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Streamline Health® Solutions Reports Q4 Results
Apr 12, 2011 (04:04 PM EDT)


CINCINNATI, April 12, 2011 /PRNewswire/ -- Streamline Health Solutions, Inc. (Nasdaq: STRM) today announced financial results for the fourth quarter of fiscal year 2010, ended January 31, 2011.

Highlights for the quarter included:

  • Company secured two new accessANYware™ purchase contracts for add-on licenses with existing clients totaling approximately $800,000; of which $450,000 of systems revenue was recognized during the quarter;
  • Company completed and delivered a new enterprise Referral Order Workflow (ROW) license from third quarter backlog resulting in $220,000 of systems revenue recorded in the fourth quarter;
  • Total system sales for the quarter were $867,000;
  • Professional services revenues improved by 44% versus the fourth quarter of the prior year;
  • Application hosting recurring revenues for the quarter increased 7% over the prior comparable quarter;
  • New bookings for the quarter, excluding maintenance revenue, exceeded $1.9 million;
  • Backlog at year end was $17.6 million

Revenues for the fourth quarter totaled $4.9 million, compared to $6.3 million in the prior year fourth quarter, which benefitted from a $1.7 million system sale  as a result of delivery of the newly developed accessANYware platform when it reached General Availability status in January 2010.  In fiscal 2010 the Company generated $867,000 in system sales. These system sales included nearly $450,000 from two new accessANYware add-on sales to existing clients. The Company also completed and delivered from backlog a $220,000 Referral Order Workflow solution that was sold to a Texas hospital in the third quarter.

Professional services revenues improved by $328,000 or 44% over the prior comparable period.  Recurring revenues from maintenance contracts improved by 5% or $95,000 over the prior comparable fourth quarter.  Hosting revenues from backlog increased by $58,000 or 7% over the prior comparable quarter.

Total operating expenses for the fourth quarter of fiscal 2010 were $5.7 million compared with $4.7 million in the comparable prior year quarter.  This increase was the result of nearly $1.4 million of one-time expenses attributable to a $755,000 non-cash charge for the impairment of capitalized software assets on uncompleted development products and nearly $500,000 of costs associated with the recent change in CEO. The results of the fourth quarter were also impacted by a $997,000 increase in non-cash tax expense due to an incremental increase in the non-cash deferred tax asset valuation allowance.

As a result, the Company recorded a net loss for the fourth quarter ended January 31, 2011 of $1.8 million, or $0.19 per share, compared with net income of $1.6 million, or $0.17 per fully diluted share, for the prior year comparable quarter. Adjusted EBITDA* (a non-GAAP measure) for the quarter ended January 31, 2011 was $976,000, or $0.10 per fully diluted common share (adjusted), compared to $2.5 million, or $0.26 per fully diluted common share (adjusted) in the comparable prior quarter. A reconciliation table is provided below.

New bookings for the fourth quarter, excluding maintenance services, were in excess of $1.9 million. Highlights of the new bookings included an accessANYware license to an existing client through one of our re-marketing partners and another one sold by our direct sales force.

Backlog at January 31, 2011 was $17.6 million, compared with $19.5 million at October 31, 2010 and $19.9 million at January 31, 2010.  Current backlog was also impacted by the recognition of revenue for application-hosted and maintenance contracts that were in the prior backlog totals as well as the previously discussed ROW solution delivery in the fourth quarter that had been in the prior quarter's backlog.

Robert E. Watson, chief executive officer of Streamline Health, commented, "We look forward to improved operational and financial results as we implement our strategic plan in the coming quarters. I firmly believe that Streamline Health has a solid portfolio of products and services that can increasingly drive significant efficiencies in healthcare institutions throughout the country while substantially assisting those institutions in meeting the requirements of 'meaningful use' and their ability to qualify for sizable incentive payments as outlined in the Health Information Technology for Economic and Clinical Health Act (HITECH). I believe there are great opportunities ahead to substantially grow our business and enhance shareholder value."

* Non-GAAP Financial Measures

Streamline Health reports its financial results in accordance with generally accepted accounting principles in the United States ("GAAP"). Streamline Health's management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health's management believes that these measures provide useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "adjusted EBITDA" as net earnings(loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, and stock-based compensation expense.  A table illustrating this measure is included in this publication.

