Earnings call transcript Q2 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Performant Financial Corp Second Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, August 8, 2023.

I would now like to turn the conference over to [Jeff Elliott] (ph), Performant Investor Relations Representative. ahead. go Please

Unidentified Company Representative

Good us operator. and you thank Thank afternoon, joining today. for you, everyone,

release this and A company's issued section was press earlier website, company's the on Investor performantcorp.com. quarter of found the results afternoon second of be XXXX can the Relations for the outlining

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

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

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

Executive Financial On Kohl, will Rohit Chief Simeon and Chief today's be Officer; Ramchandani, call Officer.

to over turn With that, the Simeon? I'd to call like Simeon.

Simeon Kohl

Good afternoon, welcome XXXX quarter second call. Performant's earnings everyone, to and

I to report objectives, XX% remarkable core QX, grew our and Healthcare in pleased new growth our claims business. businesses. quarter both eligibility another featuring implementations commercial toward growth including progress continued in of revenues and in yet our am

government set did fundamentals us While second their our of and contracts year. the experience up strong the remain sluggishness, some half well for

additional some provide context. me Let

contracts are direct of are the These opportunities. programs Though healthcare which beyond this of our also marquee to refer often position program government the at as revenue the true, pillars ecosystem, dynamics continues our serve to We business. while to providing placing these our integrity contracts in a times hold subject control. Performant of broader initiatives, leadership national unique CMS in as healthy

premier In Section to stemming decline volume end having entities. but MSP expected levels XXXX to call, payments we of the also recovery we workable our begun MSP the quarter. demand inventory the from noted the In in at center reported returning witnessed from operate a payer program, identification that national for QX of and continue CMS we reporting, had

the recoveries through the While and historic QX, its from demand levels. return inventories we working life during now to still are seeing was decline cycle way QX

also volumes due to inventories. Our programs emergency, public RAC which had health CMS extended lower the restricted

expiration the XX, our on With to claims are inventory return be the public and operating to expect of levels health pre-PHE May emergency volume at this we year. later seeing

this being awarded the operation, to newly by Additionally, Region we anticipate this provide program commenced end and year. our of recently X able detail on contract more

business, XXXX In year-over-year revenue of the eligibility surpasses terms cycle our in QX, 'XX. half our XXXX. all programs that the in our which claims efforts as am XX to compress total of commercial implementation report both we excited commercial and bringing enjoyed additional to bear number growth implementations, also double-digit I of to in first strong implementations of the XX continue implemented to fruit total we rates completed

programs will implementations additional the represent. this visibility that XX healthy an slated $XX provide for annualized growth. with along accelerated anticipate this toward But deliver cadence believe revenues leads the at revenue important the market. half pipeline We value that These the in these commercial clear steady of more estimated latter of million implementations We state. is implementations, these implementation year,

employing remains discussed key to a clients. differentiated We've of learning for our our deliver consistent, previously, but technology machine high-quality results, driver this our findings proprietary analytic

drive value efficiencies. to to we As greater further continuously are increase innovation our to into business and product client continues grow, investing

significant The with experience artificial development one extension is natural of learning. intelligence, a such of AI, as serving our machine innovation,

margins efficiencies, AI brand. are without which have sacrificing seeing opportunities analytic already to commitment shown early Current platform. by with excited the promising greater quality, Performant's results increased maintaining which pilots our to is are central we our from for We integrating should to own lead

advantage As Foundation, rates Performant an from Medicare is RAC total to commercial the confident business, come. projected the landscape federal of and Medicare market, Medicare expansion XXXX, footprint shifting Advantage through is in Family situated XXXX. that Coupled by of to given I recent our by benefit upward want particularly optimally the to of trajectory strong are neatly the spending Performant offerings. Advantage performance The CMS our a Medicare to Kaiser a on publication grow that is Medicare take significant with According we increase forecasted XX% to XX% that positioned in aside, and years full this by to emphasize enrollment

In closing, our sales robust. pipeline remains

new of that on government and to our of growing our large industry. opportunities implementations in win cadence programs ability behind our execute programs as confident Performant this the underscore leave to PHE newly and am success. continues And commercial for Our well mature, continued dozens positioned I implemented and is

the Rohit of discussion Rohit? our Officer, Financial to Ramchandani, With for I'll it that, Chief over financials. hand a

Rohit Ramchandani

Thanks, Sim.

