Q1 2024 HealthStream Inc Earnings Call

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Operator: Good morning, and welcome to HealthStream's first quarter 2024 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 questions and answers after the presentation. I'll now turn the conference over to Mollie Condra, Vice President of Investor Relations and Communications. Please go ahead, Ms. Condra.

Speaker Change: Good morning, and welcome to L streams first quarter 2024 earnings conference call at this time I would like to inform you that this conference is being recorded.

Speaker Change: And that all participants are in a listen only mode.

Speaker Change: The request of the company, we will open the conference up for question and answers after the presentation.

Speaker Change: I'll now turn the conference over to Mollie Condra, Vice President of Investor Relations at Communications. Please go ahead Ms Condra.

Mollie Condra: Thank you and good morning. Thank you for joining us today to discuss our first quarter 2024 results. Also on the conference call with me today is Robert A. Frist, Jr., CEO and Chairman of HealthStream, and Scotty Roberts, CFO and Senior Vice President of Finance and Accounting. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that could involve risk and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statement.

Mollie Condra: Thank you and good morning, Thank you for joining us today to discuss our first quarter 'twenty 'twenty four results.

Mollie Condra: Also on the conference call with me today is Robert a Frist, Jr. CEO and chairman of the Gulfstream and Scotty Roberts, CFO and senior Vice President of Finance and accounting.

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

Mollie Condra: Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements is 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 DHSDA, which is a non-GAAP financial measure. A Table Providing Supplemental Information on Adjusted EBITDA and Reconciling to Net Income Attributable to HealthStream is included in the earnings release that we issued yesterday and may refer to in

Mollie Condra: Information concerning these risks and other factors that could cause the results to differ materially.

Mollie Condra: Forward looking statements are contained in the company's filings with the SEC, including forms 10-K, 10-Q, and our earnings release.

Mollie Condra: Actually we may reference measures such as adjusted which is a non-GAAP financial measure.

Mollie Condra: A table, providing supplemental information on adjusted EBITDA and reconciling to net income attributable health stream is included in the earnings release that we issued yesterday and they refer to in this call.

Robert A. Frist: Thank you, Mollie. Good morning, everyone, and welcome to our first quarter 2024 earnings call. As our analysts sometimes say, it was a solid print. In the first quarter, we achieved record revenue and record adjusted EBITDA. In fact, our quarterly financial performance showed year-over-year increases in each of the major categories we highlighted in our earnings release. I'm excited to be able to report that type of performance. The first quarter revenues were $72.8 million, up 6% over the first quarter of last year.

Mollie Condra: So with that start today I'll turn the call over to CEO, Bobby Frist. Thank you Molly good morning, everyone and welcome to our first quarter 2024 earnings call.

Speaker Change: As our analysts sometimes saying it was a solid print.

Robert A. Frist: First quarter, we achieved record revenue and record adjusted EBITDA in fact, our quarterly financial performance showed year over year increases in each of the major categories. We highlight in our earnings release.

Robert A. Frist: I'm excited to be able to report that type of performance. The first quarter revenues were $72 8 million up 6% over the first quarter of last year and adjusted EBITDA was $17 1 million up 24% over the first quarter of last year, we were able to reiterate our financial guidance ranges for the full year of 2024.

Robert A. Frist: And adjusted EBITDA was $17.1 million, up 24% over the first quarter of last year. We were able to reiterate our financial guidance ranges for the full year of 2024. And right now, we have the full expectation that we'll be able to hit the ball right down the middle of the fairway.

Robert A. Frist: Right now we have the full expectation that we'll be able to hit the ball right down the middle of the fairway, we're looking to the middle of the range and performance. So we're excited to deliver these strong financial results and reiterate our financial frame charges with an expectation of going right down the middle.

Robert A. Frist: We're looking to the middle of the range in performance, so we're excited to deliver these strong financial results and reiterate our financial range guidance with an expectation of going right down the middle. Later in this call, after Scott's discussion about the financials, I'm going to describe some of the developments in learning, credentialing, and scheduling application suites that are helping drive these results. But I do want to back up a little bit and talk about an emerging trend we're seeing that I think is worth calling out.

Speaker Change: Later in this call after Scott's discussion about financials I'm going to describe some of the developments and learning Credentialing scheduling application suites are helping drive these results.

Speaker Change: Do you want to back up a little bit and talk about an emerging trend. We're seeing that I think is worth calling out the China I'm, referring to is the increasing amount of attention that health care organizations are paying their work force kind of broadly defined now more than ever we believe that health care. She is are embracing the fact that their worst workforce is their most valuable asset.

Robert A. Frist: The trend I'm referring to is the increasing amount of attention that health care organizations are paying to their workforce, kind of broadly defined. Now more than ever, we believe that healthcare CEOs are embracing the fact that their worst workforce is their most valuable asset. And the staffing shortages that were exacerbated by the pandemic really served to reinforce the ongoing importance of taking care of your workforce and, hopefully, from our point of view, investing in them to retain and develop them in their capabilities and capacity.

Speaker Change: The staffing shortages that were exacerbated by the pandemic really serve to reinforce the ongoing importance of taking care of your workforce.

Speaker Change: And hopefully from our point of view investing in them to retain and develop.

Speaker Change: And their capabilities and capacity and you know these are things that health team has been focused on for a long long time, we're just laser focused on workflow applications that improve.

Robert A. Frist: And, you know, these are the things that HealthStream has been focused on for a long, long time. We're just laser focused on workflow applications that improve both the quality and the knowledge of, and the knowledge by these healthcare professionals. And, of course, their skill sets.

Speaker Change: Both the quality the knowledge and the knowledge by these health care professionals and of course their skill sets. We also make sure the right people in the right place at the right time. So there's a lot of things that we do that help organizations focus and bring deliberate focus on on retaining and developing.

Robert A. Frist: We also make sure the right people are in the right place at the right time. So there's a lot of things that we do that help organizations focus on and bring deliberate focus on retaining and developing employees. In fact, if you ask any HealthStream employee, I'd say they're proud to say that our vision has always been about improving the quality of health care through the people in health care by improving, you know, who they are, and what their skills are.

Speaker Change: In fact, if you ask any hillstrom employee I'd say they are proud to say that our vision has always been about improving the quality of health care.

Speaker Change: Through the people of health care by improving you know who they are what their skills are and so we've held that vision to improve the quality of health care by developing the people who deliver care for a long time and.

Robert A. Frist: And so we've held that vision to improve the quality of health care by developing the people who deliver care for a long time. And based on our conversations with customers, it's just increasingly becoming a top priority for them as well, the health care workforce as a topic. And you can look at that from any direction, from workforce shortages to the need to cross-develop competencies and skills.

Speaker Change: And based on our conversation with customers its just increasingly becoming a top priority for them as well the health care workforce is topic and you can look at that from any direction for workforce shortages the need to cross develop competencies and skills are these are all emerging lead kind of.

Robert A. Frist: These are all emerging kinds of hospitals are realizing their need to invest in these areas. Healthcare can be complex, but working together with our customers, we help them take care of these people, and we know how to do that well. It's just something that benefits everyone.

Speaker Change: The hospitals are realizing their need to invest in these areas.

Speaker Change: Health care can be complex, but working together with our customers. We help them take care of these people and we know how to do that well and it's just something that benefits everyone. So our three application suites, along with the health stream platform underpinning them now and our deep network of customers, who have helped position how stream as the work.

Robert A. Frist: So our three application suites, along with the HealthStream platform, underpinning them now, and our deep network of customers have helped position HealthStream as the workforce platform of choice, or maybe sometimes we say the people platform for healthcare. Moving on to more specific business topics, I want to share two updates that we believe are emerging parts of our business that could become growth drivers in future years. To be clear, not material contributors today, but the expected growth results are, we're excited to see the initial results in these areas that we're going to discuss. The first is we're excited to advance our commerce capability. For the longest time, most all of our sales have been done by a field sales organization, which is wonderful.

Speaker Change: For workforce platform of choice or maybe sometimes we say that people platform for health care.

Speaker Change: Moving on to more specific business topics on the share two updates that we believe are emerging parts of our business that could become growth drivers in future years.

Speaker Change: To be clear not material contributors today.

Speaker Change: But the expected growth results are we're excited to see the initial results in these areas that we're going to discuss.

Speaker Change: The first is we're excited to advance our commerce capabilities for the longest time most all of our sales have been done are facilitated by a field sales organization, which is wonderful and we built strong bridges and relationships with thousands of customers do this incredible sales organization, but increasingly they are supported with e-commerce.

Robert A. Frist: And we build strong bridges and relationships with thousands of customers through this incredible sales organization, but increasingly, they're supported with e-commerce capabilities that are a part of our H-Stream platform. And we're building out these capabilities for three areas of commerce. The first is a kind of enterprise-level purchasing we call collaborative purchasing. And we brought this up on prior calls, but our collaborative purchasing tools are now evolving with better e-commerce capabilities built in. And so that's exciting. The second is, I guess, what we would call departmental level purchasing.

Speaker Change: <unk> capabilities that are a part of our <unk> platform and we're building out these capabilities for three areas of commerce. The first is kind of enterprise level purchasing we call collaborative purchasing and we brought this up on prior calls, but our collaborative purchasing tools are now evolving with better e-commerce capabilities built them.

And so that's exciting the second is.

Speaker Change: What we would call departmental level person, it's business to business purchasing kind of at the departmental level and we now have new tools that we're launching.

Robert A. Frist: It's business to business purchasing at the departmental level, and we now have new tools that we're launching to help department heads and others manage their education, training, and development budgets through commerce tools, which is exciting. And then finally, the one I'm going to talk about is actually the newest, our ability to focus on the individuals in our ecosystem with direct to individual commerce purchasing. And during our last call, I mentioned to you that we'd started selling a course called the DEA Mandated Opioid Course. It's required by a physician through kind of a federal mandate, so it has strong tailwinds.

Speaker Change: Department heads and others manage their education training and development budgets through commerce tools, which is exciting and then finally in the one I'm going to talk about is actually the newest abilities.

Speaker Change: I believe are the focus on the individuals in our ecosystem.

Speaker Change: With commerce direct to individual commerce purchasing and during our last call I've mentioned to you that we had started selling.

Speaker Change: Called the DEA mandated opioid course, it's required a physician through kind of a federal mandates would have strong tailwind.

Robert A. Frist: But through our e-commerce capabilities and through New Champ, we were able to present the opportunity to purchase this course on our own network and, in some cases, promote it inside of our own application areas. I can now report that we had approximately half a million in DEA course sales, direct to professional, direct to doctors, sales of the DEA course during the first quarter alone. And so this is really an exciting kind of breakthrough moment as we use our new commerce tools to allow for direct purchasing by physicians of, in this case, this course. Now, again, this course is a bit anomalous because it's a unique opportunity based on a federal mandate.

Speaker Change: But through our e-commerce capabilities entered all channel, where we're able to present the opportunity to purchase this course in our own network.

Speaker Change: Some cases promoting it inside of our own application areas I can now report that we had approximately half a million and DEA core sales of direct professional director doctors.

Speaker Change: Our sales of the DEA course during the first quarter alone and so this is a really an exciting kind of breakthrough moment as we use our new commerce tools to allow for direct purchasing by physicians of in this case. This course now again. This of course is a bit anomalous because it's unique opportunity based on federal mandate.

Robert A. Frist: It's time-sensitive, and we happen to have just the right content for it. But nonetheless, it wouldn't have been possible without being powered by our new commerce tools. So, taken by itself, this represents, you know, one group of individuals, but in the greater scheme of things, we think it represents an opportunity to expand these direct professional commerce capabilities. You know, and as the people platform of healthcare, I think HealthStream is well positioned to know what individuals need, when they need which courses and when, and then also how to get it to them.

Speaker Change: Time sensitive and we happen to have just the right content for it.

Speaker Change: But nonetheless wouldn't have been possible without being Powerbar and e-commerce tools.

Speaker Change: So taken by itself. This represents one wash sign that river of individuals', but its greater scheme of things. We think it represents an opportunity to expand these direct professional commerce capabilities.

Speaker Change: And as the people platform of health care.

Speaker Change: <unk> is well positioned to know what individuals need when they need which course and when and then also how to get it to them and so I feel well positioned to extend this commerce capability people as part of our platform for health care.

Robert A. Frist: And so I feel well positioned to extend this commerce capability, making people part of the platform for healthcare. Well, you know, the other channel where we're seeing an expansion of direct commerce is through NurseGrid Learn. And you'll recall that our NurseGrid app is extraordinarily popular with nurses. We have over half a million monthly active users. And if you ask almost any nurse, you're going to have a really high hit rate that they both like NurseGrid, the app that helps them manage their personal schedules and work schedules, and they're beginning to appreciate some of its new features and capabilities like NurseGrid Learn.

