Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 13, 2019 | |
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 | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 53,148,566 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 4,364 | $ 5,462 |
Restricted cash | 1,659 | 1,813 |
Trade accounts receivable, net of allowance for doubtful accounts of $130 and $22, respectively | 17,877 | 20,879 |
Prepaid expenses and other current assets | 3,792 | 3,420 |
Income tax receivable | 14 | 179 |
Total current assets | 27,706 | 31,753 |
Property, equipment, and leasehold improvements, net | 21,488 | 22,255 |
Identifiable intangible assets, net | 1,101 | 1,160 |
Goodwill | 81,572 | 81,572 |
ROU assets | 9,714 | 0 |
Other assets | 1,019 | 1,019 |
Total assets | 142,600 | 137,759 |
Current liabilities: | ||
Current maturities of notes payable, net of unamortized debt issuance costs of $144 and $126, respectively | 2,806 | 2,224 |
Accrued salaries and benefits | 7,364 | 5,759 |
Accounts payable | 1,989 | 1,402 |
Other current liabilities | 4,317 | 3,414 |
Deferred revenue | 658 | 1,078 |
Estimated liability for appeals | 255 | 210 |
Earnout payable | 410 | 0 |
Lease liabilities | 2,882 | 0 |
Total current liabilities | 20,681 | 14,087 |
Notes payable, net of current portion and unamortized debt issuance costs of $2,095 and $2,345, respectively | 40,755 | 41,105 |
Deferred income taxes | 53 | 22 |
Earnout payable | 1,802 | 1,936 |
Lease liabilities | 8,028 | 0 |
Other liabilities | 2,167 | 3,383 |
Total liabilities | 73,486 | 60,533 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at March 31, 2019 and December 31, 2018 respectively; issued and outstanding 53,146 and 52,999 shares at March 31, 2019 and December 31, 2018, respectively | 5 | 5 |
Additional paid-in capital | 77,747 | 77,370 |
(Accumulated deficit) | (8,638) | (149) |
Total stockholders’ equity | 69,114 | 77,226 |
Total liabilities and stockholders’ equity | $ 142,600 | $ 137,759 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 130 | $ 22 |
Debt issuance costs (current) | 144 | 126 |
Debt issuance costs notes payable (non current) | $ 2,095 | $ 2,345 |
Common Stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common Stock, authorized shares (shares) | 500,000,000 | 500,000,000 |
Common Stock, issued shares (shares) | 53,146,000 | 52,999,000 |
Common Stock, outstanding shares (shares) | 53,146,000 | 52,999,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 34,876 | $ 57,021 |
Operating expenses: | ||
Salaries and benefits | 29,116 | 21,781 |
Other operating expenses | 12,953 | 23,020 |
Total operating expenses | 42,069 | 44,801 |
(Loss) income from operations | (7,193) | 12,220 |
Interest expense | (1,136) | (1,270) |
Interest income | 11 | 6 |
(Loss) income before provision for income taxes | (8,318) | 10,956 |
Provision for income taxes | 171 | 2,501 |
Net (loss) income | $ (8,489) | $ 8,455 |
Net (loss) income per share | ||
Basic (USD per share) | $ (0.16) | $ 0.16 |
Diluted (USD per share) | $ (0.16) | $ 0.16 |
Weighted average shares | ||
Basic (shares) | 53,059 | 51,320 |
Diluted (shares) | 53,059 | 53,455 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net (loss) income | $ (8,489) | $ 8,455 |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | 0 | 1 |
Comprehensive (loss) income | $ (8,489) | $ 8,456 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (8,489) | $ 8,455 |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||
Release of net payable to client related to contract termination | 0 | (9,860) |
Release of estimated liability for appeals due to termination of contract | 0 | (17,932) |
Derecognition of subcontractor receivable for appeals due to termination of contract | 0 | 5,535 |
Derecognition of subcontractor receivable for overturned claims | 0 | 1,536 |
Provision for doubtful accounts for subcontractor receivable | 0 | 1,868 |
Depreciation and amortization | 2,312 | 2,576 |
Deferred income taxes | 31 | 283 |
Stock-based compensation | 499 | 639 |
Interest expense from debt issuance costs | 232 | 331 |
Earnout mark-to-market | 276 | 0 |
ROU assets amortization | 660 | 0 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 3,002 | (5,905) |
Prepaid expenses and other current assets | (372) | (82) |
Income tax receivable | 165 | 2,316 |
Other assets | 0 | 41 |
Accrued salaries and benefits | 1,605 | 1,417 |
Accounts payable | 587 | (80) |
Deferred revenue and other current liabilities | 483 | 1,571 |
Estimated liability for appeals | 45 | 0 |
Net payable to client | 0 | (2,940) |
Lease liabilities | (723) | 0 |
Other liabilities | 43 | 395 |
Net cash provided by (used in) operating activities | 356 | (9,836) |
Cash flows from investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (1,486) | (2,500) |
Net cash used in investing activities | (1,486) | (2,500) |
Cash flows from financing activities: | ||
Repayment of notes payable | 0 | (550) |
Taxes paid related to net share settlement of stock awards | (156) | (299) |
Proceeds from exercise of stock options | 34 | 116 |
Net cash used in financing activities | (122) | (733) |
Effect of foreign currency exchange rate changes on cash | 0 | 1 |
Net decrease in cash, cash equivalents and restricted cash | (1,252) | (13,068) |
Cash, cash equivalents and restricted cash at beginning of period | 7,275 | 23,519 |
Cash, cash equivalents and restricted cash at end of period | 6,023 | 10,451 |
Supplemental disclosures of cash flow information: | ||
Cash received for income taxes | (54) | (299) |
Cash paid for interest | 0 | 939 |
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | ||
Total cash, cash equivalents and restricted cash at end of period | $ 7,275 | $ 23,519 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2019 | |
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 accounting principles generally accepted in the United States of America, 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 March 31, 2019 , and the results of our operations and cash flows for the three months ended March 31, 2019 and 2018 and cash flows for the three months ended March 31, 2019 and 2018 . 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 year ended December 31, 2018. Performant Financial Corporation (the "Company" or "we") 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. Clients of the Company typically operate in complex and regulated environments and contract for their recovery needs in order to reduce losses on defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis; handling many or all aspects of the clients’ recovery processes. The Company's consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiaries Premiere Credit of North America, LLC (Premiere) and Performant Business Services, Inc., (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (Recovery), Performant Technologies, LLC., and Performant Europe Ltd. Performant is a Delaware corporation headquartered in California and was formed in 2003. Premiere is an Indiana limited liability company acquired by Performant on August 31, 2018. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PBS 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, earnout payable, other liabilities, deferred income taxes and income tax expense 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 The Company derives its revenues primarily from providing recovery services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: • Identification of the contract with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s contracts generally contain a single performance obligation, delivered over time as a series of services that are substantially the same and have the same pattern of transfer to the client, as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, the Company would allocate the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct service in the contract. The Company determines the standalone selling prices by taking into consideration the value of the services being provided, the client type and how similar services are priced in other contracts on a standalone basis. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s recovery service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. In certain contracts the Company can earn additional performance-based consideration determined based on its performance relative to the client’s other contractors providing similar services. Revenue from contingency fees earned upon recovery of funds is generally recognized as amounts are invoiced based on either the ‘as-invoiced’ practical expedient when such amounts reflect the value of the services completed to-date, or an output measure based on milestones which is used to measure progress of the satisfaction of its performance obligation. The Company estimates any performance-based variable consideration and recognizes such revenue over the performance period only if it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Under certain contracts, consideration can include periodic performance-based bonuses which can be awarded based on the Company’s performance under the specific contract. These performance-based awards are considered variable and may be constrained by the Company until there is not a risk of a material reversal. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund liability for each claim and recognizes revenue net of such estimate. The following table presents revenue disaggregated by category (in thousands) for the three months ended March 31, 2019 and 2018 : Three Months Ended 2019 2018 (in thousands) Student Lending $ 12,855 $ 19,105 Healthcare (1) 10,173 31,314 Other (2) 11,848 6,602 Total Revenues $ 34,876 $ 57,021 (1) Includes $27.8 million related to the termination of the 2009 CMS Region A contract for the three months ended March 31, 2018. (2) Represents outsourced call center services, tax and IRS. The Company generally either applies the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable allocation exception to contracts with performance obligations that have an average remaining duration of less than a year. 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 Secondary Payer (MSP) Commercial Payment Center (CPC) with Centers for Medicare and Medicaid Services (CMS), the Company recognizes revenues when insurance companies or other responsible parties remit payment to reimburse CMS for claims for which they are responsible, and the remittance has been applied in the CMS database. Under the Company’s Medicare Recovery Audit Contractor (RAC) contract with CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or has agreed to an offset against other claims by the provider. Under other healthcare contracts, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned, as it is a reasonable measure of the Company’s progress toward complete satisfaction of our performance obligation. Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of the healthcare client. Total estimated liability for appeals was $0.3 million and $0.2 million as of March 31, 2019 and December 31, 2018, respectively. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients following successful appeals of claims for which commissions were previously collected. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful account was $130 thousand and $22 thousand at March 31, 2019 and December 31, 2018, respectively. The Company determined that it does not have any costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are expensed as incurred. The Company has contract assets of $6.6 million and $3.0 million as of March 31, 2019 and December 31, 2018, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the three months ended March 31, 2019 and year ended December 31, 2018, but not invoiced at the reporting date. The increase in contract assets is primarily due to timing of invoices issued and increased volume of work. Contract assets are recorded to accounts receivable when the rights become unconditional and amounts are invoiced. Contract assets are included in trade accounts receivable in the consolidated balance sheets. The Company has contract liabilities of $0.7 million as of March 31, 2019 and $1.1 million as of December 31, 2018, which are included in deferred revenue in the consolidated balance sheets. The Company’s contract liability relates to an advance recovery commission payment received from a customer during the first quarter of 2018, for which the Company anticipates revenue to be recognized as services are delivered. (c) Prepaid Expenses and Other Current Assets At March 31, 2019 , prepaid expenses and other current assets were $3.8 million and included approximately $2.5 million related to prepaid software licenses and maintenance agreements and $0.5 million for prepaid insurance. (d) Impairment of Goodwill and Long-Lived Assets Goodwill and long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The balance of goodwill was $81.6 million as of March 31, 2019 and December 31, 2018. There was no impairment expense for goodwill or long-lived assets for the three months ended March 31, 2019. (e) Other Current Liabilities At March 31, 2019, other current liabilities included $2.4 million for services received for which we have not received an invoice, $0.9 million for accrued subcontractor fees, $0.8 million in accrued interest expense, and $0.2 million for estimated workers' compensation claims incurred but not reported. At December 31, 2018 other current liabilities included $2.7 million for services received for which we have not received an invoice, $0.4 million for accrued subcontractor fees, and $0.2 million for estimated workers' compensation claims incurred but not reported. (f) New Accounting Pronouncements Recently Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC Topic 840 Leases. The guidance is effective for our fiscal year beginning January 1, 2019 and should be applied using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements , which provide the option to apply the new leasing standard to all open leases as of the adoption date. The Company elected to adopt this pronouncement on January 1, 2019 using the optional transition method under ASU 2018-11 and elected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components, and to apply the short-term lease exception. As a result of implementing this guidance, the Company recognized $10.4 million of right of use (ROU) assets and $11.6 million of lease liabilities for its operating leases, including a reclassification of deferred rent of $1.2 million , on its consolidated balance sheet as of January 1, 2019. The adoption did not impact the consolidated statements of operations, nor will it have a notable impact on the Company’s liquidity. The standard will also have no impact on the Company’s debt-covenant compliance under its current agreement. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting under Topic 840. Under Topic 842, ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. We determine if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. As the implied discount rate in most of our leases is indeterminable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. |