Conference Call Information

The Company will conduct a conference call and web cast to review the results of the fourth quarter of fiscal 2010, today April 12, 2011 at 4:30 p.m. ET.

Interested parties can access the call by dialing (877) 317-6789 or (412) 317-6789, or listen via a live Internet web cast, which can be found at www.streamlinehealth.net. A replay of the call will be available by visiting www.streamlinehealth.net  for 30 days or by calling (877) 344-7529 or (412) 317-0088, access code 449946, through April 15, 2011.

About Streamline Health

Streamline Health is a leading provider of document workflow and document management solutions, applications and services that help strategic business partners and healthcare organizations improve operational efficiencies through business process optimization.  The Company provides integrated tools and technologies for automating document-intensive environments, including document workflow, document management, e-forms, connectivity, optical character recognition (OCR) and business process integration.

The Company's workflow-based services offer solutions to inefficient and labor-intensive healthcare business processes throughout the revenue cycle, such as chart coding, abstracting and completion, remote physician referral order processing, pre-admission registration scanning and signature capture, financial screening, perioperative processing,  mitigation processing, secondary billing services, explanation of benefits processing and release of information processing.  The Company's solutions also address the document workflow needs of the Human Resources and Supply Chain Management processes of the healthcare enterprise.  All solutions are available through a 'Software as a Service' (SaaS) model of delivery via the Company's Remote Hosting Center that better matches customers' capital or operating budget needs, or via a locally installed software licensing model.

Streamline Health's solutions create a permanent document-based repository of historical health information that is complementary and can be seamlessly integrated with existing disparate clinical, financial and administrative information systems, providing convenient electronic access to multiple forms of patient information from any location through secure web-based access. These integrated solutions allow providers and administrators to link existing systems with documents, which can dramatically improve the availability of patient information while decreasing direct costs associated with document retrieval, work-in-process, chart processing, document retention, and archiving.

For additional 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. 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 impact of competitive products and pricing, product demand and market acceptance, new product development, key strategic alliances with vendors that resell the Company products, the ability of the Company to control costs, availability of products produced from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accountings Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry, the markets in which the Company operates and nationally, and the Company's ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

COMPANY CONTACT:

INVESTOR CONTACT:

Robert E. Watson

Joe Diaz, Robert Blum or Joe Dorame

Chief Executive Officer

Lytham Partners, LLC

(513) 794-7100

(602) 889-9700



Financial Tables on Following Pages





STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


Three Months and Fiscal Year Ended January 31,


(Unaudited)




Three Months


Fiscal Year



2011


2010


2011


2010

Revenues:









   Systems sales

$

867,147

$

2,716,138

$

2,557,797

$

3,673,522

   Services, maintenance and support


3,133,849


2,710,208


11,497,969


11,233,183

   Application-hosting services


913,626


855,515


3,550,225


3,301,493

       Total revenues


4,914,622


6,281,861


17,605,991


18,208,198










Operating expenses:









   Cost of systems sales


1,571,533


901,453


3,827,313


2,993,442

   Cost of services, maintenance and support


1,453,535


1,335,410


5,561,578


5,033,145

   Cost of application-hosting services


493,068


437,970


1,902,521


1,641,576

   Selling, general and administrative


1,841,093


1,492,703


6,406,190


5,503,580

   Product research and development


322,243


486,128


1,759,694


1,682,773

       Total operating expenses


5,681,472


4,653,664


19,457,296


16,854,516

Operating profit (loss)


(766,850)


1,628,197


(1,851,305)


1,353,682

Other income (expense):









   Interest expense


(28,471)


(13,569)


(116,392)


(43,823)

   Other income (expense)


4,452


(1,641)


34,080


18,749

Earnings (loss) before taxes


(790,869)


1,612,987


(1,933,617)


1,328,608

   Income taxes


(1,002,000)


(27,500)


(1,017,000)


(40,500)

Net earnings (loss)

$

(1,792,869)

$

1,585,487

$

(2,950,617)

$

1,288,108










Basic net earnings (loss) per common share

$

(0.19)

$

0.17

$

(0.31)

$

0.14










Diluted net earnings (loss) per common share

$

(0.19)

$

0.17

$

(0.31)

$

0.14


Number of shares used in per common share computations:









  Basic


9,560,636


9,401,342


9,504,986


9,381,285

  Diluted


9,560,636


9,554,363


9,504,986


9,530,891




STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Assets




January 31,



2011


2010

Current assets:





 Cash and cash equivalents

$

1,403,949

$

1,025,173

 Accounts receivable, net of allowance for doubtful





   accounts of $100,000


2,620,756


1,922,279

 Contract receivables


680,096


1,182,308

 Prepaid hardware and third party software for future delivery


72,259


149,281

 Prepaid customer maintenance contracts


794,299


1,058,282

 Other prepaid assets


200,056


305,050

 Deferred income taxes


167,000


224,000

       Total current assets


5,938,415


5,866,373






Property and equipment:





 Computer equipment


2,708,819


2,987,039

 Computer software


1,947,135


1,816,397

 Office furniture, fixtures and equipment


747,867


747,867

 Leasehold improvements


639,864


574,257



6,043,685


6,125,560

 Accumulated depreciation and amortization


(4,517,860)


(4,344,432)



1,525,825


1,781,128

Contract receivables, less current portion


241,742


146,093

Capitalized software development costs, net of accumulated





 amortization of $12,832,347 and $10,411,828, respectively


7,575,064


8,049,292

Other, including deferred taxes of $711,000 and $1,651,000, respectively


734,376


1,681,661


$

16,015,422

$

17,524,547

Liabilities and Stockholders' Equity

Current liabilities:





 Accounts payable

$

565,252

$

887,928

 Accrued compensation


1,163,843


559,235

 Accrued other expenses


480,422


476,504

 Current portion of capital lease obligations


183,637


249,309

 Current portion of deferred revenues


5,766,795


4,956,303

       Total current liabilities


8,159,949


7,129,279






Deferred revenues, less current portion


-


602,239

Line of credit


1,200,000


900,000

Lease incentive liability, less current portion


61,034


-

Capital lease obligation, less current portion


-


161,666

       Total liabilities


9,420,983


8,793,184






Stockholders' equity:





 Convertible redeemable preferred stock, $.01 par value per share,





   5,000,000 shares authorized, no shares issued


-


-

 Common stock, $.01 par value per share, 25,000,000 shares authorized, 9,856,517 and  9,436,824 shares issued and outstanding, respectively


98,565


94,368

 Additional paid in capital


36,975,242


36,160,126

 Accumulated other comprehensive income


-


5,620

 Accumulated (deficit)


(30,479,368)


(27,528,751)

       Total stockholders' equity


6,594,439


8,731,363


$

16,015,422

$

17,524,547




STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


Fiscal Year Ended January 31,







2011


2010






Operating activities:





 Net earnings (loss)

$

(2,950,617)

$

1,288,108

 Adjustments to reconcile net earnings (loss) to net cash

   provided by operating activities:





   Depreciation and amortization


3,270,902


2,868,997

   Impairment loss on capitalized software development costs


754,709


-

   Deferred tax provision


997,000


-

   Loss on disposal of fixed assets


1,050


4,308

   Share-based compensation expense


678,172


274,629

 Change in assets and liabilities:





   Accounts, contract and installment receivables


(291,914)


(1,098,299)

   Other assets


440,379


54,664

   Accounts payable


(322,676)


174,020

   Accrued expenses


608,526


264,627

   Deferred revenues


208,253


(1,697,272)

 Net cash provided by operating activities


3,393,784


2,133,782






Investing activities:





 Purchases of property and equipment


(530,434)


(698,698)

 Capitalization of software development costs


(2,701,000)


(3,668,000)

 Other


2,622


(36,612)

 Net cash used in investing activities


(3,228,812)


(4,403,310)






Financing activities:





 Net change under revolving credit facility


300,000


100,000

 Proceeds from exercise of stock options and stock purchase plan


141,141


65,900

Payments on capital lease


(227,337)


-

 Net cash provided by financing activities


213,804


165,900

(Decrease) Increase in cash and cash equivalents


378,776


(2,103,628)

Cash and cash equivalents at beginning of year


1,025,173


3,128,801

Cash and cash equivalents at end of year

$

1,403,949

$

1,025,173

Supplemental cash flow disclosures:





 Interest paid

$

74,898

$

34,507

 Income taxes paid

$

47,658

$

7,265

 Property and equipment additions financed by capital leases

$

-

$

410,975









STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A

Backlog (in thousands)




January 31,
2011


October 31,
2010


January 31,
2010


Streamline Health software licenses

$

121


298


201


Custom software


42


42


105


Hardware and third party software


66


176


171


Professional services


4,629


3,293


3,977


Application-hosting services


7,362


8,068


9,414


Recurring maintenance


5,384


7,641


5,987


   Total

$

17,604


19,518


19,855





STREAMLINE HEALTH SOLUTIONS, INC.

