HealthStream (HSTM) Tops Q3 EPS by 3c; Offers FY15 Outlook

HealthStream (NASDAQ: HSTM) reported Q3 EPS of $0.08, $0.03 better than the analyst estimate of $0.05. Revenue for the quarter came in at $53.8 million versus the consensus estimate of $52.32 million.

Financial Outlook for 2015

For 2015, we anticipate that consolidated revenues will grow 19 to 22 percent as compared to 2014. We anticipate that revenue growth in our Workforce Solutions segment will be in the 17 to 19 percent range and approximately five to seven percent in our Patient Experience Solutions segment. We anticipate our Provider Solutions segment’s revenue to contribute between $12.5 million and $14 million in revenues during 2015. We expect the HLS acquisition to contribute between $7 million to $9 million of this total, which is the estimated amount after the write-down of the acquired deferred revenue balance as required under GAAP.

We anticipate that the Company's 2015 full-year operating income will decrease between 15 and 25 percent as compared to full-year 2014 results. This operating income range takes into account the following:

Between $6.5 million and $7.0 million of write-down to the deferred revenue balances of HLS;
Approximately $1 million of transaction costs related to the HLS acquisition incurred in the first quarter of this year;
An increased rate of investment over full-year 2014 in HealthStream’s product development related to new products, enhancements to existing products, and integration of acquired products—including an increase in investment in HLS’s products;
An increase in expense related to sales and marketing investments, including the Company’s customer Summit, which was held in Nashville during the second quarter of 2015; and
Share-based compensation and related expenses of $1.65 million, which was reflected in the second quarter, associated with stock awarded to employees through the special contribution to the Company of personally held shares by HealthStream’s CEO as previously disclosed.

We anticipate that our full-year 2015 capital expenditures will be between $13 million and $15 million. We expect our effective tax rate during 2015 to be between 42 percent and 44 percent.

For earnings history and earnings-related data on HealthStream (HSTM) click here.

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