Streamline Health® Solutions Reports $8.8 Million Revenue; $2.7 Million Adjusted EBITDA in Q2 2013

Streamline Health® Solutions Reports $8.8 Million Revenue;
$2.7 Million Adjusted EBITDA in Q2 2013

ATLANTA--(BUSINESS WIRE)-- Streamline Health Solutions, Inc. (NAS: STRM) , a leading provider of knowledge management solutions for healthcare providers, today announcedfinancial results for the second quarter of fiscal year 2013, which ended July 31, 2013.

Revenues increased 74% for the three-month period ended July 31, 2013 to $8.8 million, as compared to $5.0 million in the second quarter of fiscal 2012. The quarterly increase was attributable to significant new sales in the Collabra suite, which includes computer assisted coding and clinical documentation improvement solutions acquired from Meta Health Technology in Q3 2012, increases in SaaS-based revenue primarily in the Company's business analytics suite, OpportunityAnyWare and recurring maintenance in the AccessAnyWare and Collabra suites.


Adjusted EBITDA increased 81% in the quarter to $2.7 million, as compared to $1.5 million in the second quarter of fiscal 2012. Cash on the balance sheet also increased appreciably to $5.4 million.

"We continue to grow with our clients," said Robert E. Watson, President and Chief Executive Officer of Streamline Health. "Our clients are telling us what they need to be successful in this rapidly changing industry, and we believe our solutions help them meet those needs as witnessed by our first eCAC solution sale in the second quarter. Our plan is to leverage our many relationships to cross sell incremental solutions, with particular emphasis on our business analytics and our coding solutions as the deadline for ICD-10 nears."

Highlights for the quarter included:

Revenue for the second quarter 2013 was $8.8 million, an increase of 74% over the comparable period in 2012;

Software as a Service (SaaS) revenues for second quarter 2013 was $1.9 million, an increase of 9% over Q2 2012;

Maintenance and support revenues for the second quarter 2013 was $3.6 million, a 58% increase over the comparable period in 2012 primarily attributable to the contracts acquired as part of the Meta Health Technologies acquisition in August 2012;

New sales bookings for the quarter were $5.3 million;

Backlog at the end of the quarter was $51.9 million.

Operating expenses for the three-month period ending July 31, 2013 were $7.8 million, compared to $5.1 million in the comparable prior year period; an increase of $2.7 million, or 54%, over the prior year comparable period.

Backlog at July 31, 2013 was $51.9 million, compared with $51.0 million at January 31, 2013 and $32.2 million at July 31, 2012. The fiscal second quarter backlog decline of approximately $1.3 million as compared to the fiscal first quarter is primarily attributable to recognized revenue in this quarter being drawn from backlog as expected.

Conference Call Information

The Company will conduct a conference call and webcast to review the results on Monday, September 9, 2013 at 5:00 pm EDT. Interested parties can access the call by dialing 888-504-7963 and then entering the passcode 2615298. A live webcast will also be available by clicking this link: http://bit.ly/19FlIAQ

A replay of the conference call will be available from Monday, September 9, 2013 at 7:00 p.m. EDT to Saturday, September 14, 2013 at 7:00 p.m. EDT by dialing 888-203-1112 and entering passcode 2615298.

* 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 these measures provide useful supplemental information regarding the performance of Streamline Health's business operations.

Streamline Health defines "non-GAAP adjusted net earnings (loss)" as GAAP net earnings (loss), plus losses on conversion of convertible notes, transaction related expenses, and non-recurring operational costs.

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, and internal direct costs incurred to complete transactions.

About Streamline Health

Streamline Health Solutions, Inc. (NAS: STRM) is a leading provider of SaaS-based healthcare information technology (HCIT) solutions for healthcare providers. The company's comprehensive suite of solutions includes: enterprise content management (ECM), business analytics, integrated workflow systems, clinical documentation improvement (CDI), and computer assisted coding (CAC). This unique combination of solutions is designed to help healthcare organizations manage the financial and operational challenges they face in the ever-changing world of healthcare today and in the future. 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 risks and uncertainties and are no guarantee of future performance. 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 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 products and pricing, product demand and market acceptance, new product development, key strategic alliances with vendors that resell the Company's products, the ability of the Company to control costs, availability of products obtained 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.

