Streamline Health Solutions (STRM) 13 Jun 192019 Q1 Earnings call transcript

Greetings and welcome to the Streamline Health Solutions' first quarter 2019 earnings call. 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.

to conference like host, to now Mr. would turn over the your I Vice Marketing and Health Salisbury, President Randy Senior Chief Solutions. Officer Streamline for Thank you.

You begin may

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

my call Salisbury. is the conference name As operator indicated, Randy

Senior President and Streamline all manage I Investor Vice Chief Relations. at As communications Health, Marketing Officer including here

Tom and on Senior the is Chief call and Executive Financial Vice Gibson, President Chief and me President Joining David Officer today Sides, Officer.

for it or we press At our question-and-answer the from the numerous prepared on have today's anyone at conclusion not at financial websites. today's other retrieve of copy release If company's of website announcing will a remarks, open call full-text does these the call results, streamlinehealth.net session. participating may a you

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

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

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

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

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

are on so income in utilize of To another may items streamlinehealth.net, earnings own to please you release measures, for entity refer and XX-Q included consistent not differ our measures most measures. and these terms, of a such their website certain calculating at calculations measures. comparable However, amounts Form non-GAAP in our these compare to expense help the from those may which GAAP these non-GAAP reconciliation

the Executive call With and turn David Chief David? over Sides, that Officer. said, let President me to

the and This sales accelerate progress Randy. new the our development to we client you base current spending of as Thank from morning product transition we want talk about and marketing. investment to are to pace making acquisitions I expansion within client

more Our the specifics CFO, Tom quarter. of Gibson, will financial the of for performance cover our

from the the financial some of $X.X of for fiscal down performance quarter Before first metrics yesterday's XXXX. previous our million, me of key X% last year. I approximately approximately first let as revenue and the of summarize quarter's compared generated fiscal approximately sequentially, down with revenue year XX% quarter begin, from announcement We

is but increase to QX professional quarter, is of year to QX an Recurring attributable of QX And license the year, from The In fees difference recognized XX% quarter. period current the revenue realized XXXX, this to year-over-year the quarter, lower due first down ago. we revenue. the in QX total were million in $X.X delta The approximately XX% percentage the of same up license perpetual approximately for $XXX,XXX. from of for approximately in a perpetual of we QX. in in XX% fees primarily in revenues recurring revenue previous sequential in revenue from

will outpace from continue to believe revenue legacy current of primarily attrition eValuator monthly our revenue via growth, revenue the Looking compounding the recurring effect installations of SaaS that ahead, we solutions. organic and older new future

For fiscal will technology pace to Again, with Projected begin expands at in growth topline over an growth XXXX, eValuator the consistent revenue. the the XXXX accelerated company. percentage occur eValuator as revenue yield will growth. digit percentage expand this topline for SaaS single low should growth double digit legacy

Moving generated $X.X XXXX. of XXXX, from now XX% million of and previous up in to QX adjusted slightly over We EBITDA. QX the nearly quarter sequential fiscal approximately up

pleased excess in in Our the efforts. rapid we of earnings strategic the selling moves and this expansion in made further we result current the will our several run have excess cash not in foresee rate. cost minute. or on in in a moves reinvested area be We as of remain adjusted any number with quarters our last do EBITDA this More

are to Each with quarter up you in this April frame quarter, fourth every headlines communicate we wanted our many research a facing. on them even almost spoke articles follow environment, call, the dissecting been faces regardless some in needs the variety the pressures I to industry size there of more healthcare the recent the difficult institution. of these to with market circumstances of provider of I revenue way. most Since in display today's have powerful a primary

Revenue provide. Media a health of the to driving cycle Cycle issues Management, the solutions and survey HIMSS better revenue conducted regarding for organization's management. Their we entitled understand that concerns report, and Insights key quantified services October, attitude Last towards need into many

respondents instance, U.S. two revenue cycle For the most important and as denials reimbursement from their and facilities about XX% challenges, asked top issues. acute listed when XX% hospitals care

organizations. are risk most coding billing are ensure to correct the accuracy documentation the revenue they that inside established as integrity and or vulnerable guidelines. to loss revenue coding Healthcare under looking clinical be decrease amount Furthermore, with their areas providers coding improve to solution them to for XX% listing for their considered were high medium

the help do with with In other documentation coding revenue clinical improvement. CDI and middle eValuator, that's to accuracy words, of the what exactly we help and needs with cycle help

under in and technologies like facilities new beyond Driscoll's goal Midwest is Dave to invest. revenue To development update XXXX investing to we solutions. I of and for CDI presence last investing earnings for have strengthening stated the sales we new my and and and continue that in selling our our have the new leadership our end, growth Coast to we of Southeast, focus representatives company's outpatient added those eValuator West and transitioned that in from that three primary

we have First, new increased our partners. on channels and channel focus distribution

we Board Second, as members add Advisory new will added have continue to and appropriate.