Property, Equipment, and Leaseh
Property, Equipment, and Leasehold Improvements | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and December 31, 2018 (in thousands): March 31, December 31, Land $ 1,943 $ 1,943 Building and leasehold improvements 8,082 8,076 Furniture and equipment 6,480 6,248 Computer hardware and software 78,656 78,743 95,161 95,010 Less accumulated depreciation and amortization (73,673 ) (72,755 ) Property, equipment and leasehold improvements, net $ 21,488 $ 22,255 Depreciation expense of property, equipment and leasehold improvements was $2.3 million and $2.4 million for the three months ended March 31, 2019 and 2018 , respectively. |
Credit Agreement
Credit Agreement | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement On August 7, 2017, we, through our wholly-owned subsidiary Performant Business Services, Inc. (the "Borrower"), entered into a credit agreement with ECMC Group, Inc. (as amended, the “Credit Agreement”). Before the amendment described below, the Credit Agreement provided for a term loan facility in the initial amount of $44 million (the “Initial Term Loan”) and for up to $15 million of additional term loans (“Additional Term Loans”; and together with the Initial Term Loan, the “Loans”) which original Additional Term Loans were initially able to be drawn until the second anniversary of the funding of the Initial Term Loans, subject to the satisfaction of customary conditions. On August 11, 2017, the Initial Term Loan was advanced (the "Closing Date") and the proceeds were applied to repay all outstanding amounts under our prior credit agreement with Madison Capital Funding LLC as administrative agent ("the Prior Credit Agreement"). On August 31, 2018, we entered into Amendment No. 2 to the Credit Agreement to among other things (i) extend the maturity date of the Initial Term Loan and any Additional Term Loans by one year to August 2021, (ii) expand the Additional Term Loans commitment from $15 million to $25 million , (iii) extend the period during which Additional Term Loans can be borrowed by one year to August 2020, and (iv) relieve the Borrower from its obligation to comply with the financial covenants in the Credit Agreement during the six fiscal quarters following the Premiere acquisition. On October 15, 2018, the Company borrowed $4 million of the $25 million available as Additional Term Loans under the Credit Agreement. On March 21, 2019, we entered into Amendment No. 3 to the Credit Agreement to among other things relieve the Borrower from its obligation to comply with the financial covenants in the Credit Agreement until the quarter ending June 30, 2020. As of March 31, 2019, $45.8 million was outstanding under the Credit Agreement. We have the option to extend the maturity of the Loans for two additional one -year periods, subject to the satisfaction of customary conditions. The Loans bear interest at the one-month LIBOR rate (subject to a 1% per annum floor) plus a margin which may vary from 5.5% per annum to 10.0% per annum based on our total debt to EBITDA ratio. Our annual interest rate at March 31, 2019 was 8.0% and 8.0% at December 31, 2018. We are required to pay 5% of the original principal balance of the Loans annually in quarterly installments and to make mandatory prepayments of the Loans with a percentage of our excess cash flow which may vary between 75% and 0% depending on our total debt to EBITDA ratio and from the net cash proceeds of certain asset dispositions and debt not otherwise permitted under the Credit Agreement, in each case, subject to the lender's right to decline to receive such payments. The Loans may be voluntarily prepaid at any time, together with a prepayment premium of 1% for all voluntary prepayments prior to August 11, 2019. The Credit Agreement contains certain restrictive financial covenants which are not effective until the quarter ending June 30, 2020, at which point, we will be required to (1) achieve a minimum fixed charge coverage ratio of 1.0 to 1.0 through December 31, 2020 and 1.25 to 1.0 through June 30, 2022 if the maturity date of the Loans is extended until the fifth anniversary of the Closing Date and (2) maintain a maximum total debt to EBITDA ratio of 6.00 to 1.00 . The Credit Agreement also contains covenants that restrict the Company's 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. The Credit Agreement also contains various customary events of default, including with respect to change of control of the Company or its ownership of the Borrower. The obligations under the Credit Agreement are secured by substantially all of our United States domestic subsidiaries' assets and are guaranteed by the Company and its United States domestic subsidiaries, other than the Borrower. In consideration for, and concurrently with, the origination of the Initial Term Loan in accordance with the terms of the Credit Agreement, we issued a warrant to the lender to purchase up to an aggregate of 3,863,326 shares of the Company’s common stock (representing approximately up to 7.5% of our diluted common stock as calculated using the “treasury stock” method as defined under U.S. GAAP for the three month period ended June 30, 2017) with an exercise price of $1.92 per share (the "Exercise Price"). In connection with the October 15, 2018 Additional Term Loan borrowing of $4 million , we were required to, and did, issue a warrant to the lender to purchase an aggregate of 309,066 shares of the Company's common stock at the same Exercise Price of $1.92 per share. Upon any further borrowing of the Additional Term Loans, we will be required to issue additional warrants at the same Exercise Price to purchase up to an aggregate of 77,267 additional shares of common stock (which represents approximately 0.15% of our diluted common stock calculated using the “treasury stock” method as defined under U.S. GAAP for the fiscal quarter ended June 30, 2017) for each $ 1.0 million of such Additional Term Loans. Similarly, upon our election to extend the maturity of the loans for two additional one year periods, we will be required to issue additional warrants at the same Exercise Price to purchase up to an