x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 20-0484934 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | x | |
Emerging growth company | ¨ |
Title of each class | Trading Symbol(s) | Name of exchange on which registered |
Common Stock, par value $.0001 per share | PFMT | The Nasdaq Stock Market LLC |
Page | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
June 30, 2020 | December 31, 2019 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 15,211 | $ | 3,373 | |||
Restricted cash | 1,622 | 1,622 | |||||
Trade accounts receivable, net of allowance for doubtful accounts of $518 and $237, respectively | 20,593 | 27,170 | |||||
Contract assets | 977 | 1,339 | |||||
Prepaid expenses and other current assets | 3,220 | 3,329 | |||||
Income tax receivable | 2,024 | 164 | |||||
Total current assets | 43,647 | 36,997 | |||||
Property, equipment, and leasehold improvements, net | 18,010 | 18,769 | |||||
Identifiable intangible assets, net | 807 | 925 | |||||
Goodwill | 47,372 | 74,372 | |||||
Right-of-use assets | 5,559 | 6,834 | |||||
Other assets | 1,155 | 975 | |||||
Total assets | $ | 116,550 | $ | 138,872 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Current maturities of notes payable to related party, net of unamortized debt issuance costs of $91 and $130, respectively | $ | 3,359 | $ | 3,320 | |||
Accrued salaries and benefits | 4,416 | 6,126 | |||||
Accounts payable | 1,397 | 2,532 | |||||
Other current liabilities | 2,423 | 3,576 | |||||
Deferred revenue | 1,062 | 83 | |||||
Estimated liability for appeals and disputes | 1,215 | 1,018 | |||||
Lease liabilities | 2,609 | 2,775 | |||||
Total current liabilities | 16,481 | 19,430 | |||||
Notes payable to related party, net of current portion and unamortized debt issuance costs of $1,576 and $2,301, respectively | 57,561 | 58,562 | |||||
Deferred income taxes | 35 | 35 | |||||
Earnout payable | 375 | 475 | |||||
Lease liabilities | 4,024 | 4,984 | |||||
Other liabilities | 3,041 | 1,761 | |||||
Total liabilities | 81,517 | 85,247 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Common stock, $0.0001 par value. Authorized, 500,000 shares at June 30, 2020 and December 31, 2019 respectively; issued and outstanding 54,462 and 53,900 shares at June 30, 2020 and December 31, 2019, respectively | 5 | 5 | |||||
Additional paid-in capital | 81,680 | 80,589 | |||||
Accumulated deficit | (46,652 | ) | (26,969 | ) | |||
Total stockholders’ equity | 35,033 | 53,625 | |||||
Total liabilities and stockholders’ equity | $ | 116,550 | $ | 138,872 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenues | $ | 33,785 | $ | 35,830 | $ | 79,673 | $ | 70,706 | ||||||||
Operating expenses: | ||||||||||||||||
Salaries and benefits | 22,166 | 28,929 | 50,971 | 58,045 | ||||||||||||
Other operating expenses | 9,042 | 11,211 | 21,262 | 24,164 | ||||||||||||
Impairment of goodwill | 8,000 | — | 27,000 | — | ||||||||||||
Total operating expenses | 39,208 | 40,140 | 99,233 | 82,209 | ||||||||||||
Loss from operations | (5,423 | ) | (4,310 | ) | (19,560 | ) | (11,503 | ) | ||||||||
Interest expense | (2,031 | ) | (1,958 | ) | (4,258 | ) | (3,094 | ) | ||||||||
Interest income | 6 | 11 | 12 | 22 | ||||||||||||
Loss before provision for (benefit from) income taxes | (7,448 | ) | (6,257 | ) | (23,806 | ) | (14,575 | ) | ||||||||
Provision for (benefit from) income taxes | (249 | ) | 142 | (4,123 | ) | 313 | ||||||||||
Net loss | $ | (7,199 | ) | $ | (6,399 | ) | $ | (19,683 | ) | $ | (14,888 | ) | ||||
Net loss per share | ||||||||||||||||
Basic | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.36 | ) | $ | (0.28 | ) | ||||
Diluted | $ | (0.13 | ) | $ | (0.12 | ) | $ | (0.36 | ) | $ | (0.28 | ) | ||||
Weighted average shares | ||||||||||||||||
Basic | 54,267 | 53,367 | 54,105 | 53,214 | ||||||||||||
Diluted | 54,267 | 53,367 | 54,105 | 53,214 |
Three Months Ended June 30, 2020 | Three Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||
Balances at beginning of period | 54,022 | $ | 5 | $ | 81,196 | $ | (39,453 | ) | 41,748 | 53,146 | $ | 5 | $ | 77,747 | $ | (8,638 | ) | $ | 69,114 | |||||||||||||||||||
Common stock issued under stock plans, net of shares withheld for employee taxes | 440 | — | (165 | ) | — | (165 | ) | 502 | — | (289 | ) | — | (289 | ) | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | 649 | — | 649 | — | — | 719 | — | 719 | ||||||||||||||||||||||||||||
Recognition of warrant issued in debt financing | — | — | — | — | — | — | — | 803 | — | 803 | ||||||||||||||||||||||||||||
Net loss | — | — | — | (7,199 | ) | (7,199 | ) | — | — | — | (6,399 | ) | (6,399 | ) | ||||||||||||||||||||||||
Balances at end of period | 54,462 | $ | 5 | $ | 81,680 | $ | (46,652 | ) | $ | 35,033 | 53,648 | $ | 5 | $ | 78,980 | $ | (15,037 | ) | $ | 63,948 | ||||||||||||||||||
Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | |||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||
Balances at beginning of period | 53,900 | $ | 5 | $ | 80,589 | $ | (26,969 | ) | $ | 53,625 | 52,999 | $ | 5 | $ | 77,370 | $ | (149 | ) | $ | 77,226 | ||||||||||||||||||
Common stock issued under stock plans, net of shares withheld for employee taxes | 562 | — | (249 | ) | — | (249 | ) | 649 | — | (411 | ) | — | (411 | ) | ||||||||||||||||||||||||
Stock-based compensation expense | — | — | 1,340 | — | 1,340 | — | — | 1,218 | — | 1,218 | ||||||||||||||||||||||||||||
Recognition of warrant issued in debt financing | — | — | — | — | — | — | — | 803 | — | 803 | ||||||||||||||||||||||||||||
Net loss | — | — | — | (19,683 | ) | (19,683 | ) | — | — | — | (14,888 | ) | (14,888 | ) | ||||||||||||||||||||||||
Balances at end of period | 54,462 | $ | 5 | $ | 81,680 | $ | (46,652 | ) | $ | 35,033 | 53,648 | $ | 5 | $ | 78,980 | $ | (15,037 | ) | $ | 63,948 |
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (19,683 | ) | $ | (14,888 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Loss on disposal of assets | 25 | — | |||||
Impairment of goodwill | 27,000 | — | |||||
Depreciation and amortization | 2,795 | 4,557 | |||||
Right-of-use assets amortization | 1,275 | 1,335 | |||||
Deferred income taxes | — | 31 | |||||
Stock-based compensation | 1,340 | 1,218 | |||||
