Streamline Health(R) Reports Third Quarter 2019 Revenues of $5.8 Million; ($0.2 million) Net Loss; Adjusted EBITDA of $1.3 Million

Total Revenues For First Three Quarters of $15.9 Million; ($0.5 Million) Net Loss; Adjusted EBITDA of $2.7 Million

ATLANTA, GA / ACCESSWIRE / January 8, 2020 / 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 2019, which ended October 31, 2019.

Revenues for the three-month period ended October 31, 2019 increased 21% to $5.8 million as compared to revenues of $4.8 million for the second quarter of fiscal year 2019 and up 8% as compared to revenues of $5.4 million for the same quarter a year ago. Recurring revenue comprised 69% of total revenue in the quarter ended October 31, 2019. Revenues for the first nine months of fiscal year 2019 were approximately $15.9 million, down approximately 6% from $16.9 million for the same nine-month period in fiscal year 2018.

As previously disclosed in its press release dated January 2, 2020, the Company determined that certain corrections were required for capitalized software development costs and related amortization with respect to previously reported periods. The Company evaluated the materiality of these corrections and determined it was not necessary to restate its previously issued financial statements.

The Company disclosed the effect of these corrections, which were included as an out of period adjustment in the Company's financial statements for the three and nine months ended October 31, 2019, included in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2019, as filed with the U.S. Securities and Exchange Commission on January 7 2020.

Net loss for the third quarter of fiscal year 2019 was approximately ($0.2 million) as compared to a net loss of approximately ($0.7 million) for the same quarter a year ago. Net loss for the first nine months of fiscal year 2019 was approximately ($0.5 million) as compared to a net loss of ($2.8 million) for the same period a year ago.

Adjusted EBITDA for the third quarter 2019 was approximately $1.3 million as compared to $0.2 million for the second quarter of fiscal year 2019 and $0.8 million for the same quarter a year ago.

"Our third quarter performance was solid in terms of revenue and adjusted EBITDA and our bookings for the quarter of $2.6 million, while healthy, did not include any eValuator contracts. I believe the future market opportunity for our mid-revenue cycle solutions and services is far greater than the replacement market for our legacy solutions," stated Tee Green, President and Chief Executive Officer, Streamline Health. "Which is why, as we announced last month, we have agreed to sell our legacy ECM business and use the proceeds to retire all of our bank debt and to invest in development and sales of our eValuator™ technology.

"I am committed to creating greater velocity in everything we do at Streamline Health, and to becoming an entrepreneurial, fast growing company. The fact that our third quarter bookings did not include any new eValuator contracts was disappointing. But I am convinced our eValuator automated cloud-based pre-bill coding analysis platform has tremendous upside potential as demonstrated by the size of our sales pipeline. As we approach a new fiscal year this coming February, everyone in our Company will be singularly focused on selling and supporting our eValuator, Clinical Documentation Improvement and Abstracting solutions which, when reinforced by our Auditing Services, makes us a true partner for revenue integrity across any healthcare provider's enterprise."

"This company will become a growth company again and I look forward to providing guidance for fiscal year 2020 very soon."

Highlights for the third quarter ended October 31, 2019 included:

Revenue for the third quarter 2019 was $5.8 million;
Revenue for the first three quarters of 2019 was $15.9 million;
Net loss for the third quarter 2019 was ($0.2 million);
Net loss for the first three quarters of 2019 was ($0.5 million);
Adjusted EBITDA for the third quarter 2019 was $1.3 million;
Adjusted EBITDA for the first three quarters of 2019 was $2.7 million;
Bookings for the third quarter 2019 were $2.6 million.

Conference Call

The Company will conduct a conference call to review the results on Thursday, January 9, 2020 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 877-269-7756.

A replay of the conference call will be available from Thursday, January 9, 2020 at 12:00 PM ET to Wednesday, January 15, 2020 at 12:00 PM ET by dialing 877-660-6853 and requesting conference ID 13697756. An online replay of the presentation will also be available for six months following the presentation in the Investor Relations section of the Streamline Health website, www.streamlinehealth.net.