aggregate of 515,110 additional shares of common stock for the first year, and to purchase up to an aggregate of 772,665 additional shares of common stock for the second year (which represent approximately 1.0% and 1.5% of our diluted common stock for the first and second years, respectively, calculated using the “treasury stock” method as defined under U.S. GAAP for the fiscal quarter ended June 30, 2017). The Company has accounted for these warrants as equity instruments since the warrants are indexed to the Company’s common shares and meet the criteria for classification in shareholders’ equity. The relative fair value of the warrants on August 11, 2017 and October 15, 2018, were approximately $3.3 million and $0.2 million , respectively and were treated as a discount to the associated debt. These amounts are being amortized to interest expense under the effective interest method over the life of the Term Loan and Additional Term Loans, respectively, which is a period of 48 months . The Company estimated the value of the warrants using the Black-Scholes model. The key assumptions used to value the warrants are as follows: August 2017 Issuance October 2018 Issuance Exercise price $1.92 $1.92 Share price on date of issuance $1.85 $1.93 Volatility 50.0% 55.0% Risk-free interest rate 1.83% 3.01% Expected dividend yield —% —% Contractual term (in years) 5 5 In addition, at the closing of the Initial Term Loan, the Company paid transaction costs of $0.6 million , which were recorded as a discount on the debt and are being amortized to interest expense using the effective interest method over the life of the Initial Term Loan, which is a period of 36 months . Outstanding debt obligations are as follows (in thousands): March 31, 2019 Principal amount $ 45,800 Less: unamortized discount and debt issuance costs (2,239 ) Loan payable less unamortized discount and debt issuance costs 43,561 Less: current maturities (2,806 ) Long-term loan payable, net of current maturities $ 40,755 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company has entered into various non-cancelable operating lease agreements for office facilities and equipment with original lease periods expiring between 2020 and 2025 . Certain of these arrangements have free rent periods and /or escalating rent payment provisions. As such, we recognize rent expense under such arrangements on a straight-line basis in accordance with U.S. GAAP. Some leases include options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Supplemental balance sheet information related to operating leases as of March 31, 2019 are as follows (in thousands): Weighted Average Remaining Lease Term 4.5 years Weighted Average Discount Rate 6.4 % Cash paid for amounts included in the measurement of operating lease liabilities were $0.9 million for the three months ended March 31, 2019, included in operating cash flows. The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2019 (in thousands): Year Ending December 31, Amount Remainder of 2019 2,614 2020 3,397 2021 2,517 2022 1,902 2023 800 Thereafter 1,390 Total undiscounted cash flows $ 12,620 Less imputed interest $ (1,710 ) Present value of lease liabilities $ 10,910 Disclosures related to periods prior to adoption of the new lease standard Future minimum rental commitments under non-cancelable leases as of March 31, 2018 are as follows (in thousands): Year Ending December 31, Amount Remainder of 2018 2,007 2019 3,070 2020 3,033 2021 2,139 2022 1,710 Thereafter 2,190 Total $ 14,149 Operating lease expense was $0.9 million for the three months ended March 31, 2018. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
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 $0.5 million and $0.6 million for the three months ended March 31, 2019 and 2018 . The following table shows stock option activity for the three months ended March 31, 2019 : Outstanding Options Weighted average exercise price per share Weighted average remaining contractual life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2018 2,459,102 $ 8.97 3.25 $ 273 Granted — — Forfeited (239,047 ) 7.20 Exercised (19,478 ) 1.74 Outstanding at March 31, 2019 2,200,577 $ 9.23 3.37 $ 207 Vested, exercisable, expected to vest (1) at March 31, 2019 2,200,462 $ 9.23 3.37 $ 207 Exercisable at March 31, 2019 2,198,285 $ 9.23 3.37 $ 207 (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 years . (b) Restricted Stock Units and Performance Stock Units The following table summarizes restricted stock unit and performance stock unit activity for the three months ended March 31, 2019 : Number of Awards Weighted average grant date fair value per share Outstanding at December 31, 2018 2,933,236 $ 2.50 Granted 30,000 2.16 Forfeited (94,075 ) 2.50 Vested and converted to shares, net of units withheld for taxes (127,864 ) 1.75 Units withheld for taxes (74,261 ) 1.75 Outstanding at March 31, 2019 2,667,036 $ 2.55 Expected to vest at March 31, 2019 2,534,184 $ 2.55 Restricted stock units and performance stock units granted under the Performant Financial Corporation Amended and Restated 2012 Stock Incentive Plan generally vest over periods ranging from one to four years . |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective income tax rate changed to (2.1)% for the three months ended March 31, 2019 from 22.8% for the three months ended March 31, 2018 . The change in the effective tax rate is primarily driven by the overall losses from operations for the three months ended March 31, 2019 for which no benefit is recognized due to valuation allowance. 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 2015, the Company is no longer subject to Federal and certain other state tax examinations. We are currently being examined by the Franchise Tax Board of California for tax years 2011 through 2014. |
Earnings (Loss) per Share
Earnings (Loss) per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) per Share | Earnings (Loss) per Share For the three months ended March 31, 2019 and 2018 , basic earnings (loss) per share is calculated by dividing net income (loss) by the sum of the weighted average number of shares of common stock outstanding during the period. Diluted earnings 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, restricted stock units, performance stock units, and warrants. 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 March 31, 2019, dilutive common share equivalents have been excluded, and diluted weighted average shares outstanding are the same as basic average shares outstanding. When there is net income in the period, the Company excludes stock options, restricted stock units, performance stock units and warrants from the calculation of diluted earnings per share when their combined exercise price and unamortized fair value exceeds the average market price of the Company's common stock because their effect would be anti-dilutive. For the three months ended March 31, 2018, the Company excluded 2,346,711 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 2019 2018 Weighted average shares outstanding – basic 53,059 51,320 Dilutive effect of stock options — 2,135 Weighted average shares outstanding – diluted 53,059 53,455 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 5, 2019, the Company borrowed $5 million of the $21 million available as Additional Term Loans under the Credit Agreement as amended. In connection with this borrowing, we issued a warrant to the lender to purchase an aggregate of 386,333 shares of the Company's common stock (representing approximately 0.75% of our diluted common stock calculated using the "treasury stock" method as defined under U.S. GAAP for the fiscal quarter ended June 30, 2017) with an exercise price of $1.92 per share. We have evaluated subsequent events through the date these consolidated financial statements were issued and there are no other events that have occurred that would require adjustments or disclosures to our consolidated financial statements. |
