Performant Healthcare (PHLT) 10-Q10 Nov 142014 Q3 Quarterly reportFinancial data

Company Profile

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2014	Nov. 07, 2014
Document Documentand Entity Information [Abstract]	'	'
Entity Registrant Name	'Performant Financial Corporation	'
Entity Central Index Key	'0001550695	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Accelerated Filer	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-14	'
Document Fiscal Year Focus	'2014	'
Trading Symbol	'PFMT	'
Document Fiscal Period Focus (Q1,Q2,Q3,FY)	'Q3	'
Amendment Flag	'false	'
Entity Common Stock, Shares Outstanding	'	49,323,567

Consolidated_Balance_Sheets

Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:	'	'
Cash and cash equivalents	$84,970	$81,909
Trade accounts receivable, net of allowance for doubtful accounts of $32 and $32, respectively and estimated allowance for appeals of $0 and $1,160, respectively	16,654	19,649
Deferred income taxes	7,186	6,847
Prepaid expenses and other current assets	12,262	4,400
Income tax receivable	3,056	0
Debt issuance costs, current portion	1,004	1,055
Total current assets	125,132	113,860
Property, equipment, and leasehold improvements, net	26,681	26,247
Identifiable intangible assets, net	29,715	32,513
Goodwill	81,572	81,572
Debt issuance costs, net	2,045	2,789
Other assets	233	279
Total assets	265,378	257,260
Current liabilities:	'	'
Current maturities of notes payable	8,939	10,763
Accrued salaries and benefits	6,883	11,826
Accounts payable	2,442	2,383
Other current liabilities	5,167	5,311
Income taxes payable	0	103
Estimated liability for appeals	17,216	15,283
Net payable to client	13,987	0
Total current liabilities	54,634	45,669
Notes payable, net of current portion	105,311	122,541
Deferred income taxes	10,976	12,612
Other liabilities	2,139	2,204
Total liabilities	173,060	183,026
Commitments and contingencies	'	'
Stockholdersâ€™ equity:	'	'
Common stock, $0.0001 par value. Authorized, 500,000 shares at September 30, 2014 and December 31, 2013; issued and outstanding 49,324 and 48,316 shares at September 30, 2014 and December 31, 2013, respectively	5	5
Additional paid-in capital	56,096	49,791
Retained earnings	36,217	24,438
Total stockholdersâ€™ equity	92,318	74,234
Total liabilities and stockholdersâ€™ equity	$265,378	$257,260

Consolidated_Balance_Sheets_Pa

Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]	'	'
Allowance for doubtful accounts	$32	$32
Estimated allowance for appeals	$0	$1,160
Common Stock, par value (in dollars per share)	$0.00	$0.00
Common Stock, authorized shares (in shares)	500,000	500,000
Common Stock, issued shares (in shares)	49,324	48,316
Common Stock, outstanding shares (in shares)	49,324	48,316

Consolidated_Statements_of_Ope

Consolidated Statements of Operations (USD $)	3 Months Ended		9 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]	'	'	'	'
Revenues	$39,640	$76,808	$155,683	$195,326
Operating expenses:	'	'	'	'
Salaries and benefits	22,180	25,060	71,236	72,942
Other operating expenses	15,658	23,563	56,304	65,314
Total operating expenses	37,838	48,623	127,540	138,256
Income from operations	1,802	28,185	28,143	57,070
Interest expense	-2,456	-2,863	-7,765	-8,752
Income (loss) before provision for income taxes	-654	25,322	20,378	48,318
Provision for income taxes	-175	9,868	8,599	19,848
Net income (loss)	($479)	$15,454	$11,779	$28,470
Net income (loss) per share (in dollars per share)	'	'	'	'
Basic	($0.01)	$0.32	$0.24	$0.60
Diluted	($0.01)	$0.31	$0.24	$0.58
Weighted average shares (in shares)	'	'	'	'
Basic	49,004	48,050	48,641	47,247
Diluted	49,004	49,556	49,758	49,315

Consolidated_Statement_of_Chan

Consolidated Statement of Changes in Stockholders' Equity (USD $)	Total	Common Stock	Additional Paid-In Capital	Retained Earnings
In Thousands, except Share data	Total	Common Stock	Additional Paid-In Capital	Retained Earnings
Balance, value at Dec. 31, 2013	$74,234	$5	$49,791	$24,438
Balance, shares at Dec. 31, 2013	'	48,316,000	'	'
Exercise of stock options (in shares)	'	1,008,000	'	'
Exercise of stock options	606	'	606	'
Stock-based compensation expense	2,621	'	2,621	'
Income tax benefit from employee stock options	3,078	'	3,078	'
Net income	11,779	'	'	11,779
Balance, value at Sep. 30, 2014	$92,318	$5	$56,096	$36,217
Balance, shares at Sep. 30, 2014	'	49,324,000	'	'

