Market Overview

Streamline Health® Reports Third Quarter 2017 Revenues of $6.4 Million; Breakeven Net Income; Adjusted EBITDA of $1.5 Million

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ATLANTA, Dec. 12, 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 third quarter of fiscal 2017, which ended October 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 October 31, 2017 decreased approximately 3% to $6.4 million over the revenues for the three-month period ended October 31, 2016 of $6.6 million, but increased approximately 8% over the second quarter of 2017. Recurring revenue comprised 79% of total revenue in the quarter.

Net income for the third quarter of fiscal 2017 was essentially breakeven ($3 thousand) as compared to a ($2.0 million) net loss in the same period a year ago.

Adjusted EBITDA for the third quarter of fiscal 2017 was $1.5 million, up from $0.2 million in the third quarter of 2016.

"Our third quarter financial performance improved from the second quarter primarily due to an increase in professional services and some recurring revenue as we experienced growth with existing clients in expanding the number of facilities utilizing our software.  During the quarter, we continued to attract new clients as we added six new clients to the Streamline family, and importantly closed four contracts for our new Streamline Health eValuator™ technology," stated David Sides, President and Chief Executive Officer, Streamline Health.  "Our bookings momentum continues to build, growing to $1.9 million in the third quarter as we realize some of the potential in our expanding pipeline of current clients and prospects, primarily around eValuator technology and Auditing Services. We are pleased to have closed our fifth new eValuator deal in the month of November and anticipate closing more new deals before our fiscal year end.

"Our balance sheet changed slightly from the second quarter of this year as our cash on hand decreased approximately $1 million while debt declined by approximately $100,000, but we continue to anticipate our cash balance climbing substantially by year end based on our quarterly cash cyclicality."

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

  • Revenue for the third quarter 2017 was $6.4 million;
  • Net income for the third quarter 2017 was $3 thousand;
  • Adjusted EBITDA for the third quarter 2017 was $1.5 million;
  • New sales bookings for the quarter were $1.9 million; and
  • Backlog at the end of the quarter was $47.7 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 Wednesday, December 13, 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: December 13, 2017, 9:00 AM ET

Webcast Registration: Click Here

Conference Dial-In: 866-548-4713

Conference Passcode: 1764102

Conference Call Name: Streamline Health Solutions Third 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 severance 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, cash balances, 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


Nine Months Ended



October 31,


October 31



2017


2016


2017


2016

Revenues:









  Systems sales

$

348,526

$

314,218

$

1,055,941

$

2,190,256

  Professional services


801,771


630,961


1,793,618


1,869,656

  Audit Services


280,025


234,347


919,485


234,347

  Maintenance and support


3,250,229


3,749,596


9,883,563


11,237,637

  Software as a service


1,718,748


1,706,366


4,586,532


5,144,876

        Total revenues


6,399,299


6,635,488


18,239,139


20,676,772










Operating expenses:









  Cost of systems sales


434,138


663,148


1,596,988


2,080,263

  Cost of professional services


555,815


723,358


1,814,236


1,891,146

  Cost of Audit Services


404,280


595,575


1,236,358


595,575

  Cost of maintenance and support


667,307


790,291


2,241,969


2,483,462

  Cost of software as a service


289,503


450,695


914,711


1,390,308

  Selling, general and administrative


2,819,549


3,212,350


8,983,248


10,153,140

  Research and development


932,251


1,969,415


3,985,161


5,800,169

        Total operating expenses


6,102,843


8,404,832


20,772,671


24,394,063

Operating income (loss)


296,456


(1,769,344)


(2,533,532)


(3,717,291)

Other expense:









  Interest expense


(113,078)


(98,871)


(360,723)


(380,897)

  Miscellaneous expense


(177,282)


(60,555)


(235,007)


(39,089)

Earnings (loss) before income taxes


6,096


(1,928,770)


(3,129,262)


(4,137,277)

  Income tax benefit (expense)


(2,607)


(1,702)


(7,822)


