What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 108 added, 67 removed, 376 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

Current assets:

43 unchanged sentences

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

29,897 and 30,432 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

29,652 and 30,432 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

228,753 252,432

12 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

Revenues, net

17 unchanged sentences

788 1,007 2,676 2,856

Other income (expense), net

Other expense, net

( 103 ) ( 26 ) ( 141 ) ( 134 )

17 unchanged sentences

Three Months Ended

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

$ 6,086 $ 5,725 $ 15,808 $ 15,118

Other comprehensive income (loss), net of taxes:

Other comprehensive (loss) income, net of taxes:

Foreign currency translation adjustments

( 293 ) 290 511 ( 229 )

Unrealized loss on marketable securities

( 13 ) ( 1 ) ( 32 ) ( 7 )

Total other comprehensive income (loss)

Unrealized gain on marketable securities

Total other comprehensive (loss) income

( 254 ) 333 517 ( 193 )

5 unchanged sentences

(In thousands, except per share data)

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Accumulated Other Comprehensive

28 unchanged sentences

29,897 $ 235,041 $ 116,804 $ ( 1,278 ) $ 350,567

Six Months Ended June 30, 2024

— — 6,086 — 6,086

Comprehensive loss

— — — ( 254 ) ( 254 )

Dividends declared on common stock ($ 0.031 per share)

— — ( 918 ) — ( 918 )

Stock-based compensation

— 794 — — 794

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

11 ( 121 ) — — ( 121 )

Excise tax on repurchases of common stock

— ( 64 ) — — ( 64 )

Repurchases of common stock

( 256 ) ( 6,897 ) — — ( 6,897 )

Balance at September 30, 2025

29,652 $ 228,753 $ 121,972 $ ( 1,532 ) $ 349,193

Nine Months Ended September 30, 2024

Accumulated Other Comprehensive

Total Shareholders’

(Loss)/Income

Balance at December 31, 2023

22 unchanged sentences

30,408 $ 250,368 $ 100,063 $ ( 1,217 ) $ 349,214

— — 5,725 — 5,725

Comprehensive income

— — — 333 333

Dividends declared on common stock ($ 0.028 per share)

— — ( 851 ) — ( 851 )

Stock-based compensation

— 1,131 — — 1,131

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

7 ( 71 ) — — ( 71 )

Balance at September 30, 2024

30,415 $ 251,428 $ 104,937 $ ( 884 ) $ 355,481

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

OPERATING ACTIVITIES:

7 unchanged sentences

Deferred income taxes

5,055 ( 960 )

Loss on equity method investments

4 unchanged sentences

( 11,881 ) ( 8,995 )

( 8,596 ) ( 5,516 )

Accounts payable and accrued expenses

1 unchanged sentence

Accrued royalties

( 366 ) ( 370 )

Deferred revenue

1,094 ( 1,183 )

Net cash provided by operating activities

49 unchanged sentences

All intercompany transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform to the current period presentation.

Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Operating results for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

The Condensed Consolidated Balance Sheet at December 31, 2024 was derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by US GAAP for a complete set of financial statements.

5 unchanged sentences

Further, the CODM reviews and utilizes functional expenses (cost of revenues, product development, sales and marketing, general and administrative, and depreciation and amortization) at the consolidated level to manage the Company's operations.

Other segment items included in consolidated net income are interest income, other income (expense), net, and income tax provision, which are reflected in the Condensed Consolidated Statements of Income.

Expenditures for additions to long-lived assets for the consolidated entity were $ 23.2 million and $ 19.4 million for the six months ended June 30, 2025 and 2024 , respectively.

Other segment items included in consolidated net income are interest income, other expense, net, and income tax provision, which are reflected in the Condensed Consolidated Statements of Income.

Expenditures for additions to long-lived assets for the consolidated entity were $ 34.2 million and $ 29.8 million for the nine months ended September 30, 2025 and 2024 , respectively.

Non-Marketable Equity Investments

The aggregate carrying amount of non-marketable equity investments accounted for using the measurement alternative for equity investments that do not have readily determinable fair values was $ 1.5 million as of June 30, 2025 and December 31, 2024 , which the Company evaluates for impairment at each reporting period.

Cumulatively, there have been no adjustments recorded due to changes in the fair value of the non-marketable equity investments the Company held as of June 30, 2025 .

The aggregate carrying amount of non-marketable equity investments accounted for using the measurement alternative for equity investments that do not have readily determinable fair values was $ 1.5 million as of September 30, 2025 and December 31, 2024 , which the Company evaluates for impairment at each reporting period.

Cumulatively, there have been no adjustments recorded due to changes in the fair value of the non-marketable equity investments the Company held as of September 30, 2025 .

