Q4 2019 Earnings Call
Greetings and welcome to the streamline health fourth quarter fiscal year 2019 earnings conference call. At this time all participants are in listen only mode. A question answer session will follow the formal presentation.
Anyone to require operator assistance during the conference. Please press star zero on your telephone keypad <unk>.
As a reminder, this conference is being recorded.
My pleasure to introduce your host Mr. Randy Salisbury. Thank you Sir you may begin.
Thank you for joining us to review the financial results streamline health solutions for the fourth quarter and fiscal year 2019, which ended January 31st of 2020.
The conference call Operator indicated my name is Randy Salisbury, Senior Vice President and Chief sales and marketing officer here at streamline health and manage all communications, including Investor Relations.
Joining me on the call today, our T. Green.
And Chief Executive Officer, and chairman of the Board.
And Tom Gibson, Chief Financial Officer.
At the conclusion of today's prepared remarks, well open the call for 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 a company's website at www Dot streamline health.
<unk> net.
Sure at numerous financial websites.
Before we begin with prepared remarks, we want to be sure. We are clear for everyone on the record.
Oh, certain information, which may be provided today is where all of our earnings calls should be viewed.
We therefore submit for the record.
Following statement first statements made on this conference call that are not historical facts are considered to be forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These are subject to risks uncertainties assumptions and other factors that could cause actual results to differ materially.
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 and a proxy statement filed earlier this week for more information about these risks uncertainties assumptions or other factors as always were presenting management's current analysis of the.
It's items as of today.
This morning's call should take into account these risks when evaluating the topics we will discuss.
Please note streamline health is not undertaking and a commitment or obligation to publicly revise any such forward looking statements made today.
Second we'll discuss non-GAAP financial measures such as adjusted EBITDA. In addition, we're presenting some figures on a pro forma basis as result of the sale of our E. C. M business, which we successfully closed on February 24th of this year and announced in a press release on February 25 men.
Sure. It 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 are another entity may utilize in calculating their own non-GAAP measures.
To help you compare these amounts on a consistent terms. Please refer to our website that streamline health dot net and our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measures.
I would now like to turn the call over the T. Green, President and Chief Executive Officer.
Okay.
Thank you Randy and thank you all for joining us this morning.
Sure I began my comments on our fourth quarter its fiscal year 2019 performance I want to begin by acknowledging incredibly difficult and dangerous situation, our health care provider customers are facing during this kind of bit 19 pandemic.
Hi, putting themselves in harm's way and caring for the hundreds of thousands of our citizens have been affected by this virus. They are showing us all what it needs to be in American and to answer the call to help.
Our thoughts and prayers are with all of them.
Hey, streamline health, we've taken action to ensure the safety of our team in light of this pandemic. Fortunately like significant portion of our staff had already successfully transition to teleworking. Following the rationalization of our New York City Office space in 2018 and in early March we transitioned the remainder of our staff.
Work from home status.
We are grateful to our team members, who remain productive. Despite this disruption today, we like it continued to support our hospital system customers. During these trying times.
From a business perspective or hospital system customers have of course been deeply impacted by the ongoing crisis. They have seen their high margin elective procedure business replaced by low margin critical care patients customers and prospects tell us their current focus as it should be.
Used to treat those patients suffering from carbon 19 symptoms, but they are all well aware of the revenue shortfall. This pandemic is creating for their organization and they like the rest of us very impatient to see things return to more normal times.
When that happens they predict there will be a high demand for all forms of health care. It had been delayed due to this pandemic and the need to generate generate accurate billing quickly and efficiently will be greater than ever.
I believe this pent up demand for elected and other non critical procedures will provide a significant opportunity for our software solution General auditing services. The fact that we have signed about a million dollars a new evaluator bookings. So far in Q1 of this new fiscal year is a reflection of how critical our solutions our to our customer.
At the beginning of this year, we anticipated revenue.
From our ongoing core business the suite of SaaS based tools, including abstract things C.D. I ended valuator.
Along with their auditing services would grow approximately 50% and Cisco 2020.
And accelerate at a greater price pace of growth in fiscal year 2021.
