UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
| | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File No.:
HealthStream, Inc.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
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| (Address of principal executive offices) | (Zip Code) |
(
(Registrant's telephone number, including area code)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | | ☒ | ||
| Non-accelerated filer | ☐ | Smaller reporting company | | ||
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 2, 2026, there were
HEALTHSTREAM, INC.
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| Part I. |
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| Item 1. |
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| Condensed Consolidated Balance Sheets (Unaudited) – September 30, 2026 and December 31, 2025 |
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| Notes to Condensed Consolidated Financial Statements (Unaudited) |
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| Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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| Item 3. |
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| Item 4. |
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| Part II. |
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| Item 1. | Legal Proceedings | 26 |
| Item 1A. |
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 26 |
| Item 5. | Other Information | 26 |
| Item 6. |
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Item 1. Financial Statements
HEALTHSTREAM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands)
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Marketable securities | ||||||||
| Accounts receivable, net | ||||||||
| Accounts receivable - unbilled | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Capitalized software development, net | ||||||||
| Operating lease right of use assets, net | ||||||||
| Goodwill | ||||||||
| Intangibles, net | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued royalties | ||||||||
| Accrued liabilities | ||||||||
| Accrued compensation | ||||||||
| Deferred revenue | ||||||||
| Total current liabilities | ||||||||
| Deferred tax liabilities | ||||||||
| Deferred revenue, noncurrent | ||||||||
| Operating lease liability, noncurrent | ||||||||
| Other long-term liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity: | ||||||||
| Preferred Stock, par value, shares authorized, shares issued or outstanding | ||||||||
| Common stock, par value, shares authorized; and shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive (loss)/income | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Revenues, net | $ | $ | $ | $ | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of revenues (excluding depreciation and amortization) | ||||||||||||||||
| Product development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating costs and expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Interest income | ||||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income before income tax provision | ||||||||||||||||
| Income tax provision | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average shares of common stock outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
| Dividends declared per share | $ | $ | $ | $ | ||||||||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, 2026 | September 30, 2025 | September 30, 2026 | September 30, 2025 | |||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||||||
| Unrealized gain (loss) on marketable securities | ( | ) | ||||||||||||||
| Total other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Comprehensive income | $ | $ | $ | $ | ||||||||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(In thousands, except per share data)
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||
| Common Stock | Retained | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Earnings | (Loss)/Income | Equity | ||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | ( | ) | — | ( | ) | |||||||||||||||
| Excise tax on repurchases of common stock | — | |||||||||||||||||||
| Repurchases of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | — | |||||||||||||||||||
| Excise tax on repurchases of common stock | — | ( | ) | ( | ) | |||||||||||||||
| Repurchases of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive income | — | |||||||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | ( | ) | ( | ) | ||||||||||||||||
| Excise tax on repurchases of common stock | — | |||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
HEALTHSTREAM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(In thousands, except per share data)
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||
| Common Stock | Retained | Accumulated Other Comprehensive | Total Shareholders’ | |||||||||||||||||
| Shares | Amount | Earnings | (Loss)/Income | Equity | ||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive income | — | |||||||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | ( | ) | — | ( | ) | |||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive income | — | |||||||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | ( | ) | — | ( | ) | |||||||||||||||
| Excise tax on repurchases of common stock | — | ( | ) | ( | ) | |||||||||||||||
| Repurchases of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Net income | — | |||||||||||||||||||
| Comprehensive loss | — | ( | ) | ( | ) | |||||||||||||||
| Dividends declared on common stock ($ per share) | — | ( | ) | ( | ) | |||||||||||||||
| Stock-based compensation | — | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | ( | ) | ( | ) | ||||||||||||||||
| Excise tax on repurchases of common stock | ( | ) | ( | ) | ||||||||||||||||
| Repurchases of common stock | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Amortization of deferred commissions | ||||||||
| Provision for credit losses | ||||||||
| Deferred income taxes | ||||||||
| Loss on equity method investments | ||||||||
| Other | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts and unbilled receivables | ||||||||
| Prepaid royalties | ( | ) | ||||||
| Other prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Accrued royalties | ||||||||
| Deferred revenue | ||||||||
| Net cash provided by operating activities | ||||||||
| INVESTING ACTIVITIES: | ||||||||
| Cash paid for acquisitions | ( | ) | ||||||
| Proceeds from maturities of marketable securities | ||||||||
| Purchases of marketable securities | ( | ) | ( | ) | ||||
| Purchases of other investments | ( | ) | ( | ) | ||||
| Payments associated with capitalized software development | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| FINANCING ACTIVITIES: | ||||||||
| Taxes paid related to net settlement of equity awards | ( | ) | ( | ) | ||||
| Payment of earn-outs related to acquisitions | ( | ) | ||||||
| Payment of debt issuance costs | ( | ) | ||||||
| Payment of cash dividends | ( | ) | ( | ) | ||||
| Proceeds from issuance of common stock | ||||||||
| Repurchases of common stock | ( | ) | ( | ) | ||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Purchases of property and equipment, accrued but not paid | $ | $ | ||||||
| Capitalized software development, accrued but not paid | $ | $ | ||||||
See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. OVERVIEW AND BASIS OF PRESENTATION
Company Overview
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.
The Company is organized and operated according to its One HealthStream approach, with its hStream technology platform at the center of that approach. Increasingly, SaaS-based applications in the Company's diverse ecosystem of solutions utilize the Company's proprietary hStream technology platform to enhance the value proposition for customers by creating interoperability with and among other applications. We believe that our single platform strategy, as represented by hStream, is the best way to realize our mission of improving the quality of care by developing the people who deliver care and the best way to create value for our shareholders in the process. As used in this Quarterly Report on Form 10-Q (“Form 10-Q”), “HealthStream,” “Company,” “we,” “us,” and “our” mean HealthStream, Inc. and its subsidiaries, unless the context indicates otherwise.
