Q4 2020 Streamline Health Solutions Inc Earnings Call
Hello, and welcome to the streamline health solutions fourth quarter and fiscal year, 2020 earnings conference call and webcast.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded its now my pleasure to turn the call over to Randy Salisbury, Senior Vice President and Chief sales and marketing Officer Streamline Health solutions. Please go ahead Sir.
Thank you for joining us to review the financial results on streamline health solutions.
For the fourth quarter and fiscal year, 2020, which ended January 31 2021.
As the conference call Operator indicated my name is Randy Salisbury, as senior Vice President and Chief sales and marketing officer here at streamline health and manage all communications, including Investor Relations joining.
Joining me on the call today are Tee Green, President and Chief Executive Officer, and Chairman of the Board and Tom Gibson 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.
And can retrieve it from the company's website and streamline health Dot net.
Or at numerous other financial websites.
Before we begin with prepared remarks, we want to be sure. We are clear for everyone on the record how we 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 first statements.
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 and 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, and you report, which is on file with the SEC for more information about these risks uncertainties and assumptions and on.
Other factors.
And as always we are presenting management's current analysis on these items.
As of today.
And so on this call should take into account these risks when evaluating the topics we will discuss.
Please note streamline health is not undertaking any commitment or obligation to publicly revise any such forward looking statements made today.
And we'll discuss non-GAAP financial measures such as adjusted EBITDA 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 and cash.
And their own non non-GAAP measures to help you compare these amounts on consistent terms. Please refer to our website at 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 to Tee Green, President and Chief Executive Officer Qi.
Thank you Randy and thank you all for joining us this morning.
We all know how difficult. This year has been as we continue to deal with the many repercussions of the COVID-19 pandemic.
For our health care systems customers. The rhythm of day to day operations was up and forcing linear decision, making focused solely on the global pandemic.
Today with more Americans, receiving vaccinations, and we believe a return to normalcy during the second half of this year is a real possibility.
And that should free up decision makers and leading to new evaluated contract wins from our pipeline, which steadily grew throughout 2020.
Looking back on 2020, the sale of our legacy ECM business earlier in the year enabled us to focus solely on providing technology and services.
Help providers solve problems and gain efficiencies and the middle of their revenue cycle as the pandemic slowed contract closings, we asked our employees to focus on improving our processes and preparing for growth. This internal focus combined with cash resources provided by the Divesture enabled.
US to develop a world class product management team to continually expand and improve our value added technology supported by our new customer success team include.
Including and implementation team that has obtained incredible traction and has been setting a personal best for timing on the last few implementations.
This improved customer experience has delivered and expanding roster of restaurants will customers a prerequisite and closing helped your I T solutions.
Current customer references we're a critical element and helping US successfully closed five new evaluated contracts last year.
Moving now to our financial results. Despite the macro issues related to Covid total revenue for the fourth quarter of 2020 was $3 million up 11% compared to the same period of 2019.
For the year total revenue was $11 $3 million compared to $11.9 million during 2019.
SaaS revenue growth, 50% from fourth quarter of 19 to 20, and 17% sequentially recurring revenue accounted for 75 per cent of total revenue this quarter and <unk>.
74 per cent for the full year, 'twenty, and 'twenty compared to 80% and 68% for the fourth quarter and full fiscal year 2019, respectively.
Fiscal year, 2020 adjusted EBITDA improved to a loss of $1 $9 million compared to an adjusted EBITDA loss of $2 $3 million. During 2019, the improve adjusted EBITDA loss was the result of cost containment activities related to operational improvements and the divesture which occurred.
Earlier in the fiscal year.
As of January 31st.
And when he 21, we had $2 $4 million and cash on hand with no bank debt as we previously announced effective March 2nd 'twenty 'twenty. One we successfully closed a public offering resulting in gross proceeds to the company of $16 $1 million.
Our cap table remains clean with approximately 43 million fully diluted shares outstanding as of today, all of which is common stock.
And I am pleased with the strength and talent of our people and I believe we have a strong operational foundation vital for accelerating revenue growth with the new growth capital. We raised in February we can invest in sales marketing and certain software enhancements to capitalize on our industry, leading movement to improve the financial performance.
Of every health care provider through our evaluated pre bill coding analysis technology.
I will now turn the call over to our chief sales and marketing Officer, Randy Salisbury.
Update on sales activities and the state of our pipeline.
