Healthstream ( Nasdaq - HSTM ) -- Launches Simulation Business

Healthstream (HSTM $6.75) plans to launch its high potential simulation software line in April.  The company and its 50-50 partner, Laerdal Medical, recently completed the underlying technology platform.  It now is developing specific applications which will be sold on a recurring revenue basis.  Healthstream initially will market the software to its existing customer base in the United States.  Laerdal Medical, which is based in Norway, will focus on the international market.  Development kits have been provided to several third parties, which are experts in various medical procedures.  Those applications will be sold to end users through the Healthstream-Laerdal online store, similar to the iTunes model.  The partnership also will provide management software, to run individual events; and software viewers to operate the simulations on the end user computers.  The company declined to forecast the new line's 2011 revenue potential.  Our estimates assume only a modest contribution will be generated during the early going, and that some start up costs will continue to be incurred.  After the technology gains momentum substantial growth appears attainable.  Meantime, business remains strong in the core educational software line.  Our estimates are unchanged. 

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