Streamline Health Solutions Inc (STRM) 2014 Q4 法說會逐字稿

Good day and welcome to the Streamline Health to announce fourth-quarter 2014 financial results April 16, 2015 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Randy Salisbury, Chief Marketing Officer. Please go ahead.

Thank you for joining us to review the financial results of Streamline Health Solutions for the fourth quarter and fiscal year-end of 2014 which ended January 31, 2015. As the conference call operator indicated, my name is Randy Salisbury. As Senior Vice President and Chief Marketing Officer here at Streamline Health, I manage all communications, including Investor Relations. Joining me on the call today are David Sides, our President and Chief Executive Officer, and Nick Meeks, our 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 the full text copy of the release, you can retrieve it from the Company's website at StreamlineHealth.net, or at 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 within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those reflected in the forward-looking statements contained herein. Please refer to the Company's press releases and filings made with the US Securities and Exchange Commission, including our most recent Form 10-K reports, for more information about these risks, uncertainties, and assumptions and other factors. Participants on this call are cautioned not to place undue reliance on these forward-looking statements that reflect management's analysis only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements.

On this call, the Company will discuss non-GAAP financial measures such as adjusted EBITDA. Please refer to our website at StreamlineHealth.net and our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. These non-GAAP measures do not include certain items of income and expense that affect operations and other companies may calculate these non-GAAP measures differently.

With that said, let me turn the call over to David Sides, President and Chief Executive Officer. David?

Thank you Randy, and good afternoon to all of you participating in today's call. I'd like to begin my first call with our investor community today by thanking the board for their unanimous vote, selecting as President and CEO, replacing Bob Watson, our former President and CEO, and to thank all of our shareholders for their support thus far. I've made every effort to get out and meet as many of you and our clients as I could while still focusing on leading our company to improve our performance in all areas.

I believe it will be worthwhile to center my comments this afternoon on my approach to improving our company's performance and the key strategic objectives I have already put in place. Clearly, we need to perform better, and I'm committed to doing just that over the coming quarters. But first let me take a moment to review our fourth-quarter and fiscal year 2014 financial performance.

As previously released, we generated revenues of $6.6 million, representing a slight increase over the fourth quarter of last year. Recurring revenue constituted 86% of total revenue for the quarter. Adjusted EBITDA was a negative $0.8 million, a significant improvement over the negative $2.2 million from fourth quarter of fiscal year 2013.

For the fiscal year 2014, revenues were $27.6 million, down slightly from fiscal year 2013. Recurring revenues for the year comes to approximately 88% of total revenue, an increase of 9.4% from 2013.

Adjusted EBITDA for fiscal year 2013 was negative $1.1 million, and new sales bookings for the year were a record $24 million. But our fourth-quarter bookings were not up to our expectation, once again some contracts move from one quarter to the next, which happens in our business. I'll discuss our Q1 bookings to date in a few minutes.

As I said in today's release, fiscal 2014 was a difficult year for our company and for many other companies in our industry as purchasing slowed down following the most recent phase of meaningful use.

Also like most companies in our industry, we experienced some revenue attrition. Usually we see revenue attrition of approximately 4% to 6%, but in 2014 it was approximately twice that level, primarily from the loss of one of our old legacy GE-based clients and from some of our acquired client relationships, primarily from the USA acquisition. Clearly, this had a negative effect on our revenue this past year and will affect our topline in 2015 as well.

Let me give you some specifics. Nearly 1/3 of the revenue attrition we experienced in fiscal 2014 was from our content management business, specifically three clients who are from the legacy GE relationship that the original Land Vision company started with back in the mid-1990s. We've stated before that GE's strength in the EMR segment has dissipated dramatically over the years where vendors like Epic and Cerner and others have displaced them with improved feature functionality. There are only two remaining GE-based clients using our ECM solution today, East Orange, who is changing its relationship with GE and plans to buy directly from us, and Marion General, who will move off of our solution this summer. With these final two changes, the GE relationship will be completely over and behind us.

Another component of the higher than normal revenue attrition, approximately 20%, is from our patient scheduling business from clients who had notified Unibased Systems Architecture, the company required at the beginning of 2014 of their intent to terminate before the acquisition. As with any of our acquisitions, we established a meaningful escrow account for situations such as this and we put in a claim to the escrow account for a substantial amount of money. While these funds do not help recover revenue lost, it will reduce our purchase price of USA and advance cash to the other financing line.

