<SUBMISSION>
<ACCESSION-NUMBER>0001299933-08-005017
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20081028
<ITEMS>2.02
<ITEMS>7.01
<ITEMS>9.01
<FILING-DATE>20081029
<DATE-OF-FILING-DATE-CHANGE>20081028
<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>081145704
</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_29646.htm
<DESCRIPTION>LIVE FILING
<TEXT>
<!-- CoverPageHeader start -->
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">
<HTML>
<HEAD>
<TITLE> HealthStream, Inc. (Form: 8-K) </TITLE>
</HEAD>
<BODY TEXT="#000000" BGCOLOR="#FFFFFF" ALINK="#0000FF" HLINK="#FF0000" VLINK="#800080">
<A NAME="DOCUMENT_TOP">&nbsp;</A>
<P>
<!-- CoverPageHeader end --><!-- CoverPageTitle START -->
<A NAME="DOCUMENT_TOP">&nbsp;</A>
<HR NOSHADE>
<P>
<P ALIGN="CENTER">
<FONT SIZE="4">
		UNITED STATES<BR>
	SECURITIES AND EXCHANGE COMMISSION
</FONT>
<BR>
<FONT SIZE="2">
	WASHINGTON, D.C. 20549
</FONT>
<P ALIGN="CENTER">
<FONT SIZE="5">
	FORM 8-K
</FONT>
<FONT SIZE="2">

</FONT>
</P>
<P ALIGN="CENTER">
<FONT SIZE="3">
	CURRENT REPORT
</FONT>
</P>
<P ALIGN="CENTER">
<FONT SIZE="2">
	Pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934
</FONT>
</P>
<CENTER>
<TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
<TD WIDTH="51%">
	&nbsp;
</TD>
<TD WIDTH="5%">
	&nbsp;
</TD>
<TD WIDTH="44%">
	&nbsp;
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	Date of Report (Date of Earliest Event Reported):
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	October 28, 2008
</FONT>
</TD>
</TR>
</TABLE>
<BR>
</CENTER>
<!-- CoverPageTitle END --><!-- CoverPageRegistrant START -->
<P ALIGN="CENTER"><!-- -->
<FONT SIZE="6">
	HealthStream, Inc.
</FONT>
<FONT SIZE="2">
<BR>__________________________________________<BR>
	(Exact name of registrant as specified in its charter)
</FONT>
<CENTER>
<TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
<TD WIDTH="33%">
	&nbsp;
</TD>
<TD WIDTH="34%">
	&nbsp;
</TD>
<TD WIDTH="33%">
	&nbsp;
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	Tennessee
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	000-27701
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	621443555
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
_____________________<BR>
	(State or other jurisdiction
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
_____________<BR>
	(Commission
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
______________<BR>
	(I.R.S. Employer
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	of incorporation)
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	File Number)
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	Identification No.)
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	209 10th Ave. South, Suite 450, Nashville, Tennessee
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	37203
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
_________________________________<BR>
	(Address of principal executive offices)
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
___________<BR>
	(Zip Code)
</FONT>
</TD>
</TR>
</TABLE>
</CENTER>
<CENTER>
<TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">

