Q4 2023 Streamline Health Solutions Inc Earnings Call
Operator: Greetings and welcome to the Streamline Health Solutions fourth quarter and fiscal year 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jacob Goldberger, Vice President of Finance. Thank you. Please go ahead.
Greetings and welcome to the streamline health solutions fourth quarter and fiscal year 2023 earnings call at.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Jacob Goldberger, Vice President of Finance. Thank you. Please go ahead.
Jacob Goldberger: Thank you for joining us for the Corporate Update and Financial Results Review of Streamline Health Solutions for the fourth quarter and fiscal year 2023, which ended January 31st, 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 B.J. Reeves, Chief Financial Officer.
Jacob Goldberger: Thank you for joining us for the corporate update and financial results review of streamline health solutions for the fourth quarter and fiscal year 2023, which ended January 31st 2024.
Jacob Goldberger: As the conference call Operator indicated my name is Jacob Goldberger, joining me on the call today are Ben Stilwell, President and Chief Executive Officer, and B, J Reeves Chief Financial Officer.
Jacob Goldberger: At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If anyone participating in 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 innings calls, should be viewed. We therefore submit for the record the following statement.
Jacob Goldberger: At the conclusion of today's prepared remarks, we will open the call for a question and answer session. If.
Jacob Goldberger: 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 Dot streamline health got net or from numerous financial websites.
Jacob Goldberger: Before we begin with prepared remarks do you 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.
Jacob Goldberger: We therefore submit 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 Securities Litigation Reform Act.
Jacob Goldberger: 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. Such statements 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 FCC, for more information about these risks, uncertainties, and assumptions and other factors.
Jacob Goldberger: But these are subject to risks uncertainties assumptions and other factors that could cause actual results to differ materially from those discussed 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.
Jacob Goldberger: As always, we are presenting management's current analysis of these items as of today. However, 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 both SAS ACV. Management uses these measures to help provide better insight into our financial performance.
Jacob Goldberger: We are presenting management's current analysis of these items as of today participant 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.
Jacob Goldberger: On today's call, we will discuss non-GAAP financial measures such as adjusted EBITDA and books that H D. D 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.
Jacob Goldberger: 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. Therefore, if 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, President and CEO.
Jacob Goldberger: Consistent terms, please refer to our website at www Dot streamline health Dot net and our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measures.
Jacob Goldberger: I would now like to turn the call over to Ken Stillwell, President and CEO.
Benjamin L. Stilwill: Fiscal year 2023 was challenging for our business. However, the positive impact our solutions have on our client's operations continues to fuel our team and our excitement about the future. Our clients need our solutions, and the market needs our business model to exist. So when we say it's adversity, we knew we had to become a stronger, leaner, and more agile organization. Today, we exist as a more experienced team capable of driving innovation and growth in the complex landscape of hospital revenue cycles. As we announced yesterday, Book SAS ACB, which is the annualized contract value for all agreements currently being recognized, as well as bookings that have not been implemented, totals $15.6 million.
Benjamin L. Stilwill: Thank you Jacob.
Benjamin L. Stilwill: Fiscal year 2023 was challenging for our business. However, the positive impact our solutions have for our clients operations continued to fuel our team and our excitement about the future.
Benjamin L. Stilwill: Clients need our solutions in the market needs our business model to adjust.
Benjamin L. Stilwill: So when we say it's adversity, we knew we had to become a stronger leaner and more agile organization.
Benjamin L. Stilwill: Today, we exist as a more experienced team capable of driving innovation and growth in the complex landscape possible revenue cycles.
Benjamin L. Stilwill: As we announced yesterday booked SaaS ACD, which is the annualized contract value for all agreements currently being recognized as well as bookings that have not been implemented totaled $15 $6 million.
Benjamin L. Stilwill: 11.7 million of which is implemented. Notably, this is above the $15.5 million run rate needed for break-even adjusted EBITDA we discussed previously. We expect that we can implement the remaining $3.9 million of unimplemented bookings over the course of this year, and achieve a break-even adjusted EBITDA break-even run rate during the second half of this year.
Benjamin L. Stilwill: $11 7 million of which is implemented.
Benjamin L. Stilwill: Notably this is above the 15 and a half million dollar run rate needed for breakeven adjusted EBITDA, We've discussed previously.
Benjamin L. Stilwill: We expect that we can implement the remaining $3 9 million of Unimplemented bookings over the course of this year.
Benjamin L. Stilwill: And achieving adjusted EBITDA breakeven run rate during the second half of this year.
Benjamin L. Stilwill: I'd like to take a moment to comment on the current state of our client's challenges before talking about how our business is set up to address them. Our nation's health systems exist to provide clinical care, but more and more, they are forced to spend valuable time and resources to get paid for providing that care. The reimbursement system was already incredibly complex, but in recent years, payers have made it even more difficult through increased denials and hard-nosed contract negotiations. To combat these challenges, Huffles has historically added more staff to their revenue cycle. But in today's labor market, that is just not possible.
Speaker Change: I'd like to take a moment to comment on the current state of our clients' challenges before talking about how our business is set up to address them.
Benjamin L. Stilwill: Our nation's health systems exist to provide clinical care, but more and more they're forced to spend valuable time and resources to get paid for providing that care.
Benjamin L. Stilwill: The reimbursement system was already incredibly complex, but in recent years payers have made it even more difficult through increased denials and hard nose contract negotiation.
Benjamin L. Stilwill: To combat these challenges hustled have historically added more staff to their revenue cycle.
Benjamin L. Stilwill: But in today's labor market that it's just not possible and many have turned to outsourcing the challenge altogether as a result.
