Streamline Health Solutions (STRM) 11 Dec 182018 Q3 Earnings call transcript

Greetings and welcome to the Streamline Health Solutions Third Quarter Fiscal Year 2018 Results. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. President Marketing Vice Health for Senior Solutions. Salisbury, and Officer Chief Streamline Randy you. Thank

You may begin.

joining review of us of for XXXX. you Thank to Solutions which October the XXXX, Streamline the for third year quarter fiscal ended XX, Health results financial

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

Senior Officer; Vice today is and David President release and on Tom At me have Executive these Gibson, open the Officer. today’s the call Financial question-and-answer call Joining of press for on announcing results. participating a does prepared President today’s anyone we’ll and Chief not Sides, copy conclusion full-text our our Chief the If call, session. remarks, of

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

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

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

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

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

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

Thanks Randy.

of comment want our into to I XXXX our number that solid foundation to I sustained quarter next year. what remainder then planning our I of to the fiscal the solid also for improving With XXXX. quarter want of profitability. third year performance, fiscal believe will on third our I provide some for we that want to on growth performance seeing contribute the First, with achievements to the anticipate quarter, regard comment for building a and insights

attributable $X.X approximately yesterday to of of our in from XX% a same as fiscal previous as third this a approximately from we were XX% expect XX%. minutes. Recurring that More the period of we year second some the quarter, that solutions few a legacy increase the to the decline the and on million, total offset quarter revenue on released eValuator online. clients of our ago in year, and QX as about come year quarter up be a approximately for generated same of going for forward of pricing quarter the afternoon, revenues The third XXXX, Specifically, compared as churn down modest ago. XX% revenues sequentially in pressure is fiscal to

of months XXXX were of first ago. same million, nine bookings our year are which a the is bookings quarter Our the that year, fiscal period doubled million. the at this for fiscal $X.X $X.X To

sale believe to a continue our bookings revenue to revenue in $X these beyond. company for quality the eValuator of financial in and in of we our more the and point to quarterly solution million generating When our are bookings target sequential has in two We the solution in Pipeline backlog quarter eValuator with new year. in to I analytics long-term and indicators the and turning in the our quarter clients, XX%, lower were CDI $X fiscal any between growth combined expansion Texas. management activity at our new The suite. Health contracts leading meaningful Healthcare of a primarily growth The we'll at going in been Citizens pronounced growth quarter current of million and client from fourth forward. per Solutions business client bookings consisted QX Peak XXXX new period two point

have We and CDI opportunities have as prospects and evaluating numerous larger the we for Abstracting to and pipeline continue well. contract

individual pipeline that four five as times previously we size are deal several there opportunities for fact, In are average eValuator. what disclosed have or an

conversations and and are hospital to IDNs community with larger addition hospital systems. now groups in in We the regional

eValuator. earnings mentioned the signing as call, I Pete quarter third last Health first partner our in reseller our our of Solutions During early the

this We pipeline we we news selective anticipate multiple sales but to partners. that are in more coming choosing today very want our go-to-market in exploring, reseller having quarters. subject on is the Our be opportunities partner

asked in up because the basis, QX net was in detail the of million lower our down revenues Moving GAAP loss in $X.X In in QX shortly. this in to containment metrics approximately now another prepared this at after a his breakeven Gibson, impacted quarter million but financial on generated this year, our of cover loss this not The XXXX. of QX terms, of of from Tom I’ve our more $XXX,XXX. discipline. which the $X.X $XXX,XXX have EBITDA $XXX,XXX third from of the adjusted our to net and our of the approximately $X,XXX The to previously quarter remarks compared a million coming adjusted we year, onetime of from disclosed At third for move in year. year, cost dollar-for-dollar CFO, approximately for the of specifically for EBITDA, adjusting the last essentially $XXX,XXX, slightly hand net the of third down year. the as last was from QX improvement substantial loss end cash end quarter of approximately cost Atlanta results on quarter

bulk efforts to cash repay. our necessary largest As cash fourth the taken renewals sacrifices end provide balance the plus initiatives our and We’ve annual cost client make eValuator. build to as These now the sacrifices to invest there of seasonality eValuator. year our us company. of business ability our sales XXX is amounts we and grow in the hand to in to sheet that January our a to improve which marketing I’m reminder, cost associates throughout for in are of quarter right steps will at proud the our we use with around a begin around and on containment fix the our our of from pay-off grow

year our pursuing our executives a sales next to parallel. are different limited that we investing next but in be the fiscal the channels. key for and healthcare logical steps building channel call As in will customer streamlines partner third network are These to quarter our adaptors, XXXX. building These are eValuator introduction growth, streamlines early sales not influencers our include provide of I turn our to on Tom will the in the behind are distributor of over to, our company our completion Gibson, turns of greater results several detail market. to evangelists, on who our now financial Tom?

