Performant Financial Corporation (Nasdaq: PFMT), a leading provider of technology-enabled recovery and related analytics services in the United States, today reported the following financial results for its fourth quarter and full year ended December 31, 2021:

Fourth Quarter Financial Highlights

• Total revenues of $31.6 million, compared to $40.0 million in the prior year period, a decrease of 21%
• Healthcare revenues of $25.6 million, compared to $18.9 million in the prior year period, an increase of 35%
• Net loss of $2.6 million or $(0.04) per diluted share, was lower when compared to net income of $3.7 million, or $0.07 per diluted share, in the prior year period
• Adjusted EBITDA of $5.0 million, declined slightly when compared to $5.2 million in the prior year period
• Adjusted net loss of $35 thousand, or $(0.00) per diluted share, compared to adjusted net income of $4.5 million or $0.08 per diluted share, in the prior year period

Full Year 2021 Financial Highlights

• Total revenues of $124.4 million, compared to $155.9 million in the prior year period, a decrease of 20%
• Healthcare revenues of $77.5 million, compared to $68.5 million in the prior year period, an increase of 13%
• Net loss of $10.3 million, or $(0.17) per diluted share, compared to net loss of $14.0 million, or $(0.26) per diluted share in the prior year period
• Adjusted EBITDA of $11.9 million, compared to $20.5 million in the prior year period
• Adjusted net loss of $3.1 million, or $(0.05) per diluted share, compared to adjusted net loss of $8.5 million, or $0.16 per diluted share, in the prior year period

Fourth Quarter 2021 Results

Healthcare revenues in the fourth quarter were $25.6 million, up from $18.9 million in the prior year period. Recovery revenues in the fourth quarter were $2.3 million, compared to revenues of $17.5 million in the prior year period, consistent with management expectations year over year. Revenues from Customer Care / Outsourced Services in the fourth quarter were $3.7 million, in line with the $3.7 million reported in the prior year period.

Net loss for the fourth quarter of 2021 was $2.6 million, or $(0.04) per share on a fully diluted basis, compared to net income of $3.7 million or $0.07 per share on a fully diluted basis in the prior year period. Adjusted EBITDA for the fourth quarter of 2021 was $5.0 million as compared to $5.2 million in the prior year period. Adjusted net loss for the fourth quarter of 2021 was $35 thousand or $(0.00) per share on a fully diluted basis. This compares to adjusted net income of $4.5 million, or $0.08 per fully diluted share in the prior year period.

Full Year 2021 Results

Revenues for the full year ended December 31, 2021 were $124.4 million, compared to revenues of $155.9 million in 2020. Healthcare revenues were $77.5 million in 2021 compared to $68.5 million in the prior year. For the full year 2021, recovery revenues were $33.4 million, compared to $73.4 million in the prior year. Revenues from Customer Care / Outsourced Services were $13.5 million in 2021, a decrease of $0.5 million compared to $14.0 million in the prior year.

Net loss for the full year was $10.3 million, or $(0.17) per share on a fully diluted basis, compared to net loss of $14.0 million or $(0.26) per share on a fully diluted basis in 2020. Adjusted EBITDA for 2021 was $11.9 million as compared to $20.5 million in 2020. Adjusted net loss for 2021 was $3.1 million, or $(0.05) per fully diluted share. This compares to adjusted net income of $8.5 million or $0.16 per fully diluted share in 2020.

As of December 31, 2021, the Company had cash, cash equivalents and restricted cash of approximately $19.6 million.

Business Commentary

The Company announced that effective March 10th, Simeon Kohl has been named President of Performant. As President, Kohl will remain based in Sunrise, FL and will be responsible for the successful execution of Performant's growth strategy, client satisfaction and service delivery, as well as the Company's continued transformation to a healthcare pure play company.

“It gives me great pleasure to officially announce that Simeon Kohl is being promoted to President of Performant Financial. Over the past 10 years, Sim has worked tirelessly to build and mature our healthcare business. His promotion to President is a natural progression in our transformation to a healthcare pure play company and a direct reflection of his successful leadership and execution of our growth strategy,” commented Lisa Im, CEO of Performant.

“As President, I’m looking forward to continuing to work with my amazing team to further build out and grow Performant’s presence in the healthcare payment integrity space. Our fourth quarter is typically our seasonally strongest, and this year was no different, as our results in the fourth quarter punctuated a strong end to an expansive, but somewhat tumultuous year, as the nation’s healthcare system addressed the impacts of both Delta and Omicron variant waves,” commented Simeon Kohl, President of Performant.

“We continue to win the business of new healthcare payers, while also expanding our portfolio of work with our existing clients. These successes span our diversified products, such as TPL Reclamation, Clinical Audit, and Data Mining. We are a relatively small, but exceptionally nimble company competing against considerably larger competitors, and we’re winning,” continued Kohl.

“As we look ahead to 2022, we are excited at the trajectory from the implementations we have completed and the conversions we continue to achieve from our sales pipeline. We remain cautiously optimistic on a thawing of the COVID-related impacts on our operations as we look forward to 2022,” added Rohit Ramchandani, Senior Vice President of Finance and Strategy at Performant. “As such, we are introducing full year 2022 healthcare revenue guidance in the range of $90 - $94 million, with EBITDA in the range of $2 to $4 million, with an expectation of EBITDA in the first half of 2022 being negative, followed by stronger margins in Q3 and Q4, due to the anticipated quarterly trending of our revenues, as well as the continued investments into new customer contracts. This is a reflection of our ability to continue tackling available opportunities to drive growth in our platform.”

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.

Earnings Conference Call

The Company will hold a conference call to discuss its fourth quarter and full year 2021 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 13727690. The telephonic replay will be available approximately three hours after the call, through March 22, 2022.

About Performant Financial Corporation

Performant provides technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare payment integrity industry. Performant works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments.

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 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), and adjusted EBITDA in 2022 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 the Company's business, results of operations and financial condition as well as on the business operations and financial performance of many of its customers, that the Company may not have sufficient cash flows from operations 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 incurring 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 its significant clients would result in a material decline in 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 limitations on the scope of the Company's audit activity under its claims audit contracts may reduce revenue opportunities, 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, 2020 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.

We are providing the following preliminary estimates of our financial results for the year ending December 31, 2022:

We are providing the following historical breakdown of the quarterly and annual revenue contributions under the new contribution breakdowns of our healthcare revenue results for the years ended December 31, 2021, 2020, and 2019:

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