Performant Healthcare (PHLT) 10-Q 17 May 21 2021 Q1 Quarterly report Financial data

Cover Page

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	May 14, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	001-35628
Entity Registrant Name	PERFORMANT FINANCIAL CORPORATION
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-0484934
Entity Address, Address Line One	333 North Canyons Parkway
Entity Address, City or Town	Livermore
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94551
City Area Code	(925)
Local Phone Number	960-4800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, par value $.0001 per share
Trading Symbol	PFMT
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding (in shares)		55,249,883
Entity Central Index Key	0001550695
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 19,203	$ 16,043
Restricted cash	2,203	2,253
Trade accounts receivable, net of allowance for doubtful accounts of $49 and $49, respectively	20,600	23,216
Contract assets	4,749	4,466
Prepaid expenses and other current assets	3,667	3,784
Income tax receivable	4,698	4,758
Total current assets	55,120	54,520
Property, equipment, and leasehold improvements, net	16,730	17,497
Identifiable intangible assets, net	630	689
Goodwill	47,372	47,372
Right-of-use assets	4,536	5,043
Other assets	1,021	1,106
Total assets	125,409	126,227
Current liabilities:
Current maturities of notes payable to related party, net of unamortized debt issuance costs of $537 and $906, respectively	59,463	59,957
Accrued salaries and benefits	9,598	8,799
Accounts payable	865	407
Other current liabilities	4,128	3,841
Deferred revenue	466	867
Estimated liability for appeals, disputes, and refunds	4,373	1,014
Lease liabilities	2,264	2,327
Total current liabilities	81,157	77,212
Lease liabilities	2,914	3,442
Other liabilities	3,171	3,593
Total liabilities	87,242	84,247
Commitments and contingencies (note 3 and note 4)
Stockholders’ equity:
Common stock, $0.0001 par value. Authorized, 500,000 shares at March 31, 2021 and December 31, 2020 respectively; issued and outstanding 54,825 and 54,764 shares at March 31, 2021 and December 31, 2020, respectively	5	5
Additional paid-in capital	83,559	82,933
Accumulated deficit	(45,397)	(40,958)
Total stockholders’ equity	38,167	41,980
Total liabilities and stockholders’ equity	$ 125,409	$ 126,227

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 49	$ 49
Current liabilities, debt issuance costs	$ 537	$ 906
Common stock, par or stated value per share (in usd per share)	$ 0.0001	$ 0.0001
Common stock, authorized shares (in shares)	500,000,000	500,000,000
Common stock, issued shares (in shares)	54,825,000	54,825,000
Common stock, outstanding shares (in shares)	54,764,000	54,764,000

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Statement [Abstract]
Revenues	$ 31,390	$ 45,888
Operating expenses:
Salaries and benefits	24,090	28,805
Other operating expenses	10,356	12,220
Impairment of goodwill	0	19,000
Total operating expenses	34,446	60,025
Loss from operations	(3,056)	(14,137)
Interest expense	(1,346)	(2,227)
Interest income	0	6
Loss before provision for (benefit from) income taxes	(4,402)	(16,358)
Provision for (benefit from) income taxes	37	(3,874)
Net loss	$ (4,439)	$ (12,484)
Net loss per share
Basic (in usd per share)	$ (0.08)	$ (0.23)
Diluted (in usd per share)	$ (0.08)	$ (0.23)
Weighted average shares
Basic (in shares)	54,813	53,943
Diluted (in shares)	54,813	53,943

Consolidated Statements of Chan

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2019		53,900,000
Beginning balance at Dec. 31, 2019	$ 53,625	$ 5	$ 80,589	$ (26,969)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)		122,000
Common stock issued under stock plans, net of shares withheld for employee taxes	(84)		(84)
Stock-based compensation expense	691		691
Net loss	(12,484)			(12,484)
Ending balance (in shares) at Mar. 31, 2020		54,022,000
Ending balance at Mar. 31, 2020	$ 41,748	$ 5	81,196	(39,453)
Beginning balance (in shares) at Dec. 31, 2020	54,764,000	54,764,000
Beginning balance at Dec. 31, 2020	$ 41,980	$ 5	82,933	(40,958)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares)		61,000
Common stock issued under stock plans, net of shares withheld for employee taxes	(23)		(23)
Stock-based compensation expense	649		649
Net loss	$ (4,439)			(4,439)
Ending balance (in shares) at Mar. 31, 2021	54,764,000	54,825,000
Ending balance at Mar. 31, 2021	$ 38,167	$ 5	$ 83,559	$ (45,397)

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net loss	$ (4,439)	$ (12,484)
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairment of long-lived assets	636	0
Impairment of goodwill	0	19,000
Depreciation and amortization	1,016	1,540
Right-of-use assets amortization	507	599
Stock-based compensation	649	691
Interest expense from debt issuance costs	369	382
Changes in operating assets and liabilities:
Trade accounts receivable	2,616	(106)
Contract assets	(283)	138
Prepaid expenses and other current assets and other assets	117	(451)
Income tax receivable	60	(3,825)
Other assets	85	(11)
Accrued salaries and benefits	799	1,550
Accounts payable	458	475
Deferred revenue and other current liabilities	(114)	171
Estimated liability for appeals, disputes, and refunds	3,359	151
Lease liabilities	(591)	(677)
Other liabilities	(422)	78
Net cash provided by operating activities	4,822	7,221
Cash flows from investing activities:
Purchase of property, equipment, and leasehold improvements	(826)	(1,073)
Net cash used in investing activities	(826)	(1,073)
Cash flows from financing activities:
Repayment of notes payable	(863)	(863)
Taxes paid related to net share settlement of stock awards	(23)	(84)
Net cash used in financing activities	(886)	(947)
Net increase in cash, cash equivalents and restricted cash	3,110	5,201
Cash, cash equivalents and restricted cash at beginning of period	18,296	4,995
Cash, cash equivalents and restricted cash at end of period	21,406	10,196
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets:
Total cash, cash equivalents and restricted cash at end of period	21,406	10,196
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes	432	(72)
Cash paid for interest	$ 977	$ 1,845