Speaker Change: Well.

Speaker Change: You know the other channel, where we're seeing expansion of direct commerce is through nurse grid learn and Youll recall that our nurse grid App is extraordinarily popular with nurse as we have over a half a million monthly active users.

Speaker Change: And if you ask almost any nurse youre going to have a really high hit rate that they both like nurse grid, the app, which helps them manage their personal schedules and work schedules.

Speaker Change: And they are beginning to appreciate some of its new features and capabilities like nurse grid learn and so we began to see some recent transactional volume through nurse grid learn direct to nurses as well sort of to see that start to be powered by our new commerce tools.

Robert A. Frist: And so we began to see some recent transactional volume through Nurse Grid Learn go direct to nurses, and we're starting to see that start to be powered by our new commerce tool. Now, let's move on to the expansion of our Total Addressable Market, which we announced in October of last year. Specifically, I want to provide you with some developments that we're making around nursing. After completing our first major enterprise sale to one of the largest nursing schools in the nation, I'm pleased to announce that we have now fully implemented our HealthStream technology platform and the Red Cross Resuscitation at over a dozen of their campuses, and we expect a full rollout during this quarter.

Speaker Change: Move on to the expansion of our total addressable market, which we announced in October of last year, specifically I want to provide you with some.

Speaker Change: Divest that we're making around nursing schools. After completing our first major enterprise sale to one of the largest nursing schools in the nation I am pleased to announce that we have now fully implemented health stream technology platform and the Red Cross has taken over a dozen of their campuses and we expect a full rollout during this this quarter the second quarter so exciting.

Robert A. Frist: So, an exciting rollout to one of the largest nursing schools in the nation, using the HStream technology platform, the HStream ID, along with the Red Cross Resuscitation Suite, and now they're entering work when they get their first job after graduating and becoming nurses. They enter work with a Red Cross certificate, thanks to this new relationship with nursing school and this large nursing system.

Speaker Change: Rollout to our largest nursing schools in the nation you exiting the green technology platform. The H Dream I D along with the Red Cross resuscitation suite and now they're entering work when they get their first job after graduating and becoming nurses the interwork with a red Cross certificate. Thanks to this new relationship with nursing school with this.

Robert A. Frist: And so, you know, we're excited to see them enter the workforce with that ID and that Red Cross credential. We'll be able to report more on our progress there financially, but the implementation wave has begun, and we're really excited about that. And, you know, really the great opportunity is that the data on their completion of that certificate would carry forward with them into work if they land at a facility or health organization that uses our learning application suite.

Speaker Change: Large nursing system.

Speaker Change: And so we're excited to see them enter the workforce with that IV and with that Red Cross credential and we'll be able to report more on our progress here financially, but the implementation wave has began and we're really excited about that.

Speaker Change: And really the great opportunity is that the data on their completion that certificate would carry forward with them and to work if they land at our facility. Our health organization that uses our learning application suite and so we're really excited about that advance of course also powered by the upstream bark the extreme platform and its interoperability.

Robert A. Frist: And so we're really excited about that advance, of course, also powered by the HStream platform and its interoperability APIs. So again, excited to see both technical progress and financial implementation progress in the nursing school market. Of course, with this as a working model, we'll work our best to figure out how to expand sales opportunities in that channel as well. So those are the two opportunities I wanted to cover, the DEA-made direct to professional and the early developments there in entering the nursing market, the nursing school market, and the nursing student market. And so we're excited to report progress in both of those areas. But I do wanna manage expectations.

Speaker Change: <unk> Api's.

Speaker Change: Again excited to see both technical progress and financial implementation progress and the nursing school market of course with this as a working model will work our best figure how to expand sales opportunities.

Speaker Change: That channel as well so those are the two opportunities I want to cover the DEA may direct professional and the nursing school early developments there of entering a nursing market nursing school market and nursing student market and so.

Speaker Change: So we're excited to report progress in both of those areas I do want to.

Robert A. Frist: These are new areas, new channels. They're not material parts of our business, but we do see some light. We're excited to see some light at the end of the development panel and declaring these as an expanded market opportunity in our prior earnings calls. Again, we're excited to see those developments.

Speaker Change: Manage expectations. These are new areas, new channels theyre not material parts of our business.

Speaker Change: But we do see some white, we're excited to see some light at the end of the development Parnell and declaring these as an expanded market opportunity in our prior earnings call. So.

I'm excited to see those developments.

Robert A. Frist: I want to give you, just as a reminder for anyone new to the call, a base-level description of our business so you can kind of take away the nature of our business. First and foremost, HealthStream is a healthcare technology company. We're focused on the development of our technology platform, and we're dedicated to developing, credentialing, and scheduling the healthcare workforce, so three kinds of unique healthcare workflows related to their people that we provide through our SaaS-based application stacks. And increasingly, those three separate SaaS technology stacks that do credentialing, learning, and development, and scheduling are becoming interoperable through the HStream technology platform we've been building.

Speaker Change: I wanted to describe or just as a reminder for anyone new on the call are a base level of description of our business you can kind of take away the nature of our business.

Speaker Change: First and foremost <unk> is a health care technology, we're focused on the development of our technology platform and we are dedicated to developing credentialing and scheduling the health care workforce of three kind of unique health care workflows.

Speaker Change: And so there are people that we provide to our SaaS based application stacks and increasingly those three separate SaaS technology stacks that new credentials.

Speaker Change: Turning in development and scheduling are becoming interoperable through the eighth stream technology platform. We've been building a historically, we sell all of our solutions on a subscription basis under contracts that average three to five years, which makes our revenue both recurring and predictable and we'd like to get some credit for that eventually that this is a recurring revenue SaaS.

Robert A. Frist: Historically, we sell all of our solutions on a subscription basis under contracts that average five to three years, which makes our revenues both recurring and predictable. And we'd like to get some credit for that, eventually, for this being a recurring revenue SaaS subscription business. In fact, 96% of our revenues are subscription-based. As I mentioned, we have also started to open our sales channels directly to professionals and nursing students. We are profitable, we have no interest-bearing debt, we have a strong cash balance, which did surge a good bit in Q1 to $83.7 million, that's up $12.6 million over the prior quarter. So, good free cash flows and cash flows during the quarter. We're solely focused on health care, more specifically the health care workforce.

Scripps in business in fact, 96% of our revenues are subscription based.

Speaker Change: As I mentioned, we are also starting to open our sales channel directly to professionals and nursing students.

Speaker Change: We are profitable we have no interest bearing debt the strong cash balance, which did surge a good bet in Q1 to $83 7 million, that's up $12 6 million over the prior quarter. So good free cash flows cash flows during the quarter.

Speaker Change: We are solely focused on health care and more specifically the health care workforce, that's important to me, especially given the trends I mentioned at the opening of this call. There are $12 3 million health care professionals and nursing students, which we define as our total addressable market.

Robert A. Frist: That's important, especially given the trends I mentioned in the opening of this call. There are 12.3 million health care professionals and nursing students, which we define as our total addressable market. We hope over time they'll engage with us through all three of our major primary application suites and all of our secondary applications as well. And we want them all, we want to think of all 12.3 million of them, 12.3 million initially as members of our ecosystem, and we're making good headwinds towards creating a network effect or an ecology through the H-Stream platform.

Speaker Change: We hope over time, they'll engage with us through all three of our major primary application suites, and all of our secondary applications as well and we want them. All we want to thank them all 12 three of them.

Speaker Change: Italy as members of our oncology of our ecosystem and we're making good headwinds towards making a network effect or an ecology through the extreme platform.

Speaker Change: At this time I'd like to turn over Sky, Robert Tate Little deeper dive in the numbers because I just hit the top couple. Thank you go ahead, Scott Alright, Thanks, Bobby and good morning.

Scott: I'll jump right in and cover the financial highlights for the first quarter.

Robert A. Frist: Well, at this time, I'd like to turn it over to Scotty Roberts to take a little deeper dive into the numbers, because I just hit the top couple. Thank you. Go ahead, Scotty. All right. Thanks, Bobby.

Scott: And unless otherwise noted the comparisons will be against the same period of last year.

Scott: I'm pleased to share that we continue to deliver solid performance for the first quarter growing both top line and adjusted EBITDA.

Scott Alexander Roberts: All right. Thanks, Bobby, and good morning.

Scott: Revenues for the quarter were $72 8 million up 6% operating income was $5 7 million up 97%.

Scott Alexander Roberts: So I'll jump right in and go over the financial highlights for the first quarter, and I should note that comparisons will be against the same period of last year. I'm pleased to share that we continue to deliver solid performance in the first quarter, growing both the top line and adjusted EBITDA. Revenues for the quarter were $72.8 million, up 6%, and operating income was $5.7 million, up 97%. Net income was $5.2 million, up 99%. Earnings per share was $0.17 per share, up from $0.09 per share, and adjusted EBITDA was $17.1 million, which was up 24%.

Scott: Net income was $5 2 million up 99%.

Scott: Earnings per share was <unk> 17 cents per share up from nine cents per share and adjusted EBITDA was $17 1 million and was up 24%.

Scott: Revenues increased by $3 8 million or 6% coming in at $72 8 million compared to $68 9 million in last year's first quarter.

Scott: Revenues from our subscription products accounted for 96% of total revenues and.

Scott: And were $70 2 million increasing by 6%.

Scott: Subscription revenues as we have defined them for some time.

Scott: Currently includes SaaS solutions, but also software license and maintenance fees.

Scott Alexander Roberts: Revenues increased by $3.8 million, or 6%, coming in at $72.8 million compared to $68.9 million in last year's first quarter. Revenues from our subscription products accounted for 96% of total revenues, and we had $70.2 million, increasing by 6%. Subscription revenues, as we've defined them for some time, predominantly include SaaS solutions but also software licenses and maintenance. Software licenses are associated with legacy products such as our Ansoff Scheduling Solution and are occasionally sold to existing customers.

Scott: Software licenses that are associated with legacy products, such as our and soft schedule installation and or occasionally sell to existing customers I'm, calling this to your attention here because one time license revenues were approximately <unk> 8 million in the first quarter and they increased by half a million over the prior year.

Scott: In fact, the point 8 million of revenue in the quarter came exclusively from one and soft sale.

Scott: We do not expect one time license sales to continue at this level and I want to remind you that the point $8 million at first quarter license sales should.

Scott: It should not be modeled to repeat in upcoming quarters.

Scott: Additionally, our professional service revenues declined by <unk> 4 million or 13%.

Scott Alexander Roberts: I'm calling this to your attention here because one-time license revenues were approximately $0.8 million in the first quarter, and they increased by half a million over the prior year. In fact, the $0.8 million of revenue in the quarter came exclusively from one Ansoff sale. We do not expect one-time license sales to continue at this level, and I want to remind you that the $0.8 million of first quarter license sales should not be modeled to repeat in the upcoming quarter.

Scott: Last quarter I discussed two products that are expansion experiencing declines in revenues.

Scott: A quick update on this.

Scott: The first our renewals of the ansell scheduling products and the second is our quality manager solution.

Scott: During the first quarter. These products collectively declined by <unk> 6 million or 13%.

Scott: On the positive side, our initiative to sell directly to professionals through our commerce channels.

Scott: Delivered over half a million of revenue in the quarter.

Scott Alexander Roberts: Additionally, our professional service revenues declined by 0.4 million, or 13%. In the last quarter, I discussed two products that are experiencing declines in revenues, so I want to give a quick update on those. The first is renewals of the ANSOF scheduling products, and the second is our quality manager solution.

Scott: Our remaining performance obligations were $514 million as of the ended the quarter compared to 504 million for the same period of last year and.

Scott: We expect approximately 44% of the revenue backlog to be converted over the next 12 months.

Scott: Gross margin was 66, 2% compared to 65, 4% last year.

Scott Alexander Roberts: During the first quarter, these products collectively declined by 0.6 million, or 13%. On the positive side, our initiative to sell directly to professionals through our commerce channel delivered over half a million dollars in revenue in the quarter. Our remaining performance obligations were $514 million as of the end of the quarter, compared to $504 million for the same period of last year, and we expect approximately 44% of the revenue backlog to be converted over the next 12 months. Gross margin was 66.2%, compared to 65.4% last year. This improvement is primarily due to the growth in revenues. And from a cost perspective, our staffing costs were down due to last year's reorganization efforts.

Scott: This improvement is primarily due to the growth in revenues.

Scott: And from a cost perspective, our staffing costs were down due to last year's reorganization efforts.

Scott: While royalties hosting and software grew over the prior year and more than offset the labor cost reductions.

Scott: As for operating expenses, we were able to maintain operating expenses, excluding cost of revenues, so a 1% increase.

