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):  September 3, 2015

 

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)

 

(I.R.S. Employer Identification No.)

 

1230 Peachtree Street, NE, Suite 600

Atlanta, GA 30309

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code:  (404) 446-2052

 

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:

 

¨                                    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨                                    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨                                    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨                                    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 September 3, 2015, Streamline Health Solutions, Inc. (the “Company”) issued a press release announcing second quarter 2015 financial results.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information contained in this Item 2.02, as well as Exhibit 99.1 referenced herein, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor incorporated by reference in any filing under the Securities Act of 1933, as amended, unless the Company expressly so incorporates such information by reference.

 

Item 9.01.                                        Financial Statements and Exhibits.

 

(d)  Exhibits.

 

EXHIBIT

 

 

NUMBER

 

DESCRIPTION

 

 

 

99.1

 

Press release, dated September 3, 2015, regarding Second Quarter 2015 Financial Results.

 

1



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Streamline Health Solutions, Inc.

 

 

 

 

 

 

 

Date:

September 3, 2015

By:

/s/ Jack W. Kennedy Jr.

 

 

Name:

Jack W. Kennedy Jr.

 

 

Title:

Senior Vice President, Administration & Chief Legal Counsel

 

2



 

INDEX TO EXHIBITS

 

EXHIBIT

 

 

NUMBER

 

DESCRIPTION

 

 

 

99.1

 

Press release, dated September 3, 2015, regarding Second Quarter 2015 Financial Results.

 

3


Exhibit 99.1

 

 

News Release

 

STREAMLINE HEALTH® REPORTS SECOND QUARTER 2015 REVENUES OF $8.6 MILLION; ADJUSTED EBITDA OF $1.9 MILLION

 

Total First Half Fiscal 2015 Revenue $14.8 Million; Adjusted EBITDA $0.6 Million; Bookings $12 Million; $0.8M in Cash from Operations

 

Atlanta, GA — September 3, 2015 — Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of transformational data-driven solutions to help healthcare providers reduce exposure to risk, enhance clinical, financial, and operational performance, and improve patient care, today announced financial results for the second quarter of 2015, which ended July 31, 2015.

 

Revenues for the three-month period ended July 31, 2015 increased approximately 40% to $8.6 million over the April 30, 2015 quarter revenue of $6.2 million, and approximately 19% versus $7.2 million in the comparable period of fiscal 2014.  Revenues for the first six-month period of fiscal 2015 increased 4.2% over the first half of fiscal 2014.

 

Adjusted EBITDA for the second quarter 2015 improved to $1.9 million dollars as compared to $(1.3) million in the April 30, 2015 quarter; and up approximately 275% over the $0.5 million of Adjusted EBITDA from the second quarter one year ago.  Adjusted EBITDA for the first six months of fiscal 2015 totaled $0.6 million compared to effectively $0 through the first six months of fiscal 2014.

 

“I’m pleased to report a very solid quarter of performance in almost every category of measurement.  We have grown revenue and Adjusted EBITDA, improved our cash position and reduced our debt,” stated David Sides, President and Chief Executive Officer, Streamline Health.  “I said last quarter, my first full quarter as CEO, that I believed we had begun to turn the tide on our performance, and I think these results support that position.  We have much work to do, but there is great opportunity in front of us.”

 

Highlights for the second quarter ended July 31, 2015 included:

 

·                  Revenue for the second quarter 2015 was $8.6 million;

·                  Adjusted EBITDA for the second quarter 2015 was $1.9 million;

·                  Net loss for the second quarter 2015 was $0.6 million;

·                  New sales bookings for the quarter were $5.9 million; and

·                  Backlog at the end of the quarter was $69.7 million.

 



 

Conference Call Information

 

The Company will conduct a conference call to review the results on Thursday, September 3, 2015 at 5:00 PM ET. Interested parties can access the call by dialing 888-417-8465 and then entering passcode 6056218. A live webcast will also be available; click here to register.

 

A replay of the conference call will be available from Thursday, September 3, 2015 at 8:00 PM ET to Tuesday, September 8, 2015 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 6056218.

