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Earnings call: HealthStream sees solid growth in Q1, focuses on SaaS migration

EditorAhmed Abdulazez Abdulkadir
Published 24-04-2024, 10:40 pm
© Reuters.
HSTM
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HealthStream , Inc. (NASDAQ:HSTM), a leading provider of workforce and provider solutions for the healthcare industry, has reported a strong financial performance in the first quarter of 2024, with a 6% increase in revenue to $72.8 million and a significant 24% rise in adjusted EBITDA to $17.1 million.

The company's focus on workforce management in healthcare, expansion into the nursing school market, and commerce capabilities are driving growth, alongside a robust subscription revenue stream that accounts for 96% of its total revenue. HealthStream's operating income and net income both soared with an increase of 97% and 99%, respectively. The company has reaffirmed its financial guidance for the full year and is confident in achieving its targets.

Key Takeaways

  • HealthStream reports a 6% increase in revenues and a 24% increase in adjusted EBITDA for Q1 2024.
  • The company maintains a strong cash balance of $83.7 million and is debt-free.
  • 96% of HealthStream's revenues are derived from subscription-based products.
  • Over a dozen nursing schools have implemented HealthStream's technology, including the Red Cross Resuscitation Suite.
  • The company has contracted 33,000 new subscribers for its credential streaming solution, surpassing 1 million total subscribers.
  • HealthStream is focused on expanding its three primary application suites and the hStream technology platform.

Company Outlook

  • HealthStream reiterates its full-year financial guidance, expecting consolidated revenues between $292 million and $296 million, and adjusted EBITDA between $64.5 million and $67.5 million.
  • The company anticipates steady growth throughout 2024 and plans to share gains with shareholders via dividends.
  • HealthStream's virtual annual shareholder meeting is scheduled for May 30.

Bearish Highlights

  • The company experienced a decline in renewals for ANSOS and Quality Manager offerings.
  • There are challenges in the skilled nursing market and impacts from re-bundling strategies on purchase patterns.
  • A slight delay in Q1 purchases was noted as customers adjusted to the company's new repositioning strategy.

Bullish Highlights

  • HealthStream has seen initial success in direct professional commerce sales, including sales of the DEA mandated opioid course.
  • The company has reported a one-time license sale estimated between $700,000 to $800,000.
  • New customers include notable healthcare organizations such as Arkansas Blue Cross Blue Shield and Tufts Medical Center.

Misses

  • The company did not discuss the impact of the change healthcare acquisition on their business.
  • The release of new metrics, including consolidated ARR, is still in development and may take a few quarters to be publicly available.

Q&A Highlights

  • HealthStream executives emphasized the company's transition towards Software as a Service (SaaS) application stacks and the migration of legacy customers to newer applications.
  • The company's platform strategy, including API adoption and the developer portal's success, is seen as a long-term monetization opportunity.
  • HealthStream is not sunsetting legacy platforms but is encouraging migration to SaaS stacks, a strategy considered right for the next 24 months.

HealthStream's commitment to its technological advancement and strategic focus on SaaS migration positions the company to capitalize on the growing demand for healthcare workforce management solutions. With a clear strategy and a strong financial foundation, HealthStream continues to engage with its broad market of healthcare professionals and institutions.

InvestingPro Insights

HealthStream, Inc. (HSTM) has demonstrated robust financial health in the first quarter of 2024, complemented by strategic management decisions that are reflected in the company's stock performance and valuation metrics. Here are some InvestingPro Insights that provide a deeper understanding of the company's current financial landscape:

InvestingPro Data:

  • Market Capitalization: HealthStream boasts a market cap of $800.23 million, indicating a substantial presence in the healthcare solutions market.
  • P/E Ratio: The stock is currently trading at a P/E ratio of 53.05, which adjusts to 45.78 when looking at the last twelve months as of Q1 2024. This suggests that investors are willing to pay a higher price for earnings, possibly due to expected growth.
  • Revenue Growth: The company has seen a revenue growth of 4.61% over the last twelve months as of Q1 2024, showcasing its ability to expand its earnings.

InvestingPro Tips:

  • HealthStream has a perfect Piotroski Score of 9, indicating top-notch financial health, which may reassure investors about the company's stability.
  • The company's management has been actively buying back shares, a sign that those with the most insight into the company's prospects see the stock as undervalued.

For investors looking for additional insights and tips, InvestingPro offers a comprehensive list, with 11 more tips available for HealthStream. These can be accessed at InvestingPro's dedicated HealthStream page: https://www.investing.com/pro/HSTM. For those interested in a subscription, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Full transcript - HealthStream (HSTM) Q1 2024:

Operator: Good morning, and welcome to HealthStream's First Quarter 2024 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only mode. At the request of the company, we will open the conference up for questions-and-answers after the presentation. I will now turn the conference over to Mollie Condra, Vice President of Investor Relations and Communications. Please go ahead, Ms. Condra.

Mollie Condra: Thank you and good morning. Thank you for joining us today to discuss our first quarter 2024 results. Also on the conference call with me today is Robert A. Frist, Jr., CEO and Chairman of HealthStream and Scotty Roberts, CFO and Senior Vice President of Finance and Accounting. 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 could involve risks 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, 10-Q, and our earnings release. Additionally, we may reference measures such as the adjusted EBITDA, which is a non-GAAP financial measure. A table providing supplemental information on adjusted EBITDA and reconciling to net income attributable to HealthStream is included in the earnings release that we issued yesterday and may refer to in this call. So with that start today, I'll turn the call over to CEO, Bobby Frist.