Interest expense from debt issuance costs | 763 | 543 | |||||
Earnout mark-to-market | (162 | ) | (912 | ) | |||
Changes in operating assets and liabilities: | |||||||
Trade accounts receivable | 6,577 | 2,217 | |||||
Contract assets | 362 | — | |||||
Prepaid expenses and other current assets | 109 | (624 | ) | ||||
Income tax receivable | (1,860 | ) | 179 | ||||
Other assets | (180 | ) | (24 | ) | |||
Accrued salaries and benefits | (1,710 | ) | (281 | ) | |||
Accounts payable | (1,135 | ) | 556 | ||||
Deferred revenue and other current liabilities | (112 | ) | (341 | ) | |||
Estimated liability for appeals and disputes | 197 | 105 | |||||
Lease liabilities | (1,126 | ) | (1,443 | ) | |||
Other liabilities | 1,279 | 117 | |||||
Net cash provided by (used in) operating activities | 15,754 | (7,655 | ) | ||||
Cash flows from investing activities: | |||||||
Purchase of property, equipment, and leasehold improvements | (1,943 | ) | (3,062 | ) | |||
Net cash used in investing activities | (1,943 | ) | (3,062 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of notes payable | (1,725 | ) | (1,150 | ) | |||
Debt issuance costs paid | — | (25 | ) | ||||
Taxes paid related to net share settlement of stock awards | (248 | ) | (445 | ) | |||
Proceeds from exercise of stock options | — | 34 | |||||
Borrowings from notes payable | — | 11,000 | |||||
Net cash (used in) provided by financing activities | (1,973 | ) | 9,414 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 11,838 | (1,303 | ) | ||||
Cash, cash equivalents and restricted cash at beginning of period | 4,995 | 7,275 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 16,833 | $ | 5,972 | |||
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | |||||||
Cash and cash equivalents | $ | 15,211 | $ | 4,313 | |||
Restricted cash | 1,622 | 1,659 | |||||
Total cash, cash equivalents and restricted cash at end of period | $ | 16,833 | $ | 5,972 | |||
Six Months Ended June 30, | |||||||
2020 | 2019 | ||||||
Non-cash financing activities: | |||||||
Recognition of warrants issued in debt financing | $ | — | $ | 803 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash received for income taxes | $ | 2,309 | $ | 20 | |||
Cash paid for interest | $ | 3,495 | $ | 2,551 | |||
(b) | Liquidity |
• | Identification of the contract with a customer |
• | Identification of the performance obligations in the contract |
• | Determination of the transaction price |
• | Allocation of the transaction price to the performance obligations in the contract |
• | Recognition of revenue when, or as, the performance obligations are satisfied |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Healthcare | 14,593 | 9,263 | 32,117 | 18,283 | |||||||||||
Recovery (1) | 16,167 | 22,107 | 40,432 | 43,482 | |||||||||||
Customer Care / Outsourced Services | 3,025 | 4,460 | 7,124 | 8,941 | |||||||||||
Total Revenues | $ | 33,785 | $ | 35,830 | $ | 79,673 | $ | 70,706 |
(1) | Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, select financial institutions, as well as Premiere Credit of North America. |
(g) | New Accounting Pronouncements |
June 30, 2020 | December 31, 2019 | ||||||
Land | $ | 1,943 | $ | 1,943 | |||
Building and leasehold improvements | 8,141 | 8,124 | |||||
Furniture and equipment | 6,123 | 6,257 | |||||
Computer hardware and software | 80,632 | 79,066 | |||||
96,839 | 95,390 | ||||||
Less accumulated depreciation and amortization | (78,829 | ) | (76,621 | ) | |||
Property, equipment and leasehold improvements, net | $ | 18,010 | $ | 18,769 |
August 2017 Issuance | October 2018 Issuance | April 2019 Issuance | May 2019 Issuance | August 2019 Issuance | September 2019 Issuance | |
Exercise price | $1.92 | $1.92 | $1.92 | $1.92 | $1.92 | $1.92 |
Share price on date of issuance | $1.85 | $1.93 | $2.24 | $1.75 | $1.11 | $1.10 |
Volatility | 50.0% | 55.0% | 57.5% | 57.5% | 67.5% | 67.5% |
Risk-free interest rate | 1.83% | 3.01% | 2.31% | 2.15% | 1.53% | 1.60% |
Expected dividend yield | —% | —% | —% | —% | —% | —% |
Contractual term (in years) | 5 | 5 | 5 | 5 | 5 | 5 |
Number of shares | 3,863,326 | 309,066 | 386,333 | 463,599 | 386,333 | 386,333 |
Relative fair value of each warrant | $3.3 million | $0.2 million | $0.4 million | $0.4 million | $0.2 million | $0.2 million |
June 30, 2020 | |||
Principal amount | $ | 62,588 | |
Less: unamortized discount and debt issuance costs | (1,668 | ) | |
Notes payable less unamortized discount and debt issuance costs | 60,920 | ||
Less: current maturities, net of unamortized discount and debt issuance costs | (3,359 | ) | |
Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs | $ | 57,561 |
June 30, 2020 | June 30, 2019 | ||
Weighted Average Remaining Lease Term (in years) | 3.1 | 4.5 | |
Weighted Average Discount Rate | 6.7% | 6.4% | |
Cash paid for amounts included in the measurement of operating lease liabilities | $0.5 million | $0.9 million |
Year Ending December 31, | Amount | ||
Remainder of 2020 | 1,749 | ||
2021 | 2,395 | ||
2022 | 1,694 | ||
2023 | 573 | ||
2024 | 580 | ||
Thereafter | 397 | ||
Total undiscounted cash flows | $ | 7,388 | |
Less imputed interest | $ | (755 | ) |
Present value of lease liabilities | $ | 6,633 |
Outstanding Options | Weighted average exercise price per share | Weighted average remaining contractual life (Years) | Aggregate Intrinsic Value (in thousands) | |||||||||
Outstanding at December 31, 2019 | 1,991,166 | $ | 10.06 | 2.89 | $ | — | ||||||
Granted | — | — | ||||||||||
Forfeited | (150,105 | ) | 7.47 | |||||||||
Exercised | — | — | ||||||||||
Outstanding at June 30, 2020 | 1,841,061 | $ | 10.27 | 2.44 | $ | — | ||||||
Vested and exercisable at June 30, 2020 | 1,841,061 | $ | 10.27 | 2.44 | $ | — |
Number of Awards | Weighted average grant date fair value per share | |||||
Outstanding at December 31, 2019 | 3,254,254 | $ | 2.12 | |||
Granted | 285,415 | 0.82 | ||||
Forfeited | (96,425 | ) | 2.30 | |||
Vested and converted to shares, net of units withheld for taxes | (562,401 | ) | 2.32 | |||
Units withheld for taxes | (300,862 | ) | 2.32 | |||
Outstanding at June 30, 2020 | 2,579,981 | $ | 1.91 | |||