I believe we need to change our approach in a number of areas. I'm already well into the process of making changes I believe will generate better financial results primarily in the form of sales bookings and renewals, cost containment, and improved adjusted EBITDA.

When I joined the Company last September as Executive Vice President and Chief Operating Officer, I did so because I saw an opportunity to help take this company from a small playing industry to a big one, not unlike what happened while I was at Cerner. I believe we have the right solutions that deliver meaningful benefits and ROI to healthcare providers throughout North America. When I look at our list of clients I know this to be true.

My near-term focus will be on improving our execution to take better advantage of our unique position in the industry. To that end, I have established three strategic objectives for our company this year -- Grow sales, both inside and outside of our current client base, and keep the clients we have; complete our software links among the four solutions of our Looking Glass platform and improve professional services.

Our number one objective this year is to ramp up our sales growth, primarily in the form of new contract bookings. But this also includes improving client retention, in effect maintaining the clients we've worked so hard to get over the years, which will help us minimized revenue attrition.

The market we compete in is huge, both in terms of dollar spending and number of potential clients. Recently, we saw it has the potential market for each of our four key Looking Glass solution suites over the next five years in North America that are going to be worth approximately $7.9 billion.

In terms of potential clients, there are more than 800 large complex healthcare providers with more than 400 beds in the US. This is our sweet spot and we plan to attack this space more aggressively.

With such a large market opportunity, we need to expand our go-to-market strategy, including signing more channel partners who can help us get our products to market. We know we can't do this all by ourselves.

We just returned from our industry's largest tradeshow, HIMSS, where we received our 12th straight best in class award for our scheduling solution where we had numerous meetings with well-known companies in our space to augment their product offerings, and we believe we will finalize at least one contract with them in the next quarter or so. Once in place, we need to nurture these channel and strategic partners to help us get more prospects more quickly than we would otherwise reach with our own sales force. This represents a major change in our go-to-market strategy but it's one I've deployed before and I have seen it work well. We will announce these new alliances or partnerships as they are formalized.

In addition, we will invest in more direct selling and have already added two more sales regional vice presidents to our Company's sales force than we had at this time last year. To increase the size of our sales funnel, we've hired in-house legionary sales associates whose primary objective is to arrange introductory meetings for our regional sales leaders throughout the country. I want our folks to get more at-bats with clients and prospects because I believe our solutions can help providers improve their clinical, financial, and operational performance.

Our second strategic objective, which will also support our efforts toward our first objective of growing sales, is to complete the links among the four solution suites of our Looking Glass platform. We believe that our range of solutions that assist healthcare providers throughout the entire patient experience, from patient engagement to Accounts Receivable and audit management, is unique and competitively superior. These solutions, whether it be our Looking Glass platform, have been assembled mostly through acquisition over the past four years. By linking the solutions more tightly, improving the user experience, we believe we will be able to demonstrate greater value to existing and potential clients, which should also aid in our cross-selling efforts. Combining clinical and financial data together, which gives clients greater insight into their care process and how they can evolve from volume to value, is just one example of how better linkage can help our clients operate their businesses more efficiently.

Our third strategic objective is to focus on improving our professional services. Looking back at 2014, our ability to help our clients implement the solutions they had purchased from us suffered from the backlog and their corporate IT departments, as well as from implementation difficulties that we are in the process of improving. We have refocused our implementation methodology to make it easier for our clients to work with us, more specifically by better allowing us to help clients implement our solutions more readily so that the ROI we can deliver can be realized more quickly. By returning our professional services efforts to a breakeven level of performance, we can have a meaningful impact on the bottom line as reflected in our adjusted EBITDA. Having spent the first four months of my tenure as EVP and Chief Operating Officer, we've already put numerous programs in place to help us realize this objective by fiscal 2015 year-end.

Before turning the call over to Nick Meeks, our Chief Financial Officer, I wanted to review some positive developments that I think are worth mentioning this afternoon. First, our Q1 new sales bookings to date look very healthy. With about two weeks to go in the quarter, we have slightly more than $6 million on the books. Second, we have undertaken some serious cost cutting programs to help us reduce and rebalance our budget by effectively reducing our management overhead, allowing us to increase our investment in sales.

I will now turn the call over to Nick to review the quarterly and year-end performance in more detail. Nick?

Thank you David. I'm pleased to be talking to everyone this afternoon, having filed our financials in a timely fashion.

