Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2024 | May 07, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 | 900 South Pine Island Road, | |
Entity Address, Address Line Two | Suite 150 | |
Entity Address, City or Town | Plantation | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33324 | |
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 $.0001 per share | |
Trading Symbol | PFMT | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding (in shares) | 76,953,376 | |
Entity Central Index Key | 0001550695 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 3,788 | $ 7,252 |
Restricted cash | 0 | 81 |
Trade accounts receivable, net of allowance for credit losses | 14,283 | 17,584 |
Contract assets | 11,879 | 10,879 |
Prepaid expenses and other current assets | 4,131 | 3,651 |
Income tax receivable | 0 | 335 |
Total current assets | 34,081 | 39,782 |
Property, equipment, and software, net | 15,664 | 9,724 |
Goodwill | 47,372 | 47,372 |
Debt issuance costs | 588 | 631 |
Right-of-use assets | 790 | 531 |
Other assets | 743 | 990 |
Total assets | 99,238 | 99,030 |
Current liabilities: | ||
Accrued salaries and benefits | 6,074 | 7,924 |
Accounts payable | 2,151 | 727 |
Other current liabilities | 2,103 | 2,385 |
Contract liabilities | 492 | 493 |
Estimated liability for appeals and disputes | 591 | 601 |
Deferred asset acquisition payments | 708 | 0 |
Lease liabilities | 281 | 250 |
Total current liabilities | 12,400 | 12,380 |
Long-term loan payable, net of current portion and unamortized debt issuance costs of $0 and $0, respectively | 5,000 | 5,000 |
Deferred asset acquisition payments | 3,010 | 0 |
Lease liabilities | 525 | 295 |
Other liabilities | 656 | 648 |
Total liabilities | 21,591 | 18,323 |
Commitments and contingencies (note 3 and note 4) | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at March 31, 2024 and December 31, 2023 respectively; issued and outstanding 76,920 and 76,920 shares at March 31, 2024 and December 31, 2023, respectively | 8 | 8 |
Additional paid-in capital | 146,958 | 146,001 |
Accumulated deficit | (69,319) | (65,302) |
Total stockholders’ equity | 77,647 | 80,707 |
Total liabilities and stockholders’ equity | $ 99,238 | $ 99,030 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Noncurrent unamortized debt issuance costs | $ 0 | $ 0 |
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) | 76,920 | 76,920 |
Common stock, outstanding shares (in shares) | 76,920 | 76,920 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Statement [Abstract] | ||
Revenues | $ 27,334 | $ 25,729 |
Operating expenses: | ||
Salaries and benefits | 23,221 | 22,449 |
Other operating expenses | 8,034 | 7,069 |
Total operating expenses | 31,255 | 29,518 |
Loss from operations | (3,921) | (3,789) |
Gain on sale of certain recovery contracts | 0 | 3 |
Interest expense | (186) | (414) |
Interest income | 106 | 0 |
Loss before provision for income taxes | (4,001) | (4,200) |
Provision for income taxes | 16 | 21 |
Net loss | $ (4,017) | $ (4,221) |
Net loss per share | ||
Basic (in usd per share) | $ (0.05) | $ (0.06) |
Diluted (in usd per share) | $ (0.05) | $ (0.06) |
Weighted average shares | ||
Basic (in shares) | 76,920 | 75,505 |
Diluted (in shares) | 76,920 | 75,505 |
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, 2022 | 75,705 | |||
Beginning balance at Dec. 31, 2022 | $ 84,485 | $ 7 | $ 142,261 | $ (57,783) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 798 | 798 | ||
Net loss | (4,221) | (4,221) | ||
Ending balance (in shares) at Mar. 31, 2023 | 75,705 | |||
Ending balance at Mar. 31, 2023 | $ 81,062 | $ 7 | 143,059 | (62,004) |
Beginning balance (in shares) at Dec. 31, 2023 | 76,920 | 76,920 | ||
Beginning balance at Dec. 31, 2023 | $ 80,707 | $ 8 | 146,001 | (65,302) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation expense | 957 | 957 | ||
Net loss | $ (4,017) | (4,017) | ||
Ending balance (in shares) at Mar. 31, 2024 | 76,920 | 76,920 | ||
Ending balance at Mar. 31, 2024 | $ 77,647 | $ 8 | $ 146,958 | $ (69,319) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Cash flows from operating activities: | ||
Net loss | $ (4,017) | $ (4,221) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Loss on disposal of assets | 29 | 32 |
Depreciation and amortization | 1,398 | 1,247 |
Right-of-use assets amortization | 108 | 1,263 |
Stock-based compensation | 957 | 798 |
Interest expense from debt issuance costs | 58 | 35 |
Gain on sale of certain recovery contracts | 0 | (3) |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 3,301 | 158 |
Contract assets | (1,000) | 2,467 |
Prepaid expenses and other current assets | (480) | 42 |
Income tax receivable | 335 | 40 |
Other assets | 325 | (194) |
Accrued salaries and benefits | (1,850) | (1,120) |
Accounts payable | 1,424 | (291) |
Contract liabilities and other current liabilities | (365) | (673) |
Estimated liability for appeals and disputes | (10) | (243) |
Lease liabilities | (106) | (1,492) |
Other liabilities | 7 | 6 |
