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 third quarter ended September 30, 2014:
Third Quarter Financial Highlights
- Total Revenues of $39.6 million, representing a year-over-year decrease of 48.4%
- Net loss of $0.48 million, resulting in a net loss per diluted share of $0.01, compared to net income of $15.5 million, or $0.31 per diluted share, in the prior year period
- Adjusted EBITDA of $5.7 million, compared to $31.7 million in the prior year period
- Adjusted net income of $0.7 million, or $0.01 per diluted share, compared to $16.6 million and $0.34 per diluted share, respectively, in the prior year period
Lisa Im, Performant Financial’s Chief Executive Officer said, “This was a challenging quarter for our company. The combination of lower student loan rehabilitation fees and our inability to recognize some revenues in the quarter due to new documentation requirements related to income based rehabilitation drove Student Lending revenues lower. On the healthcare audit and recovery side of our business, activity remains severely restrained as the contract award process remains in limbo. CMS’ decision in August to allow Recovery Auditors to restart a limited number of reviews was a positive step, but we do not anticipate seeing revenues from this activity until next year.”
Student Lending revenues declined 35.3% during the third quarter to $28.1 million, from $43.4 million in the prior year period. Student Loan Placement Volume (defined below) during the quarter totaled $1.7 billion, which was down $0.2 billion from prior quarter.
Healthcare revenues declined during the third quarter of 2014 to $5.2 million from $28.3 million in the prior year period. Net Claim Recovery Volume (defined below) during the quarter was $46.1 million, compared to $251.3 million in the prior year period. Other revenues increased during the third quarter to $6.4 million from $5.1 million in the prior year period.
“Although we expect to see traction in our commercial healthcare business in coming quarters and believe the long-term trajectory of our overall business strategy remains intact, our near-term results will be challenged by RAC contract delays and fees changes in our student lending business. We now expect our 2014 full year revenue to be in the range of $195 to $200 million,” concluded Im.
Student Loan Placement Volume refers to the dollar volume of defaulted student loans first placed with us during the specified period by public and private clients for recovery. Placement Volume allows us to measure and track trends in the amount of inventory our clients in the student lending market are placing with us during any period. The revenue associated with the recovery of a portion of these loans may be recognized in subsequent accounting periods, which assists management in estimating future revenues and in allocating resources necessary to address current Placement Volumes.
Net Claim Recovery Volume refers to the dollar volume of improper Medicare claims that we have recovered for CMS during the applicable period net of any amount that we have reserved to cover appeals by healthcare providers. We are paid recovery fees as a percentage of this recovered claim volume. We calculate this metric by dividing our claim recovery revenue by our Claim Recovery Fee Rate (the weighted-average percentage of our fees compared to amounts recovered by CMS). This metric shows trends in the volume of improper payments within our region and allows management to measure our success in finding these improper payments, over time.
Performant Financial Corporation is a leading provider of technology-enabled recovery and related analytics services. The Company’s services help identify and recover delinquent or defaulted assets and improper payments for various government, healthcare and financial services markets in the United States. The Company was founded in 1976 and is headquartered in Livermore, California.