Performant Financial Corporation Announces $35MM Debt Refinancing

Rhea-AI Summary

Performant Financial Corporation (Nasdaq: PFMT) has entered a new credit agreement with MUFG Union Bank, securing up to $35 million in debt financing. This includes a $20 million term loan and a $15 million revolving credit facility, aimed at enhancing operational stability and growth in healthcare payment services. The company expects to save over $8 million in debt service payments in 2022 due to lower principal payments and interest rates. The credit facility matures in December 2026, reinforcing Performant's financial position and growth strategy.

Positive

• Secured up to $35 million in debt financing to support growth.
• Estimated savings of over $8 million in debt service payments in 2022.
• New credit facility matures in December 2026, providing long-term financial stability.

Negative

• Dependence on the performance of significant clients and government contracts could impact revenues.
• Potential risks from regulatory changes and high competition in the market.

LIVERMORE, Calif.--(BUSINESS WIRE)-- Performant Financial Corporation (Nasdaq: PFMT), (the "Company"), a leading provider of technology-enabled audit, recovery, and related analytics services in the United States with a focus in the healthcare payment integrity services industry, today announced that it has entered into a new credit agreement with MUFG Union Bank that provides the Company with up to $35 million in debt financing through a combination term loan and revolving credit facility.

“Our new commercial banking relationship with MUFG Union Bank provides further stability to our balance sheet, while enhancing our ability to drive investment into our growing healthcare operations. Compared to the credit facility that we have now refinanced, we estimate that this could yield over $8MM lower debt service payments in 2022 alone,” stated Rohit Ramchandani, SVP of Finance & Strategy. These savings are expected to be achieved through a combination of lower annual principal payments and a lower interest rate margin, which is tiered based on the Company’s consolidated leverage ratio.

“We are excited at the flexibility this new arrangement will help provide to allow us to continue to execute on our growth strategy and ultimately drive value to our clients and shareholders,” added Simeon Kohl, GM & SVP of Healthcare.

The credit facility has a maturity in December of 2026, with a fully funded $20 million term loan and an initially unfunded $15 million revolver. A combination of the term loan proceeds and existing cash on the balance sheet were used to repay all outstanding amounts under our prior credit agreement.

“MUFG Union Bank is excited to be Performant’s financial partner for this credit facility,” said Anvar Hodjaev, Managing Director and Head of Healthcare for Commercial Banking. “Performant has been growing their presence in the healthcare IT space substantially and we are proud to provide the refinancing necessary to support their continued growth and help them with their strategic goals.”

Additional details regarding the Company's financing are included in the Company’s Current Report on Form 8-K which is expected to be filed on December 20, 2021 with the Securities and Exchange Commission.

About Performant Financial Corporation

Performant provides technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare payment integrity industry. Performant works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) 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.

Powered by a proprietary analytic platform and workflow technology, Performant also provides professional services related to the recovery effort, including reporting capabilities, support services, customer care and stakeholder training programs meant to mitigate future instances of improper payments. Founded in 1976, Performant is headquartered in Livermore, California.

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 our outlook for revenues, net income (loss), and adjusted EBITDA in 2020 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 material adverse impact of the COVID-19 pandemic on our business, results of operations and financial condition as well as on the business operations and financial performance of many of our customers, that the Company may not have sufficient cash flows from operations to fund ongoing operations and other liquidity needs, that the Company’s indebtedness could adversely affect its business and financial condition and could reduce the funds available for other purposes and the failure to comply with covenants contained in its credit agreement could result in an event of default that could adversely affect its results of operations, that the Company faces a long period to implement a new contract which may result in the incurring of expenses before the receipt of revenues from new client relationships, the high level of revenue concentration among the Company's largest customers and any termination in the Company’s relationship with any of our significant clients would result in a material decline in our revenues, that many of the Company's customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes and may be changed or terminated unilaterally and on short notice, that the Company may not be able to manage its potential growth effectively, that the Company faces significant competition in all of its markets, that continuing limitations on the scope of our audit activity under our RAC contracts have significantly reduced our revenue opportunities with this client, that the U.S. federal government accounts for a significant portion of the Company's revenues, that future legislative and regulatory changes may have significant effects on the Company's business, that failure of the Company's or third parties' operating systems and technology infrastructure could disrupt the operation of the Company's business and the threat of breach of the Company's security measures or failure or unauthorized access to confidential data that the Company possesses. 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, 2020 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211220005815/en/

Richard Zubek

Investor Relations

925-960-4988

investors@performantcorp.com

Source: Performant Financial Corporation

FAQ

What is the new credit facility announced by Performant Financial Corporation?

Performant Financial Corporation announced a new credit agreement with MUFG Union Bank, providing up to $35 million in financing through a term loan and revolving credit facility.

How much money could Performant save from the new credit facility?

The company estimates it could save over $8 million in debt service payments in 2022 due to lower principal payments and interest rates.

When is the maturity date for Performant's new credit facility?

The credit facility has a maturity date in December 2026.

What impact does the new credit agreement have on Performant's growth strategy?

The new agreement enhances stability and provides flexibility for Performant to execute its growth strategy in healthcare payment services.

What potential risks does Performant Financial Corporation face after the new credit agreement?

Performant faces risks related to dependence on major clients, regulatory changes, and significant competition in the healthcare payment integrity market.