Greetings. And welcome to the Streamline Health Fourth Quarter and Fiscal Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Randy Salisbury. Thank you, sir. You may begin..

Thank you for joining us to review the financial results of Streamline Health Solutions for the fourth quarter and fiscal year 2019, which ended January 31, 2020. As the conference call operator indicated, my name is Randy Salisbury.

As Senior Vice President and Chief Sales and Marketing Officer here at Streamline Health, I manage all communications, including Investor Relations.Joining me on the call today are Tee Green, President and Chief Executive Officer and Chairman of the Board; 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 at 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.First, 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 and a proxy statement filed earlier this week for more information about these risks, uncertainties and assumptions, and other factors.As always, we’re presenting management’s current analysis of these items as of today.

Our 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.Second, we will discuss non-GAAP financial measures such as adjusted EBITDA.

In addition, we are presenting some figures on a pro forma basis as a result of the sale of our business, which we successfully closed on February 24th of this year and announced in a press release on February 25th.

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 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, President and Chief Executive Officer.

Tee?.

Thank you, Randy, and thank you all for joining us this morning.

Before I begin my comments on our fourth quarter and fiscal year 2019 performance, I want to begin by acknowledging the incredibly difficult and dangerous situation our healthcare provider customers are facing during this COVID-19 pandemic.By putting themselves in harm's way and caring for the hundreds of thousands of our citizens who have been affected by this virus.

They are showing us all what it means to be an American, and to answer the call to help. Our thoughts and prayers are with all of them.At Streamline Health, we've taken action to ensure the safety of our team in light of this pandemic.

Fortunately, a significant portion of our staff had already successfully transitioned to teleworking, following the rationalization of our New York City office space in 2018 and in early March, we transitioned the remainder of our staff to work from home status.

We are grateful to our team members who remain productive despite this disruption to daily life and continue to support our hospital system customers during these trying times.From a business perspective, our hospital system customers have, of course, been deeply impacted by the ongoing crisis, but they have seen their high margin, elective procedure business replaced by low margin critical care patients.Customers and prospects tell us their current focus as it should be is to treat those patients suffering from COVID-19 symptoms.

But they are all well aware of the revenue shortfall this pandemic is creating for their organization and they, like the rest of us are impatient to see things return to more normal times.When that happens, they predict there will be a high demand for all forms of healthcare that have been delayed due to this pandemic and the need to generate accurate billing quickly and efficiently will be greater than ever.I believe this pent-up demand for elective and other non-critical procedures will provide a significant opportunity for our software solutions and our auditing services.

The fact that we have signed about a million dollars in new evaluator bookings so far in Q1 of this new fiscal year is a reflection of how critical our solutions are to our customers.At the beginning of this year, we anticipated revenue from our ongoing core business.

The suite of SaaS-based tools, including abstracting CDI and eValuator, along with our auditing services will grow approximately 50% in fiscal 2020 and accelerate at a greater pace of growth in fiscal year 2021.But despite the relative strength of our first quarter bookings so far, we've made the decision to suspend our financial guidance until there is more certainty around the magnitude of the Coronavirus effect on our overall economy and for our customers.Given the vitality of our pipeline, which Randy will discuss shortly, we remain encouraged and excited about our opportunities for growth.

But believe the prudent approach is to hold off on providing specific financial performance guidance for 2020 at this time.On our third quarter call, we discussed some key improvements that we want to make to the eValuator product for inpatient, outpatient and professional fee settings.

During this period of time when the COVID-19 pandemic has slowed some of our prospects buying activity, we are focusing our product management efforts on making improvements and evaluate the technology.Given the sale of our ECM legacy business, we are in the fortunate position to have the capital necessary to institute these improvements based upon feedback from current clients and prospects as well.Specifically, our team is working to expand the reporting functionality for both inpatient and outpatient versions of eValuator, and to finish the dashboard functionalities of the software for the outpatient module.

We are actively listening customer feedback and taking action on the recommended improvements that will deliver the most value to clients and prospects alike.During 2019, our team made great strides in expanding the customer base for our core SaaS-based solutions, and in reshaping our cap structure, enabling us to position our company for growth through the successful sale of our legacy ECM business.

Today, Streamline is more nimble, highly focused company providing solutions and services to help our hospital customers better manage the issues in the middle of the revenue cycle.From initial charge capture to build drop, we believe that the value of our offerings will only increase as the healthcare industry becomes more complex.

