e8vk
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 6, 2011
Streamline Health Solutions, Inc.
(Exact name of registrant as specified in its charter)
         
Delaware   0-28132   31-1455414
         
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer Identification No.)
     
10200 Alliance Road, Suite 200,
Cincinnati, OH
   
45242-4716
     
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code: (513) 794-7100
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 


 

Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On December 6, 2011, Streamline Health Solutions, Inc. (“Streamline Health”) issued the press release attached hereto as Exhibit 99.1, which press release contains financial information about Streamline Health’s third fiscal quarter ended October 31, 2011. The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
         
EXHIBIT    
NUMBER   DESCRIPTION
       
 
  99.1    
Third Quarter Earnings News Release of Streamline Health Solutions, Inc. dated December 6, 2011.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  Streamline Health Solutions, Inc.
 
 
Date: December 6, 2011  By:   /s/ Stephen H. Murdock    
    Stephen H. Murdock   
    Chief Financial Officer   

 

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INDEX TO EXHIBITS
 
         
Exhibit No.   Description of Exhibit
       
 
  99.1    
Third Quarter Earnings News Release of Streamline Health Solutions, Inc. dated December 6, 2011.

 

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exv99w1
Exhibit 99.1
(STREAMLINE HEALTH LOGO)
News Release
Visit our web site at: www.streamlinehealth.net
     
COMPANY CONTACT:
  INVESTOR CONTACT:
Robert E. Watson
  John Baldissera
Chief Executive Officer
  BPC Financial Marketing
(513) 794-7100
  (800) 368-1217
STREAMLINE HEALTH® SOLUTIONS REPORTS Q3 RESULTS
Cincinnati, Ohio — December 6, 2011 — Streamline Health Solutions, Inc. (Nasdaq: STRM) today announced financial results for the third quarter of fiscal year 2011, ended October 31, 2011.
Highlights for the quarter and the nine-month period included:
    Returned to profitability for the quarter and year-to-date;
    Recurring maintenance revenues improved by 13% over the prior comparable quarter;
    Recurring software-as-a-service (SaaS) revenues for the quarter increased 7% over the prior comparable quarter;
    New bookings and maintenance contract renewals for the quarter exceeded $3.0 million;
    Backlog at quarter end was $16.8 million;
    Adjusted EBITDA on a year-to-date basis increased 37% over the prior year period;
    In Q3 PeaceHealth signed an agreement through a Streamline Health strategic partner to upgrade to AccessAnyWare® v5.1, and Oakwood Healthcare System expanded the use of Streamline Health’s document management solutions through a direct licensing agreement. Revenues from these agreements will be recognized in future periods and are included in “new bookings”.
Revenues for the third quarter totaled $4.3 million, compared to $4.5 million in the prior year third quarter. The prior year included systems sales revenues recognized from the sale of three large proprietary licenses.
Recurring revenues from maintenance contracts improved by 13% or $270,000 over the prior comparable third quarter. The increase is due to the continued revenue recognition from backlog, and the incremental maintenance revenues from systems sold in prior quarters for which maintenance periods commenced subsequent to their respective sales in prior quarters. SaaS revenues increased by $64,000 or 7% over the prior comparable quarter due to two large customer subscriptions which reached go-live status in fiscal 2011, as well as increased revenues due to contractual increases in storage fees as a result of increased customer usage and customer conversions to the SaaS model.

 

 


 

