What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 214 added, 88 removed, 300 unchanged (50% of the section changed)

8 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $ 541 and $ 853 at March 31, 2022 and December 31, 2021, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 699 and $ 853 at June 30, 2022 and December 31, 2021, respectively

28,744  

2 unchanged sentences

Prepaid royalties, net of amortization

11,188  

Other prepaid expenses and other current assets

11,539  

10,824  

Total current assets

1 unchanged sentence

106,845  

Property and equipment, net of accumulated depreciation of $ 19,270 and $ 17,999 at March 31, 2022 and December 31, 2021, respectively

Property and equipment, net of accumulated depreciation of $ 20,183 and $ 17,999 at June 30, 2022 and December 31, 2021, respectively

16,477  

17,950  

Capitalized software development, net of accumulated amortization of $ 90,537 and $ 86,097 at March 31, 2022 and December 31, 2021, respectively

Capitalized software development, net of accumulated amortization of $ 95,206  and $ 86,097 at June 30, 2022 and December 31, 2021, respectively

34,509  

5 unchanged sentences

182,501  

Customer-related intangibles, net of accumulated amortization of $ 47,847 and $ 45,615 at March 31, 2022 and December 31, 2021, respectively

Customer-related intangibles, net of accumulated amortization of $ 50,036 and $ 45,615 at June 30, 2022 and December 31, 2021, respectively

66,333  

68,803  

Other intangible assets, net of accumulated amortization of $ 18,140 and $ 16,752 at March 31, 2022 and December 31, 2021, respectively

Other intangible assets, net of accumulated amortization of $ 19,574 and $ 16,752 at June 30, 2022 and December 31, 2021, respectively

20,436  

30 unchanged sentences

Common stock, no par value, 75,000 shares authorized;

30,518 and 31,327 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

30,570 and 31,327 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

253,036  

3 unchanged sentences

68,122  

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

( 402 )  

Total shareholders’

9 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Revenues, net

$ 65,638  

$ 64,816  

$ 131,005  

$ 128,284  

Operating costs and expenses:

Cost of revenues (excluding depreciation and amortization)

22,234  

22,657  

44,232  

45,518  

Product development

10,583  

10,336  

20,995  

19,861  

Sales and marketing

10,869  

21,287  

18,481  

Other general and administrative expenses

18,760  

19,391  

Depreciation and amortization

18,742  

18,302  

Total operating costs and expenses

62,685  

61,385  

124,016  

121,553  

Operating income

Other loss, net

Other income (loss), net

( 65 )  

Income before income tax provision

Income tax provision

$ 3,083  

$ 2,441  

$ 5,976  

$ 4,732  

Net income per share:

$ 0.10  

$ 0.08  

$ 0.19  

$ 0.15  

$ 0.10  

$ 0.08  

$ 0.19  

$ 0.15  

Weighted average shares of common stock outstanding:

30,491  

31,553  

30,723  

31,528  

30,512  

31,616  

30,744  

31,571  

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

Three Months Ended

March 31, 2022

March 31, 2021

Six Months Ended

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Other comprehensive income, net of taxes:

Foreign currency translation adjustments

Unrealized (loss) gain on marketable securities

Total other comprehensive income

Unrealized gain (loss) on marketable securities

Total other comprehensive (loss) income

Comprehensive income

3 unchanged sentences

(In thousands)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Accumulated Other Comprehensive

Total Shareholders’

Income (Loss)

Balance at December 31, 2021

15 unchanged sentences

$ 322,572  

Three Months Ended March 31, 2021

Comprehensive loss

( 780 )  

Issuance of common stock in acquisition

Stock-based compensation

Common stock issued under stock plans, net of shares withheld for employee taxes

Repurchase of common stock

( 159 )  

( 3,143 )  

Balance at June 30, 2022

30,570  

$ 253,036  

$ 74,098  

$ ( 402 )  

$ 326,732  

Six Months Ended June 30, 2021

Accumulated Other Comprehensive

1 unchanged sentence

Balance at December 31, 2020

31,493  

$ 271,784  

$ 62,277  

$ 334,062  

Comprehensive income

1 unchanged sentence

Common stock issued under stock plans, net of shares withheld for employee taxes

( 399 )  

Balance at March 31, 2021

31,553  

$ 272,001  

$ 64,569  

$ 336,805  

Comprehensive income

Stock-based compensation

Common stock issued under stock plans, net of shares withheld for employee taxes  

Balance at June 30, 2021

31,554  

$ 272,783  

$ 67,010  

$ 340,379  

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

OPERATING ACTIVITIES:

5 unchanged sentences

Deferred income taxes

Gain on sale of fixed assets

Loss on non-marketable equity investments

Non-cash paid time off expense

Change in fair value of non-marketable equity investments

Changes in operating assets and liabilities:

13 unchanged sentences

Payments associated with capitalized software development

Proceeds from sale of fixed assets

Purchases of property and equipment

18 unchanged sentences

Operating results for the 

three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The Condensed Consolidated Balance Sheet at December 

11 unchanged sentences

Revenue from Contracts with Customers , as if it had originated the contracts.

