Streamline Health Solutions Inc (STRM) 2012 Q3 法說會逐字稿

Good day, everyone, and welcome to the Streamline Health Solutions third-quarter conference call. Today's call is being recorded.

And now, your host for today call, Mr. Randy Salisbury. Mr. Salisbury, please go ahead, sir.

Thank you for joining us to review the financial results of Streamline Health Solutions for the third quarter of fiscal year 2012, which ended October 31, 2012. Joining me this morning are Bob Watson, our President and Chief Executive Officer; and Steve Murdock, Senior Vice President and Chief Financial Officer.

At the conclusion of today's prepared remarks, we will open the call for a question-and-answer session. If anyone participating on today's call does not have a full-text copy of the release, you can retrieve it from the company's website at www.streamlinehealth.net, or numerous financial websites.

Before we begin with our 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 marketplace 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 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, Randy, and good morning to all of you joining us on today's call. Thank you for your time today and for your continued interest and support of our Company. As noted in our press release earlier this morning, we had a busy and successful third quarter. Revenue and adjusted EBITDA increased 52% and 49%, respectively, over the same period a year ago. In addition, as many of you know, we completed the Meta Health Technology acquisition, and the most significant financing for this Company since our IPO in 1996. By any measure, the third quarter of our fiscal year was a complicated one for everyone in this country, given the financial market's uncertainty surrounding the election, the pending fiscal cliff, and, of course, Hurricane Sandy.

Despite these macro marketplace challenges, we performed very well as we continued in our quest to be a more integral partner -- not just a vendor -- to our clients. Proof of this can be found in a number of relevant facts. First, we continue to improve the position of our Company in the eyes of our current clients, and for future clients, with the completion of the acquisition of Meta Health Technology. The addition of their Collabra suite of solutions, computer-assisted coding, and clinical documentation improvement to our solutions portfolio, is an integral part of our forward-looking strategic plan. Second, our sales backlog increased from $32 million at the end of Q2 2012 to nearly $49 million. After adjusting for the impact of the backlog acquired in the Meta transaction, the quarter-over-quarter improvement in backlog was $3 million.

We believe this demonstrates not only that our solutions address current market needs, but also that our clients, by signing multiyear extensions, are committed to our solutions for the long-term.

Third, we also had a successful quarter from the perspective of operations. During the quarter, we continued to reduce our implementation timeframes as we improved our speed to go live for our clients. That's the positive. The negative, quite frankly, is that we continue to need more top quality human capital to join our team as we grow with our clients. We firmly believe that moving our corporate headquarters to Atlanta, a nationally recognized center for healthcare information technology companies, will help us attract quality associates to keep up with the growing demand for our solutions.

I will provide additional perspective on our Company's improving market position and continuing growth prospects after Steve Murdock, our CFO, reviews the specifics of our third-quarter performance.

Steve?

Thank you, Bob. I would like to review some of the more significant aspects of the financial results for the quarter ended October 31, 2012, and the fiscal year to date. Revenue for the second quarter was $6.5 million, a 52% increase over the third quarter of last year. This included $895,000 revenue from the previously acquired Interpoint Partners business; and $1.2 million related to the Meta Health acquisition. Revenue for the fiscal year to date is $17 million, a 35% increase over last year. On a same-store basis, year-to-date revenue increased 9.3% over the prior year.

Generally speaking, our operating income performance was negatively affected in Q3 by certain nonrecurring expenses associated with the acquisition of Meta Health Technology.

Operating expenses increased approximately $2.9 million during the third quarter over the prior-year period, contributing to an operating loss of $302,000 compared to an operating profit in the prior-year quarter of $364,000. The net loss for the third quarter was $1.2 million, or $0.11 per share, compared to a net income in the third quarter of last year of $296,000, or $0.03 per share. Net loss for the fiscal year to date is $1.1 million, compared to a net income for the prior fiscal year period of $8000.

These results included nearly $1 million of nonrecurring expenses related to the acquisition of Meta Health technology that closed on August 16. The Company took charges of $26,000 of nonrecurring expense in the first quarter; $524,000 in the second quarter; and $406,000 in the third quarter; all related to the acquisition of Meta Health Technology.

In addition to those nonrecurring charges, during the quarter we took incremental year-to-date amortization and interest expense charges of approximately $1.4 million, related to three important transactions for our Company -- one, the acquisition of Interpoint Partners, LLC, and Meta Health Technology; two, the refinancing of our debt with Fifth Third Bank; and, three, the product placement investment from Great Point Partners and Noro-Moseley Partners.