Consolidated_Statements_of_Cas

Consolidated Statements of Cash Flows (USD $)	9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:	'	'
Net income	$11,779	$28,470
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Loss on disposal of asset	29	1
Depreciation and amortization	9,058	7,840
Deferred income taxes	-1,975	-1,144
Stock-based compensation	2,621	2,196
Interest expense from debt issuance costs and amortization of discount note payable	887	939
Changes in operating assets and liabilities:	'	'
Trade accounts receivable	2,995	-7,549
Prepaid expenses and other current assets	-7,862	120
Income tax receivable	-3,056	0
Other assets	46	117
Accrued salaries and benefits	-4,943	1,249
Accounts payable	59	396
Other current liabilities	-144	-1,791
Income taxes payable	-103	5,799
Deferred revenue	0	-2,187
Estimated liability for appeals	1,933	8,319
Net payable to client	13,987	0
Other liabilities	594	-137
Net cash provided by operating activities	25,905	42,638
Cash flows from investing activities:	'	'
Purchase of property, equipment, and leasehold improvements	-6,724	-8,697
Net cash used in investing activities	-6,724	-8,697
Cash flows from financing activities:	'	'
Repayment of notes payable	-19,054	-11,774
Proceeds from exercise of stock options	606	1,653
Income tax benefit from employee stock options	3,078	8,641
Payment of purchase obligation	-750	-750
Net cash used in financing activities	-16,120	-2,230
Net increase in cash and cash equivalents	3,061	31,711
Cash and cash equivalents at beginning of period	81,909	37,843
Cash and cash equivalents at end of period	84,970	69,554
Supplemental disclosures of cash flow information:	'	'
Cash paid for income taxes	10,331	6,552
Cash paid for interest	$6,863	$7,796

Organization_and_Description_o

Organization and Description of Business	9 Months Ended
	Sep. 30, 2014
Accounting Policies [Abstract]	'
Organization and Description of Business	'
	Organization and Description of Business


	(a)	Basis of Presentation and Organization
	The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our and our subsidiaries’ financial position at September 30, 2014, the results of our operations for the three and nine months ended September 30, 2014 and 2013 and cash flows for the nine months ended September 30, 2014 and 2013. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the years ended December 31, 2013, 2012 and 2011.
	The Company is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Company clients typically operate in complex and regulated environments and outsource their recovery needs in order to reduce losses on billions of dollars of defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis, where we handle many or all aspects of the clients’ recovery processes.
	The Company's consolidated financial statements include the operations of Performant Financial Corporation (PFC), its wholly owned subsidiary Performant Business Services, Inc., and its wholly owned subsidiaries Performant Recovery, Inc. (Recovery) and Performant Technologies, Inc. PFC is a Delaware corporation headquartered in California and was formed in 2003. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. Performant Technologies, Inc. is a California corporation that was formed in 2004. All significant intercompany balances and transactions have been eliminated in consolidation.
	The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer.
	The preparation of the consolidated financial statements in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, intangible assets, goodwill, estimated liability for appeals, accrued expenses, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates.


	(b)	Revenues, Accounts Receivable, and Estimated Liability for Appeals
	Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. Under the Company’s Medicare Recovery Audit Contractor, or RAC, contract with Centers for Medicare and Medicaid Services, or CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or offset. Providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. The Company accrues an estimated liability for appeals based on the amount of commissions received which are subject to appeal and which the Company estimates are probable of being returned to providers following successful appeal. At September 30, 2014, a total of $17.2 million was presented as an allowance against revenue, representing the Company’s estimate of claims that may be overturned. Of this amount, $0.0 million was related to amounts in accounts receivable and $17.2 million was related to commissions which had already been received. The $17.2 million balance at September 30, 2014, and the $15.3 million balance as of December 31, 2013, represents the Company’s best estimate of the probable amount of losses related to appeals of claims for which commissions were previously collected. In addition to the $17.2 million amount accrued at September 30, 2014, the Company estimates that it is reasonably possible that it could be required to pay an additional amount up to approximately $5.4 million as a result of potentially successful appeals. To the extent that required payments by the Company exceed the amount accrued, revenues in the applicable period would be reduced by the amount of the excess.
	(c) Net Payable to Client
	The Company nets outstanding accounts receivable invoices from an audit & recovery contract against payables for overturned audits. The overturned audits are netted against current fees due on the invoice to the client when they are processed by the client’s system. The “Net payable to client” balance of $14.0 million represents the excess of payables of $14.2 million for overturned audits offset by outstanding accounts receivable of $0.2 million at September 30, 2014. At December 31, 2013, the net of the outstanding accounts receivable invoices of $12.8 million was offset against a payable for overturned audits of $5.9 million for a net receivable of $6.9 million, presented in Accounts receivable. The Company expects that the net payable-to-client balance will be paid to the client within the next twelve months.

