Streamline Health Solutions Inc (STRM) 2011 Q2 法說會逐字稿

Good afternoon and welcome to the Streamline Health Solutions Report Second Quarter 2011 Financial Results Conference Call. All participants will be in listen only mode.

(Operator Instructions)

After today's presentation there will be an opportunity to ask questions.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Robert Blume of Lytham Partners. Please go ahead.

Thank you, Amy; and thank you all for joining us to review the financial results of Streamline Health Solutions for the second quarter of fiscal year 2011, which ended July 31, 2011. As the conference call operator indicated, my name is Robert Blume. 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; Steve Murdock, 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'll 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. We thank you for your time today and for your continued interest and support of the Company. With two quarters of tenure behind this management team, we are making real and meaningful progress towards transforming Streamline Health into a world class market-facing healthcare information technology company. As I noted in prior calls, this is a process. But we are well-engaged in the orderly transition steps that this team committed to when joining the Company. I will go into more detail on our progress against our strategic plan after Steve Murdock's review of our Q2 financial performance.

However, before passing this call to Steve, I do want to draw your attention to one of our announcements made during the quarter, and highlight the Meaningful Use Certification of Access Anywhere Five Dot One. This is an important step in the previously discussed process of transformation.

This product will be commercially released later this year and will do so with Certification for Meaningful Use already in place. This is an important step for Streamline Health. The power of this product to support the needs and requirements facing our clients is indicative of not only our movement towards being more market-facing, but also our commitment to our current and future clients.

At this point, I'd like to turn the call over to Steve Murdock, our Chief Financial Officer, for a summary of our financial results for the quarter. At the conclusion of Steve's remarks, I'll provide additional perspective on the results of the quarter, and then we'll open the call for your questions. Steve?

Thanks, Bob. I'd like to highlight the more significant aspects of the financial results through the second quarter ending July 31, 2011. Total revenue for three months ended July 31, were $4.1 million, compared to $4.7 million in the comparable quarter of 2010, a decrease of 11%. On a year-to-date basis, total revenues for the six months ended July 31, 2011, were $8.3 million, compared to $8.2 million for the comparable prior year period.

Professional services revenue decreased 7% over the prior comparable second quarter, while on a year-to-date basis, professional services revenue increased 18% over the prior year comparable six month period, primarily as a result of many milestones on systems implementations and services sold in prior quarters.

Recurring revenue for maintenance contracts increased $300,000, or 16% over the prior comparable second quarter as the result of revenue recognized from back-logged and from commencement of maintenance periods subsequent to the second quarter of 2010. For the six months ended July 31, 2011, revenue for maintenance contracts increased 13% over the prior comparable six-month period. Additionally, recurring revenue from Softwares of Service increased $29,000, or 3% over the prior comparable quarter; and year-to-date Softwares of Service revenues increased 13% over the prior year-to-date period as the result of achieving goal life status for one large subscription customer sold in 2010.

Total operating expenses for the three months ended July 31, 2011, were $4.1 million, compared to $4.7 million in the comparable quarter of 2010, a decrease of 12%. For the six months ended July 31, 2011, operating expenses were $8.5 million, compared to $9.4 million for the comparable prior period, a decrease of 10%. The decrease is primarily a result of a decrease in capitalized software amortization as older components of previously capitalized software became fully amortized in 2011. The overall decrease was somewhat offset by increases in stock based compensation, allowance for [dopla] accounts, and accruals for severance costs.

The cost of system sales for the second quarter was $628,000, a 20% decrease over the prior comparable quarter, and on a year-to-date basis, costs of system sales decreased 23% over the prior comparable period. The decline was primarily a result of the decrease in amortization of capitalized software as previously mentioned, as well as a decline in sales of third-party hardware and software over the prior comparable periods.

The cost of services, maintenance, and support was $1.156 million, as compared to $1.379 million for the prior comparable quarter, a 16% decrease. And year-to-date the cost of services, maintenance, and support decreased 10%. The quarterly and year-to-date decreases were primarily a result of staff reductions in the area of revenue cycle management consulting, as well as a reduction in the cost of third party provider maintenance contracts over the prior comparable periods.

