<SUBMISSION>
<ACCESSION-NUMBER>0000950144-05-006393
<TYPE>8-K/A
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20050328
<ITEMS>9.01
<FILING-DATE>20050610
<DATE-OF-FILING-DATE-CHANGE>20050610
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>HEALTHSTREAM INC
<CIK>0001095565
<ASSIGNED-SIC>7370
<IRS-NUMBER>621443555
<STATE-OF-INCORPORATION>TN
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K/A
<ACT>34
<FILE-NUMBER>000-27701
<FILM-NUMBER>05890684
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>209 10TH AVE SOUTH STE 450
<CITY>NASHVILLE
<STATE>TN
<ZIP>37203
<PHONE>6153013100
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>209 10TH AVE SOUTH STE 450
<CITY>NASHVILLE
<STATE>TN
<ZIP>37203
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>8-K/A
<SEQUENCE>1
<FILENAME>g95764e8vkza.htm
<DESCRIPTION>HEALTHSTREAM, INC. - FORM 8-K/A
<TEXT>
<HTML>
<HEAD>
<TITLE>HEALTHSTREAM, INC. - FORM 8-K/A</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>


<P align="center" style="font-size: 10pt"><HR size="1" noshade width="26%" align="center" color="#000000">


<P align="center" style="font-size: 18pt"><B>FORM 8-K/A</B>

<DIV align="center" style="font-size: 10pt"><B>(Amendment No.&nbsp;1)</B></DIV>



<P align="center" style="font-size: 10pt"><B>CURRENT REPORT<BR>
Pursuant to Section&nbsp;13 or 15(d) of the<BR>
Securities Exchange Act of 1934</B>



<P align="center" style="font-size: 10pt">Date of Report (Date of earliest event reported): March&nbsp;29, 2005 (March&nbsp;28, 2005)


<P align="center" style="font-size: 24pt"><B>HEALTHSTREAM, INC.<BR>
<HR size="1" noshade width="100%" align="center" color="#000000"></B>


<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Tennessee
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">001-8833
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">62-1443555</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or Other Jurisdiction of Incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Identification No.)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">209 10th Avenue South, Suite&nbsp;450, Nashville, Tennessee 37203<BR>
<HR size="1" noshade width="100%" align="center" color="#000000">


<DIV align="center" style="font-size: 10pt">(Address of principal executive offices) (Zip Code)</DIV>



<P align="center" style="font-size: 10pt">(615)&nbsp;301- 3100<BR>
<HR size="1" noshade width="100%" align="center" color="#000000">


<DIV align="center" style="font-size: 10pt">(Registrant&#146;s telephone number, including area code)</DIV>



<P align="center" style="font-size: 10pt">Not Applicable<BR>
<HR size="1" noshade width="100%" align="center" color="#000000">


<DIV align="center" style="font-size: 10pt">(Former name or former address, if changed since last report)</DIV>



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (<I>see </I>General
Instruction A.2. below):

<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


<P align="left" style="font-size: 10pt"><FONT style="font-family: Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))<BR>



<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">








<!-- TOC -->
<A name="toc"><DIV align="CENTER" style="page-break-before:always"><U><B>TABLE OF CONTENTS</B></U></DIV></A>

<P><CENTER>
<TABLE border="0" width="90%" cellpadding="0" cellspacing="0">
<TR>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="3%"></TD>
	<TD width="76%"></TD>
</TR>
<TR><TD></TD><TD colspan="8"><A HREF="#000">Item&nbsp;9.01 Financial Statements and Exhibits.</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">SIGNATURE</A></TD></TR>
<TR><TD colspan="9"><A HREF="#002">INDEX TO EXHIBITS</A></TD></TR>
<TR><TD colspan="9"><A HREF="g95764exv23w1.txt">EX-23.1 CONSENT OF ERNST & YOUNG LLP</A></TD></TR>
<TR><TD colspan="9"><A HREF="g95764exv99w2.txt">EX-99.2 AUDITED FINANCIAL STATEMENTS</A></TD></TR>
<TR><TD colspan="9"><A HREF="g95764exv99w3.txt">EX-99.3 UNAUDITED PRO FORMA FINANCIAL INFORMATION</A></TD></TR>
</TABLE>
</CENTER>
<!-- /TOC -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>




