HealthStream Announces Fourth Quarter & Full Year 2008 Results

Business Wire, Feb 25, 2009

Our days sales outstanding, 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 fourth quarter of 2008 compared to 66 days for the fourth quarter of 2007 and 63 days for the third quarter of 2008. The improvement over the prior year quarter and prior quarter is associated with improved collections from HealthStream Learning customers during the fourth quarter of 2008, while collections from HealthStream Research customers were slower than expected. While the Company's accounts receivable balances have improved from the 2007 full-year and the third quarter of 2008, the Company believes that uncertain economic conditions in the United States may result in slower payment patterns from some portion of our customers in the future.

As of December 31, 2008, we have federal and state net operating loss of carryforwards of approximately $38.4 million and $29.9 million, respectively, which are available to offset income tax liabilities as they arise in the future.

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 December 31, 2008, approximately 1,732,000 healthcare professionals were fully implemented to use our Internet-based HLC for training and education. This number is up from approximately 1,541,000 at December 31, 2007. The total number of contracted subscribers at December 31, 2008 was approximately 1,855,000, up from 1,705,000 at December 31, 2007. "Contracted subscribers" include both those already implemented (1,732,000) and those in the process of implementation (123,000). Revenue recognition commences when a contract is fully implemented.

Customers representing approximately 90 percent of subscribers that were up for renewal did renew in the fourth quarter of 2008, while our renewal rate based on the annual contract value was approximately 104 percent. The renewal rates for the fourth quarter of 2008 compare to a subscriber renewal rate of 107 percent and an annual contract value renewal rate of 127 percent during the fourth quarter of 2007. During the fourth quarter of 2008, quarterly renewal rates were negatively impacted by the non-renewal of one customer which accounted for 11,000 subscribers, but was partially offset by customers renewing at higher prices or adding subscribers at time of renewal. For the full year 2008, approximately 91 percent of subscribers renewed, and the annual contract value renewal rate was 100 percent.