HealthStream Inc. (HSTM, Financial) filed Quarterly Report for the period ended 2009-03-31.
Healthstream Inc. is pioneering a Web-based solution to meet the training and education needs of the healthcare industry utilizing our proprietary system. Through strategic relationships with medical institutions and commercial organizations the company has amassed hours of training and education courses. The company distributes hours of these courses online to allied healthcare professionals nurses doctors and other healthcare workers. HealthStream Inc. has a market cap of $55.8 million; its shares were traded at around $2.61 with a P/E ratio of 17.4 and P/S ratio of 1.
Revenues for HealthStream Learning increased $1.5 million, or 20.0%, over the first quarter of 2008. Revenues from our Internet-based subscription learning products accounted for $1.1 million of the increase, and were comprised of revenue increases from the HLC of $498,000 and from courseware subscriptions and online training services of $591,000. Revenues from these products increased 17 percent over the prior year quarter and approximated $7.6 million for the first quarter of 2009. These revenue increases resulted from continued growth in our HLC subscriber base and additional courseware sales to our customers. Revenues associated with implementation, development, and consulting services increased $559,000 over the prior year quarter due to increased courseware development service revenues compared to the prior year . These increases in revenues were partially offset by a decline in revenues from live events, study guides, and other project-based activities, which collectively declined $151,000 from the same quarter in the prior year.
Cost of Revenues (excluding depreciation and amortization). Cost of revenues increased approximately $740,000, or 16.3%, to $5.3 million for the three months ended March 31, 2009 from $4.5 million for the three months ended March 31, 2008. Cost of revenues as a percentage of revenues were 38.7% of revenues for the three months ended March 31, 2009 down from 39.6% of revenues for the three months ended March 31, 2008. Cost of revenues for HealthStream Learning increased approximately $548,000 to $3.0 million and approximated 33.4% and 32.8% of revenues for the three months ended March 31, 2009 and 2008, respectively. The expense increase was primarily associated with increased royalties paid by us resulting from growth in courseware subscription revenues as well as increased costs to support the growth in implementation, development, and consulting revenues. Cost of revenues for HealthStream Research increased approximately $192,000 to $2.3 million and approximated 48.9% and 52.7% of revenues for the three months ended March 31, 2009 and 2008, respectively. The increase in cost of revenues for HealthStream Research is primarily a result of the costs associated with increased survey volumes compared to the same quarter in the prior year. The decrease in cost of revenues as a percentage of revenues resulted from improved operating efficiencies compared to the same quarter in the prior year.
Other Income (Expense). Other income (expense) decreased approximately $23,000, or 104.1%, to an expense of $1,000 for the three months ended March 31, 2009 from income of $22,000 for the three months ended March 31, 2008. Interest income decreased $37,000 from the prior year quarter resulting from lower yield rates on cash and cash equivalents. Interest expense decreased $15,000 from the prior year quarter due to reductions in debt and capital lease balances.
Our revenues increased and our operating income improved over the prior year quarter, and our balance sheet reflects positive working capital at March 31, 2009. Current assets increased approximately $3.0 million during the first quarter of 2009 primarily due to increases in accounts receivable, cash balances, and prepaid royalties, while current liabilities also increased approximately $2.2 million during the first quarter of 2009 resulting from increases in deferred revenue. Our primary source of liquidity was $4.8 million of cash and cash equivalents, restricted cash, and interest receivable. We also have a $15.0 million revolving credit facility loan agreement, all of which was available at March 31, 2009.
We are exposed to market risk from changes in interest rates. We do not have any foreign currency exchange rate risk or commodity price risk. As of March 31, 2009, our outstanding indebtedness included a promissory note of approximately $852,000 and approximately $23,000 of capital lease obligations. We may become subject to interest rate market risk associated with borrowings under our revolving credit facility, which bears interest at a variable rate based on the 30 Day LIBOR Rate plus 150 basis points. We are also exposed to market risk with respect to our cash balances. At March 31, 2009, the Company had cash and cash equivalents, restricted cash, and related interest receivable totaling approximately $4.8 million. Current investment rates of return approximate 1.00% 1.50%. Assuming a 1.25% rate of return on $4.8 million, a hypothetical 10% decrease in interest rates would decrease interest income and decrease net income on an annualized basis by approximately $6,000.
