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Item 1A. Risk Factors

2026-02-27 compared with 2025-02-28 · 107 added, 64 removed, 386 unchanged (31% of the section changed)

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Risks Related to Our Business Model

Unfavorable conditions in our industry or the U.S.

economy, or reductions in information technology spending, could limit our ability to grow our business and negatively affect our operating results.

has experienced challenging macroeconomic conditions in recent periods in certain respects, including as the result of significant inflationary pressures, ongoing elevated interest rate levels, and challenging labor market conditions.

We have been adversely impacted, and may continue to be adversely impacted, by unfavorable conditions and uncertainty in the healthcare industry and the U.S.

economy more generally .

Macroeconomic conditions in the U.S.

continue to be challenging in certain respects, driven by, among other things, persistent inflationary pressures, ongoing elevated interest rate levels, heightened geopolitical tensions, including as a result of ongoing conflicts abroad, and strained global trade relations.

Continued global economic uncertainty, political conditions, and fiscal challenges in the U.S.

and abroad, such as inflation and potential recessionary conditions, have, among other things, limited our ability to forecast future demand for our products and services, contributed to increased volatility in customer demand, and could constrain future access to capital for ourselves, our suppliers, customers, and partners.

and abroad, have, among other things, limited our ability to forecast future demand for our products and services, contributed to increased volatility in customer demand, and could constrain future access to capital for ourselves, our suppliers, customers, and partners.

While inflationary conditions have decreased in comparison to recent periods, we believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures.

Moreover, these conditions impacting the U.S.

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

In addition, if current economic conditions in the U.S.

significantly deteriorate, including as a result of the impact of increased tariffs or trade restrictions, our results of operations, financial position, and/or cash flows could be materially and adversely affected.

Our operating results may vary based on the impact of changes in our industry or the economy on us or our clients.

The revenue growth and potential profitability of our business depends on demand for our solutions by healthcare providers.

We sell our products and services to large, mid-sized, and small organizations whose businesses fluctuate based on general economic and business conditions.

In addition, a portion of our revenue is attributable to the number of users of our products at each of our clients, which in turn is influenced by the employment and hiring patterns of our clients and potential clients.

As such, our operating results are impacted by the level of demand for our solutions by healthcare organizations and the impact of changes in our industry or the economy on us or our clients.

For example, we have recently experienced a decrease in demand for certain of our solutions, such as health equity and belonging content, that may be viewed as a more elective type of offering by some of our customers.

In addition, a portion of our revenue is attributable to the number of users of our products at our clients, which in turn is influenced by the employment and hiring patterns of our clients and potential clients.

To the extent that economic uncertainty or weak economic conditions cause our clients and potential clients to freeze or reduce their headcount or operations, demand for our products may be negatively affected.

Moreover, prior economic downturns and the current economic circumstances have resulted in overall reductions in spending by some healthcare providers as well as pressure from some clients and potential clients for extended payment terms.

Moreover, current economic conditions and uncertainty have resulted in and may continue to result in overall reductions in spending by some healthcare providers as well as pressure from some clients and potential clients for extended payment terms.

If current economic conditions deteriorate, our clients and potential clients may elect to decrease their budgets for our solutions by deferring or reconsidering purchases or could file for bankruptcy, which has occurred from time to time.

Such budget decreases or bankruptcy filings would limit our ability to grow our business and negatively affect our operating results.

Moreover, other economic, regulatory, or other developments that adversely or disproportionately impact the healthcare industry may reduce spending on information technology by healthcare organizations and otherwise adversely affect our customer base.

Furthermore, the margins of many healthcare providers are modest, and potential decreases in reimbursement for healthcare costs may reduce the overall solvency of our customers or cause further deterioration in their financial or business condition.

These developments could reduce our sales or adversely impact the ability of our customers to pay for our products and services.

In addition, budget pressures at the federal and state levels have had and may continue to have a negative impact on spending for many health and human services programs, including Medicare and Medicaid, which represent significant payor sources for our customers.

We anticipate that federal and state budget deficits and growing governmental healthcare expenditures will continue to place pressure on governmental healthcare programs.

Any reductions in government healthcare spending, including as a result of deficit reduction initiatives, could result in reduced demand for our products or additional pricing pressure.