Scott: And most of this increase year over year was from depreciation and amortization, which was up 4%.

Scott: Product development expenses were up 3%.

Scott: Our G&A and sales and marketing expenses were down, 6% and less than 1% respectively.

Scott: Adjusted EBITDA was $17 1 million, which was up 24% and.

Scott Alexander Roberts: While royalties, hosting, and software grew over the prior year and more than offset the labor cost reduction, as for operating expenses, we were able to maintain operating expenses, excluding cost of revenues, at a 1% increase. And most of this increase, year over year, was from depreciation and amortization, which was up four percent, and product development expenses were up three percent. However, our G&A and sales and marketing expenses were down 6% and less than 1%, respectively.

Scott: And adjusted EBITDA margin improved to 23, 4% compared to 19, 9% last year.

Scott: As a reminder, last year's adjusted EBITDA was negatively impacted by.

Scott: $1 million of severance charges associated with the reorganization and our single platform strategy.

Scott: Now, let's go over the balance sheet metrics, we ended the quarter with cash and investment balances $83 7 million.

Scott: Compared to $71 1 million last quarter.

Scott: During the quarter, we deployed $7 8 million for capital expenditures and paid $8 million to shareholders through our dividend program.

Scott Alexander Roberts: Adjusted EBITDA was $17.1 million, which was up 24%, and the adjusted EBITDA margin improved to 23.4% compared to 19.9% last year. As a reminder, last year's adjusted EBITDA was negatively impacted by $1 million of severance charges associated with the reorganization under our Single Platform Strategy. Now, let's go over the balance sheet. We ended the quarter with cash and investment balances of $83.7 million, compared to $71.1 million last quarter. During the quarter, we deployed $7.8 million for capital expenditures and paid $0.8 million to shareholders through our dividend program. For receivables management, overall, it was a strong quarter of collections, which led to a day sales outstanding of 46 days compared to 51 days last year. DSO has improved, and bad debt charges were not material.

Scott: For receivables management overall, it was a strong quarter of collections. The slab the days sales outstanding of 46 days compared to 51 days last year.

Scott: DSO has improved bad debt charges were not material and generally speaking the payment timeliness from our customer base remains fairly stable.

Scott: Now switching to cash flows our cash flows from operations were up slightly over the prior year.

Scott: Coming in at $29 million and free cash flow has improved by $1 1 million or 9%.

Scott: With a strong balance sheet containing over $83 million of cash and no debt.

Scott: We are in a good position to strategically deploy our available capital and a variety of ways, including M&A dividends and share repurchases.

Scott: Yesterday, our board of directors declared a quarterly cash dividend of 2.8 cents per share to be paid in may.

Scott: Share repurchase program expired on March 31, and there were no shares repurchased during the quarter.

Scott Alexander Roberts: And generally speaking, the payment timeliness from our customer base remains fairly stable. Now, switching to cash flows. Our cash flows from operations were up slightly over the prior year, coming in at $20.9 million, and free cash flows improved by $1.1 million or 9%, with a strong balance sheet containing over $83 million of cash and no debt. We are in a good position to strategically deploy our available capital in a variety of ways, including M&A, dividends, and share repurchase.

Scott: For this program, we repurchased $8 9 million out of the $10 million authorization.

Scott: Now as for guidance, we are reaffirming the financial expectations that were previously announced in February.

We expect consolidated revenues to range between 292 and $296 million.

Scott: We expect adjusted EBITDA to range between 64, 5% and $67 5 million and for capital expenditures to range between 28 and $30 million.

Scott: This guidance does not include assumptions for any acquisitions that we may complete during the year.

Scott: Now that wraps up my comments for this quarters call. Thanks for your time this morning, and I'll now turn the call back over to Bobby.

Scott Alexander Roberts: Yesterday, our Board of Directors declared a quarterly cash dividend of 2.8 cents per share to be paid in May. Our share repurchase program expired on March 31st, and there were no shares repurchased during the quarter. For this program, we repurchased $8.9 million out of the $10 million dollar authorization. Now, as for guidance, we are reaffirming the financial expectations that were previously announced in February. We expect consolidated revenues to range between $292 and $296 million. We expect Adjusted EBITDA to range between $64.5 and $67.5 million, and for capital expenditures to range between $28 and $30 million. This guidance does not include a list

Robert A. Frist: Thank you Scott I'm going to highlight a few of the areas, where we saw some success.

Robert A. Frist: Each of our three primary application suites and talk a little bit about some advances in our core pump technology, we call eight stream as well. So our helps stream learning center is the application is kind of a flagship product of our learning application set.

Robert A. Frist: And it continues to be strong in the market, but importantly, when the learnings.

Robert A. Frist: Morning Center customers are up for renewal, we frequently see customers purchase multiple new solutions, along with it when they renewed.

Robert A. Frist: This is kind of an example of expanding wallet share as kind of a way to think about that in one of our academic medical center customers use their renewal of the eight health stream learning center as an opportunity to evaluate how stream might help them serve their entire clinical workforce and this may be an example of the tailwind I mentioned earlier the customer already purchased very.

Robert A. Frist: As health stream solutions for different subsets of their population.

Robert A. Frist: Thank you, Scotty. I'm going to highlight a few of the areas where we saw some success in each of our three primary application suites and talk a little bit about some advances in our core pipeline technology, which we call HStream, as well. So our HealthStream Learning Center is the application. It's kind of the flagship product of our learning application set, and it continues to be strong in the market. But importantly, when HealthStream Learning Center customers are up for renewal, we frequently see customers purchase multiple new solutions along with it when they renew.

It came time to renew they concluded that by.

Robert A. Frist: Pairing that with a renewal with a purchase of <unk> competency suite and that would benefit the entire clinical workforce, adding on the competency suite to the learning center. The comp C suite is a comprehensive and cohesive bundle of applications and content used to develop the clinical staff and.

Robert A. Frist: This case, they added that kind of the entire bundle the customer also added our nurse residency program.

Robert A. Frist: On board newly graduated nurses, which is kind of an important kind of continuum of service from the some of the work we're doing now in nursing schools and so we saw them add the nurse residency program to the account as well. So the net result was a.

Robert A. Frist: And this is kind of an example of expanding wallet shares, a way to think about that. And one of our academic medical center customers used their renewal of the HealthStream Learning Center as an opportunity to evaluate how HealthStream might help them serve their entire clinical workforce. And this may be an example of the tailwind I mentioned earlier. The customer had already purchased various HealthStream solutions for different subsets of their population.

Robert A. Frist: The recurring revenue for that customer grew by 31%.

Robert A. Frist: Approximately $100000 in the first quarter, making us a good example of expanding wallet share and kind of cross selling products. In this case, adding on clinical coffee bundles and the nurse residency program upon renewal of their base learning Center contract.

Robert A. Frist: Our SaaS scheduling solution shifting gears now known as shift Wizard is a best in class solution of its kind and we think it will only become more valuable to customers as it begins to integrate with other applicants through our <unk> technology platform and the first quarter revenues from ship lizard grew 26%.

Robert A. Frist: And when it came time to renew, they concluded that pairing that with the renewal of the HealthStream competency suite would benefit their entire clinical workforce, adding the competency suite to the learning center. The competency suite is a comprehensive and cohesive bundle of applications and content used to develop the clinical staff. And in this case, they added that kind of that entire bundle.

Robert A. Frist: Over the prior year quarter as customers continued to report high assessed first action with the shift Wizard application.

Robert A. Frist: We contract with several new customers during the quarter, which were excited about welcomed Samaritan Medical Center Bay State Health and Hudson regional type of Snake.

Robert A. Frist: All new customers for ship Wizard, we're excited to add <unk> to our customer list.

Robert A. Frist: The customer also added our nurse residency program, which onboards newly graduated nurses, which is kind of an important kind of continuum of service from some of the work we're doing now in nursing schools. And so we saw them add the nurse residency program to the account as well. So the net result was the ARR, the recurring revenue for that customer, grew by 31% or approximately $100,000 in the first quarter, making this a good example of expanding wallet share and kind of cross-selling products.

Robert A. Frist: Our Credentialing solutions also enjoy discussed will start to the year, both in terms of competitive takeouts and conversions from our legacy solutions and Youre going to see an increased focus by our sales team on these conversions. This year. We think it's really time now as we tell our customers at the start of the year time to migrate so if you're on our older legacy platforms of Av.

Robert A. Frist: Helpline, and morrisey, you'll be hearing from Gulfstream that we think that credential stream is bright for you and it's time to get under the migration process.

Robert A. Frist: So this best in class solution for enrolling.

Robert A. Frist: In this case, adding clinical competency bundles and the nurse residency program upon renewal of their base learning center contract. We, with our SAS scheduling solution, Shifting Gears, now known as ShiftWizard, is a best-in-class solution of its kind, and we think it will only become more valuable to customers as it begins to integrate with other applications through our H-Stream technology platform.

Robert A. Frist: And privileging physicians is really.

Robert A. Frist: Just a market leader in a market leading position we believe.

Robert A. Frist: One thing you may not know about credential stream and one of its differentiating differentiator.

Robert A. Frist: As we believe its the first credentialing solution that really.

Robert A. Frist: Engages with the physician and the Credentialing process, we think of it as much more user centered software.

Robert A. Frist: In the first quarter, revenues from ShiftWizard grew 26% over the prior year's quarter as customers continue to report high customer satisfaction with the ShiftWizard application. We contracted several new customers during the quarter, which we're excited about. Welcome, Samaritan Medical Center, Bay State Health, and Hutchinson Regional Medical Center.

Robert A. Frist: And we think that's a good thing, we see increasing traffic by physicians logging in and taking control of the Credentialing process.

Robert A. Frist: Individually and professionally and so we're proud of it.

Robert A. Frist: Asian, Sweet as kind of physician centered in many ways and we think that's consistent with being the people platform of health care, we want to make that as painful process as possible for our physicians and we are laser focus on the net promoter score from physicians on that particular application. So you may not have known that one of our <unk>.

Robert A. Frist: All new customers for ShiftWizard. We're excited to add you to our customer list. Our credentialing solutions also enjoyed a successful start of the year, both in terms of competitive takeouts and conversions from our legacy solutions. And you're going to see an increased focus by our sales team on these conversions this year. We think it's really time now, as we tell our customers at the start of the year, time to migrate

Robert A. Frist: First is that our Credentialing system has a lot of tools that are easy to use by the physicians themselves to take control of the process.

Robert A. Frist: In the first quarter, we contracted 33000, new subscribers for credential stream, which is exciting and we have now exceeded over 1 million subscribers on the <unk> application suite, which is really exciting and we welcome new customers like Arkansas Blue Cross Blue Shield, which is really exciting because it's slightly different kind of customer profile than our <unk>.

Robert A. Frist: So if you're on our older legacy platforms of HealthLine and Morrissey, you'll be hearing from HealthStream that we think that CredentialStream is right for you and it's time to get under the migration process. So, this best-in-class solution for enrolling and privileging physicians is really just a market-leading position, we believe. One thing you may not know about credential streaming, one of its differentiating characteristics, is that we believe it's the first credentialing solution that really engages the physician in the credentialing process.

Robert A. Frist: Hospitals.

Robert A. Frist: Tufts Medical Center, Dartmouth Health and Wilson Regional Health care, all added the credential stream application suite.

Robert A. Frist: Their processes and we're excited to welcome them as customers in terms of our platform solutions. The momentum, we're seeing with regard to customers use and adoption of our API is paving the way for an exciting future for the company as a reminder, we launched the HD, Belgium different portal in the fourth quarter of 2022, so it's fairly new.

Robert A. Frist: We think of it as much more user-centered software, and we think that's a good thing. We see increasing numbers of physicians logging in and taking control of the credentialing process individually and professionally. And so we're proud that our patient suite is kind of physician-centered in many ways, and we think that's consistent with being the people platform of healthcare. We want to make that as painless a process as possible for physicians, and we laser-focus on the net promoter score from physicians on that particular application.

Robert A. Frist: I think of this developer portal as a window into the actual platform. So we've talk now about the three application suites, but the platform that we call eight stream is driven by a growing library of API is that we make available under license to our customers and some of them get access based on the fees they've already paid like if you use the upstream learnings.

Robert A. Frist: So you may not have known that one of our twists is that our credentialing system has a lot of tools that are easy to use by the physicians themselves to take control of the process. In the first quarter, we acquired 33,000 new subscribers for CredentialStream, which is an exciting new product, and we've now exceeded over one million subscribers on the CredentialStream application suite, which is really exciting. And we welcome new customers like Arkansas Blue Cross Blue Shield, which is really exciting because it's a slightly different kind of customer profile than our acute care hospitals.

Center, you could access to learning Api's, but over time, we also think these API and their capabilities and data sets that are in the platform.

