Streamline Health Solutions Inc. (STRM) reported a decrease in total revenue for the first quarter of fiscal 2024, amounting to $4.3 million, a drop from $5.3 million in the same period last year. The company, however, showed signs of resilience with a slight reduction in net loss and improvements in its adjusted EBITDA. Streamline Health is aiming for an adjusted EBITDA breakeven run rate in the latter half of the year and is focusing on expanding its client base and enhancing product offerings. They have also executed private placements amounting to $4.5 million and reported cash on hand of $4 million as of April 30, 2024.
Key Takeaways
- Streamline Health's total Q1 revenue was $4.3 million, down from $5.3 million year-over-year.
- SAS revenue represented 63% of total revenue, totaling $2.7 million.
- Pro forma SAS revenue grew by 22% after excluding non-renewed client revenue.
- Booked SAS ACV is at $15.9 million, with $13.1 million already implemented.
- Net loss showed a slight improvement at $2.7 million compared to $2.9 million the previous year.
- Adjusted EBITDA loss improved to $0.7 million from a $1.3 million loss in Q1 of fiscal 2023.
- The company completed private placements for $4.5 million during the quarter.
- Streamline Health is focused on achieving a $15.5 million SAS run rate and persistent adjusted EBITDA profitability.
Company Outlook
- Streamline Health aims for an adjusted EBITDA breakeven run rate in the second half of fiscal 2024.
- The company plans to grow revenues while maintaining expenses and achieving persistent adjusted EBITDA profitability.
Bearish Highlights
- Total revenue has decreased from the same quarter in the previous year.
Bullish Highlights
- Pro forma SAS revenue grew by 22%, excluding revenue from a non-renewed client.
- Net loss and adjusted EBITDA loss have both improved compared to the same quarter last year.
Misses
- Streamline Health's revenue fell short compared to the first quarter of the previous fiscal year.
Q&A Highlights
- Management reported significant progress in implementations, with an increase of $1.5 million since last year's end.
- The acquisition of RevID has improved their software model and scalability.
- A direct partnership with Oracle (NYSE:ORCL) has been established, enhancing access to technical specifications.
- AI deployments have had a meaningful impact on clients, with positive results seen in the revenue cycle.
- Management is exploring additional AI models and emphasized the demand for AI in healthcare systems.
Streamline Health Solutions, a provider of solutions for healthcare organizations, is navigating through a challenging fiscal environment with a strategic focus on its software-as-a-service (SAS) offerings and cost restructuring. Despite a dip in total revenue, the company's emphasis on SAS revenue and operational efficiency has led to an improved net loss and a better adjusted EBITDA position. With their eyes set on achieving breakeven adjusted EBITDA and enhancing their product suite, Streamline Health Solutions remains committed to growth and profitability in the evolving healthcare sector.
InvestingPro Insights
Streamline Health Solutions Inc. (STRM) has demonstrated resilience in the face of revenue challenges, as highlighted in its first quarter fiscal 2024 report. While the company works towards an adjusted EBITDA breakeven run rate, investors and analysts are closely monitoring its financial health and stock performance. Here are some key insights based on real-time data and analysis from InvestingPro:
InvestingPro Data:
- Market Cap: 31.28M USD, reflecting the company's current valuation in the market.
- Revenue Growth (Last Twelve Months as of Q4 2024): -9.21%, indicating a decrease in revenue over the past year.
- Gross Profit Margin (Last Twelve Months as of Q4 2024): 51.08%, which suggests that despite the revenue decline, the company has maintained a relatively high percentage of revenue after the cost of goods sold.
InvestingPro Tips:
- The Relative Strength Index (RSI) suggests the stock is currently in overbought territory, which could imply a potential pullback or consolidation in the near term.
- Streamline Health has experienced a significant return over the last week, with a 31.21% price total return, indicating a strong short-term performance that may interest traders looking for momentum.
For investors seeking a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/STRM, including insights on sales projections, profitability, and stock price volatility. Moreover, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing access to exclusive metrics that can further inform investment decisions. There are a total of 9 additional InvestingPro Tips available for Streamline Health Solutions, offering a comprehensive understanding of the company's financial and stock performance.
Full transcript - Streamline Health (STRM) Q1 2024:
Operator: Hello and welcome to the Streamline Health Solutions First Quarter 2024 Earnings Conference Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jacob Goldberger, Vice President of Finance. Jacob, please go ahead.
