Good day ladies and gentlemen and thank you for standing by. Welcome to the HealthStream Incorporated’s Third Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference may be recorded. Now, my pleasure to turn the floor over to Mollie Condra, Associate Vice President, Investor Relations and Communications.

Thank you. Good morning and thank you for joining us today to discuss our third quarter 2012 results. Also in the room with me are Robert A. First Jr., CEO and Chairman of HealthStream and Gerry Hayden, Senior Vice President and CFO. I would also like to remind you that this conference call may contain forward-looking statements regarding future events and the future performance of HealthStream that involve risk and uncertainties that could cause the actual results to differ materially from those projected in the forward-looking statements. Information concerning these risks and other factors that could cause the results to differ materially from those forward-looking statements are contained in the company’s filings with the SEC, including forms 10-K and 10-Q. With that, I’ll turn the call over to our CEO, Robert First.

Thank you, Mollie. Good morning everyone, welcome to our third quarter earnings conference call. We have got a lot of exciting material to cover and afterwards Q&A. So, I will jump right in with financial highlights that were represented in our earnings release last evening. We were excited to report consolidated revenues up 28% to $26.4 million in the third quarter compared to the prior year quarter. Operating income was up 39% to $3.7 million in the third quarter compared to the third quarter of 2011. We also delivered well on the bottom line with net income up 10% to $2.0 million in the third quarter compared to the same period in the prior year and adjusted EBITDA was strong a 30% increase to $5.7 million in the third quarter, that’s up about 30% over the prior year same quarter. Of course, a little later, Gerry Hayden, our CFO will give a more detailed look at the financial data. So, I thought I would look at some of our strong operational metrics again here. On the core platform, we saw subscriber growth grow by about 65,700 that were under new contracts during the period. That exceeds what we call our long standing targeted goal of contracting 20,000 to 50,000 per quarter. So, now we have three quarters sequentially where we are beating our goal and the way we target an engineer, our sales force to try to generate 20,000 to 50,000 net new subscribers a quarter. So, another strong performance period here exceeding our targeting range with hitting 65,700 new subscribers. The total number of subscribers is also approaching an exciting number. We are approaching 3 million, it actually stands at 2,975,000, which represents well over half of the nation’s hospital workforce and we are beginning to see pickup in…

Thank you Bobby and good morning everyone. Bobby has given a lot of color on the results this quarter. So, I’ll try to give some key pencil topics and then save time for questions at the end of the call. Overall, our third quarter year-to-date results demonstrate the strength of the business. The quarter year-to-date revenue growth rates of 28 and in 26% result from core growth. Is this critical acquisition did contribute to revenue during the quarter, but it did not have a significant impact on our overall growth rates. Operating income grew by a strong 39% over last year’s third quarter. Another point of reference is how the third quarter’s performance impacted the year-to-date operating income expansion. Through this year’s second quarter, operating income had grown by 12.8%; however, after this quarter, the third quarter’s performance that 2012 year-to-date expense is now at 21%. Adjusted EBITDA results reinforce these operating trends as it grew by 30% over the last year’s third quarter and by 23% year-to-date over 2011. The balance sheet remains strong, our cash in particular. At the end of the third quarter, cash stood at $95.9 million versus $91.9 million at June 30, 2012. From (inaudible) perspective, we basically regrouped the approximate cash in closing for the DCI acquisition at the end of the second quarter. Our business development pipeline as Bobby mentioned remains very active and it includes a wide variety of ideas and exciting opportunities for us here at HealthSteam and yesterday’s Sy.Med Development’s announcement just noted examples how deploying our capital base and innovative in ways to approach new opportunities. Before listening other financial topics I wanted to reinforce one thing, Bobby did say about operating expenses as you most likely know all of our deal costs such legal, banking, financial and operational…

