Performant Financial Corporation (Nasdaq: PFMT), a leading
provider of technology-enabled recovery and related analytics
services in the United States, today reported the following
financial results for its fourth quarter and full year ended
December 31, 2021:
Fourth Quarter Financial Highlights
- Total revenues of $31.6 million, compared to $40.0 million in
the prior year period, a decrease of 21%
- Healthcare revenues of $25.6 million, compared to $18.9 million
in the prior year period, an increase of 35%
- Net loss of $2.6 million or $(0.04) per diluted share, was
lower when compared to net income of $3.7 million, or $0.07 per
diluted share, in the prior year period
- Adjusted EBITDA of $5.0 million, declined slightly when
compared to $5.2 million in the prior year period
- Adjusted net loss of $35 thousand, or $(0.00) per diluted
share, compared to adjusted net income of $4.5 million or $0.08 per
diluted share, in the prior year period
Full Year 2021 Financial Highlights
- Total revenues of $124.4 million, compared to $155.9 million in
the prior year period, a decrease of 20%
- Healthcare revenues of $77.5 million, compared to $68.5 million
in the prior year period, an increase of 13%
- Net loss of $10.3 million, or $(0.17) per diluted share,
compared to net loss of $14.0 million, or $(0.26) per diluted share
in the prior year period
- Adjusted EBITDA of $11.9 million, compared to $20.5 million in
the prior year period
- Adjusted net loss of $3.1 million, or $(0.05) per diluted
share, compared to adjusted net loss of $8.5 million, or $0.16 per
diluted share, in the prior year period
Fourth Quarter 2021 Results
Healthcare revenues in the fourth quarter were $25.6 million, up
from $18.9 million in the prior year period. Recovery revenues in
the fourth quarter were $2.3 million, compared to revenues of $17.5
million in the prior year period, consistent with management
expectations year over year. Revenues from Customer Care /
Outsourced Services in the fourth quarter were $3.7 million, in
line with the $3.7 million reported in the prior year period.
Net loss for the fourth quarter of 2021 was $2.6 million, or
$(0.04) per share on a fully diluted basis, compared to net income
of $3.7 million or $0.07 per share on a fully diluted basis in the
prior year period. Adjusted EBITDA for the fourth quarter of 2021
was $5.0 million as compared to $5.2 million in the prior year
period. Adjusted net loss for the fourth quarter of 2021 was $35
thousand or $(0.00) per share on a fully diluted basis. This
compares to adjusted net income of $4.5 million, or $0.08 per fully
diluted share in the prior year period.
Full Year 2021 Results
Revenues for the full year ended December 31, 2021 were $124.4
million, compared to revenues of $155.9 million in 2020. Healthcare
revenues were $77.5 million in 2021 compared to $68.5 million in
the prior year. For the full year 2021, recovery revenues were
$33.4 million, compared to $73.4 million in the prior year.
Revenues from Customer Care / Outsourced Services were $13.5
million in 2021, a decrease of $0.5 million compared to $14.0
million in the prior year.
Net loss for the full year was $10.3 million, or $(0.17) per
share on a fully diluted basis, compared to net loss of $14.0
million or $(0.26) per share on a fully diluted basis in 2020.
Adjusted EBITDA for 2021 was $11.9 million as compared to $20.5
million in 2020. Adjusted net loss for 2021 was $3.1 million, or
$(0.05) per fully diluted share. This compares to adjusted net
income of $8.5 million or $0.16 per fully diluted share in
2020.
As of December 31, 2021, the Company had cash, cash equivalents
and restricted cash of approximately $19.6 million.
Business Commentary
The Company announced that effective March 10th, Simeon Kohl has
been named President of Performant. As President, Kohl will remain
based in Sunrise, FL and will be responsible for the successful
execution of Performant's growth strategy, client satisfaction and
service delivery, as well as the Company's continued transformation
to a healthcare pure play company.
“It gives me great pleasure to officially announce that Simeon
Kohl is being promoted to President of Performant Financial. Over
the past 10 years, Sim has worked tirelessly to build and mature
our healthcare business. His promotion to President is a natural
progression in our transformation to a healthcare pure play company
and a direct reflection of his successful leadership and execution
of our growth strategy,” commented Lisa Im, CEO of Performant.
“As President, I’m looking forward to continuing to work with my
amazing team to further build out and grow Performant’s presence in
the healthcare payment integrity space. Our fourth quarter is
typically our seasonally strongest, and this year was no different,
as our results in the fourth quarter punctuated a strong end to an
expansive, but somewhat tumultuous year, as the nation’s healthcare
system addressed the impacts of both Delta and Omicron variant
waves,” commented Simeon Kohl, President of Performant.
“We continue to win the business of new healthcare payers, while
also expanding our portfolio of work with our existing clients.
These successes span our diversified products, such as TPL
Reclamation, Clinical Audit, and Data Mining. We are a relatively
small, but exceptionally nimble company competing against
considerably larger competitors, and we’re winning,” continued
Kohl.