Robert A. Frist: Themselves become monetize will asset. So we're excited about about that and the developer portal kind of as a sign of life for the sign that the platform strategy is working we saw a doubling of different measures of utilization of these platform level capabilities. So the portal provides access modern scalable secure architecture with a <unk>.

Robert A. Frist: Along with them, Tufts Medical Center, Dartmouth Health, and Littleton Regional Healthcare all added the CredentialStream application suite to their processes, and we're excited to welcome them as customers. In terms of our platform solutions, the momentum we're seeing with regard to customers' use and adoption of our APIs is paving the way for an exciting future for the company. As a reminder, we launched the HStream developer portal in the fourth quarter of 2022, so it's fairly new.

Robert A. Frist: Oh and collection of shared services platform level applications and API is to connect to.

Robert A. Frist: And among all of these different components.

Robert A. Frist: At the end of the first quarter 2024, 104 health care organizations are chosen to open an account on the developer portal, which is kind of how you get access to these API and collectively 237 of their developers have account level access to a growing library of API as are most of them currently and the learning area to then integral.

Robert A. Frist: Our technologies into their broader technology technology environment for example into their Intranets and other applications that they built.

Robert A. Frist: And, you know, I think of this developer portal as a window into the actual platform. So we've talked now about the three application suites, but the platform that we call HStream is driven by a growing library of APIs that we make available under license to our customers. And some of them get access based on the fees they've already paid, like if you use the HealthStream Learning Center, you get access to learning APIs. But over time, we also think these APIs and their capabilities and data sets that are in the platform will themselves become monetizable assets. So we're excited about that.

Robert A. Frist: For example in the first quarter.

Robert A. Frist: Stanford Health care.

Robert A. Frist: <unk> built an internal app that provides easy access to epic of course completions and so here's an example, using the developer portal API by Stanford Health, who have licensed the access to these API is because they are a customer of the broader H stream platform.

Robert A. Frist: And they are incorporating those into this new app that helps them deliver access to epic course completions. So it's really exciting.

Robert A. Frist: And the developer portal, kind of as a sign of life or a sign that the platform strategy is working, we saw a doubling of different measures of utilization of these platform-level capabilities. So the portal provides access to a modern, scalable, secure architecture with a growing collection of shared services, platform-level applications, and APIs to connect to and among all of these different components. At the end of the first quarter of 2024, 104 health care organizations chose to open an account on the developer portal, which is kind of how you get access to these APIs, and collectively, 237 of their developers have account-level access to a growing library of APIs, most of them currently in the learning area, to then integrate our technologies into their broader technology environment, for example, into their intranets and other applications they may build.

Robert A. Frist: And there are plenty of other exciting examples of new England life over there the app to conveniently retrieved course on assignment progress and Theyre also using API developer portal. So as these API is get more and more utilized we still get more threat it in to the broader.

Robert A. Frist: Platforms of our customers.

So we think that demonstrates the value of our platform strategies increasingly and hopefully provides more value and utility to our customers.

Robert A. Frist: And we think again as the platform expands there'll be more and more capabilities in the platform more reasons to use it in more interoperable and then in the long range vision of course monetizing these capabilities directly.

Robert A. Frist: It is also an exciting possibility.

Robert A. Frist: So I think as I as I think about concluding I'd say, if you're interested are profitable recurring revenue SaaS and an increasingly a paas platform as a service health care technology company that for 2024, and we expect to deliver steady growth kind of down the middle of the fairway of our guidance in fact.

Robert A. Frist: And we are determined to share some of our games directly showers in the form of a dividend.

Robert A. Frist: For example, in the first quarter, Stanford HealthCare built an internal app that provides easy access to Epic course completion. And so this is an example using the developer portal, the APIs by Stanford Health, who have licensed access to these APIs because they're a customer of the broader, you know, HStream platform, and they are incorporating those into this new app that helps them deliver access to Epic Course Completion. So it's really exciting, and there are plenty of other exciting examples, like a New England Life Care app to conveniently retrieve course and assignment progress, and they're also using the APIs in the developer portal.

Robert A. Frist: One, which we increased last quarter, maybe hell become as a company and a good stock for you if you're a new investor.

Robert A. Frist: If you're a shareholder we welcome you to participate in and know remind you that our annual shareholder meeting is scheduled to take place virtually.

Robert A. Frist: Today may 30th at two P M and notifications of the meeting and access to the proxy statement 10-K and showed a letter were sent out on April 15th So if you're a shareholder we encourage you to vote your shares and participate in the future of our company I'll now turn it back over to the operator to begin the questions.

Operator: Thank you Sir the question and answer session will begin at this time, if youre using a speakerphone. Please pick up the handset before pressing any numbers should you have a question. Please press star one on your push button telephone.

Robert A. Frist: So as these APIs get more and more utilized, we still get more threaded into the broader tech platforms of our customers. So we think that demonstrates the value of our platform strategies and hopefully provides more value and utility to our customers. And we think, again, as the platform expands, there'll be more and more capabilities in the platform, more reasons to use it, and it will be more interoperable. And then, in the long-range vision, of course, monetizing these capabilities directly is also an exciting possibility.

Speaker Change: If you wish to withdraw your question. Please press star one again.

Speaker Change: Questions will be taken in the order. They are received please standby for your first question.

Speaker Change: And our first question comes from Matt Hewitt with Craig Hallum. Your line is open.

Matthew Gregory Hewitt: Good morning, and congratulations on the strong start to the year.

Matthew Gregory Hewitt: Maybe the first question it appears that the employment situation at your customers how hospitals healthcare systems is improving since last year.

Robert A. Frist: So I think, you know, as I think about concluding, I'd say, if you're interested in a profitable recurring revenue, SAS, and increasingly a PASS, platform as a service healthcare technology company, that for 2024, we expect to deliver steady growth kind of down the middle of the fairway of our guidance, in fact, and we've determined to share some of our gains directly with shareholders in the form of a dividend Maybe HealthStream can come as a good company and a good stock for you if you're a new investor.

Matthew Gregory Hewitt: And as that occurs how are you seeing that change the purchasing decisions I.

Speaker Change: I think you spoke a little bit about how you are seeing.

Speaker Change: Your customers are paying more attention to their workforce today than maybe they did pre pandemic, but are you seeing them, even starting to implement.

Speaker Change: Scream applications and solutions right right at the beginning with the Onboarding process and are you seeing I guess, a greater wallet share with those customers starting on day, one versus upon renewals and downstream from that initial higher.

Robert A. Frist: If you're a shareholder, we welcome you to participate in and remind you that our annual shareholder meeting is scheduled to take place virtually on Thursday, May 30th at 2 p.m., and notifications of the meeting and access to the proxy statement, 10-K, and shareholder letter were sent out on April 15th. So, if you're a shareholder, we encourage you to vote your shares and participate in the future of our company. I'll now turn it back over to the operator to begin the questions.

Speaker Change: Alright to think through all of that there's a there's a lot of different trends purchasing and patterns I think.

Speaker Change: One of them is we've done a little better job of bundling some of our products into suites now that can result in a little higher order value and I mentioned that competency suite sale as an add on earlier unconscious suite is kind of a.

Speaker Change: An aggregation of two or three products that used to be sold individually and now they're viewed as more comprehensive tool set in.

Speaker Change: To develop the comps ease of staff and so we're learning to position things a little better way, that's more consistent with the tailwind I mentioned.

Operator: Thank you, sir. The question and answer session will begin at this time. If you're using a speakerphone, please pick up the handset before pressing any number. Should you have a question, please press star 1 1 on your push button telephone. If you wish to withdraw your question, please press star 1 1 again. Your questions will be taken in the order they are received. Please stand by for your first question, and our first question comes from Matt Hewitt with Craig Hallam. Your line is open.

Speaker Change: I definitely think the pandemic created a greater as I mentioned earlier greater awareness of the need to invest directly in your workforce and make their lives better and help them do their jobs better and skill them up for new up new job opportunities inside the organization. So I think there is an earlier and preparedness.

Speaker Change: The need for investing in workforce development you can't just outsource your workforce I think people are now willing to invest hopefully a little more in the workforce and make that more of a priority discussion in the C suite and then as far as moving upstream I think youre on the call we demonstrated our strategies for moving upstream or getting to.

Matthew Gregory Hewitt: Good morning and congratulations on the strong start to the year. Perhaps the first question: it appears that the employment situation at your customers' hospitals and healthcare systems has improved since last year. And as that occurs, how are you seeing that change, the purchasing decisions? I think you spoke a little bit about how you're seeing your customers paying more attention to their workforce today than maybe they did pre-pandemic. But are you seeing them even start to implement HealthStream applications and solutions right at the beginning with the onboarding process? And are you seeing, I guess, a greater wallet share with those customers starting on day one versus upon renewals and downstream from that initial hire?

Speaker Change: The workforce before they become workforce. So the nursing school a market, where just you know it's very early but we're excited about what that can mean for us as we can catch people earlier in their career and in fact, I think we did release a white paper a study a.

Speaker Change: A press release not too long ago.

Speaker Change: Yes.

Speaker Change: But I talked about.

Speaker Change: The workforces.

Increasing need for mobility and to retain to define and develop and retain the nurses and that they were willing to take jobs at the places where they had kind of in turn are done the rotations.

Speaker Change: And hospitals need more help and recruiting those those are.

Robert A. Frist: All right, to think through all that, there are a lot of different trends, purchasing patterns, and patterns. I think one of them is that we've done a little better job of bundling some of our products into suites now, and that can result in a little higher order value. And I mentioned that the competency suite sale as an add-on earlier. The competency suite is kind of an aggregation of two or three products that used to be sold individually. And now they're viewed as a more comprehensive tool set to develop the competencies of staff. And so, you know, we're learning to position things a little better in a way that's more consistent with the tailwinds I mentioned.

Speaker Change: Precept that students under because there's and making them fulltime employees and we think <unk> might be in a good position to help with that problem over time again, its really early in early research, but a lot of the students doing clinical rotations.

Speaker Change: Or is it hospitals, we think are great hiring candidates down the road.

Speaker Change: Other way, we're going upstream as you as you mentioned so yes in all those ways I, just I think a little better attitude.

Speaker Change: It's about investing in a little better bundling strategies for us.

Speaker Change: And our deal pipeline.

Speaker Change: That's really helpful. Thank you and then maybe a separate question regarding the opioid course, obviously.

Robert A. Frist: I definitely think the pandemic created a greater awareness, as I mentioned earlier, of the need to invest directly in your workforce and make their lives better and help them do their jobs better and skill them up for new job opportunities inside the organization. So I think there is an earlier awareness of the need for investing in workforce development. You can't just outsource your workforce.

Speaker Change: It's nice to have a tailwind like that a government mandated tailwind.

Speaker Change: How quickly are hospitals expected to implement.

Speaker Change: That type of of course, and what could that mean is that a driver for this year.

Speaker Change: Could it add 1% or 2% of revenues. This year, just trying to think of how to.

Speaker Change: Kind of factored that in.

Robert A. Frist: I think people are now willing to invest, hopefully, a little more in the workforce and make that more of a priority discussion in the C-suite. And then, as far as moving upstream, I think, yeah, on the call, we demonstrated our strategies for moving upstream are getting to the workforce before they become the workforce. So the nursing school market, we're just, you know, it's very early, but we're excited about what that can mean for us as we can catch people earlier in their careers.

Speaker Change: A couple of things here and you pointed out rightly. This is a kind of a unique opportunity. So we don't want to get I mean, it's exciting route it happened late in the quarter. So if we can find a way to keep that rate up and remember that's direct to professional sales. So we don't necessarily see any institutional participation of that course, or certainly not much but the direct.

Speaker Change: Two to get to.

Speaker Change: The physician is renewing license, where this is a requirement.

Speaker Change: Drove a half men in sales in the quarter, Yeah, I think if we can keep it up it's going to be a nice small contributor, but we also want to be careful and not over extrapolate.

Robert A. Frist: In fact, I think we did release a white paper, a study, a press release not too long ago that talked about the workforce's increasing need for mobility and to find and develop and retain nurses, and that they were willing to take jobs at the places where they had kind of interned or done their rotation. And hospitals need more help in recruiting those Precepted students who are becoming nurses and making them full-time employees, and we think HealthStream might be Again, it's really early and early research, but a lot of the students doing clinical rotations before the nurses at hospitals, we think, are great hiring candidates down the road.

Speaker Change: Our capabilities are selling direct individuals' is that.

Speaker Change: Just kind of a good good fortune that requirement and the curriculum, we already had and our ability to market. Now are these channels. Our e-commerce tools set us up to do well in the quarter, but it is a kind of a onetime mandate. So we don't again at some point. The next 24 months, everyone will have met the requirement or not.

