HSTM - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the HealthStream, Inc. Fourth Quarter and Full Year 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]. today's being that advised be conference recorded. is Please Instructions]. [Operator

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

Mollie Condra

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

could remind cause to forward-looking results materially in statements actual like contained uncertainties those Forms differ the also are that events this the the contain forward-looking statements. would from XX-Q. and I cause of results and may projected call you materially including the the these SEC, from involve forward-looking with statements and that company's risks XX-K the conference filings differ that could risks future in concerning to regarding those to HealthStream future factors performance Information and other that

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

Robert A. Frist

you, set as everyone. the our year earnings and quarter XXXX back for stage great Welcome It's be prior morning Mollie a and fourth call. on call performance to well. because Thank XXXX a good reflect

and us had all direction, I that up professionals. So, the and innovative enter competent developments solutions remain And caregivers, set people the vision of as that exciting as to that we've of HealthStream credentialed really into XXXX focused we in kicks-off and think XXXX. confident, the develop, employees fulfill our on delivering many health well XXXX, care,

Vice and our Financial A. team, added our we Roberts joined our hStream example, Solutions to for Scott executive XXXX up Scott Officer. Senior McQuigg, new heading members President as Chief In two

really nearly corporate new a into employees together location, from bringing operation standpoint. single XXX moved Nashville, a We and which and office, site location is and powerful coordination multiple a Downtown offices consolidating in into

about. customers, into social We’ve Good, responsibility our where really engaged back work. program, communities all coined our of are the which excited employees our Streaming and into we’re Good new We corporate launched we it Streaming in

logo our and our updated behaviors new that guides We constitution published in actions and XXXX. a

of all our was of organization. as and our strength an culture this a refreshing So great

we XX ranks. our addition, Streamers welcome Health new In over to

country, we're our areas adding CredentialMyDdoc and family employees pleased our to excited So about new and with our the across with their including acquisition started from all of Providigm bring targeting We're organizations. CredentialMyDdoc. that growth, ended the Providigm the HealthStream we of the the We products and into the operations, contributions the sales customers. acquisition year it welcome into really to

off And manikins. We a stage with American for $XX.X an a Red XXXX. started importantly, program and new the program validation for order These contract and set these two in million Cross exciting value the using year exciting solutions. skill over we suite new technology productive ended by launching updates year enabled the

few highlights. results. a financial ended strong with XXXX just So We financial

with and at a our Scotty importantly XXXX. and a For of were all will guidance end million. $XXX.X in the year ended full at details the dive financial adjusted more few of performance time $XX.X million EBITDA We cash record And XXXX year in a also revenues about year, high minutes into in the million. was balance $XXX.X our

the And overall opportunities challenges front and this The opportunities. we ecosystem. present challenges of are three strengthen framework few want They business in started transitions to coming the with are past. higher being of been us of the a to company enhance us. margin, update a transition All the in move transitions that's the to an our provide the ago, gross revenue to I that are to quarters profitable the margins more company three in course loss designed associated towards one product stream of in years. and important

In And margin. gross fact, XX% fourth of in margin XX% the by quarter goal the through third XXXX. quarter, quarter the we pass last already gross through set crossing of the a XXXX, we

first efforts to our we and from have the sales resuscitation transitioned products legacy marketing So our a offering. transition, new in resuscitation

multiple a our Red comprised a class program healthcare seeing curriculum. professionals resuscitation PALS excited development from customer new program. healthcare and to It's of professionals to the proficiency number Red is and Cross through program life highly certification the and now brings achieve The competency BLS, base. skills of program the As knowledge successfully demonstrating ALS reminder, suite growing solution to development to we're we're a represent consummate professionals. new It offers setting and healthcare program this accounts professionals. resuscitation world necessary updated, Cross competency-based to It live an is certification really adaptive be of exciting

little a in and ourselves. surprised on And ways we more the progress color really some

credential, when value. the think expectations entered brand, we year fairly technology And that. entered in with obviously setting budget it. new new our And a we I new even new new million and some $XX million exceeded order a conservatively greatly sales year, a $XX.X product, market, supporting a around the it's we’ve

you at the it grew how if transpired momentum look sales course throughout the over the year. year, fact, of In the

