Good morning, and welcome to HealthStream's First Quarter 2023 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 of 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 2023 results. Also in the conference call with me 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 this morning that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that 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. With that start, I'll now turn the call over to CEO, Bobby Frist.

Good morning. Thank you, Mollie. Lots to cover this morning, we'll get started. I think one of the first things that is different and we're excited about is on this earnings call is our new dividend policy. It was announced on February 20, through which we'll be paying our first cash dividend on Friday of this week. I'm also pleased to share that our second dividend was announced yesterday in our earnings release and will be paid in June. Quarterly cash dividends are a new element of our shareholder return strategy, and we're excited to make our first ever quarterly dividend payment under that new policy, following a strong quarter of financial results. We're going to talk more about both of those throughout the course of this call. Let's turn to the financials and do a few highlights, and then, of course, Scotty will do more detail. For the first quarter of 2023, we delivered a record amount of quarterly top line revenue of $68.9 million, which was up 5% over the same period of 2022. We had a solid quarter of profitability resulting in EBITDA of $13.7 million, which after accounting for a $1 million severance expense related to a restructuring announced in our call in February, we've gained some efficiencies on a go-forward basis. We believe that the efficiencies resulting from the restructuring will begin to have a positive impact on our financial performance beginning in the second quarter of this year. This has taken into consideration in our guidance, which we're reiterating today. More importantly, with the restructuring in place, we now operate and are organized as a single platform company. Our hStream technology platform is increasingly at the core of everything we do, where we used to be organized as two business segments, called workforce solutions and provider solutions. We are now unified as a single platform Company by our hStream technology platform. We refer to this internally as our one HealthStream approach and we're organizing our company around that approach. Under that approach, we'll continue to invest in our platform as a service technologies that power both our SaaS application suites as well as the applications of our customers and partners. By utilizing our hStream technology platform to create interoperability among our expanding array of SaaS solutions, we believe we will help improve healthcare, continue to grow our business and provide a growing value proposition to customers of more than one of our application suites. Before we move further into the call, I'll take a minute to refresh everyone about our business. And I think this is helpful for those that are new to the HealthStream story, which I hope there are many of you on this call. First and foremost, HealthStream is a healthcare technology company dedicated to developing, credentialing, and scheduling the healthcare workforce through SaaS-based solutions. Each of which are becoming more valuable because of the interoperability they are achieving through our hStream technology platform. We sell our solutions on a subscription basis under contracts which average three to five years in length, so that means our revenues are recurring and predictable. We are profitable and we have little to no debt. We are solely focused on healthcare, and more specifically the healthcare workforce, with 11.2 million healthcare professionals working in the United States as the end users of our SaaS solutions. Now let's take a look at our present and the things that are helping drive future growth. The launch of HealthStream's developer portal in the fourth quarter of 2022 marks an inflection point in our advancing capabilities to more rapidly build interoperability among our applications and third-party applications from customers and partners. Key to this process is the access to our APIs, which are smaller reusable services that can be assembled to quickly add features and functionality both to proprietary and third-party applications. In the first quarter, this was demonstrated successfully through beta testing with three customers where primary source verified license data were shared between our Workforce Validate application and our learning center application. With the integration in place, managers will now be able to partner compliance and HR teams to ensure their staff are up-to-date on their licenses with data that has been primary source verified against the various state licensing boards. We have almost 100 customers that have already requested to have this new integration activated at their organizations during the second quarter. So again, those are customers of both Workforce Validate, which is a relatively new product, and HealthStream Learning Center, which is an established product in the market. That integration allows for the shared data occurring between those two applications, and we think those are loving that feature. In fact, as I said, 100 of them have requested to activate that integration. So that is an example of seeing some power and value being added through the hStream platform technology. The number of customers contracting for Workforce Validate also increased in the first quarter. We added 31 new health organizations to the Workforce Validate application set. We think this is a great example of hStream creating interoperability that benefits customers and adds value to our platform and applications. Examples like the one I cited give us confidence that our one HealthStream approach positions us to deliver strong financial growth and market-leading innovations going forward. Evidence of this can be seen in the 2023 financial outlook described in our earnings release and the mid-range financial goals discussed during our September 2022 Investor Day presentation. Both of which we believe we're on track to deliver in the coming months and years. As the macroeconomic forces of inflation and recession add challenges and uncertainty on a global scale, we remain confident that HealthStream will continue to provide strong and growing profits. Along these lines, we believe that the revenue impact from slower bookings during COVID will be behind us as the first half of this year closes, which gives us confidence to reaffirm the financial outlook we provided earlier in the year. At this time, I'll turn it over to Scotty Roberts for a more detailed look at the financial performance and the expectations going forward. Scotty?

