Performant Financial Corporation (Nasdaq: PFMT), a leading
provider of healthcare payment integrity services, today reported
the following financial results for its fourth quarter and full
year ended December 31, 2023:
Fourth Quarter Financial Highlights
- Total revenues of $32.6 million, compared to $29.2 million in
the prior year period
- Healthcare revenues of $31.1 million, compared to $26.0 million
in the prior year period
- Net income of $1.3 million, or $0.02 per diluted share,
compared to net loss of $0.2 million, or $0.00 per diluted share,
in the prior year period
- Adjusted EBITDA of $4.5 million, compared to $2.3 million in
the prior year period
- Adjusted net income of $3.6 million, or $0.05 per diluted
share, compared to adjusted net income of $0.4 million, or $0.01
per diluted share, in the prior year period
Full Year 2023 Financial Highlights
- Total revenues of $113.7 million, compared to $109.2 million in
the prior year period
- Healthcare revenues of $106.4 million, compared to $94.7
million in the prior year period
- Net loss of $7.5 million, or $(0.10) per diluted share,
compared to $6.5 million, or $(0.09) per diluted share in the prior
year period
- Adjusted EBITDA of $3.4 million, compared to $0.9 million in
the prior year period
- Adjusted net loss of $3.8 million, or $(0.05) per diluted
share, compared to adjusted net loss of $5.2 million, or $(0.07)
per diluted share, in the prior year period
Fourth Quarter 2023 Results
Healthcare revenues in the fourth quarter of 2023 were $31.1
million, up from $26.0 million in the prior year period. Revenues
from Customer Care / Outsourced Services in the fourth quarter were
$1.4 million, compared to $3.1 million in the prior year
period.
Net income for the fourth quarter of 2023 was $1.3 million, or
$0.02 per diluted share, compared to a net loss of $0.2 million, or
$0.00 per diluted share in the prior year period. Adjusted EBITDA
for the fourth quarter was $4.5 million compared to $2.3 million in
the prior year period. Adjusted net income for the fourth quarter
was $3.6 million, or $0.05 per diluted share, compared to adjusted
net income of $0.4 million, or $0.01 per diluted share in the prior
year period.
Full Year 2023 Results
Revenues for the full year ended December 31, 2023 were $113.7
million, compared to revenues of $109.2 million in the prior year.
Healthcare revenues were $106.4 million, compared to $94.7 million
in the prior year. Revenues from Customer Care / Outsourced
Services were $7.3 million compared to $14.3 million in the prior
year.
Net loss for the full year ended December 31, 2023 was $7.5
million, or $(0.10) per diluted share, compared to net loss of $6.5
million, or $(0.09) per diluted share in the prior year. Adjusted
EBITDA was $3.4 million, compared to $0.9 million in the prior
year. Adjusted net loss was $3.8 million, or $(0.05) per diluted
share, compared to $5.2 million, or $(0.07) per diluted share in
the prior year.
“2023 was a year of strong performance, successful
implementations, and operational growth. Healthcare revenues
experienced strong growth of 12% led by our commercial clients.
This growth was fueled by 41 new commercial implementations coupled
with scaling existing ones, helping to drive 55% revenue growth
from our commercial clients,” commented Simeon Kohl, Chief
Executive Officer. “The operational initiatives we put in place to
speed up implementation timelines and further scale our operations
are yielding significant results. In addition to our success with
commercial clients, we remain committed to fostering growth of our
longstanding government business. In 2023 we operationalized the
CMS RAC Region 2 contract and the Health and Human Services –
Office of the Inspector General contract for medical review and
consultative services. We were also awarded our first state
Medicaid RAC contract with New York state. While this award is
under protest by the incumbent, we are encouraged by the value we
are able to illustrate in this new payer market.”
As of December 31, 2023, the Company had cash, cash equivalents
and restricted cash of approximately $7.3 million.
Business Commentary
“We are proud of the financial and operational success we
delivered in 2023 and the foundation we have established for future
growth,” said Rohit Ramchandani, Chief Financial Officer. “Looking
ahead to 2024, we are investing in innovative technology and our
sales and account management teams to scale existing
implementations and execute on our record pipeline. The $25M
revolver we secured in October 2023, gives us the flexibility we
need to continue to go after new business. We are introducing full
year 2024 healthcare revenue guidance to be in the range of $117M
to $122M. In terms of EBITDA, we anticipate full year 2024 adjusted
EBITDA in the range of $4M to $5M, which is inclusive of the
investment expected to implement the New York state Medicaid RAC
contract as well as other investments aimed at improving scale and
efficiency.”