accounts in accounts year, XX new Our the quarter, first XX the new second we quarter. new the XX quarter in resuscitation start during in new our the offering, in accounts the fourth really landed new accounts the and launch in of at March, third And quarter. six quarter

of skills around XXXX, we full year XXXX February, XX These when accounts, year full totaled of part the XXX the the didactic Cross Together, of offerings, we've for the months it's in and the launched resuscitation contract accounts Red the new for really selling. say these component so as over really and technology-enabled includes which on XXX certificate and value manikins million well. in $XX.X

from are transitioning the new healthcare including customers. of and a across X,XXX mix These care, facilities, new from of over hospitals continuum contracts and

the program So, market, Innosonian we skills and the post-acute well suite validations continuum pre of saw markets we as care. the of acceptance of as this in acute acceptance and saw resuscitation in program. call the Red new We that in markets Cross

about many another the but or new solution. our in alternatives, views questions not began questions. we embraced solutions, market contracted as there When the market only that accept the were whether a journey, the them clear It's resuscitation they've also even million set $XX.X growing viable evidenced There not three would solution were values. order as by

as for to effort announced has VerityStream, and many the cover second VerityStream This adoption the our XXXX, and In in privileging platform our for transition thousands acquired quarter we launch of many this new to space managing and platforms of first we've healthcare new providers. consolidation credentialing, platform, platform. customers new great The involves in progress. through and of And migration the towards been years the enrollment now progress in VerityStream we're the credentialing organizations. privileging making

the VerityStream, In subscription for which customers vision quarter enhancements, unique this our a fourth data. content of and to platform a believe business we curated evidence-based better of of conveys continual XXXX, our name we updated of providing stream

quarter. platforms customers at to existing of customers over acquisition. of platform. These per our week new accounts customers. plus who four This new grew and XXX customers to for XXXX, new customer a mix and lot new goals new On the VerityStream over our was and end during chose fourth the VerityStream a from legacy customer of contracted the average, privileging customers exceeded represent internally stretch this migrate therefore As to even XXX contracted were credentialing

and quality Given of of the The of migration both the existing legacy of years already benefits terms our migrating is seeing to for to the several we we're and the in early adoption journey customers of get that’ll anticipate to that broader migrations accomplish, suite the high one progress, but access of require sales new improve platform history successfully new solutions, customers. customer continued capabilities. fully

involves added behind approximately information subscriptions, of potential The upgrading cumulative platform-as-a-service about, up X.XX quarter, third and XXX,XXX our of the and architecture million define in services essential X.XX and scenes the end is the hStream the million the mobility the ecosystem. XXXX. subscriptions, all third technology which suites. powers applications, subscriptions activity to across as universal our fourth In We the our at for creates to total transition contracted of that bringing we hStream from approximately to HealthStream quarter working functionality like talk Features that the a ID platform. customers

these I business transitions remind represent three want all everyone that, new to multi-year journeys.

expect of these accomplished undertaking. In would give yet, transitions them I we to was meant each that, in said example categorization to fact, the to analog here. are None any a journey. that expectations month an And was or them or I multi in of To And provide of journey. be an And them don't of a we years. nine year is by five kind each take of used company quarter. migrations one or of what a XX months last quarter we perspective, were

up so we progress margin, transitions. we end of a the At all the the real on these can XX three XX And months transitions. we're months progress this expect into XX set journey against the our this I of more journey, idea, month say on framework making of At journeys, each profitable higher company.

our guidance for give I'll Roberts it with over who more a CFO his At this turn Scotty XXXX. take and break will to and detail time, end

Scotty Roberts

fourth operations Thank stated. prior is you, quarter results against our year comparisons continuing And Bobby, today good of otherwise are only. discussion for morning. The financial the unless

for fourth the I'll briefly year the Before I quarter results full over of XXXX. go our touch on though,

Our was the quarter. but was during personally associated second an $X.X high with XX%. by down all-time $XX.X revenues employees Income finished the facilitated million million, year our up Operating of at $XXX.X that included a HealthStream CEOs which is contribution, which the at grants owned million stock stock charge X%

an $X.XX up and which which EBITDA our Our X% earnings share all-time XX%. adjusted million, up share, high was diluted was was at was per also per $XX.X

