2012 STRM year end conference call - Watson's comments - Part 2
"During the year, a total of three clients moved to direct agreements with us in lieu of renewing via channel partner. This has been a direct and meaningful positive impact on our revenue realizations from those clients. We expect this trend to continue into 2012.
Agreements with three clients to upgrade to accessANYware 5.1, which will bring the total number of clients who have committed to migrating to the newest platform to five. Likewise, we expect this trend to continue into 2012.
We have announced to our clients that we are sun setting several older versions of our accessANYware platform in 2013. This will require all clients to either move to the 5.1 platform or to version 1.9 SP3, both of which are Meaningful Use certified.
We also signed agreements with 7 clients including those previously noted to implement our integration suite for Epic EMR, which will increase our number of Epic integrations to 9 with 1 more currently in the contracting process.
We also signed an agreement with a major Texas health system to extend their maintenance and support agreement for five years. We expect the trend of longer-term maintenance and/or SaaS-based term contracts to continue as we move away from one-year renewals.
Returning to the 5 strategic points, the fourth strategic point was building human capital. We brought together the human capital that is required to accomplish each of these areas of strategic focus as we transform to a best-in-class healthcare information technology company.
During the year, we made material changes to our team. With the addition, of Mike Schiller, as discussed earlier, but also with the addition of the founders of Interpoint Partners, Matt Seefeld as Chief Strategist, Revenue Cycle, James Skrinska as our Chief Technology Officer. We also added six very talented, former Interpoint associates to our team in the Atlanta office. While we did have a material decline in our headcount, which now stands at 75, which is down from nearly 100 at the end of fiscal year in 2010, 22 of our current associates are in their first 15 months with the company.
Our fifth strategic point through 2011 was continuing to drive cost out of our infrastructure.
Operating expenses for the year were $2.5 million less than the prior year. We believe that we had taken substantially all of the costs possible out of our infrastructure during the year. We will continue, in the ordinary course of business, to monitor our spend patterns closely.
In summary, we are very pleased with the progress we made during the past fiscal year in each of the five strategic areas. We believe that providing you with the outline of our strategic plan for the coming year, as we did last April, our shareholders and stakeholders in the company will have a basis from which to assess our performance.
During 2012, we have four key strategic initiatives. First, we will scale and manage our infrastructure cost to help us efficiently and effectively grow the business. While 2011 had a focus on reducing infrastructure cost, 2012 will be a year for our teams to focus on managing the growth for infrastructure as the business begins to grow in scale. We will continue to invest in our human capital resources as we ramp to support our anticipated growth, but we will also closely manage the technical and administrative infrastructure of the business.
Second, we will expand our sales footprint to capture a greater share of the net new sales opportunities. While we added FTI Consulting as a distribution partner via our joint marketing agreement, we believe that we need to continue to develop channel partners to accelerate our growth.
However, as is the case with many distribution partnerships, there is a trade-off with this business model. Namely, that we sacrifice the percentage of the new revenue generated that is likely greater than if we sold the new sales prospects via our direct sales force.
That being said, we believe that channel strategy , cross mapped to an expanded direct sales team, both under the leadership of a dedicated senior executive, focused on revenue generation, will increase the number of net new sales opportunities for us.
Third, we will enhance our client experience. We spent much of last year deepening our knowledge of our client base. This year, we will work to enhance the experience our clients have with us. While we maintain very good relationships with our clients, our visits during the year highlighted areas where we believe we have the opportunity to improve their experience with our solutions.
Our success with this initiative will be borne out by a series of client surveys, as well as by the success of our upcoming 2012 NEXT summit, our annual Users Group meeting.
Our fourth and final strategy for this year is to introduce new and enhanced solutions for the market. During the upcoming fiscal year, we will look to continue to broaden, deepen and integrate all of our solutions offerings. This will be accomplished by bolstering our development efforts based upon input from our clients and from our understanding of where we see the challenges they face. As we did with the Interpoint Partners transaction, we may also consider inorganic solutions developments and growth opportunities as well.
As I have commented on previous calls, I want to remind everyone that this is a process. We are embarking on a measured yet aggressive growth plan, and as such, there may be bumps along the way. But we will manage our way through them.
The steps we need to take remain as clear to this management team today as they were in 2011. By methodically executing on our strategic and tactical plans, we believe positive results will be borne out by our financial performance in the years to come.
Given what we have done in 2011 to control our cost, understand the needs and opportunities within our client base, development our sales and account management teams and channel partners, we feel that we have a reasonable insight into our financial performance for this year and next.
Accordingly, we project 15% to 20% growth in net revenue for 2012. This would project revenue in the range of $20 million to $22 million.
Looking ahead, we project approximately 25% to 30% gross in net revenue in 2013 over 2012. This would project revenue in the range of $26 million to $28 million, not including the potential impact of any inorganic growth opportunities.
In addition, we anticipate adjusted EBITDA to grow at rates of 25% to 35%, respectively, for those periods rating approximately $4.5 million to $5 million this year, and approximately $6 million to $7.5 million in 2013.
Our earnings per share are projected to be between $0.07 and $0.09 this year and growing by approximately 20% to 25%, to $0.09 to $0.11 per share in 2013.
I want to thank our entire team of associates for their hard work and support of management's strategic plan. Our progress against our strategic and tactical goals has been demonstrated by our improved financial results, our growth in the backlog of nearly $10 million to the current level of $27.4 million, and the growth of our current sales pipeline opportunities to over $35 million.
There is much left to do, not only with the continuing integration of our fourth quarter acquisition, but internally as well. Suffice it to say that I believe we are well on our way to becoming a market-leading, best-in-class healthcare information technology company, one that all of our associates and shareholders can be proud of.
I will now turn the call over to our CFO, Steve Murdock, who will review of our Q4 and year-end financial information."