Streamline Health® Reports Third Quarter 2017 Revenues of $6.4 Million; Breakeven Net Income; Adjusted EBITDA of $1.5 Million
ATLANTA, Dec. 12, 2017 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), provider of integrated solutions, technology-enabled services and analytics supporting revenue cycle optimization for healthcare enterprises, today announced financial results for the third quarter of fiscal 2017, which ended October 31, 2017.
Revenues for the three-month period ended October 31, 2017 decreased approximately 3% to $6.4 million over the revenues for the three-month period ended October 31, 2016 of $6.6 million, but increased approximately 8% over the second quarter of 2017. Recurring revenue comprised 79% of total revenue in the quarter.
Net income for the third quarter of fiscal 2017 was essentially breakeven ($3 thousand) as compared to a ($2.0 million) net loss in the same period a year ago.
Adjusted EBITDA for the third quarter of fiscal 2017 was $1.5 million, up from $0.2 million in the third quarter of 2016.
"Our third quarter financial performance improved from the second quarter primarily due to an increase in professional services and some recurring revenue as we experienced growth with existing clients in expanding the number of facilities utilizing our software. During the quarter, we continued to attract new clients as we added six new clients to the Streamline family, and importantly closed four contracts for our new Streamline Health eValuator(TM) technology," stated David Sides, President and Chief Executive Officer, Streamline Health. "Our bookings momentum continues to build, growing to $1.9 million in the third quarter as we realize some of the potential in our expanding pipeline of current clients and prospects, primarily around eValuator technology and Auditing Services. We are pleased to have closed our fifth new eValuator deal in the month of November and anticipate closing more new deals before our fiscal year end.
"Our balance sheet changed slightly from the second quarter of this year as our cash on hand decreased approximately $1 million while debt declined by approximately $100,000, but we continue to anticipate our cash balance climbing substantially by year end based on our quarterly cash cyclicality."
Highlights for the three months ended October 31, 2017 included:
-- Revenue for the third quarter 2017 was $6.4 million;
-- Net income for the third quarter 2017 was $3 thousand;
-- Adjusted EBITDA for the third quarter 2017 was $1.5 million;
-- New sales bookings for the quarter were $1.9 million; and
-- Backlog at the end of the quarter was $47.7 million.
Conference Call Information
An accompanying conference call will be hosted by David Sides, Chief Executive Officer and Nicholas Meeks, Senior Vice President and Chief Financial Officer. The call will be held at 9:00 AM ET, on Wednesday, December 13, 2017 and will be accompanied by a live webcast. Please refer to the information below for conference call dial-in information and webcast registration.
Conference Date: December 13, 2017, 9:00 AM ET
Webcast Registration: Click Here
Conference Dial-In: 866-548-4713
Conference Passcode: 1764102
Conference Call Name: Streamline Health Solutions Third Quarter 2017 Results Call
Following the call, a replay will be available on the Company's website, www.streamlinehealth.net, in the Investor Relations section.
*Non-GAAP Financial Measures
Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). Streamline Health's management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health's management believes that this measure provides useful supplemental information regarding the performance of Streamline Health's business operations.
Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severance and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions. A table illustrating this measure is included in this press release.
About Streamline Health
Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge - providing actionable insights that support revenue cycle optimization for healthcare enterprises. We deliver integrated solutions and analytics that enable providers to drive reimbursement in a value-based world. We share a common calling and commitment to advance the quality of life and the quality of healthcare - for society, our clients, the communities they serve, and the individual patient. For more information, please visit our website at www.streamlinehealth.net.
