What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-27 · 188 added, 77 removed, 314 unchanged (46% of the section changed)

8 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for doubtful accounts of $ 616 and $ 544 at March 31, 2023 and December 31, 2022, respectively

30,158  

Accounts receivable, net of allowance for doubtful accounts of $ 625 and $ 544 at June 30, 2023 and December 31, 2022, respectively

35,010  

36,730  

Accounts receivable - unbilled

Prepaid royalties, net of amortization

10,959  

Other prepaid expenses and other current assets

11,290  

Total current assets

1 unchanged sentence

114,377  

Property and equipment, net of accumulated depreciation of $ 21,326 and $ 20,280 at March 31, 2023 and December 31, 2022, respectively

Property and equipment, net of accumulated depreciation of $ 22,364 and $ 20,280 at June 30, 2023 and December 31, 2022, respectively

14,461  

15,483  

Capitalized software development, net of accumulated amortization of $ 110,182 and $ 105,025 at March 31, 2023 and December 31, 2022, respectively

Capitalized software development, net of accumulated amortization of $ 115,618 and $ 105,025 at June 30, 2023 and December 31, 2022, respectively

38,950  

5 unchanged sentences

192,398  

Customer-related intangibles, net of accumulated amortization of $ 50,679 and $ 48,552 at March 31, 2023 and December 31, 2022, respectively

Customer-related intangibles, net of accumulated amortization of $ 52,807 and $ 48,552 at June 30, 2023 and December 31, 2022, respectively

58,925  

61,269  

Other intangible assets, net of accumulated amortization of $ 14,346 and $ 12,818 at March 31, 2023 and December 31, 2022, respectively

Other intangible assets, net of accumulated amortization of $ 15,936 and $ 12,818 at June 30, 2023 and December 31, 2022, respectively

16,439  

30 unchanged sentences

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

30,682 and 30,579 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

30,686 and 30,579 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

256,073  

16 unchanged sentences

Three Months Ended

March 31, 2023

March 31, 2022

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Revenues, net

7 unchanged sentences

Operating income

Other income (loss), net

Other income, net

Income before income tax provision

8 unchanged sentences

Three Months Ended

March 31, 2023

March 31, 2022

Other comprehensive income, net of taxes:

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustments

Unrealized loss on marketable securities

Total other comprehensive (loss) income

Unrealized (loss) gain on marketable securities

Total other comprehensive income (loss)

Comprehensive income

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Accumulated Other Comprehensive

19 unchanged sentences

$ 336,039  

Three Months Ended March 31, 2022

Comprehensive income

Dividends declared on common stock ($ 0.025 per share)

( 767 )  

Stock-based compensation

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

Balance at June 30, 2023

30,686  

$ 256,073  

$ 85,435  

$ ( 889 )  

$ 340,619  

Six Months Ended June 30, 2022

Accumulated Other Comprehensive

Total Shareholders’

Income (Loss)

Balance at December 31, 2021

15 unchanged sentences

$ 322,572  

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  

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:

$ 6,756  

$ 5,976  

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

20,148  

18,742  

Stock-based compensation

2 unchanged sentences

Deferred income taxes

( 490 )  

Gain on sale of fixed assets

Loss on non-marketable equity investments

Change in fair value of non-marketable equity investments

( 342 )  

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid royalties

( 810 )  

Other prepaid expenses and other current assets

( 2,408 )  

Deferred commissions

( 5,830 )  

Accounts payable and accrued expenses

( 2,835 )  

Accrued royalties

( 207 )  

Deferred revenue

Net cash provided by operating activities

25,489  

27,981  

INVESTING ACTIVITIES:

Business combinations, net of cash acquired

( 6,621 )  

Proceeds from maturities of marketable securities

10,000  

Purchases of marketable securities

( 31,983 )  

Payments associated with capitalized software development

( 13,309 )  

Proceeds from sale of fixed assets

Purchases of property and equipment

( 1,382 )  

Net cash used in investing activities

( 43,295 )  

FINANCING ACTIVITIES:

Taxes paid related to net settlement of equity awards

( 797 )  

Repurchases of common stock

Payment of cash dividends

( 1,534 )  

Net cash used in financing activities

( 2,331 )  

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

( 81 )  

Net decrease in cash and cash equivalents

( 20,218 )  

Cash and cash equivalents at beginning of period

46,023  

46,905  

Cash and cash equivalents at end of period

$ 25,805  

$ 37,216  

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

21 unchanged sentences

Operating results for the 

three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The Condensed Consolidated Balance Sheet at December 

4 unchanged sentences

Our business is managed and organized around a single platform strategy, also referred to as our One HealthStream approach. At the center of this single platform strategy is our hStream technology platform. By facilitating interoperability among our applications, as well as third party applications, we believe that our hStream technology platform is allowing stand-alone applications to leverage each other to more efficiently and effectively empower our customers to manage their business and improve their outcomes.

