Performant Financial Corporation announces strategic healthcare initiatives
LIVERMORE, Calif .– (COMMERCIAL THREAD) – Performant Financial Corporation (Nasdaq: PFMT), a leading provider of cost containment technology services and related analytics, today reiterated its intention to focus future investments on growth and profitability at long term of its healthcare activities, which for the year 2020 generated revenues of $ 68.5 million, an increase of more than 58% compared to 2019.
In addition, the Company also announces that it has signed an agreement to sell some of its non-healthcare recovery contracts to a buyer specializing in outsourced receivables solutions. Following the transaction, we modified the terms of our credit agreement with ECMC in order to partially deleverage the Company, extend the maturity of one year until August 2022, as well as achieve a structure of covenant modified to support continued investment and growth. The changes to the credit agreement will come into force at the close of the sale of the recovery contracts.
“Our decision to sell these salvage contracts reflects our plan to fully devote our resources and efforts to expanding our position in the healthcare market, where we continue to demonstrate our success by taking business from incumbents. long-term. Our intention is to build on our recent achievement of five consecutive quarters of positive EBITDA, while continuing to provide what we believe is the best service our customers have come to expect, ”said Lisa Im, CEO of Performant.
“The COVID-19 pandemic disrupted our legacy collection business, which included accelerating already declining student loan collection revenues,” Im continued. “We will continue to fulfill our current recovery contracts, but do not plan to renew or restart existing contracts, nor to seek new non-healthcare recovery opportunities. We believe that our enhanced focus on the high growth healthcare market is in the best interests of our shareholders. ”
“We continue to invest in technology and attract the best talent in the industry to further develop our healthcare business. We believe we have a solid foundation for significant growth in the short to medium term, and we will always remain a customer-centric company at our heart, ”said Simeon Kohl, SVP and GM Healthcare. “With market consolidation underway, Performant has grown into the leading independent payment integrity company capable of providing innovative cost management solutions to healthcare payers of all sizes. This unique position allows us to tailor our services to the needs of each client, while refining our technological strengths to support future growth in government and commercial markets. We are excited to strengthen our commitment to healthcare, focusing our resources on helping our clients manage the growing cost of healthcare. ”
“We expect our healthcare market revenue in 2021 to be between $ 83 million and $ 90 million, which represents continued and solid revenue growth, as well as positive EBITDA for 2021. However, we expect to record cash charges of between $ 1.5 million and $ 2.5 million. million dollars in the second and third quarters of 2021, comprised primarily of severance pay and labor costs, which will put short-term pressure on our results, ”Im added.
Truist Securities, Inc. is acting as financial advisor to Performant, and Pillsbury Winthrop Shaw Pittman LLP is acting as legal advisor to Performant.
About the Successful Financial Corporation
Performant helps government and business organizations increase revenues 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 over nine years to commercial and government clients, including as a recovery auditor for the Centers for Medicare and Medicaid Services.
Powered by a proprietary analytical platform and workflow technology, Performant also provides professional services related to the recovery effort, including reporting capabilities, support services, customer service and training programs. stakeholders to mitigate future instances of improper payments. Founded in 1976, Performant is headquartered in Livermore, California.
This 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 which are subject to change and actual results may differ materially from 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 operations. business and the financial performance of many of them. our customers, that the Company may not have sufficient cash flow from operations to finance ongoing activities and other liquidity needs, that the Company’s indebtedness could adversely affect its operations and financial position and could reduce the funds available for other purposes and failure to comply with the restrictive covenants contained in its credit agreement could result in an event of default which could adversely affect its operating results, which the Company faces. a long period to implement a new contract which may result in expenses before receipt of income from new client relationships, the high level of concentration of income among the Company’s largest clients and any termination in the Company’s relationship with one of our major customers would result in a significant drop in our revenues, as many of the Company’s customer contracts are subject to renewal. periodically, are not exclusive, do not anticipate committed business volumes and may be modified or terminated unilaterally and on short notice, that the Company may not be able to effectively manage its potential growth, that the Company is facing significant competition in all of its markets, that continued limitations in 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 represents a significant portion of revenues of the Company, that future legislative and regulatory changes may have significant effects on the activities of the Company, that the failure of the operating systems and the technology of the Company or of third-party infrastructure could disrupt the functioning of the Company activities and threats of t violation of Company security measures or failure or access s not authorized to confidential data held by the Company. Further information on potential factors that could affect the financial condition and results of operations of the Company is included from time to time in the sections “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results. results of operations ”of the Company’s annual report on Form 10. -K for the fiscal year ended December 31, 2020 and subsequently filed reports on Forms 10-Q and 8-K. 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 them to actual results or revised expectations.