Earnings call transcript: Streamline Health sees Q4 revenue drop in FY2024

Streamline Health Solutions reported a decline in revenue for the fourth quarter of fiscal year 2024, with total revenue reaching $4.7 million, down from $5.4 million in the same period last year. The company also noted a net loss of $2.1 million for the quarter, compared to a $1.4 million loss in the previous year. Despite these results, Streamline Health is optimistic about future growth, focusing on product innovation and operational efficiency. The stock has shown recent momentum with a 9.25% gain over the past week, though it remains 70% below its 52-week high of $9.75.

InvestingPro analysis reveals several key metrics that provide deeper insight into the company’s performance. Subscribers can access 10 additional ProTips and comprehensive financial analysis through the platform’s detailed research reports.

Key Takeaways

• Total revenue decreased to $4.7 million in Q4 FY2024, a decline from $5.4 million in Q4 FY2023.
• Net loss for the quarter widened to $2.1 million, compared to $1.4 million the previous year.
• Full-year revenue fell to $17.9 million from $22.6 million in FY2023.
• The company launched a new denial prevention feature in its eValuator platform.
• Streamline Health aims to achieve EBITDA profitability by Q2 FY2025.

Company Performance

Streamline Health Solutions experienced a challenging fourth quarter in FY2024, with both revenue and net income declining year-over-year. The company attributes the decline to broader industry challenges, including increased denial rates from commercial payers. Despite these setbacks, Streamline Health is focusing on enhancing its product offerings and improving operational efficiencies to drive future growth.

Financial Highlights

• Revenue: $4.7 million in Q4 FY2024, down from $5.4 million in Q4 FY2023.
• Full-year Revenue: $17.9 million in FY2024, compared to $22.6 million in FY2023.
• Net Loss: $2.1 million in Q4 FY2024, compared to a $1.4 million loss in Q4 FY2023.
• Full-year Net Loss: $10.2 million, an improvement from $18.7 million in FY2023.
• Cash and Cash Equivalents: $2.2 million, down from $3.2 million in the previous year.

Outlook & Guidance

Looking ahead, Streamline Health expects to achieve an EBITDA profitable run rate by the second quarter of FY2025. The company is optimistic about increasing its bookings rate in fiscal 2025, driven by the enhanced value of new features like denial prevention and improved client referenceability.

Executive Commentary

CEO Ben Stillwell highlighted the importance of helping healthcare systems manage their revenue cycles effectively, stating, "Healthcare systems need to be able to succeed in the revenue cycle so that they can get paid for the care they provide." He also emphasized the company’s focus on leveraging client success stories to boost marketing efforts, saying, "We’re leaning into those user stories in a bigger way with webinars and finding ways to encourage further peer-to-peer marketing from our clients."

Risks and Challenges

• Increased Denial Rates: The surge in denial activity across the healthcare industry could pose a challenge for revenue growth.
• Cash Position: With cash and cash equivalents at $2.2 million, the company may face liquidity pressures.
• Competition: Strong competition in the healthcare IT sector could impact market share and pricing power.
• Operational Efficiency: Streamline Health must continue improving implementation timelines to maintain client satisfaction and reduce churn.

Streamline Health Solutions is navigating a complex healthcare landscape with strategic initiatives aimed at enhancing its product offerings and operational efficiency. While the company faces challenges, its focus on innovation and client success stories provides a pathway for potential growth in the coming fiscal year.

Full transcript - Streamline Health Solutions Inc (STRM) Q4 2025:

Conference Operator: 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 twelve and three months ended 01/31/2025. As the conference call operator indicated, my name is Jacob Goldberger. Joining me on the call today are Ben Stillwell, President and Chief Executive Officer and BJ Reeves, Chief Financial Officer. At the conclusion of today’s prepared remarks, we will open the call for a question and answer session. If anyone participating on today’s call does not have a full text copy of our press release announcing these results, you can retrieve it from the company’s website at www.streamlinehealth.net or from numerous financial websites.

