Streamline Health Solutions Inc (STRM) 2020 Q3 法說會逐字稿

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

Thank you for joining us to review the financial results of Streamline Health Solutions for the third quarter of 2020, which ended October 31, 2020. As the conference call operator indicated, my name is Randy Salisbury, a Senior Vice President and Chief Sales and Marketing Officer here at Streamline Health. I manage all communications, including investor relations.

Joining me on the call today are Tee Green, President and Chief Executive Officer and Chairman of the Board; and Tom Gibson, 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 our press release announcing these results, you can retrieve it from the company's website at streamlinehealth.net or at numerous other financial websites.

Before we begin with prepared remarks, we want to be sure that we are clear for everyone on the record how certain information, which may be provided today, as with all of our earnings calls, should be viewed. We, therefore, submit for the record the following statement. First, statements made on 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. These are subject to risks, uncertainties, assumptions and other factors that could cause actual results to differ materially from those we may discuss. Again, please refer to the company's press releases and filings made with the U.S. Securities and Exchange Commission, including our most recent Form 10-K annual report, which is on file with the SEC for more information about these risks, uncertainties and assumptions and other factors. As always, we are presenting management's current analysis of these items as of today.

Our participants on this call should take into account these risks when evaluating the topics we will discuss. Please note, Streamline Health is not undertaking any commitment or obligation to publicly revise any such forward-looking statements made today.

Second, we'll discuss non-GAAP financial measures, such as adjusted EBITDA. Management uses these measures to help provide better insight into our financial performance. However, certain items of income and expense are not included in these measures, so these calculations may differ from those which another entity may utilize in calculating their own non-GAAP measures. To help you compare these amounts on consistent terms, 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.

I'd now like to turn the call over to Tee Green, President and Chief Executive Officer. Tee?

Thank you, Randy, and thank you all for joining us this morning. Before I review our third quarter financial performance, I want to state again our support of our health care provider customers during this global coronavirus crisis. Our team has great respect for our frontline health care professionals, and we are grateful for their continuing dedication and service to their communities. To do our part during this pandemic, the Streamline team has been successfully working remotely since March and will continue to do so for the foreseeable future. We all know how difficult this year has been as we continue to deal with the many repercussions of the COVID-19 pandemic.

Under normal circumstances, meaning life with no pandemic, our health care provider systems are experts at multitasking, constantly working to provide the best clinical services and improve efficiencies within their organization without losing sight of security, data collection and financial health. Hospital departments work independently while making decisions under the corporate umbrella. We believe this year that rhythm has been disrupted, forcing health care system decision making into a more linear approach. Job 1 for hospital systems is to understand and manage the clinic care mandated by the pandemic. Job 2 is to ensure that they have the capacity to enable their respective communities to survive a surge, and now it appears that Job 3 will be to handle the logistics of providing vaccinations in an orderly fashion, including the specific refrigeration requirements of the various vaccines as they gain FDA approval.

We are confident that our health care providers' ability to multitask and decentralize their purchase decisions to the various departments as it was before the pandemic will return in the near future. And that when they do, solutions like our eValuator pre-bill coding analysis technology will be high on their list of smart purchases to ensure improved revenue integrity going forward.

During this time, we at Streamline have focused internally on controlling the things we can and to win at each of these things every day. As the newco I mentioned at the beginning of this fiscal year when we sold our legacy ECM business to focus solely on providing technology and services to help providers solve problems and gain efficiencies in the middle of their revenue cycle, I wanted us to develop a world-class product management team to deliver our eValuator technology. I wanted us to build a world-class customer success team, including an implementation team that would be second to none. In my view, all of this is necessary to ensure that we have delighted customers who will readily speak to new prospects about the many benefits they're realizing by using our technology-enabled services. These are some of the things we can control and win at every day. I believe we have won a lot lately as we have improved in all of the areas I just articulated. One proof point is that during the first 9 months of fiscal year 2020, our SaaS revenue grew 43% over the same period a year ago.

