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 third
quarter ended September 30, 2021:
Third Quarter Financial Highlights
- Total revenues of $28.6 million, compared to revenues of $36.2
million in the prior year period.
- Net loss of approximately $1.7 million, or $(0.03) per diluted
share, compared to net income of $2.0 million, or $0.04 per diluted
share, in the prior year period.
- Adjusted net income was $0.1 million, or $0.00 per diluted
share, compared to adjusted net income of $3.2 million or $0.06 per
diluted share in the prior year period.
- Adjusted EBITDA of $2.7 million, compared to $3.8 million in
the prior year period.
Third Quarter 2021 Results
Total revenues in the third quarter were $28.6 million, a
decrease of $7.6 million, or 21% from revenues of $36.2 million in
the prior year period. Healthcare revenues in the third quarter of
2021 were $20.0 million, an increase of $2.4 million, or 14%, from
revenues of $17.6 million in the prior year period. Within
Healthcare, claims-based services revenue in the third quarter of
2021 was $7.3 million, while revenue from eligibility-based
services in the third quarter was $12.7 million.
Recovery revenues in the third quarter were $5.5 million, a
decrease of $9.9 million, or 64%, from revenues of $15.4 million in
the prior year period. Revenues from our Customer Care / Outsourced
Services in the third quarter were $3.1 million, a decrease of $0.1
million, or 3%, from revenues of $3.2 million in the prior year
period.
Net loss for the third quarter was $1.7 million, or $(0.03) per
share on a diluted basis, compared to net income of $2.0 million,
or $0.04 per share on a diluted basis, in the prior year period.
Adjusted net income for the third quarter was $0.1 million, or
$0.00 per share on a diluted basis, compared to adjusted net income
of $3.2 million, or $0.06 per diluted share, in the prior year
period. Adjusted EBITDA for the third quarter was $2.7 million as
compared to $3.8 million in the prior year period.
As of September 30, 2021, the Company had cash, cash
equivalents, and restricted cash of approximately $53.5
million.
Equity Offering
On August 20, 2021, the Company completed a registered public
offering of 12,103,750 shares of common stock, which resulted in
the Company receiving net proceeds of approximately $42.6 million.
The Company intends to use the net proceeds from this offering for
working capital and other general corporate purposes, which may
include the repayment of outstanding indebtedness.
Business Commentary and Outlook
“Our third quarter showcased the strength of our technology
platform and demonstrated our ability to continue to increase our
healthcare market share by winning business away from legacy
providers, despite a challenging operating environment. From a
macro perspective, core hospital utilization rates have still not
returned to pre-COVID levels, and the delays that have impacted the
healthcare industry are showing flow-down impact on our operations.
In light of these delays amongst other movements we've updated our
2021 healthcare revenue guidance to a range of $77 - $80 million
with nearly double digit EBITDA for the full year,” stated Lisa Im,
CEO of Performant.
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 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 877-344-8082 (domestic) or
213-992-4618 (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 147424. The telephonic
replay will be available approximately three hours after the call,
through November 16, 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. 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.
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)
September 30,
2021
December 31,
2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
51,323
$
16,043
Restricted cash
2,203
2,253
Trade accounts receivable, net of
allowance for doubtful accounts of $49 and $49, respectively
18,203
23,216
Contract assets
4,950
4,466
Prepaid expenses and other current
assets
2,539
3,784
Income tax receivable
3,453
4,758
Total current assets
82,671
54,520
Property, equipment, and leasehold
improvements, net
16,280
17,497
Identifiable intangible assets, net
—
689
Goodwill
47,372
47,372
Right-of-use assets
3,630
5,043
Other assets
986
1,106
Total assets
$
150,939
$
126,227
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable to
related party, net of unamortized debt issuance costs of $4,500 and
$906, respectively
$
47,925
$
59,957
Accrued salaries and benefits
5,060
8,799
Accounts payable
829
407
Other current liabilities
3,295
3,841
Deferred revenue
—
867
Estimated liability for appeals, disputes,
and refunds
2,254
1,014
Lease liabilities
2,105
2,327
Total current liabilities
61,468
77,212
Notes payable to related party, net of
current portion and unamortized debt issuance costs of $0 and $0,
respectively
—
—
Lease liabilities
2,029
3,442
Other liabilities
3,055
3,593
Total liabilities
66,552
84,247
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at September 30, 2021 and December 31,
2020 respectively; issued and outstanding 69,144 and 54,764 shares
at September 30, 2021 and December 31, 2020, respectively
7
5
Additional paid-in capital
132,990
82,933
Accumulated deficit
(48,610
)
(40,958
)
Total stockholders’ equity
84,387
41,980
Total liabilities and stockholders’
equity
$
150,939
$
126,227
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,
2021
2020
2021
2020
Revenues
$
28,582
$
36,228
$
92,814
$
115,901
Operating expenses:
Salaries and benefits
19,686
23,522
67,071
74,493
Other operating expenses
8,781
10,813
29,896
32,075
Impairment of goodwill
—
—
—
27,000
Total operating expenses
28,467
34,335
96,967
133,568
Income (loss) from operations
115
1,893
(4,153
)
(17,667
)
Gain on sale of certain recovery
contracts
579
—
2,428
—
Interest expense