Randy.
Thank you T.
We began 2020 with a great deal of promise in February we closed the University of Louisville Hospital and epic based academic.
Academic Medical center, a great start to achieving our stated objective of 12, new evaluate a contracts and fiscal year, 2020 with total contract value of $10 $8 million.
And then just a few weeks later on.
And I completed and what was to be my last onsite sales call and law.
Large facility and the Midwest.
And that was more than a year ago and that prospect remains very engaged and we believe they will sign a contract for evaluate or as soon as the organization returns to more standard departmental decision making.
I believe this is an example, this example is representative of the state of the market over the last 13 months.
Financial uncertainty created by the pandemic led to decision delays even for paradigm shifting solutions like evaluate or shown to generate a positive return on investment.
Given this I believe our sales performance last year should be assessed in two ways first the number of new evaluate our contracts and corresponding total contract value and second the number of prospects and our sales pipeline with a corresponding total contract value.
On the first measure we close five do evaluate our contracts totaling $5 $6 million and total contract value.
Secondly at the end of the fiscal year, our pipeline contains 72 prospects representing $79 million and total contract value.
And as compared to 69 prospects.
Representing $54 million and total contract value at the end of our last fiscal year of 2019.
And as Tim mentioned, we believe that departmental decision, making is beginning again.
Given the health of our pipeline.
Which contains nearly all of the prospects, we engaged with over a year ago.
Plus new customers introduced and 'twenty 'twenty.
We remain committed to our goal of $2 million to $3 million of total contract value bookings per quarter going forward.
Our target from the number of new value of the contracts has increased substantially from last year's target and now stands at 18.
We believe we can achieve the increased volume of contracts by activating our robust pipeline as we begin to exit the COVID-19 restraining decision environment and continuing to sign target and close T prospects through our expanding channel partnerships.
We plan to increase our direct sales force and a deliberate manner to get more coverage and the regions, where we've seen the greatest response.
In addition, our focus last year to attract new reseller partners is gaining traction as we have already signed one new large partner joining both Allscripts and chart wise.
And we are negotiating with two others, both of which have very large health care customer footprints.
Our goal is to lead and industry movement to pre bill revenue integrity validation and we believe large reseller partners will help us expand our reach and accelerate our sales.
We will update you on these potential reseller partners as appropriate through press releases or during subsequent earnings calls.
I'll now turn the call over to our CFO, Tom Gibson to review the third quarters financial results in more detail.
Tom.
Thank you Randy total revenues for the fourth quarter of fiscal 'twenty, and 'twenty were $3 million compared to $2 $7 million and the prior year period.
SaaS revenue was up $349000 or approximately 50% compared to the same quarter a year ago. The revenue growth during the quarter was driven primarily by SaaS Sim.
System sales and professional services, but offset somewhat by lower revenue from audit services and maintenance and support.
Fiscal year, 'twenty, and 'twenty revenue was $11 $3 million.
Per to 11 $9 million during fiscal 2019.
SaaS revenue and physical 2020 grew 46% and three.
And three $7 million compared to $2.5 million during 2019.
Recurring revenue comprised 74% of Rep total revenue during fiscal 2020 compared to 68% during the prior year.
Net loss for the fourth quarter, and physical 'twenty, and 'twenty was $1.2 million as compared to a net loss of $2.4 million during the fourth quarter of fiscal 2019.
Fourth quarter fiscal 2020 net loss included.
Point $4 million of income from discontinued operations.
In connection with the sale of the company's legacy ECM business, which closed February 24, 2020 compared to $18000 of income from discontinued operations during the fourth quarter.
2019.
The company recorded $3 million and net income for the 12 months ended January 31, and 2021, which included $5 $1 million of income from discontinued operations. This is compared to a net loss of $2 $9 million during fiscal two.
19, which included $3 $4 million of income from discontinued operations.
<unk> from continuing operations, and prudent and physical year, 2020 to four $8 million as compared to a loss of $6 $2 million during fiscal 2019.
Adjusted EBITDA for the fourth quarter of fiscal 'twenty 'twenty was a loss of $100000 compared to adjusted EBITDA loss of $600000 and the fourth quarter of fiscal 2019.
Fiscal year, 2020 adjusted EBITDA was a loss of $1 $9 million compared to a loss of $2 $3 million during fiscal 2019.
And the profitability improvements that we have seen through.
