Streamline Health Solutions, Inc. (NASDAQ:STRM) Q2 2023 Earnings Call Transcript

Streamline Health Solutions, Inc. (NASDAQ:STRM) Q2 2023 Earnings Call Transcript September 14, 2023

Operator: Greetings. Welcome to the Streamline Health Solutions Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the prepared remarks. [Operator Instructions] As a reminder this conference is being recorded. At this time, I would like to hand the call over to Jacob Goldberger, Director of Investor Relations. Thank you. You may begin.

Jacob Goldberger: Thank you for joining us for the corporate update and financial results review of Streamline Health Solutions for the second quarter of 2023, which ended July 31st, 2023. As the conference call operator indicated, my name is Jacob Goldberger. Joining me on the call today are Tee Green, Chief Executive Officer and Chairman of the Board; Ben Stilwill, President; and Tom Gibson, Chief Financial Officer. At the conclusion of today’s prepared remarks, we will open the call for a question and answer session. If anyone participating on today’s call does not have a full text copy of our press release announcing these results, 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 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 these we may discuss. Please refer to the company’s press releases and filings made with the US Securities and Exchange Commission, including our most recent Form 10-K and 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 Health 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.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 Tee Green, Chief Executive Officer and Chairman of the Board. Tee?

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Q&A Session

Tee Green: Thank you, Jacob, and thank you all for joining us this morning. Following my opening remarks, our President, Ben Stilwill will provide an operations and sales review followed by a financial update from our CFO, Tom Gibson. During 2022, we began reporting a new metric, booked SaaS ACV, which is the annualized contract value for all agreements that are being recognized into revenue as well as bookings that have not been implemented. As of July 31st, 2023, booked SaaS ACV was $17.6 million as compared to $17.2 million as of January 31st, 2023. We successfully closed new bookings totaling $300, 000 of ACV. This was offset by an evaluated client, which notified us of their non-renewal during the quarter whose ACV was approximately $500, 000.

Ben will discuss these events in more detail. $14.8 million of our booked SaaS ACV is implemented and contributing to recognized revenue. We continue to make progress towards our goal of having approximately $17 million of booked SaaS ACV implemented by the end of the third quarter of fiscal 2023. As of July 31st, 2023, we had $4.1 million of cash on our balance sheet, and the balance on our term loan was $9.5 million. We believe our cash on hand is sufficient to achieve positive adjusted EBITDA, less capitalized software development. We have access to an incremental $2 million of liquidity through our non-formula line of credit. We combined Avelead and eValuator operations on November 1st, 2022. Under Ben’s leadership, the integration process was smooth, and we continue to achieve significant cost savings and operational improvements.

We are working towards four corporate objectives in fiscal 2023. One, a client utilizing both of our flagship solutions, RevID and eValuator. An epic-based facility utilizing RevID, improved performance from our partner channel, and the achievement of breakeven adjusted EBITDA. We are in discussions with existing clients and remain confident we will close this fiscal year with one or more clients utilizing both RevID and eValuator. Similarly, we are in late-stage discussions about RevID with multiple epic-based prospects. Within our partner channel, we are focusing only on channel partners that can deliver strong results without unduly diverting the energy of our overall growth team. Since our alignment in November 2022, we have seen significant cost savings and expect that trend will continue and expect that this approach in combination with top line growth will deliver our profitability and cash flow goals.

The HCIT industry has experienced significant challenges in fiscal 2023 and we are no different. The administrative arms of our nation’s health systems are overwhelmed, slowing their decision-making and their ability to execute. We have seen our sales and client success operations become increasingly consultative and more difficult to forecast as a result. Increased bureaucracy and understaffed IT departments have significantly slowed our bookings, and we now anticipate closing fiscal 2023 with $24 million of booked SaaS ACV. To be clear, this change in guidance has resulted a macro conditions. I believe that under the leadership of Amy Sebero, our growth team is doing the right things and that our solution’s ability to ensure complete and accurate billing prior to the first bill drop is invaluable for our target market.

Our solutions offer a fundamentally better way of processing claims in the front of the revenue cycle. We are improving at identifying impact we can have on net revenue, billing volumes, denial rates and increase in available cash for our prospects. We have seen continued strong demand for our solutions and our sales team rarely hears the word no. Our implementation timelines for RevID are accelerating, which will result in a shorter lag between booking and revenue generation. We maintain our expectation of having $17 million of SaaS ARR implemented during the third quarter of fiscal 2023. With that, I’d like to turn the call over to our President, Mr. Ben Stilwell.

Ben Stilwill: Thank you, Tee. The integrated streamline team is evolving and is making significant progress towards our annual priorities, which are scaling the RevID and compare technology for growth, increasing client effectiveness through eValuator usability, enhancing delivery for RevID and compare, doubling the eValuator client outcomes through enhanced roles and expanding our reach to new logo clients. These priorities have allowed our innovation and service teams to become fully integrated, and they are close to using one seamless process on all our products. Our clients will soon be able to rely on the same world-class service set and delivery regardless of solution. Let me expand some on the progress and innovation.

Our innovation team completed the architecture scaling work on RevID and Compare ahead of schedule. As Tee mentioned, this will translate not only into a more efficient implementation process, but also a better client experience. These solutions are now truly scalable. We will continue to make improvements in system integrations, which can further enhance the improvements we’ve already made. The team that was focused on the architecture work is now pivoting to more traditional feature functionality development following our road map. Another result of the re-architecture is a significant cost savings as the RevID solution has moved to a serverless architecture. I am also thrilled to announce that we’ve introduced our first AI-based tool for eValuator.