Organization and Description of

Organization and Description of Business	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Organization and Description of Business	Organization and Description of Business (a) Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at March 31, 2021, and the results of our operations for the three months ended March 31, 2021 and 2020 and cash flows for the three months ended March 31, 2021 and 2020. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2020. Performant Financial Corporation (the "Company" or "we") is a leading provider of technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare industry. The Company works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments. The Company historically worked in recovery markets such as defaulted student loans, federal treasury receivables, and commercial recovery. However, with the ongoing impact of the COVID-19 pandemic in 2020, and the continued pause on student loan recovery work through 2021, the Company announced on March 29, 2021, that it has signed an agreement to sell certain of its non-healthcare recovery contracts to a buyer that specializes in outsourced receivables solutions and that it does not plan to renew or restart existing contracts, nor pursue new non-healthcare recovery opportunities. 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) and Performant Technologies, LLC (PTL). 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 originally formed in 2004. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, intangible assets, goodwill, right-of-use assets, deferred revenue, estimated liability for appeals, disputes, and refunds, lease liabilities, other liabilities, deferred income taxes and income tax expense (benefit), and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates. (b) Liquidity The accompanying consolidated financial statements have been prepared on a going concern basis 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 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. The Company believes that its forecasted results 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, specifically the $60 million of loans outstanding at March 31, 2021, the Company has the option to extend the maturity of the loans for two additional one-year periods, subject to the satisfaction of customary conditions, including certain financial covenants. If the Company fails to satisfy the conditions required to exercise the option to extend the maturity of the loans, the full balance of the loans will come due on August 11, 2021, at which time, the Company may not have sufficient cash resources to satisfy its debt obligations and the Company may not be able to continue its operations as planned. (c) Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals, Disputes and Refunds The Company derives its revenues primarily from providing audit and recovery services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: • Identification of the contract with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract; and • 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. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s audit and 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 bonuses determined based on its performance relative to the client’s other contractors providing similar services. 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 estimates variable consideration only if it can reasonably measure the progress toward complete satisfaction of the performance obligation using an output method based on reliable information, 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. Any change made to the measure of progress toward complete satisfaction of the Company’s performance obligation is recorded as a change in estimate. The Company exercises judgment to estimate the amount of constraint on variable consideration based on the facts and circumstances of the relevant contract operations and the availability and reliability of data. Although the Company believes the estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of variable consideration. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund exposure and recognizes revenue net of such estimate. 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 bonuses are considered variable and may be constrained by the Company until there is not a risk of a significant reversal. 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. For certain recovery contracts, revenue is recognized when the clients collect on amounts owed to them as a result of the Company’s services. For student loan recovery services, loan rehabilitation revenue is recognized when the rehabilitated loans are funded by clients. Bonuses are recognized upon receipt of official notification of bonus awards from customers. For healthcare claims-based audit contracts, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned based on an output metric that reasonably measures the Company's satisfaction of its performance obligation. For eligibility-based or coordination-of-benefits contracts, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to its clients. 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 for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended 2021 2020 (in thousands) Healthcare 13,286 17,524 Recovery (1) 14,491 24,265 Customer Care / Outsourced Services 3,613 4,099 Total Revenues $ 31,390 $ 45,888 (1) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, as well as Premiere Credit of North America. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful accounts was $49 thousand at March 31, 2021 and December 31, 2020. Healthcare providers have the right to appeal claims audit findings and may pursue additional appeals if the initial appeal is found in favor of healthcare clients. For coordination-of-benefits contracts, insurance companies or other responsible parties may dispute the Company’s findings regarding our clients not being the primary payer of healthcare claims. Total estimated liability for appeals, disputes, and refunds was $4.4 million as of March 31, 2021 and $1.0 million as of December 31, 2020. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients. The $4.4 million liability includes a $3.3 million refund accrual to a healthcare client related to eligibility-based services, which is expected to be offset by the client against future commissions. The Company determined that it does not have any material costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are generally expensed as incurred. Contract assets was $4.7 million and $4.5 million as of March 31, 2021 and December 31, 2020, respectively. Contract assets relate to the Company’s rights to consideration for services completed, but not invoiced at the reporting date, and receipt of payment is conditional upon factors other than the passage of time. Contract assets primarily consist of commissions the Company estimates it has earned from completed claims audit findings submitted to healthcare clients. Generally, the Company’s right to payment occurs when contract assets are recorded to accounts receivable when the rights become unconditional, which is generally healthcare providers have paid our healthcare clients. There was no impairment loss related to contract assets for the three months ended March 31, 2021. Contract liabilities was $0.5 million and $0.9 million as of March 31, 2021 and December 31, 2020, respectively, and are included in deferred revenue on the consolidated balance sheets. The Company’s contract liabilities mainly relate to an advance recovery commission payment received from a client, for which the Company anticipates revenue to be recognized as services are delivered. (d) Prepaid Expenses and Other Current Assets At March 31, 2021, prepaid expenses and other current assets were $3.7 million and included approximately $1.9 million related to prepaid software licenses and maintenance agreement s, $1.0 million for prepaid insurance, and $0.8 million for various other prepaid expenses. At December 31, 2020, prepaid expenses and other current assets were $3.8 million and included approximately $1.8 million related to prepaid software licenses and maintenance agreements, $1.4 million for prepaid insurance, and $0.6 million for various other prepaid expenses. (e) Impairment of Goodwill and Long-Lived Assets The balance of goodwill was $47.4 million as of March 31, 2021 and December 31, 2020. Goodwill is reviewed for impairment at least annually in December or as certain events or conditions arise. The Company may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. In performing the quantitative assessment of goodwill, 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 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, our market capitalization, projecting future cash flows and other assumptions, to estimate the fair value of the reporting unit. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Based on management’s analysis, there was no impairment to goodwill as of March 31, 2021. Long-lived assets and intangible assets that are subject to amortization 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. There was no impairment to intangible assets and a $0.6 million non-cash impairment charge to long-lived assets as of March 31, 2021, included in other operating expenses. (f) Other Current Liabilities At March 31, 2021, other current liabilities primarily included $3.6 million for services received for which we have not received an invoice, $0.3 million for estimated workers' compensation claims incurred but not reported, and $0.2 million for third party fees. At December 31, 2020, other current liabilities primarily included $3.4 million for services received for which we have not received an invoice, $0.2 million for estimated workers' compensation claims incurred but not reported, and $0.2 million for 3rd party fees and equipment financing payables. (g) New Accounting Pronouncements 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 intra-period 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’s adoption of ASU 2019-12 as of January 1, 2021 had no material impact on our financial position, results of operations, or cash flows. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842).” This ASU provides updated guidance on how an entity should measure credit losses on financial instruments, including trade receivables, held at the reporting date. The amendments make each Topic easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. It also addresses transition and open effective date information for Topic 842. ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02 (collectively, “ASC 326”) are effective for public entities for fiscal years beginning after December 15, 2019, except for Smaller Reporting Companies. This ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. In March 2020, the FASB issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Property, Equipment, and Leaseh

