What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-02-28 · 259 added, 95 removed, 736 unchanged (32% of the section changed)

31 unchanged sentences

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Revenue Recognition

19 unchanged sentences

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Virsys12, LLC ("Virsys12") and MissionCare Collective LLC ("MissionCare").

The assets of the acquired operations of Virsys12 and MissionCare which are included in the 2025 consolidated financial statements of the Company, constituted approximately 10% of total assets, as of December 31, 2025.

Operating results of the acquired operations of Virsys12 and MissionCare comprised approximately 0.5% of revenues for the year ended December 31, 2025.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Virsys12 and MissionCare.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 26, 2026 expressed an unqualified opinion thereon.

126 unchanged sentences

Unrealized gain on marketable securities

Total other comprehensive (loss) income

Total other comprehensive income (loss)

688 ( 1,358 ) 290

6 unchanged sentences

Common Stock Retained Accumulated Other Comprehensive Total Shareholders’

Earnings Income/(Loss) Equity

Earnings (Loss)/Income Equity

Balance at December 31, 2022

1 unchanged sentence

— — 15,213 — 15,213

Comprehensive loss

Comprehensive income

— — — 290 290

Issuance of common stock in acquisition

Dividends declared on common stock ($ 0.100 per share)

— — ( 3,058 ) — ( 3,058 )

3 unchanged sentences

123 ( 934 ) — — ( 934 )

Excise tax on repurchase of common stock

— ( 47 ) — — ( 47 )

Repurchase of common stock

3 unchanged sentences

— — 20,007 — 20,007

Comprehensive income

Comprehensive loss

— — — ( 1,358 ) ( 1,358 )

5 unchanged sentences

134 ( 1,113 ) — — ( 1,113 )

Excise tax on repurchase of common stock

— ( 47 ) — — ( 47 )

Repurchase of common stock

( 404 ) ( 8,929 ) — — ( 8,929 )

Balance at December 31, 2024

1 unchanged sentence

— — 18,342 — 18,342

Comprehensive loss

Comprehensive income

— — — 688 688

1 unchanged sentence

— — ( 3,727 ) — ( 3,727 )

Stock contributed to Company (retired shares authorized for issuance)

( 158 ) — — — —

Stock-based compensation

— 8,145 — — 8,145

Issuance of common stock in acquisition

166 4,000 — — 4,000

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

251 ( 2,516 ) — — ( 2,516 )

Excise tax on repurchase of common stock

— ( 242 ) — — ( 242 )

Repurchase of common stock

( 1,112 ) ( 30,022 ) — — ( 30,022 )

Balance at December 31, 2025

18 unchanged sentences

5,117 ( 1,114 ) ( 1,725 )

Gain on disposal of fixed assets

Loss on equity method investments

1 unchanged sentence

( 1,315 ) ( 1,639 ) ( 891 )

( 1,639 ) ( 891 ) 3

Changes in operating assets and liabilities:

5 unchanged sentences

( 2,873 ) ( 1,371 ) ( 1,243 )

Deferred commissions

( 19,266 ) ( 15,709 ) ( 14,524 )

( 258 ) 328 208

Accounts payable and accrued expenses

11 unchanged sentences

52,086 69,150 28,250

Proceeds from sale of marketable securities

Purchases of marketable securities

1 unchanged sentence

Proceeds from sale of fixed assets

Purchase of other investments

( 1,500 ) — —

Proceeds from sale of non-marketable equity investments

17 unchanged sentences

( 7 ) ( 36 ) ( 23 )

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 23,308 ) 19,136 ( 5,690 )

13 unchanged sentences

$ 712 $ 1,055 $ 961

Fair value of common stock issued as consideration for business combinations

Common stock issued as consideration for business combinations

$ 4,000 $ — $ —

Non-cash additions to operating lease ROU assets

$ 252 $ — $ —

See accompanying notes to the Consolidated Financial Statements.

6 unchanged sentences

The Company primarily provides Software-as-a-Service ("SaaS") based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting the people who deliver patient care.

The Company is focused on helping healthcare organizations meet their ongoing clinical development, talent management, training, education, assessment, competency management, safety and compliance, scheduling, and provider credentialing, privileging, and enrollment needs.

The Company is focused on helping individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs.

The Company also provides its solutions to nursing schools and nursing students.

The Company is organized and operated according to its One HealthStream approach, with its hStream technology platform at the center of that approach.

9 unchanged sentences

Subscription revenues primarily consist of fees in consideration of providing customers access to one or more of its SaaS-based solutions and/or courseware subscriptions, as well as fees related to licensing agreements, all of which include routine customer support and technology enhancements.

