Good morning and welcome to HealthStream's second quarter 2025 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 questions and answers after the presentation. I will now turn the conference over to Molly Kondra, Head of Investor Relations and Communications. Please go ahead, Ms. Kondra.

Thank you, and good morning. Thank you for joining us today to discuss our second quarter 2025 results. Also in the conference call with me today is Robert A. Frisk, 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 that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that could involve risk 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 containing the company's filings with the SEC, and these include forms 10K, 10Q, 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 Health Stream is included in the earnings release that we issued yesterday and that we may refer to in this call. So with that start and that opening, I'll now turn the call over to CEO Bobby Frist.

Good morning. Thank you, Molly. Good morning, everyone. It does seem like a quarter of follow-ups. We've got some news to share of follow-ups from our last earnings call related to our sales pipeline, macroeconomic conditions, and of course, financial results. So I'm going to hit highlights first of the financial results, which you feel good about the quarter and the results we'll be reporting. In the second quarter, we achieved record quarterly revenue, which is always an exciting milestone. It shows we're moving up and to the right. I like that, which is up 4% from the second quarter of last year. Operating income was up 33.4%, and net income was up 29.3%, while adjusted EBITDA was up 11.3%. All those are over the same quarter last year. We increased our expectations for net income for full year 2025 in our financial guidance and reiterated our expectations for revenue, adjusted EBITDA, and capital expenditures. And so later in the call, Scotty, of course, will expand on each of those. And there's some exciting developments in all of our core application suites, learning, credentialing, and scheduling, which we'll provide in the back half of this presentation. And those are the things we're most excited about to help driving our business results. First, let's look back to our prior quarterly call. In our last call, we mentioned we were tracking a handful of, well, we characterized them as medium or large-sized deals that were originally expected to close in the first quarter. And I'm pleased to report that four of the five deals that we were tracking were signed during the second quarter. And the average new order contract value of those was $2.2 million across each of the four deals that's closed. And also, in good news, the fifth deal is expected to be signed here early in the third quarter. So I feel like that's a positive update on the five deals that we, you know, while the timing wasn't as we expected, the business outcome was solid in that it looks like we've landed four of the five, and the fifth, it seems imminently will be executed. So the market conditions, you know, we'll talk more about that here in a bit. But we're excited to have that be our follow-up on the four deals that we talked specifically referenced last quarter. You know, also, I think it's positive that those five deals were really nice balance across our broad portfolio of applications and suites. One of the deals closed, for example, was a multimillion-dollar multi-year contract from a very prestigious health system for our American Red Cross resuscitation program. That's one of our leading partnerships and content offerings in our whole ecosystem, so we're very pleased to see a big win up in the Northeast for that product. Again, multi-year, multi-million dollar contract. And now that they're a customer health stream, we're pleased to have them in the network, and we hope to continuously grow that account over time as they derive more and more value from a growing library of our solutions. Another deal included a wide range of our products, including our competency suite, which is demonstrating the success of our new bundling strategy and how our customers value our ability to handle the end-to-end needs of their competency program. So, you know, I really like this new bundling strategy around staff development here, competency assessment and development, which includes a broad swatch of our competency-oriented products, won a multi-million dollar deal during the second quarter. The third deal, kind of rounding them out, was a credential stream deal. So, again, exciting to see progress from credential stream as well. There's another large health system that selected credential stream to go enterprise-wide. And our scheduling application was the fourth that's already been signed for Shift Wizard, contracted by another top health organization as well. So these are four enterprise deals balanced across learning and development and our content offerings, our scheduling application, and our credential stream application. So, again, I think the diversity of the WINS was as important as the size of the WINS, and it was nice to see them all come through here, four of the five come through, again, with the fifth still expected. Now, I think another topic that's probably on the top of mind for everybody is AI. And it seems like no earnings call is complete without talking about AI and AI strategies. And I think this call should be no exception. At HealthStream, you know, there are multiple dimensions of AI, its impact. And we're focused on utilizing AI to manage our business more efficiently, of course. And so there we're looking at, you know, role augmentation, efficiency and development of the applications we build. And so we have lots of prototypes and pilots going on in the efficiency category. And then, of course, we're working hard to use AI to create competitive differentiation throughout all our product suites and product offerings. And so a series of pilots are spooling up using AI to reshape our future roadmaps. So both