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   Biotech / MedicalHealthStream (HSTM)


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From: JakeStraw10/2/2006 9:54:43 AM
   of 21
 
HealthStream Signs New Four-Year Agreement with HCA
biz.yahoo.com
Monday October 2, 9:25 am ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning solutions for the healthcare industry, today announced that HCA Information Technology & Services, Inc., a subsidiary of HCA, Inc., has entered into a new four-year agreement with HealthStream for enterprise-wide learning services. The agreement becomes effective October 1, 2006, and includes an optional one-year renewal following the expiration of the initial four-year term.

HealthStream reiterates its 2006 financial expectations that include revenue growth of 13 to 15 percent over 2005 and net income that is comparable to 2005.

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From: JakeStraw10/11/2006 12:07:25 PM
   of 21
 
HealthStream Selected to Provide Enterprise Learning Solutions for Resurrection Health Care
biz.yahoo.com

Wednesday October 11, 10:23 am ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning solutions for the healthcare industry, today announced that it has been selected by Chicago-based Resurrection Health Care to deliver online training through HealthStream's Internet-based learning system to their 15,000+ employees over a four-year period. The HealthStream Learning Center(TM), HealthStream's online learning platform, is expected to be rolled out during the fourth quarter of this year to Resurrection Health's eight hospitals. HealthStream's Authoring Center(TM) will also be provided, empowering Resurrection Health Care managers to author online courses.

Recognized as a premier health care system in the Chicago-area, Resurrection Health Care's launch of online learning further supports their commitment to educational excellence and professional development for their personnel. Along with the HealthStream Learning Center(TM), Resurrection Health Care also purchased an AccessPass(TM) package--which enables the distribution of additional clinical and professional courseware to their hospital facilities as they are needed over the four-year agreement.

"Our rigorous evaluation required us to choose a learning partner that has an extensive knowledge of the hospital environment, the professional training needs of our employees, and the breadth of experience to provide system-wide service. Without question, HealthStream was our first choice," commented George Chessum, senior vice president and chief information officer, Resurrection Health Care.

Resurrection Health Care has an expansive and long-standing commitment to education. The Resurrection Learning Institute offers a basic Certified Nurse Assistant Program, a variety of residency programs, a wide range of continuing education offerings, and an active community education service. In addition, the West Suburban College of Nursing and the Saint Francis School of Radiography are educational institutions within Resurrection Health Care.

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From: JakeStraw10/25/2006 8:53:43 AM
   of 21
 
HealthStream Announces Third Quarter 2006 Results
biz.yahoo.com
Tuesday October 24, 4:30 pm ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM):

Highlights:

Revenues of $7.5 million in the third quarter of 2006, up $650,000, or 9.5%, over the third quarter of 2005
Net income of $474,000 in the third quarter of 2006, including $166,000 of share-based compensation expense, compared to $554,000 in the third quarter of 2005
EBITDA of $1.2 million in the third quarter of 2006, compared to $1.1 million in the third quarter of 2005
1,334,000 healthcare professional subscribers fully implemented on our Internet-based learning network at September 30, 2006
New four-year agreement signed with HCA, as of October 1, 2006
Gerard M. Hayden, Jr. and Dale W. Polley join board of directors

HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning solutions for the healthcare industry, announced today results for the third quarter ended September 30, 2006.

Financial Results:

Third Quarter 2006 Compared to Third Quarter 2005

Revenues for the third quarter of 2006 increased by $650,000, or 9.5 percent, to $7.5 million, compared to $6.8 million for the third quarter of 2005. Revenues from our hospital-based business increased $894,000 compared to the prior year quarter, including growth of $636,000 from our HealthStream Learning Center(TM) (HLC) subscriber base and $341,000 related to growth from our survey and research products. Revenues from our survey and research products increased by 26 percent when compared to the third quarter of 2005 due to growth in sales to existing customers as well as growth in new customer accounts. Revenues from our pharmaceutical and medical device business declined $244,000 compared to the prior year quarter, primarily associated with a decline in live events of $354,000, which was offset by modest revenue increases in other products.