Revenue is generally recognized over time during the contract term beginning when the service is made available to the customer.

Revenue is generally recognized ratably over the contract term beginning when the service is made available to the customer.

Subscription contracts are generally non-cancelable, one to five years in length, and billed annually, semi-annually, quarterly, or monthly in advance.

5 unchanged sentences

The contract price, which represents transaction price when the contract reflects a fixed fee arrangement, or management’s estimate of variable consideration including application of the constraint when the contract does not have a fixed fee, is allocated to the separate performance obligations on a relative standalone selling price basis.

The Company generally determines standalone selling prices based on the standard list price for each product, taking into consideration certain factors, including contract length and the quantity purchased in the contract.

Whenever possible, standalone selling price is based on observable prices, and when such observable data is not available, the Company estimates standalone selling price using an approach designed to maximize the use of observable inputs.

The Company receives payments from customers based on billing schedules established in its contracts.

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The Company’s chief operating decision maker ("CODM") is its Chief Executive Officer.

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

The Company’s business is organized and managed around a consolidated, enterprise approach, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by the CODM), organization structure, compensation, performance assessment, and resource allocation.

The Company’s CODM uses consolidated financial information to make operating decisions, assess financial performance, and allocate resources.

Further, the CODM reviews and utilizes functional expenses (cost of revenues, product development, sales and marketing, general and administrative expenses, 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, net and the income tax provision, which are reflected in the Consolidated Statements of Income.

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

Expenditures for additions to long-lived assets for the consolidated entity were $ 72.0 million, $ 45.0 million, and $ 46.8 million for the years ended December 31, 2025, 2024, and 2023 , respectively.

Use of Estimates

3 unchanged sentences

Cash Equivalents

The Company considers cash equivalents to be unrestricted, highly liquid investments with initial maturities of less than three months at the time of purchase.

The Company considers cash equivalents to be unrestricted, highly liquid investments with initial maturities of less than three months at purchase.

Marketable Securities

Marketable securities are classified as available for sale and are stated at fair value, with the unrealized gains and losses, net of tax, reported in other accumulated comprehensive income (loss) on the accompanying Consolidated Balance Sheets.

Marketable securities are classified as available for sale and are stated at fair value, with the unrealized gains and losses, net of tax, reported in other accumulated comprehensive loss on the accompanying Consolidated Balance Sheets.

Realized gains and losses on investments in marketable securities are included in interest income and declines in market value due to credit-related factors on investments in marketable securities are included in other (expense) income, net on the accompanying Consolidated Statements of Income.

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Maintenance and operating costs are expensed as incurred.

Fair Value Measurements

Fair Value Measurement

The Company measures certain assets and liabilities at fair value in accordance with ASC 820, Fair Value Measurement .

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date.

The fair value hierarchy prioritizes the inputs to valuation techniques used in measuring fair value.

There are three levels to the fair value hierarchy based on the reliability of inputs, as follows:

Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

ASC 820 establishes a three -level fair value hierarchy based on the observability of inputs used in valuation techniques:

Level 1 – Observable inputs that reflect quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions.

The Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period.

This determination may require significant judgments to be made by the Company.

At December 31, 2024 and 2023 , the Company's assets measured at fair value on a recurring basis consisted of marketable securities, which are classified as available for sale (see Note 4 – Marketable Securities).

Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions about inputs market participants would use.

The Company uses valuation techniques appropriate to the circumstances and maximizes observable inputs when available and evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period.

The Company's instruments measured at fair value on a recurring basis primarily include marketable securities (Level 1 - see Note 4 to the Consolidated Financial Statements) and contingent consideration from recently completed acquisitions (Level 3 ).

Fair value of these Level 3 liabilities is determined using a discounted cash flow technique.

Significant unobservable inputs were used in the assessment of fair value, including assumptions regarding future business results, discount rates, and probability assessments based on the likelihood of reaching various targets.

Fair value of relevant assets and liabilities is remeasured each reporting period, with changes in fair value recorded within general and administrative expense.

During the year ended December 31, 2025 and 2024, the Company recorded $ 6.0 million and $ 0.6 million of contingent consideration related to various acquisitions described in Note 8 to the Consolidated Financial Statements.

Year Ended December 31,

Contingent Consideration:

Beginning balance

Purchases/Initial recognition

Total (gains) losses:

Included in earnings

Included in other comprehensive income

Ending balance

$ 6,450 $ 535

Property and Equipment

3 unchanged sentences

Goodwill represents the excess of purchase price in a business combination over the fair value of the net identifiable assets acquired, including intangible assets.

