HealthStream Inc (HSTM) 2015 Q3 法說會逐字稿

Good morning, ladies and gentlemen. And welcome to the HealthStream, Inc. third-quarter 2015 earnings call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's conference: Mollie Condra, Vice President Investor Relations and Communications. Ma'am, you may begin.

Thank you and good morning. Thank you for joining us today to discuss our third-quarter 2015 results. Also on the conference call with me are Robert A. Frist, Jr., CEO and Chairman of HealthStream, and Gerry Hayden, Senior Vice President and Chief Financial Officer.

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 involve risk and uncertainties that could cause the actual results to differ materially from those projected in those 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 and 10-Q.

So with that this morning, I will turn the call over to Bobby Frist.

Good morning and welcome to our third-quarter 2015 earnings conference call. We have a lot to cover today, so I'm going to jump right in.

As you may recall from our previous two earnings releases, we have updated the nomenclature that describes our business units. We are now reporting on three segments: the workforce solutions segment, the patient experience solutions segment, and the provider solutions segment. So I want to dive into each of those three just a bit and pull out a few highlights. We will turn it over to Gerry for some financial review.

The workforce solutions segment performed well again in the third quarter of 2015. This business segment is comprised of applications and content solutions for customers. They are primarily SaaS subscription-based solutions and they are targeted to improving the healthcare workforce to make sure they can understand the job they are doing, improve their competent skills and knowledge.

In the third quarter, the workforce solutions annualized revenue per implemented subscriber, or ARIS, increased $0.48 over last quarter to $35.82. This is slightly below the prior-year quarter, but it does represent the third sequential quarter of improvement.

Many of our new products in the workforce solutions segment are performing well. I'm going to highlight a few of those. Last quarter, we talked about CECenter. I described that product as a Netflix-like subscription product designed to meet state licensure requirements for nursing and allied health professionals. We see continued momentum with this product. We added 35 new accounts in the third quarter alone.

Turning to our patient experience solutions group, which are really targeted to provide insight to healthcare providers to meet the CAHPS requirements, to improve the patient experience, and to engage the workforce and also targeted to enhance physician alignment. Our patient experience solutions segment increased revenues by 7% in the third quarter over the third quarter of 2014. Revenues from the patient insights surveys -- this is a survey research product that generates recurring revenues -- increased 14% over the third quarter of 2014.

In September of 2015, HealthStream introduced Echo, Inc. to the marketplace as a newly formed company. And this was a combination of two prior acquisitions: HealthLine Systems and Sy.Med Development. By providing the software that is used to validate the professionals' credentials of potential employees, Echo products serve as the gatekeeper to workforce quality in healthcare. In the third quarter of 2015, revenues from HealthLine Systems were $2.7 million and included new customers like Children's Medical Center in Dallas and Spartanburg Regional Medical Center.

Echo customers include over 2,000 healthcare organizations, representing 1,200 hospitals and 800 physician practices, which currently use 1 or more of the solutions from this business segment. Together, our three business segments help ensure that hospitals surround their patients with the best possible workforce.

Our focus as an organization and across our nearly 1,000 employees is to tune in and help -- the nation's workforce is about 8 million people that work in the healthcare provider space. And our focus is on helping determine their qualifications to improve their knowledge, to assess their competencies and skills. And as an organization, we believe that we are well positioned to continue to help develop and assess America's healthcare workforce.

Take a moment, turn it over to Gerry Hayden for a few financial highlights, and then back to me for some product lines.

Thank you, Bobby, and good morning, everyone. I will provide some color to our financial results, including certain items that affected the quarter.

For the quarter, consolidated revenues were up 21% to $53.8 million. Operating income was down 9% to $4.3 million. Operating income was adversely impacted by the $2.1 million reduction for the deferred revenue write-down associated with the HealthLine acquisition.

Net income was down in 24% to $2.6 million. And earnings per share was $0.08 compared to $0.12 in the third quarter of 2014. Both measures were adversely impacted by the HealthLine deferred revenue write-down, and this year's third-quarter earnings per share calculation includes the impact of our equity offering in May of this year. Adjusted EBITDA was up 17% to $9.3 million and was also adversely impacted by the aforementioned deferred revenue write-down.

Now let's take [a four of] our income statements and take a look at those: revenue, gross margin, operating expenses, and operating income. Revenue: for the quarter, the overall revenue growth rate was 21% and the 9-month growth rate was 22%. Revenue within our workforce solutions segment grew by 21% over the first 9 months of 2014.

Workforce solutions is comprised of compliance solutions, clinical development solutions, resuscitation solutions, revcycle managed solutions, and talent management solutions. And some examples of performance in that area, for example, HeartCode, which is part of resuscitation solutions, grew by 31% over the first 9 months of 2014. Competency and performance centers, components of talent management solutions, grew by 45% on a year-to-date basis.

Our revenue cycle management solutions, including ICD-10 readiness, are also part of the workforce solutions segment. In the third quarter, our ICD-10 readiness solution contributed about $6.3 million to revenues compared to $7.4 million in last year's third quarter. The full-year 2015 guidance for ICD-10 readiness product is approximately $26 million.

Patient experience solutions revenues grew by [7%] in this year's third quarter. Revenues from our patient insight surveys grew by 14%, with that growth partially offset by lower growth in our patient experience coaching business and other products, including surveys conducted on either annual or biannual cycles.

In the provider solutions segment, the HealthLine acquisition, which closed in March of this year, is performing to our expectations and contributed approximately $2.7 million to revenue in the third quarter of 2015. The $2.7 million recognized revenue is net of approximately $2.1 million deferred revenue write-down, which is the accounting convention requiring us to write down beginning acquired balances to fair value as defined in GAAP. From a consolidated perspective, our organic business was solid in the third quarter with a growth rate of 15%.

Now, gross margins. Gross margins have been stable in the 57% range for the past year. The combination of factors that include lower ICD-10 revenues and revenues from proprietary solutions with higher gross margins were key contributors to this trend.

Operating expenses. For the third quarter of 2015, products and development expenses were 11.5% of revenue and represented a 47% increase over the third quarter of 2014. This quarter's 11.5% of revenue compares at 9.6% for the full year of 2014 and 8.9% in 2013.

On a combined basis, income statement expense in capitalized software development from the cash flow statement, we invested 14% of revenues in product development year to date through the third quarter. We expect to continue increased levels of investment in the fourth quarter of 2015.

