EX-99.1 2 ex093022991pressrelease.htm EX-99.1 Document
Exhibit 99.1
Performant Financial Corporation Announces Financial Results for Third Quarter 2022
Livermore, Calif., November 8, 2022 - Performant Financial Corporation (Nasdaq: PFMT), (the "Company"), a leading provider of technology-enabled audit, recovery, and related analytics services in the United States with a focus in the healthcare payment integrity services industry, today reported the following financial results for its third quarter ended September 30, 2022:

Third Quarter Financial Highlights

•Total revenues of $27.2 million, compared to revenues of $28.6 million in the prior year period.
•Healthcare revenues of $23.5 million, compared to $20.0 million in the prior year period, an increase of approximately 18%
•Net loss of approximately $1.5 million, or $(0.02) per diluted share, compared to net loss of $1.7 million, or $(0.03) per diluted share, in the prior year period.
•Adjusted net loss was $1.7 million, or $(0.02) per diluted share, compared to adjusted net income of 0.1 million, or $— per diluted share, in the prior year period.
•Adjusted EBITDA of $(0.3) million, compared to $2.7 million in the prior year period.

Third Quarter 2022 Results
Total revenues in the third quarter were $27.2 million, a decrease from revenues of $28.6 million in the prior year period. Healthcare revenues in the third quarter of 2022 were $23.5 million, an increase of 18% from revenues of $20.0 million in the prior year period. Within Healthcare, claims-based services revenue in the third quarter of 2022 was $10.4 million, while revenues from eligibility-based services in the third quarter was $13.1 million.
“We are excited to see our efforts successfully drive strong top line growth particularly among commercial payors,” stated Simeon Kohl, President of Performant. “Our recently announced strategic engagement with Priority Health highlights our partnership model for commercial payors, and our focus of growing our healthcare operations through a customized high-touch approach. As we go to market as a pure-play healthcare technology company, we are aligned from a cultural, technology and leadership team perspective .”
Recovery revenues in the third quarter were $41 thousand, a decrease of 99.3% from revenues of $5.5 million in the prior year period due to the cessation of non-healthcare recovery activity which largely occurred by the end of 2021. Revenues from our Customer Care / Outsourced Services in the third quarter were $3.6 million, up $0.5 million compared to the prior year period.
Net loss for the third quarter was $1.5 million, or $(0.02) per share on a diluted basis, compared to a net loss of $1.7 million, or $(0.03) per share on a diluted basis, in the prior year period. Adjusted net loss for the third quarter was $1.7 million, or $(0.02) per share on a diluted basis, compared to adjusted net income of $0.1 million, or $0.00 per diluted share, in the prior year period. Adjusted EBITDA for the third quarter was $(0.3) million as compared to $2.7 million in the prior year period.
As of September 30, 2022, the Company had cash, cash equivalents, and restricted cash of approximately $25.7 million.
“Our third quarter results were largely inline with our expectations and our long-term plan and strategy remains intact. Our healthcare offerings demonstrated continued year-over-year growth, which we expect will continue into 2023 based on our robust sales and implementation pipelines,” stated Rohit Ramchandani, Senior Vice President of Finance and Strategy at Performant. “Our cash position remains strong and we are pleased to reiterate our healthcare revenue guidance of $92-$96 million for 2022. Following the recent re-affirmation of the contract award for RAC Region 2 from CMS, we expect to start spending on the implementation work in the current month. This RAC related spend in tandem with additional costs incurred during the protest process, as well as increases in operating expenses related to our transformation from legacy markets served to today, leads us to a revised EBITDA range for the year of negative $1MM to a positive $1MM.”


Note Regarding Use of Non-GAAP Financial Measures
In this press release, to supplement our consolidated financial statements, the Company presents adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per diluted share. These measures are not in accordance with accounting principles generally accepted in the United States of America (US GAAP) and accordingly reconciliations of adjusted EBITDA and adjusted net income (loss) to net income (loss) determined in accordance with US GAAP are included in the “Reconciliation of Non-GAAP Results” table at the end of this press release. We have included adjusted EBITDA and adjusted net income (loss) in this press release because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends and to prepare and approve our annual budget. Accordingly, we believe that adjusted EBITDA and adjusted net income (loss) provide useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and board of directors. Our use of adjusted EBITDA and adjusted net income (loss) has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under US GAAP. In particular, many of the adjustments to our US GAAP financial measures reflect the exclusion of items, specifically interest, tax and depreciation and amortization expenses, equity-based compensation expense and certain other non-operating expenses, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be calculated differently from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
Earnings Conference Call
The Company will hold a conference call to discuss its third quarter 2022 results today at 5:00 p.m. Eastern. A live webcast of the call may be accessed on the Investor Relations section of the Company’s website at investors.performantcorp.com. The conference call is also available by dialing 800-954-0628 (domestic) or 212-231-2928 (international).
A replay of the call will be available on the Company's website or by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 22021062. The telephonic replay will be available approximately three hours after the call, through November 15, 2022.
About Performant Healthcare Solutions
Performant Healthcare Solutions is a leading provider of technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare payment integrity industry. Performant works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments.

