Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 08, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35628 | |
Entity Registrant Name | PERFORMANT FINANCIAL CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-0484934 | |
Entity Address, Address Line One | 333 North Canyons Parkway | |
Entity Address, City or Town | Livermore | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94551 | |
City Area Code | (925) | |
Local Phone Number | 960-4800 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, par value $.0001 per share | |
Trading Symbol | PFMT | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding (in shares) | 76,088,187 | |
Entity Central Index Key | 0001550695 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 14,982 | $ 23,384 |
Restricted cash | 81 | 81 |
Trade accounts receivable | 12,790 | 15,794 |
Contract assets | 6,947 | 11,460 |
Prepaid expenses and other current assets | 2,982 | 3,665 |
Income tax receivable | 3,176 | 3,123 |
Total current assets | 40,958 | 57,507 |
Property, equipment, and leasehold improvements, net | 10,688 | 10,897 |
Goodwill | 47,372 | 47,372 |
Right-of-use assets | 602 | 2,057 |
Other assets | 975 | 1,000 |
Total assets | 100,595 | 118,833 |
Current liabilities: | ||
Current maturities of notes payable, net of unamortized debt issuance costs of $63 and $17, respectively | 1,437 | 983 |
Accrued salaries and benefits | 6,118 | 6,938 |
Accounts payable | 1,195 | 1,262 |
Other current liabilities | 1,920 | 2,252 |
Contract liabilities | 112 | 438 |
Estimated liability for appeals and disputes | 807 | 1,106 |
Lease liabilities | 465 | 1,228 |
Total current liabilities | 12,054 | 14,207 |
Notes payable, net of current portion and unamortized debt issuance costs of $421 and $316, respectively | 9,579 | 18,184 |
Lease liabilities | 148 | 1,076 |
Other liabilities | 894 | 881 |
Total liabilities | 22,675 | 34,348 |
Commitments and contingencies (note 3 and note 4) | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at June 30, 2023 and December 31, 2022 respectively; issued and outstanding 76,088 and 75,505 shares at June 30, 2023 and December 31, 2022, respectively | 7 | 7 |
Additional paid-in capital | 143,890 | 142,261 |
Accumulated deficit | (65,977) | (57,783) |
Total stockholders’ equity | 77,920 | 84,485 |
Total liabilities and stockholders’ equity | $ 100,595 | $ 118,833 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Debt issuance costs, current portion | $ 63 | $ 17 |
Debt issuance costs, net of current portion | $ 421 | $ 316 |
Common stock, par or stated value per share (in usd per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares (in shares) | 500,000 | 500,000 |
Common stock, issued shares (in shares) | 76,088 | 76,088 |
Common stock, outstanding shares (in shares) | 75,505 | 75,505 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenues | $ 25,485 | $ 25,681 | $ 51,214 | $ 52,764 |
Operating expenses: | ||||
Salaries and benefits | 21,710 | 20,903 | 44,159 | 41,342 |
Other operating expenses | 7,376 | 8,081 | 14,445 | 16,212 |
Total operating expenses | 29,086 | 28,984 | 58,604 | 57,554 |
Loss from operations | (3,601) | (3,303) | (7,390) | (4,790) |
Gain on sale of certain recovery contracts | 0 | 382 | 3 | 382 |
Interest expense | (351) | (216) | (765) | (371) |
Loss before provision for income taxes | (3,952) | (3,137) | (8,152) | (4,779) |
Provision for income taxes | 21 | 32 | 42 | 63 |
Net loss | $ (3,973) | $ (3,169) | $ (8,194) | $ (4,842) |
Net loss per share | ||||
Basic (in usd per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.07) |
Diluted (in usd per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.07) |
Weighted average shares | ||||
Basic (in shares) | 75,752 | 73,502 | 75,629 | 71,698 |
Diluted (in shares) | 75,752 | 73,502 | 75,629 | 71,698 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit |
Beginning balance (in shares) at Dec. 31, 2021 | 69,281 | |||
Beginning balance 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) | 674 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | 0 | |||
Stock-based compensation expense | $ 1,281 | 1,281 | ||
Proceeds from exercise of stock options (in shares) | 3,863 | |||
Proceeds from exercise of stock options | $ 5,563 | 5,563 | ||
Net loss | (4,842) | (4,842) | ||
Ending balance (in shares) at Jun. 30, 2022 | 73,818 | |||
Ending balance at Jun. 30, 2022 | 84,425 | $ 7 | 140,506 | (56,088) |
Beginning balance (in shares) at Mar. 31, 2022 | 73,144 | |||
Beginning balance at Mar. 31, 2022 | 86,871 | $ 7 | 139,783 | (52,919) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares) | 674 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | 0 | |||
Stock-based compensation expense | 723 | 723 | ||
Net loss | (3,169) | (3,169) | ||
Ending balance (in shares) at Jun. 30, 2022 | 73,818 | |||
Ending balance at Jun. 30, 2022 | $ 84,425 | $ 7 | 140,506 | (56,088) |
Beginning balance (in shares) at Dec. 31, 2022 | 75,505 | 75,505 | ||
Beginning balance at Dec. 31, 2022 | $ 84,485 | $ 7 | 142,261 | (57,783) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares) | 583 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | (57) | (57) | ||
Stock-based compensation expense | 1,686 | 1,686 | ||
Proceeds from exercise of stock options (in shares) | 0 | |||
Proceeds from exercise of stock options | 0 | 0 | ||
Net loss | $ (8,194) | (8,194) | ||
Ending balance (in shares) at Jun. 30, 2023 | 75,505 | 76,088 | ||
Ending balance at Jun. 30, 2023 | $ 77,920 | $ 7 | 143,890 | (65,977) |
