1095565--3/26/2010--HEALTHSTREAM

related topics

{customer, product, revenue}

{system, service, information}

{product, market, service}

{regulation, government, change}

{personnel, key, retain}

{property, intellectual, protect}

{regulation, change, law}

{competitive, industry, competition}

{condition, economic, financial}

{acquisition, growth, future}

{control, financial, internal}

{tax, income, asset}

{stock, price, operating}

Our ability to accurately forecast revenue may be affected by lengthy and widely varying sales cycles. We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, technical, marketing, or other resources. We may not be able to retain proper distribution rights from our content partners, and this could affect projected growth in courseware subscription revenues. We 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. We 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 increase our costs and decrease our revenue. A significant portion of our revenue is generated from a relatively small number of customers. A significant portion of our business is subject to renewal each year. Therefore, renewals have a significant impact on our revenue and operating results. We 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. Because we recognize revenue from subscriptions for our products and services over the term of the subscription period, downturns or upturns in sales may not be immediately reflected in our operating results. We 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. We have significant goodwill and identifiable intangible assets recorded on our balance sheet that may be subject to impairment losses that would reduce our reported assets and earnings. Our stock price is likely to be volatile. The current uncertain economic environment may have a negative impact on our customers and us which could have a significant impact on our revenue, operating results and financial condition. We may not be able to demonstrate compliance with Sarbanes-Oxley Section 404 in a timely manner, and the correction of any deficiencies identified during upcoming annual audits may be costly and could harm our business. Changes in generally accepted accounting principles (GAAP) and other accounting regulations and interpretations could require us to delay recognition of revenue and/or accelerate the recognition of expenses, resulting in lower earnings. Risks Related to Sales, Marketing and Competition Our operating margins could be affected if our ongoing refinement to pricing models for our products and services is not accepted by our customers and the market. We may be unable to adequately develop our systems, processes and support in a manner that will enable us to meet the demand for our services. Our business operations could be significantly disrupted if we lose members of, or fail to integrate, our management team. We may not be able to hire and retain a sufficient number of qualified employees and, as a result, we may not be able to grow as we expect or maintain the quality of our services. We may not be able to upgrade our hardware and software technology infrastructure quickly enough to effectively meet demand for our services. Our network infrastructure and computer systems and software may fail. We may lose users and lose revenue if our security measures fail. We may experience errors in our software products that administer and report on hospital performance, and these errors could result in action taken against us that could harm our business. Risks Related to Government Regulation, Content and Intellectual Property Government regulation may require us to change the way we do business. We may not be able to maintain our CMS certification to conduct HCAHPS surveys, and this could adversely affect our business. Any reduction or change in the regulation of continuing education and training in the healthcare industry may adversely affect our business. Changes to government and industry standards and regulations regarding pharmaceutical and medical device customers could negatively affect our business in these areas. We may be liable to third parties for content that is available from our online library. Protection of certain intellectual property may be difficult and costly.

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1095565--3/26/2010--HEALTHSTREAM_INC