hstm20260630

hstm20260630_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2026

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No.: 000-27701

HealthStream, Inc.

(Exact name of registrant as specified in its charter)

Tennessee	62-1443555
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

500 11th Avenue North, Suite 850,
Nashville, Tennessee	37203
(Address of principal executive offices)	(Zip Code)

(615) 301-3100

(Registrant's telephone number, including area code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (Par Value $0.00)	HSTM	Nasdaq Global Select Market

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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	☐	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 ☐ No ☒

As of August 3, 2026, there were 29,239,955 shares of the registrant’s common stock outstanding.

Table of Contents

Index to Form 10‑Q

HEALTHSTREAM, INC.

		Page Number
Part I.	Financial Information	1
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets (Unaudited) – June 30, 2026 and December 31, 2025	1
	Condensed Consolidated Statements of Income (Unaudited) – Three and Six Months ended June 30, 2026 and 2025	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) – Three and Six Months ended June 30, 2026 and 2025	3
	Condensed Consolidated Statement of Shareholders' Equity (Unaudited) – Three and Six Months ended June 30, 2026 and 2025	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) – Six Months ended June 30, 2026 and 2025	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22
Part II.	Other Information	23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
	SIGNATURE	25

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HEALTHSTREAM, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands)

	*June 30,*			*December 31,*
	*2026*			*2025*
ASSETS
Current assets:
Cash and cash equivalents	$	46,169		$	36,161
Marketable securities		20,562			20,843
Accounts receivable, net		31,142			32,153
Accounts receivable - unbilled		5,661			6,845
Prepaid and other current assets		26,687			23,654
Total current assets		130,221			119,656

Property and equipment, net		10,169			10,661
Capitalized software development, net		46,638			45,581
Operating lease right of use assets, net		13,818			15,272
Goodwill		212,727			217,518
Intangibles, net		59,970			64,930
Other assets		48,056			46,756
Total assets	$	521,599		$	520,374

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,823		$	7,769
Accrued royalties		5,114			5,595
Accrued liabilities		11,797			11,166
Accrued compensation		5,919			11,199
Deferred revenue		92,983			88,417
Total current liabilities		122,636			124,146

Deferred tax liabilities		21,952			18,246
Deferred revenue, noncurrent		1,452			1,344
Operating lease liability, noncurrent		13,429			14,684
Other long-term liabilities		5,525			7,931
Commitments and contingencies

Shareholders’ equity:
Preferred Stock, no par value, 10,000 shares authorized, no shares issued or outstanding		—			—
Common stock, no par value, 75,000 shares authorized; 29,240 and 29,579 shares issued and outstanding at June 30, 2026 and December 31, 2025, respectively		224,384			231,797
Retained earnings		134,111			123,587
Accumulated other comprehensive loss		(1,890	)		(1,361	)
Total shareholders’ equity		356,605			354,023
Total liabilities and shareholders’ equity	$	521,599		$	520,374

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

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HEALTHSTREAM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share data)

	*Three Months Ended*					*Six Months Ended*
	*June 30, 2026*			*June 30, 2025*		*June 30, 2026*			*June 30, 2025*
Revenues, net	$	83,732		$	74,396	$	164,935		$	147,881
Operating costs and expenses:
Cost of revenues (excluding depreciation and amortization)		29,015			26,364		56,774			51,851
Product development		13,581			12,073		27,187			24,121
Sales and marketing		13,503			11,808		26,463			23,958
General and administrative		8,037			7,398		16,039			16,066
Depreciation and amortization		11,275			10,867		22,640			21,621
Total operating costs and expenses		75,411			68,510		149,103			137,617

Operating income		8,321			5,886		15,832			10,264

Interest income		475			958		889			1,889
Other (expense) income, net		(100	)		23		(204	)		(39	)

Income before income tax provision		8,696			6,867		16,517			12,114
Income tax provision		2,027			1,478		3,938			2,393
Net income	$	6,669		$	5,389	$	12,579		$	9,721

Net income per share:
Basic	$	0.23		$	0.18	$	0.43		$	0.32
Diluted	$	0.23		$	0.18	$	0.43		$	0.32

Weighted average shares of common stock outstanding:
Basic		29,230			30,320		29,303			30,382
Diluted		29,314			30,450		29,369			30,519
Dividends declared per share	$	0.035		$	0.031	$	0.070		$	0.062

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

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HEALTHSTREAM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(In thousands)

	*Three Months Ended*						*Six Months Ended*
	*June 30, 2026*			*June 30, 2025*			*June 30, 2026*			*June 30, 2025*
Net income	$	6,669		$	5,389		$	12,579		$	9,721

Other comprehensive (loss) income, net of taxes:
Foreign currency translation adjustments		(306	)		754			(495	)		803
Unrealized loss on marketable securities		(18	)		(13	)		(34	)		(32	)
Total other comprehensive (loss) income		(324	)		741			(529	)		771
Comprehensive income	$	6,345		$	6,130		$	12,050		$	10,492

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

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HEALTHSTREAM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(In thousands, except per share data)