The portion of revenues derived from our Internet-based subscription products, which includes revenues from the HLC, courseware subscriptions, online training services (RepDirect(TM)), and HospitalDirect(TM), increased by $627,000, or 15 percent, over the prior year quarter. The percentage of total revenues from Internet-based subscription products improved to approximately 64 percent for the third quarter of 2006 from 60 percent for the third quarter of 2005, primarily due to the growth in these products.

Gross margins, which we define as revenues less cost of revenues (excluding depreciation and amortization) divided by revenues, improved to 68 percent from 65 percent for the third quarter of 2005. This change resulted from the change in revenue mix and improved margins associated with growth in our Internet-based subscription products and survey and research products, as mentioned above.

Net income for the third quarter of 2006 was $474,000, or $0.02 per share (basic and diluted), compared to $554,000, or $0.03 per share (basic) and $0.02 per share (diluted), for the third quarter of 2005. Consistent with our adoption of SFAS 123R beginning on January 1, 2006, share-based compensation expense was $166,000 during the third quarter of 2006 compared to $0 for the third quarter of 2005. Share-based compensation expense is allocated to all operating categories consistent with the classification of related personnel. We also experienced increases in sales and marketing expenses, other general and administrative expenses, and product development expenses, all primarily due to additional personnel. Amortization of capitalized content and feature enhancements also increased over the same quarter in the prior year. Interest income also improved over the same quarter in the prior year due to both higher cash and investment balances in 2006 and improved rates of return.

EBITDA (which we define as earnings before interest, taxes, share-based compensation, depreciation, and amortization) improved to $1.2 million for the third quarter of 2006, compared to $1.1 million for the third quarter of 2005. This improvement is consistent with the factors mentioned above.

Other Financial Indicators

At September 30, 2006, the Company had cash, investments, and related interest receivable of $13.3 million, compared to $13.4 million at June 30, 2006. The primary change in cash and investment balances resulted from capital expenditures and investments in new product development and feature enhancements totaling approximately $1.3 million during the third quarter of 2006, which was virtually offset by cash generated from operations. The Company also maintains full availability under the $7.0 million line of credit put in place during July 2006.

Days sales outstanding (DSO), which we calculate by dividing the accounts receivable balance (excluding unbilled and other receivables) by average daily revenues for the quarter, improved to 54 days for the third quarter of 2006 from approximately 57 days for the third quarter of 2005, primarily due to improvements in the collection of receivables for the hospital-based business.

Hospital-based Customer Channel (HCO) Update

Our learning solutions are helping healthcare organizations improve their required regulatory training, while also offering an opportunity to train their employees in multiple clinical areas. In addition, our products are designed to improve knowledge of medical devices, thereby improving patient safety and reducing organizational risks.

Subsequent to the close of the third quarter, we announced that HCA Information Technology & Services, Inc., a subsidiary of HCA, Inc., entered into a new four-year agreement with HealthStream for enterprise-wide learning services. The agreement became effective October 1, 2006, and includes an option for HCA to renew for one additional year following the expiration of the initial four-year term.

At September 30, 2006, approximately 1,334,000 healthcare professionals were fully implemented to use our Internet-based HealthStream Learning Center(TM) for training and education. This number is up from approximately 1,130,000 at September 30, 2005, an 18 percent increase. The total number of contracted subscribers at September 30, 2006 was approximately 1,418,000, up from 1,229,000 at September 30, 2005, a 15 percent increase. "Contracted subscribers" include both those already implemented (1,334,000) and those in the process of implementation (84,000). Revenue recognition commences when a contract is fully implemented.

Customers representing approximately 104 percent of full-time equivalents (FTEs) renewed in the third quarter of 2006, while our renewal rate based on the annual contract value was approximately 117 percent. Our renewal rates reflect the addition of subscribers, as well as increased pricing at renewal, compared to previously contracted amounts. The renewal rates for the third quarter of 2006 compare to an FTE renewal rate of 90 percent and an annual contract value renewal rate of 88 percent during the third quarter of 2005. Our third quarter renewal activity excludes our new four-year agreement with HCA, which became effective October 1, 2006.

Pharmaceutical and Medical Device Customer Channel (PMD) Update

HealthStream works with its pharmaceutical and medical device company customers to develop education initiatives that reach hospital-based healthcare professionals. Our innovative learning solutions are also used by these customers in their product launch plans and in support of their sales training efforts.