you, David, morning, everyone. Thank good and

for cost no which the November the operating consists almost the a XXXX. primary quarter XXXX factors product. operating pure non-cash lease four XXXX. has fourth in expense year professional for in contracts, from of adjusted move hold was the and write-off with and some million net XXXX, was all New entirely longer that of recognized was million sales and from were of The effective recurring attributable pressure, development generated $XXX,XXX $XXX,XXX each first EBITDA. the recorded XXXX were cost G&A expenses, as company depreciation for costs, our its the million and future for with EBITDA and office performance with continue third assigned certain provide XXXX liability in in adjusted $XXX,XXX leased rent obligations of and We the professional the R&D revenues is $XXX,XXX equipment of we content where we revenue. EBITDA X, $XXX,XXX SaaS-based to quarter. cost the to $X.X the will assignment. slightly the in much approximately savings of will York the G&A. $XXX,XXX came and enhancements eValuator have offset Atlanta furniture the improvements, investment. They in party. and higher a and a will revenue In same Atlanta for months deferred repositioned fiscal initiatives. $X.X previously net the of Combined content in call revenue the disclosed, EBITDA $X.X consisting first from of to support additional and third in has under quarter staff costs in office cost being its write-off over all on move a and now eValuator The will was savings company cost move were furniture generated expand costs and savings hold in down and for move management pricing in of third in some by $X.X office quarter $X,XXX,XXX quarter, There avoided move improvements, margin day $XXX,XXX The next eValuator of improved was lower quarter of reduction $XXX,XXX of benefit compared savings onetime the of the The cash depreciation three to in XXXX, implementation I and primarily cash associated $XXX,XXX, Atlanta City expenses primarily technology, $XXX,XXX in amortization. reviewed years. sales have auditing in for fiscal our The lease as earnings The of to experienced the third adjusted transactional the Office company by lighter amortization adjusted better proportionate -- equipment office previous it we lowered Atlanta and in third subleased, we and services with execute costs the Operating to personnel XXXX. move services. fiscal future nine in The In quarter, lower software Atlanta our the of recurring software management million The the on of period of same in financial XXXX to XXXX.

show reduction, a compared the million meaning savings want I the XX, leaving savings. million want business, operating For the up XXXX. company operating nine to of of year, million company approximately including months to $X have $X.X are costs, to that saves period. real in cost emphasize the related of $X certain estate million a XXXX these as continue for $XX.X eValuator. the in in period million cash estate, amounts that costs savings the numbers, ended nine operating of not XXXX savings in quarters in non-cash adjusted $X.X redeploy first in throughout in XXXX, executed, the to portion and months We cash-related The million primarily last of exit cost this point of the ahead X-month XXXX, with million, savings our same grow costs been fully compared Of reduction around the costs. realized $X.X real to and the October $XX.X true some were reiterate reported will

$XXX,XXX the addition move the share net and includes In compensation. onetime $XXX,XXX Atlanta adjustment amortization $XXX,XXX cost to office in base for in non of and loss XXXX nearly depreciation QX, to cash

quarter of finished the we with million approximately of includes cash $X.X sheet, normal the hand. use balance operations. from on during the to cash That quarter the Moving

The ago, seasonality As a prior are A leveled issued established we its from company and November on will an invoices. mentioned generates company in we annual cash minutes collected QX will of the hand in have at quarter. substantial following end XXXX The cash of end a amount few have similar cash years, anticipates the it with of year of these a cash invoices healthy of material each to generate a David to manner and January. the the balance. number in the

invested full invest we is have in primarily revenue growth. the to million operations, eValuator. it solutions straight second for anticipates to the to a expected most fiscal million key capitalized XXXX as on to The million client the new capitalized introduce $XXX,XXX software $X required XXXX our software in heavy fiscal for development for a functionality development $X.X fiscal The for market the company $X.X us. the quarter, spin spin Beyond potential that compared lower proceed and the year at our a behind XXXX. eValuator in solutions, We for lifting spin to total is continuing company on to