Alright. Thank you, Bobby, and good morning. Let's begin with the financial highlights for the first quarter, and unless otherwise noted, the comparisons that I will discuss will be against the same period of last year. We're pleased to deliver a solid quarter of financial results, as follows: Revenues were $68.9 million and were up 5%. Operating income was $2.9 million, down 28%. Net income was $2.6 million, down 9%. Earnings per share was $0.09 per share for both the first quarter of 2023 and 2022. Finally, adjusted EBITDA was $13.7 million and was down 2%. I'd like to emphasize that during the first quarter of 2023, our operating income, net income, and adjusted EBITDA metrics were negatively impacted by a $1 million severance charge. This severance expense resulted from the previously announced elimination of 33 positions that were made to further consolidate and streamline our operations under a single platform company strategy. Now back to the results for the quarter. Our revenues were $68.9 million, and were up $3.5 million or a little over 5%. Revenues from subscription products were $66 million and increased by 6%, while revenues from professional services were $2.9 million and they declined by 11%. Also, revenues from the two acquisitions that we completed last year, which were CloudCME and Eeds, contributed about one-third of the year-over-year revenue growth. Gross margin was 65.4% compared to 66.3% last year. Margins were somewhat impacted by a portion of the severance charges I mentioned as well as increased royalties and cloud hosting costs. We expect our investments in cloud hosting will continue to increase for two primary reasons. The first is associated with growth from our SaaS-based CredentialStream application suite. The second is due to an increase in hStream technology platform's capabilities. Our operating expenses excluding cost of revenues were up $2.9 million or 7% over last year's first quarter, with approximately $900,000 or 31% of it related to the two acquisitions we completed last year. We experienced increases in sales, marketing, and product development expenses, while G&A expenses declined compared to last year. Sales and marketing expenses increased by 13% due to a combination of growth in staffing levels and increased travel. Our travel costs were approximately $700,000 this quarter compared to less than $100,000 in last year's first quarter. With an increase in customer site visits, as well as industry trade shows, we've resumed customer and business travel for several quarters now, and for the first time in three years, we hosted our company-wide sales meeting in person at our Nashville office. It was a fantastic opportunity for our sales teams to convene, collaborate, and plan for the year ahead. Our product development cost increased by 12%, which is net of labor costs that would capitalize for software development. Capitalized labor costs increased about $800,000 over the prior year quarter. The increase in product development is a result of investments towards our single platform strategy and suite of applications, as well as the costs associated with the two acquisitions we made last year. General and administrative expenses declined by 3% as a result of reduced spending in several areas, including reductions in outside recruiting services, lower professional service fees, and other infrastructure-related costs. Finally, our adjusted EBITDA was $13.7 million which was down 2%, and adjusted EBITDA margin was 19.9% compared to 21.4% last year. But for the $1 million severance expense, our adjusted EBITDA would have increased over last year, and our adjusted EBITDA margin would have been approximately 21.4%. Moving to the balance sheet metrics, we ended the quarter with cash and investment balances of $58.7 million. During the quarter, we deployed $6.6 million of cash for the acquisition of Eeds and $8.4 million toward capital expenditures and we did not have any share repurchases during the quarter. DSO increased to 51 days compared to 46 days last year, and the increase in DSO was primarily related to a single customer with a multimillion-dollar balance that they remitted payment in early April. Our cash flows from operations were down less than 1% versus last year, coming in at $20.5 million, and free cash flows were $12.1 million compared to $13.7 million last year. Free cash flows were lower due to higher payments for capital expenditures and the timing of cash collections. As announced in February, our Board of Directors adopted a dividend policy under which we intend to pay a quarterly cash dividend on our common stock at an initial rate of $0.025 per share per quarter. The first quarterly cash dividend, $0.025 per share will be paid on April 28, 2023, to shareholders of record as of April 17, 2023. Yesterday, our Board of Directors approved another cash dividend of $0.025 per share to be paid on June 23, 2023, to shareholders of record as of June 12, 2023. Further, the company intends to declare and pay two more quarterly cash dividends this year, which would equate to four dividends paid in the year. Now let's review our guidance expectations for 2023. We are reaffirming the financial expectations that were previously announced in February. To recap, we expect consolidated revenues to range between $277.5 million and $283 million. Adjusted EBITDA is expected to range between $57.5 million and $60.5 million. Capital expenditures are expected to range between $27 million and $29 million. Our guidance takes into account the operating expense reductions related to the previously announced restructuring, including the 33 eliminated positions. While our guidance also includes the recently completed acquisition of Eeds, it does not include assumptions for any acquisitions that we may complete during the remainder of the year. That concludes my comments for this quarter's call. Thanks for your time this morning, and I'll now turn the call back over to Bobby.