The cost of software-as-a-service was $418,000 for the second quarter, compared to $472,000 for the prior comparable period, a decrease of 11%. And on a year-to-date basis costs of software-as-a-service decreased 8% over the comparable prior period. The cost of software-as-a-service operations is relatively fixed, but is generally subject to annual increases for the goods and services required. The decrease is the result of renegotiation of third-party license and maintenance agreements, as well as reductions in staffing which is offset by an increase in depreciation on infrastructure due to growth in hosting center operations.

Selling, general, and administrative expenses for the second quarter were $1.583 million, as compared to $1.506 million for the prior comparable quarter. On a year-to-date, selling, general, and administrative expenses were $3.247 million, a 1% increase over the prior comparable year-to-date period. The increase over respective comparable periods is a result of increases in equity awards, performance bonus accruals, investor relations expense, allowance for doubtful accounts, and severance costs.

Product research and development expenses for the second quarter were $342,000, compared to $567,000 for the prior comparable quarter, a decrease of 40%. For the six months ended July 31, 2011, research and development expenses were $760,000, a decrease of 27% over the comparable prior year-to-date period.

When examining total research and development expenditures, capitalized software development costs must be considered. The Company capitalized $606,000 in software development costs for the second quarter, as compared to $578,000 for the prior comparable quarter, and capitalized software development costs of $1.391 million for the six months ended July 31, 2011, compared to $1.274 million for the comparable prior year-to-date period.

Therefore, total research and development costs for the second quarter were $948,000, or a 17% decrease of our research and development costs of $1.145 million for the prior comparable quarter; and were $2.151 million, or 7% decrease, over the prior year-go-date period.

The decreases in research and development expense and the offsetting increases in capitalized software development costs were primarily due to an increase in cost-eligible for capitalization, decreased product support costs, and reductions in development staffing as we increased our use of third party outside development contractors.

The Company incurred an operating profit for the quarter ended July 31, 2011, of $20,000, as compared to an operating loss of $28,000 for the prior comparable quarter. For the six months ended July 31, 2011, the Company incurred an operating loss of $234,000, compared to an operating loss of $1.229 million for the comparable prior year-to-date period. The $995,000 decrease in the operating loss is the result of items previously discussed.

As a result, the Company incurred a net loss for the second quarter ended July 31, 2011, of $7,000, and a net loss of $288,000 on a year-to-date basis, or $0.00 and $0.03 per share, respectively, compared to a net loss of $75,000, or $0.01 per share in the second quarter of 2010 and a net loss of $.,252 million or$0.13 per share on a year-to-date basis for the prior year.

New bookings for the second quarter, primarily consisting of professional services and third party hardware and software were $1.9 million. Total backlog at the end of the quarter ended July 31, 2011, was $18.1 million, compared to $18.9 million at July 31, 2010, and $17.6 million at January 31, 2011.

The majority of the backlog is related to software-as-a-service and maintenance contracts versus software licensing sales. Second quarter and year-to-date software-as-a-service revenues are primarily generated from previously reported backlog.

In our earnings release, we've included a table reconciling our net loss to 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 non-cash charges, we feel that adjusted EBITDA is a more meaningful measure in understanding our underlying cash-based earnings.

For the six months ended July 31, 2011, adjusted EBITDA was $1.549 million, compared to a corresponding adjusted EBITDA of $766,000 for the prior comparable year-to-date period. We will continue to provide this non-GAAP financial measure in future earnings releases.

Our cash balance at July 31, 2011 was approximately $578,000, with $1.25 million drawn on our line of credit. Our cash cycles are still very dependent on seasonal patterns of prepaid annual maintenance fees from our customers. We will continue to use our availability on our line of credit to supplement our cash needs in those quarters where pre-paid maintenance fees are not as substantial as other quarters.

