Greetings ladies and gentlemen, and welcome to the Streamline Health Solutions' Third Quarter 2020 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Randy Salisbury, Chief Sales and Marketing Officer for Streamline Health. Thank you, sir. You may now begin..

Thank you for joining us to review the financial results of Streamline Health Solutions for the third quarter of 2020, which ended October 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..

Thank you, Randy. And thank you all for joining us this morning. Before I review our third quarter financial performance, I want to state again our support of our healthcare provider customers, during this global Coronavirus crisis.

Our team has great respect for our frontline healthcare professionals, and we are grateful for their continuing dedication and service to their communities..

Thank you, Tee. To Tee's point of focusing our efforts on things, we can control, and win at, I'm pleased to report that during the third quarter, we hired two very senior and seasoned sales professionals, as we expanded our geographical coverage from three regional territories to four.

We have a new Regional Vice Presidents in the Western and Central regions, this expansion has enabled us to reposition our previous Central region sales leader, to the Northeast where he lives and has worked from many years.

As we search for true sales leaders, we came across a multitude of people, but I've always found greater success with executives who had a job, but found our opportunity to be superior and such was the case with both of our new RVPs.

And they come with a strong database of existing relationships at some of the leading healthcare providers in their regions. I look forward to reporting on the expansion of our sales pipeline as a direct result of their efforts in future quarters.

Regarding our bookings in the third quarter, although we did not generate enough total contract bookings to meet our quarterly target of $2 million to $3 million. The prospects, we focused on closing are still with us. We've moved most of them into the fourth quarter of this year and the first fiscal quarter of next year.

As Tee stated at the outset of our call, the impact of the novel Coronavirus pandemic on our prospects, final purchase decision making has been obvious.

Many of our most mature opportunities and what we term stage four of our pipeline have been focused, excuse me - forced to delay final decision making, while internal budget or priority committees determine the most pressing needs during the crisis.

We are seeing signs of the focus on linear planning starting to dissipate, and some of our prospects are regaining the freedom to make purchases that will improve their departments performance. Clearly eValuator helps the revenue cycle, compliance and HIM department to do just that.

But during the third quarter, our sales team successfully closed $1.4 million in bookings including a new sizable eValuator contract, with a large North Carolina-based provider.

And I should note, all of our selling activities remain virtual as the majority of our prospects are still working remotely, which negates the opportunity for us to meet with them in person, which is always our preference but is not a hindrance to our prospecting and selling. Our pipeline remains plentiful and continues to expand.

At the end of the third quarter, we counted 72 prospects, representing approximately $67 million of total contract value via our direct sales and marketing efforts..

Thank you, Randy, and good morning to everyone on the call. As previously reported, Streamline Health SaaS-based revenue grew by $287,000 and $761,000 in the three months and nine months ended October 31, 2020 respectively. This represents a 48% and 43% growth rate over previous periods respectively.

Further, we generated growth of 10% sequentially in SaaS revenue from Q2 to Q3, 2020 and we are projecting a similar rate of growth in Q4, as compared with Q3 of this fiscal year based upon recently implemented eValuator customers. Our annualized run rate on eValuator SaaS revenue at the end of this fiscal year is projected to be $2,700 million.

We believe there is ample room for our company to continue these growth rates over the next three years. Certain of our past initiatives are reflected in our reported financial results for the third quarter ended October 31, 2020..

Thank you, Tom. Within our executive team as managers and leaders, our responsibility is to control what we can and win at that every day.

Our team has embodied that sentiment throughout this difficult year and this has helped us develop superior R&D talent and delivery along with world-class product management, resulting in continual improvement to our eValuator platform.

Our customer success team helps nurture our customers to see greater value from our technologies, resulting in happier customers, willing to offer struggling references. Our commitment to lead an industry movement to pre-bill revenue integrity validation is real and we believe will gain momentum in the years ahead.

I'm confident that when our healthcare providers catch their breath, innovative financial solutions like eValuator will be at the forefront of their minds. Before we begin our Q&A session, I'd like to extend my heartfelt thanks to the team members at Streamline for the hard work and perseverance during an enormous week challenging time.

Your contributions enable us to support our hospital system customers and ensure that they have the tools they need to free up time and resources to provide quality care for the communities they serve. Thank you all for your support of Streamline Health and for your support of our vision. Now I'd like to open the call up to your questions.

Operator?.