Sure. Thanks Gerry. We have 3 final announcements here. First, I’d like to welcome Sy.Med’s 21 employees, some of which may be listening in today. Yesterday, they joined us in our Downtown National Office for welcome celebrations. So, their headquarters is just a few miles south of our downtown offices. So, we welcome the Sy.Med’s employee base to HealthStream. We’re excited to see them continue their growth and as they leverage our network, even hopefully accelerate that growth. I want to break the news that we have confirmed our next customer summit and the timing of which is important to all of the financial community. We in an effort to hold that event at the National Music City Center which is our new 1.2 million square foot facility in downtown national and actually two blocks away from our headquarters. It has over – we’re looking forward to holding our conference there, but as you may have noticed if you’ve been through National, it is all under construction and so we’ve scheduled our summit for next year to accommodate that for the fourth quarter early in the fourth quarter of 2013 and so probably in the October timeframe, we’ve actually secured a window on October, but we’re going to announce the actual dates here in the next couple of months. So, we will hold the actual dates, but you can say that the summit will be in the fourth quarter in Nashville in the new Nashville Music City Center, right next to our headquarters. We’re very excited about that. And another news that is exciting and something for all employees to celebrate. HealthStream was just ranked for the second year in a row in the Forbes magazine’s 2012 list of the top 100 best small cared companies in America and so our entire company can share in this exciting announcement. Last year we actually were also in this list, we ranked 53rd, this year we rank number 27 on the list of Forbes top 100 best small companies in America. Great accomplishment for all of our employees and something they should celebrate. So, I want to congratulate all of our employees for being part of this journey and contributing to our growth story and our success over the last several years. And it is really exciting and fun when an organization like Forbes recognizes our progress. With that I would like to turn it over to the operator for questions and answers where we stand by for your questions.

Thank you sir. (Operator Instructions) Our first questionnaire comes from the line of Ryan Daniels with William Blair, please go ahead, your line is open.

Yeah. Good morning. Thanks for taking my question guys. Let me start with a couple of quick financial ones. First up, I am just curious on some of the seasonality on the cost of revenue that looks like in the third quarter every year that goes up even if your sales are kind of flat to down sequential in the Q3 period. I am curious if you have any color kind of what drives that to continue throughout the year regardless of the revenue stream.

Yeah. Hey Ryan, it is Gerry. The third quarter of this year, we had a relatively large course (inaudible) project that had high labor content in the third quarter. So, that is one part what influenced that the cost of revenue this quarter. The other thing over time is the course which becomes a growing part of the revenue stream. You do see the world DPs growing as well.

Okay, that is helpful and then can you talk a little bit about the newer contracts signing, I am curious, you talked about for example the strength in ICD-10 sales over the last 30 or 45 days in particular, how does that actually manifest in the income statement? I know you probably don’t have any recognized sales for that. But when you sign the contracts, are you getting cash right away so that that goes in differed revenue? Are we not really not seeing that manifest at all in the financials at this point?

There are two dynamics. One is we usually get some kind of -- let’s call it deposits, so with differed revenue that would go to the balance sheet but not to the income statement. However, our compensation plan tends to front load some of the commission expense. So you would see commission expense without offsetting revenue.

Okay, great. And then a couple of more bigger picture questions, Bob I thought you mentioned that your existing sales force is now starting to sell them in some of the ancillary markets and that’s helping with the new ads onto the platform. Is that just the existing sales team branching out and focusing on that? And if so, how are you balancing kind of that push from the sales force versus focusing on the core acute care business?

Yes, probably I will just note that, the core is still driving the vast majority of those numbers. I am just seeing a few more pickups here and there around the edges and so I have mentioned that. I didn’t mean to over emphasize that. The core of this number is still out of the core acute care market. So there is no team dedicated or focusing yet on those additional verticals. They will just pick up from it through affiliations, like if a health system acquires a home health agency or affiliates with one, some may extend our service out to those affiliations. So, we are just seeing a little bit more of that. I would note if more than early, an early trend not a significant trend yet, again the vast majority of those new ads are in the core markets.

Okay, that’s helpful. One last question, just thinking about some of your commentary around the NurseCompetency, clinical exams, and the skills check versus standalone now. I guess a couple of questions, how do you actually integrate that into the talent platform, kind of what is required for you to do that? Does that actually have a change on the revenue or margin profile as you move from a standalone to an integrated product? Thanks.

