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Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that the Company intends to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
−Removed: Statements that are predictive in nature, that depend on or refer to future events or conditions, or that include words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions are forward-looking statements.
−Removed: The Company cautions that forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
+Added: Statements that are predictive in nature, that depend on or refer to future events or conditions, or that include words such as “anticipates,” “believes,” “could,” "continue," “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions are forward-looking statements.
+Added: The Company cautions that forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.
Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties.
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Business Overview
−Removed: HealthStream provides primarily SaaS based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting the people who deliver patient care.
−Removed: We are focused on helping individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs.
+Added: HealthStream primarily provides SaaS based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting people who deliver patient care.
+Added: We are focused on helping individuals and organizations in healthcare meet their ongoing learning, clinical development, credentialing, and scheduling needs, through both our enterprise applications and emerging career networks.
We also provide our solutions to nursing schools and nursing students.
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At the center of this single platform strategy is our hStream technology platform.
−Removed: By enabling our applications through hStream, we believe that stand-alone applications, which already provide a powerful value proposition on their own, are beginning to leverage each other to more efficiently and effectively empower our customers to manage their business and improve their outcomes.
+Added: By enabling our applications through hStream, we believe that stand-alone applications, which already provide a powerful value proposition on their own, are beginning to leverage each other to more efficiently and effectively empower our customers to manage their businesses and improve their outcomes.
Further, the Company’s internal structure and executive leadership are likewise shaped by the organizing principle of a single platform, including with regard to technology, operations, accounting, internal reporting (including the nature of information reviewed by our key decision makers), organizational structure, compensation, performance assessment, and resource allocation.
−Removed: Significant financial metrics for the third quarter of 2025 are set forth in the bullets below.
−Removed: Revenues of $76.5 million in the third quarter of 2025, up 4.6% from $73.1 million in the third quarter of 2024
−Removed: Operating income of $7.6 million in the third quarter of 2025, up 16.5% from $6.5 million in the third quarter of 2024
−Removed: Net income of $6.1 million in the third quarter of 2025, up 6.3% from $5.7 million in the third quarter of 2024
−Removed: Earnings per share (“EPS”) of $0.20 per share (diluted) in the third quarter of 2025, up from $0.19 per share (diluted) in the third quarter of 2024
−Removed: Adjusted EBITDA 1 of $19.1 million in the third quarter of 2025, up 7.9% from $17.7 million in the third quarter of 2024
+Added: Significant financial metrics for the first quarter of 2026 are set forth in the bullets below.
+Added: Revenues of $81.2 million, up 10.5% from $73.5 million in the first quarter of 2025
+Added: Operating income of $7.5 million, up 71.6% from $4.4 million in the first quarter of 2025
+Added: Net income of $5.9 million, up 36.4% from $4.3 million in the first quarter of 2025
+Added: Earnings per share (“EPS”) of $0.20 per share (diluted), up from $0.14 per share (diluted) in the first quarter of 2025
+Added: Adjusted EBITDA 1 of $20.1 million, up 24.1% from $16.2 million in the first quarter of 2025
Adjusted EBITDA is a non-GAAP financial measure.
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The sublease commenced in April 2025 and will expire in October 2031.
−Removed: We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $1.5 million during the three and nine months ended September 30, 2025, respectively.
−Removed: In addition, we expect to record sublease income, net, of approximately $0.8 million during the last three months of 2025 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.
+Added: We recorded sublease income, net of initial direct cost amortization, of $0.8 million during the three months ended March 31, 2026.
+Added: In addition, we expect to record sublease income, net, of approximately $2.4 million during the last nine months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.
Recent Developments
−Removed: Macroeconomic and other conditions in the U.S.
−Removed: that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations.
−Removed: While healthcare costs continue to grow, government cuts or reimbursement rate reductions to funding for healthcare organizations, the impact of tariffs on goods and services utilized by healthcare provider organizations, as well as uncertainty surrounding potential policy, regulatory, and economic shifts continue to be challenging for our healthcare customers.
+Added: Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry are challenging in certain respects and may become more challenging based on recent and contemplated changes to various policies and regulations.