Before I comment on our financial results for the fiscal fourth quarter, I want to take a moment to highlight the progress we've made in our finance organization. One year ago, we were undergoing our first audit with our new auditors, having also triggered the requirements that would necessitate Sarbanes-Oxley compliance during that year. Our results for last year were filed more than eight weeks late with a number of material audit adjustments and eight material weaknesses identified in our internal controls over financial reporting. In less than one year since filing our last 10-K, we have implemented successful remediation such that I can report today no material weaknesses in our internal controls over financial reporting and am able to report that to you on time. The efforts involved were Herculean, and I want to thank my team and the entire organization for the long hours that have gone into getting us to this much improved place.

Now let's turn our attention to fourth-quarter 2014 and the fiscal year-end results. As reported earlier today, revenues for the quarter grew approximately 1% over the prior comparable period to $6.6 million. This brought revenue for the full fiscal year to $27.6 million compared to $28.5 million in the last fiscal year. The year-over-year decline was attributable to lower perpetual license sales and lower professional services revenues.

Each quarter, we have provided visibility into our unimplemented quarterly committed recurring revenue as a means to better demonstrate the potential impact on revenue these unimplemented contracts have. In the third quarter of last year, our unimplemented orderly committed recurring revenue was approximately $1.3 million, and it decreased slightly to $1.2 million in the fourth quarter.

From a future visibility perspective, we finished the quarter with approximately $72.5 million in revenue backlog, representing a 28% increase from the same period one year ago. In our earnings release and on our website at www.StreamlineHealth.net, we have 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 and tax expense, depreciation and amortization expense of tangible and intangible assets, stock-based compensation expense, and nonrecurring expenses such as severance costs. 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.

Adjusted EBITDA for the fourth quarter was a loss of $694,000. Adjusted EBITDA was adversely impacted by a negative contribution from professional services. Significant adjustments for the quarter beyond equity-based compensation expense included $2 million in a non-cash impairment charge related to the discontinued use of the Meta Trade name, and $315,000 in non-cash charges arising from the write off of deferred financing charges following the move of our credit facility to Wells Fargo. That brings our aggregated adjusted EBITDA for the full fiscal year to a loss of $1 million.

Moving now to the balance sheet and our cash position, the ending cash balance for the fourth quarter was up from the end of Q3 to approximately $6.5 million.

That concludes my remarks, and I will now turn the call back over to David.

Thank you Nick. Turning our attention now to guidance, we mentioned previously that we would like to focus our future revenue projections primarily on our recurring revenue, leaving out for now any perpetual license-based revenue that may be generated during the year. But that said, historically, perpetual license revenue has always been part of our total revenue mix. So for our fiscal year 2015 guidance, we will make reference to the contribution we believe will come from a few potential perpetual license deals already in process.

Frankly, in the past, I feel that including perpetual revenue of upwards of 15% in our total revenue guidance has led to disappointment in some of our quarterly results. For fiscal year 2015, perpetual license revenue is projected to constitute to between 5% to 7% of our total revenue.

Let me walk you through the numbers. Before I do, I want to let you know that I feel compelled to provide go-forward guidance that is conservative, but more importantly, attainable. I want to assure you that my management style is to set reasonable expectations and meet or exceed them each quarter. With this in mind, we are projecting that our total revenue for 2015 will be approximately $29 million to $30 million, representing modest organic growth of between 5% and 9%. Mentioned earlier, revenue attrition has impacted our 2015 guidance and our estimates include upper single digit percentage attrition during the year.

Specifically, we estimate recurring revenue on improve modestly from $24 million last year to $25 million this year, primarily due to the aforementioned client attrition. In addition, we project professional services will be approximately $2.5 million to $3 million, flat to slightly up from over the $2.6 million we generated in professional services in 2014. And finally, we estimate we will generate approximately $1.5 million to $2 million in perpetual license revenue for the year. Again, I have taken a conservative approach here, one that I believe is realistic and prudent. With this mix of revenue, we expect to return to profitability and cash generation from operations in fiscal year 2015, so we believe we can deliver approximate $1 million to $1.5 million in adjusted EBITDA, which will represent a significant improvement from last year.