Benjamin L. Stilwill: And many have turned to outsourcing the challenge altogether as a result. We think this is an unfortunate outcome, not only because it keeps the cost of collecting high, but by outsourcing something so critical to operations, they miss the chance to make more fundamental fixes. My vision, which is shared by our team, recognizes that true organizational change must come from within the health system and that we can serve as the guide for their quest to be accurately compensated for the care they've provided. Our investment in innovation via our flagship solutions, Red ID, and Evaluator, reflect this vision. Both of them identify, prioritize, and make actionable, specific financial opportunities.
Benjamin L. Stilwill: We think this is an unfortunate outcome not only because it keeps the cost to collect hi.
Benjamin L. Stilwill: By outsourcing something so critical to operations they missed a chance to make more fundamental fixes.
Benjamin L. Stilwill: My vision, which is shared by our team.
Benjamin L. Stilwill: Recognize that the true organizational change must come from within the health system and then we can serve as the guide for their quest to accurately compensated for the care they have provided.
Benjamin L. Stilwill: Our investment in innovation via our flagship solutions, whereby deem evaluate or reflect this mission.
Benjamin L. Stilwill: Both of them identify prioritize and make actionable specific financial opportunities.
Benjamin L. Stilwill: They are then cemented by our service model, which creates the education and feedback loops necessary to allow our clients to make the systemic changes needed to improve. As we prove our innovation and service model and message it in a way that resonates with today's inundated revenue cycle leaders, we will inevitably create growth. So, let me provide some updates on the innovation and growth front before handing off to BJ.
Benjamin L. Stilwill: They are then cemented by our service model, which creates the education and feedback loops necessary to allow our clients to make the systemic changes needed to improve.
Benjamin L. Stilwill: As we prove our innovation and service model and message it in a way that resonates with today's inundated revenue cycle leaders, we will inevitably create growth.
Benjamin L. Stilwill: So let me provide some updates on the innovation and girlfriends before handing off to BJ during fiscal 2023 we made significant strides within innovation.
Benjamin L. Stilwill: During fiscal 2023, we made significant strides in innovation. We mentioned previously the re-architecture of Rev-ID, which set the stage for enhanced performance and client satisfaction. As we look forward, our focus for innovation within RevID is automation for our users and enhanced interoperability for increased financial impact. On Evaluator, during fiscal 2023, we developed an AI model that enhances the intelligent and financial impact of our rules.
Benjamin L. Stilwill: We mentioned previously the re architecture of RFID, which set the stage for enhanced performance and client satisfaction.
Benjamin L. Stilwill: As we look forward our focus for innovation within RFID automation for our users and at HIMSS interoperability for increased financial impact.
Benjamin L. Stilwill: On a value later during 2023, we developed an AI model that enhances the intelligent and financial impact of our rules.
Benjamin L. Stilwill: We're happy to report that in the first six weeks of deployment, the enhanced rules found a million dollars of impact across our client base. And looking forward, we have opportunities to substantially improve the existing AI model, as well as other AI features further out we feel more comfortable tackling with the initial project under our belt. We also spent time on a feature called My Evaluator, which is rolling out to users this week. MyEvaluator is a major advancement in the evaluator user experience, with role-based user profiles to enhance productivity.
Benjamin L. Stilwill: Happy to report that in the first six weeks of deployment the enhanced rules found a million dollars of impact across our client base.
Benjamin L. Stilwill: Looking forward, we have opportunities to substantially improve the existing AI model as well as other AI features further out we feel more comfortable tackling with the initial projects under our belt.
Benjamin L. Stilwill: He also spent time in the future called my evaluating which is rolling out users. This week monetize winter is a major advancement to be evaluated user experience with role based user profiles to enhance productivity.
Benjamin L. Stilwill: Going forward, we'll leverage this to create more and more efficiency for our users. And there's a theme here; going back to the vision, health systems need to find more financial opportunities while leveraging automation to make the most out of their teams. That's the focus of our roadmap, and continued improvements in financial ROI and usability of our products will improve client relationships and help expand our footprint. And then, on the growth front, we remain confident in our revised growth strategy under Amy's leadership.
Benjamin L. Stilwill: Going forward leverage desk to create more and more efficiency for our users.
Benjamin L. Stilwill: And there's a theme here going back to the vision health systems need to find more financial opportunities, while leveraging automation to make the most out of their teams.
Benjamin L. Stilwill: The focus of our roadmap and continued improvements in financial Rois and usability of our products will improve client relationships and help expand our footprint.
Benjamin L. Stilwill: And then on the growth front, we remain confident in our revised growth strategy under Amy's leadership.
Benjamin L. Stilwill: As we started late last year, we went from a broad market approach to one that is much more tailored to proven market advantages. Each of these four key strategies has specific names, accounts, and approaches. And they include, one, a displacement campaign related to an existing offering, in the evaluator space, where we believe our tool delivers better results at a lower cost; a continued emphasis on our Oracle partnership, which continues to aggressively push Rev ID; and three, the development of a new and effective channel partner.
Benjamin L. Stilwill: As we started late last year, we went from a broad market approach to one that is much more tailored to proven market advantages each.
Benjamin L. Stilwill: Each of these four key strategies and specific named accounts and approaches.
Benjamin L. Stilwill: And they include one the displacement campaign related to an existing home a frame and evaluate our space, where we believe our tool delivered better results for lower cost.
Benjamin L. Stilwill: Two our continued emphasis on our Oracle partnership which continues to aggressively push Rev. I D.
Benjamin L. Stilwill: And three the development of a new effective channel partner.
Benjamin L. Stilwill: And then four, the last one, beyond new client sales, we have significant potential for upsell and cross-sell within our existing client base. We've seen progress in each of these strategies, and I do want to call out that we've had several recent expansions within our existing client base, including two enterprise clients contracted for both flagship solutions. Amy has been using an agile approach to managing our growth strategy, both in terms of who's on the team and where they focus.
