Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Apr. 28, 2020 | Jun. 30, 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 | ||
Entity Shell Company | false | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 54,028,174 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 19,812,518 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 3,373 | $ 5,462 |
Restricted cash | 1,622 | 1,813 |
Trade accounts receivable, net of allowance for doubtful accounts of $237 and $22, respectively | 27,170 | 20,879 |
Contract assets | 1,339 | 0 |
Prepaid expenses and other current assets | 3,329 | 3,420 |
Income tax receivable | 164 | 179 |
Total current assets | 36,997 | 31,753 |
Property, equipment, and leasehold improvements, net | 18,769 | 22,255 |
Identifiable intangible assets, net | 925 | 1,160 |
Goodwill | 74,372 | 81,572 |
ROU Assets | 6,834 | |
Other assets | 975 | 1,019 |
Total assets | 138,872 | 137,759 |
Current liabilities: | ||
Current maturities of notes payable to related party, net of unamortized discount and debt issuance costs of $130 and $126, respectively | 3,320 | 2,224 |
Accrued salaries and benefits | 6,126 | 5,759 |
Accounts payable | 2,532 | 1,402 |
Other current liabilities | 3,514 | 3,414 |
Deferred revenue | 83 | 1,078 |
Estimated liability for appeals and disputes | 1,018 | 210 |
Earnout payable | 62 | 0 |
Lease liabilities | 2,775 | |
Total current liabilities | 19,430 | 14,087 |
Notes payable to related party, net of current portion and unamortized discount and debt issuance costs of $2,301 and $2,345, respectively | 58,562 | 41,105 |
Deferred income taxes | 35 | 22 |
Earnout payable | 475 | 1,936 |
Lease liabilities | 4,984 | |
Other liabilities | 1,761 | 3,383 |
Total liabilities | 85,247 | 60,533 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at December 31, 2019 and 2018, respectively; issued and outstanding, 53,900 and 52,999 shares at December 31, 2019 and 2018, respectively | 5 | 5 |
Additional paid-in capital | 80,589 | 77,370 |
Accumulated deficit | (26,969) | (149) |
Total stockholders’ equity | 53,625 | 77,226 |
Total liabilities and stockholders’ equity | $ 138,872 | $ 137,759 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 237 | $ 22 |
Current unamortized debt issuance costs | 130 | 126 |
Noncurrent unamortized debt issuance costs | $ 2,301 | $ 2,345 |
Common stock, par value (USD per share) | $ 0.0001 | $ 0.0001 |
Common stock authorized (shares) | 500,000,000 | 500,000,000 |
Common stock issued (shares) | 53,900,000 | 52,999,000 |
Common stock outstanding (shares) | 53,900,000 | 52,999,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues | $ 150,432 | $ 155,668 |
Operating expenses: | ||
Salaries and benefits | 115,194 | 96,144 |
Other operating expenses | 47,687 | 58,333 |
Impairment of goodwill and intangible assets | 7,200 | 2,988 |
Total operating expenses | 170,081 | 157,465 |
Loss from operations | (19,649) | (1,797) |
Interest expense | (7,589) | (4,699) |
Interest income | 41 | 28 |
Loss before (benefit from) provision for income taxes | (27,197) | (6,468) |
(Benefit from) provision for income taxes | (377) | 1,542 |
Net loss | $ (26,820) | $ (8,010) |
Net loss per share attributable to common shareholders (see Note 1) | ||
Basic (USD per share) | $ (0.50) | $ (0.15) |
Diluted (USD per share) | $ (0.50) | $ (0.15) |
Weighted average shares (see Note 1) | ||
Basic (shares) | 53,468 | 52,064 |
Diluted (shares) | 53,468 | 52,064 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (26,820) | $ (8,010) |
Other comprehensive loss: | ||
Foreign currency translation adjustment | 0 | (32) |
Comprehensive loss | $ (26,820) | $ (8,042) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance at beginning of period (shares) at Dec. 31, 2017 | 51,085,000 | |||
Balance at beginning of period at Dec. 31, 2017 | $ 80,325 | $ 5 | $ 72,459 | $ 7,861 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (shares) | 914,000 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | (476) | (476) | ||
Stock-based compensation expense | 2,750 | 2,750 | ||
Shares issued in conjunction with agreement to purchase Premiere Credit of North America, LLC (shares) | 1,000,000 | |||
Shares issued in conjunction with agreement to purchase Premiere Credit of North America, LLC. | 2,420 | 2,420 | ||
Recognition of warrant issued in debt financing | 249 | 249 | ||
Recognition of earnout shares issued | 0 | |||
Other comprehensive loss | (32) | (32) | ||
Net loss | (8,010) | (8,010) | ||
Balance at end of period (shares) at Dec. 31, 2018 | 52,999,000 | |||
Balance at end of period at Dec. 31, 2018 | 77,226 | $ 5 | 77,370 | (149) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (shares) | 716,000 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | (433) | (433) | ||
Stock-based compensation expense | 2,311 | 2,311 | ||
Recognition of warrant issued in debt financing | 1,165 | 1,165 | ||
Recognition of earnout shares issued (shares) | 185,000 | |||
Recognition of earnout shares issued | 176 | 176 | ||
Other comprehensive loss | 0 | |||
Net loss | (26,820) | (26,820) | ||
Balance at end of period (shares) at Dec. 31, 2019 | 53,900,000 | |||
Balance at end of period at Dec. 31, 2019 | $ 53,625 | $ 5 | $ 80,589 | $ (26,969) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (26,820) | $ (8,010) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Loss on disposal of assets | 44 | 44 |
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 | (18,531) |
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 account for subcontractor receivable | 0 | 1,868 |
Impairment of goodwill and intangible assets | 7,200 | 2,988 |
Depreciation and amortization | 8,536 | 10,234 |
ROU asset amortization | 2,589 | 0 |
Gain on lease modification | (137) | 0 |
Deferred income taxes | 13 | 490 |
Stock-based compensation | 2,311 | 2,750 |
Interest expense from debt issuance costs | 1,286 | 1,221 |
Earnout mark-to-market | (1,223) | (218) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | (6,291) | (6,695) |
Contract assets | (1,339) | 0 |
Prepaid expenses and other current assets | 91 | 895 |
Income tax receivable | 15 | 6,660 |
Other assets | 40 | 69 |
Accrued salaries and benefits | 367 | 220 |
Accounts payable | 1,130 | (445) |
Deferred revenue and other current liabilities | (895) | (657) |
Estimated liability for appeals and disputes | 808 | (76) |
Net payable to client | 0 | (2,940) |
Lease liabilities | (2,786) | 0 |
Other liabilities | (362) | 773 |
Net cash used in operating activities | (15,423) | (12,149) |
Cash flows from investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (4,856) | (7,645) |
Premiere Credit of North America, LLC cash acquired | 0 | 2,285 |
Net cash used in investing activities | (4,856) | (5,360) |
Cash flows from financing activities: | ||
Repayment of notes payable | (2,488) | (2,200) |
Debt issuance costs paid | (81) | (27) |
Taxes paid related to net share settlement of stock awards | (466) | (663) |
Proceeds from exercise of stock options | 34 | 187 |
Borrowings from notes payable | 21,000 | 4,000 |
Net cash provided by financing activities | 17,999 | 1,297 |
Effect of foreign currency exchange rate changes on cash | 0 | (32) |
Net decrease in cash, cash equivalents and restricted cash | (2,280) | (16,244) |
Cash, cash equivalents and restricted cash at beginning of year | 7,275 | 23,519 |
Cash, cash equivalents and restricted cash at end of year | 4,995 | 7,275 |
Reconciliation of the consolidated statements of cash flows to the consolidated balance sheets: | ||
Total cash, cash equivalents and restricted cash at end of period | 4,995 | 7,275 |
Non-cash investing activities: | ||
Recognition of contingent consideration in acquisition | 0 | 2,154 |
Non-cash financing activities: | ||
Recognition of shares issued in acquisition | 0 | 2,420 |
Recognition of earnout shares issued | 176 | 0 |
Recognition of warrant issued in debt financing | 1,165 | 249 |
Supplemental disclosures of cash flow information: | ||
Cash received for income taxes | (202) | (6,228) |
Cash paid for interest | $ 6,304 | $ 3,477 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Organization and Nature of Business 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 our 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 (PTL), and Performant Europe Ltd (through 2018). 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. PBS is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PTL is a California limited liability company that was formed in 2004. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. (b) Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The Company consolidates entities in which it has controlling financial interest, and as of December 31, 2019 , all of the Company’s subsidiaries are 100% owned. All intercompany balances and transactions have been eliminated in consolidation. (c) Use of Estimates in the Preparation of Consolidated Financial Statements 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 and disputes, 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. (d) Liquidity The accompanying consolidated financial statements have been prepared on the basis of going concern which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred net losses of approximately $26.8 million and $8.0 million as well as net cash outflows from operations of approximately $15.4 million and $12.1 million for the years ended December 31, 2019 and 2018, respectively. The ability of the Company to continue to fund its business plans is dependent upon realizing sufficient cash flows in the future. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In March 2020, the World Health Organization declared the 2019 coronavirus disease (“COVID-19”) a pandemic. COVID-19 has had, and will likely continue to have, an impact on the Company’s business, both operationally and financially. For example, all states in which the Company has offices are under state of emergency and have shelter-in-place or equivalent orders as of the filing of this Form 10-K, which has resulted in both management and employees working remotely (from home). The United States Government has passed multiple new laws designed to help companies respond to the COVID-19 pandemic. Specifically, on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which included several student loan-related changes. These changes have had an impact on the Company’s financial results and management expects that they will continue to affect the Company’s financial results into the foreseeable future. The CARES Act included changes to student loans owned by the Department of Education. These changes include the suspension of payments, the ceasing of accruing interest, and stopping involuntary collections of payments (e.g., wage garnishments). The changes are in effect through September 30, 2020. While these changes impact the set-up of new loan rehabilitation agreements by defaulted student loan borrowers, the Department of Education will consider each month during the period of suspended payments as an eligible month towards achieving loan rehabilitation, which is an element in determining future revenue to which the Company is entitled. In addition, student loan revenue and related cash flows will continue during this period because the Company earns revenue for a number of months from existing in-process borrower rehabilitation agreements. Further, while not mandated by the CARES Act, all of the Company’s Guaranty Agency clients (who administer the Federal Family Education Loan Program) are largely complying with the provisions of the Act, with the exception of counting missed payments toward qualification for loan rehabilitation. Given the CARES Act impacts on the Company’s recovery activities through September 30, 2020, the Company has furloughed more than 400 employees to date, which will result in annual savings of more than $15 million . The Company’s healthcare business has not experienced, and is not currently expected to experience, a similar level of impact as the recovery business due to the fact that only two healthcare customers have been impacted by congressional regulations to date. While a few healthcare customers placed short term pauses on audit activities, the Company has continued to see growth and expansion in other healthcare offerings; notably, the Company’s Third Party Liability contracts have not experienced any contractions to date. Additionally, the Company does not foresee any permanent negative effects to its relationships or overall contract expectations within the healthcare markets. With respect to favorable impacts to the Company’s liquidity, the CARES Act provided the right to carryback net operating losses from 2018 and 2019 to earlier periods. The Company has already filed for a refund request for the 2013 tax year which will result in an approximately $2.4 million cash refund, and the Company will file a refund request for the 2014 tax year which is expected to result in a refund of approximately $1.5 million . The CARES Act also allows deferrals and credits for payroll tax amounts, which is expected to provide approximately $3 million in cash savings through the remainder of 2020. The Company continues to analyze the