But despite the relative strength of our first quarter bookings. So far we've made the decision to suspend our financial guidance until there's more certainty around the magnitude of the krona virus effect on our overall economy and for our customers.
Given the vitality of our pipeline, which Randy will discuss shortly we remain encouraged and excited about her opportunities for growth.
But the lead the prudent approach is to hold off on providing specific financial performance guidance for 2020 at this time.
On our third quarter call, we discuss some key improvements that we want to make to evaluate or product for inpatient outpatient and professional fees settings. During this period of time when the cabin 19 pandemic as slowed some of our prospects buying activity, we're focusing our product management efforts on making improve.
That's the evaluate <unk> technology.
Given the sale of our HCM legacy business.
We are in the fortunate position to have the capital necessary to Institute. These improvements based upon feedback from current clients and prospects as well specifically our team is working to expand the reporting functionality for both inpatient and outpatient versions of evaluator and to finish the dashboard Fox.
Analyses of the software, but outpatient modules, we are actively soliciting customer feedback in taking action on the recommended improvements that will deliver the most value to clients and prospects alike.
During 2019.
Our team made great strides in expanding the customer base for our core SAS based solutions and in reshaping our cap structure and they enabling us to position our company for growth through the successful show up our legacy C. N business today streamline it's more nimble highly focused company providing solutions and.
Services to help our hospital customers better manage the issues in the middle their revenue cycle.
Some initial charge capture to build drop we believed that the value of our offerings will only increase as the healthcare industry becomes more complex are evaluated customers are helping to see the value of prebuild auditing in the marketplace and industry movement, we're focused on lead.
One of our customers a large academic facility in the West recently hosted a reference call for another large academic facility in the Midwest.
During the call our custom describe many of the benefits they have experience using evaluator over the past couple of years, She stated and I quote evaluators not only to out there that actually provides real time feedback to the coders unquiet.
And she said this feature was what matters most to her she added quote our coders working epic decode the patient record and then submit it to evaluate or through a simple HL 70.
Within three to five seconds to record is either Smith to billing or returned to the code or for further analysis, which doesn't slow down the work flow at all unquote.
[noise] last fall this customer conducted a large post bill audit using a well known independent auditing services for.
Now to 30000 cases reviewed by the auditors they found only six DRG changes.
Our client gave the wind shear of the credit for this incredible coating accuracy to their use of evaluated.
And before you ask how keep you in the loop as to how we figure with this large evaluate a prospect in the Midwest. They are listed as a late stage prospec in our second quarter.
Shifting gears.
I want to review some of the topline figures from yesterday's press release, and then as usual our CFO, Tom Gibson will review the numbers in greater detail.
We generated $20.7 million of revenue in fiscal 2019, as compared to $22.4 million during fiscal year 2080.
I'd like to note that approximately $11 million at 29, P. revenue was generated by our go forward solutions.
The revenue decline was primarily the result of our now exited legacy E C N business and lower volumes from our perpetual sales I believe that in a stable business environment, which I know, we all hope to see into very near future. Our company would be able to generate revenue growth from our go forward solutions ever.
Approximately 15% this year.
For the fiscal year, 76% of total revenue was recur.
Compared 80% of total revenue in fiscal 2018.
Due to the relative strength of our audit services business.
Our fiscal 2019, adjusted EBITDA was $3.1 million up 7% compared to $2.9 million in 2080.
We closed the year with $1.6 million of cash and cash equivalents. However, the sale of our ATM business resulted in an additional $5.4 million in net proceeds upon closing in funding on February 24 2020.
It added to our cash balance at the beginning of this new fiscal year.
The salivary sand business will continue to add cash beyond the date of closing, including the escrowed funds that will come to the company in May of 2021.
But like many other public companies, we have followed with great interest that governments effort to provide financial assistance to keep our associates import early last week in concert with bridge Bank, we successfully completed and submitted our PPP application. We were notified two days later that are application was approved.
We are waiting confirmation of receded. These funds, which I'm sure you. All know are mostly a grant as long as we keep our employees in the small amount of debt.
