Press Release

Streamline Health® Reports Fourth Quarter And Fiscal Year 2015 Financial Performance

Streamline Health® Reports Fourth Quarter And Fiscal Year 2015 Financial Performance 83.4 KB

ATLANTA, April 20, 2016 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), provider of the Looking Glass® platform of integrated solutions and analytics supporting revenue cycle optimization for healthcare enterprises in the new value-based world, today announced financial results for the fourth quarter and fiscal year of 2015, which ended January 31, 2016.

Streamline Health Solutions, Inc. 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(TM) 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 . (PRNewsFoto/Streamline Health Solutions, Inc.)

Revenue for the three-month period ended January 31, 2016 declined 3.4 percent to $6.4 million as compared to the three-months ending January 31, 2015. Adjusted EBITDA for the fourth quarter was $0.5 million, up from $(0.7) million in the same period a year ago. Net loss for the fourth quarter was $1.8 million, improved from a $5.1 million net loss in the same period a year ago.

Revenues for fiscal year 2015 were $28.3 million, up 2.5% from $27.6 million the previous fiscal year. Recurring revenues for the year constituted 85% of overall revenue, or $24.1 million. Adjusted EBITDA for the fiscal year was $2.8 million, up from ($1.0) million in fiscal year 2014.

"2015 was a year of significant improvement over 2014 in terms of our balance sheet and operational efficiency," stated David Sides, President and Chief Executive Officer, Streamline Health. "Cash from operations improved year over year by nearly $9 million from ($3.0) million to $5.9 million. We increased our total cash on hand by $3.4 million and reduced our term loans by $1.5 million. In addition, we improved Adjusted EBITDA by $3.8 million year over year.

We have begun investing significantly in sales and marketing to ramp up our revenue growth going forward and are rebalancing our solution development efforts from a stability emphasis to one focused on innovation that addresses our future client needs and drives higher quality for our users as our industry moves to value-based care."

Highlights for the fourth quarter and fiscal year ended January 31, 2016 included:

Revenues for the fourth quarter 2015 were $6.4 million, and for the year were $28.3 million;
Adjusted EBITDA for the fourth quarter 2015 was $0.5 million, and for the year was $2.8 million;
Recorded net loss of $(1.4) million for the three-month period ended January 31, 2016, and $(4.3) million for the fiscal year 2015;
New sales bookings for the quarter were $2.0 million and $15.3 million for the fiscal year; and
Backlog at the end of the quarter was $67.1 million.

Conference Call Information

The Company will conduct a conference call to review the results on Wednesday, April 20, 2016 at 5:00 PM ET. Interested parties can access the call via live webcast; click here to register. The call can also be accessed by dialing 888-359-3624 and then entering passcode 2145327.

A replay of the conference call will be available from Wednesday, April 20, 2016 at 8:00 PM ET to Monday, April 25, 2016 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 2145327.

*Non-GAAP Financial Measures

Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). Streamline Health's management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health's management believes that this measure provides useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, and professional and advisory fees. A table illustrating this measure is included in this press release.

About Streamline Health
Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge - actionable insights that support revenue cycle optimization for healthcare enterprises. Our Looking Glass® platform delivers integrated solutions and analytics that enable providers to drive reimbursement in a value-based world. We share a common calling and commitment to advance the quality of life and the quality of healthcare - for society, our clients, the communities they serve, and the individual patient. For more information, please visit our website at www.streamlinehealth.net.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995
Statements made by Streamline Health Solutions, Inc. that are not historical facts are forward-looking statements that are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. Forward-looking statements contained in this press release include, without limitation, statements regarding the Company's estimates of future revenue, backlog, results of investments in sales and marketing, success of future products and related expectations and assumptions. These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development and enhancement of current solutions, key strategic alliances with vendors and channel partners that resell the Company's solutions, the ability of the Company to control costs, 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 January 31,				Fiscal Year Ended
		2016		2015		2016		2015
Revenues:
Systems sales	$	378,594	$	215,670	$	2,946,304	$	1,214,879
Professional services		580,124		848,279		2,212,002		2,580,167
Maintenance and support		3,829,816		3,745,952		15,145,480		16,157,371
Software as a service		1,582,314		1,785,622		8,010,672		7,672,990
Total revenues		6,370,848		6,595,523		28,314,458		27,625,407

