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):  September 11, 2019

 

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.)

 

1175 Peachtree Street NE, 10th Floor

Atlanta, GA 30361

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (888) 997-8732

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.01 par value

 

STRM

 

Nasdaq Capital Market

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o

 

 

 


 

Item 2.02.                                        Results of Operations and Financial Condition.

 

On September 11, 2019, Streamline Health Solutions, Inc. (the “Company”) issued a press release announcing second quarter fiscal 2019 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 September 11, 2019, regarding Second Quarter Fiscal 2019 Financial Results.

 

2


 

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:  September 16, 2019

By:

/s/ Thomas J. Gibson

 

Name:

Thomas J. Gibson

 

Title:

Chief Financial Officer

 

3


Exhibit 99.1

 

Streamline Health® Reports Second Quarter 2019 Revenues Of $4.8 Million; ($0.6 Million) Net Loss; Adjusted EBITDA Of $0.2 Million

 

Total First Half Fiscal 2019 Revenue Of $10.2 Million; ($0.3 Million) Net Loss; Adjusted EBITDA Of $1.3 Million

 

ATLANTA, Sept. 11, 2019 /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 second quarter and first half of fiscal 2019, which ended July 31, 2019.

 

Revenues for the three-month period ended July 31, 2019 decreased approximately 9% to $4.8 million over the July 31, 2018 quarter revenue of $5.3 million.  Recurring revenue comprised 82% of total revenue in the quarter. Revenues for the first six months of fiscal 2019 were $10.2 million, down approximately 12% as compared to $11.5 million in the first half of fiscal 2018.  Recurring revenue comprised 79% of total revenue for the first half of fiscal 2019.

 

Net loss for the second quarter was ($0.6 million) as compared to a ($1.5 million) net loss in the same period a year ago.  Net loss for the first six months of fiscal 2019 was ($0.3 million) as compared to ($2.1 million) net loss for the same period in 2018.

 

Adjusted EBITDA for the second quarter 2019 was $0.2 million versus $0.4 million in the second quarter of 2018. Adjusted EBITDA for the first six months of 2019 was $1.3 million, up approximately 35% from $1.0 million in the first half of fiscal 2018.

 

“One of my primary objectives is to help our company create greater velocity in all the things we do.  As an innovative company, we want to be constantly improving so that our clients find our people, products and services to be indispensable,” stated Tee Green, Interim President and Chief Executive Officer, Streamline Health.  “With our eValuator cloud-based pre-bill coding analysis platform, I believe we are at the forefront of a pre-bill movement with an immense amount of opportunity in both the short and long term. Our second quarter bookings performance of nearly $3.8 million was far superior to the that of previous quarters.  This level of bookings performance demonstrates that the company has been executing on a good plan for sales growth, and I want to find ways to increase the velocity on that plan.”

 

“I’m pleased to report that our nationwide search for a new President and Chief Executive Officer is going well, although it’s in the early stages,” continued Tee Green. “We have already interviewed a number of highly qualified candidates who are excited about the potential they see in our company.  I will keep you updated as to the board’s progress on this front, but I am excited to be working closely with the talented folks we have on our team.”

 

Highlights for the second quarter ended July 31, 2019 included:

 

·                                          New sales bookings for the second quarter 2019 were $3.8 million;

·                                          Revenue for the second quarter 2019 was $4.8 million;

 


 

·                                          Net loss for the second quarter 2019 was ($0.6 million);

·                                          Adjusted EBITDA for the second quarter 2019 was $0.2 million.

 

Conference Call Information

 

The Company will conduct a conference call to review the results on Thursday, September 12, 2019 at 9:00 AM ET. Interested parties can access the call by joining the live webcast: click here to register. You can also join by phone by dialing 877-269-7756.

 

A replay of the conference call will be available from September 12, 2019 at 12:00 PM ET to Thursday, September 19, 2019 at 12:00 PM ET by dialing 877-660-6853 and entering passcode 13694220. An online replay of the presentation will also be available for 6 months following the presentation in the Investor Relations section of the Streamline Health website, www.streamlinehealth.net.

