Market Overview

Streamline Health® Reports Second Quarter 2017 Revenues Of $5.9 Million; ($1.1 Million) Net Loss; Adjusted EBITDA Of $0.5 Million

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Total First Half Fiscal 2017 Revenue $11.8 Million; Net Loss ($3.1 Million)Break-Even Adjusted EBITDA

ATLANTA, Sept. 13, 2017 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), provider of integrated solutions, technology-enabled services and analytics supporting revenue cycle optimization for healthcare enterprises, today announced financial results for the second quarter and first half of fiscal 2017, which ended July 31, 2017.

Streamline Health helps hospitals optimize their mid-revenue cycle operations in ways that transform tangled revenue cycles into dynamic revenue streams. Our integrated solutions, technology-enabled services and analytics enable providers to secure accurate reimbursement in a value-based world. (PRNewsfoto/Streamline Health Solutions)

Revenues for the three-month period ended July 31, 2017 decreased approximately 20% to $5.9 million over the revenues for the three-month period ended July 31, 2016 of $7.4 million, which included $1.0 million of perpetual license revenue.  Revenue was down approximately 7% year-over-year in the second quarter of fiscal 2017 when excluding the perpetual license revenue for the same period in 2016 ($5.9 million as compared to $6.4 million).  Recurring revenue comprised 82% of total revenue in the quarter. Revenues for the first six months of fiscal year 2017 were $11.8 million, down approximately 16% as compared to $14.1 million in the first half of fiscal 2016.  Revenue for the first six months of fiscal 2017 was down approximately 9% from the same period in 2016 when excluding the perpetual license revenue for the same period in 2016.

Net loss for the second quarter of fiscal 2017 was $(1.1 million) as compared to a ($.7 million) net loss in the same period a year ago.  Net loss for the six months of fiscal 2017 was ($3.1 million) as compared to ($2.2 million) net loss for the same period in 2016.

Adjusted EBITDA for the second quarter of fiscal 2017 was $0.5 million, down from $1.6 million in the second quarter of 2016. Adjusted EBITDA for the first six months of fiscal 2017 was break-even, as compared to $2.2 million in the first half of fiscal 2016.

"Our second quarter financial performance started to show some of the promise we envisioned when we refocused our efforts to the middle of the revenue cycle.  During the quarter, we sold auditing services to four new clients such as Iora Health headquartered in Boston, Union General in Louisiana and St. Francis Medical Center in Missouri," stated David Sides, President and Chief Executive Officer, Streamline Health.  "Although these new contracts are small in terms of initial revenue contribution, we believe there is the opportunity for growth within each of these as we bring new technology to the relationships. Our pipeline for our new Streamline Health eValuator™ remains robust.  We closed a new client after the second quarter ended which we believe will be one of many throughout the second half of our fiscal year. We continue to believe that we will generate incremental growth in our bookings in the second half of this year and into 2018.

Our balance sheet was mostly unchanged from the first quarter of this year as our cash on hand decreased the same amount as our debt.  Going forward, we do not foresee paying down our debt at such an accelerated pace; rather we plan to grow our cash on hand."

Highlights for the three months ended July 31, 2017 included:

  • Revenue for the second quarter 2017 was $5.9 million;
  • Net loss for the second quarter 2017 was $(1.1 million);
  • Adjusted EBITDA for the second quarter 2017 was $0.5 million;
  • New sales bookings for the quarter were $1.1 million; and
  • Backlog at the end of the quarter was $46.3 million.

Conference Call Information
An accompanying conference call will be hosted by David Sides, Chief Executive Officer and Nicholas Meeks, Senior Vice President and Chief Financial Officer. The call will be held at 9:00 AM ET, on Thursday, September 14, 2017 and will be accompanied by a live webcast. Please refer to the information below for conference call dial-in information and webcast registration.

Conference Date: September 14, 2017, 9:00 AM ET
Webcast Registration: Click Here 
Conference Dial-In: 866-564-2842
Conference Passcode: 5680323
Conference Call Name: Streamline Health Solutions Second Quarter 2017 Results Call

Following the call, a replay will be available on the Company's website, www.streamlinehealth.net, in the Investor Relations section.

*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) 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. A table illustrating this measure is included in this press release.

