Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 15, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
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 | ||
Title of 12(b) Security | Common Stock, par value $.0001 per share | ||
Trading Symbol | PFMT | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Public Float | $ 135,663,443 | ||
Entity Common Stock, Shares Outstanding | 75,505,108 | ||
Documents Incorporated by Reference | Items 10 through 14 in Part III of this Form 10-K are incorporated by reference to the Registrant’s definitive proxy statement on Schedule 14A, to be filed with the Securities and Exchange Commission in connection with the solicitation of proxies from the Registrant’s 2023 Annual Meeting of Stockholders, referred to in this report as the 2023 Proxy Statement. | ||
Entity Central Index Key | 0001550695 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Auditor Information [Abstract] | |
Auditor Firm ID | 23 |
Auditor Name | Baker Tilly US, LLP |
Auditor Location | Milwaukee, Wisconsin |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 23,384 | $ 17,347 |
Restricted cash | 81 | 2,203 |
Trade accounts receivable, net of allowance for doubtful accounts | 15,794 | 20,808 |
Contract assets | 11,460 | 8,113 |
Prepaid expenses and other current assets | 3,665 | 3,077 |
Income tax receivable | 3,123 | 3,159 |
Total current assets | 57,507 | 54,707 |
Property, equipment, and leasehold improvements, net | 10,897 | 15,708 |
Goodwill | 47,372 | 47,372 |
Right-of-use assets | 2,057 | 3,235 |
Other assets | 1,000 | 963 |
Total assets | 118,833 | 121,985 |
Current liabilities: | ||
Current maturities of notes payable, net of unamortized debt issuance costs of $17 and $11, respectively | 983 | 489 |
Accrued salaries and benefits | 6,938 | 8,476 |
Accounts payable | 1,262 | 1,124 |
Other current liabilities | 2,252 | 3,732 |
Contract liabilities | 438 | 634 |
Estimated liability for appeals and disputes | 1,106 | 1,190 |
Lease liabilities | 1,228 | 1,862 |
Total current liabilities | 14,207 | 17,507 |
Notes payable, net of current portion and unamortized debt issuance costs of $316 and $416, respectively | 18,184 | 19,084 |
Lease liabilities | 1,076 | 1,803 |
Other liabilities | 881 | 1,168 |
Total liabilities | 34,348 | 39,562 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at December 31, 2022 and 2021, respectively; issued and outstanding, 75,505 and 69,281 shares at December 31, 2022 and 2021, respectively | 7 | 7 |
Additional paid-in capital | 142,261 | 133,662 |
Accumulated deficit | (57,783) | (51,246) |
Total stockholders’ equity | 84,485 | 82,423 |
Total liabilities and stockholders’ equity | $ 118,833 | $ 121,985 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 0 | $ 0 |
Current unamortized debt issuance costs | 17,000 | 11,000 |
Noncurrent unamortized debt issuance costs | $ 316,000 | $ 416,000 |
Common stock, par or stated value per share (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) | 75,505,000 | 69,281,000 |
Common stock, outstanding shares (in shares) | 75,505,000 | 69,281,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues | $ 109,184 | $ 124,393 |
Operating expenses: | ||
Salaries and benefits | 85,312 | 87,440 |
Other operating expenses | 30,772 | 38,269 |
Total operating expenses | 116,084 | 125,709 |
Loss from operations | (6,900) | (1,316) |
Gain on sale of certain recovery contracts | 382 | 2,403 |
Gain on sale of land and buildings | 1,120 | 0 |
Interest expense | (1,007) | (11,313) |
Loss before provision for income taxes | (6,405) | (10,226) |
Provision for income taxes | 132 | 62 |
Net loss | $ (6,537) | $ (10,288) |
Net loss per share attributable to common shareholders (see Note 1) | ||
Basic (USD per share) | $ (0.09) | $ (0.17) |
Diluted (USD per share) | $ (0.09) | $ (0.17) |
Weighted average shares (see Note 1) | ||
Basic (in shares) | 72,937 | 60,461 |
Diluted (in shares) | 72,937 | 60,461 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 54,764 | |||
Balance at beginning of period 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) | 2,113 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | (632) | $ 1 | (633) | |
Stock-based compensation expense | 2,640 | 2,640 | ||
Recognition of warrants associated with notes payable | 5,237 | 5,237 | ||
Proceeds from exercise of stock options | 41 | 41 | ||
Proceeds from public offering, net of costs (in shares) | 12,104 | |||
Proceeds from public offering, net of costs | 42,644 | $ 1 | 42,643 | |
Recognition of earnout shares issued (in shares) | 300 | |||
Recognition of earnout shares issued | 801 | 801 | ||
Net loss | $ (10,288) | (10,288) | ||
Balance at end of period (in shares) at Dec. 31, 2021 | 69,281 | 69,281 | ||
Balance at end of period at Dec. 31, 2021 | $ 82,423 | $ 7 | 133,662 | (51,246) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares) | 1,173 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | 0 | |||
Stock-based compensation expense | 3,036 | 3,036 | ||
Proceeds from exercise of stock options (in shares) | 5,051 | |||
Proceeds from exercise of warrants | 5,563 | 5,563 | ||
Net loss | $ (6,537) | (6,537) | ||
Balance at end of period (in shares) at Dec. 31, 2022 | 75,505 | 75,505 | ||
Balance at end of period at Dec. 31, 2022 | $ 84,485 | $ 7 | $ 142,261 | $ (57,783) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (6,537,000) | $ (10,288,000) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Loss on disposal of assets and impairment of long-lived assets | 41,000 | 722,000 |
Depreciation and amortization | 4,524,000 | 5,188,000 |
Right-of-use assets amortization | 1,178,000 | 1,808,000 |
Stock-based compensation | 3,036,000 | 2,640,000 |
Interest expense from debt issuance costs | 95,000 | 3,586,000 |
Loss on debt extinguishment | 0 | 3,371,000 |
Gain on sale of certain recovery contracts | (382,000) | (2,403,000) |
Gain on sale of land and buildings | (1,120,000) | 0 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 5,014,000 | 1,665,000 |
Contract assets | (3,347,000) | (3,647,000) |
Prepaid expenses and other current assets | (588,000) | 707,000 |
Income tax receivable | 36,000 | 1,599,000 |
Other assets | (37,000) | 127,000 |
Accrued salaries and benefits | (1,538,000) | (323,000) |
Accounts payable | 138,000 | 717,000 |
Contract liabilities and other current liabilities | (1,660,000) | (292,000) |
Estimated liability for appeals and disputes | (84,000) | 176,000 |
Lease liabilities | (1,361,000) | (2,104,000) |
Other liabilities | (285,000) | (2,333,000) |
Net cash (used in) provided by operating activities | (2,877,000) | 916,000 |
Cash flows from investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (3,585,000) | (3,416,000) |
Proceeds from sale of certain recovery contracts | 382,000 | 3,146,000 |
Proceeds from sales of property, equipment, and leasehold improvements | 4,934,000 | 0 |
Net cash provided by (used in) investing activities | 1,731,000 | (270,000) |
Cash flows from financing activities: | ||
Repayment of notes payable | (500,000) | (60,863,000) |
Debt issuance costs paid | (2,000) | (581,000) |
Taxes paid related to net share settlement of stock awards | 0 | (633,000) |
Proceeds from exercise of warrants | 5,563,000 | 0 |
Proceeds from exercise of stock options | 0 | 41,000 |
Borrowings from notes payable | 0 | 20,000,000 |
Proceeds from public offering, net of costs | 0 | 42,644,000 |
Net cash provided by financing activities | 5,061,000 | 608,000 |
Net increase in cash, cash equivalents and restricted cash | 3,915,000 | 1,254,000 |
Cash, cash equivalents and restricted cash at beginning of year | 19,550,000 | 18,296,000 |
Cash, cash equivalents and restricted cash at end of year | 23,465,000 | 19,550,000 |
Reconciliation of the consolidated statements of cash flows to the consolidated balance sheets: | ||
Cash and cash equivalents | 23,384,000 | 17,347,000 |
Restricted cash | 81,000 | 2,203,000 |
Total cash, cash equivalents and restricted cash at end of period | 23,465,000 | 19,550,000 |
Noncash investing and financing activities | ||
Recognition of earnout shares issued | 0 | 801,000 |
Recognition of warrants issued in debt financing | 0 | 5,237,000 |
Supplemental disclosures of cash flow information: | ||
Cash paid (received) for income taxes | 250,000 | (589,000) |