And then attracted in very affordable half the 1% interest rate.
We will provide an update on these funds as we know more.
Turning our attention now to sales.
You may recall that at the beginning of the fiscal year in early February we expanded randy's role to include Chief sales Officer. In addition to as Chief marketing Officer responsibilities.
Randy has been a leader inside streamline since 2014 and has been recently responsible for all client relationship management during that time.
He also developed our brand positioning for evaluator and the corresponding sales tools that we continue to refine for our team.
Randy is directly responsible some of our most significant client contracts to date across the business.
When we were evaluating a company after determining the path forward three see him. It was clear that he was the right sales leader for our newly formed growth business now I'd like to pass the Mike back to him for an overview of our current sales effort and what he's seeing on the ground.
Andy.
Thank you too.
In 2019, we closed about $9 million of new bookings from our core ongoing business.
This concludes our SAS offerings and audit services.
We had previously announced on an ongoing quarterly goal of $2 million to $3 million a new bookings.
Oh, all of our solutions and on average we met the lower end of that range.
As I see it when we talk about growth in 2020 and beyond we're primarily talking about evaluator sales.
However, entering this fiscal year I've also challenged our sales team to be more proactive.
In seeking out auditing services opportunities.
Yeah excellent reputation in the industry with long tenured auditors and these audit services clients.
Our given an opportunity to see first hand, the power and benefits of our high water technology.
Looking at our first quarter bookings performance to this point.
We closed a number of modest sized audit services deals, which I believe will increase in size during the course of this year.
And even with extraordinary impact of Covidien, which began to affect our ability to get new meetings beginning in about mid March our sales team generated approximately $1.3 million in bookings thus far in Q1.
And again more importantly, a million dollars of that total you just from a new evaluator client.
I'm pleased with the effort in attitude of the entire team.
I believe we'll see acceleration in deal closings in the coming quarters as the covered 19 pandemic receives.
And his team mentioned, there's elective procedures return.
I'm also pleased with the strength and vitality of our sales pipeline.
The evaluator prospects.
We expect that new accounts will be slower to close in the current environment, but our team remains engaged and highly motivated.
And the value of our products, especially evaluator.
Is more relevant than ever as they see intense margin contraction parties earlier comments.
I mentioned, we've experienced a slowdown or our ability to get some sales meetings.
More specifically.
To date about a dozen prospects out of a total of about 85 in our pipeline have asked us to delay further conversations for a few weeks two month.
As they work through the most pressing needs while adjusting to working from home.
But given the <unk> the pipeline strength, both in terms of potential deal size and in the total number of opportunities. We believe future quarters can meet or exceed our established targets of $2 million to $3 million in bookings per quarter.
When the business environment begins to improve.
I'll be available for questions and answers following our prepared remarks.
But for now I'd like to turn the call over to our CFO Tom Gibson.
Who will review the financial results for Q4.
In fiscal year 2019 in greater detail.
Tom.
Thank you Randy and good morning, everyone on the call.
The company has built on the initiatives reported to you in the third quarter.
These will be highlighted first as it is critical to the financial results for the fourth quarter ended January 31 2020.
These include the capital raise the related redemption of our preferred shares that was completed in the third quarter.
Finalizing our new banking relationship with bridge Bank.
And the sale of our E. C M assets that closed and funded on February 24 2020.
They had to occur in the order that they did and in a very short period of time.
I am proud of our teams for executing on these critical initiatives.
I believe this supports the company's embrace of velocity and execution into our culture.
The company successfully completed its new banking relationship in the fourth quarter of 2019 with bridge back.
While the company paid the term loan upon closing the sale of the E. C. M assets. The company will continue to have access to the revolving credit facility that is based upon our accounts receivable.
This will provide the company with an inexpensive fall back to our cash balance that is expected to finance the company for two years or more.
And of course as he mentioned.
We anticipate receiving PPP funds and the not too distant future.
As previously announced the company closed and funded the seller bcm assets on February 24.
This represents one of the last moves that was required to achieving its ultimate goal of becoming a fast growing healthcare technology company focused on the middle of the revenue cycle.
