- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to HealthStream's Third Quarter 2022 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I will now turn the conference over to Mollie Condra, Vice President of Investor Relations and Communications. Please go ahead, Ms. Condra.

Mollie Condra

events CFO call and Finance President is contained of risks statements and Forms and the the that may third for in results I quarter also other call cause me contain in that morning, to to us and Roberts, those the statements. Good Accounting. XX-K, you remind could company's future HealthStream uncertainties Senior materially Jr., actual like with are Vice our Frist forward-looking projected discuss XXXX differ forward-looking and Chairman today future of the results to Information SEC, A. the that performance our and filings risks XX-Q HealthStream with would Scott you. could materially concerning in earnings thank release. from joining of and you and the this regarding that including today conference CEO Thank conference involve differ factors and the those could statements to these A. Robert results. from Also forward-looking cause

information to Additionally, this adjusted to the as reference measures supplemental which and call. in we may EBITDA, a EBITDA earnings financial HealthStream issued attributable is may that measure. included table net to release providing adjusted income non-GAAP reconciling A and refer we is such on in yesterday

Bobby start, that Frist. CEO, with I'll So, our call now the to turn over

Robert Frist

Mollie. you, Thank everyone. morning, Good

by growth each based third QX year. of up X% with in which quarter when is QX the we We highlighted to last in increase to some next forward financial Looking third highlights show X% year. million, line And compared guidance, record of earnings to of top revenue quarter. our earnings revenue we'll to expect in compared quarter our quarter the third last on $XX.X of the release delivered our reviewing And XXXX of the call. start metrics

compared want Net and subscriptions is have driven $X.XX, million, sale with to developing to million, was and improve by million, $X.XX, the EBITDA held here everyone providing take which from continues on interest. company of additional was year. half I HealthStream's compared XXX% to to at organizations With The last XX%, the quarter. income X.XX healthcare adjusted ground $X.X to XX,XXX part up So up equity million, that the people represents which care. minority to ecosystem expand. our we are in a hStream both care year in quality second successful is it's we're mind, in a deliver same back to a than moment dimensions all $X.X of in since in that rates financial support now a which income higher progress $XX.X the Concurrent our in the X%, last Operating fun up same offense is subscriptions business. million core vision EPS compared which our be and the was and growth by half. health of to $X.X last an the to period both due period the to was first

to software under are credentialing contracts Healthstream SaaS recurring means length. basis company average That subscription developing five sell fairly our through technology to and in a the solutions. on healthcare healthcare and First scheduling revenues years solutions predictable. workforce a foremost, dedicated these based which is and three We

and way health million the users software focused of resistant audience. fortunate define little We are on our about SaaS end are workers, no applications we be of care profitable, and is comprised our health recession solely more we to markets to around Those the We're one of care, debt. XX.X have the solutions. also professionals which

have record inorganic who executives organic We of and are flows strong means. earnings generating proven and track team cash led both seasoned of a through by

have and Investor application have is Day suites, emerging everyone last such month, Healthstream's Jane, program solutions, developments to held acquiring such most central created our company new as as other patented of we today. internally developed and innovative integrating reminded But the exciting We platform, companies. in that the we CredentialStream hStream many through

example, For and leverage gives will capabilities, identity various hStream's that management enable proprietary between applications. us interoperability third-party

for participate to strategy healthcare our create we us ecosystem. will in powerful believe new also professionals business and will increasingly new platform opportunities enable which to ecosystem, Our build ways

to Day. in these and evolution, those ongoing Given term during I objectives we want reiterate today. developments confidence medium And Investor our our objectives our announced financial

on revenue mix grow which a of targeting standpoint, First, the organic over year from we average, to next are growth. inorganic will and be XX% a per years, X% to three

we Second, deliver to to gross working period. margins XX% over XX% same time the are of

process. Third, obviously, inorganic Unlike on include objectives to and A. Remember, period. guidance, that we'll is are less these area a credentialing predictable, application turnover, Roberts, a that we example, the for scheduling. our deeper growth. EBITDA financial of to higher margin planning Later focus strategic learning, our suites subscription these for for objectives growth, in But than call, aspire three Scott results. about the our guidance, dive organic deliver like XX% into over XX% that inform a which not they talk now,