Cash paid for interest | $ 702,000 | $ 4,310,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies (a) Organization and Nature of Business Performant Financial Corporation (the Company, "we", or "our") is a leading provider of technology-enabled audit, recovery and analytics services in the United States with a focus in the healthcare payment integrity services industry. The Company works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits or COB) 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 multifaceted 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 and the continued pause on student loan recovery work, the Company sold certain of its non-healthcare recovery contracts, and did not renew or restart existing contracts, nor pursued new non-healthcare recovery opportunities in 2021. The Company’s consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiary Performant Business Services, Inc. (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (PRI), Performant Technologies, LLC (PTL), and Premiere Credit of North America, LLC (Premiere) through the end of 2021. Performant is a Delaware corporation headquartered in California and was formed in 2003. PBS is a Nevada corporation founded in 1997. PRI 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, 2022 and 2021 for the accompanying reporting periods, 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, contract assets, goodwill, right-of-use assets, contract liabilities, estimated liability for appeals and disputes, lease liabilities, other liabilities, provision for (benefit from) income taxes, 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. (d) Cash and Cash Equivalents Cash and cash equivalents include demand deposits. The Company deposits cash and cash equivalents with high credit quality financial institutions and believes that any amounts in excess of insurance limitations to be at minimal risk. Cash and cash equivalents held at these accounts are currently insured by the Federal Deposit Insurance Corporation (FDIC) up to a maximum of $250,000. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. The Company collects monies on behalf of certain 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 9(a)). (e) Restricted Cash At December 31, 2022 and 2021, restricted cash included in current assets on our consolidated balance sheet was $0.1 million and $2.2 million, respectively, held in the form of certificates of deposit, which serve as collateral for letters of credit that were primarily associated with the recovery business. The Company’s restricted cash is held with high credit quality financial institutions and believes any amounts in excess of the FDIC limit to be at minimal risk. (f) 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. (g) Goodwill The carrying amount of goodwill was $47.4 million as of December 31, 2022 and 2021, both of which were net of accumulated impairment loss of $34.2 million. 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 events or conditions arise during the year. There was no goodwill impairment as of December 31, 2022 and 2021. 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 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. (h) 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. (i) 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 2022 and 2021, costs of $2.3 million and $2.8 million, respectively, were capitalized for projects in the application stage of development. Depreciation expense for completed projects during 2022 and 2021 were $3.4 million and $3.0 million, respectively. (j) 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 payable. (k) Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, and Estimated Liability for Appeals and Disputes The Company derives its revenues primarily from providing audit, recovery, and analytics services. Revenues are recognized upon completion of these services for 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 services 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. The Company 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 our 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 availability and reliability of data. The Company reviews the constraint on variable consideration at least quarterly. While the Company believes the estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of variable consideration recognized. For contracts that contain a refund right, the Company estimates its refund liability for each claim, as needed, 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 healthcare claims audit contracts, the Company may recognize revenue upon delivering its findings from 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 COB contracts, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the clients. 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 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 years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 (in thousands) Eligibility-based $ 53,284 $ 48,276 Claims-based 41,382 29,178 Healthcare Total $ 94,666 $ 77,454 Recovery (1) 241 33,405 Customer Care / Outsourced Services 14,277 13,534 Total Revenues $ 109,184 $ 124,393 (1) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, as well as Premiere. For the years ended December 31, 2022 and 2021, the Company had two and three different clients, respectively, 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): Year Ended December 31, 2022 Year Ended December 31, 2021 Rank Revenue Percent of Rank Revenue Percent of 1 $58,155 53% 1 $55,471 45% 2 $12,004 11% 2 $15,893 13% 3 $15,491 13% Accounts receivable from the top two customers were 47% of total trade accounts receivable at December 31, 2022, of which one of these customers comprised 47% of total trade receivables. Accounts receivable from the top three customers were 74% of total trade receivables at December 31, 2021, of which two of these customers comprised 50% and 24% of total trade receivables. 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 for December 31, 2022 and 2021, respectively. Contract assets were $11.5 million and $8.1 million as of December 31, 2022 and December 31, 2021, respectively. Contract assets relate to the Company’s rights to consideration for services completed during the respective years, 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. The increase in contract assets resulted from additional consideration earned for services provided to healthcare clients during 2022 and an update in the measure of progress under certain contracts, offset by invoiced amounts. Contract assets are recorded to accounts receivable when the Company's right to payment becomes unconditional, which is generally when healthcare providers have paid our clients. There was no impairment loss related to contract assets for the years ended December 31, 2022 and 2021. The Company had contract liabilities of $0.4 million as of December 31, 2022 and $0.6 million as of December 31, 2021. The Company’s contract liabilities related to certain reimbursable costs due to a healthcare client. Healthcare providers of our clients 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 and disputes was $1.1 million and $1.2 million as of December 31, 2022 and 2021, respectively. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients. The Company determined that it did not have any material costs related to obtaining or fulfilling a contract that are recoverable and as such, those contract costs were expensed as incurred. (l) Prepaid Expenses and Other Current Assets At December 31, 2022, prepaid expenses and other current assets were $3.7 million and included approximately $1.5 million related to prepaid software licenses and maintenance agreements, $1.8 million for prepaid insurance, and $0.4 million for various other prepaid expenses. At December 31, 2021, prepaid expenses and other current assets were $3.1 million and included approximately $1.4 million related to prepaid software licenses and maintenance agreements, $1.1 million for prepaid insurance, and $0.6 million for various other prepaid expenses. (m) Other Current Liabilities At December 31, 2022, other current liabilities were $2.3 million and primarily included $1.8 million for services received for which we have not received an invoice, $0.3 million for accrued interest for the MUFG loan, $0.1 million for estimated workers' compensation claims incurred but not reported and $0.1 million for third party fees and equipment financing payables. At December 31, 2021, other current liabilities were $3.7 million and primarily included $3.6 million for services received for which we have not received an invoice, $0.1 million for estimated workers' compensation claims incurred but not reported and 3rd party fees and equipment financing payables. (n) Legal Expenses The Company recognizes legal fees related to litigation as they are incurred. (o) Fair Value of Financial Instruments The Company’s financial instruments include cash and cash equivalents, restricted cash, 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. (p) 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 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 state and local tax jurisdictions in which the Company operates may change resulting in changes to the state tax rates and apportionment allocations used in calculating the tax rate applied to deferred income tax assets and liabilities. 