The salad bcm assets will free the company hundreds legacy base revenue stream that was after seeing every year.
Beginning with the first quarter of 2020, the company will report the easiest business as a discontinued operation, which will eliminate this revenue base and related cost.
Current and prior periods.
This will move the revenue stream for easy from the GAAP financial statements and show the appropriate amount of growth.
The remaining solutions and services.
We're all very excited about executing on this last key initiative and how it positions. The company. So it's even accelerated rate of growth.
Going forward.
Now, let me turn the company to the company's operating performance for the fourth quarter ended January 31 2020.
As announced in yesterday's press release regarding our performance for the fourth quarter and for the full 12 months of fiscal year 2019, we generate rep. We generated revenues of approximately $4.8 million down approximately 17% sequentially and down approximately 12%.
From the fourth quarter of last fiscal year.
The shortfall to prior periods was lower perpetual sales and lower revenues from the E C N business.
Total revenues for the 12 months of fiscal year, 2019 were approximately $20.7 million down 8% some $22.4 million in the same period last year.
The reduction in annual revenue again was related to a lower revenue of the legacy business and lower contribution from perpetual revenue, which we have historically generated some a select few client partner relationship.
It is worth noting that the company's revenue is within the range of guidance provided in the second quarter of 2019.
Turning now to book yields in the fourth quarter as Randy stated the company has publicly announced the target of between 2 million and $3 million in bookings per quarter.
The bookings for Q4, 2019, [laughter], where a million dollars, which was lower than our target.
As stated in previous earnings calls, our Q2 2019 bookings comprised of $3 million of evaluate or represents a pace of go forward revenue contribution that can help us add substantial revenue to our company.
A reoccurring technology revenue bags.
The bookings for Q4 2019 included a 400000 dollar evaluating upsells deal.
That upsells was.
One of the three deals that closed in Q2 2019.
The hospital system was saying value.
And our technology and expanded our relationship within their facilities.
That is significant to our models going forward.
Up so can be implemented quickly and has little upfront costs to the company.
Recurring revenues were 84% of total revenue for the fourth quarter higher than the 67% from the third quarter of this year, but lower than the 86% from Q4 last fiscal year.
[noise] ending the fiscal year at a higher recurring revenue.
Percentage supports the topline revenue growth model for fiscal year 2020.
Recurring revenue for fiscal year, 2019 was 76% of total revenue basically in the same range as fiscal year 2018, recurring revenue, which was 80%.
Moving now to adjusted EBITDA, we generated $480000 in Q4 of 2019 as compared with $1.3 million in Q3 of 2019 and $1.1 million in Q4 last fiscal.
A year.
Adjusted EBITDA for fiscal year, 2019 was $3.1 million up 7% from $2.9 million of last fiscal year.
Some of this favorable EBITDA on lower revenue is the direct result of our successful cost savings initiative, we completed last year.
That initiative is continuing to have a positive impact on operations.
The company's cost containment measures were certainly prudent given the lower sales volumes.
The company incurred $1.4 million and nonrecurring operating expenses for the fourth quarter and a total of $2 million for the full 12 months of fiscal year 2019.
The components of the nonrecurring cost.
Our the previously announced executive transition cost of $800000.
A previous a previously announced head count rationalization of $400000.
Transaction expenses on the sale of the E C M assets of 600000 homes.
And $200000 in cost associated with the correction of the immaterial err on amortization of capitalized software development cost to report the third quarter 10-Q.
[noise] of these cost the head count rationalization was completed at the end of the company's fiscal year in an effort to better align its go forward cost with revenues.
The company is always revealing opportunities to be more efficient with its personnel and back office cost.
Additionally, the company recorded $70000 and $309000 respect typically.
Interest expense for the fourth quarter and the full year of fiscal 2019, compared with $52000 and $384000 respectively.
For the same periods last year.
[noise] lower interest cost was achieved from barely by deferring higher interest amounts to her capitalized software development assets.
Turning now to other the company recognized $1.1 million in Q4, 2019, and $2.4 million for the 12 months of fiscal year, 2019 of noncash depreciation and amortization compared with $588000 and.
