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Streamline Health Solutions, Inc. Reports Third Quarter Results
Posted by: gurufocus (IP Logged)
Date: December 15, 2008 04:04PM

Press Release: Streamline Health Solutions, Inc. Reports Third Quarter Results Streamline Health Solutions Inc. is a leading supplier of 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 portal connectivity optical character recognition and interoperability. 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 order processing pre-admission registration scanning and signature capture insurance verification secondary billing services explanation of benefits processing and release of information processing. Streamline Health Solutions Inc. has a market cap of $16.28 million; its shares were traded at around $1.95 with and P/S ratio of 0.98. More on STRM: Gurus buys and sells of STRM 10-year financial history of STRM. Insider buys/sells of STRM.

Press Release:

CINCINNATI, Dec. 15 /PRNewswire-FirstCall/ -- Streamline Health Solutions, Inc. (Nasdaq: STRM) today announced the financial results for the third fiscal quarter and first nine months ended October 31, 2008.

Highlights of the quarter and the nine-month periods included:

  • Revenues increased 11% versus comparable quarter in the previous year;
  • Backlog increased by 62% versus October 31, 2007
  • Year-to-date company has won 8 total new contracts compared to 4 all of last year;
  • New contracts are primarily application-hosting services contracts which will generate increased levels of recurring revenue;
  • Cost reduction program expected to generate $800,000 in quarterly savings.

Revenues for the fiscal third quarter increased 11% to $4.4 million, compared with $3.9 million reported in the third quarter of last year. The operating profit for the quarter was $26,000 compared with $16,000 in the comparable quarter last year. Net earnings for the third quarter was $15,000, or $0.00 per basic and diluted common share, compared with net earnings of $3,000, or $0.00 per basic and diluted common share in the third quarter of last year.

During the quarter, three total contracts, including two more application-hosting services contracts were signed. One of the hosting contracts was a renewal and a major system expansion with an existing customer, and the other was a new client. Together these two hosting clients will generate future hosting fees exceeding $8.2 million and total revenue contribution of approximately $9 million.

J. Brian Patsy, Chief Executive Officer of Streamline Health, commented, "We are strategically shifting our business toward our application-hosting model with the intent of consistently increasing our base of recurring revenue in order to provide an enhanced level of predictability and visibility to our business. Year-to-date we have generated eight total new contracts, six of which are application-hosting contracts and two are license purchase transactions. We will begin to feel the recurring revenue benefit of those contracts in the next couple of quarters. I believe that all of our stakeholders - investors, customers and employees - will benefit from knowing that we will start each year, and each quarter, with a substantial base level of revenue that we expect to build upon."

Mr. Patsy continued, "We have also taken aggressive steps to right-size the Company for the shift to a more applications-hosted model. We have reconfigured our sales force and made quarterly cost reductions of approximately $800,000 going forward. Additionally, our recent contract win at Massena Memorial Hospital in upstate New York is an important development. We believe that the opportunity to integrate our hosted solution into the MEDITECH MAGIC Health Information System of Massena Memorial is of strategic importance as we continue to expand our efforts to serve the small- to medium-sized hospital market place with affordable, hosted solutions that create value. We are pleased with the progress that was achieved during the third quarter, and throughout the fiscal year to this point."

System sales for the quarter were $1.3 million, compared to $41,000 in the comparable quarter of last year. This increase was primarily the result of a large system sale of nearly $1 million, including software and third party component software, through one of the Company's remarketing partners.

Services, maintenance and support revenues for the quarter were $2.5 million versus $3.0 million in the comparable period last year, primarily as a result of delays in project management revenues this year, and the relative comparison to strong results in the comparable period last year as professional services revenues were recognized from backlog.

Application-hosting services revenues were $517,000 compared with $872,000 in the comparable period last year. This reduction in revenue was primarily due to the loss of an application-services hosting customer who built its own locally-installed solution. Revenue from recently signed hosting customers will commence over the next few quarters and has not yet materially offset the loss of this customer.

Revenues for the first nine months were up 17% to $12.8 million, when compared with $10.9 million reported in the comparable period of last year. The operating loss was $1.2 million compared with an operating loss of $1.5 million in the comparable prior period. The net loss for the period was $1.2 million, or a $0.13 loss per basic and diluted common share, when compared with a net loss of $1.5 million, or a $0.16 loss per basic and diluted common share in the comparable prior period.

