LIVERMORE, Calif., May 19, 2020 (GLOBE NEWSWIRE) — Performant Financial Corporation (Nasdaq: PFMT), (the “Company”), a leading provider of technology-enabled recovery and related analytics services in the United States, today reported the following financial results for its first quarter ended March 31, 2020:
 First Quarter Financial HighlightsTotal revenues of $45.9 million, compared to revenues of $34.9 million in the prior year periodNet loss of approximately $12.5 million, or $(0.23) per diluted share, compared to a net loss of $8.5 million, or $(0.16) per diluted share, in the prior year period. Included in the net loss was a non-cash impairment to goodwill of $19.0 millionAdjusted net income, excluding the non-cash goodwill charge was $2.1 million, or $0.04 per diluted share, compared to an adjusted net loss of $7.9 million or $(0.15) per diluted share in the prior year periodAdjusted EBITDA of $7.1 million, compared to $(4.4) million in the prior year periodFirst Quarter 2020 ResultsTotal revenues in the first quarter were $45.9 million, an increase of 31.5% from revenues of $34.9 million in the prior year period.  Healthcare revenues in the first quarter of 2020 were $17.5 million, an increase of 94.3% from revenues of $9.0 million in the prior year period. Recovery revenues in the first quarter were $24.3 million, an increase of $2.9 million, or 13.5% from revenues of $21.4 million in the prior year period.  Revenues from our Customer Care / Outsourced Services in the first quarter were $4.1 million, a decrease of $0.4 million from the prior year period.The Company recorded a non-cash impairment to goodwill of $19.0 million as of March 31, 2020. This is mainly due to the decrease in the Company’s stock price and associated market capitalization. There has been significant negative impact to the global economy and the public securities markets as a result of the COVID-19 pandemic since March 2020. As a result, the Company’s goodwill is at elevated risk of additional impairment should there be further decline in the Company’s stock price and associated market capitalization, which may result in a potentially material non-cash charge to earnings.Net loss for the first quarter of 2020 was $12.5 million, or $(0.23) per share on a fully diluted basis, compared to net loss of $8.5 million or $(0.16) per share on a fully diluted basis in the prior year period. Adjusted net income for the first quarter of 2020 was $2.1 million, resulting in $0.04 per share on a fully diluted basis. This compares to an adjusted net loss of $7.9 million or $(0.15) per fully diluted share in the prior year period. Adjusted EBITDA for the first quarter of 2020 was $7.1 million as compared to $(4.4) million in the prior year period.As of March 31, 2020, the Company had cash, cash equivalents and restricted cash of approximately $10.2 million.Impact of COVID-19Since March 11, 2020, when the World Health Organization declared the COVID-19 outbreak a pandemic, the Company has taken many proactive actions to protect the health of our employees and their families, including limiting the number of people permitted to be present in any particular meeting, curtailing business travel and encouraging videoconferencing whenever possible. As the COVID-19 pandemic worsened throughout March and into April 2020, the Company required almost all personnel, approximately 1,200 employees, to work remotely and access to Company sites was restricted to personnel who are required to perform critical business continuity activities.While the Company currently believes it has taken steps that will allow it to continue to function as a result of the COVID-19 pandemic, the extent of the COVID-19 pandemic’s effect on Performant’s operational and financial performance will depend on future developments and it is not currently possible to predict the overall long-term impact of the COVID-19 pandemic on the Company’s business.For example, pursuant to the terms of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in March 2020, the U.S. Federal government suspended payments, ceased accruing interest, and stopped involuntary collections of payments (e.g., wage garnishments) for student loans owned by the Department of Education through September 30, 2020. There is significant uncertainty around the breadth and duration of business disruptions related to the COVID-19 pandemic, as well as its impact on the Company and the U.S. economy as a whole.Business Commentary and Outlook“As the pandemic unfolded in March, we were in the process of reporting a second consecutive quarter with strong operating results that was built on momentum from the solid execution on our contracts and plans. Although we have had to pause active outbound work on most student loan and government contracts, we are still driving good operational momentum in most of our other contracts which have not been as significantly impacted by the pandemic,” stated Lisa Im, CEO of Performant.“Our Company’s Business Continuity Pandemic Taskforce has been extremely responsive in managing a multitude of changes coming from clients and various governing bodies (i.e., federal, states, counties, cities, etc.). We are actively monitoring the impacts of the COVID-19 pandemic and although we may take further actions to alter our business operations, the full impact of the COVID-19 pandemic on our operating results, financial condition, or liquidity for fiscal year 2020 and beyond cannot be estimated at this point. As a result, we have made the decision to withdraw our future guidance,” concluded Im.Note Regarding Use of Non-GAAP Financial MeasuresIn this press release, to supplement our consolidated financial statements, the Company presents adjusted EBITDA and adjusted net income. 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 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 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 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 CallThe Company will hold a conference call to discuss its first quarter 2020 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 877-705-6003 (domestic) or 201-493-6725 (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 13703913. The telephonic replay will be available approximately three hours after the call, through May 26, 2020.About Performant Financial CorporationPerformant helps government and commercial organizations enhance revenue and contain costs by preventing, identifying and recovering waste, improper payments and defaulted assets. Performant is a leading provider of these services in several industries, including healthcare, student loans and government. Performant has been providing recovery audit services for more than nine years to both commercial and government clients, including serving as a Recovery Auditor for the Centers for Medicare and Medicaid Services.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.Forward Looking StatementsThis press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for revenues, net income (loss), and adjusted EBITDA in 2020 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 material adverse impact of the COVID-19 pandemic on our business, results of operations and financial condition as well as on the business operations and financial performance of many of our customers, that the Company may not have sufficient cash flows from operations or the availability of funds under its credit agreement to fund ongoing operations and other liquidity needs, 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 the Company faces a long period to implement a new contract which may result in the incurrence of expenses before the receipt of revenues from new client relationships, the high level of revenue concentration among the Company’s largest customers and any termination in the Company’s relationship with any of our significant clients would result in a material decline in our 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 Company may not be able to manage its potential growth effectively, that the Company faces significant competition in all of its markets, that continuing limitations on the scope of our audit activity under our RAC contracts have significantly reduced our revenue opportunities with this client, that the U.S. federal government accounts for a significant portion of the Company’s revenues, 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, 2019 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
[email protected]





 

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