Bobby Frist: Thank you, Molly. Good morning, everyone and welcome to our first quarter 2024 earnings call. As our analysts sometimes say, it was a solid print. In the first quarter, we achieved record revenue and record adjusted EBITDA. In fact, our quarterly financial performance showed year-over-year increases in each of the major categories we highlight in our earnings release. I'm excited to be able to report that hyper-performance. The first quarter revenues were $72.8 million, up 6% over the first quarter of last year and adjusted EBITDA was $17.1 million, up 24% over the first quarter of last year. We were able to reiterate our financial guidance ranges for the full-year of 2024 and right now, we have the full expectation that we'll be able to hit the ball right down the middle of the fairway. We're looking to the middle of the range and performance. So we're excited to deliver these strong financial results and reiterate our financial range objects with an expectation of going right down the middle. Later in this call, after Scotty's discussion about financials, I'm going to describe some of the developments in learning, credentialing and scheduling application suites that are helping drive these results. I do want to back up a little bit and talk about an emerging trend we're seeing that I think is worth calling out. The trend I'm referring to is the increasing amount of attention that health organizations are paying to their workforce kind of broadly defined. Now more than ever, we believe that Healthcare CEOs are embracing the fact that their workforce is their most valuable asset and the staffing shortages that were exacerbated by the pandemic really served to reinforce the ongoing importance of taking care of your workforce and hopefully, from our point of view, investing in them to retain and develop them in their capabilities and capacity. And you know these are the things that HealthStream has been focused on for a long, long time. We're just laser focused on workflow applications that improve both the quality, the knowledge of, and the knowledge by these healthcare professionals and of course, their skill sets. We also make sure the right people are in the right place at the right time. So there's a lot of things that we do that help organizations focus and bring deliberate focus on retaining and developing workforce. In fact, if you ask any HealthStream employee, you know, I'd say they're proud to say that our vision has always been about improving the quality of healthcare through the people of healthcare by improving, who they are and what their skills are. And so, we've held that vision to improve the quality of healthcare by developing the people who deliver care for a long time. And based on our conversation with customers, it's just increasingly becoming a top priority for them as well, the healthcare workforce as a topic. And you can look at that from any direction, from workforce shortages, the needs to cross develop competencies and skills, these are all emerging, kind of, the hospitals are realizing their need to invest in these areas. Healthcare can be complex, but working together with our customers, we help them take care of these people and we know how to do that well. It's just something that benefits everyone. So our three application suites along with the HealthStream platform underpinning them now and our deep network of customers have helped position HealthStream as the workforce platform of choice or maybe as sometimes we say, the people platform for healthcare. Moving on to more specific business topics, I'm going to share two updates that we believe are emerging parts of our business that could become growth drivers in future years. To be clear, not material contributors today, but the expected growth results are -- we're excited to see the initial results in these areas that we're going to discuss. The first is we're excited to advance our commerce capabilities. For the longest time, most all of our sales have been done facilitated by a field sales organization, which is wonderful. And we build strong bridges and relationships with 1,000s of customers through this incredible sales organization. But increasingly they're supported with e-commerce capabilities that are a part of our hStream platform and we're building out these capabilities for three areas of commerce. The first is kind of enterprise level purchasing, we call collaborative purchasing. And we brought this up on prior calls, but our collaborative purchasing tools are now evolving with better e-commerce capabilities built in, and so that's exciting. The second is, I guess what we would call departmental level purchasing. It's business-to-business purchasing kind of at the departmental level. And we now have new tools that we're launching that department heads and others manage their education, training and development budgets through commerce tools, which is exciting. And then finally, the one I'm going to talk about is actually the newest, how to focus on the individuals in our ecosystem with commerce -- direct to individual commerce purchasing. And during our last call, I mentioned to you that we'd started selling what's called the DEA mandated opioid course. It's required of physicians through kind of a federal mandate, so it has strong tailwinds. But through our e-commerce capabilities and through multi-channel, we were able to present the opportunity to purchase this course in our own network and in some cases promoting it inside of our own application areas. I can now report that we had approximately $0.5 in DEA course sales, direct to professional, direct to doctors, sales of the DEA course during the first quarter alone. And so, this is really an exciting kind of breakthrough moment, as we use our new commerce tools to allow for direct purchasing by physicians of, in this case, this course. Now again, this course is a bit anomalous, because it's a unique opportunity based on a federal mandate, time sensitive and we happen to have just the right content for it, but nonetheless, wouldn't have been possible without being powered by our new commerce tools. So taken by itself, this represents -- one selling to group of individuals. But in this greater scheme of things, we think it represents an opportunity to expand these direct professional commerce capabilities. As the people platform of healthcare, I think HealthStream is well positioned to know what individuals need, when they need, which course and when, and then also how to get it to them. And so, I feel well positioned to extend this commerce capability people platform for healthcare. Well, you know, the other channel where we're seeing expansion of direct commerce is through NurseGrid Learn and you'll recall that our NurseGrid app is extraordinarily popular with nurses. We have over a $0.5 million monthly active users, and if you ask almost any nurse, you're going to have a really high hit rate that they both like NurseGrid, the app, which helps them manage their personal schedules and work schedules. And they're beginning to appreciate some of its new features and capabilities like NurseGrid Learn. And so, we begin to see some recent transactional volume through NurseGrid Learn, direct to nurses as well, so I'm excited to see that start to be powered by our new commerce tools. Let's move on to the expansion of our total addressable market, which we announced in October of last year. Specifically, I want to provide you with some [Technical Difficulty] we're making around nursing schools. After completing our first major enterprise sale to one of the largest nursing schools in the nation, I'm pleased to announce that we have now fully implemented our HealthStream technology platform and the Red Cross [Technical Difficulty] over a dozen of their campuses. And we expect the full rollout during this quarter, the second quarter. So an exciting rollout to one of the largest nursing schools in the nation using [Technical Difficulty] technology platform, the hStream ID along with the Red Cross Resuscitation Suite. And now they're entering work when they get their first job after graduating and becoming nurses, they enter work with a Red Cross certificate, thanks to this new relationship with nursing school, with this large nursing system. And so we're excited to see them enter the workforce with that ID and with that Red Cross credential. We'll be able to report more on our progress here financially, but the implementation wave has begun, and we're really excited about that. And you know, really the great opportunity is that the data on their completion of that certificate would carry forward with them into work if they land at a facility or health organization that uses our learning application suite. And so, we're really excited about that advance course, also powered by the hStream platform and its interoperability APIs. So again, excited to see both technical progress and financial implementation progress in the nursing school market. Of course, with this as a working model, we'll work our best to figure out how to expand sales opportunities in that channel as well. So those are the two opportunities I wanted to cover, the DEA MATE direct to professional and the nursing school early developments there of entering the nursing market -- nursing school market and nursing student market. And so we're excited to report progress in both of those areas. I do want to manage expectations. These are new areas, new channels. They're not material parts of our business, but we do see some light. We're excited to see some light at the end of the development tunnel and declaring these as an expanded market opportunity in our prior earnings calls. So again, we're excited to see those developments. I want to describe, just as a reminder for anyone new on the call, the base level description of our business, so you can kind of take away the nature of our business. First and foremost, HealthStream is a healthcare technology. We're focused on the development of our technology platform, and we're dedicated to developing, credentialing, and scheduling the healthcare workforce. So three kind of unique healthcare workflows related to their people that we provide through our SaaS based application stacks. And increasingly, those three separate SAS technology stacks that do credentialing, learning, and development and scheduling are becoming interoperable through the hStream technology platform we've been building. Historically, we sell all of our solutions on a subscription basis under contracts that average [Technical Difficulty] years, which makes our revenues both recurring and predictable. And we'd like to get some credit for that eventually that this is a recurring revenue SaaS subscription business. In fact, 96% of our revenues are subscription based. As I mentioned, we have also started to open our sales channels directly to professionals and nursing students. We are profitable. We have no interest-bearing debt. We have strong cash balance, which did surge a good bit in Q1 to $83.7 million, that's up $12.6 million over the prior quarter. So good free cash flows and cash flows during the quarter. We were solely focused on healthcare, more specifically the healthcare workforce. That's an important [Technical Difficulty] especially given the trends I mentioned at the open of this call. There are 12.3 million healthcare professionals and nursing students, which we define as our total addressable market. [Technical Difficulty] We hope over time, they'll engage with us through all three of our major primary application suites and all of our secondary applications as well. And we want them all -- we want to thank them all 12.3 of them -- 12.3 million of them essentially as members of our ecology -- of our ecosystem and we're making good headwinds towards making it a network effect or an ecology through the hStream platform. Well [Technical Difficulty] I'd like to turn over to Scotty Roberts to take a little deeper dive into the numbers, because I just hit the top couple. Thank you. Go ahead, Scotty.