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. (q) 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 2022 and 2021. (r) Loss per Share For the years ended December 31, 2022 and 2021, 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), 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. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Years Ended December 31, 2022 2021 Weighted average shares outstanding – basic 72,937 60,461 Dilutive effect of common share equivalents — — Weighted average shares outstanding – diluted 72,937 60,461 Since the Company was in a loss position for both periods presented, basic net loss per share is the same as diluted net loss per share, as the inclusion of all potential common shares outstanding would have been anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (shares in thousands): Years Ended December 31, 2022 2021 Options to purchase common stock 250 1,593 RSUs 3,905 2,935 Warrants outstanding — 6,310 Total 4,155 10,838 (s) New Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt-Debt with Conversion and Other Options, for convertible instruments. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company's adoption of ASU 2020-06 as of January 1, 2022 had no 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. The adoption of this pronouncement is not expected to have a material impact on the Company's financial position or results of operations. |
Property, Equipment, and Leaseh
Property, Equipment, and Leasehold Improvements | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 (in thousands): December 31, 2022 December 31, 2021 Land $ — $ 1,943 Building and leasehold improvements 3,785 7,411 Furniture and equipment 3,094 5,757 Computer hardware and software 76,906 74,850 83,785 89,961 Less accumulated depreciation and amortization (72,888) (74,253) Property, equipment and leasehold improvements, net $ 10,897 $ 15,708 Depreciation and amortization expense was $4.5 million for each the years ended December 31, 2022 and 2021, respectively. The Company sold two buildings and related land in September of 2022, which resulted in a gain of $1.1 million. |
Credit Agreement
Credit Agreement | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement As of December 31, 2022 and 2021, $19.5 million and $20.0 million, respectively, was outstanding under the credit agreement with MUFG Union Bank, N.A. (the Credit Agreement) . The Company’s annual interest rate at December 31, 2022 and 2021, was 7.5% and 5.6%, respectively. On December 17, 2021, Performant entered into a Credit Agreement with MUFG Union Bank, N.A. The Credit Agreement originally included a $20 million term loan commitment, which was fully advanced at closing and a $15 million revolving loan commitment, which was undrawn as of December 31, 2021. Subject to certain customary exceptions, the obligations under the Credit Agreement are, or will be, guaranteed by each of the Company’s existing and future, direct or indirect, domestic subsidiaries. The obligations of the Company under the Credit Agreement are secured by liens on substantially all of the assets of the Company and each of its domestic subsidiaries that are guarantors under the Credit Agreement. The proceeds from the term loan under the Credit Agreement were used by the Company, together with cash on hand, to repay in full its credit agreement dated as of August 17, 2017, with ECMC Group, Inc. as amended, (the Prior Credit Agreement), and to pay fees and expenses in connection with the Credit Agreement. On March 13, 2023, the Company entered into a First Amendment to the Credit Agreement to amend the Credit Agreement, to among other things, terminate the revolving loan commitment in full and to establish a new maturity date for the term loan of December 31, 2024. As a result of the First Amendment to the Credit Agreement, the Company does not have any further borrowing capacity under the Credit Agreement. In connection with the First Amendment, the Company voluntarily prepaid $7.5 million of the outstanding principal of the term loan , which reduced our outstanding cash and cash equivalents. Pursuant to the Credit Agreement, after giving effect to the First Amendment described above, the Company is required to repay the aggregate outstanding principal amount of the term loan under the Credit Agreement in quarterly installments commencing March 31, 2022 in an amount that would result in amortization of (a) 2.5% of the original term loan principal in the first full year following commencement of amortization, (b) 5.0% of the original term loan principal in the second full year following commencement of amortization, and (c) 10.0% of the original term loan principal in the third full year following commencement of amortization. In addition, the Company must make mandatory prepayments of the term loan principal under the Credit Agreement with the net cash proceeds received in connection with certain specified events, including certain asset sales, casualty and condemnation events (subject to customary reinvestment rights). Any remaining outstanding principal balance of the term loan under the Credit Agreement is repayable on the maturity date. Amounts repaid or prepaid by the Company with respect to the term loan under the Credit Agreement cannot be reborrowed. Under the Credit Agreement, after giving effect to the First Amendment described above, the term loan generally may bear interest based on term SOFR (the secured overnight financing right) or an annual base rate, as applicable, plus an applicable margin based on the Company’s leverage ratio each quarter that may range between 2.50% per annum and 4.00% per annum, in the case of term SOFR loans and between 1.50% per annum and 3.00% per annum in the case of base rate loans. The SOFR rate was approximately 2.8% as of December 31, 2021. In addition, a commitment fee based on the unused availability if there are outstanding revolving loan commitments is also payable which may vary from 0.30% per annum to 0.50% per annum, also based on the Company’s leverage ratio, however, the revolving commitment was terminated in connection with the First Amendment described above. The Credit Agreement contains certain customary representations, warranties, and affirmative and negative covenants of the Company and its subsidiaries that restrict the Company’s and its subsidiaries’ ability to take certain actions, including, incurrence of indebtedness, creation of liens, making certain investments, mergers or consolidations, dispositions of assets, assignments, sales or transfers of equity in subsidiaries, repurchase or redemption of capital stock, entering into certain transactions with affiliates, or changing the nature of the Company’s business. The Credit Agreement, after giving effect to the First Amendment described above, also contains financial covenants, which require the Company to maintain, as of the last day of each fiscal quarter commencing (a) as of September 30, 2023, a total leverage ratio of not greater than (i) 10.00 to 1.00, (b) as of December 31, 2023 and as of the last day of each fiscal quarter thereafter, (i) a total leverage ratio of not greater than 2.50 to 1.00, and (ii) a fixed charge coverage ratio of not less than 1.20 to 1.00 and (c) prior to the earlier December 31, 2023 and the date that the Company’s leverage ratio is not greater than 2.50 to 1.00 and its fixed charge coverage ratio is not less than 1.20 to 1.00, a minimum amount of unrestricted cash subject to a perfected security interest in favor of MUFG Union Bank more specifically set forth in the Credit Agreement. The obligations under the Credit Agreement may be accelerated or the commitments terminated upon the occurrence of events of default under the Credit Agreement, which include payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations or warranties, bankruptcy and insolvency related defaults, cross defaults to other material indebtedness, defaults arising in connection with changes in control, and other customary events of default. Other than the terms relating to the First Amendment as set forth above, the terms of the original Credit Agreement with MUFG Union Bank, N.A. remain in full force and effect. In consideration for the borrowings under the Prior Credit Agreement (the Loans), the Company issued warrants to ECMC to purchase up to an aggregate of 5,794,990 shares of the Company’s common stock with an exercise price of $1.92 per share. On May 24, 2021, Amendment No. 5 to the Prior Credit Agreement became effective upon the consummation of the sale of certain non-healthcare recovery contracts and satisfaction of certain conditions specified therein, including a prepayment of $6.0 million of the Loans. This amendment