PFMT Performant Financial Corporation

Performant Financial Corporation (Nasdaq: PFMT), a leading provider of healthcare payment integrity services, today reported the following financial results for its second quarter ended June 30, 2024:

Second Quarter Financial Highlights

• Healthcare revenues of $27.9 million, compared to $23.9 million in the prior year period, an increase of approximately 17%.
• Total revenues of $29.4 million, compared to total revenues of $25.5 million in the prior year period.
• Net loss of $3.0 million, or $(0.04) per diluted share, compared to net loss of $4.0 million, or $(0.05) per diluted share, in the prior year period.
• Adjusted EBITDA of $0.5 million, compared to $(1.3) million in the prior year period.
• Adjusted net loss was $2.0 million, or $(0.03) per diluted share, compared to adjusted net loss of $3.2 million, or $(0.04) per diluted share, in the prior year period.

Second Quarter 2024 Results

Healthcare revenues in the second quarter of 2024 were $27.9 million, an increase of approximately 17% from $23.9 million in the prior year period. Total revenues in the second quarter were $29.4 million, an increase of 15% from total revenues of $25.5 million in the prior year period. Within healthcare, claims-based services revenue in the second quarter of 2024 was $13.7 million, while revenue from eligibility-based services in the second quarter was $14.3 million.

“Our healthcare revenue once again enjoyed strong double-digit year over year growth, driven by an increase in commercial client implementations and the continued ramp under our CMS RAC Region 2 contract," stated Simeon Kohl, CEO of Performant. "We continue to fuel future growth with 10 commercial implementations in the second quarter. We have implemented 20 commercial programs during 2024, which are estimated to contribute approximately $9 million in revenue at annualized steady state. Our larger initiatives to drive efficiency and productivity are progressing as planned, with positive early results. We remain committed to delivering innovative solutions and long-term value to our clients and stakeholders. I am pleased with the results we have driven in the first half of the year and the progress made on our operational and organization initiatives," Kohl further remarked.

Revenues from our customer care / outsourced services in the second quarter were $1.4 million, down from $1.5 million in the prior year period.

Net loss for the second quarter was $3.0 million, or $(0.04) per diluted share, compared to a net loss of $4.0 million, or $(0.05) per diluted share, in the prior year period. Adjusted EBITDA for the second quarter was $0.5 million as compared to $(1.3) million in the prior year period. Adjusted net loss for the second quarter was $2.0 million, or $(0.03) per share on a diluted basis, compared to adjusted net loss of $3.2 million, or $(0.04) per diluted share, in the prior year period.

“The strong results we delivered in the second quarter and first half of the year are a testament to the growth of our organization,” said Rohit Ramchandani, Chief Financial Officer. “We delivered strong revenue and profitability, fueled future growth with double-digit implementations, and simultaneously invested in efficiency initiatives. With second quarter results ahead of expectations, we are encouraged to reiterate our expectation of 2024 healthcare revenues in the range of $117 million to $122 million, total Company revenues to be in the range of $124 million to $129 million, and adjusted EBITDA in the range of $4 million to $5 million," Ramchandani further commented.

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. In regard to forward looking non-GAAP guidance, we are not able to reconcile the forward-looking non-GAAP adjusted EBITDA measure to the closest corresponding GAAP measure without unreasonable efforts because we are unable to predict the ultimate outcome of certain significant items. These items include, but are not limited to, impacts associated with interest expense, and depreciation and amortization expenses.

Earnings Conference Call

The Company will hold a conference call to discuss its second quarter 2024 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. To dial into the call you can dial 877-737-7051 or 201-689-8878 or preregister through the below link. After registering, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call.

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 13747328. The telephonic replay will be available approximately three hours after the call, through August 14, 2024.

