Performant Financial Corporation (Nasdaq: PFMT), (the
"Company"), primarily operating as Performant Healthcare Solutions,
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 third quarter ended September 30,
2023:
Third Quarter Financial Highlights
- Healthcare revenues of $28.5 million, compared to $23.5 million
in the prior year period, an increase of approximately 21%.
- Total revenues of $30.0 million, compared to total revenues of
$27.2 million in the prior year period.
- Net loss of approximately $0.6 million, or $(0.01) per diluted
share, compared to net loss of $1.5 million, or $(0.02) per diluted
share, in the prior year period.
- Adjusted net income was $0.4 million, or $0.01 per diluted
share, compared to adjusted net loss of $1.7 million, or $(0.02)
per diluted share, in the prior year period.
- Adjusted EBITDA of $1.8 million, compared to $(0.3) million in
the prior year period.
Third Quarter 2023 Results
Healthcare revenues in the third quarter of 2023 were $28.5
million, an increase of approximately 21% from $23.5 million in the
prior year period. Total revenues in the third quarter were $30.0
million, an increase from total revenues of $27.2 million in the
prior year period. Within healthcare, claims-based services revenue
in the third quarter of 2023 was $10.3 million, while revenue from
eligibility-based services in the third quarter was $18.2
million.
“Our healthcare revenue enjoyed strong double-digit growth in
the quarter led by commercial client growth," stated Simeon Kohl,
CEO of Performant. "Continuing our first half trend, we implemented
12 additional commercial programs in Q3. This brings our 2023 total
to 34 implementations. We anticipate these 34 programs will deliver
$16 million in annualized revenues at steady state. On the
government side of the business, we were excited to announce the
New York State Medicaid RAC win in early October. We continue to
feel confident in our growth strategy as we have implemented
commercial programs at a more disciplined pace and solidified our
government footprint with multiple headline wins over the past few
years." Kohl further remarked.
Revenues from our customer care / outsourced services in the
third quarter were $1.5 million, down from $3.6 million in the
prior year period.
Net loss for the third quarter was $0.6 million, or $(0.01) per
diluted share, compared to a net loss of $1.5 million, or $(0.02)
per diluted share, in the prior year period. Adjusted net income
for the third quarter was $0.4 million, or $0.01 per share on a
diluted basis, compared to adjusted net loss of $1.7 million, or
$(0.02) per diluted share, in the prior year period. Adjusted
EBITDA for the third quarter was $1.8 million as compared to $(0.3)
million in the prior year period.
“We remain excited about our growth prospects as we have
continued to build upon our record year of commercial
implementations in the third quarter alongside further traction
with major government wins," stated Rohit Ramchandani, CFO of
Performant. "With regard to the near term, we maintain visibility
into our annual healthcare market guidance of $105 million to $110
million in revenues. We also maintain annual guidance for the
customer care market revenues of $6.75 million to $8 million, thus
bringing our total Company revenue guidance to $111.75 million to
$118 million. We are seeing gains from our focus on quicker scaling
and efficiencies within our business and are excited about our
opportunity to expand EBITDA margins as we execute. We are also
excited about our new credit agreement which we believe provides us
increased flexibility to further grow our business."
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 third
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 877-704-4453 (domestic) or
201-389-0920 (international). A webcast link will be also be
available on the investor relations portion of our website.