Expected to vest at June 30, 2020 | 2,309,433 | $ | 1.89 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Weighted average shares outstanding – basic | 54,267 | 53,367 | 54,105 | 53,214 | ||||||||
Dilutive effect of stock options | — | — | — | — | ||||||||
Weighted average shares outstanding – diluted | 54,267 | 53,367 | 54,105 | 53,214 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
(in thousands) | (in thousands) | ||||||||||||||
Healthcare | 14,593 | 9,263 | 32,117 | 18,283 | |||||||||||
Recovery (1) | 16,167 | 22,107 | 40,432 | 43,482 | |||||||||||
Customer Care / Outsourced Services | 3,025 | 4,460 | 7,124 | 8,941 | |||||||||||
Total Revenues | $ | 33,785 | $ | 35,830 | $ | 79,673 | $ | 70,706 |
(1) | Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, select financial institutions, as well as Premiere Credit of North America. |
• | Identification of the contract with a customer |
• | Identification of the performance obligations in the contract |
• | Determination of the transaction price |
• | Allocation of the transaction price to the performance obligations in the contract |
• | Recognition of revenue when, or as, the performance obligations are satisfied |
Three Months Ended June 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
(in thousands) | ||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||
Revenues | $ | 33,785 | $ | 35,830 | $ | (2,045 | ) | (6 | )% | |||||
Operating expenses: | ||||||||||||||
Salaries and benefits | 22,166 | 28,929 | 6,763 | 23 | % | |||||||||
Other operating expenses | 9,042 | 11,211 | 2,169 | 19 | % | |||||||||
Impairment of goodwill | 8,000 | — | (8,000 | ) | — | |||||||||
Total operating expenses | 39,208 | 40,140 | 932 | 2 | % | |||||||||
Loss from operations | (5,423 | ) | (4,310 | ) | (1,113 | ) | (26 | )% | ||||||
Interest expense | (2,031 | ) | (1,958 | ) | (73 | ) | (4 | )% | ||||||
Interest income | 6 | 11 | (5 | ) | (45 | )% | ||||||||
Loss before provision for (benefit from) income taxes | (7,448 | ) | (6,257 | ) | (1,191 | ) | (19 | )% | ||||||
Provision for (benefit from) income taxes | (249 | ) | 142 | 391 | 275 | % | ||||||||
Net loss | $ | (7,199 | ) | $ | (6,399 | ) | $ | (800 | ) | (13 | )% |
Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | $ Change | % Change | |||||||||||
(in thousands) | ||||||||||||||
Consolidated Statement of Operations Data: | ||||||||||||||
Revenues | $ | 79,673 | $ | 70,706 | $ | 8,967 | 13 | % | ||||||
Operating expenses: | ||||||||||||||
Salaries and benefits | 50,971 | 58,045 | 7,074 | 12 | % | |||||||||
Other operating expenses | 21,262 | 24,164 | 2,902 | 12 | % | |||||||||
Impairment of goodwill | 27,000 | — | (27,000 | ) | — | % | ||||||||
Total operating expenses | 99,233 | 82,209 | (17,024 | ) | (21 | )% | ||||||||
Loss from operations | (19,560 | ) | (11,503 | ) | (8,057 | ) | (70 | )% | ||||||
Interest expense | (4,258 | ) | (3,094 | ) | (1,164 | ) | (38 | )% | ||||||
Interest income | 12 | 22 | (10 | ) | (45 | )% | ||||||||
Loss before provision for (benefit from) income taxes | (23,806 | ) | (14,575 | ) | (9,231 | ) | (63 | )% | ||||||
Provision for (benefit from) income taxes | (4,123 | ) | 313 | (4,436 | ) | (1,417 | )% | |||||||
Net loss | $ | (19,683 | ) | $ | (14,888 | ) | $ | (4,795 | ) | (32 | )% |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; |
• | adjusted EBITDA does not reflect interest expense on our indebtedness; |
• | adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | adjusted EBITDA does not reflect tax payments; |
• | adjusted EBITDA and adjusted net income do not reflect the potentially dilutive impact of equity-based compensation; |
• | adjusted EBITDA and adjusted net income do not reflect the impact of certain non-operating expenses resulting from matters we do not consider to be indicative of our core operating performance; and |
• | other companies may calculate adjusted EBITDA and adjusted net income differently than we do, which reduces its usefulness as a comparative measure. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Adjusted EBITDA: | ||||||||||||||||
Net loss | $ | (7,199 | ) | $ | (6,399 | ) | $ | (19,683 | ) | $ | (14,888 | ) | ||||
Provision for (benefit from) income taxes | (249 | ) | 142 | (4,123 | ) | 313 | ||||||||||
Interest expense (1) | 2,031 | 1,958 | 4,258 | 3,094 | ||||||||||||
Interest income | (6 | ) | (11 | ) | (12 | ) | (22 | ) | ||||||||
Depreciation and amortization | 1,255 | 2,245 | 2,795 | 4,557 | ||||||||||||
Impairment of goodwill (5) | 8,000 | — | 27,000 | — | ||||||||||||
Earnout mark-to-market (6) | (162 | ) | (1,188 | ) | (162 | ) | (912 | ) | ||||||||
Stock-based compensation | 649 | 719 | 1,340 | 1,218 | ||||||||||||
Adjusted EBITDA | $ | 4,319 | $ | (2,534 | ) | $ | 11,413 | $ | (6,640 | ) | ||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Adjusted Net Income (Loss): | ||||||||||||||||
Net loss | $ | (7,199 | ) | $ | (6,399 | ) | $ | (19,683 | ) | $ | (14,888 | ) | ||||
Stock-based compensation | 649 | 719 | 1,340 | 1,218 | ||||||||||||
Amortization of intangibles (2) | 59 | 52 | 118 | 111 | ||||||||||||
Impairment of goodwill (5) | 8,000 | — | 27,000 | — | ||||||||||||
Deferred financing amortization costs (3) | 381 | 311 | 763 | 543 | ||||||||||||
Earnout mark-to-market (6) | (162 | ) | (1,188 | ) | (162 | ) | (912 | ) | ||||||||
Tax adjustments (4) | (2,455 | ) | 29 | (7,991 | ) | (264 | ) | |||||||||
Adjusted net income (loss) | $ | (727 | ) | $ | (6,476 | ) | $ | 1,385 | $ | (14,192 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
(in thousands) | (in thousands) | |||||||||||||||
Adjusted Net Income (Loss) Per Diluted Share: | ||||||||||||||||
Net loss | $ | (7,199 | ) | $ | (6,399 | ) | $ | (19,683 | ) | $ | (14,888 | ) | ||||
Plus: Adjustment items per reconciliation of adjusted net income (loss) | 6,472 | (77 | ) | 21,068 | 696 | |||||||||||
Adjusted net income (loss) | (727 | ) | (6,476 | ) | 1,385 | (14,192 | ) | |||||||||
Adjusted net income (loss) per diluted share | $ | (0.01 | ) | $ | (0.12 | ) | $ | 0.03 | $ | (0.27 | ) | |||||
Diluted average shares outstanding (7) | 54,267 | 53,367 | 54,259 | 53,214 |
(1) | Represents interest expense and amortization of issuance costs related to the refinancing of our indebtedness. |