Sure. In some cases it does affect the revenue profile as we move to an integrated product, or we change the selling model of what was maybe a more traditional model. NurseCompetency is brand new and very small, but important from an example standpoint of the type of content we are excited about. Because these tests include benchmarks and comparative data analysis that as distributed network will create hopefully some form of benchmarks that are referred to. We are excited about the nature of that product. From a revenue recognition standpoint that would be treated much like a content product and be subscription product recognized overtime through some kind of early indication of the volume commitments from customers. So, again a new product not material revenues but exciting for the nature of the product. Other revenue streams like the acquired business of Sy.Med is largely installed software and their sales organizations and their teams are geared to selling installed software that lingers on a smaller maintenance stream. As we encourage that sales organization to sell the SaaS model, the revenue would appropriately diminish because you would have more visibility into the next, say 24 or 36 months on the SaaS subscription model and less of a pop from selling the installed software. This is a migration we went through 8 or 9 years ago in learning and we are now on the back side of it and enjoying the high visibility into the revenues on learning platform. And so, in some of these acquisitions and investments we will need to take those organizations through that migration and so, as I indicated we paid a little more than two times revenues for the Sy.Med Development acquisition. However, the revenue, if we do our job in the next 12 months would drop meaningfully as they start to sell under the new model. We will see how fast we can make the migration, but it’s just important to note and from the integration standpoint sure there are cost to those migrations and integration sometimes, we can start with looser integrations like seamless logon and others like the portfolio we are actually rebuilding the code base right on our core platform using the architecture of the talent system as the infrastructure for the new portfolio product. So, in each case we will have to have a different approach and but ones we are very familiar with having done all this a decade ago, and different levels of investment. So, we are trying to explain this to everyone that as we accelerate growth and bring new components and partners into our eco system will require new types of investment in cash in IT and program and development, and even model changes which will affect revenue from the topline.

Okay, great. Thanks for the color.

Thank you sir. Our next question comes from Matt Hewitt with Craig-Hallum, please go ahead, your line is open.

Good morning. Handful of questions from me. First and foremost, one of the things that kind of jumped out this quarter for me was related to your differed revenue. There was a fairly large drop from Q2 to Q3. Is some of that related to the acquisition or could you help me understand what’s occurred there in the differed revenue line?

The renewal flow of the pre-payments on contracts and in research in the Q2 we had some larger contracts that had some pre-payments that are fully completed in Q3. So, I guess the normal fluctuation of the flow of the contracts. (inaudible)

It seemed to have been an outside move. It’s been a couple of hundred thousand one way or the other. Mostly that line has been growing. So, I guess to see that drop I was just wasn’t sure if there were something that occurred in Q3.

No.

Okay. Shifting I guess, thank you for providing the additional metrics, especially relating to some of your other platforms. You gave us not only this quarter but I think you gave us last quarter as well. I am curious, do you have plans eventually to give us – like you do for the learning center where a number of employees, just away for us to gauge how penetrated you are with a couple of those other platforms. I know it’s very early with them but I am just curious, is that the plan longer term or how should we be thinking about that?

It is. As we enter next year it’s my belief we are going to need to create some new metrics and we have been talking about this for a while and it becomes increasingly evident that as we have a broader talent management solution set that has multiple component pieces with additional subscribers to each component piece, the revenue per subscriber generated by say a subscriber-to-hospital that has access to two or three components or platform versus just one, it’s an important thing to get our hands around and report on. So, we have a long standing history reporting on this core learning piece, I would say as we enter the New Year what we are working to try to achieve is this concept of the number of members and subscribers that are members and then how many components they in fact do subscribe too. We have tried at different times of this year to find them all, get it where we wanted, we don’t quite have it and so, again, we will look for the next reporting. It’s differed one more time, but just directionally where we are working to go is to move aware from this set of metrics on just this learning piece. Because a growing important as you know are the (inaudible), the performance management pieces, the now portfolio, there is so many ways to be a subscriber now to HealthStream that you can expect a shift into next year that tries to report a new type of metric around capturing this idea of – we have looked at things as much like subscriber months, they would aggregate all of the subscriber months across all the platforms. So, be expectant for reporting paradigm because we are no longer just a single software module, we are a talent platform with multiple components.

