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8-K - FORM 8-K - STREAMLINE HEALTH SOLUTIONS INC.c15434e8vk.htm
Exhibit 99.1
STREAMLINE HEALTH SOLUTIONS, INC.
News Release of Streamline Health Solutions, Inc. Dated April 12, 2011
(STREAMLINE LOGO)
News Release
Visit our web site at: www.streamlinehealth.net
     
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
STREAMLINE HEALTH® SOLUTIONS REPORTS Q4 RESULTS
Cincinnati, Ohio — April 12, 2011 — 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 accessANYwareTM 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.

 

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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.

 

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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.

 

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Financial Tables on Following Pages

 

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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  
 
                       

 

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STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    January 31,  
    2011     2010  
Assets
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  
 
           

 

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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  
 
           

 

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STREAMLINE HEALTH SOLUTIONS, INC.
Backlog
(Unaudited)
Table A
Backlog (in thousands)
                         
    January 31,     October 31,     January 31,  
    2011     2010     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  
 
                 

 

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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.

 

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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.

 

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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.

 

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