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): June 9, 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:

 

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

 

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

 

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

 

o                                    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 June 9, 2015, Streamline Health Solutions, Inc. (the “Company”) issued a press release announcing first 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 June 9, 2015, regarding First 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:  June 9, 2015

By:

/s/ Jack W. Kennedy Jr.

 

Name:

Jack W. Kennedy Jr.

 

Title:

Senior Vice President &

 

 

Chief Legal Counsel

 

2



 

INDEX TO EXHIBITS

 

EXHIBIT

 

 

NUMBER

 

DESCRIPTION

 

 

 

99.1

 

Press release, dated June 9, 2015, regarding First Quarter 2015 Financial Results.

 

3


Exhibit 99.1

 

 

News Release

 

STREAMLINE HEALTH® REPORTS FIRST QUARTER 2015 REVENUES OF
$6.2 MILLION; RECURRING REVENUES OF 93%

 

Solid First Quarter Bookings of $6.4 Million Push Backlog Up to
$74.6 Million, a 19% Increase Over Same Quarter Year Ago

 

Atlanta, GA — June 9, 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 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 1005615. 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.