Speaker Change: And it was a unique set of circumstances. So we don't want to over excited about about that.

Speaker Change: So we just want to that's why I keep saying the middle of the fairway middle of the fairway and we also had an anomalous bit of revenue and a one time license, which we don't obviously, we don't focus on selling.

Robert A. Frist: So another way we're going upstream, as you mentioned. So yes, in all those ways, I just think a little better attitude toward customers about investing and a little better bundling strategies for us in our deal pipeline.

The enterprise license like we mentioned that.

Speaker Change: On an source, but we did you know we're not going to a customer who wants to expand their use of and sauce, we're going to take that business and we are both Nicole we don't want to over engineer the forecast based on that well at.

Robert A. Frist: That's really helpful. Thank you. And then maybe a separate question regarding the opioid course. Obviously, you know, it's nice to have a tailwind like that, a government mandated tailwind.

Speaker Change: One time license, which I think Scott you called out at about.

Speaker Change: I think it's seven or $800000 and so we are in.

Speaker Change: Middle of the fairway middle of the Fairway is what we keep saying.

Scott: Got it alright, thank you very much.

Robert A. Frist: A couple of things here, and you pointed out rightly. This is kind of a unique opportunity, so we don't want to get it wrong. I mean, it's exciting, right? We did half a million in the quarter, so if we can find a way to keep that rate up, and remember, that's direct to professional sales. So, we don't necessarily see any institutional purchasing of that course, or certainly not much, but the direct opportunity to get to a physician who has a renewing license where this is a requirement drove half a million in sales in the quarter.

Scott: Thank you. Our next question comes from Jared <unk> with William Blair <unk> Company. Your line is open.

Scott: Yes. Good morning, Thanks, guys for taking my question. This is Jared on for Ryan for Ryan Daniels, Bobby you talked a little bit I think in the Credentialing segment about a win with a payer and then I'm curious I think that's relatively new.

Jared: So just be curious to hear a little bit more as to how we should think about the opportunity with payer customers and then specifically it sounded like that was a blues plan. So I'm wondering if you see an opportunity here to sort of further penetrated our completion plans nationwide.

Robert A. Frist: So, yeah, I think if we can keep it up, it's going to be a nice small contributor, but we also want to be careful not to overextrapolate our capabilities of selling direct to individuals. I think it's kind of a good fortune that the requirement and the curriculum we already had and our ability to market these channels now and our new e-commerce tools set us up to do well in the first quarter.

Speaker Change: Well, Okay. So first we're excited you picked up on that and yes, it's a new type of customer for US, we think that our credentials trained application and the way we built it might give unique benefits to that market segment over time, the way that the way that it's been engineered to work.

Robert A. Frist: But it is kind of a one-time mandate, so at some point in the next 24 months, everyone will have met the requirement or not. And it was a unique set of circumstances, so we don't want to overexcite about that. So, you know, we just want to, that's why I keep saying the middle of the fairway. You know, we had a, and we also had an anomaly.

Speaker Change: And create data mobility, sometimes health plans are owned by health systems and that that might create some interoperability benefits that we see potentially in the future. So yes. It's a it's an example of one.

Speaker Change: Kind of exciting new development, if youre in the sales team in that area and we do think we have a unique set of capabilities and the app that could be beneficial to health plan that said health plans are hard to sell to that's new for US. We got a lot of work cut out for us, but if you think in terms of two to three years I'd love to see that become a thing for us.

Robert A. Frist: Got it. All right. Thank you very much.

Jared Phillip Haase: Yeah, good morning. Thanks, guys, for taking the questions. This is Jared on behalf of Ryan, for Ryan Daniels.

Jared Phillip Haase: Bobby, you talked a little bit, I think, in the credentialing segment about a win with a payer. And I'm curious; I think that's relatively new. So I would be curious to hear a little bit more as to how we should think about the opportunity with payer customers. And then specifically, it sounded like that was a blues plan. So I'm wondering if you see an opportunity here to sort of further penetrate the network of blues plans nationwide. OK.

Speaker Change: Where we can have a presence in that segment as well so.

Speaker Change: Again.

Speaker Change: Hopefully the way we built the application in its ability in and potential data data mobility.

Speaker Change: We will provide some benefits to health plans, particularly when they're owned by by hospitals and health systems. So and yes that was a blues, but we don't claim to have any particular expertise in selling the blues, it's new for us again and required some new modeling new selling approach but.

Speaker Change: We'll see where it goes I think I think we got a shot at making that.

Robert A. Frist: So first, we're excited you picked up on that. And yes, it's a new type of customer for us. We think that our credential stream application and the way we built it might give unique benefits to that market segment over time, the way that it's been engineered to work and create data mobility. Sometimes, health plans are owned by health systems, and that might create some interoperability benefits that we see potentially in the future.

Speaker Change: An opportunity to repeat them more than once.

Speaker Change: Got it makes sense and look forward to hearing more over the coming years.

Speaker Change: Maybe another follow up just from the prepared remarks, Bobby I think you talked a little bit about.

Speaker Change: Enterprise purchasing collaborate collaborative and I know it sounds like it's not a material part of the business today, but I was hoping number one if you could maybe just contextualize sort of what portion of bookings or Ara growth comes through a collaborative purchasing today and maybe where do you expect that to get to over the next few years and then it also sounded like that's evolved.

Robert A. Frist: So yes, it's an example of one kind of exciting new development if you're on the sales team in that area. And we do think we have a unique set of capabilities in the app that could be beneficial to health plans. That said, health plans are hard to sell to. It's new for us.

Speaker Change: With some additional capability so would love to just hear a little bit more about that as well.

Speaker Change: Yes, so the collaborate purchasing process offer enterprises kind of benefits them. The most it's a way for them to organize and orchestrate their purchasing of certain of our offerings. So if they've got no dozen different things are looking at it as a really organized kind of 90 day way for them to see all the products in the bundle.

Robert A. Frist: We have a lot of work cut out for us, but if you think in terms of two or three years, I'd love to see that become a thing for us where we can have a presence in that segment as well. So again, hopefully, the way we built the application and its interoperability and potential data mobility will provide some benefits to health plans, particularly when they're owned by hospitals and health systems. And yes, that was a blues, but we don't claim to have any particular expertise in selling the blues.

Speaker Change: <unk> organized demand for it across multiple I'll say, if they have 30 or 40 hospitals, they want to figure out how much they need at each facility based on the C. N OS at those facilities. So it's an engagement model we've used for a long time it used to historically be very manual kind of led by people in our essentially our consultative sales process.

Speaker Change: But we formalize that and the digital tools that gives the organization visibility and how demand is growing in each as orders are kind of indicated on a product that kind of aggregate orders. So so at the enterprise level as you can see that at the end there is a discounting model that ellipses.

Jared Phillip Haase: It's new for us again and requires some new modeling, and new selling approach. But we'll see where it goes. I think we've got a shot at making that an opportunity that repeats more than once.

Jared Phillip Haase: Yeah, that makes sense. And I look forward to hearing more over the coming years. Maybe another follow-up just from the prepared remarks, Bobby, I think he talked a little bit about enterprise purchasing collaborations, and I know it sounds like it's not a material part of the business today. But I was hoping, number one, if you could maybe just contextualize sort of what portion of bookings or ARR growth comes through collaborative purchasing today and maybe where you expect that to get to over the next few years. And then it also sounded like that was evolving with some additional capabilities. So we'd love to just hear a little bit more about that as well.

Speaker Change: Get a discount based on the volume commitment levels as they grow so it almost gamify the purchasing process and its budget alive. So they can do the whole process aligned with their budget purchasing cycles. So.

Speaker Change: Classes again, not widely deployed but we've increasingly built digital tools to facilitate it. So for example, now the pricing models are connected directly to our price book capabilities.

Speaker Change: Source and our sales tool sets that we have so now the collaborative software will present as you commit to higher volumes in the purchase process you can see the discounts carrying automatically because of the way it's connected digitally to the price booking mechanism that we hold in salesforce. So.

Robert A. Frist: Yeah, so the collaborative purchasing process for enterprises kind of benefits them the most. It's a way for them to organize and orchestrate their purchasing of certain of our offerings. So if they've got, you know, a dozen different things they're looking at, it's a really organized kind of 90-day way for them to see all the products in the bundle, organize demand for them across multiple, say, if they have 30 or 40 hospitals, they want to figure out how much they need at each facility based on the CNOs at those facilities.

Speaker Change: I hope someday that we can extend these capabilities more broadly and they'll continue to get better and better and easier to use them and more budget aligned them more products in the cloud is but.

Speaker Change: It's been a part of our purchase process for years. It does several million in orders and aggregate orders, but a small portion of overall orders are achieved through the cloud.

Speaker Change: Yeah.

Speaker Change: But we love it because it's enterprise enterprise level purchasing on our growing and increasingly automated tool set powered by the <unk> platform and at the other end of that spectrum, you mentioned new capability.

Robert A. Frist: So it's an engagement model we've used for a long time, historically used to be very manual, kind of led by people, and is essentially our consultative sales process. But we formalized that into digital tools that give the organization visibility into how demand is growing. And each time, you know, as orders are kind of indicated on a product, it kind of aggregates orders.

Speaker Change: Metal, we believe that there are kind of untapped budgets at the departmental level because sometimes the orchestrate at at the enterprise level, but our commerce tools are also now be geared for it and we hope to launch this year the ability for kind of managers, let's say of a department budget of $3000 that I can spend on education for my Department.

Speaker Change: We typically those are areas, we didnt need.

Robert A. Frist: So, at the enterprise level, they can see that. And at the end, there's a discounting model that lets them get a discount based on the volume commitment levels as they grow. So it almost gamifies the purchasing process.

Speaker Change: Our sales team would go to enterprise level and so now we have these commerce tools that may allow kind of at the department level people to shop and buy things. So we'll see where that goes this year that currently kind of a zero the tools have been built with seen them.

Robert A. Frist: And it's budget aligned, so they can do the whole process aligned with their budget purchasing cycle. So, again, not widely deployed, but we've increasingly built digital tools to facilitate it. So, for example, now the pricing models are connected directly to our price book capabilities in Salesforce and our sales tool sets that we have. So now, when you commit to higher volumes in the purchase process, you can see the discounts occurring automatically because of the way it's connected digitally to the price booking mechanism that we hold in Salesforce.

Speaker Change: Demonstrated them, but we haven't really released them. So we're excited about that and then the <unk>.

Speaker Change: Far end of the spectrum is direct professional commerce, we talked about the DEA make course, we can now kind of opened little many learnings.

Speaker Change: Stores, if you will like a single course available to doctors.

Speaker Change: Sale checkout. This course to meet this federal rag, they click on it and they can buy that one course directly as a professional in our network wants to have an H dream idea on the platform. So we saw half a million in sales and that revenue was recognized immediately in the quarter, which is kind of fun now.

Robert A. Frist: So, you know, I hope someday that we can extend these capabilities more broadly, and they'll continue to get better and better and easier to use and more budget-aligned and more products in the cloud. But, you know, it's been a part of our purchase process for years. It does several million in orders and aggregate orders, but a small portion of overall orders are achieved through the collaborative. We love it because it's enterprise-level purchasing on an increasingly automated toolset powered by the H-Stream platform.

Speaker Change: Many of them are at a tiny tiny fraction of our overall company.

Speaker Change: Direct professional but I, just think I call. It money, while you sleep it might be fun to fill a lot of gas each quarter with individuals' buying to their individual development needs with their own credit card in and again, we didn't do a lot of that in our past. So it's just it's fun to think that millions of customers may ultimately not just be customers through the organization the BTB purchasing.

Speaker Change: But maybe someday a lot of mobile.

Speaker Change: Services directly and we do have an example that now there's DEA MA course so.

Robert A. Frist: And at the other end of that spectrum, you mentioned new capability. In the middle, we believe that there are kind of untapped budgets at the departmental level because sometimes they are orchestrated at the enterprise level. But our commerce tools are also now being geared for, and we hope to launch this year, the ability for this kind of manager. Let's say I have a department budget of $3,000 that I can spend on education for my department.

Speaker Change: Again, we don't want to over over engineer these things get too excited about they're all good promising signs for the future. The enterprise level purchasing we were not doing department level purchasing but we have new tools for it directs professional commerce is nascent.

Speaker Change: But kind of fun and exciting to point out and more than anything it's the interoperability of all these things that we're excited about.

Speaker Change: As the platform features and functions grow expand and add these kind of capabilities were talking about some of them, let us have better commerce some of them let customers move.

Speaker Change: Credential earned in one location.

Robert A. Frist: We typically, those are areas we didn't even sell. Our sales team would go to the enterprise level. And so now we have these commerce tools that may allow people at the department level to shop and buy things. So we'll see where that goes this year. That's currently kind of at zero.