+Added: While healthcare costs continue to increase, government cuts or reimbursement rate reductions affecting healthcare organizations, evolving tariff and trade policies affecting healthcare-related goods and materials, as well as uncertainty surrounding potential policy, regulatory, and economic shifts, continue to be challenging for our healthcare customers.
In particular, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program.
−Removed: In addition, the federal government entered into a partial shutdown effective October 1, 2025.
−Removed: Although Medicare and Medicaid reimbursement generally remains available throughout a shutdown, our healthcare customers may experience delays in payment for services rendered and other effects related to government agencies operating at reduced capacity and lack of congressional action on significant issues.
−Removed: We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may in the future cause, some delays in purchasing and non-renewals of existing products and services, particularly in relation to elective or non-mandatory products and services.
−Removed: Additionally, enhanced premium tax credits for individuals eligible to purchase insurance coverage through federal and state-based health insurance marketplaces are scheduled to expire at the end of 2025, and further extension is uncertain.
−Removed: If these tax credits are not extended, this could reduce insurance coverage levels and indirectly influence customer budgets of our healthcare customers in a manner that adversely impacts us.
−Removed: Challenges also persist in terms of inflationary pressures, ongoing elevated interest rate levels, lower consumer sentiment levels compared to recent periods, and geopolitical tensions, including various ongoing and threatened conflicts abroad and strained global trade relations.
−Removed: We have experienced in certain recent periods, and believe that many of our customers have experienced, increased labor, supply chain, capital, and other expenditures and budgetary pressures associated with such conditions and challenges.
−Removed: These conditions and challenges impacting the U.S.
−Removed: economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations.
−Removed: Additionally, given our focus on customers in the healthcare industry, adverse developments impacting the healthcare industry, including as a result of the developments described above, may adversely impact our business and financial results, although we are unable to fully assess the extent to which our future results may be impacted by any such developments.
+Added: We believe that these challenges and uncertainties, particularly among healthcare provider organizations with patient populations more dependent on government-funded reimbursement, have caused, and may continue to cause, some delays in purchasing and non-renewals of our products and services, particularly in relation to elective or non-mandatory products and services.
+Added: Macroeconomic challenges also persist in the United States in terms of inflationary pressures that have moderated from recent periods but continue to affect cost structures, ongoing elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations.
+Added: We believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures.
+Added: These conditions and challenges impacting the United States economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations.
Key Financial Metrics
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Revenues, net, reflect income generated by the sales of goods and services related to our operations.
−Removed: Revenues, net, were $76.5 million and $224.4 million for the three and nine months ended September 30, 2025, respectively, compared to $73.1 million and $217.4 million for the three and nine months ended September 30, 2024, respectively.
+Added: Revenues, net, were $81.2 million for the three months ended March 31, 2026, compared to $73.5 million for the three months ended March 31, 2025.
Management utilizes revenue in connection with managing our business and believes that this metric provides useful information to investors as a key indicator of the growth and success of our products.
Net income represents revenues, net, less all expenses.
−Removed: Net income was $6.1 million and $15.8 million for the three and nine months ended September 30, 2025, respectively, compared to $5.7 million and $15.1 million for the three and nine months ended September 30, 2024, respectively.
+Added: Net income was $5.9 million for the three months ended March 31, 2026, compared to $4.3 million for the three months ended March 31, 2025.
Management utilizes net income in connection with managing our business, including with regard to our capital deployment strategies.
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Additionally, certain short-term cash incentive bonuses and performance-based equity award grants are based, in whole or in part, on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.
−Removed: Adjusted EBITDA was $19.1 million and $52.9 million for the three and nine months ended September 30, 2025, respectively, compared to $17.7 million and $50.6 million for the three and nine months ended September 30, 2024, respectively.
+Added: Adjusted EBITDA was $20.1 million for the three months ended March 31, 2026, compared to $16.2 million for the three months ended March 31, 2025.
Capital Expenditures .
Capital expenditures represent cash payments incurred for purchases of property and equipment and during the development phase for projects to develop software and content.
−Removed: Capital expenditures were $7.5 million and $25.4 million for the three and nine months ended September 30, 2025, respectively, compared to $6.8 million and $21.3 million for the three and nine months ended September 30, 2024, respectively.
