What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-09 · 110 added, 60 removed, 111 unchanged (60% of the section changed)

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Further, the Company’s internal structure and executive leadership are likewise shaped by the organizing principle of a single platform, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by our key decision makers), organizational structure, compensation, performance assessment, and resource allocation.

Significant financial metrics for the first quarter of 2025 are set forth in the bullets below.

Revenues of $73.5 million in the first quarter of 2025, up 1.0% from $72.8 million in the first quarter of 2024

Operating income of $4.4 million in the first quarter of 2025, down 23.1% from $5.7 million in the first quarter of 2024

Net income of $4.3 million in the first quarter of 2025, down 17.1% from $5.2 million in the first quarter of 2024

Earnings per share (“EPS”) of $0.14 per share (diluted) in the first quarter of 2025, down from $0.17 per share (diluted) in the first quarter of 2024

Adjusted EBITDA 1 of $16.2 million in the first quarter of 2025, down 5.0% from $17.1 million in the first quarter of 2024

Significant financial metrics for the second quarter of 2025 are set forth in the bullets below.

Revenues of $74.4 million in the second quarter of 2025, up 4.0% from $71.6 million in the second quarter of 2024

Operating income of $5.9 million in the second quarter of 2025, up 33.4% from $4.4 million in the second quarter of 2024

Net income of $5.4 million in the second quarter of 2025, up 29.3% from $4.2 million in the second quarter of 2024

Earnings per share (“EPS”) of $0.18 per share (diluted) in the second quarter of 2025, up from $0.14 per share (diluted) in the second quarter of 2024

Adjusted EBITDA 1 of $17.6 million in the second quarter of 2025, up 11.3% from $15.8 million in the second quarter of 2024

Adjusted EBITDA is a non-GAAP financial measure.

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During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders.

HealthStream’s corporate headquarters will remain in Nashville in the Capitol View building, while the Company will continue hiring new employees both locally and nationally to support its growth.

HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth.

The sublease commenced in April 2025 and will expire in October 2031.

The Company expects to record sublease income, net of initial direct costs, of approximately $2.3 million during the remainder of 2025 and $3.2 million annually thereafter for the remaining term of the lease, as a reduction to lease expense under the caption General and Administrative.

We recorded sublease income, net of initial direct cost amortization, of $0.7 million during the three months ended June 30, 2025.

In addition, we expect to record sublease income, net, of approximately $1.6 million during the last six months of 2025 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.

Recent Developments

Macroeconomic conditions in the U.S.

Macroeconomic and other conditions in the U.S.

that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations.

While healthcare costs continue to grow, government cuts or reimbursement rate reductions to funding for programs and organizations such as Federally Qualified Health Centers and academic medical institutions, the impact of tariffs on goods and services utilized by healthcare provider organizations, as well as uncertainty surrounding potential policy, regulatory, and economic shifts continue to be challenging for our healthcare customers.

We believe that these macroeconomic challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, are causing some delays in purchasing and non-renewals of existing products and services, particularly in relation to elective or non-mandatory products and services.

Additionally, challenges persist in terms of inflationary pressures, ongoing elevated interest rate levels, declining consumer sentiment, and heightened geopolitical tensions, including various ongoing and threatened conflicts abroad and strained global trade relations.

In particular, the federal reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program.

We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may in the future cause, some delays in purchasing and non-renewals of existing products and services, particularly in relation to elective or non-mandatory products and services.

Additionally, challenges persist in terms of inflationary pressures, ongoing elevated interest rate levels, lower consumer sentiment levels compared to recent periods, and heightened geopolitical tensions, including various ongoing and threatened conflicts abroad and strained global trade relations.

We have experienced in certain recent periods, and believe that many of our customers have experienced, increased labor, supply chain, capital, and other expenditures and budgetary pressures associated with such conditions and challenges.

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economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations.

Additionally, given our focus on customers in the healthcare industry, adverse developments impacting the healthcare industry may adversely impact our business and financial results.

In this regard, and as mentioned above, potential reductions in federal and state healthcare spending and reimbursements, including proposed cuts to Medicare and Medicaid, and reductions in insurance coverage to individuals, whether through changes to the Affordable Care Act (“ACA”) or otherwise, as a result of recent political developments or other factors, may adversely impact our business and financial results, although we are unable to fully assess the impact to which we may be impacted by any such developments.

Additionally, given our focus on customers in the healthcare industry, adverse developments impacting the healthcare industry, including as a result of the developments described above, may adversely impact our business and financial results, although we are unable to fully assess the impact to which we may be impacted by any such developments.

