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 services industry,
today reported the following financial results for its second
quarter ended June 30, 2021:
Second Quarter Financial Highlights
- Total revenues of $32.8 million, compared to revenues of $33.8
million in the prior year period.
- Net loss of approximately $1.5 million, or $(0.03) per diluted
share, compared to a net loss of $7.2 million, or $(0.13) per
diluted share, in the prior year period.
- Adjusted net income was $0.5 million, or $0.01 per diluted
share, compared to an adjusted net loss of $0.7 million or $(0.01)
per diluted share in the prior year period.
- Adjusted EBITDA of $4.2 million, compared to $4.3 million in
the prior year period.
Second Quarter 2021 Results
Total revenues in the second quarter were $32.8 million, a
decrease of $0.9 million, or 3% from revenues of $33.8 million in
the prior year period. Healthcare revenues in the second quarter of
2021 were $18.6 million, an increase of $4.0 million, or 27%, from
revenues of $14.6 million in the prior year period. Within
Healthcare, claims-based services revenue in the second quarter of
2021 was $7.0 million, while revenue from eligibility-based
services in the second quarter was $11.6 million.
Recovery revenues in the second quarter were $11.1 million, a
decrease of $5.1 million, or 31%, from revenues of $16.2 million in
the prior year period. Revenues from our Customer Care / Outsourced
Services in the second quarter were $3.1 million, an increase of
$0.1 million, or 4%, from revenues of $3.0 million in the prior
year period.
Net loss for the second quarter was $1.5 million, or $(0.03) per
share on a diluted basis, compared to net loss of $7.2 million, or
$(0.13) per share on a diluted basis, in the prior year period.
Adjusted net income for the second quarter was $0.5 million, or
$0.01 per share on a diluted basis, compared to an adjusted net
loss of $0.7 million, or $(0.01) per diluted share, in the prior
year period. Adjusted EBITDA for the second quarter was $4.2
million as compared to $4.3 million in the prior year period.
As of June 30, 2021, the Company had cash, cash equivalents, and
restricted cash of approximately $12.2 million.
Business Commentary and Outlook
“Our decision to transform primarily into a healthcare payment
integrity services company, remains on schedule and was reinforced
by our results in the second quarter, with healthcare revenues
growing by over 27% on a year over year basis,” stated Lisa Im, CEO
of Performant.
“We believe there is a tremendous opportunity for us to gain
market share and continue to grow within healthcare. However, the
recent surge in the Delta variant of COVID-19 provides a bit of
uncertainty as it relates to potential slow-downs or pauses in
activities in the coming quarters. While we have not seen any
impact yet, we are taking a cautious approach in light of the
uncertainty, opting to refine our 2021 healthcare revenue guidance
to a range of $80 - $85 million while currently continuing to be
confident in achieving positive EBITDA results,” continued Im.
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 2021 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 855-327-6837 (domestic) or
631-891-4304 (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 13721981. The telephonic
replay will be available approximately three hours after the call,
through August 17, 2021.
About Performant Financial Corporation
Performant provides technology-enabled audit, recovery, and
analytics services in the United States with a focus in the
healthcare payment integrity industry. Performant works with
healthcare payers through claims auditing and eligibility-based
(also known as coordination-of-benefits) services to identify
improper payments. Performant is a leading provider of these
services in several industries, including healthcare and
government. Performant has been providing recovery audit services
for more than ten years to both commercial and government clients,
including serving as a Recovery Auditor for the Centers for
Medicare and Medicaid Services.
Powered by a proprietary analytic platform and workflow
technology, Performant also provides professional services related
to the recovery effort, including reporting capabilities, support
services, customer care and stakeholder training programs meant to
mitigate future instances of improper payments. Founded in 1976,
Performant is headquartered in Livermore, California.