We continue to monitor our expenses, cash balances, and collections carefully to ensure that we remain on plan. And we believe we have the appropriate capital resources available to operate our business going forward. That concludes my review of the financial results for the second quarter. Let me now return the call back to Bob Watson. Bob?

As it relates to quarter two, we're obviously pleased with the decrease in expenses versus last year's second quarter. We have been able to make infrastructure cost reductions despite the heavy burden of severance in both quarters of 2011.

The slight decline in revenue for the second quarter is consistent with a previously stated guidance that management expects revenue for fiscal year 2011 to be flat or slightly down for the year.

As I stated in the previous call, our sales organization is very, very focused on transitioning current clients that are on maintenance agreements to the software-as-a-service revenue model, to expanding the footprint of our product mix in those clients, and to driving our net new sales prospects to the software-as-a-service model versus the historical model of a perpetual license.

As we noted in the prior call, the retention rate of clients that engage Streamline Health through the software-as-a-service model is well over 90%. This is because of the superior operational financial results that our solutions deliver and the leading edge service that we provide those clients.

Our value proposition to our current clients and sales prospects is further enhanced by the Meaningful Use Certification of Access Anywhere Five Dot One. It should also be noted that Access Anywhere one dot nine SP3, the next version of Access Anywhere built on the platform, which most of our clients are on today is scheduled for Meaningful Use Certification testing in Q4 2011, and will be commercially available the first quarter of 2012. Access Anywhere Five Dot One, built on our newly re-architected platform, will be commercially available later this year.

As we have stated previously, we believe that 2011 is the year to position Streamline Health for significant annual growth rates consistent with other high growth healthcare information technology companies. While our revenues are up slightly year-to-date, our forecast for 2011 fiscal year remains flat to down slightly. However, we are already seeing meaningful improvements in adjusted EBITDA, despite the dual burden of high severance costs as noted earlier and the cost of on-boarding new executives and associates. Year-to-date, adjusted EBITDA is up 100% from the corresponding period in 2010. This is material progress by any measure.

During our prior calls we introduced the five areas of strategic focus as we transformed Streamline Health. I would like to take a moment and comment on our progress in each of those points. For the purposes of level-setting what those points were, I will summarize them. First, becoming a market-facing organization. Second, building 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 of the capabilities of our product set.

Third, leveraging our core competencies to broaden the scope of our product portfolio and expanding our recurring revenue stream within our current client base. Fourth, building the human capital required to accomplish the foregoing. And, five, to continue to drive cost out of our infrastructure.

As reported last quarter, we are building a complete understanding of the needs of our current clients specifically, and of the overall marketplace in general. As we noted, we are rapidly transforming into an externally-facing organization. The alignment of all market-facing activities under unified leadership has demonstrated success as noted by the Meaningful Use Certification of Five dot One, the transitioning of the University of Virginia Health System to a direct client of Streamline Health, coupled with the purchase of additional workload technology, and the St. Vincent's Medical Center transition from a maintenance client to a long-term software-as-a-service client.

Second, we are actively working to secure every new opportunity that falls within the scope of the capabilities of our solutions set. We continue to recruit experienced healthcare sales executives to our team, as we announced during the quarter. We expect to have additional resources in place during Q3 or early Q4 of this year.

I was asked on a prior call about the concept of our sales assets transitioning from walking to jogging to running. Our plan was, and continues to be, to have this personnel in run mode in Q4. One indicator of their progress is the addition of $6 million in potential sales pipeline value from new and existing clients in the first two quarters of this year. However, please do keep in mind, the movement of sales prospects from qualified leads to a closed sale is a process that can and likely will extend nine to twelve months.

Also, as we previously reported, another key component to being more market-facing is to modify or expand our existing distribution channels beyond GE Healthcare in the domestic market and TELUS, formerly Emergis, in Canada. For example, we have an existing relationship with Standard Register, which, despite the depth and breadth of their client footprint and personnel, has not been productive for either company. Management believes that the construct of the prior agreement made it unlikely that either party would be successful. Consequently, we are in the process of modifying that agreement on terms which, we believe, will make this channel viable as we move into 2012.

