<SUBMISSION>
<ACCESSION-NUMBER>0001299933-08-000888
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20080219
<ITEMS>2.02
<ITEMS>7.01
<ITEMS>9.01
<FILING-DATE>20080220
<DATE-OF-FILING-DATE-CHANGE>20080219
<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
<ACT>34
<FILE-NUMBER>000-27701
<FILM-NUMBER>08627820
</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
<SEQUENCE>1
<FILENAME>htm_25612.htm
<DESCRIPTION>LIVE FILING
<TEXT>
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<TITLE> HealthStream, Inc. (Form: 8-K) </TITLE>
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		UNITED STATES<BR>
	SECURITIES AND EXCHANGE COMMISSION
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	WASHINGTON, D.C. 20549
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	FORM 8-K
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	CURRENT REPORT
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	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
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	Date of Report (Date of Earliest Event Reported):
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	February 19, 2008
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	HealthStream, Inc.
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<BR>__________________________________________<BR>
	(Exact name of registrant as specified in its charter)
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	Tennessee
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	000-27701
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	621443555
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_____________________<BR>
	(State or other jurisdiction
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	(Commission
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	of incorporation)
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	File Number)
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	Identification No.)
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	209 10th Ave. South, Suite 450, Nashville, Tennessee
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	37203
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_________________________________<BR>
	(Address of principal executive offices)
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___________<BR>
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	Registrant&#146;s telephone number, including area code:
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	615-301-3100
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	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
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	&nbsp;
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<!-- CoverPageRegistrant END --><P><FONT SIZE="2">
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:</FONT>
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[&nbsp;&nbsp;]&nbsp;&nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<br>
[&nbsp;&nbsp;]&nbsp;&nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<br>
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	Item 2.02 Results of Operations and Financial Condition.
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On February 19, 2008, the Company issued a press release announcing results of operations for the fourth quarter and full year ended December 31, 2007, and guidance for the first quarter and full year 2008, the text of which is set forth in Exhibit 99.1.
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	Item 7.01 Regulation FD Disclosure.
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On February 19, 2008, the Company issued a press release announcing results of operations for the fourth quarter and full year ended December 31, 2007, and guidance for the first quarter and full year 2008, the text of which is set forth in Exhibit 99.1.
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	Item 9.01 Financial Statements and Exhibits.
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(d)	Exhibits<br><br>99.1	Press release dated February 19, 2008.<br>
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	SIGNATURES
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	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
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	HealthStream, Inc.
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	February 19, 2008
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	By:
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<I>
	Arthur Newman
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	Name: Arthur Newman
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	Title: Chief Financial Officer
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	Exhibit&nbsp;Index
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	99.1
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Press release dated February 19, 2008.
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<P align="right" style="font-size: 10pt"><FONT style="font-size: 12pt">EXHIBIT 99.1</FONT>




<P align="left" style="margin-left:25%; font-size: 12pt"><FONT style="font-size: 10pt">Contact:
<BR>
Arthur Newman
<BR>
Chief Financial Officer
<BR>
(615)&nbsp;301-3178
<BR>
ir@healthstream.com
</FONT>


<P align="left" style="margin-left:25%; font-size: 10pt">Media:
<BR>
Mollie Elizabeth Condra
<BR>
Communications, Research, &#038; Investor Relations
<BR>
(615)&nbsp;301-3237
<BR>
mollie.condra@healthstream.com


<P align="left" style="font-size: 10pt"><FONT style="font-size: 13pt"><B>HEALTHSTREAM ANNOUNCES FOURTH QUARTER &#038; FULL YEAR 2007 RESULTS</B>
</FONT>

<P align="left" style="font-size: 13pt"><FONT style="font-size: 12pt"><B>Highlights:</B>
</FONT>