those dimensions are well underway. And, you know, it's not like this is new for us. HealthStream has an established history of utilizing AI to improve health care. And, in fact, beginning with the launch of our Jane AI program, over five years ago, our Jane AI was one of the first solutions to use AI to assess the clinical competency. And we'd say the clinical reasoning ability of nurses. So it's a little different than a knowledge test. It was using AI, natural language processing, and machine learning to suss out the clinical reasoning ability that kind of the quality of the clinical decisions being made from nurses. And so we think it's a pioneering product, and it's just getting smarter and more effective over the years. In fact, we were just awarded another patent in connection with our Jane AI and its use of natural language processing and deep learning to facilitate competency assessment of clinical staff, particularly nurses. So we're excited to have earned yet another patent related to our Jane AI technology as it continues to be kind of foundational for our moves in and towards AI. AI is playing an important role in learning experience, and actually in the back half of this presentation, we're going to give an update on the business associated with this new advance. But the HealthStream Learning Experience Application, or the HLX, as we call it, was announced last quarter. The HLX is a modern healthcare-specific application that offers the workforce personalized, and this is key, self-directed intelligent learning and development pathways. And those incorporate a wide range of learning modalities. So we've kind of expanded the dimensions of content available while we build these self-directed intelligent learning pathways for healthcare professionals using the HLX. And, of course, it's engaging the individuals in a new way, a thoroughly modern user experience. Also incorporated into the HLX is OpenAI's GPT-4O-LLM. And that's powering faster and more precise search capability for HLX users and helping establish the foundation for powering smarter, more relevant recommendations based on a learner's profile experience. It's kind of the more the HLX knows about you, the better recommendations it can make for your career development, skill development, competency development, and testing and evaluations. And so we're super excited about the HLX and its advanced incorporation of OpenAI as GPT-4-0, LLM. And so we just want to give another example of our advances with AI. We think that these together, Jane AI and HLX, are just a few of the examples of HealthStream's movement towards AI and getting our customers equipped to the latest tools, in this case, in employee development and competency assessment. You know, I think central to successful implementation of AI is building a culture focused on AI. And we're working really hard to get all of our officers on board with everything from collecting the data they'll ultimately need to potentially train agentic AI to envisioning pilot programs and equipping our teams with tools. For example, during this quarter, all of our developers will have a choice of being equipped with either cursor AI or co-pilot. And so we're excited to get, you know, that out of the pilot mode and into kind of full production mode. And we're excited to make those tools available to our developer, our in-house developer capabilities. let's see you know i think you know i think every company is going to have to go on a journey of working to define how all the roles in the company will be augmented with the with the power of ai and health stream is deep into that journey setting up a really nice governance structure over our ai projects and and beginning to fund the use of these technologies and pilots and product development. So really excited about my team's advances there and the leadership of our tech, our tech leaders in the company helping us lead us forward and building a culture of incorporating AI into our business strategies and operations. You know, before we go further in the call and before I turn it over to Scotty, I think it's useful in case we have new potential investors in HealthStream is just to kind of summarize to everyone the HealthStream story and reiterate what we are and what we stand for. So first and foremost, Healthstream is a healthcare technology company dedicated to developing, credentialing, and scheduling the healthcare workforce through SaaS-based solutions. And each of those are becoming, we believe, more valuable because of the interoperability that we're achieving through our H-Stream technology platform. We're kind of in this transition of trying to move from SaaS applications to a past, the platform-as-a-service architecture to power up and make those SaaS applications interoperable. The company holds 20 patents for its innovative products, and I just announced a new one in our Jane AI. We've been awarded over 40 Brandon Hall Awards in the recent years, showing our excellence in our learning, instruction, and development programs. Historically, we sell our solutions on a subscription basis under contracts that average three to five years in length, which makes our revenues recurring and predictable. In fact, about 97% of our revenues are subscription-based. As I just mentioned, we have also started to open our sales channels directly to healthcare professionals and nursing students across the continuum of healthcare training. We are profitable, we have no interest-bearing debt, and a strong cash balance of $90.6 million. We are solely focused on healthcare, and more specifically, the healthcare workforce and those preparing to enter it. The 12.6 million healthcare professionals and nursing students in the United States comprise the core total addressable market for our SAS solutions, and now, of course, our PATH-based ecology of applications. At this time, I'll turn it over to Scotty Roberts, our CFO, for a more detailed look at our financial performance here in the quarter with a forward look as well.