(2) | Represents amortization of intangibles related to the acquisition of Performant by an affiliate of Parthenon Capital Partners in 2004. |
(3) | Represents amortization of capitalized financing costs related to our Credit Agreement. |
(4) | Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability. |
(5) | Represents a noncash goodwill impairment charge in 2020 mainly due to the decrease of our market capitalization. |
(6) | Represents the change from prior reporting periods in the fair value of the potential earnout consideration payable to ECMC group in connection with the Premiere acquisition. |
(7) | While net loss for the six months ended June 30, 2020 is ($19,683), the computation of adjusted net income (loss) results in adjusted net income of $1,385. Therefore, the calculation of the adjusted net income per diluted share for the six months ended June 30, 2020 includes dilutive common share equivalents of 154 added to the basic weighted average shares of 54,105. |
Exhibit No. | Description |
31.1 | |
31.2 | |
32.1(1) | |
32.2(1) | |
101.INS(2) | XBRL Instance Document |
101.SCH(2) | XBRL Taxonomy Extension Scheme |
101.CAL(2) | XBRL Taxonomy Extension Calculation Linkbase |
101.DEF(2) | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB(2) | XBRL Taxonomy Extension Label Linkbase |
101.PRE(2) | XBRL Taxonomy Extension Presentation Linkbase |
(1) | The material contained in Exhibit 32.1 and Exhibit 32.2 is not deemed “filed” with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing, except to the extent that the registrant specifically incorporates it by reference. |
(2) | In accordance with Rule 406T of Regulation S-T, the information furnished in these exhibits will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such exhibits will not be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act. |
PERFORMANT FINANCIAL CORPORATION | |||||
Date: | August 12, 2020 | ||||
By: | /s/ Lisa Im | ||||
Lisa Im | |||||
Chief Executive Officer (Principal Executive Officer) | |||||
By: | /s/ Ian Johnston | ||||
Ian Johnston | |||||
Vice President and Chief Accounting Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Performant Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Lisa Im |
Lisa Im |
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Performant Financial Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Ian Johnston |
Ian Johnston |
Vice President and Chief Accounting Officer (Principal Financial Officer) |
By: | /s/ Lisa Im |
Lisa Im | |
Chief Executive Officer |
By: | /s/ Ian Johnston |
Ian Johnston | |
Vice President and Chief Accounting Officer (Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
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Jun. 30, 2020 |
Aug. 11, 2020 |
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Document Documentand Entity Information [Abstract] | ||
Entity Registrant Name | Performant Financial Corporation | |
Entity Central Index Key | 0001550695 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 54,711,484 |
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 518 | $ 237 |
Debt issuance costs (current) | 91 | 130 |
Debt issuance costs notes payable (non current) | $ 1,576 | $ 2,301 |
Common Stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock, authorized shares (in shares) | 500,000,000 | 500,000,000 |
Common Stock, issued shares (in shares) | 54,462,000 | 53,900,000 |
Common Stock, outstanding shares (in shares) | 54,462,000 | 53,900,000 |
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Statement [Abstract] | ||||
Revenues | $ 33,785 | $ 35,830 | $ 79,673 | $ 70,706 |
Operating expenses: | ||||
Salaries and benefits | 22,166 | 28,929 | 50,971 | 58,045 |
Other operating expenses | 9,042 | 11,211 | 21,262 | 24,164 |
Impairment of goodwill | 8,000 | 0 | 27,000 | 0 |
Total operating expenses | 39,208 | 40,140 | 99,233 | 82,209 |
Loss from operations | (5,423) | (4,310) | (19,560) | (11,503) |
Interest expense | (2,031) | (1,958) | (4,258) | (3,094) |
Interest income | 6 | 11 | 12 | 22 |
Loss before provision for (benefit from) income taxes | (7,448) | (6,257) | (23,806) | (14,575) |
Provision for (benefit from) income taxes | (249) | 142 | (4,123) | 313 |
Net loss | $ (7,199) | $ (6,399) | (19,683) | (14,888) |
Net loss | $ (19,683) | $ (14,888) | ||
Net loss per share | ||||
Basic (USD per share) | $ (0.13) | $ (0.12) | $ (0.36) | $ (0.28) |
Diluted (USD per share) | $ (0.13) | $ (0.12) | $ (0.36) | $ (0.28) |
Weighted average shares | ||||
Basic (in shares) | 54,267 | 53,367 | 54,105 | 53,214 |
Diluted (in shares) | 54,267 | 53,367 | 54,105 | 53,214 |
Organization and Description of Business |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Description of Business | Organization and Description of Business (a) Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at June 30, 2020, and the results of our operations for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2019. Performant Financial Corporation (the "Company" or "we") is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Clients of the Company typically operate in complex and regulated environments and contract for their recovery needs in order to reduce losses on defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis; handling many or all aspects of the clients’ recovery processes. The Company's consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiaries Premiere Credit of North America, LLC (Premiere) and Performant Business Services, Inc. (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (Recovery) and Performant Technologies, LLC (PTL). Performant is a Delaware corporation headquartered in California and was formed in 2003. Premiere is an Indiana limited liability company acquired by Performant on August 31, 2018. PBS is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PTL is a California limited liability company that was originally formed in 2004. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, intangible assets, goodwill, right-of-use assets, deferred revenue, estimated liability for appeals and disputes, lease liabilities, earnout payable, other liabilities, deferred income taxes and income tax expense (benefit) and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates.
