Streamline Health Solutions, Inc. Reports $6.7 Million Revenue; $0.6 Million Adjusted EBITDA in Q3 2013

Company Continues Transition to Recurring Revenue Business Model

Dec 12, 2013, 16:00 ET from Streamline Health Solutions, Inc.

ATLANTA, Dec. 12, 2013 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of knowledge management solutions for healthcare providers, today announced financial results for the third quarter of fiscal year 2013, which ended October 31, 2013.

Revenues for the three-month period ended October 31, 2013 were $6.7 million, as compared to $6.5 million in the third quarter of fiscal 2012. Recurring revenue as a percentage of total revenue improved sequentially in the quarter to 83% from 65%. New contract bookings increased sequentially to $6.5 million dollars in the quarter, from $5.3 million last quarter.

Adjusted EBITDA for the third quarter was $0.6 million, as compared to $1.6 million in the third quarter of fiscal 2012.  The Company incurred additional expense in the quarter primarily in three areas: increased headcount in sales, transition costs and additional headcount in implementation services, and expenses associated with Sarbanes-Oxley compliance. Cash on the balance sheet was $4.3 million, net of the $3.0 million outlay to license the previously announced Clinical Analytics platform from Montefiore Medical Center.  Post-quarter end, the Company successfully completed a follow-on stock offering on November 27, 2013, selling 3.45 million shares of common stock at $6.50 per share.  Net proceeds to the Company totaled $20,750,000.

"Our Company continues to emphasize to our clients and prospects the benefits of SaaS contracts.  During the quarter our sales organization was successful in shifting a large license transaction in its quarterly forecast to a SaaS-model sales opportunity, which is expected to close by the end of our fiscal year," said Robert E. Watson, President and Chief Executive Officer of Streamline Health.

"In addition, during the quarter, we exclusively licensed clinical analytics and population management capabilities from Montefiore Medical Center that will enable us to deliver clinical knowledge and predictive analytics to care providers prior to the act of providing care, which we believe will lead to better quality outcomes, lowered re-admission rates and improvement in their overall clinical and operational efficiency,"

Highlights for the quarter included:

  • Revenue for the third quarter 2013 was $6.7 million;
  • Software as a Service (SaaS) revenues for third quarter 2013 were $1.9 million;
  • Maintenance and support revenues for the third quarter 2013 were $3.5 million;
  • New sales bookings for the quarter were $6.5 million; and
  • Backlog at the end of the quarter was $55.0 million.

Operating expenses for the three-month period ending October 31, 2013 were $7.9 million, compared to $6.8 million in the comparable prior year period, representing an increase of $1.1 million, or 15%, over the prior year comparable period due to investment in additional sales personnel, some duplicative headcount in operations as the Company transitioned its operations function from Cincinnati to Atlanta, and incremental Sarbanes-Oxley compliance costs.

Conference Call Information

The Company will conduct a conference call and webcast to review the results on Thursday, December 12, 2013 at 5:00 p.m. EST. Interested parties can access the call by dialing 888-523-1225 and then entering the passcode 1173639. A live webcast will also be available by clicking this link: http://bit.ly/1avUgzZ

A replay of the conference call will be available from Thursday, December 12, 2013 at 8:00 p.m. EST to Tuesday, December 17, 2013 at 8:00 PM EST by dialing 888-203-1112 and entering passcode 1173639.

* 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 these measures provide useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "non-GAAP adjusted net earnings (loss)" as GAAP net earnings (loss) plus losses on conversion of convertible notes, transaction-related expenses, and non-recurring operational costs.

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, and professional and advisory fees, and internal direct costs incurred to complete transactions.

About Streamline Health Streamline Health Solutions, Inc. (NASDAQ: STRM) is a leading provider of SaaS-based healthcare information technology (HCIT) solutions for healthcare providers. 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). This unique combination of solutions is designed to help healthcare organizations manage the financial and operational challenges they face in the ever-changing world of healthcare today and in the future. 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 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 solutions and pricing, solution demand and market acceptance, new solution development, key strategic alliances with vendors 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 Accountings 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.