Speaker Change: And another application follow people around individually with their data so.

Speaker Change: Emerging capabilities give us excitement for the future.

Speaker Change: Thank you for the question I guess I had such a long answer I scared off the Q&A queue, but we're still here if you have more questions.

Speaker Change: Thank you. Our next question comes from Richard close with Canaccord Genuity. Your line is open.

Robert A. Frist: The tools have been built. We have seen them and demonstrated them, but we haven't really released them yet. So we're excited about that.

Richard: Good morning, Thanks for the question.

Robert A. Frist: And then the far end of the spectrum is direct to professional commerce. We talked about the DEA-made course. We can now kind of open up little mini-lessons.

Richard: Congratulations maybe a follow up to Matts first question.

Robert A. Frist: It's fun to fill a lot of gaps each quarter with individuals buying for their individual development needs with their own credit cards. And again, we didn't do a lot of that in our past, so it's fun to think that millions of customers may ultimately not just be customers through the organization, the B2B purchasing, but maybe someday, a lot of them will buy services directly. And we do have an example of that now with this DEA-made course.

Richard: Good example, there with the 31% increase in ADR.

Richard: With that.

Richard: Academic Medical Center I'm, just curious when you look at your book of business group of SaaS offerings like what percentage of <unk>.

Richard: Customers come up to come up for renewal on an annual basis.

Richard: And then maybe put it in that 31% into perspective.

Robert A. Frist: So again, we don't want to over-engineer these things or get too excited about them. They're all good, promising signs for the future. The enterprise-level purchasing, we're not doing department-level purchasing, but we have new tools for it. Direct professional commerce is nascent, but kind of fun and exciting to point out. And more than anything, it's the interoperability of all these things that we're excited about as the platform features and functions grow, expand, and add the kind of capabilities we're talking about.

Richard: Are you seeing.

Richard: The acceleration I guess growth than that.

Richard: Percentage increase in <unk>.

Richard: Versus one to two years ago maybe.

Speaker Change: So your perspectives on that would be great.

Speaker Change: <unk>.

Speaker Change: I think overall growth rate would be much higher if that was more prevalent I think we obviously gave an exception here, which is one that bundle, but I know our sales team our account manager focused on this kind of account expansion, we do see.

Robert A. Frist: Some of them let us have better commerce; some of them let customers move a credential earned in one to a location in another application and follow people around individually with their data. So emerging capabilities give us excitement for the future. Thank you for the question. I guess I gave such a long answer that I scared off the Q&A queue, but we're still here if you have more questions.

Speaker Change: Given takes up they had four products up for renewal they renewed three of them maybe they use one last and they added two new ones. So that's where the account managers do we have about 60 account managers that focus on this cross sell upsell and there are puts and calls to the whole the whole process is against that four products for new three they say Oh, we didn't use that one as much.

Richard Collamer Close: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Your line is open.

Speaker Change: But our account managers, if they're really good they do what this group did here and they add two to three new products. The other thing that's shifting Richard So I would say.

Richard Collamer Close: Good morning. Thanks for the questions and congratulations.

Richard Collamer Close: Maybe a follow-up to Matt's first question. A good example there with the 31% increase in ARR with the Academic Medical Center. I'm just curious, when you look at your book of business for offerings, what percentage of customers come up for renewal on an annual basis?

Speaker Change: We give the best example, we don't want to over engineered it's not happening on every renewal yet.

Speaker Change: But it's of course, our model and our objective that's what we want to do.

Speaker Change: Bob.

Speaker Change: The other thing that's happening is and so.

Speaker Change: A bit.

Speaker Change: Is that we're doing a better job bundling things like if you take this.

Robert A. Frist: I think the overall growth rate would be much higher if that was more prevalent. You know, I think we obviously gave an exception here, which is one that bundles, but you know, our sales team, and our account manager focused on this kind of account expansion. We do see, you know, give and take. So if they had four products up for renewal, they renewed three of them, maybe they used one less, and they added two new ones. So that's what account managers do. We have about 60 account managers that focus on this cross-sell and upsell. And, you know, there are puts and calls in the whole process.

Speaker Change: As the coffee as examples so the initial order value can be a little greater and that's resulted in a little delay in Q1 pipeline, but more bigger deals in the pipeline than we've ever seen and so for example in the coffee.

Speaker Change: Is the there's a lot of content that we used to sell separately. The checklist tool is in there Jane is in there and so there's a way now that instead of a CMO, making in our upstream four times by four separate products. They can evaluate making a real investment in their workforce.

Speaker Change: Up to buy the suite.

Robert A. Frist: Again, if they have four products, renew three. They say, well, we didn't use that one as much, but our account managers, if they're really good, do what this group did here, and they add, you know, two or three new products. The other thing that's changing, Richard, and so I would say, you know, we give the best example. We don't want to over-engineer. It's not happening at every renewal yet, but it's, of course, our model and our objective.

Speaker Change: And so that's some repositioning the gigantic one and the effect is more bigger deals in the pipeline than we've seen but also if you want a little delay purchasing in some areas as we've made that shift.

Speaker Change: So I'm excited about kind of hopefully we're at Q2 takes us.

Speaker Change: Through this bundling strategy and hopefully that grows that a or that youre talking about but obviously overall with our overall growth rate were not seen every renewal come up and go grow by 31%.

Robert A. Frist: That's what we want to do. The other thing that's happening is, and so a bit... is that we're doing a better job bundling things. Like, if you take the Combi as an example, so that the initial order value can be a little greater.

Speaker Change: Case study that we want to emulate more than it is an example broad broad occurrence.

Speaker Change: Okay. That's helpful and then maybe on the.

Speaker Change: Excuse me declined in renewals and so if I understand it.

Robert A. Frist: And that's resulted in a little delay in the Q1 pipeline, but there are more bigger deals in the pipeline than we've ever seen. And so, for example, in the Combi suite, there is a lot of content that we used to sell separately. The checklist tool is in there. Jane is in there.

Speaker Change: Is there anything to be concerned with on the quality manager that seems to be something new just want to make sure.

Yes, the quality manager was from an acquisition years ago focused on skilled nursing market.

Robert A. Frist: And so there's a way now that instead of a CNO making an upstream four times to buy four separate products, they can evaluate making a real investment in their workforce to buy the suite. And so that's some repositioning that began in Q1. And the effect is bigger deals in the pipeline than we've seen, but also, in Q1, a little delay in purchasing in some areas as we've made that shift. So I'm excited about kind of hopefully where Q2 takes us through this bundling strategy.

Speaker Change: And that market is under a lot of stress financially and kind of reengineering and working on defining their space better I think so.

Speaker Change: <unk> purchasing there are tighter budgets.

Speaker Change: The quality manager again, not overall, a huge part of our business.

Speaker Change: But it's enough where we don't like to see declines and so we will fight to continue to position that product, but it's predominantly sold to the skilled nursing market. We're building a version that could be sold to hospitals, but that's more competitive space.

Robert A. Frist: And hopefully, that grows that ARR that you're talking about. But, you know, obviously, with our overall growth rate, we're not seeing every renewal come up and grow by 31%. That's a case study that we want to emulate more than it is an example of a broader...

Speaker Change: So I think just in general we have dozens of products. This is one of the smaller ones that may be facing kind of a market level challenge and.

Speaker Change: You want to kind of fight through but yes.

Speaker Change: We didn't noted as decline along with and sauce.

Richard Collamer Close: Okay, that's helpful. And then maybe on the Declining Renewals, ANSOF, I understand. Is there anything to be concerned with on the Quality Manager? That seems to be something new.

Speaker Change: Not a bigger bet.

Speaker Change: Also not not as big a risk.

Speaker Change: Okay. That's helpful.

Speaker Change: And then.

Robert A. Frist: Just want to make sure I understand that. Yeah, the Quality Manager was acquired years ago. It's focused on the skilled nursing market. And, you know, that market is under a lot of stress financially and kind of reengineering and working on defining their space better, I think. So slowed purchasing there, tighter budgets.

Speaker Change: Welcome your perspective as you just talked about the pipeline some bigger deals in there maybe a little bit longer to get across the finish line, but it doesn't sound like you're too concerned with that.

Speaker Change: I'm just curious.

Speaker Change: With respect to change healthcare and everything that's going on with that over the last several months have you seen any impact.

Robert A. Frist: The Quality Manager, again, isn't overall a huge part of our business, but it's enough where, you know, we don't like to see declines. And so we'll fight to continue to position that product, but it's predominantly sold to the skilled nursing market. We're building a version that could be sold to hospitals, but that's a more competitive space. So I think just in general, you know, we have dozens of products. This is one of the smaller ones that may be facing kind of a market challenge.

Speaker Change: Your book of business in terms of.

Speaker Change: Potential new business or renewals people pulling back just.

Speaker Change: Based on everything that's going on with the change healthcare.

Speaker Change: Curious.

Speaker Change: No I don't know Richard if I've been able to relate the change healthcare to any purchase patterns again, we saw a little lighter purchase patterns in Q1 than we wanted.

Robert A. Frist: And, you know, we'll do what we can to fight through it. But we did note it as a decline along with ANSOF. Not as big of a plan also, not as big of a risk. Okay, that's helpful. And then, you know, I'd welcome your perspectives. You just talked about the pipeline, some bigger deals in there, maybe a little bit longer to get across the finish line, but it doesn't sound like you're too concerned with that.

Speaker Change: Think that's due to the some of our re bundling strategies.

Speaker Change: Some some we had a great fourth quarter. So we pulled a bunch of deals in the fourth quarter of rebuilding for the second quarter. So.

Speaker Change: We've got some work to do there, but I haven't been able to relate that to.

Speaker Change: To any macro trends or something like the change healthcare.

Speaker Change: Kind of challenge that occurred for the whole industry.

Robert A. Frist: I'm just curious. With respect to changing health care and everything that's gone on with that over the last several months, have you seen any impact in, you know, your book of business in terms of, you know, potential new business or renewals, you know, people pulling back just, you know, based on everything that's going on with the changing health care? And just curious.

Speaker Change: You'll see a little bit more duress and like the skilled nursing market a few more acute care systems or are known in the public to be under financial stress.

Speaker Change: But also I think the tailwind. So that's the had the headwinds are kind of some macro conditions things for customers.

Richard Collamer Close: No, I don't know, Richard, if I've been able to relate the change in healthcare to any purchase patterns. Again, we saw a little lighter purchase pattern in Q1 than we wanted. I think that's due to some of our bundling strategies. We had a great fourth quarter, so we pulled a bunch of deals in the fourth quarter. We're rebuilding for the second quarter, so we've got some work to do there.

Speaker Change: <unk>.

Speaker Change: The.

Speaker Change: But the.

Speaker Change: The opposite in fact.

Speaker Change: Is the workforce trends that we're seeing the interest in the work force so the bundling and the bigger deals and the more bigger deals in the pipeline is exciting, but hopefully it doesn't take too much longer to close them, but.

Speaker Change: But I think that that is maybe a more direct result of the interest in both how we're bundling our products and.

Robert A. Frist: But I haven't been able to relate that to any macro trends or something like the change healthcare kind of challenge that occurred for the whole industry. You know, see a little bit more duress in the skilled nursing market. A few more acute care systems are known in the public to be under financial stress.

Speaker Change: The interest in investing in the workforce, which is a direct shift I think in their attitude about the value of retention and developing versus maybe pre COVID-19.

I think they got so tired of staffing nurses filling majority a lot of their positions.

Richard Collamer Close: But also, I think the tailwind, so that's the headwinds, are kind of some macro conditions for customers. The opposite, in fact, is the workforce trends that we're seeing, the interest in the workforce. So the bundling and the bigger deals and the more bigger deals in the pipeline is exciting, but hopefully, it won't take too much longer to close them. But I think that is maybe a more direct result of the interest in both how we're bundling our products and the interest in investing in the workforce, which is a direct shift, I think, in their attitude about the value of retention and development versus maybe pre-COVID.

Speaker Change: Want to develop their own employees now so I hope that plays out over the next few years is what we're hoping.

Speaker Change: That's helpful and good to hear.

Speaker Change: And then maybe Scott with respect to sales and marketing as we think about the second quarters through the rest of the year.

Scott: Is there anything to keep in mind in terms of.

Scott: Maybe seasonality or.

Scott: Or anything like that.

<unk>.

Scott: With respect to the remaining quarters, yes.

Scott: I think Richard and marketing in particular.

Scott: Instead of an expectation when we plan our budget too.

Richard Collamer Close: And I think they got so tired of having nurses filling a lot of their positions that they want to develop their own employees now. So I hope that plays out over the next few years. We're hoping

Scott: More in person events.