In terms of expanding our distribution channels, it was previously stated that we expected to have one or more new channels in place prior to the third quarter of 2011. We are still tracking for that time frame. However, given the nature of the legal work required, there is some risk that a distribution agreement like this may push into the early part of quarter four. That being said, we are committed to our plan to have strengthened our channel partner relationships by the end of the year.

Third, we are leveraging our core competencies to broaden the scope of our product portfolio and expand our recurrent revenue stream within our client base. Again, our press releases during the quarter reflect our tangible progress in expanding our product footprint in our current clients. We continue to believe that there is a real and significant near term growth opportunity in revenue from this client base. Our account management team's efforts - which, by the way, are reflected in the sales pipeline growth number highlighted earlier - have been outstanding. As I stated earlier, we are actively pursuing the transition of maintenance clients to software-as-a-service platform as part of upgrades to either Access Anywhere One Dot Nine SP3 or to the new architecture, the Five Dot One platform.

Finally, in the same strategic area, we continue to identify clients who are candidates for new workloads, both standard and custom. Again, our press releases highlight this trend. In addition, our webinars programs to attract a respectable number of attendees, which management views as a solid indication of the interest of our current clients and some net new sales prospects in better understanding the depth and breadth of our product suite.

Fourth, we have brought together the human capital that is required to accomplish the other areas of strategic focus as we have transformed to a world class healthcare information technology company. We have not wavered in our plan to, as I discussed in the previous call, seek new associates who have had successful, demonstrable careers in growth oriented healthcare IT companies.

We also continue to see the positive benefits of the cultural changes in the Company. In the opinion of management, one marker for that shift is the participation in the employee stock purchase program that allows our associates to purchase stock via payroll deductions. At the close of the sign up period, over 50% of the eligible associates elected participation in this plan, which is a material improvement from participation in prior years.

Fifth, we have driven costs out of our infrastructure. During the second quarter we again eliminated a significant number of positions that were either not fully utilized or were no longer aligned with our strategic plan for 2011 and beyond. The second round of adjustments was very, very difficult, but needed. However, the support of the employee stock purchase plan following this reduction is, we believe, reflective of our associates buy-in to our plan.

In addition, our new sales automation system in sales and operations management system have been implemented. The reporting available via these systems give management at all levels a view into progress that has never been available here at Streamline. This will allow us to be more proactive rather than reactive as we grow this business.

In addition, we are aggressively moving some capabilities to outsourced resources. The process of moving certain quality assurance and development projects that are ideally suited for outsourcing to an outsource mode has been contracted for and the transition is underway. As we noted previously, this allows us to develop our solutions in a quicker, more nimble, and over time, potentially less expensive mode.

In summary, we are very pleased with the progress that we've made during each of the first two quarters of this year in each of our five strategic areas. However, as I said earlier in this call and in the prior call, I do want to remind everyone that this is a process. The steps are clear. We are executing on them. And the results are borne out by our improving financial performance.

Finally, from the bottom of my heart, I want to thank our entire team of associates for their hard work, result, and support of management's strategic and operating plan. We have made real and demonstrable progress, but there is much left to do. And every one of our 70-plus associates knows what is ahead of us. We will reach our goal of becoming a world class healthcare IT company.

That concludes my prepared remarks. We will now open the call for your questions. As noted earlier, in addition to Steve and myself, we are joined in the Q and A session by Gary Winzenread, Chief Operating Officer, and Rick Leach, Chief Marketing Officer. Operator, please instruct our listeners on how to queue up. Thank you.

(Operator Instructions)

First question comes from Joe Munda at Sidoti.

You guys had commented that the cash balance is now is at $580,000. How much availability do you have on that line of credit?

The total line of credit is $3 million. We're currently drawn down $1.2 million, to have $1.8 million in availability.

And how much cash do you foresee needing for the rest of this year to run the business?