Key Financial Metrics

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Revenues, net, reflect income generated by the sales of goods and services related to our operations.

Revenues, net, were $73.5 million for the three months ended March 31, 2025, compared to $72.8 million for the three months ended March 31, 2024.

Revenues, net, were $74.4 million and $147.9 million for the three and six months ended June 30, 2025, respectively, compared to $71.6 million and $144.3 million for the three and six months ended June 30, 2024, respectively.

Management utilizes revenue in connection with managing our business and believes that this metric provides useful information to investors as a key indicator of the growth and success of our products.

Net income represents revenues, net, less all expenses.

Net income was $4.3 million for the three months ended March 31, 2025, compared to $5.2 million for the three months ended March 31, 2024.

Net income was $5.4 million and $9.7 million for the three and six months ended June 30, 2025, respectively, compared to $4.2 million and $9.4 million for the three and six months ended June 30, 2024, respectively.

Management utilizes net income in connection with managing our business, including with regard to our capital deployment strategies.

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Additionally, certain short-term cash incentive bonuses and performance-based equity award grants are based, in whole or in part, on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.

Adjusted EBITDA was $16.2 million for the three months ended March 31, 2025, compared to $17.1 million for the three months ended March 31, 2024.

Adjusted EBITDA was $17.6 million and $33.8 million for the three and six months ended June 30, 2025, respectively, compared to $15.8 million and $32.9 million for the three and six months ended June 30, 2024, respectively.

Capital Expenditures .

Capital expenditures represent cash payments incurred for purchases of property and equipment and during the development phase for projects to develop software and content.

Capital expenditures were $8.8 million for the three months ended March 31, 2025, respectively, compared to $7.8 million for the three months ended March 31, 2024.

Capital expenditures were $9.0 million and $17.9 million for the three and six months ended June 30, 2025, respectively, compared to $6.7 million and $14.5 million for the three and six months ended June 30, 2024, respectively.

Management utilizes this metric in connection with managing the allocation of capitalized expenditures in which the Company invests related to the development of its products and believes that this metric is a key indicator of investment in products relative to their current and expected performance.

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There have been no changes in our critical accounting policies and estimates from those reported in our 2024 Form 10-K.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Revenues, net.

Revenues increased $0.7 million, or 1%, to $73.5 million for the three months ended March 31, 2025 from $72.8 million for the three months ended March 31, 2024.

Subscription revenues increased $0.6 million, or 1%, and professional services revenues increased by $0.1 million compared to the first quarter of 2024.

Compared to the three months ended March 31, 2024, revenues for the three months ended March 31, 2025 were negatively impacted by several factors, including a $1.7 million reduction from attrition in legacy applications, a $0.9 million reduction in perpetual license sales, and a $0.6 million reduction from customer bankruptcies that occurred in 2024.

Revenues increased $2.8 million, or 4%, to $74.4 million for the three months ended June 30, 2025 from $71.6 million for the three months ended June 30, 2024.

Subscription revenues increased $2.9 million, or 4%, and professional services revenues decreased by $0.1 million, or 3%, compared to the second quarter of 2024.

A comparison of revenues by revenue source is as follows (in thousands):

Three Months Ended June 30,

Percentage Change

Subscription services

Professional services

Total revenues, net

% of Revenues

Subscription services

Professional services

Cost of Revenues (excluding Depreciation and Amortization).

Cost of revenues increased $2.7 million, or 11%, to $26.4 million for the three months ended June 30, 2025, from $23.7 million for the three months ended June 30, 2024.

Cost of revenues as a percentage of revenues were 35% and 33% for the three months ended June 30, 2025 and 2024, respectively.

The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher costs for third-party software and cloud hosting as well as an increase in labor costs and royalties.

Product Development.

Product development expenses was $12.1 million for both the three months ended June 30, 2025 and 2024.

Product development expenses as a percentage of revenues were 16% and 17% for the three months ended June 30, 2025 and 2024, respectively.

Sales and Marketing.

Sales and marketing expenses, including personnel costs, increased $0.4 million, or 4%, to $11.8 million for the three months ended June 30, 2025, from $11.4 million for the three months ended June 30, 2024.

Sales and marketing expenses were 16% of revenues for both the three months ended June 30, 2025 and 2024.

The increase in amount is primarily due to higher labor costs and increased staffing levels.

General and Administrative.

General and administrative expenses decreased $2.2 million, or 23%, to $7.4 million for the three months ended June 30, 2025, from $9.6 million for the three months ended June 30, 2024.