Scott: We actually had one in the first quarter that was our own customer conference for Prudential Credentialing customers called thrive that that was the name of that event.

Scott Alexander Roberts: Okay, that's helpful and good to hear. And then maybe Scotty, with respect to sales and marketing, as we think about the second quarter through the rest of the year, is there anything to keep in mind in terms of, um, you know, maybe seasonality or, you know, events or anything like that, um, um, with respect to the remaining quarters?

Scott: But we also plan to continue to do more events throughout the course of the year I think some of those tend to be.

Scott: Scattered across the quarters, but I don't know if theres, a particular quarter, we see a kind of an outsized presence necessarily or that would impact the P&L materially, but there should be some continuation of events.

Scott: And we expect.

Scott: Hiring.

Scott: You can expect us to continue to hire sales positions as needed so that should feather in across the year, but again, it's probably not going to <unk>.

Scott Alexander Roberts: Yeah, I think Richard and marketing, in particular, we set an expectation when we planned our budget to attend more in-person events. So we actually had one in the first quarter that was our own customer conference for our credentialing customers called Thrive. That was the name of that event.

Scott: Impact any particular quarter significantly.

Speaker Change: Okay. That's helpful. Thank you very much hey, Richard I'd like to just reinforce a couple of things the quarter was obviously strong but there were a couple of one time comparator that we just need to make sure. That's why we keep saying middle of the fairway, we don't want to over engineer. The result, the and sauce onetime license was a onetime benefit.

Scott Alexander Roberts: We also plan to continue to do more events throughout the course of the year. I think some of those tend to be scattered across the quarters, but I don't know if there's a particular quarter where we'd see kind of an outsized presence necessarily that would impact the P&L materially, but there should be some continuation of events that we expect, you know, hiring. Yeah, you can expect us to continue to hire sales positions as needed. So that should come in across the year. But again, probably not going to impact any particular quarter significantly.

Richard: And also on a year over year basis, the restructuring last year, which we did it was kind of also an expense.

Change that.

Richard: We got some benefit from but we didn't do another re org and so we.

Richard: We just want to we want to be excited about the quarter and the total result, we also want to be and we point out some of the things that could impact our future in a positive way, but right now we're sticking to our range and kind of pushing people to think about the middle of the range is what we think we are.

Richard Collamer Close: Okay, that's helpful. Thank you very much.

Robert A. Frist: Hey, Richard, I'd like to reinforce a couple of things. You know, the quarter was obviously strong, but there were a couple of one-time comparators that we just need to make sure that's what we keep saying, middle of the fairway, you know; we don't want to over-engineer the result. The ANSOS one-time license was a one-time benefit.

Richard: Okay, that's very hard at the full year for each Laura Yeah, just kind of a really strong exceptional first quarter, even from a free cash flow standpoint.

Richard: For example in other trend would be in the second quarter, our free cash flows are not as strong.

Richard: I think Scott can comment on maybe more but that's a quarter, where we pay out a lot more royalties.

Robert A. Frist: And also, on a year-over-year basis, the restructuring last year, which we did, was kind of an expense change that, you know, we got some benefit from, but we didn't do another reorg. And so, we just want to be excited about the quarter, and that's the total result. We also want to be, you know, and we point out some of the things that could impact our future in a positive way. But right now, you know, we're sticking to our range and kind of pushing people to think about the middle of the range. That's where we think we are.

Richard: Commissions are I think usually higher in Q2 and Q4 so maybe.

Richard: <unk> commented on that.

Scott: Except Q1 on free cash flow as well, yes, I think if you look back at last year in particular and you probably look at several years of trend you'll see that Q1, and Q3 are typically our strongest free cash flow quarters.

Scott: With the Q2 and Q4, turning to tail off and I think even last year's second quarter flat.

Scott Alexander Roberts: Okay, that's very helpful for the four years for each quarter. Yeah, just kind of a really strong, exceptional first quarter, even from a free cash flow standpoint. Typically, for example, another trend would be in the second quarter; our free cash flows are not as strong. I think Scott can comment on maybe more, but that's a quarter where we pay out a lot more royalties, and commissions are, I think, usually higher in Q2 and Q4.

Scott: Flat to negative and so.

Scott: Another consideration is just timing of.

Federal income tax payments state income tax payments tend to not be on a.

Scott: Quarterly recurring basis.

Scott: You would expect some of that to pop in the second quarter as well similar trend that we saw last year.

Speaker Change: Okay. Thank you very much I appreciate it.

Speaker Change: Okay.

Speaker Change: Thank you. Thank you.

Speaker Change: Our next question comes from Constantine David with citizens JMP. Your line is open.

Scott Alexander Roberts: So maybe comment on that. Yeah, except Q1 on free cash flow as well. Yeah, I think if you look back at last year, in particular, and probably look at several years of trend, you'll see that Q1 and Q3 are typically our strongest free cash flow quarters, with Q2 and Q4 tending to tail off, I think even last year, second quarter. Slat to negative.

Constantine Kyriakos Davides: Hi, good morning, I apologize if I missed this but reporting a consolidated <unk>.

Constantine Kyriakos Davides: Something you've talked about previously in terms of a new way for us to understand the business better.

Constantine Kyriakos Davides: With an expectation that we'd get something around mid year can you just provide us with your latest thoughts there.

Richard Collamer Close: And so, you know, another consideration is just the timing of federal income tax payments; state income tax payments tend to not be on a quarterly recurring basis. So you should expect some of that to pop up in the second quarter as well, a similar trend that we saw last year.

Constantine Kyriakos Davides: And if there might be other.

Constantine Kyriakos Davides: Other potential Kpis, you're also considering.

Speaker Change: Yeah, I mean, we're trying to chase down everything from return on invested capital and when we looked at it 30 ways.

Speaker Change: Talk about it.

Speaker Change: We're looking at internally, we use our arda account management level at the account level, but not the company level and so I figured out how to calculate reliably do it we would probably happen.

Richard Collamer Close: Okay, thank you very much. I appreciate it.

Constantine Kyriakos Davides: Thank you. Our next question comes from Constantine Davides with Citizens J&P. Your line is open.

Speaker Change: Amidst a metric internally for a few quarters and see how it plays out before we release it publicly so.

Constantine Kyriakos Davides: Hi, good morning. I apologize if I missed you.

Speaker Change: Probably now looking at Q3 at the earliest for new metrics.

Constantine Kyriakos Davides: I apologize if I missed this, but reporting a consolidated ARR is something you talked about previously, in terms of a new way for us to understand the business better, with an expectation that we'd get something around mid-year. Can you just provide us with your latest thoughts there?

Speaker Change: And so no costly nothing nothing new to report today, but we're working on it because we retired a metric that we're working on finding other new metrics. Scott do you want to comment anymore on the things we're looking at at least to give a hint about it but I do think we're several quarters away because again, we would have kind of more adopted internally run it for a few quarters and then figure out.

Robert A. Frist: And if there might be, you know, other potential KPIs you're also considering? Yeah, I mean, we're trying to chase down everything from return on invested capital. And when we looked at it, there were 30 ways to talk about it.

Scott: Talk about get our definition straight that we'd want to use.

Scott: Of course, we have our own internal definition of free cash flow and things that we monitor.

Scott: But nothing planned release right now Scott any more details I think.

Robert A. Frist: We're looking internally; we use ARR at the account management level at the account level, but not at the company level. And so figuring out how to calculate and reliably do it would probably have to, you know, commit to a metric internally for a few quarters and see how it plays out before we release it publicly. So, you know, we're probably now looking at Q3 at the earliest for new metrics. And so, Constantine, nothing new to report today, but we're working on it, you know, because we retired a metric, and we're working on finding other new metrics.

Scott: <unk> is one that we're obviously we've looked at we used internally as Bobby mentioned on that.

Scott: More on account by account basis.

Scott: Constantine.

Scott: Either retention metrics are considering.

Scott: Whether or not those are worth sharing publicly.

Scott: Yes.

Scott: Absolutely focused on those internally as well, but just trying to get to the point, where we want to we want to share those publicly.

Scott: So net retention in particular as a possible metric as well.

Scott: Great.

Speaker Change: That's helpful and then.

Speaker Change: Bobby the 104 organizations you called out hitting the portal I just wanted to be clear they are not paying at all for that kind of access. So I guess what is the expectation on maybe starting to monetize that and what do you need to do to.

Robert A. Frist: Scotty, you want to comment anymore on the things we're looking at, at least to give a hint about them? But I do think we're several quarters away, because, again, we would have kind of more adopted it internally, run it for a few quarters, and then figure out how to talk about it, get our definitions straight that we would want to use, you know. Of course, we have our own internal definition, free cash flow, and things that we monitor, but we have nothing planned to release right now. Scotty, any more details? Yeah, I think so.

Speaker Change: Commercialize that or support it.

Speaker Change: And.

Speaker Change: Sure.

Speaker Change: How is that sort of a later this year then is that a next year event, just wondering how to think about that opportunity.

Speaker Change: Yeah sure. So a couple of things first of all.

Speaker Change: Effectively they are paying for it and here's how when you buy an application like Gulfstream learning Center.

Robert A. Frist: Yeah, I think ARR is, you know, one that we've obviously looked at, you know, used internally, as Bobby mentioned on a more account by account basis, but Constantine, you know, some other retention metrics, we're considering, you know, whether or not those are worth sharing publicly.

Speaker Change: You also buy a subscription to H stream for learning midstream for learning as a license in your agreement that gives you access to some of the API that comes with you right and you do pay for that eight stream for learning subscription. So those two subscriptions together or what gives you the access to several of the API as a customer so most of those 100 for arc.

Constantine Kyriakos Davides: Great. That's very helpful.

Robert A. Frist: And then, Bobby, the 104 organizations you called out hitting the portal, I just want to be clear, they're not paying at all for that kind of access. So I guess, you know, what is the expectation on maybe starting to monetize that? And what do you need to do to, you know, commercialize that or support it? And how, you know, is that sort of a later this year event? Is it a next year event?

Speaker Change: They're utilizing the rights they've gained by paying for the H stream for learning license for example.

Speaker Change: That said, we have had some examples commercial success of individually lighting say some licensing some of the data sets and we have some proposals out to other customers to license the functionality of the platform directly.

Robert A. Frist: Just wondering how to think about that opportunity. Yeah, sure. So, a couple things.

Speaker Change: And I think we've given some examples but.

Speaker Change: The as we get more and more of our datasets like our privilege library or regulatory compliance.

Robert A. Frist: First of all, effectively, they are paying for it, and here's how. You know, when you buy an application like the HealthStream Learning Center, you also buy a subscription to HStream for Learning. HStream for Learning is a license in your agreement that gives you access to some of the APIs that comes with your right, and you do pay for that HStream for Learning subscription. So, those two subscriptions together are what give you access to several of the APIs as a customer.

Compliance library that are content libraries.

Speaker Change: Directly accessing them through the platform for a license fee for example, or we've also given example of looking up a license validity. We currently give our customers access to that to that function and your applications, but we have an example of a third party licensing that function to check a license.

Robert A. Frist: So, most of those 104 are customers that are utilizing the rights they've gained by paying for the HStream for Learning license, for example. That said, we have had some examples of commercial success of individually licensing some of the data sets, and we have some proposals out to other customers to license the functionality of the platform directly.

Speaker Change: <unk> on an API basis, only and we had a health system that didnt buy an application from us. They just paid for checking licenses and so we have some limited examples of directly monetizing the both the data and the functionality of the platform.

Robert A. Frist: and the other 200 new developers in the portal are there by the right right they gain by paying for their H-training.

Speaker Change: But mostly the 104 people and 200 developers in the portal are there by the right. They gained by paying for their H dream for learning license and they're utilizing this API is to thread our technology more into their technical environment.

Robert A. Frist: are there by the right they gain by paying for their H-Train for Learning license, and they're utilizing those APIs to thread our technology more into their technical environment, like their networks, for example. So it is paid for in a way.

Speaker Change: For example.

Speaker Change: So it is paid for and away in fact, it is part of that if you say, what's the value proposition of each train the platform customers say, Oh, I get access to the developer portal and I get to use some of these API.

Constantine Kyriakos Davides: In fact, it's part of the, if you say, what's the value proposition of HStream, the platform? Customers would say, oh, I get access to the developer portal, and I get to use some of these APIs. A lot of them are being engineered in a way where they could be sold to non-customers directly through APIs, and that will be the learning journey. And I hope to have examples of monetizing directly in that way in each category of data and APIs by the end. I got it. Thanks. If I could just squeeze one last one in here,

Speaker Change: A lot of them are being engineered in a way where they can be sold to non customers directly the API.

Speaker Change: And that will be the learning journey and I hope to have examples.

Speaker Change: Monetizing directly in that way in.