Further, there is ongoing uncertainty regarding the federal budget and federal spending levels, including the possible impacts of a failure to increase the “debt ceiling.” Additionally, the current presidential administration has announced a planned advisory commission, the "Department of Government Efficiency," to reform federal government process and reduce expenditures, which could reduce federal spending or give rise to separate efforts at the state level to reduce governmental spending, in a manner that could adversely impact our healthcare clients and, ultimately, us.

Moreover, any U.S.

government default on its debt could have broad macroeconomic effects.

In addition, pressures on and uncertainty surrounding the US.

Federal government's budget and potential changes in spending levels, as well as any shutdown of the federal government, failure to enact annual appropriations, or holds on congressionally authorized spending, could adversely affect our financial results due to the reliance of many of our customers on payments from third-party healthcare payors, including Medicare, Medicaid, and other government-sponsored programs.

Economic, regulatory, policy, or other recent developments that adversely or disproportionately impact the healthcare industry may reduce spending on information technology by healthcare organizations and otherwise adversely affect our customer base and financial results.

Healthcare organizations continue to face labor shortages, elevated wage and operating costs, and ongoing downward pressures on and uncertainty regarding reimbursement levels.

Furthermore, the margins of many healthcare providers are modest, and potential decreases in reimbursement for healthcare costs – whether due to federal or state budgetary constraints, deficit and spending reduction initiatives, reduction or elimination of programs such as the 340B Drug Pricing Program, reduction of insurance coverage readily available to individuals, or changes to Medicare and/or Medicaid policy – may reduce the overall solvency of our customers or cause further deterioration in their financial or business condition.

In addition, U.S.

trade policy remains subject to legal, regulatory, and political uncertainty, which could adversely affect our customers’ costs and demand for our solutions.

Although the U.S.

Supreme Court on February 20, 2026 invalidated certain tariffs previously imposed by the current administration, the administration or Congress may adopt new trade measures, including tariffs, duties, or other import restrictions.

Any such actions affecting imported medical equipment, technology components, or other healthcare-related infrastructure could increase costs for healthcare organizations, which may reduce demand for our products and adversely impact our financial results.

Legislation and administrative actions at the federal and state levels may impact the funding for, or the structure of, government health and human services programs, including Medicare and Medicaid, which represent significant payor sources for our customers.

For example, the federal budget 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.

In addition, budget deficits at the federal level and within some state government entities have had, and may continue to have, a negative impact on spending for health and human services programs.

We anticipate that budgetary deficits, increasing governmental healthcare expenditures and other factors will continue to place pressure on government healthcare programs.

Any actual or potential reductions in government healthcare spending or reduction to readily available health insurance coverage for individuals could result in reduced demand for our products or heightened pricing pressure.

Further, there is ongoing uncertainty regarding the possible impacts of a failure to increase the “debt ceiling” and any possible U.S.

governmental default on its debt.

Pressures on and uncertainty surrounding the U.S.

federal and state annual appropriations, lapses in appropriations, holds on congressionally authorized spending, or interruptions in the distribution of governmental funds, or any shutdown of the federal government, could adversely affect our financial results due to the reliance of many of our customers on payments from third-party healthcare payors, including Medicare, Medicaid, and other government-sponsored programs.

We believe that conditions and uncertainties impacting the healthcare industry and our healthcare customers as described above have adversely affected, and may continue to adversely impact, our business and results of operations, including by lengthening sales cycles, increasing pricing sensitivity, and delaying investment decisions among our customers and potential customers.

Moreover, if economic or conditions impacting the healthcare industry or U.S.

economy significantly deteriorate, our results of operations, financial position, and/or cash flows could be materially and adversely affected.

We may be unable to effectively execute our business strategy, which could have an adverse effect on our business and competitive position in the industry.

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Risks that we may encounter in executing our growth strategy include:

expenses, delays, and difficulties in identifying and developing new products or services and integrating such new products or services into our existing organization;

expenses, delays, and difficulties in identifying and developing new products, capabilities, or services and integrating such new products or services into our existing organization;

inability to leverage or evolve our customer and partner facing technology platform and applications;

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If any of these risks are realized, our business, and our competitive position in the industry, could suffer.

In addition, we may be unable to effectively execute on our One HealthStream approach of operating and managing the Company on a consolidated, enterprise basis.