Scotty Roberts: All right. Thanks Bobby, and good morning. So, I'll jump right in and go over the financial highlights for the first quarter and unless otherwise noted, the comparisons will be against the same period of last year. I'm pleased to share that we continue to deliver solid performance for the first quarter, growing both topline and adjusted EBITDA. Revenues for the quarter were $72.8 million, up 6%. Operating income was $5.7 million, up 97%. Net income was $5.2 million, up 99%. Earnings per share was $0.17 per share, up from $0.09 per share, and adjusted EBITDA was $17.1 million and was up 24%. Revenues increased by $3.8 million or 6%, coming in at $72.8 million, compared to $68.9 million in last year's first quarter. Revenues from our subscription products accounted for 96% of total revenues and were $70.2 million, increasing by 6%. Subscription revenues, as we've defined them for some time, predominantly include SaaS solutions, but also software license and maintenance fees. Software licenses are associated with legacy products such as our ANSOS scheduling solution and are occasionally sold to existing customers. I'm calling this to your attention here because one-time license revenues were approximately $0.8 million in the first quarter, and they increased by $0.5 million over the prior year. In fact, the $0.8 million of revenue in the quarter came exclusively from one ANSOS sale. We do not expect one-time license sales to continue at this level, and I want to remind you that the $0.8 million of first quarter license sales should not be modeled to repeat in upcoming quarters. Additionally, our professional service revenues declined by $0.4 million, or 13%. In the last quarter, I discussed two products that are experiencing declines in revenues, so I want to give a quick update on those. The first are renewals of the ANSOS scheduling products, and the second is our quality manager solution. During the first quarter, these products collectively declined by $0.6 million or 13%. On the positive side, our initiative to sell directly to professionals through our commerce channels delivered over $0.5 million of revenue in the quarter. Our remaining performance obligations were $514 million as of the end of the quarter, compared to $504 million for the same period of last year and we expect approximately 44% of the revenue backlog to be converted over the next 12 months. Gross margin was 66.2%, compared to 65.4% last year. This improvement is primarily due to the growth in revenues and from a cost perspective, our staffing costs were down due to last year's reorganization efforts while royalties, hosting and software grew over the prior year and more than offset the labor cost reductions. As for operating expenses, we were able to maintain operating expenses, excluding cost of revenues to a 1% increase and most of this increase year-over-year was from depreciation and amortization, which was up 4% and product development expenses were up 3%. Our G&A and sales and marketing expenses were down 6% and less than 1% respectively. Adjusted EBITDA was $17.1 million, which was about 24%, and adjusted EBITDA margin improved to 23.4%, compared to 19.9% last year. As a reminder, last year's adjusted EBITDA was negatively impacted by $1 million of severance charges associated with the reorganization under our single platform strategy. Now let's go over the balance sheet metrics. We ended the quarter with cash and investment balances of $83.7 million, compared to $71.1 million last quarter. During the quarter, we deployed $7.8 million for capital expenditures and paid $0.8 million to shareholders through our dividend program. For receivables management, overall it was a strong quarter of collections, which led to days sales outstanding of 46 days, compared to 51 days last year. DSO has improved, bad debt charges were not material and generally speaking, the payment timeliness from our customer base remains fairly stable. Now switching to cash flows, our cash flows from operations were up slightly over the prior year, coming in at $20.9 million and free cash flows improved by $1.1 million or 9%. With a strong balance sheet containing over $83 million of cash and no debt, we are in a good position to strategically deploy our available capital in a variety of ways, including M&A, dividends, and share repurchases. Yesterday, our Board of Directors declared a quarterly cash dividend of $2.8 per share to be paid in May. Our share repurchase program expired on March 31st and there were no shares repurchased during the quarter. For this program, we repurchased $8.9 million out of the $10 million authorization. Now, as for guidance, we are reaffirming the financial expectations that were previously announced in February. We expect consolidated revenues to range between $292 million and $296 million. We expect adjusted EBITDA to range between $64.5 million and $67.5 million, and for capital expenditures to range between $28 million and $30 million. This guidance does not include assumptions for any acquisitions that we may complete during the year. That wraps up my comments for this quarter's call. Thanks for your time this morning, and now turn the call back over to Bobby.