The operations have come primarily from cost containment activities.
Moving to the balance sheet, we finished the fourth quarter with approximately $2 4 million and cash on hand.
The $1.6 million at the end of last year, the company generated $5 $4 million on the sale of the ECM assets net of the term loan repayment and.
Additionally, the company applied for and received a PPP loan of $2.3 million in April 2020.
Company has applied for but not been granted forgiveness of the P. P P low and at this time.
No accounting wasn't forgiveness will be reported and the company's financial statements unless or until it is granted by the U S. P. S.
Yeah.
Outside of the PPP loan the company has no debt outstanding.
And that's T commented in his opening remarks, the company completed a successful capital raise earlier this year for gross proceeds of $16 $1 million.
Contemporaneously with the closing of the capital raise on March 2nd 2021, we replaced our revolving credit facility, which was an asset based loan with the recurring revenue line facility.
The $3 million capacity recurring revenue line facility will provide more flexibility with our growth goals.
Company plans to use the proceeds and the capital raise and additional debt capacity as growth capital for expanding sales and marketing and continued investment and they evaluate and product.
The company's strategic initiatives is to take full advantage of this position is first to market with evaluated.
It's pre bill auditing technology.
The company is not in a position to provide guidance for fiscal 2021 due to the continued uncertainty around the effects of the novel Corona virus.
As Randy mentioned in his remarks, the company is targeting 18, new evaluate or bookings for its physical.
And in 'twenty one.
The company remains focused on continued growth of SaaS revenue.
And the fiscal year ended 2020, the company used approximately $1 million of cash per quarter.
Based on the company's current forecast it will begin generating cash from operations and Q2 or Q3 of fiscal year 'twenty 'twenty two.
Each quarter, we should see and improvement and the use of cash through the time, we'd begin cash generation.
This concludes my comments I will now turn the call back.
Deep brain for his closing remarks T.
Thank you Tom.
And then our executive team as managers and leaders our responsibility is to control what we can and when that every day.
Throughout the difficulties of the past year, we successfully manage cost, while making significant improvements to our organization.
Clothing, our teams and our products that create a foundation for the rapid growth of buyer evaluate your platform with the additional capital from our recent offering we will be able to grow our sales team and continue to invest and are evaluating technology to help us capitalize on the opportunity in front of us.
Our commitment to lead and industry movement to pre Bill revenue integrity validation is real and we believe we will gain momentum and the quarters and years ahead.
And I'm confident that as health care providers returned to more normal budgeting and purchase decision, making innovative financial solutions like evaluated and will be at the forefront of their minds.
Before we begin our Q&A session and I'd like to extend my heartfelt. Thanks to the team members that streamline per day.
Hard work perseverance during and enormously challenging time youre contributions enable us to support our hospital system customers and ensure they have the tools they need to free up time and resources to provide quality care for the communities they serve.
Thank you all for your support and streamline health and for your support of our vision.
Now I'd like to open the call up to your questions operator.
Thank you and not be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up.
And handset before pressing star one one moment. Please while we poll for questions. Our first question today is coming from Matt Hewitt from Craig Hallum and your line is now live.
Good morning, Congratulations on on you know getting.
And getting through a pretty challenging year.
Several questions first on the pipeline maybe.
And maybe if you could give us a little bit of and update on the conversations you've been having with not only the customers that are in the pipeline, but those that you know and potential new customers.
Where are they and they get through kind of dealing with the rush of patients and now you're starting to see more vaccinations.
And what is it how is the how is the conversation with those customers or potential customers evolved.
Uh huh.
Yeah. Thanks, Matt. This is true yeah, I'll lead into that and then let Randy followed that up but you know if you look at the.
They're the ones that we have kind of the first half of the year. They these these are conversations that obviously been going on for some time and.
And what we're seeing is we've seen and the last month as we announce these these new deals is.
Most of these 17 and 18 deals that we've been targeting you know we're in the final stages and so you know those those deals or are coming back to the cfo's desk and the C. E OS desk and Red lines have been done and legal has reviewed the age or sign and so.
All of that Super encouraging what we're seeing and the what we call maybe net new the new prospects that are coming in for the you know slightly from the back half of the year.
And in general.
The the the health systems are saying.
May 1st.
This is <unk>.
And what we're hearing is that it appears that that's the that's the the day that many of these health system for some reason had they had said it's back to business the vaccinations or you know.
For the most part.