about we As Sim continue shared, the to energized traction and wins key strategic achieve. we remain

is While achieving back the accounts, long-term vision our should goals. in not our of and given the our and we demonstrated commercial our this see fundamentals these some of bounce progress of did levels those accounts, assured overall reflective government remain success sluggishness we toward of programs. Anticipating

of $XX.X results. quarter million, were With dive market included Total the million. revenues that, revenues company healthcare quarter's in $XX.X let's the which into

customer million services Our business in the care/outsourced accounted quarter. revenues $X.X for for

our loan the customer student sequentially restart As to the of decline we revenues care federal anticipated until programs. a reminder,

a possibility of With the this a we each remain the latter steeper likely results in half for expected that anticipated. are year. the million growth sub-$X note, remainder renewed That mark that, reflected restart within being to will at said, both our and of for than anticipate the customer quarter decline programs we the On this had of quarter's care XXXX. client positive

to EBITDA, impacts as picture We have future revenues to call impact much Though modest revenues are drive, customer it to million. care we comparison as we'll what a of this healthcare close the roughly have the in the could $X.X our expectation clear muted a our margin year. market near-term quite believe market

increase were second million, quarter of from representing year-over-year. an services for $XX.X XX% the Revenue roughly eligibility

diversify our commercial have has CMS. mature growth bear to outpaced with eligibility continued as of to eligibility implementations significantly commercial offering the efforts our eligibility and that offerings Our fruit

of government anchor and bright our the we coupled As key re-awarded of were secondary which a as future years period results. rapid us programs, a government of six this to for market part our key confidence commercial in offerings expansion with contract Center reminder, This, provides a this Repayment currently is for the our eligibility Commercial strategy. with last December, Medicare a up payment

We XXXX. growth earlier. this see notable drive this, auditing contributions we combination our our claims million the This, for X growth with our Sim continue higher Revenue deflated the as PHE-related the ramp-up detailed stronger Similar commercial third as based in showed business much X% was government from we continued anticipate which should market or volumes, Region government may operational revenues, RAC impacts we through levels from of in OIG quarter, year-over-year. to later represents HHS what $X.X quarter. than second our eligibility programs though within claims-based to within claims year. to look had programs contract, fact, volume saw This returning from the growth and programs,

of maintain While to visibility the $XXX annual expectation, were $XXX bit guidance million. to achieving half results revenue our million first a of we healthcare shy

growth rates strong our records and our market quarterly year. revenues about excited to growth for are potential deliver We and rate healthcare ability this

highlight to from like value our I'd rate Furthermore, run the continued additions ongoing implementations.

we worth should mentioned, the revenues half efforts [indiscernible] be XX over an a alone have exciting of XXXX operational first implementations state. of As million Overall, in revenue underway. annualized steady lot from the estimated $XX Sim focused at

of of for the growth provide the ahead of the government these HHS from implementations growth commercial year a existing contract to those and The continued newly normalcy RAC Region ramp us, a programs, foundation into beyond. solid announced, all OIG XXXX prior continued and alongside of return implementations calendar X,

At for This the guidance of total $X million the care XXXX. in comfortable million we million $XXX.XX $XXX market XXXX. revenue this customer for also $X.XX of stage FY annual revenues combines of with for million year, to for healthcare markets guidance providing to are

expenses seen primarily last comparison QX which as healthcare Operating salaries benefits our and were quarter to is roughly increases. form of the We've into take in of million, the growth market growth in $XX.X investments second year. year-over-year our flat in headcount

expect and expense As salaries alongside future benefits we quarters, our to continue growing we healthcare look to line revenue growth.

footprint regard and manage has manage of a year-over-year our With one the continue working initiative our our we other to to expenses. as expenses, biggest to adapt the operating world physical been remote of in drivers our decrease to

around remains have customer We see below care Our and was was expectation, shared $X.X with estimate we what EBITDA negative the for XX%. we healthcare expansion. line from given This which our million, revenues. market and to gross slightly that is continue in the margin slowdown impacts for previously room quarter

opportunities tackle capitalized maintain avenues all initiatives capital We themselves. cash steps flexibility of take right to and growth to on our present remain unrestricted our current million should do eye $XX to growth, assets. continue we of strong in available for a well We base the we'll addition in to ensure with flexibility organic have roughly and

and to product commentary broadening from our market our note operation, are and delivering our excited we we growing margins. expanding financially growth, healthcare offerings, you'll what As enhancing seeing are our Sim's footprint within continue EBITDA very

offerings and our reach executing is continue pipeline bolstered growing by as All contracted of sales this within further initiatives. is business our we and against well development our

the Operator, questions? lines would open you please for up

Operator

Craig-Hallum. begin and question Ladies Sutton from comes the question-and-answer Your Please from we'll Instructions] [Operator now go ahead. George you. first Thank gentlemen, session.

