Press Release

Streamline Health® Reports Third Quarter 2014 Revenues Of $6.8 Million; Recurring Revenues Up 11% Over Q3 2013

Streamline Health® Reports Third Quarter 2014 Revenues Of $6.8 Million; Recurring Revenues Up 11% Over Q3 2013 82.1 KB

ATLANTA, Dec. 9, 2014 /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 third quarter of 2014, which ended October 31, 2014.

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...

Revenues for the three-month period ended October 31, 2014, increased approximately 2% to $6.8 million versus $6.7 million in the comparable period of fiscal 2013. Recurring revenues increased 11% in the third quarter over the same period a year earlier and are up 13% YTD over the comparable first nine months of fiscal 2013.

"As previously announced, I'm pleased with the progress we are making in transitioning our Company to a recurring revenue model," stated Robert E. Watson, President and CEO, Streamline Health Solutions, Inc. "For the first nine months of this fiscal year, 89% of our total revenues are recurring, up from 76% for the first nine months of last year. Additionally, we established a new record amount of contract bookings in a single quarter of $21.3 million, consisting entirely of recurring license revenues and professional services. I have championed a strategy from day one to always try to sell our clients a SaaS-based or recurring revenue based contract versus a perpetual license and it is gratifying to see this kind of recurring revenue and new contract bookings performance."

"With such a successful quarter of new bookings, our committed, unimplemented quarterly recurring revenues continue to build, now standing at approximately $1.3 million up from $660,000 at the end of the previous quarter. That's more than $5 million in annual revenues that are unrecognized. Going forward we are focused on implementing various strategies that will help us convert this revenue in a more timely manner."

Highlights for the third quarter ended October 31, 2014 included:

Revenues for the third quarter 2014 was $6.8 million;
Adjusted EBITDA for the third quarter 2014 was $(278) thousand;
Recorded net loss of $2.3 million for the three-month period ended October 31, 2014;
Maintenance and support revenues for the quarter increased $0.5 million over the same period one year ago;
New sales bookings for the quarter were $21.3 million
Backlog at the end of the quarter was $75.9 million.

Conference Call Information

The Company will conduct a conference call to review the results on Tuesday, December 9, 2014 at 5:00 PM EST. Interested parties can access the call by dialing 888-505-4369 and then entering Conference ID 3681688 A live webcast will also be available; click here to register.

A replay of the conference call will be available from Tuesday, December 9, 2014 at 7:00 PM EST to Sunday, December 14, 2014 at 7:00 PM EST by dialing 888-203-1112 and entering passcode 3681688.

*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, renewal sales 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				Nine Months Ended
		Oct 31,				Oct 31,
		2014		2013		2014		2013
Revenues:
Systems sales	$	345,919	$	347,532	$	999,209	$	2,905,846
Professional services		447,939		966,962		1,731,888		2,925,553
Maintenance and support		4,062,442		3,523,551		12,411,419,		10,524,595
Software as a service		1,980,343		1,893,489		5,887,368		5,622,237
Total revenues		6,836,643		6,731,534		21,029,884		21,978,231

Operating expenses:
Cost of systems sales		835,398		611,887		2,505,190		1,911,609
Cost of services		681,350		1,262,559		2,446,466		3,503,765
Cost of maintenance and support		756,469		739,887		2,553,180		2,519,952
Cost of software as a service		770,347		520,062		2,113,390		1,613,217
Selling, general and administrative		4,230,347		3,373,230		12,925,597		10,362,246
Research and development		2,275,410		1,370,178		6,850,973		3,627,336
Total operating expenses		9,549,321		7,877,803		29,394,796		23,538,125
Operating loss		(2,712,678)		(1,146,269)		(8,364,912)		(1,559,894)
Other expense (income):
Interest expense		(180,583)		(580,390)		(523,599)		(1,734,763)
Loss on early extinguishment of debt		(114,522)		-		(114,522)		-
Miscellaneous income (expenses)		752,219		(4,510,439)		1,803,509		(6,316,867)
Loss before income taxes		(2,255,564)		(6,237,098)		(7,199,524)		(9,611,524)
Income tax benefit (expense)		-		4,680		(2,290)		(158,944)
Net loss	$	(2,255,564)	$	(6,232,418)	$	(7,201,814)	$	(9,770,468)
Less: deemed dividends on Series A Preferred Shares		(269,152)		(374,162)		(751,501)		(731,309)
Net loss attributable to common shareholders	$	(2,524,716)	$	(6,606,580)	$	(7,953,315)	$	(10,501,777)
Basic net loss per common share	$	(0.14)	$	(0.50)	$	(0.44)	$	(0.82)
Number of shares used in basic per common share computation		18,309,677		13,257,943		18,210,034		12,884,711
Diluted net loss per common share	$	(0.14)	$	(0.50)	$	(0.44)	$	(0.82)
Number of shares used in diluted per common share computation		18,309,677		13,257,943		18,210,034		12,884,711