Steve stated in his comments earlier that the combination of the current cash and availability under our [fifth-third] line are more than substantial enough to carry us through the year. If you look at historical patterns here, cash collections are actually quite cyclical. Cash goes up in the third and fourth quarters. As we pre-bill maintenance agreements, annual maintenance agreements in the Fall, that cash comes in during the Q1 and two. We tend to borrow against that line to some extent. And in fact, in the second quarter, we actually paid down the line from its peak. So we're quite confident that there's plenty of cash available for our core business needs.

And I'm just looking at the CapEx -- I guess six months through. Can you give us any sense of what further spending you guys will see for the rest of the year?

On the CapEx side, there should not be substantial spending at all at this point. There'll be a few hundred thousand dollars, but I don't think it's significant between now and the end of the year.

So, what is maintenance CapEx for the Company?

Total maintenance CapEx? Do you know, Steve, offhand?

It's not a very big number for us. I can get back to you on that, Joe. Sorry about that.

What is the transition time for somebody who's using historical model to software-as-a-service?

It's going to vary on a couple of things. One is the - and this happens even with new customers - it's the availability of our hospital clients' own IT resources. You have to put everything in a queue, and we get somewhere in the queue. That affects the timing. We don't have any control over that.

How long did it take for St. Vincent's to move from the old model to the new model?

They are still on the maintenance model. When are they scheduled, Gary, to transition to software-as-a-service?

First quarter of next year before the transition happens. It takes about nine months.

Nine months.

And, technically, it can be done much sooner. I mean, there's not a technical constraint. It's actually a resource restraint on our client's side for the most part. We experienced it in the - even with new sales.

And I guess my last question was in regards to Standard Register. You guys had spoken a little bit about it. Can you provide us a little bit more color? I mean, how much revenue were you guys generating from that agreement? And what can we see going forward from this agreement? I know you guys said that you're going to change the agreement around. How is that going to work?

I was trying to be a bit more subtle in my prepared remarks when I used the phrase "not productive." There was absolutely no revenues generated by that channel since that channel's been in place. And in our analysis, it's really a simple reason for that. I don't quite understand how the company got itself in that position, but it predates me. But the current construct of the agreement with Standard Register limits them to a single product, and that single product is large and complicated. Not the kind of product that the department level facing account managers and sales people at Standard Register can appropriately sell.

Essentially, they were given the rights to sell an enterprise product as opposed to a departmental product. Standard Register team is primarily departmentally focused. And so we believe the pathway to making that agreement productive is to broaden the product mix they're allowed to sell on a distribution basis. And then the large scale enterprise opportunities that they identified will be handled by our sales team. But they will be compensated as a referral agent, not as a distributor. And that's the general concept of it.

I kind of get what you're saying. That's all I had right now. I'll hop back in the queue.

Our next question comes from Frank Sparacino at First Analysis.

More of a general question. I'm just curious what you're seeing from the hospital clients today as it relates to Meaningful Use and their ability to spend. Also, what their advertising is spent on today and how that's impacting you?

You know, it's interesting when the entire Meaningful Use opportunity was foisted upon us by the Federal Government a couple of years ago, it created a challenge for vendors like Streamline and some of us who were departmental level solutions. The requirement of phase one Meaningful Use demonstrate meaningful use of an enterprise-wide EMR-EHR. So, the IT spend and the IT resource deployment for the last couple of years has been focused on the deployment of the core EMR.

That being said, they are now starting to get their stimulus payments, they're collecting the cash that was promised by the Federal Government, and IT resources are freeing up to begin to look at the phase two opportunities, which is where we fall in. There are several categories in phase two where our Meaningful Use certification, we feel like, should have a positive impact on our sales timelines and our positioning with our clients.

The last two or three years, it's been a bit of a drag on the sales engine, if you will. I think as we go into 2012 and we start to approach 2015 where there's penalties for failure to meet Meaningful Use, we feel like there should be some positive pull-through for our applications.

Thank you.

