Healthstream (HSTM) Q2 Earnings call transcript Jul 23, 2024

HealthStream, a health care technology company dedicated to developing and managing the health care workforce through SaaS-based solutions, recently held its second quarter 2024 earnings call. The call was marked by a positive outlook for the company, with CEO Bobby Frist highlighting the company's financial performance and operational progress.

Financial Performance and Guidance

HealthStream reported strong financial performance in the second quarter, with year-over-year increases in each major category. The company reiterated its 2024 guidance ranges, citing a solid sales pipeline and promising growth opportunities in its core application areas: learning, scheduling, and credentialing.

Credentialing and Scheduling

HealthStream's credentialing and scheduling solutions, particularly CredentialStream and ShiftWizard, have been instrumental in driving the company's growth. CredentialStream, a best-in-class solution for credentialing, privileging, and enrolling physicians, added 34 new customer organizations in the second quarter, with 65% of these being new and 35% being migrations from legacy applications. ShiftWizard, the company's scheduling application, grew 34% in the quarter, becoming the largest revenue generator in the portfolio.

Platform Update

HealthStream's focus on interoperability and platform development was another highlight of the call. The company has begun to see the first examples of interoperability between its applications and is working towards key development milestones on its HealthStream platform. This focus on platform development is expected to enhance the company's offerings and differentiate it from competitors.

Challenges and Mitigating Factors

Despite these positives, HealthStream faced two significant challenges in the second quarter. The first was a timing anomaly at one of its larger customers, which resulted in temporary headwinds for revenue growth. The company is confident that this issue will correct itself in the second half of the year and not negatively impact full-year revenue. The second challenge was the bankruptcy of one of its strategic accounts, Steward Health Care System, which had a negative impact on net income, adjusted EBITDA, earnings per share, and operating income in the second quarter. HealthStream expects negative impacts to revenue and other financial metrics in the last half of the year but has factored these into its reiterated guidance.

Outlook and Future Opportunities

Looking ahead, HealthStream remains optimistic about its growth prospects, particularly in its core application areas. The company's focus on platform development, interoperability, and expanding its offerings to health plans is expected to drive further growth. HealthStream's profitable position, with no interest-bearing debt and a strong cash balance, positions it well for strategic investments and future growth.

Investor and Analyst Questions

The earnings call featured a lively question-and-answer session with key shareholders and investors. Questions ranged from the impact of the CrowdStrike situation on HealthStream to the company's approach to sales force evolution and the move to a single sign-on. HealthStream's executives provided detailed responses, shedding light on the company's strategies and future plans.

Conclusion

HealthStream's second quarter 2024 earnings call painted a picture of a company on the right track, with strong financial performance, strategic development initiatives, and a positive outlook for the future. Despite the challenges faced, the company remains focused on its growth trajectory and is well-positioned to capitalize on the opportunities in the health care technology sector.