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Streamline Health Solutions Reports Q3 Results
Date:12/8/2010

CINCINNATI, Dec. 8, 2010 /PRNewswire-FirstCall/ -- Streamline Health Solutions, Inc. (Nasdaq: STRM) today announced financial results for the third quarter of fiscal year 2010, ended October 31, 2010.

Highlights for the quarter included:

  • Revenue for the quarter increased 9% over prior year's comparable quarter;
  • System sales increased 241% compared to last year's third quarter;
  • Adjusted EBITDA* for the quarter increased 140% to $1.2 million from $0.5 million in the third quarter of 2009;
  • Net earnings for the quarter were $95,000, or $0.01 per share, compared to a net loss of $296,000, or $(0.03) per share, in the third quarter of 2009;
  • Company was awarded purchase contracts for one new, and one add-on, accessANYware™ enterprise licenses - total contracts valued at approximately $500,000; of which $300,000 of systems revenue was recognized during the quarter;
  • Company was also awarded a purchase contract for a new enterprise Referral Order Workflow (ROW) license with a total contract value in excess of $400,000; of which $220,000 of systems revenue was added to backlog;
  • Year-to-date application hosting recurring revenues increased 8% over the prior 9 month period;
  • New bookings for the quarter, excluding maintenance revenue, were in excess of $1.2 million;
  • Backlog at quarter's end was $19.5 million; a net increase of $600,000 compared to the end of the second fiscal quarter of 2010.

  • Revenues for the quarter totaled $4.5 million, compared to $4.1 million in the prior year third quarter, an increase of 9%. The increase in revenues is primarily attributed to higher license systems sales and increased recurring revenues recognized from maintenance contracts. Application-hosting revenues for the third quarter remained consistent with the comparable prior year period. System sales for the quarter increased 241% versus the third quarter of 2009 to $579,000. The Company incurred a net profit of $95,000, or $0.01 per fully diluted share, for the quarter ended October 31, 2010, compared to a net loss of $296,000, or $(0.03) per fully diluted share, in the prior year quarter.

    Total recurring revenues increased $189,000 or 7% over the prior year third quarter driven by a $217,000 or 12% increase in recurring maintenance revenue and partially offset by a $28,000 reduction in hosting contract revenue for the quarter. The results for the quarter were also impacted by a $233,000 decrease in professional services revenues from the prior comparable quarter, primarily due to customer delays in implementations.  

    New bookings for the third quarter, excluding maintenance services, were in excess of $1.2 million. Highlights of the new bookings included a new enterprise license contract signed through our international remarketing partner; a large add-on enterprise license sale signed with a Texas hospital and a Referral Order Workflow solution also sold to a Texas hospital.  

    Backlog at October 31, 2010 was $19.5 million, compared with $18.9 million at July 31, 2010 and $22.6 million at October 31, 2009. The increase in the sequential backlog since July 31, 2010 was primarily the result of increased maintenance commitments received during the third quarter of 2010 and the impending delivery of the Referral Order Workflow solution sold during the third quarter that will take place in the upcoming fourth quarter. The delivery of accessANYware 5.0 to our Canadian customer in the fourth quarter of fiscal 2009 and the recognition of approximately $2.0 million of that revenue in that quarter was the main driver in the year-over-year backlog decrease. Current backlog was also impacted by the recognition of revenue for application-hosted and maintenance contracts that were in the prior backlog totals.

    Adjusted EBITDA* (a non-GAAP measure) for the quarter ended October 31, 2010 was $1.2 million, or $0.12 per fully diluted common share (adjusted), compared to $488,000, or $0.05 per fully diluted common share (adjusted) in the comparable prior quarter.

    J. Brian Patsy, chief executive officer of Streamline Health, commented, "We are very pleased with the strong results of the quarter. Solid top-line and bottom-line increases, improved proprietary system sales and new customers are indicative of the traction that we are achieving in our reorganized sales and marketing process. We have also made great progress in managing operating expenses and driving operating efficiencies throughout the entire company."

    "By its nature," continued Mr. Patsy, "our business can generate very uneven quarterly results throughout any given year. Implementation of systems can easily slide from one quarter into another, impacting quarterly financial results, as appropriate modifications are made to ensure customer acceptance and system start-up. In that regard, we believe that Streamline Health is more accurately evaluated on a year-over-year basis. We also believe that in the coming years as our application-hosting model gains greater traction, that some of the variability will be taken out of our operating results as our recurring revenue continues to increase in aggregate and as a percentage of total revenue.  Furthermore, as the economy continues to improve, additional proprietary licensing sales will add a boost to results, both on a quarterly and annual basis. We expect to complete the fiscal year with a solid fourth quarter. That said, we are very excited with the opportunities ahead in the years to come."

    * Non-GAAP Financial Measures

    Streamline Health reports its financial results in accordance with generally accepted accounting principles in the United States ("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 these measures provide useful supplemental information regarding the performance of Streamline Health's business operations.

