HealthStream (HSTM) investor relations material

Executive summary

• Q3 revenue rose 8.9% YoY to $83.3M; operating income fell 13.0% to $6.6M, net income fell 11.7% to $5.4M, and adjusted EBITDA rose 1.0% to $19.3M.

• Nine-month revenue rose 10.6% to $248.2M; operating income increased 25.7% to $22.4M, net income rose 13.6% to $18.0M, and adjusted EBITDA rose 13.4% to $60.0M.

• Full-year 2026 revenue and adjusted EBITDA guidance were raised for the second consecutive quarter.

Financial highlights

• Q3 subscription revenue increased 8.0% to $80.0M; professional services revenue increased to $3.3M from $2.6M, bringing total revenue to $83.3M.

• Q3 diluted EPS was $0.18 vs. $0.20 YoY; nine-month diluted EPS was $0.61 vs. $0.52.

• Q3 operating costs and expenses increased to $76.7M from $68.9M, including higher cost of revenues, product development, sales and marketing, and G&A.

• Nine-month operating cash flow rose to $58.0M from $50.1M; cash and equivalents were $59.0M and marketable securities were $56.2M at quarter-end.

Outlook and guidance

• FY2026 revenue guidance rose to $331M–$333M from $327M–$332M; net income guidance is $21.8M–$22.4M, and adjusted EBITDA guidance is $77M–$78M from $74M–$78M previously.

• FY2026 capital expenditure guidance is $31M–$34M; guidance assumes expected new sales and renewals and no deterioration in general economic conditions.

• Q4 revenue growth is expected at 4%–6%, with adjusted EBITDA margin near 21%; higher labor, trade-show, and cloud-migration costs are expected.

• Lower Q4 inorganic growth is expected as Virsys12 and MissionCare Collective enter year-over-year comparisons.