What changed in this filing

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Item 1. Financial Statements

2026-05-06 compared with 2025-11-06 · 186 added, 172 removed, 312 unchanged (53% of the section changed)

3 unchanged sentences

(In thousands)

September 30,

Current assets:

43 unchanged sentences

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

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

29,305 and 29,579 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

225,089 231,797

12 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Revenues, net

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

Operating costs and expenses:

Cost of revenues (excluding depreciation and amortization)

26,507 24,470 78,357 72,825

Product development

12,107 12,100 36,228 36,208

Sales and marketing

12,143 11,497 36,101 34,676

General and administrative

7,330 8,457 23,396 26,325

Depreciation and amortization

10,820 10,073 32,441 30,779

Total operating costs and expenses

68,907 66,597 206,523 200,813

Operating income

7,567 6,498 17,832 16,598

Interest income

788 1,007 2,676 2,856

Other expense, net

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

Income before income tax provision

8,252 7,479 20,367 19,320

Income tax provision

2,166 1,754 4,559 4,202

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

Net income per share:

$ 0.20 $ 0.19 $ 0.52 $ 0.50

Weighted average shares of common stock outstanding:

29,688 30,409 30,151 30,374

29,811 30,590 30,283 30,512

Dividends declared per share

$ 0.031 $ 0.028 $ 0.093 $ 0.084

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30, 2025

September 30, 2024

September 30, 2025

September 30, 2024

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

March 31, 2026

March 31, 2025

Other comprehensive (loss) income, net of taxes:

Foreign currency translation adjustments

( 293 ) 290 511 ( 229 )

Unrealized gain on marketable securities

Unrealized loss on marketable securities

Total other comprehensive (loss) income

( 254 ) 333 517 ( 193 )

Comprehensive income

$ 5,832 $ 6,058 $ 16,325 $ 14,925

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands, except per share data)

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

Accumulated Other Comprehensive

Total Shareholders’

(Loss)/Income

Balance at December 31, 2025

1 unchanged sentence

— — 5,910 — 5,910

Comprehensive income

Dividends declared on common stock ($ 0.031 per share)

— — ( 943 ) — ( 943 )

Stock-based compensation

— 1,104 — — 1,104

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

93 ( 1,070 ) — — ( 1,070 )

Balance at March 31, 2025

30,525 $ 252,466 $ 112,361 $ ( 2,019 ) $ 362,808

— — 5,389 — 5,389

Comprehensive income

— — — 741 741

Dividends declared on common stock ($ 0.031 per share)

— — ( 946 ) — ( 946 )

Stock-based compensation

— 836 — — 836

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

22 ( 5 ) — — ( 5 )

Excise tax on repurchases of common stock

— ( 135 ) ( 135 )

Repurchases of common stock

( 650 ) ( 18,121 ) ( 18,121 )

Balance at June 30, 2025

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

— — 6,086 — 6,086

Comprehensive loss

7 unchanged sentences

Excise tax on repurchases of common stock

— ( 64 ) — — ( 64 )

Repurchases of common stock

( 342 ) ( 7,507 ) — — ( 7,507 )

Balance at September 30, 2025

Balance at March 31, 2026

29,305 $ 225,089 $ 128,469 $ ( 1,566 ) $ 351,992

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Accumulated Other Comprehensive

4 unchanged sentences

— — 4,332 — 4,332

Comprehensive loss

— — — ( 481 ) ( 481 )

Dividends declared on common stock ($ 0.028 per share)

— — ( 849 ) — ( 849 )

Stock-based compensation

— 1,060 — — 1,060

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

100 ( 855 ) — — ( 855 )

Balance at March 31, 2024

30,398 $ 249,280 $ 96,746 $ ( 1,172 ) $ 344,854

— — 4,168 — 4,168

Comprehensive loss

— — — ( 45 ) ( 45 )

Dividends declared on common stock ($ 0.028 per share)

— — ( 851 ) — ( 851 )

Stock-based compensation

— 1,094 — — 1,094

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

10 ( 6 ) — — ( 6 )

Balance at June 30, 2024

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

— — 5,725 — 5,725

Comprehensive income

— — — 333 333

Dividends declared on common stock ($ 0.031 per share)

4 unchanged sentences

93 ( 1,070 ) — — ( 1,070 )