All right. Thanks, Bobby, and good morning. Let's go over the financial results for the second quarter. Unless otherwise noted, the comparisons will be against the same period of last year. Revenues were a record of $74.4 million, up 4%. Operating income was $5.9 million, up 33.4%. Net income was $5.4 million, up 29.3%. Earnings per share was $0.18 per share, up from $0.14 per share, and adjusted EBITDA was $17.6 million and was up 11.3 percent. Revenues increased by $2.8 million or 4 percent and were $74.4 million compared to $71.6 million in last year's second quarter. Revenues from subscription products were up $2.9 million or 4.2 percent, while professional service revenues were down 0.1 million or 3.5 percent. Our core solutions continued to deliver strong subscription revenue growth with credential stream growing by 26 percent, shift wizard growing by 21 percent, and competency suite growing by 18 percent. Offsetting the strong growth in these solutions were declines from legacy products and credentialing and scheduling totaling 1.8 million compared to last year. Excluding the impact of the legacy products from the core business, the core business grew over 8% in the quarter. Our remaining performance obligations were 618 million as of the end of the second quarter. That compares to 538 million for the same period of last year. We expect approximately 39% of the remaining performance obligations will be converted to revenue over the next 12 months and that 68 percent will be converted over the next 24 months. Gross margin came in at 64.6 percent compared to 66.8 percent in the prior quarter. Gross margin was impacted by an increase in our cloud hosting costs which are primarily for the credential stream application and the hstream platform. As noted on the last earnings call. To improve the scalability and performance of credential stream, we added more capacity in our Azure hosting environment. In addition, changes in product mix resulted in higher royalty costs in the quarter. Operating expenses excluding cost to revenues declined by 2.9%. Sales and marketing expenses were up 3.5% and was primarily from additions to our staffing. depreciation and amortization was up 4.8 percent and that was primarily from capitalized software amortization our general and administrative expenses were down 22.6 percent and that's due to lower bad debt charges and lower rent resulting from the commencement of the sublease for a portion of our Nashville office space and finally product development expenses were flat compared to last year. Net income improved to $5.4 million, and that was up 29.3% over last year. And finally, adjusted EBITDA came in at $17.6 million, and that was up 11.3%. And our adjusted EBITDA margin was 23.7%, and that compares to 22.1% last year. Now, moving on to the balance sheet, we ended the quarter with cash and investment balances of $90.6 million compared to $113.3 million last quarter. And during the second quarter, we deployed $9 million for capital expenditures. We paid $0.9 million to shareholders through our dividend program. And we repurchased $18.1 million of our common stock under the share repurchase program that we announced in May. Our day sales outstanding improved to 35 days compared to 45 days last year. And this improvement resulted from more timely customer payments compared to the prior year. As I mentioned just a moment ago, our bad debt charges were lower compared to last year, although we did have a mid-sized customer file bankruptcy, resulting in an increase to our allowance for doubtful accounts in the quarter of approximately $150,000. dollars. On a year-to-date basis, cash flows from operations were 32.1 million compared to 27.4 million in the prior year, an increase of 17.2 percent. Also on a year-to-date basis, free cash flows improved by 1.3 million, or 10.1 percent, and were 14.2 million compared to 12.9 million last year. This improvement is a result of the growth in our billings and improved cash collections, but was partially offset by a $3.4 million increase in payments for capital expenditures. With $90.6 million of cash and investments, free cash flows, and no debt, we are well positioned to deploy capital to improve shareholder value. We maintain a disciplined approach to capital allocation and how we prioritize our use of capital. Our utmost priority is making organic investments back into the business, which is evident by our annual capital expenditure and R&D plans. The second is pursuing acquisition opportunities, which we have a long track record of executing. Third is returning a portion of our profits back to shareholders in the form of cash dividends. And the fourth priority is that our board may authorize share repurchase programs, which they did last quarter. Speaking of, in May, our board of directors authorized a $25 million share repurchase program. And during the second quarter, we repurchased $18.1 million of our common stock, and we've made $6.9 million of share repurchases during the month of July, completing the full program. From an M&A perspective, we maintain an active pipeline and continue to evaluate opportunities that may align with our product and platform strategy. In respect to our dividend program, yesterday our board of directors declared a quarterly cash dividend of 3.1 cents per share to be paid on August 29th to holders of record on August 18th. Now, I'll wrap up my comments this morning with a recap of our financial outlook for the year, which is mostly unchanged except for a refinement to our net income outlook. We continue to expect that consolidated revenues will range between $297.5 and $303.5 million. We now expect that net income will range between $19.5 and $22.4 million, mainly because we now expect lower depreciation and amortization. We continue to expect that adjusted EBITDA will range between $68.5 and $72.5 million, and continue to expect capital expenditures to range between $31 and $34 million. This guidance does not include assumptions for any acquisitions that we may complete during the year. And that concludes my comments for this quarter's call. As always, thanks for your time. And I'll now turn the call back over to Bobby for other updates.