“As we look ahead to 2022, we are excited at the trajectory from
the implementations we have completed and the conversions we
continue to achieve from our sales pipeline. We remain cautiously
optimistic on a thawing of the COVID-related impacts on our
operations as we look forward to 2022,” added Rohit Ramchandani,
Senior Vice President of Finance and Strategy at Performant. “As
such, we are introducing full year 2022 healthcare revenue guidance
in the range of $90 - $94 million, with EBITDA in the range of $2
to $4 million, with an expectation of EBITDA in the first half of
2022 being negative, followed by stronger margins in Q3 and Q4, due
to the anticipated quarterly trending of our revenues, as well as
the continued investments into new customer contracts. This is a
reflection of our ability to continue tackling available
opportunities to drive growth in our platform.”
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 fourth
quarter and full year 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 877-705-6003
(domestic) or 201-493-6725 (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 13727690. The telephonic
replay will be available approximately three hours after the call,
through March 22, 2022.
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 the Company's outlook for
revenues, net income (loss), and adjusted EBITDA in 2022 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 the Company's business,
results of operations and financial condition as well as on the
business operations and financial performance of many of its
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 its significant clients would
result in a material decline in 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 limitations on the scope of the Company's
audit activity under its claims audit contracts may reduce revenue
opportunities, 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)
(Unaudited)
Assets
December 31,
2021
December 31,
2020
Current assets:
Cash and cash equivalents
$
17,347
$
16,043
Restricted cash
2,203
2,253
Trade accounts receivable, net of
allowance for doubtful accounts of $0 and $49, respectively
20,808
23,216
Contract assets
8,113
4,466
Prepaid expenses and other current
assets
3,077
3,784
Income tax receivable
3,159
4,758
Total current assets
54,707
54,520
Property, equipment, and leasehold
improvements, net
15,708
17,497
Identifiable intangible assets, net
—
689
Goodwill
47,372
47,372
Right-of-use assets
3,235
5,043
Other assets
963
1,106
Total assets
$
121,985
$
126,227
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $11 and $906,
respectively
$
489
$
59,957
Accrued salaries and benefits
8,476
8,799
Accounts payable
1,124
407
Other current liabilities
3,732
3,841
Contract liabilities
634
867
Estimated liability for appeals and
disputes
1,190
1,014
Lease liabilities
1,862
2,327
Total current liabilities
17,507
77,212
Notes payable, net of current portion and
unamortized debt issuance costs of $416 and $0, respectively
19,084
—
Lease liabilities
1,803
3,442
Other liabilities
1,168
3,593
Total liabilities
39,562
84,247
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at December 31, 2021 and 2020,
respectively; issued and outstanding, 69,281 and 54,764 shares at
December 31, 2021 and 2020, respectively
7
5
Additional paid-in capital
133,662
82,933
Accumulated deficit
(51,246
)
(40,958
)
Total stockholders’ equity
82,423
41,980
Total liabilities and stockholders’
equity
$
121,985
$
126,227
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Revenues
$
31,579
$
40,036
$
124,393
$
155,937
Operating expenses:
Salaries and benefits
20,369
26,161
87,440
100,654
Other operating expenses
8,373
10,173
38,269
42,248
Impairment of goodwill
—
—
—
27,000
Total operating expenses
28,742
36,334
125,709
169,902
Income (loss) from operations
2,837
3,702
(1,316
)
(13,965
)
(Loss) gain on sale of certain recovery
contracts
(25
)
—
2,403
—
Interest expense
(5,447
)
(1,400
)
(11,313
)
(7,227
)
Interest income
—
3
—
21
Income (loss) before benefit from income
taxes
(2,635
)
2,305
(10,226
)
(21,171
)
Provision for (benefit from) income
taxes
1
1,415
62
(7,182
)
Net income (loss)
$
(2,636
)
$
3,720
$
(10,288
)
$
(13,989
)
Net income (loss) per share
Basic
$
(0.04
)
$
0.07
$
(0.17
)
$
(0.26
)
Diluted
$
(0.04
)
$
0.07
$
(0.17
)
$
(0.26
)
Weighted average shares
Basic
69,210
54,754
60,461
54,414
Diluted
69,210
56,206
60,461
54,414
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Twelve Months Ended
December 31,
2021
2020
Cash flows from operating
activities:
Net loss
$
(10,288
)
$
(13,989
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Impairment of long-lived assets
722
88
Impairment of goodwill
—
27,000
Depreciation and amortization
5,188
5,216
Right-of-use assets amortization
1,808
1,791
Stock-based compensation
2,640
2,610
Interest expense from debt issuance
costs
3,586
1,525
Earnout mark-to-market
—
(398
)
Loss on debt extinguishment
3,371
—
Gain on sale of certain recovery
contracts
(2,403
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
1,665
3,954
Contract assets
(3,647
)
(3,127
)
Prepaid expenses and other current
assets
707
(455
)
Income tax receivable
1,599
(4,594
)
Other assets