Before we begin with prepared remarks, we want to be sure we are clear for everyone on the record how certain information, may be provided today as in 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, 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 better insight into our financial performance. However, certain items of income and expense are not included in these measures, so these calculations may differ from those which another entity may utilize in calculating their own non GAAP measures. To help you compare these amounts on consistent terms, please refer to our website at www.streamonhealth.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 Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Thanks Jacob, and thank you all for joining this morning. In fiscal twenty twenty four, we furthered our mission to ensure our health system clients be paid accurately for the care they provided. As of 01/31/2025, our solutions are delivering an annualized financial impact of more than $210,000,000 across our client base. That impact is the result of our partnership with revenue cycle departments who leverage our solutions to maintain control over the financial outcomes of their health systems. And thanks to our solutions, our team and our client partnerships, U.

Health systems now have $210,000,000 to care for their communities in 2025. As of the end of fiscal twenty twenty four, we had booked SaaS ACV of $14,000,000 and as of 04/30/2025 booked SaaS ACV totaled $14600000.0.13100000.0 dollars of which was implemented. Since we last reported our 10/31/2024 results, we booked an additional $1,400,000 in new SaaS ACV, and this was offset by $700,000 of churn, the majority of which was the result of two clients lost to an acquisition of those health systems. Dollars 3 and 50,000 of our new bookings were the result of our Oracle channel for Rev ID, including a new CommunityWorks client. And we expect continued wins from this channel as our relationship with Oracle remains strong.

The remaining new bookings represent significant new eValuator clients, which were sold through our direct channel and influenced by their peers and our talented sales team. We recently made the proactive decision to discontinue selling our quality module as an independent unit. While the module reflected an interesting market opportunity, it did not meet our bookings expectation and the call point was too distinct from eValuator and Rev ID. So rather than invest further in a solution that would not deliver the returns we demand, we chose to redirect resources to initiatives that allow us to expand the impact of our solutions core value proposition. So in particular, we have focused on our resources towards denials prevention functionality.

So speaking of, as of last night, we’re excited to debut our new denial prevention functionality within the eValuator platform, a major step forward in how we help clients protect revenue in real time. These new rules will enable eValuator users to proactively identify and prevent both outright denials and coding DRG downgrades before a claim is submitted. This capability is the result of a deep collaboration across our rules team, client partners and our data science efforts, incorporating the insights from client feedback and machine learning trained on eight thirty five remittance data we’ve received from select users. By leveraging real world denial patterns, we built rules that are not only clinically sound, but directly aligned with payer behavior. And based on extensive back testing, we expect these new rules to expand the inpatient financial impact of eValuator by more than 15% and potentially double the financial impact on outpatient cases.

That’s particularly important given the surge in denial activity we’re seeing across the industry the last couple of years, especially from commercial payers, which tend to represent higher dollar patient populations for our clients. These denials are placing an unsustainable burden on providers and we believe our denial prevention functionality is launching at exactly the right time to provide much needed relief and measurable value. Client success team has been sharing this new functionality with our clients over the last couple of months and they are universally excited and will be quickly translating those client results into a data story and narrative to Armor direct sellers. Our Rev ID clients are more excited than ever to talk about their partnerships with Streamline. Last week, one of our Rev ID users, Chris Regional, presented to a packed room at a user conference how they leveraged our solution to develop a charge reconciliation program and the impact of adding the tool and workflow to the revenue cycle.

Many of these CommunityWorks type systems have not historically had the resources to attack charge capture, but many sorely need it. And as I’ve noted, we had a successful new booking from CommunityWorks user recently and have been receiving significant inbound interest from that cohort. We’re leaning into those user stories in a bigger way with webinars and finding ways to encourage further peer to peer marketing from our clients. We expect the enhanced value offered by new features like denials prevention and improving client referenceability to translate to an increased rate of bookings in fiscal twenty twenty five. Our implementation teams continue to make strides in their ability to execute projects across both solutions.