Property, Equipment, and Leasehold Improvements	3 Months Ended
	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Property, Equipment, and Leasehold Improvements	Property, Equipment, and Leasehold Improvements Property, equipment, and leasehold improvements consist of the following at March 31, 2021 and December 31, 2020 (in thousands): March 31, December 31, Land $ 1,943 $ 1,943 Building and leasehold improvements 7,593 7,591 Furniture and equipment 5,928 5,922 Computer hardware and software 80,307 80,358 95,771 95,814 Less accumulated depreciation and amortization (79,041) (78,317) Property, equipment and leasehold improvements, net $ 16,730 $ 17,497

Credit Agreement

Credit Agreement	3 Months Ended
	Mar. 31, 2021
Debt Disclosure [Abstract]
Credit Agreement	Credit AgreementOn August 7, 2017, we, through our wholly-owned subsidiary Performant Business Services, Inc., entered into a credit agreement (as amended, the “Credit Agreement”) with ECMC Group, Inc, as the lender. 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 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) increase the commitment for Additional Term Loans from $15 million to $25 million, (iii) extend the period during which Additional Term Loans were able to have been borrowed by one year to August 2020 and, (iv) not require compliance with the financial covenants in the Credit Agreement during the six fiscal quarters following our acquisition of Premiere. On March 21, 2019, we entered into Amendment No. 3 to the Credit Agreement to, among other things, extend the period during which we would not be required to comply with the financial covenants in the Credit Agreement until the quarter ending June 30, 2020. On September 19, 2019, we entered into Amendment No. 4 to the Credit Agreement to, among other things, designate one of our subsidiary guarantors under the Credit Agreement as a borrower and make corresponding changes and related to such change. As of September 30, 2019, the Company had borrowed all of the $25 million available as Additional Term Loans. On March 23, 2021, we entered into Amendment No. 5 to the Credit Agreement (the “Fifth Amendment”). The effectiveness of the Fifth Amendment is subject to the satisfaction of certain conditions specified therein, including our having prepaid an aggregate amount of $6.0 million of the Loans if and when we consummate the sale of certain of our assets. If such conditions to the effectiveness of the Fifth Amendment are satisfied, the maturity date of the Credit Agreement will automatically be extended until August 11, 2022 and the financial covenants will modified as described below. As of March 31, 2021, $60.0 million was outstanding under the Credit Agreement. While this amount is classified in current liabilities, the maturity of the Loans will be extended through August 11, 2022 if the Fifth Amendment becomes effective, and we will retain an option to further extend the maturity date for an additional one year period. If the Fifth Amendment does not become effective, we may extend the maturity of the Loans for two additional one-year periods, in each case, 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 was 6.5% at March 31, 2021 and December 31, 2020. We are required to pay 5% of the original principal balance of the Loans annually in quarterly installments (subject to adjustment in the event of any prepayment made in connection with the Fifth Amendment) 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. If we make a prepayment of $6.0 million in connection with the Fifth Amendment we will not be required to make mandatory prepayment on account of excess cash flow for the fiscal year ended December 31, 2020, however we will be required to make a mandatory prepayment of at least $6.0 million on account of excess cash flow for the fiscal year ending December 31, 2021, subject to reduction in accordance with the Credit Agreement for any other prepayments made prior the end of such fiscal year. The Credit Agreement contains certain financial covenants, which require, that we: (1) achieve a minimum fixed charge coverage ratio (A) prior to the effectiveness of the Fifth Amendment, of 1.0 to 1.0 through December 31, 2020 and 1.25 to 1.0 through June 30, 2021, and through June 30, 2022 if the maturity date of the Loans is extended until August 2022; and (B) on and after the effectiveness of the Fifth Amendment; of 0.75 to 1.0 through December 31, 2021, 1.0 to 1.0 through June 30, 2022, and 1.25 to 1.0 thereafter and (2) maintain a maximum total debt to EBITDA ratio (A) prior to the effectiveness of the Fifth Amendment, of 6.00 to 1.00; and (B) on and after the effectiveness of the Fifth Amendment, of 8.0 to 1.0 through June 30, 2021, of 7.0 to 1.0 through September 30, 2021 and 6.0 to 1.0 thereafter. 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 borrowers. 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 the effectiveness of the Fifth Amendment and the extension of the maturity of the loans for an additional one year period, we will be required to issue additional warrants at the exercise price of $0.96 per share to purchase up to an aggregate of 515,110 additional shares of common stock of the Company and the “Exercise Price” for a portion of the existing warrants issued to ECMC to purchase 1,931,663 shares of common stock of the Company will be reduced from $1.92 to $0.96 per share. In addition, upon the effectiveness of the Fifth Amendment, we will be required to issue to ECMC 300,000 additional shares of common stock of the Company in connection with an amendment to that certain Agreement for Purchase of LLM Membership Interests between ECMC Holdings Corporation and the Company, dated as of August 9, 2018 (as amended), and the full satisfaction of certain earnouts pursuant to such agreement. If we extend maturity of the loans for an additional one year period, we will be required to issue additional warrants to ECMC at the exercise price of $0.96 per share, and to purchase up to an aggregate of 772,665 additional shares of common stock (which represent approximately 1.0% and 1.5% of our diluted common stock for the first extension exercised under the Fifth Amendment once it becomes effective, and second one year extension (if exercised), 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): March 31, 2021 Principal amount $ 60,000 Less: unamortized discount and debt issuance costs (537) Notes payable less unamortized discount and debt issuance costs 59,463 Less: current maturities, net of unamortized discount and debt issuance costs — Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs $ 59,463