The carrying amount of its goodwill is evaluated for impairment at least annually during the fourth quarter and whenever events or changes in facts or circumstances indicate that impairment may exist.

The carrying amount of its goodwill is evaluated for impairment at least annually during the fourth quarter of each fiscal year and whenever events or changes in facts or circumstances indicate that impairment may exist.

In accordance with ASC 350, Intangibles – Goodwill and Other , companies may opt to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

8 unchanged sentences

As of December 31, 2025 , intangible assets include customer relationships, internally developed technologies, non-competition agreements, and trade names.

Intangible assets that are considered to have definite useful lives are being amortized on a straight-line basis over periods ranging between one and eighteen years.

Intangible assets that are considered to have definite useful lives are being amortized on a straight-line basis over periods ranging between three and eighteen years.

The weighted average amortization period for definite lived intangible assets as of December 31, 2025 was 11.9 years.

Intangible assets considered to have indefinite useful lives are evaluated for impairment at least annually during the fourth quarter, and all intangible assets are reviewed for impairment whenever events or changes in facts or circumstances indicate that the carrying amount of the assets may not be recoverable.

There were no intangible asset impairments identified or recorded for the years ended December 31, 2024, 2023, and 2022 .

Intangible assets considered to have indefinite useful lives are evaluated for impairment at least annually during the fourth quarter of each fiscal year, and all intangible assets are reviewed for impairment whenever events or changes in facts or circumstances indicate that the carrying amount of the assets may not be recoverable.

There were no significant intangible asset impairments identified or recorded for the years ended December 31, 2025, 2024, and 2023 .

Long-Lived Assets

Long-lived assets to be held for use are reviewed for events or changes in facts and circumstances, both internally and externally, which may indicate that an impairment of long-lived assets held for use is present.

The Company measures any impairment using observable market values or discounted future cash flows from the related long-lived assets.

The Company measures any impairment using discounted future cash flows from the related long-lived assets.

The cash flow estimates and discount rates incorporate management’s best estimates, using appropriate and customary assumptions and projections at the date of evaluation.

16 unchanged sentences

Advertising expense for the years ended December 31, 2025, 2024, and 2023 was $ 1.9 million, $ 1.9 million, and $ 1.5 million, respectively, and is included under the caption sales and marketing expense in the accompanying Consolidated Statements of Income.

Business Combinations

The Company accounts for business combinations in accordance with ASC 805, Business Combinations using the acquisition method of accounting.

Under this method, the identifiable assets acquired, including intangibles assets such as customer relationships, trade names, non-compete agreements, and developed technology, liabilities assumed, and any noncontrolling interests are recognized and measured at their estimated fair values as of the acquisition date.

The excess of the purchase consideration over the fair value of net assets acquired is recorded as goodwill.

Transaction‑related expenses are expensed as incurred.

The fair value measurements applied in accounting for business combinations may require significant judgment, including estimates related to future cash flows associated with intangible assets, discount rates, market-participant assumptions, projected synergies and operating results, and useful lives.

These judgments rely on unobservable inputs and valuation models consistent with ASC 820, and certain asset and liability valuations may include Level 3 inputs due to limited market data.

The results of operations of acquired businesses are included in the Company's Consolidated Financial Statements from the acquisition date.

Contingent Consideration

Some business combinations include arrangements that require future payments to the seller based on the achievement of specified financial or operational metrics (earn‑outs).

The Company recognizes the fair value of contingent consideration as part of the purchase consideration as of the acquisition date in accordance with ASC 805.

Contingent consideration obligations are typically measured using probability‑weighted performance outcomes and discounted cash‑flow models or other option‑pricing techniques that incorporate significant unobservable inputs ( Level 3 ), such as management's estimates of revenue or performance outcomes, the probability of achieving milestone events, timing of expected payments, and market-participant discount rates.

After initial recognition, contingent consideration classified as a liability is remeasured at fair value at each reporting period, with changes in fair value recorded under the caption general and administrative expenses in the accompanying Consolidated Statements of Income.

Because of the use of Level 3 valuation inputs, fair‑value changes may result in earnings volatility.

Cash flows related to contingent consideration are classified in the Consolidated Statements of Cash Flows based on the nature and timing of the payments.

Cash payments made after the acquisition date to settle contingent consideration obligations are classified according to their underlying nature:

amounts that represent deferred purchase price are presented as financing activities, while payments attributable to fair value remeasurements recognized in earnings are presented as operating activities, consistent with the income statement classification of the related expense.