The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The ability of the Company to continue to fund its business plans is dependent upon realizing sufficient cash flows in the future. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In March 2020, the World Health Organization declared the outbreak of novel coronavirus (“COVID-19”) a pandemic. COVID-19 has had, and will likely continue to have, an impact on the Company’s business, both operationally and financially. For example, all states in which the Company has offices are under state of emergency and continue to have shelter-in-place or equivalent orders as of the filing of this Form 10-Q, which has resulted in both management and employees continuing to work remotely (from home). The United States Government passed multiple new laws designed to help companies respond to the COVID-19 pandemic. Specifically, on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which included several student loan-related changes. These changes have had an impact on the Company’s financial results and management expects that they will continue to affect the Company’s financial results into the foreseeable future. The CARES Act included changes to student loans owned by the Department of Education. These changes include the suspension of payments, the ceasing of accruing interest, and stopping involuntary collections of payments (e.g., wage garnishments). The changes are in effect at least through September 30, 2020. While these changes impact the set-up of new loan rehabilitation agreements by defaulted student loan borrowers, the Department of Education will consider each month during the period of suspended payments as an eligible month towards achieving loan rehabilitation, which is an element in determining future revenue to which the Company is entitled. In addition, student loan revenue and related cash flows will continue during this period because the Company earns revenue for a number of months from existing in-process borrower rehabilitation agreements. Further, while not mandated by the CARES Act, all of the Company’s Guaranty Agency clients (who administer the Federal Family Education Loan Program) are largely complying with the provisions of the Act, with the exception of counting missed payments toward qualification for loan rehabilitation. Given the CARES Act impacts on the Company’s recovery activities at least through September 30, 2020, the Company has furloughed more than 500 employees to date, which could result in annual savings of approximately $18 million. The Company’s healthcare business has not experienced, and is not currently expected to experience, a similar level of impact as the recovery business due to the fact that only two healthcare customers have been impacted by congressional regulations to date. While a few healthcare customers placed short term pauses on audit activities, the Company has continued to see growth and expansion in other healthcare offerings; notably, the Company’s Third Party Liability contracts have not experienced any contractions to date. Additionally, the Company does not foresee any permanent negative effects to its relationships or overall contract expectations within the healthcare markets. With respect to favorable impacts to the Company’s liquidity, the CARES Act provided the right to carryback net operating losses from 2018 and 2019 to earlier periods. The Company has already received a cash refund of approximately $2.4 million for the 2013 tax year, and the Company will file a refund request for the 2014 tax year which is expected to result in a refund of approximately $1.8 million. The CARES Act also allows deferrals and credits for payroll tax amounts, which is expected to result in approximately $3 million in cash savings through 2020. The Company continues to analyze the impact of COVID-19. However, the Company believes that its forecasted results, considering the impact of COVID-19, will be sufficient to fund the Company’s current operations, for at least a year from the issuance of these consolidated financial statements. While the Company believes its financial projections are attainable, there can be no assurances that the financial results will be recognized in a timeframe necessary to meet the Company’s ongoing cash requirements. To address the Company’s liquidity needs, the Company may need to execute various actions to increase cash necessary for operations. These actions include, but are not limited to, additional reductions in workforce (both through furloughs and layoffs), reduce or delay capital expenditures, seek additional capital infusions through public and/or private means, sales of real estate assets or operations, and scaling back of certain lower margin operations. (c) Revenues, Accounts Receivable, and Estimated Liability for Appeals The Company derives its revenues primarily from providing recovery services and healthcare audit services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps:
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s contracts generally contain a single performance obligation, delivered over time as a series of services that are substantially the same and have the same pattern of transfer to the client, as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s recovery service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. In certain contracts, the Company can earn additional performance-based consideration determined based on its performance relative to the client’s other contractors providing similar services. Revenue from contingency fees earned upon recovery of funds is generally recognized as amounts are invoiced based on either the ‘as-invoiced’ practical expedient when such amounts reflect the value of the services completed to-date, or an output measure based on milestones which is used to measure progress of the satisfaction of its performance obligation. The Company estimates any performance-based variable consideration and recognizes such revenue over the performance period only if it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Under certain contracts, consideration can include periodic performance-based bonuses which can be awarded based on the Company’s performance under the specific contract. These performance-based awards are considered variable and may be constrained by the Company until there is not a risk of a material reversal. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund liability for each claim and recognizes revenue net of such estimate. The Company generally either applies the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable consideration allocation exception to contracts with performance obligations that have an average remaining duration of less than a year. Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. For healthcare claims audit contracts with the Centers for Medicare and Medicaid Services (CMS) and commercial clients, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned based on an output method, as it is a reasonable measure of the Company’s progress toward complete satisfaction of our performance obligation. For coordination-of-benefits contracts with CMS and commercial clients, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the client. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category for the three and six months ended June 30, 2020 and 2019 (in thousands):
Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS or other healthcare clients under the Medicare Recovery Audit Contractor (RAC) or other commercial healthcare contracts, respectively. Under the Medicare Secondary Payer Commercial Payment Center (MSP) contract, insurance companies or other responsible parties may dispute the Company’s findings regarding Medicare not being the primary payer of healthcare claims. Total estimated liability for appeals and disputes was $1.2 million and $1.0 million as of June 30, 2020 and December 31, 2019, respectively. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients following successful appeals of claims for which commissions were previously collected. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful account was $0.5 million and $0.2 million at June 30, 2020 and December 31, 2019, respectively. The Company determined that it does not have any material costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are generally expensed as incurred. The Company has contract assets of $1.0 million and $1.3 million as of June 30, 2020 and December 31, 2019, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the six months ended June 30, 2020 and year ended December 31, 2019, but not invoiced at the reporting date. The decrease in contract assets is primarily due to timing of invoices issued. Contract assets are recorded to accounts receivable when the rights become unconditional and amounts are invoiced. The Company has contract liabilities of $1.1 million and $0.1 million as of June 30, 2020 and December 31, 2019, respectively, which are included in deferred revenue on the consolidated balance sheets. The Company’s contract liabilities mainly relate to an advance recovery commission payment received from a customer, for which the Company anticipates revenue to be recognized as services are delivered. (d) Prepaid Expenses and Other Current Assets At June 30, 2020, prepaid expenses and other current assets were $3.2 million and included approximately $2.1 million related to prepaid software licenses and maintenance agreements, $0.4 million for prepaid insurance, and $0.7 million for various other prepaid expenses. At December 31, 2019, prepaid expenses and other current assets were $3.3 million and included approximately $2.2 million related to prepaid software licenses and maintenance agreements, $0.7 million for prepaid insurance, and $0.4 million for various other prepaid expenses. (e) Impairment of Goodwill and Long-Lived Assets Goodwill is reviewed for impairment at least annually. The balance of goodwill was $47.4 million as of June 30, 2020 and $74.4 million as of December 31, 2019, respectively. The economic impact from the COVID-19 pandemic was a triggering factor requiring an interim assessment of goodwill for impairment. In performing the quantitative assessment of goodwill, if the carrying value of the Company, as one reporting unit, exceeds its fair value, goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and the fair value of the reporting unit. Impairment testing is based upon the best information available and estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, our market capitalization, projecting future cash flows and other assumptions, to estimate the fair value of the reporting unit. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Based on management’s quantitative analysis, we concluded that the carrying value of our reporting unit was greater than its fair value, which resulted in non-cash goodwill impairment charges of $8.0 million and $27.0 million for the three and six months ended June 30, 2020, respectively. The goodwill impairment charges had no impact on the Company’s cash flows or compliance with debt covenants. Long-lived assets and intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. There was no need to impair long-lived assets or intangible assets as of June 30, 2020. (f) Other Current Liabilities At June 30, 2020, other current liabilities primarily included $1.8 million for services received for which we have not received an invoice, $0.3 million for insurance premium and equipment financing payables, and $0.3 million for estimated workers' compensation claims incurred but not reported. At December 31, 2019, other current liabilities primarily included $2.2 million for services received for which we have not received an invoice, $0.6 million for insurance premium financing payables, $0.3 million for accrued subcontractor fees, and $0.3 million for estimated workers' compensation claims incurred but not reported.