Excluding nonrecurring items, net loss for the third quarter and fiscal year to date was $672,000 and $94,000, respectively; or $0.05 and $0.01 per share. It also should be noted that earlier in the year, we did not have visibility on the amortization and interest expense associated with the acquisition and the financings. Consequently, while our operating performance is well within our previous guidance and expectations, our financial results were negatively impacted by those transactions.

Looking ahead, with the approval of shareholders at the October 31 special meeting of the conversion of the notes issued as part of the product placement investment into the Series 8 preferred shares, we will record an approximately $5.9 million non-cash, one-time charge in Q4. In addition, we expect to take approximately $500,000 of nonrecurring charges pertaining to severance costs, as we realign our headcount following the acquisition of Meta Health Technology.

New bookings for the third quarter were $2.9 million, and contract renewals were $2.5 million. As Bob mentioned, Hurricane Sandy hit the greater New York metropolitan area during our fiscal third quarter. Fortunately, the negative impact was modest, and primarily on our new sales bookings for the quarter, rather than revenue. We had anticipated closing some business late in the month of October, specifically with clients on the Eastern seaboard. And, obviously, those negotiations were delayed due to the incredible interruption of normal workflows.

However, from a professional services standpoint, we expect some revenue impact in Q4 as our clients have been slow to restart implementations that were in process at the time of the hurricane.

Our total backlog was nearly $49 million at the end of Q3. Approximately $41 million of this backlog is related to maintenance and support in SaaS contracts. Cash from operations and cash collections continued to improve; and when combined with the cash raised in our financing transaction in August, our cash balances at the end of the quarter now stand at $10.5 million.

As part of the financing transaction -- which included, as previously reported, a new debt facility with our lender -- the Company now has approximately $14 million in debt, for a net debt position of $3.5 million. 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, stock-based compensation expense, and nonrecurring expenses. Given the relatively large amount of non-cash charges and certain nonrecurring expenses, we feel that adjusted EBITDA is a more meaningful measure in understanding our underlying cash-based earnings. For the three months ended October 31, 2012, adjusted EBITDA was $1.6 million, compared to a corresponding adjusted EBITDA of $1.1 million for the prior comparable period. On a year-to-date basis, adjusted EBITDA was $4.8 million, compared to an adjusted EBITDA for the prior year of $2.6 million.

We will continue to provide this non-GAAP financial measure in future earnings releases.

In summary, although there were numerous and complex accounting transactions this quarter, we believe our financial condition is stronger today than at any time in the recent past. That concludes my review of the financial results for the third quarter of fiscal year 2012.

Let me now turn the call back to Bob Watson. Bob?

Thanks, Steve. As frequent participants in our quarterly earnings calls know, I always take the time to review and update our stakeholders on the progress we are making on our key strategic goals for the year. This quarter will be no different, but, hopefully, more brief. At the beginning of each fiscal year, I set forth key strategic goals that I believe will help us continue to deliver superior results for our clients, our associates, and our shareholders.

Three-quarters of the way through this fiscal year, I believe we are on a very, very positive track toward material progress against those goals. Our first goal was to continue to invest in our human capital. As mentioned, we believe that our move to Atlanta will help us in this regard. We continue to seek out highly motivated individuals that want to be part of a winning team. Second, we continue to expand our sales footprint to capture a greater share of net new sales opportunities. During the quarter, our net new sales team delivered several new clients. Our relationship with FTI consulting led to another new client. And we signed a partnership agreement with RSource. As with our relationships with FTI and [Intelligent], this relationship will take time some time to bear fruit. But we do think it provides another opportunity for us to have a touch point on net new sales opportunity.

Third, our efforts to improve the client experience continue. This, as I have said before, is a journey, not a destination. The journey continues as we reach out to our new clients acquired as part of the Meta transaction. That process continues. The development of relationships with those organizations is critical to our cross-selling strategy.

Fourth, on the subject of strategically introducing new and enhanced solutions to the market, I think the release of our Collabra suite -- which includes the computer-assisted coding solution -- is clearly a step in that direction. Our solution strategy team is continually evaluating our options of build versus buy.

As we approach the calendar year end, I think it is helpful to look back at what our Company was just a year ago, to see how much progress we have made in a relatively short period of time. Our plan has always been to build for growth by positioning ourselves to provide world-class healthcare information technology solutions in the area of knowledge management. For years, this organization has positioned itself as a document management solution provider.