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

Assets

		October 31, 2014		January 31, 2014

Current assets:
Cash and cash equivalents	$	5,944,750	$	17,924,886
Accounts receivable, net of allowance for doubtful
accounts of $477,994 and $267,264, respectively		5,917,038		7,999,571
Contract receivables		213,652		1,181,606
Prepaid hardware and third party software for
future delivery		33,473		25,640
Prepaid client maintenance contracts		1,017,261		909,464
Other prepaid assets		1,447,214		1,407,515
Deferred income taxes		95,498		95,498
Other current assets		55,694		144,049
Total current assets		14,724,580		29,688,229

Non-current assets:
Property and equipment:
Computer equipment		4,854,578		3,769,564
Computer software		2,521,293		2,239,654
Office furniture, fixtures and equipment		687,407		889,080
Leasehold improvements		1,227,999		697,570
		9,291,277		7,595,868
Accumulated depreciation and amortization		(6,012,436)		(6,676,824)
Property and equipment, net		3,278,841		919,044

Contract receivables, less current portion		52,263		78,395
Capitalized software development costs, net of
accumulated amortization of $10,904,467 and
$7,949,352, respectively		10,044,129		10,238,357
Intangible assets, net of accumulated amortization
of $2,981,391 and $1,930,366, respectively		11,797,610		12,175,634
Deferred financing, costs net of accumulated
amortization, $107,271 and $98,102, respectively		120,760		44,898
Goodwill		15,889,595		11,933,683
Other		841,432		500,634
Total non-current assets		42,024,630		35,890,645
	$	56,749,210	$	65,578,874

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

Liabilities and Stockholders' Equity

		October 31, 2014		January 31, 2014

Current liabilities:
Accounts payable	$	2,173,577	$	1,796,418
Accrued compensation		1,073,771		1,782,599
Accrued other expenses		962,247		554,877
Current portion of long-term debt		1,214,280		1,214,280
Deferred revenues		8,215,846		9,658,232
Current portion of note payable		-		300,000
Current portion of capital lease obligation		795,339		105,573
Total current liabilities		14,435,060		15,411,979

Non-current liabilities:
Term loans		5,887,331		6,971,767
Warrants liability		1,791,901		4,117,725
Royalty liability		2,376,564		2,264,000
Swap contract		-		111,086
Note payable		600,000		600,000
Lease incentive liability, less current portion		220,883		74,434
Capital lease obligation		772,804		121,089
Deferred revenues, less current portion		114,433		-
Deferred income tax liability, less current portion		825,677		816,079
Total non-current liabilities		12,589,593		15,076,180
Total liabilities		27,024,653		30,488,159

Series A 0% Convertible Redeemable Preferred stock, $.01 par value per share, $8,849,985 and $8,849,985 redemption value, 4,000,000 shares authorized, 2,949,995 and 2,949,995 issued and outstanding, net of unamortized preferred stock discount of $2,498,816 and $3,250,317, respectively		6,351,169		5,599,668

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares
authorized, 18,458,745 and 18,175,787 shares issued and
outstanding, respectively		184,588		181,758
Additional paid in capital		77,953,327		76,983,088
Accumulated deficit		(54,764,527)		(47,562,713)
Accumulated other comprehensive loss		-		(111,086)
Total stockholders' equity		23,373,388		29,491,047
	$	56,749,210	$	65,578,874