General and administrative expenses were 10% and 13% of revenues for the three months ended June 30, 2025 and 2024, respectively.

The decrease in amount is primarily due to a decrease in bad debt expense associated with a customer bankruptcy that occurred during the three months ended June 30, 2024, coupled with sublease income associated with the sublease that commenced during the second quarter of 2025 as noted above.

Depreciation and Amortization.

Depreciation and amortization expense increased $0.5 million, or 5%, to $10.9 million for the three months ended June 30, 2025, from $10.4 million for the three months ended June 30, 2024.

This increase in amount is primarily a result of an increase in amortization associated with capitalized software.

Interest Income .

Interest income was $1.0 million and $0.9 million for the three months ended June 30, 2025 and 2024, respectively.

This increase is a result of an increase in cash and investment balances.

Other Income (Expense), Net .

Other income (expense), net was income of $23,000 and expense of $55,000 for the three months ended June 30, 2025 and 2024, respectively.

The change is primarily a result of foreign currency gains.

Income Tax Provision.

The Company recorded a provision for income taxes of $1.5 million for the three months ended June 30, 2025, compared to $1.1 million for the three months ended June 30, 2024.

The Company’s effective tax rate was 22% for the three months ended June 30, 2025, compared to 21% for the three months ended June 30, 2024.

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

Net income was $5.4 million and $4.2 million for the three months ended June 30, 2025 and 2024, respectively.

EPS was $0.18 per share (diluted) and $0.14 per share (diluted) for the three months ended June 30, 2025 and 2024, respectively.

Adjusted EBITDA was $17.6 million for the three months ended June 30, 2025, compared to $15.8 million for the three months ended June 30, 2024.

See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Revenues, net.

Revenues increased $3.6 million, or 2%, to $147.9 million for the six months ended June 30, 2025 from $144.3 million for the six months ended June 30, 2024.

Subscription revenues increased $3.5 million, or 3%, compared to the six months ended June 30, 2024.

Compared to the six months ended June 30, 2024, revenues for the six months ended June 30, 2025 were negatively impacted by several factors, including a $3.5 million reduction from attrition in legacy applications, a $1.1 million reduction from customer bankruptcies, and a $0.9 million reduction in perpetual license sales.

These reductions to revenue were more than offset by $9.1 million of revenue growth across our portfolio of solutions.

A comparison of revenues by revenue source is as follows (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Percentage Change

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Cost of Revenues (excluding Depreciation and Amortization).

Cost of revenues increased $0.9 million, or 4%, to $25.5 million for the three months ended March 31, 2025, from $24.6 million for the three months ended March 31, 2024.

Cost of revenues as a percentage of revenues were 35% and 34% for the three months ended March 31, 2025 and 2024, respectively.

The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher costs for software and cloud hosting as well as an increase in labor costs, partially offset by a decrease in royalties.

Cost of revenues increased $3.5 million, or 7%, to $51.9 million for the six months ended June 30, 2025, from $48.4 million for the six months ended June 30, 2024.

Cost of revenues as a percentage of revenues were 35% and 34% for the six months ended June 30, 2025 and 2024, respectively.

The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher costs for cloud hosting and third-party software as well as an increase in labor costs.

Product Development.

Product development expenses was $12.0 million for both the three months ended March 31, 2025 and 2024.

Product development expenses as a percentage of revenues were 16% and 17% for the three months ended March 31, 2025 and 2024, respectively.

Product development expenses was $24.1 million for both the six months ended June 30, 2025 and 2024.

Product development expenses as a percentage of revenues were 16% and 17% for the six months ended June 30, 2025 and 2024, respectively.

Sales and Marketing.

Sales and marketing expenses, including personnel costs, increased $0.3 million, or 3%, to $12.1 million for the three months ended March 31, 2025, from $11.8 million for the three months ended March 31, 2024.

Sales and marketing expenses were 17% and 16% of revenues for the three months ended March 31, 2025 and 2024.

Sales and marketing expenses, including personnel costs, increased $0.8 million, or 3%, to $24.0 million for the six months ended June 30, 2025, from $23.2 million for the six months ended June 30, 2024.

Sales and marketing expenses were 16% of revenues for both the six months ended June 30, 2025 and 2024.

The increase in amount is primarily due to higher labor costs and sales commissions.

General and Administrative.

General and administrative expenses increased $0.4 million, or 4%, to $8.7 million for the three months ended March 31, 2025, from $8.3 million for the three months ended March 31, 2024.