Our ability to effectively execute this strategy is dependent upon various factors, including our ability to achieve anticipated operational efficiencies and to effectively implement the operational and management changes associated with this strategy without adversely impacting the services we provide.

In the event that we are unable to effectively execute on this strategy or are otherwise adversely affected by our shift to this One HealthStream approach, our business and financial results may be adversely affected.

In addition, our ability to effectively execute on our One HealthStream strategy is dependent upon various factors, including our ability to achieve anticipated operational efficiencies and to effectively implement the operational changes associated with this strategy without adversely impacting the services we provide.

In the event that we are unable to effectively execute on this strategy, our business and financial results may be adversely affected.

The development and use of AI or the failure to adequately or appropriately develop and use AI, including generative AI and agentic AI, may result in reputational harm, liability, and adverse financial results, and could impact our value proposition.

We are investing in AI, including generative AI and agentic AI technologies, in certain aspects of our products, services, and internal operations.

AI technology and services are a highly competitive and rapidly evolving market.

If we are unable to successfully innovate, compete effectively, or differentiate our AI-enabled offerings relative to competitors, or if competitors or customers deploy AI technologies more rapidly or effectively than we do, our market position could be adversely affected.

AI-powered features may produce inaccurate, biased, or unexpected outputs, and may not perform as anticipated.

While we are taking a deliberate and measured approach to the development and deployment of AI-enabled features, we cannot guarantee that these measures will prevent all errors, biases, or undesirable outcomes.

If AI-enabled features or tools embedded in our offerings generate flawed or misleading results, or are perceived as doing so, customers may lose confidence in our products, which could negatively impact our brand and expose us to contractual, regulatory, or reputational risk.

As our use of AI technologies grows, we may face increased risks of or susceptibility to cyberattacks or security threats.

As AI technologies develop rapidly, threat actors are using these technologies to create new sophisticated attack methods that are increasingly automated, targeted, and coordinated and more difficult to defend against.

The use of AI often requires large volumes of data, including customer data or proprietary information, and may involve reliance on third-party models, infrastructure, or data sources.

These factors may increase the risk of unauthorized access to, or inadvertent disclosure or misuse of, confidential or proprietary information.

Any actual or perceived failure to safeguard data or maintain appropriate controls could result in regulatory scrutiny, litigation, contractual liability, or harm to our reputation.

The legal and regulatory environment relating to AI is evolving and remains uncertain.

Although the United States has not adopted a comprehensive federal AI law, the evolving AI regulatory environment may, among other impacts, result in inconsistencies among AI regulations and frameworks across jurisdictions;

increase our compliance, governance, and research and development costs;

increase our exposure to claims related to our AI models;

and increase liability related to the use of AI by our customers or users that are beyond our control.

While we believe we are taking a responsible approach to the development and use of AI, there can be no guarantee that current or future AI regulations will not adversely impact us or conflict with our approach to AI, including affecting our ability to make our AI offerings available without costly changes, delaying or halting development of AI offerings, requiring us to change our AI development practices, monetization strategies, and/or indemnity protections, and subjecting us to additional compliance requirements, regulatory action, competitive harm, reputational harm, and/or legal liability.

We may also be required to invest significant resources to develop, acquire, integrate, and maintain AI capabilities, including investments in computing infrastructure, data management, security controls, governance processes, and specialized personnel.

Given the rapid and uncertain pace at which AI is evolving, the costs associated with AI-related investments may be difficult to forecast and may have a negative impact on our financial results.

Conversely, if we are unable to make adequate investments related to AI or unable to make them in a timely manner, our financial results and competitive position in the market may be adversely impacted.

There are also significant risks involved in the development and deploying of AI, and there can be no assurance that AI-related investments will enhance our products or services or be beneficial to our business, including efficiency or profitability.

If we are unable to effectively manage the risks associated with investing in the development, use, and integration of AI technologies, our business, results of operations, financial condition, and reputation could be materially adversely affected.

Additionally, our ability to develop and efficiently deploy AI/ML depends on access to specific third-party equipment and other physical infrastructure, such as processing hardware and network capacity, where the availability and pricing of such infrastructure is outside of our control, especially in a highly competitive environment.

A deterioration of public health conditions associated with a future pandemic, epidemic, or public health event, or a future catastrophic event, could adversely affect our business and financial results.

