Streamline Health Solutions Inc (STRM) 2010 Q4 法說會逐字稿

Good afternoon and welcome to the Streamline Health Solutions fourth-quarter fiscal year 2010 financial results conference call. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to Robert Blum. Please go ahead.

Thank you, Amy, and thank you for joining us to review the financial results of Streamline Health Solutions for the fourth quarter of fiscal year 2010, which ended January 31, 2011. As the conference call operator indicated, my name is Robert Blum. I am with Lytham Partners. We are the investor relations consulting firm for Streamline Health.

With us on the call representing the Company today are Bob Watson, President and Chief Executive Officer; Don Vick, Interim Chief Financial Officer; Gary Winzenread, Senior Vice President and Chief Operating Officer; and Rick Leach, Senior Vice President and Chief Marketing 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 from the Company's website at www.streamlinehealth.net or numerous financial websites.

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, fluctuations 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 Bob Watson, President and Chief Executive Officer of Streamline Health Solutions. Bob?

Thank you, Robert, and good afternoon to all of you participating on today's call. All of us at Streamline Health appreciate your continued interest in and support of the Company. Thank you for your time today.

As most of you know, I recently joined the Company as President and Chief Executive Officer. In the 10 weeks since my appointment, I have spent the majority of my time reviewing the Company's core technologies, operations and personnel with an eye toward developing a strategic business plan that leverages the competitive advantages of our technology and services while matching those competitive advantages with the right human capital to advance this Company in the coming years.

I have also had the opportunity to meet many of our clients during this period. As a result of those meetings, one of the primary areas of focus for this management team as we move forward together is to leverage our relationships with those clients to guide our product development and to ensure their satisfaction and, ultimately, their retention.

As it relates to my background, I have over 20 years in the healthcare information technology industry. The details of my career history are available on our website, but it is worthy to note that this is the fourth time in my career when I have joined a team as the replacement for a founder CEO at the request of a Board of Directors.

As I noted a moment ago, I have engaged in a thorough review of the Company. Based upon that review, I am convinced that Streamline has a solid portfolio of products and services that will enable healthcare organizations to drive operational and financial efficiency while substantially assisting in meeting the requirements of meaningful use as outlined in the High Tech Act. By meeting meaningful use, these healthcare organizations will become eligible for significant incentive payments.

I have concluded that the well-documented global push to the electronic medical record confirms the long-term relevancy of our product set. You cannot complete the electronic record without the capture, storage and intelligent distribution of the enormous quantities of unstructured data -- some on paper, some in the form of Web-based forms, some coming from certain medical devices -- that exist at all touch points in the patient care continuum.

Our track record of successful and meaningful integration with the legacy EMR vendors -- GE, Cerner, Allscripts and Epic, for example -- is a clear and demonstrable advantage of our product positioning in the marketplace. Going forward, we must leverage that advantage to an even greater degree.

At this point, I'd like to turn the call over to Don Vick, our Interim Chief Financial Officer, for a summary of our financial results for the quarter and the year. After Don's summary, I will discuss our operational plans for the Company going forward, and then we'll open the call for your question. Don?

Thanks, Bob. I would like to highlight the more significant aspects of the financial results of our fourth quarter of our fiscal year ended January 31, 2011.

Revenues for the three months ended January 31, 2011, were $4.9 million compared with $6.3 million in the comparable quarter of 2009. This decrease in revenues was primarily a result of a $1.8 million decrease in system sales.

As you may recall, the fourth quarter of fiscal 2009 included the revenue recognition of nearly $1.7 million of system sales as a result of achieving general availability status and delivery of our latest-generation software platform called accessANYware 5.0.

While the fourth quarter of fiscal 2010 did not have the benefit of such a significant event, there was still nearly $867,000 of new system sales revenues generated. This fourth-quarter 2010 system sales revenue was primarily the result of two new accessANYware add-on sales to existing clients and the delivery from the third-quarter backlog of a large Referral Order Workflow to an existing large client.

Professional services revenues improved by $328,000 or 44% over their prior comparable fourth quarter. Recurring revenues from maintenance contracts experienced a 5% or a $95,000 improvement over the prior comparable fourth quarter. And hosting revenues from backlog increased by $58,000 or 7% over the prior comparable quarter.