Further, we have supported new customers with more rapid implementations in the last couple of months. With the pandemic unabated, the team successfully completed implementations at Cooper University in New Jersey and M Health Fairview in Minnesota working 100% virtually. And the team has conducted regularly scheduled monthly meetings to ensure our customers achieve the results they anticipate and see the value eValuator delivers. This improved customer experience has delivered an expanding roster of referenceable clients. In general, I'm pleased with these stronger teams of individuals and believe they represent the kind of strong foundation any company needs to grow and grow quickly.

Turning now to our third quarter and first 9 months financial performance. Revenues for the third quarter totaled $2.6 million, down approximately 25% as a result of a $700,000 perpetual sale during the third quarter of fiscal 2019. Recurring revenue accounted for 74% of total revenue this quarter compared to 55% during the third quarter of 2019.

Revenues for the first 9 months of 2020 totaled $8.4 million, down approximately 9% compared to $9.2 million during the first 9 months of fiscal 2019. The decline was primarily attributable to both lower perpetual revenue and lower revenues from the clinical analytics business that was sunset in 2019. Tom Gibson, our CFO, will provide more detail on the impact from the clinical analytics business in his remarks later on.

Despite the macro issues related to COVID that I mentioned earlier, our sales team successfully closed $1.4 million of new bookings during the third quarter and $5.6 million during the first 9 months of 2020, just shy of our $2 million quarterly threshold to date. Randy would add additional detail about our sales efforts and prospects for continuing eValuator bookings success in a few minutes.

Another area that we can control is our operating expense. For the 9 months ended October 31, 2020, and 2019, we delivered significant improvement in operating expenses, which totaled $13 million, down from $13.7 million during the same year ago period. Our team has successfully managed cost throughout the year. And as a result, adjusted EBITDA improved to a loss of $1.7 million compared to an adjusted EBITDA loss of $2.5 million during the same prior year period.

As of October 31, 2020, we had $3 million of cash on hand with no bank debt. Our cap table remains clean with approximately 31 million shares outstanding, all of which is common stock. Our finance team has completed the paperwork to apply for conversion of our PPP loans we secured in April of this year into a grant. We will provide an update on this and other financial details shortly. But at this point, I will turn the call over to our Chief Sales and Marketing Officer, Randy Salisbury, for an update on sales activity and the state of our pipeline. Randy?

Thank you, tee. To Tee's point of focusing our efforts on things we can control and win at, I'm pleased to report that during the third quarter, we hired 2 very senior and seasoned sales professionals as we expanded our geographical coverage from 3 regional territories to 4. We have new regional vice presidents in the Western and Central regions. This expansion has enabled us to reposition our previous Central region sales leader to the Northeast, where he lives and has worked for many years.

As we search for true sales leaders, we came across a multitude of people. But I've always found greater success with executives who had a job but found our opportunity to be superior, and such was the case with both of our new RVPs. And they come with a strong database of existing relationships at some of the leading health care providers in their regions. I look forward to reporting on the expansion of our sales pipeline as a direct result of their efforts in future quarters.

Regarding our bookings in the third quarter, although we did not generate enough total contract bookings to meet our quarterly target of $2 million to $3 million, the prospects we focused on closing are still with us. We've moved most of them into the fourth quarter of this year and the first fiscal quarter of next year. As Tee stated at the outset of our call, the impact of the novel coronavirus pandemic on our prospects' final purchase decision-making has been obvious. Many of our most mature opportunities, and what we term stage 4 of our pipeline, have been focused -- excuse me, forced to delay final decision-making while internal budget or priority committees determine the most pressing needs during the crisis. We are seeing signs of the focus on linear planning starting to dissipate. And some of our prospects are regaining the freedom to make purchases that will improve their department's performance.

Clearly, eValuator helps with revenue cycle, compliance, and HIM departments do just that. But during the third quarter, our sales team successfully closed $1.4 million of bookings, including a new sizable eValuator contract with a large North Carolina based provider. And I should note, all of our selling activities remain virtual as the majority of our prospects are still working remotely, which negates the opportunity for us to meet with them in person, which is always our preference but is not a hindrance to our prospecting and selling.

