Performant Financial Corporation (Nasdaq: PFMT), (the
"Company"), a leading provider of technology-enabled audit,
recovery, and related analytics services in the United States with
a focus in the healthcare payment integrity industry, today
reported the following financial results for its first quarter
ended March 31, 2023:
First Quarter Financial Highlights
- Total revenues of $25.7 million, compared to total revenues of
$27.1 million in the prior year period.
- Healthcare revenues of $22.9 million, compared to $23.4 million
in the prior year period, a decrease of approximately 2%
- Net loss of approximately $4.2 million, or $(0.06) per diluted
share, compared to net loss of $1.7 million, or $(0.02) per diluted
share, in the prior year period.
- Adjusted net loss was $3.6 million, or $(0.05) per diluted
share, compared to adjusted net loss of $1.1 million, or $(0.02)
per diluted share, in the prior year period.
- Adjusted EBITDA of $(1.7) million, compared to $0.3 million in
the prior year period.
First Quarter 2023 Results
Total revenues in the first quarter were $25.7 million, a
decrease from total revenues of $27.1 million in the prior year
period. Healthcare revenues in the first quarter of 2023 were $22.9
million, a decrease of approximately 2% from $23.4 million in the
prior year period. Within healthcare, claims-based services revenue
in the first quarter of 2023 was $10.4 million, while revenues from
eligibility-based services in the first quarter was $12.5
million.
“During the first quarter of 2023 we saw continued growth
activities as we have seen in prior quarters, highlighted by our
successful completion of 11 commercial implementations,” stated
Simeon Kohl, CEO of Performant. “We saw lower MSP CRC available
demands than we had expected, but we are pleased that overall
demands began to return to expected levels by the end of the
quarter. Based on the combination of the return to expected demand
volumes along with the increased pace of implementations we saw
this quarter, we currently anticipate that healthcare revenues for
2023 will remain in line with our previous guidance.”
Revenues from our Customer Care / Outsourced Services in the
first quarter were $2.8 million, down $0.8 million compared to the
prior year period.
Net loss for the first quarter was $4.2 million, or $(0.06) per
share on a diluted basis, compared to a net loss of $1.7 million,
or $(0.02) per share on a diluted basis, in the prior year period.
Adjusted net loss for the first quarter was $3.6 million, or
$(0.05) per share on a diluted basis, compared to adjusted net
income of $1.1 million, or $(0.02) per diluted share, in the prior
year period. Adjusted EBITDA for the first quarter was $(1.7)
million as compared to $0.3 million in the prior year period.
As of March 31, 2023, the Company had cash, cash equivalents,
and restricted cash of approximately $12.4 million.
“Our first quarter 2023 results remain on track for our
continued goals of growing our healthcare market operations and we
remain pleased with what we are seeing in terms of continued
implementations and volume growth,” stated Rohit Ramchandani, Chief
Financial Officer of Performant. “We are excited to continue
growing the business and have our eye on both our revenue growth
targets and the expansion of our EBITDA margins. As such, we are
reiterating our guidance for 2023 healthcare revenues to be in the
range of $105 million to $110 million and for full year 2023
adjusted EBITDA to be in the range of $2 million to $5
million.”
Note Regarding Use of Non-GAAP Financial Measures
In this press release, to supplement our consolidated financial
statements, the Company presents adjusted EBITDA, adjusted net
income (loss), and adjusted net income (loss) per diluted share.
These measures are not in accordance with accounting principles
generally accepted in the United States of America (US GAAP) and
accordingly reconciliations of adjusted EBITDA and adjusted net
income (loss) to net income (loss) determined in accordance with US
GAAP are included in the “Reconciliation of Non-GAAP Results” table
at the end of this press release. We have included adjusted EBITDA
and adjusted net income (loss) in this press release because they
are key measures used by our management and board of directors to
understand and evaluate our core operating performance and trends
and to prepare and approve our annual budget. Accordingly, we
believe that adjusted EBITDA and adjusted net income (loss) provide
useful information to investors and analysts in understanding and
evaluating our operating results in the same manner as our
management and board of directors. Our use of adjusted EBITDA and
adjusted net income (loss) has limitations as an analytical tool
and should not be considered in isolation or as a substitute for
analysis of our results as reported under US GAAP. In particular,
many of the adjustments to our US GAAP financial measures reflect
the exclusion of items, specifically interest, tax and depreciation
and amortization expenses, equity-based compensation expense and
certain other non-operating expenses, that are recurring and will
be reflected in our financial results for the foreseeable future.
