PFMT - Earnings call transcript Q3 2021 | Performant Financial Corporation

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Operator

Welcome to today's Performant Financial Corp.

Third Quarter 2021 Earnings Calls. [Operator Instructions] I will now turn the call over to your host, Richard Zubek, Investor Relations.

You may begin.

Richard Zubek

Thank you, operator, and good afternoon, everyone. have third copy quarter should release the you our for XXXX now, received of a earnings By results.

Strategy. today's our If is you Simeon President of site. Kohl, of General President Executive Senior Vice Healthcare; available copy be and On Web Manager on the Senior of Im, have Investor Relations Officer; not, Chief call will a and and Ramchandani, Lisa Vice portion Finance Rohit

on today's Before and I'd made of to the statements you These remind uncertainties, described in risks some are we our the that call are filings begin, like those to statements. forward-looking with comments subject SEC. including

Our actual during described those materially results may from the call. differ

any revised as to call non-GAAP reconciled today, table would are In directly are the addition, turn attached discussed call company Lisa statements expectations. our financial any GAAP the on now press measures to and this of the forward-looking release. I new circumstances Im. Lisa? statements over Also, measures to in forward-looking most during to like based to all comparable or does made update the not undertake

Lisa Im

Thank our call. everyone, you and you, earnings us joining Rich. Good for afternoon, for thank

growth visibility existing support strong continue among client our included clients. position within our our targets, our are expansion of continued that We announce third and into ever This is implementation that our an industry. focus to conducted. growth, audits marketplace to new healthcare maintain sequential of by revenue growth centric quarter new consolidating We long and excited our number offerings in both year-over-year and the toward driven being term

until commercial markets commitment made space. we healthcare entered markets to that the have initially wasn't focus entered Although, back payers, we millions different in in the contracts we few the a across services. revenue time, XXXX, Since healthcare to truly grown healthcare that on we where contracts earned also we XXXX multiple and payers. across with annual added a hundred mid-size and thousand We've some large these just clients numerous it some

our built Additionally, have a highly talent remain very study and strong. over a the growth midterm hospital centric and to rates payer gains vaccine continues our are have admissions ambulatory ability Peterson utilization with team believe leadership a expected structured. in we to below We overall expected hospital our June, Based incumbents. of core early term hospitals at from and integrity focused top from prospects The services, market growing healthcare despite levels some great market, this level industry. through remains come In healthcare spending April the care perspective, client KFS, which have least past macro COVID From couple on of is below rates. XXXX market through long XXXX. rising large impact and well by years, for take the share facilitated health

the COVID-XX Specifically, of unprecedented KFS care of utilization occur below early than simply noted in have pandemic rather delayed. did of expected the forgone than admissions The the that some lower in suggests remains that decrease core core expected hospital XXXX, persistence levels. that utilization number not following may been in

We on could will impact will coming the quarters utilization cause watch keep claims volumes available as a how these temporary close core in trends this compression.

quarter third the implementations slippage Sim within COVID ramp and impacted been slowdown discuss. up end some similarly have We due that to back will

and these we of the our platform maintained our focus temporary have on term we to excitement adapt we company. and focus the long strong impacts, As have

thank a from about complete would additional the company Kohl, was we and grateful. integrity it's a as is we providers experience, company both Simeon The business. your a and for and with healthcare Sim? in of how the As talk back new we toward our and General humbling our efforts who today everyone healthcare been vendor integrity and be am our are goals leading this remains payment prospects has term To the truly current dedication Performant and greatest of Manager fundamentally are her President family. I our and want payment making predominantly capture that employees, one that to the that, transformation without of long Performant market signing focused long of to nearly healthcare independent At we on continuing reflect part initiatives our former, a share point, I becoming as other come great journey in not student Senior to to in no the and like Vice into market in this recovery company clients. our progress loan we've point, could detail healthcare healthcare quarter sound term by country. I