G&A expenses were 13.3% of revenue and reflect another full quarter of HealthLine G&A expenses in our income statement. Our year-to-date G&A, when adjusted for the $1 million of HealthLine Systems transaction closing costs in the first quarter this year, continues to trend to 13% of revenues and below. This is the lowest percent of revenue we have seen since 2012 and this shows continued progress versus our historical recent results.

Operating income. Operating income, as I mentioned a few minutes ago, was $4.3 million in the third quarter and once again was adversely impacted by the $2.1 million reduction from the deferred revenue write-down accounting convention for HealthLine Systems acquisition.

Now the balance sheet. Our cash position and overall balance sheet remains strong and were reinforced by positive cash flow from operations, as evidenced by our $9.3 million of adjusted EBITDA this quarter. Our cash balance at September 30 was $145 million, up from $140 million at June 30 of this year.

We have no outstanding debt and our full $50 million line of credit capacity is available to us. We believe our overall capital position is likely to support our organic and inorganic growth opportunities, and we continue to review and evaluate a variety of potential acquisition and business development opportunities in terms of strategic fit and valuation.

Yesterday's earnings release contains updated guidance for the 2015 full year. We anticipate that consolidated revenues will grow between 19% and 22% as compared to 2014. It will be derived from the following three areas.

First, we expect the revenue growth in workforce solutions to increase in the 17% to 19% range. This workforce solutions growth range, excluding Sy.Med, which had revenues of approximately $4.5 million in our 2014 full-year results. Sy.Med is now part of our provider solutions segment.

Second, we expect our patient experience solutions revenues to grow by approximately 5% to 7%. Third, we anticipate our provider solutions segment, which consists of our wholly owned subsidiary, Echo, Inc., which Bobby mentioned a few minutes ago, to contribute between $12.5 million and $14 million of revenues.

We expect HealthLine Systems to contribute between $7 million and $9 million of its total, which is the estimated amount after the $6.5 million to $7 million of acquired deferred revenue balance write-down we will incur as part of GAAP.

We expect our full-year 2015 operating income will decrease between 15% to 25% over 2014 as our guidance takes into account, among other things, the impact of the HealthLine Systems acquisition completed in this year's first quarter and our plans to continue Company-wide increased levels of investment in sales and product development in the fourth quarter of 2015.

We anticipate that our 2015 capital expenditures will be between $13 million and $15 million, and our effective tax rate will be between 42% and 44%. And finally, this guidance does not include the impact of any other acquisitions that we may complete during 2015.

Thank you for your time and I will turn the call back to Bobby.

Thank you, Gerry. I would like to give a few product line updates and then turn it over for questions. Last week was an exciting week. After a lot of work and energy went into the development of KnowledgeQ, we are able to announce its availability and have begun the sales rollout to take this exciting new mobile-enabled solution into the market.

It is designed to achieve -- help hospitals and health organizations achieve compliance for regulatory training. We call them the annual mandatory training requirements. And it is also the second product from HealthStream and our partners, which follows Precyse University DNA, that includes a control center application from HealthStream.

And you may recall as investors that we began investing in the development of this control center technologies through our investment in a company called Juice Analytics about two years ago. So we are excited now to have two products in the market that rely upon this new analytics framework connected to our entire network.

The components of KnowledgeQ include an application, courseware, some standardized assessments, and the ability to create national comparison benchmarks within the product. We believe that it is imperative that health care leaders -- and this includes line managers, officers in charge of particular areas of the hospital -- need to be given information at the point where they can make meaningful improvements in their program. And in this case, in their compliance program. And be giving meaningful information at the time of need to help them manage the costs of their programs.

And so KnowledgeQ, through the use of this control center technology, gives them the tools they need to do this in ways that were never before possible. I look forward to reporting to you our progress as we introduce this product to the market and hopefully get some sales momentum on these new innovative data-driven products.

I would like to turn our attention to the revenue cycle solutions area, which historically was comprised of a single product, the ICD-10 readiness product. But now includes the ICD-10 readiness product, which is sunsetting, and the Precyse University DNA product that I just mentioned, which is based on the control center technology, which is the new replacement product.

In addition, we have exciting products in the pipeline for early next year in the revenue cycle solutions area. So by early next year, we hope to have this as a solution group area where we found a new buyer in the hospital in the financial management section of the hospital. And instead of having one product to sell, the ICD-10 readiness, we hope to have and expect to have a suite of products by the end of Q1 next year to sell into this area of -- an important area of operations at the heart of revenue recognition for hospitals and healthcare organizations.

So to take a quick review of the existing products in this revenue cycle solution area. At $6.3 million in revenue, that represented the third consecutive quarter of decline for the readiness product, which peaked about a year ago -- exactly a year ago. In the third quarter of last year, it generated $7.4 million in revenue, which represents the peak revenue contribution from that product. And then since that peak contribution in Q4 -- Q3 of 2014, we delivered $7.2 million and then $7.1 million and then $6.8 million and then $6.3 million in revenue. So the cumulative year to date on the readiness product is about $20.2 million.

We do expect to wrap the year on this product at about $26 million, which is consistent with the prior quarter's guidance. We said $28 million for the category, but $26 million for the ICD-10 readiness product, which means that our estimated revenue from the readiness product for the fourth quarter is approximately $6 million. And that would represent, again, a sequential decline in the quarter -- the fourth quarter.

We were pleased to report that the new product -- the ICD-10 product that is called Precyse University DNA, is performing very well. DNA is the follow-on product to Precyse's ICD-10 readiness solution. And let's talk a little bit about what it is.

It is a data-driven product that leverages our partner Precyse's coding expertise while also using the control center technology to use the data flowing through our network. And again, we call this technology the control center technology. It is the same technology used in the KnowledgeQ product that we released just late last week.

And it offers a one-of-a-kind solution for maintaining revenue cycle management competence in the workforce -- in the healthcare workforce. It offers customers the ability to assess and compare their level of competence against national benchmarks. DNA empowers hospitals to manage their coding workforce kind of actively, looking at their knowledge in six areas -- domain areas of expertise in coding.

We signed an additional 21 new contracts for DNA in the third quarter and cumulatively in its history, since its introduction, we have generated about $8 million in order value on the DNA product. So about $2 million in additional order value across 21 contracts in the third quarter.