Thank you, Scotty, for those details. I'm going to turn it back to kind of a business narrative and hit some highlights. Of course, our strategy overall is to continue to grow the health and strength of the business and of course grow revenues. And we have lots of ways that we can do that with our growing ecosystem. We want to grow subscriptions and we want to grow wallet share from our subscribers. In this quarter, we fell a little short in terms of growing our hStream subscriptions. It's a fairly immature metric, and we're working on enhancing its definition. For example, in the second half of this year, we expect to announce our hStream for scheduling product definition. So we'll have more products connected to hStream. We'll also be having a new form of subscription under hStream, which we will call individual memberships, different from enterprise memberships to hStream. It's kind of a moving and volatile metric to begin with, and probably be much more meaningful next year. That said, we fell a little short in terms of growing hStream subscriptions this quarter. Our subscription count dropped by 20,000 versus last quarter, which is less than 0.5 percentage points of our 5.52 million subscriptions. The slight dip was based on the timing of two non-renewals in the quarter, both of which we had already factored into our financial guidance. There were two customers that really only used one of our many solutions. They weren't particularly heavy users of the totality of our ecosystem. They're less wed to our business model and to our Company. Their non-renewals were obviously a disappointment; we'd liked to have renewed them. Our experience is that over time, those kinds of customers tend to come back and plug back into our ecosystem and then we begin to grow them as subscribers, and we continue to get more wallet count. We'll look forward to redeveloping those relationships and getting back into one of the many doors that we can enter at our customer base. Four of our five largest customers up for renewal for the remainder of the year have already renewed and are trending positive. So with that solid indicator for the rest of the year, we have confidence in the continued growth of hStream subscriptions on a go-forward basis. Focusing on overall revenue growth, we did a nice job of winning wallet share from our subscribers in the quarter, which obviously drove our 5% top line growth. That means that more of our subscribers purchased and used more of our products, which is exactly how we want our marketplace approach to work. It also resulted in revenue growth for the quarter, which is in line with our forecast and while we haven't factored it into this year's guidance, I'm optimistic that our marketplace and solution is expanding rapidly enough and increasing in value to the point where we eventually win back the two customers that chose not to renew in Q1. We look forward to welcoming them back in the fall when that happens. A few other highlights that we want to cover for each of our product application suites, the learning, scheduling, credentialing application suites, and then of course our platform itself. We saw competitive wins and growing interest in the marketplace concepts overall and the advantages of being a member of HealthStream’s hStream network are becoming more and more apparent. I'm going to give you a few examples. The HealthStream Learning Center is the most utilized learning management system in healthcare and continues to add new customers. In the first quarter, we announced in a press release that Ardent Health Services purchased our HealthStream Learning Center to support their workforce enterprise-wide. Subsequent to that announcement, they have chosen to add several clinical content offerings. Moreover, as a member of our hStream network, they launched HealthStream Sales Collaborative in March to conveniently offer content to the 15 hospitals in their system. The HealthStream Sales Collaborative allows facilities within health systems to optimize purchasing decisions in alignment with their education budgets and professional development objectives. Here we have an example of a hospital system entering our ecology, our network by purchasing the learning center, and then almost immediately expanding the services through what we call our purchasing collaboratives, expanding their purchasing across multiple products almost immediately. That's a good example of a health system that buys into the value proposition and we grow share of wallet by getting an increasing amount in this case of their educational budget. So we're excited about that as an example of how to continue to grow. We believe our staff scheduling solution known as ShiftWizard is the best-in-class solution and best of its kind. It will only become more valuable to customers as it becomes more integrated with other applications through our HealthStream hStream technology platform. In the first quarter, revenues from ShiftWizard grew 30% over the prior year quarter as customers continued to report high satisfaction with an over 96% positive rating. We contracted new customers to ShiftWizard in the quarter, such as Perm Health, Mercy Cedar Rapids, and Catawba Valley Medical Center, which are examples of the new customers we're welcoming to the ShiftWizard application set. Our credentialing solutions also enjoyed a successful start to the year, both in terms of competitive takeouts and conversions from our legacy solutions to CredentialStream, which we also believe is the best-in-class solution for enrolling, credentialing, and privileging physicians. In the first quarter, we contracted 29 new customers for CredentialStream representing 33,000 new subscriptions collectively. These new customers included many highly respected healthcare organizations like Summit Health, AMSURG, TriHealth, and Valley Health System. In