General and administrative expenses were 12% and 11% of revenues for the three months ended March 31, 2025 and 2024, respectively.

The increase in amount is primarily due to an increase in labor costs and software expenses, partially offset by a decrease in facilities costs associated with satellite offices.

General and administrative expenses decreased $1.8 million, or 10%, to $16.1 million for the six months ended June 30, 2025, from $17.9 million for the six months ended June 30, 2024.

General and administrative expenses were 11% and 12% of revenues for the six months ended June 30, 2025 and 2024, respectively.

The decrease in amount is primarily due to a decrease in bad debt expense associated with a customer bankruptcy that occurred during the six months ended June 30, 2024, coupled with sublease income associated with the sublease that commenced during the second quarter of 2025 as noted above.

Depreciation and Amortization.

Depreciation and amortization expense increased $0.5 million, or 4%, to $10.8 million for the three months ended March 31, 2025, from $10.3 million for the three months ended March 31, 2024.

Depreciation and amortization expense increased $0.9 million, or 4%, to $21.6 million for the six months ended June 30, 2025, from $20.7 million for the six months ended June 30, 2024.

This increase in amount is primarily a result of an increase in amortization associated with capitalized software.

Interest Income .

Interest income was $0.9 million for both the three months ended March 31, 2025 and 2024.

Other Expense, Net .

Other expense, net was $0.1 million for both the three months ended March 31, 2025 and 2024.

Interest income was $1.9 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively.

This increase is a result of an increase in cash and investment balances.

Other Income (Expense), Net .

Other income (expense), net was expense of $39,000 and $107,000 for the six months ended June 30, 2025 and 2024, respectively.

The change is primarily a result of foreign currency gains.

Income Tax Provision.

The Company recorded a provision for income taxes of $0.9 million for the three months ended March 31, 2025, compared to $1.3 million for the three months ended March 31, 2024.

The Company’s effective tax rate was 17% for the three months ended March 31, 2025, compared to 20% for the three months ended March 31, 2024.

The Company recorded a provision for income taxes of $2.4 million for both the six months ended June 30, 2025 and June 30, 2024.

The Company’s effective tax rate was 20% for the six months ended June 30, 2025, compared to 21% for the six months ended June 30, 2024.

Net income was $4.3 million and $5.2 million for the three months ended March 31, 2025 and 2024, respectively.

EPS was $0.14 per share (diluted) and $0.17 per share (diluted) for the three months ended March 31, 2025 and 2024, respectively.

Adjusted EBITDA was $16.2 million for the three months ended March 31, 2025, compared to $17.1 million for the three months ended March 31, 2024.

Net income was $9.7 million and $9.4 million for the six months ended June 30, 2025 and 2024, respectively.

EPS was $0.32 per share (diluted) and $0.31 per share (diluted) for the six months ended June 30, 2025 and 2024, respectively.

Adjusted EBITDA was $33.8 million for the six months ended June 30, 2025, compared to $32.9 million for the six months ended June 30, 2024.

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A reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income, is set forth below (in thousands).

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

GAAP net income

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Liquidity and Capital Resources

Net cash provided by operating activities increased by $6.2 million to $27.1 million during the three months ended March 31, 2025, from $20.9 million during the three months ended March 31, 2024.

The increase in net cash provided by operating activities is primarily due to strong cash receipts from customers during the quarter, resulting in a reduction to our days sales outstanding ("DSO").

Our DSO was 37 days for the first quarter of 2025 compared to 46 days for the first quarter of 2024.

Net cash provided by operating activities increased by $4.7 million to $32.1 million during the six months ended June 30, 2025, from $27.4 million during the six months ended June 30, 2024.

The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, resulting in a reduction to our days sales outstanding ("DSO").

Our DSO was 35 days for the second quarter of 2025 compared to 45 days for the second quarter of 2024.

The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter.

The Company’s primary sources of cash were receipts generated from the sales of our products and services.

The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, and general corporate expenses.

Net cash used in investing activities was $7.2 million for the three months ended March 31, 2025, compared to $7.1 million for the three months ended March 31, 2024.

During the three months ended March 31, 2025, the Company invested in marketable securities of $9.2 million, made payments for capitalized software development of $7.8 million, purchased property and equipment of $1.1 million, and purchased an investment of $0.5 million.

Net cash used in investing activities was $18.4 million for the six months ended June 30, 2025, compared to $19.0 million for the six months ended June 30, 2024.

During the six months ended June 30, 2025, the Company invested in marketable securities of $26.1 million, made payments for capitalized software development of $14.5 million, purchased property and equipment of $3.4 million, and purchased an investment of $0.5 million.

