Good morning and welcome to HealthStream’s First Quarter 2022 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 question-and-answers after the presentation. I will now turn the conference over to Mollie Condra, Vice President, Investor Relations and Communications. Please go ahead, Ms. Condra.

Thank you and good morning. Thank you for joining us today to discuss our first quarter 2022 results. Also in the conference call with me are Robert A. Frist Jr., CEO and Chairman of HealthStream and Scotty Roberts, CFO and Senior Vice President. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and 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 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, I’ll now turn the call over to CEO, Bobby Frist.

Thank you, Molly. Good morning, everyone, and welcome to our first quarter 2022 earnings call. As I reflect on the first quarter, management delivered several key results I’d like to review. First, we did deliver record top line revenue in the first quarter, lapping previous high watermarks set in Q1 of 2019 where legacy resuscitation revenue reached a peak of 17.3 million in Q1 of 2019. We’ve now replaced and grown through that amount with a nearly even mix of organic and inorganic growth strategies. Second, I told you that one of our multi-year goals was to become a higher gross margin company. Our gross margins for Q1 of 2022 were 66.3%, a 750 basis point improvement over Q1 of 2019. Third, our ecosystem and ecosystem strategy, as reflected in the hStream platform strategy, continues to expand. With hStream subscriptions now at 5.13 million, we believe that our platform strategy is well positioned for the future. I believe we’re delivering on some of the key promises that we’ve made on our key operational commitments over the last several years. Regarding a macro context for healthcare in the United States, it appears that COVID is significantly tapering off. Last week, the White House COVID czar said the data doesn’t point toward another full on COVID surge because hospitalizations are currently the lowest they’ve been in the entire pandemic. According to the CDC, the U.S. is currently averaging just over 1,300 hospitalizations per day, which is a pandemic era low point. This means that our customers are no longer facing the threat of being overrun by COVID patients. This is good news for everyone. In fact, some of our customers are starting to invite sales representatives back on site as they return to more normalized operations. That said, the longer-term impact of COVID on our customers and in turn, our businesses are being experienced in ways still being determined, which I’d like to elaborate on. In several areas of our business, we see improving sales environments. In our learning and development application suite, for example, the need for regulatory compliance solutions appears to have rebounded from pandemic or pre-pandemic and pandemic era levels and is steadily increasing. We have a strong sales pipeline in this area and a fully staffed sales team to meet the solid market demand. At the same time, we’re seeing some purchasing hesitancy among chief nursing officers to contract for our elective clinical education products right now, as the stresses on healthcare professionals persist. Everyone’s heard about the unprecedented burnout among staff. According to a recent Fitch Ratings report, resignations in the healthcare and social services sector reached unprecedented levels in 2021 with overall resignations up more than 50% since the start of the pandemic in the U.S. As many hospital CEOs and CNOs are realizing, onboarding, retaining, and engaging the healthcare workforce has never been more important. We believe that HealthStream’s products are well positioned to help solve these problems and that delays based on the need to alleviate burnout and increase retention will ultimately drive sales for the company. As you think about our results, it’s important to remember that our revenue is not expected to be linear over the course of the year. I’d like to point out that overall bookings in the first quarter exceeded our internal expectations, even though our revenue growth for the quarter was just