Our eValuator customers are helping to see the value of pre-bill auditing in the marketplace. In industry movement, we are focused on leading.One of our customers a large academic facility in the west recently hosted a reference call for another large academic facility in the Midwest.

During the call, our customers describe many of the benefits they have experienced using eValuator over the past couple of years.

She stated and I will quote, eValuators the only tool out there that actually provides real time feedback to the coders, unquote.And she said, this feature was what matters most to her she added, quote, our coders work in epic to code the patient record, and then submit it to eValuator through a simple HL70.

Within three to five seconds, the record is either sent to billing or returned to the coder for further analysis, which doesn't slow down the workflow at all, unquote.Last fall, this customer conducted a large post-bill audit using a well-known independent auditing services firm and out of 30,000 cases reviewed by the auditors, they found only six DRG changes.

Our client gave the lion's share of the credit for this incredible coding accuracy to their use of eValuator. And before you ask, I will keep you in the loop as to how we fare with this large eValuator prospect in the Midwest.

They are listed as a late stage prospect in our second quarter.Shifting gears, I want to review some of the topline figures from yesterday's press release, and then as usual, our CFO Tom Gibson will review the numbers in greater detail.

We generated $20.7 million of revenue in fiscal 2019, as compared to $22.4 million during fiscal year 2018.I'd like to note that approximately $11 million of 2019 revenue was generated by our go-forward solutions. The revenue decline was primarily the result of our now exited legacy ECM business and lower volumes from our perpetual sales.

I believe that in a stable business environment, which I know we all hope to see in the very near future, our company would be able to generate revenue growth from our go-forwards solutions of approximately 15% this year.For the fiscal year, 76% of total revenue was recurring, compared to 80% of total revenue in fiscal 2018, due to the relative strength of our audit services business.

Our fiscal 2019 adjusted EBITDA was $3.1 million, up 7% compared to $2.9 million in 2018.We close the year with $1.6 million of cash and cash equivalents. However, the sale of our ECM business resulted in an additional $5.4 million in net proceeds upon closing and funding on February 24, 2020.

That added to our cash balance at the beginning of this new fiscal year.The sale of our ECM business will continue to add cash beyond the date of closing, including the escrowed funds that will come to the company in May of 2021.

But like many other public companies, we have followed with great interest our government's effort to provide financial assistance to keep our associates employed.Early last week in concert with Bridge Bank, we successfully completed and submitted our PPP application. We were notified two days later that our application was approved.

We are awaiting confirmation of receipt of these funds, which I'm sure you all know are mostly a grant as long as we keep our employees in the small amount of debt in an attractive and very affordable half to 1% interest rate. We will provide an update on these funds as we know more.Turning our attention now to sales.

You may recall that at the beginning of [Audio Gap] for the fiscal year in early February, we expanded Randy’s roles to include Chief Sales Officer in addition to his Chief Marketing Officer responsibilities.Randy has been a leader inside Streamline since 2014 and has been responsible for all client relationship management during that time.

He also developed our brand positioning for eValuator and the corresponding sales tools that we continue to refine for our team.Randy is directly responsible some of our most significant client contracts to-date across the business.

When we were evaluating our company after determining the path forward for ECM, it was clear that he was the right sales leader for a newly formed growth business.Now I'd like to pass the mic back to him for an overview of our current sales effort and what he is seeing on the ground.

Randy?.

Thank you, Tee. In 2019, we closed about $9 million of new bookings from our core ongoing business, which includes our SaaS offerings and audit services.

We had previously announced on an ongoing quarterly goal of $2 million to $3 million of new bookings of all of our solutions, and on average, we met the lower end of that range.As I see it, when we talk about growth in 2020 and beyond, we are primarily talking about eValuator sales.

However, entering this fiscal year, I've also challenged our sales team to be more proactive in seeking out auditing services opportunities in an excellent reputation in the industry with long tenured auditors, and these audit services clients are given an opportunity to see first-hand the power and benefits of our eValuator technology.Looking at our first quarter bookings performance to this point, we closed the number of modifies audit services deals, which I believe will increase in size during the course of this year.

And even with the extraordinary impact of COVID, which began to affect our ability to get new meetings beginning in about mid-March, our sales team generated approximately $1.3 million in bookings thus far in Q1, and again, more importantly, $1 dollars of that total is from a new eValuator client.I'm pleased with the effort and attitude of the entire team and I believe we'll see acceleration and deal closings in the coming quarters, as the COVID-19 pandemic recedes, and as Tee mentioned, there is elective procedures returned.I'm also pleased with the strength and vitality of our sales pipeline of eValuator prospects.