We face a wide variety of risks related to the emergence and effects of potential future epidemics, pandemics, outbreaks of infectious disease or other public health crises.

Our primary customers are healthcare organizations, which are particularly vulnerable to health and economic effects of public health conditions.

Our primary customers are healthcare organizations, which are particularly vulnerable to the health and economic effects of public health conditions.

The potential impact of a future public health crisis on our customers could, in turn, adversely impact our business, including in a similar or more extensive manner to how our business was adversely impacted by COVID-19.

It is difficult to predict how and when a future public health crisis may evolve, and we may not be able to predict or effectively respond to any such future developments.

If a new public health crisis emerges or if public health conditions in the U.S.

significantly deteriorate, our business and financial results could be adversely affected.

Our business could also be adversely impacted by catastrophic events (particularly in areas where we have office locations and/or where we have network infrastructure), such as fires, earthquakes, hurricanes, natural disasters, social or civil unrest, military conflicts or warfare (such as the war in the Ukraine or the conflict in the Middle East), geographic instability, terrorist attacks, or the effects of climate change (such as drought, flooding, wildfires, increased storm severity and sea level rise).

If a new public health crisis emerges or if public health conditions in the United States significantly deteriorate, our business and financial results could be adversely affected.

Our business could also be adversely impacted by catastrophic events (particularly in areas where we have office locations and/or where we have network infrastructure), such as fires, earthquakes, hurricanes, natural disasters, social or civil unrest, military conflicts (such as the war in the Ukraine or ongoing conflicts and instability in the Middle East), geographic instability, terrorist attacks, or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise).

We may be unable to effectively identify, complete, or integrate the operations of acquisitions, joint ventures, collaborative arrangements, or other strategic investments, which would inhibit our ability to execute upon our growth strategy.

As part of our growth strategy, we actively review possible acquisitions, joint ventures, collaborative arrangements, or strategic investments that complement or enhance our business.

For example, in 2024, we completed the acquisitions of TCPS and The Clinical Hub.

For example, in 2025, we completed the acquisitions of Virsys12 and MissionCare.

However, we may be unable to source or complete future acquisitions, joint ventures, collaborative arrangements, or other strategic investments on acceptable terms or at all.

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Sales of additional solutions to existing customers may also experience sales cycles ranging from three to nine months, or longer.

The range in the sales cycle can be impacted by multiple factors, including customer size, an increasing trend towards more formal request for proposal processes and more competition within our industry, increased customer-driven security assessments, as well as formal budget timelines which impact timing of purchases by target customers.

The range in the sales cycle can be impacted by multiple factors, including customer size, funding uncertainty, an increasing trend towards more formal request for proposal processes and more competition within our industry, increased customer-driven security assessments, as well as formal budget timelines which impact timing of purchases by target customers.

New products, including those that may compete with or replace our former product offerings, tend to have a longer and more unpredictable revenue ramp period because of varying customer adoption rates.

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The timing and magnitude of these product and service contracts may vary widely from quarter to quarter and year to year, and thus may affect our ability to accurately forecast our financial performance.

In addition, some products can require significant implementation lead times and resources and may require a level of change management efforts from our clients, which may also limit our ability to accurately predict our financial performance.

In addition, some products can require significant implementation lead times and resources and may require a higher level of change management efforts from our clients, which may also limit our ability to accurately predict our financial performance.

Additionally, our ability to accurately predict our financial performance may be further limited as we expand our revenue generating model such that third parties may pay network connection fees based on sales they make.

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These companies may be able to respond more quickly than we can to new or changing opportunities, technologies, standards, or customer requirements.

Additionally, the development of AI/ML and other emerging technologies is complex and uncertain and presents various risks and uncertainties, including as the result of the rapidly evolving legal, regulatory, and ethical landscape associated with the use of AI/ML, and could subject us to competitive harm, legal and regulatory risk, and increase our cybersecurity, intellectual property, and privacy risks.

Further, given the evolving nature of technology, our technology enabled offerings may be disrupted by innovative or emerging technologies, such as AI/ML, blockchain, Web3, or quantum computing technologies, and such disruption could adversely impact our ability to compete.

Further, most of our customer agreements are for terms ranging from one to five years, with no obligation to renew.

The terms of these agreements may enable customers to more easily shift to one of our competitors following the expiration of the agreement.

