Streamline Health Solutions, Inc. (NASDAQ:STRM) has significantly expanded the value it provides to the revenue cycle in healthcare so far this year. This expansion comes from product enhancements for workforce automation and opportunity identification, as well as the clients the company has brought online or expanded its impact with. As a result, the company's pro forma SaaS revenue grew 22% during the first quarter of fiscal 2024 after excluding the revenues from a client non-renewal addressed at the end of fiscal 2023.

Streamline's booked SaaS ACV, which is the annualized contract value for all agreements currently being recognized as well as bookings that have not been implemented, has grown to $15.9 million as of the latest quarter, with $13.1 million already implemented. The company remains confident in implementing the remaining backlog and achieving an adjusted EBITDA breakeven run rate during the second-half of this fiscal year.

Business Overview

The company has achieved this growth with a more efficient operating model while improving product functionality, servicing its existing clients, and adding new clients. Streamline continues to deliver impactful solutions focused on identifying financial opportunities and providing the automated workflows to resolve them. In April, the company mentioned the initial impact of its AI model to create new and enhanced rules for its clients, which has only continued to grow, with more rules being deployed and further refined.

The company recently debuted My eValuator, a full refresh to the eValuator user experience, which has improved client satisfaction and usability. Looking forward, Streamline's eValuator roadmap focuses on identifying additional opportunities for impact, including continued utilization of AI to enhance rule development and novel methods to enhance the financial impact and operational insights provided.

Streamline's RevID application benefits the most from its investments in automation. The company's recent developments focused on usability, while its roadmap includes pattern recognition to automatically assign tasks and improvements to usability. The company's client services team provides hands-on education, optimization, and insight, putting revenue cycle leaders back in the driver's seat while bolstering the impact they receive from Streamline's solutions and cementing its relationships.

For example, on the eValuator side, Streamline drove $1 million of impact in one quarter for a 700-bed hospital by enabling the facility to identify and replace a poor outsourced coding resource. Meanwhile, a seven-facility system replaced a legacy on-premise technology solution with eValuator, resulting in a significant operating expense reduction and more than $4 million of financial impact, as well as a more than 10% improvement in coding accuracy rates.

On the RevID side, a recent implementation at a 65-bed facility resulted in more than $1 million of incremental net patient revenue in just 90-days, finding significant charges in an array of departments. Another RevID client recovered more than $7.5 million of net patient revenue across a 670-bed, five-facility health system in a 12-month period and saved more than 600 hours of work effort associated with the manual charge reconciliation process that RevID replaced.

With impactful solutions and a gold standard client services model in place, Streamline's attention is now squarely on attracting more healthcare systems to its client community. The company's stated priorities include a displacement campaign related to an existing offering in the eValuator space, a continued emphasis on its Oracle partnership which continues to aggressively push RevID, the development of a new and effective channel partner, and significant potential for upsell and cross-sell within its existing client base.

The company has seen success in each of these areas, including several recent go-lives at sites procured via the Oracle channel, a new client announcement via this channel last month, and an uptick in the number of prospects that Oracle is introducing. In the first quarter, Streamline also announced client deals for facility expansions in an enterprise client where it sold eValuator to a RevID client, representing substantial opportunity to double its revenue base from this channel alone.

From a sales operations standpoint, Streamline is arming its sales force with enhanced messaging to match with industry priorities and better explain the overall financial impact of its solutions for all prospects to align with the priorities of their C-suite leadership and with VP and Director level counterparts.

Streamline believes healthcare systems should be able to own their financial health, and the company sees its duty to develop the products and provide the insights so they can succeed in these revenue cycle functions and get paid for the care they provide. The company's biggest conceptual competitors are ignoring the process or outsourcing the functions, leaving healthcare systems lacking the information and workflow to systemically address issues with revenue integrity.

Financials

For the first quarter of fiscal 2024, Streamline reported total revenue of $4.3 million, compared to $5.3 million in the prior year period. The change in total revenue was attributable to previously announced client non-renewals offset by successful implementations of new SaaS contracts. SaaS revenue totaled $2.7 million and represented 63% of total revenue during the quarter.

On a pro forma basis, excluding the revenue recognized from the client non-renewal, SaaS revenue grew 22% in the first quarter of fiscal 2024 versus the prior year period. Total operating expense was $6.6 million during the first quarter, compared to $8.3 million for the same period last year. The lower overall operating expense was the result of the company's previously announced strategic restructuring, primarily reported in SG&A and R&D.

Streamline reported a first quarter fiscal 2024 net loss of $2.7 million, compared to a loss of $2.9 million in the prior year period. The relatively static net loss, despite lower revenue, was the result of improvement in operating expense offset by increased cash and non-cash interest expense, as well as a non-cash valuation adjustment expense.

Adjusted EBITDA for the first quarter of fiscal 2024 was a loss of $0.7 million, compared to a loss of $1.3 million during the same period last year. The significant improvement in adjusted EBITDA is the result of 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.

Liquidity

As of April 30, 2024, Streamline had $4 million of cash on hand, compared to $3.2 million at the end of the prior fiscal year. During the quarter, the company executed private placements for gross proceeds of $4.5 million. Total debt, including the senior term loan and notes resulting from the private placement, was $12.5 million, and the company had no balance on its $2 million revolving credit facility as of the latest quarter end.

Outlook

Looking forward, as Streamline continues to execute in fiscal 2024, the company anticipates growing revenues on relatively static expenses, achievement of persistent adjusted EBITDA profitability, and significant improvement in its use of cash for operations. The company remains confident in implementing its remaining backlog and achieving an adjusted EBITDA breakeven run rate during the second-half of this fiscal year.