Revenue Growth - Total revenues for the three months ended March 31, 2025, were $33.269 million, an increase of 21.7% compared to $27.334 million for the same period in 2024[84]. - Healthcare total revenues reached $33.186 million, up from $25.800 million, reflecting a growth of 28.5% year-over-year[84]. - Claims-based services generated $17.104 million in revenue, a 37.7% increase from $12.412 million in the prior year[84]. - Eligibility-based services revenue was $16.082 million, compared to $13.388 million, marking a 20.2% increase[84]. - Total revenues for the three months ended March 31, 2025, were $33.3 million, an increase of approximately $5.9 million, or 22%, compared to $27.3 million for the same period in 2024[110]. - Healthcare revenues reached $33.2 million for the three months ended March 31, 2025, representing a 29% increase compared to the same period in 2024, driven by growth in eligibility-based and claims-based services[111]. Outsourced Services Impact - The company ceased providing outsourced services, resulting in a significant drop in revenues from $1.534 million to $83,000[84][94]. - Customer Care / Outsourced Services revenues decreased to approximately $0.1 million, a decline of 95% compared to the same period in 2024, due to the cessation of outsourced services[112]. Financial Performance - Net loss for the three months ended March 31, 2025, was $81 thousand, a decrease of approximately $3.9 million, or 98%, compared to a net loss of $4.0 million for the same period in 2024[118]. - Adjusted EBITDA for the three months ended March 31, 2025, was $3.3 million, compared to a loss of $1.2 million for the same period in 2024[123]. - Cash provided by operating activities was $2.9 million for the three months ended March 31, 2025, primarily due to increasing revenues outpacing operating expenses[128]. Cash and Credit Position - Cash and cash equivalents totaled $10.0 million as of March 31, 2025, an increase from $9.3 million as of December 31, 2024[124]. - As of March 31, 2025, $8.0 million was outstanding under the new $25 million Credit Agreement, with $14.2 million available for additional borrowings[125]. - The Credit Agreement with Wells Fargo Bank includes a $25 million revolving loan commitment, with $8.0 million outstanding as of March 31, 2025[132][134]. - The annual interest rate under the Credit Agreement was 7.1% as of March 31, 2025[134]. - The company has $14.2 million of additional available credit under the Credit Agreement as of March 31, 2025[134]. - The Credit Agreement matures on October 27, 2026, with the option for the company to prepay borrowings without penalty[135][136]. Compliance and Financial Covenants - The company is subject to financial covenants requiring a minimum liquidity and a fixed charge coverage ratio of not less than 1.25 to 1.00[138]. - As of March 31, 2025, the company was in compliance with all financial covenants under the Credit Agreement[139]. Risks and Economic Factors - The company faces risks related to client contract cancellations, which could significantly impact revenues due to high client concentration[103]. - Macroeconomic factors, including fluctuations in Medicare expenditures, may influence the company's business and results of operations[105]. - The company has exposure to interest rate changes, with a potential increase of $80 thousand in annual interest expense if rates rise by 100 basis points[140]. - Future investments of excess cash may be made in short-term investments, which could be affected by market interest rate changes[141]. Growth Outlook - The company anticipates continued growth in its healthcare services as it expands its technology-enabled services platform[93]. - The company’s revenue model is primarily success-based, earning fees based on the amount of funds recovered for clients[82].

Performant Financial (PFMT) Q1 2025 Earnings Call May 08, 2025 05:00 PM ET Speaker0 Good afternoon, ladies and gentlemen, and welcome to the Performant Healthcare Inc. First Quarter twenty twenty five Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 05/08/2025. I would now like to turn the conference over to John Buzzuto, Head of Investor Relations. Please go ahead, s ...

Exhibit 99.1 Performant Healthcare, Inc. Announces Financial Results for First Quarter 2025 Plantation, FL., May 8, 2025 - Performant Healthcare, Inc. (Nasdaq: PHLT), a leading provider of healthcare payment integrity services, today reported the following financial results for its first quarter ended March 31, 2025: First Quarter 2025 Financial Highlights First Quarter 2025 Results Total revenue in the first quarter of 2025 was $33.3 million, an increase of 22% from total revenue of $27.3 million in the pr ...

