Performant Financial Corporation (Nasdaq: PFMT), a leading
provider of technology-enabled audit, recovery, and related
analytics services in the United States, with a focus in the
healthcare payment integrity industry, today reported the following
financial results for its fourth quarter and full year ended
December 31, 2022:
Fourth Quarter Financial Highlights
- Total revenues of $29.2 million, compared to $31.6 million in
the prior year period
- Healthcare revenues of $26.0 million, compared to $25.6 million
in the prior year period
- Net loss of $0.2 million or $(0.003) per diluted share,
compared to a net loss of $2.6 million, or $(0.04) per diluted
share, in the prior year period
- Adjusted EBITDA of $2.3 million, compared to $5.0 million in
the prior year period
- Adjusted net income of $442 thousand, or $0.01 per diluted
share, compared to adjusted net loss of $35 thousand or $(0.001)
per diluted share, in the prior year period
Full Year 2022 Financial Highlights
- Total revenues of $109.2 million, compared to $124.4 million in
the prior year period
- Healthcare revenues of $94.7 million, compared to $77.5 million
in the prior year period
- Net loss of $6.5 million, or $(0.09) per diluted share,
compared to net loss of $10.3 million, or $(0.17) per diluted share
in the prior year period
- Adjusted EBITDA of $0.9 million, compared to $11.9 million in
the prior year period
- Adjusted net loss of $5.2 million, or $(0.07) per diluted
share, compared to adjusted net loss of $3.1 million, or $(0.05)
per diluted share, in the prior year period
Fourth Quarter 2022 Results
Healthcare revenues in the fourth quarter of 2022 were $26.0
million, up from $25.6 million in the prior year period. Recovery
revenues in the fourth quarter were $0.1 million, compared to $2.3
million in the prior year period. Revenues from Customer Care /
Outsourced Services in the fourth quarter were $3.1 million,
compared to $3.7 million in the prior year period.
Net loss for the fourth quarter of 2022 was $0.2 million, or
$(0.003) per share on a fully diluted basis, compared to a net loss
of $2.6 million, or $(0.04) per share, on a fully diluted basis in
the prior year period. Adjusted EBITDA for the fourth quarter was
$2.3 million compared to $5.0 million in the prior year period.
Adjusted net income for the fourth quarter was $442 thousand, or
$0.01 per share on a fully diluted basis, compared to adjusted net
loss of $35 thousand, or $(0.001) per fully diluted share, in the
prior year period.
Full Year 2022 Results
Revenues for the full year ended December 31, 2022 were $109.2
million, compared to revenues of $124.4 million in the prior year.
Healthcare revenues were $94.7 million, compared to $77.5 million
in the prior year. Recovery revenues were $0.2 million, compared to
$33.4 million in the prior year. Revenues from Customer Care /
Outsourced Services were $14.3 million compared to $13.5 million in
the prior year.
Net loss for the full year ended December 31, 2022 was $6.5
million, or $(0.09) per share on a fully diluted basis, compared to
net loss of $10.3 million, or $(0.17) per share on a fully diluted
basis, in the prior year. Adjusted EBITDA was $0.9 million,
compared to $11.9 million in the prior year. Adjusted net loss was
$5.2 million, or $(0.07) per fully diluted share, compared to
adjusted net loss of $3.1 million, or $(0.05) per fully diluted
share in the prior year.
“2022 was a strong year, as Performant achieved numerous
strategic milestones. These milestones started with the Health and
Human Services, Office of the Inspector General claim audit and
consultative services award, followed by the CMS RAC Region 2
award, and culminated with our successful recompete of the CMS
Medicare Secondary Payer Commercial Repayment Center contract,”
commented Simeon Kohl, President of Performant. “2022 was also a
breakthrough year for our work in the commercial payer market, as
we added 21 new implementations and made meaningful progress in our
efforts to further scale our operations. We anticipate that our
sales pipeline will support a similar cadence in 2023.”
As of December 31, 2022, the Company had cash, cash equivalents
and restricted cash of approximately $23.5 million.
