HEALTHSTREAM INC Segments Disclosure
9. BUSINESS SEGMENTS
The Company provides services to healthcare organizations and other members within the healthcare industry. The Company’s services are focused on the delivery of workforce training, certification, assessment, development, and scheduling products and services (Workforce Solutions) and provider credentialing, privileging, call center, and enrollment products and services (Provider Solutions).
The Company measures segment performance based on operating income before income taxes and prior to the allocation of certain corporate overhead expenses, interest income, interest expense, gains and losses from equity investments, and depreciation. The Unallocated component below includes corporate functions, such as accounting, human resources, legal, information systems, investor relations, administrative and executive personnel, depreciation, a portion of amortization, and certain other expenses, which are not currently allocated in measuring segment performance. The following is the Company’s business segment information as of and for the years ended December 31, 2022, 2021, and 2020 (in thousands).
| Revenues, net: | 2022 | 2021 | 2020 | |||||||||
| Workforce Solutions | $ | 213,589 | $ | 205,443 | $ | 197,587 | ||||||
| Provider Solutions | 53,237 | 51,269 | 47,239 | |||||||||
| Total revenues, net | $ | 266,826 | $ | 256,712 | $ | 244,826 | ||||||
| Operating income: | 2022 | 2021 | 2020 | |||||||||
| Workforce Solutions | $ | 35,498 | $ | 31,736 | $ | 41,622 | ||||||
| Provider Solutions | 6,857 | 7,915 | 4,678 | |||||||||
| Unallocated | (29,906 | ) | (31,596 | ) | (30,482 | ) | ||||||
| Total operating income | $ | 12,449 | $ | 8,055 | $ | 15,818 | ||||||
| Assets* | Purchases of long-lived assets | Depreciation and amortization | ||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||||||||||||||||||||
| Workforce Solutions | $ | 273,488 | $ | 258,864 | $ | 18,915 | $ | 17,831 | $ | 17,586 | $ | 23,741 | $ | 20,616 | $ | 12,930 | ||||||||||||||||
| Provider Solutions | 135,276 | 137,008 | 5,889 | 4,719 | 2,849 | 9,722 | 9,861 | 10,311 | ||||||||||||||||||||||||
| Unallocated | 88,977 | 90,881 | 1,051 | 892 | 573 | 4,482 | 6,336 | 6,948 | ||||||||||||||||||||||||
| Total | $ | 497,741 | $ | 486,753 | $ | 25,855 | $ | 23,442 | $ | 21,008 | $ | 37,945 | $ | 36,813 | $ | 30,189 | ||||||||||||||||
* Segment assets include accounts and unbilled receivables, prepaid royalties, prepaid and other current assets, other assets, capitalized software development, deferred commissions, certain property and equipment, and intangible assets. Cash and cash equivalents, marketable securities, non-marketable equity investments, and certain ROU assets are not allocated to individual segments and are included within Unallocated. A significant portion of property and equipment assets are included within Unallocated.
As described in greater detail earlier in this Annual Report on Form 10-K, the Company has been in the process of more completely unifying its business under a single platform strategy that is designed to serve as a foundation for the entire enterprise. As a result of this process, the Company’s business is now organized and managed around a consolidated, enterprise approach, including with regard to technology, operations, accounting, internal reporting, organizational structure, compensation, performance assessment, and resource allocation. As of January 2023, the Company’s shift to operate and organize itself on a consolidated, enterprise basis consistent with its single platform strategy reached an inflection point which has resulted in Workforce Solutions and Provider Solutions no longer existing as separate operating segments or separate reportable segments. As a result, beginning with the Quarterly Report on Form 10-Q to be filed for the three months ended March 31, 2023, the Company will report its financial performance as a single reportable segment.
As of January 2023, the Company has operating segment. Operating segments are defined as components of an enterprise where separate financial information is evaluated regularly by a chief operating decision maker (CODM) in deciding how to allocate resources and assess performance. As of January 1, 2023, the Company’s CODM was our Chief Executive Officer, Robert A. Frist, Jr. The Company’s CODM now allocates resources and assesses performance based upon discrete financial information at the consolidated level. Discrete financial information to measure profitability is no longer being prepared at any other level.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.