Our pipeline remains plentiful and continues to expand. At the end of the third quarter, we counted 72 prospects, representing approximately $67 million of total contract value via our direct sales and marketing efforts. And for the first time, we've added 5 prospects to our funnel from our reseller partnerships, representing approximately $5 million in total contract value potential. So our pipeline now holds 77 prospects with a potential total contract value of $72 million.

As our prospects' decision-making frees up, I believe we will see improved velocity in our contract signings and the building of our SaaS-based revenue in the quarters and years ahead. As I just mentioned, we are seeing promising sales activity from our reseller partnerships. You may recall that last quarter, we signed a new eValuator reseller agreement with ChartWise, and we expanded our reseller agreement with Allscripts to include eValuator and our CDI technology in addition to Abstracting.

We project that the revenue generated through these partnerships will be primarily recurring SaaS-based revenue. Our goal is to lead an industry movement to pre-bill revenue integrity validation. And we believe that in addition to our direct selling efforts, large reseller partners should enable us to expand our reach and accelerate our sales. We continue to have discussions with other potential reselling partners, and we'll update you as these materialize.

Looking ahead to Q4 and Q1 of next year, I firmly believe that a number of our best prospects from the third quarter will sign new eValuator contracts with us. As mentioned, our best prospects have not left our pipeline. They've just been asked to delay our conversations and in some instances, contract signings. I'll now turn the call over to Tom Gibson, our CFO, to review the third quarter financial results in more detail. Tom?

Thank you, Randy, and good morning to everyone on the call. As previously reported, Streamline Health's SaaS-based revenue grew by $287,000 and $761,000 in the 3 months and 9 months ended October 31, 2020, respectively. This represents a 48% and 43% growth rate over previous periods, respectively.

Further, we generated growth of 10% sequentially in SaaS revenue from Q2 to Q3 2020, and we are projecting a similar rate of growth in Q4 as compared with Q3 of this fiscal year based upon recently implemented eValuator customers. Our annualized run rate on eValuator SaaS revenue at the end of this fiscal year is projected to be $2.7 million. We believe there is ample room for our company to continue these growth rates over the next 3 years. Certain of our past initiatives are reflected in our reported financial results for the third quarter ended October 31, 2020. The initiatives include the company's sale of the ECM assets effective February 24, 2020, and the funding of our PPP loan in April 2020 that supported our ongoing operations during the novel coronavirus pandemic.

As a result of the sale of the ECM assets, the company is reporting discontinued operations in fiscal 2020 and for comparability, fiscal 2019. Discontinued operations effectively separate the ECM assets and operations from the remaining or continuing business. As a result of this separation, we will report on continuing operations for the current and comparable previous periods. This will set a basis for the guidance of revenues, earnings and cash flows of the continuing operations once these are provided. I will address the subject of guidance in more detail at the conclusion of my remarks.

Now let me turn to the company's operating performance for the third quarter ended October 31, 2020. As announced in yesterday's press release, we generated revenues of approximately $2.6 million and $8.4 million for the 3 and 9-month periods ending October 31, 2020, respectively. This was 25% and 9% lower than the 3 and 9 months period ending October 31, 2019, respectively. The decrease in revenues for the 3-month period ending October 31, 2020, is a direct result of both the timing of the perpetual sale we booked in Q3 2019 and the removal of a sunset product, clinical analytics, which I will comment on momentarily.

The company's professional services, perpetual revenue and audit services have each been adversely impacted by coronavirus. Perpetual sales primarily generated through our reseller partnership with Allscripts and centered solely on our Abstracting technology were delayed due to health care organizations putting larger system changes on hold. However, as previously mentioned, the company's SaaS revenue increased by $287,000 and $761,000 in the 3 months and 9 months ended October 31, 2020, over the comparable previous periods. This was a direct result of the company's eValuator solutions.

Our company has provided insight regarding our legacy versus growth businesses. There are 2 legacy revenue streams that impact fiscal year 2020. One is clinical analytics, which represented approximately $330,000 of revenue in the 9 months ended October 31, 2020, as compared to approximately $605,000 in the same period last year. Clinical analytics was a patient care system measuring outcomes of certain procedures and has a different buyer, primarily in the research and educational segments of health care. It is not in the company's core business. And as previously announced, this platform was sunset in fiscal year 2019. The revenue stream for clinical analytics, a component of the company's maintenance and support category, expired in the second quarter of this fiscal year.