Business Commentary
“We are quite pleased with our operational results for 2022,
particularly in consideration of the transition we have completed
into a healthcare driven company over the past few years,” added
Rohit Ramchandani, Senior Vice President of Finance and Strategy at
Performant. “Looking ahead to 2023, we are excited to keep building
upon the momentum of our historical and current pipeline of
implementations, whilst investing into speed to revenue and margin
expansion opportunities. We are introducing full year 2023
healthcare revenue guidance to be in the range of $105M to $110M.
In terms of EBITDA, we anticipate full year 2023 EBITDA in the
range of $2 - $5 million, which is inclusive of $10M to $14M of
expected investment spend, consistent with our investment in growth
initiatives and improving our operational efficiencies.”
Amendment to Credit Agreement
The Company recently completed an amendment to its existing
Credit Agreement with MUFG Union Bank, N.A. in response to certain
macroeconomic factors and the Company’s current growth initiatives.
The details of this amendment will be contained in the Company’s
Form 10-K for the year ended December 31, 2022 to be filed with the
Securities and Exchange Commission expected to be filed on or
before March 16, 2022.
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 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 877-704-4453
(domestic) or 201-389-0920 (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 13736959. The telephonic
replay will be available approximately three hours after the call,
through March 22, 2023.
About Performant Healthcare Solutions
Performant provides technology-enabled audit, recovery, and
analytics services in the United States to the healthcare industry.
Performant works with healthcare payers through claims auditing and
eligibility-based (also known as coordination-of-benefits, or COB)
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.
To learn more, please visit http://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 2023 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 Company’s
ability to generate revenue following long implementation periods
associated with new customer contracts; client relationships and
the Company’s ability to maintain such client relationships;
downturns in domestic or global economic conditions and other
macroeconomic factors; the Company’s ability to generate sufficient
cash flows to fund our ongoing operations and other liquidity
needs; the Company’s ability to hire and retain employees with
specialized skills that are required for its healthcare business;
anticipated trends and challenges in our business and competition
in the markets in which the Company operates; the impact of
COVID-19 on the Company’s business and operations, opportunities
and expectations for the markets in which the Company operates; the
Company’s indebtedness and compliance, or failure to comply, with
restrictive covenants in the Company’s credit agreement;
opportunities and expectations for growth in the various markets in
which the Company operates; anticipated trends and challenges in
the Company’s business and competition in the markets in which it
operates; the adaptability of the Company’s technology platform to
new markets and processes; the Company’s ability to invest in and
utilize our data and analytics capabilities to expand its
capabilities; the Company’s growth strategy of expanding in
existing markets and considering strategic alliances or
acquisitions; the Company’s ability to meet liquidity and working
capital needs; expectations regarding future expenses; expected
future financial performance; and the Company’s ability to comply
with and adapt to industry regulations and compliance demands.
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, 2022 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,
2022
December 31,
2021
Current assets:
Cash and cash equivalents
$
23,384
$
17,347
Restricted cash
81
2,203
Trade accounts receivable, net of
allowance for doubtful accounts
15,794
20,808
Contract assets
11,460
8,113
Prepaid expenses and other current
assets
3,665
3,077
Income tax receivable
3,123