Okay, that’s sounds great. We look forward to it. Thank you Bobby. It will just help us get our hands around the opportunity a lot better and it’s much appreciated. Last one from me and it’s actually I guess two fold. You might have pressed on it a little bit, but as far as the gross margin is concerned, up until this year it’s been 62, 63, 64, obviously as you add more and more content partnerships where you are paying royalty rates that is having an impact. In fact, I think it was in Q1 of this year you commented that it was hardcore (inaudible) that has become a contributor to your growth that also does carry pretty significant royalty rates. Was that some of the impact here in Q3 and also, as you do some of these acquisitions, as you make some new acquisitions, will that become an offset as those products grow, seeing as how you then own the content versus partnering?

A couple of comments there. Yes, the growth in content, our entire model is built around creating consumption patterns of content. The platform themselves create developmental plans for people that we believe drive content consumption in addition to things like regulatory driver. So the growth in content consumption is a positive effect, but at the gross margin level, yes, it has a negative effect. So, the relative growth rates of platform versus affect the blended gross margin. That’s why we continue to turn our emphasis down towards operating income lines and EBITDA. But, you are right to note that the acceleration of content is a great phenomenon, we hope to continue to pay more and more royalties to our content partners because that’s the model that we are working to build, we are not just a software company, we are an ecosystem of partners and we want our partners to do well and we enjoy paying them the royalties, so that the whole ecosystem is strong. What was the second part of the question? Can you rephrase the second part?

Yes, as you acquire some more products, will that help offset some of that?

It will but I think I have tried to be clear earlier and I will restate. I think that some of these acquisitions require a bit of reengineering before we get to leverage out of them. So, these are investments for the three and five year window and we really like the way we are picking up these unique properties. I think in long run, yes, you are absolutely right that the platform components have higher gross margin and the more of them we sell the better the blended gross margin rate will be. So, that’s true of the portfolio of products, but now the credentialing products that is in fact true. So, it’s just a relative balance of those things and the cost and time to reengineering them that will affect how it comes out say next year.

Okay, great. Thank you.

Thank you, sir. Our next question comes from the line of Richard Close with Avondale Partners, please go ahead, your line is open.

Great, thank you. A lot of my questions have already been answered. Maybe to dive into them a little bit more. With respect to the investment and integration into various content and I guess the two acquisitions. Is there any type of – I guess, I don’t want to say guidance, but can you give us some help in terms of what kind of levels of investment the reengineering is going to pay you? I think product, development right now was running around 8.5% of revenue. Is that something we need to think about as ratcheting up to like a 10% level or just trying to get a feel of how significant the levels of investment you are going to incur here over the coming year or so?

Yes. I think what I can reinforce now is just to transfer the need to continue increasing the rate of investment. In our next earnings call we will hit with guidance and after we finish our strategic planning process. So it’s right to note the trend. We will try to put good magnitude around that trend and I believe it’s our late February call is when we will do that. So, we are kind of explaining the trend but we will provide precision on it in February.

But it’s fair to say that this has to increase over the coming months, coming quarters, basically because you have either signed content relationships and you have to reengineer that or make these acquisitions. So the level of investment is stepping up.

That is correct. I think in this high growth environment we are excited to continue to innovate and deploy R&D and the expenses into those areas. But we are also, Richard, this is the time to grow in other areas as well. So, we are beginning to do the pre-hiring releases, what we call in the sales areas for example, if you noticed on our website 4 or 5 brand new sales positions have popped as well. So, in this area clinical courseware executives to help and all of our clinical courseware organizations will be excited to see this new level of commitment, focused to selling clinical courseware through our network. Organizations like AORN, ACN and ANA, this will bring a renewed focus to selling their content into our network with the specific type of expertise in the sales organization. So, I think the theme as we enter next year across the several areas is to continue to focus on top line growth, we are going to need to invest in many areas in the company and probably at a higher rate than our historical models.

