HEALTHSTREAM INC
For the period ended Sep 30, 2026. Filed Nov 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 5, 2026
HSTM$28.89-2.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0001437749-26-026301
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-05.
0001437749-26-035320
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 69 current paragraphs.
22 unchanged; 38 reworded; 8 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
The Company incurred $250,000 in expense related to this incident during the three months ended September 30, 2026, after giving effect to related insurance recoveries. The Company expects to incur additional costs as a result of this incident in future periods associated with ongoing cybersecurity monitoring and prevention as well as enhancements to the Company's cybersecurity program. The Company has become subject to litigation as a result of this incident. For additional information regarding this litigation, see Note 10 to the Condensed Consolidated Financial Statements included herein. Based on information currently known, this incident has not had, and the Company does not expect that this incident will have, a material adverse impact on the Company's business, operations, or financial results.
Current report
Other Expense, Net. Other expense, net was $28,000 and $0.1 million for the three months ended September 30, 2026 and 2025, respectively.
Current report
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Current report
The Company has included an adjustment in the definition of adjusted EBITDA for the expense related to the Cybersecurity Incident incurred during the third quarter of 2026, after giving effect to related insurance recoveries, because the Company believes that this expense amount may not be reflective of the underlying operational performance of our business and that including this adjustment is consistent with the intended purpose of adjusted EBITDA of reflecting the underlying operating performance of our business and comparing the Company’s operational performance between periods.
Current report
Private Placement Transactions
Current report
On September 14, 2026, the Company issued 1,355,932 shares of its common stock to WJRJJ Ventures, LLC (“WJRJJ”) in a private placement for an aggregate cash purchase price of approximately $40.0 million, reflecting a price of $29.50 per share, and Robert A. Frist, Jr., the Company's Chief Executive Officer and Chairman of the Board of Directors, sold 144,068 shares of the Company's common stock to WJRJJ for approximately $4.25 million, reflecting a price of $29.50 per share, pursuant to a securities purchase agreement dated as of September 11, 2026. In connection with this issuance and sale, the Company entered into a registration rights agreement dated as of September 14, 2026, with WJRJJ providing for certain registration rights with respect to the resale of the shares issued and sold to WJRJJ as provided above.
Current report
The Company intends to use the net proceeds it received from the issuance of these shares for general corporate purposes, including continued investment in its solutions, working capital, potential acquisitions, and other strategic initiatives. The Company did not receive any proceeds from the sale of shares by Mr. Frist.
Current report
On September 10, 2026, the Company entered into a second amendment to its amended and restated revolving credit agreement originally dated October 6, 2023 and amended by a first amendment on March 13, 2026 (such credit agreement, as amended by the first amendment and the second amendment, the “Amended Credit Agreement”). Under the Amended Credit Agreement, the Company has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants. There currently are no outstanding borrowings under the revolving credit facility. The Amended Credit Agreement expires on September 10, 2031, unless earlier renewed, amended, or replaced. For additional information regarding the Amended Credit Agreement, see Note 8 to the Condensed Consolidated Financial Statements included herein.
Removed paragraphs (4)
Previous report
Other (Expense) Income, Net. Other (expense) income, net was expense of $0.1 million and income of $23,000 for the three months ended June 30, 2026 and 2025, respectively.
Previous report
Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025
Previous report
We have incurred, and expect to continue to incur, certain expenses related to this incident, including, among others, expenses to respond to, remediate and investigate this incident. To the extent required by contract or law, the Company will ensure that any additional notification is provided to individuals, entities, and regulatory agencies. While the Company’s investigation is ongoing, based on information currently known, the Company does not expect that this incident will have a material adverse impact on the Company’s business, operations or financial results. For additional information, see the July 29 Form 8-K.
Previous report
The Company also has a $50.0 million revolving credit facility, the availability of which is subject to certain covenants and minimum liquidity requirements. There currently are no outstanding borrowings under the revolving credit facility. The revolving credit facility expires on October 6, 2026, unless earlier renewed, amended, or replaced. Prior to the expiration of this facility, we expect to evaluate our liquidity needs and financing alternatives, including whether to renew, amend, or replace the Revolving Credit Facility We can provide no assurance that any such renewal, amendment, or replacement of this facility will be available on terms acceptable to us or at all. For additional information regarding our revolving credit facility, see Note 8 to the Condensed Consolidated Financial Statements included herein.
Reworded paragraphs (38)
Previous wording
Significant financial metrics for the second quarter of 2026 are set forth in the bullets below.
Current wording
Significant financial metrics for the third quarter of 2026 are set forth in the bullets below.