Total operating expenses for the third quarter of fiscal 2011 were $3.9 million compared with $4.3 million in the comparable prior year quarter. This decrease of approximately $400,000 was the result of management’s action to implement more sustainable staffing levels, processes, and costs; these reductions coupled with decreased capitalized software amortization due to older assets becoming fully amortized.
As a result, the Company recorded a net profit for the third quarter ended October 31, 2011 of $296,000, or $0.03 per fully diluted share, compared with a net profit of $95,000, or $0.01 per fully diluted share, for the prior year comparable quarter. Adjusted EBITDA* (a non-GAAP measure) for the quarter ended October 31, 2011 was $1,077,000, or $0.11 per fully diluted common share (adjusted), compared to $1,145,000, or $0.12 per fully diluted common share (adjusted) in the comparable prior quarter. A reconciliation table is provided below.
New bookings, primarily consisting of professional services, hardware and third party software, and maintenance contract renewals for the third quarter were approximately $3.0 million.
Backlog at October 31, 2011 was $16.8 million, compared with $19.5 million at October 31, 2010 and $17.6 million at January 31, 2011. The decrease in the current backlog reflects recognition of revenue from SaaS and maintenance contracts in the prior backlog offset by the addition to the backlog of new maintenance, software and professional services contracts sold in the quarters subsequent to October 31, 2010. The decrease in recurring maintenance backlog is primarily the result of the timing of the receipt of signed annual maintenance contracts or payment of the renewal invoice from some large customers as compared to the prior comparable period.
Robert E. Watson, president and chief executive officer of Streamline Health said, “While revenues are down slightly on a year-to-date basis, adjusted EBITDA for the nine month period is up 37% versus the comparable period last year and we were profitable for the quarter and returned to profitability on a year-to-date basis. This is meaningful progress despite the dual burden of high severance costs and the costs to bring on-board the appropriate executives and associates as we continue to reposition this company to achieve material annual growth rates consistent with other high growth healthcare information technology companies. As I’ve indicated previously, this is a process and we are moving along that continuum at a consistent rate. I am pleased with the progress this new management team has made in the three quarters of its tenure.”
Mr. Watson continued, “Continuing the trend noted in previous quarters, we are also pleased with the transition of Oakwood Healthcare System to a “direct client” and their additional purchase of our Epic© Integration Suite and FolderAnyWare solution, as well as the PeaceHealth agreement to upgrade to AccessAnyWare v5.1. We are confident that our solutions will help these clients improve patient care, save physician and staff time, and improve operating efficiencies. These are more examples of the new commitment of our sales force to gain a deeper understanding of our clients and to present solutions on how we might better meet their needs. In conjunction with a strong focus on managing operating expenses, we continue to make meaningful progress in our goal for Streamline Health to become a leading healthcare information technology company.”

 

2


 

* 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 webcast to review the results of the third quarter of fiscal 2011 tomorrow, December 7, 2011, at 11:00 a.m. ET.
Interested parties can access the call by dialing 877-269-7756, or listen via a live Internet webcast, which can be found at www.streamlinehealth.net or http://www.investorcalendar.com/IC/CEPage.asp?ID=166678.
In addition, a replay of the conference call will be archived and available until January 7, 2012 at the following number: 877-660-6853, account number: 396 and then conference ID: 383917.
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.

 

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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.
Financial Tables on Following Pages

 

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STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Nine Months Ended October 31,
(Unaudited)
                                 
    Three Months     Nine Months  
    2011     2010     2011     2010  
Revenues:
                               
Systems sales
  $ 232,395     $ 579,332     $ 526,597     $ 1,690,650  
Services, maintenance and support
    3,113,478       2,989,610       9,267,308       8,364,120  
Software as a service
    966,218       901,934       2,804,141       2,636,599  
 
                       
Total revenues
    4,312,091       4,470,876       12,598,046       12,691,369  
 
                       
 
                               
Operating expenses:
                               
Cost of systems sales
    583,388       737,385       1,751,890       2,255,780  
Cost of services, maintenance and support
    1,085,924       1,347,055       3,575,460       4,108,043  
Cost of software as a service
    480,368       480,327       1,334,659       1,409,453  
Selling, general and administrative
    1,494,891       1,361,657       4,742,084       4,565,097  
Product research and development
    303,973       400,133       1,063,903       1,437,451  
 
                       
Total operating expenses
    3,948,544       4,326,557       12,467,996       13,775,824  
 
                       
Operating income (loss)
    363,547       144,319       130,050       (1,084,455 )
Other income (expense):
                               
Interest expense
    (25,896 )     (31,585 )     (67,529 )     (87,921 )
Miscellaneous income (expenses)
    (36,885 )     (13,158 )     (42,155 )     29,628  
 
                       
Earnings (loss) before income taxes
    300,766       99,576       20,366       (1,142,748 )
Income tax expense
    (5,000 )     (5,000 )     (12,315 )     (15,000 )
 
                       
Net earnings (loss)
  $ 295,766     $ 94,576     $ 8,051     $ (1,157,748 )
 
                       
Basic net earnings (loss) per common share
  $ 0.03     $ 0.01     $ 0.00     $ (0.12 )
 
                       
Number of shares used in basic per common share computation
    9,943,567       9,536,051       9,823,937       9,486,233  
 
                       
Diluted net earnings (loss) per common share
  $ 0.03       0.01       0.00       (0.12 )
 
                       
Number of shares used in diluted per common share computation
    9,958,947       9,544,183       9,837,750       9,486,233  
 
                       
(1)   Software as a service was previously labeled “Application hosting services”; management determined that “Software as a service” more closely defines the Company’s service offering.

