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Streamline Health Solutions, Inc. Reports Third Quarter Results

CINCINNATI, Nov. 26 /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, 2007.

GAAP Revenues for the fiscal third quarter increased 10% to $3.9 million, compared with $3.6 million reported in the third quarter of last year. The operating profit for the quarter was $16 thousand compared with an operating loss of $297 thousand in the comparable prior quarter. The net earnings for the third quarter were $3 thousand, or $0.00 per basic and diluted common share, compared with a net loss of $334 thousand, or a $0.04 loss per basic and diluted common share in the third quarter of last year.

GAAP Revenues for the first nine months were $10.9 million, when compared with $12 million reported in the comparable period of last year. The operating loss was $1.5 million compared with an operating loss of $127 thousand in the comparable prior period. The net loss for the period was $1.5 million, or a $0.16 loss per basic and diluted common share, when compared with a net loss of $199 thousand, or a $0.02 loss per basic and diluted common share in the comparable prior period.

In addition to using GAAP results in evaluating the business, management also believes it is useful to evaluate results using non-GAAP measures. Using a non-GAAP measure, the Company reported non-GAAP revenue year-to-date of $12 million, which includes approximately $1.1 million in software licensing revenues and excludes approximately $1 million in services and 3rd party components contracted for in the second quarter. On a non-GAAP basis, to include the software licensing revenues noted above, the operating loss y46,580 432,142

Accrued other expenses 459,361 615,363 541,904

Deferred revenues 3,483,620 2,739,739 3,693,668

Current portion of

capitalized leases - 89,450 91,002

Current portion of

long-term debt - 1,000,000 -

Total current

liabilities 5,027,832 5,256,759 5,378,078

Non-current portion of

long-term debt - - 1,000,000

Non-current portion of

capitalized leases - 79,390 56,049

Non-current portion of lease

incentives 165,515 241,474 222,484

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, 9,245,320 shares

9,211,399 shares and

9,211,399 shares issued,

respectively 92,453 92,114 92,114

Capital in excess of par

value 35,456,283 35,256,004 35,286,238

Accumulated (deficit) (28,217,713) (27,030,080) (26,734,118)

Total stockholders'

equity 7,331,023 8,318,038 8,644,234

$12,524,370 $13,895,661 $15,300,845




Nine Months

2007 2006

Operating activities:

Net (loss) $(1,511,386) $(199,501)

Adjustments to reconcile net earnings to

net cash provided by (used for) operating


Depreciation and amortization 1,648,445 1,386,646

Share-based compensation expense 83,553 80,903

Loss on sale of fixed assets 11,546 -

Cash provided by (used for) assets and


Accounts, contract and installment

receivables 1,066,381 138,573

Other assets (420,258) (233,042)

Accounts payable and accrued expenses (21,404) (1,511,668)

Deferred revenues (210,048) 122,555

Net cash provided by (used for)

operating activities 646,829 (215,534)

Investing activities:

Purchases of property and equipment (596,205) (393,897)

Proceeds on the sale of fixed assets 138,775 -

Capitalization of software development

costs (1,767,994) (1,355,664)

Other (49,134) (51,055)

Net cash (used for) investing activities (2,274,558) (1,800,616)

Financing activities:

Payment of long-term debt (1,000,000) (1,000,000)

Payment of capitalized leases (147,051) (63,162)

Exercise of stock options and stock

purchase plan 86,831 85,318

Net cash (used for) financing activities (1,060,220) (977,844)

Decrease in cash (2,687,949) (2,993,994)

Cash at beginning of year 3,316,614 4,634,219

Cash at end of period $628,665 $1,640,225

Supplemental cash flow disclosures:

Interest paid $25,459 $107,408

Income taxes paid $9,202 $66,537

At October 31, 2007, 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 $14,106,058 compared with $15,805,426 and $13,909,523 at the end of the second and first quarter as follows:

October 31, July 31, April 30,

2007 2007 2007

Streamline Health

Software Licenses $1,360,196 $1,360,196 $201,796

Custom Software 310,572 317,238 297,238

Hardware and Third Party

Software 975,427 980,058 408,233

Professional Services 3,435,180 4,903,871 4,448,609

Application Hosting

Services 3,187,840 4,002,995 4,465,106

Recurring Maintenance 4,836,844 4,241,068 4,088,541

TOTAL $14,106,058 $15,805,426 $13,909,523

ear- to-date was $384 thousand, and the net loss was $411 thousand, or a $0.04 loss per basic and diluted common share. This software license revenue can not be recognized under GAAP until such time as the site specific integration of our standard software required by the customer can be completed.