Total operating expenses for the fourth quarter of 2010 were $5.7 million compared with $4.7 million in the comparable quarter of 2009. It is worth noting that there were several one-time adjustments affecting expenses in operating income in the fourth quarter of 2010. These one-time expenses total nearly $1.4 million.

This includes an accrual of approximately $329,000 relating to the severance package for our prior CEO, Brian Patsy. It includes approximately $158,000 of expenses related to the signing bonus and stock compensation recorded in the fourth quarter associated with the employment of our new CEO, Bob Watson.

Additionally, fourth quarter of 2010 included an impairment charge of approximately $755,000 on our capitalized software assets relating to uncompleted workflow products that least fit our new expectations for growth and profitability. Furthermore, approximately $143,000 of obsolete hardware and other assets were written off during the quarter.

Obviously, the one-time expenses just mentioned were the main factors influencing the expense increases in the fourth quarter of 2010.

The cost of system sales for the fourth quarter ended January 31, 2011, was $1.6 million compared with $901,000 in the comparable prior period. The cost of system sales includes the amortization of capitalized software. As such, the vast majority of this increase relates to the $755,000 capitalized software impairment charge discussed earlier.

The cost of services, maintenance and support for the three months ended January 31, 2011, increased by $118,000 to $1.5 million. This increase was primarily due to the startup associated with our revenue cycle management consulting services group.

The cost of application hosting services for the three months ended January 31, 2011, was $493,000 compared with $438,000 in the prior period. The increase is primarily attributable to increased staffing costs, depreciation, and third-party license and maintenance fees as a result of the growing hosting center operations.

Selling, general and administrative expenses for the three months ended January 31, 2011 and 2010, were $1.8 million and $1.5 million, respectively. Nearly $500,000 of this increase was due to the one-time expenses discussed earlier relating to the change in CEO. These increases were offset by the cost savings initiated earlier in the year from the reorganization of the sales and marketing staff.

During the fourth quarter of fiscal 2010, research and government expenses decreased to approximately $322,000 from $486,000 in the comparable prior quarter of fiscal 2009. The Company capitalized approximately $759,000 and $789,000 of product research and development costs in the fourth quarter of fiscal 2010 and 2009, respectively.

I also want to remind everyone that capitalized software development costs should be included when determining total R&D expenditures. For this quarter, on an income-state basis, our R&D expenditures decreased by $164,000 over the prior quarter.

Our R&D expense and our capitalized software for the quarter both decreased from the fourth quarter of last year due to a reduction in development resources since the completion of accessANYware 5.0 at the end of the prior fiscal year.

As a result of the revenue and expense items discussed, the operating loss for the fourth quarter of fiscal 2010 was $767,000 compared to an operating profit of $1.6 million in the fourth quarter of fiscal 2009. On a pro forma basis, excluding the one-time items discussed earlier, the 2010 fourth-quarter operating loss of $767,000 would have been an operating profit of $617,000.

The 2010 fourth-quarter results were further impacted by a $997,000 reduction in our deferred tax asset as a result of the loss reported in 2010 and the uncertain impact on tax projections. As a result, the net loss for the quarter was $1.8 million or $0.19 per share compared to a net profit of $1.6 million or $0.17 per share in the fourth quarter of 2009.

On a pro forma basis, excluding all the one-time items discussed, our fourth-quarter 2010 net income would have been $587,000.

Total backlog at the end of the quarter was $17.6 million compared with $19.5 million in backlog at January 31, 2010. The bulk of our backlog continues to come from hosting services and maintenance contracts versus software licensing sales.

Fourth-quarter hosting revenues are primarily generated out of previously reported backlog. In our earnings release, we included the table showing the non-GAAP financial measure of adjusted EBITDA. We define adjusted EBITDA as net earnings or loss plus interest expense, tax expense, depreciation and amortization expense of tangible and intangible assets and stock-based compensation expense.

Given the relatively large amount of our noncash charges, we feel that this adjusted EBITDA measure is helpful in providing a more meaningful understanding of our underlying cash-based earnings.

