Form 8-K - Current report

0001550695FALSE00015506952024-11-062024-11-06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2024 

 

Performant Financial Corporation

(Exact name of registrant as specified in its charter)

Delaware

001-35628

20-0484934

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

900 South Pine Island Road,

Plantation, FL 33324

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (925)  960-4800

N/A

(Former name or former address, if changed since last report.)

 

 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§ 240.12b–2 of this chapter).     

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Act:

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

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Item 2.02			Results of Operations and Financial Condition.

On November 6, 2024 Performant Financial Corporation issued a press release announcing financial results for its quarter ended September 30, 2024. The full text of the press release is furnished as Exhibit 99.1.

The information furnished in this Form 8-K, including the exhibit attached, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and it shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01			Financial Statements and Exhibits.

(d)Exhibits

99.1						Press release issued by Performant Financial Corporation, dated November 6, 2024.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: November 6, 2024

 

						PERFORMANT FINANCIAL CORPORATION
By:						/s/Rohit Ramchandani
						Rohit Ramchandani
						Chief Financial Officer

Exhibit 99.1

Performant Financial Corporation Announces Financial Results for Third Quarter 2024

Plantation, FL., November 6, 2024 - Performant Financial Corporation (Nasdaq: PFMT), a leading provider of healthcare payment integrity services, today reported the following financial results for its third quarter ended September 30, 2024:

Third Quarter Financial Highlights

•Healthcare revenues of $30.3 million, compared to $28.5 million in the prior year period, an increase of approximately 6%.

•Total revenues of $31.5 million, compared to total revenues of $30.0 million in the prior year period.

•Net loss of $2.4 million, or $(0.03) per diluted share, compared to net loss of $0.6 million, or $(0.01) per diluted share, in the prior year period.

•Adjusted EBITDA of $1.9 million, compared to $1.8 million in the prior year period.

•Adjusted net loss was $0.8 million, or $(0.01) per diluted share, compared to adjusted net income of $0.4 million, or $0.01 per diluted share, in the prior year period.

Third Quarter 2024 Results

Healthcare revenues in the third quarter of 2024 were $30.3 million, an increase of approximately 6% from $28.5 million in the prior year period. Total revenues in the third quarter were $31.5 million, an increase of 5% from total revenues of $30.0 million in the prior year period. Within healthcare, claims-based services revenue in the third quarter of 2024 was $14.2 million, while revenue from eligibility-based services in the third quarter was $16.1 million.

“Our third quarter revenue and overall profitability grew as expected against a difficult year-over-year comparison. Existing commercial client implementations continue to scale as expected along with the CMS RAC Region 2 contract to drive revenue growth," stated Simeon Kohl, CEO of Performant. "We are capitalizing on market opportunities, including our first State Medicaid contract with New York, one of the nation’s largest Medicaid programs. Our contract awards across federal, commercial, and now State Medicaid clients are a testament to our growth strategy, driven by our quality services and ability to understand clients’ needs in this dynamic market. Within our commercial clients, we have implemented 32 programs during 2024, which we currently estimate to collectively contribute between $13 and $14 million in annualized revenue at steady state. Our long-term focus remains on delivering value for our healthcare clients and stakeholders, including initiatives to deliver efficiency and productivity gains. I am pleased with the results and excited to lead the team to successfully close out 2024."

Revenues from our customer care / outsourced services in the third quarter were $1.2 million, down from $1.5 million in the prior year period. Simeon Kohl remarked on this business: “We have made the decision to reduce services in our customer care line of business. Our strategy remains clear, with a focus on the healthcare payment integrity market as we remain optimistic about its growth horizon.”

Net loss for the third quarter was $2.4 million, or $(0.03) per diluted share, compared to a net loss of $0.6 million, or $(0.01) per diluted share, in the prior year period. Adjusted EBITDA for the third quarter was $1.9 million as compared to $1.8 million in the prior year period. Adjusted net loss for the third quarter was $0.8 million, or $(0.01) per share on a diluted basis, compared to adjusted net income of $0.4 million, or $0.01 per diluted share, in the prior year period.