	(d) Prepaid Expenses and Other Current Assets
	At September 30, 2014, Prepaid expenses and other current assets includes $5.3 million of amounts estimated to become due from subcontractors. The Company employs subcontractors to audit claims as part of an audit & recovery contract, and to the extent that audits by these subcontractors are overturned on appeal, the fees associated with such claims are contractually refundable to the Company. At September 30, 2014, the receivable associated with estimated future overturns of subcontractor audits was $5.3 million. In addition, at September 30, 2014, Prepaid expenses and other current assets includes a net receivable of $3.4 million for subcontractor fees for already overturned audits refundable to the Company once the Company refunds its fees to the client as prime contractor. By comparison, at December 31, 2013, there was a net subcontractor payable under this contract of $3.7 million that was offset by a subcontractor receivable for estimated future overturns of subcontractor audits of $5.2 million, with the net asset of $1.5 million included in Other liabilities.


	(e)	Recent Accounting Pronouncements

	In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

Property_Equipment_and_Leaseho

Property, Equipment, and Leasehold Improvements	9 Months Ended
	Sep. 30, 2014
Property, Plant and Equipment [Abstract]	'
Property, Equipment, and Leasehold Improvements	'
	Property, Equipment, and Leasehold Improvements
	Property, equipment, and leasehold improvements consist of the following at September 30, 2014 and December 31, 2013 (in thousands):


		September 30,			December 31,
		2014			2013
	Land	$	1,767		$	1,767

	Building and leasehold improvements	5,943			5,773

	Furniture and equipment	5,113			4,932

	Computer hardware and software	56,958			52,021

		69,781			64,493

	Less accumulated depreciation and amortization	(43,100		)	(38,246		)
	Property, equipment and leasehold improvements, net	$	26,681		$	26,247

	Depreciation expense of property, equipment and leasehold improvements was $2.1 million and $1.8 million for the three months ended September 30, 2014 and 2013, respectively, and $6.2 million and $5.1 million for the nine months ended September 30, 2014 and 2013, respectively.

Credit_Agreement

Credit Agreement	9 Months Ended
	Sep. 30, 2014
Debt Disclosure [Abstract]	'
Credit Agreement	'
	Credit Agreement
	On March 19, 2012, the Company recapitalized by entering into a credit agreement (the Agreement) consisting of a Term A Loan of $57.0 million, a Term B Loan of $79.5 million, and a revolving credit facility of $11.0 million. On June 28, 2012, the Agreement was amended to increase the Term B Loan to $99.0 million. On November 4, 2014, the Agreement was further amended to, among other things, modify a number of existing covenants and add new covenants requiring the Company to maintain a minimum cash balance, comply with an interest coverage ratio and achieve minimum EBITDA levels. See Footnote 8. Subsequent Events, for additional information regarding the November 4, 2014 amendment. Scheduled payments under the Agreement for the next five years and thereafter are as follows (in thousands):



	Year Ending December 31,	Amount
	Remainder of 2014	$	2,455

	2015	9,820

	2016	9,820

	2017	9,119

	2018	83,036

	Thereafter	—

	Total	$	114,250

	The Term A Loan is charged interest either at Prime (subject to a 2.50% floor) +4.25% or LIBOR (subject to a 1.50% floor) +5.25%, which was 6.75% at September 30, 2014. The Term A loan requires quarterly payments of $2.2 million, with the remaining outstanding principal balance due March 19, 2017. As of September 30, 2014, the Term A loan ending balance, including the current portion was $28.4 million.
	The Term B loan is charged interest at Prime +4.75% (subject to a 2.50% floor) or LIBOR (subject to a 1.50% floor) +5.75% which was 7.25% at September 30, 2014. The Term B loan requires quarterly payments of $0.2 million, with the outstanding principal balance due March 19, 2018. As of September 30, 2014, the Term B loan ending balance, including the current portion was $85.9 million.
	The Company has a line of credit under the Agreement which allows for borrowings of up to $11.0 million. Borrowings accrue interest at Prime +4.25% or LIBOR +5.25%, which was 6.75% as of September 30, 2014. Both the Prime and the LIBOR alternatives are subject to minimum rate floors. In addition, a facility fee of 0.5% is assessed on the commitment amount. There were no outstanding borrowings under this line of credit at September 30, 2014, other than letters of credit outstanding in the amount of $1.6 million, leaving remaining borrowing capacity under the line of credit of $9.4 million at September 30, 2014. The line of credit expires on March 19, 2017.
	The Agreement contains a prepayment provision which requires the Company to perform an annual excess cash flow computation based on earnings before interest, taxes, depreciation and amortization compared to changes in working capital. Based on the results of this computation, in May 2014, the Company made a payment of $11.5 million to the lenders.
	The Agreement contains certain restrictive financial covenants, which require, among other things, that we meet a minimum fixed charge coverage ratio of 1.20, a maximum total debt to EBITDA ratio of 3.25. Additionally, these covenants restrict the Company and its subsidiaries’ ability to incur certain types or amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of its business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into certain restrictive agreements, or engage in certain transactions with affiliates. We were in compliance with all such covenants at September 30, 2014.

