HealthStream announced its first quarter 2025 financial results on May 5, 2025, reporting revenues of $73.5 million, a modest 1.0% increase from Q1 2024. However, operating income declined by 23.1% to $4.4 million, net income fell 17.1% to $4.3 million, and diluted EPS was $0.14, down from $0.17 in the prior year.
The company's revenue growth was negatively impacted by $1.7 million in legacy application attrition, a $0.9 million reduction in perpetual license sales, and $0.6 million from customer bankruptcies. Adjusted EBITDA also decreased by 5.0% to $16.2 million, attributed to ongoing investments in platform and SaaS applications, alongside changes in revenue mix.
HealthStream significantly updated its full-year 2025 guidance, lowering revenue expectations to $297.5 - $303.5 million from $302.0 - $307.0 million. Net income guidance was reduced to $18.6 - $21.0 million from $19.2 - $21.4 million, and adjusted EBITDA guidance was trimmed to $68.5 - $72.5 million from $70.0 - $74.0 million, citing macroeconomic conditions and temporary technology scaling issues with CredentialStream. Despite these challenges, the company noted signing one of its largest customer contracts in history during the quarter.
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