Streamline Health® Reports Third Quarter 2016 Revenues Of $6.6 Million; Adjusted EBITDA Of $.2 Million; Net Loss Of $1.9 Million

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Bookings Improve to $3.2 Million in the Third Quarter

ATLANTA, Dec. 7, 2016 /PRNewswire/ -- Streamline Health Solutions, Inc. STRM, provider of the Looking Glass® platform of integrated solutions, technology-enabled services and analytics supporting revenue cycle optimization for healthcare enterprises in the new value-based world today announced financial results for the third quarter of fiscal 2016, which ended October 31, 2016.

 

Revenues for the three-month period ended October 31, 2016 were $6.6 million, down approximately 10% compared to $7.4 million in Q2 2016, but up approximately 4% when excluding the $1 million in perpetual license revenue in that quarter.  Revenue was down approximately 7% as compared to $7.2 million in the same quarter year ago. Recurring revenue comprised 84% of total revenue in the quarter. 

Adjusted EBITDA for the third quarter 2016 was approximately $.2 million, down from $1.6 million in Q2 2016, and $1.7 million in Q3 2015 due primarily to the acquisition of Opportune IT during the quarter and the many attendant one-time costs that were associated with the transaction.  Net loss for the third quarter of 2016 was $1.9 million.

"Our third quarter financial performance, although down from Q2 2016 levels, was as expected given that we did not close a perpetual license revenue contract in the quarter as we had in the previous quarter.  Additionally, along with the incremental expense from the Opportune IT acquisition, we made additional investments to accelerate the roadmap of the acquired technologies, which also impacted our Adjusted EBITDA performance," stated David Sides, President and Chief Executive Officer, Streamline Health.  "However, we are very excited about the opportunities for growth both with our new Coding Audit Services and the benefits of integrating our existing coding technology with the new software.  Additionally, as we had projected, our bookings improved substantially over the first half of this year as many of the investments in sales have started to gain traction."

Highlights for the third quarter ended October 31, 2016 included:

  • Revenue for the third quarter 2016 was $6.6 million;
  • Adjusted EBITDA for the third quarter 2016 was $.2 million;
  • Net loss for the third quarter 2016 was $1.9 million;
  • New sales bookings for the quarter were $3.2 million; and
  • Backlog at the end of the quarter was $54.9 million.

Conference Call Information

The Company will conduct a conference call to review the results on Wednesday, December 7, 2016 at 5:00 PM ET. Interested parties can access the call by joining the live webcast: click here to register. You can also join by phone by dialing 888-256-1030 and then entering passcode 3605504.

A replay of the conference call will be available from Wednesday, December 7, 2016 at 8:00 PM ET to Monday, December 12, 2016 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 3605504.

*Non-GAAP Financial Measures
Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). Streamline Health's management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health's management believes that this measure provides useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "adjusted EBITDA" as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation and amortization, stock-based compensation expense, transaction expenses and other expenses that do not relate to Streamline Health's core operations. A table illustrating this measure is included in this press release.

About Streamline Health
Streamline Health Solutions, Inc. STRM is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge­ – actionable insights that support revenue cycle optimization for healthcare enterprises.   Our Looking Glass® platform delivers integrated solutions and analytics that enable providers to drive reimbursement in a value-based world. We share a common calling and commitment to advance the quality of life and the quality of healthcare – for society, our clients, the communities they serve, and the individual patient. For more information, please visit our website at www.streamlinehealth.net.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995
Statements made by Streamline Health Solutions, Inc. that are not historical facts are forward-looking statements that are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. Forward-looking statements contained in this press release include, without limitation, statements regarding the Company's estimates of future revenue, backlog, results of investments in sales and marketing and related expectations and assumptions.  These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development and enhancement of current solutions, key strategic alliances with vendors and channel partners that resell the Company's solutions, the ability of the Company to control costs, availability of solutions from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates and nationally, and the Company's ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Company Contact:
Randy Salisbury
SVP, Chief Marketing Officer
(404) 229-4242
randy.salisbury@streamlinehealth.net

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)








Three Months Ended


Nine Months Ended



October 31,


October 31,



2016


2015


2016


2015

Revenues:









  Systems sales

$

314,218

$

327,493

$

2,190,256

$

2,567,710

  Professional services


865,308


621,547


2,104,003


1,631,878

  Maintenance and support


3,749,596


4,034,481


11,237,637


11,315,664

  Software as a service


1,706,366


2,171,548


5,144,876


6,428,358

        Total revenues


6,635,488


7,155,069


20,676,772


21,943,610










Operating expenses:









  Cost of systems sales


663,148


695,824


2,080,263


2,117,409

  Cost of professional services


1,318,933


829,964


2,486,721


2,249,029

  Cost of maintenance and support


790,291


766,594


2,483,462


2,297,772

  Cost of software as a service


450,695


611,158


1,390,308


2,052,758

  Selling, general and administrative


3,212,350


2,351,082


10,153,140


10,636,370

  Research and development


1,969,415


2,258,092


5,800,169


6,715,641

        Total operating expenses


8,404,832


7,512,714


24,394,063


26,068,979

Operating loss


(1,769,344)