See "DISCUSSION OF NON-GAAP FINANCIAL MEASURES" below for further information on the Company's non-GAAP measures.

Brian Patsy, Streamline Health's president and chief executive officer commented, "The results for the third quarter reflect a significant increase in our professional services revenues as we accelerate the implementation of contracts in our backlog. However, system sales, as with the two previous quarters, were below our expectations as negotiations continue on several significant contracts. Subsequent to the end of the quarter we did sign and announced a large anticipated system sale with a multi-hospital healthcare organization located in the northeastern region of the US. This was an important win for us because of the significant revenue and backlog contribution for software and services from this transaction as a result of the culmination of protracted contract negotiations through our largest remarketing partner. When considering revenue and backlog, we are on track for annual revenue and backlog contribution approximately equal to last year's annual performance irrespective of any other transactions anticipated throughout the remainder of the fiscal year. It is also important to note that, as in prior quarters, we continue to be the vendor of choice with several other potential new customers as contract negotiations continue with each of these prospects."

Mr. Patsy concluded: "As we announced last quarter, we signed a new agreement with an existing customer for the expansion of our advanced solution on an enterprise wide basis, in the amount of $2.1 million, of which $1.1 million would have been currently recognized as system sales under normal circumstances. However, revenue on this contract can not be recognized in fiscal year 2007 as site specific integration of our standard software is required by the customer, which we expect to complete in 2008. Had we been able to recognize the $1.1 million as system sales revenue, our year-to-date revenues and operating results would be approximately the same as last year- to-date through the third quarter. Although the reported operating performance is below our expectations, we are encouraged by the completion of the recent large system sale agreement early in the fourth quarter, and the prospect of eventually closing several other contracts still in negotiations."

Conference Call Information

The third quarter conference call is scheduled at 10:00 a.m. Eastern Time, on Tuesday, November 27, 2007. The call will feature remarks from J. Brian Patsy, president and chief executive and Paul W. Bridge, Jr., chief financial officer.

The Conference Call will be broadcast live via the Internet. To listen, please go to approximately twenty minutes before the conference call is scheduled to begin. You will need to download and install any necessary audio software. The webcast will be available at our website for the next 30 days.

About Streamline Health

Streamline Health is a leading supplier of workflow and document management tools, applications and services that assist healthcare organizations and strategic business partners' customers to improve operational efficiencies through business process optimization. The Company provides integrated technology solutions 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

"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, 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 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.


Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, for making operating decisions and for forecasting and planning for future periods. We consider the use of non-GAAP revenue helpful in understanding the performance of our business, as it includes certain software revenue that can not be recognized due to the provision of certain product roadmaps or future deliverables as a part of the selling or contract process. We also consider the use of non-GAAP earnings helpful in assessing the performance of the continuing operation of our business. By continuing operations we mean the ongoing results of the business inclusive of software revenue that generates cash but can not be recognized due to contract provisions that include product roadmaps or future product deliverables. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP revenue and operating results. Consistent with this approach, we believe that disclosing non-GAAP revenue and non-GAAP operating results to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP revenue, operating results and earnings (loss) per share, allows for greater transparency in the review of our financial and operational performance. We believe that providing non-GAAP information for certain software revenue that can not be recognized allows the users of our financial statements to review both the GAAP revenue in the period, as well as the non- GAAP revenue, thus providing for enhanced understanding of our historic and future financial results. We further believe that providing this information allows investors to not only better understand our financial performance but more importantly, to evaluate the efficacy of the methodology and information used by management to evaluate and measure such performance.

The non-GAAP financial measures described above, and used in this press release, should not be considered in isolation from, or as a substitute for a measure of financial performance prepared in accordance with GAAP. Furthermore, investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool.

Streamline Health Solutions, Inc.

