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Streamline Health Solutions (NASDAQ:STRM)

Q1 2013 Earnings Call

June 05, 2013 11:00 am ET

Executives

Randy Salisbury

Robert E. Watson - Chief Executive Officer, President and Director

Nicholas A. Meeks - Chief Financial Officer, Senior Vice President and Secretary

Analysts

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Frank Sparacino - First Analysis Securities Corporation, Research Division

Operator

Good day, and welcome to the Streamline Health Solutions First Quarter Earnings Results Call. As a reminder, this call is being recorded. At this time, I would like to turn the call over to Mr. Randy Salisbury, Head of Communications, Investor Relations. Please go ahead.

Randy Salisbury

Thank you, and good morning, everyone. Thank you for joining us to review the financial results of Streamline Health Solutions for the first quarter of fiscal year 2013, which ended this past April 30. As the conference call operator indicated, my name is Randy Salisbury, and I manage Communications and Investor Relations here at Streamline Health Solutions.

Joining me on the call today are Bob Watson, our President and Chief Executive Officer; and Nick Meeks, our Senior Vice President and Chief Financial Officer. At the conclusion of today's 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 our company's website at streamlinehealth.net or at a number of financial websites.

Before we begin with prepared remarks, we submit for the record the following statements: Statements made by the management team of Streamline Health Solutions during the course of this conference call that are not historical facts are considered to be forward-looking statements, subject to risks and uncertainties. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will and other similar statements of expectation identify forward-looking statements. The forward-looking statements contained herein are subject to certain risks, uncertainties and important factors that could cause actual results to differ materially from those reflected in the forward-looking statements included herein. These risks and uncertainties include, but are not limited to, the impact of competitive products and pricing, product demand and market acceptance, new product development, key strategic alliances with vendors that resell the company's products, the ability of the company to control costs, availability of products produced from third-party vendors, the health care regulatory environment, health care information systems budgets, availability of health care 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 U.S. Securities and Exchange Commission.

Participants on this call are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. With that said, let me turn the call over to Bob Watson, President and Chief Executive Officer. Bob?

Robert E. Watson

Thank you, Randy, and good morning to all of you participating on today's call. We thank you for your time today and for your continued interest and support of our company.

I would like to start today's call by discussing the press release this morning. I want to remind everyone that this is our first quarterly earnings review with our new auditors, KPMG. As with any transition to new auditors, our new audit team brings with them certain viewpoints on interpreting the accounting rules. Consequently, we are still in discussions with KPMG regarding a noncash, nonoperating expense item related to the warrants issued in August of 2012 as part of the financial transaction that raised $12 million. We anticipate that we will conclude these discussions in the next few days and will report adjusted EBITDA performance as usual in our 10-K on June 14.

In addition, KPMG has recommended that we take a different approach to some of our revenue recognition and after careful consideration, we have agreed to embrace the recommendation as part of our methodology. This change in approach resulted in a reduction in what we would have otherwise reported as our top line revenue in Q1. But we do not anticipate this change in procedure to affect our go-forward performance. In fact, we reiterated in our press release this morning that we remain confident in our guidance for fiscal 2013, that we will produce top line revenues of between $35 million and $37 million and adjusted EBITDA of $7.5 million to $9 million.

That said, as I mentioned in our Q4 and our fiscal year-end call in late April, we believe we are making meaningful progress towards becoming the world-class health care information technology company that we aspire to be when we arrived in early 2011.

Today, I want to provide more background on that statement and to give you some key indicators that support our position, namely that we have significant forward momentum in the marketplace and are on the right track for continued growth. As most of you know, we require that our senior managers engage with our clients and even sales prospects on a regular and formalized basis. These meetings, as well as our own consideration of macro market trends, have led us to develop our company's strategic direction and plan. Strategically, our position is this: we believe that as the health care industry continues to consolidate, we will see larger and more complex health care organizations with multi-facility networks and multiple points of care delivery requiring significant care coordination. Most health care organizations will continue to grow their portfolios of own physician practices, they will require other care delivery sites such as ambulatory surgical centers and diagnostic centers, and they will acquire other post-acute care points of care. They will also face the looming [ph] inspector of coordinated care payment models in the financial and operational pressures that will arise from those new reimbursement models.