Net cash provided by (used in) operating activities | 121 | (2,149) |
Cash flows from investing activities: | ||
Purchase of property, equipment, and software | (3,652) | (909) |
Proceeds from sale of certain recovery contracts | 0 | 3 |
Net cash used in investing activities | (3,652) | (906) |
Cash flows from financing activities: | ||
Repayment of long-term loan payable | 0 | (7,750) |
Debt issuance costs paid | (14) | (244) |
Net cash used in financing activities | (14) | (7,994) |
Net decrease in cash, cash equivalents and restricted cash | (3,545) | (11,049) |
Cash, cash equivalents and restricted cash at beginning of period | 7,333 | 23,465 |
Cash, cash equivalents and restricted cash at end of period | 3,788 | 12,416 |
Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | ||
Cash and cash equivalents | 3,788 | 12,335 |
Restricted cash | 0 | 81 |
Total cash, cash equivalents and restricted cash at end of period | 3,788 | 12,416 |
Non-cash investing activities: | ||
Deferred asset acquisition payments | 3,718 | 0 |
Supplemental disclosures of cash flow information: | ||
Cash (received) paid for income taxes | (304) | 5 |
Cash paid for interest | $ 127 | $ 582 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 and December 31, 2023, the results of our operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. 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, 2023. Performant Financial Corporation (the "Company", "we", or "our") supports payers in the healthcare industry in identifying, preventing, and recovering waste and improper payments by leveraging advanced technology, analytics and proprietary data assets. The Company works with leading national and regional healthcare payers to provide eligibility-based, also known as coordination-of-benefits (COB) services, as well as claims-based services, which include the audit and identification of improperly paid claims. The Company is a leading provider of these services in both government and commercial healthcare markets. The Company also provides advanced reporting capabilities, support services, customer care, and stakeholder training programs designed to mitigate future instances of improper payments. 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), dba Performant Healthcare Solutions, 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 revenues and expenses during the reporting periods and 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. Actual results may differ from amounts presently estimated. (b) Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals and Disputes The Company generally 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. • 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. Certain of the Company’s contracts contain more than one performance obligation and are delivered as of a point in time. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s 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 may apply the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable consideration allocation exception to contracts with performance obligations that have an average remaining duration of less than one year. 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 the availability and reliability of data. The Company reviews the constraint on variable consideration 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 healthcare claims audit contracts, the Company may recognize revenue upon delivering its findings to its clients, when sufficient reliable information is available for estimating the variable consideration earned based on an output metric that reasonably measures the Company's satisfaction of it performance obligations. For eligibility-based or COB contracts, the Company may recognize revenue upon delivering its findings to its clients' counterparties (e.g. insurance companies or other responsible parties that appear to have primary responsibility to pay the claims). 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. For customer care / outsourced services clients, the Company recognizes revenues based on the volume of processed transactions or the quantity of labor hours provided. The following table presents revenue disaggregated by category for the three months ended March 31, 2024 and 2023: Three Months Ended 2024 2023 (in thousands) Eligibility-based $ 13,388 $ 12,480 Claims-based 12,412 10,412 Healthcare Total 25,800 22,892 Recovery — 19 Customer Care / Outsourced Services 1,534 2,818 Total Revenues $ 27,334 $ 25,729 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 credit losses was $0 as of March 31, 2024 and December 31, 2023. Contract assets were $11.9 million and $10.9 million as of March 31, 2024 and December 31, 2023, respectively. Contract assets relate to the Company’s rights to consideration for services completed but not invoiced at the reporting date, and receipt of payment is conditional upon factors other than the passage of time. Contract assets primarily consist of commissions that the Company estimates it has earned from claims audit findings submitted to healthcare clients. 