terms of our platform solutions, the early momentum we're seeing regarding customers' use and adoption of our APIs is paving the way for an exciting future for the Company. As a reminder, we launched the developer portal in the fourth quarter of 2022, which delivers a powerful addition to our hStream platform capability. The portal provides access to modern, scalable, secure architecture with a growing collection of shared services, platform-level applications, and APIs to connect among all of these components. At the end of the first quarter, 32 health organizations had chosen to open an account on the developer portal, where collectively 135 developers have account-level access to the seven APIs currently available with more to come. That's a little bit of an update on our platform strategies. We're just seeing customers turn to our developer portal to get access to these platform-level services at an increasing pace, and I'm excited to provide that development kind of coming out of the beta stage and kind of the live utilization of the platform services. I gave the example earlier of one of them that integrated the flow of data on verified credentials between two application sets at HealthStream. We're really excited about the potential represented in these APIs and our platform strategy and hStream developer portal as an access point to our infrastructure. We believe these customer wins and successful developments illustrate the value our customers see from our ability to provide enterprise-wide solutions, and we're confident they become more valuable as they become more integrated and more interoperable across multiple applications. As I said, in the second half of the year, we expect more applications to come online, connected to the hStream platform itself. Shifting gears, in the first quarter, we announced the acquisition of Eeds. With this acquisition, we expanded our ecosystem with an innovative SaaS-based continuing education management system for healthcare organizations. Eeds represents the third acquisition in the specialty area that we completed within a 13-month period, making us a market leader in this niche of healthcare technology. Importantly, we believe that the acquisition of Rievent Technology, CloudCME, and Eeds, which are all CME application management businesses, showcases how our platform is well positioned to empower new solutions that add to our growing ecosystem and marketplace. Since we're into the second quarter of 2023 right now, I want to share that this is the last quarterly call with Eddie Pearson, HealthStream's President and COO, serving in his current position. As announced earlier this year, Eddie will be retiring from his current role at the end of the second quarter and assuming a new role. At that time, he plans to continue serving the Company in a multi-year part-time leadership position as Executive-in-Residence. We're really excited about that new role. While it will be less time with the Company, we expect continued contributions for many years to come, as he develops the leaders across HealthStream. Since joining HealthStream in 2006, Eddie has played a transformative role in completing, and we were reflecting that when he joined the company, it had about $26 million in revenue, and under Eddie Pearson's leadership, we left last year with $265 million in revenue. So, that’s 10 times the growth under Eddie's leadership—fantastic outcome. We're grateful for his years of service and dedication to HealthStream as he helped shape our culture and our Company into what it is today. I’d like to also mention that Mike Shmerling, the long-standing HealthStream Board member since 2005, is not standing for re-election at our upcoming annual meeting. He's also decided to move into a more retirement phase for his life, and we're so appreciative of his service to our Board. He's been our audit chair and has successfully led that function. He's a veteran entrepreneur with a strong track record of growing companies, and he's been a great contributor to HealthStream's growth story and leadership over our financial matters. We're also just appreciative of Terry Rappuhn, who joined the Board in January 2022, who has become the new chair of our audit committee when Mike's service on the Board ends. We want to thank Mike for his service and Terry for her continued service in this new capacity as chair of our audit committee. As we reach the close of this portion of the call today, I want to reiterate our dividend policy, which I mentioned at the opening of the call. We're pleased to have a strong balance sheet, including reliable free cash flows, and now we're sharing a portion of the free cash flows with our shareholders. That's a return directly to shareholders, and I think in today's economy and time, as companies are performing, sharing some of the gains is the right thing to do. We're excited to continue with the dividend policy during the second quarter and on throughout the year, where we expect to make multiple payments—one each quarter throughout the year. I think as we think about the totality of the quarter, and the future that we're excited for HealthStream, we’ve got a strong, profitable, highly recurring revenue SaaS application suite with new past services emerging. Our senior leadership team and Board of Directors are excited for the future and continued growth into the future. If you're already a shareholder, you know that our Annual Shareholder Meeting is scheduled to take place virtually on Thursday, May 25th, at 2 PM. Notifications of the meeting and access to the proxy statement 10-K and Shareholder Letter were sent out on April 12. So you should have those in your mailbox or digitally. We encourage you to vote your shares and anticipate the future of our Company. Now, I'd like to turn it over to the operator to go back to Q&A with our analysts.