Beginning balance (in shares) at Mar. 31, 2023 | 75,505 | |||
Beginning balance at Mar. 31, 2023 | 81,062 | $ 7 | 143,059 | (62,004) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Common stock issued under stock plans, net of shares withheld for employee taxes (in shares) | 583 | |||
Common stock issued under stock plans, net of shares withheld for employee taxes | (57) | (57) | ||
Stock-based compensation expense | 888 | 888 | ||
Net loss | $ (3,973) | (3,973) | ||
Ending balance (in shares) at Jun. 30, 2023 | 75,505 | 76,088 | ||
Ending balance at Jun. 30, 2023 | $ 77,920 | $ 7 | $ 143,890 | $ (65,977) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (8,194) | $ (4,842) |
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 | 36 | (15) |
Depreciation and amortization | 2,512 | 2,260 |
Right-of-use assets amortization | 1,455 | 588 |
Stock-based compensation | 1,686 | 1,281 |
Interest expense from debt issuance costs | 122 | 48 |
Gain on sale of certain recovery contracts | (3) | (382) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 3,004 | 928 |
Contract assets | 4,513 | (1,084) |
Prepaid expenses and other current assets | 683 | (257) |
Income tax receivable | (53) | (89) |
Other assets | 25 | (6) |
Accrued salaries and benefits | (820) | (1,081) |
Accounts payable | (67) | (161) |
Contract liabilities and other current liabilities | (658) | (1,860) |
Estimated liability for appeals, disputes, and refunds | (299) | (114) |
Lease liabilities | (1,691) | (704) |
Other liabilities | 14 | 12 |
Net cash provided by (used in) operating activities | 2,265 | (5,478) |
Cash flows from investing activities: | ||
Purchase of property, equipment, and leasehold improvements | (2,339) | (1,589) |
Proceeds from sale of certain recovery contracts | 3 | 382 |
Net cash used in investing activities | (2,336) | (1,207) |
Cash flows from financing activities: | ||
Repayment of notes payable | (8,000) | (250) |
Debt issuance costs paid | (274) | (2) |
Taxes paid related to net share settlement of stock awards | (57) | 0 |
Proceeds from exercise of warrants | 0 | 5,563 |
Net cash (used in) provided by financing activities | (8,331) | 5,311 |
Net decrease in cash, cash equivalents and restricted cash | (8,402) | (1,374) |
Cash, cash equivalents and restricted cash at beginning of period | 23,465 | 19,550 |
Cash, cash equivalents and restricted cash at end of period | 15,063 | 18,176 |
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | ||
Cash and cash equivalents | 14,982 | 15,973 |
Restricted cash | 81 | 2,203 |
Total cash, cash equivalents and restricted cash at end of period | 15,063 | 18,176 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 143 | 238 |
Cash paid for interest | $ 721 | $ 244 |
Organization and Description of
Organization and Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Organization and Description of Business | Organization and Description of Business (a) Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at June 30, 2023, and December 31, 2022,the results of our operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2022. 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. 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 also has a call center which serves clients with multifaceted consumer engagement needs. The Company historically worked in recovery markets such as defaulted student loans, tax receivables, and commercial recovery. 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) and Performant Technologies, LLC (PTL). 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. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, goodwill, right-of-use assets, estimated liability for appeals and disputes, lease liabilities, other liabilities, provision for income taxes, and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues. Actual amounts may differ from amounts presently estimated. (b) Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, 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 service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. 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 its clients. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category (in thousands) for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended 2023 2022 2023 2022 (in thousands) (in thousands) Eligibility-based $ 14,131 $ 12,417 26,611 26,632 Claims-based 9,798 9,339 20,210 18,488 Healthcare Total 23,929 21,756 46,821 45,120 Recovery (1) 14 7 33 124 Customer Care / Outsourced Services 1,542 3,918 4,360 7,520 Total Revenues $ 25,485 $ 25,681 $ 51,214 $ 52,764 (1) Represented defaulted student loans and tax receivables markets, which substantially concluded in 2021. 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 as of June 30, 2023 and December 31, 2022. Contract assets were $6.9 million and $11.5 million as of June 30, 2023 and December 31, 2022, 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 claims audit findings submitted to healthcare clients. Changes in contract assets result from invoiced amounts offset by additional consideration earned for services provided to healthcare clients during the period. 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 six months ended June 30, 2023 and 2022. The Company had contract liabilities of $0.1 million and $0.4 million as of June 30, 2023 and December 31, 2022, respectively. 