Okay and that last answer dovetails into where my next question was. With respect to 4 or 5 sales positions popping up, when I look at the sales and marketing expense, if the percentage of revenue, it was quite a bit below what we were looking for. And then Gerry’s question or answer to one of Bryan’s question was talking about some upfront commission expense. And it just seems like those are too -- I guess I would have expected sales and marketing expense to be up, maybe year-over-year, the percentage revenue were at least flat, so I’m not sure how you been leveraged there, what drove that, was there something one-time in that line item, maybe Gerry can help me out there.

Well, I’ll try first as Gerry thinks that, I don’t that there is anything new or different there. We each year really in a third and fourth quarters, when we access how to grow the sales organization begin to release hiring in it. You can already see it, for example, 4 new positions as I mentioned. Commission is not all front loaded, it’s usually about in some products half contract signing and half, a year later. But when we have usually the fourth quarter is one of our strongest periods of closing contracts, and so you’re going to have that first half of the commission hit you all in the last month of the year and the revenue recognition clearly can’t began until sometime of the next year. And so and specifically, if you think about the fourth quarter, you’ll kind of see that phenomenon is definitely one of our largest, it is not our largest by a good stretch in closing of new business. We call the new order value, the value of these multi-year contracts. These commissions are paid on the multi-year value of those contracts as well. So, half of the commission assumed in the month of December for a three year value contract is the way our model works and so, but it has always worked that way and this is the period when we increase investments in the sales organization and then also incur those commissions towards the end of the year, as our sales team celebrate what is usually an outsized performance in the fourth quarter. So it’s kind of that mixture, a good news, a challenging news is that and really if you think about hard enough, it’s all good news when you pay higher commissions, because essentially the backlog being created for new business.

Okay that’s helpful. And then with respect to, if you can just refresh me the talent management products or center, performance center competency center. What the revenue model is on that, just a refresh and then I also follow on with these exclusive relationships, on NurseCcompetency and a set system. Can you talk a little bit about the price points, I know that might be a little bit sensitive but I’m trying to get a feel of should we think about, revenue per subscriber, that’s the only metric we really have in terms of number of subscribers. But these new areas that you’re going into, does that have a positive impact on the revenue per subscriber, maybe some discussion around those points, I know that is a lot, so sorry?

Yeah, so the revenue model for the performance in competency centers is identical to the revenue model for the learning center and the operating center and the SimManager part of Sim center. They are all a SaaS based, subscription based multi-year contracts and recognized ratably over the period of implementation. So, hope that helps. The content what I would say is that right now, the drivers we have approximately 130, 140 partners that are content partners and these two that we announced here are brand new and currently not impactful to the blended rates and in fact that we’re just beginning to sell them, and don’t have revenues from those products. I highlight these products because of a. exclusivity and b. their nature is a little different than our traditional content products. So, it shows that the definition of the type of content we’re delivering, in this case, test and assessments is as being enhanced. So, I would continue and if I were thinking that modeling to model core products like the HeartCode products set, which we occasionally provide detailed updates on being on a weighted basis. The much more material part of the content revenue streams. They come from two or three areas, our Lippincott Nursing Library and from a growth momentum standpoint, our ICD-10 libraries, should be good for next year. The HeartCode and BLS and ACLS and PALS content, then we talk about, the resuscitation content libraries. Those are kind of three key areas if I wanted to peel out of the 140 partnerships and say what are the three key drivers for content, it will be that clinical libraries from Lippincott Williams & Wilkins. The resuscitation libraries from our Laerdal Joint Venture and the ICD-10 libraries in our precise venture. Now, all the others including NurseCompetency and the assess systems, I would consider immaterial part of the mix of how content is growing, but I wouldn’t model any of those individually at this point.