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 our outlook for revenues,
net income (loss), and adjusted EBITDA in 2020 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 material adverse
impact of the COVID-19 pandemic on our business, results of
operations and financial condition as well as on the business
operations and financial performance of many of our customers, that
the Company may not have sufficient cash flows from operations to
fund ongoing operations and other liquidity needs, that the
Company’s indebtedness could adversely affect its business and
financial condition and could reduce the funds available for other
purposes and the failure to comply with covenants contained in its
credit agreement could result in an event of default that could
adversely affect its results of operations, that the Company faces
a long period to implement a new contract which may result in the
incurring of expenses before the receipt of revenues from new
client relationships, the high level of revenue concentration among
the Company's largest customers and any termination in the
Company’s relationship with any of our significant clients would
result in a material decline in our revenues, that many of the
Company's customer contracts are subject to periodic renewal, are
not exclusive, do not provide for committed business volumes and
may be changed or terminated unilaterally and on short notice, that
the Company may not be able to manage its potential growth
effectively, that the Company faces significant competition in all
of its markets, that continuing limitations on the scope of our
audit activity under our RAC contracts have significantly reduced
our revenue opportunities with this client, that the U.S. federal
government accounts for a significant portion of the Company's
revenues, that future legislative and regulatory changes may have
significant effects on the Company's business, that failure of the
Company's or third parties' operating systems and technology
infrastructure could disrupt the operation of the Company's
business and the threat of breach of the Company's security
measures or failure or unauthorized access to confidential data
that the Company possesses. 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, 2020 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, 2021
December 31,
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
9,949
$
16,043
Restricted cash
2,203
2,253
Trade accounts receivable, net of
allowance for doubtful accounts of $49 and $49, respectively
19,056
23,216
Contract assets
5,770
4,466
Prepaid expenses and other current
assets
3,407
3,784
Income tax receivable
5,692
4,758
Total current assets
46,077
54,520
Property, equipment, and leasehold
improvements, net
16,005
17,497
Identifiable intangible assets, net
72
689
Goodwill
47,372
47,372
Right-of-use assets
4,028
5,043
Other assets
985
1,106
Total assets
$
114,539
$
126,227
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable to
related party, net of unamortized debt issuance costs of $1,001 and
$906, respectively
$
8,149
$
59,957
Accrued salaries and benefits
7,727
8,799
Accounts payable
846
407
Other current liabilities
3,511
3,841
Deferred revenue
—
867
Estimated liability for appeals, disputes,
and refunds
4,500
1,014
Lease liabilities
2,207
2,327
Total current liabilities
26,940
77,212
Notes payable to related party, net of
current portion and unamortized debt issuance costs of $4,819 and
$0, respectively
39,243
—
Lease liabilities
2,395
3,442
Other liabilities
3,090
3,593
Total liabilities
71,668
84,247
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at June 30, 2021 and December 31, 2020
respectively; issued and outstanding 56,401 and 54,764 shares at
June 30, 2021 and December 31, 2020, respectively
6
5
Additional paid-in capital
89,784
82,933
Accumulated deficit
(46,919
)
(40,958
)
Total stockholders’ equity
42,871
41,980
Total liabilities and stockholders’
equity
$
114,539
$
126,227
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,
2021
2020
2021
2020
Revenues
$
32,842
$
33,785
$
64,232
$
79,673
Operating expenses:
Salaries and benefits
23,295
22,166
47,385
50,971
Other operating expenses
10,759
9,042
21,115
21,262
Impairment of goodwill
—
8,000
—
27,000
Total operating expenses
34,054
39,208
68,500
99,233
Loss from operations
(1,212
)
(5,423
)
(4,268
)
(19,560
)
Gain on sale of certain recovery
contracts
1,849
—
1,849
—
Interest expense
(2,126
)
(2,031
)
(3,472
)