We expect that new accounts will be slower to close in the current environment.

But our team remains engaged and highly motivated and the value of our products especially eValuator is more relevant than ever as they see intense margin contraction for Tee’s earlier comments.I mentioned we've experienced a slowdown in our ability to get some new sales meetings.

More specifically, today, about a dozen prospects out of a total of about 85 in our pipeline have asked us to delay for the conversations for a few weeks to a month as they work through the most pressing needs while adjusting to work from home.But given the pipeline strength both in terms of potential deal size and in the total number of opportunities, we believe future quarters can meet or exceed our established targets of $2 million to $3 million in bookings per quarter when the business environment begins to improve.I'll be available for questions-and-answers following our prepared remarks.

But for now, I'd like to turn the call over to our CFO, Tom Gibson, who will review the financial results for Q4 and fiscal year 2019 in greater detail.

Tom?.

Thank you, Randy, and good morning to everyone on the call. The company has built on the initiatives reported to you in the third quarter.

These will be highlighted first, as it is critical to the financial results for the fourth quarter ended January 31, 2020.These include the capital raise the related redemption of our preferred shares that was completed in the third quarter, finalizing our new banking relationship with Bridge Bank and the sale of our ECM assets that closed and funded on February 24, 2020.These had to occur in the order that they did and in a very short period of time, I am proud of our teams for executing on these critical initiatives.

I believe this supports the company's embrace of velocity and execution into our culture.The company successfully completed its new banking relationship in the fourth quarter of 2019 with Bridge Bank, while the company paid the term loan upon closing the sale of the ECM assets the company will continue to have access to the revolving credit facility that is based upon our accounts receivable.

This will provide the company with an inexpensive fallback to our cash balance that is expected to finance the company for two years or more. And of course, as Tee mentioned, we anticipate receiving PPP funds in the not too distant future.As previously announced, the company closed and funded the sale of the ECM asset on February 24th.

This sale represents one of the last moves that was required to achieving its ultimate goal of becoming a fast growing healthcare technology company focused on the middle of the revenue cycle.

The sale of the ECM assets will free the company from its legacy based revenue stream that was atrophying every year.Beginning with the first quarter of 2020, the company will report the ECM business as a discontinued operation, which will eliminate this revenue base and related costs from current and prior periods.

This will remove the revenue stream for ECM from the GAAP financial statements and show the appropriate amount of growth from the remaining solutions and services.

We are all very excited about executing on this last key initiative and how it positions the company to achieve an accelerated rate of growth going forward.Now, let me turn the company -- to the company's operating performance for the fourth quarter ended January 31, 2020.

As announced in yesterday's press release, regarding our performance for the fourth quarter and for the full 12 months of fiscal year 2019, we generate revenue -- we generated revenues of approximately $4.8 million down approximately 17% sequentially and down approximately 12% from the fourth quarter of last fiscal year.

The shortfall to prior periods was lower perpetual sales and lower revenues from the ECM business.Total revenues for the 12 months of fiscal year 2019 were approximately $20.7 million, down 8% from $22.4 million in the same period last year.

The reduction in annual revenue again was related to a lower revenue of the legacy business and lower contribution from perpetual revenue, which we have historically generated from a select few clients of partner relationship.

It is worth noting that the company's revenue is within the range of guidance provided in the second quarter of 2019.Turning now to bookings in the fourth quarter, as Randy stated, the company has publicly announced a target of between $2 million and $3 million in bookings per quarter.

The bookings for Q4 2019 were $1 million, which was lower than our target.As stated in previous earnings calls, our Q2, 2019 bookings comprised of $3 million of eValuator, represents a pace of go-forward revenue contribution that can help us add substantial revenue to our company, a recurring technology revenue base.The bookings for Q4 2019 included a $400,000 eValuator upsell deal.

That upsell was on one of the three deals that closed in Q2 2019. The hospital system was seeing value in our technology and expanded our relationship within their facilities.

That is significant to our models going forward and upsell can be implemented quickly and has little upfront costs to the company.Recurring revenues were 84% of total revenue for the fourth quarter higher than the 67% from the third quarter of this year, but lower than the 86% from Q4 of last fiscal year.