Bobby Frist: Thank you, Scotty. I'm going to highlight a few of the areas, where we saw some success in each of our three primary application suites and talk a little bit about some advances in our [Technical Difficulty] technology, we call hStream as well. So, our HealthStream Learning Center is the application, it's kind of a flagship product of our learning application set and it continues to be strong in the market. But importantly, when the HealthStream Learning Center customers are up for renewal, we frequently see customers purchase multiple new solutions along with it when they renew. And this is kind of an example of expanding wallet share is kind of a way to think about that. And one of our academic medical center customers used their renewal of the HealthStream Learning Center as an opportunity to evaluate how HealthStream might help them serve their entire clinical workforce. And this may be an example of the tailwind I mentioned earlier. The customer already purchased various HealthStream solutions for different subsets of their population, and when it came time to renew, they concluded that by pairing that with the renewal with a purchase of HealthStream competency suite and that would benefit their entire clinical workforce, adding on the competency suite to the learning center. The competency suite is a comprehensive and cohesive bundle of applications and content used to develop the clinical staff, and in this case they added that kind of that entire bundle. The customer also added our nurse residency program, which onboard newly graduated nurses, which is kind of an important kind of continuum of service from some of the work we're doing now in nursing schools. And so, we saw them add the nurse residency program to the account as well. So, the net result was the ARR, the recurring revenue, for that customer grew by 31% or approximately $100,000 in the first quarter, making this a good example of expanding wallet share and kind of cross selling products, in this case adding on clinical competency bundles and the nurse residency program, upon renewal of their base learning center contract. With our SaaS scheduling solution, shifting gears now known as ShiftWizard is a best-in-class solution of its kind, and we think it will only become more valuable to customers as it begins to integrate with other [Technical Difficulty] applicants through our hStream technology platform. In the first quarter, revenues from ShiftWizard grew 26% over the prior year quarter as customers continue to report high customer satisfaction with the ShiftWizard application. We contracted several new customers during the quarter, which we're excited about. Welcome Samaritan Medical Center, Bay State Health, and Hutchison Regional Medical Center, all new customers for ShiftWizard, we're excited to add you to our customer list. Our credentialing solutions also enjoyed a successful start to the year, both in terms of competitive take outs and conversions from our legacy solutions, and you're going to see an increased focus by our sales team on these conversions this year. We think it's really time now, as we tell our customers at the start of the year, time to migrate, so if you're on our older legacy platforms of HealthLine and Morrisey, you'll be hearing from HealthStream that we think that credential stream is right for you and it's time to get under the migration process. So, this best-in-class solution for enrolling [Technical Difficulty] and privileging physicians is really just in a market leading position, we believe. One thing you may not know about credential streaming, one of its differentiating characteristics is we believe it's the first credentialing solution that really engages with the physician and the credentialing process. We think of it as much more user centered software and we think that's a good thing. We see increasing traffic by physicians logging in and taking control of the credentialing process individually and professionally. And so, we're proud that our [Technical Difficulty] suite is kind of physician centered in many ways, and we think that's consistent with being the people platform of healthcare. We want to make that as pain free a process as possible for physicians, and we laser focus on the net promoter score from physicians on that particular application. So, you may not have known that one of our twists is that our credentialing system has a lot of tools that are easy to use by the physicians themselves to take control of the process. In the first quarter, we contracted 33,000 new subscribers for credential stream, which is an exciting add and we've now exceeded over 1 million subscribers on the credential stream application suite, which is really exciting. And we welcome new customers like Arkansas Blue Cross Blue Shield, which is really exciting, because it's slightly different kind of customer profile than our hospitals [Technical Difficulty] Tufts Medical Center, Dartmouth Health and Littleton Regional Healthcare, all added the credential stream application suite to their processes, and we're excited to welcome them as customers. In terms of our platform solutions, the momentum we're seeing with regard to customers using adoption of our APIs is paving the way for an exciting future for the company. As a reminder, we launched the hStream [Technical Difficulty] portal in the fourth quarter of 2022, so it's fairly new. I think of this developer portal as a window into the actual platform. So, we talk now about the three application suites, but the platform that we call hStream is driven by a growing library of APIs that we make available under license to our customers, and some of them get access based on the fees they've already paid, like if you use the HealthStream Learning Center, you get access to learning APIs. But over time, we also think these APIs and their capabilities and datasets that are in the platform will themselves become monetizable assets. So, we're excited about that. In the developer portal, kind of, as a sign of life or a sign that the platform strategy is working, we saw a doubling of different measures of utilization of these platform level capabilities. So the portal provides access to modern, scalable, secure architecture with a growing collection of shared services, platform level applications and APIs to connect two and among all of these different components. At the end of the first quarter 2024, 104 healthcare organizations have chosen to open an account on the developer portal, which is kind of how you get access to these APIs and collectively 237 of their developers have account level access to a growing library of APIs, most of them currently in the learning area to then integrate our technology into their broader technology environment, for example into their intranets and other applications they may build. For example, in the first quarter, Stanford Healthcare built an internal app that provides easy access to epic course completions. And so, here's an example using the developer portal, the APIs by Stanford Health, who have licensed access to these APIs, because they're a customer of the broader you know hStream platform and they are incorporating those into this new app that helps them deliver access to epic course completion, so it's really exciting. And there are plenty of other examples, New England Life Care app to conveniently retrieve course and assignment progress, and they're also using the APIs in the developer portal. So as these APIs get more and more utilized, we feel we get more threaded into the broader [Technical Difficulty] platforms of our customers. So, we think that demonstrates the value of our platform strategies increasingly and hopefully provides more value and utility to our customers. And we think again, as the platform expands, there'll be more and more capabilities in the platform, more reasons to use it and more interoperable, and then in the long range vision, of course, monetizing these capabilities directly is also an exciting possibility. So I think, as I think about concluding, I'd say if you're interested in profitable, recurring revenue SaaS and increasingly a PaaS, a platform-as-a-service healthcare technology company, that for 2024 we expect to deliver steady growth, kind of down the middle of the fairway of our guidance in fact, and we're determined to share some of our gains directly with shareholders in the form of a dividend, one which we increased last quarter, maybe HealthStream [Technical Difficulty] company and a good stock for you if you're a new investor. If you're a shareholder, we welcome you to participate in and know remind you that our annual shareholder meeting is scheduled to take place virtually on Thursday, May 30 at 02:00 p.m. and notifications of the meeting and access to the proxy statement 10-K and shareholder letter were sent out on April 15. So, if you're a shareholder, we encourage you to vote your shares and participate in the future of our company. I'll now turn it back over to the operator to begin the questions.

Operator: Thank you, sir. The question-and-answer session will begin at this time. [Operator Instructions] And our first question comes from Matt Hewitt with Craig-Hallum. Your line is open.

Matt Hewitt: Good morning and congratulations on the strong start to the year. Maybe the first question, it appears that the employment situation at your customers, hospitals, healthcare systems is improving since last year. And as that occurs, how are you seeing that change the purchasing decisions, I think you spoke a little bit about how you're seeing, your customers are paying more attention to their workforce today than maybe they did pre-pandemic, but are you seeing them even starting to implement HealthStream applications and solutions right at the beginning with the onboarding process and are you seeing, I guess, a greater wallet share with those customers starting on day-1 versus upon renewals and downstream from that initial hire?