Organization and Description _2
Organization and Description of Business (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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 accounting principles generally accepted in the United States of America, 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 March 31, 2019 , and the results of our operations and cash flows for the three months ended March 31, 2019 and 2018 and cash flows for the three months ended March 31, 2019 and 2018 . 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 year ended December 31, 2018. Performant Financial Corporation (the "Company" or "we") 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. Clients of the Company typically operate in complex and regulated environments and contract for their recovery needs in order to reduce losses on defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides services on an outsourced basis; handling many or all aspects of the clients’ recovery processes. The Company's consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiaries Premiere Credit of North America, LLC (Premiere) and Performant Business Services, Inc., (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (Recovery), Performant Technologies, LLC., and Performant Europe Ltd. Performant is a Delaware corporation headquartered in California and was formed in 2003. Premiere is an Indiana limited liability company acquired by Performant on August 31, 2018. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PBS 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, earnout payable, other liabilities, deferred income taxes and income tax expense 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 The Company derives its revenues primarily from providing recovery services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: • Identification of the contract with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s contracts generally contain a single performance obligation, delivered over time as a series of services that are substantially the same and have the same pattern of transfer to the client, as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, not distinct. For contracts with multiple performance obligations, the Company would allocate the contract’s transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct service in the contract. The Company determines the standalone selling prices by taking into consideration the value of the services being provided, the client type and how similar services are priced in other contracts on a standalone basis. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s recovery service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. In certain contracts the Company can earn additional performance-based consideration determined based on its performance relative to the client’s other contractors providing similar services. Revenue from contingency fees earned upon recovery of funds is generally recognized as amounts are invoiced based on either the ‘as-invoiced’ practical expedient when such amounts reflect the value of the services completed to-date, or an output measure based on milestones which is used to measure progress of the satisfaction of its performance obligation. The Company estimates any performance-based variable consideration and recognizes such revenue over the performance period only if it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Under certain contracts, consideration can include periodic performance-based bonuses which can be awarded based on the Company’s performance under the specific contract. These performance-based awards are considered variable and may be constrained by the Company until there is not a risk of a material reversal. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund liability for each claim and recognizes revenue net of such estimate. The following table presents revenue disaggregated by category (in thousands) for the three months ended March 31, 2019 and 2018 : Three Months Ended 2019 2018 (in thousands) Student Lending $ 12,855 $ 19,105 Healthcare (1) 10,173 31,314 Other (2) 11,848 6,602 Total Revenues $ 34,876 $ 57,021 (1) Includes $27.8 million related to the termination of the 2009 CMS Region A contract for the three months ended March 31, 2018. (2) Represents outsourced call center services, tax and IRS. The Company generally either applies the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable allocation exception to contracts with performance obligations that have an average remaining duration of less than a year. 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 Secondary Payer (MSP) Commercial Payment Center (CPC) with Centers for Medicare and Medicaid Services (CMS), the Company recognizes revenues when insurance companies or other responsible parties remit payment to reimburse CMS for claims for which they are responsible, and the remittance has been applied in the CMS database. Under the Company’s Medicare Recovery Audit Contractor (RAC) contract with CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or has agreed to an offset against other claims by the provider. Under other healthcare contracts, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned, as it is a reasonable measure of the Company’s progress toward complete satisfaction of our performance obligation. Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of the healthcare client. Total estimated liability for appeals was $0.3 million and $0.2 million as of March 31, 2019 and December 31, 2018, respectively. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients following successful appeals of claims for which commissions were previously collected. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful account was $130 thousand and $22 thousand at March 31, 2019 and December 31, 2018, respectively. The Company determined that it does not have any costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are expensed as incurred. The Company has contract assets of $6.6 million and $3.0 million as of March 31, 2019 and December 31, 2018, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the three months ended March 31, 2019 and year ended December 31, 2018, but not invoiced at the reporting date. The increase in contract assets is primarily due to timing of invoices issued and increased volume of work. Contract assets are recorded to accounts receivable when the rights become unconditional and amounts are invoiced. Contract assets are included in trade accounts receivable in the consolidated balance sheets. The Company has contract liabilities of $0.7 million as of March 31, 2019 and $1.1 million as of December 31, 2018, which are included in deferred revenue in the consolidated balance sheets. The Company’s contract liability relates to an advance recovery commission payment received from a customer during the first quarter of 2018, for which the Company anticipates revenue to be recognized as services are delivered. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets At March 31, 2019 , prepaid expenses and other current assets were $3.8 million and included approximately $2.5 million related to prepaid software licenses and maintenance agreements and $0.5 million for prepaid insurance. |
