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): January 8, 2020

 

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(s) Name of Each Exchange on Which Registered
Common Stock, $0.01 par value STRM The 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:

 

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

 

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

 

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

 

¨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          ¨

 

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.          ¨

 

 

 

 

 

 

Item 2.02.Results of Operations and Financial Condition.

 

On January 8, 2020, Streamline Health Solutions, Inc. (the “Company”) issued a press release announcing third quarter fiscal 2019 financial results. A copy of the press release is attached hereto as Exhibit 99.1.

 

The information contained in this Item 2.02, including the attached press release on Exhibit 99.1, is furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 except as may be expressly set forth by specific reference in such filing.

 

The Company makes references to non-GAAP financial information in the attached press release. A description of the non-GAAP financial information and a reconciliation of the non-GAAP financial information to the comparable GAAP financial measures are contained in the attached press release and the Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2019.

 

Item 9.01.Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit  
Number Description
   
99.1 Press release, dated January 8, 2020, regarding Third Quarter Fiscal 2019 Financial Results.

 

 

 

 

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: January 8, 2020 By: /s/ Thomas J. Gibson
    Name: Thomas J. Gibson
    Title: Chief Financial Officer

 

 

 

Exhibit 99.1 

 

 

Streamline Health® Reports Third Quarter 2019 Revenues of $5.8 Million; ($0.2 million) Net Loss; Adjusted EBITDA of $1.3 Million

 

Total Revenues For First Three Quarters of $15.9 Million; ($0.5 Million) Net Loss; Adjusted EBITDA of $2.7 Million

 

Atlanta, GA – January 8, 2020 – 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 2019, which ended October 31, 2019.

 

Revenues for the three-month period ended October 31, 2019 increased 21% to $5.8 million as compared to revenues of $4.8 million for the second quarter of fiscal year 2019 and up 8% as compared to revenues of $5.4 million for the same quarter a year ago. Recurring revenue comprised 69% of total revenue in the quarter ended October 31, 2019. Revenues for the first nine months of fiscal year 2019 were approximately $15.9 million, down approximately 6% from $16.9 million for the same nine-month period in fiscal year 2018.

 

As previously disclosed in its press release dated January 2, 2020, the Company determined that certain corrections were required for capitalized software development costs and related amortization with respect to previously reported periods.  The Company evaluated the materiality of these corrections and determined it was not necessary to restate its previously issued financial statements.

 

The Company disclosed the effect of these corrections, which were included as an out of period adjustment in the Company’s financial statements for the three and nine months ended October 31, 2019, included in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2019, as filed with the U.S. Securities and Exchange Commission on January 7 2020.

 

Net loss for the third quarter of fiscal year 2019 was approximately ($0.2 million) as compared to a net loss of approximately ($0.7 million) for the same quarter a year ago. Net loss for the first nine months of fiscal year 2019 was approximately ($0.5 million) as compared to a net loss of ($2.8 million) for the same period a year ago.

 

Adjusted EBITDA for the third quarter 2019 was approximately $1.3 million as compared to $0.2 million for the second quarter of fiscal year 2019 and $0.8 million for the same quarter a year ago.

 

“Our third quarter performance was solid in terms of revenue and adjusted EBITDA and our bookings for the quarter of $2.6 million, while healthy, did not include any eValuator contracts. I believe the future market opportunity for our mid-revenue cycle solutions and services is far greater than the replacement market for our legacy solutions,” stated Tee Green, President and Chief Executive Officer, Streamline Health. “Which is why, as we announced last month, we have agreed to sell our legacy ECM business and use the proceeds to retire all of our bank debt and to invest in development and sales of our eValuator™ technology.

 

 

 

 

“I am committed to creating greater velocity in everything we do at Streamline Health, and to becoming an entrepreneurial, fast growing company. The fact that our third quarter bookings did not include any new eValuator contracts was disappointing. But I am convinced our eValuator automated cloud-based pre-bill coding analysis platform has tremendous upside potential as demonstrated by the size of our sales pipeline. As we approach a new fiscal year this coming February, everyone in our Company will be singularly focused on selling and supporting our eValuator, Clinical Documentation Improvement and Abstracting solutions which, when reinforced by our Auditing Services, makes us a true partner for revenue integrity across any healthcare provider’s enterprise.”

 

“This company will become a growth company again and I look forward to providing guidance for fiscal year 2020 very soon.”