<P align="left" style="font-size: 12pt; text-indent: 2%"><FONT style="font-size: 10pt"><U><B>Fourth Quarter</B></U>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenues of $12.0&nbsp;million in the fourth quarter of 2007, up 40% over the fourth quarter
of 2006, including $2.5&nbsp;million resulting from the acquisition of The Jackson Organization
on March&nbsp;12, 2007</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net income for the fourth quarter of 2007 of $2.9&nbsp;million, or $0.13 per diluted share
(including the effect of an income tax benefit of $2.0&nbsp;million, or $0.09 per diluted
share), compared to $1.1&nbsp;million, or $0.05 per diluted share, for the fourth quarter of
2006</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Adjusted EBITDA of $2.2&nbsp;million in the fourth quarter of 2007, compared to $1.9&nbsp;million
in the fourth quarter of 2006</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt; text-indent: 2%"><U><B>Full Year</B></U>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Revenues for the year of $43.9&nbsp;million, up 38% over 2006, including $9.7&nbsp;million
resulting from the acquisition of The Jackson Organization</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net income of $4.1&nbsp;million for 2007, or $0.18 per diluted share (including the effect of
an income tax benefit of $2.0&nbsp;million, or $0.09 per diluted share), compared to $2.5
million, or $0.11 per diluted share, for 2006</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Adjusted EBITDA of $7.2&nbsp;million, compared to $5.5&nbsp;million for 2006</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>1,541,000 healthcare professional subscribers fully implemented on our Internet-based
learning network at December&nbsp;31, 2007, up from 1,352,000 at December&nbsp;31, 2006</TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>As of February&nbsp;11, 2008, all of our subscriber base has been transitioned to our Next
Generation HLC</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><FONT style="font-size: 11pt"><B>NASHVILLE, Tenn. (February&nbsp;19, 2008)</B>&#151;HealthStream, Inc. (NASDAQ: HSTM), a leading provider of
learning and research solutions for the healthcare industry, announced today results for the fourth
quarter and full year ended December&nbsp;31, 2007.
</FONT>

<P align="left" style="font-size: 11pt"><B>Financial Results:</B>
<BR>
<B>Fourth Quarter 2007 Compared to Fourth Quarter 2006</B>
<BR>
Revenues for the fourth quarter of 2007 increased $3.4&nbsp;million, or 40&nbsp;percent, to $12.0&nbsp;million,
compared to $8.6&nbsp;million for the fourth quarter of 2006. The Company&#146;s revenue mix during the
fourth quarter of 2007 was comprised 64&nbsp;percent of revenues from HealthStream Learning and 36
percent of revenues from HealthStream Research. This compares to 77&nbsp;percent from HealthStream
Learning and 23&nbsp;percent from HealthStream Research services during the fourth quarter of 2006. This
revenue mix change is primarily a result of the acquisition of The Jackson Organization Research
Consultants, Inc. (TJO)&nbsp;during 2007 whose revenues are included in HealthStream Research.


<P align="left" style="font-size: 11pt">Revenues from HealthStream Learning increased by $1.0&nbsp;million when compared to the fourth quarter
of 2006. Of this increase, $1.2&nbsp;million was derived from our Internet-based subscription learning
products, which includes revenue increases from the HLC of $650,000, courseware subscriptions and
online training services (RepDirect&#153;) of $477,000, and HospitalDirect&#153; of $34,000. Revenues from
these products increased 24&nbsp;percent over the prior year quarter and approximated $6.1&nbsp;million for
the fourth quarter of 2007. The remaining revenue growth came from custom online courseware
development services which increased $243,000, and implementation and consulting services which
increased $198,000 over the prior year fourth quarter. These revenue increases were partially
offset by a decline in revenues from our live event business of $456,000, resulting from fewer live
event activities for 2007 than in 2006.