“The combination of our strong year-to-date financial performance and advancements in initiatives aimed at improving profitability, gives us confidence in reiterating our healthcare revenue guidance range” said Rohit Ramchandani, Chief Financial Officer. “We expect to deliver financial results within our originally stated range which is an achievement considering some unusual conditions in the healthcare market in 2024. Full guidance expectations are as follows: 2024 healthcare revenues in the range of $117 million to $122 million, and adjusted EBITDA in the range of $4 million to $5 million." Ramchandani further commented.

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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. In regard to forward looking non-GAAP guidance, we are not able to reconcile the forward-looking non-GAAP adjusted EBITDA measure to the closest corresponding GAAP measure without unreasonable efforts because we are unable to predict the ultimate outcome of certain significant items. These items include, but are not limited to, impacts associated with interest expense, and depreciation and amortization expenses.

Earnings Conference Call

The Company will hold a conference call to discuss its third quarter 2024 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. To dial into the call you can dial 800-717-1738 or 646-307-1865.

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 1114357. The telephonic replay will be available approximately three hours after the call, through November 13, 2024.

About Performant Healthcare Solutions

Performant supports healthcare payers in identifying, preventing, and recovering waste and improper payments by leveraging advanced technology, analytics and proprietary data assets. Performant works with leading national and regional healthcare payers to provide eligibility-based, also known as coordination-of-benefits (COB) services, as well as claims-based services, which includes the audit and identification of improperly paid claims. Performant is a leading provider of these services in both government and commercial healthcare markets. Performant also provides advanced reporting capabilities, support services, customer care, and stakeholder training programs designed to mitigate future instances of improper payments.

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

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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), adjusted EBITDA in 2024 and beyond, our commercial client growth strategy, and our estimated revenue from commercial programs implemented in the first nine-months of 2024. 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; many of the Company’s customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes; anticipated trends and challenges in the Company’s business and competition in the markets in which it 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; the Company’s ability to hire and retain employees with specialized skills that are required for its healthcare business; 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 impact of public health pandemics such as COVID-19 on the Company’s business and operations, opportunities and expectations for the markets in which the Company operates; the impacts of a failure of the Company’s operating systems or technology infrastructure or those of third-party vendors and subcontractors; the impacts of a cybersecurity breach or related incident to the Company or any of the Company’s third-party vendors and subcontractors; 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 maintain, protect and enhance its intellectual property; 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, 2023 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

Jon Bozzuto

Investor Relations

925-960-4988

[e-mail]

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PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except par value amounts)

			September 30, 2024						December 31, 2023
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents			$	7,775					$	7,252
Restricted cash			—						81
Trade accounts receivable, net of allowance for credit losses			17,955						17,584
Contract assets			9,538						10,879
Prepaid expenses and other current assets			2,944						3,651
Income tax receivable			119						335
Total current assets			38,331						39,782
Property, equipment, and software, net			14,033						9,724
Goodwill			47,372						47,372
Debt issuance costs			473						631
Right-of-use assets			847						531
Other assets			787						990
Total assets			$	101,843					$	99,030
Liabilities and Stockholders’ Equity
Current liabilities:
Accrued salaries and benefits			7,588						7,924
Accounts payable			719						727
Other current liabilities			2,404						2,385
Contract liabilities			1,897						493
Estimated liability for appeals and disputes			600						601
Deferred asset acquisition payments			737						—
Lease liabilities			423						250
Total current liabilities			14,368						12,380
Long-term loan payable			8,000						5,000
Deferred asset acquisition payments			3,123						—
Lease liabilities			442						295
Other liabilities			672						648
Total liabilities			26,605						18,323
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.0001 par value. Authorized, 500,000 shares at September 30, 2024 and December 31, 2023 respectively; issued and outstanding 78,291 and 76,920 shares at September 30, 2024 and December 31, 2023, respectively			8						8
Additional paid-in capital			149,929						146,001
Accumulated deficit			(74,699)						(65,302)
Total stockholders’ equity			75,238						80,707
Total liabilities and stockholders’ equity			$	101,843					$	99,030