These complex organizations, many with billions of dollars in net patient revenue, will face continuing pressure on margins especially as the revenue models change over the coming years. For example, a larger portion of the payment burden will be transferred to the consumer. We are already seeing providers in certain parts of the country receiving bundled payments where they are responsible for paying all of the other providers in a particular patient's care experience. We also believe that reimbursements will also be based on patient outcomes instead of on the number of procedures provided. Our contention is that these large health care organizations will need innovative technologies to help them become more efficient, both operationally and financially. Hence, in the past 2 years, we have invested in expanding our suite of solutions to better meet the needs of our current and future clients. As I stated last quarter, you cannot successfully sell in today's tumultuous health care provider marketplace if your solutions do not deliver meaningful return on investment to your clients. Ours do.

Let me give you some examples to support our thesis. First, during the first quarter, we competed for, won and closed a competitive cross-selling opportunity of our clinical documentation improvement solution or CDI, which is part of the Collabra suite acquired in the Meta Health Technology acquisition last August. The client is United Health Services, Kenosha, Wisconsin, a multi-hospital system that owns physician practices as well. The reason I mentioned this particular client among other closed opportunities in the quarter is that it represents the first client on our roster who is contracted for a solution from each of our 3 technology suites. They originally acquired our content management solution, accessANYware. Then in 2012, they acquired our business analytics solution, OpportunityAnyWare. And now, they have our clinical documentation improvement solution from our Collabra suite.

United Health Services is one of the many health care organizations that we're actively targeting not only for cross-selling within our install base but as net new sales opportunities as well. It is our assertion that our value proposition is well designed for this type of client, and we firmly believe the United Health Services will be the first of many clients who will find value and a meaningful return on their investment in all of our solution suites.

Second, during the quarter, we closed 2 net new sales opportunities with large health care organizations in competitive sales environments. These 2 clients, BayCare Health System in Tampa, Florida, with 11 hospitals, 5 ambulatory surgery centers and hundreds of physicians; and Community Health Network in Indianapolis, Indiana, with 7 hospitals and nearly 900 physicians. These are important wins as they represent net new clients for our company. As I stated earlier, we believe these organizations and others like them represent a future trend in our industry, large complex enterprises that require innovative technologies to help them meet their growing list of challenges.

We execute on our net new sales strategy by leveraging our Business Analytics Solutions suite as the solution sales leader. Our success is proving out our sales plan set in motion 2 years ago. These large complex health care organizations are going to require best-of-breed solutions to help them solve the operational and financial challenges that they will face as the health care system continues to remake itself in the face of changes in the legacy reimbursement models. We believe that these same organizations will want to work with fewer, more trusted partners, not vendors, and that is what Streamline solutions is all about. We are their partners.

I also think it is worth pointing out that during the first quarter, we finalized our 5-year strategic plan on our annual Board of Directors planning meeting. That plan includes 5 key strategic areas of focus. I'm not going to go through each of those on today's call but we will discuss them during the course of this year as appropriate in that particular quarter. However, in the case of 1 of those 5 strategic areas of focus, we are taking immediate action. We elected to begin to build out our solutions optimization platform, wherein we will provide additional, post-implementation support to ensure that our clients maximize their return on investment. These additional contracts are sold as a subscription, which of course, we like.

We chose to enhance our solutions offering in this area organically, given that our first desire is always to innovate and build new solutions. If there is a clear path to profitable revenue and we have the runway to build out the solutions to realize that revenue potential, we will build, as we are in this case.

Early returns are encouraging as we closed 3 of these opportunities in the first quarter and have subsequent to quarter's end, signed 2 additional opportunities.

Returning to the quarter's financial results, I want to remind everyone that we guided to expect modest to flat revenue growth this quarter due to the impact of the known terminations in our accessANYware client base from 2010. The reality is that we were down slightly compared to that guidance. This is entirely reflective of the change in the revenue recognition policies as suggested by KPMG.