Commitments_and_Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies	'
	Commitments and Contingencies
	We have entered into various non-cancelable operating lease agreements for certain of our office facilities and equipment with original lease periods expiring between 2014 and 2021. Certain of these arrangements have free rent periods and /or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.
	Future minimum rental commitments under non-cancelable leases as of September 30, 2014 are as follows (in thousands):



	Year Ending December 31,	Amount
	Remainder of 2014	$	574

	2015	2,278

	2016	1,945

	2017	1,477

	2018	660

	Thereafter	1,416

	Total	$	8,350

	Operating lease expense was $0.8 million and $0.7 million for the three months ended September 30, 2014 and 2013, respectively, and was $2.2 million and $1.9 million for the nine months ended September 30, 2014 and 2013, respectively.

Stockbased_Compensation

Stock-based Compensation	9 Months Ended
	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'
Stock-based Compensation	'
	Stock-based Compensation
	(a) Stock Options
	Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $0.8 million and $0.8 million for the three months ended September 30, 2014 and 2013, respectively, and $2.6 million and $2.2 million for the nine months ended September 30, 2014 and 2013, respectively.
	The following table shows stock option activity for the nine months ended September 30, 2014:


		Outstanding		Weighted		Weighted	Aggregate
		Options		average		average	Intrinsic Value
				exercise price		remaining	(in thousands)
				per share		contractual life
						(Years)
	Outstanding at December 31, 2013	5,212,821		$	6.03	6.62	$	23,466

	Granted	254,000		9.69

	Forfeited	(239,093	)	10.45

	Exercised	(1,007,856	)	0.61

	Outstanding at September 30, 2014	4,219,872		$	7.29	6.5	$	10,013

	Vested, exercisable, and expected to vest(1) at September 30, 2014	4,133,236		$	7.24	6.46	$	9,986

	Exercisable at September 30, 2014	2,456,023		$	5.24	5.35	$	9,629



	-1	Options expected to vest reflect an estimated forfeiture rate.

	The Company recognizes share-based compensation costs as expense on a straight-line basis over the option vesting period, which generally is four to five years.
	(b) Restricted Stock Units
	The following table summarizes restricted stock unit activity for the nine months ended September 30, 2014:


		Number of Awards		Weighted
				average
				grant date fair value
				per share
	Outstanding at December 31, 2013	5,263		$	10.59

	Granted	481,545		9.27

	Outstanding at September 30, 2014	486,808		$	9.28

	Expected to vest at September 30, 2014	462,468		$	9.28

	Restricted stock units granted under the Performant Financial Corporation 2012 Stock Incentive Plan generally vest over periods ranging from one to four years.

Income_Taxes

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2014
Income Tax Disclosure [Abstract]	'
Income Taxes	'
	Income Taxes
	Our effective income tax rate changed to 42.2% for the nine months ended September 30, 2014 from 41.1% for the nine months ended September 30, 2013. The increase in the effective tax rate is primarily due to the decrease in earnings for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013 and the resulting impact of permanent difference on the effective tax rate.

	We file income tax returns with the U.S. federal government and various state jurisdictions. We operate in a number of state and local jurisdictions, most of which have never audited our records. Accordingly, we are subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. For tax years before 2011, the Company is no longer subject to Federal and certain state tax examinations. For tax years before 2010, the Company is no longer subject to certain other state tax examinations. We are currently being examined by the Franchise Tax Board of California for tax years 2011 and 2012.

Earnings_per_Share

Earnings per Share	9 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Earnings per Share	'
	Earnings per Share
	For the three and nine months ended September 30, 2014 and 2013, basic income per share is calculated by dividing net income by the sum of the weighted average number of shares of Common Stock outstanding during the period. Diluted income per share is calculated by dividing net income by the weighted average number of shares of Common Stock and dilutive common share equivalents outstanding during the period. Common share equivalents consist of stock options and restricted stock units. When there is a loss in the period, dilutive common share equivalents are excluded from the calculation of diluted earnings per share, as their effect would be anti-dilutive. For example, for the three months ended September 30, 2014, dilutive common share equivalents have been excluded, and diluted weighted average shares outstanding are the same as basic average shares outstanding. The Company excludes options from the calculation of diluted earnings per share when the combined exercise price, unamortized fair value and excess tax benefits of the options exceed the average market price of the Company's common stock because their effect would be anti-dilutive. For the nine months ended September 30, 2014, the Company excluded 2,834,079 options from the calculation of diluted earnings per share because their effect would be anti-dilutive. For the three and nine months ended September 30, 2013, the Company excluded 2,623,314 options and 2,574,709 options from the calculation of diluted earnings per share because their effect would be anti-dilutive.
	The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands):



		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2014	2013	2014	2013
	Weighted average shares outstanding – basic	49,004	48,050	48,641	47,247