*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 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 – 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 performance, growth and market opportunities, investments in sales and marketing related to the development of the Company's eValuator product, 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, the effects of cost-containment measures implemented by the Company, 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

October 31,

Nine Months Ended

October 31,

 
2019
 
 
2018
 
 
2019
 
 
2018
 

Revenues:

Systems sales

 
$
668,000
 
 
$
309,000
 
 
$
1,046,000
 
 
$
1,827,000
 

Professional services

 
 
626,000
 
 
 
577,000
 
 
 
1,615,000
 
 
 
1,086,000
 

Audit Services

 
 
517,000
 
 
 
234,000
 
 
 
1,266,000
 
 
 
841,000
 

Maintenance and support

 
 
2,827,000
 
 
 
3,051,000
 
 
 
8,537,000
 
 
 
9,577,000
 

Software as a service

 
 
1,150,000
 
 
 
1,198,000
 
 
 
3,474,000
 
 
 
3,570,000
 

Total revenues

 
 
5,788,000
 
 
 
5,369,000
 
 
 
15,938,000
 
 
 
16,901,000
 

Operating expenses:

Cost of systems sales

 
 
135,000
 
 
 
223,000
 
 
 
391,000
 
 
 
763,000
 

Cost of professional services

 
 
493,000
 
 
 
675,000
 
 
 
1,616,000
 
 
 
2,079,000
 

Cost of audit services

 
 
325,000
 
 
 
323,000
 
 
 
949,000
 
 
 
1,017,000
 

Cost of maintenance and support

 
 
453,000
 
 
 
506,000
 
 
 
1,275,000
 
 
 
1,720,000
 

Cost of software as a service

 
 
356,000
 
 
 
207,000
 
 
 
936,000
 
 
 
805,000
 

Selling, general and administrative

 
 
2,800,000
 
 
 
2,392,000
 
 
 
7,745,000
 
 
 
8,160,000
 

Research and development

 
 
726,000
 
 
 
1,026,000
 
 
 
2,385,000
 
 
 
3,302,000
 

Executive Transition Costs

 
 
481,000
 
 
 
—
 
 
 
621,000
 
 
 
—
 

Loss on exit of operating lease

 
 
—
 
 
 
562,000
 
 
 
—
 
 
 
1,368,000
 

Total operating expenses

 
 
5,769,000
 
 
 
5,914,000
 
 
 
15,918,000
 
 
 
19,214,000
 

Operating income (loss)

 
 
19,000
 
 
 
(545,000
)
 
 
20,000
 
 
 
(2,313,000
)

Other expense:

Interest expense

 
 
(91,000
)
 
 
(106,000
)
 
 
(239,000
)
 
 
(332,000
)

Miscellaneous expense

 
 
(80,000
)
 
 
(25,000
)
 
 
(224,000
)
 
 
(118,000
)

Loss before income taxes

 
 
(152,000
)
 
 
(676,000
)
 
 
(443,000
)
 
 
(2,763,000
)

Income tax expense

 
 
(12,000
)
 
 
(2,000
)
 
 
(16,000
)
 
 
(5,000
)

Net Loss

 
$
(164,000
)
 
$
(678,000
)
 
$
(459,000
)
 
$
(2,768,000
)

Add: Redemption of Series A Preferred Stock

 
 
4,894,000
 
 
 
—
 
 
 
4,894,000
 
 
 
—
 

Net income (loss) attributable to common shareholders

 
$
4,730,000
 
 
$
(678,000
)
 
$
4,435,000
 
 
$
(2,768,000
)

Net income (loss) per common share – basic

 
$
0.22
 
 
$
(0.03
)
 
$
0.22
 
 
$
(0.14
)

Weighted average number of common shares – basic

 
 
21,598,146
 
 
 
19,655,882
 
 
 
20,435,055
 
 
 
19,495,745
 

Net loss per common share – diluted

 
$
(0.01
)
 
$
(0.03
)
 
$
(0.02
)
 
$
(0.14
)

Weighted average number of common shares – diluted

 
 
21,598,146
 
 
 
19,655,882
 
 
 
20,435,055
 
 
 
19,495,745
 

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

Assets

 
October 31,
 
 
January 31,
 

 
2019
 
 
2019
 

Current assets:

Cash and cash equivalents

 
$
1,220,000
 
 
$
2,376,000
 

Accounts receivable, net

 
 
2,214,000
 
 
 
2,933,000
 

Contract receivables

 
 
704,000
 
 
 
1,263,000
 

Prepaid hardware and other current assets

 
 
1,285,000
 
 
 
1,235,000
 

Total current assets

 
 
5,423,000
 
 
 
7,807,000
 

Non-current assets:

Property and equipment, net

 
 
175,000
 
 
 
237,000
 

Contract receivables, less current portion

 
 
355,000
 
 
 
407,000
 

Capitalized software development costs, net

 
 
7,785,000
 
 
 
5,698,000
 

Intangible assets, net

 
 
1,245,000
 
 
 
1,669,000
 

Goodwill

 
 
15,537,000
 
 
 
15,537,000
 

Other non-current assets

 
 
756,000
 
 
 
385,000
 

Total non-current assets

 
 
25,853,000
 
 
 
23,933,000
 

 
$
31,276,000
 
 
$
31,740,000
 

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

Liabilities and Stockholders' Equity

 
October 31,
 
 
January 31,
 

 
2019
 
 
2019
 

Current liabilities:

Accounts payable

 
$
629,000
 
 
$
1,280,000
 

Accrued expenses

 
 
1,407,000
 
 
 
1,814,000
 

Current portion of long-term debt

 
 
3,472,000
 
 
 
597,000
 

Deferred revenues

 
 
6,310,000
 
 
 
8,338,000
 

Royalty Liability

 
 
953,000
 
 
 
—
 

Other

 
 
94,000
 
 
 
94,000
 

Total current liabilities

 
 
12,865,000
 
 
 
12,123,000
 

Non-current liabilities:

Term loan, net of current portion

 
 
—
 
 
 
3,351,000
 

Royalty liability

 
 
—
 
 
 
905,000
 

Deferred revenues, less current portion

 
 
123,000
 
 
 
432,000
 

Other Liabilities

 
 
19,000
 
 
 
41,000
 

Total non-current liabilities

 
 
142,000
 
 
 
4,729,000
 

Total liabilities

 
 
13,007,000
 
 
 
16,852,000
 

Series A 0% Convertible Redeemable Preferred Stock

 
 
—
 
 
 
8,686,000
 

Total stockholders' equity

 
 
18,269,000
 
 
 
6,202,000
 

 
$
31,276,000
 
 
$
31,740,000
 

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

 
Nine Months Ended,
 

October 31,

2019

October 31,

2018

Cash flows from operating activities:

Net loss

 
$
(459,000
)
 
$
(2,768,000
)

     Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

 
 
113,000
 
 
 
411,000
 

Amortization of capitalized software development costs

 
 
644,000
 
 
 
895,000
 

Amortization of intangible assets

 
 
424,000
 
 
 
705,000
 

Amortization of other deferred costs

 
 
208,000
 
 
 
347,000
 

Valuation adjustment

 
 
48,000
 
 
 
71,000
 

Loss on exit of operating lease

 
 
—
 
 
 
1,368,000
 

Loss (Gain) on disposal of fixed assets

 
 
—
 
 
 
5,000
 

Share-based compensation expense

 
 
719,000
 
 
 
492,000
 

Provision for accounts receivable

 
 
(125,000
)
 
 
(24,000
)

Changes in assets and liabilities, net

 
 
(2,547,000
)
 
 
(2,210,000
)

Net cash used in operating activities

 
 
(975,000
)
 
 
(708,000
)

Cash flows from investing activities:

Purchases of property and equipment

 
 
(51,000
)
 
 
(21,000
)

Proceeds from sales of property and equipment

 
 
—
 
 
 
20,000
 

Capitalization of software development costs

 
 
(2,730,000
)
 
 
(2,288,000
)

Net cash used in investing activities

 
 
(2,781,000
)
 
 
(2,289,000
)

Cash flows from financing activities:

Principal payments on term loan

 
 
(448,000
)
 
 
(448,000
)

Deferred financing costs

 
 