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Healthstream Inc. is pioneering a Web-based solution to meet the training and education needs of the healthcare industry utilizing our proprietary system. Through strategic relationships with medical institutions and commercial organizations the company has amassed hours of training and education courses. The company distributes hours of these courses online to allied healthcare professionals nurses doctors and other healthcare workers. HealthStream Inc. has a market cap of $55.8 million; its shares were traded at around $2.61 with a P/E ratio of 17.4 and P/S ratio of 1.
Highlight of Business Operations:
Revenues. Revenues increased approximately $2.2 million, or 19.2%, to $13.6 million for the three months ended March 31, 2009 from $11.4 million for the three months ended March 31, 2008. Revenues for 2009 consisted of $9.0 million, or 66% of total revenue, for HealthStream Learning and $4.6 million, or 34% of total revenue, for HealthStream Research. In 2008, revenues consisted of $7.5 million, or 66% of total revenue, for HealthStream Learning and $3.9 million, or 34% of total revenue, for HealthStream Research.Revenues for HealthStream Learning increased $1.5 million, or 20.0%, over the first quarter of 2008. Revenues from our Internet-based subscription learning products accounted for $1.1 million of the increase, and were comprised of revenue increases from the HLC of $498,000 and from courseware subscriptions and online training services of $591,000. Revenues from these products increased 17 percent over the prior year quarter and approximated $7.6 million for the first quarter of 2009. These revenue increases resulted from continued growth in our HLC subscriber base and additional courseware sales to our customers. Revenues associated with implementation, development, and consulting services increased $559,000 over the prior year quarter due to increased courseware development service revenues compared to the prior year . These increases in revenues were partially offset by a decline in revenues from live events, study guides, and other project-based activities, which collectively declined $151,000 from the same quarter in the prior year.
Cost of Revenues (excluding depreciation and amortization). Cost of revenues increased approximately $740,000, or 16.3%, to $5.3 million for the three months ended March 31, 2009 from $4.5 million for the three months ended March 31, 2008. Cost of revenues as a percentage of revenues were 38.7% of revenues for the three months ended March 31, 2009 down from 39.6% of revenues for the three months ended March 31, 2008. Cost of revenues for HealthStream Learning increased approximately $548,000 to $3.0 million and approximated 33.4% and 32.8% of revenues for the three months ended March 31, 2009 and 2008, respectively. The expense increase was primarily associated with increased royalties paid by us resulting from growth in courseware subscription revenues as well as increased costs to support the growth in implementation, development, and consulting revenues. Cost of revenues for HealthStream Research increased approximately $192,000 to $2.3 million and approximated 48.9% and 52.7% of revenues for the three months ended March 31, 2009 and 2008, respectively. The increase in cost of revenues for HealthStream Research is primarily a result of the costs associated with increased survey volumes compared to the same quarter in the prior year. The decrease in cost of revenues as a percentage of revenues resulted from improved operating efficiencies compared to the same quarter in the prior year.
Other Income (Expense). Other income (expense) decreased approximately $23,000, or 104.1%, to an expense of $1,000 for the three months ended March 31, 2009 from income of $22,000 for the three months ended March 31, 2008. Interest income decreased $37,000 from the prior year quarter resulting from lower yield rates on cash and cash equivalents. Interest expense decreased $15,000 from the prior year quarter due to reductions in debt and capital lease balances.
Our revenues increased and our operating income improved over the prior year quarter, and our balance sheet reflects positive working capital at March 31, 2009. Current assets increased approximately $3.0 million during the first quarter of 2009 primarily due to increases in accounts receivable, cash balances, and prepaid royalties, while current liabilities also increased approximately $2.2 million during the first quarter of 2009 resulting from increases in deferred revenue. Our primary source of liquidity was $4.8 million of cash and cash equivalents, restricted cash, and interest receivable. We also have a $15.0 million revolving credit facility loan agreement, all of which was available at March 31, 2009.
We are exposed to market risk from changes in interest rates. We do not have any foreign currency exchange rate risk or commodity price risk. As of March 31, 2009, our outstanding indebtedness included a promissory note of approximately $852,000 and approximately $23,000 of capital lease obligations. We may become subject to interest rate market risk associated with borrowings under our revolving credit facility, which bears interest at a variable rate based on the 30 Day LIBOR Rate plus 150 basis points. We are also exposed to market risk with respect to our cash balances. At March 31, 2009, the Company had cash and cash equivalents, restricted cash, and related interest receivable totaling approximately $4.8 million. Current investment rates of return approximate 1.00% 1.50%. Assuming a 1.25% rate of return on $4.8 million, a hypothetical 10% decrease in interest rates would decrease interest income and decrease net income on an annualized basis by approximately $6,000.
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