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S‑X. Accordingly, condensed consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. 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, 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 Segment
The Company’s chief operating decision maker ("CODM") is its Chief Executive Officer. 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. Further, the CODM reviews and utilizes functional expenses (cost of revenues, product development, sales and marketing, general and administrative, and depreciation and amortization) at the consolidated level to manage the Company's operations. Other segment items included in consolidated net income are interest income, other 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 $
Non-Marketable Equity Investments
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 $
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Fair Value Measurement
In connection with the acquisitions of Total Clinical Placement System ("TCPS") in October 2024, The Clinical Hub, Inc. ("The Clinical Hub") in November 2024, Virsys12, LLC ("Virsys12") in October 2025, and MissionCare Collective LLC ("MissionCare") in December 2025, a portion of the purchase price payable by the Company was in the form of contingent consideration. During the three and nine months ended September 30, 2026 and 2025, the Company recorded contingent consideration liabilities representing the estimated fair value of future earnout payments to the former owners of such entities in connection with these acquisitions, contingent upon the achievement of specified revenue milestones. The contingent consideration liability is remeasured to fair value each reporting period, with changes recognized in general and administrative expense in the Condensed Consolidated Statements of Income. The Company classifies this liability within Level 3 of the fair value hierarchy because the valuation relies on significant unobservable inputs. As of September 30, 2026, the Company's ending balance contained liabilities related to Virsys12 and MissionCare.
| Contingent Consideration | 2026 | 2025 | ||||||
| Balance at January 1 | $ | $ | ||||||
| Purchases / Initial recognition | ( | ) | ||||||
| Total (gains) losses included in earnings | ||||||||
| Payments | ||||||||
| Balance at March 31 | $ | $ | ||||||
| Purchases / Initial recognition | ||||||||
| Total (gains) losses included in earnings | ( | ) | ||||||
| Payments | ( | ) | ||||||
| Balance at June 30 | $ | $ | ||||||
| Purchases / Initial recognition | ||||||||
| Total (gains) losses included in earnings | ||||||||
| Payments | ( | ) | ||||||
| Balance at September 30 | $ | $ | ||||||
2. RECENT ACCOUNTING PRONOUNCEMENTS
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. This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. 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): Targeted Improvements to the Accounting for Internal-Use Software, to modernize the accounting guidance for the costs to develop software for internal use. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile development. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project, and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The new standard also supersedes the guidance related to costs incurred to develop a website. ASU 2025-06 is effective for annual periods beginning after December 15, 2027. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or on a retrospective basis. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.
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.
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
3. REVENUE RECOGNITION
Revenues are recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods or services. Revenue is recognized based on the following five step model:
| • | Identification of the contract with a customer |
| • | Identification of the performance obligations in the contract |
| • | Determination of the transaction price |
| • | Allocation of the transaction price to the performance obligations in the contract |
| • | Recognition of revenue when, or as, the Company satisfies a performance obligation |
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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Subscription services | $ | $ | $ | $ | ||||||||||||
| Professional services | ||||||||||||||||
| Total revenues, net | $ | $ | $ | $ | ||||||||||||
During the three months ended September 30, 2026 and 2025, the Company recognized revenues of $
4. INCOME TAXES
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
5. SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION
Dividends on Common Stock
During the nine months ended September 30, 2026, the Company's Board of Directors (“Board”) declared the following quarterly dividends 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 | |||||||
| $ | $ | ||||||||||
| $ | $ | ||||||||||
| $ | $ | ||||||||||
Additionally, on November 2, 2026, the Board of Directors declared a quarterly cash dividend under the Company's dividend policy of $
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Stock Option Activity
A summary of stock option activity for the three months ended September 30, 2026 is as follows (in thousands, except weighted-average exercise price).
| Weighted- | ||||||||||||
| Common | Average | Aggregate | ||||||||||
| Shares | Exercise Price | Intrinsic Value | ||||||||||
| Outstanding at beginning of period | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Expired | ||||||||||||
| Forfeited | ||||||||||||
| Outstanding at end of period | $ | $ | ||||||||||
| Exercisable at end of period | $ | $ | ||||||||||
The weighted average remaining contractual term of options outstanding at September 30, 2026 was
Restricted Share Unit Activity
A summary of Restricted Share Unit ("RSU") activity for the three months ended September 30, 2026 is as follows (in thousands, except weighted-average grant date fair value):
| Weighted- | ||||||||||||
| Number of | Average Grant Date | Aggregate | ||||||||||
| RSUs | Fair Value | Intrinsic Value | ||||||||||
| Outstanding at beginning of period | $ | |||||||||||
| Granted | ||||||||||||
| Vested | ( | ) | ||||||||||
| Forfeited | ||||||||||||
| Outstanding at end of period | $ | $ | ||||||||||
The aggregate fair value of RSUs that vested during the three months ended September 30, 2026 and 2025, as of the respective vesting dates, was $
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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Cost of revenues (excluding depreciation and amortization) | $ | $ | $ | $ | ||||||||||||
| Product development | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation expense | $ | $ | $ | $ | ||||||||||||
As of September 30, 2026, total unrecognized compensation expense related to non-vested stock options, RSUs, and performance-based RSUs where the performance criteria has been established was $
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Share Repurchase Plan
On November 11, 2025, the Board approved a share repurchase program under which the Company was authorized to repurchase up to $
On March 13, 2026, the Company announced the adoption of a new share repurchase program approved by the Board under which the Company was authorized to repurchase up to $
In the aggregate during the nine months ended September 30, 2026, the Company repurchased
Private Placement of Common Stock
In September 2026, the Company issued
6. EARNINGS PER SHARE
Basic earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing the net income available to common shareholders for the period by the weighted average number of potentially dilutive common and common equivalent shares outstanding during the period. Common equivalent shares are composed of incremental common shares issuable upon the exercise of stock options and RSUs subject to vesting. 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
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, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| Effect of dilutive shares | ||||||||||||||||
| Weighted-average diluted shares | ||||||||||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7. MARKETABLE SECURITIES
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, 2026 | ||||||||||||||||
| Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||
| Level 2: | ||||||||||||||||
| U.S. treasury securities | $ | $ | $ | ( | ) | $ | ||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
| December 31, 2025 | ||||||||||||||||
| Adjusted Cost | Unrealized Gains | Unrealized Losses | Fair Value | |||||||||||||
| Level 2: | ||||||||||||||||
| U.S. treasury securities | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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, 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.