The sunsetting of this platform complements our selling of the ECM assets. The company has committed to exit solutions that are not focused on solving customer problems or helping create efficiencies in the middle of their revenue cycle or that do not offer future revenue growth as we continue to make strides in removing obstacles that have kept us from generating incremental top line revenue growth.

Turning now to bookings. As Tee and Randy mentioned earlier, the company generated approximately $1.4 million of bookings in the third quarter of fiscal 2020, which was below our target. The onset of coronavirus slowed the pace of our eValuator bookings, but we have not seen any slowdown in growth of the company's pipeline. We remain energized about the traction we are seeing with large, multiunit hospital systems and believe there will be an upward trend for future eValuator bookings performance. The pipeline data confirms that our bookings are being delayed and not eliminated.

Recurring revenues were approximately 74% of total revenue for the third quarter, substantially higher than the 55% from the same period last year, primarily due to the aforementioned perpetual license revenue generated last year. The largest impact on recognized revenue from the novel coronavirus in our 9 months ended October 31, 2020, was from perpetual sales, professional services and audit services, which are nonrecurring in nature. It is our view that hospitals are consumed by the need to focus on the increased demand for care as a result of COVID, the plan to address the logistical dissemination of a vaccine and the budgetary obstacles of higher COVID treatments and fewer elective procedures.

Moving now to adjusted EBITDA. We reported a deficit of $725,000 for the 3 months ended October 31, 2020, as compared with a deficit of $759,000 in Q3 2019. For the first 9 months of this fiscal year, we reported a deficit of $1.7 million compared with a deficit of $2.5 million in the same period last year. This reduction in the loss from adjusted EBITDA is a direct result of certain continual improvements we are making to the company's cost structure that does not impact growth or product development on eValuator.

Lower spend on trade shows and travel due to the coronavirus contributed some of the cost savings as hospitals are not currently taking in-person sales calls, which, as Randy mentioned, has not hampered our selling efforts as we can easily conduct live demonstrations of our technology virtually.

The company reported $39,000 and $239,000 of interest expense for the 9 months of fiscal 2020 and 2019, respectively. The company paid the entirety of its term loan on the day we closed the sale of the ECM assets, February 24, 2020. The company qualified and received a PPP loan in April of 2020 with a 1% interest rate.

Turning now to other areas. The company recognized depreciation and amortization of $1.775 million and $1.499 million during the 9 months of 2020 and 2019, respectively. The company has accelerated completion of projects that are in inventory for capitalized software development under the agile method of development, and that is leading to higher rates of amortization. The company has added tighter discipline to its development procedures by limiting the starting and completion of projects to within 1 or 2, 3-week sprints. This speeds the development work to completion and should result in higher amortization in future periods for capitalized software development. The primary benefit of this development method is that our customers should see greater velocity and enhancements, increasing their confidence in all of our technology solutions.

The company recognized $1.054 million and $719,000 of share-based compensation for the 9 months of fiscal 2020 and 2019, respectively. The company expects share-based compensation to trend higher in fiscal 2020 as compared with last year. The Board has continued to favor equity compensation for executives as opposed to the company's cash. Further, the company's development partner is receiving a portion of their compensation in stock, which is reported in this share-based compensation figure.

The company reported income from discontinuing operations, net of tax, for the first 9 months of 2020 and 2019 of $4.7 million and $3.4 million, respectively. The discontinued operation for fiscal 2020 includes a gain on sale of the ECM assets of $6 million. Discontinued operations in fiscal 2019 represents the income derived from the ECM assets sold in February 2020. The company has $800,000 of the original proceeds from the sale of the ECM asset held in escrow that is scheduled to be released on or about May 2021. The escrow funds are reported in the company's balance sheet as other assets.

Finally, the company recognized an income tax expense in the 9 months of fiscal 2020 and 2019 for both continuing and discontinued operations of approximately $90,000 and $16,000, respectively. The company has substantial federal and state income tax net operating loss carryforwards that may be used for the gain on sale of the ECM assets and sufficient to absorb any forgiveness received on the PPP loan. We do not expect to pay any material amounts of federal or state income tax for the full fiscal year 2020.