DNA offers us an opportunity to retain the 7.5% of our platform subscribers that have only purchased the readiness product. And so as you remember in our last call, we mentioned that about 360,000 subscribers, which is about 7.5%, 8% of our subscribers, are customers at HealthStream for only one product: the readiness product. And this DNA product gives us yet another opportunity to go and cross-sell them to retain them as customers.

In terms of revenue, we expect revenue cycle management solutions category again to generate approximately $28 million in 2015.

I will turn our attention to the resuscitation solutions category. We have not updated on that in a while. In that category is the exciting product of HeartCode, and HeartCode has been a steady contributor to growth over the years. There is also a new product in this category that uses a data-driven framework as well.

This product is focused on teaching resuscitation skills to healthcare professionals and is offered through our partnerships with Laerdal Medical and the American Heart Association. As of September 30, approximately 1.9 million cumulative CPR training certifications have been completed through HealthStream. And we added approximately 100 new HeartCode contracts in the third quarter of 2015.

So this represents new HeartCode business. It is just exciting to see this product continue to deliver results into the market; provide a steady growth driver for our organization. And as Gerry mentioned, just continued contributor in double-digit growth rates to our overall growth.

I would like to update on a few other exciting transitions. We are in the midst now of transitioning our entire customer base to our new, mobile responsive, smarter user experience that we announced in August. After almost 2 years in development and hundreds of prototyping sessions and over 60 different coders from our programming development group have been involved in its development, we have now crossed the 1.8 million subscriber mark on the new mobile UI.

And we are rolling out at a much faster clip now. We went from pilot and now we are rolling out in segments of about 225,000 every through few weeks. And so we have done a really fantastic job. We are at about 1.8 million of our 4.5 million subscribers that are on the new mobile UI.

And feedback has been very positive. The workflows are improved for the students. It is very student-centered or professional-centered. They get organized to-do lists around how they operate day in and day out. And receptivity, because of the intuitive workflows, the mobile-enabled capacity, the responsive design, which means it works on an iPhone or an Android device. It works on multi-browsers. Safari is now supported. And so -- as well as two or three other browsers and so multi-platform as well.

So it is an exciting dawn for our customers as we move them to the new mobile UI. And exciting for us because of our success in migrating them -- almost 1.8 million subscribers -- to this new experience. We call it the HealthStream Experience. It is absolutely fantastic and represents over 2 years of development work. To see that going into the market is very rewarding and exciting for everyone here that has worked on it.

We are in a period of great innovation and we have talked a lot about increased investment, which we plan to continue through the fourth quarter into product development. But the new products are now rolling out at a very fast clip. Of course, the new user experience I just mentioned. Two control center-enabled products. One from a partner called DNA and one internally developed called KnowledgeQ are now in the market.

Our PQRS Survey is new. Physician quality reporting survey is a new product of our research organization. We have also launched compensation management and recruitment center new talent management applications in the last year.

And it doesn't stop there. We have an exciting next two quarters of product introductions. We may have hinted at new products around readmissions, where we have been working for about a year with Duke to build a new certificate program there.

Lots of exciting new announcements and I will just hold those back as they roll out over the next two quarters. But fantastic period of new product innovation to prepare us up for some of the challenges and we have mentioned those.

The ARIS metric will continue to be under pressure as we enter into the next year because of the ICD-10 readiness products and the challenge we face with that product rolling off. As you may recall, and we have talked about for over two years, that product was based on a federal mandate and that deadline has now passed as of October of this year. All health system are required to report under the new ICD-10 guidelines and we were very strong in our ability to take a very market-leading product, deliver it to 1.8 million subscribers, and help this country get ready for the ICD-10 change out.

The federal government delayed that change out two or three times, which stretched the life of this product. But now we're past the deadline and we do not expect any new sales of the readiness product. We have shifted all of our attention to the new DNA product. And so now, we look to that category of revenue to try to figure out how to backfill the declining -- sequential declining revenue out of the preparedness product as we've talked about.

And we do expect as we enter next year that the rate of decline after we have just given the guides for the fourth quarter -- and we will give guidance in February about next year -- but I would say, for those of you modeling our business,, we expect the rate of decline in that particular revenue stream to accelerate as we enter next year post deadline. And with no new sales of the existing product to occur.

However, as a category, we have a new sales leader in the area in that area of our revenue cycle. We have new product introductions pending, both with Precyse and organically developed. And the new DNA product, as I just mentioned, with dozens of new contracts in the quarter is performing very well. So we have a lot of optimism that will continue to grow that segment.

I mean, not overall. It will have the downward pressure of the declining preparedness product, but we do have products in the market now to try to grow that area for our business overall.

With those comments in hand and as we look forward to new product introductions in the second -- in the next two quarters, I would like to turn it over to the -- for questions from analysts.

(Operator Instructions) Peter Heckmann, Avondale.

Nice results.

Thank you. It was a good quarter.

Definitely. Bobby, I just wanted to see if we can fine tune on your last comment there on acceleration of the sequential decline of ICD-10 into 2016. You are doing a nice job rolling out new products and offsetting that, but is there a way you can give us a little bit more color in terms of how to think about 2016? Might that revenue stream fall from, let's say, 30% of revenue to maybe 6% of revenue on its way to question mark? That is what I am really trying to figure out.

And so I know you are not going to give full 2016 guidance until February, but can you tell us how you are thinking about that? Because obviously, you have better insight into the contract flow than we do.

Yes. So couple things. And you are right to observe that and we try to provide just absolute clarity within this year, each quarter to quarter, as we always do. We guide in February, as you know, and then we update every quarter and now we are left with one quarter and have given a pretty targeted number for that quarter of $6 million. And we have also carefully advised and think everyone should thinkfully -- thoughtfully process that we expect the rate of decline to be much faster as we enter next year.

However, without the full context of the offsetting products which are new in the market, the full context of the budget cycle we are in now, and all the other growth products, we have decided that it would be counterproductive to provide guidance on a single revenue component of our entire business. And so we're going to wait until February, as we have done for 10 years, to provide thoughtful, complete guidance on the Company, which will have all the ins and outs of all the product lines, including within this category much more great and thoughtful detail.

We are in the budget cycle now, approving the investments as we enter into next year. And we have exciting new products to offset it. And so we think that at this time, we need to not guide on a single revenue line in our model, but we need to wait, as we have always done, for February to provide comprehensive 2016 guidance.

I will note, though, that the analysts need to be -- continue to review their thoughts on how this product came in and will go out of our system. Looking at the early ramp periods, which were all fully disclosed back in late 2013 and 2014.