 

5


 

STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
                 
    (Unaudited)     (Audited)  
    October 31, 2011     January 31, 2011  
 
               
Current assets:
               
Cash and cash equivalents
  $ 300,438     $ 1,403,949  
Accounts receivable, net of allowance for doubtful accounts of $140,000 and $100,000, respectively
    2,423,203       2,620,756  
Contract receivables
    411,753       680,096  
Prepaid hardware and third party software for future delivery
    34,365       72,259  
Prepaid customer maintenance contracts
    776,253       794,299  
Other prepaid assets
    205,269       200,056  
Deferred income taxes
    167,000       167,000  
 
           
Total current assets
    4,318,281       5,938,415  
 
           
 
               
Property and equipment:
               
Computer equipment
    2,824,153       2,708,819  
Computer software
    2,037,063       1,947,135  
Office furniture, fixtures and equipment
    747,867       747,867  
Leasehold improvements
    639,864       639,864  
 
           
 
    6,248,947       6,043,685  
Accumulated depreciation and amortization
    (5,057,977 )     (4,517,860 )
 
           
 
    1,190,970       1,525,825  
 
           
Other assets:
               
Contract receivables, less current portion
    248,121       241,742  
Capitalized software development costs, net of accumulated amortization of $14,287,329 and $12,832,347, respectively
    8,090,082       7,575,064  
Other, including deferred income taxes of $711,000, respectively
    874,169       734,376  
 
           
Total other assets
    9,212,372       8,551,182  
 
           
 
  $ 14,721,623     $ 16,015,422  
 
           

 

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STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Liabilities and Stockholders’ Equity
                 
    (Unaudited)     (Audited)  
    October 31, 2011     January 31, 2011  
 
               
Current liabilities:
               
Accounts payable
  $ 726,861     $ 565,252  
Accrued compensation
    800,544       1,163,843  
Accrued other expenses
    279,563       480,422  
Capital lease obligation
    27,017       183,637  
Deferred revenues
    3,862,154       5,766,795  
 
           
Total current liabilities
    5,696,139       8,159,949  
 
           
 
               
Long-term liabilities:
               
Line of credit
    1,750,000       1,200,000  
Lease incentive liability, less current portion
    51,179       61,034  
 
           
Total liabilities
    7,497,318       9,420,983  
 
           
 
               
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, 10,053,980 and 9,856,517 shares issued and outstanding, respectively
    100,540       98,565  
Additional paid in capital
    37,595,082       36,975,242  
Accumulated deficit
    (30,471,317 )     (30,479,368 )
 
           
Total stockholders’ equity
    7,224,305       6,594,439  
 
           
 
  $ 14,721,623     $ 16,015,422  
 
           

 

7


 

STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended October 31,
(Unaudited)
                 
    2011     2010  
Operating activities:
               
Net earnings (loss)
  $ 8,051     $ (1,157,748 )
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
               
Depreciation and amortization
    2,008,432       2,550,778  
Loss on disposal of fixed asset
    26,667        
Stock-based compensation expense
    529,104       414,486  
Provision for accounts receivable
    40,000        
Change in assets and liabilities:
               
Accounts, contract and installment receivables
    419,517       (107,249 )
Other assets
    (89,066 )     180,874  
Accounts payable
    161,609       427,996  
Accrued expenses
    (574,012 )     (833,360 )
Deferred revenues
    (1,904,641 )     (918,608 )
 
           
Net cash provided by operating activities
    625,661       557,169  
 
           
 
               
Investing activities:
               
Purchases of property and equipment
    (245,262 )     (447,470 )
Capitalization of software development costs
    (1,970,000 )     (1,942,000 )
Other
          6,785  
 
           
Net cash used in investing activities
    (2,215,262 )     (2,382,685 )
 
           
 
               
Financing activities:
               
Net change under revolving credit facility
    550,000       1,500,000  
Proceeds from municipal incentive agreement
          8,172  
Proceeds from exercise of stock options and stock purchase plan
    92,711       135,341  
Payments on capital lease obligation
    (156,621 )     (177,698 )
 
