PFMT Performant Healthcare Inc

Performant Financial Corporation (Nasdaq: PFMT), a leading provider of healthcare payment integrity services, today reported the following financial results for its first quarter ended March 31, 2024:

First Quarter Financial Highlights

• Healthcare revenues of $25.8 million, compared to $22.9 million in the prior year period, an increase of approximately 13%.
• Total revenues of $27.3 million, compared to total revenues of $25.7 million in the prior year period.
• Net loss of $4.0 million, or $(0.05) per diluted share, compared to net loss of $4.2 million, or $(0.06) per diluted share, in the prior year period.
• Adjusted net loss was $3.0 million, or $(0.04) per diluted share, compared to adjusted net loss of $3.6 million, or $(0.05) per diluted share, in the prior year period.
• Adjusted EBITDA of $(1.2) million, compared to $(1.7) million in the prior year period.

First Quarter 2024 Results

Healthcare revenues in the first quarter of 2024 were $25.8 million, an increase of approximately 13% from $22.9 million in the prior year period. Total revenues in the first quarter were $27.3 million, an increase from total revenues of $25.7 million in the prior year period. Within healthcare, claims-based services revenue in the first quarter of 2024 was $12.4 million, while revenue from eligibility-based services in the first quarter was $13.4 million.

“Our healthcare revenue enjoyed strong double-digit year over year growth to start the year, which we believe demonstrates the performance of our commercial client growth strategy," stated Simeon Kohl, CEO of Performant. "Building upon our 2023 implementations, we implemented 10 commercial programs in the first quarter estimated to contribute $5-6 million in revenue at annualized steady-state. We are also pleased with the cadence of how RAC Region 2 is scaling in support of growth in our government side of the business. In April, we were excited to announce we acquired AI technology from RecordsOne, our first acquisition since becoming a pure-play healthcare company in 2021. The RecordsOne technology uses AI and natural language processing to plug into our audit workflow to improve prioritization and speed of medical claim reviews. Our commitment to innovation and efficiency gains is solidified by this acquisition as we continue to pursue long-term growth. We continue to feel confident in our growth strategy anchored by our client centric culture and technology enabled approach." Kohl further remarked.

Revenues from our customer care / outsourced services in the first quarter were $1.5 million, down from $2.8 million in the prior year period.

Net loss for the first quarter was $4.0 million, or $(0.05) per diluted share, compared to a net loss of $4.2 million, or $(0.06) per diluted share, in the prior year period. Adjusted net loss for the first quarter was $3.0 million, or $(0.04) per share on a diluted basis, compared to adjusted net loss of $3.6 million, or $(0.05) per diluted share, in the prior year period. Adjusted EBITDA for the first quarter was $(1.2) million as compared to $(1.7) million in the prior year period.

“The RecordsOne technology asset acquisition, plus strong financial and operational results in the first quarter, are encouraging for our longer term growth strategy,” said Rohit Ramchandani, Chief Financial Officer. “Our 2024 growth targets for both revenue and profitability are still on target. We are reiterating our expectation that 2024 healthcare revenues will be 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. The acquisition of technology from RecordsOne fits into our larger project Turing initiative with the aim of furthering scale and efficiency. We believe we successfully structured this deal to fit within our capital means, between cash on hand and our current credit facility with Wells Fargo, without sacrificing our ability to continue organic growth opportunities. We remain confident in our overall strategic and growth goals." 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 first 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.

https://services.incommconferencing.com/DiamondPassRegistration/register?confirmationNumber=13745649&linkSecurityString=1ca8df3d4b

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 13745649. The telephonic replay will be available approximately three hours after the call, through May 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 quarter, 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)

 

 

March 31, 2024

 

December 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

3,788

 

 

$

7,252

 

Restricted cash

 

—

 

 

 

81

 

Trade accounts receivable, net of allowance for credit losses

 

14,283

 

 

 

17,584

 

Contract assets

 

11,879

 

 

 

10,879

 

Prepaid expenses and other current assets

 