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
8. DEBT
Revolving Credit Facility
On September 10, 2026, the Company entered into the Second Amendment to Amended and Restated Revolving Credit Agreement (the “Second Amendment”) by and among the Company, as Borrower, its domestic subsidiaries as Guarantors, certain lenders party thereto from time to time, and Truist Bank, as Administrative Agent, Issuing Bank, and Swingline Lender. The Second Amendment amends that certain Amended and Restated Revolving Credit Agreement dated October 6, 2023, as amended by that certain First Amendment to Amended and Restated Revolving Credit Agreement, dated as of March 13, 2026 (the “Prior Credit Agreement”; the Prior Credit Agreement, as amended by the Second Amendment, the “Amended Credit Agreement”).
The Amended Credit Agreement provides for revolving loans in the maximum principal amount of $
The Company's obligations under the Amended Credit Agreement are unsecured. In addition, if the Company forms or acquires any domestic subsidiaries, the loans and other obligations under the Amended Credit Agreement will be guaranteed by such domestic subsidiaries.
At the Company’s election, the borrowings under the Amended Credit Agreement, 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, (b) the Federal Funds Rate, plus
The Company is also required to pay a commitment fee accruing on the unused Revolving Commitment, which fee varies with the Company's net funded debt leverage ratio and initially is
Principal is payable in full at maturity on September 10, 2031, and there are no scheduled principal payments prior to maturity. 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 Amended Credit Agreement is for anticipated working capital needs, new product development, permitted acquisitions (as defined in the Amended Credit Agreement), quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and capital expenditures.
The Amended Credit Agreement contains certain customary affirmative and negative covenants.
In addition, the Amended Credit Agreement requires the Company to meet certain financial tests, including, without limitation:
| • | a net funded debt leverage ratio (consolidated debt/consolidated EBITDA) of not more than |
| • | an interest coverage ratio (consolidated EBITDA/consolidated interest expense) of not less than |
As of September 30, 2026, the Company was in compliance with all covenants of the Amended Credit Agreement. There were
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
9. BUSINESS COMBINATIONS
Virsys12
On October 8, 2025, the Company acquired all of the outstanding equity of 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 $
A summary of the purchase price is as follows (in thousands):
| Cash | $ | |||
| Fair value of contingent consideration | ||||
| Total consideration | $ |
The following table summarizes the fair value of the assets acquired and liabilities assumed as of the date of acquisition (in thousands):
| Cash | $ | |||
| Accounts and unbilled receivable | ||||
| Prepaid and other current assets | ||||
| Operating lease right-of-use asset | ||||
| Property and equipment | ||||
| Deferred tax assets | ||||
| Goodwill | ||||
| Intangible assets | ||||
| Accounts payable and accrued liabilities | ( | ) | ||
| Deferred revenue | ( | ) | ||
| Net assets acquired | $ |
The excess of purchase price over the fair values of net tangible and intangible assets is recorded as goodwill. The fair values of tangible and identifiable intangible assets and liabilities are based on management’s estimates and assumptions. The Company recorded a measurement period adjustment for the valuation of an indemnification asset and liability related to sales tax attributes, which was valued at $
The following table sets forth the components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands):
| Fair value | Useful life | ||||
| Customer relationships | $ |
| |||
| Developed technology |
| ||||
| Non-compete |
| ||||
| Trade name |
| ||||
| 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 September 30, | Nine Months Ended September 30, | |||||||
| 2025 | 2025 | |||||||
| Total revenues | $ | $ | ||||||
| Net income | $ | $ | ||||||
| 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, a healthcare workforce company that includes the largest caregiver network in the United States. The consideration paid at closing for MissionCare consisted of approximately $
A summary of the purchase price is as follows (in thousands):
| Cash | $ | |||
| 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):
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid and other current assets | ||||
| Deferred tax assets | ||||
| Goodwill | ||||
| 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. 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 area of the preliminary purchase price allocation that is not finalized includes the valuation of an indemnification asset and liability related to sales tax attributes, which was preliminarily valued at $
The following table sets forth the preliminary components of identifiable intangible assets and their estimated useful lives as of the acquisition date (in thousands):
| Fair value | Useful life | ||||
| Customer relationships | $ |
| |||
| Developed technology |
| ||||
| Trade name |
| ||||
| 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 September 30, | Nine Months Ended September 30, | |||||||
| 2025 | 2025 | |||||||
| Total revenues | $ | $ | ||||||
| Net income | $ | $ | ||||||
| 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. 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.
10. LITIGATION
In connection with its business, the Company is from time to time involved in various legal actions. These legal actions may be subject to significant complexities and uncertainties, some of which are beyond the Company’s control, and may allege substantial or indeterminate monetary damages. Based on current information, management does not believe that the ultimate resolution of pending legal matters will have a material adverse effect on the Company’s consolidated financial position or liquidity. However, an adverse outcome in one or more pending legal matters could be material to the Company’s results of operations or cash flows for any particular reporting period.
The Company accrues for loss contingencies when it is both probable that a loss has been incurred and when the amount of the loss can be reasonably estimated. If a loss or additional loss with respect to material legal matters is reasonably possible and the Company is able to estimate the possible loss or range of loss, the Company discloses the estimate of the possible loss or range of loss, if material and as required. However, the Company may be unable to estimate a possible loss or range of loss in some instances based on the significant uncertainties involved in, and/or the preliminary nature of, certain legal matters.