Benjamin L. Stilwill: And then for the last one beyond new client sales you have significant potential for upsell and cross sell within our existing client base.
Benjamin L. Stilwill: And we've seen progress in each of these strategies, Mike do you want to call out that we've had several recent expansions within our existing client base, including two enterprise clients contracted for both flagship solutions.
Benjamin L. Stilwill: Amy has been using agile approach to managing our growth strategy. Both in terms of who's on the team and where they focus.
Mike: So enhancing our messaging to emphasize a success not only in coding and charge reconciliation, but also our ability to decrease denials and ultimately improve cash flow.
Benjamin L. Stilwill: We're also enhancing our messaging to emphasize our success not only in coding and charge reconciliation but also our ability to decrease denials and ultimately improve cash flow. These are top priority areas for all health care organizations and allow us to engage most effectively with prospects at multiple levels within their organization. We believe that making these focus and strategy adjustments will help us to capitalize on the investments made in innovation and service. We remain optimistic about our need to be in the marketplace and building to work with health systems on their challenges. And with that, I'd like to turn the call over to our CFO, EJ Reeves.
Mike: These are top priority areas for all health care organizations will allow us to engage most effectively with prospects and multiple levels within their organizations.
Benjamin L. Stilwill: We believe that making these focus and strategy adjustments will help us to capitalize on the investments made in innovation and service.
Benjamin L. Stilwill: We remain optimistic about our need to be in the marketplace and ability to work with health systems on their challenges.
Speaker Change: With that I'd like to turn the call over to our CFO T J Rodgers.
Speaker Change: Thank you Ben.
Speaker Change: Total revenue for the fourth quarter fiscal 2023 was $5 4 million as compared to $6 7 million during the fourth quarter fiscal 2022.
Speaker Change: The 12 months ended January 31, 'twenty 'twenty four revenue totaled 22.6 million as compared to $24 9 million during fiscal 2022.
Bryant Reeves: Total revenue for the fourth quarter of fiscal 2023 was $5.4 million, as compared to $6.7 million during the fourth quarter of fiscal 2022. For the 12 months into January 31st, 2024, revenue totaled $22.6 million as compared to $24.9 million during fiscal 2022. The change in total revenue for both periods was attributable to lower revenue from the company's legacy maintenance and support contracts and professional services offerings, offset by higher revenue from the SAS
Speaker Change: The change in total revenue for both periods was attributable to lower revenue from the company's legacy maintenance and support contracts and professional services offerings offset by a higher SaaS revenue.
Speaker Change: As previously reported the company has a large professional services contract, which did not renew at the end of its 2022 fiscal year. This was a professional services contract that is not related to the company's core business going forward.
Speaker Change: During the fourth quarter and fiscal year 2023, SaaS revenue grew point $3 million.
Bryant Reeves: As previously reported, the company had a large professional services contract that did not renew at the end of its 2022 fiscal year. This was a contract that was not related to the company's core business going forward.
Speaker Change: And 1.7 million, respectively as compared to the prior year periods.
Speaker Change: Please note due to the previously announced changes in our client base, we anticipate recognizing a sequential decline in our SaaS revenues during the first quarter of fiscal 2024, and anticipate that fast revenue for the duration of fiscal 'twenty 'twenty four will lag fiscal 2023.
Bryant Reeves: During the fourth quarter of fiscal year 2023, SAS revenue grew $0.3 million and $1.7 million, respectively, as compared to the prior year period. Please note, due to the previously announced changes in our client base, we anticipate recognizing a sequential decline in our SAS revenues during the first quarter of fiscal 2024 and anticipate that SAS revenue for the duration of fiscal 2024 will lag fiscal 2023. Total operating expense was $6.5 million during the fourth quarter of fiscal 2023, compared to $8.6 million for the fourth quarter of 2022.
Speaker Change: Yeah.
Speaker Change: Total operating expense was $6 $5 million during the fourth quarter fiscal 2023 compared to $8.6 million for the fourth quarter of 2022.
Speaker Change: The lower overall operating expense was the result of the company's previously announced integration of the Abilene and evaluate our businesses and what's primarily reported in SG&A and R&D.
Speaker Change: We also saw lower costs associated with our professional fees and software licenses in line with the.
Speaker Change: Lower overall revenue from that portion of our business.
Speaker Change: Compared to our third fiscal quarter total operating expenses, excluding impairment expenses of $10 $8 million.
Bryant Reeves: The lower overall operating expense was the result of the company's previously announced integration of the Avalide and Evaluator businesses 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.
Speaker Change: Decreased.
Speaker Change: Total of $1 $7 billion.
Speaker Change: The sequential decline in operating expenses compared to the third quarter was the result of the previously announced restructuring and seasonally low expenses in the fourth quarter.
Bryant Reeves: Compared to our third fiscal quarter, total operating expenses, excluding impairment expenses of $10.8 million, decreased by a total of $1.7 million. The sequential decline in operating expenses compared to the third quarter was the result of the previously announced restructuring and seasonally low expenses in our fourth quarter. Looking forward, based on our current operating model, we anticipate that expenses will stabilize at a slightly higher run rate than we experienced during the fourth quarter of fiscal 2023.
Speaker Change: Looking forward based on our current operating model, we anticipate that expenses will stabilize at a slightly higher run rate than we experienced during the fourth quarter of fiscal 2023.
Speaker Change: We continue to make investments to improve our technology, including the development of enhancements such as the my evaluate our update continuing development and expansion of applications for the AI technology that we have leverage to generate additional content and.
Speaker Change: And improvements related to the ease of implementation, especially for the Rep I D technology.
Bryant Reeves: We continue to make investments to improve our technology, including the development of enhancements such as the MyEvaluator update, continuing development and expansion of applications for the AI technology that we have leveraged to generate additional content, and improvements related to the ease of implementation, especially for the RevID technology.
