Streamline Health Solutions, Inc. (STRM)

Q2 2010 Earnings Call Transcript

September 8, 2010 4:30 pm ET

Executives

Robert Blum – IR, Lytham Partners, LLC

Brian Patsy – President and CEO

Don Vick – Interim CFO, Interim Treasurer, Controller, and Interim Corporate Secretary

Gary Winzenread – COO

Analysts

Tom Carpenter – Hilliard Lyons

Jay Barder [ph]

Presentation

Operator

Good afternoon and welcome to the Streamline Health Solutions second quarter financial results conference call. All participants will be in listen-only mode. (Operator instructions) Please note this event is being recorded. I would now like to turn the conference over to Robert Blum. Please go ahead.

Robert Blum

Thank you, Amy. And thank you for joining us to review the financial results of Streamline Health Solutions for the second quarter of fiscal year 2010, which ended July 31, 2010. As the conference call operator indicated, my name is Robert Blum. I’m with Lytham Partners. We are the financial relations consulting firm for Streamline Health.

With us on the call representing the company today are Mr. Brian Patsy, President and Chief Executive Officer; Mr. Don Vick, Interim Chief Financial Officer; and Mr. Gary Winzenread, recently appointed Chief Operating 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 the release, you can retrieve it off the company’s website at www.streamlinehealth.net or numerous financial websites on the Internet.

Before we begin with prepared remarks, we submit for the record the following statement. Statements made by the management team of Streamline Health Solutions during the course of this conference call that are not historical facts are considered to be forward-looking statements subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will, and other similar statements of expectation identify forward-looking statements.

The forward-looking statements contained herein are subject to certain risks, uncertainties, and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein.

These risks and uncertainties include, but are not limited to, the impact of competitive products and pricing; product demand and market acceptance; new product development; key strategic alliances with vendors that resell the company’s products; the ability of the company to control costs; availability of products produced from third-party vendors; the healthcare regulatory environment; healthcare information systems budgets; availability of healthcare information systems trained personnel for implementation of new systems; as well as maintenance of legacy systems; fluctuation in operating results and other risks detailed from time to time in the Streamline Health Solutions filings with the US Securities and Exchange Commission.

Participants on this call are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

With that said, let me turn the call over to Brian Patsy, President and Chief Executive Officer of Streamline Health Solutions. Brian?

Brian Patsy

Thank you, Robert, and good afternoon. For today’s call, Don Vick, our Interim Chief Financial Officer, will summarize our financial results. After Don’s summary, I’ll discuss our second quarter results and then Don Vick, Gary Winzenread and I will participate in our question-and-answer session.

At this point, I’d like to turn the call over to Don for his financial summary.

Don Vick

Thanks, Brian. I would like to highlight the more significant aspects of the financial results of our second quarter of our fiscal year ended July 31, 2010. Revenues for the three months ended July 31, 2010 were $4.7 million compared with $4.0 million in the comparable quarter of 2009, representing an increase of 15%. The increase in revenues was primarily a result of a $520,000 or 118% increase in system sales as a result of two large sales made during the quarter, which I’ll describe in more detail a bit later in the call.

Hosting revenues from backlog also increased by $57,000 or 7% over the prior comparable quarter. Maintenance revenues also increased by $54,000 or 3%. These revenue increases in the quarter were partially offset by a decrease in professional services revenues of $25,000 and a decrease in hardware and third-party software sales of $62,000 from the prior comparable period.

As you may have seen in our recent press releases, we were successful in closing several new purchased contracts during this quarter, two of which contributed software system sales revenues in the quarter, totaling nearly $680,000. The largest of these contracts was through our remarketing partner, GE Healthcare, and was sold to Saint Francis Hospital and Medical Center in Connecticut. This contract included Streamline Health Enterprise Suite software and related professional services.

Another contract sold this quarter was with our existing client, Nassau University Medical Center, who upgraded their system to an enterprise level. In addition, three new BPM, Business Process Management workflow solutions, and additional add-on schedules were sold to existing clients. As a result, total new bookings for the quarter were in excess of $2 million.

Total operating expenses for the second quarter of 2010 were $4.7 million compared with $4.1 million in the comparable quarter of 2009. This increase in expense includes a $123,000 increase in capitalized software amortization as a result of the recent general availability status of Access Anywhere 5.0 and other new products. This increase is included in the cost of system sales.

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