 

Highlights for the third quarter ended October 31, 2019 included:

 

·Revenue for the third quarter 2019 was $5.8 million;

 

·Revenue for the first three quarters of 2019 was $15.9 million;

 

·Net loss for the third quarter 2019 was ($0.2 million);

 

·Net loss for the first three quarters of 2019 was ($0.5 million);

 

·Adjusted EBITDA for the third quarter 2019 was $1.3 million;

 

·Adjusted EBITDA for the first three quarters of 2019 was $2.7 million;

 

·Bookings for the third quarter 2019 were $2.6 million.

 

Conference Call

The Company will conduct a conference call to review the results on Thursday, January 9, 2020 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 Thursday, January 9, 2020 at 12:00 PM ET to Wednesday, January 15, 2020 at 12:00 PM ET by dialing 877-660-6853 and requesting conference ID 13697756. An online replay of the presentation will also be available for six 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, 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. 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 future performance, growth and market opportunities, investments in sales and marketing related to the development of the Company’s eValuator product, 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

October 31,

  

Nine Months Ended

October 31,

 
   2019   2018   2019   2018 
Revenues:                
Systems sales  $668,000   $309,000   $1,046,000   $1,827,000 
Professional services   626,000    577,000    1,615,000    1,086,000 
Audit Services   517,000    234,000    1,266,000    841,000 
Maintenance and support   2,827,000    3,051,000    8,537,000    9,577,000 
Software as a service   1,150,000    1,198,000    3,474,000    3,570,000 
Total revenues   5,788,000    5,369,000    15,938,000    16,901,000 
                     
Operating expenses:                    
Cost of systems sales   135,000    223,000    391,000    763,000 
Cost of professional services   493,000    675,000    1,616,000    2,079,000 
Cost of audit services   325,000    323,000    949,000    1,017,000 
Cost of maintenance and support   453,000    506,000    1,275,000    1,720,000 
Cost of software as a service   356,000    207,000    936,000    805,000 
Selling, general and administrative   2,800,000    2,392,000    7,745,000    8,160,000 
Research and development   726,000    1,026,000    2,385,000    3,302,000 
Executive Transition Costs   481,000    --    621,000    -- 
Loss on exit of operating lease   --    562,000    --    1,368,000 
Total operating expenses   5,769,000    5,914,000    15,918,000    19,214,000 
Operating income (loss)   19,000    (545,000)   20,000    (2,313,000)
Other expense:                    
Interest expense   (91,000)   (106,000)   (239,000)   (332,000)
Miscellaneous expense   (80,000)   (25,000)   (224,000)   (118,000)
Loss before income taxes   (152,000)   (676,000)   (443,000)   (2,763,000)
Income tax expense   (12,000)   (2,000)   (16,000)   (5,000)
Net Loss  $(164,000)  $(678,000)  $(459,000)  $(2,768,000)
Add: Redemption of Series A Preferred Stock   4,894,000    --    4,894,000    -- 
Net income (loss) attributable to common shareholders  $4,730,000   $(678,000)  $4,435,000   $(2,768,000)
Net income (loss) per common share – basic  $0.22   $(0.03)  $0.22   $(0.14)
Weighted average number of common shares – basic   21,598,146    19,655,882    20,435,055    19,495,745 
Net loss per common share - diluted  $(0.01)  $(0.03)  $(0.02)  $(0.14)
Weighted average number of common shares – diluted   21,598,146    19,655,882    20,435,055    19,495,745 

 

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Assets

 

   October 31,   January 31, 
   2019   2019 
Current assets:          
Cash and cash equivalents  $1,220,000   $2,376,000 
Accounts receivable, net   2,214,000    2,933,000 
Contract receivables   704,000    1,263,000 
Prepaid hardware and other current assets   1,285,000    1,235,000 
Total current assets   5,423,000    7,807,000 
           
Non-current assets:          
Property and equipment, net   175,000    237,000 
Contract receivables, less current portion   355,000    407,000 
Capitalized software development costs, net   7,785,000    5,698,000 
Intangible assets, net   1,245,000    1,669,000 
Goodwill   15,537,000    15,537,000 
Other non-current assets   756,000    385,000 
Total non-current assets   25,853,000    23,933,000 
   $31,276,000   $31,740,000 

 

 

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

Liabilities and Stockholders’ Equity

 

   October 31,   January 31, 
   2019   2019 
Current liabilities:          
Accounts payable  $629,000   $1,280,000 
Accrued expenses   1,407,000    1,814,000 
Current portion of long-term debt   3,472,000    597,000 
Deferred revenues   6,310,000    8,338,000 
Royalty Liability   953,000    -- 
Other   94,000    94,000 
Total current liabilities   12,865,000    12,123,000 
           