Scott Roberts

good and All right, thank morning. you, Bobby,

was was X%. And and unless $X.X period we're at otherwise with in same $XX.X the was income per came Workforce was the And Operating came quarter. year. at in and X%. are last million at noted, $XX.X which $XX.X Net X%. the up XXX%. of against $X.X up comparisons revenues Solutions Earnings million XXX%. we're share million, $X.XX up and $XX.X XX%. start adjusted were highlights and million Let's was X%. income million, revenues was Solutions from Provider share, up up Revenues financial per up for finally, were And million EBITDA

pulling indicative growth growth progression steady our first sales, getting of rate third X% the that is the an we've the growth contributing earlier the revenue the was the last an half of of height The to and were our was the particularly to compared with the a the also of during the the over other revenue year. second new of year, legacy experienced months, rate pandemic, and quarters rate consolidated resuscitation of bookings Through past down run nine and line is which improvement year. first in X% in since in the This offs year. expectations comps growth improvement some half in

medium consolidated be decline expense earlier. compared margins XX% quarter. last products sales was margins higher expenses in of Our XX.X% are and The revenue in half year. increase million due from mentioned development Mid partner year's objectives, Revenues to and revenues and commissions, Bobby primarily increased also Gross and year. were the XX% gross anticipates a Sales resulting sales $X.X within Operating cost as of excluding pay first fourth or in to combination XX.X% the to in the which a line third the forecast marketing the we marketing up increased over the by travel. was mentioned of for approximately levels, Bobby will slight already X% in last X% increased margin categories. earlier. growth quarter during product staffing compared royalties term with quarter

compared last year. over and been steadily quarter $XXX,XXX expenses increasing quarter, business travel have this $XXX,XXX of we're about to in Our third the

many will we closure that our Sales we've made are rates related trade in pipelines industry and As site return investments to past the the results to visits compared sales travel through are expect events. up at rate are the the with along positive are leading customer couple of the and end year. shows increasing years. And year-over-year. remain of and The increased, marketing as of bookings improving current

Our also product were costs for increased XX%, of by development. capitalized labor development software is expenses that net which

reduction. costs million and about there declined primary year quarter. drivers over two Our by increase behind X%. labor $X capitalized prior were administrative expenses And the General this

office last about for resulted full been places adopted decided our couple them. a expense company. footprint up is million office third going and of result savings Healthstream to reduction hybrid the for X.X $XXX,XXX some renew in year, policy the work the office savings over for years, in quarter year. it's expected to as leases for over we in our in in satellite well renewal We've That of not past the space place to reduced came and employees First,

our market approximately space to We recently needs will space one-third light to in evaluate continue of and our of decided have office national the in subleases. our model new for headquarters

not share year's per quarter quarter. just of resulted $XX.X we've The earnings Additionally, up we Adjusted tax have an in did minority held was $XXX,XXX our were year. which of sold impacting EBITDA. and interest million $X.X costs G&A, approximately $X.X income minority is from quarter, calculation of we years was the And gain, that third and acquisition for increased that pre by mentioned adjusted gain for third a service million the and within increased $X.X over third million. we over X% recognition $X.XX. proceeds excluded during transits of seven and that I was net the last the the from sale the investment last million clarification, by from EBITDA And received about had of

the switching We $XX.X which million, million metrics. sheet $XX.X and last quarter. with up to ended balances balance is quarter of the since cash by Now investment

million days last DSO $XX.X year, have deployed cash expenditures, During for not cash did were operations were million million million of this to $XX.X and million free $XX.X repurchases $X flows to a from XX was we $XX.X days basis, to-date year. compared last On year cash quarter. capital the compared XX we to quarter, and year. share any flows compared last

by unless as no of remaining program, plan, million have and had $X.X repurchase said, share terminated XXXX this expires our we company. March the earlier which in For approximately quarter, I we under the repurchases

provide our follows. With guidance as expectations quarter ranges out me year. one we're let updating as our we Now, close the review guidance a remaining, of

million rank and expected range million. We expect million $XX and Adjusted EBITDA to range X between $XX.X and to revenues expected to $XX.X $XXX expenditures $XX.X is consolidated between million. between and are point million capital $XXX.X

we approximately over to the last For expect quarter, period grow revenues same X% fourth year. the

year of EBITDA half. for is of our adjusted direction, quarter fourth pleased growth the this X.X% the revenue the Despite expect half also we've range to first XXXX in the from revenue due positive expected X.X% reason the last We're our underperformance scheduling. is We that in that accelerate year. primary second lowered to to guidance to of improve