Simeon Kohl

of quarter expanding good also Lisa, we expansion continued quarter both within diversifying each X.X% logos, base client programs, representing clients Thanks third client. when was of within new and another afternoon. sequentially. six a to strategy last XX% year our was and compared Healthcare demonstrating our busy while QX our as implemented and the revenue offerings dual existing higher higher

seen be and our as of organic with our about that visibility our are offerings business In Similarly, these KPIs. Advantage the the volumes on this into strengthening eligibility our previous trend our growth, our based and in continues proprietary success revenue implemented excited yielded offerings, direction of to and our future MSP to programs quarters and our in both were provider steady debt. on team trends strong results audit experienced testament we is of expansion growth. mature. impressive we of that recovery dividends Collectively, within We strategy our industry provide [each] continue claims has data accomplished diversification growth to have a the seeing production leaders also can seen business platform. Coupled

new Additionally, eligibility strong to able clients. achieved we healthcare our savings our of in quarter as attained demonstrated the our healthcare to continues for business. on year-over-year pipeline opportunities together, pending were of organic Taking drive of grow, history strengthen finally, confirm our highest development growth our awards revenue to new and our ability to eligibility meaningful continues based assets sales of and And implementations. contract

timing. our anticipation latitude the in by but variant. from for even largely the with lagging of our pre-COVID processing Delta during of delays eligibility, insurers our of And business, progress, the of has time QX, concerns this while affording whole to certain experienced anticipated collection a higher the a However, return correlated COVID-XX claims the saw cadence demands. number quicker audit the by slowing was during made was In as than stemming exhibited our recovery In quarter frame we a industry revenue some greater our industry growth primarily we delay in providers are still clients to quarter. we

are challenges systemic, headwinds QX than anticipate that While more temporary in we we expect will we further believe do XXXX. continue these into

our unique million increased this healthcare all well challenge, impacted compliance they to existing compensation new our strategic we an mandates. our to an organizations. with offered QX. applicants Furthering revenue by new President signed the changed our are $XX recently nearly to apathy Specifically, our as been may some to I'll these updating qualified which digit mandate to operations source of bring range $XX of business as of workforce ability the of aggressive These this outlook vaccine healthcare to We In products factors, nor guidance hampered million anticipate challenges or double XXXX have EBITDA. win with difficulty in to have due requiring combination worker impact address by have executive now. packages a that being consideration market, haven't are order

year. We of have implementations kicking several off new the the before end

from resulted includes competitive vendors, the this a of these lines incumbent of advantage payers’ a process was benefits of The the scope vendor. One over commercial multiple and opportunity solution business. payer. Performance at coordination national selection of selected Medicare including

performance excited our launched also outpatient these the of expanded to all Medicare of advantage growth offerings. announce the great and I'm for Collectively, products claims, We our Advantage audit continued plans. advantage for our to enhancements in represent MSP sustained offering,

growth We integrity vendor aware in our These superior not in a through successes of portfolio payment client continued healthcare the new another of program industry our combination performance, platform space Vice I'd of data demonstrate results implementations. to of of President center that, Senior the robust with to the through the and are our top Rohit? quarter. you With our introduce Strategy walk to talent. ability proprietary level like our and Finance similar Ramchandani, Rohit attract

Rohit Ramchandani

which in was quarter XXXX the ever is decline of In the points the while [XXXX] than of third revenues Adjusted claim quarter and of lower contract. second year growth, increase expected factors EBITDA of Base healthcare reported in healthcare Sim. than delays our still expected of year the total an market released the $XX.X over healthcare over the growth. related account XX% and of we our the revenues to claims the reduction end we from the the reflective the as $X.X in from were $X and million into reported recovery Lisa year year. the Thanks largest XXXX. $X.X investing nearly quarter announcements third healthcare million, activities reported that and note, in was higher representing we with in which third operating quarter caused quarter prior the the million, in XXXX excluding the the Within space the spite sequentially period Of of in Sim EBITDA XXXX, operations some demonstrated million previous $XX to balancing this to also $X.X quarter third quarter commentary. in expenses revenue mentioned end XX% to our million of compared $XX the of growth revenues healthcare revenues due period. million the associated healthcare million $X.X was in we market prior million, have was in heavily year pace known The reserve associated the still that when of efforts in $XX.X compared auditing sustain

between process our we've revenues. are KPIs such timing Sim end delays, creating indicated, which As some client a delayed and back audit as experienced reporting our recoveries,