For GAAP purposes, the income tax originally reported in the first quarter of 2020 related to the gain from discontinued operations is being reversed through the fourth quarter of fiscal 2020. Income taxes assigned to continuing operations and discontinued operations is an allocation of taxes that offset, resulting in the company paying a minor amount of minimum state income taxes for the year.

Moving to the balance sheet. We finished the third quarter with approximately $3 million of cash on hand compared to $1.6 million at the end of the company's previous fiscal year. The company generated $5.4 million in the sale of the ECM assets, net of the term loan repayment. Additionally, the company applied for and received a PPP loan of $2.3 million in April 2020. The company has applied for but not been granted forgiveness of a portion of the PPP loan. No accounting for the forgiveness will be reported in the company's financial statements unless or until it is granted by the SBA. Beyond operations for the 9 months of fiscal year 2020, we invested $1.5 million into capitalized software development asset, primarily new functionality for our key customer solution, eValuator, down from $2.139 million in the same period last year. The continuation of this spend and development on the eValuator platform is deemed essential to expand our sales velocity.

The company continues to have flexibility with the investments we make into our software related to the timing, nature and type of spend. The company has reduced headcount from last year and refocused its R&D efforts around the company's go-forward solutions that have the greatest growth opportunities.

During the first 9 months of fiscal 2020, the company made no payment on the term loan as it was principal-free for the first 12 months. The term loan balance was $4 million when we closed with Bridge Bank on December 12, 2019. The term loan principal was repaid upon the closing of the sale of the ECM assets. The company has access to a $2 million revolving credit facility with Bridge Bank. The revolving credit facility is an asset-based loan, and the commitment is limited to a certain portion of the company's accounts receivable.

The company has not drawn on the revolving credit facility at any time during fiscal 2020. The PPP loan has no repayment requirements for the first 7 months. Additionally, based on certain criteria, the company may be forgiven a portion or all of the PPP loan. As stated previously, the company has applied for, but not yet been granted forgiveness of the PPP loan.

The company is not in a position to provide guidance for fiscal 2020 due to the continued uncertainty around the effects of the novel coronavirus. The company will continue to report ECM revenue as a discontinued operation in fiscal 2020, and it will impact all prior periods.

For fiscal year 2020, as previously reported, the company projects to generate a deficit adjusted EBITDA. The effects of the coronavirus have increased our estimate of the shortfall in adjusted EBITDA for this year. While we plan to use our cash efficiently and effectively, we have no intention of decreasing our investment in the company's growth engine, eValuator, or its direct sales channel. We are speaking proudly to all our stakeholders that Streamline is now a growth company. The company will provide guidance as soon as there is more certainty around the return of our macro economy from the effects of COVID-19.

That concludes my remarks. But before I turn the call back to Tee, I want to say again that I am very proud of our team's accomplishments over the last few quarters. We are realizing a new culture of velocity and execution. I am highly confident that you will continue to see financial results that will support my confidence in the new Streamline organization. Tee?

Thank you, Tom. Within our executive team, as managers and leaders, our responsibility is to control what we can and win at that every day. Our team has embodied that sentiment throughout this difficult year. And this has helped us develop superior R&D talent and delivery, along with world-class product management, resulting in continual improvement to our eValuator platform. Our customer success team helps nurture our customers to seek greater value from our technologies, resulting in happier customers willing to offer sterling references. Our commitment to lead an industry movement to pre-bill revenue integrity validation is real, and we believe we'll gain momentum in the years ahead.

I'm confident that when our health care providers catch their breath, innovative financial solutions like eValuator will be at the forefront of their minds. Before we begin our Q&A session, I'd like to extend my heartfelt thanks to the team members at Streamline for their hard work and perseverance during an enormously challenging time. Your contributions enable us to support our hospital system customers and ensure that they have the tools they need to free up time and resources to provide quality care for the communities they serve.

Thank you all for your support of Streamline Health and for your support of our vision. Now I'd like to open the call up to your questions. Operator?