This approach differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

This approach differs from the previous requirement to measure contract assets and contract liabilities acquired in a business combination at fair value.

The standard will be effective for the 

3 unchanged sentences

The Company early adopted this ASU on 

January 1, 2022, and the adoption impact of the new standard will depend on the magnitude of future acquisitions.

January 1, 2022, and the impact of the new standard will depend on the magnitude of future acquisitions but has not had a material impact to date.

The standard will 

11 unchanged sentences

Sales taxes are excluded from revenues.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Six Months Ended June 30, 2022

Business Segments

Workforce Solutions

Provider Solutions

Workforce Solutions

Provider Solutions

Subscription services

$ 50,553  

$ 11,522  

$ 62,075  

Professional services

Total revenues, net

$ 52,039  

$ 13,328  

$ 65,367  

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Six Months Ended June 30, 2021

Business Segments

Workforce Solutions

Provider Solutions

Workforce Solutions

Provider Solutions

Subscription services

$ 49,770  

$ 10,597  

$ 60,367  

Professional services

Total revenues, net

$ 51,247  

$ 12,221  

$ 63,468  

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the three months ended March 31, 2022 and 2021 , the Company recognized $ 6,000  and $ 0.1  million in impairment losses on receivables and contract assets arising from the Company’s contracts with customers, respectively.

For the six months ended June 30, 2022 and 2021 , the Company recognized $ 0.4  million and $ 3,000  in impairment losses on receivables and contract assets arising from the Company’s contracts with customers, respectively.

Deferred revenue represents contract liabilities that are recorded when cash payments are received or are due in advance of our satisfaction of performance obligations.

During the three  months ended 

March 31, 2022 and 2021 , we recognized revenues of approximately $ 34.6  million and $ 33.6  million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

As of March 31, 2022 , approximately $ 444  million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

June 30, 2022 and 2021 , we recognized revenues of approximately $ 40.0  million and $ 40.5  million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

During the 

six months ended June 30, 2022 and 2021 , we recognized $ 56.0  million and $ 52.2 million of revenue from amounts included in deferred revenues at the beginning of the respective periods.

As of June 30, 2022 , approximately $ 455  million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

We expect to recognize revenue related to approximately 

5 unchanged sentences

Non-commensurate commissions are amortized over the greater of the contract term or technological obsolescence period of approximately three years.

The Company recorded amortization of deferred commissions of approximately $ 2.5  million and $ 2.1  million for the three  months ended March 31, 2022 and 2021 , respectively, which is included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Income.

The Company recorded amortization of deferred commissions of approximately $ 2.5  million and $ 2.4  million for the three  months ended June 30, 2022 and 2021 , and $ 5.0  million and $ 4.5  million for the 

six months ended June 30, 2022 and 2021 , respectively, which is included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Income.

Income taxes are accounted for using the asset and liability method, whereby deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities measured at tax rates that will be in effect for the year in which the differences are expected to affect taxable income.

The Company computes its interim period provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period.

During both the three  months ended March 31, 2022 and 2021 , the Company recorded a provision for income taxes of approximately $ 0.9  million.

The Company’s effective tax rate was 23 % and 29 % for the three months ended March 31, 2022 and 2021 , respectively.

During the three  months ended June 30, 2022 and 2021 , the Company recorded a provision for income taxes of approximately $ 0.5  million and $ 0.9 million, respectively.

During the 

six months ended June 30, 2022 and 2021 , the Company recorded a provision for income taxes of $ 1.4 million and $ 1.8 million, respectively.

The Company’s effective tax rate was 19 % and 28 % for the six months ended June 30, 2022 and 2021 , respectively.

The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, and the effect of various permanent tax differences.

The Company recognizes excess tax benefits and tax deficiencies associated with stock-based awards as a component of its provision for income taxes.

During the three months ended March 31, 2022 , the Company recorded discrete tax expense of $ 0.1  million, which consisted primarily of tax deficiencies associated with stock-based awards.

During the three months ended March 31, 2021 , the Company recorded discrete tax expense a $ 0.1  million related primarily to a permanent difference related to purchase accounting adjustments and the impact of a state tax rate change enacted during the period. 