Balance at September 30, 2024

Balance at March 31, 2025

30,525 $ 252,466 $ 112,361 $ ( 2,019 ) $ 362,808

3 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

OPERATING ACTIVITIES:

7 unchanged sentences

Deferred income taxes

5,055 ( 960 )

Loss on equity method investments

2 unchanged sentences

Accounts and unbilled receivables

Prepaid and other current assets

( 4,550 ) ( 1,002 )

Prepaid royalties

( 1,695 ) ( 1,200 )

Other prepaid expenses and other current assets

( 2,611 ) ( 2,781 )

Accounts payable and accrued expenses

6 unchanged sentences

INVESTING ACTIVITIES:

Cash paid for acquisitions

Proceeds from maturities of marketable securities

2 unchanged sentences

( 10,197 ) ( 9,171 )

Proceeds from sale of non-marketable equity investments

Purchase of other investments

Purchases of other investments

( 1,750 ) ( 500 )

Payments associated with capitalized software development

13 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Net increase in cash and cash equivalents

12,550 17,820

11 unchanged sentences

Company Overview

HealthStream provides primarily 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 individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs.

HealthStream 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 individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs, whether through the Company's enterprise applications or emerging career networks.

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

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

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

Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.

The Condensed Consolidated Balance Sheet at December 31, 2025 was derived from the audited Consolidated Financial Statements at that date but does not include all of the information and footnotes required by US GAAP for a complete set of financial statements.

For further information, refer to the Consolidated Financial Statements and Notes thereto for the year ended December 31, 2025 (included in the Company's Annual Report on Form 10 -K, filed with the Securities and Exchange Commission on February 26, 2026).

Business Segments

Business Segment

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 net income to make operating decisions, assess financial performance, and allocate resources.

1 unchanged sentence

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

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

Expenditures for additions to long-lived assets for the consolidated entity were $ 12.2 million and $ 10.7 million for the three months ended March 31, 2026 and 2025 , respectively.

Non-Marketable Equity Investments

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

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

The aggregate carrying amounts of non-marketable equity investments accounted for using the measurement alternative for equity investments that do not have readily determinable fair values were $ 3.0 million and $ 1.5 million as of March 31, 2026 and December 31, 2025 , respectively, which the Company evaluates for impairment at each reporting period.

Cumulatively, there have been no adjustments recorded due to changes in the fair value of the non-marketable equity investments the Company held as of March 31, 2026 .

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

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fair Value Measurement

During the three months ended March 31, 2026, the Company recorded a purchase accounting adjustment to reduce the fair value of contingent consideration by $ 2.3 million related to the MissionCare Collective acquisition from the original estimate recorded based on updated information received from valuation specialists (see Note 9 to the Condensed Consolidated Financial Statements).

Contingent Consideration:

Beginning balance

$ 6,450 $ 535

Purchases/Initial recognition

( 2,300 ) 6,000

Total (gains) losses:

Included in earnings

Included in other comprehensive income

Ending balance

$ 4,150 $ 6,450

RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

ASU 2023 - 07 was effective for the Company 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.

In December 2023, the FASB issued 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.

ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024.

The Company is currently evaluating the effect of this standard on its disclosures and will adopt the standard effective for the annual period ending December 31, 2025.

In November 2024, the FASB issued ASU 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures:

Disaggregation of Income Statement Expenses , which requires disclosure of disaggregated information about specific categories underlying certain income statement expense line items in the footnotes to the financial statements for both annual and interim periods.

2 unchanged sentences

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

In July 2025, the FASB issued ASU 2025 -05, Measurement of Credit Loss for Accounts Receivable and Contract Assets .

The ASU provides a practical expedient for the calculation of current expected credit losses for current accounts receivable and contract assets, allowing entities to assume that current conditions as of the balance sheet date will persist through the forecast period.

The Company adopted the ASU effective January 1, 2026 on a prospective basis and elected the practical expedient for the calculation of current expected credit losses.

The adoption did not have a material impact on the Company’s allowance for doubtful accounts.

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

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

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements , which clarifies the guidance in Topic 270 to improve the consistency of interim financial reporting.

The standard provides a comprehensive list of required interim disclosures and introduces a disclosure principle requiring entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2025-11.