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 three months ended March 31, 2024 and 2023, respectively. The Company had contract liabilities of $0.5 million as of March 31, 2024 and December 31, 2023, 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 services, 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 $0.6 million as of March 31, 2024 and December 31, 2023, respectively. 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 March 31, 2024, prepaid expenses and other current assets were $4.1 million and included approximately $2.5 million related to prepaid software licenses and maintenance agreements, $1.0 million for prepaid insurance, and $0.6 million for various other prepaid expenses. At December 31, 2023, prepaid expenses and other current assets were $3.7 million and included approximately $1.8 million related to prepaid software licenses and maintenance agreements, $1.3 million for prepaid insurance, and $0.6 million for various other prepaid expenses. (d) Impairment of Goodwill and Long-Lived Assets The carrying amount of goodwill was $47.4 million as of March 31, 2024 and December 31, 2023, 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 for the three months ended March 31, 2024 and 2023. 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. 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. There was no impairment during the three months ended March 31, 2024 and 2023. (e) Other Current Liabilities At March 31, 2024, other current liabilities were $2.1 million and primarily included $1.9 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 $0.1 million accrued interest for the borrowings under our revolving loan. At December 31, 2023, other current liabilities were $2.4 million and primarily included $2.1 million for services received for which we have not received an invoice. (f) Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. Acquisitions meeting the definition of business combinations are accounted for using the acquisition method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. In a business combination, any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Asset acquisitions that are not deemed to be business combinations are measured and recognized based on the cost to acquire the assets, which includes direct costs related to the acquisition recorded in professional fees. Goodwill or bargain purchase is not recognized in asset acquisitions. Any difference between the fair value and cost of the assets acquired is allocated on a relative fair value basis to certain nonfinancial assets. (g) 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 on January 1, 2023, had no impact on our financial position, results of operations, or cash flows. In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures", which enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is assessing the impact of this ASU, and upon adoption, may be required to include certain additional disclosures in the notes to its financial statements. |
Property, Equipment, and Softwa
Property, Equipment, and Software | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment, and Software | Property, Equipment, and Software Property, equipment, and software consist of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, December 31, Building and leasehold improvements $ 2,261 $ 2,412 Furniture and equipment 1,479 1,659 Computer hardware and software 77,624 70,257 81,364 74,328 Less accumulated depreciation and amortization (65,700) (64,604) Property, equipment and software, net $ 15,664 $ 9,724 Computer hardware and software included the acquisition of technology assets from a technology company in March 2024. The purchase agreement included deferred cash payments of approximately $3.7 million to be made over a three-year period, which are recorded in deferred asset acquisition payments on the consolidated balance sheet as of March 31, 2024. These payments were discounted to present values using our incremental borrowing rate. Depreciation and amortization expense was $1.4 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively. |
Credit Agreement
Credit Agreement | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosure [Abstract] | |
Credit Agreement | Credit Agreement As of March 31, 2024 and December 31, 2023, $5.0 million and $5.0 million, respectively, was outstanding under the Company's revolving Credit Agreement (defined below) and the Company had $14.9 million of additional availability under the Credit Agreement. The annual interest rate for outstanding loans under the Credit Agreement at March 31, 2024 and December 31, 2023 was 7.9% and 8.1%, respectively. On October 27, 2023, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the “Credit Agreement”). The Credit Agreement includes a $25 million revolving loan commitment, subject to borrowing base limitations based on a percentage of applicable eligible receivables and contract assets, of which $5.0 million was advanced on the closing date of the Credit Agreement. A portion of the revolving loan commitment of up to $2.5 million is available for the issuance of letters of credit. Subject to certain customary exceptions, the Company’s existing and future, direct or indirect, domestic subsidiaries are, or will be, jointly and severally obligated as borrowers or guarantors for the obligations under the Credit Agreement. 