During software favor to of of the SaaS year, half decided based we solutions. curtail our subscription legacy sales second of the in installed

transition adopted I for also have your to That's intended benefit away for time. the over SaaS believe will based to decisions term. scheduling all you. shareholders long over customers, We conversion back these a And software and you from it turn We Bobby, the Thank installed company scheduling strategy customers onto today. solutions. and I'll

Robert Frist

Thank you, Scotty.

of each of hStream Those suites are some are I'll They're is of the three highlights overview Let's discussed application I by to put turn and of these by subscription each specifically platform a workforce. brief to earlier. each. SaaS an them our and healthcare application designed application. made scheduling. a from up based, learning, And Remember credentialing suites. that and our for increasingly connected hStream platform technology each informed strategies powered our of

solutions. is established at let's First, learning, and well a look encompasses of which broad range

interactive this Center market leader Learning acute deliver product Our Learning marketplace include third also Healthstream the including continues as with Learning added our customers content in With can positively our our and products Cross, an products. ecosystem partnerships. GRC the and learning surgery centers Examples utilize benchmarks system the presence in past market in platform. partners Learning utilized our of Marketplace, learning added SafetyQ quarter, from approximately and year, American XX continuum only contributing flagship we've the Red adopted safety AORN includes SafetyQ, proprietary enhance national EBSCO, subscriptions which growing Learning diversity the care a their the HealthStream has marketplace solution available proprietary be healthcare set our facilities. Channel is skilled In impact in and over and our Center, and the by to and ambulatory through the and Healthcare utilizing our compliance known SafetyQ. management programs many of the others. to to most XX,XXX nursing leading new XX space in solutions Center,

the impact time Credential credentialing the their reimbursed attention our positions. SaaS cycle the minimum revenue We and for to products and Let's which we Stream that positively believe rolling Stream. we credentialing, that the getting best we is XXXX of by combine between took acquired product work. suite, We the company's software features solution the credentialing and onboarding, and our assessing to on to call It physician acquisitions form best new that them customers market from is turn hiring towards allows XXXX. privileging each occurred a absolute of credential physicians for application

appreciate the remain very Sales CredentialStream on investment, customers provides. Our of that CredentialStream return strong.

remain In working you and which of company. strong I we of customers backlog new implementation until we both complex substantial. solution three the on that backlog obviously, know, our are for so work not fully fairly we do fact, sales we four, selling per into the implementing process, will just ratio and benefit could way implement deals is automating a tilt together. and if remains of three bit could instead both a And this week they We're little and revenue mean, our win growing implementing the kind Generally, more week. implemented. that recognize even customers as

that. on working we're So

through bit best a in of systems like set why as in time take value, it's vision, were and on believe we clear journey, to it acquisitions, but we the And those test, we've this of deliver in them let's talk going little described a is scheduling, the hypotheses of scheduling all be have marketplace. will which things us XXXX. solid we develop to the credentialing. we which Finally, a to formed three a we about get have completed can deliver can some But journey market, which

running we in scheduling same ran the successfully So in we're playbook that credentialing.

enhancing is ShiftWizard and scheduling, elements expectations. outperforming growth our the our promising scheduling already assets. of plan with discussion our continue from NurseGrid with the ShiftWizard, a highlighting other viral We best we to SaaS Fortunately, I'll scheduling end sales by application. our have which Solution of continued

of and active the we manage it satisfaction NurseGrid time For acquired and over look by professional their calendars, XXXX it the Perhaps NurseGrid month one to nurses centric market into any it the in is their that platform for shifts other impressive, want the every pointing for than Stay issued, Center product. Cross application were XX,XXX our nurses to a Learning NurseGrid, to supports coming on company. strategy users XX,XXX signed in three just future week time. were that on were approximately our tuned I the subscriptions consistent the to and their social colleagues this the with not engagement the has nurses monthly Store. XXX,XXX -- metrics be the it. early forward now, of our opportunity of active more application CredentialStream. agenda the level do alone uses we contracts to the that the to third steady today. and of more for and forward We new App believe with first reporting and show of became NurseGrid it doubled innovation. Over throughout from certifications out months. look users are I exists Apple's by monthly on acquired those In nurse on swap plan per for And ecosystem. in just believe application these evolving American growth We're to our contracted. more the in generally growth Red the dynamic -- I we solutions peers. close log of quarter and provided XX,XXX more few number since our And our new growth today continues continued

operators, we our I'll Now it back the into over quality so turn to sessions. Q&A to head can

Operator

from Canaccord and at sir. will Richard first you, Genuity. Close time. Instructions] this Thank question session will question The answer of [Operator Our begin come

is online You open.

