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, 2022:
Third Quarter Financial Highlights
- Total revenues of $27.2 million, compared to revenues of $28.6
million in the prior year period.
- Healthcare revenues of $23.5 million, compared to $20.0 million
in the prior year period, an increase of approximately 18%.
- Net loss of approximately $1.5 million, or $(0.02) per diluted
share, compared to net loss of $1.7 million, or $(0.03) per diluted
share, in the prior year period.
- Adjusted net loss was $1.7 million, or $(0.02) per diluted
share, compared to adjusted net income of 0.1 million, or $0.00 per
diluted share, in the prior year period.
- Adjusted EBITDA of $(0.3) million, compared to $2.7 million in
the prior year period.
Third Quarter 2022 Results
Total revenues in the third quarter were $27.2 million, a
decrease from revenues of $28.6 million in the prior year period.
Healthcare revenues in the third quarter of 2022 were $23.5
million, an increase of 18% from revenues of $20.0 million in the
prior year period. Within Healthcare, claims-based services revenue
in the third quarter of 2022 was $10.4 million, while revenues from
eligibility-based services in the third quarter was $13.1
million.
“We are excited to see our efforts successfully drive strong top
line growth particularly among commercial payors,” stated Simeon
Kohl, President of Performant. “Our recently announced strategic
engagement with Priority Health highlights our partnership model
for commercial payors, and our focus of growing our healthcare
operations through a customized high-touch approach. As we go to
market as a pure-play healthcare technology company, we are aligned
from a cultural, technology and leadership team perspective .”
Recovery revenues in the third quarter were $41 thousand, a
decrease of 99.3% from revenues of $5.5 million in the prior year
period due to the cessation of non-healthcare recovery activity
which largely occurred by the end of 2021. Revenues from our
Customer Care / Outsourced Services in the third quarter were $3.6
million, up $0.5 million compared to the prior year period.
Net loss for the third quarter was $1.5 million, or $(0.02) per
share on a diluted basis, compared to a net loss of $1.7 million,
or $(0.03) per share on a diluted basis, in the prior year period.
Adjusted net loss for the third quarter was $1.7 million, or
$(0.02) per share on a diluted basis, compared to adjusted net
income of $0.1 million, or $0.00 per diluted share, in the prior
year period. Adjusted EBITDA for the third quarter was $(0.3)
million as compared to $2.7 million in the prior year period.
As of September 30, 2022, the Company had cash, cash
equivalents, and restricted cash of approximately $25.7
million.
“Our third quarter results were largely inline with our
expectations and our long-term plan and strategy remains intact.
Our healthcare offerings demonstrated continued year-over-year
growth, which we expect will continue into 2023 based on our robust
sales and implementation pipelines,” stated Rohit Ramchandani,
Senior Vice President of Finance and Strategy at Performant. “Our
cash position remains strong and we are pleased to reiterate our
healthcare revenue guidance of $92-$96 million for 2022. Following
the recent re-affirmation of the contract award for RAC Region 2
from CMS, we expect to start spending on the implementation work in
the current month. This RAC related spend in tandem with additional
costs incurred during the protest process, as well as increases in
operating expenses related to our transformation from legacy
markets served to today, leads us to a revised EBITDA range for the
year of negative $1MM to a positive $1MM.”
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 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 800-954-0628 (domestic) or
212-231-2928 (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 22021062. The telephonic
replay will be available approximately three hours after the call,
through November 15, 2022.
About Performant Healthcare Solutions
Performant Healthcare Solutions 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.