below our annual guidance range. In a subscription SaaS model like ours, the slower bookings we experienced during the height of the pandemic are now showing up in revenue after the fact and we expect that to persist into the second quarter. That said, we expect our first quarter bookings to be in helping revenues in the last half of the year, which is a key reason that we believe our full year revenue growth rate will be within our guidance range. The longer-term impact of COVID has also been experienced in our provider solutions business with our credential stream application. While sales have been strong, the revenue stream for these sales has lagged due to implementation backlog, which has occurred in part due to customers’ recent preferences to minimize more change for their staff. Keep in mind that revenue recognition occurs after the credential stream application has been fully implemented. Now that our customers are beginning to pick up some of their delayed initiatives, we are hiring more employees to respond to this backlog. For these reasons, we’re optimistic that revenue from provider solutions will be backloaded in the second half of the year. Our CFO Scotty Roberts will talk more about our financial results soon, but I’d first like to talk about how management has been able to implement initiatives to reduce expenses while driving employee satisfaction. Given the encouraging developments regarding the sighting of COVID in the United States, we announced to our employees on March 14, that everyone is welcome to voluntarily work from one of our offices, which we now call our resource centers, should they want to do that, whether they’ve been vaccinated or not. HealthStream’s transition to a hybrid workplace was initially announced last July, and has since that time proven to work very effectively and appears to be highly appreciated by our employees. We determined that our smaller office leases that we inherited through acquisitions were underutilized and we decided to sunset these offices in favor of the hybrid work practice. This has allowed us to reduce our number of leases from 14 to 5, thus reducing our annual G&A expense by approximately $900,000 on an annual basis. HealthStream, like most other companies, experienced high turnover in the last several quarters but we’ve been able to out-hire the losses, which has resulted in a net gain of our employee base of over 1,100 employees at the end of the first quarter. We had a net gain of 20 employees in the first quarter of 2022 and a net gain of 15 employees in the fourth quarter of 2021. The strong corporate culture our employees built is helping us attract and hire fantastic talent. We’ve also invested in our current employee base to develop qualified and promising employees for higher levels of responsibility and new career trajectories. In fact, I believe in the last 14 or 15 months we’ve had over 150 internal promotions. I think this is really exciting for our workforce and has resulted in generally very high stability amongst our leadership team. Before turning over to Scott, I’d like to comment on our ongoing share repurchase program. We continue to believe that this program is an excellent way to return capital to shareholders. On November 30, 2021, we announced a $20 million share repurchase program, and in March 2022, we completed the full $20 million of repurchase authorized under that program. We then determined to expand our repurchase program and our Board of Directors approved an additional $10 million of share buybacks on March 14, 2022. Beginning on March 14, through the end of the quarter, we purchased $5 million worth of shares during the second authorization. That means we entered the second quarter with $5 million still authorized to repurchase under the second plan. Based on our confidence in the company and the value of the buybacks for bringing the shareholders, I’m pleased that our share repurchase program continues to remain in place and active as we progress through the year. In the last segment of the call, I’ll elaborate on several exciting business developments, but before I do that, let’s turn it over to Scotty Roberts for a more detailed look at the financials.

