Streamline Health® Reports Second Quarter 2018 Revenues Of $5.3 Million; ($1.5 Million) Net Loss; Adjusted EBITDA Of $0.4 Million

Published: Sep 11, 2018

 

ATLANTA, /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 2018, which ended July 31, 2018.

Revenues for the three-month period ended July 31, 2018 decreased approximately 11% to $5.3 million over the July 31, 2017 quarter revenue of $5.9 million. Recurring revenue comprised 83% of total revenue in the quarter. Revenues for the first six months of fiscal year 2018 were $11.5 million, down approximately 3% as compared to $11.8 million in the first half of fiscal 2017.

Net loss for the second quarter was $(1.5 million) as compared to a ($1.1 million) net loss in the same period a year ago. Net loss for the first six months of fiscal 2018 was ($2.1 million) as compared to ($3.1 million) net loss for the same period in 2017.

Adjusted EBITDA for the second quarter 2018 was $0.4 million, down from $0.5 million in the second quarter of 2017. Adjusted EBITDA for the first six months of 2018 was $1.0 million, as compared to $45,000 in the first half of fiscal 2017.

"We continued to make meaningful operational progress in the second quarter. Our bookings included our first Abstracting client through our reseller agreement with Allscripts, and two new eValuator clients - one of which is a leading educational facility on the west coast, which uses Epic as their EMR provider," stated David Sides, President and Chief Executive Officer, Streamline Health. "We continue to drive incremental operational efficiencies and we are deploying these savings to fund future growth and development. In the second quarter we expanded the capabilities of eValuator from the original Inpatient version to Outpatient; Profee - for physician practices, and Value-based Care (by adding Hospital Acquired Conditions, HACs, and Patient Safety Indicators, PSIs). We believe we have a spectrum of middle revenue cycle solutions for healthcare providers that no other competitor in the marketplace can match.

In addition, during the quarter we brought Tom Gibson on to our team at Streamline Health. We are very excited to have Tom on the team given his extensive financial and strategic experience in the industry."

Highlights for the second quarter ended July 31, 2018 included:

  • Revenue for the second quarter 2018 was $5.3 million;
  • Net loss for the second quarter 2018 was $(1.5 million);
  • Adjusted EBITDA for the second quarter 2018 was $0.4 million;
  • New sales bookings for the quarter were $1.9 million; and
  • Backlog at the end of the quarter was $23.4 million.

Conference Call Information
The Company will conduct a conference call to review the results on Wednesday, September 12, 2018 at 9:00 AM ET. Interested parties can access the call by joining the live webcast: click here to register. You can also join by phone by dialing 800-263-0877 and then entering passcode 1552127.

A replay of the conference call will be available from Wednesday, September 12, 2018 at 12:00 PM ET to Monday, September 17, 2018 at 12:00 PM ET by dialing 888-203-1112 and entering passcode 1552127.

*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, and professional and advisory fees. A table reconciling this non-GAAP measure to net loss 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 - producing 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 future growth, new sales bookings, backlog, results of investments in sales and marketing, competitive strengths, 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.


                                                                   
       CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                           
            (Unaudited)






                                                                                                                   Three Months Ended                                       Six Months Ended

                                                                                                 
            
              July 31,                             
        
            July 31,



                                                                                                                2018                                2017                            2018                     2017




     
              Revenues:



       Systems sales                                                                                $
            385,875                   $
            328,692             $
            1,517,549        $
            707,415



       Professional services                                                                                271,121                             571,812                         509,435                  991,847



       Audit Services                                                                                       247,843                             294,441                         607,556                  639,460



       Maintenance and support                                                                            3,216,251                           3,278,562                       6,525,355                6,633,334



       Software as a service                                                                              1,147,642                           1,442,652                       2,372,010                2,867,784



             Total revenues                                                                               5,268,732                           5,916,159                      11,531,905               11,839,840






     
              Operating expenses:



       Cost of systems sales                                                                                289,890                             596,799                         539,874                1,162,850



