Q2 2022 HealthStream Inc Earnings Call

July 26, 2022

Okay.

Good morning, and welcome to the Health stream second quarter 2022 earnings Conference call.

So I'm all would like to inform you that this conference is being recorded and that all participants are in a listen only mode. At the request of the company. We will open the conference up for question and answers. After the presentation should you have a question. Please press star one one on your push button telephone.

I will now turn the conference over to Scotty Roberts, CFO and senior Vice President. Please go ahead Mr. Robert.

Thank you good morning, and thank you for joining us today to discuss our second quarter 2022 results I'll be filling in this morning for Mollie Condra also in the conference call with me is Robert a Frist, Jr. CEO and chairman of help stream.

I would also like to remind you that this conference call may contain forward looking statements regarding future events and the future performance that helps stream that involve risks and uncertainties that could cause the actual results to differ materially from those projected in the forward looking statements.

Information concerning these risks and other factors that could cause the results to differ materially from those forward looking statements.

Are contained in the company's filings with the SEC.

Including forms 10-K, 10-Q, and our earnings release.

Additionally, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure a table, providing supplemental information on adjusted EBITDA and reconciling to net income attributable to help strains included in the earnings release that we issued yesterday.

And may refer to in this call.

I'll now turn the call over to our CEO Bobby Frist.

Thank you Scott and good morning, everyone and welcome to our second quarter 2022 earnings call.

At a time when so many things in the world are up in the air the pandemic recessionary trends.

Or there are just so many unpredictable things that continue shifting I think it's important to kind of pause a little bit.

Double down on who we are and where we're going and for that reason I'm going to take the opportunity here to open to re ground everyone in the basics of our business and our business focus first and foremost health stream as a healthcare technology company dedicated to developing credentialing and scheduling the healthcare workforce.

Through SaaS based applications.

We sell these applications on a subscription basis under contracts, which averaged three to five years in length.

That means our revenues are recurring and highly predictable we.

We are profitable and we have little to no debt.

We're also fortunate to be solely focused on one of the more recession resistant markets around health care.

And as we define our target customers within healthcare, we see it's a rather large audience of about $10 4 million health care professionals.

Those health care professionals are the end users of our SaaS applications.

We are led by a seasoned team of executives, who have proven track record of generating earnings and cash flows through both organic.

And inorganic means.

We are internally developed innovative patented solutions such as Jane.

Robust enterprise class.

Leading applications again developed internally such as our health stream learning Center.

And we have created new application suites, such as credential stream through acquiring and integrating other companies.

When markets have been appropriate for repurchasing our shares we have done that as well.

Since March of 2020, we have repurchased approximately $48 million of shares at an average price of $21 75, retiring approximately six 5% of our shares outstanding in the process.

Keeping side of these fundamentals are allowed us to reliably deliver even an unreliable times and we expect to continue doing so.

With that framework in place.

I want to share three key takeaways for the remainder of this year.

<unk>.

We believe we are positioned to deliver an improved topline growth rate of generally around 6% inclusive of our acquisition of cloud <unk> in the second half of the year this rate, which would be more than double our <unk>.

Both rate of the first half.

Second our gross margin and <unk>.

66% from the second quarter, representing a 700 basis point improvement.

From the 2019 gross margins of 59%.

That improvement at core occurred sequentially over time due to our improving mix of higher margin products.

Third.

We believe sales bookings indicate that customer purchasing decisions are beginning to pick up based on our sales teams reporting higher levels of engagement with customers and an increased level of virtual and in person meetings when compared to the height of the pandemic.

We take each of these three items to be positive indicators as we move into the second half of the year.

In fact, as we reflect on the last few years.

Management team is excited to feel that we're now more on offense than maybe a slightly more defensive posture of the prior three years.

It's exciting to be on offense.

Later in the call I'll talk about important developments with our single platform strategy.

As well as areas that we believe will drive future growth and expansion, but first I'll turn it over to Scotty Roberts, our CFO to provide details on our financial results for the second quarter.

Thank you Bobby I'll jump into the financials, beginning with a recap of our key financial metrics for the quarter.

Revenues were $65 6 million, which were up 1%.

Operating income was $3 million.

Down 14%.

Net income was $3 1 million up 26%.

Earnings per share was <unk> 10 per share, which is up 25% and.

And adjusted EBITDA was $13 1 million and down 10%.

Workforce solutions revenues were $52 5 million and were up 1%.

And revenues from provider solutions were $13 2 million and were up 4%.

We continued to see positive product adoption and sales momentum in areas such as the market, leading learning application to help stream learning center.

Clinical competency installations, like Jane and credential stream application shipped Wizard scheduling application and new contributions from the <unk> and cloud CME acquisitions.

We are pleased with the growth of the installations, although the year over year comparisons, particularly in the workforce segment with.

And that's impacted about two products that experienced lower revenues this quarter.

The first was the expected revenue run off from the legacy resuscitation products of approximately $9 million.

And the second one is the decline in the legacy <unk> scheduling product of $1 million.

And toss along with nurse grid and shift whether it was acquired in 2020 and collectively they comprise our scheduling and capacity management application suite.

Unlike the other key products, we acquired and soft features an installed software application sold under nonrecurring perpetual software licenses.

During the quarter and soft experienced lower new sales and a higher rate of churn of its legacy installed software.

Focus is now on upgrading legacy and soft customers to a recurring revenue SaaS scheduling applications.

Including shipped Wizard, which by the way he demonstrated 28% revenue growth compared to the same period last year.

Our gross margin was 66, 1% compared to 65, 1% last year.

As Bobby mentioned, just a minute ago, our shift in product mix to higher margin solutions continues to improve our gross margin.

Looking at operating expenses.

Excluding cost of revenues those were up four 4% or $1 7 million.

As our business has grown over the past year staffing levels in particular have increased and were the primary driver for expense growth over last year.

Investing in sales marketing and product development have been our primary focus to drive sales and revenue growth and create new products and enhancements for our customers.

Sales and marketing.

<unk> increased by 15% and.

And clearly the combination of increased staffing levels.

Sales commissions travel and marketing spend.

Good to see the pickup in sales activity, even though it brings some increased levels of expense.

Product development increased by 2%, which is net of labor costs that were capitalized for software development.

Capitalized labor cost increased approximately 800000.

Over the prior year quarter.

This increase was mainly associated with investments in our scheduling and capacity management application suite.

Well as the development of courseware of create more higher margin products.

As anticipated our business travel begin to pick up during the second quarter.

Been about $400000 this quarter compared to less than $60000 in the second quarter of last year.

While $400000 in the quarter is well below our pre COVID-19 travel spend.

