UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

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)		(IRS Employer Identification No.)

10200 Alliance Road, Suite 200, Cincinnati, OH		45242-4716
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (513) 794-7100

Check the appropriate box below if the Form 8-K 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 April 9, 2009, Streamline Health Solutions, Inc. (“Streamline Health”) issued the press release attached hereto as Exhibit 99.1, which press release contains financial information about Streamline Health’s fourth fiscal quarter and fiscal year ended January 31, 2009. The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

EXHIBIT
NUMBER		DESCRIPTION
99.1		Fourth Quarter Earnings News Release of Streamline Health Solutions, Inc. dated April 9, 2009

Signatures

Pursuant to the requirements of the Securities Act of 1934, registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

INDEX TO EXHIBITS

Exhibit No.		Description of Exhibit
99.1		Fourth Quarter Earnings News Release of Streamline Health Solutions, Inc. Dated April 9, 2009

Exhibit 99.1

STREAMLINE HEALTH SOLUTIONS, INC.
News Release of Streamline Health Solutions, Inc. Dated April 9, 2009

News Release

Visit our web site at: www.streamlinehealth.net

COMPANY CONTACT:		INVESTOR CONTACT:
J. Brian Patsy		Joe Diaz, Robert Blum or Joe Dorame
Chief Executive Officer		Lytham Partners, LLC
(513) 794-7100		(602) 889-9700

FOR IMMEDIATE RELEASE

STREAMLINE HEALTH SOLUTIONS, INC.
REPORTS FOURTH QUARTER RESULTS

Cincinnati, Ohio — April 9, 2009 -— Streamline Health Solutions, Inc. (Nasdaq
CM: STRM) today announced financial results for the fourth quarter and the fiscal year 2008, ended January 31, 2009.

Reflective of the Company’s shift to the Software as a Service (SaaS) recurring revenue model, highlights of the fiscal year 2008 included:

	•		SaaS-based hosting backlog increased to $13 million compared to $3 million at the end of the previous year; a 330% increase;
	•		Total Company backlog increased 64% to $26.2 million;
	•		The Company expects approximately 50% of the total backlog to be recognized as revenue in fiscal 2009;
	•		The Company was awarded 10 new contracts during fiscal 2008 that added approximately $17 million to revenue and backlog over the life of those contracts, compared to 4 new contracts in fiscal 2007; 8 of the 10 new contracts were hosting contracts;
	•		Recent cost reduction initiatives are generating in excess of $700 thousand in quarterly savings, exclusive of variable cost of sale expenses, capitalized software amortization and minor increases in headcount and operating expenses planned in fiscal 2009; and.
	•		The Company was cash flow positive for the fiscal year.

Revenues for the fourth quarter of 2008 were $3.4 million compared to $5.7 million in the fourth quarter in 2007, which benefited from a large system sale of nearly $1.9 million through one of the Company’s remarketing partners. Net loss for the fourth quarter of 2008 was $146,000, or $(0.02) per fully diluted share, compared to net income of $776,000, or $0.08 per fully diluted share, in the fourth quarter of 2007.

During the fourth quarter of 2008, two new hosting contracts were signed and one existing application-hosting contract was renewed. These contracts expand the Company’s backlog by approximately $1.1 million in future hosting revenues.

J. Brian Patsy, Chief Executive Officer of Streamline Health, commented, “We continue to make progress in strategically shifting our business toward our SaaS-based hosted model and the recurring revenue benefit that it will provide. During fiscal year 2008, we increased our backlog by 64 percent to $26.2 million. Based on all our contracts in place as of today, our anticipated recurring revenue, backlog fulfillment and scheduled professional services revenue for fiscal 2009 is in the $16 million to $17 million range, exclusive of any generated new business. We believe that the stage is now set for consistently improving operational and financial performance going forward. The trade-off in focusing on SaaS-based hosted model is giving up short-term revenue recognition in return for achieving long-term revenue visibility. While the challenges endured in 2007 and 2008 were significant and sometimes painful, as we executed this strategic shift, we believe that the more predictable nature of our business going forward justifies confronting those challenges.”