       Cost of professional services                                                                        697,467                             543,206                       1,403,697                1,258,421



       Cost of audit services                                                                               300,081                             391,439                         694,060                  832,078



       Cost of maintenance and support                                                                      566,248                             768,140                       1,214,587                1,574,662



       Cost of software as a service                                                                        281,872                             285,832                         598,259                  625,208



       Selling, general and administrative                                                                2,518,893                           2,790,171                       5,767,950                6,163,699



       Research and development                                                                           1,212,845                           1,495,972                       2,275,164                3,052,910



       Loss on exit of operating lease                                                806,163                                                              806,163



             Total operating expenses                                                                     6,673,459                           6,871,559                      13,299,754               14,669,828




     Operating loss                                                                                     (1,404,727)                          (955,400)                    (1,767,849)             (2,829,988)



     Other expense:



       Interest expense                                                                                   (110,385)                          (120,377)                      (226,603)               (247,645)



       Miscellaneous expense                                                                                (5,383)                           (19,681)                       (93,028)                (57,725)



     Loss before income taxes                                                                           (1,520,495)                        (1,095,458)                    (2,087,480)             (3,135,358)



       Income tax benefit                                                                                   (1,713)                            (2,607)                        (3,427)                 (5,215)




     Net Loss                                                                                   $
            (1,522,208)                $
          (1,098,065)           $
           (2,090,907)     $
          (3,140,573)




     Net loss per common share - basic and diluted                                                   $
            (0.08)                   $
            (0.06)               $
            (0.10)        $
            (0.16)




     Weighted average number of common shares - basic and diluted                                        19,971,090                          19,834,859                      19,978,757               19,765,125




 

                                                
              STREAMLINE HEALTH SOLUTIONS, INC.


                                                   
              CONSOLIDATED BALANCE SHEETS


                                                           
              (Unaudited)




                                                             
              Assets




                                                                      July 31,                          January 31,



                                                                                                 2018                           2018




              Current assets:


               Cash and cash
                equivalents                                                       $
              3,246,395              $
          4,619,834


               Accounts receivable, net of
                allowance for doubtful                                                      2,238,088                      3,001,170
     accounts of $267,221 and
      $349,058, respectively


               Contract receivables                                                           826,277                        223,791


               Prepaid hardware and third-
                party software for future
                delivery                                                                                      5,858


               Prepaid client maintenance
                contracts                                                                     560,004                        506,911


               Other prepaid assets                                                           828,257                        742,232


               Other current assets                                                           367,326                        546,885



               Total current assets                                                         8,066,347                      9,646,681






              Non-current assets:


                 Property and equipment:


                 Computer equipment                                                         2,876,707                      2,852,776



                Computer software                                                            704,562                        730,950


                 Office furniture, fixtures and
                  equipment                                                                   662,157                        683,443


                 Leasehold improvements                                                       582,271                        729,348



                                                                                            4,825,697                      4,996,517


                 Accumulated depreciation and
                  amortization                                                            (3,956,221)                   (3,834,153)



                 Property and equipment, net                                                  869,476                      1,162,364




               Contract Receivables, less
                current portion                                                               683,031


               Capitalized software
                development costs, net of                                                   5,190,076                      4,307,351
     accumulated amortization of
      $19,304,635 and
                                                  $18,658,183, respectively


                Intangible assets, net                                                      5,365,257                      5,835,151



               Goodwill                                                                   15,537,281                     15,537,281


                Other non-current assets                                                      378,672                        642,226



                Total non-current assets                                                   28,023,793                     27,484,373



                                                                                 $
              36,090,140             $
          37,131,054


 

                                     
            STREAMLINE HEALTH SOLUTIONS, INC.