Our most recent eValuator go live was completed forty two days after contract signature and our most recent client win wants to go live by July 1. We expect to maintain this rapid pace on the eValuator side and our RevID implementation time continues to accelerate. Our new feature push pipeline and improved implementation execution mean we maintain our expectation related to achieving an EBITDA profitable run rate as we exit the second quarter of fiscal twenty twenty five. 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.

With that, I’d like to turn the call over to our CFO, BJ Reeves. BJ?

BJ Reeves, Chief Financial Officer, Streamline Health Solutions: Thanks, Ben. As Ben mentioned, our booked SaaS ACV as of 01/31/2025 totaled $14,000,000 and as of 04/30/2025 totaled $14,600,000 Currently, 13,100,000.0 of our booked SaaS ACV is implemented, and we anticipate we successfully implement and achieve an EBITDA profitable ARR run rate during the first half of fiscal twenty twenty five. Total revenue for the fourth quarter of fiscal twenty twenty four was $4,700,000 as compared to $5,400,000 during the fourth quarter of fiscal twenty twenty three. For the twelve months ended 01/31/2025, revenue totaled $17,900,000 as compared to $22,600,000 during fiscal twenty twenty four. The change in total revenue is attributable to previously announced SaaS non renewals as well as lower revenue from the company’s legacy maintenance and support contracts and professional service offerings, offset by new bookings and go lives in the company’s SaaS business.

SaaS revenue for the fourth quarter of fiscal twenty twenty four totaled $3,100,000 60 6 percent of total revenue compared to SaaS revenue of $3,400,000 or 64 percent of total revenue during the fourth quarter of fiscal twenty twenty three. For the twelve months ending 01/31/2025, SaaS revenue totaled $11,800,000 or 66% of total revenue compared to $14,100,000 or 62 percent of total revenue during fiscal twenty twenty three. As previously reported, the company had a SaaS contract, which did not renew at the end of its 2023 fiscal year. Net loss for the fourth quarter of fiscal twenty twenty four was $2,100,000 compared to net loss of $1,400,000 during the fourth quarter of fiscal twenty twenty three. Fiscal ’20 ’20 four’s net loss totaled $10,200,000 compared to a net loss of $18,700,000 during fiscal twenty twenty three.

The increased net loss during the fourth quarter was the result of the lower total revenue and higher non cash interest expense offset by lower total operating expenses as compared to the fourth quarter of fiscal twenty twenty three. The improved net loss in fiscal year twenty twenty four was the result of 10,800,000 of non cash impairment charges incurred during fiscal year twenty twenty three that did not recur in the current fiscal year. Cash and cash equivalents as of 01/31/2025 were $2,200,000 as compared to $3,200,000 as of 01/31/2024. The company had a $1,000,000 outstanding balance on its revolving credit facility as of 01/31/2025 compared to $1,500,000 as of 01/31/2024. Subsequent to the end of the fiscal period on 03/28/2025, the company and its principal lender amended certain financial covenants related to the company’s senior term loan and revolving line of credit, which are described in more detail in the company’s annual report on Form 10 ks for the fiscal year ended 01/31/2025.

On 03/28/2025, the company drew an additional $1,000,000 from its revolving line of credit. And that concludes our prepared remarks. Operator, please begin the question and answer session.

Conference Operator: Thank Our first question is from Neil Cattaldi with Blueprint Capital Management. Please proceed.

Neil Cattaldi, Analyst, Blueprint Capital Management: Hey, Ben. Thanks for taking a few of my questions today.

Ben Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Yes. Hey, Neil.

Neil Cattaldi, Analyst, Blueprint Capital Management: I’ll start with denials prevention. It sounds like this is ready to go in terms of your ability to sell the product. Can you talk a little bit about what that means for the current customer base and how does it play into the marketability of eValuator?