That said, in Q1, with a net $300,000 headwind and some revenue recognition adjustments from our new auditors, we generated revenue of $6.5 million, an increase of 19% over Q1 a year ago. New contract bookings were $4.3 million and included the net new clients noted earlier as well as our cross-selling activities. Additionally, we continue to see our SaaS-based revenue stream perform well with a 6-percentage-point improvement in margins during the quarter.

I will now turn the call over to Nick Meeks, our CFO, to review the specifics of the first quarter with you.

Before I do, I want to welcome Nick as our CFO. As you know, we promoted Nick a few weeks ago to Senior Vice President and Chief Financial Officer, and I am pleased to introduce him to you today. Nick?

Nicholas A. Meeks

Thank you, Bob, and thank you to our investors for attending today's call. Some of you I've already had the pleasure of meeting, and I'm sure others I'll meet in due course. Before discussing operating results this morning, I'd like to speak briefly about the ongoing discussions with our new auditor, KPMG, which Bob referenced. The specific issue at hand relates to the complex accounting required to value warrants, both at issuance and in subsequent quarters. The warrants in question were granted as part of a capital raise in the third quarter of fiscal year 2012 and the expense item and associated balance sheet liability are both noncash and nonoperating. We will conclude these discussions and file the 10-Q for the first quarter in the normal course of business on June 14, 2013. That said, today, I will limit my comments to operating results only. I will provide -- I will also provide a deeper context to the various costs incurred in the quarter as some relate specifically to our consolidation of human capital and the relocation of our headquarters to Atlanta, Georgia, and others relate to a potential strategic acquisition that management ultimately elected to pass on after negotiations commenced.

Revenue for the first quarter was $6.5 million, representing a 19% increase over the first quarter of last year. This included $1.8 million in revenue attributable to the acquired Meta Health business. In addition, our OpportunityAnyWare solutions suite drove approximately $888,000 in revenue during the quarter or 70% growth over the first quarter of fiscal year 2012.

Recurring revenue in the quarter totaled $5.2 million, 81% of our total revenues and growth of 32% over the prior year period. We ended the first quarter with a total revenue backlog of $53.2 million, which includes $42 million of recurring SaaS and maintenance revenues.

As noted earlier, our operating income was impacted in Q1 by certain nonrecurring expenses resulting from strategic moves. Operating expenses increased $3.1 million during the first quarter over the prior year period, contributing to an operating loss of $1.4 million compared to an operating profit of $672,000 in the first quarter of 2012. Included in operating expenses during the quarter were approximately $1.7 million of expense associated with the Meta Health business. We incurred $73,000 of professional service expense related to the potential acquisition that we decided to pass on, and approximately $383,000 of severance expense resulting from our headquarters relocation to Atlanta.

That concludes my results about operating performance for the first quarter of fiscal year -- of this fiscal year. I will now turn the call back over to Bob Watson, our CEO. Bob?

Robert E. Watson

Thanks, Nick. As I've said in the past, we will continue to thoughtfully make investments in our future through increased investments in development and infrastructure. Likewise, we will focus on the long-term strength and stability of our revenue stream by driving, whenever possible, our sales contracts to the SaaS model.

As Nick mentioned, we took a onetime charge in the quarter for out-of-pocket cost associated with the due diligence for a potential acquisition that would have augmented one of our existing solution suites. We did not prevail in the process, and that asset went to a third-party, primarily because we would not vary from our disciplined approach to acquire any additional assets. Simply, the price point moved to a level that we did not think was prudent. We believe that our decision to pass on this investment opportunity was the right decision.