During the third quarter, several of our long-term existing customers contracted for additional products and services. A leading medical device company customer selected HealthStream to develop and produce a series of two live workshops for physicians. Similarly, another leading medical device company customer extended services procured from HealthStream with the purchase of a proctorship product training activity for physicians.

Additions to Board of Directors

We announced the addition of Gerard M. Hayden, Jr. and Dale W. Polley to the Company's Board of Directors in August and September, respectively. During the October board meeting, Mr. Hayden and Mr. Polley were appointed to our Audit Committee.

As an experienced leader of healthcare technology companies, Mr. Hayden brings broad industry experience in finance, mergers and acquisitions, and accounting to the Company's board. Currently an independent consultant, Mr. Hayden's prior experience includes serving as chief financial officer for such companies as Private Business, Inc., Covation, Meridian Occupational Healthcare Associates, Inc., ENVOY (now part of WebMD), Allied Clinical Laboratories, Inc., and others.

Mr. Polley has held several highly visible positions, including director for the Federal Reserve Bank of Atlanta, Nashville branch, from 1995 to 2001. Prior to his retirement, he served as president and vice chairman of the Board of Directors of First American Corporation and First American National Bank. Prior to joining First American in 1991, Mr. Polley served in various executive management positions for C&S/Sovran Financial Corporation, Sovran Financial Corporation, and Commerce Union Corporation--including chief financial officer.

Financial Expectations

Revenues for the fourth quarter of 2006 are expected to approximate $8.2 to $8.4 million, an increase of approximately $0.2 to $0.4 million over the fourth quarter of 2005, resulting from the overall growth in our hospital-based business, primarily from our HealthStream Learning Center subscriber base, and to a lesser extent from research and survey services and courseware subscriptions. Revenues for the fourth quarter of 2006 from our hospital-based channel are expected to increase compared to the third quarter of 2006 resulting from seasonal increases in our survey and research product revenues and, to a lesser degree, increases in courseware subscriptions. We expect revenues from our pharmaceutical and medical device channel to experience seasonal increases associated with live events during the fourth quarter of 2006 as compared to the third quarter of 2006, but are anticipated to be lower than the fourth quarter of 2005.

For the year-to-date period ended September 30, 2006, revenues from learning and survey products provided to HCA represented approximately 12 percent of our revenues, down from approximately 14 percent for the year ended December 31, 2005. We anticipate that our fourth quarter 2006 renewal rate based on annual contract value will range from 70 to 80 percent due to pricing under the new HCA agreement, while the FTE renewal rate will be positively impacted because 100 percent of the subscribers associated with the HCA account renewed.

We anticipate gross margins for the fourth quarter of 2006 will be moderately higher than the fourth quarter of 2005, but moderately lower than the third quarter of 2006 due to the changes in revenue mix. Product development and sales expenses in the fourth quarter of 2006 are expected to increase over both the same quarter in the prior year and the third quarter of 2006 as we launch our next generation platform and grow our sales team. Depreciation and amortization is also expected to increase during the fourth quarter resulting from amortization of capitalized feature enhancements and content rights. Net income for the fourth quarter of 2006 is expected to approximate $400,000 to $600,000, or $0.02 to $0.03 per basic share, a decline from the same quarter in the prior year due to investment in product development, sales and account management personnel, increased marketing spending, and share-based compensation.

We anticipate full-year 2006 revenue of approximately $31.4 to $31.6 million, an increase of approximately 15 percent over 2005. Net income is expected to approximate $1.8 to $2.0 million, or $0.08 to $0.09 per basic share, which is comparable to 2005, but includes an incremental $700,000 of share-based compensation expense during 2006.

Commenting on the third quarter, Robert A. Frist, Jr., chief executive officer, said, "With Gerry Hayden and Dale Polley, we made two outstanding additions to our board of directors that bring extensive business and financial expertise. We are excited to have them join HealthStream's board, and I look forward to their contributions in the coming months and years."