<TR VALIGN="BOTTOM">
<TD WIDTH="51%">
	&nbsp;
</TD>
<TD WIDTH="5%">
	&nbsp;
</TD>
<TD WIDTH="44%">
	&nbsp;
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	Registrant&#146;s telephone number, including area code:
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="CENTER" VALIGN="TOP">
<FONT SIZE="2">
	615-301-3100
</FONT>
</TD>
</TR>
</TABLE>
</CENTER>
<P ALIGN="CENTER">
<FONT SIZE="2">
	Not Applicable
<BR>______________________________________________<BR>
	Former name or former address, if changed since last report
</FONT>
<P ALIGN="CENTER">
<FONT SIZE="2">
	&nbsp;
</FONT>
<!-- 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>
</P>
<P><FONT SIZE="2">
[&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>
</P></FONT><!-- PageBreak START -->
<P>
<HR NOSHADE>
<DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
<A HREF="#DOCUMENT_TOP">
<U>
<B>
<FONT SIZE="2">Top of the Form</FONT>
</B>
</U>
</A>
</DIV>
<!-- PageBreak END --><!-- Item START -->
<P ALIGN="LEFT">
<FONT SIZE="2">
<B>
	Item 2.02 Results of Operations and Financial Condition.
</B>
</FONT>
</P>
<P ALIGN="LEFT">
<FONT SIZE="2">
On October 28, 2008, HealthStream, Inc. (the "Company") issued a press release announcing results of operations for the third quarter ended September 30, 2008, the text of which is set forth in Exhibit 99.1.
</FONT>
</P>
<!-- Item END -->
<BR><BR><BR><BR><!-- Item START -->
<P ALIGN="LEFT">
<FONT SIZE="2">
<B>
	Item 7.01 Regulation FD Disclosure.
</B>
</FONT>
</P>
<P ALIGN="LEFT">
<FONT SIZE="2">
On October 28, 2008, HealthStream, Inc. (the "Company") issued a press release announcing results of operations for the third quarter ended September 30, 2008, the text of which is set forth in Exhibit 99.1.
</FONT>
</P>
<!-- Item END -->
<BR><BR><BR><BR><!-- Item START -->
<P ALIGN="LEFT">
<FONT SIZE="2">
<B>
	Item 9.01 Financial Statements and Exhibits.
</B>
</FONT>
</P>
<P ALIGN="LEFT">
<FONT SIZE="2">
(d)	Exhibits<br><br>99.1	Press release dated October 28, 2008.<br>
</FONT>
</P>
<!-- Item END -->
<BR><BR><BR><BR><P ALIGN="LEFT" STYLE="FONT-SIZE: 10PT"></P><!-- PageBreak START -->
<P>
<HR NOSHADE>
<DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
<A HREF="#DOCUMENT_TOP">
<U>
<B>
<FONT SIZE="2">Top of the Form</FONT>
</B>
</U>
</A>
</DIV>
<!-- PageBreak END --><!-- SignatureHeader START -->
<P ALIGN="CENTER">
<FONT SIZE="2">
<B>
	SIGNATURES
</B>
</FONT>
</P>
<P ALIGN="LEFT">
<FONT SIZE="2">
	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.
</FONT>
</P>
<!-- SignatureHeader END --><!-- Signature START -->
<CENTER>
<TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="100%">
<TR VALIGN="BOTTOM">
<TD WIDTH="19%">
	&nbsp;
</TD>
<TD WIDTH="34%">
	&nbsp;
</TD>
<TD WIDTH="3%">
	&nbsp;
</TD>
<TD WIDTH="1%">
	&nbsp;
</TD>
<TD WIDTH="43%">
	&nbsp;
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD COLSPAN="3" VALIGN="TOP" ALIGN="LEFT">
<FONT SIZE="2">
	HealthStream, Inc.
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP">
<FONT SIZE="2">
<I>
	October 28, 2008
</I>
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
<I>
	By:
</I>
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
<I>
	Gerard M. Hayden, Jr.
</I>
<BR>
</FONT>
</TD>
</TR>
<TR>
<TD VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<HR SIZE="1" NOSHADE>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
<I>
	Name: Gerard M. Hayden, Jr.
</I>
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD>
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP">
<FONT SIZE="2">
<I>
	Title: Chief Financial Officer
</I>
</FONT>
</TD>
</TR>
</TABLE>
</CENTER>
<!-- Signature END --><!-- PageBreak START -->
<P>
<HR NOSHADE>
<DIV ALIGN="LEFT" STYLE="PAGE-BREAK-BEFORE:ALWAYS">
<A HREF="#DOCUMENT_TOP">
<U>
<B>
<FONT SIZE="2">Top of the Form</FONT>
</B>
</U>
</A>
</DIV>
<!-- PageBreak END --><P ALIGN="CENTER">
<FONT SIZE="2">
	Exhibit&nbsp;Index
</FONT>
<CENTER>
<TABLE CELLSPACING="0" BORDER="0" CELLPADDING="0" WIDTH="60%">
<TR VALIGN="BOTTOM">
<TD WIDTH="8%">
	&nbsp;
</TD>
<TD WIDTH="15%">
	&nbsp;
</TD>
<TD WIDTH="77%">
	&nbsp;
</TD>
</TR>