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

To learn more, please visit https://www.performanthealth.com


Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's outlook for revenues, net income (loss), and adjusted EBITDA in 2022 and beyond. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, that the Company faces a long period to implement a new contract which may result in the incurring of expenses before the receipt of revenues from new client relationships, that the high level of revenue concentration among the Company's largest customers and any termination of or deterioration in the Company’s relationship with any of its significant clients would result in a material decline in revenues, that many of the Company's customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes and may be changed or terminated unilaterally and on short notice, that the U.S. federal government accounts for a significant portion of the Company's revenues, that downturns in domestic or global economic conditions and other macroeconomic factors could harm the Company’s business and results of operations, that the Company may not have sufficient cash flows from operations to fund ongoing operations and other liquidity needs, that the Company may not be able to manage its potential growth effectively, that the Company faces significant competition in all of its markets, the material adverse impact of the COVID-19 pandemic on the Company's business, results of operations and financial condition as well as on the business operations and financial performance of many of its customers, that limitations on the scope of the Company's audit activity under its claims audit contracts may reduce revenue opportunities, that the Company’s indebtedness could adversely affect its business and financial condition and could reduce the funds available for other purposes and the failure to comply with covenants contained in its credit agreement could result in an event of default that could adversely affect its results of operations, that future legislative and regulatory changes may have significant effects on the Company's business, that failure of the Company's or third parties' operating systems and technology infrastructure could disrupt the operation of the Company's business and the threat of breach of the Company's security measures or failure or unauthorized access to confidential data that the Company possesses. More information on potential factors that could affect the Company's financial condition and operating results is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's annual report on Form 10-K for the year ended December 31, 2021 and subsequently filed reports on Forms 10-Q and 8-K. The forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements to conform these statements to actual results or revised expectations.
Contact Information
Richard Zubek
Investor Relations
925-960-4988
investors@performantcorp.com

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except per share amounts)
 September 30,
2022		December 31,
2021
 (Unaudited) 
Assets
Current assets:
Cash and cash equivalents$25,591 $17,347 
Restricted cash81 2,203 
Trade accounts receivable, net of allowance for doubtful accounts of $0 and $0, respectively
15,850 20,808 
Contract assets9,735 8,113 
Prepaid expenses and other current assets2,395 3,077 
Income tax receivable3,211 3,159 
Total current assets56,863 54,707 
Property, equipment, and leasehold improvements, net10,681 15,708 
Goodwill47,372 47,372 
Right-of-use assets2,394 3,235 
Other assets970 963 
Total assets$118,280 $121,985 
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of notes payable, net of unamortized debt issuance costs of $16 and $11, respectively
$859 $489 
Accrued salaries and benefits6,532 8,476 
Accounts payable785 1,124 
Other current liabilities2,304 3,732 
Contract liabilities531 634 
Estimated liability for appeals and disputes1,148 1,190 
Lease liabilities1,303 1,862 
Total current liabilities13,462 17,507 
Notes payable, net of current portion and unamortized debt issuance costs of $341 and $416, respectively
18,409 19,084 
Lease liabilities1,365 1,803 
Other liabilities1,148 1,168 
Total liabilities34,384 39,562 
Commitments and contingencies (note 3 and note 4)
Stockholders’ equity:
Common stock, $0.0001 par value. Authorized, 500,000 shares at September 30, 2022 and December 31, 2021 respectively; issued and outstanding 74,212 and 69,281 shares at September 30, 2022 and December 31, 2021, respectively
7 7 
Additional paid-in capital141,437 133,662 
Accumulated deficit(57,548)(51,246)
Total stockholders’ equity83,896 82,423 
Total liabilities and stockholders’ equity$118,280 $121,985 


PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended  
September 30,		Nine Months Ended  
September 30,
 2022202120222021
Revenues$27,178 $28,582 $79,942 $92,814 
Operating expenses:
Salaries and benefits21,759 19,686 63,101 67,071 
Other operating expenses7,733 8,781 23,945 29,896 
Impairment of goodwill— — — — 
Total operating expenses29,492 28,467 87,046 96,967 
Income (loss) from operations(2,314)115 (7,104)(4,153)
Gain on sale of certain recovery contracts— 579 382 2,428 
Gain on sale of land and buildings1,120 — 1,120 — 
Interest expense(277)(2,394)(648)(5,866)
Loss before provision for income taxes(1,471)(1,700)(6,250)(7,591)
Provision for (benefit from) income taxes(11)(9)52 61 
Net loss$(1,460)$(1,691)$(6,302)$(7,652)
Net loss per share
Basic$(0.02)$(0.03)$(0.09)$(0.13)
Diluted$(0.02)$(0.03)$(0.09)$(0.13)
Weighted average shares
Basic74,021 62,127 72,480 57,512 
Diluted74,021 62,127 72,480 57,512 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 Nine Months Ended  
September 30,
 20222021
Cash flows from operating activities:
Net loss$(6,302)$(7,652)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Loss on disposal of assets and impairment of long-lived assets40 718 
Depreciation and amortization3,355 3,883 
Right-of-use assets amortization841 1,413 
Stock-based compensation2,212 1,963 
Interest expense from debt issuance costs71 2,453 
Gain on sale of certain recovery contracts(382)(2,428)
Gain on sale of land and buildings(1,120)— 
Changes in operating assets and liabilities:
Trade accounts receivable4,958 4,270 
Contract assets(1,622)(484)
Prepaid expenses and other current assets682 1,245 
Income tax receivable(52)1,305 
Other assets(7)120 
Accrued salaries and benefits(1,944)(3,739)
Accounts payable(339)422 
Contract liabilities and other current liabilities(1,515)(1,363)
Estimated liability for appeals, disputes, and refunds(42)1,240 
Lease liabilities(997)(1,635)
Other liabilities (19)(445)
Net cash (used in) provided by operating activities(2,182)1,286 
Cash flows from investing activities:
Purchase of property, equipment, and leasehold improvements(2,198)(2,695)
Proceeds from sale of certain recovery contracts382 3,171 
Proceeds from sales of property, equipment, and leasehold improvements4,934 — 
Net cash provided by investing activities3,118 476 
Cash flows from financing activities:
Repayment of notes payable(375)(8,438)
Debt issuance costs paid(2)(150)
Taxes paid related to net share settlement of stock awards— (633)
Proceeds from exercise of warrants5,563 41 
Proceeds from public offering, net of costs— 42,648 
Net cash provided by financing activities5,186 33,468 
Net increase in cash, cash equivalents and restricted cash6,122 35,230 
Cash, cash equivalents and restricted cash at beginning of period19,550 18,296 
Cash, cash equivalents and restricted cash at end of period$25,672 $53,526 
Reconciliation of the Consolidated Statements of Cash Flows to the
Consolidated Balance Sheets:
Cash and cash equivalents$25,591 $51,323 
Restricted cash81 2,203 
Total cash, cash equivalents and restricted cash at end of period$25,672 $53,526 
Non-cash financing activities:
Recognition of earnout shares issued$— $801 
Recognition of warrants associated with notes payable $— $5,237 
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes$267 $(683)
Cash paid for interest$449 $3,413 

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Results
(In thousands, except per share amount)
(Unaudited)
 Three Months Ended  
September 30,		Nine Months Ended  
September 30,
 2022202120222021
(in thousands)(in thousands)
Adjusted EBITDA:
Net income (loss)$(1,460)$(1,691)$(6,302)$(7,652)
Provision for (benefit from) income taxes(11)(9)52 61 
Interest expense (1)
277 2,394 648 5,866 
Stock-based compensation931 540 2,212 1,963 
Depreciation and amortization1,095 843 3,355 3,883 
Impairment of long-lived assets— — — 636 
Severance expenses (4)
10 380 189 1,876 
Non-core operating expenses (5)
3 $775 9 2,683 
Gain on sale of certain recovery contracts (6)
— (579)(382)(2,428)
Gain on sale of land and buildings (7)
$(1,120)$— $(1,120)$— 
Adjusted EBITDA$(275)$2,653 $(1,339)$6,888 


 Three Months Ended  
September 30,		Nine Months Ended  
September 30,
 2022202120222021
(in thousands)(in thousands)
Adjusted Net Income (Loss):
Net income (loss)$(1,460)$(1,691)$(6,302)$(7,652)
Stock-based compensation931 540 2,212 1,963 
Amortization of intangible assets (2)
— 72 — 689 
Amortization of debt issuance costs (3)
23 1,320 71 2,453 
Impairment of long-lived assets— — — 636 
Severance expenses (4)
10 380 189 1,876 
Non-core operating expenses (5)
3 — 9 2,683 
Gain on sale of certain recovery contracts (6)
— (579)(382)(2,428)
Gain on sale of land and buildings (7)
(1,120)— (1,120)— 
Tax adjustments (8)
(42)(690)(269)(2,165)
Adjusted net income (loss)$(1,655)$127 $(5,592)$(1,945)



PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Results
(In thousands, except per share amount)
(Unaudited)
Three Months Ended  
September 30,		Nine Months Ended  
September 30,
2022202120222021
(in thousands)(in thousands)
Adjusted Net Income (Loss) Per Diluted Share:
Net income (loss)$(1,460)$(1,691)$(6,302)$(7,652)
Plus: Adjustment items per reconciliation of adjusted net income (loss)(195)1,818 710 5,707 
Adjusted net income (loss)$(1,655)$127 $(5,592)$(1,945)
Adjusted net income (loss) per diluted share$(0.02)$— $(0.08)$(0.03)
Diluted average shares outstanding (9)
74,021 67,948 72,480 57,512 
We are providing the following preliminary estimates of our financial results as follows:
Nine months endedThree months endedYear Ended
September 30, 2022December 31, 2022December 31, 2021December 31, 2022
ActualEstimateActualEstimate
Adjusted EBITDA:
Net income (loss)$(6,302)$ (1,144) to (1,755)$(10,288)$ (7,446) to (8,057)
Provision for (benefit from) income taxes$52 (302) to 19862 (250) to 250
Interest expense (1)
$648 102 to 60211,313 750 to 1,250
Stock-based compensation$2,212 538 to 1,0382,640 2,750 to 3,250
Depreciation and amortization$3,355 1,145 to 2,1455,188 4,500 to 5,500
Impairment of long-lived assets$— — 636 — 
Severance expenses (4)
$189 0 to 1112,160 189 to 300
Non-core operating expenses (5)
$9 — 2,588 9 
Gain on sale of certain recovery contracts (6)
$(382)— (2,403)(382)
Gain on sale of land and buildings (7)
$(1,120)— — (1,120)
Adjusted EBITDA$(1,339)$ 339 to 2,339$11,896 $ (1,000) to 1,000

(1)Represents interest expense and amortization of debt issuance costs related to our Credit Agreement and Prior Credit Agreement.
(2)Represents amortization of intangibles related to the acquisition of Performant by an affiliate of Parthenon Capital Partners in 2004.
(3)Represents amortization of debt issuance costs related to our Credit Agreement and Prior Credit Agreement.
(4)Represents severance expenses incurred in connection with a reduction in force for our non-healthcare recovery services.
(5)Represents professional fees related to strategic corporate development activities.
(6)Represents gain on the sale of certain non-healthcare recovery contracts.
(7)Represents gain on the sale of land and two office buildings.
(8)Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.
(9)While net loss for the three months ended September 30, 2021 is ($1,691), the computation of adjusted net income (loss) results in adjusted net income of $127. Therefore, the calculation of the adjusted earnings per diluted share for the three months ended September 30, 2021 includes dilutive common share equivalents of 5,821 added to the basic weighted average shares of 62,127.

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Results
(In thousands, except per share amount)
(Unaudited)
We are providing the following historical breakdown of the quarterly and annual revenue contributions under the new contribution breakdowns of our healthcare revenue results for the three and nine months ended September 30, 2022, and for the years ended December 31, 2021 and 2020:
For the Three Months EndedFor the Nine Months Ended
March 31, 2022June 30, 2022September 30, 2022
September 30, 2022
(in thousands)
Eligibility-based$14,214 $12,417 $13,142 $39,773 
Claims-based9,150 9,339 10,377 28,866 
Healthcare Total23,364 21,756 23,519 68,639 
Recovery118 7 41 166 
Customer Care / Outsourced Services3,601 3,918 3,618 11,137 
Total$27,083 $25,681 $27,178 $79,942 


For the Three Months EndedFor the Year Ended
March 31, 2021June 30, 2021September 30, 2021December 31, 2021December 31, 2021
Eligibility-based$7,911 $11,577 $12,727 $16,061 $48,276 
Claims-based5,375 7,025 7,280 9,498 29,178 
Healthcare Total13,286 18,602 20,007 25,559 77,454 
Recovery14,491 11,091 5,490 2,333 33,405 
Customer Care / Outsourced Services3,613 3,149 3,085 3,687 13,534 
Total$31,390 $32,842 $28,582 $31,579 $124,393 


For the Three Months EndedFor the Year Ended
March 31, 2020June 30, 2020September 30, 2020December 31, 2020December 31, 2020
Eligibility-based$10,949 $11,292 $13,480 14,126 $49,847 
Claims-based6,575 3,301 4,086 4,739 18,701 
Healthcare Total17,524 14,593 17,566 18,865 68,548 
Recovery24,265 16,167 15,443 17,521 73,396 
Customer Care / Outsourced Services4,099 3,025 3,219 3,650 13,993 
Total$45,888 $33,785 $36,228 $40,036 $155,937