Earnings wrap: HealthStream, J. Alexander's

Health care learning firm hikes forecast; no end in sight for restaurant chain's woes

Email | Print By Erin Lawley and Geert De Lombaerde

Two of Nashville's smaller public companies reported very different sets of third-quarter numbers after hours Monday. Health care learning company HealthStream announced strong results: The Nashville-based company's net income for the quarter rose to $1 million, or 5 cents per share, compared to $609,000 and 3 cents per share a year ago.

Revenues came in at $14.1 million for the quarter ended Sept. 30, up 3 percent from 2008. Year-to-date, revenues are up 11 percent to $42.3 million while net income has climbed 157 percent to $3.6 million.

CEO Bobby Frist adjusted his outlook for the rest of the year, saying his team now expects earnings per diluted share to come in between 19 cents and 21 cents, up from a range of 16 cents to 19 cents three months ago.

A four-percent reduction in operating expenses, including a nearly $500,000 cut in sales and marketing spending related to nixing its annual customer summit, boosted the company’s Q3 income growth. On the negative side, the company’s newer division, HealthStream Research, saw revenues fall 11 percent. The company attributed the fall to customer belt-tightening.

HealthStream shares (Ticker: HSTM) closed 2 percent higher Monday at $4.08. They've been flat since running from about $2.60 to $4 in late July.

The third-quarter news was nowhere as positive at J. Alexander's, which lost $1.3 million during the period on sales of $32.4 million. Those numbers were better than those of a year-ago by 34 percent and 0.2 percent, respectively, but the bottom-line improvement was due entirely to a larger tax benefit.

Same-store sales were down 5.2 percent from the fall of 2008 and average weekly sales fell even more as the company's new eateries continued to struggle.

CEO Lonnie Stout said that, given the state of the economy, a meaningful sales turnaround isn't in the cards until "some point in 2010." His team is rolling out more value-oriented items this quarter but won't throw overboard its broader premium strategy.

"We are still committed to avoiding major discounting and do not plan to adopt this strategy," Stout said. "Research shows that while guests are presently spending less, they expect us to continue offering excellent food quality and superior service."

Shares of J. Alexander's (Ticker: JAX) ended Monday trading unchanged at $4.50. Year to date, they've gained almost 90 percent.