Press Release

Streamline Health® Reports First Quarter 2015 Revenues Of $6.2 Million; Recurring Revenues Of 93%

Streamline Health® Reports First Quarter 2015 Revenues Of $6.2 Million; Recurring Revenues Of 93% 56.1 KB

ATLANTA, June 9, 2015 /PRNewswire/ -- 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 first quarter of 2015, which ended April 30, 2015.

Revenues for the three-month period ended April 30, 2015 decreased approximately 11% to $6.2 million versus $7.0 million in the comparable period of fiscal 2014. Adjusted EBITDA for the first quarter was $(1.3) million, down from $(0.5) million in the same period a year ago.

"While revenues for the first quarter declined from year ago period primarily due to the run rate impact of the previously discussed client attrition we experienced during fiscal year 2014, our solid bookings in Q1 has pushed our backlog to nearly $75 million. Today our committed, unimplemented quarterly recurring revenue stands at approximately $1.1 million, equating to nearly $4.5 million in annual revenues that are unrecognized at this time," stated David W. Sides, President and CEO, Streamline Health Solutions, Inc. "Given the healthy sales activity we are experiencing early into our second quarter, we firmly believe that our first quarter performance will represent the bottom of the curve. We believe that our key fundamentals will show improvement in the coming quarters, from continued solid bookings, to improving top line revenue growth, to cash on the balance sheet and reduction in our debt."

Highlights for the first quarter ended April 30, 2015 included:

Revenues for the first quarter 2015 were $6.2 million;
Adjusted EBITDA for the first quarter 2015 was $(1.3) million;
Recorded net loss of $(1.9) million for the three-month period ended April 30, 2015;
Maintenance and support revenues for the quarter decreased $0.5 million over the same period one year ago;
New sales bookings for the quarter were $6.4 million; and
Backlog at the end of the quarter was $74.6 million.

The Company will conduct a conference call to review the results on Tuesday, June 9, 2015 at 5:00 PM ET. Interested parties can access the call by dialing 888-572-7034 and then entering Conference ID 5377721. A live webcast will also be available; click here to register.

A replay of the conference call will be available from Tuesday, June 9, 2015 at 8:00 PM ET to Sunday, June 14, 2015 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 5377721.

*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, cash position, debt, backlog, renewal sales, interoperability among the Company's solutions, new client sales, success of the Company's channel partner relationships 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, 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
		April 30,
		2015		2014
Revenues:
Systems sales	$	298,616	$	339,205
Professional services		350,959		608,951
Maintenance and support		3,654,065		4,171,812
Software as a service		1,865,802		1,831,202
Total revenues		6,169,442		6,951,170

Operating expenses:
Cost of systems sales		726,791		835,468
Cost of services		771,496		986,425
Cost of maintenance and support		816,905		960,186
Cost of software as a service		738,831		771,579
Selling, general and administrative		4,506,174		4,640,456
Research and development		2,224,193		2,350,443
Total operating expenses		9,784,390		10,544,557
Operating loss		(3,614,948)		(3,593,387)
Other income (expense):
Interest expense		(243,941)		(169,478)
Miscellaneous income		1,988,974		1,092,771
Loss before income taxes		(1,869,915)		(2,670,094)
Income tax expense		3,882		(1,145)
Net loss	$	(1,866,033)	$	(2,671,239)
Less: deemed dividends on Series A Preferred Shares		(295,657)		(229,766)
Net loss attributable to common shareholders	$	(2,161,690)	$	(2,901,005)
Basic net loss per common share	$	(0.12)	$	(0.16)
Number of shares used in basic per common share computation		18,600,957		18,146,232
Diluted net loss per common share	$	(0.12)	$	(0.16)
Number of shares used in diluted per common share computation		18,600,957		18,146,232

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

Assets

		April 30, 2015		January 31, 2015

Current assets:
Cash and cash equivalents	$	5,269,706	$	6,522,600
Accounts receivable, net of allowance for doubtful
accounts of $700,083 and $665,962, respectively		6,255,485		6,935,270
Contract receivables		248,674		191,465
Prepaid hardware and third party software for
future delivery		30,978		55,173
Prepaid client maintenance contracts		1,006,895		935,858
Other prepaid assets		1,093,834		1,437,680
Deferred income taxes		220,004		220,004
Other current assets		114,052		207,673
Total current assets		14,239,628		16,505,723

Non-current assets:
Property and equipment:
Computer equipment		2,325,641		2,381,923
Computer software		750,532		964,857
Office furniture, fixtures and equipment		683,443		683,443
Leasehold improvements		727,654		724,015
		4,487,270		4,754,238
Accumulated depreciation and amortization		(1,683,426)		(1,617,423)
Property and equipment, net		2,803,844		3,136,815

Contract receivables, less current portion		34,842		43,553
Capitalized software development costs, net of
accumulated amortization of $12,628,936 and
$11,846,468, respectively		8,414,650		9,197,118
Intangible assets, net of accumulated amortization of
$3,663,913 and $3,326,683, respectively		9,163,087		9,500,317
Deferred financing costs, net of accumulated
amortization of $31,330 and $13,677, respectively		323,349		387,199
Goodwill		16,184,667		16,184,667
Other		826,603		823,723
Total non-current assets		37,751,042		39,273,392
	$	51,990,670	$	55,779,115