Jacob Goldberger: Thank you for joining us for the corporate update and financial results review of Streamline Health Solutions for the first quarter of fiscal 2024, which was a three-month period that ended April 30, 2024. As the conference call operator indicated, my name is Jacob Goldberger. Joining me on the call today are Ben Stilwill, President and Chief Executive Officer; and BJ Reeves, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. If anyone participating on today's call does not have a full text copy of our press release announcing these results, you can retrieve it from the company's website at www.streamlinehealth.net or from numerous financial websites. Before we begin with prepared remarks, we want to be sure we are clear for everyone on the record how certain information which may be provided today, as with all of our earnings calls, should be viewed. We therefore submit for the record the following statement. Statements made on this conference call that are not historical facts are considered to be forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. These are subject to risks, uncertainties, assumptions, and other factors that could cause actual results to differ materially from those we may discuss. Please refer to the company's press releases and filings made with the U.S. Securities and Exchange Commission, including our most recent form 10-K annual report, which is on file with the SEC for more information about these risks, uncertainties, and assumptions, and other factors. As always, representing management's querying analysis of these items as of today, participants on this call should take into account these risks when evaluating the topics we will discuss. Please note, Streamline is not undertaking any commitment or obligation to publicly revise any such forward-looking statements made today. On today's call, we will discuss non-GAAP financial measures, such as adjusted EBITDA and booked SAS ACV. Management uses these measures to help provide better insight into our financial performance. However, certain items of income and expense are not included in these measures, so these calculations may differ from those which another entity may utilize in calculating their own non-GAAP measures. To help you compare these amounts on consistent terms, please refer to our website at www.streamlinehealth.net and our earnings release for reconciliation of such non-GAAP measures to the most comparable GAAP measures. I would now like to turn the call over to Ben Stilwill, CEO.
Ben Stilwill: Thank you, Jacob. Good morning. So far this year, we have significantly expanded on the value we provide to the revenue cycle in healthcare. This expansion comes from product enhancement for workforce automation and opportunity identification from the clients we have brought online or expanded our impact in identifying the next set of clients to partner with us to get paid for the care they provide. As a result, our pro forma SAS revenue grew 22% during the first quarter of fiscal 2024 after excluding the revenues from the client non-renewal we have addressed at the end of fiscal 2023. Booked SAS ACV, which is the annualized contract value for all agreements currently being recognized, as well as bookings that have not been implemented, has grown to $15.9 million as of today, with $13.1 million already implemented. We remain confident in implementing the remaining backlog and achieving an adjusted EBITDA breakeven run rate during the second-half of this year. And we've achieved this with a more efficient operating model while improving product functionality, servicing our existing clients, and adding new clients. Now to discuss our product innovation. We continue to deliver impactful solutions, focused on identifying financial opportunities to providing the automated workflows to resolve them. In April, we mentioned the initial impact of our AI model to create new and enhanced rules for our clients. This has only continued to grow, with more rules being deployed and further refined. The model observes coding changes that occurred unrelated to our existing rules. That work started out based on observations within eValuator and is now expanding to coding changes that occurred outside eValuator from other processes or applications, both up and downstream from us. Recently, we also debuted My eValuator, a full refresh to the eValuator user experience, which has improved client satisfaction and usability. Looking forward, our eValuator roadmap focuses on identifying additional opportunities for impact. In addition to continued utilization of AI to enhance rule development, the eValuator roadmap is focused on novel methods to enhance the financial impact and operational insights we can provide with the existing technology. Our RevID application benefits the most from our investments in automation. Thousands of charges occur in a hospital daily, so identifying only those that need attention and quickly allowing users to resolve them is paramount. Our recent developments focused on usability, while our roadmap includes pattern recognition to automatically assign tasks, improvements to usability. Moving to our service model, which a Kansas City based client recently called “the gold standard” for a partner-vendor relationship. Our client services team provides hands-on education, optimization, and insight, putting revenue cycle leaders back in the driver's seat while bolstering the impact they receive from our solutions and cementing our relationships. For example, on the evaluator side, we drove $1 million of impact in one quarter for a 700-bed hospital. Our insights enabled the facility to identify and replace a poor outsourced coding resource. Meanwhile, a seven-facility system replaced a legacy on-premise technology solution with eValuator, resulting in a significant operating expense reduction in more than $4 million of financial impact. This same client saw a more than 10% improvement in coding accuracy rates. On the RevID side, a recent implementation at a 65-bed facility resulted in more than $1 million of incremental net patient revenue in just 90-days, finding significant charges in an array of departments, including the ED, radiation, and nursing. This implementation was completed in less than three months with just an hour of Chemoliv client IT time. Another RevID client recovered more than $7.5 million of net patient revenue across a 670-bed, five-facility health system in a 12-month period. In addition, that client saved more