3,159
Total current assets
57,507
54,707
Property, equipment, and leasehold
improvements, net
10,897
15,708
Goodwill
47,372
47,372
Right-of-use assets
2,057
3,235
Other assets
1,000
963
Total assets
$
118,833
$
121,985
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of notes payable, net
of unamortized debt issuance costs of $17 and $11, respectively
$
983
$
489
Accrued salaries and benefits
6,938
8,476
Accounts payable
1,262
1,124
Other current liabilities
2,252
3,732
Contract liabilities
438
634
Estimated liability for appeals and
disputes
1,106
1,190
Lease liabilities
1,228
1,862
Total current liabilities
14,207
17,507
Notes payable, net of current portion and
unamortized debt issuance costs of $316 and $416, respectively
18,184
19,084
Lease liabilities
1,076
1,803
Other liabilities
881
1,168
Total liabilities
34,348
39,562
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at December 31, 2022 and 2021,
respectively; issued and outstanding, 75,505 and 69,281 shares at
December 31, 2022 and 2021, respectively
7
7
Additional paid-in capital
142,261
133,662
Accumulated deficit
(57,783
)
(51,246
)
Total stockholders’ equity
84,485
82,423
Total liabilities and stockholders’
equity
$
118,833
$
121,985
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,
2022
2021
2022
2021
Revenues
$
29,242
$
31,579
$
109,184
$
124,393
Operating expenses:
Salaries and benefits
22,211
20,369
85,312
87,440
Other operating expenses
6,827
8,373
30,772
38,269
Total operating expenses
29,038
28,742
116,084
125,709
Income (loss) from operations
204
2,837
(6,900
)
(1,316
)
(Loss) gain on sale of certain recovery
contracts
—
(25
)
382
2,403
Gain on sale of land and buildings
—
—
1,120
—
Interest expense
(359
)
(5,447
)
(1,007
)
(11,313
)
Loss before provision for income taxes
(155
)
(2,635
)
(6,405
)
(10,226
)
Provision for income taxes
80
1
132
62
Net loss
$
(235
)
$
(2,636
)
$
(6,537
)
$
(10,288
)
Net income (loss) per share
Basic
$
—
$
(0.04
)
$
(0.09
)
$
(0.17
)
Diluted
$
—
$
(0.04
)
$
(0.09
)
$
(0.17
)
Weighted average shares
Basic
74,291
69,210
72,937
60,461
Diluted
74,291
69,210
72,937
60,461
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Twelve Months Ended
December 31,
2022
2021
Cash flows from operating
activities:
Net loss
$
(6,537
)
$
(10,288
)
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
41
722
Depreciation and amortization
4,524
5,188
Right-of-use assets amortization
1,178
1,808
Stock-based compensation
3,036
2,640
Interest expense from debt issuance
costs
95
3,586
Loss on debt extinguishment
—
3,371
Gain on sale of certain recovery
contracts
(382
)
(2,403
)
Gain on sale of land and buildings
(1,120
)
—
Changes in operating assets and
liabilities:
Trade accounts receivable
5,014
1,665
Contract assets
(3,347
)
(3,647
)
Prepaid expenses and other current
assets
(588
)
707
Income tax receivable
36
1,599
Other assets
(37
)
127
Accrued salaries and benefits
(1,538
)
(323
)
Accounts payable
138
717
Contract liabilities and other current
liabilities
(1,660
)
(292
)
Estimated liability for appeals and
disputes
(84
)
176
Lease liabilities
(1,361
)
(2,104
)
Other liabilities
(285
)
(2,333
)
Net cash (used in) provided by operating
activities
(2,877
)
916
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(3,585
)
(3,416
)
Proceeds from sale of certain recovery
contracts
382
3,146
Proceeds from sales of property,
equipment, and leasehold improvements
4,934
—
Net cash provided by (used in) investing
activities
1,731
(270
)
Cash flows from financing
activities:
Repayment of notes payable
(500
)
(60,863
)
Debt issuance costs paid
(2
)
(581
)
Taxes paid related to net share settlement
of stock awards
—
(633
)
Proceeds from exercise of warrants
5,563
—
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
5,061
608
Net increase in cash, cash equivalents and
restricted cash
3,915
1,254
Cash, cash equivalents and restricted cash
at beginning of year
19,550
18,296
Cash, cash equivalents and restricted cash
at end of year
$
23,465
$
19,550
Reconciliation of the consolidated
statements of cash flows to the consolidated balance
sheets:
Cash and cash equivalents
$
23,384
$
17,347
Restricted cash
81
2,203
Total cash, cash equivalents and