Operating expenses:
Cost of systems sales		660,632		1,031,305		2,778,041		3,536,495
Cost of services		894,852		1,012,518		3,143,881		3,458,984
Cost of maintenance and support		738,778		534,662		3,036,550		3,087,842
Cost of software as a service		389,385		807,013		2,442,143		2,920,403
Selling, general and administrative		2,806,429		3,299,977		13,442,799		16,225,574
Research and development		2,377,712		2,905,233		9,093,353		9,756,206
Impairment of intangible assets		--		1,952,000		--		1,952,000
Total operating expenses		7,867,788		11,542,708		33,936,767		40,937,504
Operating loss		(1,496,940)		(4,947,185)		(5,622,309)		(13,312,097)
Other income (expense):
Interest expense		(185,824)		(225,370)		(884,226)		(748,969)
Loss on early extinguishment of debt		--		(315,327)		--		(429,849)
Miscellaneous income (expenses)		284,880		(211,060)		2,224,423		1,592,449
Loss before income taxes		(1,397,884)		(5,698,942)		(4,282,112)		(12,898,466)
Income tax (expense) benefit		(5,358)		889,299		(8,003)		887,009
Net loss	$	(1,403,242)	$	(4,809,643)	$	(4,290,115)	$	(12,011,457)
Less: deemed dividends on Series A Preferred Shares		(369,058)		(286,809)		(1,336,072)		(1,038,310)
Net loss attributable to common shareholders	$	(1,772,300)	$	(5,096,452)	$	(5,626,187)	$	(13,049,767)
Basic net loss per common share	$	(0.09)	$	(0.28)	$	(0.30)	$	(0.71)
Number of shares used in basic per common share computation		18,689,854		18,417,100		18,689,854		18,261,800
Diluted net loss per common share	$	(0.09)	$	(0.28)	$	(0.30)	$	(0.71)
Number of shares used in diluted per common share computation		18,689,854		18,417,100		18,689,854		18,261,800

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

Assets

		January 31,
		2016		2015
Current assets:
Cash and cash equivalents	$	9,882,136	$	6,522,600
Accounts receivable, net of allowance for doubtful accounts of $155,407 and $665,962, respectively		4,199,315		6,935,270
Contract receivables		119,697		191,465
Prepaid hardware and third party software for future delivery		5,858		55,173
Prepaid client maintenance contracts		956,913		935,858
Other prepaid assets		941,532		1,437,680
Deferred income taxes		--		220,004
Other current assets		97,986		207,673
Total current assets		16,203,437		16,505,723

Non-current assets:
Property and equipment:
Computer equipment		2,647,135		2,381,923
Computer software		801,895		964,857
Office furniture, fixtures and equipment		683,443		683,443
Leasehold improvements		729,348		724,015
		4,861,821		4,754,238
Accumulated depreciation and amortization		(2,407,746)		(1,617,423)
Property and equipment, net		2,454,075		3,136,815

Contract receivables, less current portion		8,711		43,553
Capitalized software development costs, net of accumulated amortization of $14,919,948 and $11,846,468 respectively		6,123,638		9,197,118
Intangible assets, net of accumulated amortization of $84,531 and $13,677, respectively		8,155,325		9,500,317
Deferred financing costs		270,147		387,199
Goodwill		16,184,667		16,184,667
Other		746,018		823,723
Total non-current assets		33,942,581		39,273,392
	$	50,146,018	$	55,779,115

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

Liabilities and Stockholders' Equity


		January 31,
		2016		2015
Current liabilities:
Accounts payable	$	1,136,779	$	2,298,851
Accrued compensation		935,324		865,865
Accrued other expenses		328,551		563,838
Current portion of long-term debt		673,807		500,000
Deferred revenues		10,447,280		9,289,076
Current portion of capital lease obligation		592,642		781,961
Total current liabilities		14,114,383		14,299,591

Non-current liabilities:
Term loans		7,861,084		9,500,000
Warrants liability		205,113		1,834,380
Royalty liability		2,291,888		2,385,826
Lease incentive liability, less current portion		369,406		342,129
Capital lease obligation		93,257		582,911
Deferred revenues, less current portion		1,212,709		964,933
Deferred income tax liability, less current portion		--		229,579
Total non-current liabilities		12,033,457		15,839,758
Total liabilities		26,147,840		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 $875,935 and $2,212,007, respectively		7,974,050		6,637,978

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares authorized, 18,783,540 and 18,553,389 shares issued and outstanding, respectively		187,836		185,534
Additional paid in capital		79,700,577		78,390,424
Accumulated deficit		(63,864,285)		(59,574,170)
Total stockholders' equity		16,024,128		19,001,788
	$	50,146,018	$	55,779,115

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

		Fiscal Year
		2015		2014
Operating activities:
Net loss	$	(4,290,115)	$	(12,011,457)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation		1,245,400		1,005,283
Amortization of capitalized software development costs		3,073,479		3,677,991
Amortization of intangible assets		1,344,992		1,396,317
Amortization of other deferred costs		206,881		189,107
Amortization of debt discounts		--		47,552
Valuation adjustment for warrants liability		(1,629,267)		(2,283,345)
Deferred tax expense (benefit)		(9,575)		(720,582)
Other valuation adjustments		(39,299)		128,855
Gain from early extinguishment of lease liability		(33,059)		--
Loss on impairment of intangible assets		--		1,952,000
Loss from early extinguishment of debt		--		315,327
Loss on disposal of fixed assets		92,448		180,793
Loss on exit of operating lease		--		234,823
Share-based compensation expense		2,386,490		1,934,298
Provision for accounts receivable		124,235		440,771
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables		2,718,330		2,157,977
Other assets		575,774		(637,348)
Accounts payable		(1,117,986)		600,263
Accrued expenses		(174,133)		(1,422,571)
Deferred revenues		1,405,980		(197,698)
Net cash provided by (used in) operating activities		5,880,575		(3,011,644)