When this team arrived, we took a deeper look at our solutions deployment in our clients' sites and discovered that a real value to our clients was providing them with actionable information. The addition of the OpportunityAnyWare solution, via the Interpoint acquisition, furthered our ability to deliver actionable information to our clients. As we watch those clients grow with us this year, it has become clear that they see that solution as a pathway to better knowledge management. We define knowledge management as the real-time delivery of information from disparate sources in a format that our end-users can act upon find that information to improve the financial outcomes of their organization.

The information we gather via our clinical documentation improvement and computer-assisted coding solutions, bundled with our analytics platform, continues to strengthen our status as a provider of knowledge management solutions. At the end of the day, our clients tell us that we are valuable partners, providing critical solutions to help them better manage the incredible amount of information -- both structured and unstructured -- inside their organization.

A year ago as a Company, we were not well-positioned for the kind of growth I had envisioned because we only offered one set of solutions -- content management, which is a mature segment of the industry. Today, we offer two additional complementary solution suites in segments that are rapidly growing. We think that this is very important to our long-term strategy.

At the outset of this year, when we provided general guidance, we could not foresee the timing of the Meta acquisition or the balance sheet reconfiguration; nor could we anticipate the costs associated with these important strategic moves. As a result of those moves, we improved our balance sheet and positioned us for accelerating growth. The accounting treatment of these transactions will have a negative impact on our GAAP EPS this fiscal year, but not going forward.

That said, I want to be very clear about one thing. Had we not reconfigured -- and, in our opinion, dramatically improved our balance sheet -- or completed the Meta Health Technology acquisition, which added an important suite of solutions to our mix, we would be tracking directly to the EPS results we had forecast back in April during our Q4 2011 fiscal year-end earnings call.

I believe we are a much improved Company today than just a year ago, and that it is our intent to make us a much improved Company a year from now. As I have stated in all of our prior calls, this is a process. To date, that process has borne positive results. As you know, we have made and will continue to make the investments required to deliver the results that we have committed to all of our stakeholders -- our clients, our associates, and our shareholders.

As always, I want to thank our entire team of associates for their hard work, results, and support of management's strategic plan. With the help and hard work of our associates in New York, Cincinnati, and Atlanta, I am confident that we will reach our goal. This concludes my prepared remarks.

We will now open the call for your questions. Operator, please instruct our listeners on how to queue up.

Thank you, sir. (Operator Instructions). Matt Hewitt, Craig-Hallum.

Good morning, gentlemen. Thanks for taking the questions. My first question for you, the bookings. You mentioned that Sandy had created a bit of a negative impact. You weren't able to close a couple of transactions. Have those since closed? And, if so, maybe is there a way that you could help us understand what that would have meant for your new bookings number for the quarter, if they had closed in Q3 versus Q4?

There were two large transactions that were in process at the end of the quarter. Both are in the final stages of contracting, where we expect them to close during the month of December. The impact, if you think about it, generally meant that a deployment or a contract signing for our analytics platform over a five-year period of time is likely a bookings number of somewhere between $1 million and $2 million range.

One of the two opportunities that was on the table was a -- OpportunityAnyWare, our analytics platform opportunity in the Northeast. The second opportunity was a Meta Health configuration opportunity where that would actually come in the form of a term license, as opposed to software-as-a-service. Both those agreements are still in process.

Okay. Thank you for that. Secondly, I know it's still very early, but what has been the response, post your acquisition of Meta Health? Obviously, I'm sure you've reached out and spoken to most if not all of those customers. Are they excited? What type of cross-selling opportunities are you seeing? And how quickly do you think those will start to flow?

Yes, we think -- actually, the early days, post the announcement in August, I think, for many of the Meta clients -- since it had been -- some of them had relationships with Meta for over 20 years. I think it was a little bit shocking. But we've been -- as we did with Interpoint, we've been very aggressive about reaching out to those clients. Every one of them, of course, has been touched multiple times over the last three months or so.

In fact, as recently as last week, I met with 10 of our New York City clients in person in a group meeting in New York. So we feel like we've made good progress in terms of starting the process of building a relationship with those clients. We think that's important for us. And, as a result of that, our sales pipeline continues to grow, as we add identified opportunities for cross-selling, not only into the prior existing 70 or so Streamline clients, but also in the 30 clients acquired as part of the acquisition of Meta.