quarter, first was are quarter $XX.X decrease clear than base up the $XX.X million, how eligibility of the from third in surprised recorded XXXX in year indicated and delays $XX.X of at our be quarter approximately at for still more As XXXX XXXX QX. the on represents we would fourth we looked these remains. the as the of million as the Revenue the to higher we timing revenue extent unsure will but period not third diverse sequentially GAAP and than quickly quarter prior of we a million from a services

as KPIs also coming the to continued slippage remain quite We play implementations as of our to is continue from out our a well this trajectory quarters. excited QX implementation market and experiencing ripple the where QX a to see future and sales we in mentioned, we're internal Sim anticipate some of As the effect bolstering timing pipelines. and in growth

from million $XX we are each was in $XX.X end steady quarter sustain the norms in of from of last the in $X.X lower the implementation third rapid market on pre-COVID recovery $X quarters the a anticipated visibility the of continuing individual during the tandem XXXX million on revenue achieve. we’ve Total albeit state the expectations varies to to on this are million what year from higher of revenues. drive of aim dollars These year. and and depending number end, penetration completed QX decline we with trajectory into down the in $XX.X in a few third alone around growth our strategy While $XXX,XXX the implementations efforts recorded slower last to expected non-healthcare inputs to incremental million, reported few we million returns a million in than quarter

continue maintain revenues trend of this and to next our quarter not any XXXX. expect having We into recovery anticipation in

last services total second revenues flat expectations. which slightly customer the sequentially when and down million care the consistent of $X.X compared for year, Our outsource was to quarter, with our were quarter

offset the healthcare the year, on in Moving and our to by compared decrease markets. and diminishing last transition which operating is in primarily to revenues related QX were million, expenses, into investment expenses recovery $X.X operating continued quarter to by third of expenses expenses driven lower $XX.X million

company. begin that note, with do expect QX we the forward, will overall a corporate to expense bit QX expenses typically seasonality growth the level to expense larger outpace recovery. will of with lower XXXX to healthcare as the related Looking Of cost from and corporate out experienced operating expenses begin representing we offsets associated in our for headcount

This approximately XXXX, of Finally, new from share. a financing cash completed which August flow over equity an a price company. XX per of in we we $XX the proceeds shares, net in the perspective, over-allotment issued resulted in just million $X.XX including at million offering to

debt, purposes a and and up pursuing. other we of corporate refinance the for questions. and take pay Our open With clients capital and like which call majority working our general use existing we'd that, proceeds from to these to currently down deal are your strategies the

Operator

first Bauser. And Instructions]. from question [Operator our comes Kyle

Kyle Bauser

to for double core profitability. taking Maybe I the and the full healthcare all year some just questions bit sales But year XX% I'm around. the the would a that if about Can wrong. you digit guidance margin. margins around for start the still provide me know in and Thanks the I'm in color healthcare were on quarter? updates today. obviously healthcare for we business business of EBITDA QX, that's just had imply assuming the business, for for little correct for the more

the the is get wanted just how quarter? profitability in I So looking of the of better business understanding healthcare a to

Rohit Ramchandani

visibility continue invest play margins EBITDA as financial actual that a the of into will conversations, towards have we the the of our And in was become So segment anticipate our previous to just we actually individual guidance healthcare as in to actually, lower in and mid-XXs quarters Performant. along share the results. next margins our year, on clarify, remain something the committed we But future to do profitability. segment margins, company more and for operations. to not reporting term we guidance continue we margin providing we the the look And healthcare entirety pure way long it's as similar provided to

Kyle Bauser

the business. includes whole be mentioned And next you business the year. will gone recovery by it So

assume last ’XX? even [bolus] down again it or going in to is recovery revenue safe it QX in to it have could of is will the So leveled business step zero or before possible out one be

Rohit Ramchandani

fourth way another expected anticipate the to to down along We revenue be in quarter, do the but step zero.

Kyle Bauser

delays, business structure pretty and curious for a have of COVID an capacity the constraint nice you now? curious growing what balance COVID you -- of if trending stronger So have health is the things margins just appreciate hiring where Just preventing now you think shortages organization implies given and go? are if And and that right you related what the that they of faster care that. current then, size given anything and revenue is labor for And a how from the estimate beyond could sheet? kind kind

Simeon Kohl

think we're of our So in terms number scaling some of we've accounts, out before, of our the a capacity opportunities. issues, existing indicated I new

So stated aggressive the step we production in for our absolutely kind have, of all to we've pretty before, cadence terms through resources we have a hiring of opportunity.