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 (COB) 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 $0.8 million as of June 30, 2023 and $1.1 million as of December 31, 2022. This represents the Company’s best estimate of the amount probable of being refunded to the Company’s healthcare clients. (c) Prepaid Expenses and Other Current Assets At June 30, 2023, prepaid expenses and other current assets wer e $3.0 million and included approximately $2.0 million related to prepaid software licenses and maintenance agreements, $0.6 million for prepaid insurance, and $0.4 million for various other prepaid expenses. 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. (d) Impairment of Goodwill and Long-Lived Assets The balance of goodwill was $47.4 million as of June 30, 2023 and $47.4 million as of December 31, 2022, which was net of accumulated impairment loss of $34.2 million. Goodwill is reviewed for impairment at least annually in December or as certain events or conditions arise during the year. The Company may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. In performing the quantitative assessment of goodwill, if the carrying value of the Company, as one reporting unit, exceeds its fair value, goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and the fair value of the reporting unit. Impairment testing is based upon the best information available and estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, our market capitalization, projecting future cash flows and other assumptions, to estimate the fair value of the reporting unit. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Based on management’s analysis, there was no impairment to goodwill as of June 30, 2023 and December 31, 2022. Long-lived assets and intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. 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. There was no impairment as of June 30, 2023 and December 31, 2022. (e) Other Current Liabilities As of June 30, 2023, other current liabilities primarily included $1.4 million for services received for which we have not received an invoice, and $0.5 million for estimated workers' compensation claims incurred but not reported, third party fees, and accrued interest under our Credit Agreement (Note 3). As of December 31, 2022, other current liabilities primarily included $1.8 million for services received for which we have not received an invoice, and $0.5 million for accrued interest under our Credit Agreement, estimated workers' compensation claims incurred but not reported and third party fees and equipment financing payables. (f) New Accounting Pronouncements In February 2020, the Financial Accounting Standards Board (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 Company's adoption of this ASU had no impact on our financial position, results of operations, or cash flows. |
Property, Equipment, and Leaseh
Property, Equipment, and Leasehold Improvements | 6 Months Ended |
Jun. 30, 2023 | |
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 June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, Building and leasehold improvements $ 3,703 $ 3,785 Furniture and equipment 3,090 3,094 Computer hardware and software 78,856 76,906 85,649 83,785 Less accumulated depreciation and amortization (74,961) (72,888) Property, equipment and leasehold improvements, net $ 10,688 $ 10,897 Depreciation and amortization expense was $1.3 million and $1.2 million for the three months ended June 30, 2023 and 2022, respectively, and $2.5 million and $2.3 million for the six months ended June 30, 2023 and 2022, respectively. |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Notes Payable | Notes Payable As of June 30, 2023 and December 31, 2022, $11.5 million and $19.5 million, respectively, was outstanding under the Company's credit agreement with MUFG Union Bank, N.A. (the "Credit Agreement"). The Company’s interest rate under the Credit Agreement at June 30, 2023 and December 31, 2022 was 9.1% and 7.5%, respectively. On December 17, 2021, the Company entered into a Credit Agreement with MUFG Union Bank, N.A. The Credit Agreement includes a $20 million term loan commitment, which was fully advanced at closing and a $15 million revolving loan commitment. 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. On March 13, 2023, the Company entered into a First Amendment to the Credit Agreement (the “First Amendment”) to amend the Credit Agreement to, among other things, terminate the revolving loan commitment in full and to establish a new maturity date of December 31, 2024 for the term loan. 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. 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 5.1% as of June 30, 2023. 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, N.A. 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. Outstanding debt obligations were as follows (in thousands): June 30, 2023 December 31, 2022 Principal amount $ 11,500 $ 19,500 Less unamortized discount and issuance costs (484) (333) Notes payable, net of unamortized discount and issuance costs 11,016 19,167 Less current maturities, net of unamortized discount and issuance costs (1,437) (983) Long-term notes payable, net of current maturities and unamortized discount and issuance costs $ 9,579 $ 18,184 The following is a schedule, by years, of maturities of notes payable as of June 30, 2023 (in thousands): Year Ending December 31, Amount Remainder of 2023 $ 500 2024 11,000 Total notes payable $ 11,500 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company has entered into various non-cancelable operating lease agreements for office facilities and equipment with lease periods expiring between 2023 and 2026. 