Press Release

Streamline Health® Reports Third Quarter 2017 Revenues of $6.4 Million; Breakeven Net Income; Adjusted EBITDA of $1.5 Million

Streamline Health® Reports Third Quarter 2017 Revenues of $6.4 Million; Breakeven Net Income; Adjusted EBITDA of $1.5 Million 99 KB

ATLANTA, Dec. 12, 2017 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), provider of integrated solutions, technology-enabled services and analytics supporting revenue cycle optimization for healthcare enterprises, today announced financial results for the third quarter of fiscal 2017, which ended October 31, 2017.

Streamline Health helps hospitals optimize their mid-revenue cycle operations in ways that transform tangled revenue cycles into dynamic revenue streams. Our integrated solutions, technology-enabled services and analytics enable providers to secure accurate reimbursement in a value-based world. (PRNewsfoto/Streamline Health Solutions)

Revenues for the three-month period ended October 31, 2017 decreased approximately 3% to $6.4 million over the revenues for the three-month period ended October 31, 2016 of $6.6 million, but increased approximately 8% over the second quarter of 2017. Recurring revenue comprised 79% of total revenue in the quarter.

Net income for the third quarter of fiscal 2017 was essentially breakeven ($3 thousand) as compared to a ($2.0 million) net loss in the same period a year ago.

Adjusted EBITDA for the third quarter of fiscal 2017 was $1.5 million, up from $0.2 million in the third quarter of 2016.

"Our third quarter financial performance improved from the second quarter primarily due to an increase in professional services and some recurring revenue as we experienced growth with existing clients in expanding the number of facilities utilizing our software. During the quarter, we continued to attract new clients as we added six new clients to the Streamline family, and importantly closed four contracts for our new Streamline Health eValuator™ technology," stated David Sides, President and Chief Executive Officer, Streamline Health. "Our bookings momentum continues to build, growing to $1.9 million in the third quarter as we realize some of the potential in our expanding pipeline of current clients and prospects, primarily around eValuator technology and Auditing Services. We are pleased to have closed our fifth new eValuator deal in the month of November and anticipate closing more new deals before our fiscal year end.

"Our balance sheet changed slightly from the second quarter of this year as our cash on hand decreased approximately $1 million while debt declined by approximately $100,000, but we continue to anticipate our cash balance climbing substantially by year end based on our quarterly cash cyclicality."

Highlights for the three months ended October 31, 2017 included:

Revenue for the third quarter 2017 was $6.4 million;
Net income for the third quarter 2017 was $3 thousand;
Adjusted EBITDA for the third quarter 2017 was $1.5 million;
New sales bookings for the quarter were $1.9 million; and
Backlog at the end of the quarter was $47.7 million.

Conference Call Information
An accompanying conference call will be hosted by David Sides, Chief Executive Officer and Nicholas Meeks, Senior Vice President and Chief Financial Officer. The call will be held at 9:00 AM ET, on Wednesday, December 13, 2017 and will be accompanied by a live webcast. Please refer to the information below for conference call dial-in information and webcast registration.

Conference Date: December 13, 2017, 9:00 AM ET

Webcast Registration: Click Here

Conference Dial-In: 866-548-4713

Conference Passcode: 1764102

Conference Call Name: Streamline Health Solutions Third Quarter 2017 Results Call

Following the call, a replay will be available on the Company's website, www.streamlinehealth.net, in the Investor Relations section.

*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 severance and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions. 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 - providing actionable insights that support revenue cycle optimization for healthcare enterprises. We deliver 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, cash balances, 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				Nine Months Ended
		October 31,				October 31
		2017		2016		2017		2016
Revenues:
Systems sales	$	348,526	$	314,218	$	1,055,941	$	2,190,256
Professional services		801,771		630,961		1,793,618		1,869,656
Audit Services		280,025		234,347		919,485		234,347
Maintenance and support		3,250,229		3,749,596		9,883,563		11,237,637
Software as a service		1,718,748		1,706,366		4,586,532		5,144,876
Total revenues		6,399,299		6,635,488		18,239,139		20,676,772