I want to remind everyone that when it comes enhancing our solution offerings, we will continue to follow the strategy we put in place 2 years ago. As I mentioned earlier, our first desire is to innovate and build new solutions. If we have the runway to do so, as we did with adding solutions optimization in the current quarter. If we don't have the time or it's determined that the solution is outside of our core competency, but important to our strategic plan, we will look to partner with others in the space. In fact, we announced yesterday that we have entered into a partnership agreement with Patientco, based here in Atlanta, to help our clients improve the emerging challenges relating to liability collections from patients. Patientco offers solutions that when deployed will help our clients reduce bad debt by collecting patient liability more effectively, as well as accelerating cash collections overall and reducing their DSOs or days sales outstanding. We will integrate the Patientco software into our OpportunityAnyWare solution to deliver even more robust data mining and root cause analysis for their clients and ours. We see this as a strategically important and low-risk pathway to leveraging our investment in our analytics platform into the front end or patient access portion of the revenue cycle.

On the other hand, if the opportunity is well defined and very near term, we will augment our development efforts via acquisitions, as long as the investment is in keeping with the parameters that we have set for acquisitions. We will continue to be very, very disciplined in this regard.

Finally, as we think about our sales plan for the balance of the year, we anticipate generating more revenue from cross-selling our solutions into our more than 100 existing clients, which represent more than 450 facilities. There is no question that this will continue to be an important part of our growth and momentum. The large net new clients also represent, we believe, an opportunity for growth. As our Business Analytics Solutions continue to gain traction among clients, we're seeking to improve the decision-making based on the knowledge that we can deliver to them by mining their patient data. We believe that health care organizations seek knowledge, not just information, and that our solutions give them the knowledge to enable them to perform better operationally and financially in a challenging world.

In closing, I want to thank our entire team of associates for their hard work, results and support of management strategic plan. There are no shortcuts in this business. We remain very steady and disciplined in our focus and our efforts. I've said this before, this is not a sprint, this is a marathon, and we are in the first quarter of that race. I will now turn the call over to the operator for our Q&A session. Camille?

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Matt Hewitt with Craig-Hallum Capital Group.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

First question. What was the change in the rev rec, and what type of a headwind did that represent in the first quarter? I understand that the content management contracts rolling up, but there was, obviously, it sounds like there's an additional change. Could you go into a little bit of detail on what that was?

Robert E. Watson

I don't think I can, Matt. It's complicated. It's a change in policy from what we've done for the last 15 years, essentially. We decided to accept it and move on. And going forward, I think it does not have a material impact on us now that we know that, that's where we're going to record the revenue.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

But your prior auditor had been signing off on that revenue recognition, correct? So it's -- there's not likely an issue here. It's simply just a way that you're going to record the revenues going forward?

Robert E. Watson

Yes, it's still the way we're going to record revenues going forward. And we've been recognizing the revenue the same way for 15 years and 90 amendments to this particular contract. KPMG has set an alternative and we did.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Okay, fair enough. Bigger picture. We continue to see headlines, blogs, everyone talking about ICD-10, where hospitals sit today, where they needed to be even a quarter or 2 ago to be ready for October 1, 2014. It sounds like you're starting to see some nice traction, particularly with the CDI application. What can that mean for your business over the coming quarters and years? And also, where is coding sitting in your pipeline today? How large it that business of your pipeline?

Robert E. Watson

So let's talk about the micro market for a second. There's an awful lot of noise, and you know this because you read the same journals and same blogs that I do. But there are -- there's significant noise around where coding, the conversion ICD-9 to ICD-10 is for hospitals. The reality is I think a lot of us has settled into the viewpoint that not everybody is going to be ready on October 1, 2014. So we feel strongly that there's an opportunity for companies like ourselves who offer some bridge opportunities to create a bridge between ICD-9 to ICD-10. And part of that bridge process is we see people moving down the path towards CDI or clinical documentation improvement, like UHS did in Wisconsin. So we continue to be very encouraged about that. We think that acquisition we did last year was spot on for us. As a pipeline at the end of Q, the last call in April, our percentage of our pipeline that was related to coding was approximately 30%. It remains in that same range, but ticking up on a monthly basis. As the pipeline also increases in general, so we're quite comfortable with our ability to deliver on that solutions set this year.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Okay, fair enough. On the CDI piece, who has the competing technologies? What differentiates your CDI versus some of the others?