Financial Performance - For the year ended December 31, 2024, the company generated approximately $123.0 million in revenues, with a net loss of $9.9 million and adjusted EBITDA of $4.4 million[22]. - The company's eligibility services represented 50% of total revenue for the year ended December 31, 2024, down from 54% in 2023[39]. - A substantial majority of the company's revenues are derived from a limited number of large clients, and any deterioration in these relationships could materially harm revenues[88]. - Revenues depend on the scope of potentially improper claims that can be audited, and restrictions on these claims could adversely affect revenue generation[92]. - The U.S. federal government accounts for a significant portion of revenues, and any loss of business from federal contracts could lead to a substantial decrease in revenues[96]. Market Trends - U.S. healthcare spending grew by 7.5% to $4.9 trillion in 2023, projected to grow at an average annual rate of 5.6% from 2023 to 2032[23]. - Federal spending on Medicare increased by 8.1% to $1,029.8 billion in 2023, projected to grow at an average rate of 7.8% per year from 2025 to 2031[24]. Strategic Initiatives - The company plans to pursue strategic alliances and acquisitions to enhance existing capabilities and enter new markets[36]. - The company has expanded its sales and marketing team to better capitalize on new business opportunities and align with operational growth[59]. - The company may pursue strategic transactions, including acquisitions or divestitures, which could strain resources and affect financial results[124]. Regulatory and Compliance Risks - The company is subject to extensive regulations regarding the use and disclosure of confidential personal information, which could lead to significant liabilities and expenses if not complied with[120]. - Future legislative or regulatory changes could materially affect the company’s business and operations, particularly in the Medicare program[119]. - The company’s legacy student loan recovery business was subject to various state and federal regulations, which may still impose liabilities despite exiting the business in 2022[121]. Operational Challenges - The company faces significant risks related to long implementation periods for new contracts, which can lead to substantial upfront expenses before revenue is generated[87]. - Most contracts allow clients to unilaterally terminate or change the amount of work available, leading to potential revenue instability[90]. - The company operates in a highly competitive market, and failure to maintain service levels could result in loss of contracts and negatively impact financial performance[91]. - The company may face challenges in managing growth effectively, which could increase expenses and negatively impact results[97]. - The ability to hire and retain specialized employees is critical for growth in the healthcare business, and failure to do so could hinder revenue growth[99]. Technology and Security - The company maintains a comprehensive enterprise-wide information security program certified by third-party auditors, ensuring compliance with industry standards[74]. - The company utilizes encryption technologies certified to FIPS 140-2 to protect sensitive data, ensuring compliance with HIPAA and related laws[60]. - The company’s IT systems are critical for operations, and vulnerabilities could lead to significant operational impairments and cybersecurity risks[108]. - The company’s data security measures are crucial, and any breaches could result in reputational damage and financial losses[107]. - The company holds Authorization to Operate (ATO) licenses for RAC Regions 1, 2, and 5, and is in the process of obtaining an ATO for the MSP contract[73]. Human Resources - As of December 31, 2024, the company had 964 employees, all based in the United States, with no union membership[81]. - Retaining key management and employees is critical for future success, as their loss could adversely affect the company's financial condition[126]. Financial Risks - Interest rate changes could impact annual interest expenses; a 100 basis point increase would raise expenses by approximately $80,000[225]. - Future investments of excess cash may be affected by market interest rates, influencing interest income and expenses[226]. - The company relies on third-party providers for software and network services, and any failure in their performance could adversely affect business operations[110]. Litigation and Governance - Ongoing litigation may lead to substantial costs, potentially impacting business operations and financial performance[125]. - Anti-takeover provisions in corporate governance documents may deter beneficial acquisitions and affect stockholder interests[127]. Stock Performance - The price of the common stock has fluctuated between a low of $0.54 on June 1, 2020, and a high of $14.09 on March 4, 2013, indicating significant volatility since the IPO in August 2012[122]. - Significant stockholders include Prescott Group Management (20.2%), First Light Asset Management (15.4%), and others, collectively influencing corporate decisions[123].