During the six months ended June 30, 2022 , the Company recorded discrete tax benefits of $ 0.1  million, which consisted primarily of a $ 0.2 million tax benefit associated with a nontaxable gain of $ 0.9 million recognized from the change in fair value of our previously held minority interest in CloudCME, LLC.

This tax benefit was partially offset by $ 0.1 million of excess tax deficiencies associated with stock-based awards. During the six months ended June 30, 2021 , the Company recorded discrete tax expense of $ 0.2  million related to purchase accounting adjustments and the impact of a state tax rate change enacted during the period. 

SHAREHOLDERS ’

Stock-Based Compensation

The Company has stock awards outstanding under its 2016 Omnibus Incentive Plan.

The Company accounts for its stock-based compensation plan using the fair-value based method for costs related to share-based payments, including restricted share units (“RSUs”) and stock options.

During the three months ended March 31, 2022 , the Company approved the grant of 

135,352  RSUs subject to service-based time vesting, of which 35,161 of these RSUs were conditioned upon and subject to shareholder approval of our 2022 Omnibus Incentive Plan to be submitted to the Company's shareholders for approval at the annual meeting of the Company's shareholders to be held on May 26, 2022.

Of these, the 100,191 RSUs that were not conditioned on shareholder approval of our 2022 Omnibus Incentive Plan were granted with a weighted average grant date fair value of $ 20.32  per share, measured based on the closing fair market value of the Company’s stock on the date of grant.

Applicable accounting standards require that the 35,161 RSUs conditioned upon approval of our 2022 Omnibus Incentive Plan not be valued unless and until the condition is met (that is, at such time that the 2022 Omnibus Incentive Plan is approved by shareholders at the annual meeting of the Company’s shareholders on May 26, 2022).

During the three months ended March 31, 2021 , the Company issued 121,551  RSUs subject to service-based time vesting with a weighted average grant date fair value of $ 23.16  per share, measured based on the closing fair market value of the Company’s stock on the date of grant.

During the three months ended June 30, 2018, the Company granted 

70,000 performance-based RSUs, the vesting of which occurs over a five -year period and is contingent upon continued service and achieving certain performance criteria established by the Compensation Committee on an annual basis in increments of 10 %, 15 %, 20 %, 25 %, and 30 % based on performance in 2018, 2019, 2020, 2021, and 2022, respectively.

The performance criteria for the final 

21,000 of these performance-based RSUs is based on 2022 performance.

The measurement date for these 21,000 performance-based RSUs was established during the three months ended March 31, 2022 with a grant date fair value of $ 20.32  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established. 

The Company has stock awards outstanding under its 2016 Omnibus Incentive Plan and 

2022 Omnibus Incentive Plan.

The 2022 Omnibus Incentive Plan was approved at the annual meeting of shareholders held on May 26, 2022.

The Company accounts for its stock-based compensation plans using the fair-value based method for costs related to share-based payments, including restricted share units (“RSUs”) and stock options.

During the six months ended June 30, 2022 , the Company issued 137,055  RSUs subject to service-based time vesting, with a weighted average grant date fair value of $ 20.27 per share, measured based on the closing fair market value of the Company's stock on the date of the grant. During the six months ended June 30, 2021 , the Company issued 122,686  RSUs subject to service-based time vesting with a weighted average grant date fair value of $ 23.16  per share, measured based on the closing fair market value of the Company’s stock on the date of grant.

During 2018 ,  the Company granted 

70,000  performance-based RSUs, the vesting of which occurs over a 

five -year period and is contingent upon continued service and achieving certain performance criteria established by the Compensation Committee on an annual basis.

The performance criteria and measurement date for the final 

21,000  performance-based RSUs is based on 2022 adjusted EBITDA and was established during the six  months ended June 

30, 2022  with a grant date fair value of $ 20.32  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established. 

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three months ended March 

31, 2022, the Company approved the grant of 91,042  performance-based RSUs, the vesting of which occurs over a five -year period and is contingent upon continued service and achieving certain performance criteria established by the Compensation Committee on an annual basis in increments of 15 %, 20 %, 20 %, 20 %, and 25 % based on performance in 2022, 2023, 2024, 2025, and 2026, respectively, of which 17,224 performance-based RSUs were conditioned upon and subject to shareholder approval of our 2022 Omnibus Incentive Plan to be submitted to the Company’s shareholders for approval at the annual meeting of the Company’s shareholders on May 26, 2022.

