Third Quarter 2026
Filed Nov 2, 2026HealthStream reported third-quarter revenue growth of 8.9% to $83.3 million, while operating income, net income, and diluted EPS declined; the Company raised its full-year 2026 revenue, net income, and adjusted EBITDA guidance ranges.
Revenue grew 8.9% and the Company raised full-year guidance, but third-quarter operating income declined 13.0%, net income declined 11.7%, and adjusted EBITDA increased only 1.0% as investment spending, acquisition-related amortization, and cybersecurity incident costs pressured profitability.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Revenues, net (three months ended September 30, 2026)GAAP | $83.31M | – | 8.9% |
| Subscription revenue increase (three months ended September 30, 2026)other | $6.2M | – | 8.0% |
| Professional services revenue increase (three months ended September 30, 2026)other | $700K | – | – |
| Revenue contribution from Virsys12 and MissionCare Collective acquisitions (three months ended September 30, 2026)other | $3.2M | – | – |
| Revenue contribution from growth across existing portfolio of solutions (three months ended September 30, 2026)other | $3.6M | – | – |
| Cost of revenues, excluding depreciation and amortization (three months ended September 30, 2026)GAAP | 30.01M | – | – |
| Product development expense (three months ended September 30, 2026)GAAP | 13.53M | – | – |
| Sales and marketing expense (three months ended September 30, 2026)GAAP | 13.32M | – | – |
| General and administrative expense (three months ended September 30, 2026)GAAP | 8.60M | – | – |
| Depreciation and amortization (three months ended September 30, 2026)GAAP | 11.27M | – | – |
| Total operating costs and expenses (three months ended September 30, 2026)GAAP | 76.72M | – | – |
| Operating income (three months ended September 30, 2026)GAAP | $6.59M | – | down 13.0% |
| Interest income (three months ended September 30, 2026)GAAP | 510K | – | – |
| Other expense, net (three months ended September 30, 2026)GAAP | −28K | – | – |
| Income before income tax provision (three months ended September 30, 2026)GAAP | 7.07M | – | – |
| Income tax provision (three months ended September 30, 2026)GAAP | 1.70M | – | – |
| Net income (three months ended September 30, 2026)GAAP | $5.37M | – | down 11.7% |
| Basic net income per share (three months ended September 30, 2026)GAAP | $ 0.18 | – | – |
| Diluted net income per share (three months ended September 30, 2026)GAAP | $ 0.18 | – | down from $0.20 per share (diluted) |
| Weighted average shares of common stock outstanding, basic (three months ended September 30, 2026)GAAP | 29.49M | – | – |
| Weighted average shares of common stock outstanding, diluted (three months ended September 30, 2026)GAAP | 29.66M | – | – |
| Dividends declared per share (three months ended September 30, 2026)GAAP | $ 0.035 | – | – |
| Cybersecurity incident costs (three months ended September 30, 2026)non-GAAP | 250K | – | – |
| Adjusted EBITDA (three months ended September 30, 2026)non-GAAP | $19.30M | – | up 1.0% |
| Revenues, net (nine months ended September 30, 2026)GAAP | $248.2M | – | 10.6% |
| Operating income (nine months ended September 30, 2026)GAAP | $22.42M | – | 25.7% |
| Net income (nine months ended September 30, 2026)GAAP | $17.95M | – | 13.6% |
| Basic net income per share (nine months ended September 30, 2026)GAAP | $ 0.61 | – | – |
| Diluted net income per share (nine months ended September 30, 2026)GAAP | $ 0.61 | – | – |
| Adjusted EBITDA (nine months ended September 30, 2026)non-GAAP | $60.02M | – | 13.4% |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Full Year 2026 outlook
- Revenue$ 331.0 - $ 333.0 million
- NoteNet Income: $ 21.8 - $ 22.4 million
- NoteAdjusted EBITDA: $ 77.0 - $ 78.0 million
- NoteCapital Expenditures: $ 31.0 - $ 34.0 million
- NoteInterest income: $(2,200) - $(2,400) (In thousands)
- NoteInterest expense: $100 - $100 (In thousands)
- NoteIncome tax provision: $6,900 - $7,100 (In thousands)
- NoteStock-based compensation expense: $5,000 - $5,200 (In thousands)
- NoteDepreciation and amortization: $45,100 - $45,300 (In thousands)
- NoteCybersecurity incident costs: $300 - $300 (In thousands)
Capital returns
- The Board of Directors declared a quarterly cash dividend of $0.035 per share, payable on November 27, 2026 to holders of record on November 16, 2026.