<BR>
<TR VALIGN="BOTTOM">
<TD NOWRAP ALIGN="LEFT">
<FONT SIZE="1">
<B>
	Exhibit No.
</B>
</FONT>
</TD>
<TD>
<FONT SIZE="1">
	&nbsp;
</FONT>
</TD>
<TD NOWRAP ALIGN="LEFT">
<FONT SIZE="1">
<B>
	Description
</B>
</FONT>
</TD>
</TR>
<TR VALIGN="BOTTOM">
<TD NOWRAP ALIGN="CENTER">
<HR SIZE="1" NOSHADE>
</TD>
<TD>
<FONT SIZE="1">
	&nbsp;
</FONT>
</TD>
<TD NOWRAP ALIGN="CENTER">
<HR ALIGN="LEFT" SIZE="1" WIDTH="88%" NOSHADE>
</TD>
</TR>





<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" WIDTH="8%" nowrap>
<FONT SIZE="2">
<DIV ALIGN="LEFT">
	99.1
</DIV>
</FONT>
</TD>
<TD WIDTH="15%">
<FONT SIZE="2">
	&nbsp;
</FONT>
</TD>
<TD ALIGN="LEFT" VALIGN="TOP" WIDTH="77%">
<FONT SIZE="2">
Press release dated October 28, 2008.
</FONT>
</TD>
</TR></TABLE></CENTER><!-- HTMLFooter START -->
</BODY>
</HTML>
<!-- HTMLFooter END -->
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exhibit1.htm
<DESCRIPTION>EX-99.1
<TEXT>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 3.2//EN">
<HTML>
<HEAD>
<TITLE> EX-99.1 </TITLE>
</HEAD>
<BODY TEXT="#000000" BGCOLOR="#FFFFFF" ALINK="#0000FF" HLINK="#FF0000" VLINK="#800080">

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


<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>
Gerard M. Hayden, Jr.
<BR>
Chief Financial Officer
<BR>
(615)&nbsp;301-3163
<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; text-indent: 4%"><FONT style="font-size: 14pt"><B>HEALTHSTREAM ANNOUNCES THIRD QUARTER 2008 RESULTS</B>
</FONT>

<P align="left" style="font-size: 14pt"><FONT style="font-size: 11pt"><B>NASHVILLE, Tenn. (October&nbsp;28, 2008)</B>&#151;HealthStream, Inc. (NASDAQ: HSTM), a leading provider of
learning and research solutions for the healthcare industry, announced today results for the third
quarter ended September&nbsp;30, 2008.
</FONT>

<P align="left" style="font-size: 11pt"><B>Highlights:</B>


<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: 10pt">&#149;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><FONT style="font-size: 10pt">Revenues of $13.7&nbsp;million in the third quarter of 2008, up 16% over the third
quarter of 2007</FONT></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 $609,000, compared to $739,000 in the third quarter of 2007; annual
customer Summit costs of $720,000 incurred in third quarter of 2008 versus second quarter
of 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>Adjusted EBITDA of $1.9&nbsp;million in the third quarter of 2008, compared to $2.1&nbsp;million
in the third quarter of 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>1,692,000 healthcare professional subscribers fully implemented on our Internet-based
learning network at September&nbsp;30, 2008, up from 1,457,000 at September&nbsp;30, 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>$3&nbsp;million stock repurchase plan completed resulting in 1,119,900 shares purchased at
average price of $2.68 per share</TD>
</TR>

</TABLE>


<P align="left" style="font-size: 10pt"><FONT style="font-size: 11pt"><B>Financial Results:</B>
<BR>
<B>Third Quarter 2008 Compared to Third Quarter 2007</B>
<BR>
Revenues for the third quarter of 2008 increased $1.9&nbsp;million, or 16&nbsp;percent, to $13.7&nbsp;million,
compared to $11.8&nbsp;million for the third quarter of 2007. The Company&#146;s revenue mix during the third
quarter of 2008 was comprised of 62&nbsp;percent of revenues from HealthStream Learning and 38&nbsp;percent
of revenues from HealthStream Research. This compares to 58&nbsp;percent from HealthStream Learning and
42&nbsp;percent from HealthStream Research during the third quarter of 2007.
</FONT>

<P align="left" style="font-size: 11pt">Revenues from HealthStream Learning increased by $1.7&nbsp;million when compared to the third quarter of
2007. Of this increase, $1.8&nbsp;million was derived from our Internet-based subscription learning
products, which includes revenue increases from the HealthStream Learning Center&#174; (HLC)&nbsp;of $883,000
and from courseware subscriptions and online training services of $874,000. Revenues from these
products increased 32&nbsp;percent over the prior year quarter and approximated $7.3&nbsp;million for the
third quarter of 2008. This increase in revenues was partially offset by a decrease in revenues
from live events, study guides, and association activities, which collectively declined $333,000
compared to the prior year quarter.