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. Some leases include options to renew. The Company does not assume renewals in its 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 $0.2 million and $0.5 million for the three months ended June 30, 2023 and 2022, respectively, and $0.5 million and $1.1 million for the six months ended June 30, 2023 and 2022, respectively. Supplemental other information related to operating leases were as follows: June 30, December 31, Weighted Average Remaining Lease Term (in years) 1.2 2.2 Weighted Average Discount Rate 5.2% 6.2% Supplemental cash flow information related to operating leases were as follows: June 30, June 30, Cash paid for amounts included in the measurement of operating lease liabilities $0.2 million $0.6 million The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023 (in thousands): Year Ending December 31, Amount Remainder of 2023 $ 393 2024 157 2025 82 2026 3 Total undiscounted cash flows $ 635 Less imputed interest (22) Present value of lease liabilities $ 613 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation (a) Stock Options Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $0.9 million and $0.7 million for the three months ended June 30, 2023 and 2022 respectively, and $1.7 million and $1.3 million for the six months ended June 30, 2023 and 2022, respectively. The following table sets forth a summary of the Company's stock option activity for the six months ended June 30, 2023: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2022 250,000 $ 10.31 0.90 $ 20 Granted — — — Forfeited (111,000) 12.86 — Exercised — — — Outstanding at June 30, 2023 139,000 $ 8.27 0.90 $ 10 Vested, exercisable, expected to vest (1) at June 30, 2023 139,000 $ 8.27 0.90 $ 10 Exercisable at June 30, 2023 139,000 $ 8.27 0.90 $ 10 (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. As of June 30, 2023, all options have vested and there was no unrecognized compensation costs. (b) Restricted Stock Units and Performance Stock Units The following table summarizes restricted stock unit and performance stock unit activity for the six months ended June 30, 2023: Number of Awards Weighted Outstanding at December 31, 2022 3,904,606 $ 2.85 Granted 608,622 2.59 Forfeited (96,406) 3.40 Vested and converted to shares, net of units withheld for taxes (583,079) 1.50 Units withheld for taxes (25,210) 1.60 Outstanding at June 30, 2023 3,808,533 $ 3.01 Expected to vest at June 30, 2023 3,351,509 $ 3.01 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. As of June 30, 2023, there was approximately $7.9 million of total unrecognized compensation cost related to unvested restricted stock units granted to employees. This unrecognized compensation cost is expected to be recognized over an estimated weighted-average amortization period of approximately 2.8 years. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective income tax rate was (1)% for the six months ended June 30, 2023 and (1)% for the six months ended June 30, 2022. The primary driver of the effective income tax rate is the overall losses from operations for the six months ended June 30, 2023, for which no benefit is recognized due to valuation allowance. The Company files income tax returns with the U.S. federal government and various state jurisdictions. The Company operates in a number of state and local jurisdictions, most of which have never audited our 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 has been subject to examination and assessment to the extent of net operating losses carryback refunds requested. The Company had an ongoing federal examination by the Internal Revenue Service for the 2018 tax year. This federal examination concluded in July of 2023. |
Net Income (Loss) per Share
Net Income (Loss) per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) per Share | Net Income (Loss) per ShareFor the three and six months ended June 30, 2023 and 2022, basic net income (loss) per share is calculated by dividing net income (loss) by the sum of the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of shares of common stock and dilutive common share equivalents outstanding during the period. Common share equivalents consist of stock options, restricted stock units, performance stock units, and warrants. When there is a loss in the period, dilutive common share equivalents are excluded from the calculation of diluted earnings per share, as their effect would be anti-dilutive. For example, for the six months ended June 30, 2023 and 2022, respectively, diluted weighted average shares outstanding are the same as basic average shares outstanding. When there is net income in the period, the Company excludes stock options, restricted stock units, performance stock units, and warrants from the calculation of diluted earnings per share when their combined exercise price and unamortized fair value exceeds the average market price of the Company's common stock because their effect would be anti-dilutive. The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Weighted average shares outstanding – basic 75,752 73,502 75,629 71,698 Dilutive effect of stock options — — — — Weighted average shares outstanding – diluted 75,752 73,502 75,629 71,698 Since the Company was in a loss position for all 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): June 30, 2023 June 30, 2022 Options to purchase common stock 139 1,487 RSUs 3,809 2,328 Warrants outstanding — 2,447 Total 3,948 6,262 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThe Company has evaluated subsequent events through the date these consolidated financial statements are filed with the Securities and Exchange Commission and there are no other events that have occurred that would require adjustments or disclosures to our consolidated financial statements. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net loss | $ (3,973) | $ (3,169) | $ (8,194) | $ (4,842) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 shares | Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | ||