So that to seeing we're of traditional and understanding of to the in trying the some leaving just folks terms as from whole get flagging something that a here terms standpoint industry healthcare the backdrop we're organization, of of in a come kind that of it's settings. into things competitive folks the are

stepping we're that. So through

creative a get aggressive we can on, things eye and to growth the is to we're that do But into keeping something further We very of are remainder that knowing we watchful of in pretty terms very to have certainly plans folks. some ‘XX. mindful it being support that hiring year for incentivize

Kyle Bauser

lastly then them I'll both. two And questions, ask maybe just

the the stack favorable Just healthcare curious really the more and CMS kind efforts first business. another smaller others? providing And that to of Is growth any profile private of that compete on margin nice secondly, just updates for clients your the you with those region. secure payers own the for in a curious don't kind That's are question.

Simeon Kohl

your with start second question. I'll

X. to So the opportunity the respond for Region we did RAC

that time the October frame. was in So response early

do deal we cycle terms infrastructure agencies seen most see we've CMS the months, the the with know regards And margins opportunities portfolio for on regards the difficult I so federal Those of, to to three payers with take indication can months, their cycle longer, so greater as on With with of guys anywhere even procurement whole us a expanded to with we offerings. some you statement like six as that's they in of in correct as CMS. do them a an from a it's still payers, that's let continues. we'll bit that it vendors. And So smaller a those that. certainly get for soon are as think

more offerings opportunity hope we we good an our And of that get do context. lives get in procured I to those covered so can number some of payers. And our the on consideration understanding just national gives some environments. get rates, of versus

Operator

from Craig question have We a Melcher.

Craig Melcher

plans the the cash history, curious so a areas businesses on for time other accelerate mean, first expect development. that in So growth I'm investments it I forward? the Any healthcare from about can that’s to like perspective. quicker product company looks unconstrained come you the boarding --

Simeon Kohl

So meaningful as we've looking near mentioned just QX. look, think remarks we've new implementations at opportunities what implementations. for we mentioned from and a us, very I significant. terms in we're XX And of are new so at of I prepared cliff pretty my here are what announced in And

And in so clients, can clients that compress or existing the getting we onboarded, anything clients new cycle opportunities. logos they're new whether of to do just and terms new

So ways compressed can to see quickly or can always revenue those more in opportunity. looking which to if in our absolutely, and we move are we implementation cycles we quickly get at invest

just about of at terms more In thinking a it level. wholesale

to continue As business. we've getting of to new continue to number a book current talked opportunities of opportunities. win about we We're scale new

some being to more an medical the reviews some currently based mining ways cetera. a our capability, automated moving today more that in finding review, we fashion, taking can artists are we data in records our have complex that audits out building for so [bringing] those of medical et and that human into require reviews, it's things more with and records of which automated And whether move efficient

investing in areas we're of that these drive scales. efficiencies greater are in some workflows So technology both the the to as and business

Craig Melcher

current lastly, in is which implies record QX of just lot And revenue the $XX a of million QX, so of $XX to year. healthcare over the last outlook million growth

be like halfway And but must difficult so despite a that’s things accelerating what -- sounds sounds of it through like QX, already really a bit backdrop.

wondering I'm QX year, starting XX end? year launched ones pickup of the is of last flow what you some from to through year? the some driving So programs or in this of see this the Are at QX in just

Simeon Kohl

Rohit really mentioned, seeing of these you drive, that's opportunities. as ramping with just the is Yes, largely it the giving of new we're what in terms some programs what here, color

So clients we'd have as these I were continuing programs the are to some said, scaling what broader clients markets. just that existing adoption different into that time and we're scale getting or for

new the about and of take up of opportunities months onboarded we've the some actually kind And get clients that implementation scale talked them to cycle that program. it these

existing just opportunities So it's and really both ramping. largely seeing new

Rohit Ramchandani

expansion And to existing just implementing themselves another bolster the is on an on, I note within offerings, lives growth, if will, we would not think, you or the volume consider important implementation.

see So of with sort not growth that captured in would implementations. channel which we our from be revenue well, do as announcement