<P align="left" style="font-size: 11pt">Revenues from HealthStream Research increased by $187,000 when compared to the third quarter of
2007. HealthStream Research provides four survey product lines: patient, physician, employee and
community. Revenue mix changes over the prior year quarter included increases of $601,000 in the
patient and community product lines and decreases of approximately $493,000 in the physician and
employee product lines. The decrease in the physician product line is partly attributable to the
loss of one customer contract.


<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, approximated 62&nbsp;percent for the third quarter of 2008 and 63
percent for the third quarter of 2007. In HealthStream Research, we experienced lower gross margins
as a result of lower revenues from physician and employee surveys, which have higher gross margins
than patient and community surveys. In HealthStream Learning, gross margins improved slightly
compared to the prior year quarter due to the increase in HLC revenues, but were somewhat offset by
increased personnel expenses and increased royalties paid by us associated with increased revenues
from a portion of our courseware subscription products.


<P align="left" style="font-size: 11pt">Product development, sales and marketing, and other general and administrative expenses all
increased over the prior year quarter. Product development grew by $366,000, which was primarily
associated with maintenance and support of our HealthStream Learning products, as well as a
redesignation of personnel to product development from general and administrative expenses within
HealthStream Research. Sales and marketing expenses increased by $828,000 over the prior year
quarter, of which $550,000 resulted from marketing expenses in conjunction with our annual Summit.
For comparative purposes, this event was held during the second quarter of the prior year.
Additions of sales personnel to both HealthStream Learning and HealthStream Research accounted for
the remaining increases in sales and marketing expenses. Depreciation and amortization decreased
$142,000 compared to the prior year quarter. Other general and administrative categories increased
$124,000 over the prior year quarter.


<P align="left" style="font-size: 11pt">Net income for the third quarter of 2008 was $609,000, or $0.03 per share (diluted), compared to
$739,000, or $0.03 per share (diluted), for the third quarter of 2007. The decline in net income is
consistent with the factors mentioned above.


<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 $1.9&nbsp;million for the third quarter of 2008,
compared to $2.1&nbsp;million for the third quarter of 2007. This result is consistent with the factors
mentioned above, including the expense for our annual Summit of approximately $720,000. Our
reconciliation of this calculation to measures under generally accepted accounting principles is
attached in the Summary Financial Data.


<P align="left" style="font-size: 11pt">For the nine months ended September&nbsp;30, 2008, revenues grew by 19.2&nbsp;percent from $32.0&nbsp;million to
$38.1&nbsp;million. Operating income for the same period increased by $312,000 from $1.0&nbsp;million to
$1.3&nbsp;million or 29.8&nbsp;percent. Net income grew from $1.2&nbsp;million to $1.4&nbsp;million, or 17&nbsp;percent,
for the comparable nine month periods.


<P align="left" style="font-size: 11pt"><B>Other Financial Indicators</B>
<BR>
At September&nbsp;30, 2008, the Company had cash and related interest receivable of $3.0&nbsp;million,
compared to $5.8&nbsp;million at June&nbsp;30, 2008. The decrease in cash primarily resulted from $1.9
million of cash used during the quarter to repurchase shares of our common stock pursuant to our
previously announced stock repurchase plan and to slower cash receipts from customers. Capital
expenditures and capitalized feature enhancement development totaled approximately $0.7&nbsp;million for
the third quarter of 2008.


<P align="left" style="font-size: 11pt">Our days sales outstanding, which we calculate by dividing the accounts receivable balance,
excluding unbilled and other receivables, by average daily revenues for the quarter, approximated
63&nbsp;days for the third quarter of 2008 compared to 60&nbsp;days for the third quarter of 2007 and 48&nbsp;days
for the second quarter of 2008. The increase over the prior year quarter and the prior quarter is
associated with slower collections from customers during the quarter.