Thank you. The question-and-answer session will now begin. Your first question comes from Matt Hewitt from Craig Hallum.

Good morning and thank you for taking the questions and for all the detail on the prepared remarks. Maybe the first one, what are you hearing from your customers regarding the employment trends? I know HCA reported last week they actually had some pretty positive comments as far as seeing increasing headcount, lowering or seeing a lower amount of contracted employees, but what are you hearing from customers, I guess, number one? And number two, how quickly does that translate to increased revenues for you? I mean is there kind of a waiting period when a customer hires some new employees before they get on the HealthStream roles or just walk us through that process? Thank you.

Yes. I mean as our customers grow, we grow, and that is certainly good news, particularly from an organization like HCA, hopefully they're an indicator for the rest of the market. Although, they're so well run that maybe not everybody is following the exact same trends that they are. When our customers grow, we certainly grow, and many of our products are add-ons to their payroll. It generally adds to subscriptions of our learning center. If a hospital sells, we might see it drop or subscription contracts allow for a certain flexibility based on direct divestitures of hospitals and we've seen our customers sometimes do that, but the net benefit is payroll growth in the last quarter. We continue to see that they try to build and grow their nursing core and rely less on temporary or contracted labor. Interestingly, we get business from the contracted labor pools as well, often we're direct partners with them to provide some of the basic training education services sometimes under a white label model. As the demand for healthcare grows just generally and there are more professionals in the market, regardless of whether they're on payroll hospitals or coming to market through contracted groups, that also still represents an opportunity for us to grow.

Got it. And then I guess maybe more specifically about HealthStream, how is your employment situation? Obviously, you had some restructuring but that was planned. As far as are you finding the employees that you need? Has your turnover maybe declined over the past couple of quarters, and what are your expectations as we look out over the remainder of this year regarding your employees? Thank you.

We definitely were talking about it in our Board Meeting yesterday, and we have seen a material change in the turnover rate, meaning fewer people left in the last quarter than in the prior several quarters where attrition was much higher. I think there's been a material slowdown in voluntary departures at HealthStream. As you know, we had some involuntary departures that were part of a planned restructuring. The net effect is a fairly stable employee count. We're finding the people we need. As we invest in new areas, specifically in this restructuring, we eliminated some areas of duplication because we had two segments, and we were able to eliminate those duplications and then hire and invest in areas around our platform and sales and marketing. The net effect is that we have a fairly stable headcount in line with our plan and budget for the year and some permanent efficiencies gained from the restructuring we undertook in the first quarter. We commented on the financial impact of that restructuring in the quarter, but also the future benefit to come from the restructuring.