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Simeon Kohl [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | Simeon Kohl, our Chief Executive Officer, adopted a trading plan on June 7, 2023, with an effective date of September 7, 2023, providing for the sale of up to an aggregate of 163,110 shares of our common stock until September 7, 2025. | |
Name | Simeon Kohl | |
Title | Chief Executive Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | June 7, 2023 | |
Arrangement Duration | 731 days | |
Aggregate Available | 163,110 | 163,110 |
Rohit Ramchandani [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | Rohit Ramchandani, our Chief Financial Officer, adopted a trading plan on June 7, 2023, with an effective date of September 7, 2023, providing for the sale of up to an aggregate of 65,781 shares of our common stock until September 7, 2025. | |
Name | Rohit Ramchandani | |
Title | Chief Financial Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | June 7, 2023 | |
Arrangement Duration | 731 days | |
Aggregate Available | 65,781 | 65,781 |
Ian Johnston [Member] | ||
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | Ian Johnston, our Vice President and Chief Accounting Officer, adopted a trading plan on June 7, 2023, with an effective date of September 7, 2023, providing for the sale of up to an aggregate of 63,684 shares of our common stock until September 7, 2025. | |
Name | Ian Johnston | |
Title | Vice President and Chief Accounting Officer | |
Rule 10b5-1 Arrangement Adopted | true | |
Adoption Date | June 7, 2023 | |
Arrangement Duration | 731 days | |
Aggregate Available | 63,684 | 63,684 |
Organization and Description _2
Organization and Description of Business (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Organization | Basis of Presentation and Organization The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments necessary (consisting only of normal recurring adjustments) for a fair presentation of our financial position at June 30, 2023, and December 31, 2022,the results of our operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. Interim financial statements are prepared on a basis consistent with our annual consolidated financial statements. The interim financial statements included herein should be read in conjunction with the consolidated financial statements and related notes included in our annual report on Form 10-K for the year ended December 31, 2022. 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. 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 also has a call center which serves clients with multifaceted consumer engagement needs. The Company historically worked in recovery markets such as defaulted student loans, tax receivables, and commercial recovery. 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) and Performant Technologies, LLC (PTL). 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. All intercompany balances and transactions have been eliminated in consolidation. The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. The preparation of the consolidated financial statements, in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, contract assets, goodwill, right-of-use assets, estimated liability for appeals and disputes, lease liabilities, other liabilities, provision for income taxes, and disclosure of contingent liabilities at the date of the consolidated financial statements, and the reported amounts of revenues. Actual amounts may differ from amounts presently estimated. |
Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals, Disputes and Refunds | Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, 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 service contracts consist primarily of contingency fees based on a specified percentage of the amount the Company enables its clients to recover. The contingency fee percentage for a particular recovery depends on the type of recovery or claim facilitated. 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 its clients. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. 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 as of June 30, 2023 and December 31, 2022. Contract assets were $6.9 million and $11.5 million as of June 30, 2023 and December 31, 2022, 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 claims audit findings submitted to healthcare clients. Changes in contract assets result from invoiced amounts offset by additional consideration earned for services provided to healthcare clients during the period. 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 six months ended June 30, 2023 and 2022. The Company had contract liabilities of $0.1 million and $0.4 million as of June 30, 2023 and December 31, 2022, respectively. |