<P align="left" style="font-size: 11pt">Revenues for the fourth quarter of 2007 from HealthStream Research increased by approximately $2.4
million when compared to the fourth quarter of 2006, resulting from the impact of the March&nbsp;12,
2007 acquisition of TJO. Organic research revenues declined by $147,000 due to certain customers&#146;
decisions to delay their survey cycles until 2008. TJO revenues during the fourth quarter of 2006,
prior to our acquisition of TJO and not included in our results for the fourth quarter of 2006,
approximated $2.7&nbsp;million.


<P align="left" style="font-size: 11pt">Gross margin, which we define as revenues less cost of revenues (excluding depreciation and
amortization) divided by revenues, declined to 62&nbsp;percent for the fourth quarter of 2007 from 68
percent for the fourth quarter of 2006. The decline in gross margin was primarily a result of
changes in revenue mix, including increased revenues from our lower margin research products and
custom online courseware development. Royalties paid by us also increased over the prior year same
quarter as a result of growth in courseware subscription revenues. In addition, cost of goods
included approximately $125,000 of incremental costs to support our customers in connection with
their transition to our Next Generation HLC platform.


<P align="left" style="font-size: 11pt">Net income for the fourth quarter of 2007 was $2.9&nbsp;million, or $0.13 per share (diluted), up from
$1.1&nbsp;million, or $0.05 per share (diluted), for the fourth quarter of 2006. Net income for the
fourth quarter of 2007 includes an income tax benefit of $2.0&nbsp;million, or $0.09 per share
(diluted). Historically, the Company has maintained a full valuation allowance against its deferred
tax assets, and taxable income has been offset through the use of net operating loss carryforwards.
During the fourth quarter of 2007 management concluded that it is more likely than not that $2.0
million of the Company&#146;s deferred tax assets would be realized. The Company continues to maintain a
valuation allowance of approximately $13.8&nbsp;million for the remaining portion of its deferred tax
assets, which primarily consist of net operating loss carryforwards.


<P align="left" style="font-size: 11pt">The increase in net income for the fourth quarter of 2007 resulting from the $2.0&nbsp;million income
tax benefit was partially offset by increased operating expenses primarily associated with higher
sales and marketing and other general and administrative expenses, which resulted from the addition
of TJO personnel and facilities, and increases in other corporate expenses. Depreciation increases
resulted from purchases of property and equipment during 2007. Amortization increases resulted
primarily from capitalized software development. Interest income decreased $127,000 compared to the
prior year quarter, resulting from lower cash balances.


<P align="left" style="font-size: 11pt">Adjusted EBITDA (which we define as net income before interest, income taxes, share-based
compensation, and depreciation and amortization) was $2.2&nbsp;million for the fourth quarter of 2007,
compared to $1.9&nbsp;million for the fourth quarter of 2006. This improvement is consistent with the
factors mentioned above. Our reconciliation of the calculation of adjusted EBITDA to measures under
generally accepted accounting principles is attached in the summary financial data.


<P align="left" style="font-size: 11pt"><B>Full Year 2007</B>
<BR>
Revenues for 2007 increased $12.2&nbsp;million, or 38&nbsp;percent, to $43.9&nbsp;million, compared to $31.8
million for 2006.


<P align="left" style="font-size: 11pt">Revenues for 2007 from HealthStream Research increased by $9.8&nbsp;million over 2006, of which $9.7
million resulted from the March&nbsp;12, 2007 acquisition of TJO. Organic research revenues for 2007
were flat compared to the prior year due to certain customers delaying their survey cycles until
2008.


<P align="left" style="font-size: 11pt">Revenues from HealthStream Learning increased by $2.4&nbsp;million over 2006. Of this increase, $3.2
million was derived from our Internet-based subscription learning products, which includes revenue
increases from the HLC of $1.8&nbsp;million, courseware subscriptions and online training services
(RepDirect&#153;) of $1.3&nbsp;million, and HospitalDirect&#153; of $145,000. Revenues from these products
increased 17&nbsp;percent over the prior year and approximated $21.9&nbsp;million for 2007. The remaining
revenue growth came from custom online courseware development services which increased $595,000,
and implementation and consulting services which increased $322,000 over the prior year. These
revenue increases were partially offset by a decline in revenues&nbsp;from: our live event business of
$1.3&nbsp;million, resulting from fewer live event activities during 2007; maintenance fees from our
installed learning management product of $197,000; and&nbsp;clinical education activities of $158,000.&nbsp;