Amount exceeded what we spent for the full year of 2021.

We expect that travel will continue to increase during the second half of the year, although it will likely remain below the pre COVID-19 levels.

General and administrative expenses declined by 2%.

The reduction in office lease cost.

And transition service costs associated with the <unk> staff scheduling acquisition, both generated cost savings versus last year.

Partially offsetting these savings were higher bad debt software expenses insurance premiums and costs associated with employee recruiting and onboarding.

Our adjusted EBITDA was $13 1 million, which.

It was down 10% from the record high set in last year's second quarter.

Yeah.

We ended the quarter with cash and investment balances of $39 2 million, which was down by $6 2 million since last quarter.

During the quarter, we deployed $3 1 million of cash for share repurchases.

$6 1 million for capital expenditures.

And $4 million to acquire cloud CND.

DSO was 45 days compared to 43 days last year.

On a year to date basis.

Cash flows from operations were $28 million compared to $24 3 million last year.

And free cash flows were $15 million compared to $11 6 million last year.

For our share repo repurchase program as I said, we spent $3 1 million under the program this quarter and we have approximately $1 $9 million remaining under the program.

Over the past two and a half years, we've deployed over $48 million of capital towards share buybacks.

It's hiring approximately six 5% of our outstanding common stock in the process.

The average price at which we repurchase shares over the last two and a half years.

It was $21 75 per share.

It's also had a long history of deploying capital towards mergers and acquisitions.

And on May 18th we completed the acquisition of the remaining ownership interest we had in cloud CME for approximately $4 million in cash.

$4 1 million shares of our common stock.

We also recognize the $9 million gain associated with the change in the fair value of our previously held minority interest in cloud CME.

The acquisition of clouds, CNA complement deriving acquisition that we completed in December of last year.

Both companies provide software solutions for CME management to accredited healthcare organizations.

Now, let's discuss guidance, we are reaffirming our previously issued guidance.

Which is as follows consolidated revenues are forecasted to range between 267 five.

$273 million.

Adjusted EBITDA is forecasted to range between 50 and $53 5 million in.

Capital expenditures are forecasted to range between 26 and $29 million.

But the first half of the year behind us and some of the year over year declines on the top line, mostly flushed out during the first and second quarters.

We expect revenues will began showing improvement during the second half of the year.

That said as I mentioned earlier will be reduced focus on selling and sauce nonrecurring perpetual software.

Which will.

Which will result in some drag on the top line growth.

As a reminder, even though even the low end of our range would still result in an approximate 6% revenue growth rate for the second half of the year, which is more than double our topline growth rate for the first half of the year.

From a hiring and retention perspective.

Through the first half of the year, our head count increased by four 5%.

First our new positions and the addition of cloud CNA employees.

Our plan remains to increase staffing levels by 5% to 7% during the year.

We have been able to recruit and hire effectively while our employee turnover rates remain similar to what we've experienced the past several quarters.

Looking to adjusted EBITDA guidance, we expect the second half of the year will be lower than the first half attributed in part to the expected lower sales of Amtrust nonrecurring perpetual software.

And as expenses such as travel trade shows and compensation expenses will be higher than they were in the first half of the year.

Thanks for your time this morning, Bob I will turn the call back over to you now.

Thank you Scotty.

Whether it's to help stream learning center application for learning the credential stream applications for Credentialing for the ship lizard application for scheduling.

We firmly believe that <unk> offers the best SaaS applications for the healthcare workforce.

Well, we want to do now is make those applications, even better and Thats why we never stop asking ourselves what is next.

One clear answer to what is next is we believe is inter operability.

Best application should leverage each other and they should work together.

And of course, that's easy to say, but.

Not as easy to do.

That's where our H stream platform comes in.

Our emerging <unk> platform is designed to deliver interoperability.

With the expected launch of our developer portal in the third quarter of this year.

Our first API services will become commercially available to customers and partners.

Number of API is available in the December launch of the developer portal will start small and grow over time.

That said the learning Api's for example that will be included in the developer portal at its launch are already being used by some of our largest customers.

With our learning Api's four.

For example, one large customer has plugged into the <unk> platform to establish interoperability between their HR is system and the health stream learning Center application.

Now as soon as a new nurse has hired they're automatically enrolled in the appropriate training programs and the <unk> learning Center application.

This happens automatically because learning API saving the customer time and resources.

Just one example about interoperability extends the reach of our network nature applications more deeply integrated with customer workflows and improves our value proposition with.

With the emergence of our developer portal and the API as it will contain the opportunities created through interoperability will continue to expand and we look forward to updating you on that journey.

Before we go to questions I want to tell you about something new that is happening is how stream.

There is a new way for individuals individual healthcare professionals to enter and participate in our network for.

For the first time people are arriving on our platform directly through a business to professional model.

Let me describe a couple of the applications that are making this possible.

I'll start with nurse grid, which is the top rated app for nurses in the Apple's App store with a four nine star rating and now over 84000 ratings.

<unk> love it and over 395000 of them actively use it every month.

That means one in eight nurses in the United States logged on to the nurse grid application in the past 30 days to socialize and ship and switch shifts with their colleagues.

The number of monthly average users have increased by 135000 since we acquired nurse grid in March of 2020.

I believe that's about 52%.

Both organic growth.

And just last week, we added 5000, new subscribers during the course of the week.

That's 5000 people choosing to subscribe in the last seven days I find that level of compounding network effect fantastic.

Another business to professional application is.

As my clinical exchange.

We estimate that approximately 20% of all nursing students in United States enroll in their first clinical rotation using my clinical exchange.

Constant influx of new nursing students ensures a steady flow of new your new users for my clinical exchange and they are signing up in their capacity and individuals.

Not only that but they are signing up as students before their professional careers even begin.

This will allow us.

<unk> asked to go upstream and form a relationship between individuals on our platform earlier than before.

So these examples you start to see why we're excited about this development.

25 years, we were strictly a business to business company.

Every health care professional and interacted with our applications did so because their employer purchased a subscription for them to use.

So now begin welcoming you to directly to our platform through business to professional applications like nurse Grit, My clinical exchange unlocks a great deal of potential.

The opportunity for us to re imagine our customer base in the future. We hope that the millions of healthcare professionals, who use health stream on the job will become customers and consumers and the individual capacity as well.

We'll go to questions, but not before I say a sincere. Thank you to all health stream as you are making this progress that I am reporting on possible.

Whether it is launching the developer portal and this quarter, we're creating our new business to professional experience, we're making our leading workforce applications, even better our success is due to our amazing employees.

No.

Please no.

That we are all excited now management and employees to be on offense, launching new products and solutions and growing Gulfstream I will turn it back over to the operator for Q&A from our analysts.