Impairment of Goodwill and Long-Lived Assets | Goodwill is reviewed for impairment at least annually in December or as certain events or conditions arise during the year. The Company may first assess qualitative factors for indicators of impairment to determine whether it is necessary to perform the quantitative goodwill impairment test. In performing the quantitative assessment of goodwill, if the carrying value of the Company, as one reporting unit, exceeds its fair value, goodwill is considered impaired. The amount of impairment loss is measured as the difference between the carrying value and the fair value of the reporting unit.Impairment testing is based upon the best information available and estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, our market capitalization, projecting future cash flows and other assumptions, to estimate the fair value of the reporting unit. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact the amount of impairment. Based on management’s analysis, there was no impairment to goodwill as of June 30, 2023 and December 31, 2022.Long-lived assets and intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. 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. There was no impairment as of June 30, 2023 and December 31, 2022. |
New Accounting Pronouncements | New Accounting PronouncementsIn February 2020, the Financial Accounting Standards Board (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 Company's adoption of this ASU had no impact on our financial position, results of operations, or cash flows. |
Organization and Description _3
Organization and Description of Business (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregated Revenue by Category | The following table presents revenue disaggregated by category (in thousands) for the three and six months ended June 30, 2023 and 2022: Three Months Ended Six Months Ended 2023 2022 2023 2022 (in thousands) (in thousands) Eligibility-based $ 14,131 $ 12,417 26,611 26,632 Claims-based 9,798 9,339 20,210 18,488 Healthcare Total 23,929 21,756 46,821 45,120 Recovery (1) 14 7 33 124 Customer Care / Outsourced Services 1,542 3,918 4,360 7,520 Total Revenues $ 25,485 $ 25,681 $ 51,214 $ 52,764 (1) Represented defaulted student loans and tax receivables markets, which substantially concluded in 2021. |
Property, Equipment, and Leas_2
Property, Equipment, and Leasehold Improvements (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, and Leasehold Improvements | Property, equipment, and leasehold improvements consist of the following at June 30, 2023 and December 31, 2022 (in thousands): June 30, December 31, Building and leasehold improvements $ 3,703 $ 3,785 Furniture and equipment 3,090 3,094 Computer hardware and software 78,856 76,906 85,649 83,785 Less accumulated depreciation and amortization (74,961) (72,888) Property, equipment and leasehold improvements, net $ 10,688 $ 10,897 |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | Outstanding debt obligations were as follows (in thousands): June 30, 2023 December 31, 2022 Principal amount $ 11,500 $ 19,500 Less unamortized discount and issuance costs (484) (333) Notes payable, net of unamortized discount and issuance costs 11,016 19,167 Less current maturities, net of unamortized discount and issuance costs (1,437) (983) Long-term notes payable, net of current maturities and unamortized discount and issuance costs $ 9,579 $ 18,184 |
Schedule of Maturities of Long-term Debt | The following is a schedule, by years, of maturities of notes payable as of June 30, 2023 (in thousands): Year Ending December 31, Amount Remainder of 2023 $ 500 2024 11,000 Total notes payable $ 11,500 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Lease Cost | Supplemental other information related to operating leases were as follows: June 30, December 31, Weighted Average Remaining Lease Term (in years) 1.2 2.2 Weighted Average Discount Rate 5.2% 6.2% Supplemental cash flow information related to operating leases were as follows: June 30, June 30, Cash paid for amounts included in the measurement of operating lease liabilities $0.2 million $0.6 million |
Schedule of Maturities of Lease Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2023 (in thousands): Year Ending December 31, Amount Remainder of 2023 $ 393 2024 157 2025 82 2026 3 Total undiscounted cash flows $ 635 Less imputed interest (22) Present value of lease liabilities $ 613 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
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 six months ended June 30, 2023: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2022 250,000 $ 10.31 0.90 $ 20 Granted — — — Forfeited (111,000) 12.86 — Exercised — — — Outstanding at June 30, 2023 139,000 $ 8.27 0.90 $ 10 Vested, exercisable, expected to vest (1) at June 30, 2023 139,000 $ 8.27 0.90 $ 10 Exercisable at June 30, 2023 139,000 $ 8.27 0.90 $ 10 (1) Options expected to vest reflect an estimated forfeiture rate. |
Schedule of Restricted Stock Activity | The following table summarizes restricted stock unit and performance stock unit activity for the six months ended June 30, 2023: Number of Awards Weighted Outstanding at December 31, 2022 3,904,606 $ 2.85 Granted 608,622 2.59 Forfeited (96,406) 3.40 Vested and converted to shares, net of units withheld for taxes (583,079) 1.50 Units withheld for taxes (25,210) 1.60 Outstanding at June 30, 2023 3,808,533 $ 3.01 Expected to vest at June 30, 2023 3,351,509 $ 3.01 |
Net Income (Loss) per Share (Ta
Net Income (Loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic to Diluted Weighted Average Shares | The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): Three Months Ended Six Months Ended 2023 2022 2023 2022 Weighted average shares outstanding – basic 75,752 73,502 75,629 71,698 Dilutive effect of stock options — — — — Weighted average shares outstanding – diluted 75,752 73,502 75,629 71,698 |