The fair value of non-marketable equity investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

17 unchanged sentences

The Company is currently evaluating the impact of the adoption of this standard.

In September 2025, the FASB issued ASU 2025 - 06, Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350 - 40 ):

Targeted Improvements to the Accounting for Internal-Use Software , to modernize the accounting guidance for the costs to develop software for internal use.

The standard applies to costs incurred to develop or obtain software for internal use.

ASU 2025 - 06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile development.

Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The new standard also supersedes the guidance related to costs incurred to develop a website.

ASU 2025 - 06 is effective for annual periods beginning after December 15, 2027.

The guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis.

The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.

REVENUE RECOGNITION

Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled in exchange for transferring those goods or services.

Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services.

Revenue is recognized based on the following five step model:

6 unchanged sentences

Sales taxes are excluded from revenues.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Subscription services

4 unchanged sentences

$ 76,474 $ 73,095 $ 224,355 $ 217,411

three months ended June 30, 2025 and 2024 , the Company recognized

$ 0.2 million and

$ 1.6 million in impairment losses on receivables and contract assets arising from the Company's contracts with customers, respectively.

six months ended June 30, 2025 and 2024 , the Company recognized

three months ended September 30, 2025 and 2024 , the Company recognized

$ 0.2 million in impairment losses on receivables and contract assets arising from the Company's contracts with customers.

nine months ended September 30, 2025 and 2024 , the Company recognized

$ 0.6 million and

$ 2.0 million in impairment losses on receivables and contract assets arising from the Company's contracts with customers, respectively.

During the three months ended June 30, 2025 and 2024 , the Company recognized revenues of $ 49.1 million and $ 47.2 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

During the six months ended June 30, 2025 and 2024 , the Company recognized revenues of $ 69.1 million and $ 65.2 million, respectively, from the amounts included in deferred revenue at the beginning of the respective periods.

As of June 30, 2025 , approximately $ 618 million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

During the three months ended September 30, 2025 and 2024 , the Company recognized revenues of $ 45.9 million and $ 45.0 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

During the nine months ended September 30, 2025 and 2024 , the Company recognized revenues of $ 81.9 million and $ 79.4 million, respectively, from the amounts included in deferred revenue at the beginning of the respective periods.

As of September 30, 2025 , approximately $ 621 million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

The Company expects to recognize revenue related to approximately 39 % of these remaining performance obligations over the next 12 months, 67 % over the next 24 months, and 85 % over the next 36 months, with the remaining amounts recognized thereafter.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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

The Company’s effective tax rate was 22 % for both the nine months ended September 30, 2025 and 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.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On July 4, 2025, the federal budget reconciliation legislation, commonly referred to as the One Big Beautiful Bill ("OBBB”), was signed into law.

The OBBB includes significant changes to federal tax law and other regulatory provisions that may impact the Company, including modifications to capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation.

The Company is currently evaluating the provisions of the new law and the potential effects on its financial position, results of operations, and cash flows.

As of the date of these financial statements, the Company has not completed its assessment, and, therefore, no adjustments have been made.

Additional disclosures will be provided in future periods as the impact of the legislation is determined.

On July 4, 2025, the federal budget reconciliation legislation, commonly referred to as the One Big Beautiful Bill Act ("OBBB”), was signed into law.

The legislation did not have a material impact on the Company's income tax expense during the three months ended September 30, 2025, and it is not expected to materially impact the Company's effective income tax rate for 2025.

SHAREHOLDERS' EQUITY

Dividends on Common Stock

During the six months ended June 30, 2025 , the Company's Board of Directors (“Board”) declared the following quarterly dividends under the Company's dividend policy (in thousands, except per share data):

During the nine months ended September 30, 2025 , the Company's Board of Directors (“Board”) declared the following quarterly dividends under the Company's dividend policy (in thousands, except per share data):

Dividend Payment Date Dividend Declaration Date Dividend Per Share Record Date Cash Outlay

1 unchanged sentence

May 30, 2025 May 5, 2025 $ 0.031 May 19, 2025 $ 946

Additionally, o n August 4, 2025, the Board declared a quarterly cash dividend of $ 0.031 per share, payable on August 29, 2025 to holders of record on August 18, 2025 .

August 29, 2025 August 4, 2025 $ 0.031 August 18, 2025 $ 919

Additionally, o n November 3, 2025, the Board declared a quarterly cash dividend of $ 0.031 per share, payable on November 28, 2025 to holders of record on November 17, 2025 .

Stock-Based Compensation

1 unchanged sentence

Stock Option Activity

A summary of stock option activity for the three months ended June 30, 2025 is as follows (in thousands, except weighted-average exercise price).