Yeah.

Thank you, Sir and the question and answer session will begin at this time.

You are using a speakerphone, please pick up the handset before pressing any numbers should.

Should you have a question. Please press star one one on your push button telephone again should you have a question. Please press star one one on your push button telephone your questions will be taken in the order that they are received please standby for your first question.

Our first question comes from the line of Jared <unk> from William Blair <unk> Company.

My questions I wanted to circle back on that comment from the prepared remarks about just feeling like you can plan on offense, a little bit more at this point and just to put a little more context around that should we really just think about that is more just sort of feeling better about having some of these transitions that you've been going through in the last few.

Here's kind of where behind you now combined with just the general sort of favorable end market trends or is there something else that youre seeing in the market that maybe gives you confidence that you could perhaps invest a little bit more aggressively to drive an even faster growth profile over the next couple of years.

Well, it's definitely the combination of those things as you know we've spent many quarters.

Explaining some of these business transitions, we've been going through and the risks involved in them and so its exciting to have prepared script.

I didn't feel the need to address any of them in other words, we've kind of gotten back to normal course, and normal course for us is launching new products.

Finding out new ways to grow like we've talked about here at the very end.

And acquiring companies that tuck into our strategy. So it just generally as you pointed out it feels different the tone and the attitude of our executives and our employees and then second is true the market conditions to because.

In my opening comments talked about the great uncertainties I mean.

Certainly the pandemic.

If your customers were hospitals, predominantly and skilled nursing facilities and long term care facilities.

This is one of the hardest problems they've been through in my lifetime, the pandemic adjusting their strategy. So it affected our customer base and in many ways.

And to watch them.

Get their way through all of this figure out a new normal and continue.

To improve their delivery of care to patients.

It's generally encouraging to watch market conditions for our customers change and I think some of that's reflected in some of their announcements to public company announcements over the last few quarters.

They continue to show growth as well many of them. So.

So I think it's both the macro environment conditions.

We still have plenty of overhang with recessionary failures and things like that but that's why we also mentioned that healthcare seems to always be in demand and the need for quality care is always in demand and so we feel that our products and solutions.

Our well positioned in the market as well so it is both the internal change.

Change in tone, and the condition of our target customers changing for the positive that leads me to say it feels good to be back on offense instead of on defense.

Okay, great Yeah that's.

Helpful context, there and I think this is a related follow up but just in regards to the positive comments on the velocity of booking activities in some of the pipeline things that youre seeing just because it gives you confidence for the rest of this year.

Is there any sort of competitively to call out or is it more of just starting to see the macro trends that have been really impacting the health system and market for the last couple of years, maybe just starting to alleviate and Thats what.

Giving you a little bit more comfort just specifically as it relates to that comment on the pipeline.

Sure, it's definitely a little bit of both so during the pandemic I describe things I call them Air bubbles kind of like if you know how brake system works and the card and get air bubbles it creates.

Kind of a less effective breaking I think in the sales process. There are times, where certain parts of the country. They are so busy as the pandemic they really werent in a purchasing mode or if they had purchased something they didn't have the capacity to deal with implementation.

The way I would characterize that as I think a lot of those air bubbles of kind of work their way out of the system.

And we see a return to those pattern, but in addition, I think quite.

Quietly and sometimes not so quietly we were building new products and capacity during the pandemic.

For example, our credentials training application suite and now believe has a clear competitive advantage.

Comprehensive suite.

Onboarding physicians getting them credential privilege and enrolled and ready for work.

Lime to billing, we believe we're best positioned as an organization.

Our credential stream application.

Two to shorten the time to productivity and billing for newly on boarded positions, we think that as a huge economic positive economic impact for our customers and we think our application suite credentials stream is the best in the industry. So I would say as with my prior answer it's a little bit of both.

We're really excited about the positioning of some of our products as much as we are the conditions of our customers to be able to purchase and implement them.

Okay, great. Thanks for all the color and congrats on everything in the first half of the year.

Thank you.

Thank you. Our next question comes from the line of Richard close from Canaccord Genuity.

So with respect to the previous question so.

Robbie are Scotty.

With respect to the confidence in the second half growth.

I know a.

Couple over the last couple of years, you had some softness in bookings.

Because you are a SaaS company that takes a while to flow through.

The model sort of speak.

So.

Does the confidence and the accelerated growth in the second half does that.

All of a sudden you have a lot of new contracts that are going live here as we speak just trying to gauge that level of confidence in.

And then is that in the provider or the workforce area.

Yes.

Let's see.

The confidence stems from all of the things, we've already mentioned and you reiterated.

Is that.

Some of these.

Purchase processes seem to be getting back on track, we're having more meetings both in person and virtually our sales model is accommodating customers to meet them and personal virtually.

Feel like the environment for US right now and our products are aligned with needs.

Oh good.

And we do have some.

Some operational challenges that we did have a little bit of a drag on growth. So we try to factor those in as well and we talked a little bit about the.

But I guess, we now referred to as the installed products.

Products and scheduling that we acquired struggling a little bit more than we had expected.

That said the and we have some backlog issues, we're getting through as fast we can get the revenue, but they are not really issues or opportunities because we did have some good contract wins like on the credential stream platform. We've got a nice backlog that we're trying to normalize and get the revenue on those so its really as always it's a blend of all those things, but the net effect.

Of all of that is we think our growth rate will more than double.

Fact, we provided that a little additional detail that we're looking at 6% inclusive of our cloud <unk> acquisition.

And the range that we provided so we were able to reiterate our range and provide a little more clarity using the 6% inclusive of the cloud <unk> for our growth target.

Okay.

With respect to credentials dream.

Talk.

I guess, you are referring to that with respect to backlog.

Has there been any.

Clear improvement on the implementations over the last quarter.

Any thoughts on that.

<unk> pre selling now provide some tools allow people to experiment and prepare for implementation. So.

We're getting better, but we're also selling a lot so.

We're adding to that backlog by winning deals. So it's a healthy dynamic and we don't exactly know the normal we'd always go faster, but but generally all of the tool sets and processes mature considerably in the last 36 months to.

To help us implement our credential stream customers.

Okay.

No question.

Yes.

Final question would be Scotty and soft I think you said there was a million dollar headwind in the second quarter.

Was there any headwind in the first quarter from that as well.

Yeah, Richard is looking back last year, we saw some benefits come through in the first half of Q1 and Q2.

For that product in particular and it was combination of sales.

Sales of perpetual licenses, which has upfront revenue recognition.

And then just higher professional services and then just some other items as well but.

That's kind of normalized and sell some reductions as they played out in the first half of this year. So I think.