Leases

Leases	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Leases	Leases The Company has entered into various non-cancelable operating lease agreements for office facilities and equipment with original lease periods expiring between 2021 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. Operating lease expense was $0.6 million and $0.8 million for the three months ended March 31, 2021 and 2020, respectively. Supplemental cash flow and other information related to operating leases was as follows: March 31, March 31, Weighted Average Remaining Lease Term (in years) 2.8 3.3 Weighted Average Discount Rate 6.6% 6.3% Cash paid for amounts included in the measurement of operating lease liabilities $0.7 million $0.8 million The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2021 (in thousands): Year Ending December 31, Amount Remainder of 2021 $ 1,979 2022 1,939 2023 819 2024 585 2025 398 Thereafter — Total undiscounted cash flows $ 5,720 Less imputed interest (542) Present value of lease liabilities $ 5,178

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2021
Share-based Payment Arrangement [Abstract]
Stock-Based Compensation	Stock-Based Compensation (a) Stock Options Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $0.6 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively. The following table sets forth a summary of the Company's stock option activity for the three months ended March 31, 2021: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2020 1,815,561 $ 10.31 1.92 $ — Granted — — — Forfeited (63,235) 9.57 — Exercised — — — Outstanding at March 31, 2021 1,752,326 $ 10.34 1.64 $ — Vested and exercisable at March 31, 2021 1,752,326 $ 10.34 1.64 $ — Exercisable at March 31, 2021 1,752,326 $ 10.34 1.64 $ — The Company recognizes share-based compensation costs as expense on a straight-line basis over the option vesting period, which generally is four years. (b) Restricted Stock Units and Performance Stock Units The following table summarizes restricted stock unit and performance stock unit activity for the three months ended March 31, 2021: Number of Awards Weighted Outstanding at December 31, 2020 4,592,644 $ 1.27 Granted — — Forfeited (74,926) 1.52 Vested and converted to shares, net of units withheld for taxes (61,156) 1.49 Units withheld for taxes (20,662) 1.49 Outstanding at March 31, 2021 4,435,900 $ 1.26 Expected to vest at March 31, 2021 4,228,500 $ 1.21

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesOur effective income tax rate changed to (1)% for the three months ended March 31, 2021 from 24% for the three months ended March 31, 2020. The change in the effective tax rate is primarily driven by overall losses from operations for the three months ended March 31, 2021 for which no benefit is recognized due to valuation allowance compared to the net operating loss (“NOL”) carryback benefit recorded as a result of the newly enacted provisions of the CARES Act for the three months ended March 31, 2020. We file income tax returns with the U.S. federal government and various state jurisdictions. We operate in a number of state and local jurisdictions, most of which have never audited our records. Accordingly, we are subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. For tax years before 2017, the Company is no longer subject to Federal and certain other state tax examinations. We are currently being examined by the Franchise Tax Board of California for tax years 2011 through 2014 and by the Internal Revenue Service for tax year 2017.

