired of to and lower not hire we our had, and kind what expenses therefore, earnings

We we earnings hire little quarter. existing have able been we to? everyone this hoped in lower had had So, probably a had would

underachieved. the we And setting so, them. I probably single achieving I say, do close to this internally, think our expectation is how biggest we and get hiring year, variable then, would And

didn't get I meaning, five trying hunting] to get our tell positions these [head firms correct that, teams and go aggressively all out filled. not and We’re

market, rapid national, the talent kind treating we’re not recruiting. but including our of huge heating of diligently, doing we’re is cause were battle which in and a So, up like national it fighting overinvesting for

taking that We’re the we’re thought effect kind well we the behind trying we and of where get at time yes, that. people, we’re I our think right doing net growing would standpoint headcount. But to is, sense from we’re But don’t not be to you has been headcount and a I our probably now a persistent story to the year. a that want for get

add new technology, new and sales almost adds did net in net In in every the – are of add. adds did company. We sales, we in

– know, we you that yet, ripped do instantly, not jobs look, So, said, cost cords I’m these of – the all fill recruiters. and a we're we’re haven’t and to lot but know, through things done, money you getting as that

recruiting, So, we’re doing we’re that's resulting and best little and forecast, a more of in in our income higher lower operating QX. – bit kind organic therefore,

that are fourth capitalized. quarter of to expenses we capital and make cash things the We’re work things lots for that development, and the can going so product deploy authorize [expansible] best product up some project hiring to contracts and to our design, that deficit in in and in do

if the simply shortfall. know we to up try money able and bit [amp] invested it's to don’t to to a going in QX headcount not have were we a we’ll employees, we we we’re would the So, did Again, add aggressive but offset hiring new expectations we’re invest the be earlier XX net that know more headcount, to our in – employee important shrinking so year did in hiring. the for fully

Richard Close

than update with know, that that? maybe Any a of in expenses that updates lower the to, you’ll above stand in year process positives and coming Azure on expectations? that And about an believe or, ago, maybe was with And Is Okay. I that in associated transition about associated think terms there where AWS. talked it accrue? then, a you you the anticipated you you

Robert Frist

about at expectations. It's

know, hosted increasingly and If it's strategy another think we’re the like as that centers those I’d – going environment a moving mentioned, and but I one it's a PaaS it's does this Azure I all it’s country. to a our – in had all X HLC cost and [indiscernible] take at legacy grows, across or as two a of environments managed as up where to and architecture, duplicative that the know, into well SaaS, XX the AWS, great is a XX-month process. of thorough hosting You characterize data platform, you hand months. I Tier our think migration, couple migration you describe applications is think more with But or managed

going with to managed to those there and HealthStream the you but costs, And of new data moved us to model these again, we’re in technologies any growing And X built. platform. each and and platform it's Tier to lot stable because our get and hundreds cost duplicate for of ahead are duplicative applications being because know, a next are we’re we centers bear align so, this take servers time I and say, good, hundreds the would other two migrations a hundreds having are of and hurry it’s not the particular go just in I’ll going –

don't the some to legacy all And have the over. so, platforms just the new functionality in switch platform we of

nothing time probably for And budgeted XX guess that exceptionally next take way, so, we’re the the I our that and to they’re model, our months. would I in cost at say going expectations

to I’m line So, fully. time the the the three going transitions get us us give same to cloud over as to other

of all be our Again, clear. access to

our Our delivered, webhosted architecture, and hosting architectures, multi-tenant Azure, and SaaS as as outsourced to managed the applications that so platform. they far modern versus the hosting environment, actual AWS Microsoft hosting but are

that those manage to on going are take and cost. our We time

also look you from of when those will cost is lower migrations XX if a think there months we point now, your if to because Now, – though, out – a have complete, servers are who structure, some I have facilities XXX that go refresh month journey would that capitals and over let’s but away XXX, away, server in the would XXX, as call a XX our go them them well.

Richard Close

that Okay, in gross would of included or that margin be that XX% is a of and [indiscernible]? sort type

Robert Frist

think this are more area. costs time our the since by move rapid our look next as mentioned XX% we of XX% year cross I are to duplicative costs QX Those we and that a XX next as we Yes. then can a see still the out in by month in touch assumptions kind threshold to QX, move those thinking and of a migration, and year

So, we cost. will touch the

Richard Close

Thanks. Great.

Operator

next from Instructions] [Operator comes with Thank Our Analysis. question First you. Sparacino Frank

now open. is line Your

Frank Sparacino

Hi, guys.

recently me given the talked of from haven’t we side much too one on Just things talent Bobby. about that

the thoughts is today in side, in you portfolio talent how terms are start-ups any terms just there with the see thoughts other initiatives sort into of there Bobby in of on products forward maybe of going You you some some money space but terms the of at I in hiring and have? and you that balance the the market your new know, where coming opportunity

Robert Frist

Yes, thanks.

I say, management at, that we fair about tools what dimensions, the have are been of the have to The retrenching refreshed are checklist new management the talent say, a its we Globally lot. it platform, I we learning bucket. about. good development into learning and winners, been would really best be a we tool We center the haven’t our like talked would would put excited initiative characterization, MyTeam building those and are we kind in with capabilities

there compensation, like other learning talent your learning. some and deemphasis for and exciting video-based learnings this full I call Probably example, that yes your the and education coming management our of to call the tied on management a what right is from then, and slight innovations we secondary manage. system are capabilities and and areas the so, talent momentum that on and performance is doubling down to would a And video-based connected YouTube platform new kind I away health so around what new we within like components of and move suite, tertiary give will them the own and your into some probably using around on providing platform for training learning platform. products Essentially of top of new have even

the down of is. From it management. so, kind characterization perspective, be, our core kind And of overall is we performance are and our on doubling learning would what

and years the secondary services deemphasizing tertiary the moving about. ago, video-based from like compensation overall the several then example are ATS and technologies those excited we moves the platform We away new probably made recruiting, probably like management and emerging for really

learning management. what think call performance we ourselves can we differentiate continue and development I’ll and So, to

Frank Sparacino

you. Thank

Operator

for showing not like turn call am now any questions at I I you. further time. Thank would over this the remarks. back to any Frist further to Robert

Robert Frist

for before the as progress over helping the to these key forward Actually, all. on transition thank proud, next full transitions into three we everyone for Well, responsibility you are talked three almost forward around to fourth great, Society, again and and February. the our key you Congratulations a there. Thank next employees the efforts a be their to report. reporting solutions fourth, effort to we our social that quarter. about. it for American each participating. we We Cancer investors we’ve great a sometime again move on Look And will transitions look program $XX,XXX all great good is I think hosted made on to to of migrations identified the Cloud gather about. guess raise

Operator

now you today’s and Thank conference for participating, Ladies gentlemen, concludes you disconnect. this call. may

HealthStream (HSTM) 22 Oct 192019 Q3 Earnings call transcript