Streamline Health sees jump in revenues after pending deals secured

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Streamline Health Solutions Inc. (Nasdaq: STRM) announced in a Tuesday morning conference call plans to grow revenues by 20% in fiscal year of 2007, ending Jan. 31. Brian Patsy, the healthcare IT company’s CEO, said the realization of anticipated deals will enable the company to achieve this goal.

“We’re close to signing very large direct sale contracts,” Patsy said on the call. “We have many significant deals in the pipeline that hopefully will be in the second quarter reports.”

On Monday, the Cincinnati-based company reported revenues for the first quarter ended April 30 of $3.78 million, down from $3.85 million a year earlier. On average, analysts surveyed by Thomson Financial were expecting revenues of $5.18 million. Streamline reported a first-quarter loss of $0.44 million, or $0.05 a share, compared with a loss of $0.07 million, or $0.01 a share, in the same period of 2006.

“Revenues were below management’s expectation of record first-quarter revenues, due to protracted negotiations on two large system sales,” Patsy said in a press release.

Streamline Health, founded in 1989, develops workflow and document management software for the healthcare market.

On the call, Patsy said one of the companies that Streamline was dealing with froze capital spending, which protracted the expected deal. The company has since decided to go forward with the deal and Streamline “should close deals in the second quarter,” he said.

Streamline expects three large deals to be finalized in the second quarter.

“If they get delivered, we will be on track to deliver our expectations,” Patsy said.

Also on the call, Patsy said:
• The company plans to grow its sales force this year, but said growth will be controlled by the securing of anticipated deals.

• The company is negotiating with new partners to expand Streamline’s hosting services

• Portal development is part of the company’s focus this year. “To our delight, there isn’t a lot of penetration in the [portal development] market,” Patsy said.

• The company’s biggest challenge is distribution. Streamline plans to remedy this issue by hiring more account executives, Patsy said.

• Regarding the company’s partnership with GE Healthcare, General Electric’s $18 billion healthcare services unit, begun in late April to produce healthcare software: “We have not delivered as much GE business as we’d have liked,” Patsy said.

• Regarding the company’s partnership with healthcare consulting company Healthcare Resolution Services, Inc. begun last August to produce healthcare software, there are “no changes” in the partnership to report, Patsy said. The two companies formed a partnership to streamline healthcare business processes through workflow software and consulting.

• Streamline will release second quarter results on Monday, Aug. 27.

Over the last 52 weeks, the company’s shares have traded between $3.54 and $6.60. In midday trading Tuesday, shares were down about 15% at $4.20.