	Dilutive effect of stock options	—	1,506	1,117	2,068

	Weighted average shares outstanding – diluted	49,004	49,556	49,758	49,315

Subsequent_Events

Subsequent Events	9 Months Ended
	Sep. 30, 2014
Subsequent Events [Abstract]	'
Subsequent Events	'
	Subsequent Events
	On November 4, 2014, the Company entered into Amendment No. 2 to its Credit Agreement (Second Amendment) in which certain financial covenants were amended and additional financial covenants were added. Under the Second Amendment, the total debt to EBITDA ratio, which required the Company to maintain a ratio of 3.25 to1.0 as of September 30, 2014 was revised as follows:

	•	for the computation periods ending December 31, 2014, March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015, the Company must maintain a total debt to EBITDA ratio of 5.00 to1.0


	•	for the computation periods ending March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, the Company must maintain a total debt to EBITDA ratio of 4.75 to1.0; and


	•	for each computation period ending March 31, 2017 and thereafter, the Company must maintain a total debt to EBITDA ratio of 3.25 to1.0

	In addition, the fixed charge coverage ratio of 1.20 to1.0, which was in effect for every computation period under the Credit Agreement as of September 30, 2014, has been revised under the Second Amendment to apply only to the computation periods ending September 30, 2014, March 31, 2017, and each computation period thereafter.
	The Second Amendment also added an interest coverage ratio, defined as the ratio of EBITDA compared to interest expense paid in cash for the computation period. Under this new financial covenant, the Company is required to maintain:

	•	an interest coverage ratio of not to be less than 2.25 to1.0 for the computation periods ending December 31, 2014, March 31, 2015, June 30,2015, September 30, 2015, and December 31, 2015; and


	•	an interest coverage ratio not to be less than of 2.50 to1.0 for the computation period ending March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016.

	In addition, among other things, under the Second Amendment, the Company is now required to maintain minimum adjusted cash balances of $35.0 million from November 4, 2014 through December 31, 2015, and minimum adjusted cash balances of $30.0 million from January 1, 2016 through December 31, 2016. Further, under the Second Amendment, the Company must maintain EBITDA for any trailing twelve month period of not less than $20.0 million beginning with the month ending November 30, 2014 through the month ending December 31, 2016. Also, pursuant to the terms of the Second Amendment, the lenders are not required to make new loans or issue new letters of credit under the Company's line of credit when the total debt to EBITDA ratio exceeds 3.25 to 1.0. Lastly, under the Second Amendment, capital expenditures of the Company in the years ending December 31, 2014, December 31, 2015, and December 31, 2016, are not permitted to exceed $12.5 million.
	Interest charged under the Credit Agreement as revised by the Second Amendment is a function of the total debt to EBITDA ratio, adjusted quarterly. When the total debt to EBITDA ratio is greater than 4.0 to1.00, the Term A loan is charged interest either at Prime +4.75% or LIBOR + 5.75%, while the Term B loan is charged interest either at Prime + 5.25% or LIBOR + 6.25%. When the total debt to EBITDA ratio is equal to or less than 4.0 to1.00, the Term A loan is charged interest either at Prime + 4.25% or LIBOR + 5.25%, while the Term B loan is charged interest either at Prime +4.75% or LIBOR + 5.75%.
	Fees for the Second Amendment of $518,000 were paid to the agent and lenders on November 4, 2014.

Organization_and_Description_o1

Organization and Description of Business (Policies)	9 Months Ended
Organization and Description of Business (Policies)	Sep. 30, 2014
Accounting Policies [Abstract]	'
Basis of Presentation and Organization	'
	Basis of Presentation and Organization
	The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our and our subsidiaries’ financial position at September 30, 2014, the results of our operations for the three and nine months ended September 30, 2014 and 2013 and cash flows for the nine months ended September 30, 2014 and 2013. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the years ended December 31, 2013, 2012 and 2011.
	The Company is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Company clients typically operate in complex and regulated environments and outsource their recovery needs in order to reduce losses on billions of dollars of defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis, where we handle many or all aspects of the clients’ recovery processes.
	The Company's consolidated financial statements include the operations of Performant Financial Corporation (PFC), its wholly owned subsidiary Performant Business Services, Inc., and its wholly owned subsidiaries Performant Recovery, Inc. (Recovery) and Performant Technologies, Inc. PFC is a Delaware corporation headquartered in California and was formed in 2003. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. Performant Technologies, Inc. is a California corporation that was formed in 2004. All significant intercompany balances and transactions have been eliminated in consolidation.
	The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer.
	The preparation of the consolidated financial statements in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, intangible assets, goodwill, estimated liability for appeals, accrued expenses, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates.
Revenues, Accounts Receivable, and Estimated Liability for Appeals	'
	Revenues, Accounts Receivable, and Estimated Liability for Appeals
	Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. Under the Company’s Medicare Recovery Audit Contractor, or RAC, contract with Centers for Medicare and Medicaid Services, or CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or offset. Providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. The Company accrues an estimated liability for appeals based on the amount of commissions received which are subject to appeal and which the Company estimates are probable of being returned to providers following successful appeal. At September 30, 2014, a total of $17.2 million was presented as an allowance against revenue, representing the Company’s estimate of claims that may be overturned. Of this amount, $0.0 million was related to amounts in accounts receivable and $17.2 million was related to commissions which had already been received. The $17.2 million balance at September 30, 2014, and the $15.3 million balance as of December 31, 2013, represents the Company’s best estimate of the probable amount of losses related to appeals of claims for which commissions were previously collected. In addition to the $17.2 million amount accrued at September 30, 2014, the Company estimates that it is reasonably possible that it could be required to pay an additional amount up to approximately $5.4 million as a result of potentially successful appeals. To the extent that required payments by the Company exceed the amount accrued, revenues in the applicable period would be reduced by the amount of the excess.
Recent Accounting Pronouncements	'
	Recent Accounting Pronouncements

