Streamline Health® Reports Third Quarter 2015 Financial Performance

Third Quarter Revenues of $7.2 Million; Cash up to $8.5 Million; Debt Reduced to $8.6 Million; Change in Auditors Expected to Result in Significant Savings

10 Dec, 2015, 16:05 ET from Streamline Health Solutions, Inc.

ATLANTA, Dec. 10, 2015 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of transformational data-driven solutions to help healthcare providers reduce exposure to risk, enhance clinical, financial, and operational performance, and improve patient care, today announced financial results for the third quarter of 2015, which ended October 31, 2015.

Revenues for the three-month period ended October 31, 2015 declined as expected to approximately $7.2 million, as compared to $8.6 million in the previous quarter that included $1.6 million in perpetual license revenue.  Removing the revenue from the one-time perpetual license that was recognized in Q2, revenues for the year have increased consistently over the first three quarters of 2015, from $6.2 million in Q1, to $7.0 million in Q2, and to $7.2 million in Q3.  As compared to Q3 2014, revenues for Q3 2015 increased 5.9%.

Adjusted EBITDA for the third quarter 2015 was $1.7 million, up $2.0 million compared to Adjusted EBITDA from the third quarter of 2014. Adjusted EBITDA for the year-to-date period is $2.3 million, up $2.6 million from the comparable prior year period. On a GAAP basis, the company had a net loss of $0.5 million and $2.9 million for the three and nine months ended October 31, 2015, respectively.

The Company selected RSM US LLP (formerly known as McGladrey LLP) to replace KPMG LLP as its independent registered public accounting firm, effective today.  This change is expected to result in significant savings going forward.

"I'm pleased to report another solid quarter of performance.  We continue to realize significant improvement in our balance sheet, building cash and reducing debt as we look to improve our operational efficiency in all areas of our business," stated David Sides, President and Chief Executive Officer, Streamline Health.  "With the improvement in our financial position, we are now in position to invest significantly in our sales resources going forward by adding additional direct salespeople, account executives and a dedicated channel partner manager."

Highlights for the third quarter ended October 31, 2015 included:

  • Revenue for the third quarter 2015 was $7.2 million;
  • Adjusted EBITDA for the third quarter 2015 was $1.7 million;
  • Net loss for the third quarter 2015 was $0.5 million;
  • New sales bookings for the quarter were $1.1 million; and
  • Backlog at the end of the quarter was $67.5 million.

Conference Call Information

The Company will conduct a conference call to review the results on Thursday, December 10, 2015 at 5:00 PM ET. Interested parties can access the call by dialing 888-287-5563 and then entering passcode 1594783. A live webcast will also be available; click here to register.

A replay of the conference call will be available from Thursday, December 10, 2015 at 8:00 PM ET to Tuesday, December 15, 2015 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 1594783.

About Streamline Health Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge­ – actionable insights that reduce exposure to risk, enhance operational performance, and improve patient care. Through our Looking Glass® Platform we provide clients with meaningful, intelligent SaaS-based solutions from patient engagement to reimbursement. We share a common calling and commitment to advance the quality of life and the quality of healthcare – for society, our industry, 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 expected cost savings from changing its independent registered public accounting firm, debt, backlog, future investments in sales resources, 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, 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

Oct 31,

Oct 31,

2015

2014

2015

2014

Revenues:

  Systems sales

$

327,493

$

345,919

$

2,567,710

$

999,209

  Professional services

621,547

447,939

1,631,878

1,731,888

  Maintenance and support

4,034,481

4,062,442

11,315,664

12,411,419,

  Software as a service

2,171,548

1,980,343

6,428,358

5,887,368

        Total revenues

7,155,069

6,836,643

21,943,610

21,029,884

Operating expenses:

  Cost of systems sales

695,824

835,398

2,117,409

2,505,190

  Cost of professional services

829,964

681,350

2,249,029

2,446,466

  Cost of maintenance and support

766,594

756,469

2,297,772

2,553,180

  Cost of software as a service

611,158

770,347

2,052,758

2,113,390

  Selling, general and administrative

2,351,082

4,230,347

10,636,370

12,925,597

  Research and development

2,258,092

2,275,410

6,715,641

6,850,973

        Total operating expenses

7,512,714

9,549,321

26,068,979

29,394,796

Operating loss

(357,645)

(2,712,678)

(4,125,369)

(8,364,912)

Other income (expense):

  Interest expense

(206,286)

(180,583)

(698,402)

(523,599)

  Loss on early extinguishment of debt

--

(114,522)

--

(114,522)

  Miscellaneous income

110,383

752,219

1,939,543

1,803,509

Loss before income taxes

(453,548)