Bobby Frist: I don't have to think through all that. There's a lot of different trends in purchasing and patterns. I think one of them is we've done a little better job of bundling some of our products into suites now that can result in a little higher order value. And I mentioned that competency suite sale as an add on earlier. The competency suite is kind of an aggregation of two or three products that used to be sold individually, and now they're viewed as a more comprehensive tool set to develop the competencies of staff. And so, we're learning to position things in a little better way that's more consistent with the tailwinds I mentioned. I definitely think the pandemic created a greater, as I mentioned earlier, a greater awareness of the need to invest directly in your workforce and make their lives better and help them do their jobs better and skill them up for new job opportunities inside the organization. So, I think there is an earlier increased awareness in the need for investing in workforce development, you can't just outsource your workforce. I think people are now willing to invest hopefully a little more in the workforce and make that more of a priority discussion in the C suite. And then as far as moving upstream, I think yes, on the call, we demonstrated our strategies for moving upstream are getting to the workforce before they become a workforce. So, the nursing school market, we're just -- it's very early, but we're excited about what that can mean for us, as we can catch people earlier in their career and in fact, I think we did release a white paper study, a press release not too long ago that talk about the workforce's increasing need for mobility and to retain -- to find and develop and retain the nurses, and that they were willing to take jobs at the places where they had kind of interned or done their rotations. And hospitals need more help in recruiting those precepted students and making them full time employees and we think HealthStream might be in a good position to help with that problem over time. Again, it's really early and early research, but a lot of the students doing clinical rotations or the nurses at hospitals we think are great hiring candidates down the road. So another way, we're going upstream, as you mentioned. So, yes, in all those ways, I just -- I think a little better attitude customers about investing and a little better bundling strategies for us in our deal pipeline.

Matt Hewitt: That's really helpful. Thank you. And then maybe a separate question regarding the opioid course. Obviously, you know, it's nice to have a tailwind like that, a government mandated tailwind. How quickly are hospitals expected to implement that type of a course? And what could that mean? Is it a driver for this year or could it add 1% or 2% to revenues this year, just trying to think of how to kind of factor that in?

Bobby Frist: Couple of things here. And you pointed out rightly, this is kind of a unique opportunity. So we don't want to get, I mean, it's exciting, right? We did $0.5 in the quarter, so if we can find a way to keep that rate up, and remember, that's direct to professional sales. So, we don't necessarily see any institutional purchasing of that course or certainly not much. But the direct opportunity to get to a physician, who has a renewing license where this is a requirement, drove a $0.5 in sales in the quarter. So, yes, I think if we can keep it up, it's going to be a nice small contributor, but we also want to be careful to not over extrapolate our capabilities of selling direct individuals, I think it's kind of a good fortune that requirement and the curriculum we already had and our ability to market now these channels, our new e-commerce tools, set us up to do well in the first quarter, but it is a kind of a one-time mandate, so we don't, again, at some point in the next 24 months, everyone will have met the requirement or not. And it was a unique set of circumstances, so we don't want to over excite about that. So, you know, we just want to -- that's why I keep saying the middle of the fairway, middle of the fairway. You know, we had -- and we also had an anomalous bit of revenue in the one-time license, which we don't -- obviously, we don't focus on selling the enterprise license like we mentioned on ANSOS, but we did. We're not going to -- customer wants to expand their use of ANSOS, we're going to take that business and we don't want to overengineer the forecast based on that one-time license sale, which I think Scotty called out at about, I think it's $700,000 or $800,000. And so, we -- middle of the fairway, middle of the fairway is what we keep saying.

Matt Hewitt: Got it. All right. Thank you very much.

Operator: Thank you. Our next question comes from Jared Haase with William Blair and Company. Your line is open.

Jared Haase: Yes. Good morning. Thanks guys for taking the questions. This is Jared on for Ryan Daniels. Bobby, you talked a little bit, I think, in the credentialing segment about a win with a payer. And I'm curious, I think that's relatively new. So just be curious to hear a little bit more as to how we should think about the opportunity with payer customers. And then specifically, it sounded like that was a blues plan, so I'm wondering if you see an opportunity here to sort of further penetrate the network of blues plans nationwide.

Bobby Frist: Well, okay. So, first, we're excited you picked up on that. And, yes, it's a new type of customer for us. We think that our credential stream application and the way we built it might give unique benefits to that market segment over time, the way that it's been engineered to work and create data mobility, sometimes health plans are owned by health systems, and that might create some interoperability benefits that we see potentially in the future. So, yes, it's an example of one kind of exciting new development if you're in the sales team in that area. And we do think we have a unique set of capabilities in the app that could be beneficial to health plans. That said, health plans are hard to sell too. It's new for us. We got a lot of work cut out for us. But if you think in terms of two to three years, I'd love to see that become a thing for us, where we can have a presence in that segment as well. So, again, hopefully, the way we built the application, and its interoperability and potential data mobility will provide some benefits to health plans, particularly when they're owned by hospitals and health systems. And, yes, that was a blues, but we don't claim to have any particular expertise in selling the blues. It's new for us again, and required some new modeling, new selling approach, but we'll see where it goes. I think we got a shot at making that an opportunity that repeats more than once.

Jared Haase: Got it. Yes, that makes sense and look forward to hearing more over the coming years. Maybe another follow-up just from the prepared remarks. Bobby, I think you talked a little bit about enterprise purchasing collaboratives and I know it sounds like it's not a material part of the business today, but I was hoping, number one, if you could maybe just contextualize sort of what portion of bookings or ARR growth comes through a collaborative purchasing today, and maybe where you expect that to get to over the next few years and then it also sounded like that's evolving with some additional capabilities. So we'd love to just hear a little bit more about that as well.