4,131

 

 

 

3,651

 

Income tax receivable

 

—

 

 

 

335

 

Total current assets

 

34,081

 

 

 

39,782

 

Property, equipment, and software, net

 

15,664

 

 

 

9,724

 

Goodwill

 

47,372

 

 

 

47,372

 

Debt issuance costs

 

588

 

 

 

631

 

Right-of-use assets

 

790

 

 

 

531

 

Other assets

 

743

 

 

 

990

 

Total assets

$

99,238

 

 

$

99,030

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accrued salaries and benefits

 

6,074

 

 

 

7,924

 

Accounts payable

 

2,151

 

 

 

727

 

Other current liabilities

 

2,103

 

 

 

2,385

 

Contract liabilities

 

492

 

 

 

493

 

Estimated liability for appeals and disputes

 

591

 

 

 

601

 

Deferred asset acquisition payments

 

708

 

 

 

—

 

Lease liabilities

 

281

 

 

 

250

 

Total current liabilities

 

12,400

 

 

 

12,380

 

Long-term loan payable, net of current portion and unamortized debt issuance costs of $0 and $0, respectively

 

5,000

 

 

 

5,000

 

Deferred asset acquisition payments

 

3,010

 

 

 

—

 

Lease liabilities

 

525

 

 

 

295

 

Other liabilities

 

656

 

 

 

648

 

Total liabilities

 

21,591

 

 

 

18,323

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

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

 

8

 

 

 

8

 

Additional paid-in capital

 

146,958

 

 

 

146,001

 

Accumulated deficit

 

(69,319

)

 

 

(65,302

)

Total stockholders’ equity

 

77,647

 

 

 

80,707

 

Total liabilities and stockholders’ equity

$

99,238

 

 

$

99,030

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

Revenues

 

$

27,334

 

 

$

25,729

 

Operating expenses:

 

 

 

 

Salaries and benefits

 

 

23,221

 

 

 

22,449

 

Other operating expenses

 

 

8,034

 

 

 

7,069

 

Total operating expenses

 

 

31,255

 

 

 

29,518

 

Loss from operations

 

 

(3,921

)

 

 

(3,789

)

Gain on sale of certain recovery contracts

 

 

—

 

 

 

3

 

Interest expense

 

 

(186

)

 

 

(414

)

Interest income

 

 

106

 

 

 

—

 

Loss before provision for income taxes

 

 

(4,001

)

 

 

(4,200

)

Provision for income taxes

 

 

16

 

 

 

21

 

Net loss

 

$

(4,017

)

 

$

(4,221

)

Net loss per share

 

 

 

 

Basic

 

$

(0.05

)

 

$

(0.06

)

Diluted

 

$

(0.05

)

 

$

(0.06

)

Weighted average shares

 

 

 

 

Basic

 

 

76,920

 

 

 

75,505

 

Diluted

 

 

76,920

 

 

 

75,505

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three Months Ended

March 31,

 

2024

 

2023

Cash flows from operating activities:

 

 

 

Net loss

$

(4,017

)

 

$

(4,221

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

Loss on disposal of assets

 

29

 

 

 

32

 

Depreciation and amortization

 

1,398

 

 

 

1,247

 

Right-of-use assets amortization

 

108

 

 

 

1,263

 

Stock-based compensation

 

957

 

 

 

798

 

Interest expense from debt issuance costs

 

58

 

 

 

35

 

Gain on sale of certain recovery contracts

 

—

 

 

 

(3

)

Changes in operating assets and liabilities:

 

 

 

Trade accounts receivable

 

3,301

 

 

 

158

 

Contract assets

 

(1,000

)

 

 

2,467

 

Prepaid expenses and other current assets

 

(480

)

 

 

42

 

Income tax receivable

 

335

 

 

 

40

 

Other assets

 

325

 

 

 

(194

)

Accrued salaries and benefits

 

(1,850

)

 

 

(1,120

)

Accounts payable

 

1,424

 

 

 