$X.X fourth $XX.X up the revenues X% quarter, income were to XX% to million. million. For was our up Operating

operations from income continuing $X.X to XX% million. Our was up

prior diluted from EPS compared per to was in share share, per $X.XX the diluted $X.XX year. operations continuing Our

Our adjusted continuing XX% $XX.X to EBITDA from was up million. operations

on the in In December cash. acquisition $X CredentialMyDoc we completed addition, for million XXth of

X% by The quarter, $XX.X were prior or year. XX%, our segment million $X.X to $XX.X revenues year. from Workforce over Solutions Revenues million, compared the resuscitation totaled and decreased legacy million prior for the and in million fourth $XX.X about

revenues totaled to and year, million, increased $XX.X products For by these X% the from XXXX. $XX.X full million for compared

moments. few revenue a in XXXX for products our discuss I'll just And these outlook

million, segment revenues products $XX.X fourth platform products from the million X% of client provider sales and from solution were the primarily professional grew acquisition other And our both $X.X legacy of about and growth the Revenues the Providigm implementations, XX%. quarter. $XX.X million, is from for this in Excluding services subscriptions. were workforce by and resuscitation grew

new SaaS customers mentioned, solutions were a acquired be revenues credentialing previously on our company, market. of from segment. VerityStream, CredentialMyDoc, material. December based acquisition XXX provider in to which brings I The acquisition As the quarter XXXX, will XX Fourth we primarily approximately of continuing the part not

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

of development across were excluding sales revenues and expenses and up by increased and Our cost increased X%. expenses by G&A X% by XX%, Depreciation categories. expenses following X%. XX% operating expenses increased increased Product the amortization by marketing

which corporate Overall, with last was the the And employees. $X.X to XX% associated we primarily growth to staffing year higher the of expenses. million, also in since over Gross levels, relocation growth quarter. added office expenses from fourth and operating increased operating Incremental year's due expenses our were operating XX Providigm the expenses our to and depreciation year. by additional last compared in operating of acquisition up contributed

XX% million income by $XX.X $X.X Our to operating our grew XX% million. and to EBITDA by adjusted improved also

our to balance switch sheets cash I'll Now, and flows.

working cash and at million. ended million the our $XXX and quarter balances capital investment was Our $XXX approximately

year from flows $XX.X the record is high to year, prior full $XX.X which cash of improved million an operations increase million Our in a compared for XX%. to of XXXX,

record year. the for DSO also fourth XX days prior was quarter the at XX to a low Our in days, compared

quarter were at $X.X and year incurred approximated fourth capital full capital expenditures $XX.X the million. Our our expenditures million in

of million the capital with fund $XX line which of continue expenditures. investments believe with and In and support million two business acquisitions, used shareholder two cash well-positioned and development strategic Ending to XXXX we're deployed to investments our of $XXX and minority balance pipeline strong value. investments was XXXX throughout to other initiatives a $XX million We cash, we sheet a to increase access facility. credit making year to

Now for financial I'll guidance our turn to XXXX.

workforce segment and consolidated anticipate ranging Provider revenues between revenues For revenues XXXX, million $XXX.X Workforce we guidance and is will segment resuscitation down the to Solution from expected to ranges, in million million are down million, revenues $XXX When and XX% ranging range million by and or is business. X% from in to these XX%. be $XX.X largely consolidated between be the and with Workforce to between $XX.X the X%. million. grow $XXX expected Solutions $XXX.X $XX the expected the compared to decline The revenues million of is midpoint Provider decline due legacy

be we discussed past the this will it's year. have apparent impact While headwind X over years, this

Legacy we approximate million. from XXXX, the Products expect revenues to For $XX

be Quarterly revenues as expected to follows.