<P align="left" style="font-size: 11pt">Gross margin declined to 63&nbsp;percent for 2007 from 66&nbsp;percent for 2006. The decline in gross margin
was primarily a result of changes in revenue mix, including increased revenues from our lower
margin research products. Royalties paid by us also increased over the prior year as a result of
growth in courseware subscription revenues. Cost of goods for 2007 included incremental costs of
approximately $350,000 to support customers in connection with their transition to our Next
Generation HLC platform.


<P align="left" style="font-size: 11pt">Net income for 2007 was $4.1&nbsp;million, or $0.18 per share (diluted), up from $2.5&nbsp;million, or $0.11
per share (diluted), for 2006. As previously mentioned, net income for 2007 includes an income tax
benefit of $2.0&nbsp;million, or $0.09 per share (diluted). The increase in net income for 2007
resulting from the $2.0&nbsp;million income tax benefit was partially offset by product development
expense increases; including incremental personnel and contract labor to support our HLC platform
and content maintenance; increases in sales and marketing resulting from additional personnel and
related compensation associated with the TJO acquisition; depreciation increases resulting from
purchases of property and equipment; amortization increases resulting from TJO intangible assets
and capitalized software development, primarily for our HLC platform; other general and
administrative expense increases primarily associated with personnel and facilities costs for TJO,
as well as increases in other corporate expenses; and a decrease in interest income of $370,000
compared to the prior year, resulting from lower cash balances. The estimated expense of supporting
our customer&#146;s transition to our Next Generation HLC product approximated $950,000 during 2007,
which included $350,000 in cost of goods and approximately $600,000 in product development
expenses.


<P align="left" style="font-size: 11pt">Adjusted EBITDA (which we define as net income before interest, income taxes, share-based
compensation, and depreciation and amortization) was $7.2&nbsp;million for 2007, compared to $5.5
million for 2006. This improvement is consistent with the factors mentioned above.


<P align="left" style="font-size: 11pt"><B>Other Financial Indicators</B>
<BR>
At December&nbsp;31, 2007, the Company had cash, investments, and related interest receivable of $3.6
million, up from $2.8&nbsp;million at September&nbsp;30, 2007. Payments for capital expenditures and
capitalized feature enhancements approximated $0.8&nbsp;million during the fourth quarter. This use of
cash was offset by cash generated from operations.


<P align="left" style="font-size: 11pt">Our days sales outstanding (DSO, which we calculate by dividing the average accounts receivable
balance, excluding unbilled and other receivables, by average daily revenues for the year) improved
slightly to 63&nbsp;days for the full year 2007 from 64&nbsp;days for the full year 2006. Increases in
accounts receivable balances year-over-year is primarily due to both the TJO acquisition and delays
in cash receipts from certain HealthStream Learning customers, a significant portion of which
relate to pass through expenses associated with live events that occurred during the fourth quarter
of 2007.


<P align="left" style="font-size: 11pt"><B>HealthStream Research Update</B>
<BR>
HealthStream Research supports healthcare organizations with research solutions that provide
valuable insight about patients&#146; experiences, workforce engagement, physician relations, and
community perceptions of hospital services. This insight, in turn, provides data-driven roadmaps
for organizational and workforce development&#151;which can be achieved through HealthStream&#146;s learning
solutions. Our primary research solutions include physician, employee, patient, and community
surveys that deliver insight, analyses, and industry benchmarks to healthcare organizations.