	In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09) "Revenue from Contracts with Customers." ASU 2014-09 supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605)”, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. We are currently in the process of evaluating the impact of the adoption of ASU 2014-09 on our consolidated financial statements.

Property_Equipment_and_Leaseho1

Property, Equipment, and Leasehold Improvements (Tables)	9 Months Ended
	Sep. 30, 2014
Property, Plant and Equipment [Abstract]	'
Property, Equipment, and Leasehold Improvements	'
	Property, equipment, and leasehold improvements consist of the following at September 30, 2014 and December 31, 2013 (in thousands):


		September 30,			December 31,
		2014			2013
	Land	$	1,767		$	1,767

	Building and leasehold improvements	5,943			5,773

	Furniture and equipment	5,113			4,932

	Computer hardware and software	56,958			52,021

		69,781			64,493

	Less accumulated depreciation and amortization	(43,100		)	(38,246		)
	Property, equipment and leasehold improvements, net	$	26,681		$	26,247

Credit_Agreement_Tables

Credit Agreement (Tables)	9 Months Ended
	Sep. 30, 2014
Debt Disclosure [Abstract]	'
Payments Under Credit Agreement	'
	Scheduled payments under the Agreement for the next five years and thereafter are as follows (in thousands):



	Year Ending December 31,	Amount
	Remainder of 2014	$	2,455

	2015	9,820

	2016	9,820

	2017	9,119

	2018	83,036

	Thereafter	—

	Total	$	114,250

Commitments_and_Contingencies_

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Future Minimum Rental Commitments Under Non-Cancelable Leases	'
	Future minimum rental commitments under non-cancelable leases as of September 30, 2014 are as follows (in thousands):



	Year Ending December 31,	Amount
	Remainder of 2014	$	574

	2015	2,278

	2016	1,945

	2017	1,477

	2018	660

	Thereafter	1,416

	Total	$	8,350

Stockbased_Compensation_Tables

Stock-based Compensation (Tables)	9 Months Ended
	Sep. 30, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]	'
Stock Option Activity	'
	The following table shows stock option activity for the nine months ended September 30, 2014:


		Outstanding		Weighted		Weighted	Aggregate
		Options		average		average	Intrinsic Value
				exercise price		remaining	(in thousands)
				per share		contractual life
						(Years)
	Outstanding at December 31, 2013	5,212,821		$	6.03	6.62	$	23,466

	Granted	254,000		9.69

	Forfeited	(239,093	)	10.45

	Exercised	(1,007,856	)	0.61

	Outstanding at September 30, 2014	4,219,872		$	7.29	6.5	$	10,013

	Vested, exercisable, and expected to vest(1) at September 30, 2014	4,133,236		$	7.24	6.46	$	9,986

	Exercisable at September 30, 2014	2,456,023		$	5.24	5.35	$	9,629



	-1	Options expected to vest reflect an estimated forfeiture rate.
Restricted Stock Activity	'
	The following table summarizes restricted stock unit activity for the nine months ended September 30, 2014:


		Number of Awards		Weighted
				average
				grant date fair value
				per share
	Outstanding at December 31, 2013	5,263		$	10.59

	Granted	481,545		9.27

	Outstanding at September 30, 2014	486,808		$	9.28

	Expected to vest at September 30, 2014	462,468		$	9.28

Earnings_per_Share_Tables

Earnings per Share (Tables)	9 Months Ended
	Sep. 30, 2014
Earnings Per Share [Abstract]	'
Reconciliation of Basic to Diluted Weighted Average Shares	'
	The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands):



		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2014	2013	2014	2013
	Weighted average shares outstanding – basic	49,004	48,050	48,641	47,247