First quarter the quarter quarter million of million, million, zero approximately million, to of of approximately $X.X XX.X of $X quarter third approximately revenues XX second fourth approximately and thereafter. approximately the the

our to ranges. we legacy anticipate revenues workforce guidance XX.X% X.X% business, Excluding the between based resuscitation grow on and

coming approximately $X.X of slower of new growth our with from sales, Solutions, the exceeded VerityStream we which conversions, from sales customer Providers VerityStream we We're anticipated, remainder implementation while in and expect the the of the early platform. going new contribute expectations. For recent conversions to stages were of million the have acquisition than CredentialMyDoc revenues

Our conversions ability over new several acquisition, to the drivers and this will timely be biggest the scalable next implementations of balance segment in growth and years. customer

agreement but cost reflected no of range relating resulted that in the This the partnership. XXXX. million. million adjustment with sold the the from partnership to quarter of The reduction contractual related a the $XX.X between anticipate royalties amount and $X.X XXXX. resolution paid. of unpaid past income resolution includes various of first a associated favorable in onetime $X.X be goods of favorable to to the as and will resulted range million in operating agreement, This adjustment The be quarter of We disagreement royalties occurred a a first accrued million adjustment of the will elements mutual that in of $XX contractual

onetime to we factoring Even for still XX% of this exceed margins benefit out adjustment, gross the expect XXXX.

$XX income revenues a significant primarily million resuscitation reason in of most operating income revenue to result anticipates right of being due operating expected down million to deferred compared in guidance Our is legacy assets acquisition from the $X intangible to CredentialMyDoc be approximately in The the will and downs. the year, last decline products. amortization also reduction

content into developing employees In anticipate and addition increase offerings, will a assets investment as And improve growth development or acquiring is long-term of a approximately expanding of the gross business back past course years, to product XXXX top continued margins. in investing our X%. over focused be including sales, which in the on priority. headcount product our operations to teams. XXXX, new XX We equates an of approximately more

also increase result between to and We our and from XX% investments. an software as expect increase in a content expense capitalized of XX% amortization

will between will in over We expenditures in $XX $X to spend our million. believe capital that anticipate range in $X We XXXX doubling having assets margins we content million million million time. $XX ownership that our anticipate And improve XXXX. from and

XX%. between is effective XX% and rate range expected annual income to Our tax

an we the business any pipeline, active include impact standpoint, during of may from we finally XXXX. development acquisitions guidance our does that acquisition that not And an complete maintain

that And over I will turn comments, it and to concludes Bob. my

Robert A. Frist

then Thanks, here closing Scotty. I few questions. remarks we'll move got a to and

as the to As continuum and on into learning We've playbook share released the with opioid and will Center the the the by Quality Disease opioid Aspenti micro with with care, in a best program substance to opioid of Also, curriculum tackle industry to of industry-leading National practices solution. their well continuum, an administration a crisis. joint Quality and national not leader three be selected our stewardship geared on partnerships is knowledge issues organization, be from quarter. of the part offered providers transform profit an thought the next Forum, management across responsible opioid authorities. management learners for quality the helping commission across National assessment care Forum partner partnering two The use online part includes the our co-develop for stewardship HealthStream solution Control, pain to certificates leaders We standards clinical population the vision improve HealthStream. and NQP other health and enhance national as care. This to the of towards innovators meeting XXXX customers crisis pain HealthStream Health, by program is addressing with opioid exclusively partnering

for through health is to continuum new of credentials be of to competent navigate regulation, Quality models, crisis opioid reimbursement a pressure Health, be healthcare of through the We're nature challenges the often excited increasing our shifting care and given part health the with nation's industry, Developing and new care. our workforce. the directly for the the National necessary and the lot solution confident competition, organizations and falls to ever-changing Aspenti partnerships on workforce Forum this of technology of across

deliver opportunity Our vision positively has and going quality or ongoing, the sight while the team learning virtual our in based by leader never to ever the crisis as reality like our healthcare whether never in the been industry. of picture this purpose opioid such training HealthStream the advances people, through, impact making we improve who more methodology addressing difference we're recently big transitions our temporary, Alongside to and of to developing the the our the broadly announced industry is present is program. relevant contributions care through lose are that new customers. transitions

in change it work our over healthcare like outstanding and to At us inspite for into to great vision-driven of group Thank we I'd questions. our work really XXXX improvement time, you. to As a alongside and this proud to deliver I'm as this well They're individuals an products. a face industry. take we turn challenges year employees moment delivering employees for legacy them of of some it the want for in conclude, I set to the hard and of their and thank XXXX up we