 

*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 reduce exposure to risk, enhance operational performance, and improve patient care. Through our Looking Glass® Platform we provide clients with meaningful, intelligent SaaS-based solutions from patient engagement to reimbursement. We share a common calling and commitment to advance the quality of life and the quality of healthcare — for society, our industry, 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 estimates of future revenue, backlog, net income, market opportunity, 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, key strategic alliances with vendors and channel partners that resell the Company’s solutions, the ability of the Company to control costs, availability of solutions from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates and nationally, and the Company’s ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on

 



 

these forward-looking statements, which reflect management’s analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

 

Company Contact:

 

Randy Salisbury

SVP, Chief Marketing Officer

(404)-229-4242

randy.salisbury@streamlinehealth.net

 



 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 31,

 

July 31,

 

 

 

2015

 

2014

 

2015

 

2014

 

Revenues:

 

 

 

 

 

 

 

 

 

Systems sales

 

$

1,941,601

 

$

314,085

 

$

2,240,217

 

$

653,291

 

Professional services

 

659,372

 

674,999

 

1,010,331

 

1,283,950

 

Maintenance and support

 

3,672,118

 

4,177,165

 

7,281,183

 

8,348,977

 

Software as a service

 

2,391,008

 

2,075,823

 

4,256,810

 

3,907,025

 

Total revenues

 

8,619,009

 

7,242,072

 

14,788,541

 

14,193,243

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of systems sales

 

694,794

 

834,324

 

1,421,585

 

1,669,792

 

Cost of services

 

647,569

 

778,691

 

1,419,065

 

1,765,116

 

Cost of maintenance and support

 

714,273

 

836,526

 

1,531,178

 

1,796,116

 

Cost of software as a service

 

702,769

 

571,464

 

1,441,600

 

1,343,043

 

Selling, general and administrative

 

3,779,114

 

4,054,794

 

8,285,288

 

8,695,250

 

Research and development

 

2,233,356

 

2,225,120

 

4,457,549

 

4,575,564

 

Total operating expenses

 

8,771,875

 

9,300,919

 

18,556,265

 

19,845,477

 

Operating loss

 

(152,776

)

(2,058,847

)

(3,767,724

)

(5,652,234

)

Other expense (income):

 

 

 

 

 

 

 

 

 

Interest expense

 

(248,175

)

(173,539

)

(492,116

)

(343,017

)

Miscellaneous income (expenses)

 

(159,814

)

(41,481

)

1,829,160

 

1,051,290

 

Loss before income taxes

 

(560,765

)

(2,273,867

)

(2,430,680

)

(4,943,961

)

Income tax benefit (expense)

 

(3,414

)

(1,145

)

468

 

(2,290

)

Net loss

 

$

(564,179

)

$

(2,275,012

)

$

(2,430,212

)

$

(4,946,251

)

Less: deemed dividends on Series A Preferred Shares

 

(325,018

)

(252,583

)

(620,675

)

(482,349

)

Net loss attributable to common shareholders

 

$

(889,197

)

$

(2,527,595

)

$

(3,050,887

)

$

(5,428,600

)

Basic net loss per common share

 

$

(0.05

)

$

(0.14

)

$

(0.16

)

$

(0.30

)

Number of shares used in basic per common share computation

 

18,628,288

 

18,174,193

 

18,614,622

 

18,160,213

 

Diluted net loss per common share

 

$

(0.05

)

$

(0.14

)

$

(0.16

)

$

(0.30

)

Number of shares used in diluted per common share computation

 

18,628,288

 

18,174,193

 

18,614,622

 

18,160,213

 

 



 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Assets

 

 

 

July 31,
2015

 

January 31,
2015

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

6,031,129

 

$

6,522,600

 

Accounts receivable, net of allowance for doubtful accounts of $597,811 and $665,962, respectively

 

9,034,755

 

6,935,270

 

Contract receivables

 

143,114

 

191,465

 

Prepaid hardware and third party software for future delivery

 

8,201

 

55,173

 

Prepaid client maintenance contracts

 

870,274

 

935,858

 

Other prepaid assets

 

1,185,770

 

1,437,680

 

Deferred income taxes

 

220,004

 

220,004

 

Other current assets

 

63,932

 

207,673

 

Total current assets

 

17,557,179

 

16,505,723

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Property and equipment:

 

 

 

 

 

Computer equipment

 

2,425,547

 

2,381,923

 

Computer software

 

750,532

 

964,857

 

Office furniture, fixtures and equipment

 

683,443

 

683,443

 

Leasehold improvements

 

727,654

 

724,015

 

 

 

4,587,176

 

4,754,238

 

Accumulated depreciation and amortization

 

(1,992,646

)

(1,617,423

)

Property and equipment, net

 

2,594,530

 