Good morning, and thanks to everyone listening on today’s call. We delivered another solid quarter achieving year-over-year improvement across the board on our key financial metrics. Revenues were $65.4 million, up 3%; operating income was $4 million, up 22%; net income was $2.9 million, up 26%; earnings per share was $0.09 per share, up 29%; and adjusted EBITDA improved to $14 million, up 3%. Workforce Solutions revenues were $52 million and we’re up 1.5% and revenues from provider solutions were $13.3 million and were up 9.1%. Excluding the impact of legacy resuscitation revenues, our consolidated revenue growth was 5.8% and Workforce Solutions revenue growth was 5.1%. The impact of the legacy resuscitation revenues was a decline of $1.7 million this quarter. For the remainder of the year, we expect the year-over-year declines from legacy resuscitation revenues of $1.1 million in the second quarter, $500,000 in the third quarter, and $300,000 in the fourth quarter. Offsetting this decline, though, are several other products in our portfolio that are contributing to revenue growth, such as the American Red Cross Resuscitation Suite, Prudential Stream, Jane, and hStream. With steady growth for products such as these combined with our M&A investments, quarterly revenues have now lapped the previous high point on the legacy resuscitation products hit at $17.3 million in the first quarter of 2019. This backfilling of lost revenues was nearly evenly split between organic and inorganic growth. Our gross margin was 66.3% compared to 64.2% last year, coming in ahead of our forecasted gross margin of 65%. Operating expenses, excluding cost of revenues, were up 5% or $1.9 million and reflect several areas of investment and some expense reductions, which I’ll go over. Our investments in product development increased by 9%, which is net of costs capitalized for software development. These investments span our growing product portfolio, including the hStream platform and our three primary application suites, which are learning and development, credentialing and privileging, and scheduling and capacity management. We’ve also increased investments in sales and marketing, which grew by 16%. This includes additions to staffing, higher sales commissions, and increased marketing expenses. We’ve previously stated one of our objectives has been to fully staff our scheduling and capacity management sales team. We have grown this sales team from 10 to 26 over the past year, which provides more coverage to grow this new product category for us. General and administrative expenses declined by 6%, reflecting some planned cost reductions. During the second half of last year, we exited several office leases, as Bobby already mentioned, which are expected to result in about $900,000 of annual savings. In addition, last year, we operated under a transition services agreement associated with ANSOS acquisition, and it was no longer in effect during the first quarter. Finally, another factor that we overcame was a $1 million expense reduction that last year’s first quarter associated with changing our paid time off policy. Our adjusted EBITDA was $14 million, increasing by 3% and adjusted EBITDA margin held constant at 21.4%. We ended the quarter with cash and investment balances of $45.4 million, which was down by $6.6 million since last quarter. During the quarter, we deployed $19.7 million of cash for share repurchases and $6.9 million for capital expenditures. DSL improved to 45 days compared to 52 days last year. Cash flows from operations were $20.7 million compared to $19.1 million last year. Free cash flows were $13.7 million, compared to $11.9 million last year improving by 15%. It’s worth pointing out that we have a higher concentration of billings and collections during the first quarter, causing seasonality in our free cash flows, meaning free cash flows in the first quarter are likely to be higher than other quarters during the year. The free cash flows that we generated in the quarter were primarily utilized to fund share repurchases. In total, we spent $19.7 million in cash on share repurchases during the quarter, completing a $20 million repurchase program that began during the fourth quarter of last year. We also expanded the program by $10 million last month and have approximately $5 million remaining as of March 31. This program will terminate on the earlier of March 13, 2023, noting a maximum dollar amount under the program has been expended. We may suspend or discontinue making purchases under the program at any time. Now a quick update on our guidance expectations. We are reiterating our financial guidance issued in February, which is as follows: consolidated revenues are forecasted to range between $267.5 million and $273 million; adjusted EBITDA is forecasted to range between $50 million and $53.5 million; and capital expenditures are forecasted to range between $26 million and $29 million. As I close my comments this morning, I want to reiterate that our planned investments back into the business are essential to our strategy of becoming a single-platform company capable of integrating proprietary and third-party applications in a way that increases their value to and adoption by the healthcare market. We look forward to updating you on our progress over the coming quarters. Thanks for your time this morning. Bobby, I will turn the call back over to you now.