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): June 30, 2023 June 30, 2022 Options to purchase common stock 139 1,487 RSUs 3,809 2,328 Warrants outstanding — 2,447 Total 3,948 6,262 |
Organization and Description _4
Organization and Description of Business - Narrative (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 USD ($) reporting_unit segment | Dec. 31, 2022 USD ($) | |
Accounting Policies [Abstract] | ||
Number of operating segments | segment | 1 | |
Allowance for doubtful accounts | $ 0 | $ 0 |
Contract assets | 6,947,000 | 11,460,000 |
Contract liabilities | 112,000 | 438,000 |
Estimated liability for appeals | 807,000 | 1,106,000 |
Prepaid expenses and other current assets | 2,982,000 | 3,665,000 |
Prepaid expenses and other current assets, prepaid software licenses and maintenance agreement | 2,000,000 | 1,500,000 |
Prepaid expenses and other current assets, prepaid insurance | 600,000 | 1,800,000 |
Prepaid expenses and other current assets, various other prepaid expenses | 400,000 | 400,000 |
Goodwill | 47,372,000 | 47,372,000 |
Goodwill, accumulated impairment loss | $ 34,200,000 | 34,200,000 |
Number of reporting units | reporting_unit | 1 | |
Non-cash impairment charge | $ 0 | 0 |
Accrued liabilities, current | 1,400,000 | 1,800,000 |
Workers' compensation liability, incurred | $ 500,000 | |
Premium insurance financing payables | $ 500,000 |
Organization and Description _5
Organization and Description of Business - Schedule of Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 25,485 | $ 25,681 | $ 51,214 | $ 52,764 |
Healthcare Total | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 23,929 | 21,756 | 46,821 | 45,120 |
Eligibility-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 14,131 | 12,417 | 26,611 | 26,632 |
Claims-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 9,798 | 9,339 | 20,210 | 18,488 |
Recovery | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | 14 | 7 | 33 | 124 |
Customer Care / Outsourced Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total Revenues | $ 1,542 | $ 3,918 | $ 4,360 | $ 7,520 |
Property, Equipment, and Leas_3
Property, Equipment, and Leasehold Improvements - Schedule of Property, Equipment, and Leasehold Improvements (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 85,649 | $ 83,785 |
Less accumulated depreciation and amortization | (74,961) | (72,888) |
Property, equipment and leasehold improvements, net | 10,688 | 10,897 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 3,703 | 3,785 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 3,090 | 3,094 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 78,856 | $ 76,906 |
Property, Equipment, and Leas_4
Property, Equipment, and Leasehold Improvements - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization expense | $ 1,300 | $ 1,200 | $ 2,512 | $ 2,260 |
Notes Payable - Narrative (Deta
Notes Payable - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Mar. 13, 2023 | Dec. 17, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | |
Line of Credit Facility [Line Items] | ||||
Principal amount | $ 11,500 | $ 19,500 | ||
MUFG Union Bank, N.A. | Ratio as of September 30, 2023 | ||||
Line of Credit Facility [Line Items] | ||||
Total leverage ratio | 10 | |||
MUFG Union Bank, N.A. | Ratio as of December 30, 2023 | ||||
Line of Credit Facility [Line Items] | ||||
Total leverage ratio | 2.50 | |||
Fixed charge coverage ratio | 1.20 | |||
MUFG Union Bank, N.A. | Prior to earlier of December 31, 2023 | ||||
Line of Credit Facility [Line Items] | ||||
Total leverage ratio | 2.50 | |||
Fixed charge coverage ratio | 1.20 | |||
MUFG Union Bank, N.A. | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Unused commitment fee percentage | 0.30% | |||
MUFG Union Bank, N.A. | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Unused commitment fee percentage | 0.50% | |||
MUFG Union Bank, N.A. | SOFR | ||||
Line of Credit Facility [Line Items] | ||||
Debt instrument interest rate floor rate | 5.10% | |||
MUFG Union Bank, N.A. | SOFR | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 2.50% | |||
MUFG Union Bank, N.A. | SOFR | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 4% | |||
MUFG Union Bank, N.A. | Base Rate | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.50% | |||
MUFG Union Bank, N.A. | Base Rate | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 3% | |||
MUFG Union Bank, N.A. | Redemption Period One | ||||
Line of Credit Facility [Line Items] | ||||
Amortization of principal, percentage | 2.50% | |||
MUFG Union Bank, N.A. | Redemption Period Two | ||||
Line of Credit Facility [Line Items] | ||||
Amortization of principal, percentage | 5% | |||
MUFG Union Bank, N.A. | Redemption Period Three | ||||
Line of Credit Facility [Line Items] | ||||
Amortization of principal, percentage | 10% | |||
MUFG Union Bank, N.A. | Redemption Period Four | ||||
Line of Credit Facility [Line Items] | ||||
Amortization of principal, percentage | 10% | |||
The Credit Agreement | ||||
Line of Credit Facility [Line Items] | ||||
Principal amount | $ 11,500 | $ 19,500 | ||
Debt instrument, interest rate | 9.10% | 7.50% | ||
Term Loan | MUFG Union Bank, N.A. | ||||
Line of Credit Facility [Line Items] | ||||
Principal amount | $ 20,000 | |||
Debt prepayment costs | $ 7,500 | |||