<P align="left" style="font-size: 11pt">During the fourth quarter of 2007, HealthStream Research added several new healthcare organization
customers, including Children&#146;s Hospital of Omaha, Stevens Healthcare, and MultiCare Health System.
Among our existing research customers, 18 renewed their contracts for multiple survey products,
including a large national health system that expanded their existing multi-year agreement. In
addition, approximately 40 existing research customers chose to contract for more research services
in the fourth quarter to add to their current services received from HealthStream Research.


<P align="left" style="font-size: 11pt">On October&nbsp;21<sup>st</sup> &#150; 23<sup>rd</sup>, 2007, we welcomed approximately 130 of our research
customers to the HealthStream Research Annual Conference, held in Nashville. As the conference
theme <I>Creating Excellence in Healthcare </I>suggests, workshops, sessions, and presentations focused on
the sharing of best practices for developing the healthcare workforce and on improving healthcare
organizations. In addition, the conference provided us with another venue to connect with our
customers to learn more about their research needs, while offering one-on-one time to explore new
opportunities to support their organizations.


<P align="left" style="font-size: 11pt"><FONT style="font-size: 12pt"><B>HealthStream Learning Update</B>
</FONT><BR>
<FONT style="font-size: 11pt">HealthStream Learning supports healthcare organizations in delivering quality patient care,
creating safer hospitals, meeting regulatory training requirements, and developing professional
skills through our innovative learning solutions. To this end, we provide a range of learning
solutions that include the HLC, the HealthStream Authoring Center&#151;an online
authoring/self-publishing tool, a wide range of professional, clinical, and regulatory courseware
subscriptions, and learning activities for healthcare professionals sponsored by pharmaceutical and
medical device companies.
</FONT>

<P align="left" style="font-size: 11pt">As of February&nbsp;11, 2008, we have transitioned 100&nbsp;percent of our customer base to our Next
Generation HLC, our new and enhanced version of our Internet-based HLC. While 95&nbsp;percent of our
customer base transitioned prior to September&nbsp;30, 2007, the last five percent of our subscribers
has transitioned to the new platform since that time, per their scheduling requests.


<P align="left" style="font-size: 11pt">At December&nbsp;31, 2007, approximately 1,541,000 healthcare professionals were fully implemented to
use our Internet-based HLC for training and education. Revenue recognition commences when a
contract is fully implemented. This number was up from approximately 1,352,000 at December&nbsp;31,
2006. The total number of contracted subscribers at December&nbsp;31, 2007 was approximately 1,705,000,
up from approximately 1,452,000 at December&nbsp;31, 2006. &#147;Contracted subscribers&#148; include both those
already implemented (1,541,000) and those in the process of implementation (164,000).


<P align="left" style="font-size: 11pt">Customers representing approximately 107&nbsp;percent of HLC subscribers that were up for renewal in the
fourth quarter of 2007 renewed their contracts with us. The percentage of renewed HLC subscribers
exceeded 100&nbsp;percent due to an increase in the subscriber count among those customers that renewed.
The annual contract value for these renewed customers approximated 127&nbsp;percent due to increased
pricing as well as the addition of subscribers. The renewal rates for the fourth quarter of 2007
compare to a subscriber renewal rate of 99&nbsp;percent and an annual contract value renewal rate of 77
percent during the fourth quarter of 2006. For the full year 2007, approximately 99&nbsp;percent of
subscribers renewed, and the annual contract value renewal rate was 110&nbsp;percent.


<P align="left" style="font-size: 11pt"><B>Financial Outlook for 2008</B>
<BR>
Revenues for the first quarter of 2008 are expected to range between $11.0 to 11.2&nbsp;million, an
increase of 36 to 38&nbsp;percent over the same quarter in the prior year. We anticipate the first
quarter of 2008 revenue mix will approximate 67&nbsp;percent from HealthStream Learning and 33&nbsp;percent
from HealthStream Research as compared to approximately 80&nbsp;percent from HealthStream Learning and
20&nbsp;percent from HealthStream Research in the first quarter of 2007. HealthStream Learning, revenue
growth is expected from our Internet-based HLC and courseware subscription products, while portions
of our project-based services are expected to decline compared to the same prior year quarter. We
expect HealthStream Research revenues to increase over the first quarter of 2007, primarily due to
the revenue added following the March&nbsp;12, 2007 acquisition of TJO.