    Streamline Health defines "adjusted EBITDA" as operating profit before depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense and foreign currency exchange gain or loss.  A table illustrating this measure is included in this publication.

    Conference Call InformationThe Company will conduct a conference call and web cast to review the results of the third quarter of fiscal 2010 later today, December 8, 2010 at 4:30 p.m. ET.

    Interested parties can access the call by dialing (877) 317-6789 or (412) 317-6789, or 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 (877) 344-7529 or (412) 317-0088, access code 446660, through December 13, 2010.

    About Streamline HealthStreamline 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 1995Statements 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 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. Financial Tables on Following PagesSTREAMLINE HEALTH SOLUTIONS, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSThree and Nine Months Ended October 31,(Unaudited)Three MonthsNine Months2010200920102009Revenues:Systems sales

    $

    579,332

    $

    169,801

    $

    1,690,650

    $

    957,384Services, maintenance and support2,989,6103,006,0028,364,1208,522,975Application-hosting services901,934930,2422,636,5992,445,978Total revenues4,470,8764,106,04512,691,36911,926,337Operating expenses:Cost of systems sales737,385658,2942,255,7802,091,989Cost of services, maintenance and support1,347,0551,317,6194,108,0433,697,735Cost of application-hosting services480,327407,9531,409,4531,203,606Selling, general and administrative1,361,6571,540,7454,565,0974,010,877Product research and development400,133466,4551,437,4511,196,645Total operating expenses4,326,5574,391,06613,775,82412,200,852Operating profit (loss)144,319(285,021)(1,084,455)(274,515)Other income (expense):Interest expense(31,585)(12,137)(87,921)(30,254)Other income (expense)(13,158)1,38729,62820,390Earnings (loss) before taxes99,576(295,771)(1,142,748)(284,379)Income taxes(5,000)-(15,000)(13,000)Net earnings (loss)

    $

    94,576

    $

    (295,771)

    $

    (1,157,748)

    $

    (297,379)Basic net earnings (loss) per common share

    $

    0.01

    $

    (0.03)

    $

    (0.12)

    $

    (0.03)Diluted net earnings (loss) per common share

    $

    0.01

    $

    (0.03)

    $

    (0.12)

    $

    (0.03)Number of shares used in per common share computations:   Basic9,536,0519,423,2119,486,2339,385,969   Diluted9,544,1839,423,2119,486,2339,385,969STREAMLINE HEALTH SOLUTIONS, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETSAssets(Unaudited)(Audited)October 31,January 31,20102010Current assets:Cash and cash equivalents

    $

    665,472

    $

    1,025,173Accounts receivable, net of allowance for doubtfulaccounts of $100,000 2,408,8221,922,279Contract receivables705,4721,182,308Prepaid hardware and third party software for future delivery204,263149,281Prepaid other, including prepaid customer maintenance contracts1,121,8571,363,332Deferred income taxes224,000224,000Total current assets5,329,8865,866,373Property and equipment:Computer equipment3,162,4062,987,039Computer software1,979,8691,816,397Office furniture, fixtures and equipment747,867747,867Leasehold improvements639,864574,2576,530,0066,125,560Accumulated depreciation and amortization(4,951,522)(4,344,432)1,578,4841,781,128Contract receivables, less current portion243,635146,093Capitalized software development costs, net of accumulated  amortization of $12,312,492 and $10,411,828, respectively8,090,6288,049,292Other, including deferred income taxes of $1,651,0001,674,8761,681,661$

    16,917,509

    $

    17,524,547STREAMLINE HEALTH SOLUTIONS, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETSLiabilities and Stockholders' Equity(Unaudited)(Audited)October 31,January 31,20102010Current liabilities:  Accounts payable

    $

    382,823

    $

    887,928  Accrued compensation650,027559,235  Accrued other expenses485,862476,504  Line of credit, current2,400,000-  Current portion of capital lease obligation209,060249,309  Current portion of deferred revenues4,530,4364,956,303Total current liabilities8,658,2087,129,279  Line of credit, non-current-900,000  Deferred revenues, less current portion109,498602,239  Capital lease obligation, less current portion24,217161,666  Accrued other expenses, non-current7,763-Total LiabilitiesStockholders' equity:8,799,6868,793,184  Convertible redeemable preferred stock, $.01 par value per share5,000,000 shares authorized, no shares issued--  Common stock, $.01 par value per share, 25,000,000 sharesauthorized, 9,767,284 and 9,436,824 shares issued, respectively97,67394,368  Additional paid in capital36,706,64936,160,126  Accumulated other comprehensive income-5,620  Accumulated deficit(28,686,499)(27,528,751)  Total stockholders' equity8,117,8238,731,363$

    16,917,509

    $

    17,524,547STREAMLINE HEALTH SOLUTIONS, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSNine Months Ended October 31,(Unaudited)20102009Operating activities:Net loss

    $

    (1,157,748)