“Furthermore,” Mr. Patsy added, “we have signed another major new international contract, within the past 30 days, to implement our next generation workflow solutions at another large public sector health network in Canada. This is the second major contract obtained through our partnership with Telus Health — backed by Emergis. We are very excited about our expanding international opportunities through our Telus Health relationship, and we hope to announce specific details concerning this impressive win in the very near future.”

“Looking ahead,” Mr. Patsy continued, “the Obama Administration has prioritized the further development and rapid adoption of electronic health records (EHR) by hospitals and physician practices in order for those organizations to operate more effectively while cutting healthcare costs. The recently passed Stimulus Bill has earmarked up to $19 billion to dramatically increase health information technology investments throughout the entire healthcare industry. This bodes well for our business going forward as we anticipate greater demand and additional federally initiated sources of funding for health information technology investments by our clients and prospective clients. Our solutions are complementary to hospital organizations’ plans for EHR adoption.”

System sales for the fourth quarter of fiscal 2008 were $311,000, compared to $2.1 million in the fourth quarter of fiscal 2007. This decrease was primarily the result of a large system sale of nearly $1.9 million through one of the Company’s remarketing partners being recognized during the fourth quarter of fiscal 2007. Due to recessionary pressures, a similar large system sale which was expected to occur during the fourth quarter of 2008 was postponed indefinitely by our potential new customer. For the full year, system sales increased to $3.2 million versus $3.0 million the previous year.

Services, maintenance and support revenues for the fourth quarter of 2008 were $2.5 million versus $2.7 million in last year’s fourth quarter, a decrease of approximately $209,000, primarily as a result of delays in project management revenues. For the full year, services, maintenance and support revenues remained consistent at $10.1 million.

Application-hosting services revenues were $596,000 compared with $878,000 in the comparable quarter last year. This reduction in revenue was primarily due to the loss of a large hosted customer that built its own locally-installed solution and commenced operations in July, 2008. For the full year, application-hosting service revenues were $2.9 million versus $3.5 million the previous year. Revenue from hosted customers signed in recent quarters will commence over the next few quarters and the Company expects that approximately 85% of the quarterly revenue attributable to that lost client will be replaced by the hosting contracts entered into in fiscal year 2008.

Revenues for fiscal year 2008 were $16.3 million, compared to $16.7 million last year; a decrease of 2%. The Company reported a net loss for the year of $1.4 million, or $(0.15) per fully diluted share, compared with a loss of $736,000, or $(0.08) per fully diluted share last year. During the year the Company was awarded 10 new contracts, eight of which were application-hosting contracts that added approximately $17.0 million to revenue and backlog over the life of those contracts. That compares with four new contracts, one of which was an application-hosting contract, won in fiscal 2007 that generated $6.8 million in combined revenue and backlog.

Throughout the year the Company aggressively managed operating expenses as it executed its shift away from license software transactions to SaaS-based hosted contracts. Additionally, during the third quarter of fiscal 2008 the Company further reduced expenses in order to offset some of the effects of the slower revenue ramp-up and up-front cash needs of the application-hosting model. These actions are expected to lower the Company’s cost structure in fiscal 2009 in excess of $700 thousand per quarter exclusive of variable cost of sale expenses, capitalized software amortization, and planned minor increases in headcount and operating expenses planned in fiscal 2009.

Total backlog at the end of the year increased to $26.2 million, primarily as a result of the large increase in SaaS-based hosting services contracts throughout the year. This represents an increase in backlog of 64% or $10.2 million compared to the backlog at the end of fiscal year 2007 of $16.0 million.

Conference Call Information

The Company will conduct a conference call and web cast to review the results on Thursday, April 9 at 4:30 p.m. ET. Interested parties can access the call by dialing (877) 356-5706 or (706) 679-3820, or can listen via a live Internet web cast, which can be found at www.streamlinehealth.net. A replay of the call will be available by visiting www.streamlinehealth.net for 30 days or by calling (800) 642-1687 or (706) 645-9291, access code 90553790, through April 11, 2009.

About Streamline Health

Streamline Health is a leading supplier of document workflow and document management tools, applications and services that assist strategic business partners and healthcare organizations to improve operational efficiencies through business process optimization. The Company provides integrated tools and technologies for automating document-intensive environments, including document workflow, document management, e-forms, connectivity, optical character recognition (OCR) and business process integration.