A summary of stock option activity for the three months ended September 30, 2025 is as follows (in thousands, except weighted-average exercise price).

Exercise Price

5 unchanged sentences

90 $ 20.34 $ 711

The weighted average remaining contractual term of options outstanding at June 30, 2025 was 5.4 years.

The weighted average remaining contractual term of options outstanding at September 30, 2025 was 5.2 years.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Restricted Share Unit Activity

A summary of Restricted Share Unit ("RSU") activity for the three months ended June 30, 2025 is as follows (in thousands, except weighted-average grant date fair value):

A summary of Restricted Share Unit ("RSU") activity for the three months ended September 30, 2025 is as follows (in thousands, except weighted-average grant date fair value):

Average Grant Date

3 unchanged sentences

508 $ 26.72 $ 16,852

As of June 30, 2025 , total unrecognized compensation expense related to non-vested RSUs was $ 6.4 million, net of estimated forfeitures, with a weighted average expense recognition period remaining of 2.6 years.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of September 30, 2025 , total unrecognized compensation expense related to non-vested RSUs was $ 6.7 million, net of estimated forfeitures, with a weighted average expense recognition period remaining of 2.7 years.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenues (excluding depreciation and amortization)

9 unchanged sentences

Share Repurchase Plan

On May 8, 2025, the Company announced a share repurchase program approved by the Company’s Board of Directors under which the Company is authorized to repurchase up to $ 25.0 million of its outstanding shares of common stock.

Pursuant to this authorization, repurchases may be made from time to time in the open market, including under a Rule 10b5 - 1 plan, through privately negotiated transactions, or otherwise.

During the three months ended June 30, 2025, the Company repurchased and subsequently retired 649,953 shares valued at $ 18.1 million pursuant to this authorization, 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.

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

On May 8, 2025, the Company announced a share repurchase program approved by the Company’s Board of Directors under which the Company was authorized to repurchase up to $ 25.0 million of its outstanding shares of common stock.

Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under a Rule 10b5 - 1 plan, through privately negotiated transactions, or otherwise.

During the three and nine months ended September 30, 2025, the Company repurchased and subsequently retired 255,833 shares and 905,786 shares valued at $ 6.9 million and $ 25.0 million, respectively, pursuant to this authorization.

This share repurchase program is no longer in effect as the maximum dollar amount under this program was expended during the three months ended September 30, 2025 as referenced above.

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 184,000 and 155,000 for the three months ended June 30, 2025 and 2024 , respectively, and 145,000 and 166,000 for the six months ended June 30, 2025 and 2024 .

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 224,000 and 177,000 for the three months ended September 30, 2025 and 2024 , respectively, and 171,000 and 169,000 for the nine months ended September 30, 2025 and 2024 .

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

$ 6,086 $ 5,725 $ 15,808 $ 15,118

8 unchanged sentences

$ 0.20 $ 0.19 $ 0.52 $ 0.50

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):

June 30, 2025

September 30, 2025

Adjusted Cost

12 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 June 30, 2025 and December 31, 2024 , the Company did not recognize any allowance for credit impairments on its available for sale securities.

As of September 30, 2025 and December 31, 2024 , the Company did not recognize any allowance for credit impairments on its available for sale 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.

20 unchanged sentences

In addition, the Revolving Credit Facility contains certain customary affirmative and negative covenants that, among other things, restrict additional indebtedness, liens and encumbrances, changes to the character of the Company’s business, acquisitions, asset dispositions, mergers and consolidations, sale or discount of receivables, creation or acquisitions of additional subsidiaries, and other matters customarily restricted in such agreements.

As of June 30, 2025 , 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, 2025 .

As of September 30, 2025 , 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 nine months ended September 30, 2025 .

SUBSEQUENT EVENT

On October 8, 2025, the Company acquired all of the outstanding equity of Virsys12, LLC ( "Virsys12" ), a Brentwood, Tennessee-based healthcare technology company that offers payers and health plans an innovative provider data management suite used for onboarding, credentialing, and network management.

The consideration paid at closing for Virsys12 consisted of approximately $11.2 million in cash, giving effect to customary purchase price adjustments, and is subject to a post-closing working capital adjustment.

In addition, up to an additional $ 4.0 million in cash may be paid over a three -year period following closing, contingent upon the achievement of certain financial targets.

This acquisition expands the Company's existing provider data management and credentialing solution for payers and health plan enterprises, called Network by HealthStream TM , launched 14 months ago, which is a part of its broader, market-leading Credentialing application suite.

The acquisition will be accounted for using the acquisition method of business combination under ASC 805, Business Combinations .

The Company will provide preliminary purchase price allocation information and other disclosures required by ASC 805 in our Annual Report on Form 10 -K to be filed for the year ending December 31, 2025.

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