<P align="left" style="font-size: 11pt">Compared to the fourth quarter of 2007, revenues for the first quarter of 2008 are expected to
decline due to seasonality within&nbsp;HealthStream Research and a reduction in the volume of
project-based HealthStream Learning services. Revenues from the Internet-based HealthStream
Learning products are expected to increase compared to the fourth quarter of 2007.


<P align="left" style="font-size: 11pt">Gross margin for the first quarter of 2008 is expected to decline somewhat compared to the same
quarter in the prior year due to the increased portion of revenues from HealthStream Research
products that have a higher cost of goods. We expect gross margin for the first quarter of 2008
will be comparable to the fourth quarter of 2007.


<P align="left" style="font-size: 11pt">We expect net income for the first quarter of 2008 to range between breakeven and $0.01 per diluted
share which is comparable to the same prior year quarter. The above mentioned revenue
increases&nbsp;for the first quarter of 2008 and the related gross profit are expected to be offset by
expense increases related to the TJO acquisition and increases in product development and sales and
marketing expenses.


<P align="left" style="font-size: 11pt">Compared to the fourth quarter of 2007, net income for the first quarter of 2008 is expected to
decline due to the above mentioned changes in revenue mix and gross profit expectations coupled
with increases in product development expense for further enhancements to the HLC and new product
introductions including our Competency Center product. In addition, sales expenses are expected to
increase due to increased staffing for both the Research and Learning sales forces.


<P align="left" style="font-size: 11pt">Full year 2008 revenues are expected to grow between 22 and 24&nbsp;percent over 2007 with each quarter
improving over the same quarter from the prior year. Gross margin is expected to improve moderately
over 2007 levels as we continue to grow our Internet-based, subscription revenues and reduce our
emphasis on lower margin project-based services.


<P align="left" style="font-size: 11pt">We anticipate net income per diluted share for the full year of 2008 will range between $0.12 and
$0.15. We expect increases in product development expense due to costs associated with new products
and from growth in our sales, marketing, and account management due to additional personnel to
support our growth plans. We anticipate increased amortization expense associated with our Next
Generation HLC platform, our new Competency Center product, and certain courseware. We also expect
general and administrative expenses to increase, resulting from costs associated with compliance
with Section&nbsp;404 of the Sarbanes Oxley Act and stock-based compensation. We anticipate our 2008
effective tax rate to be zero, resulting from anticipated utilization of our net operating loss
carryforwards. Our 2008 estimates do not reflect an income tax benefit associated with the
realization of additional deferred tax assets. We will continue to evaluate the need for a
valuation allowance on our remaining deferred tax assets based on whether they will more likely
than not be realized in the future.


<P align="left" style="font-size: 11pt">Capital expenditures and content purchases are expected to approximate $5.0&nbsp;million in 2008, with
approximately $2.5&nbsp;million of the anticipated spending expected for the purchase of hardware and
software associated with delivery of our products and services. The remainder relates to
development of software feature enhancements, new products, and content.


<P align="left" style="font-size: 11pt">&#147;2007 has been a year of significant progress&#148; said Robert A. Frist, Jr., chief executive officer
of HealthStream. &#147;Compared to the prior year, adjusted EBITDA improved approximately 31&nbsp;percent,
while top-line revenues increased 38&nbsp;percent. Important operational objectives were also achieved,
including the launch of HealthStream Research, which occurred concurrently with our acquisition of
The Jackson Organization in March&nbsp;2007. Throughout the year, we transitioned our learning customers
to the Next Generation HLC, which we completed in February&nbsp;2008. While transitioning our customers
to the new platform, we also grew our customer base by over 250,000 contracted subscribers. The
past year was very productive and I believe we have in place a platform for profitable growth over
the next several years.&#148;