Previous wording
During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders. HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth. The sublease commenced in April 2025 and will expire in October 2031. We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $1.6 million during the three and six months ended June 30, 2026, respectively. In addition, we expect to record sublease income, net, of approximately $1.6 million during the last six months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.
Current wording
During the first quarter of 2025, we entered into an agreement to sublease a portion of our office space in the Capitol View building in Nashville, Tennessee to optimize our workforce performance to deliver positive results for customers, employees, and shareholders. HealthStream’s corporate headquarters remains in Nashville in the Capitol View building, while we continue to hire new employees both locally and nationally to support our growth. The sublease commenced in April 2025 and will expire in October 2031. We recorded sublease income, net of initial direct cost amortization, of $0.8 million and $2.4 million during the three and nine months ended September 30, 2026, respectively. In addition, we expect to record sublease income, net, of approximately $0.8 million during the last three months of 2026 and $3.2 million annually thereafter for the remaining term of the sublease under the caption General and Administrative.
Previous wording
As disclosed in a Current Report on Form 8-K filed by us on July 29, 2026 (the “July 29 Form 8-K”), the Company detected that it had experienced a cybersecurity incident in which an unauthorized third party gained access to a limited portion of files on the Company’s corporate file server. Following such detection, the Company initiated response protocols, launched an investigation, which remains ongoing, engaged the services of cybersecurity and forensics specialists and advisors, and notified certain law enforcement authorities. The Company did not experience any interruption in its business operations in connection with this incident. In addition, based on our investigation to date, we do not believe that any customer-facing systems were accessed or compromised.
Current wording
As disclosed in a Current Report on Form 8-K filed on July 29, 2026, the Company detected that it had experienced a cybersecurity incident in which an unauthorized third party gained access to a limited portion of files on the Company’s corporate file server. Following such detection, the Company initiated response protocols, launched an investigation, engaged the services of cybersecurity and forensics specialists and advisors, and notified certain law enforcement authorities. The Company did not experience interruption in its business operations in connection with this incident. In addition, the Company's investigation found no access or compromise to customer-facing systems.
Previous wording
Based on our investigation to date, the Company believes that certain information of our employees, as well as billing related information of certain customers and vendors, and corporate and legal information of the Company, was accessed and/or exfiltrated from the Company’s corporate file servers as the result of the incident. In addition, based on our investigation to date, the Company believes that, for approximately 65 of our credentialing customers, certain customer data that previously had been copied to the Company’s corporate file servers for purposes of data conversion, analytics, and troubleshooting for these customers, was accessed and exfiltrated. Further, based on our ongoing investigation to date, we now believe that a limited subset of likely 3 of these 65 customer files contained protected health information (“PHI”), as defined by the Health Insurance Portability and Accountability Act (“HIPAA”).
Current wording
Based on its investigation, the Company believes that certain information of the Company’s employees, as well as billing related information of certain customers and vendors, and corporate and legal information of the Company, was accessed and/or exfiltrated from the Company’s corporate file servers as the result of the incident. In addition, the Company now knows that, for 39 of our credentialing customers, certain customer data that previously had been copied to the Company’s corporate file servers for purposes of data conversion, analytics, and troubleshooting for these customers, was accessed and exfiltrated. Further, based on our investigation, a limited subset of three of these 39 customer files contained protected health information (“PHI”), as defined by the Health Insurance Portability and Accountability Act (“HIPAA”).
Previous wording
Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry have been challenging in certain respects, and may continue to be challenging based on recent legislative, regulatory, and other developments and contemplated changes to various policies and regulations. In particular, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. While healthcare costs continue to increase, government cuts or reimbursement rate reductions affecting healthcare organizations, evolving tariff and trade policies affecting healthcare-related goods and materials, as well as uncertainty surrounding potential policy, regulatory, and economic shifts, continue to be challenging for our healthcare customers. For example, the enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces expired on December 31, 2025, increasing coverage costs for many individuals. In addition, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes, including changes that are expected to decrease access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. Taking into account these developments, the number of individuals with Affordable Care Act marketplace coverage has declined since 2025. We believe that these developments have caused, and may continue to cause, financial pressures among our customers in the healthcare industry that may negatively impact demand for our products and services, particularly in relation to our non-mandatory products and services.