Company Contact:

Ashley Moore

Director, Marketing

(404)-446-2057

ashley.moore@streamlinehealth.net

Investor Contact:

Randy Salisbury

Investor Relations

(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,

2013

2012

2013

2012

Revenues:

  Systems sales

$

347,532

$

290,294

$

2,905,846

$

719,495

  Professional services

966,962

1,089,814

2,925,553

3,153,672

  Maintenance and support

3,523,551

3,148,442

10,524,595

7,797,263

  Software as a service

1,893,489

2,005,813

5,622,237

5,358,120

        Total revenues

6,731,534

6,534,363

21,978,231

17,028,550

Operating expenses:

  Cost of systems sales

611,887

717,901

1,911,609

1,936,761

  Cost of services, maintenance and support

2,002,446

1,773,747

6,023,717

4,260,696

  Cost of software as a service

520,062

550,875

1,613,217

1,849,962

  Selling, general and administrative

3,373,230

2,926,830

10,362,246

6,800,794

  Research and development

1,370,178

866,659

3,627,336

1,833,865

        Total operating expenses

7,877,803

6,836,012

23,538,125

16,682,078

Operating income (loss)

(1,146,269)

(301,649)

(1,559,894)

346,472

Other income (expense):

  Interest expense

(580,390)

(895,142)

(1,734,763)

(1,494,161)

  Miscellaneous income (expenses)

(4,510,439)

43,549

(6,316,867)

55,805

Loss before income taxes

(6,237,098)

(1,153,242)

(9,611,524)

(1,091,884)

  Income tax benefit (expense)

4,680

3,552,879

(158,944)

3,519,879

Net earnings (loss)

$

(6,232,418)

$

2,399,637

$

(9,770,468)

$

2,427,995

Less: deemed dividends on Series A Preferred Shares

(374,162)

(139,133)

(731,309)

(139,133)

Net earnings (loss) attributable to common shareholders

$

(6,606,580)

2,260,504

$

(10,501,777)

2,288,862

Basic net earnings (loss) per common share

$

(0.50)

$

0.18

$

(0.82)

$

0.20

Number of shares used in basic per common share computation

13,257,943

12,393,352

12,884,711

11,346,428

Diluted net earnings (loss) per common share

$

(0.50)

$

0.15

$

(0.82)

$

0.18

Number of shares used in diluted per common share computation

13,257,943

15,365,238

12,884,711

12,417,256

 

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

Assets

October 31,

2013

January 31,

2013

Current assets:

  Cash and cash equivalents

$

4,263,991

$

7,500,256

  Accounts receivable, net of allowance for doubtful

    accounts of $109,000 and $134,000, respectively

6,885,405

8,685,017

  Contract receivables

1,387,147

1,481,819

  Prepaid hardware and third party software for

    future delivery

25,463

22,777

  Prepaid client maintenance contracts

1,230,073

1,080,330

  Other prepaid assets

963,771

997,024

  Other current assets

76,544

110,555

        Total current assets

14,832,394

19,877,778

Non-current assets:

Property and equipment:

  Computer equipment

3,496,270

3,420,452

  Computer software

2,205,941

2,196,236

  Office furniture, fixtures and equipment

886,664

843,274

  Leasehold improvements

697,570

697,570

7,286,445

7,157,532

  Accumulated depreciation and amortization

(6,446,291)

(5,958,727)

Property and equipment, net

840,154

1,198,805

 Contract receivables, less current portion

87,105

126,626

 Capitalized software development costs, net of

   accumulated amortization of $19,551,000 and

   $17,465,000, respectively

11,777,539

12,816,486

Intangible assets, net

12,044,903

8,188,131

Deferred financing costs, net

243,622

541,740

Goodwill

12,344,199

12,133,304

Other

543,087

383,708

       Total non-current assets

37,880,609

35,388,800

$

52,713,003

$

55,266,578

 

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

Liabilities and Stockholders' Equity

October 31,

2013

January 31,

2013

Current liabilities:

  Accounts payable

$

1,601,279

$

1,495,913

  Accrued compensation

1,301,613

2,088,850

  Accrued other expenses

1,838,952

1,325,039

  Deferred revenues

7,126,543

9,810,442

  Contingent consideration for earn-out, current

4,560,000

1,319,559

  Current portion of long-term debt

12,750,000

1,250,000

  Current portion of deferred tax liability

-

35,619

        Total current liabilities

29,178,387

17,325,422

Non-current liabilities:

  Term loans, less current portion

-

12,437,501

  Contingent consideration for earn-out, non-current

900,000

-

  Contingent consideration

2,225,000

-

  Warrants liability

6,393,435

3,649,349

  Lease incentive liability, less current portion

81,228

99,579

  Deferred income tax liability, less current portion

792,506

529,709

        Total non-current liabilities

10,392,169

16,716,138

        Total liabilities

39,570,556

34,041,560

Series A 0% Convertible Redeemable Preferred stock

8,497,025

7,765,716

Stockholders' equity:

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

    authorized, 13,922,834 and 12,643,620 shares issued and   

    outstanding, respectively

139,228

126,436

  Convertible redeemable preferred stock, $.01 par value per

    share, 1,000,000 shares authorized, no shares issued

-

-

  Additional paid in capital

50,122,185

49,178,389

  Accumulated deficit

(45,615,991)

(35,845,523)

        Total stockholders' equity

4,645,422

13,459,302

$

52,713,003

$

55,266,578

 

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

Nine Months Ended

October 31,

2013

2012

Operating activities:

  Net (loss) earnings

$

(9,770,468)

$

2,427,995

  Adjustments to reconcile net (loss) earnings to net cash

(used in) provided by operating activities:

Depreciation and Amortization

3,820,098

2,847,665

Valuation adjustment for warrants liability

2,082,789

-

Deferred tax expense (benefit)

150,634

(3,564,612)

Amortization of debt discount

-

111,584

Valuation adjustment for contingent earn-out

4,140,441

86,839

Share-based compensation expense

1,203,919

645,407

Net loss from conversion of convertible note

-

56,682

  Changes in assets and liabilities, net of assets acquired:

Accounts and contract receivables

2,385,390

(1,351,935)

Other assets

(627,883)

(482,785)

Accounts payable

87,014

(137,107)

Accrued expenses

(150,206)

947,630

Deferred revenues

(2,683,899)

881,677

  Net cash provided by operating activities

637,829

2,469,040

Investing activities:

Purchases of property and equipment

(106,392)

(546,061)

Capitalization of software development costs

(1,047,938)

(1,571,420)

Payment for acquisition

(2,875,548)

(12,161,634)

  Net cash used in investing activities

(4,029,878)

(14,279,115)

Financing activities:

Net change in borrowings

-

9,880,000

Principal repayments on term loans

(937,501)

-

Payment of deferred financing costs

-

(1,246,107)

Proceeds from exercise of stock options and stock purchase plan

1,093,285

161,823

Proceeds from private placement

-

12,000,000

Payment of success fee

-

(700,000)

  Net cash provided by financing activities

155,784

20,095,716

(Decrease) increase in cash and cash equivalents

(3,236,265)

8,285,641

Cash and cash equivalents at beginning of period

7,500,256

2,243,054

Cash and cash equivalents at end of period

$

4,263,991

$

10,528,695

 

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

October 31,

2013

January 31,

2013

October 31,

2012

Streamline Health Software

Licenses

$

2,529,000

$

3,416,000

$

3,650,000

Hardware and Third Party

Software

20,000

100,000

84,000

Professional Services

7,141,000

4,527,000

4,348,000

Software as a Service

17,087,000

20,439,000

19,117,000

Maintenance and Support

28,234,000

22,504,000

21,535,000

    Total

$

55,011,000

$

50,986,000

$

48,734,000

 

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

Three Months Ended

October 31, 2013

Value

% of Total

Bookings

Streamline Health Software

licenses

$

0

0%

Software as a service

1,856,000

28%

Maintenance and support

4,202,000

64%

Professional services

465,000

7%

Hardware & third party software

0

0%

    Total bookings

$

6,523,000

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, 2013

October 31, 2012

October 31, 2013

October 31, 2012

Net earnings (loss)

$

(6,232)

2,400

(9,770)

2,428

    Interest expense

580

895

1,735

1,494

    Income tax expense (benefit)

(5)

(3,553)

159

(3,520)

    Depreciation

152

184

490

548

    Amortization of capitalized software  development costs

691

708

2,087

1,930

    Amortization of intangible assets

314

229

943

254

    Amortization of other costs

23

-

50

-

EBITDA

(4,477)

863

(4,306)

3,134

    Share-based compensation expense

378

245

1,204

645

    Transaction related professional fees, advisory fees and

      other internal direct costs

138

494

363

1,043

    Associate severances and other costs relating to

      transactions or corporate restructuring

-

-

383

-

    Other non-recurring operating expenses

4,514

-

6,276

-

Adjusted EBITDA

$

553

1,602

3,920

4,822

 

SOURCE Streamline Health Solutions, Inc.



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