was accounted for as a modification in accordance with ASC 470-50, Debt Modifications and Extinguishments. Upon the effectiveness of the Fifth Amendment, which included the extension of the maturity of the loans for a one-year period, the Company was 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, 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 was reduced from $1.92 to $0.96 per share, and the contractual term of the existing warrants issued to ECMC to purchase 3,863,326 shares of common stock of the Company was extended to August 11, 2023. In addition, the Company issued to ECMC 300,000 shares of common stock of the Company in connection with an amendment to a separate agreement. The Company 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 fair values of the warrants, the incremental fair values of the warrants modified by Amendment No. 5, and the incremental fair value of the 300,000 shares of common stock issued to ECMC to settle the earnout payable, along with loan fees were treated as a discount to the Loans. These amounts totaled $6.1 million on the effective date of the debt modification and were being amortized to interest expense under the effective interest method over the life of the Loans until the Loans were paid off on December 17, 2021. The remaining unamortized debt issuance costs of $3.4 million were recorded in interest expense on the statements of operations and in loss on debt extinguishment on the statements of cash flows. There were no warrants outstanding as of December 31, 2022. Outstanding debt obligations are as follows (in thousands): December 31, 2022 December 31, 2021 Principal amount $ 19,500 $ 20,000 Less: unamortized debt issuance costs (333) (427) Loan payable less unamortized debt issuance costs 19,167 19,573 Less: current maturities (983) (489) Long-term loan payable, net of current maturities $ 18,184 $ 19,084 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company has entered into various non-cancelable operating lease agreements for office facilities and equipment with original lease periods expiring between 2020 and 2025. Certain of these arrangements have free rent periods and/or escalating rent payment provisions. As such, the Company recognizes rent expense under such arrangements on a straight-line basis in accordance with U.S. GAAP. Some leases include options to renew. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. The 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 $1.9 million and $2.3 million for the years ended December 31, 2022 and 2021, respectively. Supplemental cash flow and other information related to operating leases for the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Weighted Average Remaining Lease Term 2.2 years 2.5 years Weighted Average Discount Rate 6.2 % 6.4 % Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows $2.1 million $2.1 million The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2022 (in thousands): Year Ending December 31, Amount 2023 $ 1,337 2024 697 2025 441 Total undiscounted cash flows 2,475 Less imputed interest (171) Total $ 2,304 |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Capital Stock | Capital StockSince 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, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation (a) Stock Options 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 14,550,000 shares of common stock under the Third Amended and Restated 2012 Stock Incentive 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 2012 Plan 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 $3.0 million and $2.6 million for the years ended December 31, 2022 and 2021, respectively. The following table sets forth a summary of the Company's stock option activity for the years ended December 31, 2022 and 2021: Outstanding Weighted Weighted Aggregate Outstanding at January 1, 2021 1,815,561 $ 10.31 1.9 $ — Granted — — — Forfeited (210,960) 9.16 12 Exercised (11,500) 3.57 14 Outstanding at December 31, 2021 1,593,101 $ 10.51 0.8 $ 7 Granted — — — Forfeited/expired (1,343,101) 10.55 — Exercised — — — Outstanding December 31, 2022 250,000 $ 10.31 0.9 $ 20 Vested, exercisable, and expected to vest (1) at December 31, 2022 250,000 $ 10.31 0.9 $ 20 Exercisable at December 31, 2022 250,000 $ 10.31 0.9 $ 20 (1) Options expected to vest reflect an estimated forfeiture rate. The Company recognizes share-based compensation costs as expense on a straight-line basis over the option vesting period, which generally is four years. There were no stock options granted during the years ended December 31, 2022 and December 31, 2021. 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, 2022 and 2021 was $0 and 14 thousand, respectively. At December 31, 2022 and 2021, there was no unrecognized stock-based compensation expense related to non-vested stock options. Net cash proceeds from the exercise of stock options were $0 and $41 thousand during 2022 and 2021, respectively. If stock options had been granted during the years ended December 31, 2022 and December 31, 2021, 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, 2022 and 2021: Weighted average Number of grant date Awards fair value Outstanding at January 1, 2021 4,592,644 $ 1.27 Granted 1,411,564 4.49 Forfeited (669,570) 1.51 Vested and converted to shares, net of units withheld for taxes (2,101,431) 1.17 Units withheld for taxes (297,856) $ 1.40 Outstanding at December 31, 2021 2,935,351 $ 2.85 Granted 2,412,906 2.66 Forfeited (270,674) 2.70 Vested and converted to shares (1,172,977) 2.49 Outstanding at December 31, 2022 3,904,606 $ 2.85 Expected to vest at December 31, 2022 3,438,199 $ 2.85 Restricted stock units and performance stock units granted under the Performant Financial Corporation Amended and Restated 2012 Stock Incentive Plan generally vest over periods between one year and four years. 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. Certain of the RSUs that vested in 2021 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 298,000 shares for 2021 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. After June 2021, the Company discontinued offering net-share settlement as a method of employees meeting their minimum statutory obligation for their applicable income and other employment taxes. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit PlanThe 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 2022 and 2021. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company’s income tax expense consists of the following (in thousands): 2022 2021 Current: Federal $ 163 $ 128 State 4 (66) 167 62 Deferred: Federal $ (15) $ — State (20) — (35) — Total expense $ 132 $ 62 The reconciliation between the amount computed by applying the U.S. federal statutory rate of 21% for 2022 and 2021 to income before taxes and the Company's tax provision for 2022 and 2021 is as follows: 2022 2021 Federal income at the statutory rate 21 % 21 % State income tax, net of federal benefit — 1 Permanent differences (1) 11 Work opportunity credit 2 — Return to provision true-up 3 (2) Stock-based compensation (24) — Valuation allowance — (30) Change in uncertain tax positions (3) — Other — (2) Effective tax rate (2) % (1) % The following table summarized the components of the Company's deferred tax assets and liabilities as of December 31, 2022 and 2021 (in thousands): 2022 2021 Deferred tax assets Vacation accrual $ 542 $ 562 Nonqualified stock options 725 2,859 State tax deferral 137 347 State tax credits 79 452 Net operating loss 6,148 4,762 Interest expense limitation 2,968 3,021 Lease liability 610 1,025 Appeals reserve 289 — Federal tax credits 145 — Other 507 2,047 Total deferred tax assets 12,150 15,075 Valuation allowance $ (9,404) $ (10,727) Total deferred tax assets net of valuation allowance 2,746 4,348 Deferred tax liabilities: Fixed assets $ (1,577) $ (2,944) Right of use asset (545) (949) Other (624) (490) Total deferred tax liabilities (2,746) (4,383) Net deferred tax liabilities $ — $ (35) As of December 31, 2022, and 2021, 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, 2022 is $9.4 million, which is a decrease of $1.3 million from the amount recorded as of December 31, 2021. The decrease in the valuation allowance from December 31, 2022 to December 31, 2021 is primarily driven by a decrease in the deferred state tax rate associated with the business operations impact on state apportionment and an increase in net operating losses, offset by nonqualified stock options expiring unexercised during the year ended December 31, 2022, resulting in a reduction of the nonqualified stock options deferred tax asset. 