Speaker Change: Please note that we expect our fiscal first quarter operating expenses to be sequentially higher than the fourth quarter due to audit and annual shareholder meeting expenses expenses, which we recognized during our first quarter.
Speaker Change: Fiscal 2023 operating expense totaled $42 million compared to $35 $7 million during fiscal 2022.
Bryant Reeves: Please note that we expect our fiscal first quarter operating expenses to be sequentially higher than the fourth quarter due to audit and annual shareholder meeting expenses which we recognized during our first quarter. Fiscal 2023 operating expense totaled $42 million compared to $35.7 million during fiscal 2020; the higher operating expense was primarily attributable to a $10.8 million non-cash impairment charge primarily related to goodwill; not including the impairment, the lower operating expense in fiscal 2023 compared with fiscal 2022 is associated with lower headcount and the integration of the Abilene and Evaluator businesses.
Speaker Change: The higher operating expense was primarily attributable to a $10 $8 million noncash impairment charge primarily related to goodwill.
Speaker Change: Not including the impairment.
Speaker Change: Lower operating expense in fiscal 2023, compared with fiscal 2022.
Speaker Change: I would say that with lower head count and the integration of the Abilene and evaluate our businesses.
Speaker Change: Fourth quarter fiscal 2023, net loss totaled $1 $4 million compared to a loss of $2 $2 million for the fourth quarter of fiscal 2022.
Speaker Change: Fiscal 2023, net loss totaled $18 $7 million compared to a net loss of $11 $4 million during fiscal 2022.
Bryant Reeves: Fourth quarter fiscal 2023 net loss totaled $1.4 million compared to a loss of $2.2 million for the fourth quarter of fiscal 2022. Fiscal 2023 net loss totaled $18.7 million compared to a net loss of $11.4 million during fiscal 2022. The increased net loss was primarily the result of the non-cash impairment charge offset by lower cash operating expenses on relatively static total revenue. During the fourth quarter of fiscal 2023, we generated $0.4 million of adjusted EBITDA compared to a loss of $0.2 million during the fourth quarter of fiscal 2022.
Speaker Change: The increased net loss was primarily the result of the noncash impairment charge offset by lower cash operating expenses on relatively static total revenues.
Speaker Change: During the fourth quarter of fiscal 2023, we generated $4 million of adjusted EBITDA compared to a loss of <unk> $2 million during the fourth quarter of fiscal 2022.
Speaker Change: Fiscal 2023, adjusted EBITDA was a loss of $1 $4 million compared to a loss of $3.8 million in fiscal 2022.
Speaker Change: The improved adjusted EBITDA as a result of the shift in the revenue composition in favor of high margin SaaS revenue as well as significant cost savings achieved through the fiscal 'twenty to 'twenty two strategic alignment.
Bryant Reeves: Fiscal 2023 adjusted EBITDA was a loss of $1.4 million compared to a loss of $3.8 million in fiscal 2022. The improved adjusted EBITDA is the result of the shift in the company's revenue proposition in favor of high-margin SAS revenue, as well as significant cost savings achieved through the fiscal 2022 strategic alignment. Now moving to the balance sheets. As of January 31st, 2024, we had $3.2 million of cash on hand compared to $6.6 million at January 31st, 2023.
Speaker Change: Now moving to the balance sheet as of January 31, 'twenty 'twenty four we.
Speaker Change: We had $3 $2 million of cash on hand, compared to $6 $6 million at January 31, 2023.
Speaker Change: The balance of our term loan was $9 million and we had one $5 million drawn on our revolver.
Speaker Change: As previously announced subsequent to the close of the quarter on February seven 2024, we executed private placements for gross proceeds of $4 $5 million.
Bryant Reeves: The balance of our term loan was $9 million, and we had $1.5 million drawn on our revolver. As previously announced, subsequent to the close of the quarter on February 7, 2024, we executed private placements for gross proceeds of $4.5 million. As Ben previously mentioned, our current booked SAS ACB, including our recently announced wins of $15.6 million, is above our expected $15.5 million SAS ARR break-even point. As a result, we anticipate that we can achieve our break-even run rate during the second half of fiscal 2024 as these bookings are implemented. That concludes my review. I will now turn the call back to Ben for his closing remarks.
Speaker Change: It has been previously mentioned, our current booked SaaS ACB, including our recently announced wins of $15 $6 million is above our expected $15 $500 SaaS AAR, our breakeven point.
Speaker Change: As a result, we anticipate that we can achieve our breakeven run rate during the second half of fiscal 'twenty 'twenty four as these bookings are implemented.
Speaker Change: That concludes my review I will now turn the call back to Dan for his closing remarks.
Dan: Thank you P J.
Dan: In closing, we believe the impact our solutions bring to our current and future clients. We've seen numerous third party reports emphasizing shifting macro conditions and health system priorities that we expect to translate to increased demand for the prebuilt revenue cycle solutions, we offer.
Benjamin L. Stilwill: In closing, we believe in the impact our solutions bring to our current and future. We've seen numerous third-party reports emphasizing shifting macro conditions and health system priorities that we expect to translate to increased demand for the pre-bill revenue cycle solutions we offer. For example, more than half of respondents in the survey conducted by class in September cited an investment in new technologies to support their revenue cycle as a top priority.
Speaker Change: More than half of respondents in a survey conducted by class in September what's the investment in new technologies to support their revenue cycle is a top priority.
Speaker Change: We know the value our solutions provide and the importance of our dedication to prebuilt revenue integrity and are leading a movement for our health system clients.
Speaker Change: I'm grateful for the opportunity to lead this team and have high expectations for our ability to thrive as an organization.