Non‑cash changes in the fair value of contingent consideration do not affect cash flows and are disclosed as non‑cash investing or financing activities when material.

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 reverse.

27 unchanged sentences

The Company measures compensation cost of restricted share units based on the closing fair value of the Company’s stock on the date of grant.

Stock-based compensation cost is measured at the grant date, based on the fair value of the award that is ultimately expected to vest, and is recognized as an expense over the requisite service period.

The Company, at times, has granted performance restricted stock unit awards to executive officers and other members of senior management, which include a performance condition.

Stock-based compensation cost is measured at the grant date, based on the fair value of the award that is ultimately expected to vest by estimating forfeitures, and is recognized as an expense over the requisite service period.

The Company has also granted performance restricted stock unit awards, which include a performance condition, to its executive officers.

Stock-based compensation expense related to awards with a performance condition are measured based on the grant date closing stock price, and the expense related to these awards is recognized based on the requisite service period elapsed, as well as the probability of achievement of the performance condition as of the end of our reporting period.

1 unchanged sentence

Excess tax benefits and deficiencies are reflected in the Consolidated Statements of Income as a component of the provision for income taxes when realized.

The Company has three non-cancelable agreements to lease office space.

The Company has four non-cancelable agreements to lease office space.

For leases with a lease term greater than 12 months, the Company recognizes a right-of-use ("ROU") asset and a lease liability on the balance sheet at the lease commencement date.

3 unchanged sentences

Additionally, the Company does not have any leases with residual value guarantees or material restrictive covenants.

Most of the Company’s lease agreements contain provisions for escalating rent payments over the terms of the leases, which escalations are either fixed within the contract or are variable based on the consumer price index.

The Company’s lease agreements contain provisions for escalating rent payments over the terms of the leases, which are fixed within the contract.

The Company’s leases do not contain readily determinable implicit discount rates, and as such the Company must use its incremental borrowing rate to discount the future lease payments based on information available at lease commencement.

6 unchanged sentences

Revenues and expenses for these subsidiaries are translated using rates that approximate those in effect during the period.

Gains and losses from these translations are recognized as cumulative translation adjustments included in accumulated other comprehensive income in the Consolidated Balance Sheets.

Gains and losses from these translations are recognized as cumulative translation adjustments included in accumulated other comprehensive loss in the Consolidated Balance Sheets.

Gains and losses resulting from foreign currency transactions that are denominated in currencies other than the Company's functional currency are included within other (expense) income, net on the Consolidated Statements of Income.

2 unchanged sentences

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures .

The new guidance requires disclosures of significant reportable segment expenses that are regularly provided to the CODM and other segment items on an interim and annual basis.

Entities with a single reportable segment will also be required to apply the disclosure requirements in ASU 2023 - 07 on an interim and annual basis.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this standard effective January 1, 2024 using a retrospective method.

For further information, refer to the Business Segments section of this Note 1 - Summary of Significant Accounting Policies.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

In December 2023, the Financial Accounting Standards Board ("FASB") issued Account Standards Update ("ASU") 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures , which requires public entities to provide disclosure of disaggregated information in the entity’s tax rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

The ASU is effective for fiscal years beginning after December 15, 2024.

The Company is currently evaluating the impact of adopting the standard;

however, it is not expected to have a material impact on the Company's financial statements.

The Company adopted this standard effective January 1, 2025 using a prospective method.

Prior period disclosures have not been adjusted to reflect the new disclosure requirements.

For further information, refer to Note 9 - Income Taxes.

In November 2024, the FASB issued ASU 2024 - 04, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

3 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.

SHAREHOLDERS ’ EQUITY

5 unchanged sentences

Dividends on Common Stock

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

During the years ended December 31, 2024 and 2023 , the Board declared quarterly dividends under the Dividend Policy totaling $ 0.112 and $ 0.100 per share for the year, respectively, for a cash outlay of $ 3.4 million and $ 3.1 million, respectively.

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

During the years ended December 31, 2025, 2024, and 2023 , the Board declared quarterly dividends under the Dividend Policy totaling $ 0.124 , $ 0.112 , and $ 0.100 per share for the year, respectively, for a cash outlay of $ 3.7 million, $ 3.4 million, and $ 3.1 million, respectively.

Additionally, on February 23, 2026, the Board approved the Company’s first quarter 2026 cash dividend of $ 0.035 per share, payable on March 20, 2026 to holders of record on March 9, 2026 .