Revenue Performance - Fourth quarter 2024 healthcare revenues were $34.3 million, an increase of 10.3% from $31.1 million in the prior year period[3]. - Full year 2024 revenues totaled $123.0 million, up 8.9% from $113.7 million in the prior year[5]. - The company achieved an 18% increase in healthcare revenue from commercial clients, which now represent over 57% of total healthcare revenue[8]. - For the year ended December 31, 2024, total healthcare revenue reached $118,291,000, representing an increase from $106,444,000 in 2023, which is a growth of approximately 11.3%[29]. - Claims-based revenue for the year ended December 31, 2024, was $56,431,000, compared to $45,265,000 in 2023, reflecting a growth of approximately 25%[29]. - The healthcare total revenue for the three months ended December 31, 2024, was $34,279,000, up from $31,133,000 in 2023, indicating a growth of approximately 10.3%[29]. - The company reported a total of $34,766,000 in revenue for the year ended December 31, 2024, which is an increase from $32,567,000 in 2023, reflecting a growth of about 6.7%[29]. - The eligibility-based revenue for the year ended December 31, 2024, was $61,860,000, compared to $61,179,000 in 2023, showing a slight increase of about 1.1%[29]. - Total revenue for the three months ended June 30, 2024, was $29,362,000, an increase from $25,485,000 in the same period of 2023, marking a growth of about 7.4%[29]. - For the three months ended March 31, 2024, total revenue was $27,334,000, compared to $25,729,000 in the same period of 2023, showing an increase of about 6.2%[29]. - For the three months ended September 30, 2024, eligibility-based revenue was $16,070,000, up from $18,165,000 in the same period of 2023, indicating a decrease of about 6%[29]. Financial Performance - Net loss for the fourth quarter of 2024 was $0.5 million, or $(0.01) per diluted share, compared to net income of $1.3 million, or $0.02 per diluted share in the prior year[4]. - Adjusted EBITDA for the fourth quarter was $3.1 million, down 31.1% from $4.5 million in the prior year[4]. - Full year adjusted EBITDA was $4.4 million, an increase of 29.4% from $3.4 million in the prior year[6]. - Adjusted EBITDA for the year ended December 31, 2024, was $4,372 million, compared to $3,393 million in 2023, representing a 28.9% increase[26]. - The diluted adjusted earnings per share for the three months ended December 31, 2024, was $0.02, down from $0.05 in the same quarter of 2023[28]. - Total operating expenses for the year ended December 31, 2024, were $132,481 million, compared to $119,871 million in 2023, marking a 10.5% increase[22]. - Operating expenses for the three months ended December 31, 2024, rose to $35,455 million, compared to $30,657 million in the prior year, reflecting a 15.8% increase[22]. Cash and Assets - Cash, cash equivalents, and restricted cash as of December 31, 2024, were approximately $9.3 million, up from $7.3 million in the prior year[9]. - The company had cash, cash equivalents, and restricted cash of $9,292 million at the end of the year, up from $7,333 million at the beginning of the year[24]. - Total assets as of December 31, 2024, were $101.8 million, compared to $99.0 million in the prior year[20]. - Cash provided by operating activities for the year ended December 31, 2024, was $6,178 million, an increase from $3,860 million in 2023[24]. - The company reported a net cash used in investing activities of $(7,010) million for the year ended December 31, 2024, compared to $(4,140) million in 2023[24]. Future Guidance - The company provided full-year 2025 revenue guidance in the range of $131 million to $135 million, and adjusted EBITDA guidance of $8 million to $9 million[10]. - The company has completed over 100 commercial implementations since 2022, including 42 in 2024[8].

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2] - The individual has a background in auditing with PricewaterhouseCoopers before transitioning to day trading [2]

