Streamline Health Solutions reported a disappointing third-quarter performance, missing both earnings and revenue forecasts. The company's earnings per share (EPS) came in at -$0.61, significantly below the expected -$0.03. Revenue reached $4.4 million, falling short of the $5.3 million forecast. The market reacted negatively, with the stock price dropping by 1.18% during open market trading.
Key Takeaways
- Streamline missed EPS and revenue forecasts, signaling financial challenges.
- The company launched new innovations, including the eValuator quality module.
- Streamline aims for adjusted EBITDA profitability in early FY2025.
- Net loss improved significantly from the previous year.
Company Performance
Streamline Health Solutions faced a challenging quarter, with revenue dropping to $4.4 million from $6.1 million in the same period last year. Despite this, the net loss improved to $2.5 million from a staggering $11.9 million in Q3 2023. The company continues to navigate a complex healthcare revenue cycle market, emphasizing automation and innovation in its offerings.
Financial Highlights
- Revenue: $4.4 million, down from $6.1 million YoY
- EPS: -$0.61, missing the forecast of -$0.03
- Net loss: $2.5 million, improved from $11.9 million YoY
- Cash on hand: $800,000, down from $3.2 million in January 2024
- Total (EPA:TTEF) debt: $12.3 million
Earnings vs. Forecast
Streamline's actual EPS of -$0.61 fell short of the forecasted -$0.03, marking a significant deviation. The revenue miss of $900,000 highlights ongoing challenges in meeting market expectations, reflecting broader industry pressures and internal hurdles.
Market Reaction
The stock price fell by 1.18% following the earnings announcement, reflecting investor disappointment. Trading near its 52-week low, the stock's decline underscores concerns over the company's financial health and future prospects.
Company Outlook
Streamline Health remains focused on achieving an adjusted EBITDA positive run rate in the first half of FY2025. The company anticipates significant revenue growth in the coming fiscal year, supported by its expanding SaaS offerings and strategic partnerships.
Executive Commentary
CEO Ben Stilwell emphasized the importance of revenue cycle success in healthcare, stating, "Healthcare systems need to be able to succeed in the revenue cycle so that they can get paid for the care they provide." CFO BJ Reeves expressed optimism about future growth, highlighting, "We anticipate significant revenue growth in fiscal 2025 and the achievement of persistent adjusted EBITDA profitability."
Q&A
Analysts inquired about the company's 835 data analysis, which showed a $31 million bottom-line contribution. Streamline also addressed improvements in ROI measurement and expressed confidence in its client pipeline and success stories.
Risks and Challenges
- High total debt and reduced liquidity pose financial risks.
- The healthcare sector's complexity and reimbursement challenges may hinder growth.
- Market saturation and competitive pressures could impact revenue cycle management solutions.
- Dependence on strategic partnerships, such as with Oracle (NYSE:ORCL), for growth.
- Economic pressures and potential regulatory changes in healthcare billing.
Full transcript - Streamline Health Solutions Inc (STRM) Q3 2025:
Conference Operator: Greetings. Welcome to Streamline Health Solutions Third Quarter 2024 Earnings Conference Call. 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.
It is now my pleasure to introduce Jacob Goldberger, Vice President of Finance. Thank you. You may begin.
Jacob Goldberger, Vice President of Finance, Streamline Health Solutions: Thank you for joining us for the corporate update and financial results review of Streamline Health Solutions for the Q3 of fiscal 2024, which was the 3 month period that ended October 31, 2024. As the conference call operator indicated, my name is 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 BJ Reeves, Chief Financial Officer. At the conclusion of today's prepared remarks, we will open the call for a question and answer session.
If anyone participating on today's call does not have a full text copy of our press release announcing these results, you can retrieve it from the company's website at www.streamlinedhealth.net or from numerous financial websites. Before we begin with prepared remarks, we want to be sure we are clear for everyone on the record how certain information which may be provided today as with all of our earnings calls should be viewed. We therefore submit for the record the following statement. Statements made on this conference call that are not historical facts are considered to be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those we may discuss.