Current wording
Macroeconomic and other conditions in the United States that directly or indirectly impact the healthcare industry have been challenging in certain respects, and may continue to be challenging based on recent legislative, regulatory, and other developments and contemplated changes to various policies and regulations. In particular, the federal budget reconciliation legislation enacted on July 4, 2025 includes significant policy changes that may adversely impact healthcare provider organizations, including changes that decreased access to health insurance and result in significant cuts to federal healthcare spending, particularly within the Medicaid program. For example, the enhanced subsidies available for individuals to purchase coverage through Affordable Care Act marketplaces expired on December 31, 2025, and the number of individuals with Affordable Care Act marketplace coverage has declined since 2025. In addition, while healthcare costs continue to increase, government cuts or reimbursement rate reductions affecting healthcare organizations, evolving tariff and trade policies affecting healthcare-related goods and materials, as well as uncertainty surrounding potential policy, regulatory, and economic shifts, continue to be challenging for our healthcare customers. We believe that these developments have caused, and may continue to cause, financial pressures among our customers in the healthcare industry that may negatively impact demand for our products and services, particularly in relation to our non-mandatory products and services.
Previous wording
Macroeconomic challenges also persist in the United States in terms of inflationary pressures that have moderated in comparison to certain earlier periods but continue to affect cost structures, ongoing elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations. We believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures. These conditions and challenges impacting the United States economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations.
Current wording
Macroeconomic challenges also persist in the United States in terms of ongoing inflationary pressures, elevated interest rate levels, heightened geopolitical tensions (including as a result of ongoing conflicts in the Middle East), and strained global trade relations. We believe that many of our customers have experienced increased labor, supply chain, capital, and other expenditures associated with recent inflationary pressures. These conditions and challenges impacting the United States economy and our customers in the healthcare industry have adversely affected, and may continue to adversely impact, our business and results of operations.
Previous wording
*Revenues, net.*Revenues increased $9.3 million, or 13%, to $83.7 million for the three months ended June 30, 2026 from $74.4 million for the three months ended June 30, 2025. Subscription revenues increased by $8.0 million, or 11%, and professional services revenues increased by $1.3 million compared to the second quarter of 2025. Compared to the second quarter of 2025, revenue growth for the second quarter of 2026 was positively impacted by$3.1 million from our acquisitions of Virsys12 and MissionCare completed during the fourth quarter of 2025 and $7.5 million from growth across our existing portfolio solutions, of which $2.0 million related to a variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the second quarter of 2026, partially offset by a $1.3 million reduction from legacy applications.
Current wording
*Revenues, net.*Revenues increased $6.8 million, or 9%, to $83.3 million for the three months ended September 30, 2026, from $76.5 million for the three months ended September 30, 2025. Subscription revenues increased by $6.2 million, or 8%, and professional services revenues increased by $0.7 million compared to the third quarter of 2025. Compared to the third quarter of 2025, revenue growth for the third quarter of 2026 was positively impacted by$3.2 million from our acquisitions of Virsys12 and MissionCare completed during the fourth quarter of 2025 and $5.4 million from growth across our existing portfolio solutions, of which $0.8 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the three months ended September 30, 2026, partially offset by a $1.8 million reduction from legacy applications.
Previous wording
*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $2.7 million, or 10%, to $29.0 million for the three months ended June 30, 2026, from $26.4 million for the three months ended June 30, 2025. Cost of revenues as a percentage of revenues were 35% for both the three months ended June 30, 2026 and 2025. The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software expenses, labor costs, cloud hosting expenses, and royalties expense, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $3.5 million, or 13%, to $30.0 million for the three months ended September 30, 2026, from $26.5 million for the three months ended September 30, 2025. Cost of revenues as a percentage of revenues were 36% and 35% for the three months ended September 30, 2026 and 2025, respectively. The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software expenses, labor costs, cloud hosting expenses, and royalties expense, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
Product Development. Product development expenses increased $1.5 million, or 12%, to $13.6 million for the three months ended June 30, 2026, from $12.1 million for the three months ended June 30, 2025. Product development expenses as a percentage of revenues were 16% for both the three months ended June 30, 2026 and 2025. The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
Product Development. Product development expenses increased $1.4 million, or 12%, to $13.5 million for the three months ended September 30, 2026, from $12.1 million for the three months ended September 30, 2025. Product development expenses as a percentage of revenues were 16% for both the three months ended September 30, 2026 and 2025. The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $1.7 million, or 14%, to $13.5 million for the three months ended June 30, 2026, from $11.8 million for the three months ended June 30, 2025. Sales and marketing expenses as a percentage of revenue were 16% for both the three months ended June 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions, along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $1.2 million, or 10%, to $13.3 million for the three months ended September 30, 2026, from $12.1 million for the three months ended September 30, 2025. Sales and marketing expenses as a percentage of revenue were 16% for both the three months ended September 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
General and Administrative. General and administrative expenses increased $0.6 million, or 9%, to $8.0 million for the three months ended June 30, 2026, from $7.4 million for the three months ended June 30, 2025. General and administrative expenses as a percentage of revenue were 10% for both the three months ended June 30, 2026 and 2025. The increase in amount is primarily due to higher professional services expenses along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
General and Administrative. General and administrative expenses increased $1.3 million, or 17%, to $8.6 million for the three months ended September 30, 2026, from $7.3 million for the three months ended September 30, 2025. General and administrative expenses as a percentage of revenue were 10% for both the three months ended September 30, 2026 and 2025. The increase in amount is primarily due to increases in expenses from the Virsys12 and MissionCare acquisitions along with the cybersecurity incident expenses noted above.