Of the total amount of performance-based RSUs approved by the Company, the performance criteria for 

13,654  of these performance-based RSUs is based on 2022 performance.

The measurement date for the 

11,070 of these performance-based RSUs that are not conditioned on approval of the 2022 Omnibus Incentive Plan at the annual meeting of shareholders on May 26, 2022 was established during the three months ended March 31, 2022 with a grant date fair value of $ 20.32  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established.

Applicable accounting standards require that the 17,224 performance-based RSUs conditioned upon approval of our 2022 Omnibus Incentive Plan (including 2,584 of these performance-based RSUs for which performance criteria will be based on 2022 performance) not be valued unless and until the condition is met (that is, at such time that the 2022 Omnibus Incentive Plan is approved by shareholders at the annual meeting of the Company’s shareholders on May 26, 2022).

The performance criteria for the remaining 77,388  performance-based RSUs with performance not based on 2022 performance has not yet been determined and will be established on an annual basis in 2023, 2024, 2025, and 2026, as applicable;

During the six  months ended June 

30, 2022, the Company issued 91,042  performance-based RSUs, the vesting of which occurs over a five -year period and is contingent upon continued service and achieving certain performance criteria established by the Compensation Committee on an annual basis in increments of 15 %, 20 %, 20 %, 20 %, and 25 % based on performance in 2022, 2023, 2024, 2025, and 2026, respectively.

The performance criteria for the first -year tranche, or 13,654  of these performance-based RSUs, is based on 2022 adjusted EBITDA.

The measurement date for these 13,654  performance-based RSUs was established during the six  months ended June 30, 2022 with a grant date fair value of $ 20.29  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established or, in the case of the portion of such performance-based RSUs which were granted contingent upon the approval of the 2022 Omnibus Incentive Plan by the Company's shareholders, the date the 2022 Omnibus Incentive Plan was approved by shareholders of the Company. The performance criteria for the remaining 77,388  performance-based RSUs has not yet been determined and will be established on an annual basis in 2023, 2024, 2025, and 2026, as applicable;

therefore, the measurement date for these remaining 77,388  performance-based RSUs cannot be determined until the performance criteria have been established.

Total stock-based compensation expense recognized in the Condensed Consolidated Statements of Income is as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenues (excluding depreciation and amortization)

3 unchanged sentences

Total stock-based compensation expense

$ 1,691  

$ 1,398  

Share Repurchase Plan

On November 30, 2021, the Company's Board of Directors authorized a share repurchase program to repurchase up to $ 20.0 million of the Company's outstanding shares of common stock.

This share repurchase program concluded on March 8, 2022, when the maximum dollar amount authorized under the program was expended.

Under this program, the Company repurchased a total of 853,023 shares through open market purchases at an aggregate value of $ 20.0 million, reflecting an average price per share of $ 23.45 (excluding the cost of broker commissions).

During the three months ended March 31, 2022, the Company repurchased 649,739 shares pursuant to this share repurchase program at an aggregate fair value of $ 14.9 million, based on an average price per share of $ 22.92  (excluding the cost of broker commissions).

November 30, 2021 ,  the Company's Board of Directors authorized a share repurchase program to repurchase up to $ 20.0  million of the Company's outstanding shares of common stock.

This share repurchase program concluded on 

March 8, 2022 ,  when the maximum dollar amount authorized under the program was expended.

Under this program, the Company repurchased a total of 

853,023  shares through open market purchases at an aggregate value of $ 20.0  million, reflecting an average price per share of $ 23.45  (excluding the cost of broker commissions).

During the six  months ended June 

30, 2022 ,  the Company repurchased 

649,739  shares pursuant to this share repurchase program at an aggregate fair value of $ 14.9  million, based on an average price per share of $ 22.92  (excluding the cost of broker commissions).

On March 14, 2022, the Company's Board of Directors approved an expansion of the Company's share repurchase program by authorizing the repurchase of up to an additional $ 10.0 million of the Company's outstanding shares of common stock.

The share repurchase expansion program will terminate on the earlier of March 13, 2023, or when the maximum dollar amount has been expended.

During the three months ended March 31, 2022, the Company repurchased 242,647  shares pursuant to this share repurchase program at an aggregate fair value of $ 5.0  million, based on an average price per share of $ 20.52  (excluding the cost of broker commissions).

The share repurchase expansion program is scheduled to terminate on the earlier of March 13, 2023, or when the maximum dollar amount has been expended.

During the three months ended June 

30, 2022, the Company repurchased 159,403  shares pursuant to this share repurchase program at an aggregate fair value of $ 3.1  million, based on an average price per share of $ 19.70  (excluding the cost of broker commissions).