+Added: Capital expenditures were $7.5 million for the three months ended March 31, 2026, compared to $8.8 million for the three months ended March 31, 2025.
Management utilizes this metric in connection with managing the allocation of capitalized expenditures in which the Company invests related to the development of its products and believes that this metric is a key indicator of investment in products relative to their current and expected performance.
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There have been no changes in our critical accounting policies and estimates from those reported in our 2025 Form 10-K.
−Removed: Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
−Removed: Revenues, net.
−Removed: Revenues increased $3.4 million, or 5%, to $76.5 million for the three months ended September 30, 2025 from $73.1 million for the three months ended September 30, 2024.
−Removed: Subscription revenues increased $4.0 million, or 6%, and professional services revenues decreased by $0.6 million, or 19%, compared to the third quarter of 2024.
−Removed: A comparison of revenues by revenue source is as follows (in thousands):
−Removed: Three Months Ended September 30,
−Removed: Percentage Change
−Removed: Subscription services
−Removed: Professional services
−Removed: Total revenues, net
−Removed: % of Revenues
−Removed: Subscription services
−Removed: Professional services
−Removed: Cost of Revenues (excluding Depreciation and Amortization).
−Removed: Cost of revenues increased $2.0 million, or 8%, to $26.5 million for the three months ended September 30, 2025, from $24.5 million for the three months ended September 30, 2024.
−Removed: Cost of revenues as a percentage of revenues were 35% and 33% for the three months ended September 30, 2025 and 2024, respectively.
−Removed: The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher cloud hosting, labor costs, third-party software costs, and royalties.
−Removed: Product Development.
−Removed: Product development expenses were $12.1 million for both the three months ended September 30, 2025 and 2024.
−Removed: Product development expenses as a percentage of revenues were 16% and 17% for the three months ended September 30, 2025 and 2024, respectively.
−Removed: Sales and Marketing.
−Removed: Sales and marketing expenses, including personnel costs, increased $0.6 million, or 6%, to $12.1 million for the three months ended September 30, 2025, from $11.5 million for the three months ended September 30, 2024.
−Removed: Sales and marketing expenses were 16% of revenues for both the three months ended September 30, 2025 and 2024.
−Removed: The increase in amount is primarily due to increased commissions and higher labor costs, partially offset by a decrease in marketing expenses.
−Removed: General and Administrative.
−Removed: General and administrative expenses decreased $1.2 million, or 13%, to $7.3 million for the three months ended September 30, 2025, from $8.5 million for the three months ended September 30, 2024.
−Removed: General and administrative expenses were 10% and 12% of revenues for the three months ended September 30, 2025 and 2024, respectively.
−Removed: The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above and a reduction in stock-based compensation expense.
−Removed: Depreciation and Amortization.
−Removed: Depreciation and amortization expense increased $0.7 million, or 7%, to $10.8 million for the three months ended September 30, 2025, from $10.1 million for the three months ended September 30, 2024.
−Removed: This increase in amount is primarily a result of amortization associated with capitalized software.
−Removed: Interest Income .
−Removed: Interest income was $0.8 million and $1.0 million for the three months ended September 30, 2025 and 2024, respectively.
−Removed: This decrease is a result of lower interest rates on invested funds.
−Removed: Other Expense, Net .
−Removed: Other expense, net was $0.1 million and $26,000 for the three months ended September 30, 2025 and 2024, respectively.
−Removed: The change is primarily a result of foreign currency losses.
−Removed: Income Tax Provision.
−Removed: The Company recorded a provision for income taxes of $2.2 million for the three months ended September 30, 2025, compared to $1.8 million for the three months ended September 30, 2024.
−Removed: The Company’s effective tax rate was 26% for the three months ended September 30, 2025, compared to 23% for the three months ended September 30, 2024.
−Removed: 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.
−Removed: Net income was $6.1 million and $5.7 million for the three months ended September 30, 2025 and 2024, respectively.
−Removed: EPS was $0.20 per share (diluted) and $0.19 per share (diluted) for the three months ended September 30, 2025 and 2024, respectively.
−Removed: Adjusted EBITDA was $19.1 million for the three months ended September 30, 2025, compared to $17.7 million for the three months ended September 30, 2024.