(291

)

Contract liabilities and other current liabilities

 

(365

)

 

 

(673

)

Estimated liability for appeals and disputes

 

(10

)

 

 

(243

)

Lease liabilities

 

(106

)

 

 

(1,492

)

Other liabilities

 

7

 

 

 

6

 

Net cash provided by (used in) operating activities

 

121

 

 

 

(2,149

)

Cash flows from investing activities:

 

 

 

Purchase of property, equipment, and software

 

(3,652

)

 

 

(909

)

Proceeds from sale of certain recovery contracts

 

—

 

 

 

3

 

Net cash used in investing activities

 

(3,652

)

 

 

(906

)

Cash flows from financing activities:

 

 

 

Repayment of long-term loan payable

 

—

 

 

 

(7,750

)

Debt issuance costs paid

 

(14

)

 

 

(244

)

Net cash used in financing activities

 

(14

)

 

 

(7,994

)

Net decrease in cash, cash equivalents and restricted cash

 

(3,545

)

 

 

(11,049

)

Cash, cash equivalents and restricted cash at beginning of period

 

7,333

 

 

 

23,465

 

Cash, cash equivalents and restricted cash at end of period

$

3,788

 

 

$

12,416

 

Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:

 

 

 

Cash and cash equivalents

$

3,788

 

 

$

12,335

 

Restricted cash

 

—

 

 

 

81

 

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

$

3,788

 

 

$

12,416

 

Non-cash investing activities:

 

 

 

Deferred asset acquisition payments

$

3,718

 

 

$

—

 

Supplemental disclosures of cash flow information:

 

 

 

Cash (received) paid for income taxes

$

(304

)

 

$

5

 

Cash paid for interest

$

127

 

 

$

582

 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

 

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

 

 

(in thousands)

Adjusted EBITDA:

 

 

 

 

Net income (loss)

 

$

(4,017

)

 

$

(4,221

)

Provision for income taxes

 

 

16

 

 

 

21

 

Interest expense (1)

 

 

186

 

 

 

414

 

Interest income

 

 

(106

)

 

 

—

 

Stock-based compensation

 

 

957

 

 

 

798

 

Depreciation and amortization

 

 

1,398

 

 

 

1,247

 

Severance expenses (3)

 

 

336

 

 

 

63

 

Other

 

 

—

 

 

 

(1

)

Adjusted EBITDA

 

$

(1,230

)

 

$

(1,679

)

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

 

 

(in thousands)

Adjusted Net Income (Loss):

 

 

 

 

Net income (loss)

 

$

(4,017

)

 

$

(4,221

)

Stock-based compensation

 

 

957

 

 

 

798

 

Amortization of debt issuance costs (2)

 

 

58

 

 

 

35

 

Severance expenses (3)

 

 

336

 

 

 

63

 

Other

 

 

—

 

 

 

(1

)

Tax adjustments (4)

 

 

(372

)

 

 

(246

)

Adjusted net income (loss)

 

$

(3,038

)

 

$

(3,572

)

 

 

Three Months Ended

March 31,

 

 

2024

 

2023

 

 

(in thousands)

Adjusted Net Income (Loss) Per Diluted Share:

 

 

 

 

Net income (loss)

 

$

(4,017

)

 

$

(4,221

)

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

 

 

979

 

 

 

649

 

Adjusted net income (loss)

 

$

(3,038

)

 

$

(3,572

)

Adjusted net income (loss) per diluted share

 

$

(0.04

)

 

$

(0.05

)

Diluted average shares outstanding

 

 

76,920

 

 

 

75,505

 

(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 three months ended March 31, 2024, and for the years ended December 31, 2023 and 2022:

 

 

Three Months Ended

 

 

March 31, 2024

 

 

(in thousands)

Eligibility-based

 

$

13,388

Claims-based

 

 

12,412

Healthcare Total

 

 

25,800

Customer Care / Outsourced Services

 

 

1,534

Total

 

$

27,334

 

 

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/20240507359674/en/

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