Both Q1 and Q2.

See both.

This quarter seat reductions related to that product.

Okay Alright.

Alright, thank you.

Thank you. Our next question comes from the line of Vincent Colicchio from Barrington.

Okay.

Just wanted to ask you about the labor market. It sounds like you are now able to hire the people.

Youre looking for just curious is there any temporary wage inflation.

No, but we're doing better.

Strategies for hiring or hiring pools.

People for different types of roles, we've kind of shifting our strategies.

And and being successful hiring at the rate we need.

In general, we're probably back filling positions at fairly consistent pay grades as before but maybe getting a little less experienced people that we have to train more in those positions as the churn and employees continues to remain high for our company and all the colleagues I talked to across industries and so.

We may be getting.

We've been able to manage costs, but we're probably bringing in slightly less experienced people that we're training up more in <unk>.

Order to manage the cost of inflationary pressures on pay scales.

And.

It seems like.

Increased travel for yourselves forces is helping out the sales process just curious.

How.

Have your thoughts changed on.

How much you may spend on sales when things normalize versus pre COVID-19 levels.

Well right now, we're just still watching the patterns return and so where we're allowing our managers to encourage travel when it facilitates a customer relationship our sale, we're still encouraging generally our internal meetings with some exceptions to be done virtually demand costs and so we're trying to establish the new rate and what I would say as we see.

Seen it pick up in each of the first quarter and pick up again in the second quarter. We have in our budget plan to have it pick up again in the third and again in the fourth so but even after all of that the total travel budget for the year will probably still be less than half of pre pandemic levels and so.

Because we've insisted on kind of prioritizing travel for customer facing.

Instead of spending.

People will trade show, we tried to spend three things like that so we're making adjustments to our style, but encouraging our teams to get out with customers. When it can make a difference and closing the deal or building relationships.

Okay, and then last.

Question for me.

Patient business.

Does that meet your expectations in the quarter and has there been any change in the competitive behavior.

Yeah.

It's tracking a tracking our expectations through the middle of the year competitive dynamic as steep.

But.

<unk>.

Implementations utilization rates.

All seem to be holding up right now so we've got a long way to go though are up against a really strong.

Are we represent both partners as options for customers and both products are improving.

And so there is quite a battle for market share going on there and we're kind of facilitating that delivery of the products for both and continue.

<unk> continues to continue to invest in the development of the Red Cross solutions as well.

Thanks for answering my questions.

Thanks Vince.

Okay.

Thank you.

<unk> to ask a question you will need to press star one one on your telephone.

Our next question comes from the line of Richard close from Canaccord Genuity.

Hello.

Bobby I was curious with respect to my clinical exchange and the nurse grid.

In terms of how.

How do you monetize that and.

As you think about that longer term.

With people.

Providers clinicians whatnot accessing the platform.

What is the long term benefit with respect to that.

I guess the ecosystem.

Well, we're working that out now it's kind of a as we've mentioned new phenomenon in our in our 30 year history. This is the last 18 months.

But what it does represent a higher level of engagement at different points in their career. It makes us more of a longitudinal service provider meaning.

Instead of just engaging with these individuals when theyre employed an institution. They can now reach out log in and and increasingly participate in activities. In this case, finding a rotation of hospital appeared student or and so we hope that as other tools come online like our portfolio concept, we've been working on for a few years.

It will create a longitudinal history for each person that they can carry with them throughout their lifetime.

We think that.

By the end of the year, we'll be testing some commerce solutions directly to the professionals.

And so hopefully in the fourth quarter, we'll have our first attempt to.

To provide some value to them directly as professionals through some offerings.

Through e-commerce, so kind of a different selling model and so I don't really know the answer but just conceptually. The idea is can we maintain contact through our our applications and suites.

Over their lifetime as health care professionals instead of only during their employment therapy to the application and we think increasingly based on the numbers. We're showing you at nurse grid and clinical exchange. We think the answer is going to be yes, and we do have a fairly robust roadmap of tools.

<unk>.

Like the <unk> portfolio were working on that will service the needs of the individuals and service their further and said their career development and career opportunities. So you have to kind of watch for that we wanted to plant. The seed with these two examples and talk about their growth.

50% growth organically and nurse grid monthly active users of nurses.

We're pretty excited about that but you are right were new to beat or I'll call. It <unk> business to professional so were new to the business professional world, but we do have millions of professionals in our network.

But not as individual consumers and so.

In the next 18 months I hope to be able to announce that some of our pilots were successful and we've got some strategies to provide the value and also generate revenue so kind of have to hold on to the next couple of quarters, while we roll out some of these tools.

Okay.

My final question as last quarter.

And <unk> you talked about strength in the renewed strength in the learning Center you talked about some softness on maybe some of the clinical.

Programs I think this morning, you mentioned Jane or Scotty did as being an area of strength as well as learning center have the softness in the clinical.

Programs has that reversed and youre seeing strength, there or just any update on that would be helpful.

Sure I think first what was really exciting in the second quarter was.

Surprisingly strong new additions to the <unk> learning center.

Believe.

That's the number.

<unk> added in the quarter largely due to a couple of big renewals that extended their contracts to cover more people, but also new market share was over.

Trying to find the number I believe is over 100000, new subscribers, which if you think back even five or seven years ago that would have been a big number then.

And so we're selling into these niche markets. We have other people reselling the application as part of a bundle.

We are a direct selling it ourselves in some of our hospital systems have expanded and added users. So it was exceptional but it is fun to see that one of our oldest products.

Still grabbing some market share, which is really fantastic a 100000 more subscribers in the second quarter I believe it's right around there.

Ill put a range around it because I'm not 100% sure, but let's split between 80 and 110000 in the quarter.

Even if you think back to five years I used to say 250000 net new subscribers was good on the learning platform and we did add.

Close to 100000, this quarter, and then Jane and Checklist, and CE Center, and our <unk> products have all done well.

And so those are all clinical products and so we see a bit of a pickup, particularly in what we call CE Center.

Which is.

Almost a netflix like subscription to a large library for continuing education, we see more institutions.

Buying the subscription for their employees.

And bulk and provisioning hopefully the benefit maybe as a strategy to retain them showing theyre investing in their education and development. So we're encouraged by Jane Checklist, CE Center and <unk>, all performed pretty well now in the first half of this year.

Okay. Thank you very much.

Thank you I would now like to turn the conference back to the executives for closing remarks.

Thank you everyone for participation in the earnings call congratulations to our employees for our progress.

And we look forward to reporting our third quarter as time permits and as the schedules come up. Thank you all everyone will see on the next earnings call.