                                        
            CONSOLIDATED BALANCE SHEETS


                                              
              (Unaudited)




                                    
            Liabilities and Stockholders' Equity




                                   
            
                July 31,                          January 31,



                                                                                    2018                              2018




     Current liabilities:


        Accounts payable                                               $
              789,239                $
             421,425


        Accrued compensation                                                     883,386                           342,351


        Accrued other expenses                                                 1,402,972                           609,582


        Current portion of long-term
         debt                                                                    596,984                           596,984



       Deferred revenues                                                      8,273,251                         9,481,807



       Other                                                                     37,135


              Total current liabilities                                       11,982,967                        11,452,149





      Non-current liabilities:


      Term loan, net of deferred
       financing cost of $92,808 and
       $128,275, respectively                                                  3,638,328                         3,901,353



       Royalty liability                                                        874,437                         2,469,193


        Deferred revenues, less current
         portion                                                                 882,672                           332,645



       Other Liabilities                                                        316,514                           274,128


              Total non-current liabilities                                    5,711,951                         6,977,319



              Total liabilities                                               17,694,918                        18,429,468





      Series A 0% Convertible
       Redeemable Preferred Stock,
       $.01 par value per share,
       $8,686,392 and $8,849,985
       redemption value, 4,000,000
       shares authorized, 2,895,464
       and 2,949,995 issued and
       outstanding, respectively                                               8,686,392                         8,849,985




      Stockholders' equity:


      Common stock, $.01 par value
       per share, 45,000,000 shares
       authorized; 20,039,893 and
       20,005,977 shares issued and
       outstanding, respectively                                                 200,399                           200,060


        Additional paid in capital                                            82,284,445                        81,776,606


        Accumulated deficit                                                 (72,776,024)                     (72,125,065)



              Total stockholders' equity                                       9,708,830                         9,851,601



                                                                    $
              36,090,140             $
             37,131,054


 

                                                 
       STREAMLINE HEALTH SOLUTIONS, INC.

                                               
       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                     
              (Unaudited)




                                                                                                       Six Months Ended,


                                                                       July 31,                                          July 31,

                                                                           2018                                               2017




            Operating activities:



              Net loss                                                           $
           (2,090,907)                             $
          (3,140,573)


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



                Depreciation                                                                324,640                                          403,090


                 Amortization of capitalized
                  software development costs                                                 646,452                                        1,143,624


                 Amortization of intangible assets                                           469,894                                          666,114


                 Amortization of other deferred
                  costs                                                                      228,497                                          161,064


                 Valuation adjustment for warrants
                  liability                                                                                              (45,831)


                 Other valuation adjustments                                                  56,211                                           86,192


                 Loss on exit of operating lease                                             806,163


                 Gain on disposal of fixed assets                                            (1,555)                                           (720)


                 Share-based compensation expense                                            366,906                                          555,229


                 Provision for accounts receivable                                          (64,154)                                         166,170


               Changes in assets and liabilities,
                net of assets acquired:


             Accounts and contract receivables                                               292,442                                           99,068



            Other assets                                                                    105,148                                        (333,401)



            Accounts payable                                                                367,814                                          449,929



            Accrued expenses                                                                587,226                                        (352,132)



            Deferred revenues                                                           (1,618,004)                                       (822,867)


               Net cash provided by (used in)
                operating activities                                                         476,773                                        (965,026)






            Investing activities:


             Purchases of property and
              equipment                                                                     (14,457)                                         (9,812)


             Proceeds from sales of property
              and equipment                                                                   14,225


             Capitalization of software
              development costs                                                          (1,529,177)                                       (844,448)



               Net cash used in investing
                activities                                                               (1,529,409)                                       (854,260)






            Financing activities:


                 Principal repayments on term loan                                         (298,492)                                       (813,197)


                 Principal payments on capital
                  lease obligations                                                                                      (68,149)


             Payments related to settlement of
              employee shared-based awards                                                  (57,699)                                        (37,002)


             Proceeds from exercise of stock
              options and stock purchase plan                                                 35,388


               Net cash used in financing
                activities                                                                 (320,803)                                       (918,348)



             Net decrease in cash and cash
              equivalents                                                                (1,373,439)                                     (2,737,634)


             Cash and cash equivalents at
              beginning of year                                                            4,619,834                                        5,654,093



             Cash and cash
              equivalents at end of
              year                                                                  $
           3,246,395                                $
          2,916,459




 

 

                                        
           STREAMLINE HEALTH SOLUTIONS, INC.