During the 

six months ended June 30, 2022 , the Company repurchased 402,050  shares at an aggregate fair value of $ 8.1  million, reflecting an average price per share of $ 20.19  (excluding the cost of broker commissions).

EARNINGS PER SHARE

3 unchanged sentences

The dilutive effect of common equivalent shares is included in diluted earnings per share by application of the treasury stock method.

The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect or contingent performance conditions, was approximately 218,000  and 148,000  for the three  months ended March 31, 2022 and 2021 , respectively.

The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect or contingent performance conditions, was approximately 228,000  and 111,000  for the three  months ended June 30, 2022 and 2021 , respectively, and 

223,000 and 

130,000 for the 

six months ended June 30, 2022 and 2021 , respectively.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

$ 3,083  

$ 2,441  

$ 5,976  

$ 4,732  

Weighted-average shares outstanding

30,491  

31,553  

30,723  

31,528  

Effect of dilutive shares

Weighted-average diluted shares

Net income per share:

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARKETABLE SECURITIES

The fair value of marketable securities, which were all classified as available for sale and which the Company does not intend to sell nor will the Company be required to sell prior to recovery of their amortized cost basis, included the following (in thousands):

March 31, 2022

Corporate debt securities

30,512  

2 unchanged sentences

31,571  

Net income per share:

$ 0.10  

$ 0.08  

December 31, 2021

Corporate debt securities

$ 0.19  

4 unchanged sentences

$ 0.15  

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MARKETABLE SECURITIES

June 30, 2022

Adjusted Cost

Unrealized Gains

Unrealized Losses

Corporate debt securities

December 31, 2021

Adjusted Cost

Unrealized Gains

Unrealized Losses

Corporate debt securities

The carrying amounts reported in the Condensed Consolidated Balance Sheets approximate the fair value based on quoted market prices or alternative pricing sources and models utilizing market observable inputs.

As of March 31, 2022 , the Company did not recognize any allowance for credit impairments on its available for sale debt securities.

As of June 30, 2022 , the Company did not recognize any allowance for credit impairments on its available for sale debt securities.

All investments in marketable securities are classified as current assets on the Condensed Consolidated Balance Sheets because the underlying securities mature within one year from the balance sheet date.

BUSINESS COMBINATION

2022 ,  the Company acquired the remaining ownership interest (representing approximately 82 % of the outstanding equity interests) of CloudCME, LLC ("CloudCME"), a Nashville-based healthcare technology company offering a SaaS-based application for managing all aspects of continuing education (CME/CE) within a healthcare organization, for approximately $ 4.0  million in cash and $ 4.1 million in shares of HealthStream's common stock issued through a private placement at closing.

The Company previously held a minority interest in CloudCME of approximately 18 %.

Of the purchase price paid at closing, $ 0.3 million is being held in escrow for a period of time following the closing to serve as a source of recovery for certain potential indemnification claims by the Company.

Acquisition-related transaction costs were $ 0.1  million.

The acquisition is 

not  considered material to the Company’s financial statements.

The Company accounted for the acquisition as a business combination and has allocated the purchase consideration based on management’s estimates of fair value.

Net assets acquired were $ 9.6 million.

Based on the fair value of assets acquired and liabilities assumed, including intangible assets of $ 5.1 million, goodwill of $ 5.6 million was established.

The results of operations for CloudCME are included in the Company’s Consolidated Financial Statements from the date of acquisition and are included in the Workforce Solutions segment.

BUSINESS SEGMENTS

1 unchanged sentence

The Company’s services are focused on the delivery of workforce training, certification, assessment, development, and scheduling products and services (Workforce Solutions) and provider credentialing, privileging, call center, and enrollment products and services (Provider Solutions).

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The Company measures segment performance based on operating income before income taxes and prior to the allocation of certain corporate overhead expenses, interest income, interest expense, gains and losses from equity investments, and depreciation.

1 unchanged sentence

The following is the Company’s business segment information (in thousands).

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Revenues, net:

7 unchanged sentences

Segment assets *

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

A significant portion of property and equipment assets are included within Unallocated.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revolving Credit Facility

13 unchanged sentences

an interest coverage ratio (consolidated EBITDA/consolidated interest expense) of not less than 3.0 to 1.0.

As of March 31, 2022 , the Company was in compliance with all covenants.

There were no balances outstanding on the Revolving Credit Facility as of or during the three months ended March 31, 2022 .

As of June 30, 2022 , the Company was in compliance with all covenants.

There were no balances outstanding on the Revolving Credit Facility as of or during the three and six months ended June 30, 2022 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements