HealthStream, Inc.

Good morning, and welcome to the Healthstream's fourth quarter and full year 2024 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 question and answer after the presentation. I will now turn the conference over to Molly Condra, Head of Investor Relations and Communications. Please go ahead, Ms. Condra.

Thank you. Good morning, and thank you for joining us today to discuss our fourth quarter and full year 2024 results. Also in the conference call with me is Robert A. Frist, 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 involve risks 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.

Thank you, Molly. Good morning, everyone, and welcome to our fourth quarter and full year 2024 earnings call. We definitely have lots to cover and look forward to getting to your questions at the end. I'll just start out with some financial overview. I'm pleased to report that we finished the full year 2024 with strong year-over-year increases across all of our key financial metrics. Full year revenues were up 4.5%. Net income was up 31.5%. Operating income was up 32.9%. And adjusted EBITDA was up 9%. Looking forward to 2025, as we think forward, we expect Healthstream to continue to deliver growth in each of the areas where we provide financial guidance, as we anticipate organic revenue between 302 and 307 million, net income between 19.2 and 21.4 million, and adjusted EBITDA between 70 million and 74 million. These forward looks do not include any acquisitions that we may complete during the year. though our strong cash balance is $97.2 million, and our untapped line of credit and no long-term debt position us to take advantage of M&A opportunities as they arise. And I would say that as we think about 2025, we're going to focus on rekindling our M&A. We've been a little bit quiet on that front, and I do feel that both the pipeline of opportunities and those that are good fits for our business, there seems to be more available to look at and review. So I look forward to 2025 being a rekindling of our M&A program. Since our last conference call, I'm pleased to report that our H-Stream platform has made some excellent progress, as indicated in some of our recent press releases. Internally, we've declared 2025 as the year of the platform, and I know we've talked about the platform for a while now, but we're really starting to see it manifest in both our strategies, communications, and to customer benefits. And we're going to continue to advance our platform as a service capabilities to create interoperability among our primary applications, the ones that the healthcare workforce constantly uses. In fact, another way to think about the platform, too, we've seen a material increase in our customers accessing the features and functions of the platform directly through the developer portal. For example, in the developer portal, we've seen over 400 developers from across 184 customer accounts accessing the platform APIs to date. And it's really a really nice sign that the platform is beginning to mature into a useful tool set for our customers, direct access to features and functions of the platform from over 400 developers and 184 customer accounts. I look forward to that someday being all customer accounts, and we're seeing this nice expansion of utilization of these platform-level APIs. Importantly, the interoperability we're enabling starts with our own application suites of learning, credentialing, and scheduling, all of which are being powered at some level from the platform at the HSTREAM platform level. From there, the HSTREAM platform is designed to extend interoperability well beyond Healthstream's own proprietary applications as it begins to power third-party applications as well. So when we talk about the year of the platform, referring to the year when the platform interoperability increases meaningfully among our own applications and also begins to manifest in third-party applications. We believe that creating this type of network effect will help improve the quality of healthcare, which is one of our fundamental purposes, and to drive our business results over the next several years. While interoperability is a key feature, it's not the only benefit we're recognizing from moving to a single platform or the eight-stream platform strategy. Due to its API-first design, the HealthStream platform, we call HStream, is allowing us to develop new applications and functionality faster and more efficiently than ever before. Last quarter, we announced the release of the HealthStream Learning Experience, which is the first application to be built on top of the HStream platform itself. We're excited about the HealthStream Learning Experience, which we call the HLX, for a lot of reasons. Not only is our first application built on top of the HStream platform, is the only application of its kind designed specifically for healthcare. Using AI-native design, the HLX offers the healthcare workforce personalized, self-directed, intelligent learning and development pathways and incorporate a wide range of learning modalities from journals to VR simulations. Its modern design and interface are built to provide the healthcare workforce with the unique learning they need and the way they want it and the way they want to experience their learning journey. Because it is built on top of the HLX platform, the HLX is interoperable with the HealthStream Learning Center, our learning management system. Three large health organizations that are longtime users of the HealthStream Learning Center are launch partners and entering a pilot phase for the HLX. We're super excited about the HLX. It represents kind of a major refresh of our learning technologies and learner capabilities. Speaking of the HealthStream Learning Center, it kind of stole the spotlight last week. as G2 named it the number one software in all of healthcare across all types of software applications and products. G2 is the most trusted and largest review site around, and the rankings are based on verified customer reviews, which makes the honor all the more special to us. I have to admit, it was fun to see the HLC recognized on the NASDAQ electronic board in Times Square as the top software application in healthcare. That's just not a category killer in learning. That's across all software applications in healthcare rated by G2. I want that to sink in for a minute for our teams, too. They've done an amazing job building, maintaining, and growing the HealthStream Learning Center, and now with the HLX, kind of exciting new frontiers in learning for HealthStream. It's also great to see that in that same list, CredentialStream topped the charts in Ranking number five overall, and again, that's not just in credentialing software, that's five overall in healthcare application software, which makes it the highest ranking credentialing application in healthcare. We think a key reason for our learning and credentialing applications to rank as best and as the best is because the innovation they're beginning to enjoy from the HSTREAM platform. We look forward to adding to that platform value throughout 2025, the year of the platform. Before we go further in our call, I want to briefly summarize our business for the benefit of anyone who is new to the HealthStream story. First and foremost, HealthStream is a healthcare technology company dedicated to developing, credentialing, and scheduling the healthcare workforce through SaaS-based solutions, each of which are becoming more valuable because of the interoperability they're achieving through our H-Stream technology platform. The company holds 20 patents for its innovative products, which have been awarded over 40 Brandon Hall Awards. Historically, we sell our solutions on a subscription basis under contracts that average three to five years in length, which makes our revenues recurring and predictable. In fact, 96% of our revenues are subscription-based. As I mentioned, we have also started to open our sales channels directly to healthcare professionals and nursing students across the continuum of healthcare training. We are profitable, have no interest-bearing debt, and a strong cash balance of $97.2 million. We are solely focused on healthcare, and more specifically, the healthcare workforce that and those preparing to enter it. The 12.6 million healthcare professionals and nursing students in the United States comprise the core total addressable market for our SAS solutions. Look, there's still a lot to talk about, and I look forward to my second section. But before I do that, I want to turn it over to Scotty Roberts, our Chief Financial Officer, for some more detailed look at our financial performance for the quarter and the year.