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995
Statements made by Streamline Health Solutions, Inc. that are not historical facts are forward-looking statements that are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. Forward-looking statements contained in this press release include, without limitation, statements regarding the Company's estimates of future revenue, cash balances, backlog, results of investments in sales and marketing, success of future products and related expectations and assumptions. These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development and enhancement of current solutions, key strategic alliances with vendors and channel partners that resell the Company's solutions, the ability of the Company to control costs, availability of solutions from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates and nationally, and the Company's ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
Company Contact:
Randy Salisbury
SVP, Chief Marketing Officer
(404) 229-4242
randy.salisbury@streamlinehealth.net
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31
----------- ----------
2017 2016 2017 2016
---- ---- ---- ----
Revenues:
Systems sales $348,526 $314,218 $1,055,941 $2,190,256
Professional services 801,771 630,961 1,793,618 1,869,656
Audit Services 280,025 234,347 919,485 234,347
Maintenance and support 3,250,229 3,749,596 9,883,563 11,237,637
Software as a service 1,718,748 1,706,366 4,586,532 5,144,876
Total revenues 6,399,299 6,635,488 18,239,139 20,676,772
--------- --------- ---------- ----------
Operating expenses:
Cost of systems sales 434,138 663,148 1,596,988 2,080,263
Cost of professional services 555,815 723,358 1,814,236 1,891,146
Cost of Audit Services 404,280 595,575 1,236,358 595,575
Cost of maintenance and support 667,307 790,291 2,241,969 2,483,462
Cost of software as a service 289,503 450,695 914,711 1,390,308
Selling, general and administrative 2,819,549 3,212,350 8,983,248 10,153,140
Research and development 932,251 1,969,415 3,985,161 5,800,169
-------
Total operating expenses 6,102,843 8,404,832 20,772,671 24,394,063
Operating income (loss) 296,456 (1,769,344) (2,533,532) (3,717,291)
Other expense:
Interest expense (113,078) (98,871) (360,723) (380,897)
Miscellaneous expense (177,282) (60,555) (235,007) (39,089)
Earnings (loss) before income taxes 6,096 (1,928,770) (3,129,262) (4,137,277)
Income tax benefit (expense) (2,607) (1,702) (7,822) (5,104)
------ ------ ------ ------
Net earnings (loss) $3,489 $(1,930,472) $(3,137,084) $(4,142,381)
Less: deemed dividends on Series A -- (72,710) -- (875,935)
Preferred Shares
Net loss attributable to common $3,489 $(2,003,182) $(3,137,084) $(5,018,316)
shareholders
Basic net loss per common share $ -- $(0.10) $(0.16) $(0.26)
Number of shares used in basic per 19,985,822 19,645,521 19,838,691 19,477,538
common share computation
Diluted net loss per common share $ -- $(0.10) $(0.16) $(0.26)
===
Number of shares used in diluted per 23,068,423 19,645,521 19,838,691 19,477,538
common share computation
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Assets
October 31, January 31,
2017 2017
---- ----
Current assets:
Cash and cash equivalents $1,892,182 $5,654,093
Accounts receivable, net of allowance for doubtful 2,532,941 4,489,789
accounts of $301,773 and $198,449, respectively
Contract receivables 283,973 466,423
Prepaid hardware and third party software for 5,858 5,858
future delivery
Prepaid client maintenance contracts 587,960 595,633
Other prepaid assets 837,649 732,496
Other current assets 392,449 439
------- ---
Total current assets 6,533,012 11,944,731
--------- ----------
Non-current assets:
Property and equipment:
Computer equipment 2,971,361 3,110,274
Computer software 725,700 827,642
Office furniture, fixtures and equipment 683,443 683,443
Leasehold improvements 729,348 729,348
------- -------
5,109,852 5,350,707
Accumulated depreciation and amortization (3,762,821) (3,447,198)
---------- ----------
Property and equipment, net 1,347,031 1,903,509
Capitalized software development costs, net of 4,346,694 4,584,245
accumulated amortization of $18,119,290 and
$16,544,797 respectively
Intangible assets, net of accumulated amortization 6,074,137 6,996,599
of $6,729,799 and $5,807,338, respectively
Goodwill 15,537,281 15,537,281
Other 677,319 672,133
------- -------
Total non-current assets 27,982,462 29,693,767
---------- ----------
$34,515,474 $41,638,498
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Liabilities and Stockholders' Equity
October 31, January 31,
2017 2017
---- ----
Current liabilities:
Accounts payable $807,778 $1,116,525
Accrued compensation 593,510 496,706
Accrued other expenses 587,209 484,391
Current portion of term loan 596,984 655,804
Deferred revenues 6,130,259 9,916,454
Current portion of capital lease obligations -- 91,337
--- ------
Total current liabilities 8,715,740 12,761,217
--------- ----------
Non-current liabilities:
Term loan, net of deferred financing cost of $146,009 and
$199,211, respectively 4,032,865 4,883,286
Warrants liability 150,857 46,191
Royalty liability 2,456,233 2,350,754
Lease incentive liability 293,322 339,676
Deferred revenues, less current portion 487,832 568,515
Total non-current liabilities 7,421,109 8,188,422
--------- ---------
Total liabilities 16,136,849 20,949,639
---------- ----------
Series A 0% Convertible Redeemable Preferred stock, $.01 par 8,849,985 8,849,985
value per share, $8,849,985 redemption value, 4,000,000 shares
authorized, 2,949,995 issued and outstanding, net of unamortized
preferred stock discount of $0
Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares 199,847 196,954
authorized, 19,984,743 and 19,695,391 shares issued and
outstanding, respectively
Additional paid in capital 81,491,728 80,667,771
Accumulated deficit (72,162,935) (69,025,851)
Total stockholders' equity 9,528,640 11,838,874
--------- ----------
$34,515,474 $41,638,498
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
October 31,
-----------
2017 2016
---- ----
Operating activities:
Net loss $(3,137,084) $(4,142,381)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 595,866 895,438
Amortization of capitalized software development costs 1,574,493 2,146,374
Amortization of intangible assets 922,462 976,338
Amortization of other deferred costs 229,780 192,947
Valuation adjustment for warrants liability 104,666 (36,875)
Share-based compensation expense 844,960 1,342,513
Other valuation adjustments 124,423 120,912
(Gain) Loss on disposal of property and equipment (14,871) 567
Provision for accounts receivable 181,859 136,693
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables 1,957,439 1,679,810
Other assets (671,254) 130,875
Accounts payable (308,747) (78,320)
Accrued expenses 134,324 (814,707)
Deferred revenues (3,866,878) (3,793,603)
Net cash used in operating activities (1,328,562) (1,243,419)
---------- ----------
Investing activities:
Purchases of property and equipment (24,517) (501,148)
Capitalization of software development costs (1,336,942) (1,420,678)
Payment for acquisition, net of cash received -- (1,400,000)
--- ----------
Net cash used in investing activities (1,361,459) (3,321,826)
---------- ----------
Financing activities:
Principal repayments on term loan (962,443) (2,243,624)
Principal payments on capital lease obligation (91,337) (535,896)
Proceeds from exercise of stock options and stock purchase plan 23,703 14,793
Payments related to settlement of employee shared-based awards (41,813) (11,702)
Net cash used in financing activities (1,071,890) (2,766,429)
---------- ----------
Net decrease in cash and cash equivalents (3,761,911) (7,341,674)
Cash and cash equivalents at beginning of period 5,654,093 9,882,136
--------- ---------
Cash and cash equivalents at end of period $1,892,182 $2,540,462
STREAMLINE HEALTH SOLUTIONS, INC.