Thank you, Scotty. As part of our business updates, I want to remind you of how we talk about our business today. We’ve come a long way since pioneering internet-based training to fill governance risk and compliance needs in healthcare. We obviously still do that and actually talked about the strong demand for those services as we speak. But we also have many new services that we offer and as the business model continues to evolve. As you know, we have been developing a platform strategy as the foundation for our entire enterprise. We call the technology underlying this platform hStream and increasingly it will enable applications and the platform strategy. We also have three primary application suites. They are learning and development, credentialing and privileging, and scheduling and capacity management. Let’s walk through some updates on hStream and then I’ll give an update on one of the three application areas. So earlier I mentioned that we grew hStream subscription count to 5.13 million during the quarter. Another important way that we grow the hStream ecosystem is through adding partners. I want to take a minute to remind you of the various ways the hStream platform enables us to add partners. We have a long history of utilizing our 200-person sales team to sell our partner's products, which we then deliver through our applications and increasingly to our emerging platform directly. Historically, we also handle all the contract negotiations, billing and collections, and customer support on behalf of our partners. In this model, which I call our traditional partnership model, both customers and partners rely on us to consolidate all of their needs to a single full-service platform. This is a thriving model with over 75 active partnerships, and we believe it brings unparalleled benefits to each of those partners and of course, the customers who are recipients of that benefit of 75 fully integrated partners. In recent years, we have expanded our platform approach by offering a new way to partner. This form of partnership is well suited for organizations that prefer to sell and support their own products but want to take advantage of the benefits of enhancing and delivering their products through our applications and through our emerging platform. We call these hStream Certified Partners, because they must meet the certification standards we established for integrating with the hStream platform. As of today, we currently have eight hStream certified partners, and we expect this number to grow. hStream Certified Partners typically generate lower top-line revenue but higher margins than traditional partners I initially described. This is because hStream Certified Partners bill and collect for their own sales, which means they recognize all the top-line revenue for those sales before remitting a portion of that revenue to HealthStream. The margin HealthStream on this revenue share is generally high since our service costs are low. This is because the hStream Certified Partner, not HealthStream, is responsible for all the sales and support costs associated with their products. Offering both our traditional and hStream Certified Partner models has allowed us to grow our marketplace and better serve our customers. Now let’s move to a quick update on one of our three application suites, provider solutions. Approximately three years ago, we announced the launch of credential stream, our new SaaS based application for managing a full spectrum of credentialing, privileging, and enrollment needs in healthcare organizations. For the first quarter of 2022, 42 customer accounts contracted for credential stream, averaging about 3.2 new contracts per week. These accounts represent a mix of new customers and existing customers who choose to migrate from our legacy credentialing and privileging platforms to the new credential stream application suite. Some of the customers we contracted in the first quarter included University of Iowa Medical Center, Washington University Physician Network, Privia Health, and Colorado Care Partners. We’re excited to be gaining adoption of the best-in-class solution our team has built after taking the time to understand and improve the best parts of the legacy solutions we acquired through M&A. On April 13, we announced the promotion of Michael Collier to Executive Vice President, Corporate Strategy & Development. In this role, he will focus on our organic and inorganic growth strategies, particularly in relation to our hStream platform model. During his ten-year tenure at HealthStream, Michael has successfully sourced, negotiated, closed, and helped to integrate 14 acquisitions. This has helped originate business models like the hStream Certified Partner Program I discussed earlier and has done so while serving as the company’s General Counsel and Chief Compliance Officer. His record of accomplishment is impressive and we’re honored to have him step up to this new role on HealthStream's executive team. Congratulations, Michael. We also made an important addition to our Board of Directors in the quarter, bringing a high level of healthcare industry expertise and fresh perspective for our growing business. Terry Allison Rappuhn joined HealthStream’s Board on January 11. She’s already making an impact with her ideas and insights into the healthcare industry. She also happens to serve as a member of our audit committee. Her extensive Board level experience, which includes serving on six boards, which have been primarily in healthcare, and our executive level financial expertise, which includes serving as CFO for Quorum Health Group, makes her an outstanding addition to the Board. And I can promise you to shareholders a lot of her questions are about rate return, return on invested capital and free cash flows, so in addition to her insights into the healthcare industry and how we can grow our business. In closing, I’d like to acknowledge our employees’ dedication to our corporate value of Streaming Good. Our corporate social responsibility program, which goes by the same name of Streaming Good, is currently actively supporting the American Cancer Society with several engaging activities at this time, including a Virtual 5K Walk/Run and an Executive Challenge. Our program has currently raised over $13,000 so far, and we expect to raise even more for the American Cancer Society. It’s programs like Streaming Good that differentiate our culture, let us know who we are, and how we serve our customers and what the purpose is to our work. It unifies our workforce and gives us great energy going forward to continue to grow the great programs at HealthStream and build great applications like credential stream. Our Streaming Good program is employee-driven, and we all strive to create a positive impact on the communities we serve, including the healthcare industry at large. At this time, I’d like to turn it over for questions from the investor community. We will sure that I was on this broadcast. Let’s go ahead and open it up for questions if there are any.