impact of COVID-19. However, the Company believes that its forecasted results, considering the impact of COVID-19, will be sufficient to fund the Company’s current operations, for at least a year from the issuance of these consolidated financial statements. While the Company believes its financial projections are attainable, there can be no assurances that the financial results will be recognized in a timeframe necessary to meet the Company’s ongoing cash requirements. To address the Company’s liquidity needs, the Company may need to execute various actions to increase cash necessary for operations. These actions include, but are not limited to, additional reductions in workforce (both through furloughs and layoffs), reduce or delay capital expenditures, seek additional capital infusions through public and/or private means, sales of real estate assets or operations, and scaling back of certain lower margin operations. (e) Acquisition of Premiere Credit of North America On August 31, 2018, the Company completed its acquisition of Premiere from the ECMC Group, Inc. (“ECMC”). Premiere is a leading provider of recovery services to government, student loan and commercial clients with approximately 330 employees located in Indianapolis and Nashville. ECMC is also the lender under our existing credit agreement. The Company funded the acquisition with issuance of 1,000,000 Performant shares to ECMC and additional shares over the five -year period following the closing based on revenue associated with Premiere’s business in each year. At closing, Performant entered into a long-term agreement to be ECMC’s primary student loan recovery vendor. Consideration: The consideration for the acquisition was determined as follows (in thousands except per share amount): Initial shares consideration 1,000 Closing stock price per share $ 2.42 2,420 Earn-out consideration 2,154 Total consideration $ 4,574 The contingent earn-out consideration was valued based on a Monte Carlo simulation. Purchase price allocation: In accordance with U.S. GAAP, the total purchase price was allocated to the tangible and intangible assets acquired based on management’s estimates of their fair values. The following table summarizes the estimated fair values of the assets acquired and liabilities (in thousands): Cash and cash equivalents $ 2,285 Trade accounts receivable, net 1,690 Other current assets 576 Property, equipment, and leasehold improvements, net 3,174 Customer relationship intangible asset 50 Other assets 34 Total identifiable assets acquired 7,809 Accounts Payable (328 ) Accrued salaries and benefits (970 ) Other current liabilities (1,802 ) Other liabilities (135 ) Net assets acquired $ 4,574 The estimated fair value and useful life for the customer relationship intangible asset was $50 thousand and 4 years , respectively. The fair value of the customer relationship and the amortization method were determined using the excess earnings method that relies on projected future net cash flows including key assumptions for the customer attrition rate and discount rate. The estimated weighted average useful life reflects the time period and pattern that Performant expects for projected benefits. The Company recorded $0.2 million of acquisition-related costs in other operating expenses. The results of Premiere have been included in the Company’s consolidated financial statements from the date of acquisition. Revenues from Premiere included in the Company’s results for the twelve months ended December 31, 2018 were $7.0 million . Net loss for Premiere included in the Company’s results for the twelve months ended December 31, 2018 was $1.4 million . Pro forma information: The following table presents selected unaudited pro forma information for the Company assuming the acquisition of Premiere had occurred as of January 1, 2018. This pro forma information does not purport to present what the Company’s actual results would have been if the acquisition occurred as of the date indicated or what such results would be for any future periods. Year Ended December 31, 2018 (In thousands, except per share amounts) Total revenues $ 170,893 Net loss $ (12,672 ) Earnings per share: Basic $ (0.24 ) Diluted $ (0.24 ) (f) Cash and Cash Equivalents Cash and cash equivalents include demand deposits. The Company collects monies on behalf of its clients. Cash is often held on behalf of the clients in various trust accounts and is subsequently remitted to the clients based on contractual agreements. Cash held in these trust accounts for contracting agencies is not included in the Company’s assets (Note 11(a)). (g) Restricted Cash At December 31, 2019 and 2018 , restricted cash included in current assets on our consolidated balance sheet was $1.6 million and $ 1.8 million , respectively, held in the form of certificates of deposit, which serve as collateral for letters of credit. (h) Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 to 7 years. Buildings are depreciated using the straight-line method over 31.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. Computer software and computer hardware are depreciated using the straight-line method over 3 years and 5 years, respectively. Maintenance and repairs are charged to expense as incurred. Improvements that extend the useful lives of assets are capitalized. When property is sold or retired, the cost and the related accumulated depreciation are removed from the consolidated balance sheet and any gain or loss from the transaction is included in the consolidated statements of operations. (i) Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price and related costs over the fair value assigned to the net assets of businesses acquired. Goodwill is reviewed for impairment annually in December, or more frequently if certain indicators are present. We may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company changed its annual assessment to December in 2019 from November in 2018 since the Company had performed interim quantitative impairment assessments during 2019. The change in the annual assessment date did not have a material impact on our analysis. In performing the quantitative goodwill test, if the carrying value of the Company, as one reporting unit, exceeds its fair value, goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and the fair value of the reporting unit. Impairment testing is based upon the best information available including our market capitalization and estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of the reporting unit, inclusive of goodwill. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Identifiable intangible assets consist of customer contracts and related relationships. Customer contracts and related relationships are amortized over their estimated useful lives of 4 to 20 years. (j) Impairment of Long-Lived Assets 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. (k) System Developments The Company follows the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-40, Internal-Use Software , which specifies that costs incurred during the application stage of development should be capitalized. All other costs are expensed as incurred. During 2019 and 2018 , costs of $4.0 million and $5.5 million , respectively, were capitalized for projects in the application stage of development. Depreciation expense for completed projects during 2019 and 2018 were $5.8 million and $6.8 million , respectively. (l) Debt Issuance Costs Debt issuance costs represent loan and legal fees paid in connection with the issuance of long-term debt. Debt issuance costs are deducted from current and non-current notes payable and are amortized to interest expense under the effective interest method in accordance with key terms of the notes as amended. (m) Revenues, Accounts Receivable, and Estimated Liability for Appeals The Company derives its revenues primarily from providing recovery services and healthcare audit 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 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 consideration 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 Commercial Payment Center (MSP) contract 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. For healthcare claims audit contracts with commercial clients, 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. For coordination-of-benefits contracts with commercial clients, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the client. Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS or other healthcare clients under the RAC or other commercial healthcare contracts. Under the MSP contract, insurance companies or other responsible parties may dispute the Company’s findings regarding Medicare not being the primary payer of healthcare claims. Total estimated liability for appeals and disputes was $1.0 million and 0.2 million as of December 31, 2019 and 2018, respectively. This represents the Company’s best estimate of the probable amount of losses related to appeals or disputes of claims for which commissions were previously collected. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category (in thousands) for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 2018 (in thousands) Healthcare (1) $ 43,328 $ 54,454 Recovery (2) 89,626 83,785 Customer Care / Outsourced Services 17,478 17,429 Total Revenues $ 150,432 $ 155,668 (1) Includes $ 28.4 million related to the termination of the 2009 CMS Region A contract (2) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, select financial institutions, as well as Premiere Credit of North America. For the year ended December 31, 2019 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2019 Revenue Percent of 1 $27,867 18.5% 2 $26,593 17.7% 3 $16,329 10.9% Accounts receivable due from these three customers were 45% of total trade accounts receivable at December 31, 2019, of which two of these customers comprised 24% and 18% of total trade receivables. For the year ended December 31, 2018 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2018 Revenue Percent of 1 $41,859 26.9% 2 $26,908 17.3% 3 $26,702 17.2% Accounts receivable due from these three customers were 62% of total trade receivables at December 31, 2018 . Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in cash used in operating activities in the consolidated statements of cash flows. 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 considered remote. The allowance for doubtful accounts was $0.2 million and $0.02 million for December 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 had contract assets of $1.3 million and $0 million as of December 31, 2019 and December 31, 2018, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the respective years, 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 liabilities are included in deferred revenue in the consolidated balance sheets. The Company had contract liabilities of $0.1 million as of December 31, 2019 and $1.1 million as of December 31, 2018. The Company’s contract liability related to an advance recovery commission payment received from a customer during the first quarter of 2018, for which the Company recognized revenue as services were delivered. (n) Prepaid Expenses and Other Current Assets At December 31, 2019, prepaid expenses and other current assets were $3.3 million and included approximately $2.2 million related to prepaid software licenses and maintenance agreements, $0.7 million for prepaid insurance, and $0.4 million for various other prepaid expenses. At December 31, 2018, prepaid expenses and other current assets were $3.4 million and included approximately $2.1 million related to prepaid software licenses and maintenance agreements, $0.7 million for prepaid insurance, and $0.6 million for various other prepaid expenses. (o) Legal Expenses The Company recognizes legal fees related to litigation as they are incurred. (p) Comprehensive Loss The Company had a single component of comprehensive loss on the consolidated statements of comprehensive loss related to foreign currency translation adjustments for its subsidiary Performant Europe Ltd. for the year ended December 31, 2018 . (q) Fair Value of Financial Instruments The Company’s consolidated financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short-term debt and long-term debt. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values based on or due to their short-term maturities. The carrying values of short-term debt and long-term debt approximate fair value, in which their variable interest rates approximate market rates. (r) Income Taxes The Company accounts for income taxes under the asset-and-liability method. Deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying value of assets and liabilities for financial reporting purposes and for taxation purposes. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest expense and penalties related to unrecognized tax benefits are recorded in income tax expense. (s) Stock-based Compensation The Company accounts for its employee stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation . FASB ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the consolidated financial statements and that for equity-classified awards, such cost is measured at the grant date fair value of the award. FASB ASC Topic 718 also requires that excess tax benefits recognized in equity related to stock option exercises are reflected as financing cash inflows. There was no income tax benefit resulting from the exercise of stock options in both 2019 and 2018 . (t) Loss per Share For the years ended December 31, 2019 and 2018 , basic loss per share is calculated by dividing net loss attributable to common shareholders by the sum of the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares and dilutive common shares equivalents outstanding during the period. The Company’s common share equivalents consist of stock options, restricted stock units (RSUs), and performance 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. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Years Ended December 31, 2019 2018 Weighted average shares outstanding – basic 53,468 52,064 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 53,468 52,064 (u) 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 |
