Streamline Health® Reports Third Quarter Fiscal Year 2012 Financial Results

52% Increase in Revenue; 49% Increase in Adjusted EBITDA*

Dec 13, 2012, 09:00 ET from Streamline Health Solutions, Inc.

ATLANTA, Dec. 13, 2012 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of enterprise content management, business analytics, computer assisted coding (CAC), and clinical documentation improvement (CDI) solutions for healthcare providers, today announced financial results for the third quarter of fiscal year 2012, which ended October 31, 2012.

Revenues for the three-month period ended October 31, 2012, were $6,534,000 as compared to $4,312,000 in the comparable period of fiscal 2011. The quarterly increase was primarily attributable to revenues provided by increases in recurring SaaS revenues.

"We had a very successful third quarter," said Robert E. Watson, President and Chief Executive Officer of Streamline Health. "Revenue and adjusted EBITDA continued to grow. Additionally, we closed the acquisition of Meta Health Technology which expanded our solutions portfolio significantly and we completed a very significant financing. It is important to note that we did not forecast these major accomplishments when we began this fiscal year. Consequently, the accounting treatment for these transactions has negatively impacted our GAAP EPS for this fiscal year. However, these strategic moves were major steps in positioning our company for further growth, enabling us to invest in world-class healthcare information technology solutions, and helping our clients improve their financial outcomes."

Highlights for the quarter included:

  • Recorded net loss of $1,165,000; of which $494,000 is attributable to non-recurring transaction related expenses; resulting in an adjusted non-GAAP net loss of $671,000
  • Adjusted EBITDA* for third quarter 2012 was $1.6 million, an increase of 49% over third quarter 2011;
  • Software as a Service (SaaS) revenues for the quarter increased 23% over the prior year comparable quarter, excluding $821,000 of incremental SaaS revenue from the acquired operations of Interpoint Partners;
  • New sales bookings for the quarter were $2.9 million;
  • Maintenance and SaaS contract renewals for the quarter were $2.5 million;
  • Backlog at the end of the quarter was $48.7 million.

New sales bookings for the second quarter were $2.9 million, primarily consisting of professional services and software as a service contracts. Maintenance and SaaS renewals or extensions were $2.5 million. For the comparable prior period in 2011, new sales bookings were $1.4 million and renewals or extensions were $1.6 million.

Backlog at October 31, 2012 was $48.7 million, compared with $32.2 million at July 31, 2012. The increase in the current backlog reflects significant new SaaS contract signings as well as current clients purchasing additional solutions.

Conference Call Information Streamline Health Solutions, Inc. will hold a conference call today at 11 a.m. Eastern. Interested parties can access the call by dialing 888-427-9419 and then entering the passcode 8521046. A live webcast will also be available by clicking this link: bit.ly/VrdPro

A replay of the conference call will be available from Thursday, December 13, 2012 at 2:00 p.m. EST to Tuesday, December 18, 2012 at 2:00 p.m. EST by dialing 888-203-1112 and entering passcode 8521046.

* Non-GAAP Financial Measures Streamline Health reports its financial results in accordance with generally accepted accounting principles in the United States ("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 these measures provide 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, and non-recurring transaction costs. A table illustrating this measure is included in this publication.

About Streamline Health Streamline Health Solutions, Inc. (NASDAQ: STRM) is a leading provider of SaaS-based healthcare information technology (HCIT) solutions for hospitals and physician groups with offices in Atlanta, Cincinnati and New York. The company's comprehensive suite of solutions includes: enterprise content management (ECM), business analytics, integrated workflow systems, clinical documentation improvement (CDI), and computer assisted coding (CAC). Across the revenue cycle, these solutions offer healthcare enterprises a flexible, customizable way to communicate between disparate departments and information systems to improve processes, boost productivity, and optimize clinical, administrative and financial performance. For more information, please visit our website at http://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 risks and uncertainties and are no guarantee of future performance. The forward looking statements contained herein 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. 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 products and pricing, product demand and market acceptance, new product development, key strategic alliances with vendors that resell the Company's products, the ability of the Company to control costs, availability of products obtained 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 Accountings Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry, 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.

Company Contact:

Ashley Moore

Director, Marketing

(404)-446-2057

ashley.moore@streamlinehealth.net

Investor Contacts:

Randy Salisbury

Investor Relations

(404)-229-4242

randy.salisbury@streamlinehealth.net

BPC Financial Marketing

John Baldissera

800-368-1217

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three and Nine Months Ended October 31, (Unaudited)

Three Months

Nine Months

2012

2011

2012

2011

Revenues:

Systems sales

$

290,294

$

232,395

$

719,495

$

526,597

Professional services

1,089,814

833,592

3,153,672

2,708,824

Maintenance and support

3,148,442

2,279,886

7,797,263

6,558,484

Software as a service

2,005,813

966,218

5,358,120

2,804,141

Total revenues

6,534,363

4,312,091

17,028,550

12,598,046

Operating expenses:

Cost of systems sales

717,901

583,388

1,936,761

1,751,890

Cost of professional services

854,997

572,056

1,910,951

1,923,576

Cost of maintenance and support

918,750

513,868

2,349,745

1,651,884

Cost of software as a service

550,875

480,368

1,849,962

1,334,659

Selling, general and administrative

2,926,830

1,494,891

6,800,794

4,742,084

Product research and development

866,659

303,973

1,833,865

1,063,903

Total operating expenses

6,836,012

3,948,544

16,682,078

12,467,996

Operating income (loss)

(301,649)

363,547

346,472

130,050

Other income (expense):

Interest expense

(895,142)

(25,896)

(1,494,161)

(67,529)

Miscellaneous income (expenses)

43,549

(36,885)

55,805

(42,155)

Earnings (loss) before income taxes

(1,153,242)

300,766

(1,091,884)

20,366

Income tax expense

(11,733)

(5,000)

(44,733)

(12,315)

Net earnings (loss)

$

(1,164,975)

$

295,766

$

(1,136,617)

$

8,051

Less: deemed dividends on Preferred Shares

(139,133)

(139,133)

Net earnings (loss) attributable to common shareholders

$

(1,304,108)

$

(1,275,750)

Basic net earnings (loss) per common share

$

(0.11)

$

0.03

$

(0.11)

$

0.00

Number of shares used in basic per common share computation

12,393,314

9,943,567

11,346,415

9,823,937

Diluted net earnings (loss) per common share

$

(0.11)

$

0.03

$

(0.11)

$

0.00

Number of shares used in diluted per common share computation

12,393,314

9,958,947

11,346,415

9,837,750

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

Assets

(Unaudited)

October 31, 2012

January 31, 2012

Current assets:

Cash and cash equivalents

$

10,528,695

$

2,243,054

Accounts receivable, net of allowance for doubtful

accounts of $134,000 and $100,000, respectively

3,389,738

4,484,605

Contract receivables

648,736

430,370

Prepaid hardware and third party software for future delivery

22,777

38,193

Prepaid client maintenance contracts

1,038,035

788,917

Prepaid and other assets

555,310

256,104

Deferred income taxes

326,618

167,000

Total current assets

16,509,909

8,408,243

Non-current assets:

Property and equipment:

Computer equipment

3,418,500

2,892,885

Computer software

2,196,236

2,131,730

Office furniture, fixtures and equipment

818,231

756,375

Leasehold improvements

693,890

667,000

7,126,857

6,447,990

Accumulated depreciation and amortization

(5,778,675)

(5,232,321)

Property and equipment, net

1,348,182

1,215,669

Contract receivables, less current portion

142,021

221,596

Capitalized software development costs, net of accumulated

amortization of $16,733,274 and $14,805,236, respectively

13,119,354

9,830,175

Intangible assets, net

8,517,084

417,666

Deferred financing cost, net

1,211,912

145,857

Goodwill

12,038,226

4,060,504

Other, including deferred income taxes of $711,000 and $711,000, respectively

1,077,857

841,348

Total non-current assets

37,454,636

16,732,815

$

53,964,545

$

25,141,058

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

Liabilities and Stockholders' Equity

(Unaudited) October 31, 2012

January 31, 2012

Current liabilities:

Accounts payable

$

832,657

$

879,027

Accrued compensation

1,603,355

887,130

Accrued other expenses

1,373,307

479,526

Deferred revenues

6,262,960

6,496,938

Contingent consideration for earn-out

1,319,559

-

Current portion of long-term debt

1,250,000

-

Total current liabilities

12,641,838

8,742,621

Non-current liabilities:

Term loans

12,750,000

4,120,000

Convertible note payable, net of unamortized discount of $1,822,255

3,877,322

3,000,000

Warrants liability

4,138,783

-

Lease incentive liability

101,453

47,193

Contingent consideration for earn-out, less current portion

-

1,232,720

Deferred income tax liability

4,602,230

-

Total non-current liabilities

25,469,788

8,399,913

Total liabilities

38,111,626

17,142,534

Series A 0% Convertible redeemable preferred stock, $.01 par

value per share, $7,250,355 redemption value, 5,000,000

shares authorized, 2,416,785 shares issued

2,979,170

-

Stockholders' equity:

Common stock, $.01 par value per share, 25,000,000 shares

authorized, 12,582,598 and 10,433,716 shares issued and outstanding, respectively

125,826

104,338

Additional paid in capital

44,351,334

38,360,980

Accumulated deficit

(31,603,411)

(30,466,794)

Total stockholders' equity

12,873,749

7,998,524

$

53,964,545

$

25,141,058

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended October 31, (Unaudited)

2012

2011

Operating activities:

Net earnings (loss)

$

(1,136,617)

$

8,051

Adjustments to reconcile net earnings (loss) to net cash

provided by operating activities, net of effect of acquisition:

Depreciation and amortization

2,847,665

2,008,432

Loss on disposal of equipment

-

26,667

Stock-based compensation expense

645,407

529,104

Provision for accounts receivable

-

40,000

Amortization of debt discount

111,584

-

Fair value adjustment for contingent earnout

86,839

-

Net loss from conversion of convertible notes

56,682

-

Change in assets and liabilities:

Accounts and contract receivables

(1,351,935)

419,517

Other assets

(482,785)

(89,066)

Accounts payable

(137,107)

161,609

Accrued expenses

947,630

(574,012)

Deferred revenues

881,677

(1,904,641)

Net cash provided by operating activities

2,469,040

625,661

Investing activities:

Purchases of property and equipment

(546,061)

(245,262)

Capitalization of software development costs

(1,571,420)

(1,970,000)

Payment for acquisition, net of cash acquired

(12,161,634)

-

Net cash used in investing activities

(14,279,115)

(2,215,262)

Financing activities:

Net change in borrowings

9,880,000

550,000

Payment of deferred financing costs

(1,246,107)

-

Proceeds from exercise of stock options and stock purchase plan

161,823

92,711

Proceeds from private placement

12,000,000

-

Payment of success fees

(700,000)

-

Payments on capital lease obligation

-

(156,621)

Net cash provided by financing activities

20,095,716

486,090

Increase (decrease) in cash and cash equivalents

8,285,641

(1,103,511)

Cash and cash equivalents at beginning of period

2,243,054

1,403,949

Cash and cash equivalents at end of period

$

10,528,695

$

300,438

Supplemental cash flow disclosures:

Interest paid

$

1,181,929

$

61,532

Income taxes paid

$

78,041

$

19,136

Supplemental Disclosure of Non-Cash Financing and Investing Activities:

- In June 2012, the $3,000,000 convertible note and accrued interest was converted to 1,529,729 common shares at $2.00 per share.

- In August 2012, we issued 393,086 shares of our common stock at a price of $4.07, as part of the Meta acquisition purchase price.

- In October 2012, we issued approximately 200,000 common stock warrants, convertible into common stock shares at $4.06 per share.

- During the third quarter of 2012, we recorded approximately $139,000 of deemed dividends from preferred shares discount accretion.

STREAMLINE HEALTH SOLUTIONS, INC. Backlog (Unaudited) Table A

Backlog

October 31, 2012

January 31, 2012

October 31, 2011

Streamline Health Software Licenses

$

3,650,000

$

181,000

$

67,000

Hardware and Third Party Software

84,000

194,000

190,000

Professional Services

4,348,000

5,945,000

4,946,000

Software as a service

19,117,000

10,542,000

6,237,000

Maintenance and support

21,535,000

10,504,000

5,374,000

Total

$

48,734,000

$

27,366,000

$

16,814,000

STREAMLINE HEALTH SOLUTIONS, INC. Bookings (Unaudited) Table B

New bookings (1)

Three Months Ended

October 31, 2012

Value

% of Total Bookings

Streamline Health Software licenses

$

-

-%

Software as a service

2,200,000

76%

Maintenance and support

-

-%

Professional services

684,000

23%

Hardware & third party software

20,000

1%

Total bookings

$

2,904,000

100%

Nine Months Ended

October 31, 2012

Value

% of Total Bookings

Streamline Health Software licenses

$

50,000

-%

Software as a service

9,757,000

86%

Maintenance and support

64,000

1%

Professional services

1,160,000

10%

Hardware & third party software

368,000

3%

Total bookings

$

11,399,000

100%

(1) Bookings are the aggregate of signed contracts and/or completed customer purchase orders approved and accepted by the Company as binding commitments to purchase its products and/or services. New bookings do not include maintenance services as these tend to be recurring in nature on an annual or more frequent basis.

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.

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

Adjusted EBITDA Reconciliation

Three Months Ended,

Nine Months Ended,

October 31, 2012

October 31, 2011

October 31, 2012

October 31,

2011

Net earnings (loss)

$

(1,165)

$

296

$

(1,137)

$

8

Interest expense

895

26

1,494

68

Income tax expense

12

5

45

12

Depreciation and other amortization

184

163

548

553

Amortization of capitalized software development costs

708

454

1,930

1,455

Amortization of intangible assets

229

-

254

-

EBITDA

863

944

3,134

2,096

Stock-based compensation expense

245

133

645

529

Transaction expenses

494

-

1,043

-

Adjusted EBITDA

$

1,602

$

1,077

$

4,822

$

2,625

Adjusted EBITDA per diluted share

Earnings (loss) per share - diluted

$

(0.11)

$

0.03

$

(0.11)

$

0.00

Adjusted EBITDA per adjusted diluted share

$

0.10

$

0.11

$

0.33

$

0.27

Diluted weighted average shares

12,393,314

9,958,947

11,346,415

9,837,750

Includable incremental shares – adjusted EBITDA (1)

3,683,574

-

3,117,999

-

Adjusted diluted shares

16,076,888

9,958,947

14,464,414

9,837,750

(1) Includes preferred shares on an as-if-converted basis and common stock warrants and options under the treasury stock method.

SOURCE Streamline Health Solutions, Inc.



RELATED LINKS

http://www.streamlinehealth.net