    $

    (297,379)Adjustments to reconcile net earnings (loss) to net cash

     (used in) provided by operating activities:Loss on disposal of fixed assets-4,308Long-term lease incentive-(48,842)Depreciation and amortization2,550,7782,039,232Share-based compensation414,486204,259Changes in assets and liabilities:Accounts and contract receivables(107,249)1,704Other current assets180,8744,950Accounts payable and accrued expenses(405,364)(231,355)Deferred revenues(918,608)(1,859,963)Net cash provided by (used in) operating activities557,169(183,086)Investing activities:Purchases of property and equipment(447,470)(464,395)Capitalization of software development costs(1,942,000)(2,879,000)Other 6,78524,805Net cash used in investing activities(2,382,685)(3,318,590)Financing activities:Proceeds from stock purchase plan and exercise of stock options 135,34165,900Proceeds from municipal incentive agreement8,172-Net change in bank line of credit1,500,0001,100,000Payments on capital lease(177,698)-Net cash provided by financing activities1,465,8151,165,900Decrease in cash and cash equivalents (359,701)(2,335,776)Cash and cash equivalents at beginning of period1,025,1733,128,801Cash and cash equivalents at end of period

    $

    665,472

    $

    793,025Supplemental cash flow disclosures:Interest paid$

    87,639

    $

    24,899Income taxes paid

    $

    54,741

    $

    10,584STREAMLINE HEALTH SOLUTIONS, INC.

    Backlog

    (Unaudited)

    Table ABacklog (in thousands)October 31,2010July 31,2010January 31,2010October 31,2009Streamline Health software licenses

    $

    2981742012,036Custom software4262105140Hardware and third party software17695171268Professional services3,2933,9813,9773,156Application-hosting services8,0688,8189,41410,897Recurring maintenance7,6415,7885,9876,075Total

    $

    19,51818,91819,85522,572STREAMLINE HEALTH SOLUTIONS, INC.

    Bookings

    (Unaudited)

    Table BNew bookings (a)Three Months Ended October 31, 2010Value % of TotalBookings Streamline Health Software licenses

    $

    529,00042%Application Hosting Services--Professional services 486,00038%Hardware & third party software255,00020%Total bookings

    $

    1,270,000100%Nine Months Ended October 31, 2010Value % of Total Bookings Streamline Health Software licenses

    $

    1,204,00027%Application Hosting Services723,00016%Professional services 1,951,00044%Hardware & third party software606,00013%Total bookings

    $

    4,484,000100%(a)

    Bookings are the aggregate of signed contracts and/or completed customer purchase orders approved and accepted by the Company as binding commitments to purchase its products and/or services. New bookings do not include maintenance services as these tend to be recurring in nature on an annual or more frequent basis.STREAMLINE HEALTH SOLUTIONS, INC.

    Reconciliation of Non-GAAP Financial Measures

    (Unaudited)

    Table CThis 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.Reconciliation of operating profit (loss) to non-GAAP adjusted EBITDA (a), unaudited.Three Months EndedOctober 31,20102009Operating profit (loss)

    $

    144,319

    $

    (285,021)EBITDA adjustments Stock-based compensation171,38274,083Amortization of capitalized software development costs646,683519,754Depreciation and amortization - other195,389180,825Foreign currency (gain) loss13,159(1,387)Adjusted EBITDA

    $

    1,170,932

    $

    488,254Nine Months EndedOctober 31,20102009Operating profit (loss)

    $

    (1,084,455)

    $

    (274,515)EBITDA adjustments Stock-based compensation 414,486204,259Amortization of capitalized software development costs1,900,6641,468,118Depreciation and amortization - other650,114571,114Foreign currency (gain) loss(29,627)(24,697)Adjusted EBITDA

    $

    1,851,182

    $

    1,944,279(a)

    Earnings Before Interest, Tax, Depreciation, Amortization, Stock-based compensation, and Foreign currency exchange gain or lossReconciliation of diluted net earnings per common share to non-GAAP diluted earnings per common shareThree Months EndedOctober 31,20102009Diluted earnings from operations per common share

    $

    0.02

    $

    (0.03)Stock-based compensation 0.020.01Amortization of capitalized software development costs0.070.05Depreciation and amortization - other0.020.02Foreign currency (gain) loss0.00(0.00)Adjusted earnings from operations per common share

    $

    0.12

    $

    0.05Diluted shares used for per share calculation9,544,1839,562,293Nine Months EndedOctober 31,20102009Diluted earnings from operations per common share

    $

    (0.12)

    $

    (0.03)Stock-based compensation 0.040.02Amortization of capitalized software development costs0.200.16Depreciation and amortization - other0.070.06Foreign currency (gain) loss(0.00)(0.00)Adjusted earnings from operations per common share

    $

    0.19

    $

    0.20Diluted shares used for per share calculation9,494,3659,525,051Note: Per share amounts may not be additive due to rounding.COMPANY CONTACT:INVESTOR CONTACT:J. Brian PatsyJoe Diaz, Robert Blum or Joe DorameChief Executive OfficerLytham Partners, LLC(513) 794-7100(602) 889-9700
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    SOURCE Streamline Health Solutions, Inc.
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