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 $0.1 million, which will begin to expire in 2023 and federal tax credits of $0.1 million. The Company has state net operating loss carryforwards of $44.0 million which will start to expire in 2023 and a federal net operating loss carryforward of $14.4 million which will be carried forward indefinitely. The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2022 from its unrecognized tax benefits as of December 31, 2021 (in thousands): Unrecognized tax benefits balance at December 31, 2021 $ 397 Increase related to prior year tax positions 157 Increase related to current year tax positions 6 Lapse of statute of limitations (51) Unrecognized tax benefits balance at December 31, 2022 $ 509 At December 31, 2022 and 2021, the Company had approximately $0.5 million and $0.4 million of unrecognized tax benefits, respectively. The Company has $0.2 million of unrecognized tax benefits for which the Company believes will be finally determined during the next twelve months either through settlement or the statute of limitations is scheduled to expire. The Company records interest expense and penalties related to unrecognized tax benefits in income tax expense. The amount of accrued interest was $0.1 million and $0.1 million at December 31, 2022 and 2021, respectively. No penalties were recognized in 2022 or accrued at December 31, 2022, and 2021 respectively. The Company has unrecognized tax benefits of approximately $0.5 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 is subject to federal income tax examinations based upon statute of limitations for tax years 2018 forward. 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 2018, the Company is subject to examination and assessment to the extent of net operating losses carryback refunds requested. The Company has an ongoing federal examination by the Internal Revenue Service for the 2018 tax year. |
Other Commitments and Contingen
Other Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Other Commitments and Contingencies | Other Commitments and Contingencies (a) Trust Funds The Company collects payments from counterparties on behalf of certain of our COB clients, where our client is owed a refund because they are not the primary payer for a healthcare claim as the covered member has other forms of insurance coverage. These cash collections are held in trust in bank accounts controlled by the Company. The Company remits trust funds to the clients 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 $1.7 million and $0.2 million at December 31, 2022 and 2021, 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 are not expected to 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, 2022 | |
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 event which does not require adjustments to the consolidated financial statements. On March 13, 2023, the Company entered into a First Amendment to the Credit Agreement to amend the Credit Agreement to, among other things, terminate the revolving loan commitment in full and to establish a new maturity date for the term loan of December 31, 2024. In connection with the First Amendment, the Company voluntarily prepaid $7.5 million of the outstanding principal of the term loan, which reduced our outstanding cash and cash equivalents. . |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021 Allowance for doubtful accounts (in thousands): Description Balance at Additions Recoveries Charge-offs Balance at 2022 $ — — — — $ — 2021 $ 49 — — (49) $ — Estimated allowance and liability for appeals and disputes (in thousands): Description Balance at Additions Appeals Found Balance at 2022 $ 1,190 1,296 (1,380) $ 1,106 2021 $ 1,014 1,169 (993) $ 1,190 Deferred tax asset valuation allowance (in thousands): Description Balance at Additions Releases Balance at 2022 $ 10,727 — 1,323 $ 9,404 2021 $ 6,249 4,478 — $ 10,727 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Organization and Nature of Business | Organization and Nature of Business Performant Financial Corporation (the Company, "we", or "our") is a leading provider of technology-enabled audit, recovery and analytics services in the United States with a focus in the healthcare payment integrity services industry. The Company works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits or COB) 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 multifaceted 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 and the continued pause on student loan recovery work, the Company sold certain of its non-healthcare recovery contracts, and did not renew or restart existing contracts, nor pursued new non-healthcare recovery opportunities in 2021. The Company’s consolidated financial statements include the operations of Performant Financial Corporation (Performant), its wholly-owned subsidiary Performant Business Services, Inc. (PBS), and PBS's wholly-owned subsidiaries Performant Recovery, Inc. (PRI), Performant Technologies, LLC (PTL), and Premiere Credit of North America, LLC (Premiere) through the end of 2021. Performant is a Delaware corporation headquartered in California and was formed in 2003. PBS is a Nevada corporation founded in 1997. PRI 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 ConsolidationThe 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, 2022 and 2021 for the accompanying reporting periods, 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 StatementsThe 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, goodwill, right-of-use assets, contract liabilities, estimated liability for appeals and disputes, lease liabilities, other liabilities, provision for (benefit from) income taxes, 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include demand deposits. The Company deposits cash and cash equivalents with high credit quality financial institutions and believes that any amounts in excess of insurance limitations to be at minimal risk. Cash and cash equivalents held at these accounts are currently insured by the Federal Deposit Insurance Corporation (FDIC) up to a maximum of $250,000. The Company's credit loss in the event of failure of these financial institutions is represented by the difference between the FDIC limit and the total amounts on deposit. The Company collects monies on behalf of certain 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 9(a)). |
Restricted Cash | Restricted CashAt December 31, 2022 and 2021, restricted cash included in current assets on our consolidated balance sheet was $0.1 million and $2.2 million, respectively, held in the form of certificates of deposit, which serve as collateral for letters of credit that were primarily associated with the recovery business. The Company’s restricted cash is held with high credit quality financial institutions and believes any amounts in excess of the FDIC limit to be at minimal risk. |
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 The carrying amount of goodwill was $47.4 million as of December 31, 2022 and 2021, both of which were net of accumulated impairment loss of $34.2 million. 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 events or conditions arise during the year. There was no goodwill impairment as of December 31, 2022 and 2021. 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 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. |
Impairment of Long-Lived Assets | Impairment of Long-Lived AssetsLong-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 |
Debt Issuance Costs | Debt Issuance CostsDebt 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 payable. |
Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, and Estimated Liability for Appeals and Disputes | Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, and Estimated Liability for Appeals and Disputes The Company derives its revenues primarily from providing audit, recovery, and analytics services. Revenues are recognized upon completion of these services for 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 services 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. The Company 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 our 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 availability and reliability of data. The Company reviews the constraint on variable consideration at least quarterly. While the Company believes the estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of variable consideration recognized. For contracts that contain a refund right, the Company estimates its refund liability for each claim, as needed, 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 healthcare claims audit contracts, the Company may recognize revenue upon delivering its findings from 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 COB contracts, the Company recognizes revenue when insurance companies or other responsible parties have remitted payments to the clients. 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 customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. |