For the three months ended January 31, 2011, adjusted EBITDA was $976,000 compared with a corresponding adjusted EBITDA of $2.5 million for the comparable period last year. We continue to provide this -- we will continue to provide this non-GAAP financial measure in future earnings releases.

Our cash at January 31, 2011, was approximately $1.4 million, with $1.2 million drawn under our line of credit. Our cash cycles are still very much dependent upon our seasonal patterns of prepaid annual maintenance billings to our clients.

As mentioned in the prior conference calls, our fourth quarter is typically our best cash collections period thanks to large annual maintenance collections. This was once again the case in this past fourth quarter as we paid down our line of credit as expected from the strong cash generation.

We were recently successful in extending and expanding our AR base line of credit with Fifth Third Bank. The line was extended to October 2013 and increased to $3 million effective October 2011, with minimal changes to our covenants and other terms and conditions. We continue to monitor our expenses, cash balances and receivables carefully to ensure that they are on plan. And we believe that we have the appropriate capital available to operate our business going forward.

That concludes my review of the numbers for the quarter. Let me now turn the call back to Bob Watson. Bob?

Thank you, Don, for that thorough review of the financial results of the fourth quarter and fiscal year 2010. Given that I came on board at the end of the quarter, I'm going to let those comments stand as a review for the purposes of this specific call. Don and I will respond to any financial and operational questions during the Q&A.

What I'd like to do now is give you a general idea of where we are looking to take this Company in the coming quarters and years. From a strategic perspective, here's what we are looking to do.

First, we must and will become a market-facing organization. By that, I mean that we must have a complete understanding of the needs of our current clients specifically and of the overall marketplace in general.

We recently recruited Rick Leach, an experienced healthcare technology executive, to our team as Senior Vice President and Chief Marketing Officer. In addition to responsibility of our sales, business development, marketing and account management, we are transitioning the product management function to Rick as well.

Combining all of our market-facing functions under a single executive is a critical step in developing greater visibility to our clients in the marketplace. By being more market-facing, we will become market visionaries.

Second, we will build a sales and distribution network to assure that Streamline Health is aware of and is actively working to secure every new healthcare information technology opportunity that falls within the scope and the capabilities of our product set.

Third, we must and will leverage our core competencies to broaden the scope of our product portfolio and expand our recurring revenue stream within our current client base. Clients are asking for our assistance because of the proven effectiveness of our already-installed products and services.

As a trusted vendor to our clients, they are seeking us out to further expand operational and financial efficiencies throughout their enterprise. We have recently established a disciplined and formal account review process to ensure that we proactively address any and all such opportunities.

Fourth, we are dedicated to building the human capital required to accomplish the foregoing. While the associates who are currently part of the Streamline Health team have strong product and domain expertise, we are committed to recruiting new associates to the Company who will bring broader industry expertise and relationships and who have contributed to the success of other high-growth healthcare enterprises.

This infusion of new perspectives into the Company will enable us to create an environment that will allow us to quickly transform the culture of Streamline Health into that of a world-class healthcare IT innovator and visionary.

Fifth, we must and will continue to drive costs out of our infrastructure. We believe we can achieve this by shortening the delivery cycle of our product development process, as well as by implementing efficient new processes in our professional services organization.

We must address the product and service needs of our customers in even a more timely and efficient manner than we have in the past. We have begun the process of adding more automation to our internal processes to ensure that we are as efficient as possible in our administrative areas.

These five steps are the central themes of our go-forward strategy.

Next, I would like to address our relationship with GE Healthcare. As most of you know, our primary channel distribution partner has been GE Healthcare. In the fourth quarter of calendar year 2010, management learned that GE's organizational focus in 2011 would be on upgrading its current clients to the latest version of their software in order to assist them in meeting the meaningful use criteria under the recent Obama legislation.

The impact on Streamline Health in fiscal 2011 will most likely be a decline in net new sales opportunities from GE Healthcare. However, the opportunity to sell into their current client base that does not have our products and to sell additional products and services into our base of jointly owned GE clients remains. We believe that there are substantial opportunities to sell additional products into these accounts.