<P align="left" style="font-size: 11pt">A conference call with Robert A. Frist, Jr., chief executive officer, Arthur Newman, executive vice
president and chief financial officer, and Mollie Condra, senior director of communications,
research, and investor relations, will be held on Wednesday, February&nbsp;20, at 9:00 a.m. (EST). To
listen to the conference, please dial 877-407-0778 (no pass-code needed) if you are calling within
the domestic U.S. If you are an international caller, please dial 201-689-8565 (no pass-code
needed). The conference may also be accessed by going to
<U>http://www.healthstream.com/Investors/index.htm</U> for the simultaneous Webcast of the call,
which will subsequently be available for replay. The replay telephone numbers are 877-660-6853
(conference ID #274631; account #286) for domestic callers and 201-612-7415 (conference ID #274631;
account #286) for international callers.


<P align="left" style="font-size: 11pt"><B>About HealthStream</B>
</FONT><BR>
<FONT style="font-size: 9pt">HealthStream (NASDAQ: HSTM) is a leading provider of learning and research solutions for the
healthcare industry, transforming <I>insight into action </I>to deliver outcomes-based results for
healthcare organizations. Through HealthStream&#146;s learning solutions&#151;which have been contracted by
over 1.7&nbsp;million hospital-based healthcare professionals&#151;healthcare organizations create safer
environments for patients, increase clinical competencies of their workforces, and facilitate the
rapid transfer of the latest knowledge and technologies. Through our research products, executives
from healthcare organizations gain valuable insight about patients&#146; experiences, workforce
challenges, physician relations, and community perceptions of their services. Based in Nashville,
Tennessee, HealthStream has three satellite offices. For more information about HealthStream&#146;s
learning and research solutions, visit <U>www.healthstream.com</U> or call us at 800-933-9293.
</FONT>

<P align="center" style="font-size: 10pt; display: none">1
<!-- PAGEBREAK -->

<P align="center" style="font-size: 9pt"><FONT style="font-size: 11.5pt"><B>HEALTHSTREAM, INC.<BR>
Summary Financial Data<BR>
(In thousands, except per share data)</B></FONT>


<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">43,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">31,783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cost of revenues (excluding
depreciation and amortization)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,869</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Product development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,710</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,020</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,889</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other general and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,593</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,874</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,909</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Other income, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">166</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,528</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income tax (benefit)&nbsp;provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,972</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,945</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income per share, basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.12</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income per share, diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Weighted average shares outstanding:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,359</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt; display: none">2
<!-- PAGEBREAK -->


<P align="center" style="font-size: 11pt"><FONT style="font-size: 11.5pt"><B>Summary Financial Data &#151; Continued<BR>
(In thousands, except per share data)</B></FONT>



<P align="left" style="font-size: 11.5pt"><B>Income before interest, income taxes, share-based compensation, and depreciation and amortization,
or adjusted EBITDA</B><sup><B>(1)</B></sup><B>:</B>

<DIV align="center">
<TABLE style="font-size: 11pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Three</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7">&nbsp;</TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Year Ended</B></TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 11pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,879</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(177</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(287</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(657</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,972</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,945</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Share-based compensation expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">682</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,889</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Income before interest, income
taxes, share-based
compensation, and depreciation
and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,479</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><FONT style="font-size: 8pt">(1)</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 8pt">In order to better assess the Company&#146;s financial results, management believes that
income before interest, income taxes, share-based compensation, and depreciation and
amortization (&#147;adjusted EBITDA&#148;) is an appropriate measure for evaluating the operating
performance of the Company at this stage in its life cycle because adjusted EBITDA reflects
net income adjusted for non-cash and non-operating items. Adjusted EBITDA is also used by
many investors to assess the Company&#146;s results from current operations. Adjusted EBITDA is
a non-GAAP financial measure and should not be considered as a measure of financial
performance under generally accepted accounting principles. Because adjusted EBITDA is not
a measurement determined in accordance with generally accepted accounting principles, it is
susceptible to varying calculations. Accordingly, adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures of other companies.</FONT></TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt; display: none">3
<!-- PAGEBREAK -->