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

		Nine Months Ended Oct 31,
		2014		2013
Operating activities:
Net loss	$	(7,201,814)	$	(9,770,468)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation		670,955		490,043
Amortization of capitalized software development costs		2,735,990		2,086,885
Amortization of intangible assets		1,051,025		946,228
Amortization of other deferred costs		172,804		296,942
Valuation adjustment for warrants liability		(2,325,824)		2,082,789
Share-based compensation expense		1,286,145		1,203,919
Other valuation adjustments		119,593		4,140,441
Loss on disposal of fixed assets		110,710		-
Loss on exit of operating lease		234,823		-
Provision for accounts receivable		252,803		-
Deferred tax expense		-		150,634
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables		3,360,780		2,509,842
Other assets		(314,501)		(627,883)
Accounts payable		410,395		87,014
Accrued expenses		(801,074)		(150,206)
Deferred revenues		(2,124,790)		(2,683,899)
Net cash (used in) provided by operating activities		(2,361,980)		762,281

Investing activities:
Purchases of property and equipment		(1,862,855)		(106,392)
Capitalization of software development costs		(503,464)		(1,047,938)
Payment for acquisition		(6,058,225)		(3,000,000)
Net cash used in investing activities		(8,424,544)		(4,154,330)

Financing activities:
Principal repayments on term loan		(910,710)		(937,501)
Principal repayments on note payable		(300,000)		-
Principal payments on capital lease obligation		(165,115)		-
Payment of deferred financing costs		(256,212)		-
Proceeds from exercise of stock options and stock purchase plan		438,425		1,093,285
Net cash (used in) provided by financing activities		(1,193,612)		155,784
Decrease in cash and cash equivalents		(11,980,136)		(3,236,265)
Cash and cash equivalents at beginning of period		17,924,886		7,500,256
Cash and cash equivalents at end of period	$	5,944,750	$	4,263,991

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

		October 31, 2014		January 31, 2014		October 31, 2013
Streamline Health Software Licenses	$	21,103,000	$	2,230,000	$	2,529,000
Hardware and Third Party Software		126,000		79,000		20,000
Professional Services		8,095,000		7,255,000		7,141,000
Maintenance and Support		21,657,000		25,936,000		28,234,000
Software as a Service		24,928,000		21,073,000		17,087,000
Total	$	75,909,000	$	56,573,000	$	55,011,000

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

		Three Months Ended
		Oct 31, 2014
		Value	% of Total Bookings
Streamline Health Software licenses	$	19,463,000	91.6%
Software as a service		-	0.0%
Maintenance and support		30,000	0.1%
Professional services		1,766,000	8.3%
Hardware & third party software		-	0.0%
Total bookings	$	21,259,000	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 U.S. 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				Nine Months Ended
		Oct 31, 2014		Oct 31, 2013		Oct 31, 2014		Oct 31, 2013
Net loss	$	(2,256)	$	(6,232)	$	(7,202)	$	(9,770)
Interest expense		181		580		524		1,735
Income tax expense		-		(5)		2		159
Depreciation		310		152		671		490
Amortization of capitalized software
development costs		905		691		2,736		2,087
Amortization of intangible assets		346		314		1,051		946
Amortization of other costs		50		23		121		47
EBITDA		(464)		(4,477)		(2,097)		(4,306)
Share-based compensation expense		421		378		1,286		1,204
Loss on disposal of fixed assets		27		-		111		-
Loss on early extinguishment of debt		115		-		115		-
Associate severances and other costs
relating to transactions or corporate
restructuring		255		-		831		383
Non-cash valuation adjustments to
assets and liabilities		(1,061)		4,514		(2,206)		6,223
Transaction related professional
fees, advisory fees and other
internal direct costs		1		138		176		363
Non-recurring operating expenses		428		-		1,491		53
Adjusted EBITDA	$	(278)	$	553	$	(293)	$	3,920
Adjusted EBITDA Margin⁽¹⁾		(4%)		8%		(1%)		18%
Adjusted EBITDA per diluted share
Earnings (loss) per share - diluted	$	(0.14)	$	(0.50)	$	(0.44)	$	(0.82)
Adjusted EBITDA per adjusted diluted share ⁽²⁾	$	(0.02)	$	0.03	$	(0.02)	$	0.22

Diluted weighted average shares		18,309,677		13,257,943		18,210,034		12,884,711
Includable incremental shares — adjusted EBITDA ⁽³⁾		-		5,058,763		-		5,130,937
Adjusted diluted shares		18,309,677		18,316,706		18,210,034		18,015,648

(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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