Benjamin L. Stilwill: We know the value our solutions provide and the importance of our dedication to pre-bill revenue integrity, and we are leading a movement for our health system clients. I'm grateful for the opportunity to lead this team and have high expectations for our ability to thrive as an organization. Streamline is made up of dedicated, hardworking associates who each day rise to meet new challenges in support of our mission to ensure our nation's health systems are paid for all of the care they provide. And I thank you for your continued support of our team. Now, I'd like to open up the call to your questions, operator.
Speaker Change: Streamline is made up of dedicated hard working associates, who each day rise to meet new challenges in support of our mission to ensure our nation's health systems are paid for all of the care they provide.
Speaker Change: And I. Thank you for your continued support of our team now I'd like to open up the call to your questions operator.
Speaker Change: Thank you the floor is now open for questions. If you would like to ask a question. Please press star one on your telephone keypad at this time I'll confirmation tone will indicate your line is in the question queue.
Speaker Change: Press Star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up the handset before pressing the star keys.
Operator: Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. Once again, that's Star 1 to register a question at this time. Today's first question is coming from Matt Hewitt of Craig Hallam. Please go ahead.
Speaker Change: Once again Thats Star one to register a question at this time.
Speaker Change: Today's first question is coming from Matt Hewitt of Craig Hallum. Please go ahead.
Matthew Gregory Hewitt: Good morning, Thank you for taking the questions maybe first off.
Matthew Gregory Hewitt: You noted that you know last year was a very challenging year.
Matthew Gregory Hewitt: From our hospitals for spending perspective, but I'm just curious.
Matthew Gregory Hewitt: How is that environment evolved as it sounds like maybe things are getting a little bit better I know the change health care situation last quarter, I'm kind of put a wrinkle and things, but it does sound like things are getting a little bit better maybe if you could provide a little color on what you're seeing right now.
Matthew Gregory Hewitt: Good morning. Thank you for taking the questions. Maybe first up, you noted that, you know, last year was a very challenging year from a hospitals spending perspective. But I'm just curious, how has that environment evolved?
Speaker Change: Sure Thanks, Matt Yeah.
Speaker Change: So I think there's a lot of health systems, who are understanding that they need to straighten out there so our technology priorities and understand how to integrate some of the technology solutions that are out there into the problems that they're having changed health care. It certainly had a momentary hopefully disruption and to those buying cycles, but I think people have returned.
Benjamin L. Stilwill: It sounds like maybe things are getting a little bit better. I know the change in healthcare situation last quarter kind of put a wrinkle in things, but it does sound like things are getting a little bit better. Maybe if you could provide a little color on what you're seeing right now.
Speaker Change: Saying right how can I solve some of my issues as we talked about in the prepared remarks, I think the dynamic of some health systems are looking at fully outsource solutions and others are waking up to say, we cant outsource. These outcomes, we need to find some of these technology vendors, who can help us.
Benjamin L. Stilwill: Yeah, so I think there are a lot of health systems who are understanding that they need to straighten out their technology priorities and understand how to integrate some of the technology solutions that are out there into the problems if they're having change. Healthcare certainly had a momentary, hopefully, disruption in those buying cycles, but I think people have returned to saying, all right, how can I solve some of my issues? As we talked about in the prepared remarks, I think the dynamic of some health systems is looking at fully outsourced solutions, and others are waking up to say, we can't outsource these outcomes. We need to find some of these technology vendors who can help us with our specific problems.
Speaker Change: With our specific problems.
Speaker Change: Yeah.
Speaker Change: Got it alright. Thank you and then maybe secondly in this.
Speaker Change: Pretty current you've got a couple of wins on the tape here in the past week or so and that those are both cross selling opportunities maybe you could talk a little bit more about the opportunity there maybe what's helping drive some of those wins and where do you see that going over the course of the year and going forward.
Speaker Change: Sure.
Benjamin L. Stilwill: So we mentioned combined with one that was earlier in the calendar year that we've had to enterprise clients.
Matthew Gregory Hewitt: Got it. All right. Thank you.
Speaker Change: Where they had an existing solution and they bought our other flagship solution.
Matthew Gregory Hewitt: And then maybe second, and this is pretty current, you've got a couple wins on the tape here in the past week or so. And those are both cross-selling opportunities. Maybe talk a little bit more about the opportunity there, maybe what's helping drive some of those wins and where you see that going over the course of the year and going forward.
Speaker Change: In both cases it was an example of that.
Speaker Change: They've trusted us as a partner for several years and they saw the service model that we put on top of our technology and so when they reached out and said Hey, we're also having issues and the other areas of our revenue cycle. We know you guys have a solution as long as its the same service model, where we're in and so there was a level of trust and understanding that we have a committee.
Benjamin L. Stilwill: So we mentioned, combined with one that was earlier in the calendar year, that we've had two enterprise clients, you know, where they have an existing solution, and they bought our other flagship solution. In both cases, it was an example of They've trusted us as a partner for several years, and they saw the service model that we put on top of our technology. And so when they reached out and said, hey, we're also having issues in the other areas of our revenue cycle, we know you guys have a solution as long as it's the same service model we're in.
Speaker Change: So their outcomes that really helped with the overall selling to an enterprise client and we anticipate to having some more of that if we were to do that across the client base, it's something like a $30 million.
Benjamin L. Stilwill: It's addressable per hour, which is double what our current SaaS number. It is today. So definitely substantial we also see consolidation of health systems, we see entities trying to expand within the footprint that they have whether it's buying profi or expanding to other facilities or building. Other facilities, we're seeing a fair amount of that as well. So so we do.
Benjamin L. Stilwill: And so there was a level of trust and understanding that we have a commitment to their outcomes that really helped with the overall selling to an enterprise client. And we anticipate having some more of that. If we were to do that across the client base, it's something like a $30 million total addressable ARR, which is double what our current SAS number is today. So, definitely substantial. We also see consolidation of health systems.
Speaker Change: We're very happy with the service model that we have and it turns out it can turn into some material bookings as well.
