Streamline Health Solutions (STRM) 26 Apr 182017 Q4 Earnings call transcript

Good day and welcome to the Streamline Health Q4 Fiscal Year and Earnings Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Randy Salisbury. Please go ahead, sir.

As the conference call operator indicated, my name is Randy Salisbury, as Senior Vice President and Chief Marketing Officer here at Streamline Health. including communications, all manage Investor Relations. I

financial of on and Chief me President call Chief the for the open we Meeks, call President Sides, and conclusion At Officer. have the or announcing question-and-answer you these anyone David not can are Financial prepared today’s company’s of Executive streamlinehealth.net the Vice copy websites. retrieve call on If full-text numerous remarks, our from will website today Senior results, at Joining at today’s session. does Officer; it participating a press Nick and release

begin remarks, may calls, for viewed. We record with how Before all provided to the we the clear should be record which information, with prepared earnings be be are sure our submit we statement. certain on therefore today, want following everyone the for as we of

Securities differ Exchange most from Annual to uncertainties and for discuss. factors. press U.S. other release including call of this we actual the statements not Please Commission, made and Act Reform results the conference and facts statements more materially that filings of may about recent the to subject with other Form the these risks, to our forward-looking made meaning that refer First, be those factors considered cause XX-K within uncertainties, could information risks, are XXXX. are are assumptions These company’s Litigation to Securities on Report, historical and assumptions Private and

of we always, As presenting analysis items management’s are today. these current of as

is any or revise forward-looking on when today. Streamline these statements will publicly Please risks evaluating undertaking any this the into commitment Health we participants made call discuss. account to such Our topics note obligation take should not

Management measures such better non-GAAP as help Second, financial our adjusted measures, provide we’ll performance. uses financial these EBITDA. insight into to discuss

are these on our To to a which David own earnings and at me please David? in from With release consistent non-GAAP you such Chief Sides, measures expense compare most refer reach website to included However, the GAAP measures, call let and entity streamlinehealth.net calculations these differ President measures. amounts for Officer. another to help Executive and their non-GAAP not these over the said, measures. those may our so comparable turn of may reconciliation income of that certain items using terms,

Thank quarter you, of Today, Randy, XXXX. will I to performance. After XXXX fiscal everyone. from of XXXX. I XXXX fourth and were on revenues quarter Yesterday fiscal slightly XX% want fourth good quarter share thoughts Recurring million, our our $X.X morning, some afternoon, we total approximately year comment quarter fourth for plans revenue revenue of for which, and the announced of down the fourth XXXX. of and

was compared the material as fiscal XXXX, year any year, we to in decline XXXX. $XX.X revenue approximately referenced which we in revenue license in generated perpetual For year due to XXXX. million fiscal of This third revenue, and $XX.X contributed fiscal million which $XXX,XXX in year quarter in call, absence the revenue in in fiscal our this

of about middle scheduling late total few transition patients in I revenue decline in focus service an an entailed in the capture bill a which and comment we from to last undertook drop, our $XXX,XXX will and technology minutes. business business resulted acquiring more XXXX. transition audit this in year our refine more revenue the In company’s addition, to to cycle the charge selling

Solutions. generated this game attrition we in revenue offset during Financial in Management ECM our revenue by million, approximately $X new XXXX, services legacy and $XXX,XXX was While approximately of primarily

approximately this the last an revenues to year. of professional now approximately XX% quarter, increase fiscal and third fourth are increase over fourth $XXX,XXX attention in over of an services the the our of of XX% Turning approximately quarter year quarter

I’m this quarter of majority new million auditing $X.X which eValuator of our to the coding product fourth year. last for closed our accounts fiscal client from I’m in relationships leverage to our the services three new of be new that expected incremental XX best last I services. we to new bookings were first bookings our XXXX for clients April solutions. and attracting ends were first were year. report during comprised XXXX year that new that $X.X throughout to and our and Coding bookings or new that million of these the with to clients. quarters. Four pleased quarter with work fiscal across we Since report eValuator the forward. ended XX in we’ll The Our years roster. to eValuator of we fiscal pleased $X XX year year, XX introducing with technologies quarter And our one additions technology and mentioned That’s of new million, six the our new spring, currently primarily the deals fiscal exceeds addition going

the technology leading almost at us healthcare release movement reimbursement. before for continues been to coding analysis coding is build. bill Today, a XXX% opportunity their Looking payment. helping to done for for sales providers is bill eValuator eValuator our after our of industry sending analyze all enabling new funnel, well