−Removed: See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
−Removed: Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
+Added: Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Revenues, net.
−Removed: Revenues increased $6.9 million, or 3%, to $224.4 million for the nine months ended September 30, 2025 from $217.4 million for the nine months ended September 30, 2024.
−Removed: Subscription revenues increased $7.5 million, or 4%, compared to the nine months ended September 30, 2024.
−Removed: Compared to the nine months ended September 30, 2024, revenues for the nine months ended September 30, 2025 grew by approximately $14.7 million across our portfolio of solutions, partially offset by several factors, including a $5.8 million reduction from attrition in legacy applications, a $1.6 million reduction from customer bankruptcies, and a $0.4 million reduction in perpetual license sales.
+Added: Revenues increased $7.7 million, or 11%, to $81.2 million for the three months ended March 31, 2026 from $73.5 million for the three months ended March 31, 2025.
+Added: Subscription revenues increased by $7.6 million, or 11%, and professional services revenues increased by $0.1 million compared to the first quarter of 2025.
+Added: Compared to the first quarter of 2025, revenue growth for the first quarter of 2026 was positively impacted by $5.7 million of growth across our existing portfolio of solutions and $3.4 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, but was partially offset by a $1.4 million reduction from legacy applications.
A comparison of revenues by revenue source is as follows (in thousands):
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Percentage Change
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Cost of Revenues (excluding Depreciation and Amortization).
−Removed: Cost of revenues increased $5.6 million, or 8%, to $78.4 million for the nine months ended September 30, 2025, from $72.8 million for the nine months ended September 30, 2024.
−Removed: Cost of revenues as a percentage of revenues were 35% and 33% for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher cloud hosting, third-party software, labor costs, and royalties.
+Added: Cost of revenues increased $2.3 million, or 9%, to $27.8 million for the three months ended March 31, 2026, from $25.5 million for the three months ended March 31, 2025.
+Added: Cost of revenues as a percentage of revenues were 34% and 35% for the three months ended March 31, 2026 and 2025, respectively.
+Added: The increase in amount is primarily associated with investments in several areas of our business, primarily in our platform and SaaS applications, resulting in higher labor costs, increased royalties expense, and higher third-party software and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Product Development.
−Removed: Product development expenses were $36.2 million for both the nine months ended September 30, 2025 and 2024.
−Removed: Product development expenses as a percentage of revenues were 16% and 17% for the nine months ended September 30, 2025 and 2024, respectively.
+Added: Product development expenses increased $1.6 million, or 13%, to $13.6 million for the three months ended March 31, 2026, from $12.0 million for the three months ended March 31, 2025.
+Added: Product development expenses as a percentage of revenues were 17% and 16% for the three months ended March 31, 2026 and 2025, respectively.
+Added: The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Sales and Marketing.
−Removed: Sales and marketing expenses, including personnel costs, increased $1.4 million, or 4%, to $36.1 million for the nine months ended September 30, 2025, from $34.7 million for the nine months ended September 30, 2024.
−Removed: Sales and marketing expenses were 16% of revenues for both the nine months ended September 30, 2025 and 2024.
−Removed: The increase in amount is primarily due to higher labor costs and sales commissions, partially offset by a decrease in marketing expenses.
+Added: Sales and marketing expenses, including personnel costs, increased $0.9 million, or 7%, to $13.0 million for the three months ended March 31, 2026, from $12.1 million for the three months ended March 31, 2025.
+Added: Sales and marketing expenses were 16% and 17% of revenues for the three months ended March 31, 2026 and 2025, respectively.
+Added: The increase in amount is primarily due to increased sales commissions and higher labor costs, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
General and Administrative.
−Removed: General and administrative expenses decreased $2.9 million, or 11%, to $23.4 million for the nine months ended September 30, 2025, from $26.3 million for the nine months ended September 30, 2024.
−Removed: General and administrative expenses were 10% and 12% of revenues for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above, coupled with bad debt expense associated with a customer bankruptcy that occurred during the nine months ended September 30, 2024.
+Added: General and administrative expenses decreased $0.7 million, or 8%, to $8.0 million for the three months ended March 31, 2026, from $8.7 million for the three months ended March 31, 2025.