Operating expenses:
Cost of systems sales		434,138		663,148		1,596,988		2,080,263
Cost of professional services		555,815		723,358		1,814,236		1,891,146
Cost of Audit Services		404,280		595,575		1,236,358		595,575
Cost of maintenance and support		667,307		790,291		2,241,969		2,483,462
Cost of software as a service		289,503		450,695		914,711		1,390,308
Selling, general and administrative		2,819,549		3,212,350		8,983,248		10,153,140
Research and development		932,251		1,969,415		3,985,161		5,800,169
Total operating expenses		6,102,843		8,404,832		20,772,671		24,394,063
Operating income (loss)		296,456		(1,769,344)		(2,533,532)		(3,717,291)
Other expense:
Interest expense		(113,078)		(98,871)		(360,723)		(380,897)
Miscellaneous expense		(177,282)		(60,555)		(235,007)		(39,089)
Earnings (loss) before income taxes		6,096		(1,928,770)		(3,129,262)		(4,137,277)
Income tax benefit (expense)		(2,607)		(1,702)		(7,822)		(5,104)
Net earnings (loss)	$	3,489	$	(1,930,472)	$	(3,137,084)	$	(4,142,381)
Less: deemed dividends on Series A Preferred Shares		--		(72,710)		--		(875,935)
Net loss attributable to common shareholders	$	3,489	$	(2,003,182)	$	(3,137,084)	$	(5,018,316)
Basic net loss per common share	$	--	$	(0.10)	$	(0.16)	$	(0.26)
Number of shares used in basic per common share computation		19,985,822		19,645,521		19,838,691		19,477,538
Diluted net loss per common share	$	--	$	(0.10)	$	(0.16)	$	(0.26)
Number of shares used in diluted per common share computation		23,068,423		19,645,521		19,838,691		19,477,538

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Assets
		October 31,		January 31,
		2017		2017
Current assets:
Cash and cash equivalents	$	1,892,182	$	5,654,093
Accounts receivable, net of allowance for doubtful accounts of $301,773 and $198,449, respectively		2,532,941		4,489,789
Contract receivables		283,973		466,423
Prepaid hardware and third party software for future delivery		5,858		5,858
Prepaid client maintenance contracts		587,960		595,633
Other prepaid assets		837,649		732,496
Other current assets		392,449		439
Total current assets		6,533,012		11,944,731

Non-current assets:
Property and equipment:
Computer equipment		2,971,361		3,110,274
Computer software		725,700		827,642
Office furniture, fixtures and equipment		683,443		683,443
Leasehold improvements		729,348		729,348
		5,109,852		5,350,707
Accumulated depreciation and amortization		(3,762,821)		(3,447,198)
Property and equipment, net		1,347,031		1,903,509

Capitalized software development costs, net of accumulated amortization of $18,119,290 and $16,544,797 respectively		4,346,694		4,584,245
Intangible assets, net of accumulated amortization of $6,729,799 and $5,807,338, respectively		6,074,137		6,996,599
Goodwill		15,537,281		15,537,281
Other		677,319		672,133
Total non-current assets		27,982,462		29,693,767
	$	34,515,474	$	41,638,498

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Liabilities and Stockholders' Equity
		October 31,			January 31,
		2017		2017
Current liabilities:
Accounts payable	$	807,778	$	1,116,525
Accrued compensation		593,510		496,706
Accrued other expenses		587,209		484,391
Current portion of term loan		596,984		655,804
Deferred revenues		6,130,259		9,916,454
Current portion of capital lease obligations		--		91,337
Total current liabilities		8,715,740		12,761,217

Non-current liabilities:
Term loan, net of deferred financing cost of $146,009 and
$199,211, respectively		4,032,865		4,883,286
Warrants liability		150,857		46,191
Royalty liability		2,456,233		2,350,754
Lease incentive liability		293,322		339,676
Deferred revenues, less current portion		487,832		568,515
Total non-current liabilities		7,421,109		8,188,422
Total liabilities		16,136,849		20,949,639

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 $0		8,849,985		8,849,985

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares authorized, 19,984,743 and 19,695,391 shares issued and outstanding, respectively		199,847		196,954
Additional paid in capital		81,491,728		80,667,771
Accumulated deficit		(72,162,935)		(69,025,851)
Total stockholders' equity		9,528,640		11,838,874
	$	34,515,474	$	41,638,498