value well smarter of funnel size contracts. we in pipeline of as today. total, see XX $XX million revenue large way attraction is than recurring new a contract opportunities annual doing our Our as potential business In of in includes gaining number more as average

us eValuator EMRs. continue EMR we’re too Without of and in build far centers to cetera. quarter performance, their credentials our that to Additionally, that in purchase. the Allscripts client deals overcome to-date eValuator et base our closing employing eValuator we’ve also technologies we into all using help larger obstacles clients first sold be upside would going this McKesson is are Meditech, with providers primary that the healthcare The Epic as

new clients selling accounts. in and to to We accounts have provided the have have May. and of five month Through aid of plan our live video our eValuator running remainder up in in today these us testimonials –

the XX days is to selling points. in easy to live mini which learning implement less, of two the our or solution, process streamline we clients have one As implement. how is go to brought eValuator we’re and

revenue million, EBITDA or in we in transition negatively QX the million quarter revenue, fourth But and fiscal in up XXXX. controls. year, I want for Adjusted adjusted is affect referenced for XX.X% $XXX,XXX cost $X.X for Turning throughout and approximately the that EBITDA the compared I or our $X.X $X.X our to did totaled the tight XX.X% of from now million to approximately emphasize balance attention leadership decline XXXX investment not of planned the revenue, XXXX. experience team earlier sheet. we of implemented substantially year the fiscal to

metrics completely we into deeper year of of XXXX, our sales cost financial XX%. performance for looking fiscal our some fact, reduce In by

the reduced by loss operations terms, XX%. QX income total XX% of Our GAAP by million for the a since last quarter fourth and In $X loss our for expense from our year. net and net net loss was up operating year $XX,XXX, both

improve our $X.X coming focused For the of solutions $X.X million XXXX our to fiscal in up year and represents was we these XXXX, million a newly in company CFO year to the minutes. healthcare Nick fiscal to net more few Fiscal year net address Meeks, in designed loss their reduced loss XXXX. items of specifically services others from first a and providers, our help full-year his prepared help. financial remarks

as first with of they narrowing So not a of the we in of just reimbursement, that of well. the they more a our compelling bill can from middle the for and the clinics charges we cycle improve to patient’s And practices patient win serve. the have submission communities revenue capture By help us proposition the focus marketplace. outpatient the distinct and health with value through hospitals, believe the centers that physician can and but for

the they the help into winning provider specific Our revenue return technologies coding revenue With sweep coding solutions because that in succeeding solutions auditing and can are marketplace, today. marketplace alongside our streams. services the our are in in cycles

won Nicholas documentation integrity one Our outcomes. XXXX shows in Enterprise coding technology industry great Excellence, our Hospital General month, for the in patient revenue Davies largest as industry’s Louisiana of client, Lafayette, as delivers to the our to CDI know utilizing process. great the of Lafayette benefit E. HIMSS, – and Last cycle achievement value trade technology outstanding Award improve our clinical

a by information General to facilities the team manually documentation all have been equity care condition Integrity. These Documentation routing reflects ability their system. using and function needed of you lack have function. their throughout CDI medical healthcare cases. a in managing connect or their take assigning, or their various providers with effort were Lafayette the systems delivered. review me Let solutions share with They conflicting data and struggling and across records Most with unique CDI incomplete and Lafayette ensure for Clinical our the to to of department seven vigorous realizing specialists they patient’s of the benefits in HIM records and minute their and then accurately

CDI reporting with potential solution addressed these all impressive Lafayette the improvement CDI investment. the all Identifying for $X.X concerns. implementation And cases Our net in XXXX. on functions, an its million realized offered they and soon revenue that improvement return of realized handling greatest of in automation them better integration, of since

inaccurate quality into This enabled reimbursement One and performance. how they Using with that automation our In of to to their in of help productivity, were Lafayette because and avoid from cases penalties. subsequent solution in Often documentation. improve CDI catch staff in to care addition our metric CDI effectiveness was the technology HACs. a issues our discovered nearly flagged and their increase fact revenue, to documentation still conditions them with missing integration, their patient Lafayette address reporting these Dealers calculations solution with hospital-acquired admitted enhance contained or overall clients more help them earlier. the much payers our CDI delivery. clear certain enables all capturing financial corrections $XXX,XXX the that solutions were attract or example issues is XX% is our HACs

Another technology umbrella of our forward fine is coding the part going focus the a big under Abstracting. is fit