<P align="left" style="font-size: 11pt"><B>Stock Repurchase Plan Update</B>
<BR>
During the third quarter of 2008, we concluded our $3&nbsp;million stock repurchase program that we
announced in September&nbsp;2007. During the third quarter ended September&nbsp;30, 2008, we purchased
768,700 shares for $1.9&nbsp;million, for an average price of approximately $2.50 per share. Pursuant to
this repurchase plan, since September&nbsp;2007, we purchased an aggregate 1,119,900 shares for
approximately $3&nbsp;million, yielding an overall average purchase of $2.68 per share.


<P align="left" style="font-size: 11pt"><B>HealthStream Learning Update</B>
<BR>
HealthStream 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&#151;our Internet-based learning platform, a wide range of professional, clinical, and
regulatory content subscriptions, an online authoring/self-publishing tool, and learning activities
for healthcare professionals sponsored by pharmaceutical and medical device companies.


<P align="left" style="font-size: 11pt">At September&nbsp;30, 2008, approximately 1,692,000 healthcare professionals were fully implemented to
use our Internet-based HLC for training and education. This number is up from approximately
1,639,000 at June&nbsp;30, 2008. The total number of contracted subscribers at September&nbsp;30, 2008 was
approximately 1,762,000, up from 1,614,000 at September&nbsp;30, 2007. &#147;Contracted subscribers&#148; include
both those already implemented (1,692,000) and those in the process of implementation (70,000).
Revenue recognition commences when a contract is fully implemented.


<P align="left" style="font-size: 11pt">Customers representing approximately 82&nbsp;percent of subscribers that were up for renewal did renew
in the third quarter of 2008, while our renewal rate based on the annual contract value was
approximately 89&nbsp;percent. The renewal rates for the third quarter of 2008 compare to a subscriber
renewal rate of 100&nbsp;percent and an annual contract value renewal rate of 110&nbsp;percent during the
third quarter of 2007. During the third quarter of 2008, quarterly renewal rates were negatively
impacted by the non-renewal of two customers which accounted for 12,000 subscribers.


<P align="left" style="font-size: 11pt"><B>HealthStream Research Update</B>
<BR>
We support 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 third quarter of 2008, HealthStream Research added several new healthcare organization
customers, including Decatur Memorial Hospital, Jacobi Medical Center, and McAlester Regional
Health Center. Among our existing research customers, 52 renewed their contracts for multiple
survey products, while 60 chose to contract for more research services in the third quarter to add
to their current services received from HealthStream Research.


<P align="left" style="font-size: 11pt"><B>HealthStream Summit 2008</B>
<BR>
On September 2<sup>nd</sup> &#150; 5<sup>th</sup>, 2008, we welcomed approximately 670 of our learning
and research customers from across the nation to our Summit 2008, held in Nashville. At this annual
event, workshops, sessions, and presentations focused on the sharing of best practices for
developing the healthcare workforce and on improving healthcare organizations. In addition, the
Summit provided us with another venue to connect with our customers to learn more about their
learning and research needs, while offering one-on-one time to explore new opportunities to support
their organizations.


<P align="left" style="font-size: 11pt"><B>Financial Expectations</B>
<BR>
Revenues for the fourth quarter of 2008 are expected to range between $13.0 and $13.5&nbsp;million, an
increase of approximately $1.0 to $1.5&nbsp;million, or 8 to 12&nbsp;percent, over the same quarter in the
prior year. We expect revenues from HealthStream Learning to increase between 9 and 11&nbsp;percent over
the fourth quarter of the prior year resulting from continued growth in our HLC subscriber base and
courseware subscriptions, which we anticipate will be partially offset by continued declines in
several of our project-based products. We expect revenues from HealthStream Research to increase
between 10 and 12&nbsp;percent, compared to the fourth quarter of 2007.


<P align="left" style="font-size: 11pt">We anticipate gross margins for the fourth quarter of 2008 to be up slightly compared to the same
quarter in the prior year, but be comparable to the third quarter of 2008. Product development
expenses are expected to increase in amount and as a percentage of revenue compared to the prior
year fourth quarter, but be comparable to the third quarter of 2008. Sales and marketing expenses
are expected to increase in amount and as a percentage of revenue compared to the prior year fourth
quarter, but decrease in amount and as a percentage of revenue compared to the third quarter of
2008.&nbsp; Depreciation and amortization are expected to increase compared to both the prior year
fourth quarter and the third quarter of 2008 as a result of capital expenditures incurred during
the second half of 2008. General and administrative expenses are expected to increase slightly in
amount but decrease as a percentage of revenues compared to the prior year fourth quarter. We
expect net income for the fourth quarter of 2008 to range between $0.04 and $0.06 per diluted
share.


