Performant Financial Corporation Announces Financial Results for First Quarter 2023

Rhea-AI Summary

Performant Financial Corporation reports first quarter 2023 financial results with total revenues of $25.7 million, a decrease from the prior year period. Healthcare revenues were $22.9 million, a decrease of approximately 2%. Net loss was $4.2 million compared to $1.7 million in the prior year period. Adjusted EBITDA was $(1.7) million.

Positive

• Performant Financial Corporation reported total revenues of $25.7 million for the first quarter of 2023. Despite a decrease from the prior year period, the company remains optimistic about healthcare revenues returning to expected levels by the end of the year. They anticipate healthcare revenues for 2023 to remain in line with previous guidance, and adjusted EBITDA to be in the range of $2 million to $5 million for the full year.

Negative

• Performant Financial Corporation experienced a decrease in total revenues and healthcare revenues for the first quarter of 2023. The net loss also increased compared to the prior year period. Adjusted EBITDA was negative at $(1.7) million.

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 industry, today reported the following financial results for its first quarter ended March 31, 2023:

First Quarter Financial Highlights

• Total revenues of $25.7 million, compared to total revenues of $27.1 million in the prior year period.
• Healthcare revenues of $22.9 million, compared to $23.4 million in the prior year period, a decrease of approximately 2%
• Net loss of approximately $4.2 million, or $(0.06) per diluted share, compared to net loss of $1.7 million, or $(0.02) per diluted share, in the prior year period.
• Adjusted net loss was $3.6 million, or $(0.05) per diluted share, compared to adjusted net loss of $1.1 million, or $(0.02) per diluted share, in the prior year period.
• Adjusted EBITDA of $(1.7) million, compared to $0.3 million in the prior year period.

First Quarter 2023 Results

Total revenues in the first quarter were $25.7 million, a decrease from total revenues of $27.1 million in the prior year period. Healthcare revenues in the first quarter of 2023 were $22.9 million, a decrease of approximately 2% from $23.4 million in the prior year period. Within healthcare, claims-based services revenue in the first quarter of 2023 was $10.4 million, while revenues from eligibility-based services in the first quarter was $12.5 million.

“During the first quarter of 2023 we saw continued growth activities as we have seen in prior quarters, highlighted by our successful completion of 11 commercial implementations,” stated Simeon Kohl, CEO of Performant. “We saw lower MSP CRC available demands than we had expected, but we are pleased that overall demands began to return to expected levels by the end of the quarter. Based on the combination of the return to expected demand volumes along with the increased pace of implementations we saw this quarter, we currently anticipate that healthcare revenues for 2023 will remain in line with our previous guidance.”

Revenues from our Customer Care / Outsourced Services in the first quarter were $2.8 million, down $0.8 million compared to the prior year period.

Net loss for the first quarter was $4.2 million, or $(0.06) per share on a diluted basis, compared to a net loss of $1.7 million, or $(0.02) per share on a diluted basis, in the prior year period. Adjusted net loss for the first quarter was $3.6 million, or $(0.05) per share on a diluted basis, compared to adjusted net income of $1.1 million, or $(0.02) per diluted share, in the prior year period. Adjusted EBITDA for the first quarter was $(1.7) million as compared to $0.3 million in the prior year period.

As of March 31, 2023, the Company had cash, cash equivalents, and restricted cash of approximately $12.4 million.

“Our first quarter 2023 results remain on track for our continued goals of growing our healthcare market operations and we remain pleased with what we are seeing in terms of continued implementations and volume growth,” stated Rohit Ramchandani, Chief Financial Officer of Performant. “We are excited to continue growing the business and have our eye on both our revenue growth targets and the expansion of our EBITDA margins. As such, we are reiterating our guidance for 2023 healthcare revenues to be in the range of $105 million to $110 million and for full year 2023 adjusted EBITDA to be in the range of $2 million to $5 million.”

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.

Earnings Conference Call

The Company will hold a conference call to discuss its first quarter 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. The conference call is also available by dialing 888-886-7786 (domestic) or 416-764-8658 (international).

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 87830265. The telephonic replay will be available approximately three hours after the call, through May 16, 2023.