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurements", which eliminates, adds or modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. The Company adopted this pronouncement on January 1, 2020, noting no impact to the consolidated financial statements as the amounts subject to Level 3 fair value measurements are not material. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments" as modified by subsequently issued ASU's 2018-19, 2019-04, 2019-05 and 2019-11. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted, for public entities, except for Smaller Reporting Companies. This ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2022. The Company is evaluating the effect of the adoption of this pronouncement. In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is evaluating the effect of the adoption of this pronouncement. |
Property, Equipment, and Leasehold Improvements |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements consist of the following at June 30, 2020 and December 31, 2019 (in thousands):
Depreciation expense of property, equipment and leasehold improvements was $1.2 million and $2.2 million for the three months ended June 30, 2020 and 2019, respectively, and $2.7 million and $4.4 million for the six months ended June 30, 2020 and 2019, respectively. |
Credit Agreement |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Agreement | Credit Agreement On August 7, 2017, we, through our wholly-owned subsidiary Performant Business Services, Inc. (the "Borrower"), entered into a credit agreement (as amended, the “Credit Agreement”) with ECMC Group, Inc. Before the amendment described below, the Credit Agreement provided for a term loan facility in the initial amount of $44 million (the “Initial Term Loan”) and for up to $15 million of additional term loans (“Additional Term Loans”; and together with the Initial Term Loan, the “Loans”) which original Additional Term Loans were initially able to be drawn until the second anniversary of the funding of the Initial Term Loans, subject to the satisfaction of customary conditions. On August 31, 2018, we entered into Amendment No. 2 to the Credit Agreement to among other things (i) extend the maturity date of the Initial Term Loan and any Additional Term Loans by one year to August 2021, (ii) expand the Additional Term Loans commitment from $15 million to $25 million, (iii) extend the period during which Additional Term Loans can be borrowed by one year to August 2020, and (iv) relieve the Borrower from its obligation to comply with the financial covenants in the Credit Agreement during the six fiscal quarters following the Premiere acquisition. On March 21, 2019, we entered into Amendment No. 3 to the Credit Agreement to, among other things, relieve the Borrower from its obligation to comply with the financial covenants in the Credit Agreement until the quarter ending June 30, 2020. As of September 30, 2019, the Company has borrowed all of the $25 million available as Additional Term Loans. As of June 30, 2020, $62.6 million was outstanding under the Credit Agreement. We have the option to extend the maturity of the Loans for two additional one-year periods, subject to the satisfaction of customary conditions. The Loans bear interest at the one-month LIBOR rate (subject to a 1% per annum floor) plus a margin which may vary from 5.5% per annum to 10.0% per annum based on our total debt to EBITDA ratio. Our annual interest rate at June 30, 2020 was 11.0% and 11.8%at December 31, 2019. We are required to pay 5% of the original principal balance of the Loans annually in quarterly installments and to make mandatory prepayments of the Loans with a percentage of our excess cash flow which may vary between 75% and 0% depending on our total debt to EBITDA ratio and from the net cash proceeds of certain asset dispositions and debt not otherwise permitted under the Credit Agreement, in each case, subject to the lender's right to decline to receive such payments. The Credit Agreement contains certain restrictive financial covenants, effective starting the quarter ended June 30, 2020, which require, among other things, that we: (1) achieve a minimum fixed charge coverage ratio of 1.0 through December 31, 2020 and 1.25 to 1.0 through June 30, 2022 if the maturity date of the Loans is extended until the fifth anniversary of the Closing Date and (2) maintain a maximum total debt to EBITDA ratio of 6.00 to 1.00. The Credit Agreement also contains covenants that restrict the Company's and its subsidiaries’ ability to incur certain types or amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of its business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into certain restrictive agreements, or engage in certain transactions with affiliates. The Credit Agreement also contains various customary events of default, including with respect to change of control of the Company or its ownership of the Borrower. The obligations under the Credit Agreement are secured by substantially all of our subsidiaries' assets and are guaranteed by the Company and its subsidiaries, other than the Borrower. In consideration for, and concurrently with, the origination of the Initial Term Loan in accordance with the terms of the Credit Agreement, we issued a warrant to the lender to purchase up to an aggregate of 3,863,326 shares of the Company’s common stock (representing approximately up to 7.5% of our diluted common stock as calculated using the “treasury stock” method as defined under U.S. GAAP for the three month period ended June 30, 2017) with an exercise price of $1.92 per share (the "Exercise Price"). Upon borrowing of the Additional Term Loans, the Company was required to issue additional warrants at the same Exercise Price to purchase up to an aggregate of 77,267 additional shares of common stock (which represents approximately 0.15% of our diluted common stock calculated using the “treasury stock” method as defined under U.S. GAAP for the fiscal quarter ended June 30, 2017) for each $1.0 million of such Additional Term Loans. Similarly, upon our election to extend the maturity of the loans for two additional one year periods, we will be required to issue additional warrants at the same Exercise Price to purchase up to an aggregate of 515,110 additional shares of common stock for the first year, and to purchase up to an aggregate of 772,665 additional shares of common stock for the second year (which represent approximately 1.0% and 1.5% of our diluted common stock for the first and second years, respectively, calculated using the “treasury stock” method as defined under U.S. GAAP for the fiscal quarter ended June 30, 2017). The Company has accounted for these warrants as equity instruments since the warrants are indexed to the Company’s common shares and meet the criteria for classification in shareholders’ equity. The relative fair values of the warrants are noted below and were treated as a discount to the associated debt. These amounts are being amortized to interest expense under the effective interest method over the life of the Term Loan and Additional Term Loans, respectively, which is a period of 48 months. The Company estimated the value of the warrants using the Black-Scholes model. The key information and assumptions used to value the warrants are as follows:
In addition, at the closing of the Initial Term Loan, the Company paid transaction costs of $0.6 million, which were recorded as a discount on the debt and are being amortized to interest expense using the effective interest method over the life of the Initial Term Loan, which is a period of 48 months. Outstanding debt obligations are as follows (in thousands):
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The Company has entered into various non-cancelable operating lease agreements for office facilities and equipment with original lease periods expiring between 2020 and 2025. Certain of these arrangements have free rent periods and/or escalating rent payment provisions. As such, we recognize rent expense under such arrangements on a straight-line basis in accordance with U.S. GAAP. Some leases include options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Operating lease expense was $0.8 million and $0.8 million for the three months ended June 30, 2020 and 2019, respectively. Supplemental cash flow and other information related to operating leases was as follows:
The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2020 (in thousands):
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Stock-based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based Compensation | Stock-based Compensation (a) Stock Options Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $1.3 million and $1.2 million for the six months ended June 30, 2020 and 2019, respectively. The following table sets forth a summary of the Company's stock option activity for the six months ended June 30, 2020:
The Company recognizes share-based compensation costs as expense on a straight-line basis over the option vesting period, which generally is four years. (b) Restricted Stock Units and Performance Stock Units The following table summarizes restricted stock unit and performance stock unit activity for the six months ended June 30, 2020:
Restricted stock units and performance stock units granted under the Performant Financial Corporation Amended and Restated 2012 Stock Incentive Plan generally vest over periods ranging from one to four years. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective income tax rate changed to 17% for the six months ended June 30, 2020 from (2)% for the six months ended June 30, 2019. The change in the effective tax rate is primarily driven by the net operating loss (“NOL”) carryback benefit recorded as a result of the newly enacted provisions of the CARES Act for the six months ended June 30, 2020. We file income tax returns with the U.S. federal government and various state jurisdictions. We operate in a number of state and local jurisdictions, most of which have never audited our records. Accordingly, we are subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. For tax years before 2016, the Company is no longer subject to Federal and certain other state tax examinations. We are currently being examined by the Franchise Tax Board of California for tax years 2011 through 2014 and by the Internal Revenue Service for tax year 2017. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. This modification significantly impacts the Company by allowing for the carryback of 2018 and 2019 NOL to tax years 2013 and 2014, respectively. These NOL carryforwards had been represented in the December 31, 2019 financial statements by deferred tax assets (“DTA”) for which a valuation allowance had been recorded as the Company did not expect that these DTA would be more likely than not realizable in future periods. As a result of carrying back the NOL, the Company is recognizing an income tax benefit of $4.3 million associated with these previously unrecognized DTA in the six months ended June 30, 2020. |
Loss per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss Per Share | Loss per Share For the six months ended June 30, 2020 and 2019, basic loss per share is calculated by dividing net loss by the sum of the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of common stock and dilutive common share equivalents outstanding during the period. Common share equivalents consist of stock options, restricted stock units, performance stock units, and warrants. When there is a loss in the period, dilutive common share equivalents are excluded from the calculation of diluted earnings per share, as their effect would be anti-dilutive. For example, for the six months ended June 30, 2020 and 2019, respectively, diluted weighted average shares outstanding are the same as basic average shares outstanding. When there is net income in the period, the Company excludes stock options, restricted stock units, performance stock units and warrants from the calculation of diluted earnings per share when their combined exercise price and unamortized fair value exceeds the average market price of the Company's common stock because their effect would be anti-dilutive. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands):
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Subsequent Events |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We have evaluated subsequent events through the date these consolidated financial statements were filed with the Securities and Exchange Commission and there are no other events that have occurred that would require adjustments or disclosures to our consolidated financial statements. |
Organization and Description of Business (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Organization | Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at June 30, 2020, and the results of our operations for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2019. Performant Financial Corporation (the "Company" or "we") is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Clients of the Company typically operate in complex and regulated environments and contract for their recovery needs in order to reduce losses on defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis; handling many or all aspects of the clients’ recovery processes. The Company's consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiaries Premiere Credit of North America, LLC (Premiere) and Performant Business Services, Inc. (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (Recovery) and Performant Technologies, LLC (PTL). Performant is a Delaware corporation headquartered in California and was formed in 2003. Premiere is an Indiana limited liability company acquired by Performant on August 31, 2018. PBS is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PTL is a California limited liability company that was originally formed in 2004. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, intangible assets, goodwill, right-of-use assets, deferred revenue, estimated liability for appeals and disputes, lease liabilities, earnout payable, other liabilities, deferred income taxes and income tax expense (benefit) and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates. |
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Revenues, Accounts Receivable, and Estimated Liability for Appeals | Revenues, Accounts Receivable, and Estimated Liability for Appeals The Company derives its revenues primarily from providing recovery services and healthcare audit services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps:
The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s contracts generally contain a single performance obligation, delivered over time as a series of services that are substantially the same and have the same pattern of transfer to the client, as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s recovery service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. In certain contracts, the Company can earn additional performance-based consideration determined based on its performance relative to the client’s other contractors providing similar services. Revenue from contingency fees earned upon recovery of funds is generally recognized as amounts are invoiced based on either the ‘as-invoiced’ practical expedient when such amounts reflect the value of the services completed to-date, or an output measure based on milestones which is used to measure progress of the satisfaction of its performance obligation. The Company estimates any performance-based variable consideration and recognizes such revenue over the performance period only if it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Under certain contracts, consideration can include periodic performance-based bonuses which can be awarded based on the Company’s performance under the specific contract. These performance-based awards are considered variable and may be constrained by the Company until there is not a risk of a material reversal. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund liability for each claim and recognizes revenue net of such estimate. The Company generally either applies the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable consideration allocation exception to contracts with performance obligations that have an average remaining duration of less than a year. Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. For healthcare claims audit contracts with the Centers for Medicare and Medicaid Services (CMS) and commercial clients, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned based on an output method, as it is a reasonable measure of the Company’s progress toward complete satisfaction of our performance obligation. For coordination-of-benefits contracts with CMS and commercial clients, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the client. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category for the three and six months ended June 30, 2020 and 2019 (in thousands):
Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS or other healthcare clients under the Medicare Recovery Audit Contractor (RAC) or other commercial healthcare contracts, respectively. Under the Medicare Secondary Payer Commercial Payment Center (MSP) contract, insurance companies or other responsible parties may dispute the Company’s findings regarding Medicare not being the primary payer of healthcare claims. Total estimated liability for appeals and disputes was $1.2 million and $1.0 million as of June 30, 2020 and December 31, 2019, respectively. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients following successful appeals of claims for which commissions were previously collected. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful account was $0.5 million and $0.2 million at June 30, 2020 and December 31, 2019, respectively. The Company determined that it does not have any material costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are generally expensed as incurred. The Company has contract assets of $1.0 million and $1.3 million as of June 30, 2020 and December 31, 2019, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the six months ended June 30, 2020 and year ended December 31, 2019, but not invoiced at the reporting date. The decrease in contract assets is primarily due to timing of invoices issued. Contract assets are recorded to accounts receivable when the rights become unconditional and amounts are invoiced. The Company has contract liabilities of $1.1 million and $0.1 million as of June 30, 2020 and December 31, 2019, respectively, which are included in deferred revenue on the consolidated balance sheets. The Company’s contract liabilities mainly relate to an advance recovery commission payment received from a customer, for which the Company anticipates revenue to be recognized as services are delivered. |