Abstracting and enabled healthcare a Earlier be sales to technology optimize our again to five I’ve calls. and existing coding robust with to providers both more in financial solutions both for expansion will adding But providers changing of earnings coding and functions, meaningful operational long-time Abstracting with opportunities systems and CDI meaningful of automate discussed – workflows, custom And their CDI the previous eValuator keep integration both month, these benefits client contract for results. HIM technologies. compliance help productivity more we in this and reporting Our we Abstracting. CDI pipeline to with close drive contains facilities. from of elements our

that the three now was collect other days, needles “eValuator risk the cases tagged use this be the the one eValuator of identified to in impact services, a the some because caught approximately billing, represented cycle eValuator the high this The did the hear from helps easily gross one vast earlier future. gross of additional Cases under-billed worthwhile we not platform implemented eValuator amount haystack. solution an are states, stated his they year. And XX% month, inaccurate in in organized and of But of quite overall The $XX,XXX. revenue positive review, In more the about impact the look the you quoted coding percentage In clients. written Last billed already have morning, of their realize professional. new can in of a which could represented that their coding their this our very our I expanding smooth this cases The which of as first chart, client their not our our the and received to this of from revenue of soon”. sequence of organization clients. XX% eValuator avoid found in XX in importantly, was now over few of where eValuator it results for billing testimonial one client facilities. at implementing So at our of director like through can as the testimonial, thought would accuracy this hospital that that coding all system been was letter four person’s resulted reimbursement. is implementation audit why of client a see forward range. been we majority process sites eValuator We of

sales of for As funnel. our the approximately current quarter our funnel, we qualified, opportunity. currently sales year, second million potential in XXX Further representing been success opportunity in we total about have the XXX still to revenue continues nearly near-term XX% opportunities the We $XX of represents great opportunities clients, have fiscal our with of approach sales we’re see opportunities XXX which the pursuing. now

our new-year. efforts, and two sales fourth believe marketing so more fiscal and come new quarter in have team eValuator of this partners. through opportunities clients quarter two first closed other forecast The each close quarter channel deals accelerate sales activity pace this four the We XXXX. of and average our our in the referral throughout the and will We eValuator an

As be able clients benefits as more we future bring measured. and attract technology to successes, prebilling help our leverage reiterate, online. are and automated cloud-based their the I gain quarter, stated last easily We’ll To them many deals. close and of

Our eValuator potential of and days for results over solution benefits year fourth denied Nick being outpatient to I their Nick? Meeks, hand bills enable to greater coding cash who’ll and their practices, patient dollar greatly of amount quarter offices hospitals, of the improving payers. on the number and turn physician full XXXX. now AR, and financial call facilities provide detail by gain the our their on like reducing can cutting improve will

Thanks, David. revenue begin morning within cycle the and Streamline Allow reporting me statement, many the contributed to everyone. last over Beginning than successful issued all with related income thanking were our scheduling to EBITDA. $X will QX adjusted also a we from would be first EBITDA to by Good the audit the of they’ve Adjusting XXXX the reduced across warrants weeks. warrants transaction. the board last of that has gain equity-based expired lower last the $XXX,XXX more expenses and in addition and quarter-over-quarter. in mark-to-market divestiture PIPE to the noncash the David note over gain compensation, impacting being approximately I that early a our one operating adjustment financials. year-over-year final by and continued quarters. Those recognized both million Streamline expenses year, Operating trend for February in of four with covered

Moving cash generated $X.X of at full $X net a million fiscal million cash year on quarter We cash of hand, offset finished the of million the progress to third end. to in of by that cash generation reduction said, low this of cash quarter. end $X.X reduction $X.X the of QX the with from and at fourth pleased accounts networking That the year $XXX,XXX for fiscal capital strongest with generation is was over on true fourth of the approximately Streamline traditionally of XXXX. was balances The quarter quarter. payable increase being year. from cash through in the I'm predominantly balance quarter quarter Conversely, million year that the for the comparatively profitability the Streamline subset operations, Through sheet. impact just is our date

in from slightly any decreased fourth not quarter do forward. debt prepayments moving We well, accelerated to debt bank as stated last we quarter that Our million the $X.X down million. anticipate $X.X

quarter. amortization have term a to acquired this per reduction normal the third resulted million. Allscripts. the the of visibility, termination of $XXX,XXX The and on the majority substantial the we With by normal accelerated over penalty. $XX.X Our to portion agreement, of later sales drawdown subsequently by from respect trajectory million its is but fiscal the end in loan approximately backlog experienced long-dated revenue was approximately quarter NantHealth decreased future the originally the analytic contract from years contained with quarters, also but to recent clinical in The termination of $XX.X

