Earnings call transcript Q3 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Performant Financial Corp.

Third Quarter 2022 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded.

to conference like Zubek, to now Relations. Investor would turn over the Richard I ahead. go Please

Richard Zubek

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

you the Relations on portion is Investor website. not, copy our If have available a of

Im, will Finance Simeon and Executive Kohl, Vice President; today's call Chief Senior of On and President be Lisa Officer; Rohit Ramchandani, Strategy.

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

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

not undertake update statements forward-looking circumstances revised on forward-looking all or to new are based addition, of statements does today, expectations. as any In Company made and the

non-GAAP to reconciled the release. Also, call discussed measures the attached most measures to all this in comparable the press GAAP table during are financial directly

call would over I turn Im. Lisa? now Lisa to like to the

Lisa Im

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

clients. Our us among to year full our our of continue well and new and have we federal commercial third achieve goals to growth positioned find quarter results avenues

Without A possible. of our hardworking huge your Performant, incredible, thank to dedication this team you commitment members. and be to none would

to With Sim? detail. Kohl that, quarter to turn initiatives things in greater Simeon and I'll over discuss other our third

Simeon Kohl

good everyone. afternoon, and Lisa, Thanks,

up period X%, our growth of last third the same third quarter and our revenues. another quarter The year-over-year increase compared million, of our in offerings $XX.X and an of eligibility-based from when Revenue over approximately to Healthcare marks Healthcare quarter of year. were claims in was XXXX XX% Overall, year. continued third respectively, XX% last revenue the the quarter

least impacted program acknowledge to excited revenue top back results. growth, the want And see ramp was encounter the discussed, important timing as as at delayed. And is achieve our ability confident delay do not full in Healthcare this eligibility is implementations lost quarter we we now to we've to quarter. one are revenues we one It's of of but timing. new primary the delayed, by $XX note challenge our line that The fourth which We but delay, pushed continued million the our the the remain implementations XXXX. long of of merely to to $XX in despite This new is XXXX. operational program for with million

have of are be completed an Speaking implementations XX that to seven of additional XXXX. scheduled we end the by implementations, year-to-date, with new completed

similar half We into expect to XXXX. first a cadence of the see also

our significant and implementation recently health solutions needs. plans. that about before address In with specific announced ability This engagement addition growing convert pipeline our our One to this to health deliver pipeline, opportunities on to ability a is the small the and excited with Health. strategic opportunity we Priority of us plan's highlights are our midsized example our sales tailored

an optimistic excited are solution, into to to Health are integrity Priority similar and we next collaborate year. partnerships industry-first, deliver in We enterprise confirming with

and new wins. produce currently long-term will implement efficiently as contract quickly wins as discipline business to new potentially new as the possible. workflow scale wins internal some Ramping we requires these and ramp ensure platform possible. as sales improvements our to robust continue We imperative and bolster we it's to and although has our our is anticipate Overall, that continued pipeline pipeline growth,

In the of the driving control. efficiencies tandem are our business areas focused in continued on product within we with development,

new it these that to optimistic opportunities. to the are compress implement us takes help We will efforts time

competitive data-matching platform making have our of repository a our million XXX comprised uniquely vendors. commercial refine lives, footprint, leveraged expect to over we data to Combined technology Moving to our for value continue our option new create larger market opportunities. covered forward, technology clients health open over we amass to and care incumbent Performant a with

we We are technology proprietary and benefits self-purposing further empower enjoy to addition, our available be new deliver of developing the infrastructure customers. as excited platform. In to that a offerings our our an presently we current products allow will this that are differentiation in

in suite hiring the addressing a concerns auditor aggressively significant implementation is increased our that drive the development we offering opportunity while product in our our By shared efforts efficiencies resource-intensive focusing we claims-based our and margins. energies year, the most auditing to Claims workflows. to and earlier greater the represents discussed within earlier enhancements product both drive in refocusing are also