- During the three months ended September 30, 2026, the Company did not repurchase any shares of common stock under the share repurchase program.
- During the first nine months of 2026, the Company repurchased 432,476 shares of common stock under previously authorized share repurchase programs at an aggregate fair value of $9.3 million, reflecting an average purchase of $21.50 per share.
- On September 14, 2026, the Company issued 1,355,932 shares of its common stock to WJRJJ Ventures, LLC in a private placement for an aggregate cash purchase price of approximately $40.0 million, reflecting a price of $29.50 per share.
- The share repurchase program authorized on March 13, 2026, for up to $10.0 million of outstanding shares expired on September 12, 2026.
What drove it
- Third-quarter revenue growth was positively impacted by $3.2 million from the Virsys12 and MissionCare Collective acquisitions completed during the fourth quarter of 2025 and $3.6 million from growth across the existing portfolio of solutions.
- Subscription revenues increased by $6.2 million, or 8.0%, and professional services revenues increased by $0.7 million compared to the third quarter of 2025.
- The nine-month increase in operating income was primarily attributable to higher revenues, partially offset by higher expenses supporting investments in platform and enterprise applications.
- Management's full-year guidance assumes expectations for new sales and renewals and assumes that general economic conditions do not deteriorate.
Concerns
- Third-quarter operating income was down 13.0% from the third quarter of 2025 despite 8.9% revenue growth.
- The decline in third-quarter operating income was primarily attributable to higher operating expenses for platform and enterprise applications, including personnel costs, third-party software expenses, cloud hosting, and amortization from fourth-quarter 2025 acquisitions.
- Operating income was also impacted by expense of approximately $250,000 related to the cybersecurity incident disclosed on July 29, 2026, after giving effect to related insurance recoveries.
- Third-quarter adjusted EBITDA increased 1.0%, materially below reported revenue growth of 8.9%.
- Interest income was 510 (In thousands) in the third quarter of 2026, compared to 788 (In thousands) in the third quarter of 2025.
What to watch
- Execution against full-year 2026 revenue guidance of $ 331.0 - $ 333.0 million.
- Whether operating expenses associated with platform and enterprise application investment, third-party software, cloud hosting, and acquisition-related amortization continue to constrain operating income growth.
- New sales and renewals, which are an explicit assumption in the Company's 2026 guidance.
- Progress in containing cybersecurity incident costs, which are guided at $300 - $300 (In thousands) for 2026.
- Use of the approximately $40.0 million private-placement proceeds for general corporate purposes, continued investment in solutions, working capital, potential acquisitions, and other strategic initiatives.
Balance sheet and cash flow
- Cash and cash equivalents at September 30, 2026: $ 58,964 (In thousands).
- Marketable securities at September 30, 2026: 56,197 (In thousands).
- Cash, cash equivalents, and marketable securities at September 30, 2026: $115.2 million.
- The Company does not have any outstanding indebtedness of borrowed money.
- Net cash provided by operating activities for the nine months ended September 30, 2026: 57,958 (In thousands), compared to 50,127 (In thousands).
- Net cash used in investing activities for the nine months ended September 30, 2026: (61,139) (In thousands), compared to (27,039) (In thousands).
- Net cash provided by financing activities for the nine months ended September 30, 2026: 25,972 (In thousands), compared to net cash used in financing activities of (29,023) (In thousands).
- Capital expenditures incurred during the third quarter of 2026 were $7.5 million.
