Press Release

Streamline Health® Reports Second Quarter 2015 Revenues of $8.6 Million; Adjusted EBITDA of $1.9 Million

Streamline Health® Reports Second Quarter 2015 Revenues of $8.6 Million; Adjusted EBITDA of $1.9 Million 61.7 KB

ATLANTA, Sept. 3, 2015 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), a leading provider of transformational data-driven solutions to help healthcare providers reduce exposure to risk, enhance clinical, financial, and operational performance, and improve patient care, today announced financial results for the second quarter of 2015, which ended July 31, 2015.

Revenues for the three-month period ended July 31, 2015 increased approximately 40% to $8.6 million over the April 30, 2015 quarter revenue of $6.2 million, and approximately 19% versus $7.2 million in the comparable period of fiscal 2014. Revenues for the first six-month period of fiscal 2015 increased 4.2% over the first half of fiscal 2014.

Adjusted EBITDA for the second quarter 2015 improved to $1.9 million dollars as compared to $(1.3) million in the April 30, 2015 quarter; and up approximately 275% over the $0.5 million of Adjusted EBITDA from the second quarter one year ago. Adjusted EBITDA for the first six months of fiscal 2015 totaled $0.6 million compared to effectively $0 through the first six months of fiscal 2014.

"I'm pleased to report a very solid quarter of performance in almost every category of measurement. We have grown revenue and Adjusted EBITDA, improved our cash position and reduced our debt," stated David Sides, President and Chief Executive Officer, Streamline Health. "I said last quarter, my first full quarter as CEO, that I believed we had begun to turn the tide on our performance, and I think these results support that position. We have much work to do, but there is great opportunity in front of us."

Highlights for the second quarter ended July 31, 2015 included:

Revenue for the second quarter 2015 was $8.6 million;
Adjusted EBITDA for the second quarter 2015 was $1.9 million;
Net loss for the second quarter 2015 was $0.6 million;
New sales bookings for the quarter were $5.9 million; and
Backlog at the end of the quarter was $69.7 million.

Conference Call Information

The Company will conduct a conference call to review the results on Thursday, September 3, 2015 at 5:00 PM ET. Interested parties can access the call by dialing 888-417-8465 and then entering passcode 6056218. A live webcast will also be available; click here to register.

A replay of the conference call will be available from Thursday, September 3, 2015 at 8:00 PM ET to Tuesday, September 8, 2015 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 6056218.

*Non-GAAP Financial Measures

Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). Streamline Health's management also evaluates and makes operating decisions using various other measures. One such measure is adjusted EBITDA, which is a non-GAAP financial measure. Streamline Health's management believes that this measure provides useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, and professional and advisory fees. A table illustrating this measure is included in this press release.

About Streamline Health
Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge - actionable insights that reduce exposure to risk, enhance operational performance, and improve patient care. Through our Looking Glass® Platform we provide clients with meaningful, intelligent SaaS-based solutions from patient engagement to reimbursement. We share a common calling and commitment to advance the quality of life and the quality of healthcare - for society, our industry, our clients, the communities they serve, and the individual patient. For more information, please visit our website at www.streamlinehealth.net.

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995
Statements made by Streamline Health Solutions, Inc. that are not historical facts are forward-looking statements that are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. Forward-looking statements contained in this press release include, without limitation, statements regarding the Company's estimates of future revenue, backlog, net income, market opportunity, and related expectations and assumptions. These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development, key strategic alliances with vendors and channel partners that resell the Company's solutions, the ability of the Company to control costs, availability of solutions from third party vendors, the healthcare regulatory environment, potential changes in legislation, regulation and government funding affecting the healthcare industry, healthcare information systems budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates and nationally, and the Company's ability to maintain compliance with the terms of its credit facilities, and other risks detailed from time to time in the Streamline Health Solutions, Inc. filings with the U. S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Company Contact:
Randy Salisbury
SVP, Chief Marketing Officer
(404)-229-4242
randy.salisbury@streamlinehealth.net

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


		Three Months Ended				Six Months Ended
		July 31,				July 31,
		2015		2014		2015		2014
Revenues:
Systems sales	$	1,941,601	$	314,085	$	2,240,217	$	653,291
Professional services		659,372		674,999		1,010,331		1,283,950
Maintenance and support		3,672,118		4,177,165		7,281,183		8,348,977
Software as a service		2,391,008		2,075,823		4,256,810		3,907,025
Total revenues		8,619,009		7,242,072		14,788,541		14,193,243