Ending the fiscal year higher recurring revenue percentage supports the topline revenue growth model for fiscal year 2020.

Recurring revenue for fiscal year 2019 was 76% of total revenue, basically in the same range as fiscal year 2018 recurring revenue which was 80%.Moving now to adjusted EBITDA, we generated $480,000 in Q4 of 2019, as compared with $1.3 million in Q3 of 2019 and $1.1 million in Q4 of last fiscal year.

Adjusted EBITDA for fiscal year 2019 was $3.1 million, up 7% from $2.9 million of last fiscal year. Some of those favorable EBITDA on lower revenue is the direct result of our successful cost savings initiative we completed last year. That initiative is continuing to have a positive impact on operations.

The company's cost containment measures were certainly prudent given the lower sales volumes.The company incurred $1.4 million and non-recurring operating expenses for the fourth quarter and a total of $2 million for the full 12 months of fiscal year 2019.

The components of the non-recurring costs are the previously announced executive transition cost of $800,000, a previous -- a previously announced headcount rationalization of $400,000, transaction expenses on the sale of the ECM assets of $600,000 and $200,000 in cost associated with the correction of the immaterial error on amortization and capitalized software development cost to report the third quarter 10-Q.Of these costs the headcount rationalization was completed at the end of the company's fiscal year in an effort to better align its go-forward cost with revenues.

The company is always reviewing opportunities to be more efficient with its personnel and back office cost.Additionally, the company recorded $70,000 and $309,000, respectively, of interest expense for the fourth quarter and the full year of fiscal 2019, compared with $52,000 and $384,000, respectively, for the same periods last year.

Lower interest cost was achieved primarily by deferring higher interest amounts to our capitalized software development assets.Turning now to other areas, the company recognized $1.1 million in Q4 2019 and $2.4 million for the 12 months of fiscal year 2019 of non-cash, depreciation and amortization, compared with $588,000 and $2.9 million in comparable periods of fiscal year 2018.In addition to normal recurring amortization for the company's capitalized software development, the company included an impairment charge of $354,000 for projects that were cancelled during the fourth quarter of 2019.Finally, the company has accelerated completion of projects that are in inventory under the agile method of development.

The company has added tighter, discipline to its development procedures by limiting the starting and completing of projects to within one week or two weeks, three week spreads.

This should result in higher amortization in future periods for capitalized software development.The company also recognized $934,000 and $629,000 of share-based compensation for fiscal 2019 and 2018, respectively.

As discussed in the third quarter’s earnings call, the share-based compensation continues to trend higher compared to the same period a year ago because of certain actions initiated by the Board to secure its executive team and the hiring of our CEO.Moving to the balance sheet, we finished the quarter with approximately $1.6 million of cash on hand, compared to $1.2 million at the end of the third quarter.

The company invoices approximately $5 million in and around November of each year for annual licenses to certain legacy products. Those legacy invoices are collected in January and February of the following year. What is left is a company that uses cash specifically in the late summer months and early fall.

Substantially all of these seasonal paying customers are from the ECM business that was sold on February 24th of this year.Beyond operations for the fiscal year 2019, we invested $3.4 million into the capitalized software development asset, primarily new functionality for our key client solution eValuator.

This is comparable to the $3 million in fiscal year 2018. The continuation of this spent and development of the eValuator platform was deemed essential to expand our sales velocity through expanded capabilities for inpatient and outpatient modules.

We are also continuing to develop the product with improved dashboards to increase user functionality and satisfaction.The company continues to have flexibility with the investments we make into our software both the timing, nature and type of spend.

It is worth noting that in the company's MD&A disclosures, total research and development costs are going down. This is a result of more cost proportionately being capitalized into software development.

The company has reduced headcount and refocused its R&D efforts around the company's fewer, ongoing solutions, while less effort is being attributed to older legacy solutions.During the fourth quarter, the company made no payment on the term loan, as it was principal free for the first 12 months.

The term loan balance was $4 million when we closed with Bridge Bank on December 12, 2019. The company did not draw on the revolving credit facility during the fourth quarter.As mentioned by Tee, the company is not offering guidance due to the uncertainty based on the effects of the novel Coronavirus.

However, we did want to provide measures to help our investors understand the size and shape of the go-forward Streamline Health Company.