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 existing subsidiaries (and subject to customary exceptions, will be secured by the assets of future subsidiaries). A portion of the proceeds from the initial borrowing under the Credit Agreement were used by the Company, together with cash on hand, to repay outstanding obligations under its prior credit agreement, and to pay fees and expenses in connection with the Credit Agreement. The Credit Agreement matures and all outstanding borrowings are due on October 27, 2026. The Company may, at its option, prepay borrowings under the Credit Agreement, in whole or in part, at any time and from time to time without premium or penalty (except in certain circumstances). Borrowings under the Credit Agreement are also subject to mandatory prepayment in the event that outstanding borrowings and letter of credit usage exceed the lesser of the aggregate revolving loan commitments and the borrowing base then in effect. The Company may also request an increase to the commitments under the Credit Agreement in an aggregate principal amount of up to $10 million, subject to obtaining commitments from any participating lenders and certain other conditions. Under the Credit Agreement, loans generally may bear interest based on term SOFR (the secured overnight financing right) or an annual base rate, as applicable, plus, in each case, an applicable margin based on the Company’s average borrowing availability each quarter under the Credit Agreement that may range between 2.50% per annum and 3.00% per annum, in the case of term SOFR loans and between 1.50% per annum and 2.00% per annum in the case of base rate loans. In addition, a commitment fee of 0.50% per annum based on unused availability of the credit facility is also payable. 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 also contains financial covenants, which require the Company to maintain a minimum amount of liquidity and a consolidated fixed charge coverage ratio of not less than 1.25 to 1.00, provided that the fixed charge coverage ratio is only applicable when borrowing availability falls below a certain threshold. 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. The Company was in compliance with all covenants under the Credit Agreement as of March 31, 2024. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
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 2024 and 2028. 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 $0.1 million and $0.3 million for the three months ended March 31, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities included in operating cash flows were $0.1 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. Supplemental other information related to operating leases were as follows: March 31, December 31, 2023 Weighted Average Remaining Lease Term (in years) 3.4 years 3.0 years Weighted Average Discount Rate 6.7 % 5.7 % The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2024 (in thousands): Year Ending December 31, Amount Remainder of 2024 $ 207 2025 $ 222 2026 $ 228 2027 $ 173 2028 $ 157 Total undiscounted cash flows $ 987 Less imputed interest $ (181) Present value of lease liabilities $ 806 |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2024 | |
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 $1.0 million and $0.8 million for the three months ended March 31, 2024 and 2023 respectively. The following table sets forth a summary of the Company's stock option activity for the three months ended March 31, 2024: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2023 72,000 $ 5.74 1.00 $ 14 Granted — — — Forfeited — — — Exercised — — — Outstanding at March 31, 2024 72,000 $ 5.74 0.70 $ 12 Vested, exercisable, expected to vest (1) at March 31, 2023 72,000 $ 5.74 0.70 $ 12 Exercisable at March 31, 2024 72,000 $ 5.74 0.70 $ 12 (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 March 31, 2024, 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 three months ended March 31, 2024: Number of Awards Weighted Outstanding at December 31, 2023 4,507,754 $ 2.79 Granted 1,035,455 2.73 Forfeited (73,454) 3.04 Vested and converted to shares, net of units withheld for taxes — — Units withheld for taxes — — Outstanding at March 31, 2024 5,469,755 $ 2.78 Expected to vest at March 31, 2024 4,813,384 $ 2.78 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 March 31, 2024, there was approximately $10.9 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 2.5 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective income tax rate was 0% for the three months ended March 31, 2024 and (1)% for the three months ended