Thank you, Scotty. I think in this section we'll jump into the business updates, highlight the successes we've achieved in our learning, credentialing, and scheduling application suites during the second quarter. As many of you know, our learning business includes our flagship application, the HealthStream Learning Center, along with many other applications, assessment tools, and content libraries, including our clinical content products. The HealthStream Learning Center continues to grow, as do many of the solutions that are delivered through it. Today, however, I want to focus on our brand new learning application, HealthStream Learning Experience, and we brought that up in the first half of the call. We call it the HLX. As I mentioned, it is a modern, healthcare-specific application that offers the workforce personalized, self-directed intelligent learning and development pathways. You know, this is a nice contrast to the HealthStream Learning Center, which is really more of an assignment-driven, helps organize compliance-oriented training where you push content to individuals. HLX helps shape educational pathways for individuals, and it's more self-directed in nature. So the two together give a really rounded approach to learning and development. You know, and it's a completely modernized, built, and one thing that is very excited about it, well, there's two things. First, last month, the Healthstream Learning Experience went live with 47,000 users at a large health system. So, it's moved, clearly it's graduated from the pilot phase to a revenue generating product in the quarter. So, it's very exciting to go live with 47,000 users at a large health system. In response to the early access, an executive at that organization said, the utilization we are seeing thus far is incredible, and so we're excited to see it kind of move from the R&D labs and the pilot phase to a go-live, a billable product, and we look forward to building out a strong pipeline for this application. It's important to note that the application is bought alongside or in conjunction with HellStream Learning Center, so it extends the capabilities and the learning models and the forms of content that can be delivered instead of replacing it. And they work together through their APIs, which are available in our platform services, to create a really powerful set of enterprise class learning tools for large organizations, specifically in healthcare. You know, the other thing about HLX, it's really our first H-Stream platform native application. And that means it was built directly on and is fully integrated with our H-Stream platform. And we've been talking about this for a long time. You know, One of the benefits you'd expect from becoming a platform company is more rapid development of scaled enterprise-class applications. And this, of course, is a case in point. From concept to now billable, launchable product, enterprise-class product was about 18 months. And this is from whiteboard design to, again, a go-live billable event with a new customer. It was about 18 months. And I know that can seem like a long time, but it really is quite incredible to get that to happen. And so, again, we look forward to launching it into the broader market as an upsell opportunity to our large customer base and a new customer acquisition. Let's move to the credentialing suite. It's a broad suite of applications that empowers healthcare organizations to credential, privilege, and enroll, mostly their physician population. And last quarter, we did share with you we experienced some technology scaling issues with our credential stream product. And it is a happy report here that those issues have been resolved, and we're back on track with improved processes and expanded capacity. And Scotty mentioned that hitting our gross margins a little bit, but we've ramped up our capacity to handle what was then, I think we're crossing over about 1 million subscriptions to the credential stream application suite. And so, you know, we had a capacity issue. We talked about it last quarter. We put our best and brightest minds on it, in addition to scaling out our Azure infrastructure. And we believe that those issues are resolved and we're back on track with both improved processes and expanded capacity that will facilitate ample future growth. In fact, of our three primary application suites, Credential Stream was the strongest revenue grower versus the same period last year. So, we're already benefiting from extra capacity as we continue to add customers. I should note that the rapid and comprehensive measures we deployed to eliminate our scaling issues did result in some unplanned operating costs in the quarter, which did have a drag on EBITDA and gross margin. And again, Scotty covered that. But I think they were wise investments. And, of course, I wish we had been in front of it a little more and not had this response needed. But our response was excellent. our teams responded, and we feel like we've tamped down and eliminated the capacity-related issues with CredentialStream. You know, we believe that credentialing is a key area where we are well positioned to innovate in ways that will drive profits and productivity for our customers. Specifically, we're enhancing our CredentialStream suite to help health organizations reduce the time it takes between a physician starting work or being hired or offered a role, and actually