Property, Equipment, and Leaseh
Property, Equipment, and Leasehold Improvements | 12 Months Ended |
Dec. 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 December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 2018 Land $ 1,943 $ 1,943 Building and leasehold improvements 8,124 8,076 Furniture and equipment 6,257 6,248 Computer hardware and software 79,066 78,743 95,390 95,010 Less accumulated depreciation and amortization (76,621 ) (72,755 ) Property, equipment and leasehold improvements, net $ 18,769 $ 22,255 Depreciation and amortization expense of property, equipment and leasehold improvements was $8.3 million and $9.5 million for the years ended December 31, 2019 and 2018 , respectively. |
Identifiable Intangible Assets
Identifiable Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Identifiable Intangible Assets and Goodwill | Identifiable Intangible Assets and Goodwill Identifiable intangible assets consist of the following at December 31, 2019 and 2018 (in thousands): December 31, 2019 Gross Amounts Accumulated Amortization Net Customer contracts and related relationships $ 25,740 $ (24,815 ) $ 925 Perpetual license 3,250 (3,250 ) — Total amortizable intangible assets $ 28,990 $ (28,065 ) $ 925 December 31, 2018 Gross Amounts Accumulated Amortization Net Customer contracts and related relationships $ 25,378 $ (24,264 ) $ 1,114 Less: Impairment of customer contracts and related relationships (2,988 ) 2,988 — Add: Customer relationship intangible asset 50 (4 ) $ 46 Perpetual license 3,250 (3,250 ) — Total amortizable intangible assets $ 25,690 $ (24,530 ) $ 1,160 For the years ended December 31, 2019 and 2018, amortization expense related to intangible assets amounted to $0.2 million and $0.8 million , respectively. For the year ended December 31, 2018, an impairment expense of $3.0 million was recognized relating to the Great Lakes Higher Education Guaranty Corporation customer relationship and was presented as a separate caption in the consolidated statements of operations. The amortization expense for each of the next four fiscal years is approximately $0.2 million each year. The carrying amount of goodwill was $74.4 million and $81.6 million as of December 31, 2019 and 2018, respectively. During the fourth quarter of 2019, the Company identified an impairment indicator associated with the sustained decrease in its market capitalization and performed impairment tests on goodwill. The determination of our reporting unit’s fair value involved, among other things, the Company’s market capitalization and application of the income approach. We concluded that the carrying value of our reporting unit was greater than the fair value, which resulted in a non-cash goodwill impairment charge of $7.2 million . The goodwill impairment charge had no impact on the Company’s cash flows or compliance with debt covenants. |
Credit Agreement
Credit Agreement | 12 Months Ended |
Dec. 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 (as amended, the “Credit Agreement”) with ECMC Group, Inc. 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 during the six fiscal quarters following the beginning of the Company’s fourth fiscal quarter of 2018. On April 5, 2019 and May 15, 2019, the Company borrowed $5 million and $6 million , respectively. On August 6, 2019 and September 25, 2019, the Company borrowed $5 million and $5 million , respectively. The Company has borrowed all of the $25 million available as Additional Term Loans. As of December 31, 2019, $64.3 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 December 31, 2019 was 11.8% 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 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 subsidiaries' assets and are guaranteed by the Company and its 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"). Upon borrowing of the Additional Term Loans, the Company was 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 values of the warrants are noted below 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 information and assumptions used to value the warrants are as follows: August 2017 Issuance October 2018 Issuance April 2019 Issuance May 2019 Issuance August 2019 Issuance September 2019 Issuance Exercise price $1.92 $1.92 $1.92 $1.92 $1.92 $1.92 Share price on date of issuance $1.85 $1.93 $2.24 $1.75 $1.11 $1.10 Volatility 50.0% 55.0% 57.5% 57.5% 67.5% 67.5% Risk-free interest rate 1.83% 3.01% 2.31% 2.15% 1.53% 1.60% Expected dividend yield —% —% —% —% —% —% Contractual term (in years) 5 5 5 5 5 5 Number of shares 3,863,326 309,066 386,333 463,599 386,333 386,333 Relative fair value of each warrant $3.3 million $0.2 million $0.4 million $0.4 million $0.2 million $0.2 million 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 48 months . Outstanding debt obligations are as follows (in thousands): December 31, 2019 Principal amount $ 64,313 Less: unamortized discount and debt issuance costs (2,431 ) Notes payable less unamortized discount and debt issuance costs 61,882 Less: current maturities, net of unamortized discount and debt issuance costs (3,320 ) Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs $ 58,562 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As discussed in Note 1(d), in August of 2018, the Company purchased Premiere from ECMC, with the purchase consideration including the issuance of 1,000,000 shares of Company common stock to ECMC and a commitment to issue ECMC additional shares of common stock as part of an earn-out agreement. Additionally, as discussed in Note 4, since August 2017, ECMC has served as a lender to the Company with a Credit Agreement initially funded in August 2017 at $44 million , and a balance outstanding of $64.3 and $45.8 million as of December 31, 2019 and 2018, respectively. In connection with the Credit Agreement, the Company has issued ECMC warrants to purchase 5,794,990 and 4,172,392 shares of common stock through December 31, 2019 and 2018 respectively. ECMC’s beneficial ownership percentage on each of these dates was approximately 11.7% and 9.0% , respectively. The Company has a relationship with ECMC as a customer, with revenues of $16.3 million in 2019 and $15.5 million in 2018. Given the breadth of ECMC’s involvement with the Company as of December 31, 2019 and 2018, we have concluded that ECMC is a related party for purposes of financial statement presentation and disclosure. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
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. In November 2019, the Company amended its lease agreement for the office space in Sunrise, Florida, to reduce the amount of rentable square footage. The lease modification was accounted for as a partial termination whereby the lease liability was re-measured and the ROU asset was reduced on a proportionate basis. The difference between the proportionate reduction in the ROU asset and corresponding lease liability was immaterial and recognized in the consolidated statement of operations as a gain on the effective date of the modification. Operating lease expense was $3.3 million for the year ended December 31, 2019. Supplemental cash flow and other information related to operating leases as of December 31, 2019 are as follows: Weighted Average Remaining Lease Term 3.4 years Weighted Average Discount Rate 6.3 % Cash paid for amounts included in the measurement of operating lease liabilities was $3.5 million for the year ended December 31, 2019, included in operating cash flows. The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2019 (in thousands): Year Ending December 31, Amount 2020 $ 3,192 2021 2,306 2022 1,684 2023 563 Thereafter 975 Total undiscounted cash flows $ 8,720 Less imputed interest (961 ) Total $ 7,759 Disclosures related to periods prior to adoption of the new lease standard Future minimum rental commitments under non-cancelable leases as of December 31, 2018 were as follows (in thousands): Year Ending December 31, Amount 2020 $ 3,427 2021 3,393 2022 2,514 2023 1,901 2024 800 Thereafter 1,390 Total $ 13,425 Lease expense was $3.9 million for the year ended December 31, 2018. Deferred rent included in other liabilities on the consolidated balance sheets as of December 31, 2018 was $1.2 million . |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Capital Stock | Capital Stock Since August 15, 2012, the authorized common stock has been 500,000,000 shares and the authorized preferred stock has been 50,000,000 shares. |
Stock-based Compensation
Stock-based Compensation | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation (a) Stock Options Under the terms of the Performant Financial Corporation 2007 Stock Option Plan (2007 Plan), incentive and nonqualified stock options may be granted for up to 4,000,000 shares of the Company’s authorized but unissued common stock. Options granted under the 2007 Plan generally vest over a five -year period. The 2007 Plan was terminated on the completion of its initial public offering in August 2012. No shares of the Company's common stock are available under our 2007 Plan other than for satisfying exercises of stock options granted under this plan prior to termination. The terms of the Performant Financial Corporation 2012 Stock Incentive Plan (2012 Plan) provide for the granting of incentive stock options within the meaning of Section 422 of the Internal Revenue Code (the Code) to employees and the granting of nonstatutory stock options, restricted stock, stock appreciation rights, stock unit awards and cash-based awards to employees, non-employee directors and consultants. The Company has reserved 10,550,000 shares of common stock under the 2012 Plan. Options granted under the 2012 Plan generally vest over four years. The exercise price of incentive stock options shall generally not be less than 100% of the fair market value of the common stock subject to the option on the date that the option is granted. The exercise price of nonqualified stock options shall generally not be less than 85% of the fair market value of the common stock subject to the option on the date that the option is granted. Options issued under the two plans have a maximum term of 10 years and vest over schedules determined by the Company's Board of Directors. Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $2.3 million and $2.8 million for the years ended December 31, 2019 and 2018 , respectively. The following table sets forth a summary of the Company's stock option activity for the years ended December 31, 2019 and 2018: Outstanding Options Weighted average exercise price per share Weighted average remaining contractual life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 01, 2018 2,936,198 8.21 4.48 Granted — — Forfeited (208,346 ) 8.96 Exercised (268,750 ) 0.69 Outstanding at December 31, 2018 2,459,102 8.97 3.25 $ 273 Granted — — Forfeited (448,458 ) 4.46 Exercised (19,478 ) 1.74 Outstanding December 31, 2019 1,991,166 $ 10.06 2.89 $ — Vested, exercisable, and expected to vest (1) at December 31, 2019 1,991,145 $ 10.06 2.89 $ — Exercisable at December 31, 2019 1,990,749 $ 10.06 2.89 $ — (1) Options expected to vest reflect an estimated forfeiture rate. There were no stock options granted during the years ended December 31, 2019 and December 31, 2018. The aggregate intrinsic value of our stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during the years ended December 31, 2019 and 2018 was $0.0 million and $0.5 million , respectively. At December 31, 2019 and 2018 , there were $0.0 million and $0.01 million , respectively, of unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements. Net cash proceeds from the exercise of stock options were $0.03 million and $0.2 million during 2019 and 2018 , respectively. If stock options had been granted during the years ended December 31, 2019 and December 31, 2018, the fair value of each option grant would have been estimated using the Black-Scholes-Merton option pricing model. Expected volatilities are calculated based on the historical volatility data of the Company over a term comparable to the expected term of the options issued. The expected term of the award is determined based on the average of the vesting term and the contractual term. Management monitors share option exercise and employee termination patterns to estimate forfeiture rates within the valuation model. (b) Restricted Stock Units The following table summarizes restricted stock unit activity for the years ended December 31, 2019 and 2018: Weighted average Number of grant date Awards fair value Outstanding at January 01, 2018 2,591,587 $ 2.39 Granted 2,106,536 2.70 Forfeited (871,184 ) 2.37 Vested and converted to shares, net of units withheld for taxes (645,560 ) 2.80 Units withheld for taxes (248,143 ) $ 2.80 Outstanding at December 31, 2018 2,933,236 $ 2.50 Granted 1,660,304 1.70 Forfeited (365,225 ) 2.40 Vested and converted to shares, net of units withheld for taxes (695,709 ) 2.43 Units withheld for taxes (278,352 ) $ 2.43 Outstanding at December 31, 2019 3,254,254 $ 2.12 Expected to vest at December 31, 2019 2,869,744 $ 2.12 Share-based compensation cost for restricted stock units (RSUs) is measured based on the closing fair market value of the Company's common stock on the date of grant. The Company recognizes share-based compensation cost over the award's requisite service period on a straight-line basis for time-based RSUs and on a graded basis for RSUs that are contingent on the achievement of performance conditions. The majority of RSUs that vested in 2019 and 2018 were net-share settled such that the Company withheld shares with value equivalent to the employees’ minimum statutory obligation for the applicable income and other employment taxes and remitted the cash to the appropriate taxing authorities. The total shares withheld were approximately 278,000 shares for 2019 and approximately 248,000 shares for 2018 and were based on the value of the RSUs on their respective vesting dates as determined by the Company’s closing stock price. These net-share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting and did not represent an expense to the Company. At December 31, 2019 and 2018 , there was $4.6 million and $ 5.4 million and of compensation expense yet to be recognized related to non-vested restricted stock units. The unrecognized expense as of December 31, 2019 is expected to be recognized over the remaining weighted-average vesting period of 2.5 years. 974,061 and 893,703 of the restricted stock units vested during the years ended December 31, 2019 and 2018 , respectively. Restricted stock units granted under the 2012 Plan generally vest over periods between one and four years. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2019 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company has a 401(k) Salary Deferral Plan (the Plan) covering all full-time employees who have met certain service requirements. Employees may contribute a portion of their salary up to the maximum limit established by the Code for such plans. Employer contributions are discretionary. No matching contributions were made during 2019 and 2018. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax expense (benefit) consists of the following (in thousands): 2019 2018 Current: Federal $ — $ 275 State (390 ) 777 (390 ) 1,052 Deferred: Federal $ — $ (52 ) State 13 542 13 490 Total expense (benefit) $ (377 ) $ 1,542 The reconciliation between the amount computed by applying the U.S. federal statutory rate of 21% for 2019 and 2018 to income before taxes and the Company's tax provision for 2019 and 2018 is as follows: 2019 2018 Federal income at the statutory rate 21 % 21 % State income tax, net of federal benefit 2 % (18 )% Permanent differences (1 )% (4 )% Work Opportunity Credit 1 % — % Return to provision true-up 2 % (4 )% Valuation allowance (21 )% (18 )% Other (2 )% — % Effective tax rate 2 % (23 )% The following table summarized the components of the Company's deferred tax assets and liabilities as of December 31, 2019 and 2018 (in thousands): 2019 2018 Deferred tax assets Vacation accrual 514 551 Nonqualified stock options 2,873 3,361 State tax deferral 387 502 State tax credits 452 452 Net operating loss 4,519 3,876 Interest expense limitation 3,419 1,498 Lease liability 2,098 — Other 1,291 861 Total deferred tax assets 15,553 11,101 Valuation allowance (12,809 ) (8,397 ) Total deferred tax assets net of valuation allowance 2,744 2,704 Deferred tax liabilities: Fixed assets (749 ) (2,692 ) Right of use asset (1,848 ) — Other (182 ) (34 ) Total deferred tax liabilities (2,779 ) (2,726 ) Net deferred tax liabilities $ (35 ) $ (22 ) As of December 31, 2019 , and 2018, the Company recorded a valuation allowance against deferred tax assets that are not more likely than not realizable based upon the assessment of all positive and negative evidence. The total amount of the valuation allowance at December 31, 2019 is $12.8 million , which is an increase of $4.4 million from the amount recorded as of December 31, 2018 . On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act” (TCJA) that significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest, allows for the expensing of capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. The Company calculated year end income tax provision in accordance with the Tax Act. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and tax-planning strategies in making this assessment. Based upon the Company’s cumulative three year loss position and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will be unable to realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could change in the near term if estimates of future taxable income during the carryforward period change. The Company has state tax credits of $0.5 million , which will expire in 2024. The Company has state net operating loss carryforwards of $26.0 million which will start to expire in 2020 and a federal net operating loss carryforward of $12.1 million which will be carried forward indefinitely. The Company has $0.5 million of federal tax credit carryforwards which begin to expire in 2037. The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2019 from its unrecognized tax benefits as of December 31, 2018 (in thousands): Unrecognized tax benefits balance at January 1, 2018 $ 1,082 Increase related to prior year tax positions 602 Lapse of statute of limitations (83 ) Unrecognized tax benefits balance at December 31, 2018 1,601 Increase related to prior year tax positions 51 Lapse of statute of limitations (282 ) Unrecognized tax benefits balance at December 31, 2019 $ 1,370 At December 31, 2019 and 2018 , the Company had approximately $1.4 million and $1.6 million of unrecognized tax benefits, respectively. The Company does not expect any significant change in unrecognized tax benefits during the next twelve months. The Company records interest expense and penalties related to unrecognized tax benefits in income tax expense. The amount of accrued interest was $0.3 million and $0.2 million at December 31, 2019 and 2018 , respectively. No penalties were recognized in 2019 or accrued at December 31, 2019 , and 2018 respectively. The Company has unrecognized tax benefits of approximately $1.4 million which, if recognized, would favorably affect the Company’s effective income tax rate. The Company files income tax returns with the U.S. federal government and various state jurisdictions. The Company operates in a number of state and local jurisdictions, most of which have never audited the Company's records. Accordingly, the Company is subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. For tax years before 2016, the Company is no longer subject to Federal and certain other state tax examinations. The company is currently being examined by the Franchise Tax Board of California for tax years 2011 through 2014 and by the Internal Revenue Service for tax year 2017. |
Other Commitments and Contingen
Other Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments and Contingencies | Other Commitments and Contingencies (a) Trust Funds The Company collects principal and interest payments and collection costs on defaulted loans for various contracting agencies. Cash collections for some of the Company’s customers are held in trust in bank accounts controlled by the Company. The Company remits trust funds to the contracting agencies on a regular basis. The amount of cash held in trust and the related liability are separated from and not included in the Company’s consolidated financial statements. Cash held in trust for customers totaled $4.3 million and $3.2 million at December 31, 2019 and 2018 , respectively. (b) Litigation The Company, during the ordinary course of its operations, has been named in various legal suits and claims, several of which are still pending. In the opinion of management and the Company’s legal counsel, such legal actions will not have a material effect on the Company’s consolidated financial position or results of operations or cash flows. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements were issued and identified the following events, which do not require adjustments to the consolidated financial statements. The related disclosures are included below and in note 1(d). (a) COVID-19 Pandemic On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The pandemic has had a significant negative impact on global economic conditions. There is significant uncertainty around the breadth and duration of business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S. economy. Management is actively monitoring the situation and adjusting operations as needed. Refer also to Note 1(d). (b) Coronavirus Aid, Relief, and Economic Security (CARES) Act On March 27, 2020, the CARES Act was enacted. The CARES Act is an approximately $2 trillion emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and curtail the negative economic effect of the COVID-19 pandemic. The CARES Act provides sweeping tax changes of which the Company can utilize at least two of the provisions: net operating losses arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund: and deferral of the payment of the employer portion of social security taxes incurred between March 27 and December 31, 2020. Half of the deferred amount is due December 31, 2021 with the other half due December 31, 2022. Refer also to Note 1(d). Management will continue to analyze the different aspects of the CARES Act to determine whether any other provisions may support the Company. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2019 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS For the years ended December 31, 2019 and 2018 Allowance for doubtful accounts (in thousands): Description Balance at Beginning of Period Additions Charged against Expense Recoveries Charge-offs Balance at End of Period 2019 $ 22 219 — (4 ) $ 237 2018 $ 35 22 — (35 ) $ 22 Estimated allowance and liability for appeals and disputes (in thousands): Description Balance at Beginning of Period Additions Charged against Revenue Appeals Found in Providers Favor Balance at End of Period 2019 $ 210 1,032 (224 ) $ 1,018 2018 $ 18,817 441 (19,048 ) * $ 210 *Includes the release of $18.5 million related to the January 31, 2018 termination of the CMS Region A RAC contract. Deferred tax asset valuation allowance (in thousands): Description Balance at Beginning of Period Additions Releases Balance at End of Period 2019 $ 8,397 4,412 — $ 12,809 2018 $ 5,772 2,625 — $ 8,397 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization and Nature of Business | Organization and Nature of Business 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 our 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 (PTL), and Performant Europe Ltd (through 2018). 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. PBS is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. PTL is a California limited liability company that was formed in 2004. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. The Company consolidates entities in which it has controlling financial interest, and as of December 31, 2019 , all of the Company’s subsidiaries are 100% owned. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates in the Preparation of Consolidated Financial Statements | Use of Estimates in the Preparation of Consolidated Financial Statements 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 and disputes, 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. |