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

Three Months Ended

Six Months Ended

July 31,

July 31,

2013

2012

2013

2012

Revenues:

Systems sales

$

2,233,668

$

75,670

$

2,558,314

$

429,200

Professional services

1,039,240

941,419

1,958,591

2,063,858

Maintenance and support

3,620,446

2,297,246

7,001,046

4,648,821

Software as a service

1,880,007

1,734,719

3,728,748

3,352,308

Total revenues

8,773,361

5,049,054

15,246,699

10,494,187

Operating expenses:

Cost of systems sales

661,124

532,332

1,299,722

1,218,859

Cost of services, maintenance and support

2,062,220

1,209,187

4,021,271

2,486,951

Cost of software as a service

514,075

616,781

1,093,154

1,299,087

Selling, general and administrative

3,408,153

2,204,205

6,989,020

3,873,965

Research and development

1,160,147

510,842

2,257,157

967,205

Total operating expenses

7,805,719

5,073,347

15,660,324

9,846,067

Operating income (loss)

967,642

(24,293

)

(413,625

)

648,120

Other income (expense):

Interest expense

(587,808

)

(391,188

)

(1,154,373

)

(599,018

)

Miscellaneous income (expenses)

(1,064,163

)

(23,788

)

(1,806,428

)

12,257

Earnings (loss) before income taxes

(684,329

)

(439,269

)

(3,374,426

)

61,359

Income tax expense

(143,874

)

(24,000

)

(163,624

)

(33,000

)

Net (loss) earnings

$

(828,203

)

$

(463,269

)

$

(3,538,050

)

$

28,359

Less: deemed dividends on Series A Preferred Shares

(15,510

)

-

(357,147

)

-

Net (loss) earnings attributable to common shareholders

$

(843,713

)

$

(463,269

)

$

(3,895,197

)

$

28,359

Basic net (loss) earnings per common share

$

(0.07

)

$

(0.04

)

$

(0.31

)

$

0.00

Number of shares used in basic per common share computation

12,861,715

11,316,083

12,698,094

10,817,214

Diluted net (loss) earnings per common share

$

(0.07

)

$

(0.04

)

$

(0.31

)

$

0.00

Number of shares used in diluted per common share computation

12,861,715

11,316,083

12,698,094

10,936,752

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

Assets

July 31, 2013

January 31, 2013

Current assets:

Cash and cash equivalents

$

5,355,673

$

7,500,256

Accounts receivable, net of allowance for doubtful

accounts of $134,000 and $134,000, respectively

10,773,182

8,685,017

Contract receivables

1,769,738

1,481,819

Prepaid hardware and third party software for

future delivery

22,777

22,777

Prepaid client maintenance contracts

1,176,432

1,080,330

Other prepaid assets

924,512

997,024

Other current assets

-

110,555

Total current assets

20,022,314

19,877,778

Non-current assets:

Property and equipment:

Computer equipment

3,481,679

3,420,452

Computer software

2,202,444

2,196,236

Office furniture, fixtures and equipment

870,079

843,274

Leasehold improvements

697,570

697,570

7,251,772

7,157,532

Accumulated depreciation and amortization

(6,296,766

)

(5,958,727

)

Property and equipment, net

955,006

1,198,805

Contract receivables, less current portion

95,816

126,626

Capitalized software development costs, net of

accumulated amortization of $18,861,000 and

$17,465,000, respectively

12,218,230

12,816,486

Intangible assets, net

7,559,154

8,188,131

Deferred financing costs, net

331,955

541,740

Goodwill

12,166,959

12,133,304

Other

459,823

383,708

Total non-current assets

33,786,943

35,388,800

$

53,809,257

$

55,266,578

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

Liabilities and Stockholders' Equity

July 31, 2013

January 31, 2013

Current liabilities:

Accounts payable

$

1,605,745

$

1,495,913

Accrued compensation

1,021,515

2,088,850

Accrued other expenses

1,318,947

1,325,039

Deferred revenues

10,040,005

9,810,442

Contingent consideration for earn-out

1,358,722

1,319,559

Current portion of long-term debt

1,250,000

1,250,000

Current portion of deferred tax liability

35,619

35,619

Total current liabilities

16,630,553

17,325,422

Non-current liabilities:

Term loans, less current portion

11,812,500

12,437,501

Warrants liability

5,981,000

3,649,349

Lease incentive liability, less current portion

79,603

99,579

Deferred income tax liability, less current portion

663,033

529,709

Total non-current liabilities

18,536,136

16,716,138

Total liabilities

35,166,689

34,041,560

Series A 0% Convertible Redeemable Preferred Stock, $.01 par

value per share, $11,999,985 redemption value, 4,000,000

shares authorized, 3,999,995 issued and outstanding, net of

unamortized preferred stock discount of $4,034,470 and

7,965,515

7,765,716

$4,234,269, respectively

Stockholders' equity:

Common stock, $.01 par value per share, 25,000,000 shares

authorized, 13,039,619 and 12,643,620 shares issued and

outstanding, respectively

130,396

126,436

Convertible redeemable preferred stock, $.01 par value per

share, 1,000,000 shares authorized, no shares issued

-

-

Additional paid in capital

49,930,230

49,178,389

Accumulated deficit

(39,383,573

)

(35,845,523

)

Total stockholders' equity

10,677,053

13,459,302

$

53,809,257

$

55,266,578

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Six Months Ended