$2.9 million in comparable periods of fiscal year 2018.
In addition to normal recurring amortization on the company's capitalized software development.
Company included an impairment charge of $354000 for projects that were cancelled during the fourth quarter of 2019.
Finally, the company has accelerated completion of projects that are in inventory under the add job method of development.
The company has added tighter discipline to its development procedures by limiting the starting and completing of projects to within one or two three week spreads.
This should result in higher amortization in future periods for capitalized software developer.
The company also recognized $934000 and $629000 of share based compensation for fiscal 2019 in 2018, respectively.
As discussed in the third quarters, earning call the share based compensation continues to trend higher compared to the same period, a year ago because of certain actions.
Initiated by the board to secure its executive team and the hiring of our CEO.
Moving to the balance sheet, we finished the quarter with approximately $1.6 million cash on hand, compared to $1.2 million at the end of the third quarter.
The company invoices, approximately $5 million in and around November of each year for annual licenses to certain legacy products.
Those legacy invoices are collected in January and February the following year.
What is left is a company that uses cash specifically in the late summer months in early fall.
Substantially all of these seasonal paying customers are from the E. C. N business that was sold on February 24th of this year.
Beyond operations for the fiscal year 2019, we invested $3.4 million into the capitalized software development asset primarily new functionality for our key client solution evaluating.
This is comparable to the $3 million in fiscal year 2018.
The continuation of this spend and development of evaluated platform was deemed essential to expand ourselves velocity through it.
Then did that capabilities for inpatient and outpatient modules.
We're also continuing to develop the product with improved dashboards to increase user functionality and satisfaction.
The company continues to have flexibility within investments, we make into our software so the timing nature and type of spent.
It is worth noting that in the Companys Mdna disclosures total research and development costs are going down.
This is the result of more cost proportionately being capitalized into software developer.
The company has reduced head count and refocused its R&D efforts around the company's fewer.
Ongoing solutions, while less effort is being attributed to older legacy solutions.
During the fourth quarter company made no payment on the term loan as it was principal free for the first 12 months.
The term loan balance was $4 million when we close with bridge Bank on December 12 2019.
The company did not draw on the revolving credit facility during the fourth quarter.
As mentioned by T. The company is not offering guidance due to the uncertainty based on the effects of the novel Corona virus.
However, we did want to provide measures to help our investors understand the size and shape of the go forward streamline health company.
The company will report E C N revenue as a discontinued operation in fiscal 2020, and it will impact all prior periods.
Looking back upon fiscal year 2019 on a quarterly basis.
Think about revenues as $3.0 million $2.3 million $3.3 million and $2.5 million for each of Q1 Q2 Q3 in Q4 2019.
This totals.
Fiscal year 2019 base of $11 million.
For fiscal 2020 thinking in terms of the company's revenue beginning in the range of $2.4 million to $2.8 million per quarter.
And growing from that level on a quarter over quarter basis.
For fiscal year 2020, as previously reported the company projects that have negative adjusted EBITDA of not more than $1 million.
The company's cash balance at the end of fiscal 2020 as projected to be in the three.
Million dollar range without drawing.
On this revolving credit facility.
The company continues to project then it will begin generating cash flow from operations by the third quarter of 2021 without requiring additional financing or drawing on its line of credit.
Again these are not intended to be guidance numbers.
Rather they are intended to help our investors size our company on a go forward basis.
The company will provide guidance ascend is there's more certainty around the timing of the return of our economy as it relates to cope with 19.
That concludes my remarks, but before I turn the call back to team I wanted to reiterate that I'm very proud of our teams accomplishments over the last few months, we are realizing a new culture of the velocity and execution.
And I am confident you will hear that as a recurring theme in future releases about our town.
Gee.
Thank you Tom.
Our leadership team now has an internal code word for our company and that is new coal because that's what we believe we are a new company that has moved beyond this legacy business and it's now a laser focused on selling SaaS solutions to healthcare providers to help them with the middle of their revenues.
Cycle.
We believe if we can help our customers do a better job in the middle of their revenue cycle from charge capture to build drop there need to focus on the back end of the revenue cycle.