	*Six Months Ended June 30, 2026*
	*Common Stock*						*Retained*			*Accumulated Other Comprehensive*			*Total Shareholders’*
	*Shares*			*Amount*			*Earnings*			*Loss*			*Equity*
Balance at December 31, 2025		29,579		$	231,797		$	123,587		$	(1,361	)	$	354,023
Net income		—			—			5,910			—			5,910
Comprehensive loss		—			—			—			(205	)		(205	)
Dividends declared on common stock ($0.035 per share)		—			—			(1,028	)		—			(1,028	)
Stock-based compensation		—			1,309			—			—			1,309
Common stock issued under stock plans, net of shares withheld for employee taxes		68			(582	)		—			—			(582	)
Excise tax on repurchases of common stock		—			72			—			—			72
Repurchases of common stock		(342	)		(7,507	)		—			—			(7,507	)
Balance at March 31, 2026		29,305		$	225,089		$	128,469		$	(1,566	)	$	351,992
Net income		—			—			6,669			—			6,669
Comprehensive loss		—			—			—			(324	)		(324	)
Dividends declared on common stock ($0.035 per share)		—			—			(1,027	)		—			(1,027	)
Stock-based compensation		—			1,106			—			—			1,106
Common stock issued under stock plans, net of shares withheld for employee taxes		25			—			—			—			—
Excise tax on repurchases of common stock		—			(12	)		—			—			(12	)
Repurchases of common stock		(90	)		(1,799	)		—			—			(1,799	)
Balance at June 30, 2026		29,240		$	224,384		$	134,111		$	(1,890	)	$	356,605

	*Six Months Ended June 30, 2025*
	*Common Stock*						*Retained*			*Accumulated Other Comprehensive*			*Total Shareholders’*
	*Shares*			*Amount*			*Earnings*			*(Loss)/Income*			*Equity*
Balance at December 31, 2024		30,432		$	252,432		$	108,972		$	(2,049	)	$	359,355
Net income		—			—			4,332			—			4,332
Comprehensive income		—			—			—			30			30
Dividends declared on common stock ($0.031 per share)		—			—			(943	)		—			(943	)
Stock-based compensation		—			1,104			—			—			1,104
Common stock issued under stock plans, net of shares withheld for employee taxes		93			(1,070	)		—			—			(1,070	)
Balance at March 31, 2025		30,525		$	252,466		$	112,361		$	(2,019	)	$	362,808
Net income		—			—			5,389			—			5,389
Comprehensive income		—			—			—			741			741
Dividends declared on common stock ($0.031 per share)		—			—			(946	)		—			(946	)
Stock-based compensation		—			836			—			—			836
Common stock issued under stock plans, net of shares withheld for employee taxes		22			(5	)		—			—			(5	)
Excise tax on repurchases of common stock		—			(135	)		—			—			(135	)
Repurchases of common stock		(650	)		(18,121	)		—			—			(18,121	)
Balance at June 30, 2025		29,897		$	235,041		$	116,804		$	(1,278	)	$	350,567

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

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HEALTHSTREAM, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

	*Six Months Ended June 30,*
	*2026*			*2025*
OPERATING ACTIVITIES:
Net income	$	12,579		$	9,721
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		22,640			21,621
Stock-based compensation		2,415			1,940
Amortization of deferred commissions		6,872			6,017
Provision for credit losses		222			391
Deferred income taxes		3,724			467
Loss on equity method investments		66			107
Other		(356	)		(776	)
Changes in operating assets and liabilities:
Accounts and unbilled receivables		1,944			3,465
Prepaid royalties		(126	)		261
Other prepaid expenses and other current assets		(2,525	)		(1,989	)
Other assets		(5,989	)		(8,596	)
Accounts payable and accrued expenses		(5,031	)		(3,858	)
Accrued royalties		(481	)		(366	)
Deferred revenue		4,613			3,692
Net cash provided by operating activities		40,567			32,097

INVESTING ACTIVITIES:
Cash paid for acquisitions		(312	)		—
Proceeds from maturities of marketable securities		23,300			26,073
Purchases of marketable securities		(22,693	)		(26,100	)
Purchases of other investments		(2,600	)		(500	)
Payments associated with capitalized software development		(14,251	)		(14,500	)
Purchases of property and equipment		(1,650	)		(3,372	)
Net cash used in investing activities		(18,206	)		(18,399	)

FINANCING ACTIVITIES:
Taxes paid related to net settlement of equity awards		(582	)		(1,075	)
Payment of earn-outs related to acquisitions		(401	)
Payment of cash dividends		(2,055	)		(1,890	)
Repurchases of common stock		(9,306	)		(18,121	)
Net cash used in financing activities		(12,344	)		(21,086	)

Effect of exchange rate changes on cash and cash equivalents		(9	)		21
Net increase (decrease) in cash and cash equivalents		10,008			(7,367	)
Cash and cash equivalents at beginning of period		36,161			59,469
Cash and cash equivalents at end of period	$	46,169		$	52,102

NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment, accrued but not paid	$	208		$	87
Capitalized software development, accrued but not paid	$	923		$	611

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

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HEALTHSTREAM, INC.

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 six months ended June 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 $24.2 million and $23.2 million for the six months ended June 30, 2026 and 2025, respectively.

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 $3.0 million and $1.5 million as of June 30, 2026 and December 31, 2025, respectively, which the Company evaluates for impairment at each reporting period. Cumulatively, there have been no adjustments recorded due to changes in the fair value of the non-marketable equity investments the Company held as of June 30, 2026. The fair value of non-marketable equity investments is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

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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 six months ended June 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 June 30, 2026, the Company's ending balance contained liabilities related to TCPS, Virsys12, and MissionCare.

Contingent Consideration	2026			2025
Balance at January 1		6,450			535
Purchases / Initial recognition		(2,300	)
Total (gains) losses:
Included in earnings
Included in other comp income
Payments
Balance at March 31	$	4,150		$	535
Purchases / Initial recognition
Total (gains) losses:
Included in earnings		(4	)
Included in other comp income
Payments		(401	)
Balance at June 30	$	3,745		$	535

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.

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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