The company will report ECM revenue as a discontinued operation in fiscal 2020 and it will impact all four periods.Looking back upon fiscal year 2019 on a quarterly basis, think about revenues as $3.0 million, $2.3 million, $3.3 million and $2.5 million for each of Q1, Q2, Q3 and Q4 2019.

This totals a fiscal year 2019 base of $11 million.For fiscal 2020, think in terms of the company's revenues beginning in the range of $2.4 million to $2.8 million per quarter and growing from that level on a quarter-over-quarter basis.For fiscal year 2020, as previously reported, the company projects to have negative adjusted EBITDA of not more than $1 million.

The company's cash balance at the end of fiscal 2020 is projected to be in the $3 million range without drawing on this revolving credit facility.The company continues to project that it will begin generating cash flow from operations by the third quarter of 2021 without requiring additional financing or drawing on its line of credit.

Again, these are not intended to be guidance numbers, rather they are intended to help our investors size our company on a go forward basis. The company will provide guidance as soon as there is more certainty around the timing of the return of our economy, as it relates to COVID-19.That concludes my remarks.

But before I turn the call back to Tee, I wanted to reiterate that I am very proud of our team's accomplishments over the last few months. We are realizing a new culture of velocity and execution and I am confident you will hear that as a recurring theme in future releases about our company.

Tee?.

Thank you, Tom. Our leadership team now has an internal code word for our company and that is new code.

Because that's what we believe we are, a new company that has moved beyond this legacy business and it's now laser focused on selling SaaS solutions to healthcare providers to help them with the middle of their revenue cycle.We believe if we can help our customers do a better job in the middle of the revenue cycle from charge capture to bill drop, their need to focus on the back end of the revenue cycle, especially denials and accounts receivable will be minimized.As this new code, we are committed to building a world-class customer success organization with lots of happy clients who provide the needed references to increase velocity and our sales efforts.

To have happy clients, we need to have world class SaaS solutions like eValuator that meet and exceed our customers’ expectations.

And to ensure we have that we're building a world class product management team with top level research and development talent to keep eValuator ahead of the curve by designing today what the market will need tomorrow.I am grateful to our team members, who have remained diligent in the face of tremendous upheaval to their daily lives and who remained committed to ensuring that our hospital system customers have the tools they need to minimize the time they spend on administrative activities so they can maximize their clinical time.We have a unique offering that is gaining traction in the marketplace and I know we will continue to lead our industry's movement toward the use of cloud based prebuilt coding analysis technology.

Thank you all for your support of our company and for sharing our vision.I would now like to open up the call for questions and we'll turn the call over to the operator.

Operator?.

Thank you. [Operator Instructions] Our first question is coming from Matt Hewitt of Craig-Hallum. Please go ahead..

Good morning. Thank you for taking the question.

Maybe the first one, what was that the ECM contribution in Q4? Do you have that Tom?.

Don't, but I will look for it real quick, Matt..

Okay. Well, maybe, yeah -- maybe while you're looking for that, a broader question regarding the current environment with the Coronavirus hospitals shutting their doors to non-essential procedures, salespeople can't get in obviously, you talked about this a little bit.

As you look over the coming weeks as some states including your own Georgia, where they're starting to relax some of those restrictions. How quickly do you anticipate being able to get in there.

Have those meetings and ultimately close on some due wins?.

Yeah. Matt, this is Tee out. I'll start. Thanks for the question. And I'll let Randy maybe follow it up. But, obviously, we're having a lot of conversations with health systems and CEOs around the country.

And I think one of the key things that we're looking at region by region, state by state in some cases, county by county, but it's when elective surgeries are put back on the books.I think that's a key measurement or a key data point for us to say.

When that starts happening, these systems are going to begin opening up and there is obviously what five weeks of pent up demand. So we think once it opens, it is going to be accelerate quickly, provided there is not a bounce back of the virus.

But so, assuming that's going to be the case.I think, one, we're having a number of conference calls and video calls, interesting enough people are getting used to that and so we're still seeing demos take place.

We're still seeing contracts being sent across the wire, so to speak.And so, but as far as, at least in a dozen or so states, I think, you could see in the late May early June timeframe, some of these deals actually closing. So at least that's what it feels like. I don't have any -- can certainly not guarantee in that.

But, Randy, you want to follow that up?.

Yeah. Sure. Matt, I think, I saw that the state of Texas announced yesterday they're going to start allowing elective surgeries and what we're hearing, anecdotally from prospects. There's one in Ohio that we're pursuing that it said, boy, wish we had eValuator now.