Especially denials and accounts receivable will be minimized.
As this new coal.
We are committed to building a world class customer success organization with lots of happy clients, who provide the needed references to increase velocity and ourselves efforts to have happy clients, we need to have world class SaaS solutions like evaluator that meet and exceed our customers expect.
Stations and to ensure we had that we're building a world class product management team the top level research and development talent to keep evaluator ahead of the curve by designing today, what the market will need tomorrow.
I am grateful to our team members, who have remained diligent in the face of tremendous up eagle to their daily lives and who remain committed to ensuring that our hospital system customers have the tools they need to minimize the time they spend on administrative activities. So they can maximize.
The clinical time.
We have a unique offering that is gaining traction in the marketplace and I know, we will continue to lead our industry's movement toward the use of cloud based prebuilt coding analysis technology.
Thank you all for your support of our company and for sharing our vision.
I would now like to open up the call for questions and we'll turn the call over to the operator.
Operator.
Thank you the cars how open for questions.
If he would like to ask a question. Please press star one on your telephone keypad at this time.
Confirmation total indicate your line is and the question Q.
Let's start to if he would like to remove your question from the Q.
For participants using speaker equipment, and maybe necessary to pick up the handset before pressing the star.
Once again like a one to register questions at this time.
Our first question is coming from Matt Hewitt with Craig Hallum. Please go ahead.
Good morning. Thank you for taking the question maybe the first one what was that the see I'm contribution in Q4, <unk> do you have that Tom.
Oh.
Oh, I don't but I'll I'll look forward real quick.
Matt, Okay, well, well, maybe yeah, what maybe while you're looking for that a broader question regarding the current environment with with the Corona virus hospitals, you know shutting their doors to not a central procedures salespeople can't get in obviously you talked about this little bit it as you look over the coming we.
Yeah, So some states, including your own, Georgia, where they're starting to relax some of those restrictions.
How do how quickly do you anticipate being able to get in there [laughter] have those meetings and ultimately close on some do wins.
Yeah, Matt This is t. out I'll start. Thanks for the question then I'll, let Randy maybe follow it up but obviously, we're having a lot of conversations with health systems and Ceos around the country and I think.
One of the key things that we're looking at region by region state by state and in some cases county by County, but it's it's when elective surgeries.
You know or put back on the books I think that's a key measurement or a key data point for us to say when that starts happening. The systems are gonna began opening up and there's obviously.
What five weeks Oh.
Pent up demand. So we think wants it opened there's going to accelerate quickly you know.
Provided there is not a bounce back of the virus, but so you know assuming that's gonna be the case, you know I think.
One we're having a number of of conference calls in video calls.
Interesting enough people are getting used to that and so we're we're still seeing demos take place, we're still seeing contracts being center crossed the wire so to speak.
And so but as far as <unk>.
At least in and.
A dozen or so state I think you could see in the late May early June timeframe, you know as some of these deals actually.
Closing so at least that's the what it feels like I don't have any yeah, certainly not geared d. in that but Randy you want to follow that up.
Yeah sure amount I think I saw that have a state of Texas.
Announced yesterday, if they're going to start, allowing elective surgeries and.
What we're hearing anecdotally from prospects, there's one in Ohio that we're pursuing that it said boy I wish we had evaluate are now.
And the reason why is that a it it is a great tool for those that are no longer working in the office, our dashboards and our reports allow virtual management better right because the daily reports to say whats the accuracy of my Coaters, how busy on my auditors.
What's the output, but past that.
The other <unk> item is that.
[laughter], we're hearing stories about how revenue as being cut by up to 50% in some instances greater so obviously, they're being squeezed the for cash and they know the once electrons come back they got to capture every penny that's accurate and is do them and that's part of our go forward pitch is.
You know don't wait don't make mistakes on your coding and billing once this happens and habit all slow down the backend do it right first time and that's kind of what are the vernacular prep a promise of evaluate or is it do it right. The first time.
So I think that's echoing well entities point.