Okay, thank you and do you want more here if I can, yeah. The colored details on ICD-10 is great, it is good to hear that you’re seeing that ramp up. Have you guys done any back of the envelope in terms of the number of your current potential or your current contracted subscribers, what’s that ICD-10 opportunity is as a percentage of your what almost three million subscribers?

Yeah it’s a little too early to do that because we are seeing different purchasing patterns, some want to go deep for a very small department and create awareness, essentially training and educate a very small department, others, for me the migration is so significant that they buy what I call awareness and orientation packages for more or a higher percentage of their population and we’re just seeing such a mix right now in the approaches that it’s hard to project at this point. We’re excited to see the uptake and more contracts, the nature of it hasn’t created a kind of a mean, median and mode yet, that is worth reporting because we are seeing different adoption strategies. We believe that everyone needs to be oriented, this is, its that important a topic. But different organizations have different approaches to how they are going to meet these ICD-10 migration.

Okay, thank you very much, congratulations.

Thank you Sir. Our next question in queue comes from the line of Nick Halen with Sidoti & Company. Please go ahead, your line is open. Nick Halen – Sidoti & Company: Good morning guys. So, the first question I had was, I know you guys are really excited about the town management products what you guys are trying to building out and you guys are making investments across a lot of different verticals and things like that, but it kind of seems that SimVentures is to a certain degrees flipped into the background while you expand out these other products, so I was just wondering basically if you are happy or satisfied with how SimVentures are progressing right now?

I would say that the SimVentures is on an early adoption curve that is more linear and is measured in totality in viewing the HeartCode and ACLS products as part of the move towards simulation. The curve is more than just linear but the brand new SimVentures components are kind of on the early adopter, linear, the first hospitals beginning to bring those products in. On a blended basis, looking at the totality of our partnership with Laerdal, I suppose significant, meaningful and fully engaging the mannequin based simulation and training to do the resuscitation continues to impress in is its adoption curve and the rate of change in the industry. The newer SimVentures components that are even kind of more futuristic in their training approach, the adoption of those right now is linear and not called the early adopter phase kind of pre-acceleration curve. I remain excited that it is a contributor financially and a growing part of the business, and so that would characterize in that way. Nick Halen – Sidoti & Company: And then just lastly for me, I guess just kind of clarify if you can, what are some of the major similarities and differences between your two most recent acquisitions in Sy.Med and Decision Critical?

What are the differences between those two? Nick Halen – Sidoti & Company: Yeah

Yeah, so the Decision Critical had a small customer base that looked a lot like our customer base, it had a couple of dozen health care system accounts or hospital accounts where they provided the core of learning and a learning platform. So in that sense those customers were beginning to work with to show opportunities for our product sets. So, that one it looked a lot alike us, it was founded in a similar vein and the learning dimension of talent management, but it also had this unique asset and at this portfolio component which again, you heard me mention where rebuilding, so it had a potential for a new product to emerge out of it and not just be more of what we have. And so it was standard and we’re excited about its long run potential. Now, Sy.Med is a new dimension to our account management strategy, it is hitting this idea of determining and answering the question is the work force qualified, and their credentialing process is a unique dimension of managing personnel on a hospital also is all (inaudible) with something called privileging. And one of the things we’re doing at our talent management model is working to make sure it’s differentiated from the rest of the industries. And so what we do there is we seek out, what is different about managing these 5 million health care workers that is part of managing their talent, managing their people, improving their efficiency. And in healthcare, one of the answers to that is that the credentialing and privileging processes inside a hospital, is a unique dimension of managing the workforce. So, here the time and acquisition again, a characteristic as it was largely installed not SaaS, although it has a SaaS product and it was a new dimension to our business model credentialing and privileging instead of just learning and development. And by the way not just different to our model, but we believe different in health care and therefore a differentiator went up against other talent management companies that may not understand the processes of credentialing and privileging the work force as a core component of managing talent and healthcare. Nick Halen – Sidoti & Company: Great, thank you.