Legal Expenses | Legal ExpensesThe Company recognizes legal fees related to litigation as they are incurred. |
Fair Value of Financial Instruments | Fair Value of Financial InstrumentsThe Company’s financial instruments include cash and cash equivalents, restricted cash, 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 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 state and local tax jurisdictions in which the Company operates may change resulting in changes to the state tax rates and apportionment allocations used in calculating the tax rate applied to deferred income tax assets and liabilities. 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. |
Loss per Share | Loss per ShareFor the years ended December 31, 2022 and 2021, 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), 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. |
New Accounting Pronouncements | New Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-06, "Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity", which is intended to simplify the accounting for convertible instruments by removing certain separation models in Subtopic 470-20, Debt-Debt with Conversion and Other Options, for convertible instruments. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The Company's adoption of ASU 2020-06 as of January 1, 2022 had no 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. The adoption of this pronouncement is not expected to have a material impact on the Company's financial position or results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents revenue disaggregated by category (in thousands) for the years ended December 31, 2022 and 2021: Years Ended December 31, 2022 2021 (in thousands) Eligibility-based $ 53,284 $ 48,276 Claims-based 41,382 29,178 Healthcare Total $ 94,666 $ 77,454 Recovery (1) 241 33,405 Customer Care / Outsourced Services 14,277 13,534 Total Revenues $ 109,184 $ 124,393 (1) Represents student lending, state and municipal tax authorities, IRS and Department of Treasury markets, as well as Premiere. |
Schedule of Details of Revenue by Major Customers | For the years ended December 31, 2022 and 2021, the Company had two and three different clients, respectively, 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): Year Ended December 31, 2022 Year Ended December 31, 2021 Rank Revenue Percent of Rank Revenue Percent of 1 $58,155 53% 1 $55,471 45% 2 $12,004 11% 2 $15,893 13% 3 $15,491 13% |
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, 2022 2021 Weighted average shares outstanding – basic 72,937 60,461 Dilutive effect of common share equivalents — — Weighted average shares outstanding – diluted 72,937 60,461 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (shares in thousands): Years Ended December 31, 2022 2021 Options to purchase common stock 250 1,593 RSUs 3,905 2,935 Warrants outstanding — 6,310 Total 4,155 10,838 |
Property, Equipment, and Leas_2
Property, Equipment, and Leasehold Improvements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment and Leasehold Improvements | Property, equipment, and leasehold improvements consist of the following at December 31, 2022 and 2021 (in thousands): December 31, 2022 December 31, 2021 Land $ — $ 1,943 Building and leasehold improvements 3,785 7,411 Furniture and equipment 3,094 5,757 Computer hardware and software 76,906 74,850 83,785 89,961 Less accumulated depreciation and amortization (72,888) (74,253) Property, equipment and leasehold improvements, net $ 10,897 $ 15,708 |
Credit Agreement (Tables)
Credit Agreement (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt Obligations | Outstanding debt obligations are as follows (in thousands): December 31, 2022 December 31, 2021 Principal amount $ 19,500 $ 20,000 Less: unamortized debt issuance costs (333) (427) Loan payable less unamortized debt issuance costs 19,167 19,573 Less: current maturities (983) (489) Long-term loan payable, net of current maturities $ 18,184 $ 19,084 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Lease, Cost | Supplemental cash flow and other information related to operating leases for the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Weighted Average Remaining Lease Term 2.2 years 2.5 years Weighted Average Discount Rate 6.2 % 6.4 % Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows $2.1 million $2.1 million |
Schedule of Maturities of Lease Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2022 (in thousands): Year Ending December 31, Amount 2023 $ 1,337 2024 697 2025 441 Total undiscounted cash flows 2,475 Less imputed interest (171) Total $ 2,304 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021: Outstanding Weighted Weighted Aggregate Outstanding at January 1, 2021 1,815,561 $ 10.31 1.9 $ — Granted — — — Forfeited (210,960) 9.16 12 Exercised (11,500) 3.57 14 Outstanding at December 31, 2021 1,593,101 $ 10.51 0.8 $ 7 Granted — — — Forfeited/expired (1,343,101) 10.55 — Exercised — — — Outstanding December 31, 2022 250,000 $ 10.31 0.9 $ 20 Vested, exercisable, and expected to vest (1) at December 31, 2022 250,000 $ 10.31 0.9 $ 20 Exercisable at December 31, 2022 250,000 $ 10.31 0.9 $ 20 (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, 2022 and 2021: Weighted average Number of grant date Awards fair value Outstanding at January 1, 2021 4,592,644 $ 1.27 Granted 1,411,564 4.49 Forfeited (669,570) 1.51 Vested and converted to shares, net of units withheld for taxes (2,101,431) 1.17 Units withheld for taxes (297,856) $ 1.40 Outstanding at December 31, 2021 2,935,351 $ 2.85 Granted 2,412,906 2.66 Forfeited (270,674) 2.70 Vested and converted to shares (1,172,977) 2.49 Outstanding at December 31, 2022 3,904,606 $ 2.85 Expected to vest at December 31, 2022 3,438,199 $ 2.85 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Expense (Benefit) | The Company’s income tax expense consists of the following (in thousands): 2022 2021 Current: Federal $ 163 $ 128 State 4 (66) 167 62 Deferred: Federal $ (15) $ — State (20) — (35) — Total expense $ 132 $ 62 |
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 2022 and 2021 to income before taxes and the Company's tax provision for 2022 and 2021 is as follows: 2022 2021 Federal income at the statutory rate 21 % 21 % State income tax, net of federal benefit — 1 Permanent differences (1) 11 Work opportunity credit 2 — Return to provision true-up 3 (2) Stock-based compensation (24) — Valuation allowance — (30) Change in uncertain tax positions (3) — Other — (2) Effective tax rate (2) % (1) % |
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, 2022 and 2021 (in thousands): 2022 2021 Deferred tax assets Vacation accrual $ 542 $ 562 Nonqualified stock options 725 2,859 State tax deferral 137 347 State tax credits 79 452 Net operating loss 6,148 4,762 Interest expense limitation 2,968 3,021 Lease liability 610 1,025 Appeals reserve 289 — Federal tax credits 145 — Other 507 2,047 Total deferred tax assets 12,150 15,075 Valuation allowance $ (9,404) $ (10,727) Total deferred tax assets net of valuation allowance 2,746 4,348 Deferred tax liabilities: Fixed assets $ (1,577) $ (2,944) Right of use asset (545) (949) Other (624) (490) Total deferred tax liabilities (2,746) (4,383) Net deferred tax liabilities $ — $ (35) |
Schedule of Unrecognized Tax Benefits | The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2022 from its unrecognized tax benefits as of December 31, 2021 (in thousands): Unrecognized tax benefits balance at December 31, 2021 $ 397 Increase related to prior year tax positions 157 Increase related to current year tax positions 6 Lapse of statute of limitations (51) Unrecognized tax benefits balance at December 31, 2022 $ 509 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Narrative (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) segment reporting_unit | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Line Items] | ||
Number of segments | segment | 1 | |
Restricted cash included in current assets | $ 81,000 | $ 2,203,000 |
Goodwill | 47,372,000 | 47,372,000 |
Accumulated impairment loss | $ 34,200,000 | 34,200,000 |
Number of reporting units | reporting_unit | 1 | |
Capitalized internal use software | $ 2,300,000 | 2,800,000 |
Capitalized internal use software, depreciation expense | 3,400,000 | 3,000,000 |
Allowance for doubtful accounts | 0 | 0 |
Contract assets | 11,500,000 | 8,100,000 |
Contract liabilities | 438,000 | 634,000 |
Estimated liability for appeals and disputes | 1,106,000 | 1,190,000 |
Prepaid expenses and other current assets | 3,665,000 | 3,077,000 |
Prepaid software licenses and maintenance agreements | 1,500,000 | 1,400,000 |
Prepaid insurance | 1,800,000 | 1,100,000 |
Other prepaid expense, current | 400,000 | 600,000 |
Other current liabilities | 2,252,000 | 3,732,000 |