+Added: General and administrative expenses were 10% and 12% of revenues for the three months ended March 31, 2026 and 2025, respectively.
+Added: The decrease in amount is primarily due to sublease income associated with the office sublease that commenced during the second quarter of 2025 as noted above, partially offset by increases in expenses from the Virsys12 and MissionCare acquisitions.
Depreciation and Amortization.
−Removed: Depreciation and amortization expense increased $1.6 million, or 5%, to $32.4 million for the nine months ended September 30, 2025, from $30.8 million for the nine months ended September 30, 2024.
−Removed: This increase in amount is primarily a result of amortization associated with capitalized software.
+Added: Depreciation and amortization expense increased $0.6 million, or 6%, to $11.4 million for the three months ended March 31, 2026, from $10.8 million for the three months ended March 31, 2025.
+Added: This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.
Interest Income .
−Removed: Interest income was $2.7 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: This decrease is a result of lower interest rates on invested funds.
+Added: Interest income was $0.4 million and $0.9 million for the three months ended March 31, 2026 and 2025, respectively.
+Added: This decrease is a result of lower cash balances and lower interest rates on invested funds.
Other Expense, Net .
−Removed: Other expense, net was $0.1 million for both the nine months ended September 30, 2025 and 2024.
+Added: Other expense, net was $0.1 million for both the three months ended March 31, 2026 and 2025.
Income Tax Provision.
−Removed: The Company recorded a provision for income taxes of $4.6 million and $4.2 million for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: The Company’s effective tax rate was 22% for both the nine months ended September 30, 2025 and 2024.
+Added: The Company recorded a provision for income taxes of $1.9 million for the three months ended March 31, 2026, compared to $0.9 million for the three months ended March 31, 2025.
+Added: The Company’s effective tax rate was 24% for the three months ended March 31, 2026, compared to 17% for the three months ended March 31, 2025.
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.
−Removed: Net income was $15.8 million and $15.1 million for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: EPS was $0.52 per share (diluted) and $0.50 per share (diluted) for the nine months ended September 30, 2025 and 2024, respectively.
−Removed: Adjusted EBITDA was $52.9 million for the nine months ended September 30, 2025, compared to $50.6 million for the nine months ended September 30, 2024.
+Added: Net income was $5.9 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively.
+Added: EPS was $0.20 per share (diluted) and $0.14 per share (diluted) for the three months ended March 31, 2026 and 2025, respectively.
+Added: Adjusted EBITDA was $20.1 million for the three months ended March 31, 2026, compared to $16.2 million for the three months ended March 31, 2025.
See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
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This Form 10-Q presents adjusted EBITDA, which is a non-GAAP financial measure used by management in analyzing our financial results and ongoing operational performance.
−Removed: In order to better assess the Company’s financial results, management believes that net income before interest, income taxes, stock-based compensation, depreciation and amortization, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments (“adjusted EBITDA”) is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business.
+Added: In order to better assess the Company’s financial results, management believes that net income before interest, income taxes, stock-based compensation, depreciation and amortization, impairments of long-lived assets, changes in fair value of contingent consideration, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments (“adjusted EBITDA”) is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business.
+Added: Beginning with the presentation of adjusted EBITDA for the year ended December 31, 2025, the Company has included adjustments in the definition of adjusted EBITDA for impairment of long-lived assets and changes in fair value of contingent consideration because the Company believes that these amounts may not be reflective of the underlying operational performance of our business and that including these adjustments is consistent with the intended purpose of adjusted EBITDA with respect to reflecting the underlying operating performance of our business and comparing the Company’s operational performance between periods.
We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods.
−Removed: Additionally, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.
+Added: In addition, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.
Adjusted EBITDA is a non-GAAP financial measure and should not be considered as a measure of financial performance under GAAP.
2 unchanged sentences
A reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income, is set forth below (in thousands).
−Removed: Three Months Ended September 30,
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
GAAP net income
6 unchanged sentences
Liquidity and Capital Resources
−Removed: Net cash provided by operating activities increased by $3.6 million to $50.1 million during the nine months ended September 30, 2025, from $46.5 million during the nine months ended September 30, 2024.