Okay. That's very helpful and good to hear. As far as those cross-selling opportunities, what's the best way for us to think about the size of those potential markets? Or is there another metric that you could provide? I mean, obviously, you've got your Interpoint customers -- 18 to 20 of those. And you've got your AccessAnyWare, and now you've got Meta Health. How should we think about the combined market size, or market opportunity just from cross-selling?

There's a couple of ways to look at it. I mean, internally, we have done a calculation as part of our analysis doing due diligence, as we did with Interpoint -- we did the same thing with Meta -- of what we thought the total gross opportunity would be if we cross-sold everything across every single client. And that opportunity itself is north of a $100 million opportunity, which translates into about $20 million of annual revenue as the potential.

And, realistically of course, we're not going to realize all of that. But we do think it's a significant uplift opportunity for us. As we look forward into 2013, we are going to invest heavily in our account management team to ensure that we bring across the line as many of those opportunities as we can.

Okay. Great. Thank you. I'll jump back in the queue.

All right. Thanks, Matt.

Frank Sparacino, First Analysis.

Hi, guys. Bob, maybe first question. Can you just give us an update on where you stand from a sales rep and sales coverage perspective today, and where you think that's headed in 2013?

Yes, we are at -- including account management and net new sales team, we are at quota-carrying headcount of 8 today. Total sales and marketing organization, it's sitting at about, I think, 12 people today. We will increase the quota-carrying team, in Q1 of 2013, by 4. Toward the end of 2013, that number will probably go up again.

To give an example, when we entered 2012, our plan was to have 6 quota-carrying individuals in Q4. We are sitting at 8 today. We brought on people much earlier in 2012, as we saw the demand for the analytics solution. As we move into 2013, with the addition of the Meta suite and the understanding of the size of the opportunity in the cross-selling, we are going to go ahead and make that investment now in terms of account managers. And as we move into the year, we'll evaluate how we change the net new sales team.

Good. Maybe, Steve, for you -- on Meta, I think the figure you gave was $1.2 million of revenue in the quarter, correct?

That's correct.

Do you have, Steve, how that breaks down among the various line items?

I don't have that in front of me because the majority of that was maintenance. There was no perpetual license in that quarter.

Okay.

I'm sorry. There's a small amount of professional services, but the majority of that was -- Frank, I think it was probably 75% of that number was maintenance revenue.

Maintenance. Okay. And then, Steve, I noticed -- I see where you had to take a haircut on some of the maintenance. But I don't see that added back in terms of any of the non-GAAP reconciliation. I assume, going forward, that's probably a meaningful number, but any thoughts there?

Yes, we had to -- during the evaluation process, and as part of booking the purchase accounting entries and the deferred revenue, we had to take about -- it ended up being about a 13% haircut on their deferred revenue. We will never really realized that, so that's why we didn't add it back to the adjusted EBITDA numbers.

Okay.

It was 13%. The deferred revenue that we booked when we brought Meta over was around $4 million, so it was about 13% of that number.

Okay. Good. That's it for me. I'll jump back in the queue. Thanks.

Nick Halen, Sidoti & Company.

Good morning, guys. First question I had was -- I was wondering if you could give us a little bit of an update on what you're seeing in terms of the competitive landscape on the coding side; where we stand today and what your expectations are for the next year or so.

Well, the wild card in the coding space really was the activity by Nuance in the third quarter, where they spent something north of $500 million acquiring some partial assets from QuadraMed and the J.A. Thomas organization. And that's a relatively new competitor on the landscape. The primary competitors remain 3M and OptumInsight. And, frankly, it's competitive. And we think the leverage point for us is that our opportunity that we put forth in front of our sales prospects for current clients is the relationship between our coding assets and our clinical documentation improvements solution, bundled with the analytics platform we acquired last year from Interpoint.

We think that messaging really helps our clients understand that we help them manage their information better in a way that we, frankly, think about it has really helped them do a better job with knowledge management. So our go-forward selling strategy is really, for us, about bundling of analytics with coding; clinical documentation improvement; and our legacy content management solutions.

Got you. Okay. Great. Thanks for that. And also, have you guys spoken with FTI in regards to getting them involved with Meta at all? Is there any progress being made there?

That is on the table. That conversation is on the table. So they obviously -- FTI has a substantial clinical consulting organization that is separate and apart from the revenue cycle individuals that we work with today. But those conversations are underway.