Bobby Frist: Yes. So, the collaborative purchasing process for enterprises kind of benefits them the most. It's a way for them to organize and orchestrate their purchasing of certain of our offerings. So, if they've got you know a dozen different things they're looking at, it's a really organized kind of 90-day way for them to see all the products in the bundle, organize, demand for it across multiples, say, if they have 30 or 40 hospitals, they want to figure out how much they need at each facility based on the CNOS at those facilities. So it's an engagement model we've used for a long time, used to historically be very manual, kind of led by people and essentially our consultative sales process. But we formalized that into digital tools that gives the organization visibility and how demand is growing in each, you know, as orders are kind of indicated on a product that kind of aggregates the orders, so at the enterprise level, they can see that. At the end, there's a discounting model that lets them get a discount based on the volume commitment levels as they grow, so it almost gamifies the purchasing process and it's budget aligned, so they can do the whole process aligned with their budget purchasing cycles. So, price collaborative is again not widely deployed, but we've increasingly built digital tools to facilitate it. So, for example, now the pricing models are connected directly to our price book capabilities in sales force and our sales tool sets that we have. So now the collaborative software will present, as you commit to higher volumes in the purchase process, you can see the discounts occurring automatically because the way it's connected digitally to the price booking mechanism that we hold in Salesforce (NYSE:CRM). So, you know, I hope someday that we can extend these capabilities more broadly and they'll continue to get better and better and easier to use and more budget aligned and more products in the collaboratives. But it's been a part of our purchase process for years. It does several million in orders, in aggregate orders, but a small portion of overall orders are achieved through the collaborative process. But we love it because it's enterprise level purchasing on a growing -- an increasingly automated toolset powered by the hStream platform. And at the other end of that spectrum, you mentioned new capabilities. In the middle, we believe that there are kind of untapped budgets at the departmental level because, you know, sometimes they orchestrate at the enterprise level, but our commerce tools are also now being geared and we hope to launch this year the ability for kind of managers, let's say I have a department budget of $3,000 that I can spend on education for my department, we typically -- those are areas we didn't need to sell. Our sales team would go to the enterprise level. And so now we have these commerce tools that may allow kind of at the department level people to shop and buy things. So, we'll see where that goes this year. That's currently kind of at zero. The tools have been built. We have seen them and demonstrated them, but we haven't really released them, so we're excited about that. And then, the far end of the spectrum is direct to professional commerce. We talked about the DEA MATE course. We can now kind of open little mini learning stores, if you will, like a single course available to doctors. We could say, oh, you know, check out this course that meets this federal reg. They click on it, and they can buy that one course directly, as a professional in our network once they have an hStream ID on the platform. So, we saw $0.5 million in sales and that revenue was recognized immediately in the quarter, which is kind of fun. Now, consumer revenue is a tiny, tiny fraction of our overall company, direct to professional, but I just think it -- I call it money while you sleep. It might be fun to fill a lot of gaps each quarter with individuals buying to their individual development needs with their own credit card. And again, we didn't do a lot of that in our past, so it's just -- it's fun to think that millions of customers may ultimately not just be customers through the organization, the B2B purchasing, but maybe someday a lot of them will buy services directly. And we do have an example of that now, this DEA MATE course. So again, we don't want to over engineer these things or get too excited about, they're all good promising signs for the future. The enterprise level purchasing. We're not doing department level purchasing, but we have new tools for it. Direct to professional commerce is nascent, but kind of fun and exciting to point out. And more than anything, it's the interoperability of all these things that we're excited about. As the platform features and functions grow, expand and add these kind of capabilities we're talking about, some of us have better commerce, some of customers move a credential earned in one to a location in another application, follow people around individually with their data. So emerging capabilities give us excitement for the future. Thank you for the question. I guess I had such a long answer I scared off the Q&A queue. But we're still here if you have more questions.

Operator: Thank you. Our next question comes from Richard Close with Canaccord Genuity. Your line is open.

Richard Close: Good morning. Thanks for the questions and congratulations. Maybe a follow-up to Matt's first question. A good example there with the 31% increase in ARR with the academic medical center. I'm just curious, when you look at your book of business for the SaaS offerings, like what percentage of customers come up for renewal on an annual basis and then maybe putting that 31% into perspective, are you seeing an acceleration, I guess growth in that percentage increase in ARR versus one to two years ago, maybe any insight or perspectives on that would be great.

Bobby Frist: I think overall growth rate would be much higher if that was more prevalent. I think we obviously gave an exception here, which is one that bundled, but our sales team, our account manager, focused on this kind of account expansion. We do see some give and take, so if they had four products up for renewal, they renewed three of them, maybe they used one less and they added two new ones, so that's what account managers do. We have about 60 account managers that focus on this cross sell, upsell. There are puts and calls to the whole process. Again, if they have four products, renew three, they say, well, we didn't use that one as much. But our account managers, if they're really good, they do what this group did here, and they add two or three new products. The other thing that's shifting, Richard, and so I would say we give the best example. We don't want to overengineer, it's not happening on every renewal yet, but it's of course, our model and our objective. That's what we want to do. The other thing that's happening is and so a bit is that we're doing a better job bundling things, like if you take these companies examples, so the initial order value can be a little greater, and that's resulted in a little delay in the Q1 pipeline, but more bigger deals in the pipeline than we've ever seen. And so, for example, in the comp suite is a lot of content that we used to sell separately, the checklist tool is in there, Jane is in there. And so, there's a way now that instead of a CNO making an argument upstream 4 times to buy four separate products, they can evaluate making a real investment in their workforce to buy the suite. And so that's some repositioning that [Technical Difficulty] won. And the effect is more bigger deals in the pipeline than we've seen, but also in Q1, a little delay purchasing in some areas as we made that shift. So, I'm excited about kind of hopefully where Q2 takes us through this bundling strategy and hopefully that grows that ARR that you're talking about. But, you know, obviously, overall, with our overall growth rate, we're not seeing every renewal come up and grow by 31%. That's a case study that we want to emulate more than it is an example of broad occurrence.

Richard Close: Okay, that's helpful. And then maybe on the decline in renewals. ANSOS, I understand. Is there anything to be concerned with the quality manager, that seems to be something new, just want to make sure I understand that.

Bobby Frist: Yes, the quality manager was from an acquisition years ago. It's focused on skilled nursing market. And that market is under a lot of stress financially and kind of re-engineering and working on defining their space better I think, so slowed purchasing there, tighter budgets. The quality manager, again, is not overall a huge part of our business, but it's enough where we don't like to see declines, and so we'll fight to continue to position that product, but it's predominantly sold to the skilled nursing market. We're building a version that could be sold to hospitals, but that's a more competitive space. So, I think just in general, we have dozens of products. This is one of the smaller ones that may be facing kind of a market level challenge, and we'll do what we can to fight through it, but [Technical Difficulty] we did note a decline along with ANSOS, not as big as ANSOS, so not as big a risk.

Richard Close: Okay, that's helpful. And then, you know, I'd welcome your perspectives. You just talked about the pipeline, some bigger deals in there, maybe a little bit longer to get across the finish line, but it doesn't sound like you're too concerned with that. I'm just curious, with respect to change healthcare and everything that's gone on with that over the last several months, have you seen any impact in your book of business in terms of potential new business or renewals, people pulling back just based on everything that's going on with the change healthcare, I'm just curious.

Bobby Frist: No, I don't know, Richard, if I've been able to relate the change healthcare to any purchase patterns. Again, we saw a little lighter purchase patterns in Q1 than we wanted. I think that's due to some of our re-bundling strategies. We had a great fourth quarter, so we pulled a bunch of deals in the fourth quarter. We're rebuilding for the second quarter, so we've got some work to do there. But I haven't been able to relate that to any macro trends or something like the change healthcare, kind of, challenge that occurred for the whole industry. I see a little bit more duress in the skilled nursing market, a few more acute care systems are known in the public to be under financial stress, but also, I think tailwind, so the headwinds are kind of some macro condition things for customers. But the opposite, in fact, is the workforce trends that we're seeing, the interest in the workforce. So the bundling and the bigger deals and the more bigger deals in the pipeline is exciting, but hopefully it doesn't take too much longer to close them. But I think that is maybe a more direct result of the interest in both how we're bundling our products and the interest in investing in the workforce, which is a direct shift, I think, in their attitude about the value of retention and developing versus maybe pre-COVID. And I think they got so tired of staffing nurses filling majority -- a lot of their positions, they want to develop their own employees now. So I hope that plays out over the next few years, is what we're hoping.