Accrued liabilities, current | 1,800,000 | 3,600,000 |
Accrued interest | 300,000 | |
Workers' compensation liability, incurred | 100,000 | |
Accrued third party fees, current | $ 100,000 | |
Premium insurance financing payables | $ 100,000 | |
Furniture Fixtures and Equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property | 5 years | |
Furniture Fixtures and Equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful lives of property | 7 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 | |
Top Two Customers | Accounts Receivable | Customer Concentration Risk | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk (as a percent) | 47% | |
Top Three Customers | Accounts Receivable | Customer Concentration Risk | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk (as a percent) | 74% | |
Customer 1 | Accounts Receivable | Customer Concentration Risk | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk (as a percent) | 47% | 50% |
Customer 2 | Accounts Receivable | Customer Concentration Risk | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk (as a percent) | 24% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 109,184 | $ 124,393 |
Eligibility-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 53,284 | 48,276 |
Claims-based | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 41,382 | 29,178 |
Healthcare | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 94,666 | 77,454 |
Recovery | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 241 | 33,405 |
Customer Care / Outsourced Services | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 14,277 | $ 13,534 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Details of Revenue by Major Customers (Details) - Customer Concentration Risk - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer 1 | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 58,155 | $ 55,471 |
Customer 1 | Revenue | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 53% | 45% |
Customer 2 | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 12,004 | $ 15,893 |
Customer 2 | Revenue | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 11% | 13% |
Customer 3 | ||
Revenue, Major Customer [Line Items] | ||
Revenues | $ 15,491 | |
Customer 3 | Revenue | ||
Revenue, Major Customer [Line Items] | ||
Percent of total revenue | 13% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Reconciliation of Basic to Diluted Weighted-Average Shares Outstanding (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Weighted average shares outstanding – basic (in shares) | 72,937 | 60,461 |
Dilutive effect of common share equivalents (in shares) | 0 | 0 |
Weighted average shares outstanding – diluted (in shares) | 72,937 | 60,461 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details) - Anti-Dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 4,155 | 10,838 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 250 | 1,593 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 3,905 | 2,935 |
Warrants outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 0 | 6,310 |
Property, Equipment, and Leas_3
Property, Equipment, and Leasehold Improvements - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | $ 83,785 | $ 89,961 |
Less accumulated depreciation and amortization | (72,888) | (74,253) |
Property, equipment and leasehold improvements, net | 10,897 | 15,708 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 0 | 1,943 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 3,785 | 7,411 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | 3,094 | 5,757 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant, and equipment | $ 76,906 | $ 74,850 |
Property, Equipment, and Leas_4
Property, Equipment, and Leasehold Improvements - Narrative (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2022 USD ($) building | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense of property, equipment and leasehold improvements | $ 4,500 | $ 4,500 | |
Number of buildings sold | building | 2 | ||
Gain on sale of land and buildings | $ 1,100 | $ 1,120 | $ 0 |
Credit Agreement - Narrative (D
Credit Agreement - Narrative (Details) $ / shares in Units, $ in Millions | 12 Months Ended | ||||||||
Mar. 13, 2023 USD ($) | Dec. 17, 2021 USD ($) | May 24, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) | Dec. 31, 2023 | Dec. 30, 2023 | Sep. 30, 2023 | Dec. 31, 2021 USD ($) | Jun. 30, 2017 $ / shares shares | |
MUFG Union Bank, N.A. | Subsequent Event | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Fixed charge coverage ratio | 1.20 | 1.20 | |||||||
Minimum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Unused commitment fee percentage | 0.30% | ||||||||
Maximum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Unused commitment fee percentage | 0.50% | ||||||||
The Credit Agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Long-term borrowings outstanding | $ 19.5 | $ 20 | |||||||
Debt instrument, interest rate (as a percent) | 7.50% | 5.60% | |||||||
Term Loan | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Long-term borrowings outstanding | $ 20 | ||||||||
Term Loan | MUFG Union Bank, N.A. | Subsequent Event | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt prepayment costs | $ 7.5 | ||||||||
Revolving Loan Commitment | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Maximum borrowing capacity under credit facility | $ 15 | ||||||||
Prior Credit Agreement | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Securities called by warrants (in shares) | shares | 3,863,326 | 5,794,990 | |||||||
Initial Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Exercise price (USD per share) | $ / shares | $ 1.92 | ||||||||
Prior Credit Agreement ("Fifth Amendment") | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt prepayment costs | $ 6 | ||||||||
Securities called by warrants (in shares) | shares | 300,000 | ||||||||
Duration of optional extension periods | 1 year | ||||||||
Fair value of warrants issued including loan amendment fee | $ 6.1 | ||||||||
Unamortized debt issuance costs | $ 3.4 | ||||||||
SOFR | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Floor rate (as a percent) | 2.80% | ||||||||
SOFR | Minimum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate (as a percent) | 2.50% | ||||||||
SOFR | Maximum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate (as a percent) | 4% | ||||||||
Base Rate | Minimum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate (as a percent) | 1.50% | ||||||||
Base Rate | Maximum | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate (as a percent) | 3% | ||||||||
Redemption Period One | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of principal, percentage | 2.50% | ||||||||
Redemption Period One | MUFG Union Bank, N.A. | Subsequent Event | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Total leverage ratio | 10 | ||||||||
Redemption Period One | Additional Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Securities called per warrant (in shares) | shares | 515,110 | ||||||||
Redemption Period One | Prior Credit Agreement ("Fifth Amendment") | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Exercise price (USD per share) | $ / shares | $ 0.96 | ||||||||
Redemption Period Two | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Exercise price (USD per share) | $ / shares | $ 1.92 | ||||||||
Redemption Period Two | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of principal, percentage | 5% | ||||||||
Redemption Period Two | MUFG Union Bank, N.A. | Subsequent Event | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Total leverage ratio | 2.50 | 2.50 | |||||||
Redemption Period Two | Additional Term Loan | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Securities called per warrant (in shares) | shares | 1,931,663 | ||||||||
Redemption Period Two | Prior Credit Agreement ("Fifth Amendment") | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Exercise price (USD per share) | $ / shares | $ 0.96 | ||||||||
Redemption Period Three | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of principal, percentage | 10% | ||||||||
Redemption Period Three | Agreement For Purchase | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Additional number of securities called by warrants or rights (in shares) | shares | 300,000 | ||||||||
Redemption Period Four | MUFG Union Bank, N.A. | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Amortization of principal, percentage | 10% |
Credit Agreement - Outstanding
Credit Agreement - Outstanding Debt Obligations (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Principal amount | $ 19,500 | $ 20,000 |
Less: unamortized debt issuance costs | (333) | (427) |
Loan payable less unamortized debt issuance costs | 19,167 | 19,573 |
Less: current maturities | (983) | (489) |