REVENUE RECOGNITION

6 unchanged sentences

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

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Sales taxes are excluded from revenues.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Subscription services

1 unchanged sentence

Professional services

2,587 3,177 7,738 8,275

Total revenues, net

$ 81,203 $ 73,485

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

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

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

three months ended March 31, 2026 and 2025 , the Company recognized

$ 0.1 million and

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

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

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

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

During the three months ended March 31, 2026 and 2025 , the Company recognized revenues of $ 42.7 million and $ 44.3 million, respectively, from amounts included in deferred revenue at the beginning of the respective periods.

As of March 31, 2026 , approximately $ 687 million of revenue is expected to be recognized from remaining performance obligations under contracts with customers.

The Company expects to recognize revenue related to approximately 39 % of these remaining performance obligations over the next 12 months, 67 % over the next 24 months, and 83 % over the next 36 months, with the remaining amounts recognized thereafter.

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Income taxes are accounted for using the asset and liability method, whereby deferred tax assets and liabilities are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities measured at tax rates that will be in effect for the year in which the differences are expected to affect taxable income.

The Company computes its interim period provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period.

The Company’s effective tax rate was 22 % for both the nine months ended September 30, 2025 and 2024 .

The Company’s effective tax rate was 24 % and 17 % for the three months ended March 31, 2026 and 2025 , respectively.

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

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

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

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

SHAREHOLDERS' EQUITY

During the three months ended March 31, 2026, the Company recorded discrete tax expense of $ 0.2 million, which consisted of discrete tax expense associated with stock-based awards and reserves for uncertain tax positions.

During the three months ended March 31, 2025, the Company recorded discrete tax benefits of $ 0.2 million, which consisted of a tax benefit associated with stock-based awards partially offset by discrete tax expense related to reserves for uncertain tax positions.

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

Dividends on Common Stock

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

During the three months ended March 31, 2026 , the Company's Board of Directors (“Board”) declared the following quarterly dividend under the Company's dividend policy (in thousands, except per share data):

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

March 20, 2026 February 23, 2026 $ 0.035 March 9, 2026 $ 1,028

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

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

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

Stock-Based Compensation

The Company has stock awards outstanding under its 2016 Omnibus Incentive Plan and 2022 Omnibus Incentive Plan.

Additionally, o n May 4, 2026, the Board declared a quarterly cash dividend of $ 0.035 per share, payable on May 29, 2026 to holders of record on May 18, 2026 .

Stock Option Activity

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

A summary of stock option activity for the three months ended March 31, 2026 is as follows (in thousands, except weighted-average exercise price).

Exercise Price

5 unchanged sentences

90 $ 20.34 $ 33

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

The weighted average remaining contractual term of options outstanding at March 31, 2026 was 7.8 years.

HEALTHSTREAM, INC.

1 unchanged sentence

Restricted Share Unit Activity

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

A summary of Restricted Share Unit ("RSU") activity for the three months ended March 31, 2026 is as follows (in thousands, except weighted-average grant date fair value):

Average Grant Date

3 unchanged sentences

480 $ 26.34 $ 9,935

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

The aggregate fair value of RSUs that vested during the three months ended March 31, 2026 and 2025, as of the respective vesting dates, was $ 2.3 million and $ 2.9 million, respectively.

Stock-Based Compensation

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of revenues (excluding depreciation and amortization)

$ 50 $ 49 $ 154 $ 152

Product development

199 200 626 599

Sales and marketing

110 139 363 415

General and administrative

435 743 1,591 2,119

Total stock-based compensation expense

$ 1,309 $ 1,104

As of March 31, 2026 , total unrecognized compensation expense related to non-vested stock options, RSUs, and performance-based RSUs where the performance criteria has been established was $ 8.6 million, net of estimated forfeitures, with a weighted average expense recognition period remaining of 2.7 years.

Share Repurchase Plan

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

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

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

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

On November 11, 2025, the Board approved a share repurchase program 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 Rule 10b5 - 1 plans, through privately negotiated transactions, or otherwise.

The terms of this program provided that it would terminate on the earlier of February 26, 2026 or when the maximum dollar amount had been expended.

During the three months ended March 31, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $ 5.0 million, reflecting an average price per share of $ 22.42 (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 terminated in January 2026 when the maximum dollar amount under this program was expended.