As it relates to guidance, our primary goal in 2011 is to execute on the five central themes of our strategic plan, as I outlined previously. This will enable us to position Streamline Health beginning in 2012 to consistently grow annual revenues at a 15% or greater annual rate.

We believe that while we are executing on those changes in 2011, we can anticipate revenues to decline slightly for the year, but we do anticipate improvements to our adjusted EBITDA in the later quarters of fiscal year 2011.

As I noted earlier, we are emphasizing from a new business standpoint growth in our recurring revenue base. Many of you likely follow the purchase trends of healthcare organizations and know that there is a significant amount of volatility in the hospital market in which we compete. Many of the factors that impact purchasing decisions are well beyond our control.

Under the best of circumstances, it is virtually impossible to provide detailed guidance that is anything more than a prediction. However, we have developed a solid portfolio of products and services that clearly add value to our hospital clients, both large and small. We will be working to ensure our products integrate even more seamlessly and deeply with all of the major EMR vendors, thereby expanding our market opportunities and the ability to drive revenue.

At the same time, we will continue to drive costs out of our infrastructure, which will contribute to improvement in adjusted EBITDA.

As the dust begins to settle in the healthcare reform area specifically, and in the macroeconomic environment generally, Streamline Health is uniquely positioned today to expand its business in the coming years.

This concludes my prepared remarks. We are now -- we will now open the call for your questions. In addition to Don and myself, we are joined by Gary Winzenread, Senior VP and Chief Operating Officer, and Rick Leach, Senior VP and Chief Marketing Officer, to answer any questions that you might have. Operator, please instruct our listeners on how to queue up.

(Operator Instructions). Bill Bunn, Fort Washington Investment.

Welcome aboard. I can see that you are slightly free cash flow positive for the year. How do you see cash flow through the course of 2011, given that you have some initiatives here that might take some spending, like improving or expanding your marketing function, for example?

We've been pretty diligent throughout this quarter in trying to cut back on some of our core operating costs. And while we do have some intention of increasing our activities in the sales and marketing arena, we do see some, after the impact of severance and other items in Qs one and two, positive improvement in cash flow in the later quarters of the year.

Would you expect '11 and '12 to be positive free cash flow, or will you have to go out and raise capital to accomplish what you're looking for?

We have no expectation of raising capital in '11 or '12.

As you try to transform this Company, what will you as a manager be looking at as far as the kind of metrics that you're going to need to track in order to know that you are on track or doing the things that you want to do, that the Company is responding as you'd like?

There are a couple of things we've done. One of the things we've done internally is we've recently moved to a dashboard reporting system internally, which gives us visibility out over the next six- to nine-month period of time that will help us greatly in terms of forecasting our resource requirements internally and also forecasting our spend relative to sales opportunities in the pipeline.

So we'll continue to look, as you'd expect, at growth in the pipeline and in the quality of the sales pipeline as well. I think that's a very important point in this.

Thirdly, as I mentioned in one of the five strategic points, I think building our distribution channel and the types of distribution partners we have going forward is very, very important.

It's a pretty dynamic industry, and there are a lot of big players out there. Do you think you've got time at this point to make this transition before you're just too small to compete?

You know, I don't think it's a question -- actually, I honestly don't think it's a question of not being able to compete. Frankly, the Company has competed very well. I think it has probably not had its finger on the pulse of a lot of decisions that were being made around them.

It gets back to my point about -- my first strategic point about being market-facing. If I have an early going-in thesis, it's clearly that our ability to become a market-facing organization will put us in a position to participate in a lot more decisions, purchase decisions, than we have historically.

I don't think it's a question of having to beat out the big guys. We compete very well. If you look at our history of integration with the -- also, I made this point earlier, but if you look at our history of our integration with the legacy EMR vendors, what this Company does is really quite good, quite unique, and very deep on the integration point. And that is a significant positioning point that I think we need to drive home in the marketplace.

I've followed the story for probably 15 years, so I guess I'm sort of the grandfather of all those that follow this Company. One thing I've never been able to get comfortable with is what the quality of the software really was, whether it was up to speed or up to snuff with the industry. How did you find the state of the software when you came on board? And do you have to do anything additional there to grow your business?