Previous wording
*Depreciation and Amortization.*Depreciation and amortization expense increased $0.4 million, or 4%, to $11.3 million for the three months ended June 30, 2026, from $10.9 million for the three months ended June 30, 2025. This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.
Current wording
*Depreciation and Amortization.*Depreciation and amortization expense increased $0.4 million, or 4%, to $11.3 million for the three months ended September 30, 2026, from $10.8 million for the three months ended September 30, 2025. This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.
Previous wording
Interest Income. Interest income was $0.5 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances and lower interest rates on invested funds.
Current wording
Interest Income. Interest income was $0.5 million and $0.8 million for the three months ended September 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances for the majority of the reporting period and lower interest rates on invested funds.
Previous wording
*Income Tax Provision.*The Company recorded a provision for income taxes of $2.0 million for the three months ended June 30, 2026, compared to $1.5 million for the three months ended June 30, 2025. The Company’s effective tax rate was 23% for the three months ended June 30, 2026, compared to 22% for the three months ended June 30, 2025. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.
Current wording
*Income Tax Provision.*The Company recorded a provision for income taxes of $1.7 million for the three months ended September 30, 2026, compared to $2.2 million for the three months ended September 30, 2025. The Company’s effective tax rate was 24% for the three months ended September 30, 2026, compared to 26% for the three months ended September 30, 2025. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.
Previous wording
*Net Income.*Net income was $6.7 million and $5.4 million for the three months ended June 30, 2026 and 2025, respectively. EPS was $0.23 per share (diluted) and $0.18 per share (diluted) for the three months ended June 30, 2026 and 2025, respectively.
Current wording
*Net Income.*Net income was $5.4 million and $6.1 million for the three months ended September 30, 2026 and 2025, respectively. EPS was $0.18 per share (diluted) and $0.20 per share (diluted) for the three months ended September 30, 2026 and 2025, respectively.
Previous wording
Adjusted EBITDA was $20.6 million for the three months ended June 30, 2026, compared to $17.6 million for the three months ended June 30, 2025. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
Current wording
Adjusted EBITDA was $19.3 million for the three months ended September 30, 2026, compared to $19.1 million for the three months ended September 30, 2025. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
Previous wording
*Revenues, net.*Revenues increased $17.1 million, or 12%, to $164.9 million for the six months ended June 30, 2026 from $147.9 million for the six months ended June 30, 2025. Subscription revenues increased by $15.6 million, or 11%, and professional services revenues increased by $1.4 million compared to the six months ended June 30, 2025. Compared to the six months ended June 30, 2025, revenue growth for the six months ended June 30, 2026 was positively impacted by $13.2 million of growth across our existing portfolio of solutions, of which $2.0 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the second quarter of 2026, and $6.6 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, partially offset by a $2.7 million reduction from legacy applications.
Current wording
*Revenues, net.*Revenues increased $23.9 million, or 11%, to $248.2 million for the nine months ended September 30, 2026, from $224.4 million for the nine months ended September 30, 2025. Subscription revenues increased by $21.8 million, or 10%, and professional services revenues increased by $2.1 million compared to the nine months ended September 30, 2025. Compared to the nine months ended September 30, 2025, revenue growth for the nine months ended September 30, 2026 was positively impacted by $18.6 million of growth across our existing portfolio of solutions, of which $2.8 million related to a contract subject to the variable consideration constraint, which has been resolved and recognized as a cumulative catch-up in accordance with ASC 606 during the nine months ended September 30, 2026, and $9.8 million from our acquisitions of Virsys12 and MissionCare completed during the three months ended December 31, 2025, partially offset by a $4.5 million reduction from legacy applications.