Your first question comes from the line of Ryan Daniels. You may proceed with your question.

Yeah. Good morning. This is Jared Haase in for Ryan. Thanks for taking the question. I wanted to follow up on one of the comments in the prepared remarks, specifically that you’re seeing some hesitancy around some of the more elective clinical training products and I think burnout was sort of cited as a reason there. Given that burnout is both, I think, a near and longer term issue for clinical staff, do you think that some of those headwinds that are impacting those products will be temporary or is that kind of more reflective of the longer-term cadence going forward?

I believe the issues we are facing are temporary. We discussed this during our conversation, but it can be challenging to manage the immediate impact. The tendency might be to avoid changes unless absolutely necessary. However, we recognize that in the medium to long term, maintaining and developing our workforce is crucial for gaining a competitive edge and ensuring our survival and growth. We mentioned that while there is currently an overwhelming level of high turnover, we are focusing on making only essential changes. Products that can significantly improve outcomes, such as our Red Cross program or our Jane program, can have a higher cost. These initiatives require a change management process, and we've noticed some reluctance to implement them at the previous pace. Nevertheless, these solutions are likely to enhance long-term engagement and address workforce challenges rather than exacerbate them. We are also seeing an increased awareness of burnout and change management issues in certain elective areas, which I believe are temporary. More progressive clients have already initiated their investment efforts, with some even acquiring nursing schools as a strategy for workforce development. I am optimistic that the roles of education, development, and training will become more prominent in the long run. For now, we are experiencing a general sense of fatigue among those who have endured the challenges posed by COVID and its impact on the workforce.

Got it. That makes sense. I would like to hear your thoughts on the overall health of the end market. You've mentioned transitioning to a new phase of the pandemic, but labor costs continue to be high, which is a significant issue for hospitals. Recently, we saw reports from a major public hospital operating chain highlighting that labor costs are still elevated and will take time to normalize. I would appreciate any additional insights on what you're observing across your clients and how you are collaborating with hospitals to tackle the ongoing challenge of high costs.

Certainly, the elevated costs are a real issue. The CEOs of the enlightened health systems are addressing it and they realize they may have to actually invest more to create better retention strategies and pay more to be competitive with, say, the travel agency. But at the heart of all this is figuring how to put these employees at the center of their journey. And a lot of our products, like our scheduling program, are being built with that as a philosophy. If you look at our nurse grid application, it’s really taken off organically in the Apple App Store as the number one rated app in the Apple App Store; I think because it allows the nurse to put their work schedule into an app, but also put their social calendar and their desired time off into the app. And so then they can coordinate with their friends’ times to meet and greet. So what’s happening there is that the nurse has become the center of the scheduling process not only driven by, say, business or financial incomes maybe as in the past. And so I do think that the labor issues are real, the cost issue is real, and the turnover issues are real, but the philosophy that HealthStream has is that you have to attack it head on, develop your workforce, promote them more frequently, invest in their career, and then build smart applications that incorporate their desired personal outcomes into your work and business outcomes, like our new scheduling approach with the nurse grid application. And so I think the more of those organizations can do that, the better they’ll fight this battle, and they, like everyone, face inflation. And these burned-out nurses that realize they can make a lot more and have more flexible lives by working in a travel concept, they’re just having to rehire them and invest more in them. So it’s a really interesting dynamic of kind of recalibrating around higher labor costs, but necessarily investing in that labor cost. Meanwhile, products that save time and money and do it more effectively, like our Red Cross Resuscitation Suite, I think can be a feature of how they combat higher labor costs. I mean the objective of these organizations is to get their employees more time in front of patients. Now they want them to be competent when they’re with patients and so you’re trading out, you’re trying to assess the minimum amount to get the maximum competency at the lowest cost. I think, again, philosophically, that’s the point of HealthStream being a workforce ally; to credentialing and privileging, making sure the right people are in the jobs, our scheduling, helping put the nurse at the center of the scheduling process, and our learning and development helps retain and develop over time. I think all three of our core application suites are geared for a future where rising labor costs are a factor, but these are the strategies to combat that for these organizations.