As indicated in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2022, filed on February 28, 2023, the Company has reached an inflection point in its efforts to operate according to its single platform strategy, also known as our One HealthStream approach.

As of January 1, 2023, the Company’s business is now organized and managed around a consolidated, enterprise approach, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by our key decision maker), organization structure, compensation, performance assessment, and resource allocation.

As the result of these developments, the Company determined that Workforce Solutions and Provider Solutions were no longer separate operating segments or separate reportable segments as of January 1, 2023, such that the Company would no longer present two reportable segments for periods beginning on and after this date. As such, beginning January 1, 2023, the Company has a single reportable segment, such that the Company is presenting historical financial information on a single segment basis beginning with this Quarterly Report on Form 10 -Q for the three months ended March 31, 2023.

As indicated in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2022, filed on February 28, 2023, the Company reached an inflection point in its efforts to operate according to its single platform strategy, One HealthStream.

January 1, 2023, the Company’s business has been organized and managed around a consolidated, enterprise approach, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by our key decision maker), organization structure, compensation, performance assessment, and resource allocation.

As the result of these developments, the Company determined that Workforce Solutions and Provider Solutions were no longer separate operating segments or separate reportable segments as of January 1, 2023, such that the Company would no longer present two reportable segments for periods beginning on and after this date. As such, since January 1, 2023, the Company has had a single reportable segment, such that the Company is presenting historical financial information on a single segment basis in this Quarterly Report on Form 10 -Q for the three and six months ended June 30, 2023.

For purposes of reporting historical 2022 results in this Quarterly Report on Form 10 -Q, we are reporting comparable performance on a consolidated basis unless otherwise indicated.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

REVENUE RECOGNITION AND SALES COMMISSIONS

7 unchanged sentences

Recognition of revenue when, or as, the Company satisfies a performance obligation

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table represents revenues disaggregated by revenue source (in thousands).

Sales taxes are excluded from revenues.

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Subscription services

1 unchanged sentence

$ 62,471  

$ 132,521  

$ 124,546  

Professional services

2 unchanged sentences

$ 65,638  

For the three months ended March 31, 2023 and 2022 , the Company recognized $ 0.2  million and $ 6,000 , respectively, in impairment losses on receivables and contract assets arising from the Company’s contracts with customers.

$ 138,144  

$ 131,005  

For the 

three months ended June 30, 2023 and 2022 , the Company recognized 

$ 0.2  million and 

$ 0.4 million in impairment losses on receivables and contract assets arising from the Company's contracts with customers, respectively.

For both the 

six months ended June 30, 2023 and 2022 , the Company recognized 

$ 0.4  million in impairment losses on receivables and contract assets arising from the Company’s contracts with customers.

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, 2023 and 2022 , we recognized revenues of approximately $ 39.1  million and $ 34.6  million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

As of March 31, 2023 , approximately $ 504  million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

June 30, 2023 and 2022 , we recognized revenues of approximately $ 43.6  million and $ 40.0  million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

During the six months ended June 30, 2023 and 2022, we recognized revenues of approximately $ 62.1  million and $ 56.0  million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

As of June 30, 2023 , approximately $ 511  million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

We expect to recognize revenue related to approximately 

1 unchanged sentence

Sales Commissions

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recorded amortization of deferred commissions of approximately $ 2.7  million and $ 2.5  million for the three  months ended March 31, 2023 and 2022 , respectively, which is included in sales and marketing expenses in the accompanying Condensed Consolidated Statements of Income.

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recorded amortization of deferred commissions of approximately $ 2.8  million and $ 2.5  million for the three  months ended June 30, 2023 and 2022 , and $ 5.5 million and $ 5.0 million for the six months ended June 30, 2023 and 2022, 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 the three  months ended March 31, 2023 and 2022 , the Company recorded a provision for income taxes of approximately $ 0.5  million and $ 0.9 million, respectively. The Company’s effective tax rate was 16 % and 23 % for the three months ended March 31, 2023 and 2022 , respectively.

During the three  months ended June 30, 2023 and 2022 , the Company recorded a provision for income taxes of approximately $ 0.4  million and $ 0.5 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded a provision for income taxes of $ 0.9 million and $ 1.4  million, respectively.