You're welcome. Thanks for joining us today.

The next question comes from Mark Cahill, private investor.

Are you near completion of Access Anywhere One Point Nine, Five Point One - whatever you want to call it?

Well, there's two different products. Five Point One is scheduled to be generally available, or commercially available, this Fall, late this Fall, the fourth quarter timeframe. Access Anywhere One Dot Nine, which is an upgrade to the current platform, not a completely new platform. Five Dot One is a completely new platform. Access Anywhere One Point Nine SP3 is scheduled for Meaningful Use certification in the late third, early fourth quarter of this year. And it should be commercially available sometime in the mid to late Q1 of 2012.

One Point Nine the one that's currently in Beta at a customer?

Both of those are in some stage of beta.

Just to be clear, the One Nine platform has been GA and previous versions for a couple of years. The Five-O architecture is the newer piece, as he mentioned. So, One Nine SP3 is not a huge and significant release like Five Point One is.

Regarding your Standard Register comments, as I recall Standard Register needed a lot hand-holding a few years back. Will Rick and his team require more educational seminars for this new arrangement that you've come up with?

Well, Mark, I think actually the fact that the hand-holding was required was indicative of why the agreement was non-productive and reflected the fact that the opportunity was really limited to an enterprise version of what we do, as opposed to the departmental version.

There is going to be some spool-up time in terms of educating and training their market-facing personnel. But the opportunity for them is to continue to have conversations inside facilities and inside conversations at the levels they're used to speaking. I think it should be much more productive for us because those assets will be speaking to the people they normally speak to as opposed to being asked to go talk to a CFO or somebody they don't normally talk to in the process.

That's certain understandable. Yes. I think you also mentioned in your comments there another distribution channel that you hopefully are going to get on the books by fourth quarter?

I did say that.

Can you give us any more color, or should we just wait?

I'm not going to provide any additional color. But as I said in the prior two calls, too - in the very first call I did and then at the end of the first quarter that the relationship with GE is good. Unfortunately, the relationship with GE limits some of the opportunities that we're able to see in the marketplace.

If you think about it from a sort of logic standpoint, GE is only going to get invited to the table if it's a large scale, enterprise-wide EMR decision of which there might be 20 to 25 of those a year, which GE's going to win 20% or 25% of it, or four or five deals. And of those four or five deals, three or four deals are going to have document management in it and Streamline will get three or four deals. We actually think the number of available decisions in a year at the departmental level is probably north of 150 decisions in each of the next couple of years.

So, the challenge for us is how do we get invited to the party 150 times? It's not going to happen with GE. It's not going to happen with a direct sales force. It's going to happen by intelligently selecting partners who have relationships at the departmental levels that matter to us. And we are very focused on trying to make intelligent, thoughtful decisions about who our partners will be going forward in that area. And there's some opportunities for us. So, we're pretty pleased with the progress we're making. It's a little bit like slogging uphill in a snow storm, but we're making progress.

Right. You make it sound very logical. It sounds like the marketing staff, that hiring phase, is coming to its completion. Do you anticipate hiring more implementers in 2012?

Well, actually in the current forecast, despite the growth, we have nominal additional hiring forecasted for our operations team; primarily, because of some of the changes we made internally about how we run the business on a day-to-day basis. We think we have better visibility into the use metrics for the personnel on that team.

So we think we can actually drive more revenue and more opportunities with the same number of bodies we have today through better efficiencies and better planning. I think Gary's team and the folks that work directly on the implementation side have done a very, very good job of embracing some ideas we've had about how to - no pun intended here - how to streamline the implementation process. And I feel like we're in really good shape on the personnel side.

Good. Also in your comments you mentioned the webinars have been very effective. Has that become one of your favorite marketing tools?

Well, if it doesn't cost me having to put somebody on a plane, I'm always a fan of that. And it's actually worked out all right. We've had good participation. Our current clients enjoy the opportunity to tell their peers and colleagues all the smart things they've done with us. It's a low cost avenue to get touch points with current clients and with even new sales prospects. So we will continue to make use of that medium and any other medium that we can that we think is a low cost avenue to get us an opportunity to be invited to more of those 150 decision points I mentioned a few seconds ago.