<P align="left" style="font-size: 11pt">We are revising our full year 2008 revenue growth expectation to range between 16 and 18&nbsp;percent
over 2007, and net income per diluted share for the full year of 2008 to be in the range between
$0.10 and $0.12. Our estimates for the fourth quarter and full year of 2008 do not reflect any
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 are expected to approximate $3.5&nbsp;million in 2008.


<P align="left" style="font-size: 11pt">&#147;During the third quarter, we were delighted to welcome approximately 670 of our hospital customers
to our annual Summit in Nashville,&#148; said Robert A. Frist, Jr., chairman and chief executive
officer. &#147;At this event, we announced several new partnerships and courseware offerings for our
customers, including Laerdal&#146;s HeartCode&#153; ACLS Web-based program and Essential Learning&#146;s
Behavioral Health Library. Partnerships with Knowledge Factor and the Association for Professionals
in Infection Control and Epidemiology (APIC)&nbsp;were announced, with course offerings from each
anticipated in 2009. We are excited to deliver these new products to our customers&#151;and we look
forward to working with our new partners.&#148;


<P align="left" style="font-size: 11pt">A conference call with Robert A. Frist, Jr, chairman and chief executive officer, Gerard M. Hayden,
Jr., senior vice president and chief financial officer, and Mollie Condra, senior director of
communications, research, and investor relations will be held on Wednesday, October
29<sup>th</sup>, at 9:00 a.m. (Eastern). To listen to the conference, please dial 877-719-9791 (no
passcode needed) if you are calling within the domestic U.S. or Canada. If you are an international
caller, please dial 719-325-4803 (no passcode needed). The conference may also be accessed by going
to <U>http://ir.healthstream.com/events.cfm</U> for the simultaneous Webcast of the call, which
will subsequently be available for replay. The replay telephone numbers are 888-203-1112 (passcode
#1594888) for U.S. and Canadian callers and 719-457-0820 (passcode #1594888) for international
callers.


<P align="left" style="font-size: 11pt"><FONT style="font-size: 9pt"><B>About HealthStream</B>
</FONT><BR>
<FONT style="font-size: 10pt">HealthStream (NASDAQ: HSTM) is a leading provider of research and learning 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
approximately 1.8&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 two 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: 10pt"><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="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&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="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&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="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 Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months 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>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>September 30,</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>2008</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>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</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">$</TD>
    <TD align="right">13,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">38,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">31,957</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">5,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,611</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">1,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,344</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">3,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,849</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">1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,371</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">2,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,735</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">13,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,910</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">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,047</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">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188</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">609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="font-size: 11pt">
    <TD><DIV style="margin-left:20px; text-indent:-10px">Income tax provision</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">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</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">$</TD>
    <TD align="right">609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,208</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">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</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">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.05</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">21,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,977</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">21,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,683</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="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&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 Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Nine Months 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>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>September 30,</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>2008</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>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</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">$</TD>
    <TD align="right">609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,208</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">(32</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(48</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(118</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(230</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">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</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>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</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">178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">581</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">1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,371</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">$</TD>
    <TD align="right">1,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,999</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, 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>September 30,</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>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</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 and related interest receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,630</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">10,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,719</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">2,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,969</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">360</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">16,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,678</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">4,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,459</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">3,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,383</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">26,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,851</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, noncurrent</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">1,630</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">223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360</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">$</TD>
    <TD align="right">52,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53,361</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">$</TD>
    <TD align="right">5,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,260</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">10,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,493</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">751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">831</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">16,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,584</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">507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,064</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">17,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,648</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">95,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,126</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">(59,999</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(61,413</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">35,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,713</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">$</TD>
    <TD align="right">52,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">53,361</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, 2007.</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 $1,731 and $1,051 and other receivables of $5 and
$0 at September&nbsp;30, 2008 and December&nbsp;31, 2007, 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="left" style="font-size: 8pt"><FONT style="font-size: 11.5pt">
</FONT>

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

<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: 19%"><FONT style="font-size: 11pt"> # # # #
</FONT>


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


<!-- v.060107 -->
</BODY>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SUBMISSION>