Given that fiscal on XXXX be impact immaterial. will the year

increase clients terms. backlog periods. multi-year number in with services backlog continue audit I secured in of As that nature I contracted definable variable to clearly those note did Generally previous we I new here backlog add would expect engagements, multi-year with due our the to of of record only renewals, future contracts as speaking, calls, some and also a on eValuator we to agreements

normal have pace XX-K year. Lastly, reporting that one week noted are roughly off this you our we might

of new revenues. XXX. used XX-K the RSM, impact time SAB impact to the The around our revolved future our standard recognition XX the recognition the in application with was include test have incremental We revenue to of on Streamline ASC This the largest license standard of required the periods. for on term disclosure

license Moving we from we otherwise then We have. will agreements on bit multi-year revenues license closely this, recognition. perpetual recognized means forward, expand term further a resemble lower license existing term would recognition that more

benefit close Our that, for recognition noting factors of leases and most the of the focus the knock-on the David to continue overall call remarks. our impact we the simplifying guidance cycle elimination the reporting itself this by accounting I'll That as simplify our will somewhat have of actions David? in such Sides. and warrants virtuous and less a return operations, expiration the expensive. booking capital now my change. revenue I to as and year back making concludes of

Nick. you, Thank

my minutes to mentioned last or XXXX. I few our years, efforts want a our remarks, fiscal spend outset objectives. at two strategic three The accomplishing looking at I on year As focused the we of prepared improving ahead

more XXXX. third, be additional these our solutions. can that client focus, is by we've and why couple Abstract. analysis Driving providing of being By First, cycle focusing fiscal our innovative solutions strategic objectives in services our middle to solutions revenue we for achieve patients focus this the by to can eValuator on platform. form able in win primary new grow over refine the centric such the primarily healthcare That's acquired business innovate told been more years, previous new eValuator can we sales With of we sales; CDI market as growth in centric; clients late the that in the solutions sell and cross second, scheduling solutions and providers. to opportunity of is our coding

revenue in total fiscal approximately challenge the revenue experienced attrition today of $XX.X rate year. to X% million, attrition run approximately million enough of beginning revenue XXXX. experienced Our each revenue This we equating year, of we to past the growth is to outpace roughly generate $X

pace slightly X% of year or around ahead, we're X%. at Looking projecting attrition the slower a

the to growth $XX.X as totaling without point. this sales organic second from revenue XXXX. our in abstracting reseller through of On year, the primarily primarily amount $XX.X to revenue from any solution growth million revenue and eValuator generate of of and solution which a we base will expect revenue Primary space, to already be the throughout million approximately Turning $XX.X modest the by year sales, of year. drivers X% our our a have growth Abstracting partners with half to QX contributions in million eValuator in of approximately of CDI end closed starting year fiscal XX% some

new transition balance earlier, business normal integrity. the year. should We've implemented, been cost entire net improved with cycle two Positive deliver of this the of a our we will effective final fiscal this experience Streamline continue stewards tighter line QX a breadth throughout the believe running checking few mentioned patient and bill on in coding we improving to controls the in sheet of XXXX quarters as and and we the of helped income we've focused see from in writer QX new same of the As today, reimbursed next technologies bottom of accuracy our company performance. from management of more primarily revenue the row, revenue

for adjusted fiscal for EBITDA and Our forecast $X.X $X.X year XXXX, million. between million

projections the Affordable Our generation Care Congress not administration healthcare did that In under year move will the believe during new range. value ago the I not plus Act. change toward million $X for year during of change a said year course and cash the I conclusion, based

big focus on support need quality with for concludes remains will will we capture going revenue and remarks. That that’s remain will the made this to use bill improve corresponding tagline which revenue. healthcare efficiency believe have clients and new compelling and to drop. to our long-term, as when optimization, their moves forward strategic our my the from that the prepared continue providers we charge make small continue And to cycle We the prospects

Before over operator, Operator? the associates to their our turning the the clients, Health to the hard turn call thank operator call dedication I'll and each now I our to session. to to shareholders want work continued Streamline over our our other. Q&A for and for to

And Instructions] hear Craig-Hallum Matt will [Operator Hewitt with from we Group. first Capital

for taking for morning update Good our you thank the and questions. gentlemen,

you more mentioned perspective? off, force, so to quicker add looking of add the capitalized little given your anything from potentially that help if a of curious pipeline you customer David, all maybe of some I'm momentum either could base you First a there on with sales broadly speaking. headcount you're that or specific just bit that there Is to that some that

Yes.