Impairment of Goodwill and Long-Lived Assets | Impairment of Goodwill and Long-Lived Assets Goodwill and long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The balance of goodwill was $81.6 million as of March 31, 2019 and December 31, 2018. There was no impairment expense for goodwill or long-lived assets for the three months ended March 31, 2019. |
New Accounting Pronouncements | New Accounting Pronouncements Recently Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, “Leases”, which requires the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC Topic 840 Leases. The guidance is effective for our fiscal year beginning January 1, 2019 and should be applied using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements , which provide the option to apply the new leasing standard to all open leases as of the adoption date. The Company elected to adopt this pronouncement on January 1, 2019 using the optional transition method under ASU 2018-11 and elected the package of practical expedients permitted under the transition guidance, which permits the Company not to reassess under the new standard prior conclusions about lease identification, lease classification and initial direct costs. The Company also elected to combine lease and non-lease components, and to apply the short-term lease exception. As a result of implementing this guidance, the Company recognized $10.4 million of right of use (ROU) assets and $11.6 million of lease liabilities for its operating leases, including a reclassification of deferred rent of $1.2 million , on its consolidated balance sheet as of January 1, 2019. The adoption did not impact the consolidated statements of operations, nor will it have a notable impact on the Company’s liquidity. The standard will also have no impact on the Company’s debt-covenant compliance under its current agreement. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with historical accounting under Topic 840. Under Topic 842, ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. We determine if an arrangement is a lease at inception. ROU assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. As the implied discount rate in most of our leases is indeterminable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our incremental borrowing rate is a hypothetical rate based on our understanding of what our credit rating would be. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. |
Organization and Description _3
Organization and Description of Business (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregated Revenue by Category | The following table presents revenue disaggregated by category (in thousands) for the three months ended March 31, 2019 and 2018 : Three Months Ended 2019 2018 (in thousands) Student Lending $ 12,855 $ 19,105 Healthcare (1) 10,173 31,314 Other (2) 11,848 6,602 Total Revenues $ 34,876 $ 57,021 (1) Includes $27.8 million related to the termination of the 2009 CMS Region A contract for the three months ended March 31, 2018. (2) Represents outsourced call center services, tax and IRS. |
Property, Equipment, and Leas_2
Property, Equipment, and Leasehold Improvements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, and Leasehold Improvements | Property, equipment, and leasehold improvements consist of the following at March 31, 2019 and December 31, 2018 (in thousands): March 31, December 31, Land $ 1,943 $ 1,943 Building and leasehold improvements 8,082 8,076 Furniture and equipment 6,480 6,248 Computer hardware and software 78,656 78,743 95,161 95,010 Less accumulated depreciation and amortization (73,673 ) (72,755 ) Property, equipment and leasehold improvements, net $ 21,488 $ 22,255 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Warrant Valuation | The Company estimated the value of the warrants using the Black-Scholes model. The key assumptions used to value the warrants are as follows: August 2017 Issuance October 2018 Issuance Exercise price $1.92 $1.92 Share price on date of issuance $1.85 $1.93 Volatility 50.0% 55.0% Risk-free interest rate 1.83% 3.01% Expected dividend yield —% —% Contractual term (in years) 5 5 |
Schedule of Outstanding Debt | Outstanding debt obligations are as follows (in thousands): March 31, 2019 Principal amount $ 45,800 Less: unamortized discount and debt issuance costs (2,239 ) Loan payable less unamortized discount and debt issuance costs 43,561 Less: current maturities (2,806 ) Long-term loan payable, net of current maturities $ 40,755 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Terms and Discount Rates | Supplemental balance sheet information related to operating leases as of March 31, 2019 are as follows (in thousands): Weighted Average Remaining Lease Term 4.5 years Weighted Average Discount Rate 6.4 % |
Schedule of Maturities of Lease Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2019 (in thousands): Year Ending December 31, Amount Remainder of 2019 2,614 2020 3,397 2021 2,517 2022 1,902 2023 800 Thereafter 1,390 Total undiscounted cash flows $ 12,620 Less imputed interest $ (1,710 ) Present value of lease liabilities $ 10,910 |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental commitments under non-cancelable leases as of March 31, 2018 are as follows (in thousands): Year Ending December 31, Amount Remainder of 2018 2,007 2019 3,070 2020 3,033 2021 2,139 2022 1,710 Thereafter 2,190 Total $ 14,149 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table shows stock option activity for the three months ended March 31, 2019 : Outstanding Options Weighted average exercise price per share Weighted average remaining contractual life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2018 2,459,102 $ 8.97 3.25 $ 273 Granted — — Forfeited (239,047 ) 7.20 Exercised (19,478 ) 1.74 Outstanding at March 31, 2019 2,200,577 $ 9.23 3.37 $ 207 Vested, exercisable, expected to vest (1) at March 31, 2019 2,200,462 $ 9.23 3.37 $ 207 Exercisable at March 31, 2019 2,198,285 $ 9.23 3.37 $ 207 (1) Options expected to vest reflect an estimated forfeiture rate. |