Operator

you. Thank Instructions]. [Operator

comes the first Our Blair. William Daniels question line of Ryan from with

Ryan Daniels

the new Is for Yes. nearly product, that really guys? it Bobby, has kind expanded been it momentum significant Thanks million the for upside of VR, What's there? pricing? the sales Is out-performance surprise one XX in great driving resuscitation taking the you. Obviously that the better What with value. force? drove the of What reaction? you questions. for direct flexibility modules,

Robert A. Frist

generally, issues, a general entered, the HealthStream Cross think years modernization program as learning new has for the flexibility lot budget defined flexibility, trepidation Well, allows animations. not Red development a confluence The a the the built that and a cycles. of the by But cycles, it we kind I into flexible for a interval healthcare program. a platform. acceptance effective has not to is We happened thoughtful there's and really and thoughtful modern been adult video-based using what just really XX methodology, player one sales in of in market striking more call just approach. unique the by incredible of progressive, there's because a chord of combination build of the use longer the as and flexibility That's modern we've actors, went professionals, of

a the team at team technology through been January hasn't important but of We've and the the sales noted, saw driver. recent we equation. this main have momentum as building, year as but as sales that been we it continued hasn't a the added variable, year. enhanced throughout It's to price, has of better and as driver. Price part disruptive actually last We definitely, strengthened an been lower important the to think, isn't that that it's you

three its standards and And So in or for many almost this confidence things. had team it's development. now development and a credibility. XX and guidelines met think growing XX the in the in carefully And, The are in a Cross sales application. market. months of I The the has international scientific been now Red years confluence

up think, that I take our programs. to market in offer been they new and trusted at listen to our been And new has a our those we're to the experience Healthstream importantly review a of so least customers, customers. advisor when programs it's long, we

that it we reporting related So out an didn't have we it hurdles were go. for challenge many we think never didn't And, now of budgeting of valid to customers. of just scientifically we're as the we're conservative FYI, order will going of be workforce fold that growing be to would it's quarterly in of a overall. initial valid flat end were $XX.X some is wins into just products account but, the know It'll because first have We And orders, to the but talk our our a through. how confidence. just it's to reasons original in momentum cease now and the number We've confidence growing guidance continue this sales know over by about part competitively in million value. unnecessary products and accepted established accounts the

of And reported the the products. so this legacy follow out end great the we we're this back like going product. we quarterly of detail, always to results have in through And the run year

So investor detail products as the legacy all the and necessary is for for analysts hands modeling your in community. now the

In from legacy addition, in products. approximately we've the we clarified that zero expected XXXX, revenue

look you you rather Because continuous as standpoint, model modeling here declines. and a well those from legacy products from articulated. be the declines again, should to careful and and forward to they're forward So steep XXXX,

I mean So thank products. off question. you legacy the into to But for didn't jump

the shouldn't a And of to had teams over be ourselves this think fronts. they before because delivered it product on really on for two But excellent we a I years surprise all surprised market. the great really we working launch. people

Ryan Daniels

trying regards the to quickly missing to kind that's on in is roll $XX.X multiyear the those that us And I'm for for contracts very a $XX into million. a up length Can guess the puzzle get those feel this. stream. will would how million that be So I are piece impact assuming revenue of the is I the of average contracts? helpful give guess the feel And you of follow detail.

Robert A. Frist

sure. Sure,

are now, talk And So anymore. But won't or then averaging of we'll fortunate that now. our color it contracts right again, more. four probably provide that about we're most years

starts of be right said, is recognition. recognized, revenue they four the be the course so before spread average And and length they mostly onboarding implemented the then revenue to now, probably the contract and And as revenue four of that'll can have you years.

to should that out help you inbound XXXX. in so orders the And the model from revenues how initial figure

Ryan Daniels

you I really appreciate all for Thank that it. color. Thanks.

Operator

from question of our with Thank next And Hewitt line you. the Hallum. comes Craig Matt

Matt Hewitt

Good morning. Congratulations the on strong year.

Robert A. Frist

Thank you.

