Performant Financial Corporation (Nasdaq: PFMT), a leading
provider of healthcare payment integrity services, today reported
the following financial results for its third quarter ended
September 30, 2024:
Third Quarter Financial Highlights
- Healthcare revenues of $30.3 million, compared to $28.5 million
in the prior year period, an increase of approximately 6%.
- Total revenues of $31.5 million, compared to total revenues of
$30.0 million in the prior year period.
- Net loss of $2.4 million, or $(0.03) per diluted share,
compared to net loss of $0.6 million, or $(0.01) per diluted share,
in the prior year period.
- Adjusted EBITDA of $1.9 million, compared to $1.8 million in
the prior year period.
- Adjusted net loss was $0.8 million, or $(0.01) per diluted
share, compared to adjusted net income of $0.4 million, or $0.01
per diluted share, in the prior year period.
Third Quarter 2024 Results
Healthcare revenues in the third quarter of 2024 were $30.3
million, an increase of approximately 6% from $28.5 million in the
prior year period. Total revenues in the third quarter were $31.5
million, an increase of 5% from total revenues of $30.0 million in
the prior year period. Within healthcare, claims-based services
revenue in the third quarter of 2024 was $14.2 million, while
revenue from eligibility-based services in the third quarter was
$16.1 million.
“Our third quarter revenue and overall profitability grew as
expected against a difficult year-over-year comparison. Existing
commercial client implementations continue to scale as expected
along with the CMS RAC Region 2 contract to drive revenue growth,"
stated Simeon Kohl, CEO of Performant. "We are capitalizing on
market opportunities, including our first State Medicaid contract
with New York, one of the nation’s largest Medicaid programs. Our
contract awards across federal, commercial, and now State Medicaid
clients are a testament to our growth strategy, driven by our
quality services and ability to understand clients’ needs in this
dynamic market. Within our commercial clients, we have implemented
32 programs during 2024, which we currently estimate to
collectively contribute between $13 and $14 million in annualized
revenue at steady state. Our long-term focus remains on delivering
value for our healthcare clients and stakeholders, including
initiatives to deliver efficiency and productivity gains. I am
pleased with the results and excited to lead the team to
successfully close out 2024."
Revenues from our customer care / outsourced services in the
third quarter were $1.2 million, down from $1.5 million in the
prior year period. Simeon Kohl remarked on this business: “We have
made the decision to reduce services in our customer care line of
business. Our strategy remains clear, with a focus on the
healthcare payment integrity market as we remain optimistic about
its growth horizon.”
Net loss for the third quarter was $2.4 million, or $(0.03) per
diluted share, compared to a net loss of $0.6 million, or $(0.01)
per diluted share, in the prior year period. Adjusted EBITDA for
the third quarter was $1.9 million as compared to $1.8 million in
the prior year period. Adjusted net loss for the third quarter was
$0.8 million, or $(0.01) per share on a diluted basis, compared to
adjusted net income of $0.4 million, or $0.01 per diluted share, in
the prior year period.
“The combination of our strong year-to-date financial
performance and advancements in initiatives aimed at improving
profitability, gives us confidence in reiterating our healthcare
revenue guidance range,” said Rohit Ramchandani, Chief Financial
Officer. “We expect to deliver financial results within our
originally stated range which is an achievement considering some
unusual conditions in the healthcare market in 2024. Full guidance
expectations are as follows: 2024 healthcare revenues in the range
of $117 million to $122 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 third
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 800-717-1738 or 646-307-1865.
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 1114357. The telephonic
replay will be available approximately three hours after the call,
through November 13, 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, and our estimated revenue
from commercial programs implemented in the first nine-months of
2024. 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)
September 30,
2024
December 31,
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
7,775
$
7,252
Restricted cash
—
81
Trade accounts receivable, net of
allowance for credit losses
17,955
17,584
Contract assets
9,538
10,879
Prepaid expenses and other current
assets
2,944
3,651
Income tax receivable
119
335
Total current assets
38,331
39,782
Property, equipment, and software, net
14,033
9,724
Goodwill
47,372
47,372
Debt issuance costs
473
631
Right-of-use assets
847
531
Other assets
787
990
Total assets
$
101,843
$
99,030
Liabilities and Stockholders’
Equity
Current liabilities:
Accrued salaries and benefits
7,588
7,924
Accounts payable
719
727
Other current liabilities
2,404
2,385
Contract liabilities
1,897
493
Estimated liability for appeals and
disputes
600
601
Deferred asset acquisition payments
737
—
Lease liabilities
423
250
Total current liabilities
14,368
12,380
Long-term loan payable
8,000
5,000
Deferred asset acquisition payments
3,123
—
Lease liabilities
442
295
Other liabilities
672
648
Total liabilities
26,605
18,323
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value.