127
(135
)
Accrued salaries and benefits
(323
)
2,673
Accounts payable
717
(2,125
)
Contract liabilities and other current
liabilities
(292
)
1,061
Estimated liability for appeals and
disputes
176
(4
)
Lease liabilities
(2,104
)
(1,990
)
Other liabilities
(2,333
)
1,708
Net cash provided by operating
activities
916
20,809
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(3,416
)
(3,792
)
Proceeds from sale of certain recovery
contracts
3,146
—
Net cash used in investing activities
(270
)
(3,792
)
Cash flows from financing
activities:
Repayment of notes payable
(60,863
)
(3,450
)
Debt issuance costs paid
(581
)
—
Taxes paid related to net share settlement
of stock awards
(633
)
(266
)
Proceeds from exercise of stock
options
41
—
Borrowings from notes payable
20,000
—
Proceeds from public offering, net of
costs
42,644
—
Net cash provided by (used in) financing
activities
608
(3,716
)
Net increase in cash, cash equivalents and
restricted cash
1,254
13,301
Cash, cash equivalents and restricted cash
at beginning of year
18,296
4,995
Cash, cash equivalents and restricted cash
at end of year
$
19,550
$
18,296
Reconciliation of the consolidated
statements of cash flows to the consolidated balance
sheets:
Cash and cash equivalents
$
17,347
$
16,043
Restricted cash
$
2,203
$
2,253
Total cash, cash equivalents and
restricted cash at end of period
$
19,550
$
18,296
Non-cash financing activities:
Recognition of earnout shares issued
$
801
$
—
Recognition of warrants issued in debt
financing
$
5,237
$
—
Supplemental disclosures of cash flow
information:
Cash received for income taxes
$
(589
)
$
(2,257
)
Cash paid for interest
$
4,310
$
5,702
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Adjusted EBITDA:
Net income (loss)
$
(2,636
)
$
3,720
$
(10,288
)
$
(13,989
)
Provision for (benefit from) income
taxes
1
(1,415
)
62
(7,182
)
Interest expense(1)
5,447
1,400
11,313
7,227
Interest income
—
(3
)
—
(21
)
Stock based compensation
677
613
2,640
2,610
Depreciation and amortization
1,305
1,144
5,188
5,216
Impairment of goodwill (4)
—
—
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
(235
)
—
(397
)
Severance expenses (6)
284
—
2,160
—
Non-core operating expenses (7)
(95
)
—
2,588
—
Gain on sale of certain recovery contracts
(8)
25
—
(2,403
)
—
Adjusted EBITDA
$
5,008
$
5,224
$
11,896
$
20,464
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Adjusted Net Income (Loss):
Net income (loss)
$
(2,636
)
$
3,720
$
(10,288
)
$
(13,989
)
Stock based compensation
677
613
2,640
2,610
Amortization of intangibles assets (2)
16
63
705
239
Amortization of debt issuance costs
(3)
1,133
141
3,586
1,525
Impairment of goodwill (4)
—
—
—
27,000
Impairment of long-lived assets
—
—
636
—
Earnout mark-to-market (5)
—
(235
)
—
(397
)
Severance expenses (6)
284
—
2,160
—
Non-core operating expenses (7)
(95
)
—
2,588
—
Gain on sale of certain recovery contracts
(8)
25
—
(2,403
)
—
Tax adjustments (9)
561
160
(2,726
)
(8,519
)
Adjusted net income (loss)
$
(35
)
$
4,462
$
(3,102
)
$
8,469
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2021
2020
2021
2020
Adjusted Earnings Per Diluted
Share:
Net income (loss)
$
(2,636
)
$
3,720
$
(10,288
)
$
(13,989
)
Plus: Adjusted items per reconciliation of
adjusted net income
2,601
742
7,186
22,458
Adjusted net income (loss)
$
(35
)
$
4,462
$
(3,102
)
$
8,469
Adjusted earnings per diluted share
$
—
$
0.08
$
(0.05
)
$
0.16
Diluted average shares outstanding
(10)
69,210
56,206
60,461
54,458
We are providing the following preliminary estimates of our
financial results for the year ending December 31, 2022:
Twelve months ended December
31,
2021 Actual
2022 Estimate
Adjusted EBITDA:
Net loss
$
(10,288
)
$ (5,500) to (7,500)
Provision for (benefit from) income
taxes
62
(350) to 750
Interest expense(1)
11,313
1,000 to 1,500
Stock based compensation
2,640
2,000 to 3,000
Depreciation and amortization
5,188
4,750 to 5,750
Impairment of long-lived assets
636
—
Severance expenses (6)
2,160
100 to 500
Non-core operating expenses (7)
2,588
—
Gain on sale of certain recovery contracts
(8)
(2,403
)
—
Adjusted EBITDA
$
11,896
$ 2,000 to 4,000
(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 non-cash 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 year ended December
31, 2020 was $13,989, the computation of adjusted net income (loss)
results in adjusted net income of $8,469. Therefore, the
calculation of the adjusted earnings per diluted share for the year
ended December 31, 2020 includes dilutive common share equivalents
of 44 added to the basic weighted average shares of 54,414.
Similarly, the calculation of the adjusted earnings per diluted
share for the three months ended December 31, 2020 includes
dilutive common share equivalents of 1,452 added to the basic
weighted average shares of 54,754.
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, 2021, 2020, and 2019:
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
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 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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220315005970/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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