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From: JakeStraw6/28/2007 10:01:14 AM
   of 21
 
HealthStream's Learning Solutions Selected to Support Leading Catholic Healthcare System's Learning Strategy
biz.yahoo.com
Thursday June 28, 9:30 am ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning and research solutions for the healthcare industry, today announced that Catholic Health Initiatives (CHI), one of the largest health care organizations in the United States, has signed a three-year agreement for use of a learning management system (LMS); the LMS will be the HealthStream Learning Center(TM). A separate agreement was signed by CHI for professional implementation services of the HealthStream Learning Center(TM) for their initial 30,000 users.

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From: JakeStraw7/18/2007 10:04:54 AM
   of 21
 
HealthStream to Deliver Learning Solutions to Montefiore Medical Center
biz.yahoo.com
Wednesday July 18, 9:25 am ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning and research solutions for the healthcare industry, today announced that Montefiore Medical Center, the University Hospital & Academic Medical Center for the Albert Einstein College of Medicine, has signed a five-year agreement for use of HealthStream's learning management system (LMS), the HealthStream Learning Center(TM) for their 12,000+ employees. HealthStream's Authoring Center(TM) will also be provided, empowering Montefiore healthcare managers to author online courses.

According to their new agreement, the HealthStream Learning Center(TM) will be used by Montefiore's employees to meet regulatory training requirements as mandated by the Occupational Safety & Health Administration (OSHA) and The Joint Commission. With the convenience and accessibility of online learning, HealthStream's regulatory courses cover a wide range of topics, including Pain Management, An Overview of HIV, and Identifying and Assessing Possible Victims of Abuse or Neglec

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From: JakeStraw7/25/2007 9:54:24 AM
   of 21
 
HealthStream Announces Second Quarter 2007 Results
biz.yahoo.com
Tuesday July 24, 4:30 pm ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM):

Highlights:

* Revenues of $12.0 million in the second quarter of 2007, up 47% over the second quarter of 2006, including $3.7 million resulting from the acquisition of The Jackson Organization on March 12, 2007
* Net income of $425,000, or $0.02 per diluted share, in the second quarter of 2007, up from $289,000, or $0.01 per diluted share, in the second quarter of 2006
* Adjusted EBITDA of $1.9 million in the second quarter of 2007, compared to $1.0 million in the second quarter of 2006
* 1,422,000 healthcare professional subscribers fully implemented on our Internet-based learning network at June 30, 2007, up from 1,309,000 at June 30, 2006
* Approximately 85 percent of our subscriber base has transitioned to the Next Generation HealthStream Learning Center®, as of July 18, 2007
* Increased availability under line of credit to $15.0 million

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From: JakeStraw10/25/2007 2:16:47 PM
   of 21
 
HealthStream Announces Third Quarter 2007 Results
biz.yahoo.com
Tuesday October 23, 4:30 pm ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM):

Highlights:

* Revenues of $11.8 million in the third quarter of 2007, up 58% over the third quarter of 2006, including $3.0 million resulting from the acquisition of The Jackson Organization on March 12, 2007
* Net income of $739,000, or $0.03 per diluted share, in the third quarter of 2007, up from $474,000, or $0.02 per diluted share, in the third quarter of 2006
* Adjusted EBITDA of $2.1 million in the third quarter of 2007, compared to $1.2 million in the third quarter of 2006
* 1,457,000 healthcare professional subscribers fully implemented on our Internet-based learning network at September 30, 2007, up from 1,334,000 at September 30, 2006
* 101,000 new healthcare professional subscribers contracted to use the HealthStream Learning Center® (HLC) during the third quarter of 2007
* Approximately 95 percent of our subscriber base has transitioned to our Next Generation HLC

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From: JakeStraw2/20/2008 7:41:34 AM
   of 21
 
HealthStream Announces Fourth Quarter & Full Year 2007 Results
biz.yahoo.com
Tuesday February 19, 5:31 pm ET

