Streamline Health® Reports Fourth Quarter And Fiscal Year 2016 Financial Performance

Fourth Quarter Revenues $6.4 Million; $5.7 Million Cash on Hand; FY 2016 Revenues $27.1 Million; $1.0 Million in Cash from Operations; $5.2 Million 2016 Net Loss; 2016 Adjusted EBITDA $2.9 Million

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Streamline Health Solutions, Inc.

Apr 10, 2017, 16:01 ET

ATLANTA, April 10, 2017 /PRNewswire/ -- Streamline Health Solutions, Inc. (NASDAQ: STRM), provider of the Looking Glass® platform of integrated solutions, technology-enabled services and analytics supporting revenue cycle optimization for healthcare enterprises, today announced financial results for the fourth quarter and fiscal year of 2016, which ended January 31, 2017.

Revenues for the three-month period ended January 31, 2017 were $6.4 million, same as the three-months ended January 31, 2016. Adjusted EBITDA for the fourth quarter was $0.5 million, same as the fourth quarter a year ago. Net loss for the fourth quarter was $1.0 million, an improvement over the $1.4 million net loss in the same period a year ago.

Revenues for fiscal year 2016 were $27.1 million, down 4.4% from $28.3 million the previous fiscal year. Recurring revenues for the year constituted 82.4% of overall revenue, or $22.3 million. Net loss for 2016 was $5.2 million. Adjusted EBITDA for the fiscal year was $2.9 million, up from $2.8 million in fiscal year 2015.

"2016 was another year of significant improvement in terms of our balance sheet and operational efficiency as our cash on hand is effectively even with our bank debt," stated David Sides, President and Chief Executive Officer, Streamline Health. "As importantly, during the year we made two strategic moves to enable us to place more emphasis on solutions and services with the greatest demand in the marketplace. Our acquisition of Opportune IT added coding audit services and technologies to our mix, and the sale of our scheduling solutions moved us more firmly into the middle of the revenue cycle where our primary decision makers of CFOs, HIM and Revenue Cycle directors are focused on improving the fiscal health of their organizations."

"We continue to expand our reseller network to help us reach more potential clients, faster. And we are investing in the development of new technologies in machine learning to give us a strategic advantage in the market, specifically in pre- and post-bill auditing."

Highlights for the fourth quarter and fiscal year ended January 31, 2017 included:

Revenues for the fourth quarter 2016 were $6.4 million, and for the year were $27.1 million;
Recorded net loss of $(1.0) million for the three-month period ended January 31, 2017, and $(5.2) million for the fiscal year 2016;
Adjusted EBITDA for the fourth quarter 2016 was $0.5 million, and for the year was $2.9 million;
New sales bookings for the quarter were $2.9 million and $8.3 million for the fiscal year; and
Backlog at the end of the quarter was $50.6 million.

Conference Call Information

The Company will conduct a conference call to review the results on Monday, April 10, 2017 at 5:00 PM ET. Interested parties can access the call via live webcast; click here to register. The call can also be accessed by dialing 877-397-0286 and then entering passcode 2135649.

A replay of the conference call will be available from Monday, April 10, 2017 at 8:00 PM ET to Friday, April 14, 2017 at 8:00 PM ET by dialing 888-203-1112 and entering passcode 2135649.

*Non-GAAP Financial Measures

Streamline Health reports its financial results in accordance with U.S. generally accepted accounting principles ("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 this measure provides useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "Adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional-related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, and professional and advisory fees. A table illustrating this measure is included in this press release.