−Removed: The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, resulting in a reduction to our days sales outstanding ("DSO").
−Removed: Our DSO was 33 days for the third quarter of 2025 compared to 37 days for the third quarter of 2024.
+Added: Net cash provided by operating activities increased by $0.1 million to $27.1 million during the three months ended March 31, 2026.
+Added: The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, partially offset by higher payments for personnel related expenses and sales commissions.
+Added: Our days sales outstanding ("DSO") was 39 days for the first quarter of 2026 compared to 37 days for the first quarter of 2025.
The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter.
1 unchanged sentence
The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, general corporate expenses, and initial direct costs related to the sublease discussed above.
−Removed: Net cash used in investing activities was $27.0 million for the nine months ended September 30, 2025, compared to $25.9 million for the nine months ended September 30, 2024.
−Removed: During the nine months ended September 30, 2025, the Company invested in marketable securities of $41.4 million, made payments for capitalized software development of $21.9 million, purchased property and equipment of $3.5 million, and purchased strategic investments of $1.5 million.
+Added: Net cash used in investing activities was $6.3 million for the three months ended March 31, 2026, compared to $7.2 million for the three months ended March 31, 2025.
+Added: During the three months ended March 31, 2026, the Company invested in marketable securities of $10.2 million, made payments for capitalized software development of $6.7 million, purchased strategic investments of $1.8 million, purchased property and equipment of $0.7 million, and paid a $0.3 million post-closing working capital adjustment related to the acquisition of MissionCare.
These uses of cash were partially offset by $13.4 million in maturities of marketable securities.
−Removed: During the nine months ended September 30, 2024, the Company invested in marketable securities of $51.5 million, made payments for capitalized software development of $20.1 million, and purchased property and equipment of $1.2 million.
−Removed: These uses of cash were partially offset by $46.2 million in maturities of marketable securities and $0.8 million received upon the settlement and release of escrowed proceeds related to a prior sale of a non-marketable equity investment.
−Removed: Net cash used in financing activities was $29.0 million for the nine months ended September 30, 2025, compared to $3.5 million for the nine months ended September 30, 2024.
−Removed: The uses of cash for the nine months ended September 30, 2025 included $25.0 million for repurchases of common stock, $2.8 million for the payment of cash dividends, and $1.2 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.
−Removed: The uses of cash for the nine months ended September 30, 2024 included $2.6 million for the payment of cash dividends and $0.9 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.
−Removed: Our balance sheet reflects working capital of $35.1 million at September 30, 2025, compared to $37.4 million at December 31, 2024.
−Removed: The decrease in working capital is primarily a result of a decrease in cash and cash equivalents to fund share repurchases.
−Removed: The Company’s primary source of liquidity as of September 30, 2025 was $53.5 million of cash and cash equivalents and $39.0 million of marketable securities.
+Added: During the three months ended March 31, 2025, the Company invested in marketable securities of $9.2 million, made payments for capitalized software development of $7.8 million, purchased property and equipment of $1.1 million.
+Added: and purchased an investment of $0.5 million.
+Added: These uses of cash were partially offset by $11.3 million in maturities of marketable securities.
+Added: Net cash used in financing activities was $8.3 million for the three months ended March 31, 2026, compared to $2.0 million for the three months ended March 31, 2025.
+Added: The uses of cash for the three months ended March 31, 2026 included $6.7 million for repurchases of common stock, $1.0 million for the payment of cash dividends, and $0.6 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.
+Added: The uses of cash for the three months ended March 31, 2025 included $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units and $0.9 million for the payment of cash dividends.
+Added: Our balance sheet reflects negative working capital of $3.5 million at March 31, 2026, compared to negative working capital of $4.5 million at December 31, 2025.
+Added: The change in working capital is primarily a result of an increase in cash and cash equivalents.
+Added: The Company’s primary source of liquidity as of March 31, 2026 was $48.7 million of cash and cash equivalents and $17.8 million of marketable securities.
The Company also has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants and minimum liquidity requirements.
There currently are no outstanding borrowings under the revolving credit facility.
−Removed: The revolving credit facility expires on October 6, 2026, unless earlier renewed or amended.