Reconciliation of Supplemental Financial Information


Three months ended Nine months ended

GAAP total

Revenue $3,994,074 $3,592,113 $10,926,689 $12,023,242

Software license

adjustment - - 1,100,000 -

Total Non-GAAP

revenue $3,994,074 $3,592,113 $12,026,689 $12,023,242

GAAP Operating

income (loss) $16,367 $(296,882) $(1,484,550) $(127,368)

Software license

adjustment - - 1,100,000 -

Total Non-GAAP

Operating income

(loss) $16,367 $(296,882) $(384,550) $(127,368)

GAAP Net earnings

(loss) $3,231 $(334,350) $(1,511,385) $(199,501)

Software license

adjustment - - 1,100,000 -

Total Non-GAAP

Net earnings

(loss) $3,231 $(334,350) $(411,385) $(199,501)

GAAP earnings

(loss) per share $0.00 $(0.04) $(0.16) $(0.02)

Software license

adjustment - - 0.12 -

Total Non-GAAP

earnings (loss)

per share $0.00 $(0.04) $(0.04) $(0.02)



Three Months Ended Nine Months Ended

October 31, October 31,

2007 2006 2007 2006


Systems sales $40,753 $561,213 $905,092 $3,476,521

Services, maintenance

and support 3,031,478 2,212,044 7,356,497 6,110,393


services 871,843 818,856 2,665,100 2,436,328

Total revenues 3,944,074 3,592,113 10,926,689 12,023,242

Operating expenses:

Cost of systems sales 443,167 493,343 1,806,789 2,049,261

Cost of services,

maintenance and

support 1,101,417 956,938 3,088,605 2,649,273

Cost of application-

hosting services 263,216 278,271 818,375 855,647

Selling, general

and administrative 1,509,344 1,452,044 4,331,015 4,369,664

Product research

and development 610,554 708,399 2,366,455 2,226,765

Total operating

expenses 3,927,698 3,888,995 12,411,239 12,150,610

Operating profit (loss) 16,376 (296,882) (1,484,550) (127,368)

Other income expense:

Interest income 327 11,774 17,559 64,274

Interest expense (4,472) (24,242) (23,848) (107,407)

Other expense - - (11,546) -

Earnings (Loss) before

taxes 12,231 (309,350) (1,502,385) (170,501)

Tax (provision)

benefit (9,000) (25,000) (9,000) (29,000)

Net earnings (loss) $3,231 $(334,350) $(1,511,385) $(199,501)

Basic net earnings

(loss) per common

share $0.00 $(0.04) $(0.16) $(0.02)

Diluted net earnings

(loss) per common

share $0.00 $(0.04) $(0.16) $(0.02)

Number of shares used

in per common

Share computation -

basic 9,245,320 9,211,399 9,227,526 9,190,028

Number of shares used

in per common

Share computation -

diluted 9,361,189 9,211,399 9,227,526 9,190,028



October 31, October 31, January 31,

Assets 2007 2006 2007

Current assets:

Cash $628,665 $1,640,225 $3,316,614

Accounts receivable 1,759,878 2,161,596 2,481,313

Contract receivables 1,285,995 2,286,239 1,357,433

Allowance for doubtful

accounts (100,000) (200,000) (200,000)

Other 1,590,688 1,200,773 1,170,430

Total current assets 5,165,226 7,088,833 8,125,790

Property and equipment:

Computer equipment 2,228,439 2,353,969 2,132,853

Computer software 998,049 1,083,440 847,328

Office furniture, fixtures

and equipment 806,341 782,768 733,320

Leasehold improvements 577,737 543,318 568,098

4,610,566 4,763,495 4,281,599

Accumulated depreciation

and amortization (3,090,858) (3,240,928) (2,704,329)

1,519,708 1,522,567 1,577,270

Contract receivables 181,381 728,541 554,888

Capitalized software

development costs, net of

accumulated Amortization of

$6,261,568, $4,845,734 and

$5,116,568 respectively 4,376,355 3,249,859 3,753,361

Other, primarily deferred

tax asset 1,281,700 1,305,861 1,289,536

$12,524,370 $13,895,661 $15,300,845

Liabilities, and stockholders' equity

Current liabilities:

Accounts payable $730,725 $365,627 $619,362

Accrued compensation 354,126 4

SOURCE Streamline Health Solutions, Inc.
Copyright©2007 PR Newswire.
All rights reserved

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