March 31, 2023. The primary driver of the effective income tax rate is the overall losses from operations for the three months ended March 31, 2024, for which no benefit is recognized due to valuation allowance, similar to the same period in the prior year. The Company files income tax returns with the U.S. federal government and various state jurisdictions. The Company operates in a number of state and local jurisdictions, most of which have never audited the Company's records. Accordingly, the Company is subject to state and local income tax examinations based upon the various statutes of limitations in each jurisdiction. For tax years before 2019, the Company is no longer subject to Federal and certain other state tax examinations. The Company is not currently under examination in any jurisdiction. |
Net Loss per Share
Net Loss per Share | 3 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Loss per Share | Net Loss per Share For the three months ended March 31, 2024 and 2023, basic loss per share is calculated by dividing net loss attributable to holders of common stock 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 available to holders of common stock by the weighted average number of shares of common stock and dilutive common share 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): Three Months Ended 2024 2023 Weighted average shares outstanding – basic 76,920 75,505 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 76,920 75,505 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): March 31, 2024 March 31, 2023 Options to purchase common stock 72 154 RSUs 5,470 3,892 Total 5,542 4,046 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company has evaluated subsequent events through the date these consolidated financial statements are filed with the Securities and Exchange Commission and identified the following event, which did not require adjustments to the consolidated financial statements. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Pay vs Performance Disclosure | ||
Net loss | $ (4,017) | $ (4,221) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization and Description _2
Organization and Description of Business (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
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 March 31, 2024 and December 31, 2023, the results of our operations for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. 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, 2023. Performant Financial Corporation (the "Company", "we", or "our") supports payers in the healthcare industry in identifying, preventing, and recovering waste and improper payments by leveraging advanced technology, analytics and proprietary data assets. The Company works with leading national and regional healthcare payers to provide eligibility-based, also known as coordination-of-benefits (COB) services, as well as claims-based services, which include the audit and identification of improperly paid claims. The Company is a leading provider of these services in both government and commercial healthcare markets. The Company also provides advanced reporting capabilities, support services, customer care, and stakeholder training programs designed to mitigate future instances of improper payments. 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), dba Performant Healthcare Solutions, 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 revenues and expenses during the reporting periods and 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. Actual results may differ from amounts presently estimated. |
Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals and Disputes | Revenues, Accounts Receivable, Contract Assets, Contract Liabilities, Estimated Liability for Appeals and Disputes The Company generally 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. • 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. Certain of the Company’s contracts contain more than one performance obligation and are delivered as of a point in time. The Company’s contracts are composed primarily of variable consideration. Fees earned under the Company’s 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 may apply the as-invoiced practical expedient where its right to consideration corresponds directly to its right to invoice its clients, or the variable consideration allocation exception where the variable consideration is attributable to one or more, but not all, of the services promised in a series of distinct services that form part of a single performance obligation. As such the Company has elected the optional exemptions related to the as-invoiced practical expedient and the variable consideration allocation exception whereby the disclosure of the amount of transaction price allocated to the remaining performance obligations is not required. The Company has applied the as-invoiced practical expedient or the variable consideration allocation exception to contracts with performance obligations that have an average remaining duration of less than one year. 