Operating expenses:
Cost of systems sales		694,794		834,324		1,421,585		1,669,792
Cost of services		647,569		778,691		1,419,065		1,765,116
Cost of maintenance and support		714,273		836,526		1,531,178		1,796,116
Cost of software as a service		702,769		571,464		1,441,600		1,343,043
Selling, general and administrative		3,779,114		4,054,794		8,285,288		8,695,250
Research and development		2,233,356		2,225,120		4,457,549		4,575,564
Total operating expenses		8,771,875		9,300,919		18,556,265		19,845,477
Operating loss		(152,776)		(2,058,847)		(3,767,724)		(5,652,234)
Other expense (income):
Interest expense		(248,175)		(173,539)		(492,116)		(343,017)
Miscellaneous income (expenses)		(159,814)		(41,481)		1,829,160		1,051,290
Loss before income taxes		(560,765)		(2,273,867)		(2,430,680)		(4,943,961)
Income tax benefit (expense)		(3,414)		(1,145)		468		(2,290)
Net loss	$	(564,179)	$	(2,275,012)	$	(2,430,212)	$	(4,946,251)
Less: deemed dividends on Series A Preferred Shares		(325,018)		(252,583)		(620,675)		(482,349)
Net loss attributable to common shareholders	$	(889,197)	$	(2,527,595)	$	(3,050,887)	$	(5,428,600)
Basic net loss per common share	$	(0.05)	$	(0.14)	$	(0.16)	$	(0.30)
Number of shares used in basic per common share computation		18,628,288		18,174,193		18,614,622		18,160,213
Diluted net loss per common share	$	(0.05)	$	(0.14)	$	(0.16)	$	(0.30)
Number of shares used in diluted per common share computation		18,628,288		18,174,193		18,614,622		18,160,213

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

Assets

		July 31, 2015		January 31, 2015

Current assets:
Cash and cash equivalents	$	6,031,129	$	6,522,600
Accounts receivable, net of allowance for doubtful
accounts of $597,811 and $665,962, respectively		9,034,755		6,935,270
Contract receivables		143,114		191,465
Prepaid hardware and third party software for
future delivery		8,201		55,173
Prepaid client maintenance contracts		870,274		935,858
Other prepaid assets		1,185,770		1,437,680
Deferred income taxes		220,004		220,004
Other current assets		63,932		207,673
Total current assets		17,557,179		16,505,723

Non-current assets:
Property and equipment:
Computer equipment		2,425,547		2,381,923
Computer software		750,532		964,857
Office furniture, fixtures and equipment		683,443		683,443
Leasehold improvements		727,654		724,015
		4,587,176		4,754,238
Accumulated depreciation and amortization		(1,992,646)		(1,617,423)
Property and equipment, net		2,594,530		3,136,815

Contract receivables, less current portion		26,132		43,553
Capitalized software development costs, net of
accumulated amortization of $13,404,226 and
$11,846,468, respectively		7,639,360		9,197,118
Intangible assets, net of accumulated amortization of
$4,001,143 and $3,326,683, respectively		8,825,857		9,500,317
Deferred financing costs, net of accumulated
amortization of $49,063 and $13,677, respectively		305,615		387,199
Goodwill		16,184,667		16,184,667
Other		963,587		823,723
Total non-current assets		36,539,748		39,273,392
	$	54,096,927	$	55,779,115

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

Liabilities and Stockholders' Equity

		July 31, 2015		January 31, 2015

Current liabilities:
Accounts payable	$	2,682,679	$	2,298,851
Accrued compensation		953,619		865,865
Accrued other expenses		210,478		563,838
Current portion of long-term debt		577,530		500,000
Deferred revenues		10,695,093		9,289,076
Current portion of capital lease obligation		749,291		781,961
Total current liabilities		15,868,690		14,299,591

Non-current liabilities:
Term loans		8,431,964		9,500,000
Warrants liability		566,296		1,834,380
Royalty liability		2,446,493		2,385,826
Lease incentive liability		360,030		342,129
Capital lease obligation		211,880		582,911
Deferred revenues, less current portion		1,318,748		964,933
Deferred income tax liability		220,005		229,579
Total non-current liabilities		13,555,416		15,839,758
Total liabilities		29,424,106		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 $1,591,332 and $2,212,007, respectively		7,258,653		6,637,978

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares
authorized, 18,746,469 and 18,553,389 shares issued and
outstanding, respectively		187,465		185,534
Additional paid in capital		79,231,085		78,390,424
Accumulated deficit		(62,004,382)		(59,574,170)
Total stockholders' equity		17,414,168		19,001,788
	$	54,096,927	$	55,779,115