Ben Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Yes, sure. Great question. So we learned a lot from the quality module that we had debuted last year and try to lean more into where clients could find value out of the core functionality of eValuator. We’ve been on shtick of trying to have our clients get things right the first time pre bill before the bill goes out the door, and this really, you know, denials is the ultimate, you know, the final whatever the payer did with provider. If we can get those signals into the pre bill workflow, it’s immensely helpful to make sure that the claim is bulletproof by the time that it leaves the health system and goes to the payer.

So it’s hugely valuable. It’s something that our clients are super excited about, and and we did a lot of, hands on, showing the clients what we were doing and and getting their feedback along the way.

Neil Cattaldi, Analyst, Blueprint Capital Management: Okay. So maybe for those new to the story, you built the product, you you rolled it out last year, you had some people use it, test it, the data’s come back, it’s been really good, and and now there’s there’s a bit of a focus to to push it forward?

Ben Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Yeah, exactly. So now we’re able to quantify what we’re actually impacting as far as preventing denials. And it was done talking to our clients around how they viewed denial prevention and the coding cycle and everything like that. And so now they’re able to go to their executives and say, this is what my actual coding function is doing as far as, preventing this huge denial problem that that the industry is having.

Neil Cattaldi, Analyst, Blueprint Capital Management: Okay, great. You mentioned implementation timelines, forty two days, I think you said on an evaluator implementation that sounds like it’s really improved. And so I was wondering what changed? What are you guys doing to enable these quicker implementations? Is it a one off?

Or are we sort of resetting the expectation on how quick you guys can go a little bit faster now?

Ben Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Yeah. I think forty two days is still less than the average, certainly less than our financial forecast, but it is obviously a good example. But we’ve significantly dropped our overall average time. So a couple of years ago, we were talking about four to six months for an eValuator implementation. Most of them are getting done in two, maybe three months or less, obviously, in this case.

And then we’ve learned a lot doing that, standardizing data, standardizing training, making sure that people have the ability to have success on day one. And I think probably the most important part is on the Rev ID side of things, it’s a little bit more complicated of an implementation. When we first acquired the solution, it was upwards of nine months to a year of implementation and that’s dropping dramatically with each implementation we’re doing based on taking the eValuator playbook into Rev IDE. So I think we’ll see that number also significantly reduce.

Neil Cattaldi, Analyst, Blueprint Capital Management: Okay. And my last one, I know you guys have made a lot of changes to the sales force over the past year. It’s been a little, I don’t know, quiet, I guess, bookings, the start of this year. What gives you guys confidence that there’s some momentum building in the pipeline and that we’ll see stronger bookings going forward?

Ben Stillwell, President and Chief Executive Officer, Streamline Health Solutions: Yeah. I think we’re really trying to lean into our clients, the current client journeys that people have been successful with. So trying to put whether it was last week where we had a Rev ID user at the Oracle conference or having webinars with our clients, speaking live with prospects and current clients, we’re really trying to celebrate those victories so that when the salesperson does pick up the phone, it’s much more likely that they will say, yes, that’s a club I want to be part of, that’s an organization I want to be involved with. And we’ve seen a lot of top of funnel activity as a result of having our clients really be the focus as opposed to purely just us showing up at a trade show or what have you. So I think we’ve seen some activity recently.

I I don’t wanna oversell the Oracle conference we were just at, but a lot of activity there and the webinars and starting to get things that are more moving on the top of the funnel.

Neil Cattaldi, Analyst, Blueprint Capital Management: Okay, great. Look forward to seeing the progress. Thanks guys. Thanks Neil.

Conference Operator: We have reached the end of our question and answer session. I would like to turn the conference back over for closing remarks.

Jacob Goldberger, Vice President of Finance, Streamline Health Solutions: Thank you all for your support of Streamline Health. We look forward to speaking with you all again when we report our first quarter twenty twenty five results.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.

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