HEALTHSTREAM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Wage and Hour Litigation
On May 27, 2026, a putative collective action complaint styled Tanesha Riley v. HealthStream, Inc. was filed in the United States District Court for the Middle District of Tennessee. The alleges that certain employees in Solution Executive sales roles were misclassified as exempt employees and were not paid overtime in violation of the Fair Labor Standards Act (“FLSA”). The plaintiff seeks back wages, liquidated damages, pre-judgment interest, and attorneys’ fees. On July 21, 2026, the Company filed its answer defending against these claims. During the quarter ended September 30, 2026, the parties exchanged discovery requests, and discovery is ongoing. Taking into account the fact that this matter remains at an early phase, the Company is unable to estimate a possible loss or range of loss, if any, related to this matter. The Company denies the allegations and intends to defend the matter vigorously.
Data Privacy Litigation
On September 24, 2026, a putative class action complaint was filed against the Company in the Chancery Court for the Twentieth Judicial District, Davidson County, Tennessee, captioned Shonda Venson v. HealthStream, Inc. On September 26, 2026, an additional putative class action complaint was filed in the same court captioned Steve Iraklianos v. HealthStream, Inc. The complaints relate to the cybersecurity incident disclosed by the Company on a Current Report on Form 8-K on July 29, 2026, as discussed below, and generally assert claims relating to the alleged compromise of personally identifiable information in connection with such incident, including claims for negligence and other common law causes of action, on behalf of putative classes of individuals whose information was allegedly affected by the incident.
Because the litigation remains at an early stage, the operative allegations and claims have not yet been established through consolidated complaint, no class has been certified, and the amount of damages sought has not been specified. Accordingly, the Company cannot reasonably estimate the possible loss or range of loss, if any. The Company denies the allegations and intends to vigorously defend these matters.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Special Cautionary Notice Regarding Forward‑Looking Statements
You should read the following discussion and analysis in conjunction with our Condensed Consolidated Financial Statements and related Notes included elsewhere in this Form 10-Q and our audited Consolidated Financial Statements and the Notes thereto for the year ended December 31, 2025, appearing in our Annual Report on Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on February 26, 2026 (the “2025 Form 10-K”). 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. 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.
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. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
In evaluating any forward-looking statement, you should specifically consider the information regarding forward-looking statements set forth above and the risks set forth under the caption Part I, Item 1A. Risk Factors in our 2025 Form 10-K and other disclosures in our 2025 Form 10-K and other filings with the SEC from time to time, as well as other cautionary statements contained elsewhere in this Form 10-Q, including our critical accounting policies and estimates as discussed in this Form 10-Q and our 2025 Form 10-K. We undertake no obligation to update or revise any forward-looking statements. You should read this Form 10-Q with the understanding that our actual future results may be materially different from what we currently expect.
Business Overview
HealthStream primarily provides SaaS based applications for healthcare organizations—all designed to improve business and clinical outcomes by supporting people who deliver patient care. 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.
Our business is managed and organized around a single platform strategy, also referred to as our One HealthStream approach. At the center of this single platform strategy is our hStream technology platform. 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.
Significant financial metrics for the third quarter of 2026 are set forth in the bullets below.
| • |
Revenues of $83.3 million, up 8.9% from $76.5 million in the third quarter of 2025 |
| • |
Operating income of $6.6 million, down 13.0% from $7.6 million in the third quarter of 2025 |
| • |
Net income of $5.4 million, down 11.7% from $6.1 million in the third quarter of 2025 |
| • |
Earnings per share (“EPS”) of $0.18 per share (diluted), down from $0.20 per share (diluted) in the third quarter of 2025 |
| • |
Adjusted EBITDA1 of $19.3 million, up 1.0% from $19.1 million in the third quarter of 2025 |
| 1 |
Adjusted EBITDA is a non-GAAP financial measure. A reconciliation of adjusted EBITDA to net income and disclosure regarding why we believe adjusted EBITDA provides useful information to investors is included later in this Form 10-Q. |
During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders. HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth. The sublease commenced in April 2025 and will expire in October 2031. We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $2.4 million during the three and nine months ended September 30, 2026, respectively. In addition, we expect to record sublease income, net, of approximately $0.8 million during the last three months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.
Cybersecurity Incident
As disclosed in a Current Report on Form 8-K filed on July 29, 2026, the Company detected that it had experienced a cybersecurity incident in which an unauthorized third party gained access to a limited portion of files on the Company’s corporate file server. Following such detection, the Company initiated response protocols, launched an investigation, engaged the services of cybersecurity and forensics specialists and advisors, and notified certain law enforcement authorities. The Company did not experience interruption in its business operations in connection with this incident. In addition, the Company's investigation found no access or compromise to customer-facing systems.
Based on its investigation, the Company believes that certain information of the Company’s employees, as well as billing related information of certain customers and vendors, and corporate and legal information of the Company, was accessed and/or exfiltrated from the Company’s corporate file servers as the result of the incident. In addition, the Company now knows that, for 39 of our credentialing customers, certain customer data that previously had been copied to the Company’s corporate file servers for purposes of data conversion, analytics, and troubleshooting for these customers, was accessed and exfiltrated. Further, based on our investigation, a limited subset of three of these 39 customer files contained protected health information (“PHI”), as defined by the Health Insurance Portability and Accountability Act (“HIPAA”).
The Company incurred $250,000 in expense related to this incident during the three months ended September 30, 2026, after giving effect to related insurance recoveries. The Company expects to incur additional costs as a result of this incident in future periods associated with ongoing cybersecurity monitoring and prevention as well as enhancements to the Company's cybersecurity program. The Company has become subject to litigation as a result of this incident. For additional information regarding this litigation, see Note 10 to the Condensed Consolidated Financial Statements included herein. Based on information currently known, this incident has not had, and the Company does not expect that this incident will have, a material adverse impact on the Company's business, operations, or financial results.