<!-- link2 "Item&nbsp;9.01 Financial Statements and Exhibits." -->
<DIV align="left"><A NAME="000"></A></DIV>

<P align="left" style="font-size: 10pt"><B>Item&nbsp;9.01 Financial Statements and Exhibits.</B>


<P align="left" style="font-size: 10pt">On March&nbsp;28, 2005, HealthStream, Inc., a Tennessee corporation (the &#147;Company&#148;), entered into a
Stock Purchase Agreement with Data Management &#038; Research, Inc., a Tennessee corporation (&#147;DMR&#148;),
and Mel B. Thompson (the &#147;Seller&#148;), the owner of 100% of the stock of DMR. On the same day and in
accordance with the terms of the Stock Purchase Agreement, the Company acquired 100% of the stock
of DMR from the Seller for $10.6&nbsp;million resulting in DMR becoming a wholly-owned subsidiary of the
Company.


<P align="left" style="font-size: 10pt">The disclosure of the DMR acquisition was reported in the Company&#146;s Current Report on Form 8-K
filed with the Securities and Exchange Commission on March&nbsp;29, 2005. Since the historical financial
statements of DMR and related pro forma financial information were not available at the time of our
initial filing on Form 8-K, we are filing such information within the time allowed for such filing
as Amendment No.&nbsp;1 to Form 8-K.



<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;Financial Statements of Business Acquired


<P align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The audited financial statements of DMR for the year ended December&nbsp;31, 2004 are filed as
Exhibit&nbsp;99.2 and are hereby incorporated by reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;Pro Forma Financial Information


<P align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt">The unaudited pro forma condensed combined statements of operations for the year ended December
31, 2004 and for the three months ended March&nbsp;31, 2005 are filed as Exhibit&nbsp;99.3 and are hereby
incorporated by reference.


<P align="left" style="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;Exhibits

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stock Purchase Agreement, dated as of March&nbsp;28, 2005, by and among HealthStream,
Inc., Mel B. Thompson and Data Management &#038; Research, Inc. (Pursuant to Item&nbsp;601(b)(2) of
Regulation&nbsp;S-K, the schedules and exhibits to this agreement are omitted, but will be
provided supplementally to the Securities and Exchange Commission upon request).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consent of
Ernst & Young LLP</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*99.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Press Release dated March&nbsp;29, 2005.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Audited Financial Statements of Data Management &#038; Research, Inc. for the year ended
December&nbsp;31, 2004.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Unaudited pro forma financial information of HealthStream, Inc. for the year ended
December&nbsp;31, 2004 and for the three months ended March&nbsp;31, 2005.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">* Exhibit has been previously filed on the Company&#146;s Form 8-K dated March&nbsp;29, 2005.



<P align="center" style="font-size: 10pt">1
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<!-- link1 "SIGNATURE" -->
<DIV align="left"><A NAME="001"></A></DIV>

<P align="center" style="font-size: 10pt"><B>SIGNATURE</B>


<P align="left" style="font-size: 10pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.



<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">HEALTHSTREAM, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Arthur E. Newman
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Arthur E. Newman&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Financial Officer<br>June 10, 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>
<!-- link1 "INDEX TO EXHIBITS" -->
<DIV align="left"><A NAME="002"></A></DIV>

<P align="center" style="font-size: 10pt"><B>INDEX TO EXHIBITS</B>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">* 2.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stock Purchase Agreement, dated as of March&nbsp;28, 2005, by and among HealthStream, Inc.,
Mel B. Thompson and Data Management &#038; Research, Inc. (Pursuant to Item&nbsp;601(b)(2) of
Regulation&nbsp;S-K, the schedules and exhibits to this agreement are omitted, but will be
provided supplementally to the Securities and Exchange Commission upon request).</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consent
of Ernst & Young LLP</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">*99.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Press Release dated March&nbsp;29, 2005.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Audited Financial Statements of Data Management &#038; Research, Inc. for the year ended
December&nbsp;31, 2004.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Unaudited pro forma financial information of HealthStream, Inc. for the year ended
December&nbsp;31, 2004 and for the three months ended March&nbsp;31, 2005.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="left" style="font-size: 10pt">* Exhibit has been previously filed on the Company&#146;s Form 8-K dated March&nbsp;29, 2005