That’s perfect. I appreciate all the details there, and I’ll go ahead and hop back in the queue.

Thank you.

And your next question comes from the line of Matt Hewitt. Your line is open to answer your question.

Good morning, and congratulations on your progress on several fronts. Maybe the first question for me, you know, it sounds like there is going to be some savings, particularly on the lease side, but it also appears that some of your other operating expense lines came in a little bit lower, at least than we were anticipating, particularly in product development. Was that just a timing issue or now that you’ve kind of gotten these three major platforms launched and kind of out in the market over the past year to two years, have we kind of fallen back maybe to a little bit lower level?

We still need to hire more people, so I don't want to imply that our workforce is permanently reduced. However, we've been focusing more on general and administrative expenses. We've shifted our approach from traditional offices to resource centers that employees can visit, which reflects a different mindset. We're making adjustments for how we operate after the pandemic and identifying cost-saving opportunities. For instance, our travel expenses were around $5 million a year before the pandemic, and while we haven't imposed travel restrictions, we're encouraging teams to leverage new technology. Instead of sending multiple people to meetings, we might only send one senior person while others join via conference call. We're promoting a more blended selling strategy that doesn't restrict travel but encourages smarter decisions. In terms of our product development, we're starting to see more success in hiring, though we are still facing significant turnover due to the ongoing "great resignation." There is some talk about a "great regret," as constant change may not be beneficial for everyone. Nonetheless, we've maintained stability within our leadership team, particularly among our top 50 officers. We're focused on investing in our workforce, with 150 promotions in the last quarters, and we've seen net gains in hiring for the first time after several quarters of stagnation or losses. We need to enhance our tech team, and we're making progress in sales, particularly in developing future application suites in scheduling and capacity management. Regarding our R&D investments in credential stream, they have stabilized, and we recently released nearly 400 enhancements to the platform. These updates reflect minor fixes, and even though we haven't seen growth in our R&D spending, the investment remains steady and effective. The credential stream product is gaining market share, which is a positive sign for our efforts. Overall, our strategy includes smarter management of G&A and a new model for travel and sales. We're focusing our investments in targeted areas such as product development and scheduling capacity management while stabilizing or slightly reducing R&D levels in credentialing. This blend is promising, as some parts of our offerings are gaining market acceptance. We will continue investing in content development and scheduling capacity management, navigating various changes and investments as we progress.

Thank you, that was very helpful. I have a separate question regarding your current portfolio and platforms, which have developed through both internal efforts and mergers and acquisitions over the past few years. As you consider the next couple of years, do you believe you have the right components in place from a platform standpoint, meaning that mergers and acquisitions might not be as crucial in expanding these areas? Or would you still be looking to leverage your strong balance sheet and cash flow to identify tuck-in opportunities to further broaden some of your platforms? Thank you.

Sure, I think what I would call stabilizing each of our three application areas and getting the investments, the components we need to be successful, we don’t feel there’s anything missing. So there’s nothing that we have to do from an M&A standpoint to fulfill the vision for each of those three primary application areas. So, again, there’s nothing we have to do. That said, the new platform strategy allows for new business opportunities. It allows for the smoother integration of third-party apps, so maybe minority investments or acquiring an app that has a unique competitive advantage and integrating it with our hStream platform would make sense. And so, you know, M&A will continue to be a part of our strategy, and we also talked about ways like our new partner can be expanded through the platform strategy. So we’ve introduced now and defined a growing partnering program, we call it hStream Certified Partners. And so what I would say is that the opportunity for organic and then organic growth is expanded by our platform capabilities as they expand, and it’ll be a judgment call in each case on whether it makes sense to build versus buy or launch and develop versus adapt to or integrate with. And so, I guess I would leave all those chips on the table, but say just make it clear, there’s nothing that we feel we need to chase or have to do. And so we’ll be thoughtful and careful about the times we choose to build and the times we choose to buy.