Highlights:
Fourth Quarter
-- Revenues of $12.0 million in the fourth quarter of 2007, up 40% over the fourth quarter of 2006, including $2.5 million resulting from the acquisition of The Jackson Organization on March 12, 2007
-- Net income for the fourth quarter of 2007 of $2.9 million, or $0.13 per diluted share (including the effect of an income tax benefit of $2.0 million, or $0.09 per diluted share), compared to $1.1 million, or $0.05 per diluted share, for the fourth quarter of 2006
-- Adjusted EBITDA of $2.2 million in the fourth quarter of 2007, compared to $1.9 million in the fourth quarter of 2006
Full Year
-- Revenues for the year of $43.9 million, up 38% over 2006, including $9.7 million resulting from the acquisition of The Jackson Organization
-- Net income of $4.1 million for 2007, or $0.18 per diluted share (including the effect of an income tax benefit of $2.0 million, or $0.09 per diluted share), compared to $2.5 million, or $0.11 per diluted share, for 2006
-- Adjusted EBITDA of $7.2 million, compared to $5.5 million for 2006
-- 1,541,000 healthcare professional subscribers fully implemented on our Internet-based learning network at December 31, 2007, up from 1,352,000 at December 31, 2006
-- As of February 11, 2008, all of our subscriber base has been transitioned to our Next Generation HLC

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From: JakeStraw2/20/2008 2:07:37 PM
   of 21
 
HealthStream, Inc. Q4 2007 Earnings Call Transcript
seekingalpha.com

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From: JakeStraw4/23/2008 8:07:23 AM
   of 21
 
HealthStream Announces First Quarter 2008 Results
biz.yahoo.com
Tuesday April 22, 4:30 pm ET

NASHVILLE, Tenn.--(BUSINESS WIRE)--HealthStream, Inc. (NASDAQ: HSTM), a leading provider of learning and research solutions for the healthcare industry, announced today results for the first quarter ended March 31, 2008.

Highlights:

* Revenues of $11.4 million in the first quarter of 2008, up 41% over the first quarter of 2007
* Net income of $66,000 in the first quarter of 2008, up from $45,000 in the first quarter of 2007
* Adjusted EBITDA of $1.4 million in the first quarter of 2008, up from $0.9 million in the first quarter of 2007
* 1,594,000 healthcare professional subscribers fully implemented on our Internet-based learning network at March 31, 2008, up from 1,379,000 at March 31, 2007
* Gerard M. Hayden, Jr. joins the Company as senior vice president and chief financial officer
* Jeffrey S. Doster joins the Company as senior vice president and chief technology officer

Financial Results:

First Quarter 2008 Compared to First Quarter 2007

Revenues for the first quarter of 2008 increased $3.3 million, or 41 percent, to $11.4 million, compared to $8.1 million for the first quarter of 2007. The Company’s revenue mix during the first quarter of 2008 was comprised of 66 percent of revenues from HealthStream Learning and 34 percent from HealthStream Research. This compares to 80 percent from HealthStream Learning and 20 percent from HealthStream Research during the first quarter of 2007. This revenue mix change is primarily a result of the acquisition of The Jackson Organization Research Consultants, Inc. (TJO) during March 2007, whose revenues are included in HealthStream Research.

Revenues from HealthStream Learning increased by $1.0 million when compared to the first quarter of 2007. Of this increase, $1.5 million was derived from our Internet-based subscription learning products, which includes revenue increases from the HealthStream Learning Center® (HLC) of $900,000 and from courseware subscriptions and online training services of $616,000. Revenues from these products increased 30 percent over the prior year quarter and approximated $6.6 million for the first quarter of 2008. Revenues associated with implementation, development, and consulting services increased $302,000 over the prior year quarter. Our increase in revenues was partially offset by a decrease in revenues from our live event business, including association activities, which declined $663,000 from the prior year quarter, primarily due to fewer live events and association activities during the first quarter of 2008 than in the first quarter of 2007.

Revenues from HealthStream Research increased $2.3 million when compared to the first quarter of 2007, primarily resulting from the impact of the March 2007 acquisition of TJO. Revenue increases over the prior year quarter included $1.7 million from patient surveys, $525,000 from employee surveys, and $94,000 from physician surveys. TJO revenues during the first quarter of 2007, prior to our acquisition and not included in our results for the first quarter of 2007, approximated $2.6 million.