You know, I had the unique and daunting opportunity in my first week here to go to a users' group meeting. And I think in the new CEO handbook, that's not on the list of things you're supposed to do.

And I will tell you what I learned from the customers. A lot of the clients have been through some difficult times. They think there was -- I don't want to dwell on the history. I want to focus on what we're going to do going forward. But I think there was a period of time, up until about two or three years ago, when the organization struggled to deliver on the product commitment they made to their clients.

I think under Gary's leadership the last couple of years, those relationships with our installed base have improved. The quality of our code set has improved. And overall user satisfaction has improved dramatically.

And, you know, it's been discussed before, we have a new version of accessANYware that's being released this year. I think the work that's been done around that product and its inclusion of our ability to improve our workflow functionality is part of that -- critical to our path going forward.

So I think from a historical perspective, since you've lived with us for 15 years, you're probably right. There was a period of time where there was a challenge in the quality of the code set. What I've seen in the last 10 weeks, I don't, frankly, don't have that anxiety today.

All right, thank you. I hope to meet you soon and talk about it in more detail.

(Operator Instructions). Sam Rebotsky, SER Asset Management.

Good afternoon, Bob and Rick. I guess you're the new additions, and hopefully you'll be successful in making this Company profitable and turning it around.

The question I have relative to the write-off of the $755,000 of software, how do we know that the capitalized software of about $7.5 million is a valid asset, and what kind of timeframe do we expect to write that off? Could you sort of address that area?

Let me take it. I'll have Don answer from the financial accounting standpoint, and then I'll address it from more a broader market-facing comment. Don?

From the write-off perspective, I mean, in terms of the amortization of that software, we actually amortize the accessANYware and our FolderView products -- which are our flagship products -- we amortize those over a five-year period. Historically, we see our customers when they bring the software on board, it's enterprise and mission-critical software. So, in terms of the use of that software, it far exceeds that five-year period. But that's the write-off period that we use for that.

On some of the workflow products, we actually amortize that over a three-year period. And some of that, they are smaller products in general, and some of those are newer to us. So we are still learning the history in terms of how the customers are using those products and what the true expected life of those is. So, from a conservative perspective, we've gone with three years on those.

And as it relates to the additional write-offs we took this past period, from my perspective and looking at the product roadmap, I wanted to eliminate from that roadmap certain items that I felt were a distraction to our core plan going forward. And the result of eliminating them from the go-forward plan, it necessitated having to take the write-off as we did. And it's primarily around a couple of workflows relating to cash management and contract management that, again, were frankly just not core to where I see us moving forward in our product plans. It's the right thing to do for the balance sheet at this point.

Okay. Hopefully, your judgments are going to be right. The question as far as profitability, we want to increase revenue. Do you have an expectation of becoming profitable, and what kind of timeframe do you feel you need to and what kind of size of backlog do you need to become profitable?

To be frank, Sam, I'm working through some of that stuff, as you can imagine. It's been 10 weeks, so I've been trying to take away things on the orderly, disciplined fashion.

But let me just say this about it. This Company has to be profitable. At this kind of revenue base, we should be -- we're trying to address that by looking at not only our cost infrastructure, but I also think we also have to look at the revenue mix. Revenue mix becomes very, very important. And I noted earlier that we are going to be emphasizing with our current customers and with our new business prospects the opportunity to transition relationships so that they become recurring revenue models as opposed to licensed sale models.

I think to the extent that we can take the lumpiness out of the revenue, it will be good for us. It will put us in a better position to manage our cost side of our business and understand what it takes from an infrastructure standpoint to deliver the services to our clients and at a price point that allows us to be profitable.

Okay. Have we made any kind of judgment relative to the sales process on what we need to incentivize the salespeople to create sales and profitable sales based on the length of time, the sales cycle, etc.?

One of the very first changes I made in the organization obviously was bringing in Rick. And as part of bringing Rick on board, we've made some material changes in our direct salesforce where we are adding individuals to that direct salesforce that meet a criteria that are very important to Rick and I.