Please refer to the company's press releases and filings made with the U. S. Securities and Exchange Commission, including our most recent Form 10 ks Annual Report, which is on file with the SEC for more information about these risks, uncertainties and assumptions and other factors. As always, we are presenting management's current analysis of these items as of today. Participants on this call should take into account these risks when evaluating the topics we will discuss.
Please note, Streamline is not undertaking any commitment or obligation to publicly revise any such forward looking statements made today. On today's call, we will discuss non GAAP financial measures such as adjusted EBITDA and booked SaaS ACV. Management uses these measures to help provide a better insight to our financial performance. However, certain items of income and expense are not included in these measures, so these calculations may differ from those which another entity may utilize in calculating their own non GAAP measures. To help you compare these amounts on consistent terms, please refer to our website at www.streamlinehealth.net and our earnings release for a reconciliation of such non GAAP measures to the most comparable GAAP measures.
I would now like to turn the call over to Ben Stillwell, CEO.
Ben Stilwell, President and Chief Executive Officer, Streamline Health Solutions: Thank you, Jacob. Good morning and thank you all for joining us today. So far this year, we have significantly expanded the value we provide to the revenue cycle in healthcare. This expansion comes from product enhancements for workforce automation and identifying financial opportunities, both from the clients we have brought online or expanded our impact with and identifying the next set of clients to partner with us to get paid for the care they provide. During the Q3, we successfully closed new contracts with aggregate SaaS ACV of $700,000 These new wins included contracts for our flagship platforms, eValuator and Rev ID, as well as the new eValuator quality module, which we debuted in early October.
Book SaaS ACV, which is the annualized contract value for all agreements currently being recognized, as well as bookings that have not been implemented as of October 31, 2024, totaled $14,100,000 with $12,000,000 already implemented. Given our current operating expense expectations, the pace of new bookings and current implementation schedules, we've accelerated our expectations for the achievement of an adjusted EBITDA positive run rate to the first half of fiscal twenty twenty five as opposed to the second half of fiscal twenty twenty five. Subsequent to the end of the quarter, we successfully renegotiated key terms of our senior term loan from Bridge Bank. They remain very supportive of Streamline and our goals. That said, we believe additional capital resources may enable us to accelerate our growth plans.
And as a result, if we were able to find additional non equity capital sources, we may pursue them. Now moving to the business and the industry we serve. Health system revenue cycle departments are increasingly overwhelmed and in many ways set up to fail. The complex nature of our reimbursement system combined with labor market challenges and clunky technology have made it difficult for any health system to be accurately paid for the care they've provided. We believe revenue cycle staff need to get back in the driver seat and have the leverage they need in their continual struggle to get paid.
Our solutions help meet health systems where they are by providing white glove support, programmatic coaching, and where necessary, staffing services. And in particular, we excel at partnering with revenue cycle leaders who are overwhelmed, but inspired to make a difference in their organization. Automation is a foundational capability necessary to compete in our space, but our unique value lies in the insights we generate, insights which enable revenue cycle leaders to take informed, confident action. Our flagship solutions, eValuator and RevID are manifestations of this value. EValuator generates actionable insights that highlight coding trends, identify recurring coder errors and support targeted education and real time feedback.
And Rev ID identifies specific encounter level opportunities and fundamentally poor design within the charge capture process. The insights generated by both these solutions and their respective workflows ensure continuous improvement and measurable ROI. During the quarter, we were thrilled to debut our new quality module for eValuator. This module expands the insights generated by eValuator to include key quality metrics, enabling health systems to prospectively assess the risk score of their individual claims and their estimated impact on overall quality measurement in real time. This expands the signals we can leverage with an eValuator to deliver insight and impact, but also puts us in a position to provide powerful operational feedback about the performance of health systems' individual departments, allowing the revenue cycle department to become a proactive player in the health system rather than simply being viewed as a cost center.
The module was developed through a 9 month pilot program with 2 existing clients. And as we've announced within a month of debuting the module, we successfully added the module to 2 additional clients. Those of you who have followed us for some time understand that a less than 1 month sales cycle in this space is unheard of. And we feel this rapid adoption is representative of the value provided through prospective quality measurement. As a result of the strong client interest, we elected to launch the product without a channel partner.