facility the We company at On and the for press includes in the extended certain financing payments to The loan a on the vision XXXX was until quarter. loan, amended and company investments make XXXX. account confidence company banking in issued extended that term balance partner agreement term release The and on credit. the its that eValuator, investment and financing termination made XXXX and having credit covenants the line costs in $X.X the continue extension quarterly end net the of the the which eValuator. November company’s our side, and amended a the of views $XXX,XXX of we our million the loan to in of both days regular of the the amendment

the of contracts renewal future those million. by natural to for increased A with first and end help reforming. my periods. backlog measure the remarks. The company has had nature and service non-GAAP backlog David, only realized through audit to backlog Board. the fit and succeeding extended the That their agreements, the well includes feel forward turn to I’ve concludes next for term team their revenue compared evaluating with impact this record quarter this this financial seen of of to team timing attention the measure, value I add of wanted my through contract end due momentum which the measure. here in engagements, variable that future been the the other to reported that terminations, clear, materially could term both statements. commitments. our The growth quarters execution renewal to trends company and The many to as ahead. our first is build definition that Turning end of playing with XX% natural quarter, we call reminder only bring this are backlog reported, executive original fixed measures, I some full and David? back sequentially the or $XX of very to my has our before the of the I auto executive not look to execute both I to our our of and the in in upon the been rewarding live quarters vision the and pleasant. I part But continue to positive members that time

Last headlines healthcare facing difficulties various environment. recent publications providers Tom. industry the quarter, today’s that you, Thank American from economic I to communicate in some shared

rating credit continue downgrades Just Fitch, trend and full power. credit on providers that is down than an surprisingly, not outlook its models healthcare patients. hospital the healthcare on business sector, their plus agency, in expected the care to focus outweighed the last for the XXXX to for upgrades and week, for fair getting boil published growth, negative stated reasons to provide And to attack ever pricing they a more non-profit Moody’s compensation the

is pre-bill eValuator designed to coding that. to provider healthcare cloud-based analysis every automated solution, Our XXX% help platform, just a

coding cases and looking Florida, Director of them workflow to user stated analysis, pre-bill to to well, through better eValuator, more how number them valuable bottom they’ve the we even and the month, be they implementation can helping after rectify reduce been one Michael, Streamline, close of In at our to make sales we us Sarasota us the we’ve and last Teresa the been improve eValuator Memorial consistently Months Streamline a integrity, working eValuator look January of help fact, potential by risk product in the for all be help very experiencing XXXX. believe have "It's a audit. we some of their helps at fit been day, and filmed We’ve our catch we HIM correct that current decision". more" and new of gone an working revenue overbilling it data auditing in into testimonial we long-term to every helping under-billing funnel our analysis for reviewing contracts to as our tools were the a the made to different been making well eValuator their When eValuator very using expanding do of improvements. where We’ve we our the Teresa of and Sarasota been spoke right improvements showed and very their us. have to most current quarter, eight of In be cooperative that this even is make XX, that between found to in of clients four them and have just at said "we

and this deals closings of goal XXXX as envision reach, ahead the of to selling still more formalize XX process. our we accelerating year and fiscal of as Our have we pace prospecting we fiscal referenceable new accounts continue and in

our commented we report quarter usually normally fiscal we We call, when guidance results. this have on our third during year-end do

we fiscal revenue million. although client $X to XXXX legacy years, we solution attrition over manageable confident we've well. clients our to very our their the adjusted growth, larger the more containment operational most basis are today of EBITDA for of year. have generation as substantial impact this At existing next on With in and the of year visibility is growth mentioned. good many made expect attrition, predicated this many the past, years in this same cost leading we next exceeding That year year, to measures I modest that nearly point revenue our improvements revenue projecting renewals revenue we we've into new Given renewed grow implemented, the our the past foresee in have on contracts just including couple than

on leverage provide can key will QX next fiscal and My specific as usual forward. during is We our for more year-end we call. enthusiasm strengths based guidance year going

First, near-term primarily full but prospects, solutions for eValuator, sales through mid-range mentioned qualified and our for direct also as pipeline key our CDI abstracting efforts resellers. remains through of I and both our and sales