Recent Developments
Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry have been challenging in certain respects, and may continue to be challenging based on recent legislative, regulatory, and other developments and contemplated changes to various policies and regulations. 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 decreased access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. For example, the enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces expired on December 31, 2025, and the number of individuals with Affordable Care Act marketplace coverage has declined since 2025. In addition, 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. We believe that these developments have caused, and may continue to cause, financial pressures among our customers in the healthcare industry that may negatively impact demand for our products and services, particularly in relation to our non-mandatory products and services.
Macroeconomic challenges also persist in the United States in terms of ongoing inflationary pressures, elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations. We believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures. 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
Our management utilizes the following financial metrics in connection with managing our business.
| • |
Revenues, net. Revenues, net, reflect income generated by the sales of goods and services related to our operations. Revenues, net, were $83.3 million and $248.2 million for the three and nine months ended September 30, 2026, compared to $76.5 million and $224.4 million for the three and nine months ended September 30, 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. Net income represents revenues, net, less all expenses. Net income was $5.4 million and $18.0 million for the three and nine months ended September 30, 2026, compared to $6.1 million and $15.8 million for the three and nine months ended September 30, 2025. Management utilizes net income in connection with managing our business, including with regard to our capital deployment strategies. |
| • |
Adjusted EBITDA. Adjusted EBITDA, calculated as set forth below under “Reconciliation of Non-GAAP Financial Measures,” is utilized by our management in connection with managing our business and provides useful information to investors because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items, as more specifically set forth below, which may not fully reflect the underlying operating performance of our business. We also believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operations. 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. Adjusted EBITDA was $19.3 million and $60.0 million for the three and nine months ended September 30, 2026, compared to $19.1 million and $52.9 million for the three and nine months ended September 30, 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. Capital expenditures were $7.4 million and $23.3 million for the three and nine months ended September 30, 2026, compared to $7.5 million and $25.4 million for the three and nine months ended September 30, 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. |
Critical Accounting Policies and Estimates
See Notes to the Consolidated Financial Statements in our 2025 Form 10-K and the Notes to the Condensed Consolidated Financial Statements herein which contain additional information regarding our accounting policies and other disclosures required by US GAAP. There have been no changes in our critical accounting policies and estimates from those reported in our 2025 Form 10-K.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Revenues, net. Revenues increased $6.8 million, or 9%, to $83.3 million for the three months ended September 30, 2026, from $76.5 million for the three months ended September 30, 2025. Subscription revenues increased by $6.2 million, or 8%, and professional services revenues increased by $0.7 million compared to the third quarter of 2025. Compared to the third quarter of 2025, revenue growth for the third quarter of 2026 was positively impacted by $3.2 million from our acquisitions of Virsys12 and MissionCare completed during the fourth quarter of 2025 and $5.4 million from growth across our existing portfolio solutions, of which $0.8 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the three months ended September 30, 2026, partially offset by a $1.8 million reduction from legacy applications.
A comparison of revenues by revenue source is as follows (in thousands):
| Three Months Ended September 30, |
||||||||||||
| 2026 |
2025 |
Percentage Change |
||||||||||
| Subscription services |
$ | 80,043 | $ | 73,887 | 8 | % | ||||||
| Professional services |
3,266 | 2,587 | 26 | % | ||||||||
| Total revenues, net |
$ | 83,309 | $ | 76,474 | 9 | % | ||||||
| % of Revenues |
||||||||||||
| Subscription services |
96 | % | 97 | % | ||||||||
| Professional services |
4 | % | 3 | % | ||||||||
Cost of Revenues (excluding Depreciation and Amortization). Cost of revenues increased $3.5 million, or 13%, to $30.0 million for the three months ended September 30, 2026, from $26.5 million for the three months ended September 30, 2025. Cost of revenues as a percentage of revenues were 36% and 35% for the three months ended September 30, 2026 and 2025, respectively. The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software expenses, labor costs, cloud hosting expenses, and royalties expense, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Product Development. Product development expenses increased $1.4 million, or 12%, to $13.5 million for the three months ended September 30, 2026, from $12.1 million for the three months ended September 30, 2025. Product development expenses as a percentage of revenues were 16% for both the three months ended September 30, 2026 and 2025. 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. Sales and marketing expenses, including personnel costs, increased $1.2 million, or 10%, to $13.3 million for the three months ended September 30, 2026, from $12.1 million for the three months ended September 30, 2025. Sales and marketing expenses as a percentage of revenue were 16% for both the three months ended September 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.
General and Administrative. General and administrative expenses increased $1.3 million, or 17%, to $8.6 million for the three months ended September 30, 2026, from $7.3 million for the three months ended September 30, 2025. General and administrative expenses as a percentage of revenue were 10% for both the three months ended September 30, 2026 and 2025. The increase in amount is primarily due to increases in expenses from the Virsys12 and MissionCare acquisitions along with the cybersecurity incident expenses noted above.
Depreciation and Amortization. Depreciation and amortization expense increased $0.4 million, or 4%, to $11.3 million for the three months ended September 30, 2026, from $10.8 million for the three months ended September 30, 2025. 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. Interest income was $0.5 million and $0.8 million for the three months ended September 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances for the majority of the reporting period and lower interest rates on invested funds.
Other Expense, Net. Other expense, net was $28,000 and $0.1 million for the three months ended September 30, 2026 and 2025, respectively.
Income Tax Provision. The Company recorded a provision for income taxes of $1.7 million for the three months ended September 30, 2026, compared to $2.2 million for the three months ended September 30, 2025. The Company’s effective tax rate was 24% for the three months ended September 30, 2026, compared to 26% for the three months ended September 30, 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.