Okay. And then, just lastly for me, I guess kind of a housekeeping question. How much of the interest expense in the quarter, if any, was one-time in nature? And how should we look at that going forward?

There was about $700,000 in the quarter that was one-time related to the refinancing of the debt. So going forward, if you look at our debt, the $14 million, our average cost of capital is around -- I think it's around 12% on that $14 million. There's another piece of debt on the books -- sorry, I think it's 8% -- is the average on that. But on the other piece of debt that's on the books, is a note from the equity transaction that was issued in preferred stock, and it was a convertible note. That note converted on November 1. So going forward, there won't be interest expense related to that.

Okay. All right. Great. Thanks for that.

(Operator Instructions) Sam Rebotsky, SER Asset Management.

Yes. Good morning, Bob and Steve.

Hi, Sam.

Tremendous acquisitions; hopefully, we will see, I guess in the next year, the fruit from your putting everything together.

Yes.

Now, on the Streamline Health software licenses that increased over $3.6 million or so in the quarter, is the profit margin greater in this? And when will this be booked into income as part of the backlog?

The additions to the Streamline Health line are actually in the bookings number you're looking at -- or the backlog, rather -- is actually Meta-related term licenses.

So their profit margins are not any substantially greater than your normal profit margins. And what period of time would they be booked into the revenue and income?

They run out over about a three-year period. We'll realize, for example, through the balance of this year, we'll probably realize another $200,000 or so from that backlog that relates specifically to those Meta licenses. A much more substantial portion in fiscal year 2013, obviously, for the entire year.

Okay. And the normal maintenance support, is that a five-year, as it was -- the $21,535,000 -- or what is the timeframe for this to be booked into income?

It runs out over a, again, a five-year period. Not necessarily ratably, but -- because there were some -- to give you an example, in 2011, we signed nearly $4 million or $5 million worth of renewals that started in 2011. So we will run -- by the end of this year, we will have run through a year of that. So that there will be four years of run out on those contracts. Things that we've signed this year will run out over a five-year period, starting from the date that we signed them.

And I'm not clear. The cash that you have, what is your expected use of the $10 million as of October 31? What's your expectation there?

You know, we made a point in the transcript piece that I read earlier that, when we made the decision to go through the total reconfiguration of the balance sheet, we thought it was important to have cash on hand and available as it relates -- to give us some flexibility to make the decisions about how we expand our solutions portfolio.

I think -- I made the point, again, in the earlier transcript -- that our solutions strategy team is continually evaluating a strategy of build, buy, or partner. And so, for example, in this last quarter, we made a marketing partnership relationship at RSource that we think had some implications, not only on the solutions side, but also in terms of our opportunity for net new sales.

Clearly, the Meta decision was -- we made the decision that because of market conditions that we didn't have the time available to build, so we made the buy decision.

Sounds good. Hopefully, you achieve your goals.

We are working on it, Sam.

Okay.

Thank you.

Matt Hewitt, Craig-Hallum.

First, your gross margin -- you had another strong quarter there. And I'm trying to -- if this may be the new level, that 53% or so that we should anticipate going forward; or is their opportunities, even, to expand to that number?

I think it will go up a little bit more, Matt. We are -- if you look at our maintenance and support margins, those are very similar and haven't changed that much. Those are in the mid-70 range. What we've seen on the software-as-a-service margins, those have continued to increase. This quarter, they were 77%. If you looked at that same quarter from the prior year, those margins were in the 50% range.

So I think we expect those to be -- maintenance and support and software-as-a-service -- to be somewhere between 75% and 80% on a margins side. The margins in the other piece of the business is in professional services, won't change that much going forward, I don't believe. And then, I think, the Meta piece is a perpetual license. So we will, hopefully, as we move in the future to -- more to the software-as-a-service model, we'll see some increase in margins on that side also.

Okay. That's helpful. And then, regarding the RSource partnership that you announced yesterday, maybe you could -- is that -- should we anticipate that's going to be similar to FTI, where there's an opportunity not only to co-market or cross market to your current customer bases, but they could ultimately become a customer as well?

Yes, I think, actually, Matt, we think the relationship with RSource should track similarly as it has with FTI, where the relatively near-term successes in net new sales through the FTI guys led to a decision on their part to incorporate our analytics platform into their core consulting business. So we'll see how the relationship plays out with RSource over the next couple of quarters. But our anticipation is, clearly, that we expect it to perform like the FTI relationship has performed.