Schedule of Restricted Stock Activity | The following table summarizes restricted stock unit and performance stock unit activity for the three months ended March 31, 2019 : Number of Awards Weighted average grant date fair value per share Outstanding at December 31, 2018 2,933,236 $ 2.50 Granted 30,000 2.16 Forfeited (94,075 ) 2.50 Vested and converted to shares, net of units withheld for taxes (127,864 ) 1.75 Units withheld for taxes (74,261 ) 1.75 Outstanding at March 31, 2019 2,667,036 $ 2.55 Expected to vest at March 31, 2019 2,534,184 $ 2.55 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of 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 2019 2018 Weighted average shares outstanding – basic 53,059 51,320 Dilutive effect of stock options — 2,135 Weighted average shares outstanding – diluted 53,059 53,455 |
Organization and Description _4
Organization and Description of Business - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2019USD ($)segment | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Number of operating segments | segment | 1 | ||
Estimated liability for appeals | $ 255,000 | $ 210,000 | |
Allowance for doubtful accounts | 130,000 | 22,000 | |
Contract assets | 6,600,000 | 3,000,000 | |
Contract liabilities | 700,000 | 1,100,000 | |
Prepaid expenses and other current assets | 3,792,000 | 3,420,000 | |
Prepaid expense and other assets, prepaid software licenses | 2,500,000 | ||
Prepaid expense and other assets, prepaid insurance | 500,000 | ||
Goodwill | 81,572,000 | 81,572,000 | |
Impairment of goodwill and intangible assets | 0 | ||
Accounts payable | 2,400,000 | 2,700,000 | |
Accrued subcontractor fees | 900,000 | 400,000 | |
Accrued interest expense | 800,000 | ||
Estimated workers' compensation claims incurred but not yet reported | 200,000 | 200,000 | |
Right-of-use asset | 9,714,000 | $ 0 | |
Operating lease liability | $ 10,910,000 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use asset | $ 10,400,000 | ||
Operating lease liability | 11,600,000 | ||
Deferred rent | $ (1,200,000) |
Organization and Description _5
Organization and Description of Business - Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 34,876 | $ 57,021 |
Student Lending | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 12,855 | 19,105 |
Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 10,173 | 31,314 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 11,848 | 6,602 |
2009 CMS Region A Contract Case | Other | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 27,800 |
Property, Equipment, and Leas_3
Property, Equipment, and Leasehold Improvements - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense of property, equipment and leasehold improvements | $ 2.3 | $ 2.4 |
Property, Equipment, and Leas_4
Property, Equipment, and Leasehold Improvements - Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 95,161 | $ 95,010 |
Less accumulated depreciation and amortization | (73,673) | (72,755) |
Property, equipment and leasehold improvements, net | 21,488 | 22,255 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 1,943 | 1,943 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 8,082 | 8,076 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 6,480 | 6,248 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 78,656 | $ 78,743 |
Credit Agreement - Narrative (D
Credit Agreement - Narrative (Details) | Oct. 15, 2018USD ($)shares | Aug. 31, 2018USD ($)extension_periodshares | Aug. 08, 2017 | Aug. 07, 2017USD ($)$ / sharesshares | Jun. 30, 2017 | Dec. 31, 2020 | Jun. 30, 2022 | Mar. 31, 2019USD ($) | Dec. 31, 2018 | Aug. 11, 2017USD ($) |
Line of Credit Facility [Line Items] | ||||||||||
Number of optional additional extension periods | extension_period | 2 | |||||||||
Duration of optional additional extension periods | 1 year | |||||||||
Value of warrants | $ 200,000 | $ 3,300,000 | ||||||||
Issuance costs | $ 600,000 | |||||||||
New Credit Agreement | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Floor rate (as a percent) | 1.00% | |||||||||
Weighted average interest rate | 8.00% | 8.00% | ||||||||
Periodic payment of principal (as a percent) | 5.00% | |||||||||
Required premium for prepayments of lines of credit (as a percent) | 1.00% | |||||||||
Warrants issued (shares) | shares | 3,863,326 | |||||||||
New Credit Agreement | Minimum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Excess cash flow for prepayments of lines of credit (as a percent) | 0.00% | |||||||||
New Credit Agreement | Maximum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Excess cash flow for prepayments of lines of credit (as a percent) | 75.00% | |||||||||
Total debt to EBITDA ratio | 6 | |||||||||
Initial Term Loan | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Diluted common stock (as a percent) | 7.50% | |||||||||
Exercise price of warrants (USD per share) | $ / shares | $ 1.92 | |||||||||
Amortization period | 36 months | |||||||||
Additional Term Loans | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Warrants issued (shares) | shares | 309,066 | |||||||||
Diluted common stock (as a percent) | 0.15% | |||||||||
Stock value of warrants per term loan (shares) | shares | 77,267 | |||||||||
Allotment for warrants purchased | $ 1,000,000 | |||||||||
Number of optional additional extension periods | extension_period | 2 | |||||||||
Duration of optional additional extension periods | 1 year | |||||||||
Amortization period | 48 months | |||||||||
London Interbank Offered Rate (LIBOR) | New Credit Agreement | Minimum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (as a percent) | 5.50% | |||||||||
London Interbank Offered Rate (LIBOR) | New Credit Agreement | Maximum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Basis spread on variable rate (as a percent) | 10.00% | |||||||||
Forecast | New Credit Agreement | Minimum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Interest coverage ratio | 1 | |||||||||
Forecast | New Credit Agreement | Maximum | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Interest coverage ratio | 1.25 | |||||||||
Period One | Additional Term Loans | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Diluted common stock (as a percent) | 1.00% | |||||||||
Stock value of warrants per term loan (shares) | shares | 515,110 | |||||||||
Period Two | Additional Term Loans | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Diluted common stock (as a percent) | 1.50% | |||||||||
Stock value of warrants per term loan (shares) | shares | 772,665 | |||||||||
Line of Credit | Initial Term Loan | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Amount outstanding under line of credit | $ 44,000,000 | $ 45,800,000 | ||||||||
Line of Credit | Additional Term Loans | ||||||||||
Line of Credit Facility [Line Items] | ||||||||||
Maximum borrowing capacity under line of credit | $ 25,000,000 | $ 15,000,000 | ||||||||
Proceeds from lines of credit | $ 4,000,000 |
Credit Agreement - Warrant Valu
Credit Agreement - Warrant Valuation (Details) | 3 Months Ended |
Mar. 31, 2019$ / shares | |
Amendment Number One to Credit Agreement | |
Debt Instrument [Line Items] | |
Exercise price (USD per share) | $ 1.92 |