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		Nine Months Ended October 31,
		2017		2016
Operating activities:
Net loss	$	(3,137,084)	$	(4,142,381)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		595,866		895,438
Amortization of capitalized software development costs		1,574,493		2,146,374
Amortization of intangible assets		922,462		976,338
Amortization of other deferred costs		229,780		192,947
Valuation adjustment for warrants liability		104,666		(36,875)
Share-based compensation expense		844,960		1,342,513
Other valuation adjustments		124,423		120,912
(Gain) Loss on disposal of property and equipment		(14,871)		567
Provision for accounts receivable		181,859		136,693
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables		1,957,439		1,679,810
Other assets		(671,254)		130,875
Accounts payable		(308,747)		(78,320)
Accrued expenses		134,324		(814,707)
Deferred revenues		(3,866,878)		(3,793,603)
Net cash used in operating activities		(1,328,562)		(1,243,419)

Investing activities:
Purchases of property and equipment		(24,517)		(501,148)
Capitalization of software development costs		(1,336,942)		(1,420,678)
Payment for acquisition, net of cash received		--		(1,400,000)
Net cash used in investing activities		(1,361,459)		(3,321,826)

Financing activities:
Principal repayments on term loan		(962,443)		(2,243,624)
Principal payments on capital lease obligation		(91,337)		(535,896)
Proceeds from exercise of stock options and stock purchase plan		23,703		14,793
Payments related to settlement of employee shared-based awards		(41,813)		(11,702)
Net cash used in financing activities		(1,071,890)		(2,766,429)
Net decrease in cash and cash equivalents		(3,761,911)		(7,341,674)
Cash and cash equivalents at beginning of period		5,654,093		9,882,136
Cash and cash equivalents at end of period	$	1,892,182	$	2,540,462

STREAMLINE HEALTH SOLUTIONS, INC. Backlog (Unaudited) Table A
		October 31, 2017		January 31, 2017		October 31, 2016
Company Proprietary Software	$	10,892,000	$	11,504,000	$	15,551,000
Third Party Hardware and Software		--		150,000		200,000
Professional Services		2,824,000		4,068,000		4,973,000
Audit Services		1,454,000		1,847,000		1,849,000
Maintenance and Support		18,256,000		19,193,000		19,413,000
Software as a Service		14,242,000		13,861,000		12,929,000
Total	$	47,668,000	$	50,623,000	$	54,915,000

STREAMLINE HEALTH SOLUTIONS, INC. New Bookings (Unaudited) Table B
		Three Months Ended
		October 31, 2017
		Value	% of Total Bookings
Streamline Health Software licenses	$	94,000	5%
Software as a service		1,505,000	78%
Maintenance and support		79,000	4%
Professional services		197,000	10%
Audit services		57,000	3%
Total bookings	$	1,932,000	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 severance and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.
Reconciliation of net income (loss) to non-GAAP adjusted EBITDA (in thousands)

Adjusted EBITDA Reconciliation		Three Months Ended,				Nine Months Ended,
		October 31, 2017		October 31, 2016		October 31, 2017		October 31, 2016
Net income (loss)	$	3	$	(1,930)	$	(3,137)	$	(4,142)
Interest expense		113		99		361		381
Income tax expense		3		2		8		5
Depreciation		193		265		596		895
Amortization of capitalized software development costs		431		720		1,574		2,146
Amortization of intangible assets		256		325		922		976
Amortization of other costs		51		60		177		140
EBITDA		1,050		(459)		501		401
Share-based compensation expense		290		433		845		1,343
(Gain) Loss on disposal of fixed assets		(14)		--		(15)		1
Associate severance and other costs relating to transactions or corporate restructuring		--		89		--		199
Non-cash valuation adjustments to assets and liabilities		188		62		229		84
Transaction related professional fees, advisory fees and other internal direct costs		--		103		--		358
Adjusted EBITDA	$	1,514	$	228	$	1,560	$	2,386
Adjusted EBITDA Margin⁽¹⁾		24%		3%		9%		12%
Adjusted EBITDA per diluted share
Loss per share - diluted	$	--	$	(0.10)	$	(0.16)	$	(0.26)
Adjusted EBITDA per adjusted diluted share ⁽²⁾	$	0.07	$	0.01	$	0.07	$	0.10

Diluted weighted average shares		23,068,423		19,645,521		19,838,691		19,477,538
Includable incremental shares — adjusted EBITDA ⁽³⁾		--		3,340,390		3,242,413		3,322,710
Adjusted diluted shares		23,068,423		22,985,911		23,081,104		22,800,248

(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.

SOURCE Streamline Health Solutions, Inc.

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