Thank you Sir. Our next questioner in queue is Andrew Albert. Please go ahead, your line is open. Andrew Albert – Invicta Capital Management: Hello guys, I was just hoping to drill down a little bit further on the differed revenue that was asked earlier. I know you mentioned it was normal course of business, but the 1.8 million drop seems to be pretty large, I’m looking here the largest you have ever seen before, it was 400gm in terms of a sequential decline and differed revenue, so is there something changing in the model at all and related to that, I guess the differed revenues, now, you have a date up all that much from the beginning of the year which is pretty different from all the prior years, this far unto the year. So if you can just give a little bit more clarity on that, that would be helpful, thank you.

Yeah Andrews, this is Gerry here. I am not sure whether I can really mention about that. There has really been no change in the red recognition patterns or the entertainment patterns. One thing that maybe in the real HeartCode customer that was ramping over the early part of the year and that may have, if for maturity in the third quarter, which we have had a review recognition happen in the third quarter, while the cash is paid really earlier on in the year. But I don’t know there is a whole lot of difference in like say, either contracting patterns, red recognition or with the cash payments.

There must be some consonance of a couple of big contracts that got in, essentially executed in the period. So, we’ll look for some more clarity on that, that there was a large multi-hospital health system that went on to our HeartCode products earlier in the year, actually beginning in January and I think it took us some time to implement and that maybe getting those to implementation created a kind of a little bolus through the differed revenue. Andrew Albert – Invicta Capital Management: Okay, and then with regards to the differed revenue growth, year-to-date. Is the model just becoming more transaction based, such that we wouldn’t see differed revenue grow or just would be new talent management products, I know they’re small at this point, but I imagine that’s’ having a little bump to a differed revenues, so I’m just trying to understand the core business, how differed revenue works there?

Well, today once again, we go back to the theme as course were becomes a larger part of the revenue stream, it’s a lower revenue. Its generally both low revenue per subscriber content than the platform and there is more and more of those transactions or those contracts coming through the sales cycle into differed revenue, so that is part of it as well. Andrew Albert – Invicta Capital Management: Okay, so there is not a lot of prepayment of those course wear?

They are, they are just smaller pieces, that’s all. It’s not like as big as a platform contract might be. Andrew Albert – Invicta Capital Management: Okay, so we shouldn’t expect the differed revenue to grow at the same rate that it had in prior year. Is that kind of a good go-forward?

Yeah, it should be a more ratable growth sure, and once again, it’s going to come back. The large HeartCode customers in one of the reasons why it had the big jump in deferred revenue and now they are more historical pattern. Andrew Albert – Invicta Capital Management: Okay.

Thank you, sir. Our next question in queue comes from Frank Sparacino with First Analysis, please go ahead, your line is open.

Hi guys, just two quick questions. On the ICD-10 – you gave 30 to 250, are those net or gross before royalties? And then secondly would be, on Sy.Med, can you just give us a sense, relative growth rates of that business, was there a 10%, 20%, 30% significant growth business, what does it look like from an EBITDA perspective if there was EBITDA? Thanks.

Sure, I guess I will go in order there. The 30 to 250 is the retail pricing before commissions and royalties, and cost of goods. So, the 30 to 250 on ICD-10 libraries is the retail pricing. And then on Sy.Med, just a couple of things I want to reiterate, we would expect effectively the revenue that has been growing year-over-year and it did have EBITDA, so we identify both of those elements. However, with the reengineering the changing sales model, potentially selling more SaaS. If we are able to increase the rate of selling the SaaS components the revenue may actually decline. So, we need to be very careful modeling that. It’s going to take some time to get that revenue stream where we wanted and kind of get it to a baseline that’s going to be consistently growing. So, I think the revenues from that because it’s largely installed if the sales team sell more of the SaaS products, which we are going to ask them to try to do, the revenue components could decline and not go up. Although, historically even in the start and the maintenance revenue streams from that business has shown growth and positive EBITDA.

If I can follow-up just real quick. I was talking just more from historical perspective in terms of the growth rates, but then also on Sy.Med, can you just talk about how the product was priced in roughly a typical average deal with the size of that would be in a license mode?

