Performant Financial Corporation Announces Financial Results for Second Quarter 2023

Performant Financial Corporation (Nasdaq: PFMT), (the "Company"), primarily operating under subsidiary Performant Healthcare Solutions, a leading provider of technology-enabled audit, recovery, and related analytics services in the United States with a focus in the healthcare payment integrity industry, today reported the following financial results for its second quarter ended June 30, 2023:

Second Quarter Financial Highlights

• Healthcare revenues of $23.9 million, compared to $21.8 million in the prior year period, an increase of approximately 10%
• Total revenues of $25.5 million, compared to total revenues of $25.7 million in the prior year period.
• Net loss of approximately $4.0 million, or $(0.05) per diluted share, compared to net loss of $3.2 million, or $(0.04) per diluted share, in the prior year period.
• Adjusted net loss was $3.2 million, or $(0.04) per diluted share, compared to adjusted net loss of $2.9 million, or $(0.04) per diluted share, in the prior year period.
• Adjusted EBITDA of $(1.3) million, compared to $(1.4) million in the prior year period.

Second Quarter 2023 Results

Healthcare revenues in the second quarter of 2023 were $23.9 million, an increase of approximately 10% from $21.8 million in the prior year period. Total revenues in the second quarter were $25.5 million, a decrease from total revenues of $25.7 million in the prior year period. Within healthcare, claims-based services revenue in the second quarter of 2023 was $9.8 million, while revenues from eligibility-based services in the second quarter was $14.1 million.

“Within our commercial clients, both eligibility and claims-based revenues enjoyed strong double-digit year over year growth through the first half of 2023, demonstrating our continued focus on growing this piece of the business,” stated Simeon Kohl, CEO of Performant. “I am also excited to report that our efforts to compress the implementation cycle continue to bear fruit as we implemented 11 additional commercial programs in Q2, bringing our 2023 total to 22 implementations. This already surpasses the total number of commercial implementations we completed in all of 2022. We anticipate that these 22 programs will deliver an estimated $11 million in annualized revenues at steady state,” Kohl further remarked.

Revenues from our customer care / outsourced services in the second quarter were $1.5 million, down from $3.9 million in the prior year period.

Net loss for the second quarter was $4.0 million, or $(0.05) per share on a diluted basis, compared to a net loss of $3.2 million, or $(0.04) per share on a diluted basis, in the prior year period. Adjusted net loss for the second quarter was $3.2 million, or $(0.04) per share on a diluted basis, compared to adjusted net income of $2.9 million, or $(0.04) per diluted share, in the prior year period. Adjusted EBITDA for the second quarter was $(1.3) million as compared to $(1.4) million in the prior year period.

“We are excited about the increased pace of commercial implementations and the core potential of our government programs, which combine for strong continued traction toward our overall vision and goals,” stated Rohit Ramchandani, Chief Financial Officer of Performant. “With regard to the nearer term, we maintain visibility into our annual healthcare market guidance of $105 million to $110 million in revenues. At this stage in the year, we are also comfortable providing annual guidance for the customer care market revenues of $6.75 million to $8 million, thus bringing our total company revenue guidance to $111.75 million to $118 million. We are excited to continue delivering growth, enhancing our product offerings, broadening our market footprint, and expanding EBITDA margins. Furthermore, we remain well capitalized to tackle our organic growth initiatives and will continue to take steps to ensure we maintain flexibility in available capital for other strategic growth opportunities.”

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 second quarter 2023 results today at 5:00 p.m. Eastern. A live webcast of the call may be accessed on the Investor Relations section of the Company’s website at investors.performantcorp.com. The conference call is also available by dialing 888-886-7786 (domestic) or 416-764-8658 (international).

A replay of the call will be available on the Company's website or by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 87483139. The telephonic replay will be available approximately three hours after the call, through August 15, 2023.

About Performant Healthcare Solutions

Performant provides technology-enabled audit, recovery, and analytics services in the United States to the healthcare industry. Performant works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits, or COB) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments.

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

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the Company's outlook for revenues, net income (loss), and adjusted EBITDA in 2023 and beyond. These forward-looking statements are based on current expectations, estimates, assumptions, and projections that are subject to change and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the Company’s ability to generate revenue following long implementation periods associated with new customer contracts; client relationships and the Company’s ability to maintain such client relationships; downturns in domestic or global economic conditions and other macroeconomic factors; the Company’s ability to generate sufficient cash flows to fund our ongoing operations and other liquidity needs; the Company’s ability to hire and retain employees with specialized skills that are required for its healthcare business; anticipated trends and challenges in our business and competition in the markets in which the Company operates; the impact of COVID-19 on the Company’s business and operations, opportunities and expectations for the markets in which the Company operates; the Company’s indebtedness and compliance, or failure to comply, with restrictive covenants in the Company’s credit agreement; opportunities and expectations for growth in the various markets in which the Company operates; anticipated trends and challenges in the Company’s business and competition in the markets in which it operates; the adaptability of the Company’s technology platform to new markets and processes; the Company’s ability to invest in and utilize our data and analytics capabilities to expand its capabilities; the Company’s growth strategy of expanding in existing markets and considering strategic alliances or acquisitions; the Company’s ability to meet liquidity and working capital needs; expectations regarding future expenses; expected future financial performance; and the Company’s ability to comply with and adapt to industry regulations and compliance demands.

More information on potential factors that could affect the Company's financial condition and operating results is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's annual report on Form 10-K for the year ended December 31, 2022 and subsequently filed reports on Forms 10-Q and 8-K. The forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements to conform these statements to actual results or revised expectations.