sales our prospects. clients investment multiple we the Lastly, execute these additional touch to our refined sales the create have inside The behind reorganized purpose better is and our department areas to in hospital points on of organization strategy.

in in the C-Suite. targeting the need we influence the growth revenue increased of some more and we For are country healthcare largest providers

the to We influencers decisions. sell product managers are to our makers purchase CIOs simultaneously and via and departmental striving decision who of control multiple from CFOs budgetary to users

Regarding adjusted this to invest be the sales able in my and substantially functions EBITDA to made previous on improving has changes strategic year, back-office and company more in marketing. operation comments its

changes cloud basis. In capacity the easy run cloud technology. monthly made, a addition flexible enterprise open, computing designed on costs We to was platform, eValuator to eValuator facility little on grade add be to remarkably easy use, an we and native and built to

our spending. area away improved our of from Our has reduce datacenters CapEx efficiency, the the us cloud to strategic in especially implementation overall to to enabled and decision move

and eValuator our This skilled deploy has teams team's to helped services smaller, can days allowed be well. less. focus cloud-based Our more XXX% cases, deployed XX us professional in its and as go-live some to in engineering platform in

solutions eValuator develop others in improve to we to efficiencies like As outpatient are of their and solutions and fee professional new seeking these bringing they our constantly segments analysis, pre-bill market. new ways

challenge We on have few debt the Gibson, ourselves improved to last our this over continue improvement makeup. Tom dramatically CFO, discuss capital possible will in and our minutes. our we the in a structure structure years

call so to our comment I first the and second want Before Tom, quarter I our over on some bookings far. provide bookings turn to for commentary on quarter the

our least million in our of we as client are to up I have turning more including using In Bookings bookings million previous solution. million. our to first we the of ongoing the at QX, believe over $X.X now and established generated than effect $X up quarterly the eValuator grew $XXX,XXX $X level Outpatient quarter signing approximately

Driscoll, we number for The legal transition months in contracts Dave and solution new a submitted increase new notable Revenue four his Chief a now. number for and meetings for however, seeing expected review of of period has follow-up demonstrations, the strategy. leadership our already been number us with are of the Dave, from Officer, sales company the his

largest his business. He compliance articulated As ways for healthcare programs quarter, in system every comments revenue improve is needs believes Dave and technologies and our healthcare can better has their I change doing market that and experience to prospects our believe already on focus shifted some the them eValuator in based of right on integrity of last better we the larger new he country It do his the technology mentioned. this. been organizations as actually systems are help for

clients months, are some the healthcare larger revenue household close in with team eValuator eValuator than opportunities sales with three Dave his funnel into Most QX today. large of and deals targeted In of systems are are company's our these bottom Furthermore, have these that two of QX names. just the and the and last this dates deals annual moved very current few year. times of the average large

and pipeline connections I the our the quarter pace of to can executives reason and with of very why am activity Dave's the land we client addition is eValuator Board far opportunities. us in Board, Strategic Advisory and sales believe and the put accelerate pleased to Advisory help C-Suite that given our size second have. the together these This our so we the focus sales large contracts many very

greater our for over turn now Tom? our will on financial CFO, will who I quarter. first provide Tom the results to the call Gibson, detail

on and the to David Thank good you everyone morning call.

Driscoll QX continue Sides solidifying on placing team, are last selling. have to Those been contracting engaged Board and Advisory within talent the David XXXX. with sales activities we over with new all new associates will role As of assist channel our discussed and My relationships. quarter Dave members into the previous partner has calls, in

progress of executing operate. proud we have are should David how sales vision the of made we in organization of However, the Driscoll's

enter that we of QX we is all As in substantially that believe structure place. XXXX,

right We feel has hired be quality to high salespeople, the on lookout add we leadership. will sales the that always the but company

customers organization, impact of made is quantifiable to we and recognize we that are efforts our the at a pipeline, We the to to the on are Director. different which of in that result result close addressing C-Suite results. levels of a a and the those track matters number to opportunities Our believe have business size deliver

planned It is the that it marketing. important made company in the sales investment note and for had to has

efforts realized for the that proxy fiscal have way, previously a impact XXXX. discussed line the XXXX marketing the operating which cost of adversely the Said remainder in As is line cost the for we been remainder has discussed, containment not another already fully operating sales in of cost will fiscal investments activities and year. the