Near the end of the third quarter, the Company took action to cut expenses mindful of cash flow requirements related to the shift away from license software transactions to the increased volume, yet slower revenue ramp-up, of application-hosting services contracts. These actions are expected to reduce the Company's cost structure by approximately $800,000 per quarter.

Total backlog at the end of the quarter increased to $22.8 million, primarily as a result of the large increase in application-hosting services contracts. The backlog for hosting services has grown from $2.4 million in April to approximately $12.9 million as of October 31, 2008.

Conference Call Information

The Company will conduct a conference call and webcast to discuss the results on Monday, December 15, 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 70446458, through December 18, 2008.

About Streamline Health

Streamline Health is a leading supplier of 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, portal connectivity, optical character recognition (OCR) and interoperability.

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 order processing, pre-admission registration scanning and signature capture, insurance verification, 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 for purchase or through a remote hosting services model that better matches customers' capital or operating budget needs.

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 [www.streamlinehealth.net].

"SafeHarbor" 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 Companyproducts, the ability of the Company to control costs, availability of products produced from third party vendors, the healthcare regulatory environment, 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, 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.

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


                          Three Months Ended       Nine Months Ended
                              October 31,              October 31,
                         2008          2007        2008           2007
                         ----          ----        ----           ----

    Revenues:
      Systems
       sales          $1,343,112      $40,753    $2,938,131      $905,092
      Services,
       maintenance
       and support     2,518,583    3,031,478     7,565,489     7,356,497
      Application-
       hosting
       services          517,277      871,843     2,315,703     2,665,100
        Total
         revenues      4,378,972    3,944,074    12,819,323    10,926,689

    Operating
     expenses:
      Cost of
       systems
       sales             950,340      443,167     2,622,485     1,806,789
      Cost of
       services,
       maintenance
       and
       Support         1,053,661    1,101,417     3,252,252     3,088,605
      Cost of
       application-
       hosting
       services          286,471      263,216       883,710       818,375
      Selling,
       general
       and
       administrative  1,698,829    1,509,344     5,181,322     4,331,015
      Product
       research
       and
       development       364,002      610,554     2,094,371     2,366,455
        Total
         operating
         expenses      4,353,303    3,927,698    14,034,140    12,411,239
    Operating
     profit (loss)        25,669       16,376    (1,214,817)   (1,484,550)
    Other income
     expense:
      Interest
       income                 64          327         7,823        17,559
      Interest
       expense            (7,658)      (4,472)       (8,543)      (23,848)
      Other
       expense               -            -             -         (11,546)
    Earnings
     (Loss)
     before
     taxes                18,075       12,231    (1,215,537)   (1,502,385)
      Tax
       (provision)
       benefit            (3,500)      (9,000)      (13,500)       (9,000)
    Net earnings
     (loss)              $14,575       $3,231   $(1,229,037)  $(1,511,385)

    Basic net
     earnings
     (loss) per
     common share          $0.00        $0.00        $(0.13)       $(0.16)
    Diluted net
     earnings
     (loss) per
     common share          $0.00        $0.00        $(0.13)       $(0.16)

    Number of
     shares used
     in per common
     Share
     computation
     - basic           9,302,956    9,245,320     9,279,677     9,227,526
    Number of
     shares used
     in per common
     Share
     computation
     - diluted         9,342,130    9,361,189     9,279,677     9,227,526
STREAMLINE HEALTH SOLUTIONS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                  (Unaudited)    (Unaudited)    (Audited)
                                  October 31,    October 31,    January 31,
                   Assets            2008            2007          2008
    Current assets:
       Cash                   $   1,340,394  $     628,665  $  2,189,010
       Accounts receivable        3,093,000      1,759,878     2,932,852
       Contract receivables         852,138      1,285,995     1,833,842
       Allowance for
        doubtful accounts          (100,000)      (100,000)     (100,000)
       Other                      1,911,311      1,590,688     1,171,050
          Total current assets    7,096,843      5,165,226     8,026,754

