News Press Releases

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

STRM | September 11, 2018

Total First Half Fiscal 2018 Revenue $11.5 Million; Adjusted EBITDA $1.0 Million

PR Newswire

ATLANTA, Sept. 11, 2018

ATLANTA, Sept. 11, 2018 /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.

Streamline Health helps hospitals optimize their mid-revenue cycle operations in ways that transform tangled revenue cycles into dynamic revenue streams. Our integrated solutions, technology-enabled services and analytics enable providers to secure accurate reimbursement in a value-based world. (PRNewsfoto/Streamline Health Solutions)

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 July 31,				Six Months Ended 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 accounts of $267,221 and $349,058, respectively		2,238,088		3,001,170
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 accumulated amortization of $19,304,635 and $18,658,183, respectively		5,190,076		4,307,351
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, 2018		July 31, 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, 2018		January 31, 2018		July 31, 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.