(5,104)

Net earnings (loss)

$

3,489

$

(1,930,472)

$

(3,137,084)

$

(4,142,381)

Less: deemed dividends on Series A
Preferred Shares


--


(72,710)


--


(875,935)

Net loss attributable to common
shareholders

$

3,489

$

(2,003,182)

$

(3,137,084)

$

(5,018,316)

Basic net loss per common share

$

--

$

(0.10)

$

(0.16)

$

(0.26)

Number of shares used in basic per
common share computation


19,985,822


19,645,521


19,838,691


19,477,538

Diluted net loss per common share

$

--

$

(0.10)

$

(0.16)

$

(0.26)

Number of shares used in diluted per
common share computation


23,068,423


19,645,521


19,838,691


19,477,538

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Assets

 



October 31,


January 31,



2017


2017

Current assets:





  Cash and cash equivalents

$

1,892,182

$

5,654,093

  Accounts receivable, net of allowance for doubtful
    accounts of $301,773 and $198,449, respectively


2,532,941


4,489,789

  Contract receivables


283,973


466,423

  Prepaid hardware and third party software for
    future delivery


5,858


5,858

  Prepaid client maintenance contracts


587,960


595,633

  Other prepaid assets


837,649


732,496

  Other current assets


392,449


439

        Total current assets


6,533,012


11,944,731






Non-current assets:





  Property and equipment:





    Computer equipment


2,971,361


3,110,274

    Computer software


725,700


827,642

    Office furniture, fixtures and equipment


683,443


683,443

    Leasehold improvements


729,348


729,348



5,109,852


5,350,707

  Accumulated depreciation and amortization


(3,762,821)


(3,447,198)

  Property and equipment, net


1,347,031


1,903,509






 Capitalized software development costs, net of  
   accumulated amortization of $18,119,290 and  
   $16,544,797 respectively


4,346,694


4,584,245

 Intangible assets, net of accumulated amortization  
  of $6,729,799 and $5,807,338, respectively


6,074,137


6,996,599

 Goodwill


15,537,281


15,537,281

 Other


677,319


672,133

       Total non-current assets


27,982,462


29,693,767


$

34,515,474

$

41,638,498

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Liabilities and Stockholders' Equity

 



October 31,


January 31,



2017


2017

Current liabilities:





  Accounts payable

$

807,778

$

1,116,525

  Accrued compensation


593,510


496,706

  Accrued other expenses


587,209


484,391

  Current portion of term loan


596,984


655,804

  Deferred revenues


6,130,259


9,916,454

  Current portion of capital lease obligations


--


91,337

        Total current liabilities


8,715,740


12,761,217






Non-current liabilities:





  Term loan, net of deferred financing cost of $146,009 and





    $199,211, respectively


4,032,865


4,883,286

  Warrants liability


150,857


46,191

  Royalty liability


2,456,233


2,350,754

  Lease incentive liability


293,322


339,676

 Deferred revenues, less current portion


487,832


568,515

        Total non-current liabilities


7,421,109


8,188,422

        Total liabilities


16,136,849


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, 19,984,743 and 19,695,391 shares issued and
    outstanding, respectively


199,847


196,954

  Additional paid in capital


81,491,728


80,667,771

  Accumulated deficit


(72,162,935)


(69,025,851)

        Total stockholders' equity


9,528,640


11,838,874


$

34,515,474

$

41,638,498









 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 



Nine Months Ended
October 31,



2017


2016

Operating activities:





  Net loss

$

(3,137,084)

$

(4,142,381)

  Adjustments to reconcile net loss to net cash

     provided by (used in) operating activities:





Depreciation


595,866


895,438

Amortization of capitalized software development costs


1,574,493


2,146,374

Amortization of intangible assets


922,462


976,338

Amortization of other deferred costs


229,780


192,947

Valuation adjustment for warrants liability


104,666


(36,875)

Share-based compensation expense


844,960


1,342,513

Other valuation adjustments


124,423


120,912

    (Gain) Loss on disposal of property and equipment


(14,871)