generating revenue by providing reimbursable care to patients. On average, we estimate, based on our research, it takes about 120 days or more to onboard, enroll, credential, and privilege a physician. And of course, if that's an important surgeon, every day that they're not doing surgery is a day of lost revenue. We call it timed revenue for these hospital organizations, healthcare organizations. And so for businesses from a caregiver standpoint and from a business standpoint, that's lost time and lost opportunity. And we're working with our customers and intent on collapsing that 120 days so that physicians can get to work faster. And we think that our suites of software, particularly as they're more integrated, for example, between our learning applications credentialing, we're in a really good position to actually have an impact on a metric like that 120 days time to revenue, whereas non-integrated with learning functions like onboarding and HR separated from credentialing, we're less in a position. And so as the features of the platform manifest in interoperability, we think we'll be able to help our customers achieve true business outcomes like shortening the time to revenue on newly hired physicians, which is a little hint of the future of the power of becoming a platform company instead of just separate applications, and we're well underway in developing and delivering on those capabilities. Finally, I do want to touch on scheduling a bit. Our core product in scheduling is Shift Wizard, and we continue to deliver strong revenue growth from Shift Wizard. In terms of quarterly revenue contribution, we are pleased that Shift Wizard eclipsed our legacy and soft suite of products in the second quarter and continues to be our top performing product in scheduling. We think the growth trajectory of Shift Wizard really speaks to the market doing it as a best-in-class solution for clinical staff scheduling. Like previous quarters, our sales of Shift Wizard came both from competitive takeouts as well as growth within existing customers. And then the backside of that is, unfortunately, the rate of decline in our legacy and soft suite of products is still dragging down the overall growth rate in our scheduling suite of applications. We've talked about this legacy dragged before. Part of the positive news is that the tail of the ANSOS legacy product suite revenue has diminished such that next year, we expect to start seeing less in terms of negative offset to Shift Wizard's strong growth performance. So, just a few quarters away, we feel we'll have made material progress in this particular challenge with the legacy products. Switching gears, I want to briefly address the signing of the one big, beautiful bill, which is a landmark event in health care policy. Exactly how the bill will shape health care is something that will continue to unfold and something that will present various opportunities and challenges to our customers over time. Fortunately, we believe the Healthstream is uniquely well-positioned to help customers more efficiently and effectively accomplish their workflow needs at a time when doing so is the top focus for CEOs across the nation. Regardless of the relative advantages or disadvantages customers are expecting from new health care policies, They have been preparing for several months now. We believe that that is one of the main reasons that the handful of deals I mentioned the first of the call took a little longer to close than we originally expected. Customers are taking a little more time to make the right purchasing decisions. We believe that HealthStream's innovative solutions are the right solutions, and we're pleased that four of our five customers, hopefully the fifth soon to follow, came to that same conclusion and decision. We also believe that our H-Stream technology platform is beginning to produce results just in time, meaning that customers can begin to experience the benefits of interoperability this is the year. As I've declared, it's the year of the platform. And what we mean by that is not necessarily a platform delivering incremental revenues just yet, but that the benefits of interoperability are beginning to manifest visibly to our customers, which, again, I think represents kind of a fundamental shift from individual applications to really an ecology of interoperable SaaS applications. So we're excited. We've kind of declared this is the year of the platform, and we expect to spend the rest of this year educating and demonstrating to our customers the benefits of that emerging interoperability. operability. I'd like to remind everyone that in our calls that, you know, if you think of the profile of our company, we're obviously looking to appeal to the investor community. And we're profitable. We're highly recurring revenue. We're a SaaS with an emerging path, healthcare technology. And we're focused on the healthcare workforce industry. We expect to deliver steady growth. And we've determined to share some of the gains directly to the shelves in the form of a small dividend. And we think maybe HealthStream, if that's the kind of profile you're looking for, kind of a conservatively run, but visionary, aggressively on our visionary and what we're trying to build, may be a good company and stock for you to look at. I'd like to conclude with those comments and now turn it back over to the operator to begin the question and answer session.

Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first call comes from the line of Matthew Hewitt of Craig Hollum. Matthew, please go ahead.

Good morning, and thanks for taking the questions. Maybe first up, on the gross margins uh scotty you kind of explained what the the headwinds were there in the quarter should you or should we anticipate um the gross margins kind of bouncing back up here in q3 or is it going to take a few quarters to kind of get those back up the the you know couple hundred

basis points that they were down probably we'll still can see it to have around the 65 percent mark uh for the remainder of the year we still will see those ongoing costs related to the scale in performance improvements that we put in place, but we're also trying to take measures to manage that cost line item for us overall. So we'll take a few quarters to get there, but we'll kind of see it hover around 65%-ish. It's kind of still in line with our, you know, kind of midterm objectives that we set forth several years back. So we're kind of falling to the bottom of that range, but we're still kind of in the 65% to, you know, 66% range.

Got it. And then regarding the HLX platform, congratulations on some of the early success that you're seeing there. Bobby, I think you mentioned 47,000 users are now live. You got some positive feedback from that account. Maybe a little bit of color on what does the pipeline look like for that application, and how should we be thinking about a ramp for that as we get into the back half of this year and look at 26? Thank you.

Well, and the first is that the ramp is forecasted in all of our guidance, so there's no exceptional change. You know, subscription businesses, a steady incremental improvement is the way to grow a subscription business. I think the HLX gives us yet another opportunity to add that. It is an incremental add for base customers or a new entry point for new customers. And we've begun, you know, in the piloting phase for the last, say, six months, We've begun to tease it out with our sales team to seed the market with some educational materials about it. So I think now the pipeline building begins, now that we have a live customer that, in fact, billing has begun for. So it is a revenue-journing product now. It is an incremental add-on. It is a subscription product. And the business of building an interest and pipeline for it begins now as we go to the live product and equipping the sales team with the tools they need to promote its availability. I think it's an important product. It's kind of a paradigm shift that progressive organizations are more likely to adopt earlier, the ones that have a great interest in retaining and developing their workforce and giving them the tools for self-development. Again, which is different than kind of a command and control model of regulatory compliance training, This is more oriented towards development and retention and maybe cross-training so people can gain new skills in new areas. And so I think it's very relevant for today's workforce and to our customer base, and the serious business of building a pipeline is now beginning. We'll report on that in the coming quarters. But, again, I think it is an incremental opportunity. It's not something where we're changing our guidance based on the launch of the products. I just want to be careful. It's an exciting new subscription product that we hope to see incremental gains from.

Understood. Thank you.

One moment for our next question. The next question comes from the line of John Penny of Conaccord Genuity. John, please go ahead.