First and foremost, they've had to have a successful, demonstrable career in a growth-oriented healthcare company. And I think the individuals that we have joining us fit that mold. That's the first piece of it.

The second piece of it in terms of driving revenue is working through our portfolio of channel partners. Obviously, we have an existing long-term relationship with GE, but there are other channel partners where historically this Company has invested time, effort and, frankly, money, and those channels haven't delivered.

We are evaluating each and every channel and intend to address that. That's one of the three key strategic points I made. So I think it's very important distribute to address our distribution channels, and that will help us drive the right kind of revenue and the right mix going forward.

Well, hopefully you accomplish that, because there's no doubt there is a lot of demand there. There should be a lot of money available for your product, assuming you could get the sales, and hopefully you achieve that, and sooner than later. Good luck.

(Operator Instructions). Mark Cahill, private investor.

Just a quick couple questions on the balance sheet. I noticed there was $1.2 million on the line of credit. Did you ever -- from the fourth-quarter cash inflows, did you ever get to zero and then it went back up to $1.2 million? Is that how it worked?

No. We never did bring it all the way down to zero.

Okay. I was just wondering, is the $1.2 million related to the new bookings that you mentioned in the release?

No, what -- do you mean in terms of how we got it down to $1.2 million? Is that what you mean?

Well, I always assumed that it got down to zero and then up to $1.2 million (inaudible).

No. Basically, our fourth quarter, the cash generation that we have historically in the fourth quarter, a lot of that comes from our historical cycle of our maintenance billings. We have annual maintenance billings with our clients. And just the timing pattern of those, there is a very large amount in the fourth quarter. And that continued to be the case this year. And that's what enabled us to pay the line of credit down.

Okay. I think it was in the fourth-quarter conference call, there was mention of the new version of the accessANYware 5.1. Is that going to be completed in the first quarter, and do you have a beta customer for it?

AccessANYware 5.1 will be complete at the end of this month. It is scheduled to be installed and beta testing to begin the first week -- first two weeks in May.

Excellent. Would that be a new customer or an existing customer?

It is an existing customer.

Any guesstimate as to how long it takes to go through the beta process?

Probably three to five months.

Okay. I'm going to bring up an old name here, an old partner. Standard Register was a former partner; just didn't work out with Streamline due to the Standard Register issues. They went through their own turnaround. And the CEO, Joe Morgan, seems to be successfully turning around the company. Do you think you could reestablish a working partnership with those guys?

Well, as I mentioned when I was answering Sam's question, we are evaluating all of the partnership relationships that we've inherited. Standard Register clearly is among them. And also, by the way, I agree with your position on the good work that Joe Morgan has done. I think he has done a very nice job.

That being said, we'll make a decision with the team at Standard Register on the form and function of our relationship going forward. I know we've turfed that relationship over to Rick Leach. Rick will be picking it up and working with the Standard Register team to determine if and how we go forward with them.

Excellent. Regarding GE, I think you mentioned that the GE is going to be concentrating on transferring over their existing customers to the new platform. Is that what you were saying earlier?

What they're trying to do is they're trying to get everyone up onto their most recent release of their Centricity product. They have a history of having people lagging four or five versions behind -- or three versions, excuse me, three versions behind.

Is this the version they created with Intermountain two years ago, you think?

I don't think so. They are really trying to move it -- and the issue here, what they are trying to do, Mark, is they need to help their customers achieve meaningful use. Many of the versions of Centricity that are currently in the marketplace are lacking in terms of security and other requirements that are part of the technical underpinnings of meaningful use. So they are focusing on that with their current client base.

That seems to be the top priority for all the customers, is getting those high-tech dollars through the meaningful use.

It's real money.

Yes. Regarding TELUS Health, you guys have -- are you guys setting up meetings with them and began looking for avenues?

I'm sorry, I couldn't hear the question, Mark. Would you repeat it?

Regarding TELUS Health, I think they are going through a whole implementation stage. But do you see any progress there? Has Rick been able to meet them yet?