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 fourth
quarter and full year 2023 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 will need to register through this 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 13744430. The telephonic
replay will be available approximately three hours after the call,
through March 19, 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 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 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; 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, 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)
As of December 31,
Assets
2023
2022
Current assets:
Cash and cash equivalents
$
7,252
$
23,384
Restricted cash
81
81
Trade accounts receivable, net of
allowance for credit losses
17,584
15,794
Contract assets
10,879
11,460
Prepaid expenses and other current
assets
3,651
3,665
Income tax receivable
335
3,123
Total current assets
39,782
57,507
Property, equipment, and leasehold
improvements, net
9,724
10,897
Goodwill
47,372
47,372
Debt issuance costs
631
—
Right-of-use assets
531
2,057
Other assets
990
1,000
Total assets
$
99,030
$
118,833
Liabilities and Stockholders’
Equity
Current liabilities:
Current maturities of long-term payable,
net of unamortized debt issuance costs of $0 and $17,
respectively
$
—
$
983
Accrued salaries and benefits
7,924
6,938
Accounts payable
727
1,262
Other current liabilities
2,385
2,252
Contract liabilities
493
438
Estimated liability for appeals and
disputes
601
1,106
Lease liabilities
250
1,228
Total current liabilities
12,380
14,207
Long-term loan payable, net of current
portion and unamortized debt issuance costs of $0 and $316,
respectively
5,000
18,184
Lease liabilities
295
1,076
Other liabilities
648
881
Total liabilities
18,323
34,348
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at December 31, 2023 and 2022,
respectively; issued and outstanding, 76,920 and 75,505 shares at
December 31, 2023 and 2022, respectively
8
7
Additional paid-in capital
146,001
142,261
Accumulated deficit
(65,302
)
(57,783
)
Total stockholders’ equity
80,707
84,485
Total liabilities and stockholders’
equity
$
99,030
$
118,833
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,
2023
2022
2023
2022
Revenues
$
32,567
$
29,242
$
113,743
$
109,184
Operating expenses:
Salaries and benefits
23,308
22,211
90,447
85,312
Other operating expenses
7,349
6,827
29,424
30,772
Total operating expenses
30,657
29,038
119,871
116,084
Gain (loss) from operations
1,910
204
(6,128
)
(6,900
)
Gain on sale of certain recovery
contracts
—
—
3
382
Gain on sale of land and buildings
—
—
—
1,120
Interest expense
(785
)
(359
)
(1,974
)
(1,007
)
Interest income
154
—
240
—
Loss before provision for (benefit from)
income taxes
1,279
(155
)
(7,859
)
(6,405
)
Provision for (benefit from) income
taxes
24
80
(340
)
132
Net income (loss)
$
1,255
$
(235
)
$
(7,519
)
$
(6,537
)
Net gain (loss) per share attributable to
common shareholders
Basic
$
0.02
$
—
$
(0.10
)
$
(0.09
)
Diluted
$
0.02
$
—
$
(0.10
)
$
(0.09
)
Weighted average shares
Basic
76,896
74,291
76,156
72,937
Diluted
77,361
74,291
76,156
72,937
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
For the Years Ended
December 31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(7,519
)
$
(6,537
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Loss on disposal of assets
129
41
Depreciation and amortization
5,187
4,524
Right-of-use assets amortization
1,526
1,178
Stock-based compensation
3,936
3,036
Amortization of debt issuance costs
347
95
Loss on debt extinguishment
510
—
Gain on sale of certain recovery
contracts
(3
)
(382
)
Gain on sale of land and buildings
—
(1,120
)
Changes in operating assets and
liabilities:
Trade accounts receivable
(1,790
)
5,014
Contract assets
581
(3,347
)
Prepaid expenses and other current
assets
14
(588
)
Income tax receivable
2,788
36
Other assets
10
(37
)
Accrued salaries and benefits
986
(1,538
)
Accounts payable
(535
)
138
Contract liabilities and other current
liabilities
188
(1,660
)
Estimated liability for appeals and
disputes
(505
)
(84
)
Lease liabilities
(1,759
)
(1,361
)
Other liabilities
(231
)
(285
)
Net cash provided by (used in) operating
activities
3,860
(2,877
)
Cash flows from investing
activities:
Purchase of property, equipment, and