Hi, this is Richard Close. I had a question. Bobby, can you talk a little bit more about the comments with respect to Shift Wizard and the legacy products offsetting some of that growth and just maybe a little bit more detail in terms of the timing? The timing, you said next year, essentially, that offset is essentially going away. Just walk me through that. We got on a little late here, so I just want to go over that again, make sure I understand.

Sure. There wasn't a lot of detail, but I think that the tone of both is that the go-forward SaaS applications have superseded, in terms of absolute value and growth rates, the revenue of the legacy applications from which we're trying to migrate. So in both cases, then we're kind of achieving new milestones where, you know, each quarter the legacy applications get a little smaller and a little less material to the overall financial outlook, while the subscription products are, as you heard, have good growth rates and are now the majority of the revenue in that category. So I think that we did mention the offset this quarter. I think Scotty mentioned Scotty was about 1.8 million was the kind of the decline from the family of legacy products across credentialing and scheduling. We didn't break it out by a specific line, but those declines, you know, pull our overall growth rate down relative to the growth rates you're seeing on the subscription products. So we just, again, characterize it all. I think in Shift Wizard, we gave a little bit more color, just that the growth of Shift Wizard and the decline of ANSOC is hitting rates where in a couple more quarters, it'll be even less material overall. And so maybe we can see a little more of the organic growth rate of Shift Wizard start to contribute as opposed to kind of almost a fully offset growth. When the loss is 1.8 and the gains are across subscription across 2.9, you can see that it really affects growth. okay that's helpful and no i was just gonna say that scotty wanted to add more but i think those are the highlights and you know each quarter we'll try to give a little more clarity as we

progress okay that's helpful and then on credential stream um you know uh i guess you threw some costs at that to get back on track, as you said. Was there any reputational damage or anything to call out with respect to retention or anything like that based on what happened in

the first quarter? Well, certainly when your services aren't as you would expect at the level of excellence you demand of yourself and your customers' demand. There's frustration. We continue to remain high-level contacts, our account management programs, and our executive leadership with all of our key customers. And, you know, of course, there's some frustration in there. We think we can get through it all with, you know, minimal impact. There's always some consequence to it, but that's, of course, factored in to how we think about our overall guidance. So I don't think there'll be any major surprises that would change how we change our outlook on the year. And, you know, it's hard to go through 25 years of history like this and occasional bumps in the process as you expand. In this case, an expansion-related growth problem caught us a bit off guard. But I feel really good about how we responded and are working with all of our customers to get them all through it as well. And on the backside, just more capacity, more speed, more focus to do even better and to avoid this kind of problem in the future. So, overall, nothing that would change our outlook for the year.

Okay, that's helpful. And then I guess my final question or final two, you know, just following all the, you know, healthcare-related news sources and all that, There's been a decent amount, you know, not huge in terms of employment cuts by various hospitals and, you know, 100 here, 100 there, that type of thing. I guess I'm curious how you think about that in terms of, you know, on overall subscriptions. I mean, you're, you know, you have such a deep penetration and, you know, maybe that's just modest cuts here and there. But how you're thinking about the whole health care employment market and any impact to HealthStream?