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

		Six Months Ended July 31,
		2015		2014
Operating activities:
Net loss	$	(2,430,212)	$	(4,946,251)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation		625,239		360,986
Amortization of capitalized software development costs		1,557,758		1,830,628
Amortization of intangible assets		674,460		704,952
Amortization of other deferred costs		83,868		102,095
Valuation adjustment for warrants liability		(1,268,084)		(1,224,407)
Share-based compensation expense		1,283,459		865,142
Other valuation adjustments		94,351		78,970
Loss on disposal of fixed assets		34,228		83,236
Gain on early extinguishment of lease liability		(33,059)		-
Provision for accounts receivable		89,002		13,692
Deferred tax expense		(9,574)		-
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables		(2,122,715)		(1,264,184)
Other assets		319,962		(853,586)
Accounts payable		427,914		936,731
Accrued expenses		(276,301)		(781,283)
Deferred revenues		1,759,832		(180,110)
Net cash provided by (used in) operating activities		810,028		(4,273,389)

Investing activities:
Purchases of property and equipment		(117,182)		(1,635,952)
Capitalization of software development costs		-		(351,316)
Payment for acquisition		-		(5,890,402)
Net cash used in investing activities		(117,182)		(7,877,670)

Financing activities:
Principal repayments on term loan		(990,506)		(505,950)
Principal payments on capital lease obligation		(403,701)		(49,509)
Recovery (payment) of deferred financing costs		2,111		(112,800)
Proceeds from exercise of stock options and stock purchase plan		207,779		50,206
Net cash used in financing activities		(1,184,317)		(618,053)
Decrease in cash and cash equivalents		(491,471)		(12,769,112)
Cash and cash equivalents at beginning of period		6,522,600		17,924,886
Cash and cash equivalents at end of period	$	6,031,129	$	5,155,774

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

		July 31, 2015		January 31, 2015		July 31, 2014
Streamline Health Software Licenses	$	20,996,000	$	20,888,000	$	1,955,000
Third Party Hardware and Software		220,000		244,000		238,000
Professional Services		5,934,000		7,485,000		6,774,000
Maintenance and Support		22,921,000		21,304,000		25,608,000
Software as a Service		19,600,000		22,574,000		26,908,000
Total	$	69,671,000	$	72,495,000	$	61,483,000

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

		Three Months Ended
		July 31, 2015
		Value	% of Total Bookings
Streamline Health Software licenses	$	2,367,000	40%
Software as a service		527,000	9%
Maintenance and support		1,223,000	21%
Professional services		1,745,000	30%
Hardware & third party software		-	0%
Total bookings	$	5,862,000	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,				Six Months Ended,
		July 31, 2015		July 31, 2014		July 31, 2015		July 31, 2014
Net loss	$	(564)	$	(2,275)	$	(2,430)	$	(4,946)
Interest expense		248		174		492		343
Income tax (benefit) expense		3		1		-		2
Depreciation		311		210		625		361
Amortization of capitalized software development costs		775		914		1,558		1,831
Amortization of intangible assets		337		346		674		705
Amortization of other costs		7		43		48		71
EBITDA		1,117		(587)		967		(1,633)
Share-based compensation expense		631		422		1,283		865
Loss on disposal of fixed assets		-		83		34		83
Associate severances and other costs relating to transactions or corporate restructuring		67		126		206		576
Non-cash valuation adjustments to assets and liabilities		49		(46)		(1,173)		(1,145)
Transaction related professional fees, advisory fees and other internal direct costs		7		11		20		175
Other non-recurring operating expenses		-		489		-		1,063
Other non-recurring income		-		-		(750)		-
Adjusted EBITDA	$	1,871	$	498	$	587	$	(16)
Adjusted EBITDA Margin⁽¹⁾		22%		7%		4%		-%
Adjusted EBITDA per diluted share
Loss per share - diluted	$	(0.05)	$	(0.14)	$	(0.16)	$	(0.30)
Adjusted EBITDA per adjusted diluted share ⁽²⁾	$	0.09	$	0.02	$	0.03	$	_

Diluted weighted average shares		18,628,288		18,174,193		18,614,622		18,160,213
Includable incremental shares — adjusted EBITDA ⁽³⁾		2,237,608		3,614,119		2,623,593		-
Adjusted diluted shares		20,865,896		21,788,312		21,238,215		18,160,213

(1)	Adjusted EBITDA as a percentage of GAAP revenues
(2)	Adjusted EBITDA per adjusted diluted share for the Company's common stock is computed using the more dilutive of the two-class method or the if-converted method.

(3)	The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP net loss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.

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SOURCE Streamline Health Solutions, Inc.

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