One last important topic for today's call relates to our pursuit of the Veterans Administration Medical Appointment Scheduling System, or MASS project. Most of you know that we've had our Looking Glass patient scheduling and resource management software solution in the Indianapolis VA Medical Center for years. And we know it's enabled them to improve patient access to care, which is what the VA MASS project is all about, getting our veterans access to care in a more organized and expeditious manner. We've done it for them for years in Indianapolis, and we continue to believe that we are the best solution to meet their needs across the country now and in the future. As stated in previous conversations, because this is a nationwide federal RFP, we've never been able to gauge our chances of earning this bid although we have done and are doing, along with our prime contractor DSS, everything we can to win this business. Tomorrow, our team, known as Team DSS in our bid proposal, is meeting face-to-face with representatives of the VA to better understand why we were not invited to demonstrate our solution. We know of no formal shortlist or when demos of solutions are scheduled to take place, but we are extremely disappointed to not have the opportunity to show how our system can help our veterans. We will plan our immediate course of action as it relates to how we can reengage with the procurement process following tomorrow's meeting. I wish we could provide more insight into this matter, but for now, that's about all we know. As we have not yet met with the VA, we are not in a position to discuss this in any great detail until we meet and can determine our best course of action going forward.

Before I turn the call over to the operator to begin our question-and-answer session, I want to thank all the Streamline associates around the country for their hard work and dedication to our clients, our shareholders, and each other. I've been around long enough to get to know all of our 130 associates personally, and I'm proud to have them on this team. We have great opportunity ahead of us and lots of work to make it a reality. I'm confident we have the solutions, the clients and the talent to make it happen.

I'll now turn the call over to the operator for a Q&A session. Operator?

(Operator Instructions). Charles Rhyee, Cowen & Co.

Hey, thanks guys. David, if I could just start with the VA, I might have missed a little bit. Did you say that -- can you repeat what you said? You were not invited for a demonstration. Does that mean -- were you notified that you are effectively out?

That's right. So, we were notified that we were not invited to demo, but we don't know who was. So there's no public information out there other than they sent us an email actually to say you are not going to be invited to demo.

But you have a meeting tomorrow? What's happening tomorrow?

So tomorrow -- they notified our prime DSS that you have a chance -- once they notify us, you can meet with them to talk about what happened, what were the reasons, and get more details. But basically the letter is an invitation to meet essentially if you want to do so, which we did, and we are meeting tomorrow.

Okay. Did you ever have a sense on who else was bidding on this contract?

No, they've not said anything so far as to who has bid, what the process is, other than, as we said before, the next step was to say you get to demonstrate in front of a group of people who haven't seen the system before, and they actually run the system themselves. That's really all the details they have given us.

Okay. One last question, sorry, this just to round it out here. In your Indianapolis hospital, do you know if they have been contacted prior by the procurement process? Do you know if they've been questioned about it in the past?

We don't know. No.

Okay. Just one last question then for me on the guidance here, obviously you're growing more conservative. Earlier, you talked about your channel partner, discussions at HIMSS, potential for channel partner discussion at HIMSS, just to be clear though, none of that is in the guidance as it stands today?

That's true. And so a little more color, we were at HIMSS this week. Six people invited us to meet with them. So we didn't actually solicit, but people requested meetings with us to talk about how our solution could fit into their solution set and how we could help expand their market share. And we are open to that possibility. I think it, for us, helps a lot to be able to expand the sales force out in the country that's selling our solutions, whether it's paid for by us or paid for by a third party. So, we see that as good interest from the market. And it's not (multiple speakers)

All right. I'll stop and get back in. Thank you.

Matt Hewitt, Craig-Hallum Capital Group.

Good afternoon gentlemen. A couple of questions from me. First, could you provide a little bit more color on the customer attrition regarding USA? I think I heard you say during the prepared remarks that those were customers that at the time of the acquisition announced that they were leaving. Did you lose some after you completed the acquisition, or was there some additional attrition even after in addition to those initial customers?

This is David. Yes, so some of the customers weren't predisclosed, so we will have an escrow claim for those, and some terminated immediately after. When you do the modeling, you kind of know somewhat that as soon as you buy a company and you make those changes, people may leave thereafter. And so that attrition has been maybe more of what we expected, but the ones that weren't predisclosed certainly were not ones we expected.

Okay. And then I guess maybe following up on the prior question, regarding the partnerships, could you provide a little bit of color on where you are seeing opportunities? I know it's probably too early to divulge names, but are there specific markets or specific areas within -- maybe it's not even within acute care, but are there areas within the market that you could see a true benefit from using a channel partner? For example physicians market or long-term care? Is that kind of where you would see these partnership opportunities or is it to augment into the same market?