Share Repurchase Plan

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

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

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

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

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

The share repurchase expired on March 13, 2023.

During the year ended December 31, 2022, the Company repurchased 402,050 shares at an aggregate fair value of $ 8.1 million, reflecting an average price per share of $ 20.19 (excluding the cost of broker commissions).

No repurchases occurred under this share repurchase program during the year ended December 31, 2023.

On September 13, 2023, the Company announced that the Board authorized a share repurchase program to repurchase up to $ 10.0 million of the Company's outstanding shares of common stock.

During the year ended December 31, 2023, the Company repurchased and subsequently retired 404,188 shares at an aggregate fair value of $ 8.9 million, reflecting an average price per share of $ 22.07 (excluding the cost of broker commissions and the 1 % share repurchase excise tax imposed by the Inflation Reduction Act of 2022 ).

No repurchases occurred under this share repurchase program during the year ended December 31, 2024.

The share repurchase program expired according to its term on March 31, 2024.

During the year ended December 31, 2023, the Company repurchased 404,188 shares at an aggregate fair value of $ 8.9 million, reflecting an average price per share of $ 22.07 (excluding the cost of broker commissions).

No repurchases occurred during 2024.

Repurchased shares of common stock in all years presented herein have been retired.

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

Pursuant to the 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.

The share repurchase program provided that it would terminate on the earlier of May 31, 2026, or when the maximum dollar amount under the program was expended.

During the year ended December 31, 2025, the Company repurchased and subsequently retired 905,786 shares of common stock at an aggregate fair value of $ 25.0 million under this authorization, reflecting an average price per share of $ 27.60 (excluding the cost of broker commissions and the 1 % share repurchase excise tax imposed by the Inflation Reduction Act of 2022 ).

This share repurchase program ended in July 2025 when the maximum dollar amount under this program was expended.

On November 11, 2025, the Company announced another share repurchase program approved by the Board of Directors under which the Company was authorized to repurchase up to $ 10.0 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.

The share repurchase program provided that it would terminate on the earlier of February 26, 2026, or when the maximum dollar amount under the program was expended.

During the year ended December 31, 2025, the Company repurchased and subsequently retired 205,804 shares of common stock at an aggregate fair value of $ 5.0 million under this authorization, reflecting an average price per share of $ 24.29 (excluding the cost of broker commissions and the 1 % share repurchase excise tax imposed by the Inflation Reduction Act of 2022 ), and the Company continued to repurchase shares pursuant to this authorization during the first quarter of 2026, completing the program in January by repurchasing 222,978 additional shares valued at $ 5.0 million.

This share repurchase program terminated in January 2026 when the maximum dollar amount was expended.

NET INCOME PER SHARE

44 unchanged sentences

As of December 31, 2025 , $ 691 million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

The Company expects to recognize revenue on approximately 40 % of these remaining performance obligations over the next 12 months, with the remaining amounts recognized thereafter.

The Company expects to recognize revenue on 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.

PROPERTY AND EQUIPMENT

14 unchanged sentences

Balance at January 1, 2025

Acquisition of TCPS

Acquisition of The Clinical Hub

Acquisition of Virsys12

Acquisition of MissionCare

Effect of exchange rate changes

1 unchanged sentence

Balance at January 1, 2024

Post-closing adjustment for eeds

Acquisition of TCPS

Acquisition of The Clinical Hub

Effect of exchange rate changes

Balance at December 31, 2024

Intangible assets other than goodwill that are considered to have finite useful lives include customer-related intangibles consisting of customer relationships, which are amortized over their estimated useful lives ranging from eight to eighteen years, and other intangible assets consisting of developed technology, non-competition agreements, and trade names, which are amortized over their estimated useful lives ranging from one to ten years.

Amortization of intangible assets was $ 13.7 million, $ 13.4 million, and $ 14.9 million for the years ended December 31, 2025, 2024, and 2023 , respectively.

6 unchanged sentences

$ 116,589 $ ( 67,377 ) $ 49,212 $ 106,001 $ ( 58,536 ) $ 47,465

Developed Technology

18,790 ( 5,411 ) 13,379 23,400 ( 17,307 ) 6,093

4,066 ( 1,727 ) 2,339 4,465 ( 2,475 ) 1,990

$ 139,445 $ ( 74,515 ) $ 64,930 $ 133,866 $ ( 78,318 ) $ 55,548

The expected future annual amortization expense for the years ending December 31, is as follows (in thousands):

BUSINESS COMBINATIONS

During the year ended December 31, 2024, the Company completed business combinations of Total Clinical Placement System (d/b/a TCPS) ("TCPS") and The Clinical Hub, Inc.