Additionally, given the evolving nature of technology, our technology enabled offerings may be disrupted by innovative or emerging technologies, such as AI/ML, blockchain, Web3, or quantum computing technologies, and such disruption could adversely impact our ability to compete.

Additional information regarding the risks associated our use of AI, including regulatory, operational, and reputational risks, is included in Section 1A – Risk Factor “The development and use of AI or the failure to adequately or appropriately develop and use AI, including generative AI and agentic AI, may result in reputational harm, liability, and adverse financial results, and could impact our value proposition.”

Expanding our business model such that third parties may pay network connection fees in exchange for the ability to deliver their products through our technology platform and have them featured as part of our ecosystem may result in unpredictability and/or harm to the operational and financial performance of our business.

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Our product and service contracts typically range from one to five years in length, and customers are not obligated to renew their contract with us after their contract term expires;

in fact, some customers have elected not to renew their contract, and this risk has increased as the result of current negative macroeconomic conditions.

in fact, some customers have elected not to renew their contract, and we believe is heightened as a result of current conditions and instability impacting the healthcare industry.

In addition, our customers may renew at a lower price or volume level.

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Additionally, our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term.

Moreover, as noted above, we generally have contract terms ranging from one to five years, and the fees payable under a majority of contracts were often determined without reference to any increases in the consumer price index or similar inflation-related metric over the term of such contract, although we have begun to implement such provisions in contracts executed in 2024.

As such, particularly for longer term contracts, we have been, and may continue to be, adversely impacted by inflationary conditions such as those that the U.S.

economy has experienced in recent periods given that the fees that we are receiving during the outstanding term of such contracts will not be impacted by general price increases resulting from inflation whereas such inflationary conditions may increase the amount of labor, capital, and other expenditures we incur in connection with the operation of our business.

Moreover, as noted above, we generally have contract terms ranging from one to five years, and the fees payable under a majority of contracts were often determined without reference to any increases in the consumer price index or similar inflation-related metric over the term of such contract, although we commenced implementing such provisions in certain contracts entered into beginning in 2024.

As such, particularly for longer term contracts, we have been, and may continue to be, adversely impacted by inflationary pressures given that the fees that we are receiving during the outstanding term of such contracts will not be impacted by general price increases resulting from inflation whereas such inflationary conditions may increase the amount of labor, capital, and other expenditures we incur in connection with the operation of our business.

We may not be able to meet our strategic business objectives unless we obtain additional financing, which may not be available to us on favorable terms or at all.

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If the value of our goodwill, intangible assets, long-lived assets, or strategic investments is impaired, accounting principles require us to reduce their carrying value and report an impairment charge, which would reduce our reported assets and earnings for the period in which an impairment is recognized.

We may be affected by healthcare reform efforts and other changes in the healthcare industry that impact us and our clients.

Our clients are concentrated in the healthcare industry, which is subject to changing regulatory, economic, and political conditions.

The healthcare industry has been and continues to be impacted by healthcare reform effects at the federal and state levels.

Many recent changes have been aimed at reducing costs and government spending and increasing access to health insurance.

For example, the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (collectively, the ACA), increased health insurance coverage through a combination of public program expansion and private sector insurance reforms.

However, changes in the law’s implementation, subsequent legislation and regulations, state initiatives, and other factors have affected and may continue to affect health insurance coverage and various other elements of the ACA.

In addition, the Medicare and Medicaid programs are subject to change, including as a result of the recent change in the presidential administration.

For example, some members of Congress have proposed measures intended to accelerate the shift from traditional Medicare to Medicare Advantage, or repealing the Affordable Care Act or eliminating some of its consumer protections.

We may be affected by public policy developments and other changes and uncertainty in the healthcare industry that impact us and our clients.

Our clients are concentrated in the healthcare industry, which is has been and continues to be impacted by healthcare reform effects at the federal and state levels.

Many recent changes have been aimed at reducing costs and government spending and decreasing access to health insurance.

For example, the federal budget reconciliation legislation enacted on July 4, 2025, known as the One Big Beautiful Bill Act (OBBBA), includes several healthcare policy changes that are expected to decrease access to health insurance.

In addition, the Medicare and Medicaid programs are subject to change, including as a result of legislation and administrative actions.

For example, the OBBBA is expected to result in Medicaid spending reductions and changes in administration of state Medicaid programs.