Gross margin, which we define as revenues less cost of revenues (excluding depreciation and amortization) divided by revenues, declined to 60 percent for the first quarter of 2008 from 64 percent for the first quarter of 2007. The decline in gross margin resulted from changes in revenue mix and related cost of revenues. In HealthStream Research, we experienced lower gross margins related to increased revenues from patient surveys, which have lower margins than physician and employee surveys. In HealthStream Learning, gross margins were up slightly compared to the prior year quarter due to the increase in HLC revenues, but were somewhat offset by increased royalties paid by us associated with increased revenues from a portion of our courseware subscription products.

Other operating expenses, including product development, sales and marketing, depreciation and amortization, and other general and administrative expenses also increased over the prior year quarter. These expense increases resulted primarily from the impact of TJO personnel and operating expenses, as well as the addition of sales personnel for both HealthStream Learning and HealthStream Research. Depreciation and amortization increases were associated with capital expenditures, software enhancements, and intangible assets. Other income and expense decreased $118,000 when compared to the prior year quarter due to lower cash and investments balances.

Net income for the first quarter of 2008 was $66,000, or $0.00 per share (diluted), up slightly from $45,000, or $0.00 per share (diluted), for the first quarter of 2007.

Adjusted EBITDA (which we define as net income before interest, income taxes, share-based compensation, and depreciation and amortization) was $1.4 million for the first quarter of 2008, compared to $912,000 for the first quarter of 2007. This improvement is consistent with the factors mentioned above. Our reconciliation of this calculation to measures under generally accepted accounting principles is attached in the Summary Financial Data.

Other Financial Indicators

At March 31, 2008, the Company had cash and related interest receivable of $4.8 million, compared to $3.6 million at December 31, 2007. The increase in cash resulted from improved receipts from customers, including a reduction of accounts receivable balances by $1.5 million, but was partially offset by payments to vendors during the quarter. Capital expenditures and capitalized feature enhancement development totaled approximately $0.4 million for the first quarter of 2008.

Our days sales outstanding (DSO), which we calculate by dividing the accounts receivable balance, excluding unbilled and other receivables, by average daily revenues for the quarter) approximated 57 days for the first quarter of 2008 compared to 75 days for the first quarter of 2007. Excluding the impact of accounts receivable balances acquired with the TJO acquisition during March 2007, DSO for the first quarter of 2007 approximated 60 days. The improvement over the prior year quarter, excluding the impact of TJO, is associated with improved collections from customers during the quarter.

HealthStream Research Update

We support healthcare organizations with research solutions that provide valuable insight about patients’ experiences, workforce engagement, physician relations, and community perceptions of hospital services. This insight, in turn, provides data-driven roadmaps for organizational and workforce development—which can be achieved through HealthStream's learning solutions. Our primary research solutions include physician, employee, patient, and community surveys that deliver insight, analyses, and industry benchmarks to healthcare organizations.

During the first quarter of 2008, HealthStream Research added several new healthcare organization customers, including Tenet Healthcare Corporation, Conemaugh Health System, and Kessler Memorial Hospital. Among our existing research customers, 36 renewed their contracts for multiple survey products, while 48 chose to contract for more research services in the first quarter to add to their current services received from HealthStream Research.

HealthStream Learning Update

HealthStream supports healthcare organizations in delivering quality patient care, creating safer hospitals, meeting regulatory training requirements, and developing professional skills through our innovative learning solutions. To this end, we provide a range of learning solutions that include: the HLC—our Internet-based learning platform, a wide range of professional, clinical, and regulatory content subscriptions, an online authoring/self-publishing tool, and learning activities for healthcare professionals sponsored by pharmaceutical and medical device companies.

At March 31, 2008, approximately 1,594,000 healthcare professionals were fully implemented to use our Internet-based HLC for training and education. Revenue recognition commences when a contract is fully implemented. This number is up from approximately 1,541,000 at December 31, 2007. The total number of contracted subscribers at March 31, 2008 was approximately 1,728,000, up from 1,497,000 at March 31, 2007. “Contracted subscribers” include both those already implemented (1,594,000) and those in the process of implementation (134,000).

Customers representing approximately 93 percent of subscribers that were up for renewal did renew in the first quarter of 2008, while our renewal rate based on the annual contract value was approximately 99 percent. Our renewal rates reflect increased pricing at renewal, as well as the addition of subscribers compared to previously contracted amounts. The renewal rates for the first quarter of 2008 compare to a subscriber renewal rate of 95 percent and an annual contract value renewal rate of 102 percent during the first quarter of 2007.