<P align="center" style="font-size: 10pt">3
</DIV>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>g95764exv23w1.txt
<DESCRIPTION>EX-23.1 CONSENT OF ERNST & YOUNG LLP
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.1


                         CONSENT OF INDEPENDENT AUDITOR


We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-37440) pertaining to the (1) HealthStream, Inc. 1994 Employee Stock
Option Plan; (2) HealthStream, Inc. 2000 Stock Incentive Plan; and (3)
HealthStream, Inc. Employee Stock Purchase Plan, of our report dated March 9,
2005 (except for Note 7 as to which the date is March 28, 2005) with respect to
the financial statements of Data Management & Research, Inc. appearing in this
Current Report on Form 8-K/A of HealthStream, Inc.


                                            /s/ Ernst & Young LLP

Nashville, Tennessee
June 7, 2005

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>3
<FILENAME>g95764exv99w2.txt
<DESCRIPTION>EX-99.2 AUDITED FINANCIAL STATEMENTS
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.2


                        DATA MANAGEMENT & RESEARCH, INC.
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 2004


                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                      PAGE
                                                                                      ----
<S>                                                                                   <C>
Report of Independent Auditor......................................................    F-1
Balance Sheet - December 31, 2004..................................................    F-2
Statement of Operations - Twelve months ended December 31, 2004....................    F-3
Statement of Shareholder's Equity - Twelve months ended December 31, 2004..........    F-4
Statement of Cash Flows - Twelve months ended December 31, 2004....................    F-5
Notes to Financial Statements .....................................................    F-6
</TABLE>







<PAGE>


                         REPORT OF INDEPENDENT AUDITOR


The Board of Directors of
Data Management & Research, Inc.

We have audited the accompanying balance sheet of Data Management & Research,
Inc. as of December 31, 2004, and the related statements of operations,
shareholder's equity and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. We were not engaged to perform an audit of the
Company's internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Data Management & Research,
Inc. at December 31, 2004, and the results of its operations and its cash flows
for the year then ended in conformity with accounting principles generally
accepted in the United States.


                                                /s/ Ernst & Young LLP


Nashville, Tennessee
March 9, 2005,
except for Note 7, as to which the date is
March 28, 2005










                                      F-1
<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                                  BALANCE SHEET
                                DECEMBER 31, 2004



<TABLE>
<S>                                                                           <C>
         ASSETS
Current assets:
   Cash and cash equivalents ..............................................   $  93,741
   Accounts and unbilled receivables ......................................     417,720
   Prepaid expenses and other current assets ..............................      25,841
                                                                              ---------
      Total current assets ................................................     537,302
Property and equipment:
   Furniture ..............................................................     124,309
   Equipment ..............................................................     244,828
   Leasehold improvements .................................................      10,326
                                                                              ---------
                                                                                379,463
      Less accumulated depreciation and amortization ......................    (209,326)
                                                                              ---------
                                                                                170,137

Capitalized software costs, net of accumulated amortization of $45,688 ....       1,491
                                                                              ---------
         Total assets .....................................................   $ 708,930
                                                                              =========

         LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
   Accounts payable .......................................................   $  67,357
   Accrued compensation ...................................................     115,481
   Deferred revenue .......................................................     165,894
   Deferred tax liability, current portion ................................       7,501
   Other current liabilities ..............................................      92,762
                                                                              ---------
         Total current liabilities ........................................     448,995
Deferred tax liability ....................................................      13,113
Commitments and contingencies .............................................          --
Shareholder's equity:
   Common stock, no par value, 1,000 shares authorized;
      100 shares issued and outstanding ...................................       1,000
   Retained earnings ......................................................     245,822
                                                                              ---------
         Total shareholder's equity .......................................     246,822
                                                                              ---------
         Total liabilities and shareholder's equity .......................   $ 708,930
                                                                              =========
</TABLE>

               See accompanying notes to the financial statements.





