Streamline Health Solutions Q3 2025 Earnings Call Transcript

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Provided by Quartr
December 17, 2024

Key Takeaways

  • Booked SaaS ACV reached $14.1 million as of October 31, 2024, including $700,000 in new Q3 contracts and $12 million already implemented.
  • Management now expects to achieve an adjusted EBITDA positive run rate in the first half of fiscal 2025, one quarter earlier than previously guided.
  • The new eValuator quality module launched in early October and was adopted by two additional clients within a month, promising faster revenue and easier upsells.
  • Q3 revenue fell to $4.4 million from $6.1 million a year ago, with a net loss of $2.5 million, cash on hand at $0.8 million, and total debt of $12.3 million.
  • An 835 data analysis showed eValuator corrections delivered $31 million in actual cash impact for one client, reinforcing the solution’s ROI.
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Earnings Conference Call
Streamline Health Solutions Q3 2025
00:00 / 00:00

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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. If anyone should require operator assistance, please press star zero on your telephone keypad. 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
VP and Finance at Streamline Healthcare

Thank you for joining us for the corporate update and financial results review of Streamline Health Solutions for the third quarter of fiscal 2024, which was the three-month period that ended October 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. 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.

Jacob Goldberger
VP and Finance at Streamline Healthcare

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-K annual report, which is on file with the SEC for more information about these risks, uncertainties, assumptions, and other factors.

Jacob Goldberger
VP and Finance at Streamline Healthcare

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.

Jacob Goldberger
VP and Finance at Streamline Healthcare

I would now like to turn the call over to Benjamin Stilwill, CEO.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 third quarter, we successfully closed new contracts with aggregate SaaS ACV of $700,000. These new wins included contracts for our flagship platforms, Evaluator and RevID, as well as the new Evaluator Quality Module, which we debuted in early October.

Benjamin Stilwill
CEO and President at Streamline Healthcare

Booked 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 31st, 2024, totaled $14.1 million, with $12 million already implemented. Given our current operating expense expectations, the pace of new bookings, and current implementation schedules, we have accelerated our expectations for the achievement of an Adjusted EBITDA positive run rate to the first half of fiscal 2025, as opposed to the second half of fiscal 2025. 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 are able to find additional non-equity capital sources, we may pursue them.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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, has 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's 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 RevID 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

This expands the signals we can leverage within 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 nine-month pilot program with two existing clients, and as we've announced within a month of debuting the module, we successfully added the module to two additional clients. Those of you who have followed us for some time understand that a less-than-one-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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

After lengthy discussions, we determined that the potential partner could not 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 system's 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 is 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 can 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 an effort to leverage client 835 data to conclusively link Evaluator pre-bill financial impact with a proven cash impact.

Benjamin Stilwill
CEO and President at Streamline Healthcare

I'm thrilled to report that the results of that analysis showed Evaluator's corrections contributed $31 million to that client's bottom line, well in excess of our pre-bill 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 RevID, as well as directly addressing payer denials, an ever-present and growing concern for our health systems. Within RevID, we've begun to roll out self-service features for our clients, allowing them to increase efficiency and direct staff focus autonomously.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 RevID 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

Today, the team is focused on four primary campaigns to unlock markets and provide significant value to clients, the first being a displacement campaign related to an existing offering in the Evaluator space, where we believe our tool delivers better results at a lower cost. Second, a continued emphasis on our Oracle partnership, which continues to aggressively push RevID. And third, implementing RevID in an Epic EHR client. And fourth, the last one, beyond new client sales, we can more than double our existing ARR through upsells and cross-sales 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

We've had several successful Oracle go-lives already in fiscal 2024, 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 RevID and another who added Evaluator, are both live with their respective new Streamline 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 Streamline 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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, B.J. Reeves.

Bryant Reeves
CFO at Streamline Healthcare

Thank you, Benjamin. As Ben mentioned, our booked SaaS ACV as of October 31, 2024, totaled $14.1 million, and we continue to expect that we can generate persistent positive adjusted EBITDA above a $15.5 million SaaS ARR run rate. Currently, $12 million of our booked SaaS ACV is implemented, and we anticipate we will successfully implement and achieve that $15.5 million ARR run rate during the first half of fiscal 2025. Total revenue for the third quarter of fiscal 2024 was $4.4 million, compared to $6.1 million during the third quarter of fiscal 2023.

Bryant Reeves
CFO at Streamline Healthcare

For the nine months ended October 31, 2024, revenue totaled $13.2 million, compared to $17.2 million 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 third quarter of fiscal 2024 totaled $2.9 million, 66% of total revenue, compared to SaaS revenue of $3.9 million, 64% of total revenue during the third quarter of fiscal 2023. For the nine months ended October 31, 2024, SaaS revenue totaled $8.7 million, 66% of total revenue, compared to $10.6 million, or 62% of total revenue during the same period of fiscal 2023. We expect sequential growth of SaaS revenue in the fourth quarter of fiscal 2024 and into fiscal 2025.