On March 13, 2026, the Company announced the adoption of a new share repurchase program approved by the Board under which the Company is authorized to repurchase up to $ 10.0 million of its outstanding shares of common stock.

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

This share repurchase program terminates on the earlier of September 12, 2026 or when the maximum dollar amount under the plan has been expended.

During the three months ended March 31, 2026, the Company repurchased and subsequently retired 119,367 shares of common stock at an aggregate fair value of $ 2.5 million under this authorization, reflecting an average price per share of $ 20.94 (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 second quarter of 2026 , repurchasing 90,131 additional shares valued at $ 1.8 million through April 30, 2026.

HEALTHSTREAM, INC.

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The dilutive effect of common equivalent shares is included in diluted earnings per share by application of the treasury stock method.

The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect or contingent performance conditions, was approximately 224,000 and 177,000 for the three months ended September 30, 2025 and 2024 , respectively, and 171,000 and 169,000 for the nine months ended September 30, 2025 and 2024 .

The total number of common equivalent shares excluded from the calculations of diluted earnings per share, due to their anti-dilutive effect or contingent performance conditions, was approximately 409,000 and 105,000 for the three months ended March 31, 2026 and 2025 , respectively.

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

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 5,910 $ 4,332

2 unchanged sentences

Effect of dilutive shares

123 181 132 138

Weighted-average diluted shares

5 unchanged sentences

The fair value of marketable securities, which were all classified as available for sale and which the Company does not intend to sell nor will the Company be required to sell prior to recovery of their amortized cost basis, included the following (in thousands):

September 30, 2025

March 31, 2026

Adjusted Cost

12 unchanged sentences

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

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

As of March 31, 2026 and December 31, 2025 , the Company did not recognize any allowance for credit impairments on its available for sale securities.

All investments in marketable securities are classified as current assets on the Condensed Consolidated Balance Sheets because the underlying securities mature within one year from the balance sheet date.

2 unchanged sentences

Revolving Credit Facility

On October 6, 2023, the Company entered into an Amended and Restated Revolving Credit Agreement (“Revolving Credit Facility”), amending the Revolving Credit Facility dated as of November 24, 2014, as amended, with certain lenders party thereto from time to time, and Truist, as Administrative Agent for the lenders.

Under the Revolving Credit Facility, the Company may borrow up to $ 50.0 million, which includes a $ 5.0 million swingline sub-facility and a $ 5.0 million letter of credit sub-facility, as well as an accordion feature that allows the Company to increase the Revolving Credit Facility by a total of up to $ 25.0 million, subject to securing additional commitments from existing lenders or new lending institutions.

The Revolving Credit Facility has a maturity date of October 6, 2026.

The Company's obligations under the Revolving Credit Facility are unsecured.

In addition, if the Company forms or acquires any domestic subsidiaries, the loans and other obligations under the Revolving Credit Facility will be guaranteed by such domestic subsidiaries.

At the Company’s election, the borrowings under the Revolving Credit Facility, other than the swingline loans, bear interest at either ( 1 ) a base rate defined as the highest of (a) the rate which the Administrative Agent announces from time to time as its prime lending rate, as in effect from time to time, or (b) the Federal Funds Rate, as in effect from time to time, plus one -half of one percent ( 0.50 %) per annum (any changes in such rates to be effective as of the date of any change in such rate), plus in each case an applicable margin that varies with the company’s funded debt leverage ratio;

On March 13, 2026, the Company entered into the First Amendment (the "First Amendment") to Amended and Restated Revolving Credit Agreement, amending the Amended and Restated Revolving Credit Agreement dated October 6, 2023 ( the “Revolving Credit Facility";

the Revolving Credit Facility, as amended by the First Amendment, the "Amended Revolving Credit Facility").

The First Amendment made certain revisions to the restricted payments provision in the Revolving Credit Facility (including to broaden the scope of certain parameters restricting dividends and share repurchases by the Company), and did not otherwise change the terms of the Revolving Credit Facility.

The Revolving Credit Facility amended and restated the revolving credit facility dated as of November 24, 2014, as amended, with certain lenders party thereto from time to time, and Truist, as Administrative Agent for the lenders.

