Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of HealthStream (HSTM 0.11%), a software-as-a-service provider to the health care industry, roared higher by as much as 22% after reporting better-than-expected second-quarter earnings results after the closing bell last night.

So what: For the quarter, HealthStream delivered revenue growth of 33% to $42.5 million, although its EPS dipped modestly to $0.08 from $0.09 in the year-ago quarter. Specifically, HealthStream saw its most robust sales gains from its cash-flow-friendly subscription-based solutions, which produced a 42% sales improvement to roughly $9.6 million, and its workforce development solutions which grew by 37% to $9.3 million. Comparatively speaking, Wall Street was anticipating just $41 million in revenue and a profit of just $0.07 per share.

Looking ahead, HealthStream is projecting 26%-29% revenue growth for the full-year (or roughly $167 million-$171 million) which is right in-line with the Street's current consensus. Full-year operating income, however, is expected to fall by 2% to 11%.

Now what: Handily topping Wall Street's estimates is always a way to win back investors if your share price has been in a funk. Then again, projecting a full-year decline in operating income, even if it's to push your software products away from licensing and toward a consistent cash flow subscription-based model doesn't sit well with me -- at least in the context of HealthStream seeing 20% upside in a single bound. On paper the company makes sense as businesses will look to improve workforce efficiency, thus reducing their own long-term costs. But, the reality is that software-as-a-service companies focused in the health care sector are often loftily valued and could be years from realizing their full potential. With a monstrous forward P/E of 65 I'm more than happy passing on HealthStream here and waiting a few more quarters to reevaluate it.