           
Net cash provided by financing activities
    486,090       1,465,815  
 
           
Decrease in cash and cash equivalents
    (1,103,511 )     (359,701 )
Cash and cash equivalents at beginning of period
    1,403,949       1,025,173  
 
           
Cash and cash equivalents at end of period
  $ 300,438     $ 665,472  
 
           
Supplemental cash flow disclosures:
               
Interest paid
  $ 61,532     $ 87,639  
 
           
Income taxes paid
  $ 19,136     $ 54,741  
 
           

 

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STREAMLINE HEALTH SOLUTIONS, INC.
Backlog
(Unaudited)
Table A
Backlog
                         
    October 31, 2011     January 31, 2011     October 31, 2010  
Streamline Health Software Licenses
  $ 38,000     $ 121,000     $ 298,000  
Custom Software
    29,000       42,000       42,000  
Hardware and Third Party Software
    190,000       66,000       176,000  
Professional Services
    4,946,000       4,629,000       3,293,000  
Software as a service
    6,237,000       7,362,000       8,068,000  
Recurring Maintenance
    5,374,000       5,384,000       7,641,000  
 
                 
Total
  $ 16,814,000     $ 17,604,000     $ 19,518,000  
 
                 

 

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STREAMLINE HEALTH SOLUTIONS, INC.
Bookings
(Unaudited)
Table B
New bookings (a)
                 
    Three Months Ended  
    October 31, 2011  
    Value     % of Total Bookings  
Streamline Health Software licenses
  $ 125,000       9 %
Software as a service
    43,000       3 %
Professional services
    1,038,000       72 %
Hardware & third party software
    231,000       16 %
 
           
Total bookings
  $ 1,437,000       100 %
 
           
                 
    Nine Months Ended  
    October 31, 2011  
    Value     % of Total Bookings  
Streamline Health Software licenses
  $ 125,000       3 %
Software as a service
    1,110,000       27 %
Professional services
    2,396,000       59 %
Hardware & third party software
    463,000       11 %
 
           
Total bookings
  $ 4,094,000       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.

 

10


 

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.

 

11


 

Reconciliation of net earnings (loss) to non-GAAP adjusted EBITDA (in thousands)
                                 
    Three Months Ended,     Nine Months Ended,  
    October 31,     October 31,     October     October  
    2011     2010     31, 2011     31, 2010  
Adjusted EBITDA Reconciliation
                               
Net earnings (loss)
  $ 296     $ 95     $ 8     $ (1,158 )
Interest expense
    26       32       68       88  
Income tax expense
    5       5       12       15  
Depreciation and other amortization
    163       195       553       650  
Amortization of capitalized software development costs
    454       647       1,455       1,901  
 
                       
EBITDA
    944       974       2,096       1,496  
 
                       
Stock-based compensation expense
    133       171       529       414  
 
                       
Adjusted EBITDA
  $ 1,077     $ 1,145     $ 2,625     $ 1,910  
 
                       
Capitalized software development costs
    579       668       1,970       1,942  
Adjusted EBITDA, less capitalized software development costs
    498       477       655       (32 )
 
                       
Adjusted EBITDA Margin (1)
    12 %     11 %     5 %      
 
                       
 
                               
Adjusted EBITDA per diluted share
                               
Earnings (loss) per share — diluted
  $ 0.03     $ 0.01     $ 0.00     $ (0.12 )
Interest expense (2)
    0.00       0.00       0.01       0.01  
Tax expenses (2)
    0.00       0.00       0.00       0.00  
Depreciation and other amortization (2)
    0.02       0.02       0.06       0.07  
Amortization of capitalized software development costs (2)
    0.05       0.07       0.15       0.20  
Stock-based compensation expense (2)
    0.01       0.02       0.05       0.04  
 
                       
Adjusted EBITDA per adjusted diluted share
  $ 0.11     $ 0.12     $ 0.27     $ 0.20  
 
                       
 
                               
Diluted weighted average shares
    9,958,947       9,544,183       9,837,750       9,486,233  
Includable incremental shares — adjusted EBITDA (3)
                      8,132  
 
                       
Adjusted diluted shares
    9,958,947       9,544,183       9,837,750       9,494,365  
 
                       
(1)   Adjusted EBITDA as a percentage of GAAP revenues
 
(2)   Per adjusted diluted shares
 
(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. If negative adjusted EBITDA is incurred, no additional incremental shares are assumed for adjusted diluted shares.

 

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