(4,258
)
Interest income
—
6
—
12
Loss before provision for (benefit from)
income taxes
(1,489
)
(7,448
)
(5,891
)
(23,806
)
Provision for (benefit from) income
taxes
33
(249
)
70
(4,123
)
Net loss
$
(1,522
)
$
(7,199
)
$
(5,961
)
$
(19,683
)
Net loss per share
Basic
$
(0.03
)
$
(0.13
)
$
(0.11
)
$
(0.36
)
Diluted
$
(0.03
)
$
(0.13
)
$
(0.11
)
$
(0.36
)
Weighted average shares
Basic
55,516
54,267
55,167
54,105
Diluted
55,516
54,267
55,167
54,105
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(5,961
)
$
(19,683
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Impairment of long-lived assets
674
25
Impairment of goodwill
—
27,000
Depreciation and amortization
3,040
2,795
Right-of-use assets amortization
1,015
1,275
Stock-based compensation
1,423
1,340
Interest expense from debt issuance
costs
1,133
763
Earnout mark-to-market
—
(162
)
Gain on sale of certain recovery
contracts
(1,849
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
3,417
6,577
Contract assets
(1,304
)
362
Prepaid expenses and other current assets
and other assets
564
109
Income tax receivable
(934
)
(1,860
)
Other assets
121
(180
)
Accrued salaries and benefits
(1,072
)
(1,710
)
Accounts payable
439
(1,135
)
Deferred revenue and other current
liabilities
(1,147
)
(112
)
Estimated liability for appeals, disputes,
and refunds
3,486
197
Lease liabilities
(1,167
)
(1,126
)
Other liabilities
(414
)
1,279
Net cash provided by operating
activities
1,464
15,754
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(1,604
)
(1,943
)
Proceeds from sale of certain recovery
contracts
2,406
—
Net cash provided by (used) in investing
activities
802
(1,943
)
Cash flows from financing
activities:
Repayment of notes payable
(7,650
)
(1,725
)
Debt issuance costs paid
(150
)
—
Taxes paid related to net share settlement
of stock awards
(633
)
(248
)
Proceeds from exercise of stock
options
23
—
Net cash used in financing activities
(8,410
)
(1,973
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(6,144
)
11,838
Cash, cash equivalents and restricted cash
at beginning of period
18,296
4,995
Cash, cash equivalents and restricted cash
at end of period
$
12,152
$
16,833
Reconciliation of the Consolidated
Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents
$
9,949
$
15,211
Restricted cash
2,203
1,622
Total cash, cash equivalents and
restricted cash at end of period
$
12,152
$
16,833
Non-cash financing activities:
Recognition of earnout shares issued
$
801
$
—
Recognition of warrants associated with
notes payable
$
5,237
$
—
Supplemental disclosures of cash flow
information:
Cash paid for income taxes
$
1,482
$
2,309
Cash paid for interest
$
2,340
$
3,495
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,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(1,522
)
$
(7,199
)
$
(5,961
)
$
(19,683
)
Provision for (benefit from) income
taxes
33
(249
)
70
(4,123
)
Interest expense (1)
2,126
2,031
3,472
4,258
Interest income
—
(6
)
—
(12
)
Stock-based compensation
774
649
1,423
1,340
Depreciation and amortization
2,024
1,255
3,040
2,795
Impairment of goodwill (4)
—
8,000
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
(162
)
—
(162
)
Severance expenses (6)
1,188
—
1,496
—
Non-core operating expenses (7)
1,397
—
1,908
—
Gain on sale of certain recovery contracts
(8)
(1,849
)
—
(1,849
)
—
Adjusted EBITDA
$
4,171
$
4,319
$
4,235
$
11,413
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(1,522
)
$
(7,199
)
$
(5,961
)
$
(19,683
)
Stock-based compensation
774
649
1,423
1,340
Amortization of intangible assets (2)
558
59
617
118
Amortization of debt issuance costs
(3)
764
381
1,133
763
Impairment of goodwill (4)
—
8,000
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
(162
)
—
(162
)
Severance expenses (6)
1,188
—
1,496
—
Non-core operating expenses (7)
1,397
—
1,908
—
Gain on sale of certain recovery contracts
(8)
(1,849
)
—
(1,849
)
—
Tax adjustments (9)
(779
)
(2,455
)
(1,475
)
(7,991
)
Adjusted net income (loss)
$
531
$
(727
)
$
(2,072
)
$
1,385
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(1,522
)
$
(7,199
)
$
(5,961
)
$
(19,683
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
2,053
6,472
3,889
21,068
Adjusted net income (loss)
$
531
$
(727
)
$
(2,072
)
$
1,385
Adjusted net income (loss) per diluted
share
$
0.01
$
(0.01
)
$
(0.04
)
$
0.03
Diluted average shares outstanding
(10)
60,617
54,267
55,167
54,259
(1)
Represents interest expense and
amortization of debt issuance costs related to our Credit
Agreement.