Share price on date of issuance (USD per share) | $ 1.85 |
Amendment Number One to Credit Agreement | Volatility | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0.500 |
Amendment Number One to Credit Agreement | Risk-free interest rate | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0.0183 |
Amendment Number One to Credit Agreement | Expected dividend yield | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0 |
Amendment Number One to Credit Agreement | Contractual term (in years) | |
Debt Instrument [Line Items] | |
Contractual term (in years) | 5 years |
Amendment Number Two to Credit Agreement | |
Debt Instrument [Line Items] | |
Exercise price (USD per share) | $ 1.92 |
Share price on date of issuance (USD per share) | $ 1.93 |
Amendment Number Two to Credit Agreement | Volatility | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0.550 |
Amendment Number Two to Credit Agreement | Risk-free interest rate | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0.0301 |
Amendment Number Two to Credit Agreement | Expected dividend yield | |
Debt Instrument [Line Items] | |
Warrants and rights outstanding, measurement input | 0 |
Amendment Number Two to Credit Agreement | Contractual term (in years) | |
Debt Instrument [Line Items] | |
Contractual term (in years) | 5 years |
Credit Agreement - Outstanding
Credit Agreement - Outstanding Debt Obligations (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
Principal amount | $ 45,800 |
Less: unamortized discount and debt issuance costs | (2,239) |
Loan payable less unamortized discount and debt issuance costs | 43,561 |
Less: current maturities | (2,806) |
Long-term loan payable, net of current maturities | $ 40,755 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Leases [Abstract] | ||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 0.9 | |
Operating lease expense | $ 0.9 |
Leases - Components of Lease Te
Leases - Components of Lease Term and Discount Rate (Details) | Mar. 31, 2019 |
Leases [Abstract] | |
Weighted Average Remaining Lease Term | 4 years 6 months |
Weighted Average Discount Rate (as a percent) | 6.40% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Maturities of Lease Liabilities after Adoption of ASC 842 | ||
Remainder of 2019 | $ 2,614 | |
2020 | 3,397 | |
2021 | 2,517 | |
2022 | 1,902 | |
2023 | 800 | |
Thereafter | 1,390 | |
Total undiscounted cash flows | 12,620 | |
Less imputed interest | (1,710) | |
Present value of lease liabilities | $ 10,910 | |
Maturities of Lease Liabilities before Adoption of ASC 842 | ||
Remainder of 2018 | $ 2,007 | |
2019 | 3,070 | |
2020 | 3,033 | |
2021 | 2,139 | |
2022 | 1,710 | |
Thereafter | 2,190 | |
Total | $ 14,149 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 0.5 | $ 0.6 |
Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options vesting period | 4 years | |
Minimum | Restricted Stock and Performance Stock Units | 2012 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options vesting period | 1 year | |
Maximum | Restricted Stock and Performance Stock Units | 2012 Equity Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options vesting period | 4 years |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - Options - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Outstanding Options | ||
Balance at beginning of period (shares) | 2,459,102 | |
Granted (shares) | 0 | |
Forfeited (shares) | (239,047) | |
Exercised (shares) | (19,478) | |
Balance at end of period (shares) | 2,200,577 | 2,459,102 |
Vested (shares) | 2,200,462 | |
Exercisable (shares) | 2,198,285 | |
Weighted average exercise price per share | ||
Balance at beginning of period (USD per share) | $ 8.97 | |
Granted (USD per share) | 0 | |
Forfeited (USD per share) | 7.20 | |
Exercised (USD per share) | 1.74 | |
Balance at end of period (USD per share) | 9.23 | $ 8.97 |
Vested or expected to vest (USD per share) | 9.23 | |
Exercisable (USD per share) | $ 9.23 | |
Weighted average remaining contractual life (Years) | ||
Outstanding (USD per share) | 3 years 4 months 13 days | 3 years 3 months |
Vested, exercisable, and expected to vest (USD per share) | 3 years 4 months 13 days | |
Exercisable (USD per share) | 3 years 4 months 13 days | |
Aggregate Intrinsic Value (in thousands) | ||
Outstanding | $ 207 | $ 273 |
Vested, exercisable, and expected to vest | 207 | |
Exercisable | $ 207 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock and Performance Stock Units Activity (Details) - Restricted Stock and Performance Stock Units | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Awards | |
Outstanding at beginning of period (shares) | shares | 2,933,236 |
Granted (shares) | shares | 30,000 |
Forfeited (shares) | shares | (94,075) |
Vested and converted to shares, net of units withheld for taxes (shares) | shares | (127,864) |
Units withheld for taxes (shares) | shares | (74,261) |
Outstanding at end of period (shares) | shares | 2,667,036 |
Expected to vest (shares) | shares | 2,534,184 |
Weighted average grant date fair value per share | |
Outstanding beginning of period (USD per share) | $ / shares | $ 2.50 |
Granted (USD per share) | $ / shares | 2.16 |
Forfeited (USD per share) | $ / shares | 2.50 |
Vested and converted to shares, net of units withheld for taxes (USD per share) | $ / shares | 1.75 |
Units withheld for taxes (USD per share) | $ / shares | 1.75 |
Outstanding end of period (USD per share) | $ / shares | 2.55 |
Expected to vest (USD per share) | $ / shares | $ 2.55 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | (2.10%) | 22.80% |
Earnings (Loss) per Share - Nar
Earnings (Loss) per Share - Narrative (Details) | 3 Months Ended |
Mar. 31, 2018shares | |
Earnings Per Share [Abstract] | |
Antidilutive securities excluded from computation of earnings per share (in shares) | 2,346,711 |
Earnings (Loss) per Share - Rec
Earnings (Loss) per Share - Reconciliation of Basic to Diluted Weighted Average Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding – basic (shares) | 53,059 | 51,320 |
Dilutive effect of stock options (shares) | 0 | 2,135 |
Weighted average shares outstanding – diluted (shares) | 53,059 | 53,455 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 05, 2019 | Jun. 30, 2017 | Mar. 31, 2019 | Oct. 15, 2018 |
Additional Term Loans | ||||
Subsequent Event [Line Items] | ||||
Warrants issued (shares) | 309,066 | |||
Diluted common stock (as a percent) | 0.15% | |||
Additional Term Loans | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Diluted common stock (as a percent) | 0.75% | |||
Additional Term Loans | Line of Credit | ||||
Subsequent Event [Line Items] | ||||
Remaining borrowing capacity under line of credit | $ 21 | |||
Additional Term Loans | Line of Credit | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Proceeds from lines of credit | $ 5 | |||
Common Stock | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Warrants issued (shares) | 386,333 | |||
Exercise price of warrants (USD per share) | $ 1.92 |
Uncategorized Items - pfmt-2019
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,788,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,659,000 |