Our first question today is coming from Matt Hewitt of Craig-Hallum. Please go ahead..

Thank you for the update and for taking our questions. So I wanted to dig a little bit on the pipeline if I could. First up and maybe a little bit on the selling environment as well.

What are customers seeing right now? Obviously, you look at the - I don't know if you call it the surge map or the heat map regarding the pandemic? But we're seeing it flare up more West and therefore the East Coast seems to at least parts of the Southeast anyway seem to be easing up a little bit.

Is that making the selling environment, particularly in that area a little bit easier and how quickly do you anticipate closing some of those pipeline opportunities?.

Yes, Matt, Tee Green here and thanks for the question. I'll let Randy follow it up. But in general, I don't know if we can point to outbreaks easing in one part of the country or another that are - would assist in closing contracts sooner.

What we have seen is, and we've talked about this previously, is that these healthcare systems historically are very good in multi-tasking obviously with COVID that just create more linear decision-making.

And that we have what - I’ll let Randy answer about five or six contracts that are in red line in prospects legal or in the financial arms of those entities that we're moving through and then obviously everything we had to take care of the patients. Now we have to get the logistics worked out for the vaccine.

We're beginning to see that piece get behind these health systems and now the phone calls are coming back to Randy and team rescheduling those last meetings to go through the red line contracts.

And that's happened Randy a couple of times in the last couple of weeks and so that I can’t point to COVID outbreaks, but I can point to specific conversations with specific prospects, where we have contracts in here. Randy you want to add anything here..

Yes, I would add solely Matt that to Tee’s very point a couple of conversations that we're going to have. I have one today and one tomorrow are both in the Midwest, one of them, the Upper Midwest where the surge has really hit. I think to Tee’s point we're kind of beyond whether or not, there is a surge or not a surge.

They've lived through this linear planning. They've worked on what they've had to work on including logistics for vaccine dissemination. And now, I think they're kind of turning back to doing stuff that's smart for their departments. So that's encouraging to me. Oh and to answer your last part of the question, Matt.

Your last part I think with any luck, we'll be able to get some decent signatures on big contracts certainly this quarter, and if we can, this month, before we get into our last quarter of our fiscal year, which is January..

That's very helpful, thank you. And then I think its Slide 5 in the presentation today. In addition to the nice uptick in the number of prospects, it also appears just kind of running the simple math that the average deal size has gone up within your pipeline.

Could you talk a little bit about that is that the new partners coming on board with maybe some larger health systems? Is it customers looking to maybe make bigger initial purchases, any color there would be helpful?.

Yes Matt, Tee again. So about a year ago, we made a maybe a year and a half ago Randy. We made up a conscious effort to target the larger health systems around the country because of the ROI that eValuator has is so great. And so, as we targeted those we have a handful now that are alive that are referenceable.

And so, I think that strategy a year ago is starting to pay off today. Randy..

Yes, I completely concur and Matt I would suggest to you that your idea, your concept there is true across the board that the reseller partners are also looking at potential opportunities that are similar in average per year size.

And this is not a case where we were talking with someone and they have increased the size of the purchase that's we price this per bed. And so that's not necessarily the case, it's the audience we're gaining and the activity we're seeing in the pipeline are larger hospital systems..

And then maybe one last one, could you just walk through or remind us again regarding Allscripts the timeline as far as they've signed the contract. But as far as educating their sales force and when do you think that deals might start to flow from that as well? Thank you..

Yes, go ahead. Randy..

Matt - although they sign the addendum, we had - I want to say we signed an addendum for both CDI technology and eValuator a few months ago. And then the next steps for any partners to go through the vetting of the pricing and the positioning and how you take it to market.

Then about three weeks ago they had an internal kick off call with their salespeople to introduce the two new solutions. And then there is a large annual sales kickoff meeting in late January that they call the global kick off GKO which we will participate in, that will pretty much be the opening salvo to say okay, here's what you can do.

And one of the reasons that we're excited and I think they are too is we've talked Matt eValuator is not a replacement sale, it's greenfield and most big resellers are looking for something like that.

I think there is one Allscripts client in the current pipeline based on getting an early start on this over the last few months, but I would anticipate that closings of Allscripts deals will probably be a second half 2021 occurrence..

Our next question is coming from Brooks O'Neil of Lake Street Capital Markets. Please go ahead..