	Dilutive effect of stock options	—	1,506	1,117	2,068

	Weighted average shares outstanding – diluted	49,004	49,556	49,758	49,315

Organization_and_Description_o2

Organization and Description of Business - Additional Information (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Accounting Policies [Abstract]	'	'
Allowance against revenue	$17,200,000	'
Estimated allowance for appeals	0	1,160,000
Estimated liability for appeals	17,216,000	15,283,000
Estimated additional liability for appeals	5,400,000	'
Invoiced Receivable	200,000	12,800,000
Net receivable	'	6,900,000
Subcontractor receivables	5,300,000	'
Estimated provider-favor receivables	5,300,000	'
Customer refund liability, current	13,987,000	0
Customer refund liability, current, gross	14,200,000	5,900,000
Subcontractor fees for overturned audits	3,400,000	5,200,000
Subcontractor payables, gross	'	3,700,000
Subcontractor payable, net	'	$1,500,000

Property_Equipment_and_Leaseho2

Property, Equipment, and Leasehold Improvements (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]	'	'
Property, equipment and leasehold equipment, gross	$69,781	$64,493
Less accumulated depreciation and amortization	-43,100	-38,246
Property, equipment and leasehold improvements, net	26,681	26,247
Land	'	'
Property, Plant and Equipment [Line Items]	'	'
Property, equipment and leasehold equipment, gross	1,767	1,767
Building and leasehold improvements	'	'
Property, Plant and Equipment [Line Items]	'	'
Property, equipment and leasehold equipment, gross	5,943	5,773
Furniture and equipment	'	'
Property, Plant and Equipment [Line Items]	'	'
Property, equipment and leasehold equipment, gross	5,113	4,932
Computer hardware and software	'	'
Property, Plant and Equipment [Line Items]	'	'
Property, equipment and leasehold equipment, gross	$56,958	$52,021

Property_Equipment_and_Leaseho3

Property, Equipment, and Leasehold Improvements - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Property, Plant and Equipment [Abstract]	'	'	'	'
Depreciation and amortization expense of property, equipment and leasehold improvements	$2.10	$1.80	$6.20	$5.10

Credit_Agreement_Additional_In

Credit Agreement - Additional Information (Detail) (USD $)

9 Months Ended

Sep. 30, 2014

Mar. 19, 2012

Sep. 30, 2014

Jun. 28, 2012

Mar. 19, 2012

Sep. 30, 2014

31-May-14

Sep. 30, 2014

Term A Loan

Term B Loan

Revolving credit facility

Line of Credit

Prime Rate

London Interbank Offered Rate (LIBOR)

Minimum

Maximum

Term A Loan

Term B Loan

Line of Credit

Term A Loan

Term B Loan

Line of Credit

Line of Credit Facility [Line Items]

Recapitalized amount under credit agreement

$28,400,000

$57,000,000

$85,900,000

$79,500,000

$11,000,000

Amendment of agreement to increase Term B Loan

99,000,000

Interest rate terms

'Interest either at Prime (subject to a 2.50% floor) +4.25% or LIBOR (subject to a 1.50% floor) +5.25%, which was 6.75%

'Interest at Prime +4.75% (subject to a 2.50% floor) or LIBOR (subject to a 1.50% floor) +5.75%, which was 7.25%

'Interest at Prime + 4.25% or LIBOR + 5.25%, which was 6.75%

Floor rate (as a percent)

2.50%

1.50%

Basis spread on variable rate (as a percent)

4.25%

4.75%

4.25%

5.25%

5.75%

5.25%

Interest rate (as a percent)

6.75%

7.25%

6.75%

Quarterly payments of principal

2,200,000

200,000

Expiry date of line of credit

19-Mar-17

19-Mar-18

19-Mar-17

Borrowing under line of credit, maximum

11,000,000

Facility commitment fee (as a percent)

0.50%

Letter of credit outstanding

1,600,000

Remaining borrowing capacity under the line of credit

9,400,000

Prepayment of excess cash flow

$11,500,000

Fixed charge coverage ratio

1.2

Total debt to EBITDA ratio

3.25

Credit_Agreement_Payments_Unde

Credit Agreement Payments Under Credit Agreement (Detail) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified	Sep. 30, 2014
Debt Disclosure [Abstract]	'
Remainder of 2014	$2,455
2015	9,820
2016	9,820
2017	9,119
2018	83,036
Thereafter	0
Total	$114,250

Commitments_and_Contingencies_1

Commitments and Contingencies - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Commitment And Contingencies [Line Items]	'	'	'	'
Operating lease expense	$0.80	$0.70	$2.20	$1.90
Minimum	'	'	'	'
Commitment And Contingencies [Line Items]	'	'	'	'
Non-cancelable operating lease agreements expiration date	'	'	'2014	'
Maximum	'	'	'	'
Commitment And Contingencies [Line Items]	'	'	'	'
Non-cancelable operating lease agreements expiration date	'	'	'2021	'

Commitments_and_Contingencies_2

Commitments and Contingencies Future Minimum Rental Commitments Under Non-Cancelable Leases (Detail) (USD $)	Sep. 30, 2014
In Thousands, unless otherwise specified	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Remainder of 2014	$574
2015	2,278
2016	1,945
2017	1,477
2018	660
Thereafter	1,416
Total	$8,350