as voluntary recently XXXX, contractor. corrective on we via that proposal And as X initially reaffirmed audit full a action procurement. the initial open was value following awarded awarded contract Finally, CMS recovery for announced, to CMS and X.X-year determination process, the a Performant's award serve represents The the its Region to Performant government. XX, contract an Performant competitive March best

long-standing technology and is competitive incumbents extension our and our validates compete highlights our of work reflection partnership Performant's CMS' platform hard team's underscores CMS proposition. dedication belief win with This value This our of ability of all sizes. and a to with in

are recovery of and Inspector Center. exclusive Medicare Payer this exclusive XX Secondary states; As the fee-for-service home the and Human for health medical the for DME, reviewer eligibility a Medicare Health Office General; sole for all nationwide for XX contractor exclusive the result and we now the states; claims Repayment hospice XX award, the the auditor the Commercial Services and of auditor of

Performant serve and rely as quality, provide independent payment These ahead payment Performant's insights in brand federal and gleaning confidence within eligibility process. pillars commercial to the leaders also They services. timely trends integrity valuable plans reinforce stay provider the market as contracts that of health foundational leading and to integrity on of strong the

revenue for partners, of and them CMS a incredibly choosing target. positioned end work new well and are that sales proud in our In believe our health the contract the done thank wins Healthcare of and for encouraged trust strong updates, year our we by both we reviewing have we and stated the executing our their for We these pipeline. Performant. guidance to well are we I'm are expansion plan Overall, for commercial achieving and

full the strength untethered the operating legacy which we in a first As markets, leadership ahead payer our and excited experience from position deep be are our given in of year we and seasoned look care health will Performant one insight integrity to from for team's XXXX, recovery payment market.

company. to a we operations Solutions, on our and As health health thrilled refine we're focus technology, Performant care plan continuing as scale to operating our Healthcare be pure-play technology further

Rohit? that, With Strategy, for hand Rohit of Senior our the President to and Ramchandani, over discussion of Vice it I'll financials. Finance a

Rohit Ramchandani

Thanks, Sim.

third the million, of revenues which XXXX of increase our revenues compared as million of or total $XX.X included revenues results of quarter an overall, to As in were $XX.X line with our from Healthcare Sim third quarter mentioned, Healthcare largely XXXX. expectations, XX% our the in

We with our current run rate in the our excited revenues. our increasing are promoting growth rates business, beyond also us and pushing momentum continue

for care for help of Care/Outsourced of $X.X were quarter, market. this decline and in million our guide continued last loan Customer of market. beginning the expectations revenues XXXX The slight the total Our from the restart expected in federal future Services customer student should for process our but forgiveness the the quarter a with expectations line payment

and of going we continue quarter noting We our future this some Total the It's expenses anticipation other care zero third stream to costs in market also by non-health essentially of to revenue recovery related plans. these growth to that have that by was we end. line legacy our incur XXXX activities revenue needed cleared in year's recovery not achieve believe out end. to $XX,XXX, year's with worth should

a loss quarter in third was EBITDA the of the Adjusted in million $X.X compared year to prior period. $XXX,XXX the

growth, previously year-over-year the revenues, offset investment market has Healthcare though recent revenues operating growth departure continued Healthcare driven in by in from additionally growth shared. seen we've Our recovery expenses into as

quarter as existing million, third the 'XX which continued to of as million sharing work quarter increases the were from an to in in $X.X both known we've strong claims was of growth $XX.X revenues, nearly of scale. XXXX. of the represents XX% implementations as continue statements auditing This well been volume as Claims-based, increase third compared roughly

the for prior million modest million, Revenue from year $XX.X were our quarter. the quarter in third eligibility services representing a increase third $XX.X from the

Our at rates, work at eligibility of steady growth The continues to double-digit anchor our expectations. on in CMS eligibility line with growing market an operate rough a state, work is healthy rates. providing remainder