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 the availability and reliability of data. The Company reviews the constraint on variable consideration 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 healthcare claims audit contracts, the Company may recognize revenue upon delivering its findings to its clients, when sufficient reliable information is available for estimating the variable consideration earned based on an output metric that reasonably measures the Company's satisfaction of it performance obligations. For eligibility-based or COB contracts, the Company may recognize revenue upon delivering its findings to its clients' counterparties (e.g. insurance companies or other responsible parties that appear to have primary responsibility to pay the claims). 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. 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 credit losses was $0 as of March 31, 2024 and December 31, 2023. Contract assets were $11.9 million and $10.9 million as of March 31, 2024 and December 31, 2023, respectively. Contract assets relate to the Company’s rights to consideration for services completed but not invoiced at the reporting date, and receipt of payment is conditional upon factors other than the passage of time. Contract assets primarily consist of commissions that the Company estimates it has earned from claims audit findings submitted to healthcare clients. 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 three months ended March 31, 2024 and 2023, respectively. The Company had contract liabilities of $0.5 million as of March 31, 2024 and December 31, 2023, respectively. |
Impairment of Goodwill and Long-Lived Assets | Impairment of Goodwill and Long-Lived Assets The carrying amount of goodwill was $47.4 million as of March 31, 2024 and December 31, 2023, 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 for the three months ended March 31, 2024 and 2023. 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. |
Acquisitions | Acquisitions The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If so, the transaction is accounted for as an asset acquisition. If not, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs, which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. Acquisitions meeting the definition of business combinations are accounted for using the acquisition method of accounting, which requires that the purchase price be allocated to the net assets acquired at their respective fair values. In a business combination, any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Asset acquisitions that are not deemed to be business combinations are measured and recognized based on the cost to acquire the assets, which includes direct costs related to the acquisition recorded in professional fees. Goodwill or bargain purchase is not recognized in asset acquisitions. Any difference between the fair value and cost of the assets acquired is allocated on a relative fair value basis to certain nonfinancial assets. |
New Accounting Pronouncements | 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 on January 1, 2023, had no impact on our financial position, results of operations, or cash flows. In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures", which enhances income tax disclosure requirements for all entities by requiring specified categories and greater disaggregation within the rate reconciliation table, disclosure of income taxes paid by jurisdiction, and providing clarification on uncertain tax positions and related financial statement impacts. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is assessing the impact of this ASU, and upon adoption, may be required to include certain additional disclosures in the notes to its financial statements. |
Organization and Description _3
Organization and Description of Business (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregated Revenue by Category | The following table presents revenue disaggregated by category for the three months ended March 31, 2024 and 2023: Three Months Ended 2024 2023 (in thousands) Eligibility-based $ 13,388 $ 12,480 Claims-based 12,412 10,412 Healthcare Total 25,800 22,892 Recovery — 19 Customer Care / Outsourced Services 1,534 2,818 Total Revenues $ 27,334 $ 25,729 |
Property, Equipment, and Soft_2
Property, Equipment, and Software (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment, and Leasehold Improvements | Property, equipment, and software consist of the following at March 31, 2024 and December 31, 2023 (in thousands): March 31, December 31, Building and leasehold improvements $ 2,261 $ 2,412 Furniture and equipment 1,479 1,659 Computer hardware and software 77,624 70,257 81,364 74,328 Less accumulated depreciation and amortization (65,700) (64,604) Property, equipment and software, net $ 15,664 $ 9,724 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Lease Cost | Supplemental other information related to operating leases were as follows: March 31, December 31, 2023 Weighted Average Remaining Lease Term (in years) 3.4 years 3.0 years Weighted Average Discount Rate 6.7 % 5.7 % |