Liquidity | Liquidity The accompanying consolidated financial statements have been prepared on the basis of going concern which contemplates that the Company will be able to realize assets and discharge its liabilities in the normal course of business. Accordingly, they do not give effect to any adjustments that would be necessary should the Company be required to liquidate its assets. The Company incurred net losses of approximately $26.8 million and $8.0 million as well as net cash outflows from operations of approximately $15.4 million and $12.1 million for the years ended December 31, 2019 and 2018, respectively. The ability of the Company to continue to fund its business plans is dependent upon realizing sufficient cash flows in the future. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. In March 2020, the World Health Organization declared the 2019 coronavirus disease (“COVID-19”) a pandemic. COVID-19 has had, and will likely continue to have, an impact on the Company’s business, both operationally and financially. For example, all states in which the Company has offices are under state of emergency and have shelter-in-place or equivalent orders as of the filing of this Form 10-K, which has resulted in both management and employees working remotely (from home). The United States Government has passed multiple new laws designed to help companies respond to the COVID-19 pandemic. Specifically, on March 27, 2020, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) which included several student loan-related changes. These changes have had an impact on the Company’s financial results and management expects that they will continue to affect the Company’s financial results into the foreseeable future. The CARES Act included changes to student loans owned by the Department of Education. These changes include the suspension of payments, the ceasing of accruing interest, and stopping involuntary collections of payments (e.g., wage garnishments). The changes are in effect through September 30, 2020. While these changes impact the set-up of new loan rehabilitation agreements by defaulted student loan borrowers, the Department of Education will consider each month during the period of suspended payments as an eligible month towards achieving loan rehabilitation, which is an element in determining future revenue to which the Company is entitled. In addition, student loan revenue and related cash flows will continue during this period because the Company earns revenue for a number of months from existing in-process borrower rehabilitation agreements. Further, while not mandated by the CARES Act, all of the Company’s Guaranty Agency clients (who administer the Federal Family Education Loan Program) are largely complying with the provisions of the Act, with the exception of counting missed payments toward qualification for loan rehabilitation. Given the CARES Act impacts on the Company’s recovery activities through September 30, 2020, the Company has furloughed more than 400 employees to date, which will result in annual savings of more than $15 million . The Company’s healthcare business has not experienced, and is not currently expected to experience, a similar level of impact as the recovery business due to the fact that only two healthcare customers have been impacted by congressional regulations to date. While a few healthcare customers placed short term pauses on audit activities, the Company has continued to see growth and expansion in other healthcare offerings; notably, the Company’s Third Party Liability contracts have not experienced any contractions to date. Additionally, the Company does not foresee any permanent negative effects to its relationships or overall contract expectations within the healthcare markets. With respect to favorable impacts to the Company’s liquidity, the CARES Act provided the right to carryback net operating losses from 2018 and 2019 to earlier periods. The Company has already filed for a refund request for the 2013 tax year which will result in an approximately $2.4 million cash refund, and the Company will file a refund request for the 2014 tax year which is expected to result in a refund of approximately $1.5 million . The CARES Act also allows deferrals and credits for payroll tax amounts, which is expected to provide approximately $3 million in cash savings through the remainder of 2020. The Company continues to analyze the impact of COVID-19. However, the Company believes that its forecasted results, considering the impact of COVID-19, will be sufficient to fund the Company’s current operations, for at least a year from the issuance of these consolidated financial statements. While the Company believes its financial projections are attainable, there can be no assurances that the financial results will be recognized in a timeframe necessary to meet the Company’s ongoing cash requirements. To address the Company’s liquidity needs, the Company may need to execute various actions to increase cash necessary for operations. These actions include, but are not limited to, additional reductions in workforce (both through furloughs and layoffs), reduce or delay capital expenditures, seek additional capital infusions through public and/or private means, sales of real estate assets or operations, and scaling back of certain lower margin operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits. The Company collects monies on behalf of its clients. Cash is often held on behalf of the clients in various trust accounts and is subsequently remitted to the clients based on contractual agreements. Cash held in these trust accounts for contracting agencies is not included in the Company’s assets (Note 11(a)). |
Restricted Cash | Restricted Cash At December 31, 2019 and 2018 , restricted cash included in current assets on our consolidated balance sheet was $1.6 million and $ 1.8 million , respectively, held in the form of certificates of deposit, which serve as collateral for letters of credit. |
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 to 7 years. Buildings are depreciated using the straight-line method over 31.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. Computer software and computer hardware are depreciated using the straight-line method over 3 years and 5 years, respectively. Maintenance and repairs are charged to expense as incurred. Improvements that extend the useful lives of assets are capitalized. When property is sold or retired, the cost and the related accumulated depreciation are removed from the consolidated balance sheet and any gain or loss from the transaction is included in the consolidated statements of operations. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price and related costs over the fair value assigned to the net assets of businesses acquired. Goodwill is reviewed for impairment annually in December, or more frequently if certain indicators are present. We may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company changed its annual assessment to December in 2019 from November in 2018 since the Company had performed interim quantitative impairment assessments during 2019. The change in the annual assessment date did not have a material impact on our analysis. In performing the quantitative goodwill test, if the carrying value of the Company, as one reporting unit, exceeds its fair value, goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and the fair value of the reporting unit. Impairment testing is based upon the best information available including our market capitalization and estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of the reporting unit, inclusive of goodwill. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Identifiable intangible assets consist of customer contracts and related relationships. Customer contracts and related relationships are amortized over their estimated useful lives of 4 to 20 years. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets 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. |
System Developments | System Developments The Company follows the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-40, Internal-Use Software , which specifies that costs incurred during the application stage of development should be capitalized. All other costs are expensed as incurred. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs represent loan and legal fees paid in connection with the issuance of long-term debt. Debt issuance costs are deducted from current and non-current notes payable and are amortized to interest expense under the effective interest method in accordance with key terms of the notes as amended. |
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 and healthcare audit 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 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 consideration 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 Commercial Payment Center (MSP) contract 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. For healthcare claims audit contracts with commercial clients, 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. For coordination-of-benefits contracts with commercial clients, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the client. Healthcare providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS or other healthcare clients under the RAC or other commercial healthcare contracts. Under the MSP contract, insurance companies or other responsible parties may dispute the Company’s findings regarding Medicare not being the primary payer of healthcare claims. Total estimated liability for appeals and disputes was $1.0 million and 0.2 million as of December 31, 2019 and 2018, respectively. This represents the Company’s best estimate of the probable amount of losses related to appeals or disputes of claims for which commissions were previously collected. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category (in thousands) for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 2018 (in thousands) Healthcare (1) $ 43,328 $ 54,454 Recovery (2) 89,626 83,785 Customer Care / Outsourced Services 17,478 17,429 Total Revenues $ 150,432 $ 155,668 (1) Includes $ 28.4 million related to the termination of the 2009 CMS Region A contract (2) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, select financial institutions, as well as Premiere Credit of North America. For the year ended December 31, 2019 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2019 Revenue Percent of 1 $27,867 18.5% 2 $26,593 17.7% 3 $16,329 10.9% Accounts receivable due from these three customers were 45% of total trade accounts receivable at December 31, 2019, of which two of these customers comprised 24% and 18% of total trade receivables. For the year ended December 31, 2018 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2018 Revenue Percent of 1 $41,859 26.9% 2 $26,908 17.3% 3 $26,702 17.2% Accounts receivable due from these three customers were 62% of total trade receivables at December 31, 2018 . Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in cash used in operating activities in the consolidated statements of cash flows. 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 considered remote. The allowance for doubtful accounts was $0.2 million and $0.02 million for December 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 had contract assets of $1.3 million and $0 million as of December 31, 2019 and December 31, 2018, respectively. The contract assets relate to the Company’s rights to consideration for services completed during the respective years, 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 liabilities are included in deferred revenue in the consolidated balance sheets. The Company had contract liabilities of $0.1 million as of December 31, 2019 and $1.1 million as of December 31, 2018. The Company’s contract liability related to an advance recovery commission payment received from a customer during the first quarter of 2018, for which the Company recognized revenue as services were delivered. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets At December 31, 2019, prepaid expenses and other current assets were $3.3 million and included approximately $2.2 million related to prepaid software licenses and maintenance agreements, $0.7 million for prepaid insurance, and $0.4 million for various other prepaid expenses. At December 31, 2018, prepaid expenses and other current assets were $3.4 million and included approximately $2.1 million related to prepaid software licenses and maintenance agreements, $0.7 million for prepaid insurance, and $0.6 million for various other prepaid expenses. |
Legal Expenses | Legal Expenses The Company recognizes legal fees related to litigation as they are incurred. |
Comprehensive Income (Loss) | Comprehensive Loss The Company had a single component of comprehensive loss on the consolidated statements of comprehensive loss related to foreign currency translation adjustments for its subsidiary Performant Europe Ltd. for the year ended December 31, 2018 . |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s consolidated financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short-term debt and long-term debt. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values based on or due to their short-term maturities. The carrying values of short-term debt and long-term debt approximate fair value, in which their variable interest rates approximate market rates. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset-and-liability method. Deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying value of assets and liabilities for financial reporting purposes and for taxation purposes. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest expense and penalties related to unrecognized tax benefits are recorded in income tax expense. |