Previous wording
*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $4.9 million, or 9%, to $56.8 million for the six months ended June 30, 2026, from $51.9 million for the six months ended June 30, 2025. Cost of revenues as a percentage of revenues were 34% and 35% for the six months ended June 30, 2026 and 2025, respectively. The increase in amount is primarily associated with growth in several areas of our business, resulting in third-party software costs, labor costs, royalties expense, and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
*Cost of Revenues (excluding Depreciation and Amortization).*Cost of revenues increased $8.4 million, or 11%, to $86.8 million for the nine months ended September 30, 2026, from $78.4 million for the nine months ended September 30, 2025. Cost of revenues as a percentage of revenues were 35% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily associated with growth in several areas of our business, resulting in higher third-party software costs, labor costs, royalties expense, and cloud hosting expenses, coupled with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
Product Development. Product development expenses increased $3.1 million, or 13%, to $27.2 million for the six months ended June 30, 2026, from $24.1 million for the six months ended June 30, 2025. Product development expenses as a percentage of revenues were 16% for both the six months ended June 30, 2026 and 2025. The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
Product Development. Product development expenses increased $4.5 million, or 12%, to $40.7 million for the nine months ended September 30, 2026, from $36.2 million for the nine months ended September 30, 2025. Product development expenses as a percentage of revenues were 16% both the nine months ended September 30, 2026 and 2025. The increase in expense is primarily due to an increase in labor costs along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $2.5 million, or 10%, to $26.5 million for the six months ended June 30, 2026, from $24.0 million for the six months ended June 30, 2025. Sales and marketing expenses as a percentage of revenues were 16% for both the six months ended June 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Current wording
Sales and Marketing. Sales and marketing expenses, including personnel costs, increased $3.7 million, or 10%, to $39.8 million for the nine months ended September 30, 2026, from $36.1 million for the nine months ended September 30, 2025. Sales and marketing expenses as a percentage of revenues were 16% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily due to increased sales commissions along with increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
General and Administrative. General and administrative expenses decreased $30,000, or less than 1%, to $16.0 million for the six months ended June 30, 2026, from $16.1 million for the six months ended June 30, 2025. General and administrative expenses as a percentage of revenues were 10% and 11% for the six months ended June 30, 2026 and 2025, respectively.
Current wording
General and Administrative. General and administrative expenses increased $1.2 million, or 5%, to $24.6 million for the nine months ended September 30, 2026, from $23.4 million for the nine months ended September 30, 2025. General and administrative expenses as a percentage of revenues were 10% for both the nine months ended September 30, 2026 and 2025. The increase in amount is primarily due to increases in expenses from the Virsys12 and MissionCare acquisitions.
Previous wording
*Depreciation and Amortization.*Depreciation and amortization expense increased $1.0 million, or 5%, to $22.6 million for the six months ended June 30, 2026, from $21.6 million for the six months ended June 30, 2025. This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.
Current wording
*Depreciation and Amortization.*Depreciation and amortization expense increased $1.5 million, or 5%, to $33.9 million for the nine months ended September 30, 2026, from $32.4 million for the nine months ended September 30, 2025. This increase in amount is due to increased amortization associated with capitalized software coupled with increased amortization associated with the acquired intangibles from Virsys12 and MissionCare.
Previous wording
Interest Income. Interest income was $0.9 million and $1.9 million for the six months ended June 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances and lower interest rates on invested funds.
Current wording
Interest Income. Interest income was $1.4 million and $2.7 million for the nine months ended September 30, 2026 and 2025, respectively. This decrease is a result of lower cash balances for the majority of the reporting period and lower interest rates on invested funds.
Previous wording
Other (Expense) Income Net. Other (expense) income, net was expense of $0.2 million and $39,000 for the six months ended June 30, 2026 and 2025, respectively.
Current wording
Other Expense, Net. Other expense, net was $0.2 million and $0.1 million for the nine months ended September 30, 2026 and 2025, respectively. The change is primarily a result of foreign currency losses.
Previous wording
*Income Tax Provision.*The Company recorded a provision for income taxes of $3.9 million for the six months ended June 30, 2026, compared to $2.4 million for the six months ended June 30, 2025. The Company’s effective tax rate was 24% for the six months ended June 30, 2026, compared to 20% for the six months ended June 30, 2025. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.
Current wording
*Income Tax Provision.*The Company recorded a provision for income taxes of $5.6 million for the nine months ended September 30, 2026, compared to $4.6 million for the nine months ended September 30, 2025. The Company’s effective tax rate was 24% for the nine months ended September 30, 2026, compared to 22% for the nine months ended September 30, 2025. The Company’s effective tax rate primarily reflects the statutory corporate income tax rate, the net effect of state taxes, foreign income taxes, the effect of various permanent tax differences, and recognition of discrete tax items.
Previous wording
*Net Income.*Net income was $12.6 million and $9.7 million for the six months ended June 30, 2026 and 2025, respectively. EPS was $0.43 per share (diluted) and $0.32 per share (diluted) for the six months ended June 30, 2026 and 2025, respectively.