(d/b/a The Clinical Hub) ("The Clinical Hub") for total purchase consideration of $ 1.3 million in cash paid at closing, with up to an additional $ 0.6 million in cash payable by the Company based on agreed upon metrics of the acquirees during certain periods following closing.

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 $ 11.4 million payable in cash, giving effect to customary purchase price adjustments and 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 expanded the Company's existing provider data management and credentialing solution for payers and health plan enterprises, called Network by HealthStream TM , which is a part of its broader, market-leading Credentialing application suite.

The acquisition was accounted for using the acquisition method of business combination under ASC 805 .

The Company incurred $ 0.1 million in acquisition-related transaction costs, which are recorded in general and administrative expenses in the Consolidated Statement of Income.

The results of operations for Virsys12 have been included in the Company’s Financial Statements from the date of acquisition.

A summary of the preliminary purchase price is as follows (in thousands):

Fair value of contingent consideration

Total consideration

The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):

Accounts and unbilled receivable

Prepaid and other current assets

Operating lease right-of-use asset

Property and equipment

Deferred tax assets

Intangible assets

Accounts payable and accrued liabilities

Deferred revenue

Net assets acquired

The excess of preliminary purchase price over the preliminary fair values of net tangible and intangible assets is recorded as goodwill.

The preliminary fair values of tangible and identifiable intangible assets and liabilities are based on management’s estimates and assumptions.

The preliminary fair values of assets acquired and liabilities assumed continue to be subject to change during the measurement period (up to one year from the acquisition date) as the Company finalizes the valuation of these items.

The primary areas of the preliminary purchase price allocation that are not finalized include the composition and valuation of an indemnification asset and liability related to sales tax attributes, which is preliminarily valued at $ 0.4 million.

The primary intangible asset acquired was developed technology.

The fair value estimate for developed technology intangible asset included significant assumptions in the prospective financial information, such as revenue growth, obsolescence factor, EBITDA margin, and the discount rate.

Additionally, these assumptions are forward looking and could be affected by future economic and market conditions.

The goodwill balance is primarily attributed to the assembled workforce, additional market opportunities from offering Virsys12 products, and expected synergies from integrating Virsys12 with other products or other combined functional areas within the Company.

The goodwill balance is deductible for U.S.

income tax purposes.

The following table sets forth the preliminary components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands):

Customer relationship

$ 700 10 years

Developed technology

5,900 5 years

Total intangible assets subject to amortization

The following unaudited pro forma financial information summarizes the results of operations of the Company and Virsys12 as though the companies were combined as of January 1, 2024 ( in thousands, except per share data):

Year Ended December 31,

Total revenues

$ 309,333 $ 298,883

$ 18,040 $ 18,850

Net income per share - basic

$ 0.60 $ 0.62

Net income per share - diluted

$ 0.60 $ 0.62

These unaudited pro forma combined results of operations include certain adjustments arising from the acquisition, such as amortization of intangible assets, depreciation of property and equipment, and interest expense related to Virsys12's previously outstanding debt.

The unaudited pro forma combined results of operations is for informational purposes only and is not indicative of what the Company’s results of operations would have been had the transaction occurred at the beginning of the earliest period presented or to project the Company’s results of operations in any future period.

MissionCare Collective

On December 15, 2025 , the Company acquired all of the outstanding equity of MissionCare Collective, LLC ("MissionCare"), a healthcare workforce company that includes the largest caregiver network in the U.S.

The consideration paid at closing for MissionCare consisted of approximately $ 24.6 million payable in cash at closing, giving effect to customary purchase price adjustments, and is subject to a post-closing working capital adjustment.

In addition, 165,684 shares of HealthStream common stock valued at $ 4.0 million were issued at closing through a private placement, and up to an additional $ 10.0 million in cash may be paid over a three -year period following closing, contingent upon the achievement of certain financial targets.

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

The Company incurred $ 0.4 million in acquisition-related transaction costs, which are recorded in general and administrative expenses in the Consolidated Statement of Income.

The results of operations for MissionCare have been included in the Company’s Consolidated Financial Statements from the date of acquisition.

A summary of the preliminary purchase price is as follows (in thousands):

Common stock issued

Fair value of contingent consideration

Total consideration

The following table summarizes the preliminary fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):

Accounts receivable

Prepaid and other current assets

Deferred tax assets

Intangible assets

Accounts payable and accrued liabilities

Deferred revenue

Net assets acquired

The excess of preliminary purchase price over the preliminary fair values of net tangible and intangible assets is recorded as goodwill.