Operator

our And from Sutton. George next comes Instructions]. [Operator question

George Sutton

of a anticipate things significant Can in two normalize? number expected more to insurance to slowed detail that wanted and give timeframe little what I mentioned drivers more claims. little of You normalize, their certain collection your go would and if then lagging a how on us of a of you were to picture that you those bit kind are a clients cadence,

Simeon Kohl

stated healthy how based be look, variant, in cases as of certain it's remain both prepared the we of could and KPIs unchanged. while our Delta my of we our unsure the of to a and workflow significant, and possibility And by was in note aspects eligibility rising So impacted important remarks. terms claims were anticipated I there first, that,

providers your George, ultimately side, out really On balance is to care for of our providing claims clients have also payer some a there. happens to what are the bit kind providing and to their of need of the point, savings leeway that

the the dependent, we very we we once offsets actually are to many great KPIs, all do KPIs to dependent, payers visibility into cases, And for so, findings. actually initiate in drive again, recoveries have those exclusively the means. our other of But

get correction. more of some our saw in are and But same side idea do clients than extend I timing QX anticipated. course correction based and think I And to worked back we little We eligibility we QX applies on this we cycles. with so, of very that close course the pre-COVID And the some QX. think to bit post recovery to a get payer see we of expect in into the very, early should going business. QX terms hopefully

so parties automated, other issued are of responsible are manual. demands them those And many of and and we for some

is component. a review that workflow a there so And human has

a and or than And again expected done a being whether we'd so when workforce. key are still I saw remarks, hoped hybrid I the a in as more a much compress. to stated did. progress as our lagging that industry my to see of has here job we progress pretty QX adjusting whole a the to in some few demands had prepared support bit nice And that those remote frankly, we think able cycles We’ve out would workforce folks

I so And think at what claims I dissimilar all on side. mentioned from any don't the

will the a pre-COVID early going a I think to post back this recovery to QX QX, we of cascading hopeful cycles. that QX. And effect see into bit is sometimes have

George Sutton

give of picture little you of what give not just production KPIs you seeing evidence more not to you your seeing mentioned those growth. that you So us KPIs? of Can obvious be are future may us a a

Simeon Kohl

dollar points values available factors. et ultimately claims number Lisa clients end what a the cetera. on to on side day, the there's out, drive it's So of us. of auditing as We for for of based X the claims, our us, claims based At have the findings number of on we

for cetera, watching et watch that targets, audit product are so hitting we things us And performance.

we that. to the that, make So number up I of right important the resources to address mentioned, staff, as have sure scale to

claim that of depressed, We dollar in availability utilization also, claims. as Lisa and core a amounts with indicated certainly factor being of actual has terms the some of

we at through the velocity the for clients. work so we looking can it's then understanding on And product driving look what that we're that of terms available and based savings claims claim performance of ultimately claims to in

George Sutton

are currently you you believe you implementation just you dynamics you your discuss close don't have share Finally that to see as me, them with in think Can you mentioned talk about today? that? And also anything different competitors market XX Can mentioned for clients. I that. you

Simeon Kohl

Look, we've market consolidated that. payment mentioned this before The the has dramatically. market integrity has consolidated,

And looked to were XX through has the various players material two consolidated organizations. players Those to so of you've at that XX our pretty competitors. space the of largely the of working in kind competitors consolidation are currently

us so And presented industry competition, us, for this that for competition. its an opportunities to that, some as tends like is payers like

a So type in gotten the sales of opportunities number we've line. new

conversion here vendors demonstrated I that are will, looking to you in And payers that are currently their the approach, implementations. competitive they’ve working the to if get think more a of through number the of portfolios.

And dynamics through us, a demonstrated think of given our for A, certainly here a market pulling that, well. QX on as our pipeline, in part big I that little implementations tailwind do with in but as we’ve to I again, sales performance, so point, our bit us material and of think we're we've uptick through certainly has your pretty here. have And just a seen numbers to

Operator

no further at questions this have we And queue time. in

Lisa Im

appreciate support our Again, performing Thank and bringing thank thank us day. very want members Difficulty] we our for our team to their I would like we continued every [Technical we your clients time them, to shareholders Thank allowing serve best to you, you. to for and attention. your for their operator. thank

Operator

for today's concludes Thank This attending. call. conference you

Performant Financial (PFMT) 10 Nov 212021 Q3 Earnings call transcript