Net Income (Loss) per Share

Net Income (Loss) per Share	3 Months Ended
	Mar. 31, 2021
Earnings Per Share [Abstract]
Net Income (Loss) per Share	Net Income (Loss) per Share For the three months ended March 31, 2021 and 2020, basic net income (loss) per share is calculated by dividing net loss by the sum of the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of common stock and dilutive common share equivalents outstanding during the period. Common share equivalents consist of stock options, restricted stock units, performance stock units, and warrants. When there is a loss in the period, dilutive common share equivalents are excluded from the calculation of diluted earnings per share, as their effect would be anti-dilutive. For example, for the three months ended March 31, 2021 and 2020, respectively, diluted weighted average shares outstanding are the same as basic average shares outstanding. When there is net income in the period, the Company excludes stock options, restricted stock units, performance stock units and warrants from the calculation of diluted earnings per share when their combined exercise price and unamortized fair value exceeds the average market price of the Company's common stock because their effect would be anti-dilutive. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Three Months Ended 2021 2020 Weighted average shares outstanding – basic 54,813 53,943 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 54,813 53,943

Subsequent Events

Subsequent Events	3 Months Ended
	Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsWe have evaluated subsequent events through the date these consolidated financial statements are filed with the Securities and Exchange Commission and there are no other events that have occurred that would require adjustments or disclosures to our consolidated financial statements.

Organization and Description _2

Organization and Description of Business (Policies)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Basis of Presentation and Organization	Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP, for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at March 31, 2021, and the results of our operations for the three months ended March 31, 2021 and 2020 and cash flows for the three months ended March 31, 2021 and 2020. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2020. Performant Financial Corporation (the "Company" or "we") is a leading provider of technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare industry. The Company works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments. The Company historically worked in recovery markets such as defaulted student loans, federal treasury receivables, and commercial recovery. However, with the ongoing impact of the COVID-19 pandemic in 2020, and the continued pause on student loan recovery work through 2021, the Company announced on March 29, 2021, that it has signed an agreement to sell certain of its non-healthcare recovery contracts to a buyer that specializes in outsourced receivables solutions and that it does not plan to renew or restart existing contracts, nor pursue new non-healthcare recovery opportunities. 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) and Performant Technologies, LLC (PTL). 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 originally formed in 2004. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, intangible assets, goodwill, right-of-use assets, deferred revenue, estimated liability for appeals, disputes, and refunds, lease liabilities, other liabilities, deferred income taxes and income tax expense (benefit), and disclosure of contingent 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	LiquidityThe accompanying consolidated financial statements have been prepared on a going concern basis 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 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.
Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals and Disputes, and Refunds	Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals, Disputes and Refunds The Company derives its revenues primarily from providing audit and recovery services. Revenues are recognized when control of these services is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company determines revenue recognition through the following steps: • Identification of the contract with a customer • Identification of the performance obligations in the contract • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract; and • 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. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s audit and 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 bonuses determined based on its performance relative to the client’s other contractors providing similar services. 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 estimates variable consideration only if it can reasonably measure the progress toward complete satisfaction of the performance obligation using an output method based on reliable information, 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. Any change made to the measure of progress toward complete satisfaction of the Company’s performance obligation is recorded as a change in estimate. The Company exercises judgment to estimate the amount of constraint on variable consideration based on the facts and circumstances of the relevant contract operations and the availability and reliability of data. Although the Company believes the estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of variable consideration. For contracts that contain a refund right, these amounts are considered variable consideration and the Company estimates its refund exposure and recognizes revenue net of such estimate. 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 bonuses are considered variable and may be constrained by the Company until there is not a risk of a significant reversal. 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. For certain recovery contracts, revenue is recognized when the clients collect on amounts owed to them as a result of the Company’s services. For student loan recovery services, loan rehabilitation revenue is recognized when the rehabilitated loans are funded by clients. Bonuses are recognized upon receipt of official notification of bonus awards from customers. For healthcare claims-based audit contracts, the Company may recognize revenue upon delivering the results of claims audits, when sufficient reliable information is available to the Company for estimating the variable consideration earned based on an output metric that reasonably measures the Company's satisfaction of its performance obligation. For eligibility-based or coordination-of-benefits contracts, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to its clients. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is consider remote. The allowance for doubtful accounts was $49 thousand at March 31, 2021 and December 31, 2020. Healthcare providers have the right to appeal claims audit findings and may pursue additional appeals if the initial appeal is found in favor of healthcare clients. For coordination-of-benefits contracts, insurance companies or other responsible parties may dispute the Company’s findings regarding our clients not being the primary payer of healthcare claims. Total estimated liability for appeals, disputes, and refunds was $4.4 million as of March 31, 2021 and $1.0 million as of December 31, 2020. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients. The $4.4 million liability includes a $3.3 million refund accrual to a healthcare client related to eligibility-based services, which is expected to be offset by the client against future commissions. The Company determined that it does not have any material costs related to obtaining or fulfilling a contract that are recoverable and as such, these contract costs are generally expensed as incurred.
Impairment of Goodwill and Long-Lived Assets	Goodwill is reviewed for impairment at least annually in December or as certain events or conditions arise. The Company may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. In performing the quantitative assessment of goodwill, 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 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, our market capitalization, projecting future cash flows and other assumptions, to estimate the fair value of the reporting unit. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Based on management’s analysis, there was no impairment to goodwill as of March 31, 2021. Long-lived assets and intangible assets that are subject to amortization 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. There was no impairment to intangible assets and a $0.6 million non-cash impairment charge to long-lived assets as of March 31, 2021, included in other operating expenses.
New Accounting Pronouncements	New Accounting PronouncementsIn 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 intra-period 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’s adoption of ASU 2019-12 as of January 1, 2021 had no material impact on our financial position, results of operations, or cash flows. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842).” This ASU provides updated guidance on how an entity should measure credit losses on financial instruments, including trade receivables, held at the reporting date. The amendments make each Topic easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. It also addresses transition and open effective date information for Topic 842. ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11 and ASU 2020-02 (collectively, “ASC 326”) are effective for public entities for fiscal years beginning after December 15, 2019, except for Smaller Reporting Companies. This ASU is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. In March 2020, the FASB issued ASU No 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional expedients and exceptions to the US GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. ASU 2020-04 is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company does not expect ASU 2020-04 to have a material effect on the Company’s current financial position, results of operations or financial statement disclosures.