Long-term loan payable, net of current maturities | $ 18,184 | $ 19,084 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating lease expenses | $ 1.9 | $ 2.3 |
Leases - Components of Lease Te
Leases - Components of Lease Term and Discount Rate (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Weighted Average Remaining Lease Term (in years) | 2 years 2 months 12 days | 2 years 6 months |
Weighted Average Discount Rate (as a percent) | 6.20% | 6.40% |
Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows | $ 2.1 | $ 2.1 |
Leases - Future Minimum Rental
Leases - Future Minimum Rental Commitments under Non-Cancelable Leases (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2023 | $ 1,337 |
2024 | 697 |
2025 | 441 |
Total undiscounted cash flows | 2,475 |
Less imputed interest | (171) |
Total | $ 2,304 |
Capital Stock (Details)
Capital Stock (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 | Aug. 15, 2012 |
Equity [Abstract] | |||
Common stock authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 |
Convertible preferred stock authorized (in shares) | 50,000,000 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 3,000,000 | $ 2,600,000 |
Granted (in shares) | 0 | 0 |
Aggregate intrinsic value of stock options exercised | $ 0 | $ 14,000 |
Proceeds from exercise of warrants | $ 0 | $ 41,000 |
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% | |
Share-based Payment Arrangement, Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 4 years | |
Exercise price of stock options relative to common stock fair market value (as a percent) | 100% | |
Estimated life of stock options | 10 years | |
Granted (in shares) | 0 | 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 (in shares) | 14,550,000 | |
Share-based Payment Arrangement, Option | 2012 Stock Incentive Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 4 years | |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares paid for tax withholding (in shares) | 298,000 | |
Compensation expense that has yet to be recognized | $ 8,400,000 | $ 6,000,000 |
Remaining weighted average vesting period (in years) | 3 years 1 month 6 days | |
Number of units vested (in shares) | 1,173,000 | 2,399,000 |
RSUs | 2012 Stock Incentive Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 1 year | |
RSUs | 2012 Stock Incentive Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period (in years) | 4 years |
Stock-based Compensation - Stoc
Stock-based Compensation - Stock Option Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Outstanding Options | |||
Outstanding at beginning of period (in shares) | 1,593,101 | 1,815,561 | |
Granted (in shares) | 0 | 0 | |
Forfeited/expired (in shares) | (1,343,101) | (210,960) | |
Exercised (in shares) | 0 | (11,500) | |
Outstanding at end of period (in shares) | 250,000 | 1,593,101 | 1,815,561 |
Vested, exercisable, and expected to vest (in shares) | 250,000 | ||
Exercisable (in shares) | 250,000 | ||
Weighted average exercise price per share | |||
Outstanding at beginning of period (USD per share) | $ 10.51 | $ 10.31 | |
Granted (USD per share) | 0 | 0 | |
Forfeited/expired (USD per share) | 10.55 | 9.16 | |
Exercised (USD per share) | 0 | 3.57 | |
Outstanding at end of period (USD per share) | 10.31 | $ 10.51 | $ 10.31 |
Vested, exercisable, and expected to vest (USD per share) | 10.31 | ||
Exercisable (USD per share) | $ 10.31 | ||
Weighted average remaining contractual life (Years) | |||
Outstanding (in years) | 10 months 24 days | 9 months 18 days | 1 year 10 months 24 days |
Vested, exercisable, and expected to vest (in years) | 10 months 24 days | ||
Exercisable (in years) | 10 months 24 days | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 20,000 | $ 7,000 | $ 0 |
Forfeited | 0 | 12,000 | |
Exercised | 0 | $ 14,000 | |
Vested, exercisable, and expected to vest | 20,000 | ||
Exercisable | $ 20,000 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Awards | ||
Expected to vest (in shares) | 250,000 | |
RSUs | ||
Number of Awards | ||
Balance at beginning of period (in shares) | 2,935,351 | 4,592,644 |
Granted (in shares) | 2,412,906 | 1,411,564 |
Forfeited (in shares) | (270,674) | (669,570) |
Vested and converted to shares (in shares) | (1,172,977) | (2,101,431) |
Units withheld for taxes (in shares) | (297,856) | |
Balance at end of period (in shares) | 3,904,606 | 2,935,351 |
Expected to vest (in shares) | 3,438,199 | |
Weighted average grant date fair value | ||
Balance at beginning of period (USD per share) | $ 2.85 | $ 1.27 |
Granted (USD per share) | 2.66 | 4.49 |
Forfeited (USD per share) | 2.70 | 1.51 |
Vested and converted to shares (USD per share) | 2.49 | 1.17 |
Units withheld for taxes (USD per share) | 1.40 | |
Balance at end of period (USD per share) | 2.85 | $ 2.85 |
Expected to vest (USD per share) | $ 2.85 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Employer contribution amount | $ 0 | $ 0 |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 163 | $ 128 |
State | 4 | (66) |
Current, total | 167 | 62 |
Deferred: | ||
Federal | (15) | 0 |
State | (20) | 0 |
Deferred income taxes | (35) | 0 |
Total expense | $ 132 | $ 62 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Federal Statutory Income Tax Expense to Actual Income Tax Expense (Details) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Federal income at the statutory rate | 21% | 21% |
State income tax, net of federal benefit | 0% | 1% |
Permanent differences | (1.00%) | 11% |
Work opportunity credit | 2% | 0% |
Return to provision true-up | 3% | (2.00%) |
Stock-based compensation | (24.00%) | 0% |
Valuation allowance | 0% | (30.00%) |
Change in uncertain tax positions | (3.00%) | 0% |
Other | 0% | (2.00%) |
Total income tax expense, percentage | (2.00%) | (1.00%) |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | ||
Vacation accrual | $ 542 | $ 562 |
Nonqualified stock options | 725 | 2,859 |
State tax deferral | 137 | 347 |
State tax credits | 79 | 452 |
Net operating loss | 6,148 | 4,762 |
Interest expense limitation | 2,968 | 3,021 |
Lease liability | 610 | 1,025 |
Appeals reserve | 289 | 0 |
Federal tax credits | 145 | 0 |
Other | 507 | 2,047 |
Total deferred tax assets | 12,150 | 15,075 |
Valuation allowance | (9,404) | (10,727) |
Total deferred tax assets net of valuation allowance | 2,746 | 4,348 |
Deferred tax liabilities: | ||
Fixed assets | (1,577) | (2,944) |
Right of use asset | (545) | (949) |
Other | (624) | (490) |
Total deferred tax liabilities | (2,746) | (4,383) |
Net deferred tax liabilities | $ 0 | $ (35) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax [Line Items] | ||
Valuation allowance | $ 9,404,000 | $ 10,727,000 |
Increase in valuation allowance | 1,300,000 | |
Tax credits | 79,000 | 452,000 |
Unrecognized tax benefits | 509,000 | 397,000 |
Unrecognized tax benefit to expire during next twelve months | 200,000 | |
Accrued interest | 100,000 | 100,000 |
Tax penalties expense | 0 | 0 |
Income tax examination, penalties accrued | 0 | $ 0 |
Unrecognized tax benefits that would impact effective tax rate | 500,000 | |
State | ||
Income Tax [Line Items] | ||
Tax credits | 100,000 | |
Net operating loss carryforwards | 44,000,000 | |
Federal | ||
Income Tax [Line Items] | ||
Tax credits | 100,000 | |
Net operating loss carryforwards | $ 14,400,000 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |
Balance at beginning of period of unrecognized tax benefits | $ 397 |
Increase related to prior year tax positions | 157 |
Increase related to current year tax positions | 6 |
Lapse of statute of limitations | (51) |
Balance at end of period of unrecognized tax benefits | $ 509 |
Other Commitments and Conting_2
Other Commitments and Contingencies (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies Disclosure [Abstract] | ||
Restricted cash | $ 1.7 | $ 0.2 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | Mar. 13, 2023 USD ($) |
Subsequent Event | Term Loan | MUFG Union Bank, N.A. | |
Subsequent Event [Line Items] | |
Debt prepayment costs | $ 7.5 |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Allowance for doubtful accounts | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at Beginning of Period | $ 0 | $ 49 |
Additions Charged against Expense | 0 | 0 |
Recoveries | 0 | 0 |
Charge-offs and Releases | 0 | (49) |
Balance at End of Period | 0 | 0 |
Estimated allowance and liability for appeals | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at Beginning of Period | 1,190 | 1,014 |
Additions Charged against Expense | 1,296 | 1,169 |
Appeals Found in Providers Favor | (1,380) | (993) |
Balance at End of Period | 1,106 | 1,190 |
Deferred tax asset valuation allowance | ||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Balance at Beginning of Period | 10,727 | 6,249 |
Additions Charged against Expense | 0 | 4,478 |
Charge-offs and Releases | 1,323 | 0 |
Balance at End of Period | $ 9,404 | $ 10,727 |