revenue generated the In first $X.X in in of with compared quarter period in and we EBITDA, $X.X fiscal generated XXXX million revenue adjusted we and $X.X the when of XXXX, $X.X same nonrecurring primarily recognized XXXX million adjusted were fiscal EBITDA. to nonrecurring XXXX lower XXXX. million the $X.X year-over-year in software in The result of less million from The nearly sales. revenues company of licensed million license

cost with only and maybe in in XXXX this leaving this QX in reduced our containment lower to The related amount, compared quarter. total most million prevalent of $X.X cost quarter. depreciation, results The million $X.X cash million nearly in Of operating the of amortization company XXXX fiscal expenses are of XXXX. realized $X.X initiatives QX

the disproportionately year. has that company fiscal for the all of change annual professional with in annual associated in due company realized fees be audit changed reminder, and of until auditors meeting a company's cost savings remaining however, The than quarters. XXXX shareholders to higher the QX of from next As not will much the QX

the Offsetting a QX lower fees year efforts collections Through in the be from solid of a our of company's income execution the reduction two and its of for operating line this debt overall period. that the company's receivable company cost receivables. once accounts the a statement the concerted age one of bad These the amount arena, another offset and and lower our of our benefit higher was able anomalies in professional XXXX. in was quarter for proxy resulted fiscal should for to a again in to cost create remainder

successful the for the of of interest $XXX,XXX year. balance the recorded also and first share-based efforts This recognized the The expense XXXX depreciation $XXX,XXX recognized company QX fiscal and sheet. XXXX company's illustrates company company The of fiscal QX first and $XXX,XXX the overall in Additionally, and for load XXXX XXXX last the amortization. XXXX of $XXX,XXX lower quarter quarter $XXX,XXX compensation and its non-cash improve in respectively. with of of for debt compared same period benefit to the $XX,XXX

depreciation to depreciation noted fiscal that will depreciated. It to fully The a should and be in of assets the company's lower due depreciated trending down assets. being amortization many fully company's trend result XXXX amortization as is continue and these

the $X approximately million was balance XX, The hand. from XX, sheet. to million We $X.X on on Moving the of April of is This amount XXXX down revenue. January down from due the low XXXX. on million trailing and $X.X with cash the where balance sheet finished quarter to company's cash is fiscal it in XXXX

fiscal on lower the the reduce structure cost will cash in pressure However, continue to XXXX.

level eValuator. this We $XXX,XXX for primarily in quarter for software continuing software functionality invested Beyond and in our development, invest the solution, key then another to for temper. operations, capitalized the we at will client foresee dollars quarter new XXXX, first invested

XXXX, as XXXX. For have less spend. year the to company will software full software type timing, spend the cost compared and to capitalized it continues the nature the The the anticipates with year with regard company flexibility capitalization of in full fiscal within

company credit facility mentioned and term its a with single As into earlier, the credit replacing is current David revolving revolving looking loan facility.

to end company made financing quarter, the the of balance now of the is payment During its $X.X the on loan, cost quarterly down regular its the which at of net quarter. million $XXX,XXX term

first the fiscal addition, XXXX company's no end fiscal the company of on the XXXX capacity. maintained has the at There revolver million outstanding a with XXXX. a or year, the quarter end revolver at or were the In XX, January of amounts $X

of its reinvest current refinancing and be company balance business, its The in its on sheet. successful all positioned however, as the will would term back into If debt revolving debt, primarily company on the new into to the carry principal mandatory loan marketing. again repayments this current sales

longer The backlog company is no reporting measure. its

their the As evaluate the the believes backlog natural, only of or as proxy revenue. right a discussed in is our the total continue of the indicator base. the will through future report contracts and company or term that term. renewal previous included sustaining not to a company indicator defined. end company auto succeeding will growing future earnings company call, previously The through two or Accordingly, recurring measure the measure original next a not backlog revenue for provides The

before I to I business to believe back remarks. David, that their wanted focusing made on my cycle. have to That clients But of call concludes strides services reiterate and I turn managing great we the with the to in help middle transition the during solutions revenue this

of prepared of in future accelerate increased for to acceleration the We on revenue the next forward growth updating business. look this and are rapidly EBITDA to leverage our cash creation phase execution. We very

David?

for comfortable to concludes Thank this provided guidance by I want you with my Tom. fiscal that we have we today remarks remain reiterating year. the

improvements year, made between $XX.X million in sales, project and expect to at to EBITDA $X.X cost the over entire XX, and many the past structure Given $X million strength we and January we between and our revenue continue on $XX.X our adjustments focus the million our and of of pipeline million adjusted XXXX. dollars organization be have

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

[Operator Instructions].

the line Matt with of Please Capital first proceed question Our from comes Craig-Hallum your with Hewitt Group. question.

you our taking Thank gentlemen. morning Good questions. for

Matt. Thanks

said David, growth that accelerating in year digit off, low revenue I make to correctly? eValuator I from growth Did want to digit you double you I I sure XXXX? hear correctly, First single heard think this