The Company’s effective tax rate was 12 % and 19 % for the six months ended June 30, 2023 and 2022 , 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, 2023 , the Company recorded discrete tax benefits of $ 53,000 , which consisted primarily of a $ 133,000  tax benefit associated with stock-based awards.

This tax benefit was partially offset by $ 80,000 of discrete tax expense related to reserves for uncertain tax positions.

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. 

SHAREHOLDERS ’

Dividends on Common Stock

On February 20, 2023, the Company's Board of Directors ("Board") approved a dividend policy under which the Board declared the initial quarterly dividend in the amount of $ 0.025  per share, which will be payable on April 28, 2023 to the holders of record of all of the issued and outstanding shares of common stock as of the close of business on April 17, 2023 .

This marks the first quarterly cash dividend policy adopted by the Company.

On April 24, 2023, the Board approved the Company's 

second quarterly cash dividend of $ 0.025 per share, payable on June 23, 2023 to holders of record on June 12, 2023 .

During the six months ended June 30, 2023 , the Company recorded discrete tax benefits of $ 0.5  million, which consisted primarily of tax benefits associated with changes in state apportionment rules in Tennessee upon the enactment of the Tennessee Works Tax Act, in the amount of $ 0.6  million, and stock-based awards, in the amount of $ 0.1 million, partially offset by $ 0.2 million of discrete tax expense related to reserves for uncertain tax positions.

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. 

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SHAREHOLDERS ’

Dividends on Common Stock

On February 20, 2023, the Company's Board of Directors ("Board") approved a dividend policy, marking the first quarterly cash dividend policy adopted by the Company ("Dividend Policy").

During the six months ended June 30, 2023, the Board declared the following quarterly dividends under the Dividend Policy:

Dividend Payment Date Dividend Declaration Date  

Dividend Per Share  

Record Date  

Cash Outlay  

April 28, 2023 February 20, 2023  

$ 0.025  

April 17, 2023  

$ 767,000  

June 23, 2023 April 24, 2023  

June 12, 2023  

767,000  

Total dividends  

$ 0.050  

$ 1,534,000  

Additionally, o n July 24, 2023, the Board approved the Company’s third quarterly cash dividend of $ 0.025 per share, payable on September 

29, 2023 to holders of record on September 18, 2023 . 

Stock-Based Compensation

2 unchanged sentences

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 three months ended March 31, 2023 , the Company issued 45,907  RSUs subject to service-based time vesting, with a weighted average grant date fair value of $ 26.25  per share, measured based on the closing fair market value of the Company's stock on the date of the grant. 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 the 2022  Omnibus Incentive Plan submitted to the Company's shareholders for approval at the annual meeting of the Company's shareholders held on 

May 26, 2022 .

 Of these, the 

100,191  RSUs that were 

not  conditioned on shareholder approval of the 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 required that the 

35,161  RSUs conditioned upon approval of the 2022  Omnibus Incentive Plan 

not  be valued until the condition was met (that is, at such time that the 

2022  Omnibus Incentive Plan was approved by shareholders at the annual meeting of the Company’s shareholders on 

May 26, 2022) .

During the six months ended June 30, 2023 , the Company issued 72,923  RSUs subject to service-based time vesting, with a weighted average grant date fair value of $ 25.36  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, 2022 , the Company approved the grant of 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 grant. 

During the 

three months ended March 31, 2023 , the Company granted 138,000  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 15 %, 20 %, 20 %, 20 %, and 25 % based on performance in 2023, 2024, 2025, 2026, and 2027, respectively.

six months ended June 30, 2023 , the Company granted 138,000  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 15 %, 20 %, 20 %, 20 %, and 25 % based on performance in 2023, 2024, 2025, 2026, and 2027, respectively.

The performance criteria for the first -year tranche, or 20,700  of these performance-based RSUs, is based on 2023  adjusted EBITDA.

The measurement date for these 20,700  performance-based RSUs was established during the 

three months ended March 31, 2023 with a weighted average grant date fair value of $ 26.25  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established. The performance criteria for the remaining 117,300 performance-based RSUs has not yet been determined and will be established on an annual basis in 2024, 2025, 2026, and 2027, as applicable;

therefore, the measurement date for these remaining 117,300 performance-based RSUs cannot be determined until the performance criteria have been established. 

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

first quarter of 2023 with a grant date fair value of $ 26.25  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established. The performance criteria for the remaining 117,300 performance-based RSUs has not yet been determined and will be established on an annual basis in 2024, 2025, 2026, and 2027, as applicable;

therefore, the measurement date for these remaining 117,300 performance-based RSUs cannot be determined until the performance criteria have been established.