Speaker Change: Got it and just just to be clear that 30 million, a or that's incremental or that's the total opportunity.
Benjamin L. Stilwill: That would be the total incremental opportunity, yes for what we have not incrementally sold so if we solve all the solutions all the clients that's what that would look like.
Benjamin L. Stilwill: We see entities trying to expand within the footprint that they have, whether it's buying pro fee or expanding to other facilities or building other facilities. We're seeing a fair amount of that as well. So we do, you know, we're very happy with the service model that we have, and it turns out it can turn into some material bookings as well.
Speaker Change: Okay got it and then maybe one last one and I'll hop back in the queue, but with the AI opportunity obviously, you've got the new rules for your value winter.
Speaker Change: That's a real big opportunity for you guys, but as you look out you know over the coming years, where else could you take that that the AI model is there other opportunities either current portfolio or you know new opportunities beyond that thank you.
Matthew Gregory Hewitt: Got it. And just to be clear, that $30 million ARR, is that incremental, or is that the total opportunity?
Benjamin L. Stilwill: That would be the total incremental opportunity, yes, for what we have not currently sold. So if we sold all the solutions to all the clients, that's what it would look like. Okay.
Speaker Change: Yeah. Thanks, Matt.
Benjamin L. Stilwill: So.
Benjamin L. Stilwill: Today, we're using it in a very specific case, it's obviously, creating a lot of value the way we built it as we refer to it as a scaffolding. So we're looking at things that humans are doing that not necessarily noticed by our solution and then feeding that back in so that the solution noticed is it in the future we're doing it on our current data.
Matthew Gregory Hewitt: Okay, got it. And then maybe one last one, I'll hop back in the queue, but with the AI opportunity, obviously, you've got the new rules for your evaluator. That's a real big opportunity for you guys. But as you look out over the coming years, where else could you take that AI model? Are there other opportunities, either current portfolio or new opportunities beyond that? Thank you.
Matthew Gregory Hewitt: As we get more data elements from our clients things like denials things that you know where we can bring in with additional data feeds we can incrementally.
Matthew Gregory Hewitt: Proved that that model.
Benjamin L. Stilwill: So today, we're using it in a very specific case. It's obviously creating a lot of value. The way that we built it is, we refer to it as the scaffolding.
Matthew Gregory Hewitt: Meaningful way.
Benjamin L. Stilwill: We see that opportunity as well on the Rabbi D side, probably more on the automation.
Benjamin L. Stilwill: Oh and the automation a focus.
Benjamin L. Stilwill: So we're looking at things that humans are doing that are not necessarily noticed by our solution and then feeding that back in so that the solution notices it in the future. We're doing this on our current data. As we get more data elements from our clients, things like denials, things that we can bring in with additional data feeds, we can incrementally improve that model in a meaningful way. We see that opportunity as well on the Rev ID side, probably more in the automation. In the automation focus, so a user always does this task whenever they try to reconcile a charge.
Benjamin L. Stilwill: A user always does this task whenever they try to reconcile a charge the model was able to observe that and then try to make it so that the next time, they see that automatically creates the task.
Benjamin L. Stilwill: There is a lot of them.
Benjamin L. Stilwill: Things for a company of our size, where we're trying to use tools that are out there that are democratized, but there's also just now that you've had one project that we've been able to do we have a little bit better understanding we had to educate our subject matter experts who are medical subject matter experts on how this digital technology works and now that we've kind of been able to do that at least once it.
Benjamin L. Stilwill: The model is able to observe that and then try to make it so that the next time it sees that, it automatically creates the task. There are a lot of things for a company of our size where we're trying to use tools that are out there that are democratized. But there's also just now that we've had one project that we've been able to do, and we have a little bit better understanding. We had to educate our subject matter experts, who are medical subject matter experts, on how this digital technology works.
Benjamin L. Stilwill: It feels like we're gonna be able to deploy that smelter other areas and we have a lot of associates, who have great ideas on how we can do that in a very modular fashion. So we're excited about it.
Benjamin L. Stilwill: There's no doubt that there's current value in it but there's a road map as well.
Speaker Change: Gotcha, that's great I'm looking forward to hearing more about that thank you.
Benjamin L. Stilwill: Yep.
Speaker Change: Thank you. The next question is coming from Brooks O'neil of Lake Street Capital markets. Please go ahead.
Benjamin L. Stilwill: And now that we've kind of been able to do that at least once, it feels like we're going to be able to deploy this in other areas. And we have a lot of associates who have great ideas on how we can do that in a very modular fashion. So we're excited about it. I mean, there's no doubt that there's current value in it, but there's a roadmap as well.
Speaker Change: Good morning, guys I have a couple of questions first.
Benjamin L. Stilwill: I think I know the answer to this question, but do you.
Benjamin L. Stilwill: Any thoughts at all on the <unk>.
Benjamin L. Stilwill: <unk> implemented.
Benjamin L. Stilwill: Yeah.
Benjamin L. Stilwill: Contracts that you.
Benjamin L. Stilwill: We have been awarded but have not yet implemented.
Speaker Change: Do we issued the numbers not the question Brooks.
Matthew Gregory Hewitt: That's great. I'm looking forward to hearing more about it. Thank you.
Speaker Change: I'm sorry, I'm, sorry are you asking me that question again.
Operator: Thank you. The next question is coming from Brooks O'Neill of Lake Street Capital Markets. Please go ahead. Good morning.
Speaker Change: Could you repeat your question, sorry, that'll be easier Oh sure. So what I'm trying to figure out obviously is you're talking about $515 6 million and then you were talking about.
Brooks O'Neill: Good morning, guys. I have a couple of questions. I think I know the answer to this question, but do you guys collect any revenue at all on the unimplemented staff? Contracts that you have been awarded but have not yet implemented?