Organization and Description _3

Organization and Description of Business (Tables)	3 Months Ended
	Mar. 31, 2021
Accounting Policies [Abstract]
Schedule of disaggregated revenue by category	The following table presents revenue disaggregated by category for the three months ended March 31, 2021 and 2020 (in thousands): Three Months Ended 2021 2020 (in thousands) Healthcare 13,286 17,524 Recovery (1) 14,491 24,265 Customer Care / Outsourced Services 3,613 4,099 Total Revenues $ 31,390 $ 45,888 (1) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, as well as Premiere Credit of North America.

Property, Equipment, and Leas_2

Property, Equipment, and Leasehold Improvements (Tables)	3 Months Ended
	Mar. 31, 2021
Property, Plant and Equipment [Abstract]
Schedule of property, equipment, and leasehold improvements	Property, equipment, and leasehold improvements consist of the following at March 31, 2021 and December 31, 2020 (in thousands): March 31, December 31, Land $ 1,943 $ 1,943 Building and leasehold improvements 7,593 7,591 Furniture and equipment 5,928 5,922 Computer hardware and software 80,307 80,358 95,771 95,814 Less accumulated depreciation and amortization (79,041) (78,317) Property, equipment and leasehold improvements, net $ 16,730 $ 17,497

Credit Agreement (Tables)

Credit Agreement (Tables)	3 Months Ended
	Mar. 31, 2021
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	Outstanding debt obligations are as follows (in thousands): March 31, 2021 Principal amount $ 60,000 Less: unamortized discount and debt issuance costs (537) Notes payable less unamortized discount and debt issuance costs 59,463 Less: current maturities, net of unamortized discount and debt issuance costs — Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs $ 59,463

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2021
Leases [Abstract]
Schedule of lease cost	Supplemental cash flow and other information related to operating leases was as follows: March 31, March 31, Weighted Average Remaining Lease Term (in years) 2.8 3.3 Weighted Average Discount Rate 6.6% 6.3% Cash paid for amounts included in the measurement of operating lease liabilities $0.7 million $0.8 million
Schedule of maturities of lease liabilities	The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2021 (in thousands): Year Ending December 31, Amount Remainder of 2021 $ 1,979 2022 1,939 2023 819 2024 585 2025 398 Thereafter — Total undiscounted cash flows $ 5,720 Less imputed interest (542) Present value of lease liabilities $ 5,178

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2021
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 three months ended March 31, 2021: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2020 1,815,561 $ 10.31 1.92 $ — Granted — — — Forfeited (63,235) 9.57 — Exercised — — — Outstanding at March 31, 2021 1,752,326 $ 10.34 1.64 $ — Vested and exercisable at March 31, 2021 1,752,326 $ 10.34 1.64 $ — Exercisable at March 31, 2021 1,752,326 $ 10.34 1.64 $ —
Schedule of restricted stock activity	The following table summarizes restricted stock unit and performance stock unit activity for the three months ended March 31, 2021: Number of Awards Weighted Outstanding at December 31, 2020 4,592,644 $ 1.27 Granted — — Forfeited (74,926) 1.52 Vested and converted to shares, net of units withheld for taxes (61,156) 1.49 Units withheld for taxes (20,662) 1.49 Outstanding at March 31, 2021 4,435,900 $ 1.26 Expected to vest at March 31, 2021 4,228,500 $ 1.21

Net Income (Loss) per Share (Ta

Net Income (Loss) per Share (Tables)	3 Months Ended
	Mar. 31, 2021
Earnings Per Share [Abstract]
Schedule of reconciliation of basic to diluted weighted average shares	The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Three Months Ended 2021 2020 Weighted average shares outstanding – basic 54,813 53,943 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 54,813 53,943

Organization and Description _4

Organization and Description of Business - Narrative (Details)	3 Months Ended
	Mar. 31, 2021USD ($)extensionPeriodsegment	Mar. 31, 2020USD ($)	Dec. 31, 2020USD ($)
Line of Credit Facility [Line Items]
Number of operating segments | segment	1
Allowance for doubtful accounts	$ 49,000		$ 49,000
Estimated liability for appeals	4,373,000		1,014,000
Refund accrual	3,300,000
Contract assets	4,749,000		4,466,000
Deferred revenue	466,000		867,000
Prepaid expenses and other current assets	3,667,000		3,784,000
Prepaid expense and other assets, prepaid software licenses and maintenance agreement	1,900,000		1,800,000
Prepaid expense and other assets, prepaid insurance	1,000,000		1,400,000
Prepaid expense	800,000		600,000
Goodwill	47,372,000		47,372,000
Impairment of long-lived assets	636,000	$ 0
Accrued liabilities, current	3,600,000		3,400,000
Workers' compensation liability, incurred	300,000		200,000
Premium insurance financing payables	200,000		$ 200,000
Line of Credit | Additional Term Loans
Line of Credit Facility [Line Items]
Principal amount	$ 60,000,000
Extended maturity, number of loans | extensionPeriod	2
Extended maturity, term	1 year