Changes in governmental administration, including changes in agency structures and staffing, such as reduction or elimination of personnel and agencies, may also result in changes to established rulemaking conventions and timelines, including for regularly issued reimbursement rules, among other effects.

Further, changes in health care laws and insurance coverage may adversely affect our clients and, in turn, our business.

For example, the expiration of the enhanced premium tax credits at the end of 2025 absent further legislative action could reduce insurance coverage, increase the number of uninsured or underinsured individuals, and increase uncompensated care, placing financial pressure on healthcare providers.

As a result, our customers may reduce spending, delay, or curtail technology investments, or extend purchasing cycles, which could materially and adversely affect our business, financial condition, and results of operations.

Other recent health reform initiatives and proposals at the federal and state levels include those focused on price transparency and out-of-network charges, such as the No Surprises Act, and those intended to advance value-based payment efforts.

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The pool of qualified technical personnel, in particular, is limited.

Moreover, recent changes in immigration regulation and enforcement in the United States under the current presidential administration, including in connection with the H-1B visa program, could decrease the pool of candidates with legal work authorizations, cause disruptions in the workforce for companies such as ours, and increase the cost, time and requirements for us to hire new personnel.

Many of the companies with which we compete for experienced personnel have greater resources than we have and some of these companies may offer more lucrative compensation packages.

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Our inability to locate, attract, hire, integrate, and retain qualified personnel in sufficient numbers may reduce the quality of our services and impair our ability to grow and adversely impact our financial performance.

A significant portion of our workforce have been working remotely since 2020 and we expect a significant portion to continue working remotely under our hybrid workplace model.

Further, the market for personnel with expertise in AI/ML is highly competitive and evolving rapidly.

Demand for individuals with these skills exceeds supply, particularly for personnel who also possess industry-specific experience.

Our ability to develop, implement, maintain, and govern AI/ML depends in part on attracting and retaining qualified personnel.

If we are unable to recruit or retain personnel with the requisite expertise in AI/ML, or if the cost of recruiting or retaining such personnel is unduly high, our AI/ML initiatives may be delayed, limited in scope, or implemented inconsistently.

A significant portion of our workforce has been working remotely since 2020 and we expect a significant portion to continue working remotely under our hybrid workplace model.

If we are unable to effectively maintain this hybrid work environment long-term, then we may experience increased attrition, a less cohesive workforce, reduced performance, and less innovation, which may adversely impact our business and financial results.

We may not be able to upgrade our hardware and software technology infrastructure quickly enough to effectively meet demand for our services or our operational needs.

We may not be able to implement or upgrade our technology infrastructure and initiatives to effectively meet demand for our services or our operational needs.

We must continue to obtain reasonably priced, commercially available hardware, operating software, and hosting services, as well as continue to enhance our software and systems to accommodate the increased use of our platform, the increased content in our library, the expanding amount and type of data we store on behalf of our customers, and the resulting increase in operational demands on our business, including as imposed by new and changing legal and regulatory requirements applicable to our business.

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or other catastrophic loss) at or impacting our Internet service providers’ facilities, our on-site data center facilities, or our public-cloud infrastructure providers, could cause the loss of critical data and prevent us from offering our products and services for an unknown period of time.

Although we have taken measures intended to prevent potential problems that could affect our information systems, our or a third party's disaster recovery planning cannot account for all eventualities, or may not be sufficient to mitigate against or recover from any of these events.

Although we have taken measures intended to prevent potential problems that could affect our information systems, our or a third party's disaster recovery planning cannot account for all eventualities, or may be insufficient to mitigate against or recover from any of these events.

We also may incur increased operating expenses to recover data, including ransom payments made to cyber-attackers, repair or remediate systems, equipment or facilities, and to protect ourselves from such disruptions.

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System downtime could negatively affect our reputation and ability to sell our products and services and may expose us to significant third-party claims.

Our cyber liability and business interruption insurance may not adequately compensate us for losses that may occur.

Our cyber liability and business interruption insurance may not adequately compensate us for losses that may occur and may exclude certain types of claims or otherwise be insufficient to cover all losses.

In addition, we rely on third parties to securely store our archived data, house our infrastructure and network systems, and connect us to the Internet.