Stock-based Compensation | Stock-based Compensation The Company accounts for its employee stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation . FASB ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the consolidated financial statements and that for equity-classified awards, such cost is measured at the grant date fair value of the award. FASB ASC Topic 718 also requires that excess tax benefits recognized in equity related to stock option exercises are reflected as financing cash inflows. |
Loss per Share | Loss per Share For the years ended December 31, 2019 and 2018 , basic loss per share is calculated by dividing net loss attributable to common shareholders by the sum of the weighted average number of common shares outstanding during the year. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares and dilutive common shares equivalents outstanding during the period. The Company’s common share equivalents consist of stock options, restricted stock units (RSUs), and performance 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. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Years Ended December 31, 2019 2018 Weighted average shares outstanding – basic 53,468 52,064 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 53,468 52,064 (u) |
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 an 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. In March 2017, the FASB issued ASU 2017-04, "Intangibles-Goodwill and Other: Simplifying the Test for Goodwill Impairment" which eliminates the second step from the goodwill impairment test. An entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, but the loss cannot exceed the total amount of goodwill allocated to the reporting unit. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company early adopted this standard for the year ended December 31, 2018 on a prospective basis. There was no impact on the Company's financial position or results of operations upon adoption of this standard Relevant New Accounting Standards In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes" . This ASU clarifies and simplifies accounting for income taxes by eliminating certain exceptions for intraperiod tax allocation principles and the methodology for calculating income tax rates in an interim period, among other updates. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is evaluating the effect of the adoption of this pronouncement. In August 2018, the FASB issued ASU 2018-13, " Fair Value Measurements", which eliminates, adds or modifies certain disclosure requirements for fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year, with early adoption permitted to adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is evaluating the effect of the adoption of this pronouncement. In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments" as modified by subsequently issued ASU's 2018-19, 2019-04, 2019-05 and 2019-11. This ASU requires estimating all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company will adopt this ASU effective January 1, 2020. The Company is evaluating the effect of the adoption of this pronouncement. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Consideration Transferred for Acquisition | The consideration for the acquisition was determined as follows (in thousands except per share amount): Initial shares consideration 1,000 Closing stock price per share $ 2.42 2,420 Earn-out consideration 2,154 Total consideration $ 4,574 |
Schedule of Estimated Fair Values of Assets Acquired and Liabilities Assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities (in thousands): Cash and cash equivalents $ 2,285 Trade accounts receivable, net 1,690 Other current assets 576 Property, equipment, and leasehold improvements, net 3,174 Customer relationship intangible asset 50 Other assets 34 Total identifiable assets acquired 7,809 Accounts Payable (328 ) Accrued salaries and benefits (970 ) Other current liabilities (1,802 ) Other liabilities (135 ) Net assets acquired $ 4,574 |
Schedule of Pro Forma Information from Acquisition | The following table presents selected unaudited pro forma information for the Company assuming the acquisition of Premiere had occurred as of January 1, 2018. This pro forma information does not purport to present what the Company’s actual results would have been if the acquisition occurred as of the date indicated or what such results would be for any future periods. Year Ended December 31, 2018 (In thousands, except per share amounts) Total revenues $ 170,893 Net loss $ (12,672 ) Earnings per share: Basic $ (0.24 ) Diluted $ (0.24 ) |
Schedule of Disaggregation of Revenue | The following table presents revenue disaggregated by category (in thousands) for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 2018 (in thousands) Healthcare (1) $ 43,328 $ 54,454 Recovery (2) 89,626 83,785 Customer Care / Outsourced Services 17,478 17,429 Total Revenues $ 150,432 $ 155,668 (1) Includes $ 28.4 million related to the termination of the 2009 CMS Region A contract (2) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, select financial institutions, as well as Premiere Credit of North America. |
Schedule of Details of Revenue by Major Customers | For the year ended December 31, 2019 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2019 Revenue Percent of 1 $27,867 18.5% 2 $26,593 17.7% 3 $16,329 10.9% Accounts receivable due from these three customers were 45% of total trade accounts receivable at December 31, 2019, of which two of these customers comprised 24% and 18% of total trade receivables. For the year ended December 31, 2018 , the Company had three clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the three clients are summarized in the table below (in thousands): Rank 2018 Revenue Percent of 1 $41,859 26.9% 2 $26,908 17.3% 3 $26,702 17.2% |
Schedule of Reconciliation of Basic to Diluted Weighted Average Shares Outstanding | The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Years Ended December 31, 2019 2018 Weighted average shares outstanding – basic 53,468 52,064 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 53,468 52,064 |
Property, Equipment, and Leas_2
Property, Equipment, and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment and Leasehold Improvements | Property, equipment, and leasehold improvements consist of the following at December 31, 2019 and 2018 (in thousands): December 31, 2019 December 31, 2018 Land $ 1,943 $ 1,943 Building and leasehold improvements 8,124 8,076 Furniture and equipment 6,257 6,248 Computer hardware and software 79,066 78,743 95,390 95,010 Less accumulated depreciation and amortization (76,621 ) (72,755 ) Property, equipment and leasehold improvements, net $ 18,769 $ 22,255 |
Identifiable Intangible Asset_2
Identifiable Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |
Schedule of Identifiable Intangible Assets | Identifiable intangible assets consist of the following at December 31, 2019 and 2018 (in thousands): December 31, 2019 Gross Amounts Accumulated Amortization Net Customer contracts and related relationships $ 25,740 $ (24,815 ) $ 925 Perpetual license 3,250 (3,250 ) — Total amortizable intangible assets $ 28,990 $ (28,065 ) $ 925 December 31, 2018 Gross Amounts Accumulated Amortization Net Customer contracts and related relationships $ 25,378 $ (24,264 ) $ 1,114 Less: Impairment of customer contracts and related relationships (2,988 ) 2,988 — Add: Customer relationship intangible asset 50 (4 ) $ 46 Perpetual license 3,250 (3,250 ) — Total amortizable intangible assets $ 25,690 $ (24,530 ) $ 1,160 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Warrant Valuation | The key information and assumptions used to value the warrants are as follows: August 2017 Issuance October 2018 Issuance April 2019 Issuance May 2019 Issuance August 2019 Issuance September 2019 Issuance Exercise price $1.92 $1.92 $1.92 $1.92 $1.92 $1.92 Share price on date of issuance $1.85 $1.93 $2.24 $1.75 $1.11 $1.10 Volatility 50.0% 55.0% 57.5% 57.5% 67.5% 67.5% Risk-free interest rate 1.83% 3.01% 2.31% 2.15% 1.53% 1.60% Expected dividend yield —% —% —% —% —% —% Contractual term (in years) 5 5 5 5 5 5 Number of shares 3,863,326 309,066 386,333 463,599 386,333 386,333 Relative fair value of each warrant $3.3 million $0.2 million $0.4 million $0.4 million $0.2 million $0.2 million |
Schedule of Outstanding Debt Obligations | Outstanding debt obligations are as follows (in thousands): December 31, 2019 Principal amount $ 64,313 Less: unamortized discount and debt issuance costs (2,431 ) Notes payable less unamortized discount and debt issuance costs 61,882 Less: current maturities, net of unamortized discount and debt issuance costs (3,320 ) Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs $ 58,562 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Lease, Cost | Supplemental cash flow and other information related to operating leases as of December 31, 2019 are as follows: Weighted Average Remaining Lease Term 3.4 years Weighted Average Discount Rate 6.3 % |
Schedule of Maturities of Lease Liabilities | Year Ending December 31, Amount 2020 $ 3,192 2021 2,306 2022 1,684 2023 563 Thereafter 975 Total undiscounted cash flows $ 8,720 Less imputed interest (961 ) Total $ 7,759 |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum rental commitments under non-cancelable leases as of December 31, 2018 were as follows (in thousands): Year Ending December 31, Amount 2020 $ 3,427 2021 3,393 2022 2,514 2023 1,901 2024 800 Thereafter 1,390 Total $ 13,425 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table sets forth a summary of the Company's stock option activity for the years ended December 31, 2019 and 2018: Outstanding Options Weighted average exercise price per share Weighted average remaining contractual life (Years) Aggregate Intrinsic Value (in thousands) Outstanding at January 01, 2018 2,936,198 8.21 4.48 Granted — — Forfeited (208,346 ) 8.96 Exercised (268,750 ) 0.69 Outstanding at December 31, 2018 2,459,102 8.97 3.25 $ 273 Granted — — Forfeited (448,458 ) 4.46 Exercised (19,478 ) 1.74 Outstanding December 31, 2019 1,991,166 $ 10.06 2.89 $ — Vested, exercisable, and expected to vest (1) at December 31, 2019 1,991,145 $ 10.06 2.89 $ — Exercisable at December 31, 2019 1,990,749 $ 10.06 2.89 $ — (1) Options expected to vest reflect an estimated forfeiture rate. |
Schedule of Restricted Stock Units Award Activity | The following table summarizes restricted stock unit activity for the years ended December 31, 2019 and 2018: Weighted average Number of grant date Awards fair value Outstanding at January 01, 2018 2,591,587 $ 2.39 Granted 2,106,536 2.70 Forfeited (871,184 ) 2.37 Vested and converted to shares, net of units withheld for taxes (645,560 ) 2.80 Units withheld for taxes (248,143 ) $ 2.80 Outstanding at December 31, 2018 2,933,236 $ 2.50 Granted 1,660,304 1.70 Forfeited (365,225 ) 2.40 Vested and converted to shares, net of units withheld for taxes (695,709 ) 2.43 Units withheld for taxes (278,352 ) $ 2.43 Outstanding at December 31, 2019 3,254,254 $ 2.12 Expected to vest at December 31, 2019 2,869,744 $ 2.12 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | The Company’s income tax expense (benefit) consists of the following (in thousands): 2019 2018 Current: Federal $ — $ 275 State (390 ) 777 (390 ) 1,052 Deferred: Federal $ — $ (52 ) State 13 542 13 490 Total expense (benefit) $ (377 ) $ 1,542 |
Schedule of Reconciliation of Federal Statutory Income Tax Expense to Actual Income Tax Expense | The reconciliation between the amount computed by applying the U.S. federal statutory rate of 21% for 2019 and 2018 to income before taxes and the Company's tax provision for 2019 and 2018 is as follows: 2019 2018 Federal income at the statutory rate 21 % 21 % State income tax, net of federal benefit 2 % (18 )% Permanent differences (1 )% (4 )% Work Opportunity Credit 1 % — % Return to provision true-up 2 % (4 )% Valuation allowance (21 )% (18 )% Other (2 )% — % Effective tax rate 2 % (23 )% |
Schedule of Components of Deferred Tax Assets and Liabilities | The following table summarized the components of the Company's deferred tax assets and liabilities as of December 31, 2019 and 2018 (in thousands): 2019 2018 Deferred tax assets Vacation accrual 514 551 Nonqualified stock options 2,873 3,361 State tax deferral 387 502 State tax credits 452 452 Net operating loss 4,519 3,876 Interest expense limitation 3,419 1,498 Lease liability 2,098 — Other 1,291 861 Total deferred tax assets 15,553 11,101 Valuation allowance (12,809 ) (8,397 ) Total deferred tax assets net of valuation allowance 2,744 2,704 Deferred tax liabilities: Fixed assets (749 ) (2,692 ) Right of use asset (1,848 ) — Other (182 ) (34 ) Total deferred tax liabilities (2,779 ) (2,726 ) Net deferred tax liabilities $ (35 ) $ (22 ) |
Schedule of Unrecognized Tax Benefits | The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2019 from its unrecognized tax benefits as of December 31, 2018 (in thousands): Unrecognized tax benefits balance at January 1, 2018 $ 1,082 Increase related to prior year tax positions 602 Lapse of statute of limitations (83 ) Unrecognized tax benefits balance at December 31, 2018 1,601 Increase related to prior year tax positions 51 Lapse of statute of limitations (282 ) Unrecognized tax benefits balance at December 31, 2019 $ 1,370 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands | Mar. 27, 2020USD ($)employee | Aug. 31, 2018USD ($)employeeshares | Aug. 31, 2019USD ($) | Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Jan. 01, 2019USD ($) | Jan. 31, 2018USD ($) |
