Performant Financial Corporation (Nasdaq: PFMT), (the
"Company"), primarily operating under subsidiary 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 second
quarter ended June 30, 2023:
Second Quarter Financial Highlights
- Healthcare revenues of $23.9 million, compared to $21.8 million
in the prior year period, an increase of approximately 10%
- Total revenues of $25.5 million, compared to total revenues of
$25.7 million in the prior year period.
- Net loss of approximately $4.0 million, or $(0.05) per diluted
share, compared to net loss of $3.2 million, or $(0.04) per diluted
share, in the prior year period.
- Adjusted net loss was $3.2 million, or $(0.04) per diluted
share, compared to adjusted net loss of $2.9 million, or $(0.04)
per diluted share, in the prior year period.
- Adjusted EBITDA of $(1.3) million, compared to $(1.4) million
in the prior year period.
Second Quarter 2023 Results
Healthcare revenues in the second quarter of 2023 were $23.9
million, an increase of approximately 10% from $21.8 million in the
prior year period. Total revenues in the second quarter were $25.5
million, a decrease from total revenues of $25.7 million in the
prior year period. Within healthcare, claims-based services revenue
in the second quarter of 2023 was $9.8 million, while revenues from
eligibility-based services in the second quarter was $14.1
million.
“Within our commercial clients, both eligibility and
claims-based revenues enjoyed strong double-digit year over year
growth through the first half of 2023, demonstrating our continued
focus on growing this piece of the business,” stated Simeon Kohl,
CEO of Performant. “I am also excited to report that our efforts to
compress the implementation cycle continue to bear fruit as we
implemented 11 additional commercial programs in Q2, bringing our
2023 total to 22 implementations. This already surpasses the total
number of commercial implementations we completed in all of 2022.
We anticipate that these 22 programs will deliver an estimated $11
million in annualized revenues at steady state,” Kohl further
remarked.
Revenues from our customer care / outsourced services in the
second quarter were $1.5 million, down from $3.9 million in the
prior year period.
Net loss for the second quarter was $4.0 million, or $(0.05) per
share on a diluted basis, compared to a net loss of $3.2 million,
or $(0.04) per share on a diluted basis, in the prior year period.
Adjusted net loss for the second quarter was $3.2 million, or
$(0.04) per share on a diluted basis, compared to adjusted net
income of $2.9 million, or $(0.04) per diluted share, in the prior
year period. Adjusted EBITDA for the second quarter was $(1.3)
million as compared to $(1.4) million in the prior year period.
“We are excited about the increased pace of commercial
implementations and the core potential of our government programs,
which combine for strong continued traction toward our overall
vision and goals,” stated Rohit Ramchandani, Chief Financial
Officer of Performant. “With regard to the nearer term, we maintain
visibility into our annual healthcare market guidance of $105
million to $110 million in revenues. At this stage in the year, we
are also comfortable providing 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 excited to continue delivering growth, enhancing
our product offerings, broadening our market footprint, and
expanding EBITDA margins. Furthermore, we remain well capitalized
to tackle our organic growth initiatives and will continue to take
steps to ensure we maintain flexibility in available capital for
other strategic growth opportunities.”
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 second
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 87483139. The telephonic
replay will be available approximately three hours after the call,
through August 15, 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)
June 30, 2023
December 31,
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
14,982
$
23,384
Restricted cash
81
81
Trade accounts receivable
12,790
15,794
Contract assets
6,947
11,460
Prepaid expenses and other current
assets
2,982
3,665
Income tax receivable
3,176
3,123
Total current assets
40,958
57,507
Property, equipment, and leasehold
improvements, net
10,688
10,897
Goodwill
47,372
47,372
Right-of-use assets
602
2,057
Other assets
975
1,000
Total assets
$
100,595
$
118,833
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $63 and $17, respectively
$
1,437
$
983
Accrued salaries and benefits
6,118
6,938
Accounts payable
1,195
1,262
Other current liabilities
1,920
2,252
Contract liabilities
112
438
Estimated liability for appeals and
disputes
807
1,106
Lease liabilities
465
1,228
Total current liabilities
12,054
14,207
Notes payable, net of current portion and
unamortized debt issuance costs of $421 and $316, respectively
9,579
18,184
Lease liabilities
148
1,076
Other liabilities
894
881
Total liabilities
22,675
34,348
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at June 30, 2023 and December 31, 2022
respectively; issued and outstanding 76,088 and 75,505 shares at
June 30, 2023 and December 31, 2022, respectively
7
7
Additional paid-in capital
143,890
142,261
Accumulated deficit
(65,977
)
(57,783
)
Total stockholders’ equity
77,920
84,485
Total liabilities and stockholders’
equity
$
100,595
$
118,833
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES Consolidated Statements of
