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HealthStream Inc. (HSTM)
Q1 2013 Results Earnings Call
April 23, 2013 9:00 AM ET
Mollie Condra - Associate Vice President, IR and Communications
Robert Frist - Chairman and CEO
Gerry Hayden - Senior Vice President and CFO
Jeff Garro - William Blair
Matt Hewitt - Craig-Hallum Capital
Richard Close - Avondale Partners
Frank Sparacino - First Analysis
Previous Statements by HSTM
» HealthStream's CEO Discusses Q4 2012 Results - Earnings Call Transcript
» HealthStream's CEO Discusses Q3 2012 Results - Earnings Call Transcript
» HealthStream's CEO Discusses F2Q12 Earnings Results - Earnings Call Transcript
» HealthStream, Q2 2008 Earnings Call Transcript
As a reminder, this conference call maybe recorded. I would now like to turn the conference over to Ms. Mollie Condra, Associate Vice President, Investor Relations and Communications. Ma’am, you may begin.
Thank you. Good morning. Thank you for joining us today to discuss our first quarter 2013 results. Also in room with me are Robert A. Frist, Jr., CEO and Chairman of HealthStream; and Gerry Hayden, Senior Vice President and CFO.
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 involve risk and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements.
Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the company's filings with the SEC, including Forms 10-K and 10-Q.
With that, I will now turn the call over to our CEO, Robert Frist.
Thank you, Mollie. We have so many business updates and financial updates we’ll just jump right in. The first quarter on financial metrics were -- many or most of those metrics were quite strong.
Consolidated revenues were up 25% to $29.5 million. Operating income was up 36% to $3.2 million and net income was up 37% to $1.9 million. Our major adjusted EBITDA was up 30% to $5.4 million, all those when compared to the first quarter of 2012. So the first quarter of 2013 delivered strong core financial operating metrics.
You saw in our earnings release, in addition we introduced a new metric this quarter and one that most of our analyst had been estimating on their own for quite sometime, so we're excited to introduce the new metric annualized revenue per implemented subscriber.
I think everyone knows that once we implement subscribers that’s when we began revenue recognition. So we think this is a good metric to watch as, we’ve surpassed the 3 million subscriber mark and we are seeing an increased emphasis inside of our company of growing revenue per subscriber through our product and solution mix.
This new metric represents the quarter's revenue from Internet-based subscription products divided by the average implemented subscribers for that quarter annualized. The purposes of introduce this new metric, we provided revenue per implement subscriber for the first quarter of 2013 along with the previous seven quarters.
In the first quarter of 2013 our revenue per implemented subscriber was $28.47, which was 14% higher over the first quarter of 2012. From the second quarter of 2011 to the first quarter of 2013, we’ve seen a steady upward trajectory in this measurement and that’s indicative of our increased focus on providing more solutions on a per customer per subscriber basis.
The core operating metrics for the company also indicated strength. Overall, we implemented 95,000 subscribers in the quarter bringing our total to 3,032,000 implemented subscribers. The implementation rates for the quarter were obviously strong.
We contracted 68,000 additional net new subscribers that’s net of any loss attrition or non-renewal. So we contacted additional 68,000 net new subscribers. Obviously, the contracted number was slightly higher than that, bringing our total to 3,167,000 contracted subscribers. Also important we have a contracted backlog of unimplemented subscribers of 135,000 that are in the process of implementation.
And you can see from the implementation metrics, implementing 95,000 subscribers is also incredibly strong even compared to our history. So our implementation teams are doing a great job of bringing customers live.
Renewal rates for the first quarter of 2013 were 91% based on FTEs and 87% based on contract value, and our renewal rates reflect the addition of subscribers compared to previously contracted amounts combined with any pricing adjustment that may occur at renewal.
The -- to increase the adoption of our solutions across the marketplace, we concluded last quarter by talking about adding to our -- overall to our sales team and at year end 2012 we had 76 quota carrying sales reps. In the first quarter we’ve hired eight more, which brings our total to 84. And we have an active pipeline of additional adds that you can reference in our website you can see there still many more to be added across the various product and service line.
So, we think, we are getting good execution on bringing in and strengthening the sales organization early in the year, which is in our view the way to do that, you want to add those sales personnel earlier in the year and bring them on the -- up on the product, so they can have a bigger impact later in the year.
We want to spend a few minutes talking about some core solutions that are performing well and contributor to this growth and revenue per subscriber. During the first quarter of 2013, we continue to expand the customer base for two of our core talent management solutions. The first is HealthStream Performance Center and HealthStream Competency Center. Remember these products are very similar to each other but they do have the defining characteristics and traits that that differentiate them.