Headline Results

HealthStream Inc. reported a headline decrease in GAAP net income for both the fourth quarter and the full year of 2025, primarily attributable to a one-time CEO Stock Gift expense. While GAAP net income for Q4 2025 dropped to \$2.5 million (down 48.1% YoY), the company emphasizes that non-GAAP net income, which excludes the CEO Stock Gift, was actually up 9.5% year-over-year at \$5.4 million. Similarly, full-year net income excluding this impact was \$21.2 million (+5.8% YoY), compared to \$20.0 million in 2024.

Earnings per share (diluted) followed the same trend: GAAP EPS for Q4 was \$0.09 (down from \$0.16), but non-GAAP EPS (excluding the CEO Stock Gift) was \$0.18, up \$0.02 per share from the prior year. For the full year, GAAP EPS was \$0.61 (\$0.70 non-GAAP).

CEO Stock Gift Impact

The CEO Stock Gift, announced December 9, 2025, was a non-cash, non-recurring expense intended to facilitate equity grants to employees. The charge was fully offset by the value of shares personally contributed by the CEO. Investors should note that this event materially affects year-over-year comparisons, but does not reflect underlying business performance.

Dividend Increase

The Board of Directors declared a quarterly dividend of \$0.035 per share, an increase of 12.9% from the previous quarter (\$0.031/share). The dividend is payable March 20, 2026, to shareholders of record as of March 9, 2026. This is a clear signal of confidence in HealthStream’s ongoing cash generation and may be positively viewed by income-focused investors.

Share Repurchase Program

HealthStream authorized a share repurchase program for \$10 million in November 2025. \$5 million was repurchased in Q4; the remainder was bought in January 2026. This capital return strategy reflects management’s view that shares are undervalued and could support share prices.

Acquisitions

The company completed the acquisitions of Virsys12 and MissionCare Collective during the year, further expanding HealthStream’s product and service offerings. These additions are expected to contribute to future growth and operational synergies.

Financial Outlook for 2026

The company is forecasting revenue growth and higher net income for 2026, signaling continued positive momentum and the potential for further increases in shareholder returns.

Other Notable Items

• Executive sales leadership promotion announced.
• Capital expenditures remain elevated, supporting product development and infrastructure.
• Cash and marketable securities at year-end total \$57.0 million, indicating strong liquidity.
• Adjusted EBITDA, a key operational metric, rose to \$71.8 million in 2025 (+7.5% YoY).

Shareholder and Price Sensitive Information

• CEO Stock Gift: While non-recurring, this large expense significantly affects reported earnings and could impact investor sentiment. The company encourages use of non-GAAP metrics for a clearer view of operating performance.
• Dividend Increase: Signals confidence in ongoing cash flows, likely to positively influence share price.
• Share Repurchase: Management’s actions support the share price and may indicate undervaluation.
• Acquisitions: Potential for future growth and value creation, though integration risks exist.
• 2026 Guidance: Positive outlook, with higher revenue and net income projected.

Reconciliation of GAAP and Non-GAAP Measures

HealthStream provides detailed reconciliation of GAAP and non-GAAP financial measures in its release, notably adjusting for the CEO Stock Gift. Non-GAAP net income and EPS better reflect ongoing business performance, and are used by management and investors for period-to-period comparisons.

Forward-Looking Statements

The company’s forward-looking statements regarding 2026 performance, dividend policy, and strategic actions are subject to risks and uncertainties, including macroeconomic conditions, industry developments, and Board discretion regarding dividend payments.