Net Income. Net income was $5.4 million and $6.1 million for the three months ended September 30, 2026 and 2025, respectively. EPS was $0.18 per share (diluted) and $0.20 per share (diluted) for the three months ended September 30, 2026 and 2025, respectively.
Adjusted EBITDA was $19.3 million for the three months ended September 30, 2026, compared to $19.1 million for the three months ended September 30, 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.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Revenues, net. Revenues increased $23.9 million, or 11%, to $248.2 million for the nine months ended September 30, 2026, from $224.4 million for the nine months ended September 30, 2025. Subscription revenues increased by $21.8 million, or 10%, and professional services revenues increased by $2.1 million compared to the nine months ended September 30, 2025. Compared to the nine months ended September 30, 2025, revenue growth for the nine months ended September 30, 2026 was positively impacted by $18.6 million of growth across our existing portfolio of solutions, of which $2.8 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the nine months ended September 30, 2026, and $9.8 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, partially offset by a $4.5 million reduction from legacy applications.
A comparison of revenues by revenue source is as follows (in thousands):
| Nine Months Ended September 30, |
||||||||||||
| 2026 |
2025 |
Percentage Change |
||||||||||
| Subscription services |
$ | 238,420 | $ | 216,617 | 10 | % | ||||||
| Professional services |
9,824 | 7,738 | 27 | % | ||||||||
| Total revenues, net |
$ | 248,244 | $ | 224,355 | 11 | % | ||||||
| % of Revenues |
||||||||||||
| Subscription services |
96 | % | 97 | % | ||||||||
| Professional services |
4 | % | 3 | % | ||||||||
Cost of Revenues (excluding Depreciation and Amortization). Cost of revenues increased $8.4 million, or 11%, to $86.8 million for the nine months ended September 30, 2026, from $78.4 million for the nine months ended September 30, 2025. Cost of revenues as a percentage of revenues were 35% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software costs, labor costs, royalties expense, and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Product Development. Product development expenses increased $4.5 million, or 12%, to $40.7 million for the nine months ended September 30, 2026, from $36.2 million for the nine months ended September 30, 2025. Product development expenses as a percentage of revenues were 16% both the nine months ended September 30, 2026 and 2025. 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. Sales and marketing expenses, including personnel costs, increased $3.7 million, or 10%, to $39.8 million for the nine months ended September 30, 2026, from $36.1 million for the nine months ended September 30, 2025. Sales and marketing expenses as a percentage of revenues were 16% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.
General and Administrative. General and administrative expenses increased $1.2 million, or 5%, to $24.6 million for the nine months ended September 30, 2026, from $23.4 million for the nine months ended September 30, 2025. General and administrative expenses as a percentage of revenues were 10% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily due to increases in expenses from the Virsys12 and MissionCare acquisitions.
Depreciation and Amortization. Depreciation and amortization expense increased $1.5 million, or 5%, to $33.9 million for the nine months ended September 30, 2026, from $32.4 million for the nine months ended September 30, 2025. 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. Interest income was $1.4 million and $2.7 million for the nine months ended September 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances for the majority of the reporting period and lower interest rates on invested funds.
Other Expense, Net. Other expense, net was $0.2 million and $0.1 million for the nine months ended September 30, 2026 and 2025, respectively. The change is primarily a result of foreign currency losses.
Income Tax Provision. The Company recorded a provision for income taxes of $5.6 million for the nine months ended September 30, 2026, compared to $4.6 million for the nine months ended September 30, 2025. The Company’s effective tax rate was 24% for the nine months ended September 30, 2026, compared to 22% for the nine months ended September 30, 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.
Net Income. Net income was $18.0 million and $15.8 million for the nine months ended September 30, 2026 and 2025, respectively. EPS was $0.61 per share (diluted) and $0.52 per share (diluted) for the nine months ended September 30, 2026 and 2025, respectively.
Adjusted EBITDA was $60.0 million for the nine months ended September 30, 2026, compared to $52.9 million for the nine months ended September 30, 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.
Reconciliation of Non-GAAP Financial Measures
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.
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, changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments, and expense related to the cybersecurity incident disclosed by us in our Current Report on Form 8-K filed on July 29, 2026 (the “Cybersecurity Incident”), after giving effect to related insurance recoveries (“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. 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. 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.
The Company has included an adjustment in the definition of adjusted EBITDA for the expense related to the Cybersecurity Incident incurred during the third quarter of 2026, after giving effect to related insurance recoveries, because the Company believes that this expense amount may not be reflective of the underlying operational performance of our business and that including this adjustment is consistent with the intended purpose of adjusted EBITDA of reflecting the underlying operating performance of our business and comparing the Company’s operational performance between periods.
A reconciliation of adjusted EBITDA to the most directly comparable GAAP measure, net income, is set forth below (in thousands).
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 |
2025 |
2026 |
2025 |
|||||||||||||
| GAAP net income |
$ | 5,373 | $ | 6,086 | $ | 17,951 | $ | 15,808 | ||||||||
| Interest income |
(510 | ) | (788 | ) | (1,399 | ) | (2,676 | ) | ||||||||
| Interest expense |
26 | 26 | 76 | 76 | ||||||||||||
| Income tax provision |
1,696 | 2,166 | 5,634 | 4,559 | ||||||||||||
| Stock-based compensation expense |
1,196 | 794 | 3,611 | 2,734 | ||||||||||||
| Depreciation and amortization |
11,265 | 10,820 | 33,905 | 32,441 | ||||||||||||
| Fair value adjustment on contingent consideration |
— | — | (4 | ) | — | |||||||||||
| Cybersecurity incident costs |
250 | — | 250 | — | ||||||||||||
| Adjusted EBITDA |
$ | 19,296 | $ | 19,104 | $ | 60,024 | $ | 52,942 | ||||||||
Private Placement Transactions
On September 14, 2026, the Company issued 1,355,932 shares of its common stock to WJRJJ Ventures, LLC (“WJRJJ”) in a private placement for an aggregate cash purchase price of approximately $40.0 million, reflecting a price of $29.50 per share, and Robert A. Frist, Jr., the Company's Chief Executive Officer and Chairman of the Board of Directors, sold 144,068 shares of the Company's common stock to WJRJJ for approximately $4.25 million, reflecting a price of $29.50 per share, pursuant to a securities purchase agreement dated as of September 11, 2026. In connection with this issuance and sale, the Company entered into a registration rights agreement dated as of September 14, 2026, with WJRJJ providing for certain registration rights with respect to the resale of the shares issued and sold to WJRJJ as provided above.