Robert E. Watson

I think the competitors are the usual cast of characters you expect, 3M, Optum, among the public companies to a lesser extent, Nuance, in the private company realm, it's folks like Precise [ph] and a couple of other folks in the private company side. Our leverage point there is we felt this from the beginning is that inside our current client base, we should win those opportunities as we did at UHS, because the value of the integration of the platforms is critical. It's critical to our own product roadmap, but it's also critical to our clients to maximize their values. If you think about UHS, they've got content management, they're at Allscripts site, so we're going to interface with Sunrise Clinical Manager. We're pulling down all that rich, deep clinical data that's in the EMR, the clinical documentation improvement solution is reading that documentation, making suggestions about areas that need more documentation. With the analytics solution already on the deck, they're used primarily, for financially. Over time, we should expect that analytics solutions to include the rich data that's coming through CDI or coming through accessANYware. So that model differentiates us from anybody else.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Okay. Maybe one more here, and then I'll jump back in the queue. The Patientco partnership that you announced yesterday, how should we be thinking about that from a revenue opportunity? Is that something that will be similar to nTelagent, and RSource, where maybe a little bit longer fuse but she'll be kind of kicking the tires, getting a sense for the market and determining whether or not you should make a bigger push into that? Or could this be something that drives revenues more near term?

Robert E. Watson

Look, here's what -- the other area where there's noise other than coding in the market today is that changing reimbursement models. And the fact that we've already seen in our own health plan negotiations for our associates that the financial burden is being pushed down to the consumer. I think hospitals are trying to figure out a way to collect those dollars sooner, better, faster kind of model. We've taken some look at the space and feel like there's some demand among our client base. We think, particularly, when you marry what Patientco does to our analytics solutions, that that's a significant differentiator. On the other hand, the revenue opportunity is a little ill-defined because it's still a relatively nascent part challenge for hospitals. So from our standpoint, it makes sense for us to partner. Now thinking about it from what it means in terms of revenue for us, it will take some time for this to play out through our client base. I think it's -- we don't anticipate the near-term successes we had with FTI last year. We think it will be more along a 6- to 9-month kind of corridor before we see results that are meaningful, but we're encouraged about it. We like the fact that they're down the street, 3 blocks away from us. And their client base that they have developed, since they've been in business, is predominantly here in the Southeast, which is a net positive for us as well.

Operator

And we'll take our next question from Frank Sparacino with First Analysis.

Frank Sparacino - First Analysis Securities Corporation, Research Division

Bob, maybe you could first start with just in terms of the bookings for this quarter, the $4.3 million, can you just talk about relative contribution of the various segments?

Robert E. Watson

So yes, we can. So the bookings numbers, Software-as-a-Service was approximately $2.2 million; maintenance and support was a little over $100,000; professional services, $1.6 million and the balance was in software licenses, both our own and third party.

Frank Sparacino - First Analysis Securities Corporation, Research Division

Okay. And then also, across the 3 business lines roughly, in particular, curious around contribution from ECM, but also in the pipeline and looking forward, what you see around ECM.

Robert E. Watson

Okay. So in this particular quarter, the Software-as-a-Service bookings were entirely around OpportunityAnyWare. The software licenses were a mixture of legacy Streamline, accessANYware and Meta solutions and the professional services breaks out accordingly, and so naturally maintenance and support backlog and bookings numbers would relate back to those items. So ECM, I will tell you and I felt -- I think I mentioned this on the call in April that we did that Hartford deal in Q4. The percentage of our pipeline that's ECM-related today is probably 20% of our near-term pipeline, in that right around the 20% part. So if you think about it, 30% coding, 20% ECM and 50% analytics, and that's a good mix. I mean, I did not anticipate until the last couple of quarters for ECM to account for much more than 10% or so of our pipeline going forward. And that number is edging up a little bit as well. There appears to be, and again this is early, appears to be a developing replacement market driven by decisions by rip-and-replace decisions by some health systems that are going to rip out their EMR, which creates an opportunity to have for us to get to the table. I mean, we know now you've probably seen the same research that 81% or so of the hospitals in this country have EMRs at some stage of deployment. Some analysts believe that there's going to be a moderate bit of rip and replace going on in the next couple of years, and I think we'll benefit from that.