Richard Close

clarify the there. workforce the implied or questions. Yes. changing just want Good the for I on guidance to morning. Thanks

the the it's side? licensed and the software, on scheduling solely old products, related that's to just selling So not

Robert Frist

of And to there prior business. the little It the which that is software the the the as side. is biggest in would characterization, we SaaS also or coming from scheduling one convert to elements quarter, trying in of churn business bit the be legacy we're a mentioned

So a in I'd scheduling for the business. projections in few say, general, just variables our it's

Richard Close

that or the we to I And X% the like on Okay. set the growth respect then credentialing With it. to Solutions guess call Provider X%. product, should

if on think the is credentialing long X% I this rate what But think term business? implementations. to at I implied know quarter, look And is you in third with do guidance the year-over-year hit the up X%. the you down growth the you

Scotty Roberts

of outs. and And provide organically. to the the to kind therefore tried objectives each objectives, we be these as applications planning application X% puts we've process. suites, Well, And our X%, all will. and that to to try And what our these inform to ins kind answer that's get our of universally provided across which sets, of are, the goals calls you grow should would

So little more different is maturities for churn. somewhat of each and the businesses have a

growth, have high implementation are but backlogs. Some

that in So process and then the customers business, each scheduling of both new migrating customers. in to retaining model, introducing legacy the we're very and the whole subscription and SaaS

have objectives acquisitions X% our history with for time, all guidance different our although collectively, we've of puts project will their this is different for but growth next growth to have And inorganic from push an concept, the different also organic to three-year inorganic plan in over communicating for to So -- growth period. and the indicate and the time, contribute that committed our component, way X% And X%. first over calls, the objective, do ours we're we reasons, XX should them. then all should again, over X% would that another objective for slightly addition, they we

X% instead but And I they're and of it we each to different we'll addressing there, for say that provided an believe as to that different objectives are We'll reasons. X% acquisitions like just organic we've XX%. less some collectively, stages, application be in as growth. X% we've targeting So, of to we've X% variables got suite, or predictable, mentioned, our talked, to there's XX%, at because

Richard Close

for Okay. about into article, you a across of different I that And last week credentialing ROI area, questions staying the VerityStream. -- in maybe customers. and credentialing, some There bobby, think, the by you're of delivering talked maybe called terms the was value talked about proposition on vendors stumbled class, that I in that the

related So, do that? comments any you to have

Robert Frist

work research our describe solution to all think share they've continuum our we're because of gaining especially that we really We And, the breed, And got believe times together in more process. most I products being but we're the to best have We way some have convinced of probably are handles components put software from shorten market both the Well, do. by competitors, privileging when proposition. displacing the suite more that does we do better. as for that confident onboarding is the to all a of revenue the value to physicians. process, comprehensive

best in at during enrolling process, we're think -- So the we're privileging it. insurance, just think the credentialing and we we

at feedback work enterprise over of that we're our from So also we class imagine rankings the level, time, an confident get themselves I And because value out, our those that's very proposition. customers. will

Richard Close

per you're signing And Yes. week? three

Robert Frist

new Yes. a a call from coming And somewhere. That's are those logos we week. three, what

So, credentialing insurance the acute market we other where the feel really market, strength. market on, our some their their good insurance physicians not say, the That's now. for focus In vendors of on focused and purposes. we're our care credentialing

credentialing which Our the the they're acute of in for especially in workforce cases, focus, market. you is our as is in know, employed, suite where care are application all many on

Richard Close

Okay. you much. very thank Well,

Robert Frist

each they're an in they're customers some with very speaking discrepancies there how our week. is calling know. their So getting Class function, and don't but data. are be I choices important their who might

Richard Close

to thoughts That that. just your fair. wanted Yes. hear on was I

that. So Congratulations. I appreciate

Robert Frist

Thank you.