After lengthy discussions, we determined that the potential partner cannot move quickly enough to merit our significant attention at this time. And while we would welcome and consider a marketing partnership in the future, it is no longer a primary goal for our organization. Quality measurement is a key strategic initiative at many of our existing clients and prospects. We are still working to understand the full impact of quality scores for health systems, but expect they play a significant role in the negotiation of payer contracts and for the health systems marketing efforts. We are collaborating with our early adopter clients to identify the most impactful risk models and metrics as well as to determine the best set of business intelligence reports we can provide clients to help them unlock operational insights from this real time identification of quality measurement.
We anticipate many of our existing client relationships will expand to include the module and we continue to invest in the module's functionality. For existing clients, there's very little implementation work required to enable the quality module. And as a result, we expect that new wins with the module will contribute to revenue and cash much more rapidly than our flagship solutions alone. We also believe that the quality module will enhance overall interest in eValuator from our prospects and could serve as a meaningful way for us to demonstrate our product line to new customers. In addition to launching the quality module, our team has made significant progress against key initiatives related to our client relationships.
Last quarter, I mentioned to an effort to leverage client 835 data to conclusively link eValuator pre bill financial impact with a proven cash impact. I'm thrilled to report that the results of that analysis showed eValuator's corrections contributed $31,000,000 to that client's bottom line, well in excess of our pre built projections. We expect to publish a case study with these results soon, so please keep an eye out. We are performing this analysis elsewhere and expect to see similar results. We expect that this data will support our existing relationships and our sales efforts by confirming the ROI evaluator offers through real cash impact.
Since our last call, we also made significant progress in developing best practice manuals for our clients, helping newly implemented users of our solutions more rapidly put in place new programs alongside our high impact insights and workflows. You can see the first public examples of those on our website with a guide to start a pre bill auditing program. And finally, we've been offering new clients access to our in house auditing resources to ensure clients can prove their value and maintain control of their HIM departments. Our client success model has been well received by our clients and we expect that our continued improvement of the function will translate to clients that renew and expand their footprint with us over the long term. Our innovation team has been hard at work.
In addition to the release of the quality module and continued emphasis on leveraging our AI model for rule development, the group has been focused on improving automation for both evaluator and rev ID, as well as directly addressing payer denials, an ever present and growing concern for our health systems. Within rev ID, we've begun to roll out self-service features for our clients, allowing them to increase efficiency and direct staff focus autonomously. For eValuator's workflow, the team is adding quality of life features to the record review interface, highlighting links between our rules and the information presented to client auditors. Improvements like these can improve the financial impact of our solution while improving relationships with end users. Moving now to growth.
Last quarter, I elected to take full ownership of our growth division, as I believe nothing is more critical for the business right now than accelerating the rate which we are bringing in new clients. And therefore, as the leader of this business, I need to live and breathe sales. Our growth team's analytical approach has resulted in a renewed understanding of how to leverage our resources to generate and capture demand for our solutions. Recently, we've added a new Regional Vice President who has a strong understanding of our space and we're excited to see their impact in the coming quarters and expect to hire another new rep this quarter. Our targeted high value marketing focus has resulted in valuable content for our reps and yielded numerous new prospects.
Last month, we hosted a webinar to share Crisp Regional's Rev ID experience. We are very pleased with the response and the outcome and expect to host more of these events going forward as nothing is more valuable for helping find new wins than the lived experience of our clients. Jessica said it best when she said, I would have bought this solution sooner if I knew it had existed. This is emblematic of our demand capture strategy going forward. Today, the team is focused on 4 primary campaigns to unlock markets and provide significant value to clients.
The first being a displacement campaign related to an existing offering in its evaluator space where we believe our tool delivers better results at a lower cost. 2nd, a continued emphasis on our Oracle partnership, which continues to aggressively push Rev ID. And third, implementing Rev ID in an Epic EHR client. And 4th, the last one, beyond new client sales, we can more than double our existing ARR through upsells and cross sells within our existing client base, including through our new quality module. And we've already seen success in each of these areas.