About Streamline Health
Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge­ – providing actionable insights that support revenue cycle optimization for healthcare enterprises.   We deliver 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, success of future products 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


Six Months Ended



July 31,


July 31,



2017


2016


2017


2016

Revenues:









  Systems sales

$

328,692

$

1,364,771

$

707,415

$

1,876,038

  Professional services


571,812


548,080


991,847


1,238,695

  Audit Services


291,441


--


639,460


--

  Maintenance and support


3,278,562


3,732,488


6,633,334


7,488,041

  Software as a service


1,442,652


1,728,724


2,867,784


3,438,510

        Total revenues


5,916,159


7,374,063


11,839,840


14,041,284










Operating expenses:









  Cost of systems sales


596,799


671,631


1,162,850


1,417,115

  Cost of professional services


543,206


529,024


1,258,421


1,167,788

  Cost of Audit Services


391,439


--


832,078


--

  Cost of maintenance and support


768,140


835,353


1,574,662


1,693,171

  Cost of software as a service


285,832


455,370


625,208


939,613

  Selling, general and administrative


2,790,171


3,341,949


6,163,699


6,940,790

  Research and development


1,495,972


2,108,567


3,052,910


3,830,754

        Total operating expenses


6,871,559


7,941,894


14,669,828


15,989,231

Operating loss


(955,400)


(567,831)


(2,829,988)


(1,947,947)

Other expense (income):









  Interest expense


(120,377)


(120,014)


(247,645)


(282,026)

  Miscellaneous income (expenses)


(19,681)


(44,756)


(57,725)


21,466

Loss before income taxes


(1,095,458)


(732,601)


(3,135,358)


(2,208,507)

  Income tax benefit (expense)


(2,607)


(1,701)


(5,215)


(3,402)

Net loss

$

(1,098,065)

$

(734,302)

$

(3,140,573)

$

(2,211,909)

Less: deemed dividends on Series A
Preferred Shares


--


(418,506)


--


(803,225)

Net loss attributable to common
shareholders

$

(1,098,065)

$

(1,152,808)

$

(3,140,573)

$

(3,015,134)

Basic net loss per common share

$

(0.06)

$

(0.06)

$

(0.16)

$

(0.16)

Number of shares used in basic per
common share computation


19,834,859


19,791,805


19,765,125


19,393,547

Diluted net loss per common share

$

(0.06)

$

(0.06)

$

(0.16)

$

(0.16)

Number of shares used in diluted per
common share computation


19,834,859


19,791,805


19,765,125


19,393,547

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Assets

 



July 31,


January 31,



2017


2017

Current assets:





  Cash and cash equivalents

$

2,916,459

$

5,654,093

  Accounts receivable, net of allowance for doubtful
    accounts of $286,084 and $198,449, respectively


4,621,331


4,489,789

  Contract receivables


69,625


466,423

  Prepaid hardware and third party software for
    future delivery


5,858


5,858

  Prepaid client maintenance contracts


710,309


595,633

  Other prepaid assets


861,300


732,496

  Other current assets


665


439

        Total current assets


9,185,547


11,944,731






Non-current assets:





  Property and equipment:





    Computer equipment


3,081,856


3,110,274

    Computer software


831,242


827,642

    Office furniture, fixtures and equipment


683,443


683,443

    Leasehold improvements


729,348


729,348



5,325,889


5,350,707

  Accumulated depreciation and amortization


(3,814,938)


(3,447,198)

  Property and equipment, net


1,510,951


1,903,509






 Capitalized software development costs, net of  
   accumulated amortization of $17,688,421 and  
   $16,544,797 respectively


4,285,069


4,584,245

 Intangible assets, net of accumulated amortization  
  of $6,473,451 and $5,807,338, respectively


6,330,485


6,996,599

 Goodwill


15,537,281


15,537,281

 Other


636,232


672,133

       Total non-current assets


28,300,018


29,693,767


$

37,485,565

$

41,638,498

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Liabilities and Stockholders' Equity

 



July 31,


January 31,



2017


2017

Current liabilities:





  Accounts payable

$

1,566,454

$

1,116,525

  Accrued compensation


481,528


496,706

  Accrued other expenses


188,172


484,391

  Current portion of term loan


596,980


655,804

  Deferred revenues


9,298,192


9,916,454

  Current portion of capital lease obligations


23,188


91,337

        Total current liabilities


12,155,214


12,761,217






Non-current liabilities:





  Term loan, net of deferred financing cost of $181,477 and





    $199,211, respectively


4,164,381


4,883,286

  Warrants liability


360


46,191

  Royalty liability


2,423,602


2,350,754

  Lease incentive liability


311,585


339,676

 Deferred revenues, less current portion


363,910


568,515

        Total non-current liabilities


7,263,838


8,188,422

        Total liabilities


19,419,052


20,949,639






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 $0


8,849,985


8,849,985






Stockholders' equity:





  Common stock, $.01 par value per share, 45,000,000 shares
    authorized, 19,962,672 and 19,695,391 shares issued and
    outstanding, respectively