Being managed the Covid cases in many parts of the country are per day.
And I was with our Chief Medical Officer last night, and the health system and I think they had one or two COVID-19 patients and the whole health system and so he was saying that he and it feels like things are going to get back to normal what that means is historically these health systems have been able to make clinical decisions and financial decisions and administrative decisions.
Simultaneously right and then Covid, yes, everything with linear and we've talked about that and the past I think youre going to see these departmental initiatives come back on the table. We're seeing some thought on this already especially from the ones that are already contracts have already been redline, but these new ones and it looks like new demos, new meetings and all it looked like that.
And may timeframe things are starting to open back up so Randy anything else that day.
I think that was very thorough I would suggest just on the latter part of that newbies coming in.
And we've been doing a nice job, Matt and our prospecting.
On a sharing a day identified press releases and the like to let them know that they're there and say I don't want to.
Say, a groundswell map and they're joining good company.
And I think that's helping as well.
And so that's great and then and.
Maybe you and you touched on this a little bit on your prepared remarks regarding <unk>.
And your resellers and I think and the slide deck, you called out chart wise and all scripts, maybe an update on those and then the new potential resellers coming on board.
And I realize you might not be able to name names yet, but if you could maybe provide a little bit of color on maybe the types of resellers youre looking at are these traditional auditing firms are these.
You know any any additional color there just to help us kind of think about where those opportunities may lie.
Yeah, Randy go ahead.
Great. Thanks, I was hoping he would take this but we find a really.
And I think.
Terrific reseller partner map that we cannot name.
And the consulting auditing arena and as you can imagine.
And two others I mentioned that we're currently negotiating with.
Are also likeminded in other words, and Theyre happy practice and say.
Care oriented practice.
And obviously in the services arena, because theyre looking at our technology as an add on.
Unfortunately, all I can say because.
They've asked and it's not the one that have signed and we're already go on to market with assets not to mention their name and the two new and dark signed yet and hopefully we'll be able to talk about them and the not too distant future.
And thank you for that and as far as win with chart wise and all scripts and I would assume at this point, they're starting to kind of maybe build their own pipelines.
I think that those are probably not included in your pipeline, but how should we be thinking about those partners and how their business could ramp for you.
Yeah. Thanks, Thanks, Matt This is tee.
You know it takes it takes a lot of energy and time to Bill Good Channel partners, where you know you've trained their sales force they have the ability to.
To talk intelligently about the platform and so you know those kind of quarters are behind us and you're you are seeing the pipelines build and South beach and the the last you know we just did a release we've had our first.
Business partner.
Transaction clause, so where the pipelines are certainly building and these in these and these business partners, but we've actually seen a contract already come through so that's super encouraging to us and like Randy said, we do have some really exciting and very large org.
Organizations, and the consulting world and auditing World.
Gonna be taken the evaluate a platform to their customer base and you.
These have the potential to be substantial partnerships for streamline.
That's great and helpful.
And maybe one for Tom and there was a noticeable step down.
And SG&A in Q4 was that there was there some timing there well you know where should that bounce back starting in Q1, particularly given your comments regarding.
The incremental cash that you brought in here in Q1, and your desire to add some sales and marketing resources and any color along those lines would be helpful.
Hey, Matt how are you doing good talking to you.
Appreciate your questions man.
And so as you may recall on our Q4, we always have a step down and SG&A. It's associated with two very specific items. One is the reversal of our P. T. O is accrued up until the end of the calendar year, and then reversed and.
And the second is our R&D tax credit, which comes out and the fourth quarter of every year and so that has a meaningful decrease on our SG&A and it has to happen and the in the fourth quarter every year based on timing.
So we'll always have that step down this year it was a little bit higher than it has been in years past.
But that is the step down and it should return to more normalcy and Q1 and Q2, because you won't have those one time items.
I'm not expecting the investments and the sales side to hit us until Q3.
Okay perfect. That's helpful. On I think that that's all I had thank you are there. Thank you very much for the help.
Thanks, Matt.
Thank you we've reached end of our question and answer session and I'd like to hand, the call back to your host Randy Salisbury for closing comments.
Yeah.
Thank you again for your interest and support and streamline health. If you have any additional questions or need more information. Please contact me directly at Randy Salisbury at streamline health Dot net we look forward to speaking with you again in June when we'll discuss our first quarter 2021 financial performance Good day.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Yeah.