We've had a number of positive discovery activities as a result of the displacement campaign, and I'm confident we'll see a win from that channel in this fiscal year. We've had several successful Oracle go lives already in fiscal 'twenty four with more in our backlog and Oracle has been instrumental in a portion of our new bookings and our marketing efforts. We continue to present jointly with our sales team to additional prospects and at trade shows. Our first enterprise clients, one who added Rev ID and another who added Evaluator are both live with their respective new streamlined solutions today. We're closely monitoring their progress and look forward to sharing success stories once we've had some time to work with these clients.
We anticipate their experiences will lead more clients to adopt additional streamlined solutions. And of course, as I've already mentioned, we debuted and successfully added the quality module this quarter. And we're looking forward to continued sales success from existing eValuator clients. Healthcare systems need to be able to succeed in the revenue cycle so that they can get paid for the care they provide. We believe it is our duty to develop the products and provide the insights so they can succeed.
And with that, I'd like to turn the call over to our CFO, BJ Reeds.
BJ Reeves, Chief Financial Officer, Streamline Health Solutions: Thank you, Ben. As Ben mentioned, our booked SaaS ACV as of October 31, 2024 totaled $14,100,000 and we continue to expect that we can generate persistent positive adjusted EBITDA above a $15,500,000 SaaS ARR run rate. Currently, dollars 12,000,000 of our booked SaaS ACV is implemented and we anticipate we will successfully implement and achieve that $15,500,000 ARR run rate during the first half of fiscal twenty twenty five. Total revenue for the Q3 of fiscal 2024 was $4,400,000 compared to $6,100,000 during the Q3 of fiscal 2023. For the 9 months ended October 31, 2024, revenue totaled $13,200,000 compared to $17,200,000 during the same period in fiscal 2023.
The change in total revenue was attributable to previously announced client non renewals, offset by the successful implementation of new SaaS contracts. SaaS revenue for the Q3 of fiscal 2024 totaled $2,900,000 66 percent of total revenue compared to SaaS revenue of $3,900,000 64 percent of total revenue during the Q3 of fiscal 2023. For the 9 months ended October 31, 2024, SaaS revenue totaled $8,700,000 66 percent of total revenue compared to $10,600,000 or 62% of total revenue during the same period of fiscal 2023. We expect sequential growth of SaaS revenue in the Q4 of fiscal 2024 and into fiscal 2025. Net loss for the Q3 of fiscal 2024 totaled $2,500,000 compared to a net loss of $11,900,000 during the Q3 of fiscal 2023.
For the 9 months ended October 31, 2024, net loss totaled $8,000,000 compared to a net loss of $17,300,000 during the 2023 period. The Q3 and 1st 9 months of fiscal 2023 included $10,800,000 of impairment expenses offset by a $1,200,000 $1,900,000 gain respectively from valuation adjustments which did not recur during the same periods in fiscal 2024. Net loss during the Q3 and 1st 9 months of fiscal 2024 reflected lower total revenues and higher interest expense offset by reductions in cost of sales, SG and A and R and D expense of $1,900,000 $5,300,000 respectively, primarily due to the company's strategic restructuring at the end of fiscal 2023. We continue to make investments to improve our technology, including the development of enhancements such as the eValuator quality module, continuing development and expansion of applications for the AI technology that we have leveraged to generate additional content and improvements related to automation and usability for the Rev ID solution. Adjusted EBITDA for the Q3 of fiscal 2024 was a loss of $300,000 compared to a gain of $400,000 during the Q3 of fiscal 2023.
Adjusted EBITDA for the 9 months ended October 31, 2024 was a loss of $1,300,000 compared to $1,800,000 during the same period in fiscal 2023. The change in adjusted EBITDA reflects lower total revenue as a result of the previously announced client non renewals offset by the company's focus on the growth of its SaaS revenue solutions as well as significant cost savings achieved through the previously announced strategic restructuring. Moving to the balance sheet. As of October 31, 2024, we had $800,000 of cash on hand compared to $3,200,000 at January 31, 2024. Total debt including our senior term loan and notes resulting from the private placement was $12,300,000 and we had no balance outstanding on our $2,000,000 revolving credit facility as of October 31, 2024.