Authorized, 500,000 shares at September 30, 2024 and December 31,
2023 respectively; issued and outstanding 78,291 and 76,920 shares
at September 30, 2024 and December 31, 2023, respectively
8
8
Additional paid-in capital
149,929
146,001
Accumulated deficit
(74,699
)
(65,302
)
Total stockholders’ equity
75,238
80,707
Total liabilities and stockholders’
equity
$
101,843
$
99,030
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,
2024
2023
2024
2023
Revenues
$
31,519
$
29,962
$
88,215
$
81,176
Operating expenses:
Salaries and benefits
25,966
22,980
73,721
67,139
Other operating expenses
7,702
7,632
23,305
22,077
Total operating expenses
33,668
30,612
97,026
89,216
Loss from operations
(2,149
)
(650
)
(8,811
)
(8,040
)
Gain on sale of certain recovery
contracts
—
—
—
3
Interest expense
(313
)
(423
)
(799
)
(1,188
)
Interest income
93
86
260
86
Loss before provision for income taxes
(2,369
)
(987
)
(9,350
)
(9,139
)
Provision for (benefit from) income
taxes
15
(407
)
47
(365
)
Net loss
$
(2,384
)
$
(580
)
$
(9,397
)
$
(8,774
)
Net loss per share
Basic
$
(0.03
)
$
(0.01
)
$
(0.12
)
$
(0.12
)
Diluted
$
(0.03
)
$
(0.01
)
$
(0.12
)
$
(0.12
)
Weighted average shares
Basic
77,748
76,454
77,232
75,907
Diluted
77,748
76,454
77,232
75,907
PERFORMANT FINANCIAL
CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash
Flows
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2024
2023
Cash flows from operating
activities:
Net loss
$
(9,397
)
$
(8,774
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Loss on disposal of assets
63
258
Depreciation and amortization
5,244
3,805
Right-of-use assets amortization
312
1,411
Stock-based compensation
4,122
2,815
Interest expense from debt issuance
costs
173
256
Gain on sale of certain recovery
contracts
—
(3
)
Changes in operating assets and
liabilities:
Trade accounts receivable
(371
)
1,665
Contract assets
1,341
4,610
Prepaid expenses and other current
assets
707
561
Income tax receivable
216
2,607
Other assets
190
86
Accrued salaries and benefits
(336
)
(1,295
)
Accounts payable
(8
)
(390
)
Contract liabilities and other current
liabilities
1,423
(43
)
Estimated liability for appeals and
disputes
(1
)
(200
)
Lease liabilities
(308
)
(1,645
)
Other liabilities
25
23
Net cash provided by operating
activities
3,395
5,747
Cash flows from investing
activities:
Purchase of property, equipment, and
software
(5,744
)
(2,956
)
Proceeds from sale of certain recovery
contracts
—
3
Net cash used in investing activities
(5,744
)
(2,953
)
Cash flows from financing
activities:
Repayment of long-term loan payable
—
(8,250
)
Debt issuance costs paid
(15
)
(424
)
Taxes paid related to net share settlement
of stock awards
(194
)
(196
)
Borrowings from revolving loan
3,000
—
Net cash provided by (used in) financing
activities
2,791
(8,870
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
442
(6,076
)
Cash, cash equivalents and restricted cash
at beginning of period
7,333
23,465
Cash, cash equivalents and restricted cash
at end of period
$
7,775
$
17,389
Reconciliation of the Consolidated
Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents
$
7,775
$
17,308
Restricted cash
—
81
Total cash, cash equivalents and
restricted cash at end of period
$
7,775
$
17,389
Non-cash investing activities:
Deferred asset acquisition payments
$
3,860
$
—
Supplemental disclosures of cash flow
information:
Cash received for income taxes
$
(112
)
$
(2,904
)
Cash paid for interest
$
438
$
1,084
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,
2024
2023
2024
2023
(in thousands)
(in thousands)
Adjusted EBITDA:
Net income (loss)
$
(2,384
)
$
(580
)
$
(9,397
)
$
(8,774
)
Provision for (benefit from) income
taxes
15
(407
)
47
(365
)
Interest expense (1)
313
423
799
1,188
Interest income
(93
)
(86
)
(260
)
(86
)
Stock-based compensation
1,860
1,129
4,122
2,815
Depreciation and amortization
1,927
1,293
5,244
3,805
Severance expenses (3)
278
64
664
246
Other
21
5
36
34
Adjusted EBITDA
$
1,937
$
1,841
$
1,255
$
(1,137
)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
(in thousands)
(in thousands)
Adjusted Net Income (Loss):
Net income (loss)
$
(2,384
)
$
(580
)
$
(9,397
)
$
(8,774
)
Stock-based compensation
1,860
1,129
4,122
2,815
Amortization of debt issuance costs
(2)
58
134
173
256
Severance expenses (3)
278
64
664
246
Other
21
5
36
34
Tax adjustments (4)
(609
)
(366
)
(1,373
)
(921
)
Adjusted net income (loss)
$
(776
)
$
386
$
(5,775
)
$
(6,344
)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
(in thousands)
(in thousands)
Adjusted Net Income (Loss) Per Diluted
Share:
Net income (loss)
$
(2,384
)
$
(580
)
$
(9,397
)
$
(8,774
)
Plus: Adjustment items per reconciliation
of adjusted net income (loss)
1,608
966
3,622
2,430
Adjusted net income (loss)
$
(776
)
$
386
$
(5,775
)
$
(6,344
)
Adjusted net income (loss) per diluted
share
$
(0.01
)
$
0.01
$
(0.08
)
$
(0.08
)
Diluted average shares outstanding
77,748
76,830
77,232
75,907
(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 nine months ended September 30, 2024, and for the years ended
December 31, 2023 and 2022:
Three Months Ended
Nine Months Ended
March 31, 2024
June 30, 2024
September 30, 2024
September 30, 2024
(in thousands)
Eligibility-based
$
13,388
$
14,264
$
16,070
$
43,722
Claims-based
12,412
13,661
14,217
40,290
Healthcare Total
25,800
27,925
30,287
84,012
Customer Care / Outsourced Services
1,534
1,437
1,232
4,203
Total
$
27,334
$
29,362
$
31,519
$
88,215
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/20241106255017/en/
Jon Bozzuto Investor Relations 925-960-4988 investors@performantcorp.com
Performant Financial (NASDAQ:PFMT)
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