(Operator Instructions) Our first question today is coming from Matt Hewitt of Craig-Hallum.

I wanted to dig in a little bit on the pipeline, if I could. First up -- and maybe a little bit on the selling environment as well. What are customers seeing right now? Obviously, you look at the, I don't know if you call it, the surge map or the heat map regarding the pandemic, but we're seeing it flare-up more West. And therefore, the East Coast seems, at least parts of the Southeast anyway seem to be easing up a little bit. Is that making the selling environment, particularly in that area, a little bit easier? And how quickly do you anticipate closing some of those pipeline opportunities?

Yes, Matt, Tee Green here. Thanks for the question. I'll let Randy follow it up. But in general, I don't know if we can point to outbreaks easing in one part of the country or another that are -- would assist in closing contracts sooner. What we have seen is -- and we've talked about this previously, is that these health care systems historically are very good at multitasking. Obviously, with COVID, that has created more linear decision-making. And that -- we have, I'll let Randy answer, about 5 or 6 contracts that are in red line in prospects, legal or in the financial arms of those entities that were moving through.

And then obviously, everything, we had to take care of the patients. Now we have to get the logistics worked out for the vaccines. We're beginning to see that piece get behind these health systems. And now the phone calls are coming back to Randy and team rescheduling those last meetings to go through the red line contracts. And that's happened, Randy, a couple of times in the last couple of weeks. And that I can't point to COVID outbreaks, but I can point to specific conversations with specific prospects where we have contracts in hand. Randy, do you want to follow-up on anything?

Yes, I think the one thing -- yes, I would add solely, Matt, that -- to Tee's very point, a couple of the conversations that we're going to have, I have one today and one tomorrow, are both in the Midwest, one of them in the upper Midwest, where the surge has really hit. I think to Tee's point, we're kind of beyond whether or not there's a surge or not a surge. They've lived through this linear planning. They've worked on what they've had to work on, including logistics for vaccine dissemination. And now I think they're kind of turning back to doing stuff that's smart for their departments. So that's encouraging to me.

And to answer your last part of the question, Matt. Last part. I think with any luck, we'll be able to get some decent signatures on big contracts certainly this quarter. And if we can, this month before we get into our last quarter (sic) [month] of our fiscal year, which is January.

That's very helpful. And then I think it's Slide 5 in the presentation today, in addition to the nice uptick in the number of prospects, it also appears just kind of running the simple math that the average deal size has gone up within your pipeline. Could you talk a little bit about that? Is that the new partners coming on board with maybe some larger health systems? Is it customers looking to maybe make bigger initial purchases? Any color there would be helpful.

Yes, Matt, Tee again. About a year ago, we made -- maybe 1.5 years ago, Randy, we made a conscious effort to target the larger health systems around the country because of the ROI that eValuator has is so great. And so as we targeted those, we have a handful now that are live, that are referenceable. And so I think that, that strategy a year ago is starting to pay off today. Randy?

Yes, I completely concur. And Matt, I would suggest to you that your idea, your concept there is true across the board, that the reseller partners are also looking at potential opportunities that are similar in average per year size. And this is not a case where we were talking with someone and they've increased the size of the purchase. That's -- we price this per bed. And so that's not necessarily the case. It's the audience we're gaining and the activity we're seeing in the pipeline are larger hospital systems.

Understood. And then maybe one last one. Could you just walk us through or remind us again regarding Allscripts, the time line as far as -- they've signed the contract, but as far as educating their sales force and when do you think that deals might start to flow from that as well.

Yes. Go ahead, Randy.

Roger that. Matt, we -- although they signed the addendum, we had an MSA, we signed an addendum for both the CDI technology and eValuator a few months ago. And then the next steps for any partner is to go through the vetting of the pricing and the positioning and how you take it to market. Then about 3 weeks ago, they had an internal kickoff call with their sales people to introduce the 2 new solutions. And then there's a large annual sales kickoff meeting in late January that they call the Global Kickoff, GKO, which we'll participate in. That will pretty much be the opening salvo to say, okay, here's what you can do.