The preliminary fair values of tangible and identifiable intangible assets and liabilities are based on management’s estimates and assumptions.

The entire purchase price allocation, including the composition and valuation of an indemnification asset and liability related to sales tax attributes, which is preliminarily valued at $ 1.0 million, is preliminary.

Preliminarily, the primary intangible assets acquired were customer relationships and developed technology.

The goodwill balance is primarily attributed to the assembled workforce, additional market opportunities arising from offering MissionCare products, and expected synergies from integrating MissionCare with other products or other combined functional areas within the Company.

The goodwill balance is deductible for U.S.

income tax purposes.

The following table sets forth the preliminary components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands):

Customer relationships

$ 9,700 10 years

Developed technology

5,950 5 years

Total intangible assets subject to amortization

The following unaudited pro forma financial information summarizes the results of operations of the Company and MissionCare as though the companies were combined as of January 1, 2024 ( in thousands, except per share data):

Year Ended December 31,

Total revenues

$ 312,757 $ 301,100

$ 20,041 $ 21,505

Net income per share - basic

$ 0.67 $ 0.71

Net income per share - diluted

$ 0.66 $ 0.70

These unaudited pro forma combined results of operations include certain adjustments arising from the acquisition, such as amortization of intangible assets.

The unaudited pro forma combined results of operations is for informational purposes only and is

not indicative of what the Company’s results of operations would have been had the transaction occurred at the beginning of the earliest period presented or to project the Company’s results of operations in any future period.

During the year ended

December 31, 2024, the Company completed business combinations of Total Clinical Placement System ("TCPS") and The Clinical Hub, Inc.

("The Clinical Hub") for total purchase consideration of

$ 1.3 million in cash paid at closing, with up to an additional

$ 0.6 million in cash payable by the Company based on agreed upon metrics of the acquirees during certain periods following closing.

Both TCPS and The Clinical Hub are clinical rotation management companies offering a process that streamlines the managing and placement of students into clinical rotations that include scheduling, onboarding, tracking, and ensuring proper compliance and credentials are in place for students, schools, and healthcare organizations, further enlarging the Company's footprint among nursing and allied healthcare students as they prepare for careers in healthcare.

The acquisitions are not considered material to the Company's financial statements, either individually or in the aggregate.

The Company accounted for the acquisitions as business combinations and, as of December 31, 2024, has preliminarily allocated the purchase consideration for each based on management’s estimates of fair value.

On December 31, 2022, the Company acquired substantially all of the assets of Electronic Education Documentation System, LLC (d/b/a eeds) ("eeds"), an Asheville, North Carolina-based healthcare technology company offering a SaaS-based CME/CE management application for healthcare organizations, for approximately $ 6.6 million in cash.

The purchase price was included in accrued liabilities in the Company's Consolidated Balance Sheet as of December 31, 2022 and was paid in January 2023.

Of the purchase price paid at closing, $ 0.6 million is being held in escrow for a period of time following the closing to serve as a source of recovery for certain potential indemnification claims by the Company.

Acquisition-related transaction costs were $ 0.1 million.

The acquisition is not considered material to the Company’s financial statements.

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

Net assets acquired were $ 6.6 million.

Based on the fair value of assets acquired and liabilities assumed, including intangible assets of $ 4.7 million, goodwill of $ 2.3 million was established.

The results of operations for eeds are included in the Company’s Consolidated Financial Statements from the date of acquisition.

On May 18, 2022 , the Company acquired the remaining ownership interest (representing approximately 82 % of the outstanding equity interests) of CloudCME, LLC ("CloudCME"), a Nashville-based healthcare technology company offering a SaaS-based application for managing all aspects of continuing education ("CME/CE") within a healthcare organization, for approximately $ 4.0 million in cash and $ 4.1 million in shares of HealthStream's common stock issued through a private placement at closing.

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

Acquisition-related transaction costs were $ 0.1 million.

The acquisition is not considered material to the Company’s financial statements.

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

Net assets acquired were $ 9.6 million.

Based on the fair value of assets acquired and liabilities assumed, including intangible assets of $ 3.8 million, goodwill of $ 6.8 million was established.

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

The acquisitions are

not considered material to the Company's financial statements, either individually or in the aggregate.

The acquisitions were accounted for using the acquisition method of business combination under ASC

Components of income before income taxes are as follows (in thousands):

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Current foreign

14 15 ( 110 )

Deferred federal

6 unchanged sentences

$ 4,876 $ 4,796 $ 3,298

A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the accompanying Consolidated Statements of Income is as follows (in thousands):

As noted above, we adopted ASU 2023 - 09 on a prospective basis effective January 1, 2025.