Stockbased_Compensation_Additi

Stock-based Compensation - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
In Millions, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Total stock-based compensation expense	$0.80	$0.80	$2.60	$2.20
Minimum	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Options vesting period (in years)	'	'	'4 years	'
Minimum \| Restricted Stock \| 2012 Equity Incentive Plan	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Options vesting period (in years)	'	'	'1 year	'
Maximum	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Options vesting period (in years)	'	'	'5 years	'
Maximum \| Restricted Stock \| 2012 Equity Incentive Plan	'	'	'	'
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]	'	'	'	'
Options vesting period (in years)	'	'	'4 years	'

Stockbased_Compensation_Stock_

Stock-based Compensation Stock Option Activity (Detail) (Options, USD $)	9 Months Ended		12 Months Ended
In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014		Dec. 31, 2013
Options	'		'
Outstanding Options (in shares)	'		'
Balance at beginning of period	5,212,821		'
Granted	254,000		'
Forfeited	-239,093		'
Exercised	-1,007,856		'
Balance at end of period	4,219,872		5,212,821
Vested, exercisable, and expected to vest	4,133,236	[1]	'
Exercisable	2,456,023		'
Weighted average exercise price per share (in dollars per share)	'		'
Balance at beginning of period	$6.03		'
Granted	$9.69		'
Forfeited	$10.45		'
Exercised	$0.61		'
Balance at end of period	$7.29		$6.03
Vested or expected to vest	$7.24	[1]	'
Exercisable	$5.24		'
Weighted average remaining contractual life (in years)	'		'
Balance at beginning of period	'6 years 6 months		'6 years 7 months 13 days
Balance at end of period	'6 years 6 months		'6 years 7 months 13 days
Vested, exercisable, and expected to vest	'6 years 5 months 16 days	[1]	'
Exercisable	'5 years 4 months 6 days		'
Aggregate Intrinsic Value	'		'
Balance at beginning of period	$23,466		'
Balance at end of period	10,013		23,466
Vested, exercisable, and expected to vest	9,986	[1]	'
Exercisable	$9,629		'

[1]	Options expected to vest reflect an estimated forfeiture rate.

Stockbased_Compensation_Restri

Stock-based Compensation Restricted Stock Activity (Details) (Restricted Stock, USD $)	9 Months Ended
	Sep. 30, 2014
Restricted Stock	'
Number of Awards (in shares)	'
Outstanding at beginning of period	5,263
Granted	481,545
Outstanding at end of period	486,808
Expected to vest	462,468
Weighted average grant date fair value per share (in dollars per share)	'
Outstanding beginning of period	$10.59
Granted	$9.27
Outstanding end of period	$9.28
Expected to vest end of period	$9.28

Income_Taxes_Additional_Inform

Income Taxes - Additional Information (Detail)	9 Months Ended
Income Taxes - Additional Information (Detail)	Sep. 30, 2014	Sep. 30, 2013
Income Tax Disclosure [Abstract]	'	'
Effective income tax rate (as a percent)	42.20%	41.10%

Earnings_per_Share_Additional_

Earnings per Share - Additional Information (Detail)	3 Months Ended	9 Months Ended
Earnings per Share - Additional Information (Detail)	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]	'	'	'
Options to purchase shares (in shares)	2,623,314	2,834,079	2,574,709

Reconciliation_of_Basic_to_Dil

Reconciliation of Basic to Diluted Weighted Average Shares (Detail)	3 Months Ended		9 Months Ended
In Thousands, unless otherwise specified	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]	'	'	'	'
Weighted average shares outstanding â€“ basic	49,004	48,050	48,641	47,247
Dilutive effect of stock options	0	1,506	1,117	2,068
Weighted average shares outstanding â€“ diluted	49,004	49,556	49,758	49,315

Subsequent_Events_Subsequent_E

Subsequent Events Subsequent Events (Details) (Second Amendment, USD $)

0 Months Ended

36 Months Ended

3 Months Ended

12 Months Ended

15 Months Ended

27 Months Ended

Sep. 30, 2014

Nov. 04, 2014

Dec. 31, 2016

Mar. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Dec. 31, 2016

Nov. 04, 2014

Subsequent Event

Scenario, Forecast

Maximum

Minimum

Term Loan A

Term B Loan

Term Loan A

Term B Loan

Prime Rate

London Interbank Offered Rate (LIBOR)

Prime Rate

London Interbank Offered Rate (LIBOR)

Prime Rate

London Interbank Offered Rate (LIBOR)

Prime Rate

London Interbank Offered Rate (LIBOR)

Subsequent Event

Subsequent Event [Line Items]

Total debt to EBITDA ratio

3.25

4.75

Interest coverage ratio

1.2

2.5

2.25

Minimum cash balances

$30,000,000

$35,000,000

$30,000,000

EBITDA

20,000,000

Capital expenditures

12,500,000

Interest rate (as a percent)

4.75%

5.75%

5.25%

6.25%

4.25%

5.25%

4.75%

5.75%

Debt issuance cost

$518,000