leasehold improvements
(4,143
)
(3,585
)
Proceeds from sale of certain recovery
contracts
3
382
Proceeds from sales of property,
equipment, and leasehold improvements
—
4,934
Net cash (used in) provided by investing
activities
(4,140
)
1,731
Cash flows from financing
activities:
Repayment of long-term loan payable
(19,500
)
(500
)
Debt issuance costs paid
(1,156
)
(2
)
Taxes paid related to net share settlement
of stock awards
(196
)
—
Proceeds from exercise of warrants
—
5,563
Borrowings from revolving loan
5,000
—
Net cash (used in) provided by financing
activities
(15,852
)
5,061
Net (decrease) increase in cash, cash
equivalents and restricted cash
(16,132
)
3,915
Cash, cash equivalents and restricted cash
at beginning of year
23,465
19,550
Cash, cash equivalents and restricted cash
at end of year
$
7,333
$
23,465
Reconciliation of the consolidated
statements of cash flows to the consolidated balance
sheets:
Cash and cash equivalents
$
7,252
$
23,384
Restricted cash
81
81
Total cash, cash equivalents and
restricted cash at end of period
$
7,333
$
23,465
Supplemental disclosures of cash flow
information:
Cash (received) paid for income taxes
$
(3,052
)
$
250
Cash paid for interest
$
1,291
$
702
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP
Results
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Reconciliation of Adjusted
EBITDA:
Net income (loss)
$
1,255
$
(235
)
$
(7,519
)
$
(6,537
)
Provision for (benefit from) income
taxes
24
80
(340
)
132
Interest expense (1)
785
359
1,974
1,007
Interest income
(154
)
—
(240
)
—
Stock based compensation
1,121
824
3,936
3,036
Depreciation and amortization
1,382
1,169
5,187
4,524
Severance expenses (3)
100
85
346
274
Non-core operating expenses (4)
15
1
52
10
Gain on sale of certain recovery contracts
(5)
—
—
(3
)
(382
)
Gain on sale of land and buildings (6)
—
—
—
(1,120
)
Adjusted EBITDA
$
4,528
$
2,283
$
3,393
$
944
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Reconciliation of Adjusted Net Income
(Loss):
Net income (loss)
$
1,255
$
(235
)
$
(7,519
)
$
(6,537
)
Stock based compensation
1,121
824
3,936
3,036
Amortization of debt issuance costs
(2)
601
24
857
95
Severance expenses (3)
100
85
346
274
Non-core operating expenses (4)
15
1
52
10
Gain on sale of certain recovery contracts
(5)
—
—
(3
)
(382
)
Gain on sale of land and buildings (6)
—
—
—
(1,120
)
Tax adjustments (7)
505
(257
)
(1,427
)
(526
)
Adjusted net income (loss)
$
3,597
$
442
$
(3,758
)
$
(5,150
)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Adjusted Earnings (Loss) Per Diluted
Share:
Net income (loss)
$
1,255
$
(235
)
$
(7,519
)
$
(6,537
)
Plus: Adjusted items per reconciliation of
adjusted net income (loss)
2,342
677
3,761
1,387
Adjusted net income (loss)
$
3,597
$
442
$
(3,758
)
$
(5,150
)
Adjusted earnings (loss) per diluted
share
$
0.05
$
0.01
$
(0.05
)
$
(0.07
)
Diluted average shares outstanding (8)
77,361
75,455
76,156
69,873
(1)
Represents interest expense and
amortization of debt issuance costs related to our Credit Agreement
and prior credit agreement.
(2)
Represents amortization of debt issuance
costs related to our Credit Agreement and prior credit
agreement.
(3)
Represents severance expenses incurred in
connection with a reduction in force for our nonhealthcare
services.
(4)
Represents professional fees related to
strategic corporate development activities.
(5)
Represents gain on the sale of certain
non-healthcare recovery contracts.
(6)
Represents gain on the sale of land and
buildings in 2022.
(7)
Represents tax adjustments assuming a
marginal tax rate of 27.5% at full profitability.
(8)
Net income for the three months ended
December 31, 2023 was $1,255, and the computation of adjusted net
income results in adjusted net income of $3,597. Therefore, the
calculation of the adjusted earnings per diluted share for the
three months ended December 31, 2023 includes dilutive common share
equivalents of 465 added to the basic weighted average shares of
76,896.
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, 2023, 2022, and 2021:
For the Three Months
Ended
For the 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
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240312151508/en/
Jon Bozzuto Investor Relations 925-960-4988
investors@performantcorp.com
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