Think about the two-year cycle that was in the contracts. These were shorter-term contracts. Now, they were extended multiple times as the federal government moved the deadline, but we are post-deadline now and we are not seeing growth out of that single line item revenue. Obviously, it is in its, I guess, third or fourth quarter of sequential decline.

So I am sorry that's all the color I am going to provide today. I know there is going to be a lot of questions about that. Most of you have modeled it in a decline for next year and made your own assumptions. I think as a group and as a category, we're going to have to wait until February so that we are through the full analysis of the full picture of 2016 guidance for the full Company.

Okay. I appreciate that. And my second question then would be on Echo. Can you talk about the buildout of the sales force and remapping or rebranding at those combined businesses? And based upon the market that you are selling into, how do you feel about that business? As good as you did two quarters ago? Better? And how do we think about that business growing over time, if you could give some color there?

Well, a couple things that are just kind of important to note. One: we haven't quite figured out yet -- although we talk to all of you in the market about coming up with a new metric that is more encompassing of our overall growth picture than the ARIS, which represents our workforce solutions. Actually the SaaS-based subscription products of workforce solutions as a metric.

And so we are looking for -- and I wanted to put this out there -- to capture our other two segments in a more comprehensive metric. We have been thinking about revenue per hospital or new ways to create proxies to revenue per subscriber or bed size or facility size.

And so it is a bit -- we don't have as clear a guidance on those growth trajectories for the Echo company. However, we are very optimistic and excited under the leadership of Michael Sousa, the newly appointed President of that group. We have a robust and visionary roadmap for that segment, including posting of new sales hires.

Michael is a growth-oriented executive and we have been through the integration process now for about nine months and we are turning our attention to growth. And we have great opportunities there to both introduce new derivative products, which I think you will see growth in that segment come from leveraging the assets across all of HealthStream into new derivative products.

The credentialing, privileging, provider enrollment, and contact center management is kind of -- these are all gatekeeper type of products for the healthcare workforce. They all sit on the front end of the process of determining the qualifications of the workforce.

So as a field, we think there is no greater area of promise than to help healthcare organizations select and get the right workforce in their organization. And this credentialing, privileging, enrollment, and early contact center work that we do there is a vital to be the front door to the quality -- keeping quality in health care.

And so I think there is a lot of promise in that product line. We remain as excited as we were two quarters ago. The executive in charge of that group has a Board-supported growth plan that includes beginning to hire sales organization really right now. He has just selected and hired his COO and they together are going to begin to ramp their sales organization and their development organization as well. So you will see increased investments in this area of our business.

But categorically, if you think of our talent management and workforce solutions segment as post-employment, there are some pre-employment dimensions there, like recruiting center. But this is a particular focus on the early stages of the workforce and determining their capabilities to be a high quality provider. So we remain just as excited as we were two quarters ago.

Matt Hewitt, Craig-Hallum Capital.

I want to echo and the congratulations on the strong quarter.

Thank you.

A couple questions. First, one follow-up on ICD-10 and then I want to move on on that. First, on ICD-10, how should we be thinking of the crossover? When the readiness solution contracts are rolling off, at some point you are going to reach a period where you are crossing over with the new Precyse DNA contracts. Is that something that'll occur in 2016? Or is it two years out?

And I'm just trying to think about the ramp as the revenues came on and then the contract extensions. At some point -- I just don't know if it is 2016 and 2017 -- you are going to reach that crossover point. And any granularity you could provide there would be very helpful.

Well, yes. So first, as I noted that there are no new sales of the preparedness product going on. Any customer that is even interested in that product, we are showing the DNA product to now.

And we are both using that to sign extensions for people that just want extensions on their base contract and we will give them a year extension. We are also selling it brand-new under multiyear agreements. And there are challenges around replacing the revenue stream of preparedness because those contract lifespans are typically shorter -- say, two years. Whereas the DNA contracts are three-plus years.

And so if you do the same dollar value of orders in a multiyear contract, it gets spread over more years. And so it has lower offsetting ability. So just to be clear, it won't in the near future -- the next several quarters, it certainly won't offset the declines in ICD-10 preparedness product.

And so that is about all the color I can give right now. We have given exact numbers for the fourth quarter and we will provide a lot of detail on next year, but I would make sure you have thought carefully about your model and the fact that those are two-year contracts, that they are rolling off now at a faster rate.

Remember also that ARIS will have pressure on it as well because approximately 7.5% of our subscribers -- it is one of the reasons we added so many subscribers in the last 2 years -- were only on the preparedness product. And we are doing everything we can to cross-sell them into DNA and onto other products as well to keep them as customers. But just given the nature of that and the time remaining, there will be fall off in the percent of our subscribers that are only ICD-10 preparedness customers.

It is just -- I am not excited about that, but it is also, in many ways, a demonstration of the power of our network, that this federal mandate created an opportunity. We were able to seize it completely and be market-leading in the ability to deliver the solution to our network. We have been able to cross-sell customers and we have new exciting replacement products already in the market.

And so it has generated a new category of revenue for us. But it will go into sequential and more rapid decline as we enter next year. And unfortunately until February, that is all that I can say.

Okay. Thank you. One additional question. Regarding the investment -- and you guys have -- you had talked about in advance. You have continued to make those investments to launch new products, some of which we have seen; some are coming.

A couple times during the prepared remarks, both you and Gerry mentioned that this investment is going to continue through Q4. It was almost like you were specifically talking about how it is going to launch or continue ramping through Q4.

But I guess in the past, you have maybe talked about a period of investment. Should we read that to mean that the rate of investment is going to slow in 2016 as these products are launched and that you will kind of reevaluate at that point? Or should we anticipate that 2016 is another year of elevated investment?

Well, yes. A couple things in that area. First, remember our guidance was originally negative 25% to negative 35% operating income growth over prior year. So we did expect to invest this year at a higher rate than we actually have executed because now we have revised our guidance to a new range -- this 15% to 25%.

So we have given a whole new range because we simply can't invest at the expected rates fast enough. Although we have over $2 million in projects that we have approved in the last 100 days to accelerate outsourced development because we were not able to fully hire all the people we expected. And so we are boosting our temporary workforce to try to get the work done that we had planned on doing.

That said, we will not be able to fully invest as we had planned this year. So I would imagine that some of that increase rate of investment will carry into next year because we have not been able to fully deliver the full investment this year we planned. And so that is probably the best way to characterize it, that we would see continued investment into next year.

Ryan Daniels, William Blair.

Thanks for taking the question. Bobby, I am curious to get a little more color on the new user experience. And I guess specifically with the early adopters, are you able to track mobile use or the time it is taking to complete courseware to kind of validate a better workflow?

And then a second follow-up to that: is the expectation that that will increase demand for content on the platform? Because it's user friendly and workflow friendly and that that can help longer-term ARIS, as we look forward? Thanks.

I do think the new UI will be very helpful to our overall positioning -- competitive positioning in the market. Certainly, there is an increasingly a mobile workforce through both physicians and the new Millennials as they enter the workplace. So being mobile-enabled [responses on] is a critical competitive element. So we are pleased to have over 1.8 million customers using that interface.

We are able to see utilization, although I don't have those numbers at my fingertips, of the new mobile component. So we can tell when people log in from a phone or an iPad or an Android device. And I have been given a few of those updates in the last month or so. I don't have them at the tip of my fingers. So I won't try to quote them.

But we are seeing identifiable mobile utilization come into the network now. Before it was browser-based so -- and it was a little harder. Now with the new UI, we have coded it in a way that we track and can see where the content and all is being consumed.

I don't have any data get on yet accelerated content consumption. That is more of a function of the content design itself and so it is important to note now that our over 50 content partners need to design responsive design content to be fully compatible. And so that is going to be a long journey for them to optimize their content.

We have made sure it is kind of backwards compatible with the old content, but at the same time, they would greatly benefit from a redesign of their content over time. And that will take them time. Each organization goes through its own process of becoming mobile-enabled. And particularly responsive design.

So no particular data on speed to completion, but definitely a broader satisfied user base, addressing a greater set of needs, including physicians that remotely access more through their phones and the new Millennial workforce.

Okay. That's very helpful color. And then I was a little surprised with the strength in the patient experience survey growth in the quarter. You had been talking about the client loss at year end 2014 for a while and I thought that could turn negative. I think The Street expected that. Was there anything in particular that drove the outperformance there? Anything temporary or bigger new contracts? How should we think about that?

Yes. And so there is an area of particular performance in those product lines. The clinicians-in-group surveys, the CG-CAHP survey group, has been doing really well. We have introduced improved modalities of surveying; mobile and e-surveying as well have helped that area. We're going to see a greater use of e-surveying instead of phone surveying as we move forward, although all continue to grow.

We were pleased to be able to increase our guidance in that area. Initially, it was kind of in the 3% to 5% range and now it is up around 7%. So we have been able to boost our expectations just within this year. So there is a lot of kind of steady improvements here and there and we have got a lot of work to do in that area and a new leader, as we may have mentioned in the last couple of conference calls, that is really helping energize and organize that area of our business.

Okay. Thanks. And then final question. I wanted to talk about one of your performance metrics as well. You've talked about ARIS perhaps having a little less meaning, as it doesn't include the provider services and reflect what you are selling to hospitals.

I am curious what your longer-term thoughts are on the net subscriber adds each quarter because, as I understand it, that doesn't really give the Company any credit from selling platforms like HCC or HPC or Checklist, et cetera, into the existing HLC client base.

So how should we or how do you as a management team think about that net subscriber count and the value it adds today versus maybe three, four years ago, without all those other products to cross-sell?

Yes. It is a little tricky because it is under pressure and in a couple of different ways. In the denominator, for example, we do expect a fall off from the ICD-10 preparedness products. And that will pull both -- some revenue out of the top, but also start to pressure that net new subscriber number as some of them fall off.

And so overall, the ARIS is still relevant, obviously, and it does pick up the cross-sell by when we sell more of, say, the Checklist Management solution into the existing base. But on just -- focusing on the numerator or the denominator, you really have to think hard about what it is going to say in the next year because it will be under different pressures from different directions overall.

And so it is not quite as meaningful as it once was, although for that area of our business, which we now have two other segments, it is still an important indicator. The fact that it is under pressure, is important itself. And so one way to think about it, too, is I used to give a number -- and I have actually always said it -- that we targeted 20,000 to 50,000 net new subscribers every quarter for -- I mean, I think I have said that now for about 5 years.

And obviously, the last couple of years we have just kind of blown that number away. One of the meaningful contributors to being out of that range was the ICD-10 preparedness federal mandate. And so as you have seen these last two quarters, we've kind of returned a little more to that range, that's that 20,000 to 50,000 range, from a net new subscribers standpoint. That doesn't mean, however, we are not selling tens of thousands of subscribers on HCC/HPC checklists, because that would only show up in kind of the aggregate score.

Richard Close, Canaccord Genuity.

Congratulations. Just to follow-up on a couple of Ryan's questions, I guess. With respect to -- when we think about the DNA contracts on the ICD-10, I think you said 21 contracts were signed in the quarter; $2 million in revenue or contract value associated with that.

I think that is about half the value of what you stated in terms of last quarter on a cumulative basis. I think the number was 35 contracts for $6.4 million in value. Is there any -- how should we think about the size of these new contracts?

In the last -- in the prior quarters, we had one big health system that was on the preparedness product move to DNA. And so it moved that contract order value pretty materially. Also, that wasn't just one quarter data. I think that was a cumulative set of data over a couple of quarters that was the $6 million order value.

So we actually feel really good about the pipeline. In fact, I got an email early this morning from my head of sales that the pipeline is catching up in size and scope to the CECenter pipeline, which is another really hot product for us. So we remain excited about it.

When a big system moves from that product or adopts that product, you will see spikes in total order value. Because again, if a big system comes in and buys 2 to 3 years' worth across 100,000-plus subscribers, it is going to move the needle in that reporting period.

That is one reason we've never reported NOV. We just have -- in this one area, because of the preparedness level of detail we gave around this ICD-10, we have given a little more detail about order values. We will probably revert back to just focusing on GAAP and revenues in the future, but we wanted to show you that the contract velocity is good.

And remember, that last number was a cumulative -- it covered a couple of quarters. This is just one quarter. So good contract velocity, good pipeline. The one reason it was a little bigger in prior quarters because we have one big health system kind of sink its teeth into the new product, which we are really excited about. And the pipeline again is showing the same kind of strength is we are seeing in CECenter now from both a velocity number of contracts and a size. So we are pretty excited about it.

So as it relates it to the subscribers, to Ryan's question, I think last quarter you told us that 20,000 just solely ICD-10 subscribers rolled off. Is there any update that you could provide us for the third quarter what that number was?

No. I don't have that number. It did drop off. I don't think it is as big as the 20,000, but it did drop off. There are getting to be so many components to ARIS, like about 2 dozen, that it is hard to pick which ones to talk about. So we are just looking at the aggregate metric now. And we're going to stick to that until we come up with a new metric.

So -- but it did -- there was definitely some peel off. There was some cross-selling as well and so -- and I don't have that number exactly this time. We had it last time, but --.

Okay. And just to follow up on some of the products. Obviously, you have a lot of new stuff out there either in the market recently or expected to come to market. You didn't really talk that much in terms of, I guess, CECenter or Checklist Manager -- or Management. Do you have any stats related to those products that you could provide us as you did last quarter?

Well, we've kind of picked one or two products to give a little detail each quarter. So I didn't deep dive with those product managers this time. They all continue to show good momentum. I mean, it is part of our growth rate we reported, that 15% overall, ex-acquisition growth rate. And in the workforce solutions, as you noted, several of them are 20%, 30%, 40% growers.

And so Checklist fits those -- that category. Although I don't have good detailed numbers. I gave the more detailed look at the HeartCode resuscitation products this time instead of the Checklist. But we have got a lot of great products that are just going to be steady contributors as we move forward and a growing sales organization to take them to market.

I guess my final question would be for Gerry. In discussing the operating expenses, sales and marketing was significantly below what we were looking for. And I was just curious whether sales and marketing compared to what you guys were thinking internally.

I know you are trying to ramp up sales force and whatnot, but just any clarity on that? Whether -- maybe we were aggressive in our assumptions for the third quarter and you were focusing in on really more investment in the last four months of the year or just -- is that more of a timing thing? Or was there anything that was maybe out of whack for you guys in the quarter?

I try explain what the sequential changes between Q2 and Q3 were. That might help give some clarity. So first of all, Q2 had Summit, which I think we discussed in the last -- and then of course, it didn't recur again in Q3. So that would be one difference.

Part of the -- Bobby's stock contribution to employees occurred in Q2 in that category on the expense -- on expenses. Commissions -- there was some deferred commissions that the timing of those hit Q2, but not Q3. So that was more of accounting timing convention.

But also the rate of investment -- those are three particular things, Richard. A general comment: there has been a lot more attention, at least in the last couple of quarters, about product development investment versus sales. But we do want to still increase the size of the sales force, obviously.

Just a little more color on the sales force. Even without considering the sales positions that are posting in the Echo product and the Echo company, we have got about 10 open sales and marketing positions currently. Probably the few more to even be posted. So about 10 open. 4 those are in revenue cycle, 1 in the post-acute, 1 in clinical solutions, 1 in talent management, and 2 or 3 in the lead generation and marketing teams.

So we have got several open positions to fill. Hopefully before, as we do every year, we try to ramp up the sales organization, as we head in, to ready for January's national sales meeting. And so you can see there. And then in addition, there will be several postings on our website for hiring at Echo to strengthening the sales team at Echo.

My final question, Bobby, would be: I think November is the time frame you do a deep dive with your Board in terms of the upcoming strategic initiatives for the Company. And as you enter the closing of the year, how would you characterize the Company's position and growth opportunities as you look out over the next two years as compared to maybe in the recent past?

Yes. So some areas are under a little more pressure, obviously. We had a very opportunistic period here around this ICD-10. And we have got to work through that. But we have a huge and exciting pipeline of new products to kind of carry us forward.

Some areas we are experiencing more extreme competitive landscape, like the pure software sale to HR. There are probably two dozen different competitors selling parts of the talent management platform. So that area is very competitive.

That said, the way we bundle platform up into solutions, these solution selling groups now -- revenue cycle, compliance, simulation, resuscitation, provider solutions, and patient experience solutions -- those are the themes that we think are critical to the success in the macro environment of healthcare. And we are on those themes and we are aware of the new trends that are coming and even have new products in those areas, like we mentioned readmissions and the work with Duke.

We are moving our attention to using data and manifesting data, turning it into information, making it part of our solution set. Whereas in the past, it was more platform and content only. And as we look forward to the next three years, you can see now two new products, where data being turned into information is a core part of the value proposition on a go-forward basis.

So at our retreat, which we just held in September, a lot of discussion around this more comprehensive view of being a solution provider. And so I think we are focused in the areas of greatest need around the workforce. There are workforce challenges are tremendous. The need for a more competent, engaged, and qualified and performant workforce has never been higher and we are at the heart of how that actually happens.

So we don't just analyze it. We help organizations get an outcome out of their talent. And I think that is different than just selling software to an organization and saying, you know, good luck with your talent management. We come in and we say we can help lower the cost of your compliance.

We can help improve your resuscitation outcomes. We can improve your patient experience scores. We can improve the quality of your inbound workforce through more efficient credentialing and privileging. We are really helping solve the problems of healthcare, which are enormous and at scale.

And so I think this next generation of HealthStream, which brings data into our element of our value proposition, we are at a critical and important and exciting inflection point. And there is a lot of discussion around how to accelerate those elements of our business model to create value from them for shareholders.

And we are excited about that. It is challenging because it is a new era, but we are very excited about it and we think very well positioned with -- a lot of our work on the new UI, we're glad to have that deep into the market now so that we can turn our attention to refining these solutions, like KnowledgeQ and DNA.

Okay. Thank you. Congratulations again.

Scott Berg, Needham & Company.

Congrats on a good quarter. A couple quick questions for me. First of all, Gerry, you moved up your CapEx assumptions for the year. You know, it is $1 million, $1.5 million at the midpoint. So it is not a significant number, but it is enough to catch my eye. Can you talk about what the additional investments you are expecting in those categories this year are?

Yes. It is probably two things. One: a corollary to the whole idea of product development, there will be more capitalized software going to the balance sheet as part of the conventional accounting treatment. The second is we did add some extra capacity around the -- to prepare for the ICD-10 deadline, anticipating maybe a spike in user demand and access, pre-October 1. So those are the two major differences for that $1 million difference or so.

We have also put in some new -- a renewed focus on security and put in some new hardware infrastructure for better and improved security as well. So we have made some important investments in infrastructure recently, which we are glad to have done.

Great. And then the last question for me, Bobby, that you [tackled] just a little bit -- or a couple of questions ago. But the patient experience segment saw meaningful uptick or at least the start of an uptick in there in that business. It has been a little bit slower the last couple quarters.

Is the increased usage in demand that you're seeing there do you think is sustainable more than just the third and the fourth quarter what you are seeing in the back half of this year? Or is this something that could kind of help reaccelerate that business going into end of next year?

I don't know. I think we will finish our budget process and make some real final decisions about next year there. We have new leadership, refreshing products, and so we have new reasons to be optimistic about our competitive position as we enter next year. But we also have the drag of the legacy of the low growth.

So I am not quite prepared to say we have got that on the hook yet. But directionally, it is going in the right direction and we are real excited about the way the leadership team is now organized to set it up for growth.

And the same thing is true of the Echo business line and we have acquired two businesses, combined them. We have great leadership. They have a great vision and roadmap, but they are early to execution and we're really excited about that area.

So those two segments, we are optimistic and we feel great about the teams running them and they are well positioned. But we have got to finish the year out and think hard about the timing of the impact of these teams and people and new products and of course provide a detailed look into that at February.

Steve Rubis, Stifel.

Thanks for taking my questions. Thanks for talking about the ARIS metric. I won't ask a question about that since you have sufficiently talked about it. But what I would like to ask about is the ICD-10 products, specifically the Precyse DNA.

Can you talk a little bit more about what types of hospitals are your likely customers? Are these small community hospitals; are they larger hospitals? How do you view new RCM players entering the field, impacting this opportunity? And then why does the Precyse DNA second-generation solution work, given that you are not an RCM provider or EHR provider?

Yes. So I'll maybe take some of those backwards. I mean, the first thing is why does it work, given we are not an RCM software provider. And so just to be clear, we do not plan to get into the revenue cycle software business, where you are actually providing the software that manages revenue cycle. That is not a plan of ours from a competitive landscape.

We plan to focus on developing the workforce that is in the financial department in a way that they are knowledgeable and skilled in their areas of responsibility. Coders are a key part of that area of responsibility and we plan to have the very best tools and resources to assess the quality and competence and knowledge of that particular part of the workforce.

And so we don't plan to be in the revenue cycle business. We plan to be in the development business for the workforce in revenue cycle. So I wanted to make that clear.

And DNA is simply the best product to do that. It is thoughtfully created by our partner Precyse based on a long history of knowing what makes for quality coders. You may recall they provide themselves -- are a revenue cycle company and provide an outsourced workforce of the highest quality and more knowledgeable than even the existing workforce in hospitals.

So their programs are designed to train their own staff to be the top rate, best quality workforce in the industry. And we have now commercialized that into a product set. So we are well positioned. And it also uses data in an unprecedented way. So we have outlined the assessments of the workforce with the risk areas of upcoding and undercoding so that we think that the training we are providing has likely correlation with areas of identifying risk that could occur from people making mistakes in coding.

And so the use of data at the scale that we have is unprecedented with our partnership with Precyse. And so we think we are best positioned.

And finally, the products in the category are expanding. And so for example, we have invested real capital -- almost $500,000 with Precyse -- to build an entirely new product set around case managers. And this is a great area of need to train and develop and assess the quality of your case management group.

I was recently at a large health system that said they had over 2,000 case managers that needed training. And in the first quarter of next year, we expect to announce a new product line with our partnership in Precyse focused on case management. And training the case managers.

And there is other products that I haven't mentioned as well due out in the first quarter in this category. So we will have as many as four products in this category: the readiness product, which is essentially retiring; the DNA product, which is best of class. I just mentioned the case management product, which should be coming out in the first quarter. And then some new partnerships that are going to have brand name recognition that I can't announced yet, but will give us additional offerings to this financial department at hospitals.

So the competition in the area from an educational standpoint, we are trying to co-opt some of that competition and have them distribute through us. And you will see a little of that as we announce our new partners. I hope that helps, Scott, and -- you still there? Is that Steve? Okay. Steve.

It is Steve. Sorry about that. I had you on mute for a second. The follow-up is can you talk a little bit about the customer opportunity base? Is it large hospital? Small hospitals? Any color you can give there.

Yes. Sure. So I think the good news here is that kind of the midmarket and above are where we are going to see meaningful needs here, where they are trying to work with larger -- they have got more ability to invest in the area of revenue cycle management, optimizing that workforce that.

So I would say the medium and above. We will still sell to the small market, but I think at a system level is where we will see some of our sales opportunities.

Nicholas Jansen, Raymond James & Association.

Congrats on the good quarter. Two questions. First, on just a follow-up on the DNA product. I think you are talking about $2 million in revenue for 2015 associated with that platform, but you only have about $8 million of order value today. And I think from my interpretation of your discussion earlier is that $8 million is going to be flowed through over multiple years.

So just wanted to get a better sense of how are you coming up with that quick of revenue for that platform? And then on that point, in the third quarter, what was the revenue associated with DNA so we can kind of get a sense of what 4Q looks like?

Yes. So the full-year revenue for DNA -- revenue -- would be $2 million. And we had about $6 million in orders -- remembering these are, say, 3-year contracts. And so if you take $6 million in orders, spread it over 3 years, you're going to get about $2 million in revenue, roughly.

But we also have some extensions of contracts that converted quickly to DNA. So we were able to convert revenue, which dropped the revenue from the preparedness product and moved it to DNA kind of quickly. So those are -- and you were right in your assessment of about $8 million in total orders, spread across slightly longer-term contracts than the preparedness product. So it won't come as fast in the revenue rec as the prior products.

But your assumptions were correct. So $26 million of our $28 million in this category will come from preparedness. $2 million will come from DNA in this year. And then our total contract backlog is now at about $8 million on DNA, which is spread over multi years. So your analysis was correct.

Okay. That's helpful. Did you disclose the third-quarter revenue number for that product?

We didn't disclose the revenue. We kind of updated the order value. So the cumulative year expectation in revenues remains at $2 million. It is really hard at this point in the year to move that, as you can imagine, even if you sign big contracts. It would go over, say, 36 months. So you would only get 1 month of revenue rec, even if you signed it in November.

Okay. That's helpful. And then a more strategic question. You guys do have a very ample capacity on the balance sheet to look at deals. I know there has been some activity in the HIT arena during the third quarter or some of those multiples might have been outside of your price range or comfort zone.

But just wanted to get a better sense of how you think about deploying that cash on the balance sheet. And any areas within your existing product solutions set that you feel might be needing of beefing up a little bit to be more competitive. Thank you.