George Sutton

XX winning it you're what's What a about the you'd unique walk macro? you. amount competitively. if more is of business? through broader sense implementations Sim, these you about are Why wondered versus Thank doing and happening I what talk in this broadly in

Simeon Kohl

George. factors Thanks, of Look, think a I talked combination few a before. and about it's Yes. this we've

landscape generally is, vast trends. payers and first I the just great of I think provides such relationship into visibility how national CMS and emerging think with that our the claims appreciate

in produce discussed technology abrasion remarks, talk and to integrity most how you to I think is we second that provider my high low our quality and high-quality And consistently findings. the priority kind program that it's its ability technology, as number for our prepared initiatives. and one often payers, is heard the of

to it's ability of then value add payers. size our regardless of And finally, the

with plan or small of XX-plus our value lives. under whether So offerings drive adapt a XXX,XXX, national can number it's to of lives the regardless we of covered million covered a meaningful plan

able it plan. we've being talked about landscape before value to with an member national these bespoke solutions XXX,XXX of And kind and to leverage under that so, drive and

think capabilities that the industry these payers And that momentum the of so, recognizing its Performant the are have competition. some amongst and I we unique in has

George Sutton

with same platform, offering? respect to of your about effort things you can adoption terms the pipeline? that market talk where on middle to And SaaS in the Relative of stand

Simeon Kohl

Yes.

So look, one I'll take first. latter the

we We're going mining AI, We be I the from about to about a -- think we -- option continue talked previously self-service hearing type to as in solution. very that of valuable. are is innovation that how mentioned data we've for and payers more that looking more feedback industry a talked

that, We continue that through some front. to of that's investments on making invest pilot a actually that we're informing in capability, building out that working the

a George, of timing, be number have mid-markets. And terms we priority for I on don't continues a to and terms it and of the a continue one in will are but is in yet us. specific date focusing launch

tailoring had with offering about well that and similar Health. an to payers. we That announcement the us other with regards heard go continues quite to while of type back help to thinking Priority You a

mid seeing of broader small we're us opportunities and those in sales and the share -- types it's more opportunity success opportunity to the player. So, a of for pipeline the for teams driving in our more

George Sutton

Okay.

compression in numbers the of there? doing for an Finally you've that mentioned implementation timing like you mean about does just you're that. compress able in been What and of to the you to talk implementation? me, things Can what cycle accomplish terms

Simeon Kohl

Sure. Yes.

driving one greater coming year, when and we're of So things of internally booked pipeline of opportunities the look, of sales we We've on implementation that XX that year, talk good got we of half XX a both efficiencies. right, QX first signed is out contracts. last said the focused all implementations in already about just the the

we for objectives. possibly so as getting well soon products aligns launched, client us, those getting with our opportunities And those can launched as

tackle in technology need are technology, more account management data, efficiencies pure and we on how client just And end. the workflows, so, that do do we adapt internally is for investments educating think things their do some really internal block client that teams, about as we gains, efficiency greater payers of our it drive initiatives things And we to do do they we about our some tackle all that how how to get and making making then, allows their we onboarding, with us quickly.

have half underscore XX we of all year, so, that in deliver come And implementations of ability those together think new I and the continue. cadence to to and things our nicely expect the first

George Sutton

Perfect. guys. Thanks,

Simeon Kohl

you. Thank

Operator

Thank you.

Please Your next from Lake question go Stephan comes ahead. Street. from Jacob

Jacob Stephan

Hey, commercial the XX here. on good to guys. think implementation, my nice completed Thanks a per for implementation you implementations Congrats of way think about taking about When XXXX? is Or questions. we annually the different? that the $XXX,XXX kind is in that progress

Rohit Ramchandani

terrible Hey, Yes, a way it. Jacob. that's think not to about

historically, a given thousands the few on million on range a on shared high can we've end as to hundreds implementation think low of end. the I the

XX implementations that it's the XXXX. same can't it's pretty average, the close probably but exactly so, for from And you I tell

Jacob Stephan

Okay.

lays help year, implementations completed us over about earlier quarterly? kind of how just of maybe the And kind how just think we breakdown see annualized, model, the $XX you the that this the revenue so that out can million progress you

Rohit Ramchandani

Yes.

and at we So does in it growth guidance I and core serve to proof rate, now will our what expectations think is, its guiding against be think, our what points for XXXX. more I hope

of depend will implementations. layer the on of type it how in, terms In they

point. a mark think for year, it state, And the a side, probably X X if I year steady-state in on net whereas versus longer logo, you're then As it's claims-based somewhere that to it's a X it's or the reached seeing we've you've little opportunities, ramp-up existing more an steady the may like client. reset where take probably a X.X eligibility discussed, new

at if think waterfall, a reach a will about quarter's once. that So, ramp-up you given be kind It's will state. implementations, of steady all it

Jacob Stephan

Thank it. Got you.

Operator

are at this further may Simeon time. There Kohl, call you you. Kohl. no to Thank turn I'll Mr. questions the proceed. over

Simeon Kohl

for Performant, in to everyone always And call. in third your to earnings continued call with and thanks appreciate our look so Thanks quarter we you. much. today's you at Thank We interest forward speaking attending again November.

Operator

Ladies this please you your and for that thank call disconnect lines. participating, your conference concludes you ask gentlemen, today. for you. and Thank We

Performant Financial (PFMT) 8 Aug 232023 Q2 Earnings call transcript