This concludes today's conference call. Thank you for participating you may now disconnect.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

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Good morning, and welcome to <unk> second quarter 2022 earnings Conference call. At this time I would like to inform you that this conference is being recorded and that all participants are in a listen only mode at the request of the company. We will open the conference up for.

A question and answers after the presentation should you have a question. Please press star one one on your push button telephone I will now turn the conference over to Scotty Roberts CFO and senior Vice President. Please go ahead Mr. Robert.

Thank you good morning, and thank you for joining us today to discuss our second quarter 2022 results I'll be filling in this morning for Mollie Condra.

Also in the conference call with me is Robert a Frist, Jr, CEO and chairman of health stream.

I would also like to remind you that this conference call may contain forward looking statements regarding future events and the future performance that helps stream.

Risks and uncertainties that could cause the actual results to differ materially from those projected in the forward looking statements.

Information concerning these risks and other factors that could cause the results to differ materially from those forward looking statements.

Are contained in the company's filings with the SEC.

Including forms 10-K, 10-Q, and our earnings release.

Additionally, we may reference measures such as adjusted EBITDA, which is a non-GAAP financial measure.

Table, providing supplemental information on adjusted EBITDA and reconciling to net income attributable to help streams included in the earnings release that we issued yesterday.

And may refer to in this call.

I'll now turn the call over to our CEO Bobby Frist.

Thank you Scott and good morning, everyone welcome to our second quarter 2022 earnings call.

At a time when so many things in the world are up in the air the pandemic recessionary trends.

Or there's just so many unpredictable things and they continue shifting I think it's important to kind of pause a little bit and double down on who we are and where we're going and for that reason I'm going to take the opportunity here to open to re ground everyone in the basics of our business and our business focus first and foremost health.

Dream as health care technology company dedicated to developing Credentialing and scheduling the healthcare workforce through SaaS based applications.

We sell these applications on a subscription basis under contracts, which averaged three to five years in length.

That means our revenues are recurring and highly predictable.

We are profitable and we have little to no debt.

We're also fortunate to be solely focused on one of the more recession resistant markets around healthcare.

And as we define our target customers within healthcare, we see it's a rather large audience of about $10 4 million health care professionals.

Those health care professionals are the end users of our SaaS applications.

We are led by a seasoned team of executives, who have proven track record of generating earnings and cash flows through both organic and inorganic means.

We are internally developed innovative patented solutions such as Jane.

Robust enterprise class.

Market, leading applications again developed internally such as our health stream learning Center.

And we have created new application suites, such as credential stream through acquiring and integrating other companies.

When markets have been appropriate for repurchasing our shares we have done that as well.

Since March of 2020, we have repurchased approximately $48 million of shares at an average price of $21 75, retiring approximately six 5% of our shares outstanding in the process.

Keeping side of these fundamentals are allowed us to reliably deliver even an unreliable times and we expect to continue doing so.

With that framework in place.

I want to share three key takeaways for the remainder of this year.

<unk>.

We believe we are positioned to deliver an improved topline growth rate.

Generally around 6% inclusive of our acquisition of cloud <unk> in the second half of the year this rate, which would be more than double our growth rate of the first half.

Second our gross margin is 66% in the second quarter, representing a 700 basis points improvement.

From the 2019 gross margins of 59%.

That improvement occur occurred sequentially over time due to our improving mix of higher margin products.

Third we believe sales bookings indicate that customer purchasing decisions are beginning to pick up based on our sales teams reporting higher levels of engagement with customers and increased level of virtual and in person meetings when compared to the height of the pandemic.

We take each of these three items to be positive indicators as we move into the second half of the year.

In fact, as we reflect on the last few years.

The team is excited to deal that we're now more on offense than maybe a slightly more defensive posture of the prior three years.

It's exciting to be on offense later.

Later in the call I'll talk about important developments with our single platform strategy.

As well as areas that we believe will drive future growth and expansion, but first I'll turn it over to Scotty Roberts, our CFO to provide details on our financial results for the second quarter.

Thank you Bobby I'll jump into the financials, beginning with a recap of our key financial metrics for the quarter.

Revenues were $65 6 million, which were up 1%.

Operating income was $3 million.

Around 14%.

Net income was $3 1 million up 26%.

Earnings per share was <unk> 10 per share, which is up 25% and.

And adjusted EBITDA was $13 1 million and down 10%.

Workforce solutions revenues were $52 5 million and were up 1%.

And revenues from provider solutions were $13 2 million and were up 4%.

We continued to see positive product adoption and sales momentum in areas such as our market, leading learning application to help stream learning center.

Clinical competence installations like Jane credential.

Credential stream application.

Wizard scheduling application and new contributions from the arrive it and cloud CME acquisitions.

We are pleased with the growth of these solutions, although the year over year comparison, particularly in the workforce segment.

Impacted about two products that experienced lower revenues this quarter.

The first was the expected revenue run off from the legacy resuscitation products of approximately $9 million.

And the second was the decline in the legacy and saw scheduling product of $1 million.

And thoughts along with nurse grid and shift whether it was acquired in 2020 and collectively they comprise our scheduling and capacity management application suite.

Unlike the other key products, we acquired and soft features an installed software application filed under nonrecurring perpetual software licenses.

During the quarter and soft experienced lower new sales and a higher rate of churn of its legacy installed software.

Our focus is now on upgrading legacy <unk> customers to a recurring revenue SaaS scheduling applications.

Including shifts Wizard, which by the way demonstrated 28% revenue growth compared to the same period last year.

Our gross margin was 66, 1% compared to 65, 1% last year.

As Bobby mentioned, just a minute ago, our shift in product mix to higher margin installations continues to improve our gross margin.

Looking at operating expenses.

Excluding cost of revenues does we're at 4% or $1 7 million.

As our business has grown over the past year staffing levels in particular have increased and were the primary driver for expense growth over last year.

Investing in sales marketing and product development have been our primary focus to drive sales and revenue growth and create new products and enhancements for our customers.

Sales and marketing.

<unk> increased by 15%.

And then clearly the combination of increased staffing levels.

Commissions travel and marketing spend.

It's good to see the pickup in sales activity, even though it brings some increased levels of that expense.

Product development increased by 2%, which is net of labor costs that were capitalized for software development.

Capitalized labor costs increased approximately 800.

Over the prior year quarter.

This increase was mainly associated with investments in the scheduling and capacity management application suite.

Well as the development of courseware create more higher margin products.

As anticipated our business travel began to pick up during the second quarter.

And then about $400000 this quarter compared to less than $60000 in the second quarter of last year.

While $400000 in the quarter is well below our pre COVID-19 travel spend.

Amount exceeded what we spent for the full year of 2021.