During the six months ended 

June 30, 2022, 

the Company granted 

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 and measurement date for the second -year tranche, or 18,210  of these performance-based RSUs, is based on 2023  adjusted EBITDA and was established during the three months ended March 31, 2023  with a grant date fair value of $ 26.25  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established.

The performance criteria for the remaining 59,178  performance-based RSUs has not yet been determined and will be established on an annual basis in 2024, 2025, and 2026, as applicable;

therefore, the measurement date for these remaining 59,178  performance-based RSUs cannot be determined until the performance criteria have been established.

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 

20 %, and 

25 % based on performance in 

2025,  and 

2026,  respectively.

The performance criteria for the 

second -year tranche, or 

18,210  of these performance-based RSUs, is based on 

2023  adjusted EBITDA.

The measurement date for these 18,210 performance-based RSUs was established during the first quarter of 2023  with a grant date fair value of $ 26.25  per share, measured based on the closing fair market value of the Company's stock on the date the performance criteria was established.

The performance criteria for the remaining 

59,178  performance-based RSUs has 

not  yet been determined and will be established on an annual basis in 

2025,  and 

2026,  as applicable;

therefore, the measurement date for these remaining 

59,178  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

Share Repurchase Plan

On March 14, 2022, the Company's Board approved an expansion of the Company's share repurchase program initially authorized by the Board on November 1, 2021 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 expired on 

March 13, 2023.

Under this program, the Company repurchased a total of 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).

No repurchases occurred during the three months ended March 31, 2023.

$ 1,093  

$ 2,038  

$ 1,691  

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 268,000  and 218,000  for the three  months ended March 31, 2023 and 2022 , respectively.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 225,000  and 228,000  for the three  months ended June 30, 2023 and 2022 , respectively, and 

246,000 and 

223,000 for the six months ended June 30, 2023 and 2022, 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,

$ 4,133  

$ 3,083  

$ 6,756  

$ 5,976  

Weighted-average shares outstanding

1 unchanged sentence

30,491  

30,638  

30,723  

Effect of dilutive shares

2 unchanged sentences

30,512  

30,717  

30,744  

Net income per share:

3 unchanged sentences

$ 0.19  

$ 0.13  

$ 0.10  

$ 0.22  

$ 0.19  

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, 2023

June 30, 2023

Adjusted Cost

18 unchanged sentences

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

As of March 31, 2023 , the Company did not recognize any allowance for credit impairments on its available for sale debt securities.

As of June 30, 2023 , 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.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BUSINESS COMBINATIONS

3 unchanged sentences

Based on the results of that valuation report, the Company has estimated the fair value of the customer relationships, developed technology, non-compete, and trade name intangible assets to be $ 2.6  million, $ 1.9 million, $ 0.2 million, and $ 0.1 million, respectively.

As a result, the fair value of the customer relationships and non-compete intangible assets were increased by $ 2.0 million and $ 0.1 million during the three months ended March 31, 2023, respectively, while the developed technology and trade name intangible assets were decreased by $ 0.8 million and $ 20,000 during the three months ended March 31, 2023, respectively, due to this new information, with a corresponding decrease to goodwill of $ 1.3 million for the net change in the fair value of identifiable intangible assets.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As a result, the fair value of the customer relationships and non-compete intangible assets were increased by $ 2.0 million and $ 0.1 million during the six months ended June 30, 2023, respectively, while the developed technology and trade name intangible assets were decreased by $ 0.8 million and $ 20,000 during the six months ended June 30, 2023, respectively, due to this new information, with a corresponding decrease to goodwill of $ 1.3 million for the net change in the fair value of identifiable intangible assets.

Revolving Credit Facility

8 unchanged sentences

The obligations under the Revolving Credit Facility are guaranteed by each of the Company’s subsidiaries.

As of June 30, 2023, the LIBOR interest rate benchmark has been phased out, triggering a Benchmark Transition Event as defined by the Company's Revolving Credit Facility.

Accordingly, should the Company elect to borrow from its Revolving Credit Facility, LIBOR will be replaced with the Benchmark Replacement (as defined by the Revolving Credit Facility) for purposes of calculating an interest rate and the Revolving Credit Facility will be amended to reflect the same;

until such Benchmark Replacement is implemented, loans requested by the Company under the Revolving Credit Facility must be made as Base Rate loans, as described above.

The purpose of the Revolving Credit Facility is for general working capital needs, permitted acquisitions (as defined in the Revolving Credit Facility), and for stock repurchase and/or redemption transactions that the Company may authorize.

3 unchanged sentences

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

As of March 31, 2023 , 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, 2023 .

As of June 30, 2023 , 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, 2023 .

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