I think it's into some new markets. So, the requests have been varied, not for the same solution set even, but depending on where someone is. I would highlight that these other companies have the ability to reach much smaller in the market than we do. We usually look at 400 beds and up. Some of them look at smaller.

There's been changes recently in the competitive landscape where some of our competitors moved into for example a vendor neutral archive which competes with some other people that were previously their channel partners. And we are not going to take our ECM solution in that direction. We're going to stay purely on the medical records side. That probably opened up two opportunities on its own with people who said we're going to make a shift in our strategy and we would like you to be part of it.

The other pieces of the request have been from also large people kind of similar to the Optum piece. I think the Optum contract that we said to the market that we are actually open to do partnerships and we are open to do them in kind of a large way, even in places where it may seem like we -- co-opetition. They've been varied, but many of them actually come to us with a developed pipeline that they want to address. And with the consolidation in the industry, they have had difficulty finding someone who would actually complement their pipeline, and so we've been fortunate enough to have the solutions that they are looking for. Just part of our overall strategy to be everything other than the EMR. So we are encouraged, and I think we will get one of those contracts done here in the next 90 days, and move forward from there.

Great. Maybe one more for me and then I'll jump back into queue. I just want to understand the guidance a little bit better. So $29 million to $30 million, but that is including $1.5 million to $2 million in perpetual licenses if I heard that correct, and then professional services of $2.5 million to $3 million, so those bottom two, those would be the nonrecurring portion. Did I hear that correctly?

Yes, you did. And the perpetual piece, we are conservative with it, and we have that amount covered in current deals that we have in the pipeline or forecast. And the reason we being conservative there as well is you never know exactly how the revenue recognition will go. So the perpetual license revenue recognition hurdles are a little bit more stringent, and so we want to be sure we have enough coverage to get to that number.

Okay, great. Thank you.

Bruce Jackson, Lake Street Capital Markets.

Hi. Thanks for taking my question. Just to drill down on the guidance a little bit, with the $25 million, what's the breakout between SaaS and the maintenance and support?

It's about 70% maintenance and then probably 20% SaaS and 10% term license.

Okay. And then -- so you've laid out the strategy for increasing sales and helping out professional services business. Can you give us maybe just a little bit more detail on the professional services business in particular? What are some of the actions that you are taking to get that business generating more revenue?

One shift we've made is to move some of our new contracts toward a time and material basis. But if a project goes along or doesn't meet original timelines, kind of the scope control is built into it. Some of our older contracts have fixed fees in those, and so we are working sometimes for a declining amount of margin. We worked a lot on how do we install the application so that it's quickly done as possible and standardized so we can -- we will have some examples of some of those recently. But we can get a client from signature to live within six months. So that's taken a lot of standardization. We've trained our project managers on the PMP methodology. So we are moving to kind of industry standards and we are installing all of our solutions the exact same way through the same methodology. Before we had some variability between solutions depending on how the acquired did things before, and those have been kind of standardized out and we do things in a consistent manner.

Okay. Last question. On the implementation, one of the issues in 2014 was some of the clients on their side in terms of the resourcing didn't have the time and attention to spend on implementation because they were working on other things. Have you noticed any shift in their ability to work with you to implement some of the contracts in 2015 now that we are approaching the deadline for ICD-10 and there is some increased interest in the healthcare analytics side of it?

On your question about implementation, I'll take that first and go to the CA interest. The implementation side, I think they have a little more breathing room, but more importantly, we are shifting our strategy to make our applications not as reliant on their time to get installed. So in other words, if we went to a client and said, "Okay, you have to do the build of the system and that's going to take a 300 hours", you're always going to get de-prioritized to someone which has a different approach like the one we're taking now of "We'll do the build for you. You need to review the build and it will take 40 hours." Oh, okay, well, 40 hours I can do that. 300 sounds like a big project. It gets hard to prioritize that. So we're trying to take the burden from our clients for the work to be done and have it on ourselves, iterate and get better at it, and be paid time and materials for that as well so we can move those projects more quickly.

On the CA side, on the clinical analytics side, we are seeing a lot of interest in the marketplace for that. And we are encouraged with some of the changes we are making there in the product to add in additional capabilities like HTML 5, dashboards where it works on mobility or on the web, in addition to the very robust cohort builder and study analytics we have that help clients to find the root cause of where changes are occurring. So the early view of clinical analytics is it's improving and we think there's a good marketplace there for us.