                                      F-2
<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                             STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 2004





<TABLE>
<S>                                                               <C>
Revenues .....................................................    $ 5,172,579
Operating costs and expenses:
   Cost of revenues ..........................................      1,556,143
   Product development .......................................        359,734
   Sales and marketing .......................................        612,909
   Depreciation ..............................................         35,136
   Amortization of capitalized software ......................         24,527
   Other general and administrative expenses .................      2,696,125
                                                                  -----------
         Total operating costs and expenses ..................      5,284,574

Loss from operations .........................................       (111,995)

Other income .................................................          6,259
Provision for taxes ..........................................          6,606
                                                                  -----------

Net loss .....................................................    $   (99,130)
                                                                  ===========

Net loss per share:
Basic and diluted net loss per share .........................    $   (991.30)
                                                                  ===========

Weighted average shares of common stock outstanding:
   Basic and diluted .........................................            100
                                                                  ===========
</TABLE>

               See accompanying notes to the financial statements.







                                      F-3



<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                        STATEMENT OF SHAREHOLDER'S EQUITY
                          YEAR ENDED DECEMBER 31, 2004


<TABLE>
<CAPTION>
                                                                              TOTAL
                                         COMMON STOCK         RETAINED     SHAREHOLDER'S
                                     SHARES      AMOUNT       EARNINGS        EQUITY
                                     ------      ------       --------     -----------
<S>                                <C>          <C>           <C>          <C>
Balance at December 31, 2003.....       100     $   1,000     $ 344,952    $   345,952
Net loss.........................        --            --       (99,130)       (99,130)
                                   --------     ---------     ---------    -----------
Balance at December 31, 2004.....       100     $   1,000     $ 245,822    $   246,822
                                   ========     =========     =========    ===========
</TABLE>


               See accompanying notes to the financial statements.















                                      F-4

<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                             STATEMENT OF CASH FLOWS
                          YEAR ENDED DECEMBER 31, 2004




<TABLE>
<S>                                                                            <C>
OPERATING ACTIVITIES:
Net loss ....................................................................  $ (99,130)
Adjustments to reconcile net loss to net cash provided by operating
  activities:
      Depreciation ..........................................................     35,136
      Amortization of capitalized software ..................................     24,527
Changes in operating assets and liabilities:
      Accounts and unbilled receivables .....................................    109,629
      Prepaid expenses and other current assets .............................     (9,237)
      Accounts payable ......................................................     19,000
      Deferred revenue ......................................................     15,710
      Accrued pension expense ...............................................     24,167
      Deferred taxes ........................................................     (6,606)
      Other current liabilities .............................................     21,368
                                                                               ---------
           Net cash provided by operating activities ........................    134,564

INVESTING ACTIVITIES:
Investment in capitalized software ..........................................    (21,994)
Purchase of property and equipment ..........................................    (79,826)
                                                                               ---------
             Net cash used in investing activities ..........................   (101,820)

FINANCING ACTIVITIES:
          Net cash provided by (used in) financing activities ...............         --
                                                                               ---------
Net increase in cash and cash equivalents ...................................     32,744
Cash and cash equivalents at beginning of period ............................     60,997
                                                                               ---------
Cash and cash equivalents at end of period ..................................  $  93,741
                                                                               =========
</TABLE>


               See accompanying notes to the financial statements.



                                      F-5



<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                          NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REPORTING ENTITY

Data Management & Research, Inc. ("the Company") was incorporated in 1992 as a
Tennessee corporation and is located in Franklin, Tennessee. The Company
provides physician, employee and patient survey services to meet the ongoing
information and business needs of the healthcare industry.

BUSINESS SEGMENT

The Company operates primarily in one business segment, services provided to
healthcare organizations.

RECOGNITION OF REVENUE

Revenues are derived from survey and reporting services provided through our
information products.

Revenues recognized from our survey related services are determined using the
proportional performance method. Revenues are earned over the estimated survey
cycle, which typically ranges from less than one month to up to four months. The
survey cycle is generally initiated based on the receipt of the first survey
response and runs through provision of related survey reports to the customer.
All other revenues are recognized as the related services are performed or
products are delivered to the customer.

USE OF ESTIMATES

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates and such differences could be material to the financial statements.

CASH AND CASH EQUIVALENTS

We consider cash and cash equivalents to be unrestricted, highly liquid
investments with initial maturities of less than three months.

ACCOUNTS RECEIVABLE

Accounts receivable are recorded at the invoiced amount and do not bear
interest. Accounts receivables from customers are typically due within 30 days
and are unsecured.