(2,394
)
(1,569
)
(5,866
)
(5,827
)
Interest income
—
6
—
18
Income (loss) before provision for
(benefit from) income taxes
(1,700
)
330
(7,591
)
(23,476
)
Provision for (benefit from) income
taxes
(9
)
(1,644
)
61
(5,767
)
Net income (loss)
$
(1,691
)
$
1,974
$
(7,652
)
$
(17,709
)
Net income (loss) per share
Basic
$
(0.03
)
$
0.04
$
(0.13
)
$
(0.33
)
Diluted
$
(0.03
)
$
0.04
$
(0.13
)
$
(0.33
)
Weighted average shares
Basic
62,127
54,684
57,512
54,299
Diluted
62,127
54,710
57,512
54,299
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Nine Months Ended September
30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(7,652
)
$
(17,709
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Impairment of long-lived assets
718
88
Impairment of goodwill
—
27,000
Depreciation and amortization
3,883
4,072
Right-of-use assets amortization
1,413
1,886
Stock-based compensation
1,963
1,997
Interest expense from debt issuance
costs
2,453
1,145
Earnout mark-to-market
—
(162
)
Gain on sale of certain recovery
contracts
(2,428
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
4,270
4,756
Contract assets
(484
)
(1,523
)
Prepaid expenses and other current assets
and other assets
1,245
298
Income tax receivable
1,305
(3,555
)
Other assets
120
—
Accrued salaries and benefits
(3,739
)
(1,081
)
Accounts payable
422
(1,160
)
Deferred revenue and other current
liabilities
(1,363
)
1,664
Estimated liability for appeals, disputes,
and refunds
1,240
15
Lease liabilities
(1,635
)
(1,907
)
Other liabilities
(445
)
2,168
Net cash provided by operating
activities
1,286
17,992
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(2,695
)
(2,862
)
Proceeds from sale of certain recovery
contracts
3,171
—
Net cash provided by (used) in investing
activities
476
(2,862
)
Cash flows from financing
activities:
Repayment of notes payable
(8,438
)
(2,588
)
Debt issuance costs paid
(150
)
—
Taxes paid related to net share settlement
of stock awards
(633
)
(260
)
Proceeds from exercise of stock
options
41
—
Proceeds from public offering, net of
costs
42,648
—
Net cash provided by (used in) financing
activities
33,468
(2,848
)
Net increase in cash, cash equivalents and
restricted cash
35,230
12,282
Cash, cash equivalents and restricted cash
at beginning of period
18,296
4,995
Cash, cash equivalents and restricted cash
at end of period
$
53,526
$
17,277
Reconciliation of the Consolidated
Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents
$
51,323
$
15,655
Restricted cash
2,203
1,622
Total cash, cash equivalents and
restricted cash at end of period
$
53,526
$
17,277
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 (received) for income taxes
$
(683
)
$
(2,280
)
Cash paid for interest
$
3,413
$
4,616
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,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(1,691
)
$
1,974
$
(7,652
)
$
(17,709
)
Provision for (benefit from) income
taxes
(9
)
(1,644
)
61
(5,767
)
Interest expense (1)
2,394
1,569
5,866
5,827
Interest income
—
(6
)
—
(18
)
Stock-based compensation
540
657
1,963
1,997
Depreciation and amortization
843
1,277
3,883
4,072
Impairment of goodwill (4)
—
—
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
—
—
(162
)
Severance expenses (6)
380
—
1,876
—
Non-core operating expenses (7)
775
—
2,683
—
Gain on sale of certain recovery contracts
(8)
(579
)
—
(2,428
)
—
Adjusted EBITDA
$
2,653
$
3,827
$
6,888
$
15,240
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(1,691
)
$
1,974
$
(7,652
)
$
(17,709
)
Stock-based compensation
540
657
1,963
1,997
Amortization of intangible assets (2)
72
58
689
176
Amortization of debt issuance costs
(3)
1,320
249
2,453
1,145
Impairment of goodwill (4)
—
—
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
—
—
(162
)
Severance expenses (6)
380
—
1,876
—
Non-core operating expenses (7)
775
—
2,683
—
Gain on sale of certain recovery contracts
(8)
(579
)
—
(2,428
)
—
Tax adjustments (9)
(690
)
265
(2,165
)
(8,293
)
Adjusted net income (loss)
$
127
$
3,203
$
(1,945
)
$
4,154
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(1,691
)
$
1,974
$
(7,652
)
$
(17,709
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
1,818
1,229
5,707
21,863
Adjusted net income (loss)
$
127
$
3,203
$
(1,945
)
$
4,154
Adjusted net income (loss) per diluted
share
$
—
$
0.06
$
(0.03
)
$
0.08
Diluted average shares outstanding
(10)
67,948
54,710
57,512
54,363
(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
September 30, 2021 is ($1,691), the computation of adjusted net
income (loss) results in adjusted net income of $127. Therefore,
the calculation of the adjusted earnings per diluted share for the
three months ended September 30, 2021 includes dilutive common
share equivalents of 5,821 added to the basic weighted average
shares of 62,127. While net income (loss) for the nine months ended
September 30, 2020 was ($17,709), the computation of adjusted net
income (loss) results in adjusted net income of $4,154. Therefore,
the calculation of the adjusted net income per diluted share for
the nine months ended September 30, 2020 includes dilutive common
share equivalents of 64 added to the basic weighted average shares
of 54,299.
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 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 Nine Months
Ended
March 31, 2021
June 30, 2021
September 30, 2021
September 30, 2021
(in thousands)
Eligibility-based
$
7,911
$
11,577
$
12,727
$
32,215
Claims-based
5,375
7,025
7,280
19,680
Healthcare Total
13,286
18,602
20,007
51,895
Recovery
14,491
11,091
5,490
31,072
Customer Care / Outsourced Services
3,613
3,149
3,085
9,847
Total
$
31,390
$
32,842
$
28,582
$
92,814
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211109006389/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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