Brooks O'Neill: Getting to a level at which you were above that.
Brooks O'Neill: Breakeven and I'm curious if that includes the $3 9 million of Unimplemented contracts do you think you'll get those implemented in the relatively near term.
Brooks O'Neill: Do we issue the number? Is that the question, Brooks?
Brooks O'Neill: I'm sorry. I'm sorry. You asked me that question again.
Brooks O'Neill: Could you repeat your question? Sorry, that'll be easier. Oh, sure.
Brooks O'Neill: What I'm trying to figure out, obviously, is... You're talking about $15.6 million, and then you were talking about getting to a level at which you were above the SAS. Breakeven, and I'm curious if... That includes the $3.9 million of unimplemented contracts. Do you think you'll get those implemented in the relatively near term? Or how are you thinking about it all?
Speaker Change: Or how you're thinking about all of that.
Speaker Change: Understood. So.
Brooks O'Neill: The booked SaaS ACD is just over that 15, and a half and so yes, you get to the breakeven we need to implement the three eight we have a line of sight into those projects that get US there. There's a couple of large ones that were.
Brooks O'Neill: We're relatively close to but in general the three eight is over the course of the rest of the year and that's why we've guided towards the second half slipping into that profitability territory, but.
Benjamin L. Stilwill: Understandable. So the book SAS ACV is just over that 15 and a half. And so, yeah, to get to break-even, we need to implement 3.8. We have a line of sight into those projects that will get us there. There's a couple of large ones that we're relatively close to, but in general, the 3.8 is over the course of the rest of the year. And that's why we've guided towards the second half, flipping into that profitability territory. But there are a couple of large projects that we have a very good line of sight into going live with.
Benjamin L. Stilwill: But there are a couple of large projects that we have very good line of sight into are doing live with.
Benjamin L. Stilwill: Great. That's helpful and then secondly.
Benjamin L. Stilwill: Secondly, I think in the prepared remarks, I heard a reference to a new <unk>.
Brooks O'Neill: Great, that's helpful. And then secondly, I think in the prepared remarks, I heard a reference to a new channel partner, and I'm not sure I'm... I'm not 100% familiar with who that is or what's involved there. Can you give us any color on what that's all about?
Benjamin L. Stilwill: Channel partner and I'm not sure I'm.
Speaker Change: 3rd% familiar with who that is or.
Speaker Change: What's involved there can you give us any color on what that's all about.
Speaker Change: Sure. So we had four.
Benjamin L. Stilwill: Sure. So we have four focus sales strategies that we're working on, one of which is a new and productive channel partner. So it's a channel partner that we are in negotiations with. You know, obviously, we consistently talk to others in the market about channel partnerships, but we're really looking for one that would be more of a mutual benefit. We've signed pure reseller relationships in the past, but one of the ones that we are hunting very closely is one that would provide mutual benefit to both of our client bases, as opposed to just, you know, a relationship amongst the sales teams. It's not inked yet, and it would be announced if we get to that point. OK.
Speaker Change: Focused sales strategies that we're working on.
Benjamin L. Stilwill: One of which is a new.
Benjamin L. Stilwill: Productive channel partners. So it's a channel partner that we are in negotiations with.
Benjamin L. Stilwill: Obviously, we consistently talk to others in the market about channel partnerships, but we're really looking.
Benjamin L. Stilwill: For one that would be more of a mutual benefit we've signed pure reseller relationships in the past one of the ones that we are hunting.
Benjamin L. Stilwill: Hunting very significantly as one that would provide mutual benefit to both of our client bases as opposed to just.
Benjamin L. Stilwill: Good relationship amongst the sales teams.
Benjamin L. Stilwill: It's not inked yet.
Benjamin L. Stilwill: It would be announced if if we got to that point.
Benjamin L. Stilwill: Okay.
Brooks O'Neill: Okay, we'll keep an eye out for that one and then just... I wrestle with this all the time, and I'm sure you guys do too, but I sit here and I think to myself... What you provide, at least as well as I can understand it, is what I think is a no-brainer for the industry at this time. And yet. Here we are, just barely at the break-even SAS level, and I guess the question is... What am I missing in this picture?
Benjamin L. Stilwill: We'll keep an eye out for that one and then.
Brooks O'Neill: Yes.
Brooks O'Neill: I I wrestle with this all the time and I'm sure you guys do too, but I sit here and I think to myself.
Brooks O'Neill: What you provide at least as well as I can understand it is.
Brooks O'Neill: What I think of is a no brainer for them.
Brooks O'Neill: Industry at this time.
Brooks O'Neill: And yet.
Brooks O'Neill: Here we are.
Brooks O'Neill: Barely at the breakeven level.
Brooks O'Neill: And I guess the question is.
Brooks O'Neill: What am I missing in this picture.
Brooks O'Neill: Are your solutions doing? I don't understand your solution properly, or is it true that the marketplace just doesn't understand the value proposition you bring to the party? Does somebody else bring a far superior solution to the party? My sense is that you guys have the best thing out there, but tell me what I'm missing in this picture.
Speaker Change: Are your solutions doing that I understand your solutions properly or is it is it true that.
Brooks O'Neill: The marketplace doesn't get the value proposition you bring to the party.
Brooks O'Neill: That somebody else bring a far superior solution to the party. My sense is you guys have the best thing out there, but tell me, what what I'm missing in that picture.
Brooks O'Neill: Yeah.
Benjamin L. Stilwill: So I think that there is an element of being able to message appropriately to the priorities that revenue cycle executives have, are solutions that specifically affect the quality of coding and your ability to reconcile charges. That's, in Maslow's hierarchy, that's kind of the primal need that we serve.
Brooks O'Neill: So I think that there is an element of being able to message appropriately to the fit to the priorities that revenue cycle executives have.
