HSTMHealthStream, Inc.
Is the business good?
A genuinely good business: earnings fully cash-backed (3.6×) and margins widening.
Operating profit is fully backed by cash.
Positive operating leverage, operating profit is growing faster than sales, so margins widen as the business scales.
A balanced mix of margins, efficiency, and leverage. ROE 6% = margin × turnover × leverage.
Unless marked, from derived.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is HSTM?
HealthStream, Inc. earns 7.0% on the capital it employs against a 9.0% cost of capital, so growth costs more than it returns.
Return on invested capital · cost of capital 9.0% · 2.0 points below what the capital costs: growth destroys value
- Operating margin
- 8.0%
Operating margin · Health Information Services median 2.8% · 12 months to Q2 2026
- Cash conversion
- 3.63×
Cash conversion · 3.58× a year ago · operating cash flow covers the operating profit after tax
- Share count, year on year
- −3.7%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | 6.5% |
| FY2021 | 3.1% |
| FY2022 | 4.7% |
| FY2023 | 5.7% |
| FY2024 | 7.3% |
| FY2025 | 6.7% |
Details›
- Gross margin12 months to Q2 2026
- 65%
- Operating margin12 months to Q2 2026
- 8.0%
- Net margin12 months to Q2 2026
- 6.6%
- Free cash flow margin
- 22%
- R&D as % of revenue
- 17%
- Revenue, trailing twelve months
- $321M
- Free cash flow, trailing twelve months
- $70M
- Net income, trailing twelve months
- $21M
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 7.0%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.
Health Information Services
Ranks #3 of 20 by RyuScore