restricted cash at end of period
$
23,465
$
19,550
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 paid (received) for income taxes
$
250
$
(589
)
Cash paid for interest
$
702
$
4,310
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,
2022
2021
2022
2021
Reconciliation of Adjusted
EBITDA:
Net loss
$
(235
)
$
(2,636
)
$
(6,537
)
$
(10,288
)
Provision for income taxes
80
1
132
62
Interest expense (1)
359
5,447
1,007
11,313
Stock based compensation
824
677
3,036
2,640
Depreciation and amortization
1,169
1,305
4,524
5,188
Impairment of long-lived assets
—
—
—
636
Severance expenses (4)
85
284
274
2,160
Non-core operating expenses (5)
1
(95
)
10
2,588
Gain on sale of certain recovery contracts
(6)
—
25
(382
)
(2,403
)
Gain on sale of land and buildings (7)
—
—
(1,120
)
—
Adjusted EBITDA
$
2,283
$
5,008
$
944
$
11,896
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Reconciliation of Adjusted Net Income
(Loss):
Net loss
$
(235
)
$
(2,636
)
$
(6,537
)
$
(10,288
)
Stock based compensation
824
677
3,036
2,640
Amortization of intangibles assets (2)
—
16
—
705
Amortization of debt issuance costs
(3)
24
1,133
95
3,586
Impairment of long-lived assets
—
—
—
636
Severance expenses (4)
85
284
274
2,160
Non-core operating expenses (5)
1
(95
)
10
2,588
Gain on sale of certain recovery contracts
(6)
—
25
(382
)
(2,403
)
Gain on sale of land and buildings (7)
—
—
(1,120
)
—
Tax adjustments (8)
(257
)
561
(526
)
(2,726
)
Adjusted net loss
$
442
$
(35
)
$
(5,150
)
$
(3,102
)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2022
2021
2022
2021
Adjusted Earnings Per Diluted
Share:
Net income (loss)
$
(235
)
$
(2,636
)
$
(6,537
)
$
(10,288
)
Plus: Adjusted items per reconciliation of
adjusted net income
677
2,601
1,387
7,186
Adjusted net income (loss)
$
442
$
(35
)
$
(5,150
)
$
(3,102
)
Adjusted earnings per diluted share
$
0.01
$
—
$
(0.07
)
$
(0.05
)
Diluted average shares outstanding (9)
75,455
69,210
69,873
60,461
We are providing the following preliminary estimates of our
financial results for the year ending December 31, 2022:
Twelve months ended December
31,
2022 Actual
2023 Estimate
Adjusted EBITDA:
Net loss
$
(6,537
)
$
(6,300) to (7,500)
Provision for income taxes
132
(250) to 750
Interest expense (1)
1,007
1,000 to 2,000
Stock based compensation
3,036
2,500 to 3,500
Depreciation and amortization
4,524
5,000 to 6,000
Severance expenses (4)
274
50 to 250
Non-core operating expenses (5)
10
—
Gain on sale of certain recovery contracts
(6)
(382
)
—
Gain on sale of land and buildings (7)
(1,120
)
—
Adjusted EBITDA
$
944
$
2,000 to 5,000
(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 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 gain on the sale of certain
non-healthcare recovery contracts in 2021 and 2022.
(7)
Represents gain on the sale of land and
buildings in 2022.
(8)
Represents tax adjustments assuming a
marginal tax rate of 27.5% at full profitability.
(9)
While net loss for the three months ended
December 31, 2022 was $(235), the computation of adjusted net
income (loss) results in adjusted net income of $442. Therefore,
the calculation of the adjusted earnings per diluted share for the
three months ended December 31, 2022 includes dilutive common share
equivalents of 1,164 added to the basic weighted average shares of
74,291.
We are providing the following historical breakdown of the
quarterly and annual revenue contributions under the new
contribution breakdowns of the Company's healthcare revenue results
for the years ended December 31, 2022, 2021, and 2020:
For the Three Months
Ended
For the Year Ended
March 31, 2022
June 30, 2022
September 30, 2022
December 31, 2022
December 31, 2022
(in thousands)
Eligibility-based
$
14,214
$
12,417
$
13,142
$
13,511
$
53,284
Claims-based
9,150
9,339
10,377
12,516
41,382
Healthcare Total
23,364
21,756
23,519
26,027
94,666
Recovery
118
7
41
75
241
Customer Care / Outsourced Services
3,601
3,918
3,618
3,140
14,277
Total
$
27,083
$
25,681
$
27,178
$
29,242
$
109,184
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/20230314005846/en/
Richard Zubek Investor Relations 925-960-4988
investors@performantcorp.com
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