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In addition, there are a variety of other national, foreign, and international laws and regulations that apply to the collection, use, retention, protection, security, disclosure, transfer, and other processing of personal data, including, but not limited to:

FERPA, the European Union’s General Data Protection Regulation (GDPR), the United Kingdom's General Data Protection Regulation (which implements the GDPR into U.K.

law), Canada's Personal Information Protection and Electronic Documents Act (PIPEDA), Australia's Privacy Act 1988, and New Zealand's Privacy Act 2020.

the European Union’s General Data Protection Regulation (GDPR), the United Kingdom's General Data Protection Regulation, Canada's Personal Information Protection and Electronic Documents Act (PIPEDA), FERPA, Australia's Privacy Act 1988, and New Zealand's Privacy Act 2020.

In addition, many states have passed consumer data privacy laws, and federal lawmakers have proposed additional legislation.

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The obligations and requirements under these laws and regulations are subject to uncertainty in how they may be interpreted by government authorities and regulators.

Further, enforcement actions under these laws are increasing.

The costs of compliance with, and the other burdens imposed by, these and other laws or regulatory actions may increase our operational costs, affect our customers’ willingness to permit us to use and store personal data and sensitive information, prevent us from selling our products or services, and/or affect our ability to invest in or jointly develop products.

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This may require us to divert development and other resources from other areas, incur significant expenditures, or, if we are unsuccessful in delivering these features, enhancements, or modifications, result in monetary damages, loss of revenue or customers, reputational harm, or other adverse impacts to our business.

Further, the legal, regulatory and ethical framework with respect to AI/ML is evolving and remains uncertain.

We expect that additional laws, regulations, and policies will be enacted, and existing laws and regulations may be interpreted in new ways, which could affect our operations.

Further, there is additional uncertainty in the effectiveness of state AI/ML laws given the Executive Order issued on December 11, 2025, entitled “Ensuring a National Policy Framework for Artificial Intelligence,” which directs federal regulators to challenge and preempt state laws that the administration views as obstructive to AI/ML innovation.

If we are unable to use AI/ML as the result of such laws and regulations, regulators restrict our ability to use AI/ML for certain purposes, or our confidential information becomes part of a dataset that is accessible by other third-party AI/ML applications and uses, it could make our business less efficient, result in competitive disadvantages, increase our operating costs, hinder our ability to provide services, and subject us to potential liabilities.

In addition, to the extent we use, may use or permit the data we create, receive, maintain, and transmit to be used by any AI/ML platforms, we may be subject to additional risks under data privacy and other laws and regulations.

Moreover, the cost to comply with applicable laws and regulations could be significant and could adversely affect us.

Further, any failure or perceived failure by us, or our employees, partners, suppliers or agents, to comply with AI/ML laws and regulations could result in proceedings, investigations or actions against us by individuals, consumer rights groups, government agencies, or others.

In addition, AI/ML technologies are rapidly changing and present evolving legal, regulatory, and ethical issues, including claims of bias, discrimination, a perceived lack of transparency, as well as sometimes unpredictable behaviors or improper use of copyrighted or other protected material, any of which could expose us or our customers to reputational or legal risk and inhibit our use of AI/ML technologies.

While the ultimate impact of regulatory and legal risks associated with AI/ML is not fully known, if any of these events were to occur, our business, results of operations, and financial condition could be adversely affected.

We may lose sales from existing or potential customers or incur significant expenses if states impose or assess sales and use taxes on our services to a greater degree than is currently the case or we inherit potential state sales and use tax compliance issues in connection with acquisitions we may make from time to time.

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It may be difficult to predict how changes to applicable laws and regulations and current and future initiatives related to technology might affect our business.

Further, a regulator or court could disagree with our interpretation of these laws and regulations.

Different interpretations or enforcement of, or changes to, relevant laws and regulations in the future could subject our current or past practices to allegations of impropriety or illegality and could require us to alter to our operations.

While we strive to adhere our practices and procedures to the laws that are applicable to our business, we may not be able to timely adapt to evolving rules and regulations, interpretations, and regulator determinations.

Further, a regulator or court could disagree with our interpretation of these laws and regulations.

Failure to comply with applicable legal or regulatory requirements in the U.S.

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Our agreements with employees, consultants, and others who participate in development activities could be breached and result in our trade secrets becoming known.