The Company’s workflow-based services offer solutions to inefficient and labor-intensive healthcare business processes throughout the revenue cycle, such as chart coding, abstracting and completion, remote physician referral order processing, pre-admission registration scanning and signature capture, financial screening, perioperative processing, Recovery Audit Contractor (RAC) mitigation processing, secondary billing services, explanation of benefits processing and release of information processing. The Company’s solutions also address the document workflow needs of the Human Resource and Supply Chain Management processes of the healthcare enterprise. All solutions are available through a Software as a Service (SaaS) model of delivery via the Company’s Remote Hosting Center that better matches customers’ capital or operating budget needs, or via a locally installed software licensing model.

Streamline Health’s solutions create a permanent document-based repository of historical health information that is complementary and can be seamlessly integrated with existing disparate clinical, financial and administrative information systems, providing convenient electronic access to all forms of patient information from any location, including secure web-based access. These integrated solutions allow providers and administrators to link existing systems with documents, which can dramatically improve the availability of patient information while decreasing direct costs associated with document retrieval,

work-in-process, chart processing, document retention, and archiving. For additional information please visit our website at http://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 risks and uncertainties. The forward looking statements contained herein 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. These risks and uncertainties include, but are not limited to, the impact of competitive products and pricing, product demand and market acceptance, new product development, key strategic alliances with vendors that resell the Company products, the ability of the Company to control costs, availability of products produced 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 Accountings Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry, 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 managements 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.

Financial Tables on Following Pages

STREAMLINE HEALTH SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

		Three Months Ended								Fiscal Year Ended
		January 31,								January 31,
		2009				2008				2009				2008
Revenues:
Systems sales		$	311,139			$	2,111,003			$	3,249,270			$	3,016,095
Services, maintenance and support			2,469,215				2,678,009				10,124,829				10,125,485
Application-hosting services			595,856				877,967				2,911,559				3,543,067
Total revenues			3,376,210				5,666,979				16,285,658				16,684,647
Operating expenses:
Cost of systems sales			705,459				1,097,288				3,327,944				2,904,077
Cost of services, maintenance and Support			986,649				1,040,509				4,329,026				4,220,093
Cost of application-hosting services			323,880				264,766				1,207,590				1,083,141
Selling, general and administrative			1,322,142				1,717,199				6,503,465				6,048,214
Product research and development			169,961				766,354				2,264,332				3,132,809
Total operating expenses			3,508,091				4,886,116				17,632,357				17,388,334
Operating profit (loss)			(131,881	)			780,863				(1,346,699	)			(703,687	)
Other income expense:
Interest income			39				4,697				7,865				22,256
Interest expense			(15,893	)			(2,373	)			(24,436	)			(26,221	)
Other expense			—				(4,964	)			—				(16,510	)
Earnings (Loss) before taxes			(147,735	)			778,223				(1,363,270	)			(724,162	)
Tax (provision) benefit			1,800				(2,400	)			(11,700	)			(11,400	)
Net earnings (loss)		$	(145,935	)		$	775,823			$	(1,374,970	)		$	(735,562	)
Basic net earnings (loss) per common share		$	( 0.02	)		$	0.08			$	(0.15	)		$	(0.08	)
Diluted net earnings (loss) per common share		$	(0.02	)		$	0.08			$	(0.15	)		$	(0.08	)
Number of shares used in per common Share computation — basic			9,305,869				9,254,450				9,286,261				9,234,313
Number of shares used in per common Share computation — diluted			9,305,869				9,334,038				9,286,261				9,234,313

STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED

		January 31,
		2009				2008
Assets
Current assets:
Cash		$	3,128,801			$	2,189,010
Accounts receivable, net of allowance for doubtful accounts of $100,000			1,328,508				2,832,852
Contract receivables			502,373				1,833,842
Prepaid hardware and third party software for future delivery			681,540				484,247
Prepaid other, including prepaid customer maintenance contracts			802,951				501,803
Deferred taxes			247,000				185,000
Total current assets			6,691,173				8,026,754
Property and equipment:
Computer equipment			2,475,928				2,235,104
Computer software			1,405,407				1,086,691
Office furniture, fixtures and equipment			737,344				731,346
Leasehold improvements			574,257				574,257
			5,192,936				4,627,398
Accumulated depreciation and amortization			(3,625,408	)			(3,153,675	)
			1,567,528				1,473,723
Contract receivables			321,500				—
Capitalized software development costs, net of accumulated amortization of $8,311,760 and $6,643,235, respectively			6,481,360				4,878,694
Other, including deferred taxes of $1,628,000 and $1,690,000, respectively			1,670,891				1,720,114
		$	16,732,452			$	16,099,285
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	759,577			$	1,518,682
Accrued compensation			299,000				536,599
Accrued other expenses			472,113				521,210
Deferred revenues			5,941,837				5,183,333
Total current liabilities			7,472,527				7,759,824
Deferred revenues			1,313,977				—
Line of credit			800,000				—
Other			48,842				146,525
Total liabilities			9,635,346				7,906,349
Stockholders’ equity:
Convertible redeemable preferred stock, $.01 par value per share, authorized, 8,500 shares issued and outstanding (see above) 5,000,000 shares authorized, no shares issued			—				—
Common stock, $.01 par value per share, 25,000,000 shares authorized, 9,354,782 and 9,260,320 shares issued, respectively			93,548				92,603
Additional paid in capital			35,820,417				35,542,222
Accumulated (deficit)			(28,816,859	)			(27,441,889	)
Total stockholders’ equity			7,097,106				8,192,936
		$	16,732,452			$	16,099,285

STREAMLINE HEALTH SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

		Fiscal Year
		2008				2007
Operating activities:
Net loss		$	(1,374,970	)		$	(735,562	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			2,369,670				2,189,981
Impairment loss on capitalized software development costs			408,809				—
Loss on sale of fixed assets			—				16,510
Share-based compensation expense			158,747				142,642
Change in allowance for doubtful accounts			—				(100,000	)
Change in assets and liabilities:
Accounts, contract and installment receivables			2,514,313				(373,060	)
Other assets			(498,441	)			(440,620	)
Accounts payable			(759,105	)			899,320
Accrued expenses			(286,697	)			111,555
Deferred revenues			2,072,481				1,489,665
Net cash provided by operating activities			4,604,807				3,200,431
Investing activities:
Purchases of property and equipment			(794,950	)			(715,053	)
Proceeds from disposal of property and equipment			—				138,775
Capitalization of software development costs			(3,680,000	)			(2,652,000	)
Other			(110,459	)			(66,537	)
Net cash used in investing activities			(4,585,409	)			(3,294,815	)
Financing activities:
Proceeds from revolving credit facility			2,000,000				—
Repayment of long-term debt and revolving credit facility			(1,200,000	)			(1,000,000	)
Payment of capitalized leases			—				(147,051	)
Proceeds from exercise of stock options and stock purchase plan			120,393				113,831
Net cash provided by (used in) financing activities			920,393				(1,033,220	)
Increase (Decrease) in cash and cash equivalents			939,791				(1,127,604	)
Cash and cash equivalents at beginning of year			2,189,010				3,316,614
Cash and cash equivalents at end of year		$	3,128,801			$	2,189,010
Supplemental cash flow disclosures:
Interest paid		$	23,883			$	27,832
Income taxes paid (refund)		$	(3,278	)		$	9,202

At January 31, 2009, Streamline Health has master agreements, purchase orders or royalty reports from remarketing partners for systems and related services which have not been delivered, installed and accepted which, if fully performed, will generate future revenues of $26,179,296 compared with $22,843,684, $17,691,139 and $15,315,390 at the end of the third, second and first quarter as follows:

		January 31, 2009				October 31, 2008				July 31, 2008				April 30, 2008
Streamline Health Software Licenses		$	1,027,454			$	924,678			$	1,980,874			$	1,988,165
Custom Software			278,416				322,584				348,584				335,250
Hardware and Third Party Software			561,941				765,080				1,227,122				1,408,891
Professional Services			4,691,309				4,964,910				5,295,629				5,189,164
Application Hosting Services			13,042,472				12,895,837				4,604,815				2,355,997
Recurring Maintenance			6,577,704				2,970,595				4,234,115				4,037,923
TOTAL		$	26,179,296			$	22,843,684			$	17,691,139			$	15,315,390