About Performant Healthcare Solutions

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

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), 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; 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 Company’s ability to hire and retain employees with specialized skills that are required for its healthcare business; anticipated trends and challenges in our business and competition in the markets in which the Company operates; the impact of COVID-19 on the Company’s business and operations, opportunities and expectations for the markets in which the Company 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; anticipated trends and challenges in the Company’s business and competition in the markets in which it operates; 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 meet liquidity and working capital needs; 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)
	March 31, 2023				December 31, 2022
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	12,335			$	23,384
Restricted cash		81				81
Trade accounts receivable		15,636				15,794
Contract assets		8,993				11,460
Prepaid expenses and other current assets		3,623				3,665
Income tax receivable		3,083				3,123
Total current assets		43,751				57,507
Property, equipment, and leasehold improvements, net		10,527				10,897
Goodwill		47,372				47,372
Right-of-use assets		794				2,057
Other assets		1,194				1,000
Total assets	$	103,638			$	118,833
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of notes payable, net of unamortized debt issuance costs of $58 and $17, respectively	$	1,192			$	983
Accrued salaries and benefits		5,818				6,938
Accounts payable		971				1,262
Other current liabilities		2,017				2,252
Contract liabilities		—				438
Estimated liability for appeals and disputes		863				1,106
Lease liabilities		623				1,228
Total current liabilities		11,484				14,207
Notes payable, net of current portion and unamortized debt issuance costs of $484 and $316, respectively		10,016				18,184
Lease liabilities		189				1,076
Other liabilities		887				881
Total liabilities		22,576				34,348
Commitments and contingencies (note 3 and note 4)
Stockholders’ equity:
Common stock, $0.0001 par value. Authorized, 500,000 shares at March 31, 2023 and December 31, 2022 respectively; issued and outstanding 75,505 and 75,505 shares at March 31, 2023 and December 31, 2022, respectively		7				7
Additional paid-in capital		143,059				142,261
Accumulated deficit		(62,004	)			(57,783	)
Total stockholders’ equity		81,062				84,485
Total liabilities and stockholders’ equity	$	103,638			$	118,833

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited)
		Three Months Ended March 31,
			2023				2022
Revenues		$	25,729			$	27,083
Operating expenses:
Salaries and benefits			22,449				20,439
Other operating expenses			7,069				8,131
Total operating expenses			29,518				28,570
Loss from operations			(3,789	)			(1,487	)
Gain on sale of certain recovery contracts			3				—
Interest expense			(414	)			(155	)
Loss before provision for income taxes			(4,200	)			(1,642	)
Provision for income taxes			21				31
Net loss		$	(4,221	)		$	(1,673	)
Net loss per share
Basic		$	(0.06	)		$	(0.02	)
Diluted		$	(0.06	)		$	(0.02	)
Weighted average shares
Basic			75,505				69,873
Diluted			75,505				69,873

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited)
	Three Months Ended March 31,
		2023				2022
Cash flows from operating activities:
Net loss	$	(4,221	)		$	(1,673	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on disposal of assets and impairment of long-lived assets		32				(17	)
Depreciation and amortization		1,247				1,102
Right-of-use assets amortization		1,263				475
Stock-based compensation		798				558
Interest expense from debt issuance costs		35				24
Gain on sale of certain recovery contracts		(3	)			—
Changes in operating assets and liabilities:
Trade accounts receivable		158				971
Contract assets		2,467				(762	)
Prepaid expenses and other current assets		42				(864	)
Income tax receivable		40				74
Other assets		(194	)			(2	)
Accrued salaries and benefits		(1,120	)			(2,541	)
Accounts payable		(291	)			67
Contract liabilities and other current liabilities		(673	)			(1,815	)
Estimated liability for appeals, disputes, and refunds		(243	)			281
Lease liabilities		(1,492	)			(536	)
Other liabilities		6				7
Net cash used in operating activities		(2,149	)			(4,651	)
Cash flows from investing activities:
Purchase of property, equipment, and leasehold improvements		(909	)			(700	)
Proceeds from sale of certain recovery contracts		3				—
Net cash used in investing activities		(906	)			(700	)
Cash flows from financing activities:
Repayment of notes payable		(7,750	)			(125	)
Debt issuance costs paid		(244	)			(2	)
Proceeds from exercise of warrants		—				5,563
Net cash (used in) provided by financing activities		(7,994	)			5,436
Net increase in cash, cash equivalents and restricted cash		(11,049	)			85
Cash, cash equivalents and restricted cash at beginning of period		23,465				19,550
Cash, cash equivalents and restricted cash at end of period	$	12,416			$	19,635
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:
Cash and cash equivalents	$	12,335			$	17,432
Restricted cash		81				2,203
Total cash, cash equivalents and restricted cash at end of period	$	12,416			$	19,635
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes	$	5			$	1
Cash paid for interest	$	582			$	176