And one of the reasons that we're excited, and I think they are, too, is that, as we've talked, Matt, eValuator is not a replacement sale, it's greenfield. And most big resellers are looking for something like that. I think there is one Allscripts client in the current pipeline based on getting an early start on this over the last few months. But I would anticipate that closings of Allscripts deals will probably be a second half 2021 occurrence.

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

I have a couple of questions. I guess I'll start by following after Matt's question. I'm curious if you could help us understand how, if at all, the contracts you're going to get through resellers like Allscripts might vary from a more of a direct contract relationship. That's number one.

Number two, curious if you can help us just understand the landscape of the reseller marketplace in terms of how many are out there, how big of an opportunity do you see that as -- that's where I'd like to start.

Brooks, this is Tee. The resellers, in theory, if we could get 20%, 25% of bookings a year through resellers, I think that would be a great number. And then, obviously, direct is where we want to spend most of our energy. But the deal sizes with Allscripts, they may be just a little smaller just because of their customer installed base based on where we're trying to focus directly. And then obviously, you pay commissions on those deals to the Allscripts organization. But in theory, you're not doing sales work, you're not doing the demos, you're not -- that's incremental bookings. And then as far as number of retailers out there, gosh, there's a lot, but there's probably a dozen that would be important to us. Randy, do you want to add anything further to that?

Yes. I think that's exactly right about Allscripts. The dollar amount that they would contribute on 3-year SaaS contracts would be slightly smaller than the current average we're seeing, but nothing dramatic. And then secondly, I would say that the partners we're looking at right now, that I referenced in my comments, Brooks, to Tee's point, we're talking to a handful right now. And if we could get a couple of them to agree, and I think we could, I think that will have the kind of impact Tee is talking about. They would represent a larger potential existing client base that they would go to with this idea, this technology and could add volume in the latter part of 2021 and 2022.

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

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

Yes, sure. I was going to say, Brooks, that Epic does not have a heritage, if you will, of reselling other people's technologies. But as you know, they sort of quietly endorse them by, if you can gain entrance into their Epic App Orchard, which is their good housekeeping sale of approval, which we've done. And that helps. When people are considering us that are Epic users, it certainly helps remove barriers to say, hey, we've already done all the integration work and you don't have to take our word for it, you can take Epic's word for it, and they support that. And that's good.

Make no mistake, a lot of the wins that we've talked about with you and others are Epic-based facilities. The larger the hospital system, it seems, the more predominance we find Epic as the EMR. To Tee's point, the more, I'll say, aggressive, but the more open to referring their clientele to solutions that can improve their revenue cycle performance like a MEDITECH and some others, would be good potential partners for us in that they have a large installed base that they would effectively be saying to their existing clients, "There are ways to get more value out of your EMR and here's one of them." And that's what we're working on with them and others.

But Epic is not necessarily one of those that considers doing it. If they did, we'd be happy to do it, but they knew who we are, and we're pretty tight with them, especially when it comes to implementation. They are part and parcel to how we go about doing it. Does that answer your question, Brooks?

Yes, it does. It's very helpful. I really appreciate. And I'll just wrap up with one last one, and you probably talked about this, and it's possible I just phased out. But when you talk about going after larger hospital systems, I see that as a huge opportunity for you. And I'm assuming, given the comments about the COVID environment and whatnot, they're sort of more focused on dealing with the pandemic right at this minute. But ultimately, those must represent a really significant opportunity for your company?

Yes. Absolutely. This is Tee, Brooks. The larger transactions represent, obviously, much higher bookings and revenue numbers for us, but also the ROI for eValuator inside of those health systems is so substantial that it, we believe, ultimately is going to make the sales process more efficient. And the more sophisticated health systems are the ones that already have the plan around patient care, around vaccine logistics, and they're the ones that, I believe, are going to come out of this the quickest.

Randy tells me you have some good contacts in that marketplace. So I'm hoping you can help them out in making some of these things.

We're working on to that, Brooks.

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

Well, thank you all for your interest and support of Streamline Health. If you have any additional questions or would like more information, please feel free to contact me directly at randy.salisbury@streamlinehealth.net. We look forward to speaking with you all again in April when we will discuss our fourth quarter and full year 2020 financial performance. Until then, we wish you all a good day.

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