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 13741089. The telephonic
replay will be available approximately three hours after the call,
through November 14, 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)
September 30,
2023
December 31,
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
17,308
$
23,384
Restricted cash
81
81
Trade accounts receivable
14,129
15,794
Contract assets
6,850
11,460
Prepaid expenses and other current
assets
3,104
3,665
Income tax receivable
516
3,123
Total current assets
41,988
57,507
Property, equipment, and leasehold
improvements, net
9,790
10,897
Goodwill
47,372
47,372
Right-of-use assets
646
2,057
Other assets
914
1,000
Total assets
$
100,710
$
118,833
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $78 and $17, respectively
$
1,672
$
983
Accrued salaries and benefits
5,643
6,938
Accounts payable
872
1,262
Other current liabilities
2,147
2,252
Contract liabilities
500
438
Estimated liability for appeals and
disputes
906
1,106
Lease liabilities
333
1,228
Total current liabilities
12,073
14,207
Notes payable, net of current portion and
unamortized debt issuance costs of $423 and $316, respectively
9,077
18,184
Lease liabilities
326
1,076
Other liabilities
903
881
Total liabilities
22,379
34,348
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at September 30, 2023 and December 31,
2022 respectively; issued and outstanding 76,875 and 75,505 shares
at September 30, 2023 and December 31, 2022, respectively
8
7
Additional paid-in capital
144,880
142,261
Accumulated deficit
(66,557
)
(57,783
)
Total stockholders’ equity
78,331
84,485
Total liabilities and stockholders’
equity
$
100,710
$
118,833
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
$
29,962
$
27,178
$
81,176
$
79,942
Operating expenses:
Salaries and benefits
22,980
21,759
67,139
63,101
Other operating expenses
7,632
7,733
22,077
23,945
Total operating expenses
30,612
29,492
89,216
87,046
Loss from operations
(650
)
(2,314
)
(8,040
)
(7,104
)
Gain on sale of certain recovery
contracts
—
—
3
382
Gain on sale of land and buildings
—
1,120
—
1,120
Interest expense
(423
)
(277
)
(1,188
)
(648
)
Interest income
86
—
86
—
Loss before provision for income taxes
(987
)
(1,471
)
(9,139
)
(6,250
)
Provision for (benefit from) income
taxes
(407
)
(11
)
(365
)
52
Net loss
$
(580
)
$
(1,460
)
$
(8,774
)
$
(6,302
)
Net loss per share
Basic
$
(0.01
)
$
(0.02
)
$
(0.12
)
$
(0.09
)
Diluted
$
(0.01
)
$
(0.02
)
$
(0.12
)
$
(0.09
)
Weighted average shares
Basic
76,454
74,021
75,907
72,480
Diluted
76,454
74,021
75,907
72,480
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(8,774
)
$
(6,302
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Loss on disposal of assets and impairment
of long-lived assets
258
40
Depreciation and amortization
3,805
3,355
Right-of-use assets amortization
1,411
841
Stock-based compensation
2,815
2,212
Interest expense from debt issuance
costs
256
71
Gain on sale of certain recovery
contracts
(3
)
(382
)
Gain on sale of land and buildings
—
(1,120
)
Changes in operating assets and
liabilities:
Trade accounts receivable
1,665
4,958
Contract assets
4,610
(1,622
)
Prepaid expenses and other current
assets
561
682
Income tax receivable
2,607
(52
)
Other assets
86
(7
)
Accrued salaries and benefits
(1,295
)
(1,944
)
Accounts payable
(390
)
(339
)
Contract liabilities and other current
liabilities
(43
)
(1,515
)
Estimated liability for appeals, disputes,
and refunds
(200
)
(42
)
Lease liabilities
(1,645
)
(997
)
Other liabilities
23
(19
)
Net cash provided by (used in) operating
activities
5,747
(2,182
)
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(2,956
)
(2,198
)
Proceeds from sale of certain recovery
contracts
3
382
Proceeds from sales of property,
equipment, and leasehold improvements
—
4,934
Net cash (used in) provided by investing
activities
(2,953
)
3,118
Cash flows from financing
activities:
Repayment of notes payable
(8,250
)
(375
)
Debt issuance costs paid
(424
)
(2
)
Taxes paid related to net share settlement
of stock awards
(196
)
—
Proceeds from exercise of warrants
—
5,563
Net cash (used in) provided by financing
activities
(8,870
)
5,186
Net (decrease) increase in cash, cash
