Revenue Performance - Total revenues for the three months ended June 30, 2025, were $37,803,000, a 28.8% increase from $29,362,000 for the same period in 2024[89] - Healthcare total revenues for the six months ended June 30, 2025, reached $70,989,000, up 32.2% from $53,725,000 in 2024[89] - Total revenues for the three months ended June 30, 2025, were $37.8 million, an increase of approximately $8.4 million, or 29%, compared to $29.4 million for the same period in 2024[116] - Healthcare revenues for the three months ended June 30, 2025, were $37.8 million, representing an increase of $9.9 million, or 35%, compared to the same period in 2024[117] - Revenues from claims-based services during the three months ended June 30, 2025, were $19.7 million, an increase of $6.0 million, or 44%, compared to the same period in 2024[117] - Total revenues for the six months ended June 30, 2025, were $71.1 million, an increase of approximately $14.4 million, or 25%, compared to $56.7 million for the same period in 2024[126] - Healthcare revenues for the six months ended June 30, 2025, were $71.0 million, representing an increase of $17.3 million, or 32%, compared to the same period in 2024[127] Net Income and Expenses - Net income for the three months ended June 30, 2025, was $2.1 million, an increase of approximately $5.1 million, or 169%, compared to a net loss of $3.0 million for the same period in 2024[124] - Net income for the six months ended June 30, 2025, was $2.0 million, an increase of approximately $9.0 million, or 128%, compared to a net loss of $7.0 million for the same period in 2024[134] - Salaries and benefits expense for the three months ended June 30, 2025, was $26.8 million, an increase of $2.3 million, or 9%, compared to $24.5 million for the same period in 2024[119] - Other operating expenses for the three months ended June 30, 2025, were $8.3 million, compared to $7.6 million for the same period in 2024, primarily due to higher outside services[120] - Interest expense for the three months ended June 30, 2025, was $0.3 million, unchanged from the same period in 2024[122] EBITDA and Cash Flow - For the three months ended June 30, 2025, adjusted EBITDA was $6,173,000, a significant increase from $548,000 in the same period of 2024[139] - The company reported a net income of $2,078,000 for the three months ended June 30, 2025, compared to a net loss of $2,996,000 in the prior year[139] - Adjusted net income for the same period was $4,777,000, up from a loss of $1,962,000 in 2024[139] - Cash provided by operating activities was $3,300,000 for the six months ended June 30, 2025, compared to $4,700,000 for the same period in 2024[146] - As of June 30, 2025, cash and cash equivalents totaled $9,100,000, a slight decrease from $9,300,000 as of December 31, 2024[142] Merger and Agreements - The company entered into a Merger Agreement on July 31, 2025, with Machinify, with stockholders entitled to receive $7.75 in cash per share[85] - The Merger is expected to close by the end of calendar year 2025, pending regulatory approvals and stockholder consent[85] - A termination fee of $19,980,000 is required if the merger agreement is terminated under specified circumstances[141] Business Operations and Risks - The company ceased providing outsourced call center services in Q1 2025, resulting in a significant reduction in revenue from that segment[99] - The company derives a majority of its revenues from healthcare payment integrity services, with a focus on claims-based and eligibility-based services[88] - The company has been awarded multiple Medicare Recovery Audit Contractor contracts, including a recent contract for Region 2 with a term of eight-and-a-half years[93] - The company’s revenue model is success-based, earning fees based on the amount of funds recovered for clients[84] - The company anticipates continued growth in its healthcare services as it expands its technology-enabled services platform[98] - The company faces risks related to the implementation of new contracts, which can delay revenue recognition and impact profitability[102] Financial Agreements - The company entered into a new credit agreement with a $25 million revolving loan commitment, with $8 million outstanding as of June 30, 2025[143] - The annual interest rate under the credit agreement was 7.1% as of June 30, 2025[152] - The company expects to maintain sufficient cash flows from operating activities to fund ongoing and planned business operations[144] - The company was in compliance with all financial covenants under the credit agreement as of June 30, 2025[157]

