HSTM

HealthStream, Inc. (HSTM)

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HealthStream, Inc. (HSTM)

Q4 2007 Earnings Call

February 20, 2008 09:00 am ET

Executives

Robert A. Frist - Chairman, Chief Executive Officer

Art Newman - Executive Vice President, Interim Chief Financial Officer

Mollie Condra - Senior Director of Communications Research and Investor Relations

Analysts

Benjamin Green - Avondale Partners

Harvey Poppel - (Popteck)

Ryan Winter - KIP

Steven Hart - Howard Capital

Vincent Colicchio - Noble Financial

Presentation

Operator

Greetings, ladies and gentlemen, and welcome to the HealthStream Incorporated Fourth Quarter and Full Year 2007 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Mr. Robert A. Frist, Chief Executive Officer for HealthStream, Incorporated. Thank you, Mr. Frist, you may begin.

Robert A. Frist - Chairman, Chief Executive Officer

Good morning and thank you. Welcome to our fourth quarter and full year 2007 earnings conference call. Also in the room with me are Art Newman, Executive Vice President and CFO and Mollie Condra, Senior Director of Communications Research and Investor Relations.

Art would you read the forward-looking statement please.

Art Newman - Executive Vice President, Interim Chief Financial Officer

This conference call will contain forward looking statements regarding future events and the future performance of HealthStream that involve risks and uncertainties that can 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.

Robert A. Frist - Chairman, Chief Executive Officer

Thank you, Art. Good morning to everyone. I've got a lot of news we can cover this morning and of course a very detailed year end earnings release to get ready to answer your questions for.

A lot of exciting things have occurred since our last report to you. I'm going to pull out a few of the highlights and then will turn it over to Art for a financial review and little bit of a forward-look. And then we will go to the questions.

One of the biggest pieces of the news for us as a company is the completion of the migration of customers on our next-gen learning platform. As of February 11, 2008, all of our hospital customers have been migrated to the next-generation learning platform. It’s an exciting accomplishment, it’s the fifth of five major migration efforts that occurred beginning in January of last year and concluding in February of 11th of this year, 2008.

Congratulations to all the teams that made that happen, which is a meaningful part of our entire company and leadership provided by specially the teams of Bob (Neimer) and Tom Dugger and Joe Christopher that had so much to do with the successful migrations.

I'm very excited now to have every single one of our hospital customers, over 1,500 of them on the new platform an exciting milestone in our company. We also are already changed transactional levels on that new site exceeds the transactional levels on the prior generation technology. So we are excited to see it performing well and continuing to accelerating its utilization and adoption.

The quarter or the fourth quarter particularly was another strong quarter of adding new customers. In the third quarter, we had an impressive 110,000 net new subscribers. And generally, in the past several years I have always commented that we try to add between 20 and 50,000 net new subscribers every quarter. Sometimes I say 20 to 60,000. So the third quarter was expectational by many measures doing 110,000.

The fourth quarter also performed well delivering over 91,000 additional net new or contracted subscribers. So in the second half alone over a 175,000 new subscribers were added to our platform.

In the year total of contracted subscribers being 253,000 one of our strongest years on record, bringing in new customers in the fourth quarter like Meridian Health Systems, Clarian Health, Mercy Hospital & Medical Center, Community Memorial Hospital and long list of additional new customers.

We are excited about our new platform, our new technology, our new capabilities. Congratulations to the sales organizations for making that happen, another very strong quarter.

Our execution on the implementation side was also impressive. With that additional influx of customers in the fourth quarter alone we implemented 80,000 of our backlog. We established strong backlog as we enter into the year and we're working to accelerate through the implementation cycles but implementing over a 1000 a day in our implementation team. So we're impressed with the rate of implementation and the rate of new customer aquisition.

Renewal rates held up strong thorough the quarter, reporting 99% on a full time equivalent basis on the number of subscribers and 110% of contract value. That shows a little bit of pricing power and also added subscribers for renewing existing accounts. So that’s exciting there as well.

The research side of our business had an equally exciting quarter and completed their research conference on October 21 to 23 and had over a 130 attendees from 31 different states. And the net result of that exciting conference we continue to add new customers adding Children's Hospital of Omaha, Stevens Healthcare, Multicare Health System many new research customers coming on board in the fourth quarter.

Read the rest of this transcript for free on seekingalpha.com