Key Highlights

  • HSTM is trading down 0.21% at $33.70 on October 21, with a market capitalization of about $1.03 billion.
  • Second-quarter revenue was a record $83.7 million, up 12.5%, with EPS of $0.23 against $0.18 a year earlier.
  • Second-quarter adjusted EBITDA was $20.6 million, up 16.9%.
  • Full-year revenue guidance is $327 million to $332 million, and adjusted EBITDA guidance is $74 million to $78 million.
  • Trailing EPS is $0.72, the P/E is 46.95 and the dividend yield is 0.40%.

Despite Record Revenue, What Is Missing From the HealthStream Earnings Setup?

HealthStream (NASDAQ:HSTM) is trading down 0.21% at $33.70 on October 21, with a market capitalization of about $1.03 billion. No company announcement was identified for the session.

What investors may be missing is the timing. The company has not yet announced the date of its third-quarter report. Last year it reported in early November after the close, with a call at 9:00 a.m. ET the next morning, so this is an early look at a report expected in early November.

HealthStream provides workforce, credentialing and scheduling software to hospitals and other care organizations. On September 14, it launched its Enterprise Clinical Workforce Platform, and on September 15 it completed a $40 million private placement of 1.5 million shares to one investor, which implies about $26.67 per share, calculated.

What Did HealthStream's Latest Call Set Up for the Third Quarter?

Second-quarter revenue was a record $83.7 million, up 12.5%, with growth from organic expansion and recent acquisitions. Operating income rose 41.4% to $8.3 million, net income rose 23.8% to $6.7 million and EPS was $0.23. About 96% to 97% of revenue is subscription-based. First-quarter revenue was $81.2 million.

Management raised full-year revenue guidance to $327 million to $332 million from $323 million to $330 million, and adjusted EBITDA to $74 million to $78 million from $73 million to $77 million. Net income guidance was lowered to $19.5 million to $22.2 million on higher investment. For the third quarter, management pointed to revenue growth of about 8% and an adjusted EBITDA margin near 22%.

A year earlier, third-quarter revenue was $76.5 million and EPS was $0.20. Growth of 8% would put revenue near $82.6 million, calculated, a little below the second quarter's record. First-half revenue of $164.9 million leaves $162.1 million to $167.1 million for the second half under guidance, or roughly $81.1 million to $83.6 million a quarter, calculated.

What Would a Good or Bad HealthStream Quarter Look Like?

Encouraging readings would be revenue at or above the roughly $82.6 million implied by management's growth pointer, an adjusted EBITDA margin at or above 22%, a reiterated or raised guidance range and early adoption of the new workforce platform. Cash of $66.7 million with no debt leaves room for further acquisitions, which are not included in guidance.

Concerning readings would be a revenue dip below the implied range, a narrowed or lowered guidance range, margin pressure from investment, or weak platform adoption commentary. Management also flagged financial pressure on healthcare customers from legislative and regulatory changes as a risk.

How Do Valuation Data and Capital Returns Frame the Report?

Trailing EPS is $0.72, up 7.89%, the P/E is 46.95, a premium multiple, and the dividend is $0.035 per quarter, a yield of 0.40%. The consensus analyst rating is Buy. The company repurchased $9.3 million of stock in the first half. For HealthStream, the next items are the confirmed date, revenue against $83.7 million and any change to guidance.