About Performant Healthcare Solutions

Performant supports healthcare payers in identifying, preventing, and recovering waste and improper payments by leveraging advanced technology, analytics and proprietary data assets. Performant works with leading national and regional healthcare payers to provide eligibility-based, also known as coordination-of-benefits (COB) services, as well as claims-based services, which includes the audit and identification of improperly paid claims. Performant is a leading provider of these services in both government and commercial healthcare markets. Performant also provides advanced reporting capabilities, support services, customer care, and stakeholder training programs designed to mitigate future instances of improper 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), adjusted EBITDA in 2024 and beyond, our commercial client growth strategy, our estimated revenue from commercial programs implemented in the first half of 2024, and the expected benefits of the RecordsOne technology asset acquisition. 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; many of the Company’s customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes; anticipated trends and challenges in the Company’s business and competition in the markets in which it 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; the Company’s ability to hire and retain employees with specialized skills that are required for its healthcare business; 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 impact of public health pandemics such as COVID-19 on the Company’s business and operations, opportunities and expectations for the markets in which the Company operates; the impacts of a failure of the Company’s operating systems or technology infrastructure or those of third-party vendors and subcontractors; the impacts of a cybersecurity breach or related incident to the Company or any of the Company’s third-party vendors and subcontractors; 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 maintain, protect and enhance its intellectual property; 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, 2023 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 par value amounts)

 

 

June 30, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

10,424

 

 

$

7,252

 

Restricted cash

 

—

 

 

 

81

 

Trade accounts receivable, net of allowance for credit losses

 

14,070

 

 

 

17,584

 

Contract assets

 

9,928

 

 

 

10,879

 

Prepaid expenses and other current assets

 

3,610

 

 

 

3,651

 

Income tax receivable

 

106

 

 

 

335

 

Total current assets

 

38,138

 

 

 

39,782

 

Property, equipment, and software, net

 

14,685

 

 

 

9,724

 

Goodwill

 

47,372

 

 

 

47,372

 

Debt issuance costs

 

531

 

 

 

631

 

Right-of-use assets

 

935

 

 

 

531

 

Other assets

 

776

 

 

 

990

 

Total assets

$

102,437

 

 

$

99,030

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accrued salaries and benefits

 

8,337

 

 

 

7,924

 

Accounts payable

 

888

 

 

 

727

 

Other current liabilities

 

1,868

 

 

 

2,385

 

Contract liabilities

 

848

 

 

 

493

 

Estimated liability for appeals and disputes

 

1,223

 

 

 

601

 

Deferred asset acquisition payments

 

723

 

 

 

—

 

Lease liabilities

 

485

 

 

 

250

 

Total current liabilities

 

14,372

 

 

 

12,380

 

Long-term loan payable

 

8,000

 

 

 

5,000

 

Deferred asset acquisition payments

 

3,068

 

 

 

—

 

Lease liabilities

 

467

 

 

 

295

 

Other liabilities

 

664

 

 

 

648

 

Total liabilities

 

26,571

 

 

 

18,323

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock, $0.0001 par value. Authorized, 500,000 shares at June 30, 2024 and December 31, 2023 respectively; issued and outstanding 77,190 and 76,920 shares at June 30, 2024 and December 31, 2023, respectively

 

8

 

 

 

8

 

Additional paid-in capital

 

148,173

 

 

 

146,001

 

Accumulated deficit

 

(72,315

)

 

 

(65,302

)

Total stockholders’ equity

 

75,866

 

 

 

80,707

 

Total liabilities and stockholders’ equity

$

102,437

 

 

$

99,030

 

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Revenues

 

$

29,362

 

 

$

25,485

 

 

$

56,696

 

 

$

51,214

 

Operating expenses:

 

 

 

 

 

 

 

 

Salaries and benefits

 

 

24,534

 

 

 

21,710

 

 

 

47,755

 

 

 

44,159

 

Other operating expenses

 

 

7,569

 

 

 

7,376

 

 

 

15,603

 

 

 

14,445

 

Total operating expenses

 

 

32,103

 

 

 

29,086

 

 

 

63,358

 

 

 

58,604

 

Loss from operations

 

 

(2,741

)

 

 

(3,601

)

 

 

(6,662

)

 

 

(7,390

)

Gain on sale of certain recovery contracts

 

 

—

 

 

 

—

 

 

 

—

 

 

 

3

 

Interest expense

 

 

(300

)

 

 

(351

)

 

 

(486

)

 

 

(765

)

Interest income

 

 

61

 

 

 

—

 

 

 

167

 

 

 

—

 

Loss before provision for income taxes

 

 

(2,980

)

 

 

(3,952

)

 

 

(6,981

)

 

 

(8,152

)

Provision for income taxes

 

 

16

 

 

 

21

 

 

 

32

 

 