    Property and equipment:
       Computer equipment         2,643,847      2,228,439     2,235,104
       Computer software          1,268,827        998,049     1,086,691
       Office furniture,
        fixtures and
        equipment                   737,344        806,341       731,346
       Leasehold improvements       574,257        577,737       574,257
                                  5,224,275      4,610,566     4,627,398
      Accumulated depreciation
       and amortization          (3,676,019)    (3,090,858)   (3,153,675)
                                  1,548,256      1,519,708     1,473,723
    Contract receivables            321,500        181,381           -
    Capitalized software development
     costs, net of accumulated
        Amortization of
         $8,201,235,
         $6,261,568 and
         $6,643,235
         respectively             5,948,694      4,376,355     4,878,694
    Other, primarily
     deferred tax asset           1,724,661      1,281,700     1,720,114
                              $  16,639,954  $  12,524,370  $ 16,099,285


                        Liabilities, and stockholders' equity

    Current liabilities:
       Bank line of credit    $   2,000,000  $         -    $        -
       Accounts payable           1,522,094        730,725     1,518,682
       Accrued compensation         414,210        354,126       536,599
       Accrued other expenses       524,531        459,361       521,210
       Deferred revenues          4,955,593      3,483,620     5,183,333
          Total current
           liabilities            9,416,428      5,027,832     7,759,824

    Non-current portion of
     lease incentives                73,262        165,515       146,525
                                                                     -

    Stockholders' equity:
       Convertible redeemable
        preferred stock, $0.01
        par value per share,
        5,000,000 shares authorized     -              -             -
       Common stock, $0.01 par
        value per share,
        25,000,000 shares
        Authorized,
        9,304,782 shares 9,245,320
        shares and 9,260,320
        shares issued,
        respectively                 93,048         92,453        92,603
       Capital in excess of
        par value                35,728,142     35,456,283    35,542,222
       Accumulated (deficit)    (28,670,926)   (28,217,713)  (27,441,889)
          Total stockholders'
           equity                 7,150,264      7,331,023     8,192,936
                                $16,639,954    $12,524,370   $16,099,285
STREAMLINE HEALTH SOLUTIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

                                                        Nine   Months
                                                  2008               2007
    Operating activities:
      Net (loss)                            $  (1,229,037)    $  (1,511,386)
      Adjustments to reconcile net (loss)
       to net cash provided by (used for)
       operating activities:
        Depreciation and amortization           2,080,345         1,648,445
        Share-based compensation expense          118,922            83,553
        Loss on sale of fixed assets                    -            11,546

      Changes in assets and liabilities:
        Accounts, contract and installment
         receivables                              500,056         1,066,381
        Other assets                             (740,261)         (420,258)
        Accounts payable and accrued expenses    (115,657)          (21,404)
        Deferred revenues                        (227,740)         (210,048)
      Net cash provided by (used for)
       operating activities                       386,628           646,829

    Investing activities:
      Purchases of property and equipment        (596,877)         (596,205)
      Proceeds on the sale of fixed assets              -           138,775
      Capitalization of software
       development costs                       (2,628,000)       (1,767,994)
      Other                                       (77,810)          (49,134)
      Net cash (used for) investing
       activities                              (3,302,687)       (2,274,558)

    Financing activities:
      Net proceeds (payment) from line of
       credit                                   2,000,000        (1,000,000)
      Payment of capitalized leases                     -          (147,051)
      Exercise of stock options and stock
       purchase plan                               67,443            86,831
      Net cash (used for) financing
       activities                               2,067,443        (1,060,220)
      Decrease in cash                           (848,616)       (2,687,949)
    Cash at beginning of year                   2,189,010         3,316,614
    Cash at end of period                   $   1,340,394     $     628,665

    Supplemental cash flow disclosures:
      Interest paid                         $       3,958     $      25,459
      Income taxes paid                     $       8,740     $       9,202
At October 31, 2008, 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 $22,843,684 compared with $17,691,139 and
    $15,315,390 at the end of the second and first quarter as follows:
October 31, 2008    July 31, 2008   April 30, 2008
    Streamline Health
     Software Licenses          $924,678        $1,980,874       $1,988,165
    Custom Software              322,584           348,584          335,250
    Hardware and Third
     Party Software              765,080         1,227,122        1,408,891
    Professional Services      4,964,910         5,295,629        5,189,164
    Application Hosting
     Services                 12,895,837         4,604,815        2,355,997
    Recurring Maintenance      2,970,595         4,234,115        4,037,923
                    TOTAL    $22,843,684       $17,691,139      $15,315,390
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
Source: PRNewsWire More on STRM: Gurus buys and sells of STRM 10-year financial history of STRM. Insider buys/sells of STRM.


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