We expect the travel will continue to increase during the second half of the year, although it will likely remain below the pre COVID-19 levels.

General and administrative expenses declined by 2% the.

The reduction in office lease costs.

And transition service costs associated with the <unk> staff scheduling acquisition, both generated cost savings versus last year.

Partially offsetting these savings were higher bad debt software expenses insurance premiums and costs associated with employee recruiting and onboarding.

Our adjusted EBITDA was $13 1 million.

It was down 10% from the record high set in last year's second quarter.

Yes.

We ended the quarter with cash and investment balances of $39 2 million, which was down by $6 2 million since last quarter.

During the quarter, we deployed $3 1 million of cash for share repurchases.

$6 1 million for capital expenditures.

And $4 million to acquire cloud CME.

DSO was 45 days compared to 43 days last year.

On a year to date basis.

Cash flows from operations were $28 million compared to $24 3 million last year.

And free cash flows were $15 million compared to $11 6 million last year.

For our share.

Repurchase program as I said, we spent $3 1 million under the program this quarter and we have approximately $1 $9 million remaining under the program.

Over the past two and a half years, we've deployed over $48 million of capital towards share buybacks.

Carrying approximately six 5% of our outstanding common stock in the process.

The average price at which we repurchase shares over the last two and a half years was.

It was $21 75 per share.

We've also had a long history of deploying capital towards mergers and acquisitions.

And on May 18, we completed the acquisition of the remaining ownership interest we had in cloud CME for approximately $4 million of cash.

One 1 million shares of our common stock.

We also recognized $9 million gain associated with the change in the fair value of our previously held minority interest in cloud gaming.

The acquisition of cloud TMA complement deriving acquisition that we completed in December of last year.

Both companies provide software solutions for senior management to a credit of health care organizations.

Now, let's discuss guidance, we are reaffirming our previously issued guidance.

Which is as follows consolidated revenues are forecasted to range between 267 five.

$273 million.

Adjusted EBITDA is forecasted to range between 50, and $53 5 million and.

Capital expenditures are forecasted to range between 26 and $29 million.

But the first half of the year behind us and some of the year over year declines on the topline Leslie flushed out during the first and second quarters.

We expect revenues will began showing improvement during the second half of the year.

That said as I mentioned earlier will be reduced focus on selling and sauce nonrecurring perpetual software.

Which will.

Which will result in some drag on the topline growth.

As a reminder, even though even the low end of our range would still result in an approximate 6% revenue growth rate for the second half of the year.

More than double our topline growth rate for the first half of the year.

From a hiring and retention perspective.

Through the first half of the year, our head count increased by four 5%.

Bristow and new acquisition and the addition of cloud CME employees.

Our plan remains to increase staffing levels by 5% to 7% during the year.

We have been able to recruit and hire effectively while our employee turnover rates.

It remains similar to what we've experienced the past several quarters.

Looking to adjusted EBITDA guidance, we expect the second half of the year will be lower than the first half attributed in part to the expected lower sales of impasse nonrecurring perpetual software.

And as expenses such as travel trade shows and compensation expenses will be higher than they were in the first half of the year.

Thanks for your time this morning, Bob I will turn the call back over to you now.

Thank you Scotty.

Whether it's to help stream learning center application for learning the credential stream application for Credentialing or the shift Wizard application for scheduling.

We firmly believe that <unk> offers the best SaaS applications for the healthcare workforce.

Well, we want to do now is make those applications, even better and Thats why we never stop asking ourselves what is next.

One clear answer to what is next is we believe is inter operability.

Best application should leverage each other and they should work together.

And of course, that's easy to say, but.

<unk> is easy to do.

That's where our H stream platform comes in our emerging <unk> platform is designed to deliver interoperability.

With the expected launch of our developer portal in the third quarter of this year.

Our first API services will become commercially available to customers and partners.

A number of API is available in the December launch of the developer portal will start small and grow over time.

That said the learning Api's for example that will be included in the developer portal at its launch are already being used by some of our largest customers.

With our learning Api's for example, one large customer has plug into the <unk> platform to establish interoperability between their HR is system and the <unk> learning Center application now.

Now as soon as a new nurses hired they're automatically enrolled in the appropriate training programs and the <unk> learning Center application.

This happens automatically because learning API saving the customer time and resources.

Just one example about interoperability extends the reach of our network makes our applications more deeply integrated with customer workflows and improves our value proposition.

With the emergence of our developer portal on the API as it will contain the opportunities created through interoperability will continue to expand we look forward to updating you on that journey.

Before we go to questions I want to tell you about something new that is happening at Gulfstream.

As a new way for individuals individual healthcare professionals to enter and participate in our network.

For the first time people are arriving on our platform directly through a business to professional model.

Let me describe a couple of the applications that are making this possible.

I'll start with nurse grid, which is the top rated app for nurses in the Apple App store with a four nine star rating and now over 84000 ratings nurses love it and over 395000 of them actively use it every month.

That means one in eight nurses in the United States logged on to the nurse grid application in the past 30 days, the socialized and ship and switch shifts with their colleagues.

The number of monthly average users have increased by 135000 since we acquired <unk> in March of 2020.

I believe that's about 52%.

<unk> organic growth.

And just last week, we added 5000, new subscribers during the course of the week.

That's 5000 people choosing to subscribe in the last seven days upon that level of compounding network effect fantastic.

Another business to professional application is.

As Mike clinical exchange.

We estimate that approximately 20% of all nursing students in United States enroll in their first clinical rotation using my clinical exchange.

Constant influx of new nursing students ensures a steady flow of new your new users for my clinical exchange and they are signing up in their capacity of individuals'.

Not only that but they are signing up as students before their professional careers even begin.

Allow us, allowing us to go upstream and former relationship between individuals on our platform earlier than before.

So these examples you start to see why we're excited about this development for over 25 years, we were strictly a business to business company.

Every health care professional and interacted with our applications did so because their employer purchased a subscription for them to use.

So now begin welcoming you to directly to our platform through business to professional applications like nurse Grit, My clinical exchange unlocks a great deal of potential.

The opportunity for us to re imagine our customer base in the future. We hope that in the millions of health care professionals, who use health stream on the job will become customers and consumers and the individual capacity as well.

With that we'll go to questions, but not before I say a sincere. Thank you to all health stream as you are making this progress that I am reporting on possible.

Whether it is launching the developer portal and this quarter, we're creating a new business to professional experience are making our leading workforce applications, even better our success is due to our amazing employees.

No.

Please no.

That we are all excited now management and employees to be on offense, launching new products and solutions and growing Gulfstream I'll turn it back over to the operator for Q&A from our analysts.

