HealthStream — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue for the third quarter of 2026 was $83.3 million, an 8.9% increase from $76.5 million in the third quarter of 2025.
• Subscription revenues increased by $6.2 million (8.0%), while professional services revenues increased by $0.7 million year-over-year.
• Revenue growth was positively impacted by $3.2 million from acquisitions of Virsys and MissionCare (completed Q4 2025) and $3.6 million from organic growth.
• Operating income was $6.6 million, a 13.0% decrease from $7.6 million in the third quarter of 2025.
• Net income was $5.4 million, down 11.7% from $6.1 million in the third quarter of 2025.
• Diluted earnings per share (EPS) were $0.18, down from $0.20 in the third quarter of 2025.
• Adjusted EBITDA was $19.3 million, a 1.0% increase from $19.1 million in the third quarter of 2025.
• For the nine months ended September 30, 2026, revenue was $248.2 million (up 10.6% from $224.4 million), operating income was $22.4 million (up 25.7%), and net income was $18.0 million (up 13.6%).
• Diluted EPS for the nine months ended September 30, 2026, was $0.61, compared to $0.52 in the prior year period.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $60.0 million, up 13.4% from $52.9 million.
• Cash, cash equivalents, and marketable securities totaled $115.2 million as of September 30, 2026.
• The Company has no outstanding indebtedness.
• Capital expenditures for the third quarter of 2026 were $7.5 million.
• Deferred revenue increased to $91.861 million at September 30, 2026, from $88.417 million at December 31, 2025.

Guidance and Future Outlook:

• Full-year 2026 revenue guidance is raised to a range of $331.0 million to $333.0 million (previously $327.0 million to $332.0 million).
• Full-year 2026 net income guidance is raised to a range of $21.8 million to $22.4 million (previously $19.5 million to $22.2 million).
• Full-year 2026 Adjusted EBITDA guidance is raised to a range of $77.0 million to $78.0 million (previously $74.0 million to $78.0 million).
• Full-year 2026 capital expenditures guidance is set at $31.0 million to $34.0 million.
• Guidance assumes general economic conditions do not deteriorate and excludes impacts from future acquisitions, dispositions, or changes in fair value of non-marketable equity investments.

Business Segments and Product Lines:

• The hStream platform integrates verified healthcare professionals, students, healthcare organizations, and industry partners.
• Operating expenses increased to support investments in platform and enterprise applications, including personnel costs, third-party software, cloud hosting, and amortization from Q4 2025 acquisitions.
• Revenue growth drivers included the integration of Virsys and MissionCare acquisitions.

Market and Competitive Landscape:

• Management states the clinical healthcare workforce continues to grow, creating demand for solutions to find, develop, credential, schedule, onboard, and retain professionals.
• HealthStream positions itself as the healthcare industry's largest ecosystem of platform-delivered clinical workforce solutions.

Risks and Challenges:

• Operating income was negatively impacted by approximately $250,000 in expenses related to a cybersecurity incident disclosed on July 29, 2026, net of insurance recoveries.
• Forward-looking statements involve risks including negative economic conditions, changes in U.S. policy, adverse developments in technology and healthcare industries, tariff and trade developments, inflationary pressures, geopolitical instability, and legal requirements affecting dividend policies.

Management Commentary and Tone:

• CEO Robert A. Frist, Jr. stated that nine months into 2026, the company grew revenues 10.6%, operating income 25.7%, and adjusted EBITDA 13.4% compared to the prior year.
• Management expressed confidence in the third quarter's progress, citing an 8.9% revenue increase and the decision to raise full-year guidance.
• The CEO emphasized the company's role in building the infrastructure for the clinical workforce, describing it as the "heartbeat of American healthcare."

Other Key Points:

• A private placement of common stock to WJRJJ Ventures, LLC was completed on September 14, 2026, resulting in approximately $40.0 million in cash proceeds (1,355,932 shares at $29.50 per share).
• The Board declared a quarterly cash dividend of $0.035 per share, payable on November 27, 2026, to holders of record on November 16, 2026.
• A share repurchase program authorized on March 13, 2026, for up to $10.0 million expired on September 12, 2026; no shares were repurchased under this specific program during the third quarter.
• During the first nine months of 2026, the Company repurchased 432,476 shares under previous programs for an aggregate value of $9.3 million (average price of $21.50 per share).
• The Company acquired Virsys and MissionCare in the fourth quarter of 2025, contributing to current revenue growth.