HealthStream, Inc.

Good morning and welcome to Healthstream's third quarter 2022 earnings conference call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions and answers after the presentation. I would now like to turn the conference over to Mollie Condra, Vice President of Investor Relations and Communications. Please go ahead, Ms. Condra.

Thank you. Good morning, and thank you for joining us today to discuss our third quarter 2022 results. Also in the conference call with me today is Robert A. Prist, Jr., CEO and Chairman of HealthStream, and Scotty Roberts, CFO and Senior Vice President of Finance and Accounting. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that could involve risk and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements. Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the company's filings with the SEC, including forms 10-K, 10-Q, and our earnings release. Additionally, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling to net income attributable to HealthStream is included in the earnings release that we issued yesterday and may refer to in this call. So with that start, I'll now turn the call over to CEO Bobby Frist.

Good morning, everyone. Thank you, Molly. Looking forward to our third quarter 2022 earnings call. And we'll start with reviewing some of the highlights. Each of the financial metrics highlighted in our earnings release showed growth in the third quarter. We delivered record top-line revenue in the third quarter of $67.3 million, which is up 5% compared to Q3 of last year. And based on our guidance, we expect revenue next quarter to increase by 6% when compared to Q4 of last year. So it's fun to be back on offense and have higher growth rates here in the second half than in the first half. Operating income was $2.4 million, which is up 33%, and adjusted EBITDA was $12.7 million, up 2%, all compared to the same period last year. Net income was $3.7 million, which is up 144% from $1.5 million, and EPS was $0.12 compared to $5, both compared to the same period last year, and both due in part to the successful sale of a company in which we held a minority equity interest. Concurrent with our financial progress, HealthStream's ecosystem continues to expand. HealthStream's subscriptions are now at 5.35 million, which represents an additional 50,000 subscriptions since last quarter. The support we're providing to healthcare organizations is driven by our vision to improve the quality of healthcare by developing the people that deliver care. With that in mind, I want to take a moment to ground everyone in the core dimensions of our business. First and foremost, Healthstream is a healthcare technology company dedicated to developing, credentialing, and scheduling the healthcare workforce through SaaS-based software solutions. We sell these solutions on a subscription basis under contracts which average three to five years in length. That means our revenues are recurring and fairly predictable. We are profitable, and we have little to no debt. We are also fortunate to be solely focused on one of the more recession-resistant markets around, healthcare. which is comprised of about 10.9 million workers, the way we define our audience. Those healthcare professionals are the end users of our SaaS applications and software solutions. We are led by a seasoned team of executives who have a proven track record of generating strong earnings and cash flows through both organic and inorganic means. We have developed internally innovative patented solutions such as Jane, and we have created new application suites such as Credential Stream through acquiring and integrating other companies. At our Invest Today program held last month, we reminded everyone that Lstream's emerging platform, HStream, is central to many of the most exciting developments in the company today. For example, HStream's identity management capabilities will enable interoperability that gives us leverage between various proprietary and third-party applications. Our platform strategy will enable us to build increasingly powerful ecosystems, which we believe will create new business opportunities and also new ways for healthcare professionals to participate in our ecosystem. Given these developments and our confidence in their ongoing evolution, we announced medium-term financial objectives during our investor day. And I want to reiterate those objectives today. First, from a revenue standpoint, we are targeting to grow 7 to 10% on average per year over the next three years, which will be a mix of organic and inorganic growth. Second, we are working to deliver gross margins of 65 to 68% over the same time period. Third, we aspire to deliver a higher EBITDA margin of 21 to 24% over that period. Remember, these are not guidance, they're objectives that inform our strategic planning process. Unlike guidance, for example, these objectives include inorganic growth which is less predictable, obviously, than our subscription organic growth. Later in the call, we'll talk about our three application suites that focus on learning, credentialing, and scheduling. But for now, I'd like to turn it over to Scotty Robert for a deeper dive into the financial results.