Schedule of Maturities of Lease Liabilities | The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2024 (in thousands): Year Ending December 31, Amount Remainder of 2024 $ 207 2025 $ 222 2026 $ 228 2027 $ 173 2028 $ 157 Total undiscounted cash flows $ 987 Less imputed interest $ (181) Present value of lease liabilities $ 806 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Option Activity | The following table sets forth a summary of the Company's stock option activity for the three months ended March 31, 2024: Outstanding Weighted Weighted Aggregate Outstanding at December 31, 2023 72,000 $ 5.74 1.00 $ 14 Granted — — — Forfeited — — — Exercised — — — Outstanding at March 31, 2024 72,000 $ 5.74 0.70 $ 12 Vested, exercisable, expected to vest (1) at March 31, 2023 72,000 $ 5.74 0.70 $ 12 Exercisable at March 31, 2024 72,000 $ 5.74 0.70 $ 12 (1) Options expected to vest reflect an estimated forfeiture rate. |
Schedule of Restricted Stock Activity | The following table summarizes restricted stock unit and performance stock unit activity for the three months ended March 31, 2024: Number of Awards Weighted Outstanding at December 31, 2023 4,507,754 $ 2.79 Granted 1,035,455 2.73 Forfeited (73,454) 3.04 Vested and converted to shares, net of units withheld for taxes — — Units withheld for taxes — — Outstanding at March 31, 2024 5,469,755 $ 2.78 Expected to vest at March 31, 2024 4,813,384 $ 2.78 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
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 2024 2023 Weighted average shares outstanding – basic 76,920 75,505 Dilutive effect of stock options — — Weighted average shares outstanding – diluted 76,920 75,505 |
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): March 31, 2024 March 31, 2023 Options to purchase common stock 72 154 RSUs 5,470 3,892 Total 5,542 4,046 |
Organization and Description _4
Organization and Description of Business - Narrative (Details) | 3 Months Ended | ||
Mar. 31, 2024 USD ($) segment reporting_unit | Mar. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Accounting Policies [Abstract] | |||
Number of operating segments | segment | 1 | ||
Allowance for credit losses | $ 0 | $ 0 | |
Contract assets | 11,879,000 | 10,879,000 | |
Contract liabilities | 492,000 | 493,000 | |
Estimated liability for appeals | 591,000 | 601,000 | |
Prepaid expenses and other current assets | 4,131,000 | 3,651,000 | |
Prepaid expenses and other current assets, prepaid software licenses and maintenance agreement | 2,500,000 | 1,800,000 | |
Prepaid expenses and other current assets, prepaid insurance | 1,000,000 | 1,300,000 | |
Prepaid expenses and other current assets, various other prepaid expenses | 600,000 | 600,000 | |
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 | |
Other current liabilities | 2,103,000 | 2,385,000 | |
Accrued liabilities, current | 1,900,000 | $ 2,100,000 | |
Workers' compensation liability, incurred | 100,000 | ||
Accrued interest | $ 100,000 |
Organization and Description _5
Organization and Description of Business - Schedule of Disaggregated Revenue by Category (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 27,334 | $ 25,729 |
Healthcare Total | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 25,800 | 22,892 |
Eligibility-based | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 13,388 | 12,480 |
Claims-based | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 12,412 | 10,412 |
Recovery | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | 0 | 19 |
Customer Care / Outsourced Services | ||
Disaggregation of Revenue [Line Items] | ||
Total Revenues | $ 1,534 | $ 2,818 |
Property, Equipment, and Soft_3
Property, Equipment, and Software - Schedule of Property, Equipment, and Leasehold Improvements (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 81,364 | $ 74,328 |
Less accumulated depreciation and amortization | (65,700) | (64,604) |
Property, equipment and software, net | 15,664 | 9,724 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 2,261 | 2,412 |
Furniture and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | 1,479 | 1,659 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property, equipment and leasehold improvements, gross | $ 77,624 | $ 70,257 |
Property, Equipment, and Soft_4
Property, Equipment, and Software - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | ||
Deferred cash payments | $ 3,700 | |
Purchase agreement payment period, term (in years) | 3 years | |
Depreciation and amortization expense | $ 1,398 | $ 1,247 |
Credit Agreement - Narrative (D
Credit Agreement - Narrative (Details) - The Credit Agreement | Oct. 27, 2023 USD ($) | Mar. 31, 2024 USD ($) | Dec. 31, 2023 USD ($) |
Line of Credit Facility [Line Items] | |||
Line of credit | $ 5,000,000 | $ 5,000,000 | |
Additional borrowings | $ 14,900,000 | ||
Debt instrument, interest rate | 7.90% | 8.10% | |