(357,645)


(3,717,291)


(4,125,369)

Other expense (income):









  Interest expense


(98,871)


(206,286)


(380,897)


(698,402)

  Miscellaneous income (expenses)


(60,555)


110,383


(39,089)


1,939,543

Loss before income taxes


(1,928,770)


(453,548)


(4,137,277)


(2,884,228)

  Income tax benefit (expense)


(1,702)


(3,113)


(5,104)


(2,645)

Net loss

$

(1,930,472)

$

(456,661)

$

(4,142,381)

$

(2,886,873)

Less: deemed dividends on Series A Preferred Shares


(72,710)


(346,339)


(875,935)


(967,014)

Net loss attributable to common shareholders

$

(2,003,182)

$

(803,000)

$

(5,018,316)

$

(3,853,887)

Basic net loss per common share

$

(0.10)

$

(0.04)

$

(0.26)

$

(0.21)

Number of shares used in basic per common share computation


19,645,521


18,746,632


19,477,538


18,658,626

Diluted net loss per common share

$

(0.10)

$

(0.04)

$

(0.26)

$

(0.21)

Number of shares used in diluted per common share computation


19,645,521


18,746,632


19,477,538


18,658,626

                               


STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)






Assets








October 31,

2016


January 31,

2016






Current assets:





  Cash and cash equivalents

$

2,540,462

$

9,882,136

  Accounts receivable, net of allowance for doubtful





    accounts of $214,117 and $155,407, respectively


2,956,880


4,199,315

  Contract receivables


360,876


119,697

  Prepaid hardware and third-party software for





    future delivery


5,858


5,858

  Prepaid client maintenance contracts


710,395


956,913

  Other prepaid assets


925,992


941,532

  Other current assets


18,323


97,986

        Total current assets


7,518,786


16,203,437






Non-current assets:





Property and equipment:





  Computer equipment


3,128,865


2,647,135

  Computer software


827,642


801,895

  Office furniture, fixtures and equipment


683,443


683,443

  Leasehold improvements


729,348


729,348



5,369,298


4,861,821

  Accumulated depreciation and amortization


(3,266,162)


(2,407,746)

Property and equipment, net


2,103,136


2,454,075






 Contract receivables, less current portion



8,711

 Capitalized software development costs, net of





   accumulated amortization of $17,066,321 and





   $14,919,948, respectively


5,835,305


6,123,638

Intangible assets, net of accumulated amortization of





   $5,648,013 and $4,671,675, respectively


7,726,910


8,155,325

Deferred financing costs, net of accumulated





   amortization of zero and $84,531, respectively



270,147

Goodwill


16,184,667


16,184,667

Other


779,726


746,018

       Total non-current assets


32,629,744


33,942,581


$

40,148,530

$

50,146,018

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)






Liabilities and Stockholders' Equity








October 31,

2016


January 31,

2016






Current liabilities:





  Accounts payable

$

1,089,276

$

1,136,779

  Accrued compensation


660,244


935,324

  Accrued other expenses


175,713


328,551

  Current portion of long-term debt


842,258


673,807

  Deferred revenues


7,076,812


10,447,280

  Current portion of capital lease obligation


124,630


592,642

        Total current liabilities


9,968,933


14,114,383






Non-current liabilities:





  Term loans


5,232,064


7,861,084

  Warrants liability


168,238


205,113

  Royalty liability


2,385,315


2,291,888

  Lease incentive liability


352,545


369,406

  Capital lease obligation



93,257

  Deferred revenues, less current portion


789,574


1,212,709

        Total non-current liabilities


8,927,736


12,033,457

        Total liabilities


18,896,669


26,147,840






Series A 0% Convertible Redeemable Preferred stock, $.01 par
value per share, $8,849,985 redemption value, 4,000,000 shares
authorized, 2,949,995 issued and outstanding, net of unamortized
preferred stock discount of zero and $875,935, respectively


8,849,985


7,974,050






Stockholders' equity:





  Common stock, $.01 par value per share, 45,000,000 shares





    authorized, 19,684,284 and 18,783,540 shares issued and    





    outstanding, respectively


196,843


187,836

  Additional paid in capital


80,211,699


79,700,577

  Accumulated deficit


(68,006,666)


(63,864,285)

        Total stockholders' equity


12,401,876


16,024,128


$

40,148,530

$

50,146,018

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)






Nine Months Ended October 31



2016


2015

Operating activities:





  Net loss

$

(4,142,381)

$

(2,886,873)

  Adjustments to reconcile net loss to net cash





provided by (used in) operating activities:

Depreciation


895,438


930,508

Amortization of capitalized software development costs


2,146,374


2,332,237

Amortization of intangible assets


976,338


1,011,690

Amortization of other deferred costs


192,947


142,764

Valuation adjustment for warrants liability


(36,875)


