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 first quarter ended March 31,
2022:
First Quarter Financial Highlights
- Total revenues of $27.1 million, compared to revenues of $31.4
million in the prior year period.
- Healthcare revenues of $23.4 million, compared to $13.3 million
in the prior year period, an increase of 76%
- Net loss of approximately $1.7 million, or $(0.02) per diluted
share, compared to net loss of $4.4 million, or $(0.08) per diluted
share, in the prior year period.
- Adjusted net loss was $1.1 million, or $(0.02) per diluted
share, compared to adjusted net loss of $2.8 million, or $(0.05)
per diluted share, in the prior year period.
- Adjusted EBITDA of $0.3 million, compared to $(0.2) million in
the prior year period.
First Quarter 2022 Results
Total revenues in the first quarter were $27.1 million, a
decrease of $4.3 million, or 14% from revenues of $31.4 million in
the prior year period. Excluding the $14.5 million that we reported
in the first quarter of 2021 from our shuttered Recovery markets
business, total revenues grew over 60% year-over-year. Healthcare
revenues in the first quarter of 2022 were $23.4 million, an
increase of $10.1 million, or 76%, from revenues of $13.3 million
in the prior year period. Within Healthcare, claims-based services
revenue in the first quarter of 2022 was $9.1 million, while
revenue from eligibility-based services in the first quarter was
$14.2 million.
“In the first quarter we reported our strongest ever first
quarter for healthcare revenues driven by the continued growth from
our fully implemented SOWs as well as the contribution from some of
the 33 program implementations that we've announced over the past
five quarters,” stated Simeon Kohl, President of Performant. “In
addition, we were awarded the HHS OIG IDIQ Contract for Medical
Review and Consultative Services as well as the award for Region 2
of the Medicare Fee for Service Recovery Audit Program, but we
anticipate a delay before the latter contract kicks off as the
award is currently under review by CMS related to the incumbent
contractor’s protest.”
Recovery revenues in the first quarter were $0.1 million, a
decrease of $14.4 million, or 99%, from revenues of $14.5 million
in the prior year period. Revenues from our Customer Care /
Outsourced Services in the first quarter were $3.6 million, flat
when compared to the prior year period.
Net loss for the first quarter was $1.7 million, or $(0.02) per
share on a diluted basis, compared to a net loss of $4.4 million,
or $(0.08) per share on a diluted basis, in the prior year period.
Adjusted net loss for the first quarter was $1.1 million, or
$(0.02) per share on a diluted basis, compared to adjusted net loss
of $2.8 million, or $(0.05) per diluted share, in the prior year
period. Adjusted EBITDA for the first quarter was $0.3 million as
compared to $(0.2) million in the prior year period.
As of March 31, 2022, the Company had cash, cash equivalents,
and restricted cash of approximately $19.6 million.
“Given our achievements in the first quarter and known
opportunities ahead of us that we believe we can execute upon, we
are quite pleased with how we are tracking toward both the current
year expectations and more importantly, our long term goals. We
remain optimistic about improving trends in core utilization and
the return to normal from COVID but acknowledge that COVID variant
uncertainty and uncertainty in the macro affairs of an ever
connected world may impact utilization rates. That said, we are
pleased to amend our current views on Healthcare revenue and
believe that we can achieve $92-$96MM in Healthcare market revenues
in 2022, with Customer Care market revenues being flat to slightly
down. We are leaving our EBITDA guidance intact at $2-$4 million
for 2022 until we can gain further clarity on the timing and
ramp-speed of the RAC Region 2 contract to provide a more informed
update,” stated Rohit Ramchandani, Senior Vice President of Finance
and Strategy at 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 first
quarter 2022 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 844-826-3033 (domestic) or
412-317-5185 (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 10166578. The telephonic
replay will be available approximately three hours after the call,
through May 16, 2022.