Operator

next for Thank you. please our One question. moment

Ryan next Daniels Company. come & will William of from the Our Blair of question line

line open. Your is

Unidentified Analyst

[ph] is in This morning. Thanks taking my good question. for Ryan. Jack for Hi, filling

are targeted can with your the composition logos core the the expansion? assumptions over new And Looking around to client or growth about years, levers and offerings? same objectives the at of you next growth you product thoughts thinking speak few that, of between growth your that organic each across how underlying three

Robert Frist

we've we had little slightly Yes. down the a talk It's and the direction there's into out these but That's categories. each and leaders market broken a in is emerging many stages, three what great And there different scheduling area. third the vision so as area, because first for which solutions. as bit difficult, two maturity

assets incredible have in area. we So, that

strategy objectives. a So, first of an upselling. it's cross-selling grow largely and our base organic. an that by targeted level at adding all, characterizing it, growth of We Its subscribers organic

we core with become we have So will have we're of as the ecosystem management hStream that into as hopeful is lever the of model levers other. occur for of they once Increasingly, expectant cross-selling technology applications and shows platform. account customers integrated really get they that or good applications the a the one the more the one more frequently the other integrative

journey. a architecture, it portal, there'll think also really to as our a interconnected growing on for functions pass Investor available in a which is greater systems we're interoperability lot customers. applications ERP more beginning we're Day, our they technologies. of along to hStream shift ensures API and And the our value make an larger an in milestones ecosystem of which so, we proposition a be the And among and through the to basis, early between the that way, becoming means suite, of symbolic become But example, fairly announced we each developer our that again, exciting

is going the kind facilitate better symbolic to we're we launch reasons. capabilities, selling be moment leverageable, our shift which of a integrated, and a think platform a should more have a of service and portal, offering ultimately the become great So means more more of developer cross as

If also you be there advantages competitive example, for should buying learning system, to system. have, our credentialing our

in breed each those the lever areas, that So, kind best as two, technology. they areas of kind and we're hStream that using other the develop just can evolving of mature instead of being three of of hypothesis

been really excited the We've to team. sales that. we're adding So about

sales we We come over years So our targets, the backfill in some team had try including in to to up sales. turn to out, come whenever with to many we figure more pandemic. had we've

sales finding both we're sales which stronger our outside par team, any our in in back product. given acquisition our and at programs ecosystem up better think we resulted again, has marketing a getting on for ecosystem, customer are to new opportunities, getting the pipelines, So existing

cross-selling, more show benefit are have last we show So been levers growth, why this all deliver able organic of to half the objectives, year. parts kind those growth better of management, that would higher rates and pandemic, between -- which customers, say account of and examples the applications through those we've of in first to

as but all year, those can of those reasons, year So given any And may be a over inherent do margin those are that's it our three we're are excited there in. little profile is, that or expected again. gross the boost for February. our objectives. guidance. in on coming see profile aren't ranges in And period, a Again, every that above kind we say We'll can't the you below guidance

product margin say, so, products higher inherently new of of we we're And also history products. gross long have say, believe that and building mix, our types our an and partnered the

to mix next product should margin organic three favor the higher so And the continue years. over products

as so excited that force a well. earnings as we're And for about

Unidentified Analyst

you. bit health talk the year, market? system headwinds visibility XXXX at that little still you persist point the might a Great. out the looking Thank given level any in into this Can about end in

Robert Frist

say the in making deck. target we number I products, set general, of our was for have that cite course, based, gives sure Yes, it And of of we us it I'd investor yourself we're to percent just from Scotty, want from number, lot deck, revenues he's the we and a three And visibility. if no, were to our I I five-year contracts just majority SaaS the refresh -- while when could know really it think subscription our you high.

is quarter through really fourth third season. is an the the end solid the selling important feel we good news of the track quarter. Now with But on pipelines

and by racking. setup of get those products fourth the Because year of cycles revenue determined next say sales you some starts lot the implemented of second of half a the quarter. the so, And revenue know, implementation is for

So track revenues need really percentage feel have to year are That of first and months huge fourth second five-year we strong the feel under the the base contracts. a good to already our year. on of quarter about next said nine of three to half

a So next we have visibility year. high into very

Scotty, So additional any comments?