In addition, these measures may be calculated differently from
similarly titled non-GAAP financial measures used by other
companies, limiting their usefulness for comparison purposes.
Earnings Conference Call
The Company will hold a conference call to discuss its first
quarter 2023 results today at 5:00 p.m. Eastern. A live webcast of
the call may be accessed on the Investor Relations section of the
Company’s website at investors.performantcorp.com. The conference
call is also available by dialing 888-886-7786 (domestic) or
416-764-8658 (international).
A replay of the call will be available on the Company's website
or by dialing 844-512-2921 (domestic) or 412-317-6671
(international) and entering the passcode 87830265. The telephonic
replay will be available approximately three hours after the call,
through May 16, 2023.
About Performant Healthcare Solutions
Performant provides technology-enabled audit, recovery, and
analytics services in the United States to the healthcare industry.
Performant works with healthcare payers through claims auditing and
eligibility-based (also known as coordination-of-benefits, or COB)
services to identify improper payments. The Company engages clients
in both government and commercial markets. The Company also has a
call center which serves clients with complex consumer engagement
needs. Clients of the Company typically operate in complex and
highly regulated environments and contract for their payment
integrity needs in order to reduce losses on improper healthcare
payments.
To learn more, please visit http://www.performanthealth.com
Forward Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995, including statements regarding the Company's outlook for
revenues, net income (loss), and adjusted EBITDA in 2023 and
beyond. These forward-looking statements are based on current
expectations, estimates, assumptions, and projections that are
subject to change and actual results may differ materially from the
forward-looking statements. Factors that could cause actual results
to differ materially include, but are not limited to, the Company’s
ability to generate revenue following long implementation periods
associated with new customer contracts; client relationships and
the Company’s ability to maintain such client relationships;
downturns in domestic or global economic conditions and other
macroeconomic factors; the Company’s ability to generate sufficient
cash flows to fund our ongoing operations and other liquidity
needs; the Company’s ability to hire and retain employees with
specialized skills that are required for its healthcare business;
anticipated trends and challenges in our business and competition
in the markets in which the Company operates; the impact of
COVID-19 on the Company’s business and operations, opportunities
and expectations for the markets in which the Company operates; the
Company’s indebtedness and compliance, or failure to comply, with
restrictive covenants in the Company’s credit agreement;
opportunities and expectations for growth in the various markets in
which the Company operates; anticipated trends and challenges in
the Company’s business and competition in the markets in which it
operates; the adaptability of the Company’s technology platform to
new markets and processes; the Company’s ability to invest in and
utilize our data and analytics capabilities to expand its
capabilities; the Company’s growth strategy of expanding in
existing markets and considering strategic alliances or
acquisitions; the Company’s ability to meet liquidity and working
capital needs; expectations regarding future expenses; expected
future financial performance; and the Company’s ability to comply
with and adapt to industry regulations and compliance demands.
More information on potential factors that could affect the
Company's financial condition and operating results is included
from time to time in the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of the Company's annual report on Form 10-K
for the year ended December 31, 2022 and subsequently filed reports
on Forms 10-Q and 8-K. The forward-looking statements are made as
of the date of this press release and the Company does not
undertake to update any forward-looking statements to conform these
statements to actual results or revised expectations.