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Results (In thousands, except per share amount) (Unaudited)
		Three Months Ended March 31,
			2023				2022
		(in thousands)
Adjusted EBITDA:
Net income (loss)		$	(4,221	)		$	(1,673	)
Provision for income taxes			21				31
Interest expense (1)			414				155
Stock-based compensation			798				558
Depreciation and amortization			1,247				1,102
Severance expenses (3)			63				142
Other (4)			(1	)		$	4
Adjusted EBITDA		$	(1,679	)		$	319

		Three Months Ended March 31,
			2023				2022
		(in thousands)
Adjusted Net Income (Loss):
Net income (loss)		$	(4,221	)		$	(1,673	)
Stock-based compensation			798				558
Amortization of debt issuance costs (2)			35				24
Severance expenses (3)			63				142
Other (4)			(1	)			4
Tax adjustments (5)			(246	)			(200	)
Adjusted net income (loss)		$	(3,572	)		$	(1,145	)

		Three Months Ended March 31,
			2023				2022
		(in thousands)
Adjusted Net Income (Loss) Per Diluted Share:
Net income (loss)		$	(4,221	)		$	(1,673	)
Plus: Adjustment items per reconciliation of adjusted net income (loss)			649				528
Adjusted net income (loss)		$	(3,572	)		$	(1,145	)
Adjusted net income (loss) per diluted share		$	(0.05	)		$	(0.02	)
Diluted average shares outstanding			75,505				69,873

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Results (In thousands, except per share amount) (Unaudited)
We are providing the following preliminary estimates of our financial results as follows:
		Three months ended				Nine months ended		Year  Ended
		March 31, 2023				December 31, 2023		December 31, 2023		December 31, 2022
		Actual				Estimate		Estimate		Actual
Adjusted EBITDA:
Net income (loss)		$	(4,221	)		$  (2,079) to (3,279)		$  (6,300) to (7,500)		$	(6,537	)
Provision for income taxes			21			(271) to 729		(250) to 750			132
Interest expense (1)			414			586 to 1,586		1,000 to 2,000			1,007
Stock-based compensation			798			1,702 to 2,702		2,500 to 3,500			3,036
Depreciation and amortization			1,247			3,753 to 4,753		5,000 to 6,000			4,524
Severance expenses (3)			63			(13) to 187		50 to 250			274
Other (4)			(1	)		(1) to (1)		—			(372	)
Gain on sale of land and buildings (6)			—			—		—			(1,120	)
Adjusted EBITDA		$	(1,679	)		$       3,677 to 6,677		$      2,000 to 5,000		$	944

(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 professional fees related to strategic corporate development activities and gain on sale of certain non-healthcare recovery contracts in prior years.
(5)	Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.
(6)	Represents gain on the sale of land and two office buildings.

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Results (In thousands, except per share amount) (Unaudited)
We are providing the following historical breakdown of the quarterly and annual revenue contributions under the new contribution breakdowns of our healthcare revenue results for the three months ended March 31, 2023, and for the years ended December 31, 2022 and 2021:
		For the Three Months Ended
		March 31, 2023
		(in thousands)
Eligibility-based		$	12,480
Claims-based			10,412
Healthcare Total			22,892
Recovery			19
Customer Care / Outsourced Services			2,818
Total		$	25,729

		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/20230509005977/en/

Richard Zubek

Investor Relations

925-960-4988

investors@performantcorp.com

Source: Performant Financial Corporation

FAQ

What were Performant Financial Corporation's total revenues for the first quarter of 2023?

Performant Financial Corporation reported total revenues of $25.7 million for the first quarter of 2023.

How did healthcare revenues compare to the prior year period?

Healthcare revenues for the first quarter of 2023 were $22.9 million, a decrease of approximately 2% from the prior year period.

What is Performant Financial Corporation's guidance for healthcare revenues in 2023?

Performant Financial Corporation anticipates healthcare revenues for 2023 to remain in line with their previous guidance.

What is the expected range for adjusted EBITDA in 2023?

Performant Financial Corporation expects adjusted EBITDA to be in the range of $2 million to $5 million for the full year 2023.