Benjamin L. Stilwill: Our solutions, specifically affect the quality of coding and your ability to reconcile changes.
Benjamin L. Stilwill: Uh huh.
Benjamin L. Stilwill: It's hard to argue that that's kind of the prime will need that we serve.
Benjamin L. Stilwill: What we are trying to do now is work on our messaging to show how we're impacting the entire cost of collecting. We've heard from our current clients that they believe we have a far greater impact than what our two specific solutions do. And so being able to message to that higher executive around how we affect the overall picture and work with other vendors, work with their staff, et cetera, fit into their picture, that's what we are currently working on.
Benjamin L. Stilwill: We are trying to do now is work on our messaging to show how we're impacting the entire cost to collect we've heard from our current clients that they believe we have a far greater impact than one or two specific solutions due and so being able to message to that higher executive around how we affect the overall picture and work with other vendors.
Benjamin L. Stilwill: Work with their staff et cetera fit into that picture. That's what we are currently working on the.
Benjamin L. Stilwill: [inaudible] In terms of the landscape, yes, there are other vendors who have a couple more solutions in their pocket or maybe they've gone this outsourcing angle. There's also just the sales cycle itself for decisions like these is relatively long. And so when disruptions six months ago happened, that's when the next prospect should have entered the pipe.
Benjamin L. Stilwill: In terms of the the landscape, yes, there are other vendors who have a couple more solutions in their pocket or maybe they they've gone. These this outsourcing angle. There's also you know just the the sales cycle itself for decisions like these are relatively long and so as disruption six months ago happened that's win.
Benjamin L. Stilwill: You know the next prospects should have entered the pipe. So we're pretty confident whenever we get to a significant conversation with these prospects that we can get them across the line.
Benjamin L. Stilwill: So we're pretty confident that whenever we get to a significant conversation with these prospects, we can get them across the line. And so it's really how do we make sure that we're messaging it in such a way that we get that level of attention, get into due diligence, and then show that impact. And the most powerful way to do that is to showcase our current clients and how they're able to do it.
Benjamin L. Stilwill: So it's really how do we make sure that were messaging it in such a way that we get that level of attention get into due diligence and then show show that impact and the most powerful way to do that is to Herald, our current clients and how they're able to do it.
Benjamin L. Stilwill: And that's why you see the two enterprise clients we mentioned, but you also see that our ability to use our clients as references is significantly higher than many others in the industry. And so we're trying to leverage them and their voices in that sales process.
Benjamin L. Stilwill: That's why you see the two enterprise clients, we mentioned, but also you see that our ability to use our clients as references is significantly higher than many others in the industry.
Benjamin L. Stilwill: And so we're trying to leverage them and their voices and that sales process.
Brooks O'Neill: That's great, Ben. I appreciate that. Let me just ask one more question as a follow-up to what you were just talking about. It strikes me... If I understand it correctly, and I'm really trying to be sure I understand it correctly, there are two parts to the value proposition that you guys bring. One, I think you just alluded to, is the cost to collect. The Money. And I'm sure your solutions with the SAS underpinning are way more cost-effective than hiring a bunch of people in a labor-constrained environment.
Speaker Change: That's great I appreciate that let me just ask one more as a follow up to to what you were just talking about it strikes me.
Brooks O'Neill: If I understand it correctly and I'm really trying to be sure I understand it correctly that there is.
Brooks O'Neill: Two parts to the value proposition that you guys bring one I think you just alluded to is a cost to.
Brooks O'Neill: To collect the money.
Brooks O'Neill: And I am sure your solutions with the SaaS underpinning our way more cost effective than hiring a bunch of people in a labor constrained environment, but.
Brooks O'Neill: But It also strikes me that a key part of your value proposition is you help clients collect all the money they're due from payers based on the real care that's been provided by doctors and others in the health system. Am I understanding that two-part formula correctly?
Brooks O'Neill: It also strikes me that a key part of your value proposition as you collect you help clients.
Brooks O'Neill: Correct, all the money there too from payers based on the real care, that's been provided by doctors and others in the health system.
Brooks O'Neill: Am I understanding that two part formula correctly.
Benjamin L. Stilwill: Yeah, and the cost to collect metric is one that we have recently been talking to our clients about, because there are two parts. There's how much revenue am I able to bring in, and then how much did it cost me to get that revenue. So We, the two prongs that we do is we find more financial opportunities so that the numerator, and then we do it with the existing staff you have with a SAS solution, etc. That's the denominator.
Brooks O'Neill: Yeah and the.
Brooks O'Neill: To collect metric is one that we have recently been talking to our clients because there's two parts. There's how much revenue am I able to bring in and then how much did it cost me to get that revenue. So.
Benjamin L. Stilwill: We the two prongs that we do is we find more financial opportunities. So that the numerator and then we do it with the existing staff you have with the SaaS solution et cetera, that's the denominator.
Benjamin L. Stilwill: Yeah.
Brooks O'Neill: Got it. Makes sense. Thank you very much. Thank you, folks.
Speaker Change: Got it makes sense. Thank you very much.
Speaker Change: Thank you Brooks.
Operator: Thank you. At this time, I'd like to turn the floor back over to management for any additional or closing comments.
Speaker Change: Thank you at this time I'd like to turn the floor back over to management for any additional or 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 at streamlinehealth.net.
Speaker Change: Thank you all again for your interest and support of streamline health do you have any additional questions or need more information. Please contact me at Jacob Goldberger at streamline health Dot net we look forward to speaking with you all again, when we discuss our first quarter 2024 financial performance Good day.
Operator: We look forward to speaking with you all again when we discuss our first quarter 2024 financial performance. Good day. Ladies and gentlemen, thank you for your participation. This concludes today's event.
Speaker Change: Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect your lines.
Operator: Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.
Operator: Webcast at this time and enjoy the rest of your day.
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