Okay, great. Thanks for taking my questions.

(Operator Instructions). Frank Sparacino, First Analysis.

So two questions. First, Nick, for you, just in terms of the commentary around cost cutting, can you give me a sense as to what we should expect quarterly total expenses to be at in Q1 and going forward, I guess?

Yes. So I guess relative to Q4, if you're looking for the bridge, we cut out about $3 million of expense and added $1 million back, so we should be $2 million net down. The growth is going to be on the sales and marketing side. That's an annual number, sorry. And the contraction will be in the combination of G&A and R&D, probably I would say 80/20 respectively.

Okay. And then second, David, just in terms of the Q1 commentary around bookings, and I guess maybe just also looking at the pipeline, can you give us a sense as to where you've seen the strength in Q1 from a bookings perspective? And also when you look at the pipeline, where do you think it comes from?

It comes from a couple of places. One is the coding solution set. We are seeing some strength there between now and October, I think we will see clients who haven't prepared yet still get projects in and our ability to execute in a three- to four-month timeline will help us there. I think that will resurge after October when they've sent their data technically to the government but then they start to have difficulty and denials and other things because they are not coded properly. And when those come back, the coders will be overwhelmed and there'll be a lot of demand for our clinical documentation improvement solution. So, I think that is one place where it will be kind of bimodal through the year.

And we are also seeing demand for our scheduling and our clinical analytics solution. And we see that continuing into the next quarter. So, we have some reasonable opportunities with some large health systems that we may sign and announce in the next few weeks, but then give us the entree to get a lot larger set of hospitals that we are pretty excited about. Some of those are in new markets. So not only are we thinking about new ways to market with channel partners, we're also thinking seriously -- and some of them are driving this, using this discussion as well, about new markets. Not just hospitals, but long-term care, even small critical access hospitals, mental health providers, because they all have the need for these same solution sets. And we see that expansion of market as a reasonable one, especially as we think we can have the same level of profitability from those markets.

That's great. Thank you.

Charles Rhyee, Cowen & Co.

Thanks for taking the follow-up questions. David, as we think about the business as you envision it going forward here, obviously putting a lot of changes in over the last six-plus months now. I imagine it will still take a little while further. What do you think of as the organic growth rate if you have a well-functioning sales pipeline and sales function going forward here? Recognizing obviously with the guidance you were impacted by bookings last year. But what should that sort of -- what sort of bookings growth rate and translating to revenue growth rate do you think is a realistic target not necessarily this year but as we think about somewhere down the road?

I think the realistic target is in the 15% range, plus or minus a couple of percent, say 14% to 16%. It's our internal target is right around 16% of an annual recurring revenue growth that we want to see from our sales team this year so that next year that's what we see flow through the revenue line. It will probably around that target from there forward. But that's what we are targeting this year. It's just this year has the headwinds from last year in it, but next year we want to see 15% revenue growth.

And is it but if you -- the way your contracts are set up though, if they are multi-year, don't you have to drive more bookings growth to get 15% on the revenue line since the first year of a contract is not the full value? Maybe just help me understand that a little better? Maybe I'm not getting it right.

No, you are. There is an advantage to signing early, so signing in Q1 and Q2 makes a difference because then you're entering 2016 financial year with the revenue stream turned on. And the other piece is we are really working on increasing the speed of install. So we want to get the speed of install down to 90 days so that even Q3 this year, what we sell we could have coming on in a meaningful way if not in Q4 of this year, in Q1 of next year, which still feeds the 2016 growth pattern.

And what is your time to implement right now?

It varies by solution, but we have driven clinical analytics down for example, one that we said last year we would work on productizing it, we've spent a lot of time on getting it installable as well, and we are able to get it installed in about 95 days. So that was pretty useful.

Okay. Last question from me. So obviously you talked a little bit earlier about some interesting channel partner discussions and hopefully we could hear something soon. I think earlier when you talked about the bookings being basically flat, some deals slipped. So when we think about the first quarter bookings, maybe you did address what usually bookings look like. Can you remind me where we are at here for the first quarter?

Right now, we are at $6 million, and we have a couple deals we are still working on for the end of the quarter. So we will give you the update on wherever we are with the whole quarter on the next call. But it will be at least $6 million because that's what we've already signed.

