Performant Financial Corporation
Q4 2020 Earnings Call Transcript

Published: 16 Mar 2021

[Operator:]

Greetings and welcome to Performant Financial Corp Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. Please note this conference is being recorded. I will now turn the conference over to your host, Richard Zubek of Investor Relations. You may begin.

[Richard Zubek:]

Thank you, operator and good afternoon everyone. By now, you should have received a copy of the earnings release for our company’s fourth quarter and full-year 2020 results. If you have not, a copy is available on the Investor Relations portion of our website. On today’s call will be Lisa Im, Chief Executive Officer; and Rohit Ramchandani, Vice President of Finance and Strategy. Before we begin, I’d like to remind you that some of the comments made on today’s call are forward-looking statements. These statements are subject to risks and uncertainties, including those described in our filings with the SEC. Actual results may differ materially from those described during the call.

[Lisa Im:]

Thank you, Rich. Good afternoon, everyone, and thank you for joining us for our earnings call. Coming , we were on course to report a transformative year following multiple years of hard work transitioning performance from a company deriving its success, from a small number of large recovery contracts into a highly dynamic company with diversified healthcare offerings. We've previously shared during investor meetings, as well as on our investor websites, the multi-year investments required to bring major contracts to steady state margins. With those years of investment completed and the share gains that we have grown across our markets, we have line of sight to exceptional 2020 results. While the impact of the global pandemic brought material disruption, we were still able to report a very strong year. In the fourth quarter, we had revenues of over $40 million and adjusted EBITDA of $5.1 million. Both of these figures are lower as compared to the fourth quarter of 2019, due to the impact the pandemic had on our recovery business. However, the resiliency of our business is seen in our full-year 2020 results as we reported revenues of nearly $156 million, with corresponding adjusted EBITDA of over $20 million. This is the first time we have reported annual adjusted EBITDA in excess of $20 million since 2016. This compares to revenue of $150 million and negative EBITDA over $3 million in 2019. Our results in 2020 are a testament to our exceptional workforce and their steadfast commitment to our clients, even in the face of numerous disruptions. To all our associates, thank you for helping us reach these successes and for bringing your very best each and every day. While we are happy with our results, we also know the potential that exists and what our results could be in a COVID free environment. While the pandemic depressed operational results across all of our business, our healthcare operations were less impacted in 2020, and the majority of our healthcare contracts resumed operations by September of 2020. Furthermore, I'm happy to report that many of our healthcare clients are expanding their scope of services and we continued to renew contracts by way of competitive procurement.

[Rohit Ramchandani:]

Thanks, Lisa. As Lisa mentioned, in the fourth quarter of 2020 we recorded revenues of $40 million, which was in-line with our internal projections and 9% lower versus the prior year period. Notably, this includes almost $20 million in healthcare market revenues for the quarter. Adjusted EBITDA in the fourth quarter was $5.1 million, compared to $6.5 million in the prior year period, and $3.8 million in the third quarter of this year.

[Lisa Im:]

Thanks Rohit. Pandemics changed the world forever. Changes happened to countries, economies, families, people, and companies. As we reflect back on 2020, as much as we want to say , let's get 2020 behind us. We know that 2021 isn't going back to pre-pandemic normal, forever changed is the world as you knew it. One of those changes is how the public will perceive us as a company going forward based on the demonstrated gains that we've made in the healthcare industry. We have made the decision to focus our long-term strategy on growing this business. We have already successfully taken share from long-term industry incumbents and proven the superior nature of our technology platform, even if we are in a second or position behind those incumbents. In an industry that continues to undergo consolidation, we are well-positioned and viewed as the leading independent healthcare payment integrity provider. Long before the pandemic and the CARES Act, our recovery work with defaulted student loan borrowers has steadily been shrinking. The pandemic only accelerated this process. While it's premature at this moment to share specifics, we are working on a multi-part solution for our recovery business that we believe would result in our ability to continue driving our investment capital toward the healthcare markets and achieve the best possible outcome for the company and all of our clients and our employees. As we look ahead, beyond an expectation of continuing to report positive EBITDA for the full-year, we are not providing a more detailed outlook for 2021. Spearheaded by the continued impacts from COVID-19 there is still too much uncertainty with respect to our recovery operations in order to provide a meaningful outlook. We are confident about the long-term prospects of Performant and believe that we will continue to grow and scale our business in the coming years.

[Operator:]

[Lisa Im:]

Thank you, operator. Thank you for being with us today on our earnings call. We want to again thank our associates for their continued efforts. We want to thank our shareholders for your continued support. And of course thank our clients for letting us continue to serve you and of course, essential workers for all that you have done. Thank you again for being with us.

[Operator:]

This concludes today's conference and you may disconnect your line at this time. Thank you for your participation.