That’s very helpful. Thank you.

Your next question comes from the line of Vincent Colicchio. Your line is open.

Yeah, Bobby, so I’m curious on the hStream Certified Partner Program. What does your pipeline look like? Do you expect it to continue to grow in the near term?

We have an active program in place. Initially, we promote what we refer to as the traditional integration program, which involves taking charge of sales, marketing, and customer support fulfillment, resulting in higher margins and revenues while paying out royalties. The integrated partner program is becoming increasingly attractive as it allows partners to choose their level of engagement. If they want us to help increase market share for their product, they may decide to collaborate closely with our sales team to market their message. Conversely, if they prefer to utilize our network of end users, they can handle their own sales, marketing, and support while leveraging our growing ecosystem for delivery. Currently, we have eight partners in the program, and it is expanding. We anticipate further announcements throughout the year, and the revenue streams from this initiative are also growing. We are enhancing our service and growth models in this space. Although I can’t provide specific details, I can say we intend to increase the number of partners from eight and believe in our ability to expand further. This initiative reinforces our marketplace concept, as many partners may compete within the same categories, allowing them to determine how they wish to compete. They can either rely on us for distribution or effectively employ our sales and marketing teams to gain market share. This structure facilitates multiple products in each category, making us resemble a marketplace that offers integrated partnerships and hStream Certified Partnerships. I hope this clarifies our approach as we expect growth in both areas as our marketplace strategies take effect.

What are you observing regarding pricing on contract renewals? Does the pricing assist in alleviating a significant portion of the wage pressures you are facing?

We utilize a range of pricing strategies. In areas where we have a proprietary advantage, such as with Jane, along with patents and highly differentiated products, we place a premium value on those offerings, and they provide significant value to customers. In other cases, where maintaining or bundling is essential, we adopt a strategy similar to Amazon Prime with our hStream infrastructure, focusing on implementation and sometimes offering bundles and discounts instead of increasing prices. It's a matter of judgment, but we have numerous opportunities to create both broad reach, which enhances the ecosystem, and premium products with higher margins. Additionally, some of our new product concepts, such as our workforce validate, are inherently high-margin products, allowing us to pursue both strategies effectively. We can maintain a lower market price while positioning ourselves to gain market share since our delivery costs are very low. I realize this isn’t a precise answer, but we are actively pursuing both strategies for different products and applications in our ecosystem.

Thanks for the color and thanks for answering my questions.

Thank you, Vince.

Your next question comes from the line of Richard Close. Your line is open.

Yeah, thank you. Can you hear me okay?

Yeah, Richard.

Okay. Great. Thanks. Congratulations on the report. Bobby, I apologize for having to leave the call for a bit. I did hear you mention Privia as a new customer, and it appears to be a new customer channel for you. There’s been significant activity in the primary care physician market. Could you share some insights about the Privia announcement and whether you see it as a beneficial channel for expansion?

Yeah, I’ll. We obviously created the list to show some diversity of the types of customers we bring in. We have strong teams developing and what we call our continuum markets, which are kind of the non-acute markets for an oversimplification, and so for most of our product sets, we are beginning to figure out their applicability in additional channels but we haven’t really changed our channel definitions that would expand our audience beyond the 10.5 million that were previously defined as opportunities for us. And so I’m waiting to see if I get a text from the person over that area to see if they want me to add more color about how much they’re focusing on that channel. May or may not get one, I think they’re listening in. But I would just say that in general, we’re constantly examining the audience, and we’re adding sales channel expertise. For example, we’ve just found that a few of our products are applicable in the nursing school market, and so we’re targeting a couple of hires to begin to test out our products into the nursing school market. When we acquired myClinicalExchange, we got access to the student market as they onboard into hospitals for their rotations, or we’re now reaching people when they’re at school. And so that would be kind of yet another new onboarding channel way people come into our ecosystem. And so in each of these cases, like Privia, or the application, like myClinicalExchange, which addresses students, we are beginning to hire a few dedicated salespeople in these areas to test them as channels. So I kind of leave it at that testing expanded channels like nursing schools and organizations like Privia, without giving specifics. So they’re not the bulk of our sales organization yet, but we’re testing new channels.