I have a couple questions, I guess I'll start by following after Matt's question, I'm curious if you could help us understand how if at all the contracts you're going to get through resellers like Allscripts might vary from a more of a direct contract relationship, that's number one? Number two, just curious if you can help us just understand the landscape of the reseller marketplace in terms of how many are out there, how big of an opportunity do you see that as that's where I'd like to start? Thank you very much..

Yes thanks Brooks, this is Tee. The resellers in theory if we could get 20%, 25% of bookings a year through resellers I think that would be a great number.

And then obviously direct is where we want to spend most of our energy, but the deal sizes with Allscripts it may be just a little smaller just because of their customer installed base based on where we're trying to focus directly and then obviously you pay commissions on those deals to the Allscripts organization.

But in theory, you're not doing sales work you're not doing the demos, you're not that's incremental bookings. And then as far as number of resellers out there, gosh, there is a lot. But there's probably a dozen that would be important to us. Randy, you want to add anything further to that..

Yes, I think that's exactly right about Allscripts with the dollar amount that they would contribute on three year SaaS contracts would be slightly smaller than the current average you're seeing, but nothing dramatic.

And then secondly, I would say that you know the partners we're looking at right now that I referenced in my comments, Brooks, to Tee’s point, we're talking to a handful right now and if we could get a couple of them to agree, and I think we could, I think that will have the kind of impact Tee is talking about.

They would represent a larger potential existing client base that they would go to with this idea, this technology, and could add volume in the latter part of 2021 and 2022..

And then I apologize for trying to understand the marketplace a little better and I appreciate your help with this. So how would you characterize these resellers as compared to say whatever relationship and how you would describe what you have with Epic and as you think about what Epic represents in the marketplace.

How would you characterize additional opportunities beyond Epic is that type of scenario?.

Yes Randy, I’ll let you talk about Epic and maybe parlay that into how we view maybe Meditech..

Yes sure, I was going to say Brooks that Epic does not have a heritage if you will of reselling other people's technologies. But as you know, they sort of quietly endorsed them by, if you can gain entrants into their Epic app Orchard which is very good housekeeping sale of approval, which we've done.

And that helps when people are considering us that are Epic users. It certainly helps remove barriers to say hey, we've already done all the integration work and you don't have to take our word for it, you can take Epic's word for it and they support that and that's good. Make no mistake, a lot of the wins that we've talked about with you and others.

Our Epic based facilities - the larger, the hospital system. It seems the more predominance we find Epic is the EMR. To Tee’s point, the more I'll say aggressive, but the more open to referring their client talent to solutions that can improve their revenue cycle performance like a Meditech and some others would be good potential partners for us.

And that they have a large installed base that they would effectively be saying to their existing clients there are ways to get more value out of your EMR and here is one of them. And that's what we're working on with them and others. But Epic is not necessarily one of those that considers doing it if they did, we'd be happy to do it.

But they know who we are and we're pretty tight with them, especially when it comes to implementation. They are part and parcel to how we go about doing it.

Is that answer your question, Brooks?.

Yes, it does, it's very helpful and really appreciate. I’ll just wrap up with one last one and you probably talked about this and it's possible I just based out. But when you talk about going after larger hospital systems - I see that as a huge opportunity for you.

And I'm assuming, given the comments about the COVID environment, what are - they're sort of more focused on dealing with the pandemic rate this might ultimately, those must represent a really significant opportunity for your company?.

Yes - absolutely, this is Tee Brooks. The larger transactions represent obviously much higher bookings and revenue numbers for us, but also the ROI for eValuator inside of those health systems is so substantial that it.

We believe it ultimately is going to make the sales process more efficient and the more sophisticated health systems are the ones that already have the plan around patient care around vaccine logistics and they're are the ones that - I believe we're going to come out of this, the quickest..

Randy tells me you have some good contacts in that marketplace. So I'm hoping you can help them out and make it simply there..

We're working on that Brooks..

Thank you. At this time, I'd like to turn the floor back over to Mr. Salisbury for any closing comments..

Well, thank you all for your interest and support of Streamline Health. If you have any additional questions or would like more information, please feel free to contact me directly at randy.salisbury@streamlinehealth.net.

We look forward to speaking with you all again in April when we will discuss our fourth quarter and full year 2020 financial performance. Until then, we wish you all a good day..

Ladies and gentlemen, thank you for your participation, you may disconnect your lines or log off the webcast at this time and have a wonderful day..