We're still doing plenty of demos, we would do a virtual demos for awhile and I think you'll find that hopefully we'll get closures here in Q2 from some of the guys that were close in Q1 and in March in early April said, Hey, guys. We I you know I got a focus on other things in the near term.
Understood. Okay. That's great. Thanks for the color there and a silly question are there codes specific codes for Corona virus or does that just just treating these patients that are coming in right now does that create issues in of itself.
Yes, you know I.
I had rainy.
Well there are codes for the virus in early April the CMS put new ones out it's not enough. What happens is once you get into intensive care. The amount of reimbursement is nowhere near what is necessary sorts, putting them in a pinch.
But I think more than that Matt it's more than half of their business adjustments stopped right and I'm a variety of practitioners have been asked to stay away from the hospitals and they're not even working ophthalmologists and on her on and on so that's what we're waiting for to come back to us to say to our middle of the revenue cycle.
Folks you.
You are going to see a bolus a group of bills coming out quickly now and you got to get them right and you got to get them paid [noise].
Okay. That's helpful. Thank you and then maybe one last front one from me you know as we look at the current pipeline.
Would you.
Say that they do you know obviously given the current environment. It makes it challenging but would you see that that even despite the corona virus that you've seen that pipeline continue to build even if you're not necessarily getting contracts to the goal line, but the pipeline itself has has continued to build and it gives you confidence as we get into maybe the back.
Half of fiscal 20 that as things potentially start to open back up the larger pipeline is resulting in a larger conversion rate. Thank you.
Yeah, Hi, Hi, Randy I'll, let you take the take that out I'll start by saying.
I think what some of this is done and it's truly highlighted the need for evaluator and I think as this thing accelerates when when elective surgeries in the light come back online.
I think.
The last five weeks I wouldn't say, Matt that our pipeline just accelerated because what it was fairly large going into this thing but to what it has done is allow that.
Pipeline to become more qualified I guess is the word I would you say Randy you want to follow that up.
Yeah, I would agree with that T and by qualified it means if you're if you're staying in touch with us math and working through appropriate go forward dates, meaning if we were supposed to have met two weeks ago, but they need a delay that we stay in touch obviously, but they're picking the ball up again, saying hey, how about we meet now on may 10th or whatever.
Bay.
That's more <unk>, they're seeing at the guys that were very close that what I would have told you. We would have signed by end of this quarter. I think are just going to roll over 30 to 60 days the ones that were really at the bottom of a funnel, but to your point, Matt. There are I mean every day not every day every week I see more new opportunities opened in sales.
For us, which means they moved beyond stage, one and a number of the ones in the pipeline today, Matt are dramatically higher than our current average and higher than the average we've discussed with you and everybody else publicly of in round numbers about $300000 a year for three years, there's a number of them in the pipeline that are substantially higher.
Not as larger organizations see the value of this including the one team mentioned in his comments from the Midwest.
Great. Thank you.
Matt [laughter], Hey, Matt This is Tom again.
We generated $2.1 million of revenue from me see him in the fourth quarter.
And we generated $1.4 million of adjusted EBITDA for me see him that is on a direct cost basis, only and does not include the rationalization that we did beyond these employees that moved to Highland on February 24.
But yeah, you're looking at 2.1 million topline and 1.4 million adjusted EBITDA.
That's great. Thank you Tom I appreciate that.
Thanks, once again, ladies and gentlemen that as far one to register a question at this time.
The question is coming from Brooks Oneil of Lake Street capital market. Please go ahead.
Oh, good morning, guys lot of them for made sure. We appreciate all of it I was hoping you guys could talk just a little bit about Oh.
Implementation timeline for evaluate or so that we can get a sense of kind of how long will take.
For the.
You know installation Oh, no system and revenue recognition for you guys from new orders coming in thank a lot.
Yeah. Thanks Brooks.
Good question.
You know Fortunately, we have an incredible technology platform. So yeah deploying technology is pretty easy because of the the architecture and Msas nature, So becomes more about getting the data flowing into the platform and then the training of the end user. So we look at it from contract signing to go.
Building in about 60 days.
Okay, Great. These guy got it can go faster depending on the client but.
Sure.