(73,000
)
 
 
—
 

Proceeds from issuance of common stock

 
 
9,663,000
 
 
 
—
 

Payments for costs attributable to issuance of common stock

 
 
(681,000
)
 
 
 
 

Payments related to employee share-based awards

 
 
(50,000
)
 
 
(62,000
)

Redemption of Series A preferred stock

 
 
(5,791,000
)
 
 
—
 

Fees paid for redemption of Series A preferred stock

 
 
(22,000
)
 
 
—
 

Other

 
 
2,000
 
 
 
31,000
 

Net cash provided by (used in) financing activities

 
 
2,600,000
 
 
 
(479,000
)

Decrease in cash and cash equivalents

 
 
(1,156,000
)
 
 
(3,476,000
)

Cash and cash equivalents at beginning of year

 
 
2,376,000
 
 
 
4,620,000
 

Cash and cash equivalents at end of period

 
$
1,220,000
 
 
$
1,144,000
 

STREAMLINE HEALTH SOLUTIONS, INC.
New Bookings
(Unaudited)

Table B

 
Three Months Ended October 31, 2019
 

Systems Sales

 
$
738,000
 

Professional Services

 
 
457,000
 

Audit Services

 
 
2,000
 

Maintenance and Support

 
 
1,391,000
 

Software as a Service

 
 
24,000
 

Q3 2019 bookings

 
$
2,612,000
 

Q3 2018 bookings

 
$
1,760,000
 

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

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

Adjusted EBITDA Reconciliation

 
Three Months Ended,
 
 
Nine Months Ended,
 

 
October 31, 2019
 
 
October 31, 2018
 
 
October 31, 2019
 
 
October 31, 2018
 

Net loss

 
$
(164
)
 
$
(678
)
 
$
(459
)
 
$
(2,768
)

Interest expense

 
 
91
 
 
 
106
 
 
 
239
 
 
 
332
 

Income tax benefit

 
 
12
 
 
 
2
 
 
 
16
 
 
 
5
 

Depreciation

 
 
37
 
 
 
87
 
 
 
113
 
 
 
411
 

Amortization of capitalized software development costs

 
 
227
 
 
 
249
 
 
 
644
 
 
 
895
 

Amortization of intangible assets

 
 
138
 
 
 
235
 
 
 
424
 
 
 
705
 

Amortization of other costs

 
 
45
 
 
 
101
 
 
 
150
 
 
 
294
 

EBITDA

 
 
386
 
 
 
102
 
 
 
1,127
 
 
 
(126
)

Share-based compensation expense

 
 
290
 
 
 
125
 
 
 
719
 
 
 
492
 

Loss on disposal of fixed assets

 
 
—
 
 
 
7
 
 
 
—
 
 
 
5
 

Non-cash valuation adjustments to assets and liabilities

 
 
16
 
 
 
15
 
 
 
48
 
 
 
71
 

Other non-recurring operating expenses

 
 
481
 
 
 
562
 
 
 
562
 
 
 
1,368
 

Other non-recurring expenses

 
 
131
 
 
 
—
 
 
 
205
 
 
 
—
 

Adjusted EBITDA

 
$
1,304
 
 
$
811
 
 
$
2,661
 
 
$
1,810
 

Adjusted EBITDA per diluted share

Net income (loss) per common share – diluted

 
$
0.22
 
 
$
(0.03
)
 
$
(0.02
)
 
$
(0.14
)

Adjusted EBITDA per adjusted diluted share (1)

 
$
0.05
 
 
$
0.04
 
 
$
0.11
 
 
$
0.08
 

Diluted weighted average shares

 
 
21,598,146
 
 
 
19,655,882
 
 
 
20,435,055
 
 
 
19,495,745
 

Includable incremental shares – Adjusted EBITDA (2)

 
 
2,736,075
 
 
 
2,971,381
 
 
 
2,976,967
 
 
 
3,033,263
 

Adjusted diluted shares

 
 
24,334,221
 
 
 
22,627,263
 
 
 
23,412,022
 
 
 
22,529,008
 

(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.

SOURCE: Streamline Health Solutions, Inc.

ReleaseID: 572453