than 600 hours of work effort associated with the manual charge reconciliation process that RevID replaced. These examples, and many more like them, are what give us confidence that we can help our clients succeed. We will continue to develop the service model to put our clients in the driver's seat. With impactful solutions and a gold standard client services model in place, we know our attention needs to sit squarely on attracting more healthcare systems to our client community. To-date, our stated priorities have been, one a displacement campaign related to an existing offering in eValuator space where we believe our tool delivers better results at a lower cost. Two, a continued emphasis on our Oracle partnership, which continues to aggressively push RevID, and three, the development of a new and effective channel partner; four, and the last one, beyond new client sales, we have significant potential for upsell and cross-sell within our existing client base. We've seen success in each of these areas. For example, we have had several recent go lives at sites procured via the Oracle channel. We announced a new client via this channel last month. And we've been presenting jointly with their sales team to additional prospects at trade shows. And we've seen an uptick in the number of prospects that Oracle is introducing us to. In the first quarter, we also announced client deals for facility expansions in an enterprise client where we sold eValuator to a RevID client. There's still substantial opportunity here, enough to actually double our revenue base from this channel alone. And from a sales operations standpoint, we are arming our sales force with enhanced messaging to match with industry priorities and better explain the overall financial impact of our solutions for all prospects to align with the priorities of their C-suite leadership and with VP and Director level counterparts. But I want to expand on that financial impact and alignment by talking about our grand promise. I believe, we believe that the healthcare systems should be able to own their financial health. Today, our biggest conceptual competitors are ignoring the process or outsourcing the functions. In either case, the hospital lacks the information and workflow to systemically address issues with revenue integrity brought about by an incredibly complex reimbursement system. Healthcare systems need to be able to succeed in these revenue cycle functions, so that they can get paid for the care they provide. We believe it's our duty to develop the products and provide the insights so they can succeed. With that, I'd like to turn the call over to our CFO, BJ Reeves.
BJ Reeves: Thank you, Ben. Total revenue for the first quarter of fiscal 2024 was $4.3 million, as compared to $5.3 million during the first quarter of fiscal 2023. The change in total revenue was attributable to previously announced client non-renewals offset by successful implementations of new SAS contracts. SAS revenue totaled $2.7 million and $3.2 million and represented 63% and 60% of total revenue during the first quarter of fiscal 2024 and 2023 respectively. As previously reported, the company had a SAS contract which did not renew toward the end of its 2023 fiscal year. On a pro forma basis, excluding the revenue recognized from that client, SAS revenue grew 22% in the first quarter of fiscal 2024 versus fiscal 2023. Total operating expense was $6.6 million during the first quarter of fiscal 2024, compared to $8.3 million for the first quarter of fiscal 2023. The lower overall operating expense was the result of the company's previously announced strategic restructuring and was primarily reported in SG&A and R&D. We also saw lower costs associated with our professional fees and software licenses in line with lower overall revenue from that portion of our business. Historically, we experienced higher expenses during our first fiscal quarter, due to administrative expenses associated with our audit and annual shareholder meeting. We project a sequential decline in expenses during the second quarter of fiscal 2024 and do not anticipate significant increase in operating expenses for the duration of the fiscal year. We continue to make investments to improve our technology, including the development of enhancements, such as the My eValuator update, continuing development, and expansion of applications for the AI technology we have leveraged to generate additional content and improvements related to the automation and usability for the RevID solution. First quarter fiscal 2024 net loss totaled $2.7 million, compared to a loss of $2.9 million in the first quarter of fiscal 2023. The relatively static net loss, despite lower revenue, was the result of improvement in operating expense offset by increased cash and non-cash interest expense, as well as the non-cash valuation adjustment expense of $24,000, compared to a valuation adjustment gain of $364,000 during the first quarter of fiscal 2023. Adjusted EBITDA for the first quarter of fiscal 2024 was a loss of $0.7 million, compared to a loss of $1.3 million during the first quarter of fiscal 2023. The significant improvement of adjusted EBITDA is the result of the company's focus on the growth of its SAS revenue solutions, as well as significant cost savings achieved through the previously announced strategic restructuring. As Ben mentioned, our current booked SAS ACV, including our recent announced wins, totaled $15.9 million, and we continue to expect that we can generate persistent positive adjusted EBITDA above a $15.5 million SAS run rate. Currently, $13.1 million of our booked SAS ACV is implemented, and we anticipate we will successfully implement and achieve that $15.5 million run rate during the second-half of this fiscal year. Moving to the balance sheet, as of April 30, 2024, we had $4 million of cash on hand, compared to $3.2 million at January 31, 2024. During the quarter, we executed private placements for gross proceeds of $4.5 million. Total debt, including our senior term loan and notes resulting from the private placement was $12.5 million and we had no balance on our $2 million revolving credit facility as of April 30, 2024. Looking forward, as we continue to execute in fiscal 2024, we anticipate growing revenues on relatively static expenses, achievement of persistent adjusted EBITDA profitability, and significant improvement in our use of cash for operations. That concludes our review. Operator, please begin the question-and-answer session.
Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Matt Hewitt from Craig-Hallum. Your line is now live.
Matt Hewitt: Good morning and congratulations on the good start to the year. Obviously some progress on both the new contracts, as well as some of the implementations. Maybe starting off with the new contracts, you know, it looks like it's a little bit of a mix on where these winds are coming from, both current customers, as well as some new customers? Could you talk a little bit about the pipeline and how that's developing and your expectations over the course of this year?
Ben Stilwill: Yes, sure. Thanks, Matt. So, as we mentioned, the focus on the Oracle pipeline has started to get some wind, both in terms of getting some of the initial ones that were done on Oracle paper live. And then moving into, all right, if that model works, can we introduce them to others within the universe and really getting into their sales team? We meet with their sales team pretty regularly. So we feel good about that. And in general, RevID has just matured a lot in the last year, technology-wise, and we're feeling better about implementations, about the support model, et cetera. That translates over to the ability to cross-sell the module, both models actually, because what we've seen is as we've had more success on RevID, we've had more success proving the same services model works for both solutions, it makes it easier to do that cross-sell. So the two enterprise clients that we named, one was, you know, eValuator going to RevID, the other was vice versa. Both of them had a, okay, I see how the service model can be additive if I have it over both solutions. So positive on those two fronts, and then obviously of the four sort of sales thrust that I mentioned, we're seeing positive traction on the other two as well. So it's good to have a couple of different efforts going on simultaneously so we're not you know betting the farm on anyone specifically.
Matt Hewitt: That's great and then regarding the implementations, I think what up a $1.5 million from the start of the year, or the end of last year. But obviously great progress there. Has anything changed or what's allowing you to get those implementations done, or have a faster turnaround there? Is it something on your end? Is it something on the customer's end, a mix of both? Any color there would be helpful.
Ben Stilwill: Sure. Yes, so I think that the business that we had acquired on the RevID side was born out of consulting and it took us a minute to kind of prove out the software model that we were trying to help them with. And that was kind of the thesis originally. So what we saw after lifting into a cloudless architecture, we had a little bit more documentation on how to do things more scalably. Obviously, having a direct partnership with Oracle makes it so we have more of a direct link to the tech specs and things like that. I think that has all sort of culminated. And just in general, our team has done a couple back to back, and it feels a little bit more repeatable and scalable.
Matt Hewitt: Great, and then maybe one last one for me regarding the AI. I think last quarter when you spoke you had talked about how you had had some initial success, $1 million of impact within six weeks. I'm just curious if there's any update there or the feedback that you're getting on the AI contribution. Thank you.
Ben Stilwill: Sure, thanks Matt. So, yes, we mentioned a dollar figure during the earnings call in April. We also have a case study out there that kind of shows a little bit more detail around how we're doing it. It's been very impactful for our current clients, and it continues to have rule deployments every two weeks that are meaningful impact to our clients. They're starting to see that in their monthly reviews, et cetera. We're starting to look at other models that are relatively similar, but there are new models that we'll be able to use and having an experience in our belt with the first one certainly helps and we hope to have other unrelated features that we can deploy that are AI ML based. The other thing that we're doing is in our messaging, we're making sure that people know, I mean, even though it is a buzzword, it's something that healthcare systems are explicitly looking for is, how can I use AI within my revenue cycle? So just being able to say, yes, we're one of those vendors who's materially using it to drive impact, not just, you know, planning on using it just in the marketing part of things. It's actually driving financial impact. So we're excited about it and we'll do more of it.
Matt Hewitt: That's great, thank you.
Operator: Thank you. We reach the end of our question-and-answer session. I'd like to turn the floor back over to management for any further closing comments.
Jacob Goldberger: Thank you all again for your interest and support of Streamline Health. If you have any additional questions or need more information, please contact me at jacob.goldberger@streamlinehealth.net. We look forward to speaking with you all again when we discuss our second quarter of 2024 financial performance. Good day.
Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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