 

42

 

Net loss

 

$

(2,996

)

 

$

(3,973

)

 

$

(7,013

)

 

$

(8,194

)

Net loss per share

 

 

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

$

(0.05

)

 

$

(0.09

)

 

$

(0.11

)

Diluted

 

$

(0.04

)

 

$

(0.05

)

 

$

(0.09

)

 

$

(0.11

)

Weighted average shares

 

 

 

 

 

 

 

 

Basic

 

 

76,975

 

 

 

75,752

 

 

 

76,925

 

 

 

75,629

 

Diluted

 

 

76,975

 

 

 

75,752

 

 

 

76,925

 

 

 

75,629

 

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

Cash flows from operating activities:

 

 

 

Net loss

$

(7,013

)

 

$

(8,194

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Loss on disposal of assets

 

29

 

 

 

36

 

Depreciation and amortization

 

3,317

 

 

 

2,512

 

Right-of-use assets amortization

 

224

 

 

 

1,455

 

Stock-based compensation

 

2,262

 

 

 

1,686

 

Interest expense from debt issuance costs

 

115

 

 

 

122

 

Gain on sale of certain recovery contracts

 

—

 

 

 

(3

)

Changes in operating assets and liabilities:

 

 

 

Trade accounts receivable

 

3,514

 

 

 

3,004

 

Contract assets

 

951

 

 

 

4,513

 

Prepaid expenses and other current assets

 

41

 

 

 

683

 

Income tax receivable

 

229

 

 

 

(53

)

Other assets

 

208

 

 

 

25

 

Accrued salaries and benefits

 

413

 

 

 

(820

)

Accounts payable

 

161

 

 

 

(67

)

Contract liabilities and other current liabilities

 

(162

)

 

 

(658

)

Estimated liability for appeals and disputes

 

622

 

 

 

(299

)

Lease liabilities

 

(221

)

 

 

(1,691

)

Other liabilities

 

16

 

 

 

14

 

Net cash provided by operating activities

 

4,706

 

 

 

2,265

 

Cash flows from investing activities:

 

 

 

Purchase of property, equipment, and software

 

(4,510

)

 

 

(2,339

)

Proceeds from sale of certain recovery contracts

 

—

 

 

 

3

 

Net cash used in investing activities

 

(4,510

)

 

 

(2,336

)

Cash flows from financing activities:

 

 

 

Repayment of long-term loan payable

 

—

 

 

 

(8,000

)

Debt issuance costs paid

 

(15

)

 

 

(274

)

Taxes paid related to net share settlement of stock awards

 

(90

)

 

 

(57

)

Borrowings from revolving loan

 

3,000

 

 

 

—

 

Net cash provided by (used in) financing activities

 

2,895

 

 

 

(8,331

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

3,091

 

 

 

(8,402

)

Cash, cash equivalents and restricted cash at beginning of period

 

7,333

 

 

 

23,465

 

Cash, cash equivalents and restricted cash at end of period

$

10,424

 

 

$

15,063

 

Reconciliation of the Consolidated Statements of Cash Flows to the

Consolidated Balance Sheets:

 

 

 

Cash and cash equivalents

$

10,424

 

 

$

14,982

 

Restricted cash

 

—

 

 

 

81

 

Total cash, cash equivalents and restricted cash at end of period

$

10,424

 

 

$

15,063

 

Non-cash investing activities:

 

 

 

Deferred asset acquisition payments

$

3,791

 

 

$

—

 

Supplemental disclosures of cash flow information:

 

 

 

Cash (received) paid for income taxes

$

(151

)

 

$

143

 

Cash paid for interest

$

252

 

 

$

721

 

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(in thousands)

 

(in thousands)

Adjusted EBITDA:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2,996

)

 

$

(3,973

)

 

$

(7,013

)

 

$

(8,194

)

Provision for income taxes

 

 

16

 

 

 

21

 

 

 

32

 

 

 

42

 

Interest expense (1)

 

 

300

 

 

 

351

 

 

 

486

 

 

 

765

 

Interest income

 

 

(61

)

 

 

—

 

 

 

(167

)

 

 

—

 

Stock-based compensation

 

 

1,305

 

 

 

888

 

 

 

2,262

 

 

 

1,686

 

Depreciation and amortization

 

 

