HealthStream, Inc. Q4 FY2025 earnings call

• AI positioning: Four categories discussed - expansion of healthcare user base (nursing workforce growing), data profile (systems of record for learning and credentialing, originating proprietary data through career networks), platform strategy (hStream Platform with APIs and hStream ID for interoperability), and ecosystem (combining business verticals, data profile, platform to form difficult-to-replicate ecosystem). • Business updates: Core application suites - Competency Suite sales to top health systems, CredentialStream strong sales and conversions from legacy, ShiftWizard strong revenue growth. New career network: myCNAjobs from MissionCare Collective acquisition, helping recruit CNAs and other caregivers. • Financial highlights: Fourth quarter revenues $79.7 million, up 7.4%; adjusted EBITDA $18.8 million, up 16.4%. Full year 2025: Revenues $304.1 million, net income $18.3 million, adjusted EBITDA $71.8 million. • Acquisitions: Completed Virsys12 in October and MissionCare Collective in December. Share repurchase: $10 million program with $5 million in fourth quarter and $5 million in January. Dividend: Quarterly cash dividend of $0.035 per share declared, 12.9% increase.

Full year 2025: Revenues up 4.3%, adjusted EBITDA up 7.5% y-o-y. Fourth quarter 2025: Revenues up 7.4%, adjusted EBITDA up 16.4% y-o-y. Subscription revenues: Up $5.8 million or 8.2%, with CredentialStream growing 21%, ShiftWizard 31%, Competency Suite 27%. Legacy credentialing and scheduling applications revenues down 27%. Remaining performance obligations at end of fourth quarter 2025: $691 million, up 11.2% from last year. Gross margin 63.8% vs 66.2% prior year quarter, impacted by cloud hosting, software licensing costs, and non-cash compensation expense from CEO stock grant.

• 2026 expectations: Consolidated revenues between $323 million and $330 million (6.2%-8.5% growth). Net income between $20.4 million and $22.8 million. Adjusted EBITDA between $73 million and $77 million. Capital expenditures between $31 million and $34 million. Effective tax rate approximately 22%. Guidance doesn't include impact of potential acquisitions, dispositions, etc. • 2026 revenue growth: Estimated first quarter growth ~8%, expected sequential improvement across year with higher growth in first half due to 2025 acquisitions. Inorganic revenues expected ~$13 million for the year.

Q: Matt Hewitt from Craig-Hallum Capital Group asked about MissionCare margins and AI stickiness.

A: Robert Frist said they don't report margins per product line, but all products aim for higher margins than legacy. On AI stickiness, being a system of record is important, and customers are pushing data into HealthStream's platform showing relative strength.

Q: Constantine Davides from Citizens asked about interoperability features in career networks.

A: Robert Frist said myClinicalExchange has grown, and an example is a widget on MyTeam to connect clinical students with hospital managers for recruiting.

Q: Ryan Daniels from William Blair asked about AI impact on sales cadence.

A: Robert Frist said fourth quarter was strong with wins in various areas, and CIOs are interested in fewer platforms, and HealthStream is positioning as a core consolidation platform.

Q: Richard Close from Canaccord Genuity asked about Gen AI integration and client conversations.

A: Robert Frist said every product has an AI road map, and CIOs are tired of many point solutions, and HealthStream is working on making core products interoperable.

Q: Vincent Colicchio from Barrington Research asked about price accelerators.

A: Robert Frist said price escalators are now in contracts for renewals and new contracts in application suites, helping with budget planning.