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

Liabilities and Stockholders' Equity

		April 30, 2015		January 31, 2015

Current liabilities:
Accounts payable	$	1,718,689	$	2,298,851
Accrued compensation		511,946		865,865
Accrued other expenses		779,523		563,838
Current portion of long-term debt		562,500		500,000
Deferred revenues		8,587,107		9,289,076
Current portion of capital lease obligation		766,442		781,961
Total current liabilities		12,926,207		14,299,591

Non-current liabilities:
Term loans		9,312,500		9,500,000
Warrants liability		567,916		1,834,380
Royalty liability		2,403,830		2,385,826
Lease incentive liability		352,155		342,129
Capital lease obligation		399,408		582,911
Deferred revenues, less current portion		1,203,125		964,933
Deferred income tax liability		220,005		229,579
Total non-current liabilities		14,458,939		15,839,758
Total liabilities		27,385,146		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 $1,916,350 and $2,212,007, respectively		6,933,635		6,637,978

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares
authorized, 18,657,974 and 18,553,389 shares issued and
outstanding, respectively		186,580		185,534
Additional paid in capital		78,925,512		78,390,424
Accumulated deficit		(61,440,203)		(59,574,170)
Total stockholders' equity		17,671,889		19,001,788
	$	51,990,670	$	55,779,115

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

		Three Months Ended April 30,
		2015		2014
Operating activities:
Net loss	$	(1,866,033)	$	(2,671,239)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation		314,325		150,660
Amortization of capitalized software development costs		782,468		916,868
Amortization of intangible assets		337,230		358,879
Amortization of other deferred costs		59,362		38,838
Valuation adjustment for warrants liability		(1,266,464)		(1,138,021)
Share-based compensation expense		651,982		442,876
Other valuation adjustments		43,412		38,200
Loss on disposal of property and equipment		34,228		-
Provision for accounts receivable		80,086		-
Deferred tax expense		(9,574)		-
Changes in assets and liabilities, net of effects of acquisitions:
Accounts and contract receivables		551,201		528,680
Other assets		346,036		(927,325)
Accounts payable		(536,076)		(142,824)
Accrued expenses		(117,157)		(378,084)
Deferred revenues		(463,777)		(1,161,803)
Net cash used in operating activities		(1,058,751)		(3,944,295)

Investing activities:
Purchases of property and equipment		(15,582)		(592,498)
Capitalization of software development costs		-		(193,379)
Payment for acquisition, net of cash received		-		(5,890,402)
Net cash used in investing activities		(15,582)		(6,676,279)

Financing activities:
Principal repayments on term loan		(125,000)		(202,380)
Principal payments on capital lease obligation		(199,022)		(23,985)
Payment of deferred financing costs		2,111		(112,800)
Proceeds from exercise of stock options and stock purchase plan		143,350		592
Net cash used in financing activities		(178,561)		(338,573)
Decrease in cash and cash equivalents		(1,252,894)		(10,959,147)
Cash and cash equivalents at beginning of period		6,522,600		17,924,886
Cash and cash equivalents at end of period	$	5,269,706	$	6,965,739

STREAMLINE HEALTH SOLUTIONS, INC.
Backlog
(Unaudited)
Table A

		April 30, 2015		January 31, 2015		April 30, 2014
Streamline Health Software Licenses	$	25,347,000	$	20,883,000	$	2,006,000
Third Party Hardware and Software		113,000		255,000		54,000
Professional Services		8,046,000		7,485,000		6,948,000
Maintenance and Support		19,616,000		21,297,000		27,114,000
Software as a Service		21,465,000		22,575,000		26,808,000
Total	$	74,587,000	$	72,495,000	$	62,930,000

STREAMLINE HEALTH SOLUTIONS, INC.
New Bookings
(Unaudited)
Table B

		Three Months Ended
		April 30, 2015
		Value	% of Total Bookings
Streamline Health Software licenses	$	4,736,000	74%
Software as a service		700,000	11%
Maintenance and support		5,000	0%
Professional services		966,000	15%
Hardware & third party software		-	0%
Total bookings	$	6,407,000	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)

Adjusted EBITDA Reconciliation		Three Months Ended,
		April 30, 2015		April 30, 2014
Net loss	$	(1,866)	$	(2,671)
Interest expense		244		169
Income tax expense		(4)		1
Depreciation		314		151
Amortization of capitalized software development costs		782		917
Amortization of intangible assets		337		359
Amortization of other costs		43		27
EBITDA		(150)		(1,047)
Share-based compensation expense		652		443
Loss of disposal of fixed assets		34		-
Associate severances and other costs relating to
transactions or corporate restructuring		140		451
Non-cash valuation adjustments to assets and liabilities		(1,223)		(1,100)
Transaction related professional fees, advisory fees and
other internal direct costs		12		164
Other non-recurring operating expenses		-		574
Other non-recurring expenses		(750)		-
Adjusted EBITDA	$	(1,285)	$	(515)	`
Adjusted EBITDA Margin⁽¹⁾		(21)%		(7)%
Adjusted EBITDA per diluted share
Loss per share - diluted	$	(0.12)	$	(0.16)
Adjusted EBITDA per adjusted diluted share ⁽²⁾	$	(0.07)	$	(0.03)

Diluted weighted average shares		18,600,957		18,146,232
Includable incremental shares — adjusted EBITDA ⁽³⁾		-		-
Adjusted diluted shares		18,600,957		18,146,232

(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.

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SOURCE Streamline Health Solutions, Inc.

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