(1,558,466)

Share-based compensation expense


1,342,513


1,858,588

Other valuation adjustments


120,912


206,712

    Loss on disposal of property and equipment


567


92,448

    Gain on early extinguishment of lease liability



(33,059)

    Provision for accounts receivable


136,693


11,488

    Deferred tax benefit



(9,574)

  Changes in assets and liabilities, net of effects of acquisitions:





Accounts and contract receivables


1,679,810


3,569,941

Other assets


130,875


411,665

Accounts payable


(78,320)


(1,505,462)

Accrued expenses


(814,707)


(63,498)

Deferred revenues


(3,793,603)


(557,179)

  Net cash (used in) provided by operating activities


(1,243,419)


3,953,930






Investing activities:





Purchases of property and equipment


(501,148)


(243,283)

Capitalization of software development costs


(1,420,678)


    Payment for acquisition, net of cash received


(1,400,000)


  Net cash used in investing activities


(3,321,826)


(243,283)






Financing activities:





Principal repayments on term loan


(2,243,624)


(1,352,807)

Principal payments on capital lease obligation


(535,896)


(602,394)

Recovery of deferred financing costs



2,111

Proceeds from exercise of stock options and stock purchase plan


14,793


225,579

Payments related to settlement of employee shared-based awards


(11,702)


  Net cash used in financing activities


(2,776,429)


(1,727,511)

Decrease in cash and cash equivalents


(7,341,674)


1,983,136

Cash and cash equivalents at beginning of period


9,882,136


6,522,600

Cash and cash equivalents at end of period

$

2,540,462

$

8,505,736

 

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A










October 31,
2016


January 31,
2016


October 31,

2015

Streamline Health Software Licenses

$

15,551,000

$

21,586,000

$

21,533,000

Third Party Hardware and Software


200,000


200,000


200,000

Professional Services


6,822,000


5,803,000


5,951,000

Maintenance and Support


19,413,000


23,292,000


21,057,000

Software as a Service


12,929,000


16,264,000


18,738,000

    Total

$

54,915,000

$

67,146,000

$

67,479,000

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

(Unaudited)

Table B






Three Months Ended



October 31, 2016



Value


% of Total
Bookings

Streamline Health Software licenses

$

21,000


1%

Software as a service


0


0%

Maintenance and support


3,000


0%

Professional services


3,116,000


99%

Hardware & third party software


21,000


1%

Total bookings

$

3,161,000


100%

 

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C


This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by Streamline Health's management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the Company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the Company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. The Company's management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release. Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.



 


Reconciliation of net earnings (loss) to non-GAAP adjusted EBITDA (in thousands)






Adjusted EBITDA Reconciliation


Three Months Ended,


Nine Months Ended,



October 31,
2016


October 31,
2015


October 31,
2016


October 31,
2015

Net loss

$

(1,930)

$

(457)

$

(4,142)

$

(2,887)

    Interest expense


99


206


381


698

    Income tax expense


2


3


5


3

    Depreciation


265


305


895


931

    Amortization of capitalized software 
    development costs


720


774


2,146


2,332

    Amortization of intangible assets


325


337


976


1,012

    Amortization of other costs


60


41


140


90

EBITDA


(459)


1,209


401


2,179

    Share-based compensation expense


433


575


1,343


1,859

    Loss on disposal of fixed assets



58


1


92

    Associate severances and other costs 
    relating to transactions or corporate
    restructuring


89



199


206

   Non-cash valuation adjustments to
    assets and liabilities


62


(178)


84


(1,352)

    Transaction related professional fees,
    advisory fees and other internal direct
    costs


103


34


358


53

    Other non-recurring income





(750)

Adjusted EBITDA

$

228

$

1,698

$

2,386

$

2,287

Adjusted EBITDA Margin(1)


3%


24%


12%


10%

Adjusted EBITDA per diluted share









Loss per share – diluted

$

(0.10)

$

(0.04)

$

(0.26)

$

(0.21)

Adjusted EBITDA per adjusted diluted
share (2)

$

0.01

$

0.08

$

0.10

$

0.11










Diluted weighted average shares


19,645,521


18,746,632


19,477,538


18,658,626

    Includable incremental shares —
    adjusted EBITDA (3)


3,340,390


2,234,344


3,322,710


2,493,843

Adjusted diluted shares


22,985,911


20,980,976


22,800,248


21,152,469

 

(1)

Adjusted EBITDA as a percentage of GAAP revenues

(2)

Adjusted EBITDA per adjusted diluted share for the Company's common stock is computed using the more dilutive of the two-class method or the if-converted method.



(3)

The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP net loss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.

 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/streamline-health-reports-third-quarter-2016-revenues-of-66-million-adjusted-ebitda-of-2-million-net-loss-of-19-million-300374729.html

SOURCE Streamline Health, Inc.

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