                                                  
              Backlog


                                                
              (Unaudited)


                                             
            
                Table A




                               July 31,                                           January 31,                    July 31,
                                   2018                                                   2018                         2017



      Streamline Health
       Software
       Licenses                            $
            53,000                                      $
         984, 000            $
       11,458,000


      Hardware and Third Party
       Software                                                                                                    50,000


      Professional Services                     1,867,000                                            2,048,000                   3,517,000



     Audit Services                            1,019,000                                            1,293,000                   1,454,000


      Maintenance and Support                  11,489,000                                           15,420,000                  16,583,000


      Software as a Service                     8,936,000                                           13,048,000                  13,300,000



          Total                         $
           23,364,000                                    $
         32,793,000             $
       46,362,000


 

                              
        STREAMLINE HEALTH SOLUTIONS, INC.


                                   
              New Bookings


                                   
               (Unaudited)


                                 
            
                Table B




                                                                               Three Months Ended


                                                                                  July 31, 2018



                               
        
                Value                                            % of
                                                                                         Total
                                                                                       Bookings



      Streamline Health
       Software
       licenses                                            $
              308,000                           16%


      Software as a service                                          756,000                           40%


      Maintenance and support                                        374,000                           20%


      Professional services                                          433,000                           23%



     Audit Services                                                  33,000                            2%


      Total bookings                                     $
              1,904,000                          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. Streamline
                Health's management in its
                operating and financial decision-
                making uses non-GAAP financial
                measures 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, and professional and
                advisory fees.

 


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




                                                                                                           
            (Unaudited)





     
                Adjusted EBITDA Reconciliation                                                                                      Three Months Ended,                                     Six Months Ended,


                                                                                                     July 31, 2018                                      July 31, 2017                      July 31, 2018                        July 31, 2017




     Net loss                                                                                                     $
              (1,522)                                $
              (1,098)                  $
             (2,091)                 $
            (3,141)



         Interest expense                                                                                                       110                                                 120                                  227                                248



         Income tax benefit                                                                                                       2                                                   3                                    3                                  5



         Depreciation                                                                                                           153                                                 200                                  325                                403



         Amortization of capitalized software development costs                                                                 331                                                 572                                  646                              1,144



         Amortization of intangible assets                                                                                      235                                                 333                                  470                                666



         Amortization of other costs                                                                                             91                                                  43                                  193                                126




     EBITDA                                                                                                                   (600)                                                173                                (227)                             (549)



         Share-based compensation expense                                                                                       144                                                 288                                  367                                555



         Gain on disposal of fixed assets                                                                                                                                                           (2)                                  (1)



         Non-cash valuation adjustments to assets and liabilities                                                                 5                                                  23                                   56                                 40



         Loss on exit of operating lease                                                                      806                                                                                    806



     Adjusted EBITDA                                                                                                  $
              355                                     $
              484                     $
             1,000                     $
              45




     
                Adjusted EBITDA per diluted share



     Loss per share - diluted                                                                                      $
              (0.08)                                 $
              (0.06)                   $
             (0.10)                  $
            (0.16)




     Adjusted EBITDA per adjusted diluted share (1)                                                                  $
              0.02                                    $
              0.02                      $
             0.04                   $
              0.00






     Diluted weighted average shares                                                                                     19,971,090                                          19,834,859                           19,978,757                         19,765,125



         Includable incremental shares - Adjusted EBITDA (2)                                                              3,053,210                                           3,378,484                            3,064,204                          3,322,319




     Adjusted diluted shares                                                                                             23,024,300                                          23,213,343                           23,042,961                         23,087,444


 




              (1)              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.



              (2)              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, Inc.

 
 
Company Codes: NASDAQ-SMALL:STRM
 

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