Bryant Reeves
CFO at Streamline Healthcare

Net loss for the third quarter of fiscal 2024 totaled $2.5 million, compared to a net loss of $11.9 million during the third quarter of fiscal 2023. For the nine months ended October 31, 2024, net loss totaled $8 million, compared to a net loss of $17.3 million during the 2023 period. The third quarter and first nine months of fiscal 2023 included $10.8 million of impairment expenses offset by a $1.2 million and $1.9 million gain, respectively, from valuation adjustments, which did not recur during the same periods in fiscal 2024. Net loss during the third quarter and first nine months of fiscal 2024 reflected lower total revenues and higher interest expense, offset by reductions in cost of sales, SG&A, and R&D expense of $1.9 million and $5.3 million, respectively, primarily due to the company's strategic restructuring at the end of fiscal 2023.

Bryant Reeves
CFO at Streamline Healthcare

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 RevID solution. Adjusted EBITDA for the third quarter of fiscal 2024 was a loss of $0.3 million, compared to a gain of $0.4 million during the third quarter of fiscal 2023. Adjusted EBITDA for the nine months ended October 31, 2024, was a loss of $1.3 million, compared to $1.8 million 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.

Bryant Reeves
CFO at Streamline Healthcare

Moving to the balance sheet, as of October 31, 2024, we had $0.8 million of cash on hand compared to $3.2 million at January 31, 2024. Total debt, including our senior term loan and notes resulting from the private placement, was $12.3 million, and we had no balance outstanding on our $2 million 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 a $1 million draw from our revolving line of credit. As Ben 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.

Bryant Reeves
CFO at Streamline Healthcare

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 operations.

Jacob Goldberger
VP and Finance at Streamline Healthcare

That concludes our review.

Jacob Goldberger
VP and Finance at Streamline Healthcare

Operator, please begin the question and answer session.

Operator

Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. Our first question is from Neil Cataldi with Blueprint Capital Management. Please proceed. Hey, guys. Thanks for taking a few questions.

Neil Cataldi
Principal at Blueprint Capital Management

If I could start off, Benjamin, maybe you could expand a little bit on the 835 analysis you mentioned and what it means for your clients.

Benjamin Stilwill
CEO and President at Streamline Healthcare

Sure. Hey, Neil. Yeah. So the 835 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 coding is correct. In the last few years, relationships between providers and payers have 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 address that behavior.

Benjamin Stilwill
CEO and President at Streamline Healthcare

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 solutions.

Neil Cataldi
Principal at Blueprint Capital Management

Okay. Great. And yeah, we just want to follow up to that. How should we think about ROI for Evaluator for how you're implementing this? How does it change that ROI for the client?

Benjamin Stilwill
CEO and President at Streamline Healthcare

Yeah. 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.

Benjamin Stilwill
CEO and President at Streamline Healthcare

So we look at what is the dollar per change, and if we can prioritize that, we can drive the ROI even higher than what we currently do.

Neil Cataldi
Principal at Blueprint Capital Management

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, etc., and what gives you guys the confidence to sort of bring that break-even guidance forward.

Benjamin Stilwill
CEO and President at Streamline Healthcare

Sure. So 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, first and foremost, our client success is the thing that gives you the most confidence.

Benjamin Stilwill
CEO and President at Streamline Healthcare

So interactions reaffirm the value. But what we're trying to do as of late is focus on those client success stories. So I mentioned a webinar. We were highlighting how one client benefited from RevID, 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 the client base and then reemphasizing our go-to-market has been pretty impactful on our financial forecast.

Neil Cataldi
Principal at Blueprint Capital Management

All right. Thanks a lot. Look forward to seeing the continued progress. Great job.

Benjamin Stilwill
CEO and President at Streamline Healthcare

Thanks, Neil.

Operator

With no further questions in the queue, I would like to hand the conference back over to management for closing remarks.

Jacob Goldberger
VP and Finance at Streamline Healthcare

Thank you all for your interest and support of Streamline. If you have any additional questions or need more information, please contact me at Jacob.Goldberger@StreamlineHealth.net. We look forward to speaking with you all again when we discuss our fiscal year 2024 financial performance.

Operator

Good day. Thank you. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Analysts
    • Bryant Reeves
      CFO at Streamline Healthcare
    • Jacob Goldberger
      VP and Finance at Streamline Healthcare
    • Benjamin Stilwill
      CEO and President at Streamline Healthcare
    • Neil Cataldi
      Principal at Blueprint Capital Management
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