equivalents and restricted cash
(6,076
)
6,122
Cash, cash equivalents and restricted cash
at beginning of period
23,465
19,550
Cash, cash equivalents and restricted cash
at end of period
$
17,389
$
25,672
Reconciliation of the Consolidated
Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents
$
17,308
$
25,591
Restricted cash
81
81
Total cash, cash equivalents and
restricted cash at end of period
$
17,389
$
25,672
Supplemental disclosures of cash flow
information:
Cash (received) paid for income taxes
$
(2,904
)
$
267
Cash paid for interest
$
1,084
$
449
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amount)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(580
)
$
(1,460
)
$
(8,774
)
$
(6,302
)
Provision for (benefit from) income
taxes
(407
)
(11
)
(365
)
52
Interest expense (1)
423
277
1,188
648
Interest income
(86
)
—
(86
)
—
Stock-based compensation
1,129
931
2,815
2,212
Depreciation and amortization
1,293
1,095
3,805
3,355
Severance expenses (3)
64
10
246
189
Other (4)
5
3
34
(373
)
Gain on sale of land and buildings (6)
—
(1,120
)
—
(1,120
)
Adjusted EBITDA
$
1,841
$
(275
)
$
(1,137
)
$
(1,339
)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(580
)
$
(1,460
)
$
(8,774
)
$
(6,302
)
Stock-based compensation
1,129
931
2,815
2,212
Amortization of debt issuance costs
(2)
134
23
256
71
Severance expenses (3)
64
10
246
189
Other (4)
5
3
34
(373
)
Gain on sale of land and buildings (6)
—
$
(1,120
)
—
(1,120
)
Tax adjustments (5)
(366
)
(42
)
(921
)
(269
)
Adjusted net income (loss)
$
386
$
(1,655
)
$
(6,344
)
$
(5,592
)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(580
)
$
(1,460
)
$
(8,774
)
$
(6,302
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
966
(195
)
2,430
710
Adjusted net income (loss)
$
386
$
(1,655
)
$
(6,344
)
$
(5,592
)
Adjusted net income (loss) per diluted
share
$
0.01
$
(0.02
)
$
(0.08
)
$
(0.08
)
Diluted average shares outstanding (7)
76,830
74,021
75,907
72,480
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:
Nine Months Ended
Three Months Ended
Year Ended
September 30, 2023
December 31, 2023
December 31, 2023
December 31, 2022
Actual
Estimate
Estimate
Actual
Adjusted EBITDA:
Net income (loss)
$
(8,774
)
$ 1,577 to 725
$ (6,464) to (8,015)
$
(6,537
)
Provision for (benefit from) income
taxes
(365
)
115 to 1,115
(250) to 750
132
Interest expense (1)
1,188
0 to 812
1,000 to 2,000
1,007
Interest income
(86
)
0 to (64)
(86) to (150)
—
Stock-based compensation
2,815
0 to 685
2,500 to 3,500
3,036
Depreciation and amortization
3,805
1,445 to 2,695
5,250 to 6,500
4,524
Severance expenses (3)
246
0 to 169
50 to 415
274
Other (4)
34
—
—
(372
)
Gain on sale of land and buildings (6)
—
—
—
(1,120
)
Adjusted EBITDA
$
(1,137
)
$ 3,137 to 6,137
$ 2,000 to 5,000
$
944
(1)
Represents interest expense and
amortization of debt issuance costs related to our MUFG Credit
Agreement.
(2)
Represents amortization of debt issuance
costs related to our MUFG 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 in September of 2022.
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Quarterly and Annual Revenues
(In thousands)
(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 nine months ended September 30, 2023, and for the years
ended December 31, 2022 and 2021:
Three Months Ended
Nine Months Ended
March 31, 2023
June 30, 2023
September 30, 2023
September 30, 2023
Eligibility-based
$
12,480
$
14,131
$
18,165
$
44,776
Claims-based
10,412
9,798
10,325
30,535
Healthcare Total
22,892
23,929
28,490
75,311
Recovery
19
14
33
Customer Care / Outsourced Services
2,818
1,542
1,472
5,832
Total
$
25,729
$
25,485
$
29,962
$
81,176
Three Months Ended
Year Ended
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022
December 31, 2022
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
Three Months Ended
Year Ended
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
December 31, 2021
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/20231107256343/en/
Investor Relations investors@performantcorp.com
Performant Financial (NASDAQ:PFMT)
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Performant Financial (NASDAQ:PFMT)
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