Scotty Roberts

Yes.

trying the we're subscription to of mix XX% our are Bobby, kind what based. of think roughly I highlight revenue

remaining speaking, of I how it's performance four the I mostly obligations Then generally if might chart, visibility you're sense are, how years to contract, think fairly would behave currently what predictable our get of what's stream, asking. you sense what under give looking have But subscription Investor probably in get one deck you point kind slide a we because Day's a visibility, based. to say, revenue where another five of past that and that you a over you're revenue the can kind see for or you of indicator. much

Unidentified Analyst

you, Scotty. Thank

Scotty Roberts

you. Thank

Operator

for please our Thank moment question. you. One next

will Vincent of from Colicchio Barrington. question come next Our

open. is line Your

Vincent Colicchio

nicely. backlog implementations? with churn clients the frustrated from growing said, CredentialStream being and that it's the backlog there you Is of been bobby, or Yes, any pace

Robert Frist

I That's text for much them And acquired that was all that think to mostly can platforms. runs the to. customer the there's customer GM And question my at the or base. legacy we've that Largely even that really loss really I churn literally base just in don't But new they kept and products very waiting reply. that answer is, migrate intact, excited President. we're I'm funny, that his getting texting the area, about

the week new is are I only logo transitions. those But Probably half logos. half and our number. So think, three transitions, a meaningful are new winning we're number brand are new wins not the of logos,

of provides material and any So credentialing. clarity, hope base churn but measure that the no, we're not in seeing business

Vincent Colicchio

sort do of Have long And identified there? the take? a or Any automation will you and it potential. how you mapped sense timeline on out can what

Robert Frist

and Yes. roadmap, up way, just up. gone they've by sales rate The has on And team the it. has the implementation gone working been rate a has

in even year the better, last gotten have at we implementing. So

cycle. So interesting, well getting, better also the executed thought a take we as and I'll for That get it's implementation out we're which problem. well they've just that roadmap at said, had more, implementing, we're selling improving

begun a For pre viable those certain example, market are fully purchase, to we've context that seated implemented the only system. with functions functions, really in see of the

are works customers they the also pre the so really with implementation the before do And some platform, of even beginning both amazing. new experiment the to software, but which is buy

figure we so approach really trying see to smart to And out. a

it migration. complex think a I really was

about XX credentialing if as upstream you are applications. think integrated these and many systems as with So, downstream

in other well they're but vendors are go And we as as integrated, with sometimes when are. or not each as those four so, And win, our we're as powerful we integrated as flexible, vendors we many replacing and suites. with as are fairly

to got this is term customers adopt long also remember, which you process. have tremendous our the requires a complex will framework, So of some benefit. to It

For customers libraries, instead to privileging our which they of privileges privileging moved data of adopt model grant as each proprietary our library and privileges having written. hospital when our system example, our they adopt they, databases provided against we privileging privileging to the form a and a is credential them, proprietary stream,

we the And we'll common profile into data unique through provide created of so, -- industry of credentialing insights we're of and customers ability have getting sets, use to have and which the the kind own.

increased buy management the rate. they implement and an up to done enterprise and is this before important change overall you software. doing critical, through about remember, So, big doing even we're some great a and the customers has the just we're get be coming I'm with system, with ways issues try precision. have we're to And work really of model. And And to that clever to enterprise, that's an excited

can to months. in be a used that year. better the shorten We're And year. do months So six to down a cycle take to think ways finding I we next and nine even may

process is there's process change customers, at behalf that through a of complicated coaching getting it and is requires them we're improving. that better The management on yes, So roadmap. But a process.

Vincent Colicchio

continue in senior along salespeople to terms pressures? Will any you in overall force sales hire has a market and come availability way, of And been in the labor inflationary change QX.

Robert Frist

working are lots this at have pressures a to We journey of and part we our an be inflationary incredible exciting people development on think want there. HealthStream. really strategies. Well, of to reasons and hard We're culture retention for

say really well, I'd those headcount we all fairly last people. through So feel, increased Actually, quarter, we're variables our managing overall by we're five of well.

with just now of new little the of bit. hires workforce, So offsetting stabilizing kind size a right we're by attrition, our

of it's that we were And a filled much and the we lot employees, say but net kind a need. seats lower. So growth largely and sales I'd of

holes so or don't maybe we ago, a ago. or six year big in sales like even have organization, the And months seven

can we've I as at tell they now point. effective, learn expenses, I staffed So the fairly I pretty got feel think ramp more to well. when speed as the products. them this But make hosting feel -- HealthStream all you And managing largely, well up

say some example, Now in we our some growth. footprint, while office have occurring, for areas reducing and inflationary areas we're increasing, trade-offs other of compensation

sidebar, of So in we've just say, in, where as of escalators too, to engaged as work we can that, see our pricing automated study pricing a a a contracts. result our models and

deal to for taking areas right the our answering questions. So handle and we of a you inflation a of lot feel are have to lot issues. work steps both. teams I do the with in to workforce my Thank But