The following table presents required disclosure pursuant to ASU 2023 - 09 and reconciles the U.S.

federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025:

Year Ended December 31, 2025

federal statutory tax rate

$ 4,876 21.00 %

State and local income taxes, net of federal income tax effect (a)

Foreign tax effects

Other foreign jurisdictions (b)

( 20 ) - 0.09 %

Research and development tax credits

( 790 ) - 3.40 %

Other adjustments

( 244 ) - 1.05 %

Effective tax rate

$ 4,876 21.00 %

(a) State taxes in California, Minnesota, Oregon, Pennsylvania, Tennessee, and Texas made up the majority (greater than 50% ) of the tax effect in this category

(b) Includes Australia, Canada, and New Zealand

The following table presents a pre-ASU 2023 - 09 adoption reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the accompanying Consolidated Statements of Income is as follows (in thousands) for the years ended December 31, 2024 and 2023:

Federal tax provision at the statutory rate

6 unchanged sentences

Changes in uncertain tax positions

7 ( 71 ) ( 85 )

Provision for income taxes

48 unchanged sentences

$ 18,246 $ 14,596

We adopted ASU 2023 - 09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025:

Income taxes, net of amounts refunded

STOCK-BASED COMPENSATION

Stock Incentive Plan

The Company has outstanding stock-based awards under its 2016 Omnibus Incentive Plan ( "2016 Plan") and 2022 Omnibus Incentive Plan ( "2022 Plan") (collectively, the "2016 Plan" and "2022 Plan", referred to as the "Plans").

The Company has outstanding stock-based awards under its 2016 Omnibus Incentive Plan and 2022 Omnibus Incentive Plan ( "2022 Plan").

The 2022 Plan authorizes the grant of options, restricted share units ("RSUs"), or other forms of stock-based compensation to employees, officers, directors, and others, and such grants must be approved by the Compensation Committee of the Board of Directors.

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Product development

2,304 745 692

Sales and marketing

1,114 529 485

General and administrative

4 unchanged sentences

As of December 31, 2025 , total unrecognized compensation expense related to non-vested stock options and RSUs was $ 7.9 million, net of estimated forfeitures, with a weighted average expense recognition period remaining of 2.8 years.

During December 2025, the Company’s Chief Executive Officer, Robert A.

Frist, Jr., contributed 146,286 of his personally owned shares of HealthStream, Inc.

common stock (valued at $ 3.5 million) to the Company, without any consideration paid to him, for the benefit of the Company’s employees.

In connection therewith, effective December 9, 2025 the Company approved the award of 146,286 fully vested shares of common stock to over 700 employees of the Company under the 2022 Plan.

These shares were issued in December 2025.

As required by ASC 718, Compensation – Stock Compensation , the Company recognized $ 3.5 million of stock-based compensation expense for these stock awards during the three months ended December 31, 2025 based on the closing fair market value of the Company’s stock on the date of the Company’s approval of these grants.

Total payments related to the employees’ tax obligations to taxing authorities for these stock awards were $ 1.1 million and are reflected as a financing activity within the Consolidated Statement of Cash Flows for 2025.

In addition, the employer taxes and expenses associated with these grants were $ 0.3 million and were recorded as an expense during December 2025.

Frist contributed an additional 11,492 of his personally owned shares to the Company to cover the amount of these employer taxes and expenses.

The receipt of shares from Mr.

Frist and in connection with the withholding of shares as set forth above are presented on the Company’s Statement of Shareholders’ Equity in a similar manner as a share repurchase (i.e., reduction of outstanding shares).

EMPLOYEE BENEFIT PLAN

49 unchanged sentences

Total lease liabilities

During the year ended December 31, 2025 , the Company entered into an agreement to sublease a portion of its office space in the Capitol View building in Nashville, Tennessee to optimize the workforce performance to deliver positive results for customers, employees, and shareholders.

The Company's corporate headquarters remains in Nashville in the Capitol View building, while the Company continues to hire new employees both locally and nationally to support growth.

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

The Company recorded sublease income, net of initial direct costs amortization, of $ 2.3 million during the year ended December 31, 2025.

In addition, the Company expects to record sublease income, net, of approximately $ 3.2 million annually for the next five years and $ 2.6 million thereafter.

In connection with its business, the Company is from time to time involved in various legal actions.

4 unchanged sentences

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 8. Financial Statements and Supplementary Data