Okay. Then last question from me, Nick, maybe -- if we are looking at $1 million to $1.5 million in adjusted EBITDA expected for the year, can you give a sense of what we should expect for operating cash flow? Should we expect a cash burn in 2016 or should we be expecting to generate cash in 2016? Thanks.

I would expect to generate a nominal amount of cash, Charles, certainly not in great access to that EBITDA number, but it shouldn't be materially less than that EBITDA number either.

Okay. That's helpful. Thanks guys.

Matt Hewitt, Craig-Hallum Capital Group.

Just a couple follow-ups from me. First, your predecessor had really focused a lot of attention on the cross-selling opportunities within the installed base. Give the acquisitions the last couple of years and there not being a lot of customer overlap, it seemed like real fertile ground. Is that still a big priority, or do you see greenfield opportunities as the quicker, easier option as you look at it?

Both are priorities. I think that the cross-sell always has the advantage of there is an existing contract and you can put an amendment on an existing contract so you can get speed to contract. It has kind of near-term value and focus to us, and we are focused on that. So we, Nick and our account executives and made them quota-carrying salespeople now, and we've also hired a sales operation leader who is fantastic and is helping us work through the process of our funnel to be able to get things through more quickly.

And you will see from us a lot more transactions. We are doing a lot more transactions. Even if they are small, and they are $10,000 or $15,000, we are doing a lot of transactions. We are working on how do we get our funnel to go faster? And then with the lead gen, how do we throw more water in the top? So, even if there's rocks in our funnel, throw in enough water and you'll overrun the rocks at some point and the water will come out.

So we are really pursuing both strategies, but especially the cross-sell is still very valid, which is why our second strategic priority is to say we've got get this platform together, where it's technically together. So I was talking to someone the other day about when you have the data flowing into ECM, our enterprise content management, on the other side, you want to start running reports against that from our business analytics, that should be seamless. And you don't have to do a different interface or different work or whatever, another way to speed up our implementation timelines and make the cross-sell more palatable for clients because the work they've done in the past is just turn on another module. So you will hear announcements from us on the progress we are making there. Specifically, we're putting in a message bus amongst all our solutions as a first step. So if you send us data, we can send it to all of our solution sets and you don't have to send it twice. So those are some of the things that we are trying to put as underpinnings for this is how you get a good cross-sell strategy going and make it easy to sell, you make it easy to consume from a client perspective.

Okay. Thank you for that. And then I guess one last one. You had mentioned a couple of times that there's going to be some -- or the ability to go back and tap the escrow account. Any idea what the magnitude of that recapture will be?

We will see. So, it depends, as always, how do those discussions go and complete. So we have started the discussions. The magnitude is pretty good, but of course it will go straight to pay off our debt. It won't come on the cash line, but it will still count. So those discussions are ongoing, and they are substantial.

Is it a couple million -- I mean your debt was up -- was it $2.3 million, your net debt, so is it roughly that amount? Is that kind of what we should be thinking about? I know they are not tied to each other, but could you essentially back that back off here in the first or second quarter?

It's less than $1 million. To get to specifics, it would be somewhere between $700,000 and $900,000 probably.

Okay, great. Thank you.

Charles Rhyee, Cowen & Co.

Yes, thanks guys. Sorry, one last question from me. What is the CapEx expected to be for this year, Nick? And if we're going to generate let's say roughly cash -- sorry, operating cash flow in line with EBITDA, I mean is our net cash going to be -- are we still going to burn some cash or will we still be sort of flat to the cash balance that we had at the end of this year? Thanks.

No, I think flat is a fair and conservative estimate. So the term loan is amortizing to the tune of $0.5 million through the fiscal year. I think CapEx will be nominal, to be honest. We did a lot of data center work in 2014. I don't see a lot of equipment purchases, and having moved to an agile development framework, we are not anticipating a lot of software capitalization either.

Okay, great. Thanks a lot.

At this time, we have no more questions in queue, so I'll turn the call back over to Randy Salisbury for any additional or closing remarks.

Thank you again for your interest and support of Streamline Health. If you have any additional questions or need more information, please don't hesitate to contact me directly at Randy.Salisbury@StreamlineHealth.net. We look forward to speaking with you all again in early June when we will provide our first-quarter performance call. Thank you and good day.

That does conclude today's conference. We thank you for your participation.