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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,
						2024						2023						2024						2023
Revenues						$	31,519					$	29,962					$	88,215					$	81,176
Operating expenses:
Salaries and benefits						25,966						22,980						73,721						67,139
Other operating expenses						7,702						7,632						23,305						22,077
Total operating expenses						33,668						30,612						97,026						89,216
Loss from operations						(2,149)						(650)						(8,811)						(8,040)
Gain on sale of certain recovery contracts						—						—						—						3
Interest expense						(313)						(423)						(799)						(1,188)
Interest income						93						86						260						86
Loss before provision for income taxes						(2,369)						(987)						(9,350)						(9,139)
Provision for (benefit from) income taxes						15						(407)						47						(365)
Net loss						$	(2,384)					$	(580)					$	(9,397)					$	(8,774)
Net loss per share
Basic						$	(0.03)					$	(0.01)					$	(0.12)					$	(0.12)
Diluted						$	(0.03)					$	(0.01)					$	(0.12)					$	(0.12)
Weighted average shares
Basic						77,748						76,454						77,232						75,907
Diluted						77,748						76,454						77,232						75,907

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PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

			Nine Months Ended   September 30,
			2024						2023
Cash flows from operating activities:
Net loss			$	(9,397)					$	(8,774)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on disposal of assets			63						258
Depreciation and amortization			5,244						3,805
Right-of-use assets amortization			312						1,411
Stock-based compensation			4,122						2,815
Interest expense from debt issuance costs			173						256
Gain on sale of certain recovery contracts			—						(3)
Changes in operating assets and liabilities:
Trade accounts receivable			(371)						1,665
Contract assets			1,341						4,610
Prepaid expenses and other current assets			707						561
Income tax receivable			216						2,607
Other assets			190						86
Accrued salaries and benefits			(336)						(1,295)
Accounts payable			(8)						(390)
Contract liabilities and other current liabilities			1,423						(43)
Estimated liability for appeals and disputes			(1)						(200)
Lease liabilities			(308)						(1,645)
Other liabilities			25						23
Net cash provided by operating activities			3,395						5,747
Cash flows from investing activities:
Purchase of property, equipment, and software			(5,744)						(2,956)
Proceeds from sale of certain recovery contracts			—						3
Net cash used in investing activities			(5,744)						(2,953)
Cash flows from financing activities:
Repayment of long-term loan payable			—						(8,250)
Debt issuance costs paid			(15)						(424)
Taxes paid related to net share settlement of stock awards			(194)						(196)
Borrowings from revolving loan			3,000						—
Net cash provided by (used in) financing activities			2,791						(8,870)
Net increase (decrease) in cash, cash equivalents and restricted cash			442						(6,076)
Cash, cash equivalents and restricted cash at beginning of period			7,333						23,465
Cash, cash equivalents and restricted cash at end of period			$	7,775					$	17,389
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:
Cash and cash equivalents			$	7,775					$	17,308
Restricted cash			—						81
Total cash, cash equivalents and restricted cash at end of period			$	7,775					$	17,389
Non-cash investing activities:
Deferred asset acquisition payments			$	3,860					$	—
Supplemental disclosures of cash flow information:
Cash received for income taxes			$	(112)					$	(2,904)
Cash paid for interest			$	438					$	1,084

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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,
						2024						2023						2024						2023
						(in thousands)												(in thousands)
Adjusted EBITDA:
Net income (loss)						$	(2,384)					$	(580)					$	(9,397)					$	(8,774)
Provision for (benefit from) income taxes						15						(407)						47						(365)
Interest expense (1)						313						423						799						1,188
Interest income						(93)						(86)						(260)						(86)
Stock-based compensation						1,860						1,129						4,122						2,815
Depreciation and amortization						1,927						1,293						5,244						3,805
Severance expenses (3)						278						64						664						246
Other						21						5						36						34
Adjusted EBITDA						$	1,937					$	1,841					$	1,255					$	(1,137)