Rick has not. I've been on a few conference calls with them. We have a couple of meetings upcoming. We continue to have discussions with them regarding our relationship. They continue to expand deployment into the markets, as they are allowed to do under their existing partnership agreement with us. You know, they've been a good partner, and we'll continue to work that relationship. That relationship, just like Standard, all those will fall to Rick.

Right. Going forward on future conference calls, is it possible to ask you about pipelines for GE or direct sales, the status of those kind of pipelines?

You know, by personal design, I think it's -- in a way, I think we ought to run the business. I think you can ask the questions, Mark. And over time, we'll figure out what the appropriate metric is to report on that, because at this point, honestly, it's unclear to me, because it's not as simple as number of units or the number of sales or the number of things in the pipeline. It's also the question of the quality of the pipeline. And that makes a huge difference to an organization of our size. One of the first things I told the employees here is the difference between a good customer and a bad customer, and we're going to focus on the good customers.

Okay. Throughout your 10 weeks, do you view the Company as a document management company with workflow products, or is it a workflow company with document management products?

The heart and soul of what we do begins with the management -- I said this earlier -- the capture, storage and intelligent distribution of unstructured data. And the intelligent distribution addresses the workflow piece of it. The capture and storage addresses the document management piece.

I think one of the things Rick and his folks are working on diligently is the messaging and the positioning of the product set. So to simply sit there and say we compete with a -- even a FileNet from IBM, for example, that's not relevant. What we do is specific to healthcare, specific to the healthcare enterprise, specific to improving their operational and financial efficiencies inside their organizations. That's our sweet spot. We do it by capturing this unstructured data and making it actionable through the workplace.

Okay. Going forward, and maybe this will be a moving target, but how do you see the future mix through your distribution, more through direct sales or 50-50 between direct sales and partnerships?

You know, I don't think I have enough data points yet to give you a percentage going either way. But I think what -- I want to emphasize this, because it's, again, part of the five strategic points, is what's important here on the distribution side is the quality of our distribution partners, channel partners, and the way in which we choose to contract with them and they subsequently contract with their clients, of which we are a subvendor. That process is very important.

Secondly, as it relates to the direct salesforce, we believe we are in a position, and I think Rick has done a good job at this in his four weeks or five weeks here, of attracting direct sales talent that have a demonstrable history of success in selling products into the hospital space for growth-oriented healthcare IT companies. It's very, very important. And I think that's a mix from some of the historical hiring, a change from the historical hiring patterns.

Right. Have you added on two new sales guys or four, or is it a work in progress?

A work in progress.

Okay. My last question -- on the last conference call, there was a mention of the recovery audit compliance product. And it seems to be becoming very popular with customers. Streamline hosted a conference back in August, very popular, and there were suggestions of doing that, of holding more conferences.

Rick has only been here, like I said, four or five weeks. And our focus has really been to evaluate all the aspects of how we obtain orders from our clients and our sales prospects. And as part of that, we're looking at what we need for all aspects of sales and marketing, whether it's sponsoring more conferences, expanding our channel partners that I've talked about already today.

I think one of the key points to make as it relates to the product side of the business is that moving the product management organization out of operations and into the market-facing side of the Company will give us a better customer-facing presentation. And so right now, we'll start the process of looking at individual products, programs and promotions, and we'll see where we're at over the next couple of months. Rick, do you want to add anything to that?

Yes, I do think that the interest that we did receive from clients in that area was substantial enough to warrant looking at how we approach it. So as we look at going forward, whether what was done in the past was spot-on or not, we need to look at how we can provide them with the tools they need to make those activities in their organization highly successful.

So as we look at the portfolio, at all the things we can do to help our clients improve their revenue and decrease their expenses, this falls in the area of pretty significant interest.

All right. Thank you for your time, and good luck.

This concludes our question-and-answer session. I would like to turn the conference back over to Bob Watson for any closing remarks.

Thank you. Again, I would like to thank everyone for participating in today's call. I firmly believe that we have just started to scratch the surface of what is possible with our technology. We are dedicated to building a company that can consistently grow and drive and enhance shareholder value.

I look forward to talking with you again at the conclusion of the current quarter. Thank you for spending some time with us today, and have a good evening.

The conference has now concluded. Thank you for attending today's event. You may now disconnect.