Backlog
(Unaudited)
Table A
October 31, January 31, October 31,
2017 2017
2016
----
Company Proprietary Software $10,892,000 $11,504,000 $15,551,000
Third Party Hardware and Software -- 150,000 200,000
Professional Services 2,824,000 4,068,000 4,973,000
Audit Services 1,454,000 1,847,000 1,849,000
Maintenance and Support 18,256,000 19,193,000 19,413,000
Software as a Service 14,242,000 13,861,000 12,929,000
---------- ---------- ----------
Total $47,668,000 $50,623,000 $54,915,000
STREAMLINE HEALTH SOLUTIONS, INC.
New Bookings
(Unaudited)
Table B
Three Months Ended
October 31, 2017
----------------
Value % of Total
Bookings
--------
Streamline Health
Software licenses $94,000 5%
Software as a service 1,505,000 78%
Maintenance and support 79,000 4%
Professional services 197,000 10%
Audit services 57,000 3%
Total bookings $1,932,000 100%
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Table C
This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance
with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by Streamline
Health's management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the Company believes it is useful
for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the Company's
current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not
include all items of income and expense that affect operations. The Company's management compensates for these limitations by considering the Company's financial results and outlook as determined in accordance with GAAP and by providing a detailed
reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release. Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense,
depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions,
associate severance and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.
Reconciliation of net income (loss) to non-GAAP adjusted EBITDA (in thousands)
Adjusted EBITDA Reconciliation Three Months Ended, Nine Months Ended,
October 31, October 31, October 31, October 31,
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) $3 $(1,930) $(3,137) $(4,142)
Interest expense 113 99 361 381
Income tax expense 3 2 8 5
Depreciation 193 265 596 895
Amortization of capitalized software development costs 431 720 1,574 2,146
Amortization of intangible assets 256 325 922 976
Amortization of other costs 51 60 177 140
--- --- --- ---
EBITDA 1,050 (459) 501 401
----- ---- --- ---
Share-based compensation expense 290 433 845 1,343
(Gain) Loss on disposal of fixed assets (14) -- (15) 1
Associate severance and other costs -- 89 -- 199
relating to transactions or corporate
restructuring
Non-cash valuation adjustments to assets and liabilities 188 62 229 84
Transaction related professional fees, advisory fees and other internal direct costs -- 103 -- 358
Adjusted EBITDA $1,514 $228 $1,560 $2,386
Adjusted EBITDA Margin(1) 24% 3% 9% 12%
--- --- --- ---
Adjusted EBITDA per diluted share
Loss per share - diluted $ -- $(0.10) $(0.16) $(0.26)
===
Adjusted EBITDA per adjusted diluted share (2) $0.07 $0.01 $0.07 $0.10
Diluted weighted average shares 23,068,423 19,645,521 19,838,691 19,477,538
Includable incremental shares - adjusted EBITDA (3) -- 3,340,390 3,242,413 3,322,710
--- --------- --------- ---------
Adjusted diluted shares 23,068,423 22,985,911 23,081,104 22,800,248
---------- ---------- ---------- ----------
(1) Adjusted
EBITDA as a
percentage
of GAAP
revenues.
(2) Adjusted
EBITDA per
adjusted
diluted
share for
the
Company's
common
stock is
computed
using the
more
dilutive of
the two-
class
method or
the if-
converted
method.
(3) The number
of
incremental
shares that
would be
dilutive
under
profit
assumption,
only
applicable
under a
GAAP net
loss. If
GAAP profit
is earned
in the
current
period, no
additional
incremental
shares are
assumed.
SOURCE Streamline Health Solutions, Inc.
