Streamline Health® Reports First Quarter 2018 Financial Performance

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

Three Months Ended

April 30,

2018

2017

Revenues:

  Systems sales

$

1,131,674

$

378,723

  Professional services

238,314

420,035

  Audit Services

359,713

345,019

  Maintenance and support

3,309,104

3,354,772

  Software as a service

1,224,368

1,425,132

        Total revenues

6,263,173

5,923,681

Operating expenses:

  Cost of systems sales

249,984

566,051

  Cost of professional services

706,230

715,215

  Cost of audit services

393,979

440,639

  Cost of maintenance and support

648,339

806,522

  Cost of software as a service

316,387

339,376

  Selling, general and administrative

3,249,057

3,373,528

  Research and development

1,062,319

1,556,938

        Total operating expenses

6,626,295

7,798,259

Operating loss

(363,122)

(1,874,588)

Other income (expense):

  Interest expense

(116,218)

(127,268)

  Miscellaneous income (expenses)

(87,645)

(38,044)

Loss before income taxes

(566,985)

(2,039,900)

  Income tax benefit (expense)

(1,714)

(2,608)

Net Income (Loss)

$

(568,699)

$

(2,042,508)

Net loss per common share – basic and diluted

$

$

(0.10)

Weighted average number of common shares – basic and diluted

19,695,390

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

Assets

April 30,

January 31,

2018

2018

Current assets:

Cash and cash equivalents

$

3,745,532

$

4,619,834

Accounts receivable, net of allowance for doubtful
  accounts of $323,524 and $349,058, respectively

2,819,849

3,001,170

Contract receivables

923,274

223,791

Prepaid hardware and third-party software for future delivery

--

5,858

Prepaid client maintenance contracts

555,689

506,911

Other prepaid assets

608,363

742,232

Other current assets

545,431

546,885

Total current assets

9,198,138

9,646,681

Non-current assets:

  Property and equipment:

  Computer equipment

2,831,024

2,852,776

  Computer software

730,950

730,950

  Office furniture, fixtures and equipment

683,443

683,443

  Leasehold improvements

729,348

729,348

4,974,765

4,996,517

  Accumulated depreciation and amortization

(3,981,311)

(3,834,153)

  Property and equipment, net

993,454

1,162,364

Contract Receivables, less current portion

686,658

--

 Capitalized software development costs, net of 
  accumulated amortization of $18,973,594 and
  $18,658,183, respectively

4,717,986

4,307,351

 Intangible assets, net

5,600,204

5,835,151

 Goodwill

15,537,281

15,537,281

 Other non-current assets

577,570

642,226

 Total non-current assets

28,113,153

27,484,373

$

37,311,291

$

37,131,054

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

Liabilities and Stockholders' Equity

April 30,

January 31,

2018

2018

Current liabilities:

  Accounts payable

$

1,344,377

$

421,425

  Accrued compensation

829,062

342,351

  Accrued other expenses

766,353

609,582

  Current portion of long-term debt

596,984

596,984

  Deferred revenues

7,301,408

9,481,807

        Total current liabilities

10,838,184

11,452,149

Non-current liabilities:

Term loan, net of deferred financing cost of $110,541 and $128,275, respectively

3,769,840

3,901,353

  Royalty liability

2,518,068

2,469,193

  Lease incentive liability, less current portion

254,933

274,128

  Deferred revenues, less current portion

181,877

332,645

        Total non-current liabilities

6,724,718

6,977,319

        Total liabilities

17,562,902

18,429,468

Series A 0% Convertible Redeemable Preferred Stock, $.01 par value per share, $8,849,985 redemption and liquidation value, 4,000,000 shares authorized, 2,895,464 and 2,949,995 issued and outstanding, respectively, net of unamortized preferred stock discount of $0

8,686,392

8,849,985

Stockholders' equity:

  Common stock, $.01 par value per share, 45,000,000 shares authorized; 20,034,446 and 20,005,977 shares issued and outstanding, respectively

200,344

200,060

  Additional paid in capital

82,115,469

81,776,606

  Accumulated deficit

(71,253,816)