Subsequent to the end of the quarter, on November 13, the company and its principal lender amended certain financial covenants in its senior term loan and on November 20, we received $1,000,000 draw from our revolving line of credit. As Bidd mentioned, we believe additional capital resources may enable us to accelerate our growth plans and as a result, if we are able to find additional non equity capital sources, we may pursue them. Looking forward, as we continue to execute new bookings in fiscal 2024, we anticipate significant revenue growth in fiscal 2025 and the achievement of persistent adjusted EBITDA profitability and significant improvement in our use of cash for operation. That concludes our review. Operator, please begin the question and answer session.
Conference Operator: Thank Our first question is from Neil Kidaldi with Blueprint Capital Management. Please proceed.
Neil Kidaldi, Analyst, Blueprint Capital Management: Hey guys, thanks for taking a few questions. If I could start off, Ben, maybe you could expand a little bit on the A35 analysis you mentioned and what it means for your clients?
Ben Stilwell, President and Chief Executive Officer, Streamline Health Solutions: Sure. Hey, Neil. Yes, so the A35 file itself is a term for one of the correspondences between the provider and the payer. So we've always helped our clients, making sure accurate bills go out the door, which is historically just focused on making sure charges reconcile, medical codings. In the last few years, relationships between providers and payers has become, we'll say, tenuous.
Different payers have different negotiated rates, sure, but they also have different behaviors as of late, so denials, underpayments. So if we incorporate the 835 data, both in our rules and in our sort of feedback to the clients, we can start to preemptively adjust that behavior. And it's increasingly something our clients are focused on and asking us for. So we're pretty excited to be able to incorporate that into the solution.
Neil Kidaldi, Analyst, Blueprint Capital Management: Okay, great. And yes, we just want to follow-up to that. How does it how should we think about ROI for eValuator for how you're implementing this? How does it change that ROI for the client?
Ben Stilwell, President and Chief Executive Officer, Streamline Health Solutions: Yes. So for some, it's replacing what is sort of the standard CMS reimbursement rates with the actual cash impact. So now a leader can compare us apples to apples with any other vendor who is talking about cash. And then the other is we can actually focus on the ones that are higher reimbursement rates for say a commercial payer and actually drive up. So we look at what is the dollar per change and if we can prioritize that we can drive the ROI even higher than we currently
Neil Kidaldi, Analyst, Blueprint Capital Management: do. Okay, great. And then just one more. Really nice to see you guys pull the guidance forward today. I was wondering if you can talk a little bit about what you're seeing in the near term with the pipeline interest in the module, etcetera, and what gives you guys the confidence to sort of bring that breakeven guidance forward?
Ben Stilwell, President and Chief Executive Officer, Streamline Health Solutions: Sure. So we've had a we've talked about our backlog in the past. I think we've had some good wins on getting clients live into a place where they're renewing and happy. So we feel pretty good about the underlying client base. And then on the sales front, 1st and foremost, our client success is the thing that gives you the most confidence.
So, interactions reaffirm the value. But what we're trying to do as of late is focus on those client success stories. So we had a I mentioned a webinar. We're highlighting how one client benefited from Rev ID, but by putting them on the spotlight, we saw significant interest from other health systems. And we don't typically comment on pipeline generation on these calls, but it was significant from that single event.
So if we can reorient our messaging to celebrate our leaders, we can already see some pipeline generation. I think in the very near term, you'll see contracts coming through and start getting the flywheel going. So stabilizing client base and then reemphasizing our go to market has been pretty impactful on our financial forecast.
Neil Kidaldi, Analyst, Blueprint Capital Management: All right. Thanks a lot. Look forward to seeing the continued progress. Great job.
Ben Stilwell, President and Chief Executive Officer, Streamline Health Solutions: Thanks, Neil.
Conference Operator: With no further questions in the queue, I would like to hand the conference back over to management for closing remarks.
BJ Reeves, Chief Financial Officer, Streamline Health Solutions: Thank you all for
Jacob Goldberger, Vice President of Finance, Streamline Health Solutions: your interest and support of Streamline. If you have any additional questions or need more information, please contact me at jacob. Goldburgerstreamlinehealth.net. We look forward to speaking with you all again when we discuss our fiscal year 2024 financial performance. Good day.
Conference Operator: Thank you. That will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.
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