About Streamline Health
Streamline Health Solutions, Inc. (NASDAQ: STRM) is a healthcare industry leader in capturing, aggregating, and translating enterprise data into knowledge – actionable insights that support revenue cycle optimization for healthcare enterprises. Our Looking Glass® platform delivers integrated solutions, technology-enabled services and analytics that enable providers to drive reimbursement in a value-based world. We share a common calling and commitment to advance the quality of life and the quality of healthcare – for society, our clients, the communities they serve, and the individual patient. For more information, please visit our website at 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 certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. Forward-looking statements contained in this press release include, without limitation, statements regarding the Company's estimates of future revenue, backlog, results of investments in sales and marketing, success of future products and related expectations and assumptions. These risks and uncertainties include, but are not limited to, the timing of contract negotiations and execution of contracts and the related timing of the revenue recognition related thereto, the potential cancellation of existing contracts or clients not completing projects included in the backlog, the impact of competitive solutions and pricing, solution demand and market acceptance, new solution development and enhancement of current solutions, key strategic alliances with vendors and channel partners that resell the Company's solutions, the ability of the Company to control costs, availability of solutions 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 Accounting Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and 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, except as required by law.

Company Contact:
Randy Salisbury
SVP, Chief Marketing Officer
(404) 229-4242
[email protected]

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

		Three Months Ended January 31,				Fiscal Year Ended
		2017		2016		2017		2016
Revenues:
Systems sales	$	322,323	$	378,594	$	2,512,579	$	2,946,304
Professional services		526,331		580,124		2,395,987		2,212,002
Audit Services		393,572		--		627,919		--
Maintenance and support		3,572,298		3,829,816		14,809,935		15,145,480
Software as a service		1,568,609		1,582,314		6,713,485		8,010,672
Total revenues		6,383,133		6,370,848		27,059,905		28,314,458

Operating expenses:
Cost of systems sales		632,400		660,632		2,712,663		2,778,041
Cost of professional services		832,932		894,852		2,724,078		3,143,881
Cost of audit services		504,579		--		1,100,154		--
Cost of maintenance and support		743,049		738,778		3,226,511		3,036,550
Cost of software as a service		373,397		389,385		1,763,705		2,442,143
Selling, general and administrative		2,934,934		2,806,429		13,088,074		13,442,799
Research and development		1,653,469		2,377,712		7,453,638		9,093,353
Gain on sale of business		(238,103)		--		(238,103)		--
Total operating expenses		7,436,657		7,867,788		31,830,720		33,936,767
Operating loss		(1,053,524)		(1,496,940)		(4,770,815)		(5,622,309)
Other income (expense):
Interest expense		(127,962)		(185,824)		(508,859)		(884,226)
Miscellaneous income (expenses)		145,173		284,880		106,084		2,224,423
Loss before income taxes		(1,036,313)		(1,397,884)		(5,173,590)		(4,282,112)
Income tax (expense) benefit		17,128		(5,358)		12,024		(8,003)
Net loss	$	(1,019,185)	$	(1,403,242)	$	(5,161,566)	$	(4,290,115)
Less: deemed dividends on Series A Preferred Shares		--		(369,058)		(875,935)		(1,336,072)
Net loss attributable to common shareholders	$	(1,019,185)	$	(1,772,300)	$	(6,037,501)	$	(5,626,187)
Basic net loss per common share	$	(0.05)	$	(0.09)	$	(0.31)	$	(0.30)
Number of shares used in basic per common share computation		19,680,751		18,783,539		19,528,341		18,689,854
Diluted net loss per common share	$	(0.05)	$	(0.09)	$	(0.31)	$	(0.30)
Number of shares used in diluted per common share computation		19,680,751		18,783,539		19,528,341		18,689,854

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

Assets

		January 31,
		2017		2016
Current assets:
Cash and cash equivalents	$	5,654,093	$	9,882,136
Accounts receivable, net of allowance for doubtful accounts of $198,449 and $155,407, respectively		4,489,789		4,199,315
Contract receivables		466,423		119,697
Prepaid hardware and third party software for future delivery		5,858		5,858
Prepaid client maintenance contracts		595,633		956,913
Other prepaid assets		732,496		941,532
Other current assets		439		97,986
Total current assets		11,944,731		16,203,437