As the foreseeable over pipelines growth healthy, balanced are across each seeing we product recognize implementation acknowledge but different. and care may our trends Sim anticipate we offerings and health future, year and sales all balance noted, look of of the our that

million Operating health the increases on quarter higher compared expenses million Moving to primarily care expenses increase year. of continued by for the investment $X was into or QX This our to to hiring due in last expenses. were salary driven $XX.X our markets. third in

product of months our or training ramp production be claims-based Consequently, go with typically quality be example would it they control. of into work. steady-state around investment months growth the four- months' it basis. of on conducted. This individual date be which many can date six of of being to can plus to from you an the the couples Altogether, work two way today. an of A to coder the I the work returns provide thought two delivered mark. with in flow to then by up note heavy to may through hit revenue, auditing They see six-month helpful may work to waterfall four hired will and hire nurse complex then from effort

$X.X transformation currently some those anticipate increased costs legacy within were did and expenses These into tune the quarter increases we but quarter. served of from We've fourth roughly continue to able and to plan earlier, mentioned above some company markets unforeseen quarter, spend. planned vendor services been headcount as the to in other of to we some the in may Separately, seen today. outside the million our have see salary and manage related

had our a recalibrated We as a position successfully opportunities. combined organic operations, of sold gain learnings and cash to operational COVID-XX, the of cash net part have center our with strong health as existed pursue untapped us to pure-play position buildings Finally, into previously in our and combined a we care that of footprint which that revolver well call currently $X.X transition growth million. company, believe maintain resulted and

success in pleased importantly, quarter, we and, achievements how year building upon with tracking our continued current towards expectations of goals. long-term the more in first our our we remain XXXX, the Given half third are

also we $XX revenue mentioned, reiterate our of guidance are Sim million to $XX to As million. Healthcare pleased

anticipate we work RAC implementation of to contract, the X start the With the the in affirmation on current spending month. Region

a to on as as contribute seeing results. that line counsel we and We relates it to to to tandem soon leads get earlier, as the us up RAC-related discussed $X expense RAC to the worth noting also this with of for is it trends revised top negative $X some ramped year It given our of engage the contract million range opted spend, in protest start This of outside significance feasible a the Region are positive for process with contract. the increased EBITDA million. to excited ultimately X

technology to look pleased our been have we a our year health we wrap care focused first As with company, results. as

intact, remains strategy and long-term we excited are Our future. about very the

you for line would questions. up please Operator, open the

Operator

from [Operator Instructions] And George Sutton first our of Craig-Hallum. is the question with line

James Rush

RAC Congrats win. for on George. James on is This the Region X

So I'd getting contract of imagine around you the in sort buzz space that guys X, Region that your some capabilities. RAC created

the increased I with side? since on So momentum award? all or guess, the conversations interest has changed any Or prospects inbound are you at seeing commercial

Simeon Kohl

think and that. our I commercial were note certainly to took think, that award that of the I look, the of see glad something James, confirmation prospects, was our clients

out a protest there. bit of that about little are period, some the with So there questions

and CMS it CMS for some to bit confirm So big rigor quite with what selected certainly for in the in what spend having be that I it's value, vendors, a say is, folks another evaluating that been were the what go saying through we've to are selected sales region. And think program they a yet is manage in able coming of about underscore time. we the we that does talk they integrity their terms and attribute and best

But is So your buzz terms there. to too directly a we're point, the how in early impact of to little pipeline. tell the seeing it

James Rush

costs? potential costs some sort sensitivity payers way a to with Great. maybe how for to about then next more rationalize payers cut in about the see or talk a you macro you trying about little functions concerns to outsource recession a bit, as Or do could payment backdrop, cyclicality the And of business? integrity think year, you economic

