Bull of the Day: HealthStream (HSTM)

HealthStream (HSTM - Snapshot Report) has seen its estimates increase due to a solid Q1 earnings report where subscriber growth for the Workforce Development Solutions segment was the main driver.  Further, revenues grew +23% year over year, while contracted subscribers increased +15% year over year.  These combined factors has made HealthStream the Zacks Bull of the Day.

For all intended purposes, HealthStream has a solid grip on the healthcare education market, and is considered the industry leader.  The company boasts of having their customer base represented by over half the nation’s hospitals, and about 4.1 million healthcare professionals, who have all chosen HealthStream’s platform of products and solutions. This Zacks Rank #1 (Strong Buy) stock is known for pioneering Web-based solutions to meet the training and education needs of the healthcare industry utilizing a proprietary system.  Through strategic relationships with medical institutions and commercial organizations the company has amassed hours of training and educations courses.  The company distributes hours of these courses online to allied healthcare professionals, nurses, doctors, and other healthcare workers.

Their Workforce Development Solutions segment is the main driver for the company where each sub-segment saw growth above or in line with management’s expectations.  Also, the Patient Experience Solutions segment, second largest segment, saw +8% year over year growth, and has recently contracted two large health systems for just over $1 million in services. 

Price and EPS Surprise

The graph below shows the Price and +EPS Surprise for HealthStream.

Increasing Estimates

Over the past 7 days, estimates have increased for Q2 15, Q3 15, FY 15, and FY 16; Q2 15 rose from $0.04 to $0.06, Q3 15 increased from $0.06 to $0.08, FY 15 jumped from $0.22 to $0.32, and FY 16 rose from $0.39 to $0.43. 

Company Data

Bottom LineHealthStream’s dominate position in healthcare education and training has produced 10 consecutive quarters with revenue growth, while containing COGS and SG&A to reasonable levels.  During the same 10 quarters, the company has also increased Total Assets each quarter.  These are all indications of a solid growth company.

After their fifth consecutive earnings beat and solid client pipeline HealthStream has earned its spot as the Zacks Bull of the Day.  Further, with high expectations, and increasing estimates, it is expected that this company will continue to grow over the next few quarters.

by Brian Hamilton

Source; http://www.zacks.com/commentary/44154/bull-of-the-day-healthstream-hstm