In each category data and API is by the end of the year.

Speaker Change: Got it thanks.

Speaker Change: If I could just squeeze one last one in here obviously.

Robert A. Frist: Obviously, you guys are in a really good cash position, no debt. In terms of just M&A opportunities, I'm just curious, you know, are you pretty committed, at least in the near term, to the three application suites you currently have? Or, you know, is there a possibility you could even start to sort of expand upon that prior to having the unified platform sort of fully realized? Yeah, I think Constantine, we are already focused on expanding the kind of the three areas, the three application suites, meaning within their own context.

Speaker Change: You guys are in a really good cash position no debt.

Speaker Change: In terms of just M&A opportunities I'm just curious.

Speaker Change: You're pretty committed at least in the near term to the three application suites, you currently have or.

Speaker Change: Is there a possibility you even start to sort of expand upon that.

Speaker Change: <unk> to <unk>.

Speaker Change: Having a unified platform sort of fully realized.

Speaker Change: Yes, I think cutting.

Speaker Change: Already focused on expanding the kind of these three areas the three application suites, meaning within their own context. So.

Robert A. Frist: So, if we find something that bolsters our learning capability, that would be something to look at, or credentialing, or scheduling, but not adding a fourth dimension. The only fourth dimension we have is the platform itself, which we call HStream.

If we find some that bolsters, our learning capability that would be something to look at our credentialing, our scheduling, but not adding a fourth dimension.

Speaker Change: The only fourth dimension, we have is the platform itself with all eight streams. So we want to get all four of those the three application suites and the H stream platform working together really well and I think this is the year, where we went we want all of these ways to demonstrate that interoperability. We just talked about one which is when you licensed the learning center and you get a license H stream for learning.

Robert A. Frist: So we want all four of those, the three application suites, and the HStream platform working together really well. And I think this is the year where we want all these ways to demonstrate that interoperability. We just talked about one, which is, you know, when you license the Learning Center and you get a licensed HStream for learning, you have access to the API.

Robert A. Frist: That's a good example of adding value to our network. And so our M&A strategy is adding to those areas that they already exist more than creating new areas of business. And focused on interoperability is kind of a key word for this year, and also focused on the migration of legacy customers. So if you're on a legacy credentialing application that we acquired, to say the credentialing, the modern application we've been building and selling now with over 750 accounts on it.

Speaker Change: You had access to the API. That's a good example of adding value to our network and so our M&A strategy is is adding to those areas that they already exist more than creating new areas of business.

Speaker Change: And focused on the interoperability is kind of a key word for this year and also focused on the migration of legacy customers. So if you're at a legacy credentialing application that required to say the credentials. The modern application, we've been building and selling now with over 750 accounts on it.

Robert A. Frist: So you'll see this year more of this in conversions from legacy to existing customers, which unfortunately don't have a lot of revenue growth. I mean, they do grow revenue a little bit when we convert, but what they really do is get people solidly on the new application suite. So that's the focus this year, and then our M&A strategy, which we specifically asked about, is to bolster existing areas. So incremental add-ons to existing areas rather than expanding the model into new areas.

Speaker Change: So you'll see this year is more of a is on.

Speaker Change: Conversions from legacy to ignite, which unfortunately don't have a lot of revenue growth I mean, they do grow revenue a little bit longer to convert but what they really do is get people solidly on the new application suite. So that's our focus this year.

Speaker Change: And then our M&A strategy, specifically asked about is to bolster existing areas so incremental.

Speaker Change: Add ons to existing areas more than expanding the model into new areas now forget it all work out in the next 18 months then maybe.

Robert A. Frist: Now, if we get it all working in the next, you know, 18 months, then maybe adding a fourth operational dimension to the network would be exciting. But right now, M&A would be focused on areas that strengthen the current lines of business.

Speaker Change: Fourth operational dimension to the to the network would be exciting, but right now M&A would be focused on areas that strengthen the current lines of business.

Vincent Alexander Colicchio: Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.

Robert A. Frist: Thanks, Bobby.

Robert A. Frist: Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.

Robert A. Frist: Well, we're working on that. I think you're right. I mean, generally, that product is great. We have some good examples of big systems that

Vincent Alexander Colicchio: Yes, probably in another strong quarter for ship Wizard.

Vincent Alexander Colicchio: <unk> added a few new clients curious if they were mostly I would assume that most of the mid market clients and if thats correct. When may you be prepared to move.

Vincent Alexander Colicchio: Move up to larger enterprise clients.

Vincent Alexander Colicchio: And one last one, anything in the competitive market worth calling out? Well, uh... Thank you. You know, I don't.

Vincent Alexander Colicchio: Well, we're working on that I think youre right I mean generally that product is great. We have some good examples of big systems that are using it but I.

Robert A. Frist: You know, no, I don't think anything particularly special. I mean, everyone, everyone, including HealthStream, is working on their AI strategies. So we see different approaches to that, you know, with our Jane technology continuing to evolve. We're excited. We have some things in the pipeline to refresh our learning technology stack, and we're really excited about the second half of this year. So we're working on our competitive positioning there and our thought leadership and our application leadership in that area, which, you know, hasn't been revitalized in quite some time.

Vincent Alexander Colicchio: I think.

Vincent Alexander Colicchio: In general the successes are coming in the mid market right now and that's the focus of our sales team so well.

Vincent Alexander Colicchio: We continue to try to expand its capability and make it more relevant.

Vincent Alexander Colicchio: We have ambition to integrate our properties like nurse grabbed the app too.

Vincent Alexander Colicchio: The shifts Wizard application, which would extend its functionality.

Vincent Alexander Colicchio: And so I think right now, though for the next six.

Vincent Alexander Colicchio: Six to nine months, maybe even for the full year. The remainder of this year, our focus is that middle market.

Vincent Alexander Colicchio: And.

Speaker Change: One last one.

Speaker Change: The competitive market worth calling out.

Speaker Change: Since last call.

Speaker Change: Uh huh.

Speaker Change: No I don't think anything, particularly I mean, everyone, everyone, including house team is working on their AI strategies.

Speaker Change: So we see different approaches to that with our <unk> technology continues to evolve we're excited.

Robert A. Frist: So that's a little sneak peak that we've got some innovation coming in our learning business that we hope to catch the competitors with. So, in general, it is a very competitive landscape with lots of fledgling startups and big established companies as well, and we're just fighting for our piece of that, or more than our fair share. Thanks, Bobby. Thank you. Our next question comes from Stephanie Davis with Barclays. Your line is open.

Speaker Change: We have some things in the pipeline to refresh our learning technology stack and we're really excited about the second half of this year. So.

Speaker Change: We're working on our competitive positioning there and our thought leadership and our application leadership in that area, which hasnt been revitalized in quite some time, so that's a little sneak peek that.

Speaker Change: Minuteman coming in our learning business that we hope to catch the competitors with so.

Speaker Change: But in general it is a.

Speaker Change: Very competitive landscape.

Speaker Change: Lots of what had startups and big established companies as well and we're just fighting for a piece of that or more than our fair share.

Stephanie July Davis: Yeah, I think we determined early this year, like in January, that we need to focus on some areas like where we are. We have a legacy platform, so credentialing and scheduling, and both have legacy platforms, so the message to our existing customers is twofold. We're not sunsetting. So that word, we need to tone it down a little bit because we're still, of course, supporting and releasing enhancements to some of those legacy platforms and communicating frequently with customers about how to better optimize their use. So you did see, for example, the expansion of Ansos. We actually had two big wins at Ansos.

Speaker Change: Thanks, Bobby.

Speaker Change: Thank you. Our next question comes from Stephanie Davis with Barclays. Your line is open.

Stephanie Davis: Hey, guys. Thank you for taking my question I'll try to keep it brief.

Stephanie Davis: On the call.

Stephanie Davis: But you've been talking a little bit more about sunsetting activity and being more proactive on that in the prepared remarks.

Stephanie Davis: Is there first any way tease out what your growth look like excluding the sunset impact and get a cleaner number for your go forward and as a follow up could you talk to us more about maybe the pushback you're getting in any sort of update on the timeline.

Speaker Change: Yes, I think.

Speaker Change: I think we've determined early this year like in January that we need to focus in some areas like where we are.

Speaker Change: Yes.

Speaker Change: Legacy form so credentialing and scheduling and both have legacy platforms that message to our existing customers is twofold.

Robert A. Frist: We were able to convert another big contract into a more healthy financial model, and then we had the big Ansos license expansion. So we are supporting those. We're just not actively outselling.

Speaker Change: We're not sunsetting, so that word we need to tone, a little bit because.

Speaker Change: We're still of course, supporting and releasing enhancements to some of those legacy platforms and communicating frequently customers how to better optimize their use. So you did see for example expansion of an sauce.

Robert A. Frist: If a customer wants to expand, we'll sell, but we're not sunsetting. We are changing the tone of our message, though. Beginning in January at that conference that we mentioned earlier, we said now is the year to migrate to the SaaS application stacks.

Speaker Change: We actually had two big wins in and sauce, we're able to convert another big contract.

Speaker Change: Into more healthy model financially.

Speaker Change: And then we had the big and sausage license expansion. So we are supporting those were just not actively out selling the customer wants to expand useful sell but we're not sunsetting. We are changing the tone of our message, though beginning in January at that conference that we mentioned earlier, we said now is the year to migrate to the SaaS application stacks.

Robert A. Frist: And so that's different than staying comfortable where you are and waiting for migration. Now we're actively promoting to customers that now is the year to migrate. And so the tone of the organization, the tone of HealthStream, is that. And as I mentioned, that does tamp down growth a little bit because you're kind of switching from one dollar set to another. There is a bit of an uplift in annual recurring revenue when you go to the SaaS application from the maintenance models that they're under.

Speaker Change: So that's different than stay comfortable where you are in wait for migration now we're actively promoting.

Two customers that now is the year to migrate and so the tone of the sales organization and the tone of health stream is data and as I mentioned that does tamped down growth a little bit because youre kind of switching from $1 set to another there is a bit of an uplift in the annual recurring revenue. When you got this application from the maintenance models that they are.

Robert A. Frist: So it's positive, but it's not nearly the same as, say, acquiring a wholly new customer. So, yeah, that does have a little bit of a dampening effect to have that as a focus, a bit of a dampening effect on the top line.

Speaker Change: Under so it's positive, but it's not nearly the same in say acquiring a wholly new customer.

Speaker Change: So yes that does have a little bit of a dampening effect on to have that as a focus as a bit of a dampening effect on the topline, but look it's the healthiest thing to do and the right thing to do is to just to begin a more aggressive migration strategy from the older.

Robert A. Frist: But look, it's the healthiest thing to do and the right thing to do is to begin a more aggressive migration strategy from the older. And so, but we're not doing that by actually sunsetting. We're doing that by encouraging and stating and giving examples of where migrations are successful. We're just better at it. We're better at the tools. So you talk about barriers.

Speaker Change: So, but we're not doing that by actually sunsetting, we're doing that by encouraging and stating in and giving examples of where migrations are successful. We're just better at it we're better at the tools. So you're talking about barriers, we have better data migration tool sets, we have better methodologies.

Robert A. Frist: We have better data migration tool sets. We have better methodologies, We've learned a lot from the early migrations, and overall, our teams are doing a great job. And so we're communicating. We have more confidence we could handle more migrations now, too, because of all that I just mentioned. So great question. It does, it does, it makes top-line growth look a little less stellar to make that a focus, but it is absolutely the right thing to do for a 24-month horizon. And again, we're better equipped technologically to facilitate those, and the marketing message has changed. So thanks for the question and I hope I've got the answer.

Aren't a lot from the early early migrations and overall our teams are doing a great job and so we're communicating we have more confidence we could handle more migrations now too because of all that I just mentioned so.

Speaker Change: Great question. It does it does it makes topline growth look a little less stellar to make that a focus but it is absolutely the right thing to do for our 24 month horizon and and again, we're better equipped technologically to facilitate those and the marketing message has changed so thanks for the question and hope Hope I've got to answer.

Robert A. Frist: Thank you. There are no further questions at this time. I'd like to turn the call back over to Bobby Frist for any closing remarks.

Speaker Change: Thank you.

Speaker Change: Thank you there are no further questions at this time I'd like to turn the call back over to Bobby Frist for any closing remarks.

Robert A. Frist: Thank you, everyone, and congratulations to our employees. A lot of hard work went on to make all this happen. Look forward to reporting the next earnings call to everyone, and we'll see you on the next call. Thanks, everybody.

Thank you everyone and congrats to our employees a lot of hard work going on to make all this happen and look forward to reporting the next earnings call to everyone and we will see on the next call. Thanks, everybody.

Operator: Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.

Speaker Change: Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.

Speaker Change: Yeah.

Speaker Change: [music].