Organization and Description _5

Organization and Description of Business - Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Total Revenues	$ 31,390	$ 45,888
Healthcare
Disaggregation of Revenue [Line Items]
Total Revenues	13,286	17,524
Recovery
Disaggregation of Revenue [Line Items]
Total Revenues	14,491	24,265
Customer Care / Outsourced Services
Disaggregation of Revenue [Line Items]
Total Revenues	$ 3,613	$ 4,099

Property, Equipment, and Leas_3

Property, Equipment, and Leasehold Improvements - Summary (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, equipment and leasehold improvements, gross	$ 95,771	$ 95,814
Less accumulated depreciation and amortization	(79,041)	(78,317)
Property, equipment and leasehold improvements, net	16,730	17,497
Land
Property, Plant and Equipment [Line Items]
Property, equipment and leasehold improvements, gross	1,943	1,943
Building and leasehold improvements
Property, Plant and Equipment [Line Items]
Property, equipment and leasehold improvements, gross	7,593	7,591
Furniture and equipment
Property, Plant and Equipment [Line Items]
Property, equipment and leasehold improvements, gross	5,928	5,922
Computer hardware and software
Property, Plant and Equipment [Line Items]
Property, equipment and leasehold improvements, gross	$ 80,307	$ 80,358

Property, Equipment, and Leas_4

Property, Equipment, and Leasehold Improvements - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense of property, equipment and leasehold improvements	$ 1	$ 1.5

Credit Agreement - Narrative (D

Credit Agreement - Narrative (Details)	Mar. 23, 2021$ / sharesshares	Mar. 22, 2021$ / shares	Jun. 30, 2017USD ($)$ / sharesshares	Mar. 31, 2021USD ($)extensionPeriod	Dec. 31, 2021USD ($)	Dec. 31, 2020USD ($)	Sep. 30, 2019USD ($)	Aug. 31, 2018USD ($)	Aug. 30, 2018USD ($)	Aug. 09, 2018shares	Aug. 07, 2017USD ($)
Line of Credit Facility [Line Items]
Prepayment cost						$ 6,000,000
Issuance costs			$ 600,000
Forecast
Line of Credit Facility [Line Items]
Prepayment cost					$ 6,000,000
New Credit Agreement
Line of Credit Facility [Line Items]
Floor rate (as a percent)				1.00%
Annual interest rate				6.50%		6.50%
Periodic payment of principal (as a percent)				5.00%
Warrants issued (in shares) | shares			3,863,326
New Credit Agreement | Minimum
Line of Credit Facility [Line Items]
Excess cash flow for prepayments of lines of credit (as a percent)				0.00%
New Credit Agreement | Maximum
Line of Credit Facility [Line Items]
Excess cash flow for prepayments of lines of credit (as a percent)				75.00%
Initial Term Loan
Line of Credit Facility [Line Items]
Exercise price of warrants (in usd per share) | $ / shares			$ 1.92
Diluted common stock (as a percent)			7.50%
Amortization period			48 months
Additional Term Loans
Line of Credit Facility [Line Items]
Diluted common stock (as a percent)			0.15%
Stock value of warrants per term loan (in shares) | shares			77,267
Allotment for warrants purchased			$ 1,000,000
Term Loan and Additional Term Loans
Line of Credit Facility [Line Items]
Amortization period			48 months
Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Duration of optional additional extension periods	1 year
Agreement For Purchase
Line of Credit Facility [Line Items]
Duration of optional additional extension periods	1 year
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%
Period One | New Credit Agreement
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio		1
Total debt to EBITDA ratio		6
Period One | Additional Term Loans
Line of Credit Facility [Line Items]
Stock value of warrants per term loan (in shares) | shares	515,110
Period One | Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Exercise price of warrants (in usd per share) | $ / shares	$ 0.96
Period One | Agreement For Purchase
Line of Credit Facility [Line Items]
Diluted common stock (as a percent)	1.00%
Period Two
Line of Credit Facility [Line Items]
Exercise price of warrants (in usd per share) | $ / shares		$ 1.92
Period Two | New Credit Agreement
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio		1.25
Period Two | Additional Term Loans
Line of Credit Facility [Line Items]
Stock value of warrants per term loan (in shares) | shares	1,931,663
Period Two | Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Exercise price of warrants (in usd per share) | $ / shares	$ 0.96
Total debt to EBITDA ratio	8
Period Two | Agreement For Purchase
Line of Credit Facility [Line Items]
Diluted common stock (as a percent)	1.50%
Period Three | Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio	0.75
Total debt to EBITDA ratio	7
Period Three | Agreement For Purchase
Line of Credit Facility [Line Items]
Additional number of shares (in shares) | shares										300,000
Period Four | Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio	1
Total debt to EBITDA ratio	6
Period Four | Agreement For Purchase
Line of Credit Facility [Line Items]
Exercise price of warrants (in usd per share) | $ / shares	$ 0.96
Stock value of warrants per term loan (in shares) | shares	772,665
Period Five | Credit Agreement ("Fifth Amendment")
Line of Credit Facility [Line Items]
Minimum fixed charge coverage ratio	1.25
Line of Credit | Initial Term Loan
Line of Credit Facility [Line Items]
Principal amount											$ 44,000,000
Line of Credit | Additional Term Loans
Line of Credit Facility [Line Items]
Principal amount				$ 60,000,000
Maximum borrowing capacity under line of credit							$ 25,000,000	$ 25,000,000	$ 15,000,000		$ 15,000,000
Extended maturity, number of loans | extensionPeriod				2
Extended maturity, term				1 year