Got it. Alright. Thank you very much.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Richard Close from Canaccord Genuity.

Great. Thanks for the questions. Congratulations on the quarter. Just Bobby, maybe with respect to the two non-renewals, I understand that was factored into the guidance already, but can you just talk a little bit about why they decided not to renew?

Yes, sure. It's always disappointing when you lose something, but it's natural, especially on things like our learning platform that is so market-leading. When you reach high market share, there’s just kind of natural competition. In some cases, particularly in the learning case, with the market share we have, occasionally someone who is not a big consumer of all of our products chooses to go with an integrated application suite of services like Workday or Oracle; they want that instead of best-of-breed. We’re working hard to integrate our own applications so that there's material integration advantages. Occasionally, one might switch to a lesser quality, but more integrated application suite with their ERP. We have a pretty good track record of getting them back, so sometimes they go to something that didn’t meet their business needs and clinical needs and they decide to circle back around to rejoin the network. So, yes, we don’t like to see them go. We'll do our best to get them more integrated, but we didn’t succeed this time. The losses were factored into our guidance, and we have a lot of confidence that hStream subscription metrics will grow in the next three quarters.

Okay. That's helpful. And then with respect to the Workforce Validate, can you talk about that integration and does that increase your wallet share at all? You talked about 100 customers looking to activate that integration?

Yes, sure. Let's talk about it for just a second. At the platform level, we have a service that's API-driven that can check and validate a license. It's connected to over 2000 endpoints, which are locations where you validate the primary source of a license. So we’ve done all the work at the platform level to ping our API and ask if the license is current, and then check these 2000 different endpoints. That service at the platform level is, of course, built into our application called Workforce Validate. So we call customers and parts of Workforce Validate are included with your hStream subscription. They're free, and they displace competitors. There are buy-up opportunities to Workforce Validate the application where you can do more than just verify licenses. So, Workforce Validate is an application that has a freemium version included with hStream that relies on that license service I mentioned, and then it has a buy-up. We're starting to see those buy-ups happen. In the HealthStream Learning Center, there's a place called MyTeam, and that's where managers manage their staff. Now customers can activate the platform-level service and when managers see the list of employees reporting to them, they can have a little flag indicating whether the licenses are current for those employees. This integration creates a stickier platform that could displace competitors. So it represents many opportunities; we’re excited about it!

That's helpful. My final question is if you can just give us an update on the digital network development unit in terms of finding ways to monetize assets like NurseGrid?

Yes, we're super excited about this. We finally consolidated all of our direct-to-professional opportunities and put them under a leader that knows how to manage direct professional growth. We're seeing organic growth of subscriptions to these products, at least one of which—NurseGrid—is free. We're seeing 2000 to 3000 new nurses signing up for the service each week, so we're approaching 0.5 million monthly active users. It's incumbent on us to monetize that. We have several strategies being defined and we look forward to launching a direct-to-consumer purchase mechanism in the app where we will offer NurseGrid learning to that user base. There are four or five other ideas in incubation, and while we expect some revenue from this in the third and fourth quarters, it'll be more impactful next year as we get these monetization strategies to market.

I had one more question if I could slip it in.

Sure.

AI seems like it could be incorporated into your platform. Have you guys started thinking about that going forward?

Yes. In fact, third generation learning AI, machine learning, and expert systems are all critical to the future of learning and development. We've probably under-marketed it, but Jane, with its handful of patents, is one of the first true expert systems that helps determine a nurse's critical thinking ability. We've recently rebranded Jane as Jane AI to make sure people understand what we're building there. We're seeing breakthroughs in that product about the methodologies and learning and training that incorporate fundamental technologies of AI, including natural language processing. We also have our application sets accumulating interesting data sets. We're going to focus hard on organizing our business around those datasets to power AI solutions in the future. While there's nothing immediate now, Jane is our immediate focus, and we're also well situated for the future.

Okay. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Jack Melick from William Blair.

Hi, good morning. Thanks for taking our questions. Last quarter, you mentioned that you had some contract wins for your credentialing and scheduling enterprise applications that would materialize later in 2023. What progress are you seeing on these contracts? Are any of them moving quicker than anticipated, or are they about on par with what you expected?