(72,125,065)

        Total stockholders' equity

11,061,997

9,851,601

$

37,311,291

$

37,131,054

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

Three Months Ended,

April 30,

2018

April 30,

2017

Operating activities:

  Net loss

$

(568,699)

$

(2,042,508)

  Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of acquisitions:

     Depreciation

171,215

202,782

Amortization of capitalized software development costs

315,412

571,428

Amortization of intangible assets

234,947

333,057

    Amortization of other deferred costs

119,910

100,815

    Valuation adjustment for warrants liability

--

(31,210)

    Share-based compensation expense

222,458

267,174

    Other valuation adjustments

51,142

48,467

    Loss (Gain) on disposal of fixed assets

(1,555)

(720)

    Provision for accounts receivable

(7,851)

187,134

  Changes in assets and liabilities, net of assets acquired:

Accounts and contract receivables

(446,246)

618,647

Other assets

43,207

(97,889)

Accounts payable

922,952

(240,403)

Accrued expenses

622,020

382,530

Deferred revenues

(1,641,942)

(1,754,243)

  Net cash provided by (used in) operating activities

36,970

(1,454,942)

Investing activities:

Purchases of property and equipment

(3,300)

(8,719)

Proceeds from sales of property and equipment

14,225

--

Capitalization of software development costs

(726,047)

(386,498)

  Net cash used in investing activities

(715,122)

(395,217)

Financing activities:

Principal repayments on term loan

(149,246)

(163,951)

Principal payments on capital lease obligations

--

(33,811)

Payments related to settlement of employee share-based awards

(46,904)

(28,927)

  Net cash used in financing activities

(196,150)

(226,689)

Increase (decrease) in cash and cash equivalents

(874,302)

(2,076,848)

Cash and cash equivalents at beginning of year

4,619,834

5,654,093

Cash and cash equivalents at end of year

$

3,745,532

$

3,577,245

STREAMLINE HEALTH SOLUTIONS, INC.
Backlog
(Unaudited)

Table A

April 30,
2018

January 31,
2018

April 30,
2017

Streamline Health Software Licenses

$

115,000

$

984, 000

$

11,234,000

Hardware and Third Party Software

--

--

100,000

Professional Services

2,415,000

2,048,000

3,642,000

Audit Services

703,000

1,293,000

1,634,000

Maintenance and Support

12,978,000

15,420,000

18,084,000

Software as a Service

9,903,000

13,048,000

13,194,000

    Total

$

26,114,000

$

32,793,000

$

47,888,000

STREAMLINE HEALTH SOLUTIONS, INC.
New Bookings
(Unaudited)

Table B

Three Months Ended 

April 30, 2018

Value

% of

Total

Bookings

Streamline Health Software licenses

$

1,147,000

33%

Software as a service

398,000

12%

Maintenance and support

713,000

21%

Professional services

1,118,000

33%

Audit Services

58,000

2%

Total bookings

$

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):

(Unaudited)

Adjusted EBITDA Reconciliation

Three Months Ended,

April 30,

2018

April 30,

2017

Net loss

$

(569)

$

(2,043)

    Interest expense

116

127

    Income tax benefit

2

3

    Depreciation

171

203

    Amortization of capitalized software development costs

315

571

    Amortization of intangible assets

235

333

    Amortization of other costs

102

89

EBITDA

372

(722)

    Share-based compensation expense

222

267

    Loss on disposal of fixed assets

(2)

(1)

    Non-cash valuation adjustments to assets and liabilities

51

17

Adjusted EBITDA

$

643

$

(439)

Adjusted EBITDA per diluted share

Loss per share – diluted

$

(0.03)

$

(0.10)

Adjusted EBITDA per adjusted diluted share ⁽¹⁾

$

0.03

$

(0.02)

Diluted weighted average shares

19,986,425

19,695,390

    Includable incremental shares — Adjusted EBITDA ⁽²⁾

3,075,198

--

Adjusted diluted shares

23,061,622

19,695,390

(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.