199,627


196,954

  Additional paid in capital


81,183,325


80,667,771

  Accumulated deficit


(72,166,424)


(69,025,851)

        Total stockholders' equity


9,216,528


11,838,874


$

37,485,565

$

41,638,498









 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 



Six Months Ended July 31,



2017


2016

Operating activities:





  Net loss

$

(3,140,573)

$

(2,211,909)

  Adjustments to reconcile net loss to net cash





provided by (used in) operating activities:

Depreciation


403,090


630,706

Amortization of capitalized software development costs


1,143,624


1,425,962

Amortization of intangible assets


666,114


650,892

Amortization of other deferred costs


161,064


115,113

Valuation adjustment for warrants liability


(45,831)


(61,856)

Share-based compensation expense


555,229


909,411

Other valuation adjustments


86,192


83,937

    Loss on disposal of property and equipment


(720)


567

    Provision for accounts receivable


166,170


88,472

  Changes in assets and liabilities, net of assets acquired:





Accounts and contract receivables


99,086


357,774

Other assets


(333,401)


(214,327)

Accounts payable


449,929


(403,600)

Accrued expenses


(352,132)


(472,420)

Deferred revenues


(822,867)


(759,411)

  Net cash (used in) provided by operating activities


(965,026)


139,311






Investing activities:





Purchases of property and equipment


(9,812)


(60,518)

Capitalization of software development costs


(844,448)


(936,560)

  Net cash used in investing activities


(854,260)


(997,078)






Financing activities:





Principal repayments on term loan


(813,197)


(2,075,172)

Principal payments on capital lease obligation


(68,149)


(438,962)

Proceeds from exercise of stock options and stock purchase plan


--


14,793

Payments related to settlement of employee shared-based awards


(37,002)


(11,702)

  Net cash used in financing activities


(918,348)


(2,511,043)

Decrease in cash and cash equivalents


(2,737,634)


(3,368,810)

Cash and cash equivalents at beginning of period


5,654,093


9,882,136

Cash and cash equivalents at end of period

$

2,916,459

$

6,513,326

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A

 



July 31,
2017


January 31,
2017


July 31,

2016

Company Proprietary Software

$

11,458,000

$

11,504,000

$

15,133,000

Third Party Hardware and Software


50,000


150,000


200,000

Professional Services


3,517,000


4,068,000


5,563,000

Audit Services


1,454,000


1,847,000


--

Maintenance and Support


16,583,000


19,193,000


19,569,000

Software as a Service


13,300,000


13,861,000


13,177,000

    Total

$

46,362,000

$

50,623,000

$

53,642,000

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

 (Unaudited)

Table B

 



Three Months Ended



July 31, 2017



Value


% of Total
Bookings

Streamline Health Software licenses

$

59,000


5%

Software as a service


47,000


4%

Maintenance and support


122,000


11%

Audit Services


108,000


10%

Professional services


777,000


70%

Hardware & third party software


--


0%

Total bookings

$

1,113,000


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,


Six Months Ended,



July 31,
2017


July 31,
2016


July 31,
2017


July 31,
2016

Net loss

$

(1,098)

$

(734)

$

(3,134)

$

(2,212)

    Interest expense


120


120


248


282

    Income tax expense


3


2


5


3

    Depreciation


200


310


403


631

    Amortization of capitalized software 
development costs


572


710


1,144


1,426

    Amortization of intangible assets


333


325


666


651

    Amortization of other costs


43


36


126


80

EBITDA


173


769


(549)


861

    Share-based compensation expense


288


432


555


909

    (Gain) Loss on disposal of fixed assets


--



(1)


1

    Associate severances and other costs         
relating to transactions or corporate
restructuring


--


110


--


110

   Non-cash valuation adjustments to
assets and liabilities


23


14


40


22

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


--


236


--


255

Adjusted EBITDA

$

484

$

1,561

$

45

$

2,158

Adjusted EBITDA Margin(1)


8%


21%


--%


15%

Adjusted EBITDA per diluted share









Loss per share – diluted

$

(0.06)

$

(0.06)

$

(0.16)

$

(0.16)

Adjusted EBITDA per adjusted diluted
share (2)

$

0.02

$

0.07

$

--

$

0.10










Diluted weighted average shares


19,834,859


19,791,805


19,765,125


19,393,547

    Includable incremental shares —
adjusted EBITDA (3)


3,378,484


3,376,285


3,322,319


3,313,870

Adjusted diluted shares


23,213,343


23,168,090


23,087,444


22,707,417











 

(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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SOURCE Streamline Health Solutions, Inc.

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