Matt Hewitt

training. should testing, I First thinking you're we about about live a still you subscribers how Obviously a from beta and sense But be to or, in expect with that opportunity don't how up, when just TAMs. go VR-based could to talk know trying that? for be the market of either get regarding and typically number big that opportunity you

Robert A. Frist

is So largely ignored about approach. what's that in paradigm interesting it's that an this training

for the lot interaction, the of responding their We making the is and during existing the that professionals, the the team So, legacy in on the example, element have decision a a dynamic skills outcome. believe competence an to code they crisis is programs dynamic of and the individual. emphasis of essential

important or may essential or In very be time relevant over statistically to impact. it a fact, prove

the it a does allows simulations general, to what stress, aligned it of be the environment and VR, individuals, resources of so experience of interactions And realistic multiple in environment. for with the

is in the different equipped situation. ER in way. the So a than equipped It's field hospital certain

So it of learning. different for type allows a

is evolving in PC close a new. a for rapid as we to the what $X,XXX been I'm no the months making that six sensors And emerging we self-contained And technologies about is run I VR as is physically such announced over required ago, empowers monitors in spatial in a we that headset. it two into spatial as it. most most There everything hardware dedicated no excited in in that room probably Matt, effectively year, just with sub announce is new a think excited pace years. Now, a are up development did is PC, plugged a dedicated this almost that speak, headset, we're room, what's and set very program program to The room. little a has

that early And so we see now can to uptake. soon think like begin adoption the some

new a that methodology new though a modality, component over trainings All clinical situational growing all technology. awareness our we're And training, that but have story. and of will a it piece resuscitation not that or for is We is importance it the excited critical. a now have time just of new dynamic team forms think said

its it. would will require paid. and to And dawn and kind how view fast they be items be That early available and it And But modeling And now. whether you think our pilot at as wouldn't the of a but progress small would and extraordinary for not throughout sale it on entire in I a provided report I assumptions market. change I to models. we're the guidance this conservative product training to impact this management you're line will new or guidance methodology. financial as We'll or and an the add era are on training module. front stick as you. going maybe for with be down adopt adoption opportunity We of of it's a of And programs relevant expectations said, putting be right for the discount pilots the There's that a revenue new the of some to adopters, we've and year. that glad

think in this professional training every method to ultimately, that environment. of should that is So, I essentially a be every relevant

Matt Hewitt

that's helpful. should Okay, this then thinking how progresses? apps selling that. we And the as regarding CredentialMyDoc, opportunities for be about year Those cross

Robert A. Frist

what should think How we about the?

Matt Hewitt

opportunity? selling cross The

Robert A. Frist

in, small they've niche of tuck a on I the great that's think audience. a got a particular focused again, market. They

the it's, in to synergies did cross add for sell how to hStream bring we of for a, time And really XXX be now. cross it now access main a I can little us technologies or selling opportunities. it the exact to, model more it become consider customers so, nice wouldn't technologies was take time thing that upgraded us the The three offer. us. out or we've other and Give some to figure we're over it'll like done to But niche going opportunities migrated for

So, stick kind its for revenue, I now, model. $X.X Scotty an again, We of million. I about indication gave conservatively with of And did will just kind of that.

Matt Hewitt

hStream that up model the or we regarding progress this the renewal on contracts that obviously, any Thank be then Are continue to last you And you. customers new trying year? there converting for large for platform. one, watching for are to to make Okay. should

Robert A. Frist

No. I converting necessarily, don't subscribers. core yet. think individually the that in existing modeling still just still is We're HLC foundation useful

So, also are well. in new of conversions, as a these additions coming part of but large are course

you We the we the challenges have into gave non-renewals, for expected renewals our non-renewals. renewals, of and impact the have financial factored and guidance we opportunities overall

you up guidance we've given to believe it. to So, model you sets financially the way we accurate in

Matt Hewitt

much. you right. Understood. Thank All very

Operator

you. our And the next Cooper Raymond from of James. Thank Andrew line question comes with

Andrew Cooper

Hi. as any through up the go sort covered of as was of Thanks one. about XXXX, as progress so legacy the rolling the just and about lumpiness we quarter XQ and margin, for of really I'll there of any noise new obviously we obviously a on thinking of we sort down, think rate course should from just through a here continue think noise question. out resuscitation grounds, about we of be floor that there lot sort gross there of Is to I run baseline But, or strong. as this numbers the kind qualitative think could or a front? ask the the is about is some quarters, sort where be especially think We've the