Second, out prospects. breadth outpatient appropriate our our solutions, by Profee the we're of rolling and eValuator of pipeline increasing

adding of marketing impact eValuator for the mix. Third, resellers our

earlier, mentioned improving measured about into sales. as As There gives automated prospects. by conversations clients now leverage enabling described use. in phases pre-billing sell we're cloud-based EBITDA many of three our of to accelerate lastly, benefits just And all are to resellers entering and groups are them technology our to us that their with invest additional to I've our easily

other. work for a dedication remarks. before to and the the to hospitals, and concludes That their to clients, cutting our their being to But Operator? call for the in turn potential I to over Our will audits. and Streamline my call payers days of dollar will number to practices. I of benefits improve now thank facilities our bills reducing Health the for like associates Q&A enable the outpatient the and improving Seeing practices need by coding eValuator hard our patient operator, turning greatly post-bill solution on prepared their session. continued denied cash operator each to their reducing physician accounts hand, over want amounts receivable, shareholders

questions. Matt Instructions] comes [Operator proceed of Please with with first you. from your the Our Craig-Hallum. Hewitt question Thank line

Lucas Craig-Hallum. for here Yes. Baranowski This Hewitt Matt is at on

you're up Regarding customers. eValuator, for referenceable Epic, on you've how commented and previously client base Cerner building EMR MEDITECH

could you give maybe that how on an update So us is initiative progressing?

David Sides. This Lucas. is Thanks

client, have clients. we're close Allscripts. couple of there, Epic So the And Epic a referenceable of a Epic have so good on -- couple Medtech clients our to we've got clients live. really signing we third we and Multiples

of us because many knock for going and be They’re three. will do have out they of one when are clients the hear that want word center you and big metric people larger really that's question clients. a well. third a The Those two how to or kind clients have

So through major we’re ones. moving the

have end we’ll think we important get third, quarter QX. fourth by live that Epic, This the Epic's we three even the our maybe think thing of we’ll but

sounds deals turning the Yes. then some of to potentially pretty you’ve And That there kind sounds like great. pipeline, and a larger ones. got of I'd it pipeline nice

larger kind maybe are So outpatient? are give a little on about those could more and versus whether color there of you came the of in that deals how pipeline just some impatient

been Larger So are some going of that ones the deals for some time. on have -- good question.

more get and to hospitals, to they than So people. when consensus lot of with or you larger five slowly greater a clients build XX move tend

those. deals are to working some average in is with there $XXX,XXX for the fruition to come the or in negotiations starting been our $XXX,XXX three these So for for on that time quarters we’ve size final than range. two And are greater we’re anywhere

they have we So inpatient, them a it’s because things But outpatient. our system. in differentiating and some a like And approvals their Profee more take us view health that also is while committee give across can primarily they that.

their reward that system of across view and a can’t competitors health everything have can broader through happening maybe view. wide really a where to we that’s that that risk clients So manage our how get system our of just in they show some kind

these and larger the with because clients that So in -- there we is aren't also helping the market. our alternatives Profee the see in other outpatient expansion

be trying kind something there That’s that of seen early competitive the then with have Okay. having eValuator, great to might the given be anything indicates similar? noticed you provide standpoint color. from others success to a you’ve And

the so we’ve seen that much far. set pretty same It’s

We offering a written that we take here. were we’re But good that competitors lease sign recognize of which the as discount some functionality. their have out recently, on in seen just

capabilities. that I in having So one talked of on about reporting win view the is we our that that system-wide things before

say, solutions. hard competitors have companies let's less may across or bought and have and have may different some inpatient they those answers a competitors not that reporting or modern outpatient, our time So all solutions, Profee, have for they of of some different

one inpatient, weren’t you report made is put Well be So together, not have across one they’re have different even show don’t did you difficult solution outpatient, to because to have built together. that the that maybe they two did Profee. a databases, really

And so or put reporting selling a And integrity software that clinic and I improve to or a there resources problems kind comes or really we’re us revenue in from this accuracy this have the strong view unified where those for you I math difficult a that And position. people my point of we quickly aggregate of problems should can an for my more coding architecture view. my for to are in ahead because this correct perspective. think show sometime more hospital

the like bottom-line. bit And you’re cost to to the talked to lot And be going about I so, would for that some fiscal would savings of looking mean, if growth are that suggest there be? 'XX? invest saving a cost Great. those Okay. flowing maybe then But in that looking measures. a areas is adjusted you at also what in And $X million EBITDA,

Yes. Good question.

shows estate that it’s have that more and such And two But from sales through pediatrics, our and year a are project in Profee kind go through view we’re thinking that just We’ve once past setting we people lead, and this be coming in hard complete even to above sell see investments we savings growth of some may as run we'll next the offices side to solution, the next guidance cost with that’s just quarters of for for including of we continuing accelerate our wanted that real into happening the from we’re so niche further clients, Sales quarter, next that rate, we a QX, growth and call. so perspective revenue outpatient comes together we some forward the making. to see to could sales put budget just oncology highlight investing perspective. and on beta The EBITDA that. certainly is what from our changes from the and million view areas I growth. $X got up sure more in and think to our much earnings resellers real for for So from a EBITDA expand, so work quarter this in in the going better year. we QX a real finish last expand

