HealthStream faces another round of challenges
Doster has been named HealthStream's chief technology officer, and he's to report aboard in mid-May. Given the company's recent technology troubles and Doster's base salary of $200K, expectations will be high.
Last week's analysts briefing suggested that stronger momentum won't emerge at HealthStream until at least the second half. That gives Doster and the rest of the team about 90 days to get some fresh traction.
Local MBA students, as well as investors, should be studying HealthStream. Here's a company that's facing competitive pressures from healthcare, software, publishing and research players; a company dependent upon complex technologies and systems; an enterprise that needs to foster innovation amid disruption; and, a business subject to the pronouncements of the SEC, the FDA and the FTC, among others.
Last week, nearly 18 years after CEO Bobby Frist launched his original privately held "small multimedia company" in 1990, HealthStream (Nasdaq:HSTM) reported it had earned $66,000 in net income during its first quarter of 2008. HealthStream also signalled it may reach $54.5 million in revenue for 2008, with as much as $3.4 million in earnings.
The guidance did not deter one analyst from asking politely when the company is going to "start getting legs on it" and produce more returns for shareowners.
Much as he did in announcing an earlier quarter's results, Frist explained that long-term success still requires using cash to buy back some of the company's stock; developing and marketing new products and product enhancements; smoothly implementing service for new customers; integrating the learning and research sides of the business; and, regaining momentum in business development.
HealthStream lost some momentum in 2007, due to major problems in migrating existing customers to a new learning platform. Frist revealed during last week's call that problems have also slowed HealthStream's introduction of its much-heralded Competency Center, with related development work now lagging about 90 days behind target.
So, Doster into the breach: He will join Frist, newly appointed SVP-CFO Gerry Hayden, Research SVP Eddie Pearson, VP-IT Tom Dugger, and other marketing, sales and customer-care executives in a fresh push to improve HealthStream's ability to shape its own future. Doster has been consulting as Altus Group LLC on tech strategy and systems from his Brentwood home during the past 18 months.
He launched his consultancy after a six-month stint as SVP-IT with Ozburn-Hessey Logistics. Prior to that, he had 20 months as CTO for ill-fated Shop At Home Network. Earlier, he did four years as SVP with IT outsourcer NewRoads Inc., and five years as CIO with e-retailer Interactive Marketing Services. ♦