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Impairment of Goodwill and Long-Lived Assets | Impairment of Goodwill and Long-Lived Assets Goodwill is reviewed for impairment at least annually. |
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New Accounting Pronouncements | In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurements", which eliminates, adds or modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. The Company adopted this pronouncement on January 1, 2020, noting no impact to the consolidated financial statements as the amounts subject to Level 3 fair value measurements are not material. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments" as modified by subsequently issued ASU's 2018-19, 2019-04, 2019-05 and 2019-11. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted, for public entities, except for Smaller Reporting Companies. This ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 31, 2022. The Company is evaluating the effect of the adoption of this pronouncement. In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is evaluating the effect of the adoption of this pronouncement. |
Organization and Description of Business (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of disaggregated revenue by category | The following table presents revenue disaggregated by category for the three and six months ended June 30, 2020 and 2019 (in thousands):
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Property, Equipment, and Leasehold Improvements (Tables) |
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Schedule of property, equipment, and leasehold improvements | Property, equipment, and leasehold improvements consist of the following at June 30, 2020 and December 31, 2019 (in thousands):
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Credit Agreement (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of warrant valuation | The Company estimated the value of the warrants using the Black-Scholes model. The key information and assumptions used to value the warrants are as follows:
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Schedule of outstanding debt | Outstanding debt obligations are as follows (in thousands):
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Leases (Tables) |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of lease cost | Supplemental cash flow and other information related to operating leases was as follows:
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Schedule of maturities of lease liabilities | The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2020 (in thousands):
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Stock-based Compensation (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock option activity | The following table sets forth a summary of the Company's stock option activity for the six months ended June 30, 2020:
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Schedule of restricted stock activity | The following table summarizes restricted stock unit and performance stock unit activity for the six months ended June 30, 2020:
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Loss per Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reconciliation of basic to diluted weighted average shares | The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands):
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Organization and Description of Business - Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 33,785 | $ 35,830 | $ 79,673 | $ 70,706 |
Healthcare | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 14,593 | 9,263 | 32,117 | 18,283 |
Recovery | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 16,167 | 22,107 | 40,432 | 43,482 |
Customer Care / Outsourced Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 3,025 | $ 4,460 | $ 7,124 | $ 8,941 |
Property, Equipment, and Leasehold Improvements - Summary (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 96,839 | $ 95,390 |
Less accumulated depreciation and amortization | (78,829) | (76,621) |
Property, equipment and leasehold improvements, net | 18,010 | 18,769 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 1,943 | 1,943 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 8,141 | 8,124 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 6,123 | 6,257 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 80,632 | $ 79,066 |
Property, Equipment, and Leasehold Improvements - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense of property, equipment and leasehold improvements | $ 1.2 | $ 2.2 | $ 2.7 | $ 4.4 |
Credit Agreement - Warrant Valuation (Details) - Amendment Number One to Credit Agreement $ / shares in Units, $ in Millions |
1 Months Ended | |||||
---|---|---|---|---|---|---|
Sep. 30, 2019
USD ($)
$ / shares
shares
|
Aug. 31, 2019
USD ($)
$ / shares
shares
|
May 31, 2019
USD ($)
$ / shares
shares
|
Apr. 30, 2019
USD ($)
$ / shares
shares
|
Oct. 31, 2018
USD ($)
$ / shares
shares
|
Aug. 31, 2017
USD ($)
$ / shares
shares
|
|
Debt Instrument [Line Items] | ||||||
Exercise price (USD per share) | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 |
Share price on date of issuance (USD per share) | $ 1.10 | $ 1.11 | $ 1.75 | $ 2.24 | $ 1.93 | $ 1.85 |
Number of shares (in shares) | shares | 386,333 | 386,333 | 463,599 | 386,333 | 309,066 | 3,863,326 |
Relative fair value of each warrant | $ | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.4 | $ 0.2 | $ 3.3 |
Volatility | ||||||
Debt Instrument [Line Items] | ||||||
Warrants and rights outstanding, measurement input | 0.675 | 0.675 | 0.575 | 0.575 | 0.550 | 0.500 |
Risk-free interest rate | ||||||
Debt Instrument [Line Items] | ||||||
Warrants and rights outstanding, measurement input | 0.0160 | 0.0153 | 0.0215 | 0.0231 | 0.0301 | 0.0183 |
Expected dividend yield | ||||||
Debt Instrument [Line Items] | ||||||
Warrants and rights outstanding, measurement input | 0 | 0 | 0 | 0 | 0 | 0 |
Contractual term (in years) | ||||||
Debt Instrument [Line Items] | ||||||
Contractual term (in years) | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years |
Credit Agreement - Outstanding Debt Obligations (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
Less: unamortized discount and debt issuance costs | $ (1,668) |
Notes payable less unamortized discount and debt issuance costs | 60,920 |
Less: current maturities, net of unamortized discount and debt issuance costs | (3,359) |
Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs | $ 57,561 |
Leases - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Operating lease expense | $ 0.8 | $ 0.8 |
Leases - Components of Lease Term and Discount Rate (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Weighted Average Remaining Lease Term (in years) | 3 years 1 month 17 days | 4 years 6 months |
Weighted average discount rate (as a percent) | 6.70% | 6.40% |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 0.5 | $ 0.9 |
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Maturities of Lease Liabilities after Adoption of ASC 842 | |
Remainder of 2020 | $ 1,749 |
2021 | 2,395 |
2022 | 1,694 |
2023 | 573 |
2024 | 580 |
Thereafter | 397 |
Total undiscounted cash flows | 7,388 |
Less imputed interest | (755) |
Present value of lease liabilities | $ 6,633 |
Stock-based Compensation - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation expense | $ 1.3 | $ 1.2 | |
Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options vesting period | 4 years | ||
Minimum | Restricted Stock and Performance Stock Units | 2012 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options vesting period | 1 year | ||
Maximum | Restricted Stock and Performance Stock Units | 2012 Equity Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options vesting period | 4 years |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | 17.00% | (2.00%) |
CARES Act, income tax expense (benefit) | $ 4.3 |
Loss per Share - Reconciliation of Basic to Diluted Weighted Average Shares (Details) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Earnings Per Share [Abstract] | ||||
Weighted average shares outstanding – basic (in shares) | 54,267 | 53,367 | 54,105 | 53,214 |
Dilutive effect of stock options (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding – diluted (in shares) | 54,267 | 53,367 | 54,105 | 53,214 |
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