Okay. And then, last question for me. As far as the pipeline is concerned, you talked that it's been building. But are there any types of metrics or numbers that you could provide? I know, obviously, computer-assisted coding is going to be huge over the next year and a half or so, leading up to 2014. The business analytics, there's been these surveys talking about how many hospitals are going to be acquiring, either new or replacing their existing. Are you seeing a significant amount of RFP flow? Are you getting into those RFPs? Any type of metrics you could provide would be helpful.

Well, on the issue of providing guidance, if you will, on sales pipeline -- for the time being, we're not going to go down that path. We'll reconsider it as we look at 2013. But in general, the pipeline, as you'd expect, with the addition of a significant number of members to the sales team this year -- if you think about it, if you go back to Q1 of this year, we had two quota-carrying sales people at that time. And we're at 8 today. So you'd expect that pipeline to continue to expand.

Clearly, with the decision in August -- the decision by the Federal Government for a date to start in on the ICD-10 conversion that came about two weeks after we acquired the Meta asset -- the uplift in our sales pipeline opportunities that relate to computer-assisted coding and clinical documentation improvement is obviously accelerated; and, frankly, and to be honest, at a pace that exceeded our original expectations. It still leaves us the challenge of working through the sales process and the closing, and those types of things. But we are encouraged.

Maybe on the business analytics or the computer-assisted coding -- or both, for that matter -- how long are those sales cycles typically? And what are you seeing right now?

Yes, in the case of analytics, where we obviously have a year under our belt with that solution, the sales pipelines -- excuse me, the sales timelines are three months on the short end and six months on the long cycle. Which, if you think about it in terms of more traditional HIT sales, where you're looking at 9- to 18-month sales cycles, we are pretty solidly in the 3- to 6-month sales cycle on the analytic platform.

Wow. Okay. That's impressive.

And in the case of coding, including we have not owed the asset long enough to know what the sales cycle is.

Okay. Well, that's still very helpful. And I appreciate the update.

Sure, Matt.

Frank Sparacino, First Analysis.

Bob, just one last question for me; more high-level. When you look at hospital IT spending, obviously some elements of reform have already kicked in terms of readmissions. And there may be changes as it relates to Medicare and even Medicaid reimbursement in 2013. Do you have a sense around how hospitals are looking at spending? Are they more apprehensive now, heading into 2013?

You know, actually, if you had asked me this question last year, I would have had a very different answer than what I'm about to give you. And the answer is that I think that, because of the fear or anticipation -- depending on which side of the ledger you're on as a hospital CFO -- of the pending changes in the payment models, I think all of us are convinced. And you've written about it in some of your research. But the payment models are clearly going to change. And what we are seeing is -- because, again, hospital margins continue to be compressed; they're going to be compressed more -- is that, particularly in the larger health systems, those CFOs are getting ahead of the wind; and accelerating and shortening their decision cycles around solutions that help them address changes in payment models, which is clearly where our analytics and business intelligence solutions fit. So we don't see any pullback at all in the availability of funds for those types of solutions.

Great. Thank you, Bob.

You're welcome.

(Operator Instructions) Mark Cahill.

Good morning, guys. Just a quick question regarding Meta and their legacy clients. Do they get a free upgrade to the ICD-10 product?

They are on perpetual licenses. So the software is obviously included in it. However, there is a professional services component. Any time we do any kind of upgrade, whether it's, frankly, in our legacy Streamline maintenance clients or in clients acquired through the Meta transaction.

Okay. Would the Meta acquisition -- does it make the coding part, that Streamline redundant -- that the ones you had before?

Yes. Again, one of the reasons for making the acquisition was to replace that particular product in our product suite. Now, the good news, from a financial accounting standpoint, is that the costs associated with that particular solution had already been amortized.

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

Thanks, Mark.

And with that, ladies and gentlemen, we have no further questions on our roster. Therefore, Mr. Salisbury, I will turn the conference back over to you for any closing remarks.

Thank you very much, Rufus. And thank you all for participating on today's call. If you have any follow-up questions or would like additional information, please feel free to contact me, Randy Salisbury, at randy.salisbury@streamlinehealth.net. Or you can call me at 404-229-4242. We look forward to speaking with you again on our fourth-quarter and fiscal year-end call in early April. Have a good day.

And, ladies and gentlemen, this will conclude today's conference. Thank you for your participation.