Operations (In thousands, except per share amounts) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
$
25,485
$
25,681
$
51,214
$
52,764
Operating expenses:
Salaries and benefits
21,710
20,903
44,159
41,342
Other operating expenses
7,376
8,081
14,445
16,212
Total operating expenses
29,086
28,984
58,604
57,554
Loss from operations
(3,601
)
(3,303
)
(7,390
)
(4,790
)
Gain on sale of certain recovery
contracts
—
382
3
382
Interest expense
(351
)
(216
)
(765
)
(371
)
Loss before provision for income taxes
(3,952
)
(3,137
)
(8,152
)
(4,779
)
Provision for income taxes
21
32
42
63
Net loss
$
(3,973
)
$
(3,169
)
$
(8,194
)
$
(4,842
)
Net loss per share
Basic
$
(0.05
)
$
(0.04
)
$
(0.11
)
$
(0.07
)
Diluted
$
(0.05
)
$
(0.04
)
$
(0.11
)
$
(0.07
)
Weighted average shares
Basic
75,752
73,502
75,629
71,698
Diluted
75,752
73,502
75,629
71,698
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities:
Net loss
$
(8,194
)
$
(4,842
)
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
36
(15
)
Depreciation and amortization
2,512
2,260
Right-of-use assets amortization
1,455
588
Stock-based compensation
1,686
1,281
Interest expense from debt issuance
costs
122
48
Gain on sale of certain recovery
contracts
(3
)
(382
)
Changes in operating assets and
liabilities:
Trade accounts receivable
3,004
928
Contract assets
4,513
(1,084
)
Prepaid expenses and other current
assets
683
(257
)
Income tax receivable
(53
)
(89
)
Other assets
25
(6
)
Accrued salaries and benefits
(820
)
(1,081
)
Accounts payable
(67
)
(161
)
Contract liabilities and other current
liabilities
(658
)
(1,860
)
Estimated liability for appeals, disputes,
and refunds
(299
)
(114
)
Lease liabilities
(1,691
)
(704
)
Other liabilities
14
12
Net cash provided by (used in) operating
activities
2,265
(5,478
)
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(2,339
)
(1,589
)
Proceeds from sale of certain recovery
contracts
3
382
Net cash used in investing activities
(2,336
)
(1,207
)
Cash flows from financing
activities:
Repayment of notes payable
(8,000
)
(250
)
Debt issuance costs paid
(274
)
(2
)
Taxes paid related to net share settlement
of stock awards
(57
)
—
Proceeds from exercise of warrants
—
5,563
Proceeds from public offering, net of
costs
—
—
Net cash (used in) provided by financing
activities
(8,331
)
5,311
Net decrease in cash, cash equivalents and
restricted cash
(8,402
)
(1,374
)
Cash, cash equivalents and restricted cash
at beginning of period
23,465
19,550
Cash, cash equivalents and restricted cash
at end of period
$
15,063
$
18,176
Reconciliation of the Consolidated
Statements of Cash Flows to the Consolidated Balance
Sheets:
Cash and cash equivalents
$
14,982
$
15,973
Restricted cash
81
2,203
Total cash, cash equivalents and
restricted cash at end of period
$
15,063
$
18,176
Supplemental disclosures of cash flow
information:
Cash paid for income taxes
$
143
$
238
Cash paid for interest
$
721
$
244
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Results
(In thousands, except per share amount) (Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(3,973
)
$
(3,169
)
$
(8,194
)
$
(4,842
)
Provision for income taxes
21
32
42
63
Interest expense (1)
351
216
765
371
Stock-based compensation
888
723
1,686
1,281
Depreciation and amortization
1,265
1,158
2,512
2,260
Severance expenses (3)
119
37
182
179
Other (4)
30
(380
)
29
(376
)
Adjusted EBITDA
$
(1,299
)
$
(1,383
)
$
(2,978
)
$
(1,064
)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(3,973
)
$
(3,169
)
$
(8,194
)
$
(4,842
)
Stock-based compensation
888
723
1,686
1,281
Amortization of debt issuance costs
(2)
87
24
122
48
Severance expenses (3)
119
37
182
179
Other (4)
30
(380
)
29
(376
)
Tax adjustments (5)
(309
)
(111
)
(555
)
(311
)
Adjusted net income (loss)
$
(3,158
)
$
(2,876
)
$
(6,730
)
$
(4,021
)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(3,973
)
$
(3,169
)
$
(8,194
)
$
(4,842
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
815
293
1,464
821
Adjusted net income (loss)
$
(3,158
)
$
(2,876
)
$
(6,730
)
$
(4,021
)
Adjusted net income (loss) per diluted
share
$
(0.04
)
$
(0.04
)
$
(0.09
)
$
(0.06
)
Diluted average shares outstanding
75,752
73,502
75,629
71,698
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:
Six Months Ended
Six Months Ended
Year Ended
June 30, 2023
December 31, 2023
December 31, 2023
December 31, 2022
Actual
Estimate
Estimate
Actual
Adjusted EBITDA:
Net income (loss)
$
(8,194
)
$
1,615 to 0
$
(6,550) to (8,165)
$
(6,537
)
Provision for income taxes
42
(292) to 708
(250) to 750
132
Interest expense (1)
765
235 to 1,235
1,000 to 2,000
1,007
Stock-based compensation
1,686
814 to 1,814
2,500 to 3,500
3,036
Depreciation and amortization
2,512
2,738 to 3,988
5,250 to 6,500
4,524
Severance expenses (3)
182
(132) to 233
50 to 415
274
Other (4)
29
—
—
(372
)
Gain on sale of land and buildings (6)
—
—
—
(1,120
)
Adjusted EBITDA
$
(2,978
)
$
4,978 to 7,978
$
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 six months ended June 30, 2023, and for the years ended
December 31, 2022 and 2021:
For the Three Months
Ended
For the Six Months
Ended
March 31, 2023
June 30, 2023
June 30, 2023
(in thousands)
(in thousands)
Eligibility-based
$
12,480
$
14,131
$
26,611
Claims-based
10,412
9,798
20,210
Healthcare Total
22,892
23,929
46,821
Recovery
19
14
33
Customer Care / Outsourced Services
2,818
1,542
4,360
Total
$
25,729
$
25,485
$
51,214
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
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