Richard Close: Okay. That's helpful and good to hear. And then maybe, Scotty, with respect to sales and marketing, as we think about the second quarter through the rest of the year, is there anything to keep in mind in terms of maybe seasonality or events or anything like that with respect to the remaining quarters?

Scotty Roberts: Yes, I think, Richard in marketing in particular, we've set an expectation, we planned our budget to attend more in person events, so we actually had one in the first quarter. That was our own customer conference for our credentialing customers called Thrive, that was the name of that event. We also plan to continue to do more events throughout the course of the year. I think some of those tend to be, you know, scattered across the quarters, but I don't know if there's a particular quarter where we'd see kind of an outsized presence, necessarily, or that would impact the P&L materially, but there should be some continuation of events that we expect. You know, hiring -- can expect us to continue to hire sales positions as needed. So that should feather in across the year, but again, probably not going to impact any particular quarter significantly.

Richard Close: Okay. That's helpful. Thank you very much.

Bobby Frist: Hey, Richard, I'd like to just reinforce a couple of things. The quarter was obviously strong, but there were a couple one-time comparators that we just need to make sure, that's why we keep saying middle of the fairway, you know, we don't want to overengineer the result. The ANSOS one-time license was a one-time benefit. And also, on a year-over-year basis, the restructuring last year, which we did, it's kind of also an expense change that, you know, we got some benefit from, but we didn't do another reorg. And so, we just want to be excited about the quarter, and it's the total result. We also want to be, you know, and we point out some of the things that could impact our future in a positive way. But right now, you know, we're sticking to our range and kind of pushing people to think about the middle of the range is what where we think we are.

Richard Close: Okay. That's very helpful…

Bobby Frist: For the full-year and for each course. Yes, just kind of really strong, exceptional first quarter, even from a free cash flow standpoint, you know typically, for example, another trend would be in the second quarter, our free cash flows are not as strong, I think, Scotty can comment on maybe more, but that's a quarter where we pay out a lot more royalties and commissions are, I think, usually higher than Q2 and Q4. So maybe Scotty can comment on that -- Q1 on free cash flow as well.

Scotty Roberts: Yes. Sure. Yes, I think if you look back at last year, in particular, and probably look at several years of trend, you'll see that Q1 and Q3 are typically our strongest free cash flow quarters, with Q2 and Q4 tending to tail off. I think even last year, second quarter was flat to negative. And so, another consideration is just timing of Federal income tax payments, state income tax payments tend to not be on a quarterly recurring basis. So, you should expect some of that to pop in the second quarter as well. Similar trend that we saw last year.

Richard Close: Okay. Thank you very much. I appreciate it.

Bobby Frist: Thank you.

Operator: Thank you. Our next question comes from Constantine Davides with Citizens JMP. Your line is open.

Constantine Davides: Hi, good morning. I apologize if I missed this, but reporting a consolidated ARR has been something you talked about previously in terms of a new way for us to understand the business better with an expectation that we get something around midyear. Can you just provide us with your latest thoughts there and if there might be other potential KPI's you're also considering?

Bobby Frist: Yes, I mean, we're trying to chase down everything from return on invested capital. And when we looked at it, there's 30 ways to talk about it, we're looking at internally, we use ARR at our account management level, at the account level, but not the company level. And so, figuring out how to calculate and reliably do it, we would probably have to commit to a metric internally for a few quarters and see how it plays out before we release it publicly. So, we're probably now looking at Q3 at the earliest for new metrics. And so, no Constantine, nothing new to report today, but we're working on it, you know, because we retired a metric, we're working on finding other new metrics. Scotty, do you want to comment any more on the things we're looking at, at least to give a hint about it, but I do think we're several quarters away because again, we would have kind of more adopted internally, run it for a few quarters, and then figure out how to talk about it, get our definitions straight that we would want to use, you know, of course we have our own internal definition, free cash flow and things that we monitor, but nothing planned to release right now. Scotty, any more details?

Scotty Roberts: Yes, I think ARR is one that we're obviously, we've looked at and used internally, as Bobby mentioned, on a more an account-by-account basis, but you know, Constantine, you know, some other retention metrics, we're considering whether or not those are worth sharing publicly. But, you know, obviously been focused on those internally as well, but just trying to get to the point where we want to share those publicly. So net retention in particular is a possible metric as well.

Constantine Davides: Great, that's helpful. And then, Bobby, the 104 organizations you called out hitting the portal, I just want to be clear, they're not paying at all for that kind of access. So I guess, you know, what is the expectation on maybe starting to monetize that and what do you need to do to commercialize that or support it? And how -- is that sort of a later this year event, is it a next year event, just wondering how to think about that opportunity.

Bobby Frist: Yes, sure. So a couple things. First of all, effectively they are paying for it. And here's how. When you buy an application like HealthStream Learning Center, you also buy a subscription to hStream for Learning. hStream for Learning is a license in your agreement that gives you access to some of the APIs that comes with your right, and you do pay for that hStream for learning subscription. So those two subscriptions together are what give you the access to several APIs as a customer. So, most of those 104, they are utilizing the rights they've gained by paying for the hStream for learning license, for example. That said, we have had some examples, commercial success of individually licensing some of the data sets, and we have some proposals out to other customers to license the functionality of the platform directly. And I think we've given some examples. But the -- as we get more and more of our data sets, like our privilege library, our regulatory compliance library, that are content libraries directly accessing them through the platform for a license fee, for example or we've also given the example of looking up a license validity. We currently give our customers access to that function in our applications, but we have an example of a third-party licensing that function to check a license validity on an API basis only. And we had a health system that didn't buy an application from us, they just paid for checking licenses. And so, we have some limited examples of directly monetizing both the data and the functionality of the platform. But mostly, the 104 people and 200 new developers in the portal are there by the right they gained by paying for their hStream for learning license and they're utilizing those APIs to thread our technology more into their technical environment, like their [Technical Difficulty] for example. So, it is paid for in a way. In fact, it's part of, if you say what's the value proposition of hStream, the platform? Customer would say, oh, I get access to the developer portal, and I get to use some of these APIs. A lot of them are being engineered in a way where they could be sold to non-customers, directly the APIs, and that will be the learning journey. And I hope to have examples of monetizing directly in that way, in each category of data and APIs by the end of the year.