Yes.

whole we over that, some that a kind have with about typical should am the for I erosion is, how about years then last And growth guess conjunction revenue seen So couple be of side? getting we I as be should of XXXX? where the license thinking of at on we perpetual where in the thinking

we on I Tom. and response. question David's is this sure Matt, to are make want the clear

will product growth that exponential digit digit talking low entire the have primarily we But eValuator. in company of we for a single So are growth as single eValuator are is yes, The in itself about including thinking by XXXX. growth in in driven the XXXX double going whole, all and all in as over recurring a and company of of XXXX that to digits eValuator from net and nonrecurring then the both products. the that is for churn XXXX, revenue the back the legacy of XXXX

there? you, margin. Actually, a anything remainder had Thank Tom, kind for be moving Okay. Or pop And it. about you. in drive actually what there gross should That's in the one-time that helpful. how nature of that? margin. down year? thinking we a follow-up a of Was the in you great there maybe really quarter gross income Got was over helped And statement, big the then

is we on. quarter vast was that support in depreciation hammering The majority occurred. Yes. staff and benefited of some which amortization, that have been year-over-year Also reduction from the

So margin rest yes, for total think base. the year of to you is percentage be going looking the how at gross I are as

Okay. And total where if add right know salespeople. more. three get does presented then your organization sales or have over had the of I it herself sounds that for might a Could you person added But the like that we year, think the now? course team you headcount commented sit him today? And you

XX or And the to good people, find will continue to we XX move talent. around probably It's extent there Matt. we money

think out that you lock one on update the that queue. back been Epic or short I third then period. on. I maybe not customer there Okay. to would will get along QX, mentioned And in QX that even down and their you to am more was was know of if But back your any it getting QX I I had down and Prior, had maybe it shut hop discussion that threshold a turned front? to sure that's they App need for that you Orchard. was

going on App back and be are turned been that are all would live in we be us. the Orchard and update calls It's other Yes. reference for taking those three to and the clients

are larger one clients health about, moving systems to Epic we So the to systems. ways larger of we as seem be talked is, those

of of references they that's and really We partner lots good live have and three taking kind are us great calls us. for there being helping

Thank much. you great. That's

Matt. Thanks

Matt. Thank you

Instructions]. [Operator

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

Hi guys.

Tom, for flow Just me. historically. a have was two for just number than we seen better The questions QX you, standpoint. cash from

Just the cash some of then side, million of you thoughts metrics the perhaps million bookings around the in on if alluded is to way maybe David, to the and quarter? any the funnel the flow as get there $X to sales ability to $X And starting know of to for the year/ I top on quantify next any don't back sort confidence

and Thank can start, you that's you you will all behind Frank. I David come right, if me.

cash Those in about flow that you a in thinking came payments were recall, had us. QX couple if So through QX we in customers delayed QX. paying for XXXX, of

flow QX of So of And those I think million two it collection we as so. cash had a result or customers. a stronger about in was $X.X

Cash cost flow of seeing we not going lower cash are much as structure. is in Again, we think, come I year, for the the a be are good. rest seeing to but

our a tremendous should we of positive, cash leases. XXXX. have XXXX including able cash still the net-net, We we service from we cash After So are little are bit spending projecting including activities XXXX, that debt to be flow flow. for

that's my cash. comment So on

And sales then side. the Frank, on

top is of the the QX, third double of So probably QX, top In the at it's compared our XX% funnel. XX%, larger the entire funnel of of probably QX QX. to

are here. this now outpatient acceleration as and is possible organizations we organizations but increase the well. So the we after quantity real driven mentioned with size comments, offering, we will size quarter. that of are well going and part in that by, a the go And of the live But of is see that real as we our

outpatient So our clients sold quarter. have last live. We we two first will one

live clients quarter. So two outpatient this we will have

We are the quickly working third. to get

entire and solution by enterprisewide expansion that have then us our to enterprise. all inpatient coding and who helps the and That's that happening also to larger as can't sell of been systems accuracy sometimes their health impacted reporting they revenue an see we clients. a product across separate they received systems, compared how so what's that cover can now their well of the give across So integrity has view can competitors with a and us outpatient differentiator is for

Thank you guys. Great.

turn concludes Thank to you. gentlemen, back Ladies Mr. our for comments. will Salisbury and this the I question-and-answer floor final any session.

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

additional please don't any quarter our you September or need you in we to day. of contact discuss all If with performance. again Good We year me at additional hesitate will more randy.salisbury@streamlinehealth.net. when questions information, look have forward fiscal to speaking XXXX second

This today's teleconference. you. Thank concludes

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