HealthStream (NASDAQ:HSTM), which develops e-learning software, certainly has a big market opportunity in the 5 million employees of acute-care hospitals. Despite this, the company continues to struggle in growing its business.

In the fiscal fourth-quarter earnings released this week, revenues increased 6.4% to $8.6 million. Net income was $1.1 million, or $0.05 per share, which compares to $1.2 million (also $0.05 per share) in the same period in 2005.

Founded in 1990, HealthStream has a broad assortment of training software tools for the health-care sector. The key content areas include regulatory compliance, workforce development, patient safety, and training for medical technologies. Some customers include Merck (NYSE:MRK), Triad Hospitals (NYSE:TRI), Tenet Healthcare (NYSE:THC), and Zimmer Holdings (NASDAQ:ZMH).

Another big customer is HCA, which represents about 12% of revenues. The good news is that HealthStream was able to negotiate a new four-year contract with the hospital chain last October.

The transition
In the fourth quarter of 2006, HealthStream launched its "next-generation" learning center platform. It's a major upgrade to the prior version and relies on an Internet-based approach. It also has an infrastructure that makes it much easier to add courses and new functionality.

The problem? Well, it has taken a tremendous amount of resources to transition existing customers onto the new platform. The result has been less attention to other important details.

The transition process appears to be going smoothly, though, and should be completed by mid-April.

Management forecasts first-quarter revenues in the $7.3 million-$7.5 million range and net income from breakeven to $0.01 per share. For the full year, revenues are expected to grow at a 10%-12% rate, with net income of $0.12 to $0.14 per share.

That's a decent rate, but it's still not the hallmark of a tech company that's targeting a large market opportunity. Besides, with the technology transition still ongoing, the growth is likely to be pushed into the second half of 2007. So in the meantime, it's probably a good idea to stay away from the stock.

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Fool contributor Tom Taulli does not own shares of companies mentioned in this article. Check him out in Motley Fool CAPS. The Fool has a disclosure policy.