Current wording
*Net Income.*Net income was $18.0 million and $15.8 million for the nine months ended September 30, 2026 and 2025, respectively. EPS was $0.61 per share (diluted) and $0.52 per share (diluted) for the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
Adjusted EBITDA was $40.7 million for the six months ended June 30, 2026, compared to $33.8 million for the six months ended June 30, 2025. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
Current wording
Adjusted EBITDA was $60.0 million for the nine months ended September 30, 2026, compared to $52.9 million for the nine months ended September 30, 2025. See “Reconciliation of Non-GAAP Financial Measures” below for our reconciliation of adjusted EBITDA to the most directly comparable measure under US GAAP and disclosure regarding why we believe adjusted EBITDA provides useful information to investors.
Previous wording
In order to better assess the Company’s financial results, management believes that net income before interest, income taxes, stock-based compensation, depreciation and amortization, impairments of long-lived assets, changes in fair value of contingent consideration, and changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments (“adjusted EBITDA”) is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business. We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods. In addition, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.
Current wording
In order to better assess the Company’s financial results, management believes that net income before interest, income taxes, stock-based compensation, depreciation and amortization, impairments of long-lived assets, changes in fair value of contingent consideration, changes in fair value of, including gains (losses) on the sale of, non-marketable equity investments, and expense related to the cybersecurity incident disclosed by us in our Current Report on Form 8-K filed on July 29, 2026 (the “Cybersecurity Incident”), after giving effect to related insurance recoveries (“adjusted EBITDA”), is a useful measure for evaluating the operating performance of the Company because adjusted EBITDA reflects net income adjusted for certain GAAP accounting, non-cash, and/or non-operating items which may not, in any such case, fully reflect the underlying operating performance of our business. We believe that adjusted EBITDA is useful to investors to assess the Company’s ongoing operating performance and to compare the Company’s operating performance between periods. In addition, certain short-term cash incentive bonuses and performance-based equity awards are based on the achievement of adjusted EBITDA (as defined in applicable bonus and equity grant documentation) targets.
Previous wording
Net cash provided by operating activities increased by $8.5 million to $40.6 million during the six months ended June 30, 2026. The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, partially offset by higher payments for personnel related expenses, sales commissions, and third-party software. Our days sales outstanding ("DSO") was 38 days for the second quarter of 2026 compared to 35 days for the second quarter of 2025. The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter. The Company’s primary sources of cash were receipts generated from the sales of our products and services. The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, and general corporate expenses.
Current wording
Net cash provided by operating activities increased by $7.8 million to $58.0 million during the nine months ended September 30, 2026, from $50.1 million during the nine months ended September 30, 2025. The increase in net cash provided by operating activities is primarily due to higher cash receipts from customers during the period, partially offset by higher payments for personnel related expenses, sales commissions, and third-party software expenses. Our days sales outstanding ("DSO") was 35 days for the third quarter of 2026 compared to 33 days for the third quarter of 2025. The Company calculates DSO by dividing the average accounts receivable balance for the quarter by average daily revenues for the quarter. The Company’s primary sources of cash were receipts generated from the sales of our products and services. The primary uses of cash to fund operations included personnel expenses, sales commissions, royalty payments, payments for contract labor and other direct expenses associated with delivery of our products and services, income tax payments, and general corporate expenses.
Previous wording
Net cash used in investing activities was $18.2 million for the six months ended June 30, 2026, compared to $18.4 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, the Company invested in marketable securities of $22.7 million, made payments for capitalized software development of $14.3 million, purchased strategic investments of $2.6 million, purchased property and equipment of $1.7 million, and paid a$0.3 million post-closing working capital adjustment related to the acquisition of MissionCare. These uses of cash were partially offset by $23.3 million in maturities of marketable securities. During the six months ended June 30, 2025, the Company invested in marketable securities of $26.1 million, made payments for capitalized software development of $14.5 million, purchased property and equipment of $3.4 million, and purchased an investment of $0.5 million. These uses of cash were partially offset by $26.1 million in maturities of marketable securities.
Current wording
Net cash used in investing activities was $61.1 million for the nine months ended September 30, 2026, compared to $27.0 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2026, the Company invested in marketable securities of $66.2 million, made payments for capitalized software development of $21.3 million, purchased strategic investments of $2.7 million, purchased property and equipment of $2.0 million, and paid a$0.3 million post-closing working capital adjustment related to the acquisition of MissionCare. These uses of cash were partially offset by $31.4 million in maturities of marketable securities. During the nine months ended September 30, 2025, the Company invested in marketable securities of $41.4 million, made payments for capitalized software development of $21.9 million, purchased property and equipment of $3.5 million, and purchased strategic investments of $1.5 million. These uses of cash were partially offset by $41.3 million in maturities of marketable securities.