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share
amounts)
March 31, 2023
December 31,
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
12,335
$
23,384
Restricted cash
81
81
Trade accounts receivable
15,636
15,794
Contract assets
8,993
11,460
Prepaid expenses and other current
assets
3,623
3,665
Income tax receivable
3,083
3,123
Total current assets
43,751
57,507
Property, equipment, and leasehold
improvements, net
10,527
10,897
Goodwill
47,372
47,372
Right-of-use assets
794
2,057
Other assets
1,194
1,000
Total assets
$
103,638
$
118,833
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $58 and $17, respectively
$
1,192
$
983
Accrued salaries and benefits
5,818
6,938
Accounts payable
971
1,262
Other current liabilities
2,017
2,252
Contract liabilities
—
438
Estimated liability for appeals and
disputes
863
1,106
Lease liabilities
623
1,228
Total current liabilities
11,484
14,207
Notes payable, net of current portion and
unamortized debt issuance costs of $484 and $316, respectively
10,016
18,184
Lease liabilities
189
1,076
Other liabilities
887
881
Total liabilities
22,576
34,348
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at March 31, 2023 and December 31, 2022
respectively; issued and outstanding 75,505 and 75,505 shares at
March 31, 2023 and December 31, 2022, respectively
7
7
Additional paid-in capital
143,059
142,261
Accumulated deficit
(62,004
)
(57,783
)
Total stockholders’ equity
81,062
84,485
Total liabilities and stockholders’
equity
$
103,638
$
118,833
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Revenues
$
25,729
$
27,083
Operating expenses:
Salaries and benefits
22,449
20,439
Other operating expenses
7,069
8,131
Total operating expenses
29,518
28,570
Loss from operations
(3,789
)
(1,487
)
Gain on sale of certain recovery
contracts
3
—
Interest expense
(414
)
(155
)
Loss before provision for income taxes
(4,200
)
(1,642
)
Provision for income taxes
21
31
Net loss
$
(4,221
)
$
(1,673
)
Net loss per share
Basic
$
(0.06
)
$
(0.02
)
Diluted
$
(0.06
)
$
(0.02
)
Weighted average shares
Basic
75,505
69,873
Diluted
75,505
69,873
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(4,221
)
$
(1,673
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Loss on disposal of assets and impairment
of long-lived assets
32
(17
)
Depreciation and amortization
1,247
1,102
Right-of-use assets amortization
1,263
475
Stock-based compensation
798
558
Interest expense from debt issuance
costs
35
24
Gain on sale of certain recovery
contracts
(3
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
158
971
Contract assets
2,467
(762
)
Prepaid expenses and other current
assets
42
(864
)
Income tax receivable
40
74
Other assets
(194
)
(2
)
Accrued salaries and benefits
(1,120
)
(2,541
)
Accounts payable
(291
)
67
Contract liabilities and other current
liabilities
(673
)
(1,815
)
Estimated liability for appeals, disputes,
and refunds
(243
)
281
Lease liabilities
(1,492
)
(536
)
Other liabilities
6
7
Net cash used in operating activities
(2,149
)
(4,651
)
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(909
)
(700
)
Proceeds from sale of certain recovery
contracts
3
—
Net cash used in investing activities
(906
)
(700
)
Cash flows from financing
activities:
Repayment of notes payable
(7,750
)
(125
)
Debt issuance costs paid
(244
)
(2
)
Proceeds from exercise of warrants
—
5,563
Net cash (used in) provided by financing
activities
(7,994
)
5,436
Net increase in cash, cash equivalents and
restricted cash
(11,049
)
85
Cash, cash equivalents and restricted cash
at beginning of period
23,465
19,550
Cash, cash equivalents and restricted cash
at end of period
$
12,416
$
19,635
Reconciliation of the Consolidated
Statements of Cash Flows to the Consolidated Balance
Sheets:
Cash and cash equivalents
$
12,335
$
17,432
Restricted cash
81
2,203
Total cash, cash equivalents and
restricted cash at end of period
$
12,416
$
19,635
Supplemental disclosures of cash flow
information:
Cash paid (received) for income taxes
$
5
$
1
Cash paid for interest
$
582
$
176
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amount)
(Unaudited)
Three Months Ended
March 31,
2023