The Company intends to use the net proceeds it received from the issuance of these shares for general corporate purposes, including continued investment in its solutions, working capital, potential acquisitions, and other strategic initiatives. The Company did not receive any proceeds from the sale of shares by Mr. Frist.
For additional information regarding these transactions, see the Current Report on Form 8-K filed by us on September 15, 2026.
Liquidity and Capital Resources
Net cash provided by operating activities increased by $7.8 million to $58.0 million during the nine months ended September 30, 2026, from $50.1 million during the nine months ended September 30, 2025. 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, sales commissions, and third-party software expenses. Our days sales outstanding ("DSO") was 35 days for the third quarter of 2026 compared to 33 days for the third quarter of 2025. The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter. The Company’s primary sources of cash were receipts generated from the sales of our products and services. 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, and general corporate expenses.
Net cash used in investing activities was $61.1 million for the nine months ended September 30, 2026, compared to $27.0 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2026, the Company invested in marketable securities of $66.2 million, made payments for capitalized software development of $21.3 million, purchased strategic investments of $2.7 million, purchased property and equipment of $2.0 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 $31.4 million in maturities of marketable securities. 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. These uses of cash were partially offset by $41.3 million in maturities of marketable securities.
Net cash provided by financing activities was $26.0 million for the nine months ended September 30, 2026, compared to net cash used in financing activities of $29.0 million for the nine months ended September 30, 2025. The net cash provided by financing activities for the nine months ended September 30, 2026 included $39.9 million from the issuance of common stock, partially offset by $9.3 million used for repurchases of common stock, $3.1 million for the payment of cash dividends, $0.8 million for the payment of employee payroll taxes in relation to the vesting of restricted share units, $0.4 million for an earn-out payment related to a prior acquisition, and $0.3 million for debt issuance costs related to our revolving credit facility amendment. 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.
Our balance sheet reflects positive working capital of $58.2 million at September 30, 2026, compared to negative working capital of $4.5 million at December 31, 2025. The change in working capital is primarily a result of an increase in cash and cash equivalents and marketable securities following the issuance of common stock in September 2026. The Company’s primary source of liquidity as of September 30, 2026 was $59.0 million of cash and cash equivalents and $56.2 million of marketable securities.
On September 10, 2026, the Company entered into a second amendment to its amended and restated revolving credit agreement originally dated October 6, 2023 and amended by a first amendment on March 13, 2026 (such credit agreement, as amended by the first amendment and the second amendment, the “Amended Credit Agreement”). Under the Amended Credit Agreement, the Company has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants. There currently are no outstanding borrowings under the revolving credit facility. The Amended Credit Agreement expires on September 10, 2031, unless earlier renewed, amended, or replaced. For additional information regarding the Amended Credit Agreement, see Note 8 to the Condensed Consolidated Financial Statements included herein.
The 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.
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 nine months ended September 30, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $5.0 million under this authorization, 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 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 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 September 12, 2026 or when the maximum dollar amount had been expended. During the nine months ended September 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization, reflecting an average price per share of $20.51 (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 on September 12, 2026 upon the expiration of its term.
In the aggregate, during the nine months ended September 30, 2026, the Company repurchased 432,476 shares of common stock at an aggregate fair value of $9.3 million under both of the share repurchase programs described above, reflecting an average price per share of $21.50 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).
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.
The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business. It is anticipated that future acquisitions or strategic investments, if any, would be effected through cash consideration, stock consideration, debt, or a combination thereof. The issuance of our stock as consideration for an acquisition or to raise additional capital could have a dilutive effect on earnings per share and could adversely affect our stock price. Our revolving credit facility contains financial covenants and availability calculations designed to set a maximum leverage ratio of net funded debt to consolidated EBITDA (as defined in our credit facility) and an interest coverage ratio of consolidated EBITDA to interest expense. Therefore, the maximum borrowings against our revolving credit facility would be dependent on the covenant calculations at the time of borrowing. As of September 30, 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. Failure to generate sufficient cash flow from operations or raise additional capital when required in sufficient amounts and on terms acceptable to us could harm our business, financial condition, and results of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company is exposed to market risk from changes in interest rates, foreign currency risk, and investment risk. We do not have any commodity price risk.
Interest Rate Risk
As of September 30, 2026, and during the nine months then ended, the Company had no outstanding debt. We may become subject to interest rate market risk associated with any future borrowings under our revolving credit facility. The interest rate under the revolving credit facility varies depending on the interest rate option selected by the Company plus a margin determined in accordance with a pricing grid. We are also exposed to market risk with respect to our cash and investment balances, which were $115.2 million at September 30, 2026. Assuming a hypothetical 10% decrease in interest rates for invested balances, interest income from cash and investments would decrease on an annualized basis by $0.3 million.
Foreign Currency Risk
We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the US dollar, including Canadian dollar, New Zealand dollar, and Australian dollar. Increases or decreases in our foreign-denominated revenue from movements in foreign exchange rates are often partially offset by the corresponding increases or decreases in our foreign-denominated operating expenses.
To the extent that our international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to assess our approach to managing this risk. In addition, currency fluctuations or a weakening US dollar can increase the costs of our international operations. To date, we have not entered into any foreign currency hedging contracts although we may do so in the future.