Not at this time because we are going to work on the migration of it and get, probably have new pricing models, maybe new selling models and we are not sure when we will roll those out, it might be the middle of next year, it might be the end of next year, it might be in January. So, there is going to be some work to do on that small and immaterial initial acquisition to get a physician ride in our portfolio of products. So, I don’t really want to talk about pricing because I think it’s going to have – there is going to be a lot of potential change with how we approach that product.

Thank you, sir. Our next question in queue comes from Chris Blackman with Imperial Capital, please go ahead, your line is open.

Yes, thank you. Bob, I appreciate all the disclosure. Can you help clarify a little bit the opportunities in some of the ancillary facility areas and maybe clarify some of the areas where you have seen the greatest traction?

Yes, I think – we think the opportunities remain strong in those verticals. We have been assessing them for quite some time now. Again, only through affiliations with hospitals we have seen some improvements and additions in those markets. There is a lot of people employed in those markets. They probably don’t have the same revenue per person potential of the hospital and the acute setting that has all types of demands in surgery and the broad mix. The long-term care home health surgery center markets are all interesting, they are probably over time a great opportunity about 5 or 6 million people work across all those (inaudible) what we call secondary or ancillary markets. So, there is a lot of people working in them. Probably their revenue per subscriber potential is a little lower in those markets. And again, we haven’t launched anything official that would dedicate resources to those markets, but that’s all of a consideration as well, as we enter the next year. So, I hope that provides some color. I mean, there is about 5 million people in acute care hospitals. There is another, I’ve heard numbers from 5 to 7 in those secondary markets, when you add them all up. And the largest of those is probably a long term care home health market and several million. So, there is definite opportunity there, and we are working on figure out how to pursue it. We just pursue it through our hospital customers as they acquire, integrate and extend to the accountable care concepts, or do we dedicate teams to go after them, and that’s kind of a pending decision to our retreat and strategic period here at the end of the year.

I know you have been challenged with trying to determine exactly how to clarify that opportunity in the year to break out those areas, do you expect to breaking those out force then next year, some of the specific markets?

Well they are juts right now, they are blending into our core numbers and you know, we’ve got a couple of different breakouts people are asking us to make. The first is explaining how these component pieces are spread and we’re working on that. We’ll probably do that before we do the vertical market breakout, so that would be like a further matrix segmentation of the user base, but we’re open to both. I think the first we will probably do a little more detailed reporting on the penetration of platform components.

Thank you and then on the hiring, and I know you mentioned the sales people that you posted spots for, but, on a larger picture, as far your employment, are you contracting more or have you been able to find the employees that you have been looking for on the last couple of quarters and some of the challenges as far as finding the work force you needed, any updates there?

Yeah, it’s a fair question. I think this exciting time and downtown national where we’re adding space and people as quickly as you can or adding a recruiter, an HR to help on the recruiting process, trying to lower costs of finding talents. We’re finding wonderful talent in many areas, we’re challenged in others. The developmental teams, the programming development teams were having a hard time, filling those at the rate that we’re trying to add them, and so it’s a little bit of mix bag, it’s an exciting time, we’re bringing in lots of great new talent. I wish that in these in the tech areas, we could have a bigger talent pool in the area of the country. We’re kind of excited to have our Austin office, gives us another pool to recruit from and potentially add to and create mobility between offices. So, we hope that adds to the rate of hiring. But it is a fair statement that we’ve been challenged to fill at the rate that we had hoped in the last several quarters and we’ll just keep working through that until we solve that problem.

Thank you Bobby.

Thank you Sir. And with that, that does conclude our questions. I’d like to turn the program back over to Mr. First for any additional or closing remarks.

Thank you for your participation in this call. We look forward to reporting the next quarter and full year results in some time, I believe in late February. So, thank you again and look forward to the next call.

Thank you Sir. Again, ladies and gentlemen this does conclude today’s conference. Thank you for your participation and have a wonderful day. Attendees, you may log off at this time.