Well, you beat me to the punch on that one. I was going to ask you about nursing and nursing schools, and you have one right across the street from you there, so I was curious on that. Can you talk a little bit about nursing in terms of, obviously, that’s been a hard area? What are customers telling you in terms of their thoughts, maybe how the nursing labor situation sort of plays out, maybe over the next year or so?

There is ongoing pressure on nursing schools to increase enrollment and interest in the nursing field. We need innovative approaches to encourage more individuals to pursue nursing, which is challenging. Existing nurses are experiencing burnout, even with increased compensation and opportunities for travel nursing. This burnout has led to a diminished sense of teamwork and increased stress among nurses. Organizations are creatively tackling the labor challenges posed by an engaged but aging workforce. When a significant portion of the team is new or consists of traveling nurses, clinical effectiveness suffers. There is a growing awareness that labor issues extend beyond costs to include impacts on quality. Forward-thinking organizations are seeking ways to invest in solutions to these challenges. Although we see some hesitance in product adoption, such as with Jane, we continue to sell contracts regularly. However, organizations may be piloting these solutions rather than fully implementing them across their workforce. They are exploring strategies to streamline cross-training and career development. Some have begun acquiring nursing schools or forming partnerships with them, and they are launching well-being initiatives. We have started integrating well-being topics into our programming, which has proven beneficial. This is both a clinical efficacy issue and a labor cost concern. Although organizations have noted labor costs, prolonged issues will likely lead to quality problems. This presents an opportunity for us, as rapid competency in a rapidly turning workforce is vital. Our programs are ideally suited to address these labor challenges, which are quite real. When engaging with health system CEOs, they are searching for ways to compete with travel staffing agencies. Interestingly, some travel agencies have begun purchasing our educational products to support the career development of travel nurses, indicating a shift in their perspective towards the need for staff training and development. Because they can charge hospitals more, they are likely in a better position to invest in training. This creates an intriguing dynamic, and while I don’t have a complete answer, these trends appear to be beneficial for our products in the long term.

That's very helpful. Regarding the partnerships you mentioned, your extensive customer base makes you quite attractive. I'm curious if there are opportunities for you to cross-sell into your partners' existing business portfolio.

I don’t think I’ve really thought about it like that, but I would say that we’re developing capabilities at the platform level that give us a lot more flexibility on how to provision services. And so if you think of a service as a whole application, like you need to build features and an interface, a front end of the application, as we increasingly enhance the hStream platform to include, for example, a growing library of APIs, it does change the engagement model potential. And so you might find that some of our databases someday become licensable assets that are available through APIs where people can integrate some of our unique data into their applications or into their intranet or into their EHR. And so I do think part of Michael Collier’s promotion is to help think through how to monetize some of these new capabilities as they come on board. I don’t want to overrepresent their maturity. They’re still relatively immature but just, in general, as we bring, for example, our platform-level license service into play, it not only enables products like workforce validate, it may enable an organization like a Workday, I guess I’ll call that appeal out there, to directly access the data that underlies that product on a transactional basis. So, you know, I think the platform strategy opens up the possibilities. I do want to be careful not overrepresent where we are on that curve; we’re actively investing to build those. We’re working on launching, hopefully this year, what we would call our developer portal for the APIs that come with the hStream platform, and once that’s open as a toolkit, the economic models for our business, we think, evolve, and so really excited about that. But again, I don’t want to get too far in front of it. It’s a later this year kind of thing, not a right now thing.

Okay, thank you.

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Thank you. This concludes our earnings conference call. We look forward to our next report to all of you coming up soon. Thank you very much. Goodbye.

This concludes today’s conference call. You may now disconnect.