UNBILLED RECEIVABLES

Unbilled receivables represent revenue earned for contracts accounted for using
the proportional performance method for which invoices have not been generated
or billing milestones have not been reached.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

We believe that no accounts receivable are doubtful for collection at
December 31, 2004. The Company has experienced few historical write-offs.
Management reviews its accounts receivable portfolio on a regular basis to
determine if any amounts are potentially uncollectible. Write-offs are made in
the period management determines a balance will not be collected.



                                      F-6
<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY AND EQUIPMENT

Property and equipment are stated on the basis of cost. Depreciation is provided
using the straight-line method over the following estimated useful lives, except
for leasehold improvements, which are amortized over the shorter of the
estimated useful life or their respective lease term.

<TABLE>
<CAPTION>
                                                                           YEARS
                                                                           -----
<S>                                                                        <C>
Furniture..............................................................      10
Equipment..............................................................       3
</TABLE>


PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of deferred expenses
associated with delivering survey services, prepaid insurance, warranty
maintenance and technical support, and other assets expected to benefit future
periods.

The Company defers certain direct, incremental costs associated with delivering
survey services, such as postage and materials. These costs are charged to cost
of revenues proportionally as revenues are recognized.

LONG-LIVED ASSETS

We account for assets of a long term nature ("long-lived assets") in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," ("Statement 144"), which
requires that companies consider whether events or changes in facts and
circumstances, both internally and externally, may indicate that an impairment
of long-lived assets held for use are present. We measure any impairment based
on discounted future cash flows from the long-lived assets. The cash flow
estimates and discount rates incorporate management's best estimates, using
appropriate and customary assumptions and projections at the date of evaluation.

DEFERRED REVENUE

Deferred revenue represents amounts, which have been billed or collected, but
not yet recognized in revenue.

ADVERTISING

We expense the costs of advertising in accordance with SOP 93-7, "Reporting on
Advertising Costs." Advertising expense for the year ended December 31, 2004 was
approximately $6,600.

SHIPPING AND HANDLING COSTS

Shipping and handling costs are included in cost of revenues.

INCOME TAXES

The Company has elected to be taxed as an S-Corporation, and as such, the
Company's income tax obligations pass through to its shareholder. No income tax
liability or expense is recorded in these financial statements, except for
certain state income taxes in states which do not recognize S-Corporations.



                                      F-7
<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CAPITALIZED SOFTWARE COSTS

Capitalized software costs includes internal and external costs to develop our
survey tools and reporting products. We capitalize the cost of software where
the life expectancy is greater than one year and the anticipated cash flows from
such software is expected to exceed its cost. During 2004, capitalized software
was $21,994. Such amounts are included in the accompanying balance sheet under
the caption "Capitalized software costs." We amortize capitalized software over
its expected useful life, which is generally one to three years. Software costs
that have been capitalized are subject to a periodic impairment review in
accordance with our policy. Management did not identify any impairments of
capitalized software during the year ended December 31, 2004.

NET LOSS PER SHARE

Net loss per share is determined following SFAS No. 128, "Earnings Per Share,"
("Statement 128"). Under the provisions of Statement 128, basic net loss per
share is computed by dividing the net loss for the period by the weighted
average number of common shares outstanding during the period. Diluted net loss
per share is computed by dividing the net loss for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. The Company did not have any common stock equivalents as of December 31,
2004.

CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

We place our temporary excess cash investments in high quality, short-term money
market instruments. At times, such investments may be in excess of the FDIC
insurance limits.

Our services are provided to various companies in the healthcare industry that
are located in the United States. We perform ongoing credit evaluations of our
customers' financial condition and generally require no collateral from
customers. A significant portion of our revenues are generated from a relatively
small group of customers. Customers representing more than ten percent of net
revenues during 2004 were as follows: HCA, Inc. - 17%, Community Health - 13%,
and Vanguard Health - 11%. Total accounts receivable from these significant
customers at December 31, 2004 were as follows: HCA, Inc.: $16,974, Community
Health: $-0-, and Vanguard Health: $32,352.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used in estimating fair value for
financial instruments:

Cash and cash equivalents: The carrying amounts approximate the fair value
because of the short-term maturity or short-term nature of such instruments.