3,136,815

 

 

 

 

 

 

 

Contract receivables, less current portion

 

26,132

 

43,553

 

Capitalized software development costs, net of accumulated amortization of $13,404,226 and $11,846,468, respectively

 

7,639,360

 

9,197,118

 

Intangible assets, net of accumulated amortization of $4,001,143 and $3,326,683, respectively

 

8,825,857

 

9,500,317

 

Deferred financing costs, net of accumulated amortization of $49,063 and $13,677, respectively

 

305,615

 

387,199

 

Goodwill

 

16,184,667

 

16,184,667

 

Other

 

963,587

 

823,723

 

Total non-current assets

 

36,539,748

 

39,273,392

 

 

 

$

54,096,927

 

$

55,779,115

 

 



 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Liabilities and Stockholders’ Equity

 

 

 

July 31,
2015

 

January 31,
2015

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

2,682,679

 

$

2,298,851

 

Accrued compensation

 

953,619

 

865,865

 

Accrued other expenses

 

210,478

 

563,838

 

Current portion of long-term debt

 

577,530

 

500,000

 

Deferred revenues

 

10,695,093

 

9,289,076

 

Current portion of capital lease obligation

 

749,291

 

781,961

 

Total current liabilities

 

15,868,690

 

14,299,591

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Term loans

 

8,431,964

 

9,500,000

 

Warrants liability

 

566,296

 

1,834,380

 

Royalty liability

 

2,446,493

 

2,385,826

 

Lease incentive liability

 

360,030

 

342,129

 

Capital lease obligation

 

211,880

 

582,911

 

Deferred revenues, less current portion

 

1,318,748

 

964,933

 

Deferred income tax liability

 

220,005

 

229,579

 

Total non-current liabilities

 

13,555,416

 

15,839,758

 

Total liabilities

 

29,424,106

 

30,139,349

 

 

 

 

 

 

 

Series A 0% Convertible Redeemable Preferred stock, $.01 par value per share, $8,849,985 redemption value, 4,000,000 shares authorized, 2,949,995 issued and outstanding, net of unamortized preferred stock discount of $1,591,332 and $2,212,007, respectively

 

7,258,653

 

6,637,978

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $.01 par value per share, 45,000,000 shares authorized, 18,746,469 and 18,553,389 shares issued and outstanding, respectively

 

187,465

 

185,534

 

Additional paid in capital

 

79,231,085

 

78,390,424

 

Accumulated deficit

 

(62,004,382

)

(59,574,170

)

Total stockholders’ equity

 

17,414,168

 

19,001,788

 

 

 

$

54,096,927

 

$

55,779,115

 

 



 

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended July 31,

 

 

 

2015

 

2014

 

Operating activities:

 

 

 

 

 

Net loss

 

$

(2,430,212

)

$

(4,946,251

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation

 

625,239

 

360,986

 

Amortization of capitalized software development costs

 

1,557,758

 

1,830,628

 

Amortization of intangible assets

 

674,460

 

704,952

 

Amortization of other deferred costs

 

83,868

 

102,095

 

Valuation adjustment for warrants liability

 

(1,268,084

)

(1,224,407

)

Share-based compensation expense

 

1,283,459

 

865,142

 

Other valuation adjustments

 

94,351

 

78,970

 

Loss on disposal of fixed assets

 

34,228

 

83,236

 

Gain on early extinguishment of lease liability

 

(33,059

)

 

Provision for accounts receivable

 

89,002

 

13,692

 

Deferred tax expense

 

(9,574

)

 

Changes in assets and liabilities, net of assets acquired:

 

 

 

 

 

Accounts and contract receivables

 

(2,122,715

)

(1,264,184

)

Other assets

 

319,962

 

(853,586

)

Accounts payable

 

427,914

 

936,731

 

Accrued expenses

 

(276,301

)

(781,283

)

Deferred revenues

 

1,759,832

 

(180,110

)

Net cash provided by (used in) operating activities

 

810,028

 

(4,273,389

)

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(117,182

)

(1,635,952

)

Capitalization of software development costs

 

 

(351,316

)

Payment for acquisition

 

 

(5,890,402

)

Net cash used in investing activities

 

(117,182

)

(7,877,670

)

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

Principal repayments on term loan

 

(990,506

)

(505,950

)

Principal payments on capital lease obligation

 

(403,701

)

(49,509

)

Recovery (payment) of deferred financing costs

 

2,111

 

(112,800

)

Proceeds from exercise of stock options and stock purchase plan

 

207,779

 

50,206

 

Net cash used in financing activities

 

(1,184,317

)

(618,053

)

Decrease in cash and cash equivalents

 

(491,471

)

(12,769,112

)

Cash and cash equivalents at beginning of period

 

6,522,600

 

17,924,886

 

Cash and cash equivalents at end of period

 

$

6,031,129

 

$

5,155,774

 

 



 

STREAMLINE HEALTH SOLUTIONS, INC.