Revenue Performance - Total revenues for the three months ended September 30, 2024, were $31,519,000, an increase of 5.2% compared to $29,962,000 for the same period in 2023[73]. - Total revenues for the three months ended September 30, 2024, were $31.5 million, an increase of approximately $1.6 million, or 5%, compared to $30.0 million for the same period in 2023[99]. - Total revenues for the nine months ended September 30, 2024, were $88.2 million, an increase of approximately $7.0 million, or 9%, compared to $81.2 million for the same period in 2023[110]. Healthcare Revenue - Healthcare revenues, which include eligibility-based and claims-based services, totaled $30,287,000 for the three months ended September 30, 2024, up from $28,490,000 in the same period of 2023, reflecting a growth of 6.3%[73]. - Healthcare revenues reached $30.3 million for the three months ended September 30, 2024, representing an increase of $1.8 million, or 6%, compared to the same period in 2023[100]. - Healthcare revenues for the nine months ended September 30, 2024, were $84.0 million, an increase of $8.7 million, or 12%, compared to the same period in 2023[111]. Claims-Based Services - Claims-based services revenue increased to $14,217,000 for the three months ended September 30, 2024, compared to $10,325,000 for the same period in 2023, representing a significant growth of 37.5%[73]. - Revenues from eligibility-based services decreased by $2.1 million, or 12%, to $16.1 million for the three months ended September 30, 2024, while claims-based services increased by 38% to $14.2 million[100]. Operating Expenses and Losses - Net loss for the three months ended September 30, 2024, was $2.4 million, an increase of approximately $1.8 million, or 311%, compared to a net loss of $0.6 million for the same period in 2023[107]. - Net loss for the nine months ended September 30, 2024, was $9.4 million, representing an increase in net loss of approximately $0.6 million, or 7%, compared to $8.8 million for the same period in 2023[119]. - Salaries and benefits expense increased by $6.6 million, or 10%, to $73.7 million for the nine months ended September 30, 2024, in support of healthcare services growth[113]. - Net loss for the nine months ended September 30, 2024, was $(9,397) thousand, compared to $(8,774) thousand for the same period in 2023, indicating a deterioration of 7.1%[126]. Cash Flow and Investments - Cash provided by operating activities was $3.4 million for the nine months ended September 30, 2024, down from $5.7 million in the same period of 2023[133]. - Cash used in investing activities increased to $5.7 million for the nine months ended September 30, 2024, compared to $3.0 million in the same period of 2023, primarily due to capital expenditures for software and technology assets[134]. - As of September 30, 2024, the company had $7.8 million in cash and cash equivalents, an increase from $7.3 million as of December 31, 2023[129]. Credit and Financing - The company entered into a new credit agreement on October 27, 2023, with a $25 million revolving loan commitment, of which $8.0 million was outstanding as of September 30, 2024[130]. - The annual interest rate under the credit agreement was 8.0% as of September 30, 2024[137]. - As of September 30, 2024, the company was in compliance with all covenants under the credit agreement[143]. Strategic Outlook - The company anticipates that healthcare revenues will drive the majority of overall revenue growth moving forward[82]. - The company’s growth strategy includes expanding in existing markets and considering strategic alliances or acquisitions to enhance service offerings[76]. - The company’s revenue model is primarily success-based, earning fees based on the amount of funds recovered for clients, aligning business objectives with client interests[70]. - The company has a high level of revenue concentration among its largest clients, which poses risks if any significant contracts are canceled or not renewed[93]. - The company’s revenues are significantly influenced by the volume of claims permitted for audit by healthcare clients, which can fluctuate based on various factors[88].

Financial Data and Key Metrics Changes - In Q3 2024, total company revenues were $31.5 million, with healthcare revenues at $30.3 million, reflecting year-over-year growth of 5% and 6% respectively [28] - Adjusted EBITDA for Q3 was positive at $2 million, approximately flat compared to the prior year [38] - Year-to-date adjusted EBITDA comparison showed an increase of roughly $2.5 million ahead of the prior year [38] Business Line Data and Key Metrics Changes - Healthcare revenue grew 6% year-over-year, with claims-based business revenues of $14.2 million, marking over 30% growth in both Q3 and year-to-date [31][32] - Eligibility revenues for Q3 were $16.1 million, a decrease of roughly 12% year-over-year, attributed to a difficult comparison year [33] - Customer care/outsourced services revenue accounted for $1.2 million, a decline from the previous year, as the company adapts to reduced services in this market [29] Market Data and Key Metrics Changes - The company has implemented 32 programs year-to-date, expected to deliver $13 million to $14 million in annualized revenue at steady state [9][35] - The State Medicaid market presents a $300 million to $500 million annual revenue opportunity, with a significant contract win in New York [15][18] Company Strategy and Development Direction - The company aims to focus solely on the healthcare payment integrity market, believing it offers the most effective path to long-term profitability and sustained growth [25] - The next phase of organizational transformation is centered around scaling operations, supported by technology and a data-driven approach [21][22] - The company is strategically reducing services within the customer care line of business to concentrate on healthcare payment integrity [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating industry challenges, including security breaches and election-related conservatism, while maintaining guidance for 2024 healthcare revenues [27][43] - The company anticipates that the end of the election cycle will alleviate some conservatism seen in client decision-making [66] Other Important Information - The company has successfully integrated assets from a recent acquisition into its technology stack, enhancing its capabilities [22] - The New York State RAC contract win is expected to generate double-digit millions in annual revenues at steady state, with a contract start anticipated in early Q2 2025 [39] Q&A Session Summary Question: Expectations on operationalizing the New York Medicaid contract - Management anticipates a typical ramp cycle of two to three years to reach steady state, with potential for compression depending on client motivation [46] Question: Margin expectations for the new state business - Margins are expected to be similar to existing federal and commercial business, with government contracts typically yielding better fee rates [50] Question: Sales cycle delays and their impact - Delays were noted following a data breach, leading to more cautious decision-making among payers, but management views this as temporary [56][57] Question: Size differential between RAC Regions 3 and 4 - RAC Region 4 is a 16-state region including California, while Region 3 encompasses eight states, with Region 4 historically being one of the largest [60] Question: Market share opportunities with large commercial payers - The company has a small market share with large payers but has demonstrated the ability to win additional business through existing relationships [63][65] Question: Impact of integrated technology on EBITDA - Margin expansion from the integration of RecordsOne is expected to be seen in 2025, with more significant impacts anticipated in 2026 and 2027 [70]