(2)
Represents amortization of intangibles
related to the acquisition of Performant by an affiliate of
Parthenon Capital Partners in 2004.
(3)
Represents amortization of debt issuance
costs related to our Credit Agreement.
(4)
Represents a noncash goodwill impairment
charge in 2020 mainly due to the decrease of our market
capitalization in the first half of 2020.
(5)
Represents the change from prior reporting
periods in the fair value of the potential earnout consideration
payable to ECMC group in connection with the Premiere
acquisition.
(6)
Represents severance expenses incurred in
connection with a reduction in force for our non-healthcare
recovery services.
(7)
Represents professional fees related to
strategic corporate development activities.
(8)
Represents gain on the sale of certain
non-healthcare recovery contracts in 2021.
(9)
Represents tax adjustments assuming a
marginal tax rate of 27.5% at full profitability.
(10)
While net loss for the three months ended June 30, 2021 is
($1,522), the computation of adjusted net income results in
adjusted net income of $531. Therefore, the calculation of the
adjusted earnings per diluted share for the three months ended June
30, 2021 includes dilutive common share equivalents of 5,101 added
to the basic weighted average shares of 55,516. While net loss for
the six months ended June 30, 2020 is ($19,683), the computation of
adjusted net income (loss) results in adjusted net income of
$1,385. Therefore, the calculation of the adjusted net income per
diluted share for the six months ended June 30, 2020 includes
dilutive common share equivalents of 154 added to the basic
weighted average shares of 54,105.
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
years ended December 31, 2019 and December 31, 2020, and six months
ended June 30, 2021:
For the Three Months
Ended
For the Year Ended
March 31, 2019
June 30, 2019
September 30, 2019
December 31, 2019
December 31, 2019
(in thousands)
Eligibility-based
$
7,742
$
7,042
$
8,005
$
9,987
$
32,776
Claims-based
1,278
2,221
2,752
4,301
10,552
Healthcare Total
9,020
9,263
10,757
14,288
43,328
Recovery
21,375
22,107
20,936
25,208
89,626
Customer Care / Outsourced Services
4,481
4,460
4,210
4,327
17,478
Total
$
34,876
$
35,830
$
35,903
$
43,823
$
150,432
For the Three Months
Ended
For the Year Ended
March 31, 2020
June 30, 2020
September 30, 2020
December 31, 2020
December 31, 2020
(in thousands)
Eligibility-based
$
10,949
$
11,292
$
13,480
$
14,126
$
49,847
Claims-based
6,575
3,301
4,086
4,739
18,701
Healthcare Total
17,524
14,593
17,566
18,865
68,548
Recovery
24,265
16,167
15,443
17,521
73,396
Customer Care / Outsourced Services
4,099
3,025
3,219
3,650
13,993
Total
$
45,888
$
33,785
$
36,228
$
40,036
$
155,937
For the Three Months
Ended
For the Six Months
Ended
March 31, 2021
June 30, 2021
June 30, 2021
(in thousands)
Eligibility-based
$
7,911
$
11,577
$
19,488
Claims-based
5,375
7,025
12,400
Healthcare Total
13,286
18,602
31,888
Recovery
14,491
11,091
25,582
Customer Care / Outsourced Services
3,613
3,149
6,762
Total
$
31,390
$
32,842
$
64,232
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210810005914/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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