Previous wording
Net cash used in financing activities was $12.3 million for the six months ended June 30, 2026, compared to $21.1 million for the six months ended June 30, 2025. The uses of cash for the six months ended June 30, 2026 included $9.3 million for repurchases of common stock, $2.1 million for the payment of cash dividends, $0.6 million for the payment of employee payroll taxes in relation to the vesting of restricted share units, and $0.4 million for an earn-out payment related to a prior acquisition. The uses of cash for the six months ended June 30, 2025 included $18.1 million for repurchases of common stock, $1.9 million for the payment of cash dividends, and $1.1 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.
Current wording
Net cash provided by financing activities was $26.0 million for the nine months ended September 30, 2026, compared to net cash used in financing activities of $29.0 million for the nine months ended September 30, 2025. The net cash provided by financing activities for the nine months ended September 30, 2026 included $39.9 million from the issuance of common stock, partially offset by $9.3 million used for repurchases of common stock, $3.1 million for the payment of cash dividends, $0.8 million for the payment of employee payroll taxes in relation to the vesting of restricted share units, $0.4 million for an earn-out payment related to a prior acquisition, and $0.3 million for debt issuance costs related to our revolving credit facility amendment. The uses of cash for the nine months ended September 30, 2025 included $25.0 million for repurchases of common stock, $2.8 million for the payment of cash dividends, and $1.2 million for the payment of employee payroll taxes in relation to the vesting of restricted share units.
Previous wording
Our balance sheet reflects positive working capital of $7.6 million at June 30, 2026, compared to negative working capital of $4.5 million at December 31, 2025. The change in working capital is primarily a result of an increase in cash and cash equivalents. The Company’s primary source of liquidity as of June 30, 2026 was $46.2 million of cash and cash equivalents and $20.6 million of marketable securities.
Current wording
Our balance sheet reflects positive working capital of $58.2 million at September 30, 2026, compared to negative working capital of $4.5 million at December 31, 2025. The change in working capital is primarily a result of an increase in cash and cash equivalents and marketable securities following the issuance of common stock in September 2026. The Company’s primary source of liquidity as of September 30, 2026 was $59.0 million of cash and cash equivalents and $56.2 million of marketable securities.
Previous wording
On February 20, 2023, we announced that our Board approved a quarterly dividend policy, under which we have paid dividends on a quarterly basis since our adoption of this policy. Under this dividend policy, the Board declared, and the Company paid, quarterly cash dividends on our common stock at the rate of $0.025 per share, $0.028 per share, and $0.031 per share during the years ended December 31, 2023, December 31, 2024, and December 31, 2025, respectively. On February 23, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on March 20, 2026 to holders of record of our common stock on March 9, 2026. On May 4, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on May 29, 2026 to holders of record of our common stock on May 18, 2026. On August 3, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, payable on August 28, 2026 to holders of record on August 17, 2026.
Current wording
On February 20, 2023, we announced that our Board approved a quarterly dividend policy, under which we have paid dividends on a quarterly basis since our adoption of this policy. Under this dividend policy, the Board declared, and the Company paid, quarterly cash dividends on our common stock at the rate of $0.025 per share, $0.028 per share, and $0.031 per share during the years ended December 31, 2023, December 31, 2024, and December 31, 2025, respectively. On February 23, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on March 20, 2026 to holders of record of our common stock on March 9, 2026. On May 4, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on May 29, 2026 to holders of record of our common stock on May 18, 2026. On August 3, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, which was paid on August 28, 2026 to holders of record on August 17, 2026. On November 2, 2026, the Board approved a quarterly cash dividend under this policy of $0.035 per share, payable on November 27, 2026 to holders of record on November 16, 2026.
Previous wording
On November 11, 2025, the Board approved a share repurchase program under which the Company was authorized to repurchase up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under Rule 10b5-1 plans, through privately negotiated transactions, or otherwise. The terms of this program provided that it would terminate on the earlier of February 26, 2026, or when the maximum dollar amount had been expended. During the six months ended June 30, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $5.0 million under this authorization, reflecting an average price per share of $22.42 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022). This program terminated in January 2026 when the maximum dollar amount under this program was expended.
Current wording
On November 11, 2025, the Board approved a share repurchase program under which the Company was authorized to repurchase up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under Rule 10b5-1 plans, through privately negotiated transactions, or otherwise. The terms of this program provided that it would terminate on the earlier of February 26, 2026, or when the maximum dollar amount had been expended. During the nine months ended September 30, 2026, the Company repurchased and subsequently retired 222,978 shares of common stock at an aggregate fair value of $5.0 million under this authorization, reflecting an average price per share of $22.42 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022). This program terminated in January 2026 when the maximum dollar amount under this program was expended.