Bookings

(Unaudited)

Table B


New bookings (a)




Three Months Ended



January 31, 2011



Value


% of Total Bookings

Streamline Health Software licenses

$

522,000


27%

Application Hosting Services


87,000


5%

Professional services


1,075,000


56%

Hardware & third party software


227,000


12%

   Total bookings

$

1,911,000


100%





Fiscal Year Ended



January 31, 2011



Value


% of Total Bookings

Streamline Health Software licenses

$

1,726,000


27%

Application Hosting Services


810,000


13%

Professional services


3,026,000


47%

Hardware & third party software


833,000


13%

   Total bookings

$

6,395,000


100%




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



STREAMLINE HEALTH SOLUTIONS, INC.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C


This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. Non-GAAP financial measures are used by Streamline Health's management in its operating and financial decision-making because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the Company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. The Company's management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release.


Reconciliation of net earnings(loss) to non-GAAP adjusted EBITDA (a, b).  




Three Months Ended



January 31,



2011


2010

Net earnings (loss)

$

(1,792,869)

$

1,585,487

EBITDA adjustments





Interest expense


28,471


13,569

Tax expense


1,002,000


27,500

Amortization of capitalized software development costs


1,274,564


631,949

Depreciation and amortization – other


200,268


197,816

Stock based compensation


263,686


70,371






Adjusted EBITDA

$

976,120

$

2,526,692





Fiscal Year Ended



January 31,



2011


2010

Net earnings (loss)

$

(2,950,617)

$

1,288,108

EBITDA adjustments





Interest expense


116,392


43,823

Tax expense


1,017,000


40,500

Amortization of capitalized software development costs


3,175,228


2,100,068

Depreciation and amortization – other


850,383


768,930

Stock based compensation


678,172


274,630






Adjusted EBITDA

$

2,886,558

$

4,516,059



(a)  Earnings Before Interest, Tax, Depreciation, Amortization, and Stock-based compensation

(b)  Adjusted EBITDA previously included foreign currency gains and losses.  These have now been excluded from the definition of Adjusted EBITDA to correspond to the definition under the terms of the line of credit, renewed in the first quarter of fiscal 2011.



STREAMLINE HEALTH SOLUTIONS, INC.

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C (continued)



Reconciliation of diluted net earnings per common share to non-GAAP diluted earnings per common share.




Three Months Ended



January 31,



2011


2010

Diluted net earnings (loss)

$

(0.19)

$

0.17

EBITDA adjustments





Interest expense


0.00


0.00

Tax expense


0.10


0.00

Amortization of capitalized software development costs


0.13


0.07

Depreciation and amortization – other


0.02


0.02

Stock based compensation


0.03


0.01






Adjusted EBITDA per adjusted diluted share


$

0.10

$

0.26






Diluted weighted average shares


9,560,636


9,554,363

  Includable incremental shares – adjusted EBITDA (a)


5,889


-

Adjusted diluted shares


9,566,525


9,554,363





Fiscal Year Ended



January 31,



2011


2010

Diluted net earnings (loss)

$

(0.31)

$

0.14

EBITDA adjustments





Interest expense


0.01


0.00

Tax expense


0.11


0.00

Amortization of capitalized software development costs


0.33


0.22

Depreciation and amortization – other


0.09


0.08

Stock based compensation


0.07


0.03






Adjusted EBITDA per adjusted diluted share

$

0.30

$

0.47






Diluted weighted average shares


9,504,986


9,530,891

  Includable incremental shares – adjusted EBITDA (a)


83,353


-

Adjusted diluted shares


9,588,339


9,530,891



Note: Per share amounts may not be additive due to rounding.


(a)  The number of incremental shares that would be dilutive under a profit assumption are only applicable under a  GAAP net-loss.  If GAAP profit is earned in the current period, no incremental shares are assumed.



SOURCE Streamline Health Solutions, Inc.