Under the Amended Revolving Credit Facility, the Company may borrow up to $ 50.0 million, which includes a $ 5.0 million swingline sub-facility and a $ 5.0 million letter of credit sub-facility, as well as an accordion feature that allows the Company to increase the Amended Revolving Credit Facility by a total of up to $ 25.0 million, subject to securing additional commitments from existing lenders or new lending institutions.

The Amended Revolving Credit Facility has a maturity date of October 6, 2026.

The Company's obligations under the Amended Revolving Credit Facility are unsecured.

In addition, if the Company forms or acquires any domestic subsidiaries, the loans and other obligations under the Amended Revolving Credit Facility will be guaranteed by such domestic subsidiaries.

At the Company’s election, the borrowings under the Amended Revolving Credit Facility, other than the swingline loans, bear interest at either ( 1 ) a base rate defined as the highest of (a) the rate which the Administrative Agent announces from time to time as its prime lending rate, as in effect from time to time, or (b) the Federal Funds Rate, as in effect from time to time, plus one -half of one percent ( 0.50 %) per annum (any changes in such rates to be effective as of the date of any change in such rate), plus in each case an applicable margin that varies with the company’s funded debt leverage ratio;

or ( 2 ) a term secured overnight financing rate (“SOFR”) defined as the greater of (a)(i) the forward-looking term rate based on SOFR determined as of the reference time for such interest period with a term equivalent to such interest period plus (ii) a term SOFR adjustment equal to 0.10 % per annum and (b) zero, plus, in each case, an applicable margin that varies with the Company’s consolidated total leverage ratio.

5 unchanged sentences

Interest on base rate loans and swingline loans is payable quarterly in arrears, and interest on SOFR loans is payable at the end of each interest period, and in the case of interest periods longer than three months, on each day which occurs every three months after the initial date of such interest period.

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

In addition, the Revolving Credit Facility required the Company to meet certain financial tests, including, without limitation:

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

In addition, the Amended Revolving Credit Facility required the Company to meet certain financial tests, including, without limitation:

a funded debt leverage ratio (consolidated debt/consolidated EBITDA) of not greater than 3.0 to 1.0;

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

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

As of September 30, 2025 , the Company was in compliance with all covenants.

There were no balances outstanding on the Revolving Credit Facility as of or during the three and nine months ended September 30, 2025 .

SUBSEQUENT EVENT

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

As of March 31, 2026 , the Company was in compliance with all covenants of the Amended Revolving Credit Facility.

There were no balances outstanding on the Amended Revolving Credit Facility as of or during the three months ended March 31, 2026 .

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BUSINESS COMBINATIONS

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

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

The consideration paid at closing for Virsys12 consisted of approximately $ 11.4 million payable in cash, after 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 expands the Company's existing provider data management and credentialing solution for payers and health plan enterprises, called Network by HealthStream TM , launched 14 months ago, which is a part of its broader, market-leading Credentialing application suite.

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

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

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

A summary of the 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 relationships

$ 700 10 years

Developed technology

5,900 5 years

Total intangible assets subject to amortization

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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):

Three Months Ended March 31,

Total revenues

Net income per share - basic

Net income per share - diluted

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 as of January 1, 2024 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 United States.

The consideration paid at closing for MissionCare consisted of approximately $ 24.9 million payable in cash at closing, after giving effect to customary purchase price adjustments and 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 results of operations for MissionCare have been included in the Company’s Condensed Consolidated Financial Statements from the date of acquisition.

A summary of the 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

HEALTHSTREAM, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

During the three months ended March 31, 2026, the Company recorded adjustments to intangible assets and contingent consideration based on information received during the period from valuation specialists, as well as recorded the post-closing working capital adjustment, which resulted in the Company recording a measurement period adjustment which decreased goodwill by $ 4.6 million.

The measurement period adjustment had an immaterial effect on current or prior period earnings.

The primary intangible assets acquired were customer relationships and developed technology.

The fair value estimate for customer relationships intangible asset included significant assumptions regarding prospective financial information with respect to the acquisition, including with respect to revenue growth, customer attrition, EBITDA margin, and the discount rate.

The fair value estimate for developed technology intangible asset included significant assumptions, including the estimate of employee hours that would be needed to recreate the technology.

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 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

$ 9,000 7 years

Developed technology

8,800 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):

Three Months Ended March 31,

Total revenues

Net income per share - basic

Net income per share - diluted

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements