Healthstream Inc (NASDAQ: HSTM)

Sector: Healthcare Industry: Health Information Services CIK: 0001095565
Market Cap 709.34 Mn
P/B 2.27
P/E 21.60
P/S 3.20
ROIC (Qtr) 4.54
Div Yield % 4.68
Rev 1y % (Qtr) 4.62
Total Debt (Qtr) 15.29 Mn
Debt/Equity (Qtr) 0.04

About

Price action

Investment thesis

Bull case

  • Strong operating cash flow of 61.29M provides robust 4.01x coverage of total debt 15.29M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 217.24M provides 14.21x coverage of total debt 15.29M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 61.29M provides strong 15.64x coverage of stock compensation 3.92M, indicating sustainable incentive practices.
  • Retained earnings of 121.97M provide full 7.98x coverage of long-term debt 15.29M, indicating strong internal capital position.
  • Robust tangible asset base of 217.24M provides 6.19x coverage of working capital 35.08M, indicating strong operational backing.

Bear case

  • Operating cash flow of 61.29M barely covers its investment activities of (35.11M), with a coverage ratio of -1.75, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 61.29M provides thin coverage of dividend payments of (3.66M) with a -16.74 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (35.11M) provide weak support for R&D spending of 48.91M, which is -0.72x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 53.54M provide limited coverage of acquisition spending of (1.30M), which is -41.22x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 61.29M provides insufficient coverage of deferred revenue obligations of 86.98M, which is 0.70x, raising concerns about future service delivery capabilities.

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Health Information Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 TEM Tempus AI, Inc. 45.63 Bn -223.83 41.29 1.34 Bn
2 GEHC GE HealthCare Technologies Inc. 38.75 Bn 19.85 2.19 10.28 Bn
3 VEEV Veeva Systems Inc 37.30 Bn 43.36 12.11 0.09 Bn
4 DOCS Doximity, Inc. 7.81 Bn 30.87 12.57 0.01 Bn
5 BTSG BrightSpring Health Services, Inc. 7.70 Bn 59.42 0.62 2.70 Bn
6 HQY Healthequity, Inc. 7.32 Bn 38.14 5.67 1.03 Bn
7 WAY Waystar Holding Corp. 5.00 Bn 44.97 4.81 1.25 Bn
8 PRVA Privia Health Group, Inc. 2.79 Bn 153.67 1.37 0.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.11 2.77
EV to Cash from Ops. EV/CFO 14.24 -10.86
EV to Debt EV to Debt 36.18 161.93
EV to EBIT EV/EBIT 16.22 -106.48
EV to EBITDA EV/EBITDA 15.17 4.22
EV to Free Cash Flow [EV/FCF] EV/FCF 23.02 7.46
EV to Market Cap EV to Market Cap 0.78 -14.93
EV to Revenue EV/Rev 2.49 1.76
Price to Book Value [P/B] P/B 2.27 10.57
Price to Earnings [P/E] P/E 21.60 147.14
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 5.65 -8.65
Dividend Payout Ratio % Div Payout % (Qtr) 17.80 5.00
Dividend per Basic Share Div per Share (Qtr) 0.09 0.04
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 9.50 4.57
Interest Coverage Int. cover (Qtr) 0.00 -584.72
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -15.49 -24.09
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -6.86 172.48
Dividend Growth (1y) % Div 1y % (Qtr) -14.68 -1.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 5.00 -17.73
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 5.26 39.85
EBIT Growth (1y) % EBIT 1y % (Qtr) 4.49 -38.83
EBT Growth (1y) % EBT 1y % (Qtr) 4.49 -4.52
EPS Growth (1y) % EPS 1y % (Qtr) 4.62 2.60
FCF Growth (1y) % FCF 1y % (Qtr) -10.33 -48.57
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 2.07 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.60 0.66
Cash Payout Ratio Cash Payout (Qtr) 0.04 0.03
Cash Ratio Cash Ratio (Qtr) 0.48 1.87
Current Ratio Curr Ratio (Qtr) 1.31 3.27
Debt to Equity Ratio Debt/Equity (Qtr) 0.04 -0.43
Interest Cover Ratio Int Coverage (Qtr) 0.00 -584.72
Times Interest Earned Times Interest Earned (Qtr) 0.00 -584.72
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 23.00 -435.80
EBIT Margin % EBIT Margin % (Qtr) 8.66 -464.70
EBT Margin % EBT Margin % (Qtr) 8.66 -461.74
Gross Margin % Gross Margin % (Qtr) 65.30 44.03
Net Profit Margin % Net Margin % (Qtr) 6.90 -468.01