(2,255,564)

(2,884,228)

(7,199,524)

  Income tax expense

(3,113)

--

(2,645)

(2,290)

Net loss

$

(456,661)

$

(2,255,564)

$

(2,886,873)

$

(7,201,814)

Less: deemed dividends on Series A Preferred Shares

(346,339)

(269,152)

(967,014)

(751,501)

Net loss attributable to common shareholders

$

(803,000)

$

(2,524,716)

$

(3,853,887)

$

(7,953,315)

Basic net loss per common share

$

(0.04)

$

(0.14)

$

(0.21)

$

(0.44)

Number of shares used in basic per common share computation

18,746,632

18,309,677

18,658,626

18,210,034

Diluted net loss per common share

$

(0.04)

$

(0.14)

$

(0.21)

$

(0.44)

Number of shares used in diluted per common share computation

18,746,632

18,309,677

18,658,626

18,210,034

 

 

                               

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Assets

October 31,

2015

January 31,

2015

Current assets:

  Cash and cash equivalents

$

8,505,736

$

6,522,600

  Accounts receivable, net of allowance for doubtful

    accounts of $130,214 and $665,962, respectively

3,429,188

6,935,270

  Contract receivables

142,250

191,465

  Prepaid hardware and third party software for

    future delivery

5,858

55,173

  Prepaid client maintenance contracts

1,048,667

935,858

  Other prepaid assets

1,084,721

1,437,680

  Deferred income taxes

220,004

220,004

  Other current assets

34,644

207,673

        Total current assets

14,471,068

16,505,723

Non-current assets:

Property and equipment:

  Computer equipment

2,507,132

2,381,923

  Computer software

677,354

964,857

  Office furniture, fixtures and equipment

683,443

683,443

  Leasehold improvements

729,348

724,015

4,597,277

4,754,238

  Accumulated depreciation and amortization

(2,103,282)

(1,617,423)

Property and equipment, net

2,493,995

3,136,815

 Contract receivables, less current portion

17,421

43,553

 Capitalized software development costs, net of

   accumulated amortization of $14,178,705 and

   $11,846,468, respectively

6,864,881

9,197,118

Intangible assets, net of accumulated amortization of

   $4,338,373 and $3,326,683, respectively

8,488,627

9,500,317

Deferred financing costs, net of accumulated

   amortization of $66,797 and $13,677, respectively

287,881

387,199

Goodwill

16,184,667

16,184,667

Other

784,909

823,723

       Total non-current assets

35,122,381

39,273,392

$

49,593,449

$

55,779,115

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

Liabilities and Stockholders' Equity

October 31,

2015

January 31,

2015

Current liabilities:

  Accounts payable

$

749,303

$

2,298,851

  Accrued compensation

1,104,120

865,865

  Accrued other expenses

213,130

563,838

  Current portion of long-term debt

617,657

500,000

  Deferred revenues

8,201,299

9,289,076

  Current portion of capital lease obligation

772,781

781,961

        Total current liabilities

11,658,290

14,299,591

Non-current liabilities:

  Term loans

8,029,536

9,500,000

  Warrants liability

275,914

1,834,380

  Royalty liability

2,548,965

2,385,826

  Lease incentive liability

365,140

342,129

  Capital lease obligation

126,550

582,911

  Deferred revenues, less current portion

1,495,531

964,933

  Deferred income tax liability

220,005

229,579

        Total non-current liabilities

13,061,641

15,839,758

        Total liabilities

24,719,931

30,139,349

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 stockdiscount of $1,244,994 and $2,212,007, respectively

7,604,992

6,637,978

Stockholders' equity:

 Common stock, $.01 par value per share, 45,000,000 shares authorized, 18,783,540 and 18,553,389 shares issued and outstanding, respectively

187,835

185,534

  Additional paid in capital

79,541,734

78,390,424

  Accumulated deficit

(62,461,043)

(59,574,170)

        Total stockholders' equity

17,268,526

19,001,788

$

49,593,449

$

55,779,115

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended

Oct 31,

2015

2014

Operating activities:

Net loss

$

(2,886,873)

$

(7,201,814)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation

930,508

670,955

Amortization of capitalized software development costs

2,332,237

2,735,990

Amortization of intangible assets

1,011,690

1,051,025

Amortization of other deferred costs

142,764

172,804

Valuation adjustment for warrants liability

(1,558,466)

(2,325,824)

Share-based compensation expense

1,858,588

1,286,145

Other valuation adjustments

206,712

119,593

Loss on disposal of property and equipment

92,448

110,710

Loss on exit of operating lease

--

234,823

Gain on early extinguishment of lease liability

(33,059)

