Healthstream (HSTM) risk factors, FY2025 10-K

Risks Related to Our Business Model

1. 01We have been adversely impacted, and may continue to be adversely impacted, by unfavorable conditions and uncertainty in the healthcare industry and the U.S. economy more generallyNew
2. 02We may be unable to effectively execute our business strategy, which could have an adverse effect on our business and competitive position in the industry
3. 03If any of these risks are realized, our business, and our competitive position in the industry, could suffer58% rewritten
4. 04The development and use of AI or the failure to adequately or appropriately develop and use AI, including generative AI and agentic AI, may result in reputational harm, liability, and adverse financial results, and could impact our value propositionNew
5. 05A deterioration of public health conditions associated with a future pandemic, epidemic, or public health event, or a future catastrophic event, could adversely affect our business and financial results
6. 06We may be unable to effectively identify, complete, or integrate the operations of acquisitions, joint ventures, collaborative arrangements, or other strategic investments, which would inhibit our ability to execute upon our growth strategy
7. 07an inability to generate sufficient revenue, profit, and cash flow from acquisitions, joint ventures, collaborative arrangements, or other strategic investments to offset our investment costs
8. 08We are subject to risks associated with our equity investments, including partial or complete loss of invested capital, and significant changes in the fair value of these investments could adversely impact our financial results
9. 09Our financial performance may be difficult to predict as the result of lengthy and widely varying sales cycles and other factors
10. 10We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, technical, marketing, or other resources62% rewritten
11. 11Additionally, given the evolving nature of technology, our technology enabled offerings may be disrupted by innovative or emerging technologies, such as AI/ML, blockchain, Web3, or quantum computing technologies, and such disruption could adversely impact our ability to competeNew
12. 12The failure to maintain and strengthen our relationships with ecosystem partners or significant changes in the terms of the agreements we have with ecosystem partners may have an adverse impact on our ability to successfully market, sell, and deliver certain product and service offerings
13. 13We may not be able to develop new products and services or enhancements to our existing products and services, or be able to achieve widespread acceptance of new products, services, or features, or keep pace with technological developments
14. 14We may be unable to continue to license our third-party software, on which a portion of our product and service offerings rely, or we may experience errors in this software, which could adversely impact our business

Financial Risks

1. 15A significant portion of our revenue is generated from a relatively small number of customers
2. 16A significant portion of our business is subject to renewal. Therefore, renewals have a significant impact on our revenue and operating results26% rewritten
3. 17Failure to adequately optimize our direct sales infrastructure will impede our growth
4. 18We may be unable to accurately predict the timing of revenue recognition from sales activity as it is often dependent on achieving certain events or performance milestones, and this inability could impact our operating results
5. 19Because we recognize revenue from subscriptions for our products and services over the term of the subscription period, downturns or upturns in new sales and renewals may not be immediately reflected in our operating results
6. 20We may not be able to meet our strategic business objectives unless we obtain additional financing, which may not be available to us on favorable terms or at all
7. 21At December 31, 2025, we had approximately $57.0 million in cash, cash equivalents, and marketable securities. We also have up to $50.0 million of availability under our revolving credit facility, subject to certain covenants and minimum liquidity requirements, which expires in October 2026
8. 22Goodwill, identifiable intangible assets, long-lived assets, and strategic investments recorded on our balance sheet may be subject to impairment losses that could reduce our reported assets and earnings
9. 23We may be affected by public policy developments and other changes and uncertainty in the healthcare industry that impact us and our clientsNew
10. 24We may discover weaknesses in our internal controls over financial reporting, which may adversely affect investor confidence in the accuracy and completeness of our financial reports and consequently the market price of our securities

Risks Related to Operations

1. 25We continue to make changes in the pricing of our offerings so as to increase revenue and meet the needs of our customersNew
2. 26We may be unable to adequately develop our systems, processes, and support in a manner that will enable us to meet the demand for our products and services
3. 27We operate in a challenging market for talent and may fail to attract and retain qualified personnel, including key management personnel33% rewritten
4. 28We may not be able to implement or upgrade our technology infrastructure and initiatives to effectively meet demand for our services or our operational needs
5. 29Our network infrastructure and computer systems and software may fail
6. 30A data breach or cybersecurity incident could result in a loss of confidential data, give rise to remediation and other expenses, expose us to liability, subject us to litigation and governmental inquiries and actions, damage our reputation, and otherwise adversely impact our financial results and business
7. 31For information on our cybersecurity risk management, strategy, and governance, see Item 1C. Cybersecurity

Risks Related to Government Regulation, Content, and Intellectual Property

1. 32Government regulation may subject us to investigation, litigation, or liability or require us to change the way we do business47% rewritten
2. 33The rapidly evolving and uncertain regulatory and technology environment could require us to change how we do business or incur additional costs. It may be difficult to predict how changes to applicable laws and regulations and current and future initiatives related to technology might affect our businessNew
3. 34Any reduction or change in the regulation of continuing education and training in the healthcare industry may adversely affect our business
4. 35We may be liable to third parties for content that is sold or made available by us
5. 36Protection of certain intellectual property may be difficult and costly, and our inability to protect our intellectual property could reduce the value of our products and services or reduce our competitive advantage25% rewritten
6. 37We may be liable for infringing the intellectual property rights of others43% rewritten
7. 38We use open source software in our products, which could subject us to litigation or other actions
8. 39Our sources of data might restrict our use of or refuse to license data, which could adversely impact our ability to provide certain products or services

Risks Related to International Operations

1. 40We face risks arising from our international operations

Risks Related to Ownership of Our Common Stock

1. 41It may be difficult for a third party to acquire our company
2. 42In addition, we are subject to certain provisions of Tennessee law which limit, in some cases, our ability to engage in certain business combinations or transactions with significant shareholders
3. 43There is no assurance that we will not discontinue or reduce the amount of our current quarterly dividend29% rewritten