HealthStream, Inc. (NASDAQ: HSTM) reported Q3 EPS of $0.12, $0.04 better than the analyst estimate of $0.08. Revenue for the quarter came in at $44.5 million versus the consensus estimate of $43.3 million.

Financial Outlook for 2014

We anticipate that consolidated revenues will grow by 28 to 30 percent as compared to 2013, which revenue growth includes the impact of the deferred revenue write-down related to the HCCS acquisition. We anticipate that revenue growth in our Workforce Development Solutions segment, which includes HCCS, will be in the 33 to 35 percent range, which also includes the impact of the deferred revenue write-down related to the HCCS acquisition. We expect our Research/Patient Experience Solutions segment's revenue to increase by approximately 10 to 12 percent, which includes revenues from the BLG acquisition that we closed in September 2013.

We anticipate that the Company's 2014 full-year operating income will increase between five and 10 percent as compared to full-year 2013 results. This operating income estimated range includes approximately $2.0 million related to the combined impact of the deferred revenue write-down primarily related to the HCCS acquisition, amortization of acquired intangibles, incremental investments in HCCS related sales, marketing, product development to drive future growth, and approximately $365,000 of transaction costs associated with the HCCS acquisition.

We anticipate that our 2014 capital expenditures will be between $9.0 million and $10.0 million. We expect our effective tax rate to be between 37 percent and 39 percent. This effective tax rate incorporates the research and development tax credits the Company recognized in the third quarter of 2014.

Our updated guidance reflects the anticipated impact of the HCCS acquisition that we announced on March 4, 2014, but does not include the impact from any other business development initiatives that we may complete during 2014.

Commenting on third quarter 2014 results, Robert A. Frist, Jr., chief executive officer, HealthStream, said, “Compared to the third quarter last year, our revenues were up 32 percent, operating income was up 22 percent, and net income was up 50 percent. In addition, we celebrated another milestone by crossing over the four million mark with the number of contracted subscribers to our workforce development platform.”

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