And the reason was that, A, it is a great tool for those that are no longer working in the office.

Our dashboards and our reports allow virtual management better, right, because of the daily reports to say, what's the accuracy of my coders? How busy are my auditors? What's the output?But past that, the other item is that, we're hearing stories about how revenue is being cut by up to 50% in some instances greater.

So, obviously, they're being squeezed for cash and they know that once electives come back, they got to capture every penny that's accurate and is due them.

And that's part of our go forward pitch is, don't wait, don't make mistakes on your coding and billing once this happens and have it all slowdown on the back end, do it right the first time.And that's kind of what the vernacular prep -- promise of the eValuator is, do it right the first time. So, I think, that's echoing well.

And to Tee’s point, we're still doing plenty of demos. We've been doing virtual demos for a while. And I think you'll find that, hopefully, we'll get closures here in Q2 from some of the guys that were closed in Q1 and in March and early April said hey guys, like, I got to focus on other things in the near-term..

Understood. Okay. That's great and thanks for the color there.

And a silly question, are there codes -- specific codes for Coronavirus or does that -- just treating these patients that are coming in right now does that create issues in and of itself?.

Yes..

Go ahead, Randy..

Well, there are codes for the virus in early April, the CMS put new ones out it's not enough. What happens is once you get into intensive care, the amount of reimbursement is nowhere near what is necessary. So it's putting them in a pinch.

But I think more than that, Matt, it's more than half of their business has just been stopped, right? And a variety of practitioners have been asked to stay away from the hospitals.And they're not even working, ophthalmologists and on and on and on. So that's what we're waiting for to come back to say to all our middle of the revenue cycle folks.

You're going to see a bolus of group of bills coming out quickly now and you got to get them right and you got to get them paid..

Okay. That's helpful. Thank you. And then maybe one last one from me, as we look at the current pipeline, would you say that, obviously, given that the current environment it makes it challenging.

But would you say that that even despite the Coronavirus that you seen that pipeline continue to build even if you're not necessarily getting contracts to the goal line, but the pipeline itself has continued to build and it gives you confidence as we get into maybe the back half of fiscal ‘20, that as things potentially start to open back up, the larger pipeline is resulting in a larger conversion rate? Thank you..

Yes. Hey, Randy. I'll let you take that, but I'll start by saying. I think what some of this has done and is truly highlighted the need for eValuator. And I think if this thing accelerates when the elective surgeries and the like come back online. I think, the last five weeks I wouldn't say Matt that our pipeline just accelerated.

But one, it was fairly large going into this thing. But two, what it has done is allowed our pipeline to become more qualified, I guess is the word I would use.

So Randy you want to follow that up?.

Yeah. I would agree with that Tee. And by qualified it means if you're staying in touch with us Matt and working through appropriate go forward dates, meaning if we were supposed to have met two weeks ago, but they need to delay it.

We stay in touch, obviously, but they're picking the ball up again, saying, hey, how about we meet now on May 10th or whatever it might be.And that's more -- they're seeing it. The guys that were very close that what I would have told you, we would have signed by end of this quarter.

I think are just going to roll over 30 to 60 days, the ones that were really at the bottom of the funnel.But to your point Matt, there are, I mean every day, not every day, every week I see more new opportunities opened in sales force, which means they move beyond stage one and a number of the ones in the pipeline today Matt are dramatically hired then our current average and higher than the average we've discussed with you and everybody else publicly of in round numbers about $300,000 a year for three years.There is a number of them in the pipeline that are substantially higher than that as larger organizations see the value of this, including the one Tee mentioned in his comments from the Midwest..

Great. Thank you..

Hey, Matt. This is Tom again. We generated $2.1 million of revenue from ECM in the fourth quarter. And we generated $1.4 million of adjusted EBITDA from ECM. That is on a direct cost basis only and does not include the rationalization that we did beyond these employees that moved to Highland on February 24th.

But, yeah, you're looking at $2.1 million topline and $1.4 million adjusted EBITDA..

That's great. Thank you, Tom. I appreciate that..

Thank you. [Operator Instructions] Our question is coming from Brooks O'Neil of Lake Street Capital Markets. Please go ahead..

Good morning, guys. A lot of information, we appreciate all of it. I was hoping you guys could talk to us a little bit about the implementation timeline for eValuator. So that we could get a sense of kind of how long it will take for the installation of the system and revenue recognition for you guys from new orders coming in? Thanks a lot..