Right. Would you be posting any of these re-plays on your website?

We do not for client confidentiality reasons.

Okay. Next question is regarding kind of a new product type question. As your marketing staff interacts with the customers in a give and take process, do you expect to get new product ideas from these discussions?

Well, again, you go back and look at the transcript of the April 10-K call. One of the points we made about one of my observations then was that this organization was oddly internally focused and not as externally focused. So the realignment of all the market-facing members of our team under a single leadership in Rick Leach's organization, I think, gives us an avenue by the very nature of that kind of alignment that we are more market-facing today. And I think I made the statement earlier in the call today that we are becoming more market-facing. And what that means is it will help guide product development in a way that's much more disciplined, much more structured than it has in the past.

Now, when you have a broader pool of associates that are interfacing with current clients and sales prospects on a daily, weekly, or monthly basis, you get much better input about where the market's going and where we need to think to stay ahead of the game.

Right. Good. Just a couple more questions. Regarding the Meaningful Use extension deadline, what I'm reading is customers are still overwhelmed. They're going to be clamoring for an extra year between phase one and two. Does that work to Streamline's advantage?

I don't think it works to a disadvantage. I think time will show whether or not it's an advantage. I don't think it's necessarily a disadvantage because there are - of the folks that are already in our pipeline, our sales pipeline, they've already made the decision to start moving down a path towards adding this kind of functionality to their mix of EMR vendors. So, it's not going to change the process, I don't think, for the people. Is it going to slow people coming into the sales pipeline? I don't think so, either. I just think even if we give them another year, it's still only a year. And it takes them a year to make a decision. I don't see a negative necessarily. Again, I don't see a positive in it, but I think it's a net neutral.

From another angle, does it give you a chance to increase your volume of potential customers?

You know, that's probably true. I give you that point. I think that's probably true.

Right. The last question, and this might be a little early to ask, but are you able to give us any color on building your pipeline foundation?

Do you want to be more specific?

Well, are you getting a good quality pipeline of existing customer business, or new customer business?

All right. Let me answer that. Because I said this earlier in the call - you know we made the statement in the earlier call about the improvement in the sales pipeline dollar value since the beginning of the year. The other part of that story - that's not necessarily evident in that statement is that one of the first things that Rick and I did when we came in here with support from Gary and Trish Wharton who runs our account management team, was to really assess the quality of what was in the pipeline was delivered to us.

So, we were able to clean that out and we've been able to add significant, real, and meaningful opportunities to the pipeline. And we will continue to do that. Will we shorten the sales cycle from nine to twelve months? We're going to try everything we can to do that.

But I will tell you that we believe - and you've seen it in the press releases, and you'll continue to see it - is that there is real demonstrable growth in our current customer base. Those sales cycles are shorter. Those implementation timelines can be, in some cases, shorter. Not always, but can be. But I think we've done a very good to excellent job in the last six months of quantifying and moving prospects through the pipeline. But like everything else, it's a process, Mark.

It takes time and you've got to go one foot in front of the other. It's mind numbingly boring at times, but you have to go through the steps to get to the end. But things are moving through and we have a very tight process. Again, a process that was never in place in the past for evaluating the stage of where our prospects are in the sales cycle. I'm quite comfortable with the forward progress we've made.

Good. Thank you. That's it for me.

You're welcome. Thanks for joining the call.

There are no further questions at this time. We can turn the call back over to Bob Watson for any closing remarks.

Again, my thanks to everyone for participating on today's call.

In the past two quarters we have taken demonstrable steps in implementing what management believes is a solid strategic plan. This team is focused on delivering results for our clients and our shareholders. As each day passes, we will make progress towards our goal. We have a lot to look forward to.

And I look forward to talking to you again at the conclusion of the current quarter. Have a good evening, and thank you very much for joining us.