Performant Financial (PFMT) - 2024 Q2 - Quarterly Report

Revenue Performance - Total revenues for the three months ended June 30, 2024, were $29,362,000, representing a 15% increase from$ 25,485,000 for the same period in 2023[66] - Healthcare revenues, which include eligibility-based and claims-based services, totaled $27,925,000 for the three months ended June 30, 2024, up 16% from$ 23,929,000 in the prior year[66] - Claims-based services revenue increased to $13,661,000 for the three months ended June 30, 2024, compared to$ 9,798,000 for the same period in 2023, marking a 39% growth[66] - Total revenues for Q2 2024 were $29.4 million, an increase of approximately$ 3.9 million, or 15%, compared to Q2 2023 revenues of $25.5 million[88] - Healthcare revenues reached$ 27.9 million in Q2 2024, representing a $4.0 million increase, or 17%, compared to Q2 2023[88] - Total revenues for the first half of 2024 were$ 56.7 million, an increase of approximately $5.5 million, or 11%, compared to$ 51.2 million in the first half of 2023[98] - Healthcare revenues for the first half of 2024 were $53.7 million, reflecting a$ 6.9 million increase, or 15%, from the first half of 2023[98] Operational Results - Loss from operations improved to $2.7 million in Q2 2024, a decrease of$ 860,000, or 24%, from a loss of $3.6 million in Q2 2023[92] - Net loss for Q2 2024 was$ 3.0 million, a reduction of approximately $1.0 million, or 25%, compared to a net loss of$ 4.0 million in Q2 2023[95] - Net loss for the first half of 2024 was $7.0 million, a decrease of approximately$ 1.2 million, or 14%, compared to a net loss of $8.2 million in the first half of 2023[106] - Adjusted net loss for the three months ended June 30, 2024, was$ (1,962) thousand, compared to $(3,158) thousand for the same period in 2023, reflecting a 38% improvement[1] Expenses - Salaries and benefits expense increased to$ 24.5 million in Q2 2024, up $2.8 million, or 13%, from$ 21.7 million in Q2 2023[90] - Other operating expenses for Q2 2024 were $7.6 million, a slight increase from$ 7.4 million in Q2 2023, primarily due to higher depreciation expenses[91] - Interest expense decreased to $0.3 million in Q2 2024, down from$ 0.4 million in Q2 2023, representing a decrease of approximately $0.1 million[93] Cash Flow and Financial Position - Cash provided by operating activities was$ 4.7 million for the six months ended June 30, 2024, an increase from $2.3 million for the same period in 2023[119] - Cash used in investing activities was$ 4.5 million for the six months ended June 30, 2024, primarily for capital expenditures, compared to $2.3 million in the same period of 2023[120] - As of June 30, 2024, the company had$ 10.4 million in cash and cash equivalents, up from $7.3 million as of December 31, 2023[115] - The company entered into a new credit agreement on October 27, 2023, with a$ 25 million revolving loan commitment, of which $8.0 million was outstanding as of June 30, 2024[116] - The annual interest rate under the credit agreement was 8.0% as of June 30, 2024[123] - The company expects to maintain sufficient cash flows from operating activities to fund ongoing and planned business operations[117] - The company was in compliance with all covenants under the credit agreement as of June 30, 2024[128] - If interest rates on borrowings increased by 100 basis points, the annual interest expense would rise by approximately$ 80 thousand[130] Strategic Outlook - The company anticipates that healthcare revenues will drive the majority of overall revenue growth moving forward[72] - The company’s growth strategy includes expanding in existing markets and considering strategic alliances or acquisitions[68] - Regulatory changes affecting Medicare claims could significantly impact the company’s revenues and operational results[81] Revenue Model - The company has a contingency-based revenue model, earning fees based on the amount of funds recovered for clients, aligning its objectives with those of its clients[63] - The company’s revenues are significantly influenced by the volume of claims it is permitted to audit, which can be unilaterally changed by clients[78] - The company was awarded the Medicare Recovery Audit Contractor (RAC) contract for Region 2 in November 2022, with a term of eight-and-a-half years[69]