Yes.

Thank you, Sir and the question and answer session will begin at this time.

You are using a speakerphone, please pick up the handset before pressing any numbers sure.

Sure do you have a question. Please press star one one on your question button telephone again should you have a question. Please press star one one on your question by telephone your questions will be taken in the order that they are received please standby for your first question.

Our first question comes from the line of Jared <unk> from William Blair <unk> Company.

The questions I wanted to circle back on that comment from the prepared remarks about just feeling like you can plan on offense, a little bit more at this point and just to put a little more context around that should we really just think about that is more just sort of feeling better about having some of these transitions that you've been going through in the last few.

Here is kind of more behind you now combined with just the general sort of favorable end market trends or is there something else that youre seeing in the market that maybe gives you confidence that you could perhaps invest a little bit more aggressively to drive an even faster growth profile over the next couple of years.

Well, it's definitely the combination of those things as you know we spent many quarters.

Explaining some of these business transitions, we've been going through and the risks involved in them and so its exciting to have prepared script.

I didn't feel the need to address any of them in other words, we've kind of gotten back to normal course, and normal course for us is launching new products.

Finding out new ways to grow like we've talked about here at the very end.

And acquiring companies that tuck into our strategy. So it just generally as you pointed out it feels different that tone and the attitude of our executives and our employees and then second is true the market conditions to because.

In my opening comments talked about the great uncertainties I mean.

Certainly the pandemic.

If your customers were hospitals, predominantly and skilled nursing facilities and long term care facilities.

This is one of the hardest time they've been through in my lifetime, the pandemic adjusting their strategy. So it affected our customer base and in many ways.

And to watch them.

Get their way through all of this figure out a new normal.

To improve their delivery of care to patients.

It's generally encouraging to watch market conditions for our customers change and.

I think some of that is reflected in some of their announcements to public company announcements over the last few quarters.

They continue to show growth as well many of them.

So I think it's both the macro environment conditions.

And tone and the condition of our target customers changing for the positive that leads me to say it feels good to be back on offense instead of on defense.

Okay, Great. Yes, that's helpful context, there and I think this is a related follow up but just in regards to the positive comments on the velocity of booking activities in some of the pipeline.

Things that you are seeing just because it gives you confidence for the rest of this year.

Is there any sort of competitively to call out or is it more of just starting to see.

Macro trends that have been really impacting the health system and market for the last couple of years, maybe just starting to alleviate and thats.

Giving you a little bit more comfort just specifically as it relates to that comment on the pipeline.

Sure, it's definitely a little bit of both so during the pandemic I described things I call them Air bubble kind of like if you know how brake system Mark Mccarthy air bubble as it creates.

Kind of a less effective breaking I think in the sales process. There are times, where certain parts of the country. They are so busy with the pandemic they really werent in our purchasing mode or if they had purchased something they didn't have the capacity to deal with implementation and the way I would characterize that as I think a lot of those air bubbles of kind of work their way out of the system and.

And we see a return to those pattern, but in addition, I think.

Quietly and sometimes not so quietly we were building new products and capacity during the pandemic.

For example, our credentials training application suite I now believe has a clear competitive advantage.

Most comprehensive suite for Onboarding physicians getting them credential privilege and enrolled and ready for work.

<unk> billing, we believe we're best positioned as an organization through our credential stream application.

Two to shorten the time to productivity and billing for newly on boarded positions. We think that is a huge economic positive economic impact for our customers and we think our application suite credentials team is the best in the industry. So I would say as with my prior answer is a little bit of both.

We're really excited about the positioning of some of our products as much as we are the conditions of our customers to be able to purchase and implement them.

Okay, great. Thanks for all the color and congrats on everything in the first half of the year.

Thank you.

Thank you. Our next question comes from the line of Richard close from Canaccord Genuity.

So with respect to the previous question so.

Robbie are Scotty.

With respect to the confidence in the second half growth.

I know a couple over the last couple of years, you had some softness in bookings.

Because you are a SaaS company that takes a while to flow through.

The model sort of speak.

So.

Does the confidence and the accelerated growth in the second half because that.

All of a sudden you have a lot of new contracts that are going live here as we speak just trying to gauge that level of confidence.

And then is that in the provider or the workforce area.

Yes.

C. So the confidence stems from all of the things we've already mentioned and you reiterated.

That some.

Some of these.

<unk> properties seem to be getting back on track, we are having more meetings both in person and virtually our sales model is accommodating customers to meet them and personal virtually.

Feel like the environment for US right now and our products are aligned with needs.

Oh good.

And we do have some.

Some operational challenges that we did have a little bit of a drag on growth. So we tried to factor those in as well and we talk a little bit about the.

But I guess, we now referred to as the installed products.

Products and scheduling that we acquired struggling a little bit more than we had expected.

That said the and we have some backlog issues, we're getting through as fast we can get to revenue, but they are not really issues or opportunities. Because we did have some good contract wins like on the credential stream platform. We've got a nice backlog that we're trying to normalize and get the revenue on those so its really as always it's a blend of all of those things, but the net effect.

All that is we think our growth rate will more than double.

We provided that a little additional detail that we're looking at 6% inclusive of our cloud <unk> acquisition.

And the range that we provided so we were able to reiterate our range and provide a little more clarity using the 6% inclusive of the cloud <unk> for our growth target.

Okay.

With respect to credentials dream you've talked.

I guess, you are referring to that with respect to backlog.

Has there been any.

Clear improvement on the implementations over the last quarter any any thoughts on that.

Yes, the processes and tools and teams we have been hiring the teams to increase the rate of implementation of processes are better the tools to help customers migrate the strategies for migration or even enhanced we actually pre selling now provide some tools that allow people to experiment and prepare for implementation. So.

We're getting better but we're also selling a lot. So we're adding to that backlog by winning deals. So it's a healthy dynamic and we don't exactly know the normal we'd always go faster, but but generally all the tool sets and processes mature considerably in the last 36 months.

To help us implement our credential screening customers.

Okay.

No question.

Yes.

Final question would be Scotty and soft I think you said there was a million dollar headwind in the second quarter.

Was there any headwind in the first quarter from that as well.

Yes, Richard is looking back last year, we saw some benefits come through in the first half of Q1 and Q2.

For that product in particular.

A combination of sales.

Sales of perpetual licenses, which have kind of upfront revenue recognition.

And then just higher professional services and then just some other items as well but.

That's kind of normalized.

Some reductions as they played out in the first half of this year. So I think it can be.

Both Q1 and Q2.

See both.

This quarter seat reductions related to that product.

Okay Alright.

Alright, thank you.