+Added: The revolving credit facility expires on October 6, 2026, which we intend to renew on or prior to its expiration.
For additional information regarding our revolving credit facility, see Note 8 to the Condensed Consolidated Financial Statements included herein.
On February 20, 2023, we announced that our Board approved a quarterly dividend policy, under which we have paid dividends on a quarterly basis since our adoption of this policy.
+Added: Under this dividend policy, the Board declared, and the Company paid, quarterly cash dividends on our common stock at the rate of $0.025 per share, $0.028 per share, and $0.031 per share during the years ended December 31, 2023, December 31, 2024, and December 31, 2025, respectively.
On February 23, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on March 20, 2026 to holders of record of our common stock on March 9, 2026.
−Removed: On May 5, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on May 30, 2025 to holders of record of our common stock on May 19, 2025.
−Removed: On August 4, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which was paid on August 29, 2025 to holders of record of our common stock on August 18, 2025.
−Removed: In addition, on November 3, 2025, the Board approved a quarterly cash dividend under this policy of $0.031 per share, which will be payable on November 28, 2025 to holders of record of our common stock on November 17, 2025.
+Added: In addition, on May 4, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which will be payable on May 29, 2026 to holders of record of our common stock on May 18, 2026.
T he dividend policy and the declaration and payment of each quarterly cash dividend will be subject to our Board’s continuing determination that the policy and the declaration and payment of dividends thereunder are in the best interests of our shareholders and are in compliance with applicable law and our credit agreement.
Our Board retains the power to modify, suspend, or cancel the dividend policy and quarterly dividends thereunder in any manner and at any time that our Board may deem necessary or appropriate.
−Removed: On September 13, 2023, the Company announced a share repurchase program authorized by the Company’s Board of Directors under which the Company was authorized to purchase up to $10.0 million of its common stock.
−Removed: Pursuant to this authorization, repurchases could be made in the open market, including under a Rule 10b5-1 plan, through privately negotiated transactions, or otherwise.
−Removed: Under this program, during 2023, the Company repurchased 404,188 shares of common stock at an aggregate fair value of $8.9 million, reflecting an average price per share of $22.07 (excluding the cost of broker commissions).
−Removed: The share repurchase program expired according to its terms on March 31, 2024, and no repurchases occurred under such program during 2024.
−Removed: On May 8, 2025, the Company’s Board of Directors approved a new 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.
−Removed: 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.
−Removed: Under this program, during the three and nine months ended September 30, 2025, the Company repurchased 255,833 shares and 905,786 shares of common stock at an aggregate fair value of $6.9 million and $25.0 million, respectively, reflecting an average price per share of $26.94 and $27.60 (excluding the cost of broker commissions), respectively.
−Removed: 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.
−Removed: We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.
+Added: 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.
+Added: 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.
+Added: 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.
+Added: 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).
+Added: This program terminated in January 2026 when the maximum dollar amount under this program was expended.
+Added: 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.
+Added: 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.
+Added: This share repurchase program terminates on the earlier of September 12, 2026 or when the maximum dollar amount under the plan has been expended.
+Added: During the three months ended March 31, 2026, the Company repurchased 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.
+Added: This share repurchase program does not require the Company to acquire any amount of shares and may be suspended, modified, or discontinued at any time.
+Added: We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility (available through October 6, 2026) will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.
The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business.
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Our revolving credit facility contains financial covenants and availability calculations designed to set a maximum leverage ratio of outstanding debt to consolidated EBITDA (as defined in our credit facility) and an interest coverage ratio of consolidated EBITDA to interest expense.
−Removed: Therefore, the maximum borrowings against our new revolving credit facility would be dependent on the covenant calculations at the time of borrowing.
−Removed: September 30, 2025, we were in compliance with all covenants under our revolving credit facility.
+Added: Therefore, the maximum borrowings against our revolving credit facility would be dependent on the covenant calculations at the time of borrowing.
+Added: March 31, 2026, we were in compliance with all covenants under our revolving credit facility.
There can be no assurance that amounts available for borrowing under our revolving credit facility will be sufficient to consummate any possible acquisitions, and we cannot provide assurance that if we need additional financing, it will be available on terms favorable to us or at all.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.