so I makes year headcounts better last set now repeatable fairly think we think process. been what the sales the so I so, have for a and of view our

good cash And force and that have process now marketing sales to get client that help add – to people we think will repeatable have campaigns, the videos to So the we a earnings that the you think we so really have testimonials, I our accelerate. do good power so. try and

that you'll think our guidance, happen and current there. nothing see this I year so so there's and in budget And it's

update you've And or could year? and your number Great, out what coming an relationships expectations if over announced just proceeding to thank are of a partnerships got various on others. you. you channel past so a those Allscripts curious your channels maybe little those this then the shifting and so give have are of how you bit, year that I'm

see think that. go Some GA to – Allscripts through for channels got and we we come of so some quarter have we could those deals made a next progress good with started

the So them deals to the working this into nice get group, none and how are of be end year, have their in that can be them work we our on so goes. exciting, but their the Without in we’ll guidance. large through still GA one still in we of would that larger with process to that's see those

this upside totally So through out since to at taken that there from that its in not them. would due all nature comes year, it so binary we've be it's

anything or somebody struck gaining nature to And of hospitals, a this and it wind seem maybe I’ll built me you're of for mean hop in and you anything have anything implying momentum. else's seen of unique the and in back you given you that caught maybe more seen queue. replicate what eValuator Have could then Have great. one mimic year? that you. the for trying to then on heard chord Thank Okay a in guys competitive what you landscape or with

already a perspective services out of it competitor. But there from that than there’s software sell a a Well, more single competitor kind they perspective.

main it's kind is words, other selling consulting than that's own software [indiscernible] we're accurate. in selling use of focus their or trying software company, – to ours their a So the really be people with client to the more

have we of forward, in We've will we least to funnel. like some validations. actually a to so will try to those go And the And had tool, we're taking We do from may and We looks could that it we an share the lot may have always talked that time, like you or pro-fee trying starting it? said, and on a get start seen inpatient kind Wow, that moving probably, more there. capture we to do – which of adjacency love – our side. Over copy competitor other charge demos this at we out and them differentiate further this we’re about idea. marketplace as it on year pro-fee. doing things clients in the move with And outpatient us do people

That's great. Thank you.

First hear from Instructions] We’ll with Sparacino Analysis. [Operator next Frank

cycles in your terms seen? hospitals pushback those guys. primary that delays for eValuator, Hi, I’m not David, to-date with sales forward. the What on you’ve seeing in discussions is more of or moving curious just recent

of – Frank. part good think question, the I

sometimes until kind a client way shift or list operationalize about, So how the people thinking can that. you a think and auditors really is to think, to much are with a today with the they smaller let they do their do on still everything to your pushback audit We a be support people, transition. we and review I sampling it? high we really, check through have to clients how now use structure computer then from here's them, that have auditors help our working of are our saying, denials okay, on who keep talk use value, part think that's of

denials people So as not your working you're denials real working from of and that then back time. getting many on have things start codes, came on kind

times shift industry of be let's kind a at who don't have daunting that adjusted XXX% by that So a can to for structure check people that. say

pre-bill – – in the a our clients through to financially, they've here's okay, all to and transition or made pre-bill. once the management that from talk they're you So made here's you to way process shift. much talk And can program we sales who these get the post change doing better how once get

but do So perspective it, change it’s often it's to thing can as down important slow if this things they do that from sometimes organizationally stall have get okay, is see actually to I I I an that that that there, of, do to out do, how and get year. where the people kind and of I get what across of a think chasm checks they're But make couple through rather fine that part help, to side, real this a in than other better through. times again, we're to trying it's during time that continuously tune and our actually message sales place it effect

year Great. it just of side. financial this spread as between in lines evenly between and terms product the year forecast And the the for last return – and ECM maybe two the split follow-up one

In terms and those of year of and just year this you’re thoughts standpoint last terms lines. strategic what particular in business forecasting then from any a

one bit I this using had year obviously, little on too. ECM had into feeds client products stopped think large and it we of and the last side, it disproportionate impact year kind that ECM more a was our

mainly it's So ECM.

you. Thank

turn to this I for at will additional conference And Mr. Instructions] over [Operator time, Salisbury the or closing remarks.

Streamline you Health. support and again your interest Thank of for

all to Thank questions more we'll We look randy.salisbury@streamlinehealth.net. forward need good or XXXX any please have our contact directly you discuss information, additional and you first when at in performance. If again with financial June, day. quarter me speaking you

Thank Ladies for and conclude participation. gentlemen, your you conference. does today's that