Our competitors may develop similar intellectual property, duplicate our offerings, or design around any patents or other intellectual property rights we hold.

Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the patents, intellectual property, or other proprietary rights of third parties, which could be time consuming and costly and have an adverse effect on our business and financial condition.

Alternatively, competitors and other third parties may independently develop or create content or systems that do not infringe our intellectual property rights.

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In addition, the laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States, and effective intellectual property protection may not be available in those jurisdictions.

If we are unable to safeguard our proprietary rights adequately, our competitors could offer similar services, potentially significantly harming our competitive position and decreasing our revenues.

Our business could be harmed if unauthorized parties infringe upon or misappropriate our intellectual property, proprietary systems, content, platform, applications, services, or other information or the intellectual property of our ecosystem partners.

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We also have certain contractual obligations to protect the intellectual property of our ecosystem partners and could be required to indemnify such ecosystem partners if we do not adequately provide such protections.

There has been substantial litigation in the software services and healthcare technology industries regarding intellectual property assets, particularly patents.

There has been substantial litigation in the software services and healthcare technology industries regarding intellectual property assets, particularly patents and increasingly with regard to the use of AI in relation to intellectual property assets.

Third parties may claim infringement by us with respect to current and future products, trademarks, or other proprietary rights, and we may counterclaim against such third parties in such actions.

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We may be liable for infringing the intellectual property rights of others.

Our competitors may develop similar intellectual property, duplicate our offerings, or design around any patents or other intellectual property rights we hold.

Intellectual property infringement claims could be made against us and our ecosystem partners, especially as the number of our competitors grows.

These claims, even if not meritorious, could be expensive and divert our attention from operating our company and result in a temporary inability to use the intellectual property subject to such claim.

In addition, if we, our ecosystem partners, and/or our customers become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and develop comparable non-infringing intellectual property, to obtain a license, or to cease providing the content or services that contain the infringing intellectual property.

We may be unable to develop non-infringing intellectual property or obtain a license on commercially reasonable terms, if at all.

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greater difficulty in supporting and localizing our products;

unrest and/or changes in a specific country’s or region’s social, political, legal, health, or economic conditions or other geopolitical developments (such as developments arising from the ongoing conflict between Russia and Ukraine, increasing tensions between China and Taiwan, and the ongoing conflict in the Middle East);

unrest and/or changes in a specific country’s or region’s social, political, legal, health, or economic conditions or other geopolitical developments (such as developments arising from the ongoing conflict between Russia and Ukraine, ongoing and increasing tensions between China and Taiwan, and ongoing conflicts and tensions in the Middle East);

challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, controls, policies, benefits, and compliance programs;

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These provisions in our organizational documents:

authorize us to issue "blank check" preferred stock, which is preferred stock that can be created and issued by the board of directors, without prior shareholder approval, with rights senior to those of common stock;

provide for a staggered board of directors comprised of three classes such that it would take three successive annual meetings to replace all directors;

authorize us to issue "blank check" preferred stock, which is preferred stock that can be created and issued by the Board, without prior shareholder approval, with rights senior to those of common stock;

provide for a staggered Board comprised of three classes such that it would take three successive annual meetings to replace all directors;

prohibit shareholder action by written consent;

do not provide shareholders with the right to call a special shareholders meeting;

establish advance notice requirements for submitting nominations for election to the board of directors and for proposing matters that can be acted upon by shareholders at a meeting.

establish advance notice requirements for submitting nominations for election to the Board and for proposing matters that can be acted upon by shareholders at a meeting.

In addition, we are subject to certain provisions of Tennessee law which limit, in some cases, our ability to engage in certain business combinations or transactions with significant shareholders.

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There is no assurance that we will not discontinue or reduce the amount of our current quarterly dividend.

Our payment of dividends, as well as the rate at which we pay dividends, is subject to the discretion of our board of directors and compliance with applicable legal requirements and our credit agreement, and our board of directors retains the power to modify, suspend, or cancel our dividend policy in any manner and at any time that our board may deem necessary or appropriate.

Our payment of dividends, as well as the rate at which we pay dividends, is subject to the discretion of our Board and compliance with applicable legal requirements and our credit agreement, and our Board retains the power to modify, suspend, or cancel our dividend policy in any manner and at any time that our board may deem necessary or appropriate.

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-K

Item 1A. Risk Factors