And growth? I I then, new off there, customer you’re so that being of next most for Yes. going mean, to into currently the investments, growth see you things factors a guess I that, kind year, some on is expanding a resellers, of of touched important sales, expecting you guess, lot which that those achieving do segments. of

most important. of I’d and have their client is I still at this say clients I -- stage, still number of breadth experience see that testimonials in we the

we’re sure to reference program works client well those time to because be are clients the just really our lot evangelizing next set. key of putting a So success a

region know solution. those get we’ve could together to or sales the clients helping clients people talking So a the out approaching region hosting just other to who they from that in that are one is been way us lunches in and by benefit fill

and passionate really clients. the why great they next ways get solution you that And as help they benefit results the for So could people same the That’s to they around clients, your best the know some absolute need other meet away. become your use to similar you have how can of expand. in

with of with Frank question. question Please Sparacino proceed First Analysis. Our line your from comes next

for what current Maybe just attrition, first on is year, fiscal the the estimated attrition?

XXXX, million. For X.X for XXXX? XXXX what or think we For do

for a number that good And year, next David? is

little smaller. think I bit be it’s to going a

lot time legacies, a gotten We're to gives another for on because of starting note. of for we’ve 'XX. visibility it 'XX, has good first not just Frank, helped we’re see some in through for the multi-year positive renewals renewals, So but the and which us the

And X.X, that if by category? you looked at 'XX that breakdown roughly how does product

probably but also some business analytics. ECM, Mainly --

A business analytics of small dollar amount

this year some sold too. business we So analytics

So somewhat offset.

hoping was sizable as at Tom, then up could I number going And numbers. a it's look just you contract the AR and I Okay. sheet, clarify keeps the balance

driving So curious what's just that?

revenue that's our mainly have from some is number we revenues policy. ASC did on our And change of recognize future under where XXX. and Yes, ASC volume probably the you you're I to think seeing XXX, today. under based our peak to because of think earlier take course those old than of them is that I It rate

bigger well, good. modest just a of 'XX, terms eValuator. sales bit you I in just Okay, where now? little months of and me a But to this are R&D and be from as David, where has but year that's and given today been bit with can more know XX you the like of you'd talked on maybe a investments, we little terms side sense sales a about And think in I guess, in give capacity, maybe

Yes.

R&D, year somewhat. So just so see kind the we to next on clarify moderating that of

as up So get as less from to we somewhat sales we new more move support R&D more feature live. clients

to sales the recently. how I'm greater million organizations. relationships? a us, large people talking initiative about new we just when On get complicated really side, do than politics. get $X with larger to to we really into And started new relationships the It's places, navigate we've it's to start on working just you

scalability, some And a for Our functionality we've of feel level that's kind -- going its few of ones recently quarters. We organization how performance, on that to at see more those forward. We're that larger comfortable we ability working even been look to client. of where deliver with why selling started you you now. in though works into do value, its sell just

capacity sales side. the on So

revenue billion a national are somewhat $XX when I or accounts. billion that long-term you kind And accounts, like who you like of of those us large works $XX potential that there's that know greater could base. think maybe we large see enormous sales, add megas, but the on than client get within

rest to we've need So we the pretty at may person, they just I team think the and feels of team But national someone good. point, about to some do. that talked add caliber what otherwise internally of that sales the

addition things speed nice could two up we'd the conservative. all -- we -- that be there a year. obviously, And always we've have I in with one our doing the business up there. think would our some kind that if is next what to a to investments. even the give made of sure sales an budget our lot is from front from go. see the on as accelerate to after activity metrics that our reseller purposes power that if But plans we in kind reseller one we’ve then already or changes we we'll team earnings talked of then, And want we adjust own for to others the now, view add of early be We're

you. are comments. at Mr. floor Salisbury, final the Thank there no time. you for any questions turn this back to further I’ll

for And in all Streamline Melissa. again Thank thank you, Health. you supporting your interest and

financial performance. need more any end year have additional the at to again when or information, hesitate forward and questions day. quarter we in fiscal you please look with will If our XXXX Good spring you don’t fourth randy.salisbury@streamlinehealth.net. We to contact me discuss speaking

Thank you. teleconference. today’s This concludes

at this lines your disconnect your time. for participation. you may Thank You