Constantine Davides: Got it. Thanks. If I could just squeeze one last one in here. Obviously, you guys are in a really good cash position, no debt. In terms of just M&A opportunities, I'm just curious, are you pretty committed, at least in the near term, to the three application suites you currently have or is there a possibility you even start to sort of expand upon that prior to having the unified platform sort of fully realized?

Bobby Frist: Yes. I think, Constantine, we are already focused on expanding the kind of these three areas -- these three application suites, meaning within their own context. So if we find something that bolsters our learning capability, that would be something to look at our credentialing, our scheduling, but not adding a fourth dimension. The only fourth dimension we have is the platform itself, we call hStream, so we want to get all four of those, the three application suites and the hStream platform working together really well. And I think this is the year, where we want all these ways to demonstrate that interoperability. We just talked about one, which is when you license the learning center and you get the license hStream for learning, you get access to the APIs. That's a good example of adding value to our network. And so, our M&A strategy is adding to those areas that they already exist more than creating new areas of business. And focused on the interoperability is kind of a key word for this year and also focused on the migration of legacy customers, so if you're on a legacy credentialing application that we acquired to say the credential, the modern application we've been building and selling now with over 750 accounts on it. So, you'll see this year as more of this on conversions from legacy to existing, which unfortunately don't have a lot of revenue growth, I mean they do grow revenue a little bit when we convert, but what they really do is get people solidly on the new application suite. So that's a focus this year and then our M&A strategy specifically asked about is to bolster existing areas. So incremental add-ons to existing areas more than expanding the model into new areas. Now, if we get it all working in the next 18 months, then maybe adding a fourth operational dimension to the network would be exciting. But right now, M&A would be focused on areas that strengthen the current lines of business.

Constantine Davides: Thanks, Bobby.

Operator: Thank you. Our next question comes from Vincent Colicchio with Barrington Research. Your line is open.

Vincent Colicchio: Yes, Bobby, another strong quarter for ShiftWizard. You added a few new clients. Curious if they were mostly, I assume they're mostly mid-market clients. And if that's correct, when may you be prepared to move up to larger enterprise clients?

Bobby Frist: Well, we're working on that, I think you're right. I mean, generally that product is great. We have some good examples of big systems that are using it. But I think in general, the successes are coming in the mid-market right now and that's the focus of our sales team. So, we continue to try to expand this capability and make it more relevant. We have ambition to integrate properties like NurseGrid, the app, to the ShiftWizard application, which would extend its functionality. And so, I think right now, though, for the next six to nine months, maybe even for the full year, the remainder of this year, our focus is at middle market.

Vincent Colicchio: And one last one. Anything in the competitive market worth calling out since last quarter?

Bobby Frist: Well, you know, no, I don't think anything particularly, I mean, everyone, including HealthStream is working on their AI strategies, so we see different approaches to that, you know, with our Jane Technology continues to evolve, we're excited. We have some things in the pipeline to refresh our learning technology stack that we're really excited about for the second-half of this year, so we're working on our competitive positioning there and our thought leadership and our application leadership in that area, which hasn't been revitalized in quite some time. So that's a little sneak peek that we've got coming in our learning business that we hope to catch the competitors with. So but in general, it is a very competitive landscape with lots of good startups and big established companies as well. And we're just fighting for our piece of that or more than our fair share.

Vincent Colicchio: Thanks, Bobby.

Operator: Thank you. Our next question comes from Stephanie Davis with Barclays (LON:BARC). Your line is open.

Stephanie Davis: Hey, guys, thank you for taking my question. I'll try to keep it brief, given the length of the call, but you've been talking a little bit more about sunsetting activity and being more proactive on the prepared remarks, is there first any way to tease out what your growth would look like excluding the sunset impacts and get a cleaner number for your go forward? And as a follow-up, could you talk to us more about maybe the pushback you're getting and any sort of updates on the timeline for the process?

Bobby Frist: Yes, I think we've determined early this year, like in January, that we need to focus in some areas, like where [Technical Difficulty] so credentialing and scheduling, and both have legacy platforms, that the message to our existing customers is two-fold. We're not sunsetting, so that word we need to tone a little bit, because we're still, of course, supporting and releasing enhances to some of those legacy platforms and communicating frequently with customers how to better optimize their use. So, you did see, for example, expansion of ANSOS. We actually had two big wins at ANSOS, we were able to convert another big contract into a more healthy model financially, and then we had the big ANSOS license expansion. So we are supporting those. We're just not actively outselling. If a customer wants to expand useful sell, but we're not sunsetting. We are changing the tone of our message, though, beginning in January, at that conference that we mentioned earlier, we said now is the year to migrate to the SaaS application stacks. And so, that's different than stay comfortable where you are and wait for migration, now we're actively promoting to customers that now is the year to migrate. And so the tone of the sales organization, and the tone of HealthStream is that. And as I mentioned, that does tamp down growth a little bit, because you're kind of switching from $1 set to another. There is a bit of an uplift in the annual recurring revenue when you [Technical Difficulty] application from the maintenance models that they're under. So it's positive, but it's not nearly the same as, say, acquiring a wholly new customer. So yes, that does have a little bit of a dampening effect on to have that as a focus has a bit of a dampening effect on the topline. But look, it's the healthiest thing to do and the right thing to do is to begin a more aggressive migration strategy from the older. And so, but we're not doing that by actually sunsetting, we're doing that by encouraging and stating and giving examples of where migrations are successful. We're just better at it, we're better at the tools, so you talk about barriers. We have better data migration tool sets, we have better methodologies. We've learned a lot from the early migrations. And overall, our teams are doing a great job. And so we're communicating. We have more confidence, we could handle more migrations now too, because of all that I just mentioned. So, great question. It does -- it makes topline growth look a little less stellar to make that a focus, but it is absolutely the right thing to do for a 24 month horizon. And again, we're better equipped technologically to facilitate those and the marketing message has changed. So thanks for the question and hope I got the answer.

Stephanie Davis: Thank you.

Operator: Thank you. There are no further questions at this time. I'd like to turn the call back over to Bobby Frist for any closing remarks.

Bobby Frist: Thank you, everyone, and congrats to our employees a lot of hard work going on to make all this happen. Look forward to reporting the next earnings call to everyone and we'll see you on the next call. Thanks everybody.

Operator: Thank you for your participation. This does conclude the program and you may now disconnect. Everyone, have a great day.

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