Previous wording
On March 13, 2026, the Company announced the adoption of a new share repurchase program approved by the Board under which the Company is authorized to repurchase up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company is authorized to make repurchases in the open market, including under Rule 10b5-1 plans, through privately negotiated transactions, or otherwise. This share repurchase program terminates on the earlier of September 12, 2026 or when the maximum dollar amount under the plan has been expended. During the six months ended June 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization, reflecting an average price per share of $20.51 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022). This share repurchase program does not require the Company to acquire any amount of shares and may be suspended, modified, or discontinued at any time.
Current wording
On March 13, 2026, the Company announced the adoption of a new share repurchase program approved by the Board under which the Company was authorized to repurchase up to $10.0 million of its outstanding shares of common stock. Pursuant to this authorization, the Company was authorized to make repurchases in the open market, including under Rule 10b5-1 plans, through privately negotiated transactions, or otherwise. The terms of this program provided that it would terminate on the earlier of September 12, 2026 or when the maximum dollar amount had been expended. During the nine months ended September 30, 2026, the Company repurchased 209,498 shares of common stock at an aggregate fair value of $4.3 million under this authorization, reflecting an average price per share of $20.51 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022). This share repurchase program terminated on September 12, 2026 upon the expiration of its term.
Previous wording
In the aggregate, during the six months ended June 30, 2026, the Company repurchased 432,476 shares of common stock at an aggregate fair value of $9.3 million under both of the share repurchase programs described above, reflecting an average price per share of $21.50 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).
Current wording
In the aggregate, during the nine months ended September 30, 2026, the Company repurchased 432,476 shares of common stock at an aggregate fair value of $9.3 million under both of the share repurchase programs described above, reflecting an average price per share of $21.50 (excluding the cost of broker commissions and the 1% share repurchase excise tax imposed by the Inflation Reduction Act of 2022).
Previous wording
We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility (through the date of its maturity on October 6, 2026) and any amended, renewed, or replacement credit facility that we may enter into in connection with the upcoming maturity of our current revolving credit facility as noted above, will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.
Current wording
We believe that our existing cash, cash equivalents, marketable securities, cash generated from operations, and available borrowings under our revolving credit facility will be sufficient to meet anticipated working capital needs, new product development, pay our quarterly dividends, any share repurchases we may elect to make under any future share repurchase program, and fund capital expenditures for at least the next 12 months and for the foreseeable future thereafter.
Previous wording
The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business. It is anticipated that future acquisitions or strategic investments, if any, would be effected through cash consideration, stock consideration, debt, or a combination thereof. The issuance of our stock as consideration for an acquisition or to raise additional capital could have a dilutive effect on earnings per share and could adversely affect our stock price. Our revolving credit facility contains financial covenants and availability calculations designed to set a maximum leverage ratio of outstanding debt to consolidated EBITDA (as defined in our credit facility) and an interest coverage ratio of consolidated EBITDA to interest expense. Therefore, the maximum borrowings against our revolving credit facility would be dependent on the covenant calculations at the time of borrowing. As of June 30, 2026, we were in compliance with all covenants under our revolving credit facility. There can be no assurance that amounts available for borrowing under our revolving credit facility will be sufficient to consummate any possible acquisitions, and we cannot provide assurance that if we need additional financing, it will be available on terms favorable to us or at all. Failure to generate sufficient cash flow from operations or raise additional capital when required in sufficient amounts and on terms acceptable to us could harm our business, financial condition, and results of operations.
Current wording
The Company’s growth strategy includes acquiring businesses or making strategic investments in businesses that complement or enhance our business. It is anticipated that future acquisitions or strategic investments, if any, would be effected through cash consideration, stock consideration, debt, or a combination thereof. The issuance of our stock as consideration for an acquisition or to raise additional capital could have a dilutive effect on earnings per share and could adversely affect our stock price. Our revolving credit facility contains financial covenants and availability calculations designed to set a maximum leverage ratio of net funded debt to consolidated EBITDA (as defined in our credit facility) and an interest coverage ratio of consolidated EBITDA to interest expense. Therefore, the maximum borrowings against our revolving credit facility would be dependent on the covenant calculations at the time of borrowing. As of September 30, 2026, we were in compliance with all covenants under our revolving credit facility. There can be no assurance that amounts available for borrowing under our revolving credit facility will be sufficient to consummate any possible acquisitions, and we cannot provide assurance that if we need additional financing, it will be available on terms favorable to us or at all. Failure to generate sufficient cash flow from operations or raise additional capital when required in sufficient amounts and on terms acceptable to us could harm our business, financial condition, and results of operations.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For additional information regarding these transactions, see the Current Report on Form 8-K filed by us on September 15, 2026.