Revolving Loan Commitment | MUFG Union Bank, N.A. | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity under credit facility | $ 15,000 |
Notes Payable - Schedule of Out
Notes Payable - Schedule of Outstanding Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Debt Disclosure [Abstract] | ||
Principal amount | $ 11,500 | $ 19,500 |
Less unamortized discount and issuance costs | (484) | (333) |
Notes payable, net of unamortized discount and issuance costs | 11,016 | 19,167 |
Less current maturities, net of unamortized discount and issuance costs | (1,437) | (983) |
Long-term notes payable, net of current maturities and unamortized discount and issuance costs | $ 9,579 | $ 18,184 |
Notes Payable - Schedule of Mat
Notes Payable - Schedule of Maturities of Long-term Debt (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Debt Disclosure [Abstract] | |
Remainder of 2023 | $ 500 |
2024 | 11,000 |
Total notes payable | $ 11,500 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease expense | $ 0.2 | $ 0.5 | $ 0.5 | $ 1.1 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Leases [Abstract] | |||
Weighted Average Remaining Lease Term (in years) | 1 year 2 months 12 days | 2 years 2 months 12 days | |
Weighted Average Discount Rate | 5.20% | 6.20% | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 0.2 | $ 0.6 |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2023 | $ 393,000 |
2024 | 157,000 |
2025 | 82,000 |
2026 | 3,000 |
Total undiscounted cash flows | 635,000 |
Less imputed interest | (22,000) |
Present value of lease liabilities | $ 613,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 900,000 | $ 700,000 | $ 1,700,000 | $ 1,300,000 |
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options vesting period | 4 years | |||
Unrecognized compensation expense | 0 | $ 0 | ||
Restricted Stock and Performance Stock Units | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options vesting period | 1 year | |||
Restricted Stock and Performance Stock Units | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options vesting period | 4 years | |||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 7,900,000 | $ 7,900,000 | ||
Unrecognized compensation expense, recognition term | 2 years 9 months 18 days |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Outstanding Options | |||
Exercised (in shares) | (3,863,000) | ||
Options to purchase common stock | |||
Outstanding Options | |||
Balance at beginning of period (in shares) | 250,000 | ||
Granted (in shares) | 0 | ||
Forfeited (in shares) | (111,000) | ||
Exercised (in shares) | 0 | ||
Balance at end of period (in shares) | 139,000 | 250,000 | |
Vested, exercisable, expected to vest (in shares) | 139,000 | ||
Exercisable (in shares) | 139,000 | ||
Weighted average exercise price per share | |||
Balance at beginning of period (in usd per share) | $ 10.31 | ||
Granted (in usd per share) | 0 | ||
Forfeited (in usd per share) | 12.86 | ||
Exercised (in usd per share) | 0 | ||
Balance at end of period (in usd per share) | 8.27 | $ 10.31 | |
Vested, exercisable, expected to vest (in usd per share) | 8.27 | ||
Exercisable (in usd per share) | $ 8.27 | ||
Weighted average remaining contractual life (Years) | |||
Outstanding | 10 months 24 days | 10 months 24 days | |
Vested, exercisable, expected to vest | 10 months 24 days | ||
Exercisable | 10 months 24 days | ||
Aggregate Intrinsic Value (in thousands) | |||
Outstanding | $ 10 | $ 20 | |
Vested, exercisable, expected to vest | 10 | ||
Exercisable | $ 10 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) - Restricted Stock and Performance Stock Units | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Number of Awards | |
Outstanding at beginning of period (in shares) | shares | 3,904,606 |
Granted (in shares) | shares | 608,622 |
Forfeited (in shares) | shares | (96,406) |
Vested and converted to shares, net of units withheld for taxes (in shares) | shares | (583,079) |
Units withheld for taxes (in shares) | shares | (25,210) |
Outstanding at end of period (in shares) | shares | 3,808,533 |
Expected to vest (in shares) | shares | 3,351,509 |
Weighted average grant date fair value per share | |
Outstanding at beginning of period (in usd per share) | $ / shares | $ 2.85 |
Granted (in usd per share) | $ / shares | 2.59 |
Forfeited (in usd per share) | $ / shares | 3.40 |
Vested and converted to shares, net of units withheld for taxes (in usd per share) | $ / shares | 1.50 |
Units withheld for taxes (in usd per share) | $ / shares | 1.60 |
Outstanding at end of period (in usd per share) | $ / shares | 3.01 |
Expected to vest (in usd per share) | $ / shares | $ 3.01 |
Income Taxes (Details)
Income Taxes (Details) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | (1.00%) | (1.00%) |
Net Income (Loss) per Share - S
Net Income (Loss) per Share - Schedule of Reconciliation of Basic to Diluted Weighted Average Shares (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Earnings Per Share [Abstract] | ||||
Weighted average shares outstanding – basic (in shares) | 75,752 | 73,502 | 75,629 | 71,698 |
Dilutive effect of stock options (in shares) | 0 | 0 | 0 | 0 |
Weighted average shares outstanding – diluted (in shares) | 75,752 | 73,502 | 75,629 | 71,698 |
Net Income (Loss) per Share -_2
Net Income (Loss) per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 3,948 | 6,262 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 139 | 1,487 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 3,809 | 2,328 |
Warrants outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 0 | 2,447 |