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Streamline Health Solutions Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: December 6, 2011 02:58PM
Streamline Health Solutions Inc. (STRM) filed Quarterly Report for the period ended 2011-10-31. Streamline Health Solutions Inc. has a market cap of $16.1 million; its shares were traded at around $1.6 with and P/S ratio of 0.9.
Highlight of Business Operations:At October 31, 2011 Streamline Health has master agreements and purchase orders from customers and remarketing partners for systems and related services (excluding support and maintenance, and transaction-based SaaS revenues), which have not been delivered or installed which, if fully performed, would generate future revenues of approximately $5,203,000 compared with $3,809,000 at October 31, 2010. The related systems and services are expected to be delivered over the next two to three years. The increase in the backlog is the result of several contracts for professional services, or third-party hardware and software entered into subsequent to the prior year comparable quarter end, net of the revenues recognized from backlog since October 31, 2010. At October 31, 2011, Streamline Health had maintenance agreements purchase orders, from customers and remarketing partners for maintenance, which if fully performed, will generate future revenues of approximately $5,374,000 compared with $7,641,000 at October 31, 2010, through their respective renewal dates in fiscal year 2012 and 2011. This decrease is primarily the result of a variance in the timing of the receipt of signed annual maintenance contracts or payment of the renewal invoice from some large customers as compared to the prior comparable period. In the prior year these customers had either paid their renewal invoice or submitted a signed maintenance renewal agreement at an earlier date than in the current year. At October 31, 2011, Streamline Health has entered into SaaS agreements, which are expected to generate revenues in excess of $6,237,000 through their respective renewal dates in fiscal years 2011 through 2014. The software as a service backlog decreased to $6,237,000 from $8,068,000 at October 31, 2010, due to recognized revenues from backlog on contracts signed in prior years, net of new SaaS business, conversions from license to SaaS, and contract renewals.
The Company recognized revenues in the three and nine month periods ending October 31, 2011 of $4,312,000 and $12,598,000, compared to $4,471,000 and $12,691,000; a decrease of $159,000 and $93,000, respectively. Revenues are derived primarily from recurring revenues recognized from SaaS and maintenance contracts. The Company earned an operating profit of $364,000 and $130,000 for the three and nine month periods ended October 31, 2011. In the prior year comparable periods the Company earned an operating profit of $144,000 and incurred an operating loss of $1,084,000, respectively. Operating expenses for the three and nine month periods ending October 31, 2011 were $3,949,000 and $12,468,000, compared to $4,327,000 and $13,776,000 in the comparable prior periods; a decrease of $378,000 or 9% and $1,308,000 or 10%, respectively over the prior comparable periods.
Revenues for the three and nine month periods ended October 31, 2011, were $4,312,000 and $12,598,000 respectively; as compared to $4,471,000 and $12,691,000 respectively in the comparable periods of fiscal 2010. The quarterly and year to date decrease was primarily attributable to a decrease in proprietary license sales, which consisted of three large proprietary license sales recognized in the third quarter of fiscal 2010, that had no comparable sales in fiscal 2011. The significant decrease in proprietary software revenues was partially offset by increases in recurring revenues from software maintenance and SaaS. The increase in SaaS revenue on a quarterly and year-to-date basis is due to several factors: a large SaaS customer contract sold in fiscal 2010 that reached go-live status in the first quarter of fiscal 2011 and was able to begin ratable revenue recognition; a large add-on workflow reached go-live in October 2011 and commenced revenue recognition; revenues earned due to contractual increases in storage fees due to increased customer data on the Companys systems; customer conversions to SaaS from licensed products; and the continued recognition of SaaS revenues from backlog. Additionally, the increase in year-to-date and quarterly recurring revenues from maintenance and support is due to revenues recognized for maintenance periods commencing on new software licenses sold since the close of the third quarter 2010, as well as annual renewal net increases in maintenance fees throughout fiscal 2011. The year-to-date increase in professional services is primarily the result of increased revenue earned from implementations of systems and other professional services sold in prior quarters. The quarterly decrease in professional services is primarily the result of the completion of several projects sold in prior quarters, coupled with the timing of revenue recognition for projects initiated during fiscal 2011.
The Company incurred an operating profit of $364,000 and $130,000 for the three and nine month periods ended October 31, 2011; compared to an operating profit of $144,000 and an operating loss of $1,084,000 in the prior comparable periods of fiscal 2010. The Companys new management team has implemented its plans during the first three quarters of fiscal 2011, including across-the-board analysis of staffing levels, processes, and costs needed to support the Companys short and long term goals; which has resulted in significant reductions of operating expenses in fiscal 2011. These reductions were coupled with decreases in capitalized software amortization expense; which resulted in quarterly and year-to-date decreases in operating expenses of $378,000 or 8%, and $1,308,000 or 10%, respectively.
Net cash provided by operations for the nine month period ended October 31, 2011 was $626,000, an increase of approximately $68,000 from the prior year comparable quarter. The increase was primarily due to the year-to-date increase in net income of $1.2 million as compared to prior year; a $527,000 net increase in cash flows from net accounts receivables collections; a net increase in compensation accruals and stock awards expense; and offset by a $986,000 decrease in deferred revenue, and a $542,000 decrease in depreciation and amortization expense.
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