Accounts receivable, accounts receivable-unbilled, accounts payable, accrued
liabilities and deferred revenue: The carrying amounts, net of any allowances,
approximate the fair value because of the short-term nature of such instruments.

2. SHAREHOLDER'S EQUITY

COMMON STOCK

We are authorized to issue up to 1,000 shares of common stock. As of December
31, 2004 one shareholder owned all issued and outstanding shares of the
Company's common stock.




                                      F-8
<PAGE>

                        DATA MANAGEMENT & RESEARCH, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


3. EMPLOYEE BENEFIT PLANS

401(K) PLAN

We have a defined-contribution employee benefit plan ("401(k) Plan")
incorporating provisions of Section 401(k) of the Internal Revenue Code. Our
employees must have attained the age of 21 and have completed one continuous
year of service to be eligible to participate in the 401(k) Plan. Under the
provisions of the 401(k) Plan, a plan member may make contributions, on a
tax-deferred basis, not to exceed the maximum amount allowed by the IRS. The
Company has not provided matching contributions through December 31, 2004.

PROFIT SHARING PLAN

We have an employee profit sharing plan (the "Plan"). Our employees must have
attained the age of 21, have completed one continuous year of service,
completed 1,000 hours of service during each Plan year, and must be employed on
December 31st in order to be eligible for a contribution during the year.
Contributions vest 20% per year, and employees become fully vested after five
eligible years of service. Forfeited, unvested balances are redistributed to
employees remaining in the Plan. For the year ended December 31, 2004, the
Company contributed $115,481 on behalf of the employees in the Plan.

On January 1, 2005, the 401(k) Plan and the Plan were merged to become the Data
Management & Research, Inc. 401(k) Profit Sharing Plan.

4. LEASE COMMITMENTS

We lease office facilities in Franklin, TN, under an agreement that expires on
August 31, 2007 and provides for two one-year renewal options. Our office lease
agreement contains a provision for escalating rent payments over the initial
term of the lease. We account for this lease by recognizing rent expense on the
straight-line basis and adjusting the deferred rent expense liability for the
difference between the straight-line rent expense and the amount of rent paid.
The Company also leases certain office equipment under a non-cancelable
operating lease. Total rent expense under all operating leases was approximately
$102,000 for the year ended December 31, 2004.

Future rental payment commitments at December 31, 2004 under non-cancelable
operating leases, with initial terms of one year or more, are as follows:

<TABLE>
<S>                                                                   <C>
2005..............................................................    $  110,112
2006..............................................................        98,796
2007 and thereafter...............................................        67,346
                                                                      ----------
Total minimum lease payments......................................    $  276,254
                                                                      ==========
</TABLE>


5. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per
share:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 2004
<S>                                                           <C>
Numerator:
      Net loss..............................................   $        (99,130)
                                                               ================
Denominator:
      Weighted-average shares outstanding...................   $            100
                                                               ================
      Net loss per share, basic and diluted.................   $        (991.30)
                                                               ================
</TABLE>


                                      F-9


<PAGE>


                        DATA MANAGEMENT & RESEARCH, INC.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


6. RELATED PARTY TRANSACTIONS

The Company has one shareholder who owns all issued and outstanding shares of
the Company's common stock. The shareholder holds the title of President and
Chief Executive Officer. For the year ended December 31, 2004, the Company paid
the shareholder approximately $2.0 million in compensation.

7. SUBSEQUENT EVENTS

On March 28, 2005, the Company and its sole shareholder entered into a stock
purchase agreement with HealthStream, Inc. in which HealthStream, Inc. acquired
100% of the Company's common stock from the shareholder, for consideration of
$9.1 million in cash and 479,234 shares of Healthstream, Inc. common stock.

In connection with the stock purchase agreement with HealthStream, Inc., the
Data Management & Research, Inc. 401(k) Profit Sharing Plan was terminated.