Yeah. Thanks Brooks. Good question. Fortunately, we have an incredible technology platform. So deploying the technology is pretty easy because of the architecture and the SaaS nature. So it becomes more about getting the data flowing into the platform and then the training of the end user.

So we look at it from contract signing to go out building in about 60 days..

Okay..

It can go faster, depending on the client, but..

Sure.

Could you guys talk just a little bit about some of the specific focus of your R&D initiatives and the things you think will you can add that will significantly improve the functionality or user friendliness of the system?.

Yeah. There are several things where we're working on. But I would say, structurally the most important thing we've done in -- over the last couple quarters is, put in place a product management organization that drives the functionality of the platform, which historically had not been the case.

So we have a much more funneled approach in what comes out of the R&D organization, which that Streamline is a tremendous amount of work and creates efficiencies and kind of we know which way we're going.So, but if you look at we have the outpatient dashboards, we have advanced reporting.

We had some architectural things inside the eValuator platform that we've made more sound and more scalable. So those are some of the big items. But I would say, the reporting side of it and the dashboards are going to be the biggest things that our clients are going to see over the next quarter..

And if it sort of recognized the structure of many integrated delivery systems today, I assume these companies, these hospital systems need maybe three big components, right? They need that hospital billing, they need outpatient billing and then they need physician billing.

Do you guys offer all of that?.

The inpatient and outpatient, yes, and the pro-fees side of it is something that's on our roadmap..

Okay. Cool.

And then maybe just one or two more quick ones Randy or Tom, I know you guys aren't providing guidance here and I'm not looking for guidance, but I was curious if you have a rough guess of what the split might be between the eValuator and the auditing business going forward?.

Yeah.

Tom, you want to take that or you want me to?.

Yeah. Let me give some color and then you can come on the top..

Sure..

Our strongest revenue base going forward is going to be CDI and abstracting.

It will probably be in the neighborhood of 60% to 70% of our revenue base and then audit services will contribute 20%-ish maybe a little bit stronger and then eValuator will be a smaller piece or what is left there for fiscal 2020.But the thing to keep in mind is that eValuator, the way, it's a SaaS model and so every time we make one of these sales it adds incrementally, but it stacks.

So the three that we sold in fiscal 2019 -- Q2 of fiscal 2019 which had about $1 million of ACV only, we only recognize a very small portion of that in fiscal 2019, but we will get all of that in fiscal 2020. So you can see how those stacking of the revenues going to have a big impact going forward..

Yeah. That's great. One last one and I -- yeah, Randy go ahead. Sorry..

I was just going to add that, I think, what we're finding, at least I'm finding early in the Q1 with the sales team. There is a lot of opportunity to add new audit services clients. But most of those first contracts and books are modest. They haven't worked with you before.

Let me do something smallish, see how it goes and then we can grow from there.As compared to kind of a standard eValuator contract, which in round numbers is around $300,000 a year for three years pure SaaS.

So I think what will happen is, God willing and the creek don't rise, very quickly, we are going to find the eValuator revenue building quickly and surfing the revenue contribution of our audit services pretty quickly. It's because of the size and the build.

But I don't want to diminish the fact that these new audit services clients I think are very important for steps to having them see the value of eValuator and choosing to use it themselves..

Well, that makes a lot of sense. I was hoping and I apologize for this having went through all the various I think largely non-recurring fourth quarter expenses related to the transactions and the refinancing stuff.

Is it possible for you to give us one summary number for kind of the non-recurring expenses from Q4 just, so we can think about how things will look in 2020 or little easier?.

I'd be on mute. Sorry about that. That -- yes, we summarize that, of course, in our reconciliation of EBITDA and I think you're thinking about a number of about a $1.5 million non-recurring expenses for Q4..

Thank you very much..

Thank you. This brings us to the end of our question-and-answer session. I would like to turn the floor back over to Mr. Salisbury for closing comments..

Thank you and thank you all on the call this morning. Again, for your interest and support of Streamline Health. If you have any additional questions or need more information, please feel free to contact me at randy.salisbury@streamlinehealth.net.

We look forward to speaking with you all again in June when we'll discuss our first quarter 2020 financial performance. Good day..

Ladies and gentlemen, thank you for your participation. You may now disconnect or logoff the webcast and have a wonderful day..