Frank Sparacino - First Analysis Securities Corporation, Research Division

Good. And moving on. So in terms of the cross-sell, I'd be curious, do you think from a product standpoint right now, there are any limitations, I don't know, the folks up at Kenosha if there was something that you've done from a product development perspective that perhaps helped that decision along? So I'm just trying to figure out where you are today to really improve that cross-sell opportunity.

Robert E. Watson

Well, I think, actually we've made, I think, a significant amount of headway since we acquired that asset in August. I think with our current clients where we see the cross-selling opportunities you expect, we think they understand the value of the integration of the pieces. There's not a direct competitor today that we believe can have the same pull-through of clinical information and the ability to display it in the analytics framework that we use in OpportunityAnyWare. That conversation with our clients matters, and we feel like they get it. And I think UHS is just a single, near-term example. But as I've reiterated in this call today and in the call a month ago, we expect a heavier emphasis on cross-selling in this fiscal year than we had in the prior year. And then again, that's reflective, I think, of our development roadmap and our continued investment in building relationships with our clients. I mean, the amount of senior management effort that goes into relationship development, not necessarily sales, but relationship development with our clients is important. We want them to understand deeply what our roadmap is, what our timing is and how that plays into financial benefit for their organizations going forward.

Frank Sparacino - First Analysis Securities Corporation, Research Division

Okay. And maybe lastly, real quick, Nick. Just on the $300,000 in terms of client turnover. Can you give me a sense where the bulk of that is coming from, in terms of the 4 revenue streams?

Nicholas A. Meeks

It's entirely content management. In terms of line items, it's about 2/3 from the maintenance line item, and 1/3 from SaaS. Does that answer your question, Frank, I'm sorry?

Frank Sparacino - First Analysis Securities Corporation, Research Division

Perfect. Yes.

Robert E. Watson

They were that same handful of folks that announced their terminations in 2010, which precipitated the management change.

Operator

[Operator Instructions] We'll take a follow-up question from Matt Hewitt.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

First, on the SaaS gross margin, and you mentioned this in the prepared remarks, but that was smartly in the quarter. Was there anything onetime in nature there? Or can we expect that, that SaaS gross margin should continue to expand as you continue to sell more of that product into your install base?

Nicholas A. Meeks

No, Matt, I think it will expand. It will probably expand at a slower rate as we move into the future. But it will certainly improve through time. The hardware investments that we have to make occurred in a step function and so we're moving through one of those step functions right now.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Okay. And then, a second one for me. The pro services expense has been up the past few quarters. Can we -- is that tied to some large, complicated installations that you're doing? Is it tied to the Meta Health or the Collabra suite? Where those installs department by department and much more challenging or what else could be driving that incremental expense?

Robert E. Watson

So that professional service team is fixed, and it's -- there's not like the actual cost number is relative. It's been ticking up a little bit but that's really reflective of adding the Meta folks last August and some overlap in a few positions in this quarter as we try to reposition people. So you've got a little bit of an overlap on the cost side. On the revenue side, professional services did lag a little bit to plan, which is reflective of the fact that much of the revenue recognition and professional services is milestone based, and those milestones slipped into the second quarter or a decisional quarter and that did not get realized in Q1. So that's sort of the dynamic we're working through on the professional services side. We monitor that pretty closely, but that cost structure is, for the most part, fixed. A little extra burden in this quarter as we reposition some of those assets by bringing on additional people for training. There's a training overlap, those kinds of things. So costs were a little bit higher, revenue was a little bit lower due to the milestone-based revenue recognition issues.

Matthew Hewitt - Craig-Hallum Capital Group LLC, Research Division

Okay. And those revenues likely push to Q2, and that's maybe part of the confidence in the step-up that we -- the step function that we should see each of the quarters this year as you get towards your guidance range?

Robert E. Watson

Yes, that's accurate.