These uses of cash were partially offset by $26.1 million in maturities of marketable securities.

During the three months ended March 31, 2024, the Company invested in marketable securities of $14.1 million, made payments for capitalized software development of $7.0 million, and purchased property and equipment of $0.7 million.

During the six months ended June 30, 2024, the Company invested in marketable securities of $34.5 million, made payments for capitalized software development of $13.6 million, and purchased property and equipment of $0.9 million.

These uses of cash were partially offset by $29.2 million in maturities of marketable securities and $0.8 million received upon the settlement and release of escrowed proceeds related to a prior sale of a non-marketable equity investment.

Net cash used in financing activities was $2.0 million for the three months ended March 31, 2025, compared to $1.7 million for the three months ended March 31, 2024.

The uses of cash for the three months ended March 31, 2025 included $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units and $0.9 million for the payment of cash dividends.

The uses of cash for the three months ended March 31, 2024 included $0.9 million for the payment of employee payroll taxes in related to the vesting of restricted share units and $0.8 million for the payment of cash dividends.

Our balance sheet reflects working capital of $43.9 million at March 31, 2025, compared to $37.4 million at December 31, 2024.

The increase in working capital is primarily a result of an increase in cash and cash equivalents.

The Company’s primary source of liquidity as of March 31, 2025 was $77.3 million of cash and cash equivalents and $36.0 million of marketable securities.

Net cash used in financing activities was $21.1 million for the six months ended June 30, 2025, compared to $2.6 million for the six months ended June 30, 2024.

The uses of cash for the six months ended June 30, 2025 included $18.1 million for repurchases of common stock, $1.9 million for the payment of cash dividends, and $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.

The uses of cash for the six months ended June 30, 2024 included $1.7 million for the payment of cash dividends and $0.9 million for the payment of employee payroll taxes in relation to the vesting of RSUs.

Our balance sheet reflects working capital of $29.0 million at June 30, 2025, compared to $37.4 million at December 31, 2024.

The decrease in working capital is primarily a result of a decrease in cash and cash equivalents to fund share repurchases.

The Company’s primary source of liquidity as of June 30, 2025 was $52.1 million of cash and cash equivalents and $38.5 million of marketable securities.

The Company also has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants and minimum liquidity requirements.

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On February 24, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on March 21, 2025 to holders of record of our common stock on March 10, 2025.

In addition, on May 5, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which will be payable on May 30, 2025 to holders of record of our common stock on May 19, 2025.

On May 5, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on May 30, 2025 to holders of record of our common stock on May 19, 2025.

In addition, on August 4, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which will be payable on August 29, 2025 to holders of record of our common stock on August 18, 2025.

T he dividend policy and the declaration and payment of each quarterly cash dividend will be subject to our Board’s continuing determination that the policy and the declaration and payment of dividends thereunder are in the best interests of our shareholders and are in compliance with applicable law and our credit agreement.

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In addition, any repurchases under the authorization will be subject to prevailing market conditions, liquidity and cash flow considerations, applicable securities laws requirements (including under Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934, as applicable), and other factors.

The share repurchase program will terminate on the earlier of May 31, 2026 or when the maximum dollar amount has been expended.

The share repurchase program does not require the Company to acquire any amount of shares and may be suspended or discontinued at any time.

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, effect any share repurchases we may elect to make under our share repurchase program as described above, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.

Under this program, during the three months ended June 30, 2025, the Company repurchased and subsequently retired 649,953 shares of common stock at an aggregate fair value of $18.1 million, reflecting an average price per share of $27.86 (excluding the cost of broker commissions), and the Company continued to repurchase shares pursuant to this authorization during the third quarter, completing the program in July by repurchasing and retiring 255,833 shares valued at $6.9 million, reflecting an average price per share of $26.94 (excluding the cost of broker commissions).

The share repurchase program terminated in July when the maximum dollar amount was expended.

We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, effect share repurchases we made under our share repurchase program as described above and any future program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.

The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business.

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Therefore, the maximum borrowings against our new revolving credit facility would be dependent on the covenant calculations at the time of borrowing.

March 31, 2025, we were in compliance with all covenants under our revolving credit facility.

June 30, 2025, we were in compliance with all covenants under our revolving credit facility.

There can be no assurance that amounts available for borrowing under our revolving credit facility will be sufficient to consummate any possible acquisitions, and we cannot provide assurance that if we need additional financing, it will be available on terms favorable to us or at all.

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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 2. Management’s Discussion and Analysis