						Three Months Ended   September 30,												Nine Months Ended   September 30,
						2024						2023						2024						2023
						(in thousands)												(in thousands)
Adjusted Net Income (Loss):
Net income (loss)						$	(2,384)					$	(580)					$	(9,397)					$	(8,774)
Stock-based compensation						1,860						1,129						4,122						2,815
Amortization of debt issuance costs (2)						58						134						173						256
Severance expenses (3)						278						64						664						246
Other						21						5						36						34
Tax adjustments (4)						(609)						(366)						(1,373)						(921)
Adjusted net income (loss)						$	(776)					$	386					$	(5,775)					$	(6,344)

						Three Months Ended   September 30,												Nine Months Ended   September 30,
						2024						2023						2024						2023
						(in thousands)												(in thousands)
Adjusted Net Income (Loss) Per Diluted Share:
Net income (loss)						$	(2,384)					$	(580)					$	(9,397)					$	(8,774)
Plus: Adjustment items per reconciliation of adjusted net income (loss)						1,608						966						3,622						2,430
Adjusted net income (loss)						$	(776)					$	386					$	(5,775)					$	(6,344)
Adjusted net income (loss) per diluted share						$	(0.01)					$	0.01					$	(0.08)					$	(0.08)
Diluted average shares outstanding						77,748						76,830						77,232						75,907

(1)Represents interest expense and amortization of debt issuance costs related to our Credit Agreement.

(2)Represents amortization of debt issuance costs related to our Credit Agreement.

(3)Represents severance expenses incurred in connection with a reduction in force for our non-healthcare recovery services.

(4)Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.

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PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Quarterly and Annual Revenues

(In thousands)

(Unaudited)

We are providing the following historical breakdown of the quarterly and annual revenue contributions under the contribution breakdowns of our healthcare revenue results for the nine months ended September 30, 2024, and for the years ended December 31, 2023 and 2022:

						Three Months Ended																								Nine Months Ended
						March 31, 2024						June 30, 2024						September 30, 2024												September 30, 2024
																														(in thousands)
Eligibility-based						$	13,388					$	14,264					$	16,070											$	43,722
Claims-based						12,412						13,661						14,217												40,290
Healthcare Total						25,800						27,925						30,287												84,012
Customer Care / Outsourced Services						1,534						1,437						1,232												4,203
Total						$	27,334					$	29,362					$	31,519											$	88,215

						Three Months Ended																								Year Ended
						March 31, 2023						June 30, 2023						September 30, 2023						December 31, 2023						December 31, 2023
						(in thousands)
Eligibility-based						$	12,480					$	14,131					$	18,165					$	16,403					$	61,179
Claims-based						10,412						9,798						10,325						14,730						45,265
Healthcare Total						22,892						23,929						28,490						31,133						106,444
Recovery						19						14						—						—						33
Customer Care / Outsourced Services						2,818						1,542						1,472						1,434						7,266
Total						$	25,729					$	25,485					$	29,962					$	32,567					$	113,743

						Three Months Ended																								Year Ended
						March 31, 2022						June 30, 2022						September 30, 2022						December 31, 2022						December 31, 2022
						(in thousands)
Eligibility-based						$	14,214					$	12,417					$	13,142					$	13,511					$	53,284
Claims-based						9,150						9,339						10,377						12,516						41,382
Healthcare Total						23,364						21,756						23,519						26,027						94,666
Recovery						118						7						41						75						241
Customer Care / Outsourced Services						3,601						3,918						3,618						3,140						14,277
Total						$	27,083					$	25,681					$	27,178					$	29,242					$	109,184

Cover	Nov. 06, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 06, 2024
Entity Registrant Name	Performant Financial Corporation
Entity Incorporation, State or Country Code	DE
Entity File Number	001-35628
Entity Tax Identification Number	20-0484934
Entity Address, Address Line One	900 South Pine Island Road,
Entity Address, City or Town	Plantation
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33324
City Area Code	(925)
Local Phone Number	960-4800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Trading Symbol	PFMT
Security Exchange Name	NASDAQ
Title of 12(b) Security	Common Stock, par value $.0001 per share
Entity Central Index Key	0001550695
Amendment Flag	false

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