Operator

And we'll take our next question from Mark Cahill [ph].

Unknown Analyst

Just a couple of questions on the expenses. I've noticed that R&D has increased quite a bit over the past couple of quarters. Is that a function of the mergers or is that really towards the buildout that you mentioned in your comments?

Robert E. Watson

It's a function of the addition of the Meta asset, it's a function of the investment we're making in integrating the 3 solutions. So we created an environment where we have a common user experience. Today, the user experience varies a little bit between solution sets. So it's a decision we -- a spend decision we felt was the right thing to do for the future of the business.

Unknown Analyst

Do you see that $1 million figure roughly maintaining throughout this year?

Robert E. Watson

I would not anticipate it to go down. We're going to continue to invest it.

Unknown Analyst

The shows -- I know you attended HIMSS. I was looking on your website. Are you still attending other shows or are you relying more on direct contact with clients?

Robert E. Watson

If I could not go to HIMSS for 1 year in my life, I would be so incredibly happy to not have to go. That said, you kind of have to go to HIMSS if you're in this business, likewise given our shift to the revenue side and the analytics side of the business and the coding side, which all really relate to revenue. We've increased our presence at regional HFMA events. We'll have a team at the HFMA annual meeting in a couple weeks from now. So we do invest in those. I think of our marketing spend, it's a significant marketing investment, but at the same time, we've continued to invest in the sales team in terms of people and individuals, so.

Unknown Analyst

Okay. Regarding the coding business, has there been any talk about delaying the ICD-10 implementation?

Robert E. Watson

They can talk all they want. The AMA recently, which was the last remaining organization of any power objecting to it, dropped their objection in the last month or so. It's a date certain -- I think the challenge, I said this earlier, and I really think that it's interesting, is folks aren't going to make it. I mean, they're not going to be 100% ready. It's going to be a dustup [ph]. So I think for companies like ourselves that have an ICD-9 to ICD-10 crosswalk conversion solution, it changes the -- we can give them a bridge to computer coding. There are some other things we can do. We think there's -- our implementation model around computer-assisted coding is different than our competitors. So we think -- and the conversations we're having with our sales prospects about it are very much driven by, "Okay, I'm not going to make it. How can you help me not fall completely off the edge and go bankrupt because of it?" Because it's potentially financially devastating to hospitals.

Operator

And we'll take our next question from James Terwilliger [ph] with Wunderlich Security.

Unknown Analyst

A couple of quick questions, most of my questions have been answered. First of all, congratulations on the nice revenue growth number. 19% is a very nice number in this type of environment. My question is more on the expense side, could you just provide some additional color on the SG&A? It looks like it had a significant increase from 2012 and 2013. I'm sure there's probably some onetime items in there. Could you provide any additional color on the SG&A expense increase?

Robert E. Watson

Yes, I can give you some. I mean, as Nick pointed out in his segment, there was $350,000 plus in severance, some of which hits that line are, we do an accounting cost, we occurred some legal fees, due diligence fees as related to the potential acquisition we were looking at. There's some other noise around some engagements we did with Grant Thornton and others around compensation planning and annual meeting cost in this particular quarter, which were higher than the past. So there's some noise in that SG&A number, and we'll -- to the extent that we can call it out over time, we can try to do that for you guys.

Unknown Analyst

Okay, great. And then just real quick, and I don't know if you will be able to answer this with some of the things going on. Can you give a cash flow and a CapEx number for the quarter?

Robert E. Watson

I cannot. It will be when we release the Q. Those items will be in there. Happy to discuss it after we release, but some of these items have some impact on that.

Operator

[Operator Instructions] And at this time, there are no further questions in the queue.

Randy Salisbury

Great. Thank you, operator. Well, once again I want to thank you all for joining us and attending our Q1 earnings call today. Should you have any more questions or need additional information, please visit our website at streamlinehealth.net, or you may call me directly, I'm Randy Salisbury at (404) 229-4242. Again, thanks for joining us on the call today. Have a good day.

Operator

And this does conclude today's presentation. Thank you for your participation.

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