Investing activities:
Purchases of property and equipment		(518,254		(2,125,240)
Capitalization of software development costs		--		(619,752)
Payment for acquisition, net of cash acquired		--		(6,058,225)
Net cash used in investing activities		(518,254)		(8,803,217)

Financing activities:
Proceeds from term loan		--		10,000,000
Principal repayments on term loan		(1,465,109)		(8,297,620)
Principal repayments on note payable		--		(900,000)
Principal payments on capital lease obligation		(815,826)		(368,386)
Payment of deferred financing costs		2,111		(573,002)
Proceeds from exercise of stock options and stock purchase plan		276,039		551,583
Net cash provided by (used in) financing activities		(2,002,785)		412,575
Increase (decrease) in cash and cash equivalents		3,359,536		(11,402,286)
Cash and cash equivalents at beginning of year		6,522,600		17,924,886
Cash and cash equivalents at end of year	$	9,882,136	$	6,522,600

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

		January 31, 2016		October 31, 2015		January 31, 2015
Streamline Health Software Licenses	$	21,586,000	$	21,533,000	$	20,888,000
Hardware and Third Party Software		200,000		200,000		244,000
Professional Services		5,803,000		5,951,000		7,485,000
Maintenance and Support		23,292,000		21,057,000		21,304,000
Software as a Service		16,264,000		18,738,000		22,574,000
Total	$	67,145,000	$	67,479,000	$	72,495,000

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

		Fiscal Year Ended
		January 31, 2016
		Value	% of Total Bookings
Streamline Health Software licenses	$	7,153,000	47%
Software as a service		2,519,000	16%
Maintenance and support		1,318,000	9%
Professional services		4,262,000	28%
Hardware & third party software		41,000	0%
Total bookings	$	15,293,000	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. Streamline Health's management in its operating and financial decision-making uses non-GAAP financial measures because management believes these measures reflect ongoing business in a manner that allows meaningful period-to-period comparisons. Accordingly, the Company believes it is useful for investors and others to review both GAAP and non-GAAP measures in order to (a) understand and evaluate current operating performance and future prospects in the same manner as management does and (b) compare in a consistent manner the Company's current financial results with past financial results. The primary limitations associated with the use of non-GAAP financial measures are that these measures may not be directly comparable to the amounts reported by other companies and they do not include all items of income and expense that affect operations. The Company's management compensates for these limitations by considering the company's financial results and outlook as determined in accordance with GAAP and by providing a detailed reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures in the tables attached to this press release. Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.

Reconciliation of net earnings (loss) to non-GAAP adjusted EBITDA (in thousands):

Adjusted EBITDA Reconciliation		Three Months Ended,				Twelve Months Ended,
		January 31, 2016		January 31, 2015		January 31, 2016		January 31, 2015
Net loss	$	(1,403)	$	(4,809)	$	(4,290)	$	(12,011)
Interest expense		186		225		884		749
Income tax benefit		5		(889)		8		(887)
Depreciation		314		334		1,245		1,005
Amortization of capitalized software development costs		741		942		3,073		3,678
Amortization of intangible assets		333		345		1,345		1,396
Amortization of other costs		46		45		136		166
EBITDA		222		(3,807)		2,402		(5,904)
Share-based compensation expense		527		648		2,386		1,934
Loss on impairment of intangibles		--		1,952		--		1,952
Loss on early extinguishment of debt		--		315		--		430
Loss on disposal of fixed assets		--		70		92		181
Non-cash valuation adjustments to assets and liabilities		(317)		52		(1,669)		(2,154)
Transaction related professional fees, advisory fees and
other internal direct costs		40		6		93		182
Associate severances and other costs relating to
transactions or corporate restructuring		--		70		206		901
Other non-recurring operating expenses		--		--		(750)		1,491
Adjusted EBITDA	$	472	$	(694)	$	2,761	$	(987)
Adjusted EBITDA per diluted share
Loss per share - diluted	$	(0.09)	$	(0.28)	$	(0.30)	$	(0.71)
Adjusted EBITDA per adjusted diluted share ⁽¹⁾	$	0.03	$	(0.04)	$	0.15	$	(0.05)

Diluted weighted average shares		18,689,854		18,417,100		18,689,854		18,261,800
Includable incremental shares — adjusted EBITDA ⁽²⁾		--		--		--		--
Adjusted diluted shares		18,689,854		18,417,100		18,689,854		18,261,800

(1)	Adjusted EBITDA per adjusted diluted share for the Company's common stock is computed using the more dilutive of the two-class method or the if-converted method.
(2)	The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP net loss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.

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