Property, Plant and Equipment [Line Items] | |||||||
Number of segments | segment | 1 | ||||||
Net loss | $ 26,820 | $ 8,010 | |||||
Net cash used in operating activities | 15,423 | 12,149 | |||||
2020 | 200 | ||||||
Restricted cash included in current assets | 1,622 | 1,813 | |||||
Capitalized internal use software | 4,000 | 5,500 | |||||
Capitalized internal use software, depreciation expense | 5,800 | 6,800 | |||||
Estimated liability for appeals and disputes | 1,018 | 210 | |||||
Allowance for doubtful accounts | 237 | 22 | |||||
Contract assets | 1,339 | 0 | |||||
Contract liabilities | 100 | 1,100 | |||||
Prepaid expenses and other current assets | 3,329 | 3,420 | |||||
Prepaid software licenses and maintenance agreements | 2,200 | 2,100 | |||||
Prepaid insurance | 700 | 700 | |||||
Other prepaid expense, current | 400 | 600 | |||||
ROU Assets | 6,834 | $ 10,400 | |||||
Operating lease liability | $ 7,759 | 11,600 | |||||
Deferred rent | $ 1,200 | $ 1,200 | |||||
Accounts Receivable | Customer Concentration Risk | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as a percent) | 45.00% | 62.00% | |||||
Furniture Fixtures and Equipment | Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful lives of property | 7 years | ||||||
Furniture Fixtures and Equipment | Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful lives of property | 5 years | ||||||
Building | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful lives of property | 31 years 6 months | ||||||
Computer Hardware and Software | Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful lives of property | 3 years | ||||||
Computer Hardware and Software | Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated useful lives of property | 5 years | ||||||
Customer contracts and related relationships | Minimum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Identifiable intangible assets estimated useful lives | 4 years | ||||||
Customer contracts and related relationships | Maximum | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Identifiable intangible assets estimated useful lives | 20 years | ||||||
2009 CMS Region A Contract Case | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Estimated liability for appeals and disputes | $ 18,500 | ||||||
Premiere Credit of North America | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Number of employees | employee | 330 | ||||||
Initial stock consideration (shares) | shares | 1,000,000 | ||||||
Period of additional stock issuance pursuant to acquisition | 5 years | ||||||
Customer relationship intangible asset | $ 50 | ||||||
Acquisition-related costs | $ 200 | ||||||
Pro forma revenue of acquiree since acquisition | $ 7,000 | ||||||
Pro forma net loss of acquiree since acquisition | $ 1,400 | ||||||
Premiere Credit of North America | Customer Relationships | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Customer relationship intangible asset | $ 50 | ||||||
Identifiable intangible assets estimated useful lives | 4 years | ||||||
Customer 1 | Revenue | Customer Concentration Risk | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as a percent) | 18.50% | 26.90% | |||||
Customer 1 | Accounts Receivable | Customer Concentration Risk | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as a percent) | 24.00% | ||||||
Customer 2 | Revenue | Customer Concentration Risk | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as a percent) | 17.70% | 17.30% | |||||
Customer 2 | Accounts Receivable | Customer Concentration Risk | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Concentration risk (as a percent) | 18.00% | ||||||
Subsequent Event [Member] | |||||||
Property, Plant and Equipment [Line Items] | |||||||
CARES Act, employees furloughed | employee | 400 | ||||||
CARES Act, annual savings | $ 15,000 | ||||||
CARES Act, cash savings, remainder of year | 3,000 | ||||||
Subsequent Event [Member] | Tax Year 2013 | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Amended tax refund | 2,400 | ||||||
Subsequent Event [Member] | Tax Year 2014 | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Amended tax refund | $ 1,500 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Consideration Transferred (Details) - Premiere Credit of North America $ / shares in Units, $ in Thousands | Aug. 31, 2018USD ($)$ / sharesshares |
Business Acquisition [Line Items] | |
Initial stock consideration (shares) | shares | 1,000,000 |
Closing stock price (USD per share) | $ / shares | $ 2.42 |
Value of initial shares consideration | $ 2,420 |
Earn-out consideration | 2,154 |
Total consideration | $ 4,574 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Purchase Price Allocation (Details) - Premiere Credit of North America $ in Thousands | Aug. 31, 2018USD ($) |
Business Acquisition [Line Items] | |
Cash and cash equivalents | $ 2,285 |
Trade accounts receivable, net | 1,690 |
Other current assets | 576 |
Property, equipment, and leasehold improvements, net | 3,174 |
Customer relationship intangible asset | 50 |
Other assets | 34 |
Total identifiable assets acquired | 7,809 |
Accounts Payable | (328) |
Accrued salaries and benefits | (970) |
Other current liabilities | (1,802) |
Other liabilities | (135) |
Net assets acquired | $ 4,574 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Pro Forma Information (Details) - Premiere Credit of North America $ / shares in Units, $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)$ / shares | |
Business Acquisition, Pro Forma Information [Abstract] | |
Total revenues | $ | $ 170,893 |
Net loss | $ | $ (12,672) |
Earnings per share: | |
Basic (USD per share) | $ / shares | $ (0.24) |
Diluted (USD per share) | $ / shares | $ (0.24) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 150,432 | $ 155,668 |
Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 43,328 | 54,454 |
Recovery | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 89,626 | 83,785 |
Recovery | 2009 CMS Region A Contract | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 28,400 | |
Customer Care / Outsourced Services | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 17,478 | $ 17,429 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Details of Revenue by Major Customers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue, Major Customer [Line Items] | ||
Revenues | $ 150,432 | $ 155,668 |
Customer 1 | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 27,867 | $ 41,859 |
Customer 1 | Revenue | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 18.50% | 26.90% |
Customer 2 | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 26,593 | $ 26,908 |
Customer 2 | Revenue | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 17.70% | 17.30% |
Customer 3 | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 16,329 | $ 26,702 |
Customer 3 | Revenue | Customer Concentration Risk | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 10.90% | 17.20% |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Reconciliation of Basic to Diluted Weighted-Average Shares Outstanding (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Accounting Policies [Abstract] | ||
Weighted average shares outstanding – basic (shares) | 53,468 | 52,064 |
Dilutive effect of stock options (shares) | 0 | 0 |
Weighted average shares outstanding – diluted (shares) | 53,468 | 52,064 |
Property, Equipment, and Leas_3
Property, Equipment, and Leasehold Improvements - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense of property, equipment and leasehold improvements | $ 8.3 | $ 9.5 |
Property, Equipment, and Leas_4
Property, Equipment, and Leasehold Improvements - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | $ 95,390 | $ 95,010 |
Less accumulated depreciation and amortization | (76,621) | (72,755) |
Property, equipment and leasehold improvements, net | 18,769 | 22,255 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 1,943 | 1,943 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 8,124 | 8,076 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 6,257 | 6,248 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | $ 79,066 | $ 78,743 |
Identifiable Intangible Asset_3
Identifiable Intangible Assets and Goodwill - Summary (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2019 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | $ 25,690 | $ 28,990 |
Accumulated Amortization | (24,530) | (28,065) |
Less: Impairment of customer contracts and related relationships | 2,988 | |
Total | 1,160 | 925 |
Customer contracts and related relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | 25,378 | 25,740 |
Accumulated Amortization | (24,264) | (24,815) |
Total | 1,114 | 925 |
Add: Customer relationship intangible asset | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | 50 | |
Accumulated Amortization | (4) | |
Total | 46 | |
Perpetual license | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | 3,250 | 3,250 |
Accumulated Amortization | (3,250) | (3,250) |
Total | $ 0 | $ 0 |
Identifiable Intangible Asset_4
Identifiable Intangible Assets and Goodwill - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Amortization expense | $ 200 | $ 800 |
Impairment expense | 3,000 | |
Intangible asset amortization, next twelve months | 200 | |
Intangible asset amortization, year two | 200 | |
Intangible asset amortization, year three | 200 | |
Intangible asset amortization, year four | 200 | |
Goodwill | 74,372 | $ 81,572 |
Goodwill, impairment loss | $ 7,200 |
Credit Agreement - Narrative (D
Credit Agreement - Narrative (Details) | Sep. 25, 2019USD ($) | Aug. 06, 2019USD ($) | May 15, 2019USD ($) | Apr. 05, 2019USD ($) | Oct. 15, 2018USD ($) | Aug. 31, 2018USD ($)extension_periodshares | Aug. 07, 2017USD ($)$ / sharesshares | Jun. 30, 2017 | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($)$ / sharesshares | Aug. 31, 2019USD ($)$ / sharesshares | May 31, 2019USD ($)$ / sharesshares | Apr. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($) | Oct. 31, 2018USD ($)$ / sharesshares | Aug. 31, 2017USD ($)$ / sharesshares |
Line of Credit Facility [Line Items] | ||||||||||||||||
Number of optional extension periods | extension_period | 2 | |||||||||||||||
Duration of optional extension periods | 1 year | |||||||||||||||
Initial Term Loan | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Diluted undistributed earnings (as a percent) | 7.50% | |||||||||||||||
Exercise price (USD per share) | $ / shares | $ 1.92 | |||||||||||||||
Remaining discount amortization period | 48 months | |||||||||||||||
Transaction costs | $ 600,000 | |||||||||||||||
Initial Term Loan | Line of Credit | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Long-term borrowings outstanding | $ 44,000,000 | 44,000,000 | $ 64,300,000 | $ 45,800,000 | ||||||||||||
Additional Term Loan | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Number of optional extension periods | extension_period | 2 | |||||||||||||||
Duration of optional extension periods | 1 year | |||||||||||||||
Diluted undistributed earnings (as a percent) | 0.15% | |||||||||||||||
Securities called per warrant (shares) | shares | 77,267 | |||||||||||||||
Allotment of securities called by warrants | $ 1,000,000 | |||||||||||||||
Additional Term Loan | Line of Credit | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Long-term borrowings outstanding | $ 64,300,000 | |||||||||||||||
Maximum borrowing capacity under credit facility | $ 25,000,000 | $ 15,000,000 | $ 25,000,000 | |||||||||||||
Proceeds from credit facility | $ 5,000,000 | $ 5,000,000 | $ 6,000,000 | $ 5,000,000 | $ 4,000,000 | |||||||||||
Term Loan and Additional Term Loans | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Remaining discount amortization period | 48 months | |||||||||||||||
New Credit Agreement | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Floor rate (as a percent) | 1.00% | |||||||||||||||
Weighted-average interest rate (as a percent) | 11.80% | 8.00% | ||||||||||||||
Periodic principal payment (as a percent) | 5.00% | |||||||||||||||
Debt to EBITDA ratio | 6 | |||||||||||||||
Securities called by warrants (shares) | shares | 3,863,326 | |||||||||||||||
New Credit Agreement | Minimum | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Excess cash flow (as a percent) | 0.00% | |||||||||||||||
New Credit Agreement | Maximum | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Excess cash flow (as a percent) | 75.00% | |||||||||||||||
Amendment Number One to Credit Agreement | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Securities called by warrants (shares) | shares | 386,333 | 386,333 | 463,599 | 386,333 | 309,066 | 3,863,326 | ||||||||||
Exercise price (USD per share) | $ / shares | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | ||||||||||
Value of warrants outstanding | $ 200,000 | $ 200,000 | $ 400,000 | $ 400,000 | $ 200,000 | $ 3,300,000 | ||||||||||
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% | |||||||||||||||
Redemption Period One | Additional Term Loan | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Diluted undistributed earnings (as a percent) | 1.00% | |||||||||||||||