 

*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, non-cash valuation adjustments to assets and liabilities, significant non-recurring 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.   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 growth prospects, estimates of backlog, industry trends and market growth, results of investments in sales and marketing, adjusted EBITDA, 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, the effects of cost-containment measures implemented by the Company, 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended
July 31,

 

Six Months Ended
July 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

Revenues:

 

 

 

 

 

 

 

 

 

Systems sales

 

$

147,000

 

$

386,000

 

$

378,000

 

$

1,518,000

 

Professional services

 

408,000

 

271,000

 

989,000

 

509,000

 

Audit services

 

354,000

 

248,000

 

749,000

 

608,000

 

Maintenance and support

 

2,759,000

 

3,216,000

 

5,710,000

 

6,525,000

 

Software as a service

 

1,125,000

 

1,148,000

 

2,324,000

 

2,372,000

 

Total revenues

 

4,793,000

 

5,269,000

 

10,150,000

 

11,532,000

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of systems sales

 

143,000

 

290,000

 

256,000

 

540,000

 

Cost of professional services

 

581,000

 

697,000

 

1,123,000

 

1,404,000

 

Cost of audit services

 

321,000

 

300,000

 

624,000

 

694,000

 

Cost of maintenance and support

 

413,000

 

566,000

 

822,000

 

1,215,000

 

Cost of software as a service

 

300,000

 

282,000

 

580,000

 

598,000

 

Selling, general and administrative

 

2,461,000

 

2,520,000

 

4,945,000

 

5,768,000

 

Research and development

 

867,000

 

1,213,000

 

1,659,000

 

2,275,000

 

Executive transition cost

 

140,000

 

 

140,000

 

 

Loss on exit of operating lease

 

 

806,000

 

 

806,000

 

Total operating expenses

 

5,226,000

 

6,674,000

 

10,149,000

 

13,300,000

 

Operating (loss) income

 

(433,000

)

(1,405,000

)

1,000

 

(1,768,000

)

Other expense:

 

 

 

 

 

 

 

 

 

Interest expense

 

(70,000

)

(110,000

)

(148,000

)

(227,000

)

Miscellaneous expense

 

(103,000

)

(5,000

)

(144,000

)

(92,000

)

Loss before income taxes

 

(606,000

)

(1,520,000

)

(291,000

)

(2,087,000

)

Income tax expense

 

(2,000

)

(2,000

)

(4,000

)

(4,000

)

Net loss

 

$

(608,000

)

$

(1,522,000

)

$

(295,000

)

$

(2,091,000

)

Net loss per common share — basic and diluted

 

$

(0.03

)

$

(0.08

)

$

(0.01

)

$

(0.11

)

Weighted average number of common shares — basic and diluted

 

19,913,658

 

19,532,044

 

19,853,510

 

19,415,676

 

 


 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Assets

 

 

 

July 31,

 

January 31,

 

 

 

2019

 

2019

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

1,229,000

 

$

2,376,000

 

Accounts receivable, net

 

2,764,000

 

2,933,000

 

Contract receivables

 

861,000

 

1,263,000

 

Prepaid hardware and other current assets

 

1,786,000

 

1,346,000

 

Total current assets

 

6,640,000

 

7,918,000

 

 

 

 

 

 

 

Non-current assets:

 

 

 

 

 

Property and equipment, net

 

207,000

 

237,000

 

Contract receivables, less current portion

 

337,000

 

407,000

 

Capitalized software development costs, net

 

7,159,000

 

5,698,000

 

Intangible assets, net

 

1,384,000

 

1,669,000

 

Goodwill

 

15,537,000

 

15,537,000

 

Other non-current assets

 

287,000

 

274,000

 

Total non-current assets

 

24, 911,000

 

23,822,000

 

 

 

$

31,551,000

 

$

31,740,000

 

 


 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Liabilities and Stockholders’ Equity

 

 

 

July 31,

 

January 31,

 

 

 

2019

 

2019

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

927,000

 

$

1,280,000

 

Accrued expenses

 

1,229,000

 

1,814,000

 

Current portion of long-term debt

 

597,000

 

597,000

 

Line of credit

 

1,000,000

 

 

Deferred revenues

 

8,624,000

 

8,338,000

 

Royalty liability

 

936,000

 

 

Other

 

95,000

 

94,000

 

Total current liabilities

 

13,408,000

 

12,123,000

 

 

 

 

 

 

 

Non-current liabilities:

 

 

 

 

 

Term loan, net of current portion and deferred cost

 

3,081,000

 

3,351,000

 

Royalty liability

 

 

905,000

 

Deferred revenues, less current portion

 

27,000

 

432,000

 

Other liabilities

 

24,000

 

41,000

 

Total non-current liabilities

 

3,132,000

 

4,729,000

 

Total liabilities

 

16,540,000

 

16,852,000

 

 

 

 

 

 

 

Series A 0% Convertible Redeemable Preferred Stock

 