                                      F-10
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>4
<FILENAME>g95764exv99w3.txt
<DESCRIPTION>EX-99.3 UNAUDITED PRO FORMA FINANCIAL INFORMATION
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.3


                         PRO-FORMA FINANCIAL INFORMATION
                     UNAUDITED PRO-FORMA COMBINED CONDENSED
                              FINANCIAL INFORMATION

HealthStream, Inc. (the "Company") acquired all of the issued and outstanding
common stock of Data Management & Research, Inc. ("DMR") on March 28, 2005 for
approximately $10.6 million, consisting of approximately $9.1 million in cash
and 479,234 shares of HealthStream, Inc. common stock. A portion of the common
stock, 319,489 shares, will be held in an escrow account until September 28,
2006, subject to any claims for indemnification pursuant to the stock purchase
agreement. The Company also incurred approximately $0.2 million of direct,
incremental expenses associated with the acquisition of DMR. DMR provides
healthcare organizations a wide range of quality and satisfaction surveys, data
analyses of survey results, and other research-based measurement tools.

The unaudited pro forma financial information is presented to combine the
historical results of operations of HealthStream and DMR. The unaudited pro
forma combined statements of operations for the year ended December 31, 2004 and
for the three months ended March 31, 2005 give effect to the acquisition of DMR
as if it had occurred at the beginning of the earliest period presented. A pro
forma combined balance sheet is not presented within this Current Report on Form
8-K/A, since the transaction was reflected in the Company's consolidated balance
sheet filed on Form 10-Q for the period ended March 31, 2005, filed with the
Securities and Exchange Commission ("SEC") on May 13, 2005.

The unaudited pro forma financial information is for informational purposes only
and does not intend to represent what the Company's results of operations would
have been had the acquisition of DMR occurred at the beginning of the period
presented, or intend to project the results of operations for any future
periods. The unaudited pro forma financial information does not reflect any cost
savings or synergies which may result from the acquisition, other than the
reduction in DMR's sole shareholder's compensation based on a new employment
agreement in connection with the acquisition. The unaudited pro forma financial
information should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 2004 as filed by the Company with the
SEC on March 18, 2005 and the audited financial statements of DMR, included as
Exhibit 99.2 within this Current Report on Form 8-K/A.





<PAGE>


                               HEALTHSTREAM, INC.
         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                          YEAR ENDED DECEMBER 31, 2004


<TABLE>
<CAPTION>
                                                                   HISTORICAL                        PRO FORMA
                                                           ---------------------------  -----------------------------------
                                                           HEALTHSTREAM       DMR        ADJUSTMENTS             COMBINED
                                                           ------------   ------------  ------------           ------------
<S>                                                        <C>            <C>           <C>                    <C>
Revenues, net ........................................     $ 20,057,308   $  5,172,579  $         --           $ 25,229,887
Operating costs and expenses:
   Cost of revenues ..................................        7,277,173      1,556,143            --              8,833,316
   Product development ...............................        2,531,177        359,734            --              2,890,911
   Sales and marketing ...............................        4,798,687        612,909            --              5,411,596
   Depreciation ......................................        1,366,216         35,136        21,576   (1,2)      1,422,928
   Amortization ......................................          740,542         24,527       540,297   (1,3)      1,305,366
   Other general and administrative expenses .........        4,634,377      2,696,125    (1,910,550)  (4,5)      5,419,952
                                                           ------------   ------------  ------------           ------------
         Total operating costs and expenses ..........       21,348,172      5,284,574    (1,348,677)            25,284,069

Loss from operations..................................       (1,290,864)      (111,995)    1,348,677                (54,182)

Other income..........................................          242,484          6,259      (136,168)   (6)         112,575
Provision for taxes ..................................               --          6,606            --                  6,606
                                                           ------------   ------------  ------------           ------------
                                                                242,484         12,865      (136,168)               119,181

Net (loss) income ....................................     $ (1,048,380)  $    (99,130) $  1,212,509           $     64,999
                                                           ============   ============  ============           ============

Basic net (loss) income per share ....................     $      (0.05)                                       $       0.00
                                                           ============                                        ============
Diluted net (loss) income per share ..................     $      (0.05)                                       $       0.00
                                                           ============                                        ============

Weighted average shares of common stock outstanding:
   Basic .............................................       20,585,825                      159,745    (7)      20,745,570
                                                           ============                 ============           ============
   Diluted............................................       20,585,825                      962,324    (8)      21,548,149
                                                           ============                 ============           ============
</TABLE>


PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS

(1)  Reflects the elimination of historical depreciation and amortization.
(2)  Reflects depreciation based on the fair value of fixed assets of $170,137
     over an average three year life.
(3)  Reflects the amortization of capitalized software over a one year life, the
     amortization of non-compete agreement of $250,000 over an estimated three
     year life and the amortization of remaining definite lived intangibles of
     $2.4 million over an estimated five year life.
(4)  Reflects the elimination of DMR's sole shareholder's compensation, less the
     expected replacement salary based on the employment agreement in connection
     with the acquisition.
(5)  Reflects the elimination of personal charitable donation's made on behalf
     of the sole DMR shareholder.
(6)  Reflects the elimination of a portion of HealthStream's interest income
     resulting from cash paid in connection with the acquisition of DMR.
(7)  Reflects the issuance of 479,234 shares issued in connection with the
     acquisition of DMR, less the 319,489 shares that were placed in escrow.
(8)  Reflects the issuance of 479,234 shares issued in connection with the
     acquisition of DMR, and the assumed conversion of 483,090 HealthStream
     common stock equivalent shares that were "in-the-money" at December 31,
     2004.



<PAGE>


                               HEALTHSTREAM, INC.
         UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
                        THREE MONTHS ENDED MARCH 31, 2005

<TABLE>
<CAPTION>
                                                                   HISTORICAL                        PRO FORMA
                                                           ---------------------------  -----------------------------------
                                                           HEALTHSTREAM       DMR        ADJUSTMENTS            COMBINED
                                                           ------------   ------------  ------------          ------------
<S>                                                        <C>            <C>           <C>                   <C>
Revenues, net ........................................     $  5,682,402   $  1,410,203  $         --          $  7,092,605
Operating costs and expenses:
   Cost of revenues ..................................        2,035,765        508,639       (88,014)    (1)     2,456,390
   Product development ...............................          636,518        174,212      (131,073)    (1)       679,657
   Sales and marketing ...............................        1,190,262        311,368      (193,016)    (1)     1,308,614
   Depreciation ......................................          408,161         16,772            --     (2)       424,933
   Amortization ......................................          209,820            517       140,833     (3)       351,170
                                                                                                       (1,4,
   Other general and administrative expenses .........        1,155,929        382,169      (237,969)   5,6)     1,300,129
                                                           ------------   ------------  ------------          ------------
         Total operating costs and expenses ..........        5,636,455      1,393,677      (509,239)            6,520,893

Income from operations................................           45,947         16,526       509,239               571,712
Other income..........................................           98,219            503       (52,907)   (7)         45,815
                                                           ------------   ------------  ------------          ------------
Net income ...........................................     $    144,166   $     17,029  $    456,332          $    617,527
                                                           ============   ============  ============          ============

Basic net income per share ...........................     $       0.01                                       $       0.03
                                                           ============                                       ============
Diluted net income per share ............................  $       0.01                                       $       0.03
                                                           ============                                       ============

Weighted average shares of common stock outstanding:
   Basic .............................................       20,685,786                      154,420    (8)     20,840,206
                                                           ============                 ============          ============
   Diluted............................................       21,772,332                      154,420    (8)     21,926,752
                                                           ============                 ============          ============
</TABLE>


PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS

(1)  Reflects the elimination of payments to DMR employees paid prior to the
     acquisition, triggered as a result of the acquisition transaction.
(2)  No adjustment for depreciation is required as the historical results of
     DMR for the three months ended March 31, 2005 reflect the depreciable lives
     consistent with HealthStream's policies.
(3)  Reflects the amortization of non-compete agreement of $250,000 over an
     estimated three year life and the amortization of remaining definite lived
     intangibles of $2.4 million over an estimated five year life.
(4)  Reflects the elimination of DMR's sole shareholder's compensation, less the
     expected replacement salary based on the employment agreement in connection
     with the acquisition.
(5)  Reflects the elimination of personal charitable donation's made on behalf
     of the sole DMR shareholder.
(6)  Reflects the elimination of direct, incremental expenses paid by DMR
     related to the acquisition.
(7)  Reflects the elimination of a portion of HealthStream's interest income
     resulting from cash paid in connection with the acquisition of DMR.
(8)  Reflects the impact on the weighted average shares related to the issuance
     of 479,234 shares issued in connection with the acquisition of DMR, less
     the 319,489 shares that were placed in escrow.


</TEXT>
</DOCUMENT>
</SUBMISSION>