Non-current assets:
Property and equipment:
Computer equipment		3,110,274		2,647,135
Computer software		827,642		801,895
Office furniture, fixtures and equipment		683,443		683,443
Leasehold improvements		729,348		729,348
		5,350,707		4,861,821
Accumulated depreciation and amortization		(3,447,198)		(2,407,746)
Property and equipment, net		1,903,509		2,454,075

Contract receivables, less current portion		--		8,711
Capitalized software development costs, net of accumulated amortization of $16,544,797 and $14,919,948 respectively		4,584,245		6,123,638
Intangible assets, net		6,996,599		8,155,325
Goodwill		15,537,281		16,184,667
Other non-current assets		672,133		746,018
Total non-current assets		29,693,767		33,672,434
	$	41,638,498	$	49,875,871

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

Liabilities and Stockholders' Equity

		January 31,
		2017		2016
Current liabilities:
Accounts payable	$	1,116,525	$	1,136,779
Accrued compensation		496,706		935,324
Accrued other expenses		484,391		328,551
Current portion of long-term debt		655,804		673,807
Deferred revenues		9,916,454		10,447,280
Current portion of capital lease obligations		91,337		592,642
Total current liabilities		12,761,217		14,114,383

Non-current liabilities:
Term loan, net of deferred financing cost of $199,211 and $270,147, respectively		4,883,286		7,590,937
Warrants liability		46,191		205,113
Royalty liability		2,350,754		2,291,888
Lease incentive liability, less current portion		339,676		369,406
Capital lease obligations		--		93,257
Deferred revenues, less current portion		568,515		1,212,709
Total non-current liabilities		8,188,422		11,763,310
Total liabilities		20,949,639		25,877,693

Series A 0% Convertible Redeemable Preferred stock, $.01 par value per share, $8,849,985 redemption value, 4,000,000 shares authorized, 2,949,995 issued and outstanding, net of unamortized preferred stock discount of $0 and $875,935, respectively		8,849,985		7,974,050

Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares authorized, 19,695,391 and 18,783,540 shares issued and outstanding, respectively		196,954		187,836
Additional paid in capital		80,667,771		79,700,577
Accumulated deficit		(69,025,851)		(63,864,285)
Total stockholders' equity		11,838,874		16,024,128
	$	41,638,498	$	49,875,871

STREAMLINE HEALTH SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

		Fiscal Year
		2016		2015
Operating activities:
Net loss	$	(5,161,566)	$	(4,290,115)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities, net of acquisitions:
Depreciation		1,099,957		1,245,400
Amortization of capitalized software development costs		2,771,437		3,073,479
Amortization of intangible assets		1,344,980		1,344,992
Amortization of other deferred costs		324,496		206,881
Valuation adjustment for warrants liability		(158,922)		(1,629,267)
Deferred tax expense (benefit)		--		(9,575)
Other valuation adjustments		94,009		(39,299)
Gain from early extinguishment of lease liability		--		(33,059)
Gain on sale of business		(238,103)		--
Loss on disposal of fixed assets		567		92,448
Share-based compensation expense		1,787,367		2,386,490
Provision for accounts receivable		121,025		124,235
Changes in assets and liabilities, net of assets acquired:
Accounts and contract receivables		(344,445)		2,718,330
Other assets		449,673		575,774
Accounts payable		(51,071)		(1,117,986)
Accrued expenses		(690,094)		(174,133)
Deferred revenues		(341,008)		1,405,980
Net cash provided by (used in) operating activities		1,008,302		5,880,575

Investing activities:
Purchases of property and equipment		(506,040)		(518,254)
Capitalization of software development costs		(1,978,946)		--
Payment for acquisition		(1,400,000)		--
Proceeds from sale of business		2,000,000		--
Net cash used in investing activities		(1,884,986)		(518,254)