Simeon Kohl

'XX. 'XX about costs. Yes. this and about they Look, though, I terms payers the being definitely engaged to amping recession-proof. they're time think, for do what we've reduce targets find as look, the we for trying folks and year are that, business relatively and of talked to projecting looking the are long ways Conversations think about thinking them various and today of are at where in up

the integrity take about notice critical where is the in kind think do making sit business how operate. economy, program terms payers as of their they to I of margins the as we macro the they think of with we a think effect kind at So of backdrop, some about which component

outsourcing, of think message. I terms it's a In just consistent

deserves integrity payers the in and think able or, those understand what the They the of payers, capacities, role the bottom certainly midsized to some that frankly, to that smaller Performant to payers do have with it in supporting. participating with their capacity And needs to this priority ties capacity own the like they commitment understand and again, engage multiple they and the kind think time about we internally engagement, of talked I don't program play the of well. this really vendors be some I understand they and line. just internal what that now, give for context to we've highlighted either vendors

solution, think is And offering suite. really refer enterprise as that I where we with integrity that this which to we so end-to-end up continue full to that's an come to excited be

the the in of So is actually market economy again, the I Performant. a win macro think impact for

Operator

question next with is Kyle line And Lake our Capital. from of the Bauser Street

Kyle Bauser

here. the updates on Congrats

QX So in seven I the in expect five implemented similar mentioned 'XX. half another of were QX and programs think first in you with cadence you

programs that verify quarter just be forward? of I To about wanted So five clear, kind to going this. is per

Rohit Ramchandani

thanks, a question. yes, good Kyle,

per seven expectation terms today reasonable to similar. in we a think as is five it quarter see I of

Kyle Bauser

Okay. Got it.

up quarter about since of guidance, year maybe what your of wave would XX know talk bit should following XX the largely love I can that, to longer-term guess just you're of kind a recent the eventually how contract XXXX, margin I but with So hear are. on on I goals the XX XXXX a little operationalizing you of months? think, the fourth expect giving kind over of past to margins we evolve to not latest wins,

Rohit Ramchandani

you should is think laid in which the as the bolstering new the it maintain scale, those I the hit state to well, as towards long-term And view ones all ramp the we've think strategic And steady out. Absolutely. be we XXs. margins do there, programs our a and therefore, continue I those of plan

will the on outside quarters about Region depressive coming the margins that RAC can I for think its As do just term, we ramp nearer program until the think of that, implementation given X be up size. potential

help remains but goal may in Region in And long-term actually term, impact our intact. short So fact, negative RAC have margins. a the on medium X it will in that accelerate term,

Kyle Bauser

regarding Got And following revised Appreciate Okay. EBITDA the up that. on that, guidance. it. maybe

delta Or costs teasing and the they is go some So Is of X? I the the costs that in. Region with markets. wouldn't the if you of most buckets what legacy on kind appreciate associated from related transformation change, guess, to color of that, out maybe with the mind operationalizing associated which

Rohit Ramchandani

comes be our the the expense, little we When bucket given meetings excesses transformation, had kind are haven't on it the related we don't a size, started kickoff the get to but up exact IT going the we would but I say bigger few plan. cadence RAC to probably to actually see know front. ramp those for yet, past planned would something that to we go of did a Absolutely.

how our accomplish spend. So some it will a on is vendor little able much be dependent with other along to team IT

spent much So will on QX a Region is bit how the on that in air, X. up piece, get

that excesses the actually I change the unforeseen it transformation. But of related the today, answer. to as could that think So was sits it majority

Kyle Bauser

jump updates. that. queue, I'll Well, back nice in appreciate really Okay. Got it. I

Rohit Ramchandani

Kyle. Thanks,

Operator

no call for now And I further questions. we have turn over remarks. to the Mr. Kohl will closing

Simeon Kohl

dedication Thank our to for for our again to you, we for on us thank like customers partnership, to you and operator. joining and team also everyone forward We'd to look today, call. like QX and trust commitment speaking and unmatched to you. serving our members We our we'd thank Thank their clients. their thank

Operator

for Ladies and We that disconnect the conclude participation call your and lines. conference you you gentlemen, ask that thank your today. for does please

Performant Healthcare (PHLT) 8 Nov 222022 Q3 Earnings call transcript