To learn more, please visit https://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 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, 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 the high level of revenue
concentration among the Company's largest customers and any
termination of or deterioration 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 U.S. federal government
accounts for a significant portion of the Company's revenues, 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 Company may not be able to manage its potential
growth effectively, that the Company faces significant competition
in all of its markets, 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 limitations on
the scope of the Company's audit activity under its claims audit
contracts may reduce revenue opportunities, 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)
September 30,
2022
December 31,
2021
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
25,591
$
17,347
Restricted cash
81
2,203
Trade accounts receivable, net of
allowance for doubtful accounts of $0 and $0, respectively
15,850
20,808
Contract assets
9,735
8,113
Prepaid expenses and other current
assets
2,395
3,077
Income tax receivable
3,211
3,159
Total current assets
56,863
54,707
Property, equipment, and leasehold
improvements, net
10,681
15,708
Goodwill
47,372
47,372
Right-of-use assets
2,394
3,235
Other assets
970
963
Total assets
$
118,280
$
121,985
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $16 and $11, respectively
$
859
$
489
Accrued salaries and benefits
6,532
8,476
Accounts payable
785
1,124
Other current liabilities
2,304
3,732
Contract liabilities
531
634
Estimated liability for appeals and
disputes
1,148
1,190
Lease liabilities
1,303
1,862
Total current liabilities
13,462
17,507
Notes payable, net of current portion and
unamortized debt issuance costs of $341 and $416, respectively
18,409
19,084
Lease liabilities
1,365
1,803
Other liabilities
1,148
1,168
Total liabilities
34,384
39,562
Commitments and contingencies (note 3 and
note 4)
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at September 30, 2022 and December 31,
2021 respectively; issued and outstanding 74,212 and 69,281 shares
at September 30, 2022 and December 31, 2021, respectively
7
7
Additional paid-in capital
141,437
133,662
Accumulated deficit
(57,548
)
(51,246
)
Total stockholders’ equity
83,896
82,423
Total liabilities and stockholders’
equity
$
118,280
$
121,985
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,
2022
2021
2022
2021
Revenues
$
27,178
$
28,582
$
79,942
$
92,814
Operating expenses:
Salaries and benefits
21,759
19,686
63,101
67,071
Other operating expenses
7,733
8,781
23,945
29,896
Impairment of goodwill
—
—
—
—
Total operating expenses
29,492
28,467
87,046
96,967
Income (loss) from operations
(2,314
)
115
(7,104
)
(4,153
)
Gain on sale of certain recovery
contracts
—
579
382
2,428
Gain on sale of land and buildings
1,120
—
1,120
—
Interest expense
(277
)
(2,394
)
(648
)
(5,866
)
Loss before provision for income taxes
(1,471
)
(1,700
)
(6,250
)
(7,591
)
Provision for (benefit from) income
taxes
(11
)
(9
)
52
61
Net loss
$
(1,460
)
$
(1,691
)
$
(6,302
)
$
(7,652
)
Net loss per share
Basic
$
(0.02
)
$
(0.03
)
$
(0.09
)
$
(0.13
)
Diluted
$
(0.02
)
$
(0.03
)
$
(0.09
)
$
(0.13
)
Weighted average shares
Basic
74,021
62,127
72,480
57,512
Diluted
74,021
62,127
72,480
57,512
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2022
2021
Cash flows from operating
activities:
Net loss
$
(6,302
)
$
(7,652
)
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
40
718
Depreciation and amortization
3,355
3,883
Right-of-use assets amortization
841
1,413
Stock-based compensation
2,212
1,963
Interest expense from debt issuance
costs
71
2,453
Gain on sale of certain recovery
contracts
(382
)
(2,428
)
Gain on sale of land and buildings
(1,120
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
4,958
4,270
Contract assets
(1,622
)
(484
)
Prepaid expenses and other current
assets
682
1,245
Income tax receivable
(52
)
1,305
Other assets
(7
)
120
Accrued salaries and benefits
(1,944
)
(3,739
)
Accounts payable
(339
)
422
Contract liabilities and other current
liabilities
(1,515
)
(1,363
)
Estimated liability for appeals, disputes,
and refunds
(42
)
1,240
Lease liabilities
(997
)
(1,635
)
Other liabilities
(19
)
(445
)
Net cash (used in) provided by operating
activities
(2,182
)
1,286
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(2,198
)
(2,695
)
Proceeds from sale of certain recovery
contracts
382
3,171
Proceeds from sales of property,
equipment, and leasehold improvements
4,934
—
Net cash provided by investing
activities
3,118
476
Cash flows from financing
activities:
Repayment of notes payable
(375
)
(8,438
)
Debt issuance costs paid
(2
)
(150
)
Taxes paid related to net share settlement
of stock awards
—
(633
)
Proceeds from exercise of warrants
5,563
41
Proceeds from public offering, net of
costs
—
42,648
Net cash provided by financing
activities
5,186
33,468
Net increase in cash, cash equivalents and