567

    Provision for accounts receivable


181,859


136,693

  Changes in assets and liabilities, net of assets acquired:





Accounts and contract receivables


1,957,439


1,679,810

Other assets


(671,254)


130,875

Accounts payable


(308,747)


(78,320)

Accrued expenses


134,324


(814,707)

Deferred revenues


(3,866,878)


(3,793,603)

  Net cash used in operating activities


(1,328,562)


(1,243,419)






Investing activities:





Purchases of property and equipment


(24,517)


(501,148)

Capitalization of software development costs


(1,336,942)


(1,420,678)

Payment for acquisition, net of cash received


--


(1,400,000)

  Net cash used in investing activities


(1,361,459)


(3,321,826)






Financing activities:





Principal repayments on term loan


(962,443)


(2,243,624)

Principal payments on capital lease obligation


(91,337)


(535,896)

Proceeds from exercise of stock options and stock purchase plan


23,703


14,793

Payments related to settlement of employee shared-based awards


(41,813)


(11,702)

  Net cash used in financing activities


(1,071,890)


(2,766,429)

Net decrease in cash and cash equivalents


(3,761,911)


(7,341,674)

Cash and cash equivalents at beginning of period


5,654,093


9,882,136

Cash and cash equivalents at end of period

$

1,892,182

$

2,540,462

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A

 



October 31,
2017


January 31,
2017


October 31,

2016

Company Proprietary Software

$

10,892,000

$

11,504,000

$

15,551,000

Third Party Hardware and Software


--


150,000


200,000

Professional Services


2,824,000


4,068,000


4,973,000

Audit Services


1,454,000


1,847,000


1,849,000

Maintenance and Support


18,256,000


19,193,000


19,413,000

Software as a Service


14,242,000


13,861,000


12,929,000

    Total

$

47,668,000

$

50,623,000

$

54,915,000

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

 (Unaudited)

Table B

 



Three Months Ended



October 31, 2017



Value


% of Total
Bookings

Streamline Health Software licenses

$

94,000


5%

Software as a service


1,505,000


78%

Maintenance and support


79,000


4%

Professional services


197,000


10%

Audit services


57,000


3%

Total bookings

$

1,932,000


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 severance and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.

 

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






Adjusted EBITDA Reconciliation


Three Months Ended,


Nine Months Ended,



October 31,
2017


October 31,
2016


October 31,
2017


October 31,
2016

Net income (loss)

$

3

$

(1,930)

$

(3,137)

$

(4,142)

    Interest expense


113


99


361


381

    Income tax expense


3


2


8


5

    Depreciation


193


265


596


895

    Amortization of capitalized software  development costs


431


720


1,574


2,146

    Amortization of intangible assets


256


325


922


976

    Amortization of other costs


51


60


177


140

EBITDA


1,050


(459)


501


401

    Share-based compensation expense


290


433


845


1,343

    (Gain) Loss on disposal of fixed assets


(14)


--


(15)


1

    Associate severance and other costs 
relating to transactions or corporate
restructuring


--


89


--


199

   Non-cash valuation adjustments to assets and liabilities


188


62


229


84

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


--


103


--


358

Adjusted EBITDA

$

1,514

$

228

$

1,560

$

2,386

Adjusted EBITDA Margin(1)


24%


3%


9%


12%

Adjusted EBITDA per diluted share









Loss per share – diluted

$

--

$

(0.10)

$

(0.16)

$

(0.26)

Adjusted EBITDA per adjusted diluted share (2)

$

0.07

$

0.01

$

0.07

$

0.10










Diluted weighted average shares


23,068,423


19,645,521


19,838,691


19,477,538

    Includable incremental shares — adjusted EBITDA (3)


--


3,340,390


3,242,413


3,322,710

Adjusted diluted shares


23,068,423


22,985,911


23,081,104


22,800,248


(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.

 

SOURCE Streamline Health Solutions, Inc.

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