About Performant Financial Corporation
Performant is a leading provider of 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 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, that downturns
in domestic or global economic conditions and other macroeconomic
factors could harm the Company’s business and results of
operations, that the Company may not have sufficient cash flows
from operations to fund ongoing operations and other liquidity
needs, that 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 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 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, 2021 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)
March 31,
2022
December 31,
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
17,432
$
17,347
Restricted cash
2,203
2,203
Trade accounts receivable, net of
allowance for doubtful accounts of $29 and $—, respectively
19,837
20,808
Contract assets
8,875
8,113
Prepaid expenses and other current
assets
3,941
3,077
Income tax receivable
3,085
3,159
Total current assets
55,373
54,707
Property, equipment, and leasehold
improvements, net
15,306
15,708
Goodwill
47,372
47,372
Right-of-use assets
2,760
3,235
Other assets
965
963
Total assets
$
121,776
$
121,985
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $13 and $11, respectively
$
612
$
489
Accrued salaries and benefits
5,935
8,476
Accounts payable
1,191
1,124
Other current liabilities
1,762
3,732
Contract liabilities
773
634
Estimated liability for appeals and
disputes
1,471
1,190
Lease liabilities
1,528
1,862
Total current liabilities
13,272
17,507
Notes payable, net of current portion and
unamortized debt issuance costs of $392 and $416, respectively
18,858
19,084
Lease liabilities
1,601
1,803
Other liabilities
1,174
1,168
Total liabilities
34,905
39,562
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at March 31, 2022 and December 31, 2021
respectively; issued and outstanding 73,144 and 69,281 shares at
March 31, 2022 and December 31, 2021, respectively
7
7
Additional paid-in capital
139,783
133,662
Accumulated deficit
(52,919
)
(51,246
)
Total stockholders’ equity
86,871
82,423
Total liabilities and stockholders’
equity
$
121,776
$
121,985
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of
Operations
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
March 31,
2022
2021
Revenues
$
27,083
$
31,390
Operating expenses:
Salaries and benefits
20,439
24,090
Other operating expenses
8,131
10,356
Total operating expenses
28,570
34,446
Loss from operations
(1,487
)
(3,056
)
Interest expense
(155
)
(1,346
)
Loss before provision for income taxes
(1,642
)
(4,402
)
Provision for income taxes
31
37
Net loss
$
(1,673
)
$
(4,439
)
Net loss per share
Basic
$
(0.02
)
$
(0.08
)
Diluted
$
(0.02
)
$
(0.08
)
Weighted average shares
Basic
69,873
54,813
Diluted
69,873
54,813
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2022
2021
Cash flows from operating
activities:
Net loss
$
(1,673
)
$
(4,439
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Loss (gain) on disposal of assets and
impairment of long-lived assets
(17
)
636
Depreciation and amortization
1,102
1,016
Right-of-use assets amortization
475
507
Stock-based compensation
558
649
Interest expense from debt issuance
costs
24
369
Changes in operating assets and
liabilities:
Trade accounts receivable
971
2,616
Contract assets
(762
)
(283
)
Prepaid expenses and other current
assets
(864
)
117
Income tax receivable
74
60
Other assets
(2
)
85
Accrued salaries and benefits
(2,541
)
799
Accounts payable
67
458
Contract liabilities and other current
liabilities
(1,815
)
(114
)
Estimated liability for appeals and
disputes
281
3,359
Lease liabilities
(536
)
(591
)
Other liabilities
7
(422
)
Net cash (used in) provided by operating
activities
(4,651
)
4,822
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(700
)
(826
)
Proceeds from sale of certain recovery
contracts
—
—
Net cash used in investing activities
(700
)
(826
)
Cash flows from financing
activities:
Repayment of notes payable
(125
)
(863
)
Debt issuance costs paid
(2
)
—
Taxes paid related to net share settlement
of stock awards
—
(23
)
Proceeds from exercise of warrants
5,563
—
Net cash provided by (used in) financing
activities
5,436
(886
)
Net increase in cash, cash equivalents and
restricted cash
85
3,110
Cash, cash equivalents and restricted cash
at beginning of period
19,550
18,296
Cash, cash equivalents and restricted cash
at end of period
$
19,635
$
21,406
Reconciliation of the Consolidated
Statements of Cash Flows to the Consolidated Balance
Sheets:
Cash and cash equivalents
$
17,432
$
19,203
Restricted cash
2,203
2,203
Total cash, cash equivalents and
restricted cash at end of period
$
19,635
$
21,406
Supplemental disclosures of cash flow
information:
Cash paid for income taxes
$
1
$
432
Cash paid for interest
$
176
$
977
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amount)
(Unaudited)
Three Months Ended
March 31,
2022
2021
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(1,673
)
$
(4,439
)
Provision for income taxes
31
37
Interest expense (1)
155
1,346
Stock-based compensation
558
649
Depreciation and amortization
1,102
1,016
Impairment of long-lived assets
—
636
Severance expenses (4)
142
—
Non-core operating expenses (5)
4
511
Adjusted EBITDA
$
319
$
(244
)
Three Months Ended
March 31,
2022
2021
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(1,673
)
$
(4,439
)
Stock-based compensation
558
649
Amortization of intangible assets (2)
—
59
Amortization of debt issuance costs
(3)
24
369
Impairment of long-lived assets
—
636
Severance expenses (4)
142
—
Non-core operating expenses (5)
4
511
Tax adjustments (6)
(200
)
(611
)
Adjusted net income (loss)
$
(1,145
)
$
(2,826
)
Three Months Ended
March 31,
2022
2021
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(1,673
)
$
(4,439
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
528
1,613
Adjusted net income (loss)
$
(1,145
)
$
(2,826
)
Adjusted net income (loss) per diluted
share
$
(0.02
)
$
(0.05
)
Diluted average shares outstanding
69,873
54,813
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:
Three Months
Ended
Nine Months Ending
Year Ended
Year Ending
March 31, 2022
December 31, 2022
December 31, 2021
December 31, 2022
Actual
Estimate
Actual
Estimate
Adjusted EBITDA:
Net income (loss)
$
(1,673
)
$
(3,827) to (5,827)
$
(10,288
)
$
(5,500) to (7,500)
Provision for income taxes
31
(381) to 719
62
(350) to 750
Interest expense (1)
155
845 to 1,345
11,313
1,000 to 1,500
Stock-based compensation
558
1,442 to 2,442
2,640
2,000 to 3,000
Depreciation and amortization
1,102
3,648 to 4,648
5,188
4,750 to 5,750
Impairment of long-lived assets
—
—
636
—
Severance expenses (4)
142
(42) to 358
2,160
100 to 500
Non-core operating expenses (5)
4
(4)
2,588
—
Gain on sale of certain recovery contracts
(7)
—
—
(2,403
)
—
Adjusted EBITDA
$
319
$
1,681 to 3,681
$
11,896
$
2,000 to 4,000
(1)
Represents interest expense and
amortization of debt issuance costs related to our Credit Agreement
and Prior 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 and Prior Credit
Agreement.
(4)
Represents severance expenses incurred in
connection with a reduction in force for our non-healthcare
recovery services.
(5)
Represents professional fees related to
strategic corporate development activities.
(6)
Represents tax adjustments assuming a
marginal tax rate of 27.5% at full profitability.
(7)
Represents gain on the sale of certain
non-healthcare recovery contracts in 2021.
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 three months ended March 31, 2022, and for the years ended
December 31, 2021 and 2020:
For the Three
Months Ended
March 31, 2022
(in thousands)
Eligibility-based
$
14,215
Claims-based
9,149
Healthcare Total
23,364
Recovery
118
Customer Care / Outsourced Services
3,601
Total
$
27,083
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220509005583/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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