--

Provision for accounts receivable

11,488

252,803

Deferred tax expense

(9,574)

--

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

Accounts and contract receivables

3,569,941

3,360,780

Other assets

411,665

(314,501)

Accounts payable

(1,505,462)

410,395

Accrued expenses

(63,498)

(801,074)

Deferred revenues

(557,179)

(2,124,790)

  Net cash provided by (used in) operating activities

3,953,930

(2,361,980)

Investing activities:

Purchases of property and equipment

(243,283)

(1,862,855)

Capitalization of software development costs

--

(503,464)

Payment for acquisition, net of cash acquired

--

(6,058,225)

  Net cash used in investing activities

(243,283)

(8,424,544)

Financing activities:

Principal repayments on term loan

(1,352,807)

(910,710)

Principal repayments on note payable

--

(300,000)

Principal payments on capital lease obligation

(602,394)

(165,115)

Recovery (payment) of deferred financing costs

2,111

(256,212)

Proceeds from exercise of stock options and stock purchase plan

225,579

438,425

  Net cash used in financing activities

(1,727,511)

(1,193,612)

Increase (decrease) in cash and cash equivalents

1,983,136

(11,980,136)

Cash and cash equivalents at beginning of period

6,522,600

17,924,886

Cash and cash equivalents at end of period

$

8,505,736

$

5,944,750

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A

October 31, 2015

January 31, 2015

October 31, 2014

Streamline Health Software Licenses

$

21,533,000

$

20,888,000

$

21,103,000

Hardware and Third Party Software

200,000

244,000

126,000

Professional Services

5,951,000

7,485,000

8,095,000

Maintenance and Support

21,057,000

21,304,000

21,657,000

Software as a Service

18,738,000

22,574,000

24,928,000

    Total

$

67,479,000

$

72,495,000

$

75,909,000

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

 (Unaudited)

Table B

Three Months Ended

Oct 31, 2015

Value

% of Total Bookings

Streamline Health Software licenses

$

44,000

4%

Software as a service

248,000

22%

Maintenance and support

58,000

5%

Professional services

760,000

68%

Hardware & third party software

2,000

0%

Total bookings

$

1,112,000

100%

 

 

Reconciliation of Non-GAAP Financial Measures (Unaudited) Table C

 

Streamline Health Solutions, Inc. (the "Company") reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP").  The Company'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.  The Company 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.

Non-GAAP financial information supplements and is not intended to represent a measure of performance in accordance with disclosures required by GAAP. Non-GAAP financial measures are used internally to manage the business, such as in establishing the Company's annual operating budget. The Company's management uses non-GAAP financial measures 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 financial 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 below table.

Below is a table reconciling adjusted EBITDA to net loss, which is the most comparable GAAP measure.

In thousands, except per share data

Three Months Ended

Nine Months Ended

Oct 31, 2015

Oct 31, 2014

Oct 31, 2015

Oct 31, 2014

Net loss

$

(457)

$

(2,256)

$

(2,887)

$

(7,202)

    Interest expense

206

181

698

524

    Income tax expense

3

--

3

2

    Depreciation

305

310

931

671

    Amortization of capitalized software 

        development costs

774

905

2,332

2,736

    Amortization of intangible assets

337

346

1,012

1,051

    Amortization of other costs

41

50

90

121

EBITDA

1,209

(464)

2,179

(2,097)

   Share-based compensation expense

575

421

1,859

1,286

   Loss on disposal of property and equipment

58

27

92

111

   Loss on early extinguishment of debt

--

115

--

115

   Associate severances and other costs    

      relating to transactions or corporate 

      Restructuring

--

255

206

831

   Non-cash valuation adjustments to  

      assets and liabilities

(178)

(1,061)

(1,352)

(2,206)

   Transaction related professional

      fees, advisory fees and other

      internal direct costs

34

1

53

176

   Non-recurring operating expenses

--

428

--

1,491

   Other non-recurring income

--

--

(750)

--

Adjusted EBITDA

$

1,698

$

(278)

$

2,287

$

(293)

Adjusted EBITDA Margin(1)

24%

(4%)

10%

(1%)

Adjusted EBITDA per diluted share

Earnings (loss) per share – diluted

$

(0.04)

$

(0.14)

$

(0.21)

$

(0.44)

Adjusted EBITDA per adjusted diluted share (2)

$

0.08

$

(0.02)

$

0.11

$

(0.02)

Diluted weighted average shares

18,746,632

18,309,677

18,658,626

18,210,034

    Includable incremental shares — adjusted EBITDA (3)

2,234,344

--

2,493,843

--

Adjusted diluted shares

20,980,976

18,309,677

21,152,469

18,210,034

 

(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.