Wells Fargo Bank | |||
Line of Credit Facility [Line Items] | |||
Line of credit | $ 5,000,000 | ||
Maximum borrowing capacity under credit facility | 25,000,000 | ||
Letters of credit | 2,500,000 | ||
Aggregate principal amount | $ 10,000,000 | ||
Unused commitment fee percentage | 0.50% | ||
Fixed charge coverage ratio | 1.25 | ||
Wells Fargo Bank | Minimum | SOFR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 2.50% | ||
Wells Fargo Bank | Minimum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 1.50% | ||
Wells Fargo Bank | Maximum | SOFR | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 3% | ||
Wells Fargo Bank | Maximum | Base Rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate (as a percent) | 2% |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases [Abstract] | ||
Operating lease expense | $ 0.1 | $ 0.3 |
Operating lease payments | $ 0.1 | $ 0.2 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) | Mar. 31, 2024 | Dec. 31, 2023 |
Leases [Abstract] | ||
Weighted Average Remaining Lease Term (in years) | 3 years 4 months 24 days | 3 years |
Weighted Average Discount Rate | 0.067% | 0.057% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands | Mar. 31, 2024 USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
Remainder of 2024 | $ 207,000 |
2025 | 222,000 |
2026 | 228,000 |
2027 | 173,000 |
2028 | 157,000 |
Total undiscounted cash flows | 987,000 |
Less imputed interest | (181,000) |
Present value of lease liabilities | $ 806,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Total stock-based compensation expense | $ 1,000,000 | $ 800,000 |
Employee Stock Option | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options vesting period | 4 years | |
Unrecognized compensation expense | $ 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 | $ 10,900,000 | |
Unrecognized compensation expense, recognition term | 2 years 6 months |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock Option Activity (Details) - Options to purchase common stock - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2024 | Dec. 31, 2023 | |
Outstanding Options | ||
Balance at beginning of period (in shares) | 72,000 | |
Granted (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Exercised (in shares) | 0 | |
Balance at end of period (in shares) | 72,000 | 72,000 |
Vested, exercisable, expected to vest (in shares) | 72,000 | |
Exercisable (in shares) | 72,000 | |
Weighted average exercise price per share | ||
Balance at beginning of period (in usd per share) | $ 5.74 | |
Granted (in usd per share) | 0 | |
Forfeited (in usd per share) | 0 | |
Exercised (in usd per share) | 0 | |
Balance at end of period (in usd per share) | 5.74 | $ 5.74 |
Vested, exercisable, expected to vest (in usd per share) | 5.74 | |
Exercisable (in usd per share) | $ 5.74 | |
Weighted average remaining contractual life (Years) | ||
Outstanding | 8 months 12 days | 1 year |
Vested, exercisable, expected to vest | 8 months 12 days | |
Exercisable | 8 months 12 days | |
Aggregate Intrinsic Value (in thousands) | ||
Outstanding | $ 12 | $ 14 |
Vested, exercisable, expected to vest | 12 | |
Exercisable | $ 12 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Restricted Stock Activity (Details) - Restricted Stock and Performance Stock Units | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Number of Awards | |
Outstanding at beginning of period (in shares) | shares | 4,507,754 |
Granted (in shares) | shares | 1,035,455 |
Forfeited (in shares) | shares | (73,454) |
Vested and converted to shares, net of units withheld for taxes (in shares) | shares | 0 |
Units withheld for taxes (in shares) | shares | 0 |
Outstanding at end of period (in shares) | shares | 5,469,755 |
Expected to vest (in shares) | shares | 4,813,384 |
Weighted average grant date fair value per share | |
Outstanding at beginning of period (in usd per share) | $ / shares | $ 2.79 |
Granted (in usd per share) | $ / shares | 2.73 |
Forfeited (in usd per share) | $ / shares | 3.04 |
Vested and converted to shares, net of units withheld for taxes (in usd per share) | $ / shares | 0 |
Units withheld for taxes (in usd per share) | $ / shares | 0 |
Outstanding at end of period (in usd per share) | $ / shares | 2.78 |
Expected to vest (in usd per share) | $ / shares | $ 2.78 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate (as a percent) | 0% | (1.00%) |
Net Loss per Share - Schedule o
Net Loss per Share - Schedule of Reconciliation of Basic to Diluted Weighted Average Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Earnings Per Share [Abstract] | ||
Weighted average shares outstanding – basic (in shares) | 76,920 | 75,505 |
Dilutive effect of stock options (in shares) | 0 | 0 |
Weighted average shares outstanding – diluted (in shares) | 76,920 | 75,505 |
Net Loss per Share - Schedule_2
Net Loss per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 5,542 | 4,046 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 72 | 154 |
RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 5,470 | 3,892 |