HealthStream, which offers software products for healthcare organizations, reported that its customer base grew rapidly in 2014's fourth quarter, leading to a 22% increase in revenue.
HealthStream reported fourth-quarter net income of $2.6 million on $45.3 million in revenue compared with $1.8 million in net income on $37.1 million in revenue for the prior-year period.
The Nashville-based technology company, which makes tools for employee recruitment and training, as well as billing and collections and other services, increased its pre-tax income 19.4%. Higher royalties, sales commissions, additional personnel and other expenses offset some of the revenue growth.
Its net income, however, benefited from a lower effective tax rate as it received research and development credits.
The company's largest division, HealthStream Workforce Development Solutions, saw a 28% year-over-year increase in fourth-quarter revenue. It received a boost from its product offerings that help with ICD-10 readiness, the conversion to a more comprehensive medical coding system that is scheduled to roll out in October. Revenues from ICD-10 training products increased 44% year over year.
HealthStream this month entered into a deal to acquire HealthLine Systems, a San Diego-based developer of products for healthcare credentialing, for about $88 million in cash. The transaction is expected to close this quarter. HealthLine reported 2014 operating income of $7.7 million on $18.8 million in revenue, an operating margin of 41%, according to HealthStream.
HealthStream is predicting another strong year in 2015. It expects its workforce development business to increase its revenue in the 15% to 18% range, with total revenue across the company rising 18% to 21%.
However, the company said it expects its operating income will decrease between 25% and 35% as it incurs costs related to the HealthLine transaction, develops new HealthLine products and invests in its own sales and marketing activities.
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