Yes. So we definitely think across each solution area. Resuscitation, what should we add. Clinical development, what should we add. Compliance, what she we add. Provider solutions, what should we add. Patient experience. So we do kind of go across those segments now and think about are there nice additions to them. And in each category, we have at least a couple of ideas that we are interested in.

Now, you are right to say the market is hot and multiples are high, so we are going to have to be careful and make sure that there is a really good strategic fit and a good case to be made for IRR. And be disciplined investors. So we are not afraid of paying high multiples if we think we can get a return.

Our history has been on the conservative side. We expect to remain careful and thoughtful in our analysis to make sure that we can get the appropriate leverage out of these acquisitions into our network.

We do have more of an ecology effect here, where we can lever assets into our network and we are excited about that. So it gives us the opportunity to think about revenue synergies and opportunities for smaller companies into our network.

And so we have a good pipeline across all the segments. We also may have a history of minority investments. I think over three of them now, where we have taken minority stakes in small innovative companies. Juice Analytics is our favorite example, but there are others where we bolster our technological capabilities by taking a minority investment, securing the right to the technologies we need for our vertical for healthcare, while allowing those companies to pursue growth in other markets as well.

So both minority investments, acquisitions that fit our segments, and again, we have opportunities in each segment that we are evaluating. And we expect to maintain the same kind of discipline, although I would say we are willing to pay if we think the fit and leverage is appropriate.

Matthew Gilmore, Robert Baird.

Thanks for squeezing me in. Just one question from me. And this dovetails off some earlier comments Bobby made. But I wanted to ask about KnowledgeQ and the other control center solutions.

So for KnowledgeQ, the announcement mentioned the ability for hospitals to reduce costs associated with their training programs. Can you give us a sense for how impactful that is in terms of the cost for the hospital client?

And then, also just generally, how are you approaching the pricing strategy for KnowledgeQ and some of the other control center solutions that have been analytics component compared to some of the legacy products that don't have an analytics component?

Right. So a great question. We are excited about this product. So the first thing is on the approach to cost savings. So really interesting, but what we have done is we have taken a Bureau of Labor Statistics data set and stood it up alongside of our data sets. And customers can elect to import their own data set as well under the benchmarks if they want to do more detailed cost analysis.

But built into KnowledgeQ is a whole analysis thread on the cost of running your annual mandatory compliance program. And that has never been done before. So if a customer is utilizing this product, they get kind of a running investment scorecard, calculating hours spent and time spent and applying labor rates to different types of positions across their hospital. So it is like a built-in ROI or cost calculator that is running.

And as we accumulate more data, the benchmarks will become more meaningful. And then over time, of course, we will show them how the configuration choices -- that there are numerous choices they make when they run their compliance program -- can affect costs. And so the idea to give them the data to adjust the configuration changes.

I will give you one example. We have just entered into a two-year agreement with a large health system under our research team. We have a team we call the Living Labs team. And we're going to use actual cost data, the toolset of KnowledgeQ, and we are going to look at how their policy decisions in compliance affect their cost of their program. And we will be using the toolsets of KnowledgeQ to help them manage and actively understand and make policy level decisions.

For example, how frequently should people be required to take mandatories. How long is it before knowledge starts to drop off before it introduces new risk. When you decide how many courses to assign to someone, is that based on data or not. How do you set your testing thresholds so you can test people out of content by setting testing thresholds higher or lower. And the data will help inform that. And obviously if someone tests out of a course by scoring a 99, they don't spend 2 hours in the course, which saves time and money.

And so the idea of KnowledgeQ is to give them the data to make those types of policy decisions. And we have just entered into a new two-year agreement using KnowledgeQ with a large health system to help manage the cost and understand the nature of their investment in their compliance program. And those tools, now that they are built, are available to Precyse to add those kind of cost calculators into their DNA product.

And so this is a leverageable architecture. Once we have stood up the Bureau of Labor and Statistics data set and make it available into this toolset, now other partners can build into their control centers these cost calculators. So we are out actively promoting the control center technology to associations, to our 50 content partners so that they, too, can release data-driven products.

As far as pricing, KnowledgeQ is a separate product. There is an upgrade path from our current annual mandatory courseware library. But it requires an additional subscription to buy the new mobile-enabled regulatory courses and the new control center-powered KnowledgeQ products.

So it is kind of a -- for existing customers, there is an upgrade path. For new customers, it has a higher price point than the old, what we used to call the regulatory library. And so because it is so much more powerful now with data, as I mentioned.

Frank Sparacino, First Analysis.

I will keep it short. Just on -- Bobby, maybe just an update from your perspective how the conversion of the readiness clients is going, moving them to DNA. I don't know if you have got any sort of expectations, targets on your side. But just an update there.

We do. And one thing I am -- I want to see what happens, of course, is this fourth quarter, a lot of the contracts -- as you remember, the government moved the deadline -- were extended through just past the deadline, which would put us at kind of now or into the fourth quarter.

And it will be interesting to see how many of them are in a kind of a coding crisis, where they know they need something. They have got to continue with what they are doing. And the product we offer them is DNA. So I would like to see an uptick in the rate of sales on DNA in the fourth quarter. It would give me confidence as the people face the decision of just completely dropping and thinking about coding as a one-time preparedness investment. Will they make the shift in the fourth quarter to saying we need this -- this is an ongoing issue for us.

And you should know that we are 15 years into ICD-9, and until a few weeks ago, we were still training on that area. So this is a continuous issue of managing the excellence of this workforce and we think this product is well positioned.

One thing that I just don't know yet is we know it will have -- be a steady and successful products because its level of innovation is unprecedented. But one question I have is will conversion rates step up in the next couple months because people face the reality of being under ICD-10 and dropping their preparedness product.

So I am a little bit optimistic that we will see an uptick in the rate in the fourth quarter, but since it hasn't happened yet, we will report on that in February.

Thank you. And I am not showing any further questions. I will now turn the conference back over to management for closing remarks.

Thank you for everyone participating. Congratulations to our employee in delivering an excellent result in the quarter. I know you have been resource-constrained as we have tried to get the hiring on board. You needed to get the jobs done, so we have tried to free up some additional capital to help you get projects done that you are under pressure to do.

So thank you to our investors who followed our story. And followed the challenges and opportunities of HealthStream. We look forward to reporting next quarter and full-year guidance in February for 2016. Thank you all and we will see you soon.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day.