Company Performance - Performant Financial reported a quarterly loss of $0.01 per share, better than the Zacks Consensus Estimate of a loss of $0.02, representing an earnings surprise of 50% [1] - The company posted revenues of $31.52 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.57%, compared to year-ago revenues of $29.96 million [2] - Over the last four quarters, Performant Financial has surpassed consensus EPS estimates just once [2] Stock Movement and Outlook - Performant Financial shares have increased by approximately 28% since the beginning of the year, outperforming the S&P 500's gain of 21.2% [3] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the coming quarter is $0.02 on revenues of $37.6 million, and for the current fiscal year, it is -$0.06 on revenues of $125.9 million [7] Industry Context - The Business - Services industry, to which Performant Financial belongs, is currently ranked in the top 23% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

Revenue Performance - Healthcare revenues for Q3 2024 were $30.3 million, a 6% increase from $28.5 million in the prior year period[1]. - Total revenues for Q3 2024 reached $31.5 million, up 5% from $30.0 million in the prior year period[2]. - Revenue from claims-based services in Q3 2024 was $14.2 million, while eligibility-based services revenue was $16.1 million[2]. - Total revenue for the nine months ended September 30, 2024, was $88,215,000, compared to $106,444,000 for the same period in 2023, representing a decline of approximately 17%[19]. - Total healthcare revenue for the nine months ended September 30, 2024, was $84,012,000, down from $106,444,000 in the same period of 2023[19]. Profitability and Loss - Net loss for Q3 2024 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[3]. - Net loss for the nine months ended September 30, 2024, was $9,397,000, compared to a net loss of $8,774,000 for the same period in 2023[13]. - Adjusted EBITDA for Q3 2024 was $1.9 million, slightly up from $1.8 million in the prior year[3]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $(1,255,000), a decrease from $(1,137,000) in the same period of 2023[14]. - Adjusted net income (loss) for the nine months ended September 30, 2024, was $(5,775,000), compared to $(6,344,000) for the same period in 2023[15]. Cash Flow and Investments - Cash provided by operating activities for the nine months ended September 30, 2024, was $3,395,000, down from $5,747,000 in the same period of 2023[13]. - Cash and cash equivalents at the end of the period were $7,775,000, compared to $17,389,000 at the end of September 30, 2023[13]. - Total cash used in investing activities for the nine months ended September 30, 2024, was $5,744,000, compared to $2,953,000 in the same period of 2023[13]. Company Programs and Future Outlook - The company expects 2024 healthcare revenues to be in the range of $117 million to $122 million[4]. - The company implemented 32 programs during 2024, estimated to contribute between $13 million and $14 million in annualized revenue[3]. Assets and Liabilities - Total assets as of September 30, 2024, were $101.8 million, compared to $99.0 million in the prior year[11]. - Total liabilities increased to $26.6 million from $18.3 million in the prior year[11]. Stock and Shares - Stock-based compensation for the nine months ended September 30, 2024, was $4,122,000, an increase from $2,815,000 in the same period of 2023[14]. - The diluted average shares outstanding for the nine months ended September 30, 2024, were 77,232, compared to 75,907 for the same period in 2023[16].