Non-current liabilities:          
Term loan, net of current portion   --    3,351,000 
Royalty liability   --    905,000 
Deferred revenues, less current portion   123,000    432,000 
Other Liabilities   19,000    41,000 
Total non-current liabilities   142,000    4,729,000 
Total liabilities   13,007,000    16,852,000 
           
Series A 0% Convertible Redeemable Preferred Stock   --    8,686,000 
           
Total stockholders' equity   18,269,000    6,202,000 
   $31,276,000   $31,740,000 

 

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine Months Ended, 
  

October 31,

2019

  

October 31,

2018

 
Cash flows from operating activities:          
Net loss  $(459,000)  $(2,768,000)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   113,000    411,000 
Amortization of capitalized software development costs   644,000    895,000 
Amortization of intangible assets   424,000    705,000 
Amortization of other deferred costs   208,000    347,000 
Valuation adjustment   48,000    71,000 
Loss on exit of operating lease   --    1,368,000 
Loss (Gain) on disposal of fixed assets   --    5,000 
Share-based compensation expense   719,000    492,000 
Provision for accounts receivable   (125,000)   (24,000)
Changes in assets and liabilities, net   (2,547,000)   (2,210,000)
Net cash used in operating activities   (975,000)   (708,000)
           
Cash flows from investing activities:          
Purchases of property and equipment   (51,000)   (21,000)
Proceeds from sales of property and equipment   --    20,000 
Capitalization of software development costs   (2,730,000)   (2,288,000)
Net cash used in investing activities   (2,781,000)   (2,289,000)
           
Cash flows from financing activities:          
Principal payments on term loan   (448,000)   (448,000)
Deferred financing costs   (73,000)   -- 
Proceeds from issuance of common stock   9,663,000    -- 
Payments for costs attributable to issuance of common stock   (681,000)     
Payments related to employee share-based awards   (50,000)   (62,000)
Redemption of Series A preferred stock   (5,791,000)   -- 
Fees paid for redemption of Series A preferred stock   (22,000)   -- 
Other   2,000    31,000 
Net cash provided by (used in) financing activities   2,600,000    (479,000)
Decrease in cash and cash equivalents   (1,156,000)   (3,476,000)
Cash and cash equivalents at beginning of year   2,376,000    4,620,000 
Cash and cash equivalents at end of period  $1,220,000   $1,144,000 

 

 

 

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

New Bookings

(Unaudited)

Table B

 

   Three Months
Ended October
31, 2019
 
Systems Sales  $738,000 
Professional Services   457,000 
Audit Services   2,000 
Maintenance and Support   1,391,000 
Software as a Service   24,000 
Q3 2019 bookings  $2,612,000 
Q3 2018 bookings  $1,760,000 

 

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, 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 loss to non-GAAP Adjusted EBITDA (in thousands):

 

(Unaudited)

 

Adjusted EBITDA Reconciliation

 

   Three Months Ended,   Nine Months Ended, 
   October
31, 2019
   October
31, 2018
   October
31, 2019
   October
31, 2018
 
Net loss  $(164)  $(678)  $(459)  $(2,768)
Interest expense   91    106    239    332 
Income tax benefit   12    2    16    5 
Depreciation   37    87    113    411 
Amortization of capitalized software development costs   227    249    644    895 
Amortization of intangible assets   138    235    424    705 
Amortization of other costs   45    101    150    294 
EBITDA   386    102    1,127    (126)
Share-based compensation expense   290    125    719    492 
Loss on disposal of fixed assets   --    7    --    5 
Non-cash valuation adjustments to assets and liabilities   16    15    48    71 
Other non-recurring operating expenses   481    562    562    1,368 
Other non-recurring expenses   131    --    205    -- 
Adjusted EBITDA  $1,304   $811   $2,661   $1,810 
Adjusted EBITDA per diluted share                    
Net income (loss) per common share – diluted  $0.22   $(0.03)  $(0.02)  $(0.14)
Adjusted EBITDA per adjusted diluted share (1)  $0.05   $0.04   $0.11   $0.08 
                     
Diluted weighted average shares   21,598,146    19,655,882    20,435,055    19,495,745 
Includable incremental shares – Adjusted EBITDA (2)   2,736,075    2,971,381    2,976,967    3,033,263 
Adjusted diluted shares   24,334,221    22,627,263    23,412,022    22,529,008 

 

(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.