I would say they're on par with expected. They were nice wins, and we expect them to roll in during the second half, which is why we have confidence in our growth ranges that we gave. Our overall assessment is that the wins are on track, and we're delivering them into the application suites and getting them implemented. In general, both of those application suites have longer implementation cycles. For the learning application, we can get them up and running in less than 45 days. For a scheduling or credentialing win with a larger customer, say a dozen or more hospitals, that can take anywhere from three to nine months to implement or even longer if you have 30 or 40 hospitals. So, there's a net change management involved. We are tracking and feel good about both the wins and the status of the customers and their implementation cycle, and that’s one of the reasons we have confidence in our guidance.

Great. I appreciate the commentary there. A big theme recently has been the realignment to a unified platform and brand. Could you speak to the reception you're seeing in the market regarding that branding effort and whether it's leading to smoother cross-selling opportunities or quicker conversions?

Yes, all of it's well underway including our own cultural changes inside the Company. The impact is still in front of us, but it's starting to take hold. For example, we dropped the separate corporate identity of VerityStream. All traffic to the websites under the VerityStream brand are now directed through the HealthStream main website. For those 600 customers that have purchased VerityStream’s application, it’s becoming clearer that that's really HealthStream now. To really get there though, the interoperability driven by the platform of hStream is key. I think the next 12 months will show more benefits. Our nearly 60 account managers are working to take the message to customers about how these applications will talk to each other and leverage each other. As mentioned earlier, we have over 100 customers interested in the integrations we talked about, which is a direct result of the platform service we built that benefitted both Workforce Validate and the HealthStream Learning Center. We’re really excited about the progress; I believe customers will receive it well.

Great. Appreciate the comment and congrats again on the strong quarter.

Thank you.

Thank you. One moment for our next question. Our next question comes from the line of Vincent Colicchio from Barrington.

Yes. Good morning, Bobby. Can you give us some color on the learning side in terms of what products had the best traction in the quarter?

Yes. A lot of the clinical education products are performing really well. In fact, we've had some shortcomings in scheduling. As you know, we talked about some of the legacy applications having more attrition than we wanted compared to ANSOS, for example, the old legacy brand. That was more than offset by growth in a lot of our clinical products, including onboarding products and clinical education products from our partners like AORN, which are performing really well. Our products like the Red Cross continue to perform well with some new wins in the market. Overall, just strength in clinical education is what I would say.

Thanks for that. In terms of contract renewals relative to last quarter, what does pricing look like?

Pricing is generally stable. We try to increase prices in some areas where it makes sense. In other areas, when customers grow and add subscribers, they expect a little lower price for higher volume or longer-term commitments. We have a long-standing program where based on the length of your commitment and the scale of your commitment, you get better pricing. Some customers expanding in their growth since their last renewal will pay for more users but might pay a slightly lower unit cost, and that's generally been our philosophy. We're trying to work price escalators into certain products so that they'll automatically grow; that's a new practice for us.

On the DSO increase, did I hear correctly that that client has been slow in paying before? Is there any specific reason they're slow? Do you expect DSOs to come back down next quarter?

Bobby, I will take that one. So Vince, we highlighted one particular customer that had a multimillion-dollar net balance paid in April. Last year, the same customer paid their balance in March, so just a slight timing delay impacted the calculation of DSO for the quarter. I’d say that overall, the trends we're seeing in collection behavior from customers have not changed significantly. We're always going to have a handful that are slower than we'd like, but overall it shouldn't change significantly, and DSOs should continue to perform in the range that we've seen historically, which is generally below 50 days.

Thanks for answering my questions.

Thanks, Vince.

Thanks.

Thank you. At this time, I would like to turn the conference back over to Robert Frist for closing remarks.

Thank you to HealthStream employees who delivered this quarter and helped us organize and grow throughout this restructuring period. And thank you to our shareholders for following along in our story and our analysts that tell the story, particularly thanks to Eddie Pearson and Michael Shmerling for their longstanding service and specific roles for the Company. I look forward to reporting the next quarter's earnings and, of course, paying the dividend to you guys in a few days. See you. Thanks.

This concludes today's conference call. Thank you for participating. You may now disconnect.