I think overall health care employment will continue to grow over the next five years and roles may change. And, you know, more nurse practitioners, less primary care doctors, there may be overall relative shortages to demand. But I think overall, there's just going to be more health care needs. And so, and, you know, while people look at research organizations are going through this reduction in funding from the federal government for research, sure, there are role positions or eliminations there. You know, hopefully the country finds a way to reinstigate its research programs and find new funding sources. But I think those are relatively small. The overall demand for health care services, the new types of roles being created and grown rapidly, like nurse practitioners and the supply of new nurses. I think the capitalistic market is responding to try to fill the demands for skilled, competent health care givers. And we think we're part of that journey. So I don't see material changes, certainly not downward in the employment numbers. You know, certain subsegments of the market are particularly challenged financially right now, like the skilled nursing market. It kind of has good years and bad years. I'd say these are more challenging years in that market. We're present in that market. So as they change both ownership models, private equity, and experience potentially less access to federally funded patient-insured patients, you know, there's going to be pockets of challenge. The small rural hospitals may face challenges, but that almost depends on things we can't tell yet, which is like the state's response to the new legislation. For us, these macro conditions, I think employment will go up. And so that was the root of your question is around the number of people. I think over time there will be more health care providers. The way we would relate most closely to the macro uncertainty and the macroeconomic visions are definitely, you know, the legislation is known. The impact is unknown and kind of downstream and depends on a lot of interactions that are yet to be seen, like state responses to the federal funding changes. You know, for us, that would manifest in how we think about the sales pipeline. And right now we're seeing records noted, you know, expected close dates are getting pushed. It seems that customers maybe have more, you know, committees deciding the wisdom and timing of purchases. And so what we'll be watching most and probably be more of a next year phenomenon is the impact of potentially slower purchasing. So I don't think it'll be a lack of number of people or a lack of demand for health care services. For us, we'll have to see the downstream impact in the purchasing patterns. And we clearly experienced a little of that in Q1 as deals moved into Q2. And even part of that pipeline that was expected in Q1 delivered, we think will now deliver in early Q3. So that's a little bit of a lag effect, and that's the way we're most thinking about these macro conditions. Okay, thank you.

As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. One moment for your next question. The next question comes from the line of Vincent Colicchio of Barrington Research. Vincent, please go ahead.

yeah bobby i'm curious uh how are the price accelerators playing out and uh were they included in the four large deals you just lent uh yes it's i need to check specifically those but i i believe we're now officially working them into every uh new and renewed contract uh and generally being accepted uh as as a you know as more an established pattern across all healthcare IT. So we're glad to have that model in place. And credentialing, learning, and scheduling as contracts are gained and renewed, we're working in price escalators. And they're, of course, negotiated, but we're actually finding it's a reasonable negotiation. We're trying to get essentially as best we can close to cost of living level adjustments on an annual basis. So this will take three, three and a half more years to play out fully, but it's exciting to be layering it in with every single renewal and new contract. In fact, I think it would be an

exception to not have them at this point. And could you provide an update on NurseGrid? In particular, I'm interested in the e-commerce performance. Yeah, I don't have the numbers right

in front of me, but NurseGrid, we have three or four monetization strategies on NurseGrid, and several of them are at play. The core one is we launched NurseGrid Learn in the application, and I believe it's doing in excess of about $50,000 a month in collective commerce revenue, so we're generating revenue now through that network. It's exciting. We're also meeting needs for the nurses. We have a strategic partnership with a group called Plannery and a business relationship with them, and Plannery is helping nurses consolidate student debt and save money, and so it's not really an advertising relationship, it's a business relationship, but their services are highly valued by our nurses, and we're beginning to refer business to them and share in that business outcome, while importantly saving money for nurses, so it's really a fantastic kind of value add. We launched a jobs function on the site, which is not yet generating revenue, but generating lots of interest, and so watch for that in the to help our nurses see opportunities in front of them. And then finally, the audience for NurseGrid continues to grow organically, passing, I believe it's, oh, shoot, I hope someone will text me, I think it's 640,000 monthly active users on NurseGrid. I'll watch my text and correct that if I'm off a little bit, but I think it's growing around 1,500 to 2,000 a week. One other important point about NurseGrid is we've now shifted the app to use our platform identity management service. So all the nurses on NurseGrid are logging in with an HTREAM ID, which is an identity capability issued by our platform as a service capabilities. And that's going to allow us to bring even more value to the nurses on NurseGrid as we're able to bring forward things like some of their credentials. Like, for example, if they'd earned an American Red Cross certificate, they can now show up in their portfolio on NurseGrid. So I think it will be even more useful to the nurses to be able to use and benefit from the platform identity service. And so watch for more announcements in that area as well. Lots of advances with NurseGrid and more to come. Thank you, Bobby.

This does conclude the question and answer portion of our call. I would now like to hand it back over to Robert Fritz for closing remarks.

Well, thank you, everyone, for participating in this earnings call. We look forward to the next quarter. Thanks to all health streamers who made this all possible. I love being the spokesperson for your excellent work and look forward to reporting out on the next quarterly earnings call. Thank you, everyone, and see you next time.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.