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 11pt">



</TABLE>


<P align="center" style="font-size: 8pt"><FONT style="font-size: 11.5pt"><B>HealthStream, Inc.<BR>
Condensed Consolidated Balance Sheets<BR>
(In thousands)</B></FONT>


<DIV align="center">
<TABLE style="font-size: 11.5pt" cellspacing="0" border="0" cellpadding="0" width="95%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 11.5pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 11.5pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B><sup><B>(1)</B></sup></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">ASSETS</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Cash, short term investments and related interest receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12,759</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accounts and unbilled receivables, net <sup>(2)</sup></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,793</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Prepaid and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,659</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred tax assets, current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,211</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Capitalized software feature enhancements, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,572</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,184</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Goodwill and intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Deferred tax assets, non current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">968</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">LIABILITIES AND SHAREHOLDERS&#146; EQUITY</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accounts payable, accrued and other liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Current portion of long-term debt and capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">176</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,063</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Long-term debt and capital lease obligations,
net of current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Other long-term liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">204</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,134</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Accumulated deficit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(61,413</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(65,500</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,634</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11.5pt">
    <TD><DIV style="margin-left:30px; text-indent:-10px">Total liabilities and shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53,361</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,008</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 11.5pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><FONT style="font-size: 10pt">(1)</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 10pt"></FONT><FONT style="font-size: 9pt">Derived from audited financial statements contained in the Company&#146;s filing on Form
10-K for the year ended December&nbsp;31, 2006.</FONT></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 9pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="1%" nowrap align="right"><FONT style="font-size: 10pt">(2)</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 10pt"></FONT><FONT style="font-size: 9pt">Includes unbilled receivables of $1,051 and $1,275 and other receivables of $0 and
$4 at December&nbsp;31, 2007 and 2006, respectively.</FONT></TD>
</TR>

</TABLE>


<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 9pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="right">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 8pt"></FONT></TD>
</TR>


</TABLE>

<P align="center" style="font-size: 10pt; display: none">4
<!-- PAGEBREAK -->


<P><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt">



</TABLE>


<P align="left" style="font-size: 8pt"><FONT style="font-size: 11.5pt">
</FONT>

<P align="left" style="font-size: 11.5pt"><FONT style="font-size: 10pt"><I>This press release includes certain forward-looking statements (statements other than solely
with respect to historical fact), including statements regarding expectations for the financial
performance for 2008 that involve risks and uncertainties regarding HealthStream. These statements
are based upon management&#146;s beliefs, as well as assumptions made by and data currently available to
management. This information has been, or in the future may be, included in reliance on the &#147;safe
harbor&#148; provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such results or events predicted in these statements may differ materially from actual future
events or results.</I></FONT><FONT style="font-size: 9pt"> </FONT><FONT style="font-size: 10pt"><I>The forward-looking statements are subject to significant
uncertainties and other risks referenced in the Company&#146;s Annual Report on </I><I>Form 10-K</I><I> and in the
Company&#146;s other filings with the Securities and Exchange Commission. Consequently, such
forward-looking information should not be regarded as a representation or warranty by the Company
that such projections will be realized. Many of the factors that will determine the Company&#146;s
future results are beyond the ability of the Company to control or predict. Readers should not
place undue reliance on forward-looking statements, which reflect management&#146;s views only as of the
date hereof. The Company undertakes no obligation to update or revise any such forward-looking
statements.</I>
</FONT>

<P align="left" style="font-size: 10pt; text-indent: 17%"><FONT style="font-size: 11pt"> # # # #
</FONT>


<P align="center" style="font-size: 10pt; display: none">5


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