Investment Risk
The Company’s investment policy and strategy is focused on investing in highly rated securities with the objective of minimizing the potential risk of principal loss. The Company’s policy limits the amount of credit exposure to any single issuer and sets limits on the average portfolio maturity.
We have an investment portfolio that includes strategic investments in privately held companies, which primarily include early-stage companies. We primarily invest in healthcare technology companies that we believe can help expand our ecosystem. We may continue to make these types of strategic investments as opportunities arise that we find attractive. We may experience additional volatility to our Condensed Consolidated Financial Statements due to changes in market prices, observable price changes, and impairments to our strategic investments. These changes could be material based on market conditions and events.
The above market risk discussion and the estimated amounts presented are forward-looking statements of market risk assuming the occurrence of certain adverse market conditions. Actual results in the future may differ materially from those projected as a result of actual developments in the market.
Item 4. Controls and Procedures
Evaluation of Controls and Procedures
HealthStream’s chief executive officer and principal financial officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this Form 10-Q. Based on that evaluation, the chief executive officer and principal financial officer have concluded that HealthStream’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and the information required to be disclosed in the reports the Company files or submits under the Exchange Act was accumulated and communicated to the Company’s management, including its chief executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in HealthStream’s internal control over financial reporting that occurred during the third quarter of 2026 that has materially affected, or that is reasonably likely to materially affect, HealthStream’s internal control over financial reporting.
Information required by this Part II, Item 1, is included in Note 10 to the Condensed Consolidated Financial Statements herein, which is incorporated by reference herein.
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of the 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) Unregistered Sales of Equity Securities
As discussed above, on September 14, 2026, the Company issued 1,355,932 shares of its common stock to WJRJJ in a private placement for an aggregate cash purchase price of approximately $40.0 million, reflecting a price of $29.50 per share, pursuant to a securities purchase agreement dated as of September 11, 2026 (the “Securities Purchase Agreement”). The issuance of the shares by the Company pursuant to the Securities Purchase Agreement was not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and the issuance of these shares was exempt from registration under Section 4(a)(2) of the Securities Act. The Company relied on this exemption from registration based in part on representations made by WJRJJ.
(c) Issuer Purchases of Equity Securities
On March 13, 2026, the Company announced the adoption of a share repurchase program approved by the Board 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 September 12, 2026 or when the maximum dollar amount had been expended. The Company did not repurchase any shares during the three months ended September 30, 2026. During the nine months ended September 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization, reflecting an average price per share of $20.51 (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 on September 12, 2026 upon expiration of its term.
The following table presents information with respect to HealthStream's repurchases of common stock during the three months ended September 30, 2026.
| Period |
(a) Total number of shares (or units) purchased |
(b) Average price paid per share (or unit) |
(c) Total number of shares (or units) purchased as part of publicly announced plans or programs |
(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs(1) |
||||||||||||
| Month #1 (July 1 - July 31) |
— | $ | — | — | $ | 5,702,314 | ||||||||||
| Month #2 (August 1 - August 31) |
— | — | — | 5,702,314 | ||||||||||||
| Month #3 (September 1 - September 30) |
— | — | — | — | ||||||||||||
| Total |
— | $ | — | — | — | |||||||||||
(1) On March 13, 2026, the Company announced the adoption of a share repurchase program approved by the Board under which the Company was authorized to repurchase up to $10.0 million of its outstanding shares of common stock. This share repurchase program terminated on September 12, 2026, as disclosed above.
Without limiting the generality of the foregoing, during the nine months ended September 30, 2026, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement,” or any “non-Rule - trading arrangement,” as such terms are defined in Item 408 of Regulation S-K.
| (a) |
Exhibits |
| 10.1 (1) † | Second Amendment to Amended and Restated Revolving Credit Agreement, dated September 10, 2026 by and among HealthStream, Inc., its domestic subsidiaries as guarantors and Truist Bank, as the Administrative Agent, the Issuing Bank, Swingline Lender and as a Lender |
| 10.2 (2) † | Securities Purchase Agreement, dated September 11, 2026, by and among HealthStream, Inc., Robert A. Frist, Jr. and WJRJJ Ventures, LLC |
| 10.3 (2) † | Registration Rights Agreement, dated September 14, 2026, by and between HealthStream, Inc. and WJRJJ Ventures, LLC |
| 10.4* ^ | Form of HealthStream, Inc. Restricted Stock Unit Agreement (September 2026 Special Time Based) under 2022 Omnibus Incentive Plan |
| 10.5* ^ | Form of HealthStream, Inc. Restricted Stock Unit Agreement (September 2026 Special Performance) under 2022 Omnibus Incentive Plan |
| 31.1* |
|
| 31.2* |
|
| 32.1** |
|
| 32.2** |
|
| 101.1 INS |
Inline XBRL Instance Document – The instant document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.1 SCH |
Inline XBRL Taxonomy Extension Schema |
| 101.1 CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase |
| 101.1 DEF |
Inline XBRL Taxonomy Extension Definition Linkbase |
| 101.1 LAB |
Inline XBRL Taxonomy Extension Label Linkbase |
| 101.1 PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, has been formatted in Inline XBRL |
| ^ | Management contract or compensatory plan or arrangement |
| * | Filed herewith |
| ** | Furnished herewith |
| † | Exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish, on a supplemental basis, a copy of such omitted exhibits to the Securities and Exchange Commission upon request. |
| (1) | Incorporated by reference from exhibit filed on our Current Report on Form 8-K, dated September 14, 2026. |
| (2) | Incorporated by reference from exhibit filed on our Current Report on Form 8-K, dated September 15, 2026. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| HEALTHSTREAM, INC. |
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| November 5, 2026 | By: |
/s/ Scott A. Roberts |
|
| Scott A. Roberts |
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| Chief Financial Officer |
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