Vincent Colicchio

Instructions] Richard Canaccord moment, follow of [Operator Mr. Close have please for a And question. you. Genuity. our we up next Thank from One

open. is line Your

Richard Close

the for in of decision the softness quarter. made those year, respect to up I the had scheduling. maybe decision first but you not offer forward? churn Was some legacy during question. the Yes. was I the just third follow know on Thanks just in the curious going that and the legacy half with

Robert Frist

we stop. and of let's in had that the had Yes. early That strategy. selling, did just focus third occur some call about quarter, second decided, on also think we the And migration talked had softness we let's just in look, kind after I quarter

also we're incentivize migration application. creating the programs So SaaS the towards to

anyway, to software. active quarter model. very wasn't is selling in selling the It you model, our installed third made decision an which So stop license the early well software we as old both, the not know,

to So migrating we're incentives people and that some both process that those just consider and instead meanwhile, said, our the look, counting on benefits account just launched it. benefits right we showing focusing in sales the migration. of on our teams and was of let's to in management providing selling of okay. creating organizations But budget, our And to stop we get

want engaged, And supporting migrate. to them platforms to course, to also also keep of to connecting reasons them new customers we're the the while formal and giving maintaining all legacy benefits. now So

the say, quarter, migration active stop and to decision I'd trying third of the to the both active So yes, changes, the program those installed sell are software.

Richard Close

respect Okay. there with what's talk Is that deal, any provide? average an timeline can metrics you a about? signs respect go there commentary maybe, can to to then, new the And live? you helpful. with is credentialing, when That's the Or just to like credential someone

Robert Frist

what post try confident I probably find way is that tell ROI the you, on our, good areas really run both do papers to have and And website. white analysis. we'll our teams a to those that those I'm

at we that in sales cycles the things So -- the you way and find when as a of frankly because time time cycle. call a you that revenue it's can to guys, put what or out we to time process. least we of We'll kind implementation explain implementation revenue. to the profile, use would some the for see the

I'm things there's or least both them them. as they're And and going available. on to confident we you on white at two papers So publicly We'll on sales generally materials point there. have kind try research to and marketing of of

Richard Close

flow that terms final question months. a of Okay. that target or the cash Is very a be sort -- solid, as sort EBITDA obviously, maybe for some target, thinking first through be generation Scotty about yes, adjusted there? great. should that'd nine there you of cash be anything would of free percentage of we And flow in free Scotty,

Scotty Roberts

possible. keep do Probably nothing to quickly want think was for years, as trying that for. we're obviously, fairly past our would it up that metric to moving to as $XX guidance flat two million $XX best And million. to I the around But, provide I

some see as next to So, benefits we provide to about metrics as this goal go And improving as that generate continue and obviously, it's possible. good But into free the we're year, is seeing cash improve much think to that come to flow through we'll that metric. and our year.

Robert Frist

In and kind areas strategies software our growth addition, leadership really Richard, I'd capital sure of going of development say, right now, we're business. to a allocation based make our our into very are program and initiative capitalized that our active

our growth the example, calibrate created can our teams products, to So management a and software. capital product carefully software know developing approach legacy much company we're our has we our how classification products and system, making new our for sure where versus and and that we older maintaining the

So the more expensive, pipelines us at experienced focused cap I our we in out leverage software development in on would putting which more it into to expect into ratio. right making getting and mean, do, turns our can have cap making the allocation, get we're and sure them those programs you and software managing costs, more we're the I'd money say we good right products future, really of sure

in addition and think what Scotty of better process, to mentioned, allocation the we're So getting our I kind better at managing capital it.

Richard Close

much. Thank right. All very you

Operator

Thank you. I queue. And to to I'm back conference further turn A. closing seeing for questions would the remarks. the no Frist like now in Robert Jr.

Robert Frist

us you see driving you, really reporting developments. questions look are exciting I on to offense, to outstanding not everyone. employees say defense as next back our I on analysts our that delivering those and to results anymore. and for story our participation, everyone, these forward from Thank that follow for quarter Thank

and look in keep I results then. year sometime let's you forward think I to work We'll the So guys end see great up February. reporting the

Operator

This participating. today's call. conference concludes for Thank you all

have pleasant day. You a may and disconnect now

HealthStream (HSTM) 25 Oct 222022 Q3 Earnings call transcript