Thank you. Our next question comes from the line of Vincent Colicchio from Barrington.

Okay.

Yes.

Just wanted to ask you about the labor market. It sounds like you are.

It will to hire the people Youre looking for just curious is there any temporary wage inflation.

No, but we're doing better.

Strategies for hiring or hiring pools.

People for different types of roles, we've kind of shifting our strategies.

And and being successful hiring at the rate we need.

In general, we're probably back filling positions at fairly consistent pay grades as before but maybe get a little less experienced people that we have to train more in those positions as the churn and employees continues to remain high for really our company and all the colleagues I talked to you across industries and so.

We may be getting.

<unk> been able to manage costs, but we're probably bringing in slightly less experienced people that we're training up more.

Order to manage the cost of inflationary pressures on pay scales.

And.

It seems like.

Increased travel for yourselves force is helping out the sales process just curious.

How.

Have your thoughts changed on.

How much you may spend on sales when things normalize versus pre COVID-19 levels.

Well right now, we're just still watching the patterns return and so where we're allowing our managers to encourage travel.

<unk> facilitates a customer relationship our sale, we're still encouraging generally our internal meetings with some exceptions to be done virtually to manage cost and so we're trying to establish the new rate.

What I would say is we've seen it pick up in each of the first quarter and pick up again in the second quarter. We have in our budget plan to have it pick up again in the third and again in the fourth so but even after all that the total travel budget for the Eurostar, we'd probably still be less than half of pre pandemic levels and so.

Because we've insisted on kind of prioritizing travel for customer facing.

Instead of sending five people that trade show, we tried to send three things like that so we're making adjustments to our style, but encouraging our teams to get out with customers. When it can make a difference in closing a deal or building relationships.

Okay and then.

Last question from me.

Patient business does.

Does that meet your expectations in the quarter and has there been any change in the competitive behavior.

Yeah.

It's tracking well.

Cracking expectations through the middle of the year competitive dynamic as steep.

But the.

Implementations utilization rates.

All seem to be holding up right now so we've got a long way to go though are up against a really strong.

Are we represent both partners as options for customers and both products are improving.

And so there is quite a battle for market share going on there and we're kind of facilitating that delivery of the products for both them and continue.

<unk> continues to continue to invest in the development of the Red Cross solution as well.

Thanks for answering my questions.

Thanks, Dan.

Thanks Vince.

Thank you.

Minder to ask a question you will need to press star one one on your telephone.

Our next question comes from the line of Richard close from Canaccord Genuity.

Hello.

Bobby I was curious with respect to my clinical exchange and the nurse grid.

In terms of.

Hi, how you monetize that.

And.

<unk>.

As you think about that longer term.

With people.

Providers clinicians whatnot accessing the platform.

What is the long term benefit with respect to that I.

I guess the ecosystem.

Well, we're working that out now kind of as we've mentioned new phenomenon in our in our 30 year history. This is last 18 months.

But what it does represent a higher level of engagement at different points in their career. It makes us more of a longitudinal service provider meaning.

Instead of just engaging with these individuals when they are employed an institution. They can now reach out log in and an increasingly participate in activities. In this case, finding a rotation of hospital appeared student or and so we hope that as other tools come online like our portfolio concept, we've been working on for a few years.

It'll create a longitudinal history for each person that they can carry with them throughout their lifetime.

We think that.

By the end of the year, we'll be testing some commerce solutions directly to the professionals.

And so hopefully in the fourth quarter, we'll have our first attempts to.

To provide some value to them directly as professionals through some offerings.

Through e-commerce, so kind of a different selling model and so I don't really know the answer but just conceptually. The idea is can we maintain contact through our our applications and suites.

Over their lifetime as health care professionals instead of only during their employment therapy to the application and we think increasingly based on the kind of the numbers. We're showing you at nurse grid and clinical exchange. We think the answer is going to be yes, and we do have a fairly robust roadmap of tools.

<unk>.

Like the <unk> portfolio were working on that will service the needs of the individuals and service their further instead their career development and career opportunity. So you have to kind of watch for that we wanted to plant. The seed with these two examples and talk about their growth I mean, a 50% growth organically.

And nurse grid monthly active users of nurses.

We're pretty excited about that but youre right were new to be to I'll call. It <unk> business to professional so we're new to the business the professional world, but we do have millions of professionals in our network.

But not as individual consumers and so.

In the next 18 months I hope to be able to announce that some of our pilots are successful and we've got some strategies to provide the value and also generate revenue so kind of have to hold onto the next couple of quarters, while we rollout some of these tools.

Okay.

My final question as last quarter.

And <unk> you talked about strength in the renewed strength in the learning Center you.

<unk> talked about some softness on maybe some of the clinical.

Programs.

This morning, you mentioned Jane or Scotty did as being an area of strength as well as learning center have the softness in the clinical.

Programs has that reversed and youre seeing strength, there or just any update on that would be helpful.

Sure I mean first what was really exciting in the second quarter was.

Surprisingly strong new additions to the <unk> learning Center I believe.

That's the number.

Added in the quarter largely due to a couple of big renewals that extended their contracts to cover more people, but also new market share was over.

Trying to find the number I believe is over 100000, new subscribers, which if you think back even five or seven years ago that would have been a big number then.

We're selling into these niche markets, we have other people reselling the application as part of a bundle.

We're a direct selling it ourselves in some of our hospital systems have expanded.

And added users. So it was exceptional but it is on the C. One of our oldest products. We're still grabbing some market share, which is really fantastic 100 or more subscribers in the second quarter I believe it's right around there I guess I'll put a range around it because I'm not 100% sure, but let's split between 80 and 110 valve.

In the quarter.

Even if you think back five years that I used to say 250000 net new subscribers was good on the learning platform and we did add.

Close to 100000, this quarter, and then Jane and Checklist, and CE Center, and our <unk> products have all done well.

And so we those are all clinical products and so we see a bit of a pickup, particularly in what we call CE Center, which is a.

Almost a netflix like subscription to a large library for continuing education, we see more institutions.

Buying the subscription for their employees.

In bulk and provisioning it hopefully the benefit and maybe as a strategy to retain them showing theyre investing in their education and development. So we're encouraged by Jane Checklist, CE Center and <unk>, all performed pretty well now in the first half of this year.

Okay. Thank you very much.

Thank you I would now like to turn the conference back to the executives for closing remarks.

Thank you everyone for participation in the earnings call congratulations to our employees for our progress.

And we look forward to reporting our third quarter as time permits and as the schedules come up. Thank you all everyone will see on the next earnings call.

This concludes today's conference call. Thank you for participating you may now disconnect.

Q2 2022 HealthStream Inc Earnings Call

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