Securities called per warrant (shares) | shares | 515,110 | |||||||||||||||
Redemption Period One | New Credit Agreement | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Interest coverage ratio | 1 | |||||||||||||||
Redemption Period Two | Additional Term Loan | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Diluted undistributed earnings (as a percent) | 1.50% | |||||||||||||||
Securities called per warrant (shares) | shares | 772,665 | |||||||||||||||
Redemption Period Two | New Credit Agreement | ||||||||||||||||
Line of Credit Facility [Line Items] | ||||||||||||||||
Interest coverage ratio | 1.25 |
Credit Agreement - Warrant Valu
Credit Agreement - Warrant Valuation (Details) - Amendment Number One to Credit Agreement $ / shares in Units, $ in Millions | 1 Months Ended | |||||
Sep. 30, 2019USD ($)$ / sharesshares | Aug. 31, 2019USD ($)$ / sharesshares | May 31, 2019USD ($)$ / sharesshares | Apr. 30, 2019USD ($)$ / sharesshares | Oct. 31, 2018USD ($)$ / sharesshares | Aug. 31, 2017USD ($)$ / sharesshares | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Exercise price (USD per share) | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 | $ 1.92 |
Share price on date of issuance (USD per share) | $ 1.10 | $ 1.11 | $ 1.75 | $ 2.24 | $ 1.93 | $ 1.85 |
Number of shares (in shares) | shares | 386,333 | 386,333 | 463,599 | 386,333 | 309,066 | 3,863,326 |
Relative fair value of each warrant | $ | $ 0.2 | $ 0.2 | $ 0.4 | $ 0.4 | $ 0.2 | $ 3.3 |
Volatility | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Measurement input of warrants (as a percent) | 0.675 | 0.675 | 0.575 | 0.575 | 0.550 | 0.500 |
Risk-free interest rate | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Measurement input of warrants (as a percent) | 0.0160 | 0.0153 | 0.0215 | 0.0231 | 0.0301 | 0.0183 |
Expected dividend yield | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Measurement input of warrants (as a percent) | 0 | 0 | 0 | 0 | 0 | 0 |
Contractual term (in years) | ||||||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||||||
Contractual term of warrants | 5 years | 5 years | 5 years | 5 years | 5 years | 5 years |
Credit Agreement - Outstanding
Credit Agreement - Outstanding Debt Obligations (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
Principal amount | $ 64,313 |
Less: unamortized discount and debt issuance costs | (2,431) |
Notes payable less unamortized discount and debt issuance costs | 61,882 |
Less: current maturities, net of unamortized discount and debt issuance costs | (3,320) |
Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs | $ 58,562 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) $ in Millions | Aug. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 07, 2017 |
New Credit Agreement | ||||
Related Party Transaction [Line Items] | ||||
Securities called by warrants (shares) | 3,863,326 | |||
Line of Credit | Initial Term Loan | ||||
Related Party Transaction [Line Items] | ||||
Long-term borrowings outstanding | $ 44 | $ 64.3 | $ 45.8 | $ 44 |
Premiere Credit of North America | ||||
Related Party Transaction [Line Items] | ||||
Initial stock consideration (shares) | 1,000,000 | |||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Revenue from related party | $ 16.3 | $ 15.5 | ||
Affiliated Entity | ECMC | ||||
Related Party Transaction [Line Items] | ||||
Beneficial ownership percentage (as a percent) | 11.70% | 9.00% | ||
Affiliated Entity | ECMC | New Credit Agreement | ||||
Related Party Transaction [Line Items] | ||||
Securities called by warrants (shares) | 5,794,990 | 4,172,392 | ||
Affiliated Entity | ECMC | Premiere Credit of North America | ||||
Related Party Transaction [Line Items] | ||||
Initial stock consideration (shares) | 1,000,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2019 | |
Leases [Abstract] | |||
Operating lease expenses | $ 3.3 | ||
Operating lease liabilities | $ 3.5 | ||
Lease expense | $ 3.9 | ||
Deferred rent | $ 1.2 | $ 1.2 |
Leases - Components of Lease Te
Leases - Components of Lease Term and Discount Rate (Details) | Sep. 30, 2019 |
Lease [Abstract] | |
Weighted Average Remaining Lease Term | 3 years 4 months 24 days |
Weighted Average Discount Rate (as a percent) | 6.30% |
Leases - Future Minimum Rental
Leases - Future Minimum Rental Commitments under Non-Cancelable Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 3,192 | |
2021 | 2,306 | |
2022 | 1,684 | |
2023 | 563 | |
Thereafter | 975 | |
Total undiscounted cash flows | 8,720 | |
Less imputed interest | (961) | |
Total | 7,759 | $ 11,600 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ||
2020 | 3,427 | |
2021 | 3,393 | |
2022 | 2,514 | |
2023 | 1,901 | |
2024 | 800 | |
Thereafter | 1,390 | |
Total | $ 13,425 |
Capital Stock - Narrative (Deta
Capital Stock - Narrative (Details) - shares | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 15, 2012 |
Equity [Abstract] | |||
Common stock authorized (shares) | 500,000,000 | 500,000,000 | 500,000,000 |
Convertible preferred stock authorized (shares) | 50,000,000 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 2,300 | $ 2,800 |
Aggregate intrinsic value of stock options exercised | 0 | 500 |
Unrecognized stock-based compensation | 0 | 10 |
Proceeds from exercise of stock options | $ 34 | $ 187 |
Nonqualified Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price of stock options relative to common stock fair market value (as a percent) | 85.00% | |
Share-based Payment Arrangement, Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise price of stock options relative to common stock fair market value (as a percent) | 100.00% | |
Estimated life of stock options | 10 years | |
Share-based Payment Arrangement, Option | 2007 Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock available for future issuance (shares) | 4,000,000 | |
Vesting period | 5 years | |
Common stock available for grant (shares) | 0 | |
Share-based Payment Arrangement, Option | 2012 Stock Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock available for future issuance (shares) | 10,550,000 | |
Share-based Payment Arrangement, Option | 2012 Stock Incentive Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years | |
Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares paid for tax withholding (shares) | 278,000 | 248,000 |
Compensation expense that has yet to be recognized | $ 4,600 | $ 5,400 |
Remaining weighted average vesting period | 2 years 6 months | |
Number of units vested (shares) | 974,061 | 893,703 |
Restricted Stock Units | 2012 Stock Incentive Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | |
Restricted Stock Units | 2012 Stock Incentive Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 4 years |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 273 | ||
Options | |||
Outstanding Options | |||
Outstanding at beginning of period (shares) | 2,459,102 | 2,936,198 | |
Granted (shares) | 0 | 0 | |
Forfeited (shares) | (448,458) | (208,346) | |
Exercised (shares) | (19,478) | (268,750) | |
Outstanding at end of period (shares) | 1,991,166 | 2,459,102 | 2,936,198 |
Vested, exercisable, and expected to vest (shares) | 1,991,145 | ||
Exercisable (shares) | 1,990,749 | ||
Weighted average exercise price per share | |||
Outstanding at beginning of period (USD per share) | $ 8.97 | $ 8.21 | |
Granted (USD per share) | 0 | 0 | |
Forfeited (USD per share) | 4.46 | 8.96 | |
Exercised (USD per share) | 1.74 | 0.69 | |
Outstanding at end of period (USD per share) | 10.06 | $ 8.97 | $ 8.21 |
Vested, exercisable, and expected to vest (USD per share) | 10.06 | ||
Exercisable (USD per share) | $ 10.06 | ||
Weighted average remaining contractual life (Years) | |||
Outstanding | 2 years 10 months 20 days | 3 years 3 months | 4 years 5 months 22 days |
Vested, exercisable, and expected to vest | 2 years 10 months 20 days | ||
Exercisable | 2 years 10 months 20 days | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 0 | ||
Vested, exercisable, and expected to vest | 0 | ||
Exercisable | $ 0 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Number of Awards | |||
Balance at beginning of period (shares) | 2,933,236 | 2,591,587 | |
Granted (shares) | 1,660,304 | 2,106,536 | |
Forfeited (shares) | (365,225) | (871,184) | |
Vested and converted to shares, net of units withheld for taxes (shares) | (695,709) | (645,560) | |
Units withheld for taxes (shares) | (278,352) | (248,143) | |
Balance at end of period (shares) | 3,254,254 | 2,933,236 | |
Expected to vest (shares) | 2,869,744 | ||
Weighted average grant date fair value | |||
Balance at beginning of period (USD per share) | $ 2.50 | $ 2.39 | |
Granted (USD per share) | 1.70 | 2.70 | |
Forfeited (USD per share) | 2.40 | 2.37 | |
Vested and converted to shares, net of units withheld for taxes (USD per share) | 2.43 | 2.80 | |
Units withheld for taxes (USD per share) | 2.43 | 2.80 | |
Balance at end of period (USD per share) | $ 2.50 | $ 2.39 | $ 2.12 |
Expected to vest (USD per share) | $ 2.12 |
Employee Benefit Plan - Narrati
Employee Benefit Plan - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Employer matching contributions during period | $ 0 | $ 0 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax [Line Items] | |||
Valuation allowance | $ 12,809,000 | $ 8,397,000 | |
Increase (decrease) in valuation allowance | 4,400,000 | ||
Tax credits | 452,000 | 452,000 | |
Unrecognized tax benefits | 1,370,000 | 1,601,000 | $ 1,082,000 |
Accrued interest | 300,000 | 200,000 | |
Tax penalties expense | 0 | 0 | |
Tax penalties accrued | 0 | $ 0 | |
Unrecognized tax benefits that would impact effective tax rate | 1,400,000 | ||
State | |||
Income Tax [Line Items] | |||
Tax credits | 500,000 | ||
State net operating loss carryforwards | 26,000,000 | ||
Federal | |||
Income Tax [Line Items] | |||
Tax credits | 500,000 | ||
Federal net operating loss carryforwards | $ 12,100,000 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | ||
Federal | $ 0 | $ 275 |
State | (390) | 777 |
Current, total | (390) | 1,052 |
Deferred: | ||
Federal | 0 | (52) |
State | 13 | 542 |
Deferred, total | 13 | 490 |
Total expense (benefit) | $ (377) | $ 1,542 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Federal Statutory Income Tax Expense to Actual Income Tax Expense (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Federal income at the statutory rate | 21.00% | 21.00% |
State income tax, net of federal benefit | 2.00% | (18.00%) |
Permanent differences | (1.00%) | (4.00%) |
Work Opportunity Credit | 1.00% | 0.00% |
Return to provision true-up | 2.00% | (4.00%) |
Valuation allowance | (21.00%) | (18.00%) |
Other | (2.00%) | 0.00% |
Total income tax expense, percentage | 2.00% | (23.00%) |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets | ||
Vacation accrual | $ 514 | $ 551 |
Nonqualified stock options | 2,873 | 3,361 |
State tax deferral | 387 | 502 |
State tax credits | 452 | 452 |
Net operating loss | 4,519 | 3,876 |
Interest expense limitation | 3,419 | 1,498 |
Lease liability | 2,098 | 0 |
Other | 1,291 | 861 |
Total deferred tax assets | 15,553 | 11,101 |
Valuation allowance | (12,809) | (8,397) |
Total deferred tax assets net of valuation allowance | 2,744 | 2,704 |
Deferred tax liabilities: | ||
Fixed assets | (749) | (2,692) |
Right of use asset | (1,848) | 0 |
Other | (182) | (34) |
Total deferred tax liabilities | (2,779) | (2,726) |
Net deferred tax liabilities | $ (35) | $ (22) |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Balance at beginning of period of unrecognized tax benefits | $ 1,601 | $ 1,082 |
Increase related to prior year tax positions | 51 | 602 |
Lapse of statute of limitations | (282) | (83) |
Balance at end of period of unrecognized tax benefits | $ 1,370 | $ 1,601 |
Other Commitments and Conting_2
Other Commitments and Contingencies - Narrative (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Commitments and Contingencies Disclosure [Abstract] | ||
Restricted cash | $ 4.3 | $ 3.2 |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jan. 31, 2018 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Estimated liability for appeals and disputes | $ 1,018 | $ 210 | |
2009 CMS Region A Contract | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Estimated liability for appeals and disputes | $ 18,500 | ||
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 22 | 35 | |
Additions Charged against Expense | 219 | 22 | |
Recoveries | 0 | 0 | |
Charge-offs and Releases | (4) | (35) | |
Balance at End of Period | 237 | 22 | |
Estimated allowance and liability for appeals | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 210 | 18,817 | |
Additions Charged against Expense | 1,032 | 441 | |
Appeals Found in Providers Favor | (224) | (19,048) | |
Balance at End of Period | 1,018 | 210 | |
Deferred tax asset valuation allowance | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Period | 8,397 | 5,772 | |
Additions Charged against Expense | 4,412 | 2,625 | |
Charge-offs and Releases | 0 | 0 | |
Balance at End of Period | $ 12,809 | $ 8,397 |
Uncategorized Items - pfmt-2019
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,813,000 |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 1,622,000 |