restricted cash
6,122
35,230
Cash, cash equivalents and restricted cash
at beginning of period
19,550
18,296
Cash, cash equivalents and restricted cash
at end of period
$
25,672
$
53,526
Reconciliation of the Consolidated
Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents
$
25,591
$
51,323
Restricted cash
81
2,203
Total cash, cash equivalents and
restricted cash at end of period
$
25,672
$
53,526
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
$
267
$
(683
)
Cash paid for interest
$
449
$
3,413
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,
2022
2021
2022
2021
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(1,460
)
$
(1,691
)
$
(6,302
)
$
(7,652
)
Provision for (benefit from) income
taxes
(11
)
(9
)
52
61
Interest expense (1)
277
2,394
648
5,866
Stock-based compensation
931
540
2,212
1,963
Depreciation and amortization
1,095
843
3,355
3,883
Impairment of long-lived assets
—
—
—
636
Severance expenses (4)
10
380
189
1,876
Non-core operating expenses (5)
3
$
775
9
2,683
Gain on sale of certain recovery contracts
(6)
—
(579
)
(382
)
(2,428
)
Gain on sale of land and buildings (7)
$
(1,120
)
$
—
$
(1,120
)
$
—
Adjusted EBITDA
$
(275
)
$
2,653
$
(1,339
)
$
6,888
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(1,460
)
$
(1,691
)
$
(6,302
)
$
(7,652
)
Stock-based compensation
931
540
2,212
1,963
Amortization of intangible assets (2)
—
72
—
689
Amortization of debt issuance costs
(3)
23
1,320
71
2,453
Impairment of long-lived assets
—
—
—
636
Severance expenses (4)
10
380
189
1,876
Non-core operating expenses (5)
3
—
9
2,683
Gain on sale of certain recovery contracts
(6)
—
(579
)
(382
)
(2,428
)
Gain on sale of land and buildings (7)
(1,120
)
—
(1,120
)
—
Tax adjustments (8)
(42
)
(690
)
(269
)
(2,165
)
Adjusted net income (loss)
$
(1,655
)
$
127
$
(5,592
)
$
(1,945
)
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,
2022
2021
2022
2021
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(1,460
)
$
(1,691
)
$
(6,302
)
$
(7,652
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
(195
)
1,818
710
5,707
Adjusted net income (loss)
$
(1,655
)
$
127
$
(5,592
)
$
(1,945
)
Adjusted net income (loss) per diluted
share
$
(0.02
)
$
—
$
(0.08
)
$
(0.03
)
Diluted average shares outstanding (9)
74,021
67,948
72,480
57,512
We are providing the following preliminary estimates of our
financial results as follows:
Nine months ended
Three months ended
Year Ended
September 30, 2022
December 31, 2022
December 31, 2021
December 31, 2022
Actual
Estimate
Actual
Estimate
Adjusted EBITDA:
Net income (loss)
$
(6,302
)
$ (1,144) to (1,755)
$
(10,288
)
$ (7,446) to (8,057)
Provision for (benefit from) income
taxes
$
52
(302) to 198
62
(250) to 250
Interest expense (1)
$
648
102 to 602
11,313
750 to 1,250
Stock-based compensation
$
2,212
538 to 1,038
2,640
2,750 to 3,250
Depreciation and amortization
$
3,355
1,145 to 2,145
5,188
4,500 to 5,500
Impairment of long-lived assets
$
—
—
636
—
Severance expenses (4)
$
189
0 to 111
2,160
189 to 300
Non-core operating expenses (5)
$
9
—
2,588
9
Gain on sale of certain recovery contracts
(6)
$
(382
)
—
(2,403
)
(382
)
Gain on sale of land and buildings (7)
$
(1,120
)
—
—
(1,120
)
Adjusted EBITDA
$
(1,339
)
$ 339 to 2,339
$
11,896
$ (1,000) to 1,000
- Represents interest expense and amortization of debt issuance
costs related to our Credit Agreement and Prior Credit
Agreement.
- Represents amortization of intangibles related to the
acquisition of Performant by an affiliate of Parthenon Capital
Partners in 2004.
- Represents amortization of debt issuance costs related to our
Credit Agreement and Prior Credit Agreement.
- Represents severance expenses incurred in connection with a
reduction in force for our non-healthcare recovery services.
- Represents professional fees related to strategic corporate
development activities.
- Represents gain on the sale of certain non-healthcare recovery
contracts.
- Represents gain on the sale of land and two office
buildings.
- Represents tax adjustments assuming a marginal tax rate of
27.5% at full profitability.
- 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.
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 and nine months ended September 30, 2022, and for the years
ended December 31, 2021 and 2020:
For the Three Months
Ended
For the Nine Months
Ended
March 31, 2022
June 30, 2022
September 30, 2022
September 30, 2022
(in thousands)
Eligibility-based
$
14,214
$
12,417
$
13,142
$
39,773
Claims-based
9,150
9,339
10,377
28,866
Healthcare Total
23,364
21,756
23,519
68,639
Recovery
118
7
41
166
Customer Care / Outsourced Services
3,601
3,918
3,618
11,137
Total
$
27,083
$
25,681
$
27,178
$
79,942
For the Three Months
Ended
For the Year Ended
March 31, 2021
June 30, 2021
September 30, 2021
December 31, 2021
December 31, 2021
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
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/20221108005989/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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