- Purchases of property and equipment for the nine months ended September 30, 2026: (1,980) (In thousands), compared to (3,481) (In thousands).
- Payments associated with capitalized software development for the nine months ended September 30, 2026: (21,329) (In thousands), compared to (21,910) (In thousands).
- Cash and cash equivalents at end of period: $ 58,964 (In thousands), compared to $ 53,544 (In thousands).
Analysis
HealthStream delivered $83.3 million of third-quarter revenue, up 8.9% from $76.5 million in the third quarter of 2025. The increase included $3.2 million from the Virsys12 and MissionCare Collective acquisitions completed in the fourth quarter of 2025 and $3.6 million from growth across the existing portfolio. Subscription revenues increased by $6.2 million, or 8.0%, while professional services revenues increased by $0.7 million.
Profitability softened during the quarter. Operating income declined 13.0% to $6.6 million, net income declined 11.7% to $5.4 million, and diluted EPS was $0.18 versus $0.20. Management attributed the operating-income decline primarily to investment in platform and enterprise applications, including personnel, third-party software, cloud hosting, and acquisition-related amortization. The quarter also included approximately $250,000 of cybersecurity incident expense after related insurance recoveries. Adjusted EBITDA increased 1.0% to $19.3 million.
The nine-month results remained stronger than the quarterly profitability trend. Revenue increased 10.6% to $248.2 million, operating income increased 25.7% to $22.4 million, net income increased 13.6% to $18.0 million, and adjusted EBITDA increased 13.4% to $60.0 million. Nine-month operating cash flow was 57,958 (In thousands), compared with 50,127 (In thousands) in the prior-year period. Investing cash usage included (21,329) (In thousands) in payments associated with capitalized software development and (34,818) (In thousands) of net purchases of marketable securities.
The balance sheet was strengthened by the private placement completed on September 14, 2026. Cash and cash equivalents were $ 58,964 (In thousands), marketable securities were 56,197 (In thousands), and the Company reported $115.2 million of cash, cash equivalents, and marketable securities with no outstanding indebtedness of borrowed money. Financing cash flow included 39,882 (In thousands) of proceeds from issuance of common stock and (9,306) (In thousands) of common-stock repurchases during the nine-month period.
Management raised the full-year revenue range to $331.0 - $333.0 million from a previously expected range of $327.0 to $332.0 million. It also raised the net income range to $21.8 - $22.4 million from $19.5 to $22.2 million and the adjusted EBITDA range to $77.0 - $78.0 million from $74.0 to $78.0 million. The updated outlook points to continued revenue growth and improved full-year profitability, while the third-quarter results place focus on the cost of growth investments, acquisition-related amortization, cloud and software expenses, and cybersecurity-related costs.
Management, verbatim
Nine months into 2026, HealthStream has grown revenues 10.6%, operating income 25.7%, and adjusted EBITDA 13.4% compared to the same period last year. Our third quarter continued that progress, with revenues up 8.9% to $83.3 million, and we are raising our full-year guidance.
Robert A. Frist, Jr., Chief Executive Officer, HealthStream
The clinical healthcare workforce continues to grow, and healthcare organizations need better ways to find, develop, credential, schedule, onboard, and retain these professionals. Our hStream platform brings together verified healthcare professionals and students, healthcare organizations, and industry partners in one powerful ecosystem. The clinical workforce is the heartbeat of American healthcare, and HealthStream is building the infrastructure it runs on.
Robert A. Frist, Jr., Chief Executive Officer, HealthStream
Not in the filing
stated, not guessed- Segment revenue totals and segment-level revenue disclosures were not reported.
- Gross profit and gross margin were not reported.
- Free cash flow was not reported.
- Quarterly operating cash flow was not reported; operating cash flow was reported only for the nine months ended September 30, 2026.
- Prior-quarter figures and sequential comparisons were not reported for the listed metrics.
- Full-year 2026 guidance for gross margin, operating expenses, and tax rate was not reported.
- A previous earnings release outlook section was not provided; therefore, no actual-versus-prior-guidance comparisons are presented.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.