Could you guys talk just a little bit about some of the.
Focus up your R&D and most of them. The things you think will you can add that will significantly improve the functionality or user friendly most of the system.
Yeah. There are several things, where we're we're working on but I would say structurally the most important thing we've done and over the last couple of quarters is is put in place of product management organization that drives the functionality.
Of the platform, which historically has not been the cage. So we have a much more funneled approach in what comes out of the R&D organization, which that that streamline is a tremendous amount of work and creates efficiencies and.
We know what 20 were go and so but if you look at we have the the outpatient dashboards, we have advanced reporting we had some architectural.
Things inside the valuation platform that we've we've made more sounded more scalable. So those are some of the big items, but I would say the reporting side of it in the dashboards, you're gonna be but the biggest things that our clients are going to see over the next quarter.
Well move group the group sort of recognizing that structure of money immigration delivery systems today.
I would still.
The company Hospital systems <unk>.
Maybe three big components right, they need that hospital, a billing they need outcomes and filling and then they need physician billing do bounce off for all of that.
Inpatient and outpatient, yes, and the Prophy side of it is something that's on our roadmap.
Okay Cool and then maybe just one or two more quick ones Randy.
Oh or Tom I know you guys don't provide clear and I'm not looking for governments, but I was curious if you have a rough.
Oh, Oh, what what the split might be between the evaluated and the audible business going forward.
Yeah, Tom you want to take the other you want me to.
Yeah, Let me give some color and then you can come on on top so our strongest revenue base going forward is gonna be CVI Nab striking it will probably be.
In the neighborhood of.
60% to 70% of our revenue base and then audit services will contribute 20 ish.
For said, maybe a little bit stronger and then evaluate or will be a smaller piece or the smell. The what's left there for.
Fiscal 2020, but the thing to keep in mind.
Is that evaluate or the way you know its asked model and so every time, we make one of these sales it adds incrementally.
But it stacks so you know the.
Three that we sold in fiscal 2019, Q2 fiscal 2019, which had about a million dollar ACB only we only recognize a very small portion of that in fiscal 2018, but we will get all of that in fiscal 2000.
So you can see how those stacking up the revenues going to have a big impact going forward.
Yeah, that's great.
Well, that's one and I pod at three in go ahead, sorry, I'm just gonna have that I think what we're finding at least I'm finding early in Q1 with the sales team. There is a lot of opportunity to add new audit services clients.
But most of those first contracts books are modest there.
Have a review before let me do something smallish.
See how it goes and then we can grow from there as a poll as compared to I kind of a standard.
What a contract which in round numbers is around $300000 here for three years pure SaaS. So I think what will happen is <unk>, yeah God willing in the Creek don't rise very quickly we're going to find the evaluate our revenue building quickly and surfing the revenue contribution of our audit services pretty quickly it's because of this.
And the build but I don't want to diminish. The fact that these new audit services clients. I think are very important first steps to having them see the value of evaluator and choosing to use it themselves.
Well that makes a lot of said I was hoping and I apologize, but those are.
Tom you went through all the various cool largely nonrecurring or fourth quarter expenses related to the transactions and the refinancing stuff. It's impossible for you to give US one summary number for kind of the nonrecurring expenses from.
Q4, just so we can.
Think about.
Hi, how things will look in in 2020, a little easier.
[noise], Tom Tom I'd be on mute.
Sorry about that.
<unk>, yes, we summarize that of course, and our reconciliation of EBITDA on a think you're thinking about a number of about a 1.5 million dollar nonrecurring.
Expenses for Q4.
Thank you very much.
[laughter].
Thank you this brings us to the end of our question and answer session I would like to turn the floor back over to Mr., So sorry for closing comments.
Thank you and thank you all on the call. This morning again for your interest and support a streamline health. If you have any additional questions or need more information. Please feel free to contact me at Randy Dot Salisbury.
At streamline health and that we look forward to speaking with you all again in June one will discuss our first quarter 2020 financial performance.
Good day.
Ladies and gentlemen, thank you for your participation you may now disconnect or local for webcast and have a wonderful day.
[noise].