Executive Personnel Announcements

We are pleased to announce the addition of two new members to HealthStream’s executive team. Gerard (“Gerry”) M. Hayden, Jr. will join us as senior vice president and chief financial officer (CFO) and Jeffrey S. Doster will join us as senior vice president and chief technology officer (CTO), both effective in mid-May 2008.

Mr. Hayden has been a director of the Company since 2006 and has most recently served as chief financial officer for MedAvant Healthcare Solutions. As an experienced leader in healthcare technology companies, he brings broad industry experience in finance, mergers and acquisitions, and accounting to HealthStream’s executive team. Mr. Hayden’s prior experience includes serving as chief financial officer for such companies as Private Business, Inc., Covation, Meridian Occupational Healthcare Associates, Inc., ENVOY (now part of WebMD), and Allied Clinical Laboratories, Inc. In his new role at HealthStream, Mr. Hayden will assume leadership for all accounting and financial operations.

Upon his acceptance of the role of HealthStream’s CFO, Mr. Hayden resigned from the Company’s board of directors where he served on the audit committee. Michael D. Shmerling—who joined the board in 2005—will join the audit committee.

Mr. Doster has held several senior information technology (IT) positions, including senior vice president and chief technology officer at The Shop at Home Network, LLC and senior vice president of IT at New Roads, Inc. With over 20 years of experience in IT across several companies, he has demonstrated outstanding executive leadership in developing enterprise-level systems infrastructures, highly effective data warehouse management systems, and innovative Internet commerce systems. At HealthStream,

Mr. Doster will be responsible for leading all aspects of the Company’s technology development, including our strategy for technology platforms, product development, and partnerships.

Financial Expectations

Revenues for the second quarter of 2008 are expected to range between $12.8 and $13.0 million, an increase of approximately $0.8 to $1.0 million, or seven to nine percent, over the same quarter in the prior year. We expect revenues from HealthStream Learning to increase between 18 and 20 percent over the second quarter of the prior year resulting from continued growth in our HLC subscriber base and courseware subscriptions, which we anticipate will be partially offset by continued declines in several of our project-based products. We expect revenues from HealthStream Research to decrease between eight and 10 percent, compared to the second quarter of 2007. We expect this revenue decrease will result from fewer physician and employee survey projects being completed during the second quarter of 2008 as compared to the same quarter in the prior year. Revenues from patient surveys, which comprise approximately 50 percent of the total HealthStream Research business, are expected to increase during the second quarter of 2008 compared to same quarter in the prior year.

We anticipate gross margins for the second quarter of 2008 to be comparable to the same quarter in the prior year and improve compared to the first quarter of 2008. Product development expenses are expected to increase in amount and as a percentage of revenue compared to both the first quarter of 2008 and the prior year second quarter. Sales and marketing expenses are also expected to increase in amount, but are expected to be comparable as a percentage of revenues compared to both the first quarter of 2008 and the prior year second quarter. Depreciation and amortization are expected to increase in amount and as a percentage of revenues compared to the prior year second quarter. General and administrative expenses are expected to increase in amount and as a percentage of revenues compared to both the first quarter of 2008 and the prior year second quarter. We expect net income for the second quarter of 2008 to range between $0.02 and $0.03 per diluted share.

We are maintaining our full year 2008 revenue growth expectation of between 22 and 24 percent over 2007. Revenues are expected to increase in each remaining quarter of 2008 over the same quarter from the prior year. Revenues from HealthStream Learning are expected to increase for the full year 2008 over the full year 2007. Revenues from HealthStream Research are expected to increase for the full year 2008 over the full year 2007 both on an as reported basis and a pro forma basis (as if TJO were included in our operating results as of January 1, 2007.). We are also maintaining our expectation of net income per diluted share for the full year of 2008 to be in the range between $0.12 and $0.15. Our estimates for the second quarter and full year of 2008 do not reflect an income tax benefit associated with the realization of additional deferred tax assets. We will continue to evaluate the need for a valuation allowance on our remaining deferred tax assets based on whether they will more likely than not be realized in the future.

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