8,686,000

 

8,686,000

 

 

 

 

 

 

 

Total stockholders’ equity

 

6,325,000

 

6,202,000

 

 

 

$

31,551,000

 

$

31,740,000

 

 


 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Six Months Ended,

 

 

 

July 31,
2019

 

July 31,
2018

 

Cash flows from operating activities:

 

 

 

 

 

Net loss

 

$

(295,000

)

$

(2,091,000

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

76,000

 

325,000

 

Amortization of capitalized software development costs

 

417,000

 

646,000

 

Amortization of intangible assets

 

285,000

 

470,000

 

Amortization of other deferred costs

 

136,000

 

228,000

 

Valuation adjustment

 

31,000

 

56,000

 

Loss on exit of operating lease

 

 

806,000

 

Gain on disposal of fixed assets

 

 

(2,000

)

Share-based compensation expense

 

429,000

 

367,000

 

Provision for accounts receivable

 

(125,000

)

(64,000

)

Changes in assets and liabilities, net

 

(865,000

)

(265,000

)

Net cash provided by operating activities

 

89,000

 

476,000

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Purchases of property and equipment

 

(46,000

)

(14,000

)

Proceeds from sale of property and equipment

 

 

14,000

 

Capitalization of software development costs

 

(1,878,000

)

(1,529,000

)

Net cash used in investing activities

 

(1,924,000

)

(1,529,000

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Proceeds from revolving line of credit

 

1,000,000

 

 

Principal payments on term loan

 

(298,000

)

(298,000

)

Payments related to settlement of employee share awards

 

(31,000

)

(58,000

)

Other

 

17,000

 

35,000

 

Net cash provided by (used in) financing activities

 

688,000

 

(321,000

)

Decrease in cash and cash equivalents

 

(1,147,000

)

(1,374,000

)

Cash and cash equivalents at beginning of year

 

2,376,000

 

4,620,000

 

Cash and cash equivalents at end of period

 

$

1,229,000

 

$

3,246,000

 

 


 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

(Unaudited)

Table B

 

 

 

Three Months Ended
July 31, 2019

 

Systems Sales

 

$

112,000

 

Professional Services

 

478,000

 

Audit Services

 

124,000

 

Maintenance and Support

 

104,000

 

Software as a Service

 

2,966,000

 

Q2 2019 bookings

 

$

3,784,000

 

Q2 2018 bookings

 

$

1,904,000

 

 

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, non-cash valuation adjustments to assets and liabilities, significant non-recurring 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):

 

(Unaudited)

 

Adjusted EBITDA Reconciliation

 

Three Months Ended,

 

Six Months Ended,

 

 

 

July 31,
2019

 

July 31,
2018

 

July 31,
2019

 

July 31,
2018

 

Net loss

 

$

(608

)

$

(1,522

)

$

(295

)

$

(2,091

)

Interest expense

 

70

 

110

 

148

 

227

 

Income tax expense

 

2

 

2

 

4

 

3

 

Depreciation

 

41

 

153

 

76

 

325

 

Amortization of capitalized software development costs

 

211

 

331

 

417

 

646

 

Amortization of intangible assets

 

142

 

235

 

285

 

470

 

Amortization of other costs

 

55

 

91

 

105

 

193

 

EBITDA

 

(87

)

(600

)

740

 

(227

)

Share-based compensation expense

 

160

 

144

 

429

 

367

 

Gain on disposal of fixed assets

 

 

 

 

(2

)

Non-cash valuation adjustments to assets and liabilities

 

16

 

5

 

31

 

56

 

Other non-recurring operating expenses

 

75

 

806

 

75

 

806

 

Other non-recurring expenses

 

74

 

 

74

 

 

Adjusted EBITDA

 

$

238

 

$

355

 

$

1,349

 

$

1,000

 

Adjusted EBITDA per diluted share

 

 

 

 

 

 

 

 

 

Loss per share — diluted

 

$

(0.03

)

$

(0.08

)

$

(0.01

)

$

(0.11

)

Adjusted EBITDA per adjusted diluted share (1)

 

$

0.01

 

$

0.02

 

$

0.06

 

$

0.04

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares

 

19,913,658

 

19,532,044

 

19,853,510

 

19,415,676

 

Includable incremental shares — Adjusted EBITDA (2)

 

3,163,149

 

3,053,210

 

3,097,413

 

3,064,204

 

Adjusted diluted shares

 

23,076,807

 

22,585,254

 

22,950,923

 

22,479,880

 

 


(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.