Financing activities:
Principal repayments on term loan		(2,796,590)		(1,465,109)
Payments related to settlement of employee share-based awards		(11,702)		--
Principal payments on capital lease obligations		(569,189)		(815,826)
Recovery of deferred financing costs		--		2,111
Proceeds from exercise of stock options and stock purchase plan		26,122		276,039
Net cash used in financing activities		(3,351,359)		(2,002,785)
Increase (decrease) in cash and cash equivalents		(4,228,043)		3,359,536
Cash and cash equivalents at beginning of year		9,882,136		6,522,600
Cash and cash equivalents at end of year	$	5,654,093	$	9,882,136

STREAMLINE HEALTH SOLUTIONS, INC. Backlog (Unaudited) Table A

		January 31, 2017		October 31, 2016		January 31, 2016
Streamline Health Software Licenses	$	11,504,000	$	15,551,000	$	21,586,000
Hardware and Third Party Software		150,000		200,000		200,000
Professional Services		4,068,000		4,973,000		5,803,000
Audit Services		1,847,000		1,849,000
Maintenance and Support		19,193,000		19,413,000		23,292,000
Software as a Service		13,861,000		12,929,000		16,264,000
Total	$	50,623,000	$	54,915,000	$	67,145,000

STREAMLINE HEALTH SOLUTIONS, INC. New Bookings (Unaudited) Table B

		Fiscal Year Ended
		January 31, 2017
		Value	% of Total Bookings
Streamline Health Software licenses	$	819,000	10%
Software as a service		2,359,000	28%
Maintenance and support		716,000	9%
Professional services		4,244,000	51%
Hardware & third party software		143,000	2%
Total bookings	$	8,281,000	100%

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

Table C

This 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. Streamline Health's management in its operating and financial decision-making uses non-GAAP financial measures 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. Streamline Health defines "Adjusted EBITDA" as net earnings (loss) plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, significant non-recurring operating expenses, and transactional related expenses including: gains and losses on debt and equity conversions, associate severances and related restructuring expenses, associate inducements, professional and advisory fees, and internal direct costs incurred to complete transactions.

Reconciliation of net earnings (loss) to non-GAAP Adjusted EBITDA (in thousands):

Adjusted EBITDA Reconciliation		Three Months Ended,				Twelve Months Ended,
		January 31, 2017		January 31, 2016		January 31, 2017		January 31, 2016
Net loss	$	(1,020)	$	(1,403)	$	(5,162)	$	(4,290)
Interest expense		128		186		509		884
Income tax benefit		(17)		5		(12)		8
Depreciation		205		314		1,100		1,245
Amortization of capitalized software development costs		625		741		2,771		3,073
Amortization of intangible assets		369		333		1,345		1,345
Amortization of other costs		114		46		254		136
EBITDA		404		222		805		2,402
Share-based compensation expense		444		527		1,787		2,386
Gain on sale of business		(238)		--		(238)		--
Loss on disposal of fixed assets		--		--		1		92
Non-cash valuation adjustments to assets and liabilities		(149)		(317)		(65)		(1,669)
Transaction related professional fees, advisory fees and
other internal direct costs		34		40		392		93
Associate severances and other costs relating to
transactions or corporate restructuring		40		--		239		206
Other non-recurring operating expenses		--		--		--		(750)
Adjusted EBITDA	$	535	$	472	$	2,921	$	2,761
Adjusted EBITDA per diluted share
Loss per share – diluted	$	(0.05)	$	(0.09)	$	(0.31)	$	(0.30)
Adjusted EBITDA per adjusted diluted share (1)	$	0.02	$	0.03	$	0.13	$	0.13

Diluted weighted average shares		19,680,751		18,783,539		19,528,341		18,689,854
Includable incremental shares — Adjusted EBITDA (2)		3,340,390		2,989,571		3,327,130		3,075,278
Adjusted diluted shares		23,021,141		21,773,110		22,855,471		21,765,132

(1)	Adjusted EBITDA per adjusted diluted share for the Company's common stock is computed using the more dilutive of the two-class method or the if-converted method.
(2)	The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP net loss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.

SOURCE Streamline Health Solutions, Inc.

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