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
Debt Instrument [Line Items]
Exercise price (in usd per share)	$ 1.92	$ 1.92	$ 1.92	$ 1.92	$ 1.92	$ 1.92
Share price on date of issuance (in 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
Debt Instrument [Line Items]
Warrants and rights outstanding, measurement input	0.675	0.675	0.575	0.575	0.550	0.500
Risk-free interest rate
Debt Instrument [Line Items]
Warrants and rights outstanding, measurement input	0.0160	0.0153	0.0215	0.0231	0.0301	0.0183
Expected dividend yield
Debt Instrument [Line Items]
Warrants and rights outstanding, measurement input	0	0	0	0	0	0
Contractual term (in years)
Debt Instrument [Line Items]
Contractual term (in years)	5 years	5 years	5 years	5 years	5 years	5 years

Credit Agreement - Outstanding

Credit Agreement - Outstanding Debt Obligations (Details) $ in Thousands	Mar. 31, 2021USD ($)
Debt Disclosure [Abstract]
Less: unamortized discount and debt issuance costs	$ (537)
Notes payable less unamortized discount and debt issuance costs	59,463
Less: current maturities, net of unamortized discount and debt issuance costs	0
Long-term notes payable, net of current maturities and unamortized discount and debt issuance costs	$ 59,463

Leases - Narrative (Details)

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Operating lease expense	$ 0.6	$ 0.8

Leases - Components of Lease Te

Leases - Components of Lease Term and Discount Rate (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Weighted Average Remaining Lease Term (in years)	2 years 9 months 18 days	3 years 3 months 18 days
Weighted Average Discount Rate	6.60%	6.30%
Cash paid for amounts included in the measurement of operating lease liabilities	$ 0.7	$ 0.8

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Mar. 31, 2021USD ($)
Maturities of Lease Liabilities after Adoption of ASC 842
Remainder of 2021	$ 1,979
2022	1,939
2023	819
2024	585
2025	398
Thereafter	0
Total undiscounted cash flows	5,720
Less imputed interest	(542)
Present value of lease liabilities	$ 5,178

Stock-Based Compensation - Narr

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 0.6	$ 0.7
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vesting period	4 years
Minimum | 2012 Equity Incentive Plan | Restricted Stock and Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vesting period	1 year
Maximum | 2012 Equity Incentive Plan | Restricted Stock and Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options vesting period	4 years

Stock-Based Compensation - Stoc

Stock-Based Compensation - Stock Option Activity (Details) - Options - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Outstanding Options
Balance at beginning of period (in shares)	1,815,561
Granted (in shares)	0
Forfeited (in shares)	(63,235)
Exercised (in shares)	0
Balance at end of period (in shares)	1,752,326	1,815,561
Vested and exercisable (in shares)	1,752,326
Exercisable (in shares)	1,752,326
Weighted average exercise price per share
Balance at beginning of period (in usd per share)	$ 10.31
Granted (in usd per share)	0
Forfeited (in usd per share)	9.57
Exercised (in usd per share)	0
Balance at end of period (in usd per share)	10.34	$ 10.31
Vested or expected to vest (in usd per share)	10.34
Exercisable (in usd per share)	$ 10.34
Weighted average remaining contractual life (Years)
Outstanding	1 year 7 months 20 days	1 year 11 months 1 day
Vested and exercisable	1 year 7 months 20 days
Exercisable	1 year 7 months 20 days
Aggregate Intrinsic Value (in thousands)
Outstanding	$ 0	$ 0
Vested and exercisable	0
Exercisable	$ 0

Stock-Based Compensation - Rest

Stock-Based Compensation - Restricted Stock and Performance Stock Units Activity (Details) - Restricted Stock and Performance Stock Units	3 Months Ended
	Mar. 31, 2021$ / sharesshares
Number of Awards
Outstanding at beginning of period (in shares) | shares	4,592,644
Granted (in shares) | shares	0
Forfeited (in shares) | shares	(74,926)
Vested and converted to shares, net of units withheld for taxes (in shares) | shares	(61,156)
Units withheld for taxes (in shares) | shares	(20,662)
Outstanding at end of period (in shares) | shares	4,435,900
Expected to vest (in shares) | shares	4,228,500
Weighted average grant date fair value per share
Outstanding beginning of period (in usd per share) | $ / shares	$ 1.27
Granted (in usd per share) | $ / shares	0
Forfeited (in usd per share) | $ / shares	1.52
Vested and converted to shares, net of units withheld for taxes (in usd per share) | $ / shares	1.49
Units withheld for taxes (in usd per share) | $ / shares	1.49
Outstanding end of period (in usd per share) | $ / shares	1.26
Expected to vest (in usd per share) | $ / shares	$ 1.21

Income Taxes - Narrative (Detai

Income Taxes - Narrative (Details)	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Income Tax Disclosure [Abstract]
Effective income tax rate (as a percent)	(1.00%)	24.00%

Net Income (Loss) per Share - R

Net Income (Loss) per Share - Reconciliation of Basic to Diluted Weighted Average Shares (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Weighted average shares outstanding – basic (in shares)	54,813	53,943
Dilutive effect of stock options (in shares)	0	0
Weighted average shares outstanding – diluted (in shares)	54,813	53,943