HealthStream, Inc. (NASDAQ: HSTM) provides learning and research options to meet the training and education requirements of the healthcare industry. This diminutive company, with its market cap of $637.51 million, is a major competitor in the profitable sector of health care training, both in-classroom and online. Clients include nurses, physicians and a variety of emergency services personnel. HealthStream also educates pharmaceutical and medical technology sales representatives. These services are generally not considered optional as continuing education and accreditation are directed by both state and federal governments. This caveat could contribute to making HealthStream a good investment in a downturn.
The numbers look decent. The most recent closing price was $23.86. Revenue grew by 27.93 percent during the third quarter of 2012; $26.38 million versus $20.62 million reported in the third quarter 2011. It is worth noting that revenue growth has slightly outpaced the industry average of 21.2 percent. Accounts receivable grew by 19.14 percent during the same time period; $16.99 million versus $14.26 million year-over-year.
Why should you invest in HealthStream, or any health related company now? Because the baby boomer generation, the largest generation in history, is becoming older and increased testing and medical care are becoming a necessity. As an aging society, we require a significant increase in health care services. Health care professionals are preparing for the increase in demand. This company is offering hospitals a viable method to keep their credentials and certifications up to date in an inexpensive and highly efficient way. Health care professionals benefit from subscribing to their services, but even better for company growth is the fact that subscribers pay for their entire staff to have access to accreditation classes as well as research opportunities. Renewal rates are close to 100% from existing patrons. They must be doing something right.
If you compare HealthStream to its top competitors, the price difference is worth noting. Both SXC Health Solutions (NASDAQ: SXCI) and Cerner (NASDAQ: CERN) are trading at over $90 and $75 per share respectively. All three are good plays in an expanding sector but HealthStream is the better option with its appealing $24 price per share. Although this is not a quick cash stock for the moment, this play could turn into a missed opportunity if not taken advantage of in the near-term.