1,919

 

 

 

1,265

 

 

 

3,317

 

 

 

2,512

 

Severance expenses (3)

 

 

50

 

 

 

119

 

 

 

386

 

 

 

182

 

Other

 

 

15

 

 

 

30

 

 

 

15

 

 

 

29

 

Adjusted EBITDA

 

$

548

 

 

$

(1,299

)

 

$

(682

)

 

$

(2,978

)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(in thousands)

 

(in thousands)

Adjusted Net Income (Loss):

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2,996

)

 

$

(3,973

)

 

$

(7,013

)

 

$

(8,194

)

Stock-based compensation

 

 

1,305

 

 

 

888

 

 

 

2,262

 

 

 

1,686

 

Amortization of debt issuance costs (2)

 

 

57

 

 

 

87

 

 

 

115

 

 

 

122

 

Severance expenses (3)

 

 

50

 

 

 

119

 

 

 

386

 

 

 

182

 

Other

 

 

15

 

 

 

30

 

 

 

15

 

 

 

29

 

Tax adjustments (4)

 

 

(393

)

 

 

(309

)

 

 

(764

)

 

 

(555

)

Adjusted net income (loss)

 

$

(1,962

)

 

$

(3,158

)

 

$

(4,999

)

 

$

(6,730

)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

 

 

(in thousands)

 

(in thousands)

Adjusted Net Income (Loss) Per Diluted Share:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(2,996

)

 

$

(3,973

)

 

$

(7,013

)

 

$

(8,194

)

Plus: Adjustment items per reconciliation of adjusted net income (loss)

 

 

1,034

 

 

 

815

 

 

 

2,014

 

 

 

1,464

 

Adjusted net income (loss)

 

$

(1,962

)

 

$

(3,158

)

 

$

(4,999

)

 

$

(6,730

)

Adjusted net income (loss) per diluted share

 

$

(0.03

)

 

$

(0.04

)

 

$

(0.06

)

 

$

(0.09

)

Diluted average shares outstanding

 

 

76,975

 

 

 

75,752

 

 

 

76,925

 

 

 

75,629

 

(1)

Represents interest expense and amortization of debt issuance costs related to our Credit Agreement.

(2)

Represents amortization of debt issuance costs related to our Credit Agreement.

(3)

Represents severance expenses incurred in connection with a reduction in force for our non-healthcare recovery services.

(4)

Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Quarterly and Annual Revenues (In thousands) (Unaudited)

We are providing the following historical breakdown of the quarterly and annual revenue contributions under the contribution breakdowns of our healthcare revenue results for the six months ended June 30, 2024, and for the years ended December 31, 2023 and 2022:

 

 

Three Months Ended

 

Six Months Ended

 

 

March 31, 2024

 

June 30, 2024

 

June 30, 2024

 

 

 

 

 

 

(in thousands)

Eligibility-based

 

$

13,388

 

$

14,264

 

$

27,652

Claims-based

 

 

12,412

 

 

13,661

 

 

26,073

Healthcare Total

 

 

25,800

 

 

27,925

 

 

53,725

Customer Care / Outsourced Services

 

 

1,534

 

 

1,437

 

 

2,971

Total

 

$

27,334

 

$

29,362

 

$

56,696

 

 

 

Three Months Ended

 

Year Ended

 

 

March 31, 2023

 

June 30, 2023

 

September 30, 2023

 

December 31, 2023

 

December 31, 2023

 

 

(in thousands)

Eligibility-based

 

$

12,480

 

$

14,131

 

$

18,165

 

$

16,403

 

$

61,179

Claims-based

 

 

10,412

 

 

9,798

 

 

10,325

 

 

14,730

 

 

45,265

Healthcare Total

 

 

22,892

 

 

23,929

 

 

28,490

 

 

31,133

 

 

106,444

Recovery

 

 

19

 

 

14

 

 

 

 

—

 

 

33

Customer Care / Outsourced Services

 

 

2,818

 

 

1,542

 

 

1,472

 

 

1,434

 

 

7,266

Total

 

$

25,729

 

$

25,485

 

$

29,962

 

$

32,567

 

$

113,743

 

 

 

Three Months Ended

 

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807227296/en/

Jon Bozzuto Investor Relations 925-960-4988 investors@performantcorp.com