Scotty Roberts

our also and guidance try in you in be that business to to margins in products products the given and higher our Yeah, revenue driver Andrew, rolling margin biggest improvement margin continue coming XXXX to legacy QX Gross impacted the will instead on margin your of low that. and the by question. have what were margins decline I'll the a of going Probably a gross expectations we've improve definitely is for is low guidance Scotty. into we're this off are of that higher blows combination of introducing which margins margin factored and off that new some product product in. answer

to into there's benefits first mention, would operating occurred that that's in the and guidance also us event I talked give I that to margin. gross quarter going about that, a income

in our margins create So, there's reduction will that we reporting will that in a gross and costs $X.X million in or It are QX a increase revenues. benefit QX.

the is see, end of into I year. QX to XX% where we're will the margin expected off model I So, but that think wouldn't getting expecting range the likely

Andrew Cooper

And Healthstream obviously of that like off the entirety potential a the kind from of we Or helpful. Okay. perspective, is scale Is I a these XX had bogey from little from kind think product 'XX. margin on sort margin some and what could sort of continue new at of to longer start That's goal think look as the there of as think higher we perspective and still once of more for rolled the that get of said that higher bit with term about these creep out for the some strategic to then, a newer as a to legacy further resuscitation? term to you you've longer products. of of

Robert A. Frist

you that the we I like margin. our products Yeah, interacts helped product where resuscitation a legacy the new investment develop, we dialogue, of think of role development have positive impact believe the we help impact with million that in help leader heard $X some some million, VR our content gross should to training on dollars from increased $X -- team gross potential to put Obviously, margin.

at second would So said initially said we say we we've point, think which was, what I crossed at XX% the safe XXXX. We the we do XXXX. for this it's over think overall, half XX% to of stick to

we point. year, in we front to in think be as XX% want get XX% that as that far out I further, quarters XX% of without plus reiterate should So QX think of in to XXXX. And around probably XX% that's next early. for believe Will or minus range be going should couple I any it But a think you XXXX, a modeling as we about ourselves.

Andrew Cooper

helpful. for Okay, follow it I'll up. it. Appreciate up that's leave

Operator

question you. Vincent Thank comes the our Research. from Colicchio next And line of Barrington with

Vincent Colicchio

I'm your from Bobby. uses of prior been what question of any is, competitor And from traction? response has Yeah, the resuscitation curious accounts products? also it early available another were portion Laerdal

Robert A. Frist

both and it's mix nice converted customers Yeah, so and new large the small. mix a of and is

we big some some and wins had So that were wins were new. big that conversions

dialysis was this head and earlier, head account. complete of locations. a services huge new of That to provider For hundreds we a conversion conversion that existing CHS example, announced And to a an account. that of and global example a net Fresenius is large-scale of win, was hundreds percentages

and percentage nice legacy. selling a don't really actually acquired nice think really they balanced I was mix without are disclosing So know newly it two and of Again, exact It was because a those example a opportunity. of I growing it. and

Vincent Colicchio

and the response question other then Yeah from Laerdal. was been has there competitive any

Robert A. Frist

distribute as a we know customers their them But operational our market business have good a in are do products some into agreement as we that that relationship they customers with compatibility partnership you so if can There them. always and place their because or be to a available products them. there as benefit sell functioning to from ensure that and irony We competitive not responses our have select do we're or well well.

very their base. competitive great these delivery them. so, to up the to And facilitate large And is here response to programs customer we're a of

Vincent Colicchio

Okay thanks. Nice quarter.

Operator

turn I sure call you. further any the will closing I'm remarks. Robert no at Frist to Thank CEO time. questions now over this for back

Robert A. Frist

and listening look is call. the the faster corner. for reporting of call through you this to next you Thank your earnings rest comes the enjoy right quarter facilitating We around and next the day. Thank forward

Operator

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

Mollie Condra	Vice President Investor Relations and Communications
Robert A. Frist, Jr.	CEO and Chairman
Scotty Roberts	CFO and Senior Vice President
Ryan Daniels	William Blair
Matt Hewitt	Craig Hallum
Andrew Cooper	Raymond James
Vincent Colicchio	Barrington Research

HealthStream (HSTM) 19 Feb 202019 Q4 Earnings call transcript