2022
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(4,221
)
$
(1,673
)
Provision for income taxes
21
31
Interest expense (1)
414
155
Stock-based compensation
798
558
Depreciation and amortization
1,247
1,102
Severance expenses (3)
63
142
Other (4)
(1
)
$
4
Adjusted EBITDA
$
(1,679
)
$
319
Three Months Ended
March 31,
2023
2022
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(4,221
)
$
(1,673
)
Stock-based compensation
798
558
Amortization of debt issuance costs
(2)
35
24
Severance expenses (3)
63
142
Other (4)
(1
)
4
Tax adjustments (5)
(246
)
(200
)
Adjusted net income (loss)
$
(3,572
)
$
(1,145
)
Three Months Ended
March 31,
2023
2022
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(4,221
)
$
(1,673
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
649
528
Adjusted net income (loss)
$
(3,572
)
$
(1,145
)
Adjusted net income (loss) per diluted
share
$
(0.05
)
$
(0.02
)
Diluted average shares outstanding
75,505
69,873
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amount)
(Unaudited)
We are providing the following preliminary
estimates of our financial results as follows:
Three months ended
Nine months ended
Year Ended
March 31, 2023
December 31, 2023
December 31, 2023
December 31, 2022
Actual
Estimate
Estimate
Actual
Adjusted EBITDA:
Net income (loss)
$
(4,221
)
$ (2,079) to (3,279)
$ (6,300) to (7,500)
$
(6,537
)
Provision for income taxes
21
(271) to 729
(250) to 750
132
Interest expense (1)
414
586 to 1,586
1,000 to 2,000
1,007
Stock-based compensation
798
1,702 to 2,702
2,500 to 3,500
3,036
Depreciation and amortization
1,247
3,753 to 4,753
5,000 to 6,000
4,524
Severance expenses (3)
63
(13) to 187
50 to 250
274
Other (4)
(1
)
(1) to (1)
—
(372
)
Gain on sale of land and buildings (6)
—
—
—
(1,120
)
Adjusted EBITDA
$
(1,679
)
$ 3,677 to 6,677
$
2,000 to 5,000
$
944
(1)
Represents interest expense and
amortization of debt issuance costs related to our Credit
Agreement.
(2)
Represents amortization of debt issuance
costs related to our Credit Agreement.
(3)
Represents severance expenses incurred in
connection with a reduction in force for our non-healthcare
recovery services.
(4)
Represents professional fees related to
strategic corporate development activities and gain on sale of
certain non-healthcare recovery contracts in prior years.
(5)
Represents tax adjustments assuming a
marginal tax rate of 27.5% at full profitability.
(6)
Represents gain on the sale of land and
two office buildings.
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP
Results
(In thousands, except per share
amount)
(Unaudited)
We are providing the following historical
breakdown of the quarterly and annual revenue contributions under
the new contribution breakdowns of our healthcare revenue results
for the three months ended March 31, 2023, and for the years ended
December 31, 2022 and 2021:
For the Three Months
Ended
March 31, 2023
(in thousands)
Eligibility-based
$
12,480
Claims-based
10,412
Healthcare Total
22,892
Recovery
19
Customer Care / Outsourced Services
2,818
Total
$
25,729
For the Three Months
Ended
For the Year Ended
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022
December 31, 2022
(in thousands)
Eligibility-based
$
14,214
$
12,417
$
13,142
$
13,511
$
53,284
Claims-based
9,150
9,339
10,377
12,516
41,382
Healthcare Total
23,364
21,756
23,519
26,027
94,666
Recovery
118
7
41
75
241
Customer Care / Outsourced Services
3,601
3,918
3,618
3,140
14,277
Total
$
27,083
$
25,681
$
27,178
$
29,242
$
109,184
For the Three Months
Ended
For the Year Ended
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
December 31, 2021
(in thousands)
Eligibility-based
$
7,911
$
11,577
$
12,727
$
16,061
$
48,276
Claims-based
5,375
7,025
7,280
9,498
29,178
Healthcare Total
13,286
18,602
20,007
25,559
77,454
Recovery
14,491
11,091
5,490
2,333
33,405
Customer Care / Outsourced Services
3,613
3,149
3,085
3,687
13,534
Total
$
31,390
$
32,842
$
28,582
$
31,579
$
124,393
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005977/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
Performant Financial (NASDAQ:PFMT)
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