Backlog

(Unaudited)

Table A

 

 

 

July 31,
2015

 

January 31,
2015

 

July 31,
2014

 

Streamline Health Software Licenses

 

$

20,996,000

 

$

20,888,000

 

$

1,955,000

 

Third Party Hardware and Software

 

220,000

 

244,000

 

238,000

 

Professional Services

 

5,934,000

 

7,485,000

 

6,774,000

 

Maintenance and Support

 

22,921,000

 

21,304,000

 

25,608,000

 

Software as a Service

 

19,600,000

 

22,574,000

 

26,908,000

 

Total

 

$

69,671,000

 

$

72,495,000

 

$

61,483,000

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

(Unaudited)

Table B

 

 

 

Three Months Ended

 

 

 

July 31, 2015

 

 

 

Value

 

% of Total
Bookings

 

Streamline Health Software licenses

 

$

2,367,000

 

40

%

Software as a service

 

527,000

 

9

%

Maintenance and support

 

1,223,000

 

21

%

Professional services

 

1,745,000

 

30

%

Hardware & third party software

 

 

0

%

Total bookings

 

$

5,862,000

 

100

%

 



 

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C

 

This press release contains a non-GAAP financial measure under the rules of the U.S. Securities and Exchange Commission for adjusted EBITDA. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with disclosures required by generally accepted accounting principles. Non-GAAP financial measures are used internally to manage the business, such as in establishing an annual operating budget. 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. 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 earnings (loss) to non-GAAP adjusted EBITDA (in thousands)

 

 

 

Three Months Ended,

 

Six Months Ended,

 

Adjusted EBITDA Reconciliation

 

July 31,
2015

 

July 31,
2014

 

July 31,
2015

 

July 31,
2014

 

Net loss

 

$

(564

)

$

(2,275

)

$

(2,430

)

$

(4,946

)

Interest expense

 

248

 

174

 

492

 

343

 

Income tax (benefit) expense

 

3

 

1

 

 

2

 

Depreciation

 

311

 

210

 

625

 

361

 

Amortization of capitalized software development costs

 

775

 

914

 

1,558

 

1,831

 

Amortization of intangible assets

 

337

 

346

 

674

 

705

 

Amortization of other costs

 

7

 

43

 

48

 

71

 

EBITDA

 

1,117

 

(587

)

967

 

(1,633

)

Share-based compensation expense

 

631

 

422

 

1,283

 

865

 

Loss on disposal of fixed assets

 

 

83

 

34

 

83

 

Associate severances and other costs relating to transactions or corporate restructuring

 

67

 

126

 

206

 

576

 

Non-cash valuation adjustments to assets and liabilities

 

49

 

(46

)

(1,173

)

(1,145

)

Transaction related professional fees, advisory fees and other internal direct costs

 

7

 

11

 

20

 

175

 

Other non-recurring operating expenses

 

 

489

 

 

1,063

 

Other non-recurring income

 

 

 

(750

)

 

Adjusted EBITDA

 

$

1,871

 

$

498

 

$

587

 

$

(16

)

Adjusted EBITDA Margin(1)

 

22

%

7

%

4

%

%

Adjusted EBITDA per diluted share

 

 

 

 

 

 

 

 

 

Loss per share — diluted

 

$

(0.05

)

$

(0.14

)

$

(0.16

)

$

(0.30

)

Adjusted EBITDA per adjusted diluted share (2)

 

$

0.09

 

$

0.02

 

$

0.03

 

$

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares

 

18,628,288

 

18,174,193

 

18,614,622

 

18,160,213

 

Includable incremental shares — adjusted EBITDA (3)

 

2,237,608

 

3,614,119

 

2,623,593

 

 

Adjusted diluted shares

 

20,865,896

 

21,788,312

 

21,238,215

 

18,160,213

 

 



 


(1)

Adjusted EBITDA as a percentage of GAAP revenues

(2)

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.

(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.