Financial Performance - Performant Healthcare, Inc. announced preliminary financial results for the quarter ended June 30, 2025[6] - The company is focusing on revenue growth and adjusted EBITDA outlook for 2025 and beyond[8] - Factors affecting financial performance include client relationships and the ability to generate revenue from new contracts[8] - Future financial performance is subject to compliance with industry regulations and covenants in credit agreements[8] Growth Strategy - The company is considering strategic alliances or acquisitions as part of its growth strategy[8] - The adaptability of the company's technology platform to new markets is a key focus area[8] Operational Challenges - The company faces challenges from economic downturns and public health emergencies impacting operations[8] - There are risks related to the company's ability to maintain and protect its intellectual property[9] Human Resources - The company emphasizes the importance of hiring and retaining specialized employees for its healthcare business[8] Forward-Looking Statements - The company does not undertake to update forward-looking statements to conform to actual results[9]

Summary of Performant Healthcare Conference Call Industry Overview - Performant operates in the healthcare payment integrity industry, which is characterized by a limited number of players and a significant market size. The total healthcare spending in the US exceeds $4 trillion, with an estimated $1 trillion wasted, which is more than the entire US K-12 education budget [4][5] - Within this waste, over $300 billion is attributed to payment integrity waste, which relates to the processing of claims [5] Company Positioning and Services - Performant's services are categorized into claims-based and eligibility-based offerings. Claims-based services focus on auditing whether claims should have been paid, while eligibility-based services determine who should pay the claim by coordinating benefits among multiple payers [6] - The company has evolved from a call center debt recovery provider to a healthcare-focused entity since acquiring a CMS contract in 2009. The technology acquired in 2012 remains central to its operations [7] Competitive Landscape - The competitive landscape has consolidated from 10-15 direct competitors to 2-3 major players, enhancing Performant's market position. The industry has seen increased barriers to entry due to the need for compliance and cybersecurity standards [8] - Performant has established strong relationships with federal entities like CMS and five of the top seven national payers, as well as around 20 mid-market plans [9] Growth Strategy - The company's growth strategy includes a "land and expand" approach, where initial contracts lead to upselling additional services over time. This strategy is crucial for expanding relationships with both commercial and government clients [10] - The sales cycle in this industry is lengthy, often taking 2-3 years from contract win to steady revenue, providing high visibility into future results [11] Financial Performance and Projections - For the current year, Performant projects healthcare revenues between $133 million and $135 million, with adjusted EBITDA between $9 million and $10 million. The company aims for a 20%+ adjusted EBITDA margin as it scales [12] - Performant has demonstrated consistent double-digit growth in top-line revenue and anticipates continuing this trend, focusing on execution rather than new market wins [13] Macro Environment and Future Outlook - The company believes it is well-positioned within a macro environment that emphasizes reducing fraud, waste, and abuse in healthcare, which aligns with broader systemic goals [13] - Performant is optimistic about its future, citing a combination of competitive wins and a favorable market environment as key drivers for growth [13] Conclusion - The conference concluded with an invitation for questions, indicating a readiness to engage with stakeholders [14][15]

Revenue Growth - Total revenues for the three months ended March 31, 2025, were $33.269 million, an increase of 21.7% compared to $27.334 million for the same period in 2024[84]. - Healthcare total revenues reached $33.186 million, up from $25.800 million, reflecting a growth of 28.5% year-over-year[84]. - Claims-based services generated $17.104 million in revenue, a 37.7% increase from $12.412 million in the prior year[84]. - Eligibility-based services revenue was $16.082 million, compared to $13.388 million, marking a 20.2% increase[84]. - Total revenues for the three months ended March 31, 2025, were $33.3 million, an increase of approximately $5.9 million, or 22%, compared to $27.3 million for the same period in 2024[110]. - Healthcare revenues reached $33.2 million for the three months ended March 31, 2025, representing a 29% increase compared to the same period in 2024, driven by growth in eligibility-based and claims-based services[111]. Outsourced Services Impact - The company ceased providing outsourced services, resulting in a significant drop in revenues from $1.534 million to $83,000[84][94]. - Customer Care / Outsourced Services revenues decreased to approximately $0.1 million, a decline of 95% compared to the same period in 2024, due to the cessation of outsourced services[112]. Financial Performance - Net loss for the three months ended March 31, 2025, was $81 thousand, a decrease of approximately $3.9 million, or 98%, compared to a net loss of $4.0 million for the same period in 2024[118]. - Adjusted EBITDA for the three months ended March 31, 2025, was $3.3 million, compared to a loss of $1.2 million for the same period in 2024[123]. - Cash provided by operating activities was $2.9 million for the three months ended March 31, 2025, primarily due to increasing revenues outpacing operating expenses[128]. Cash and Credit Position - Cash and cash equivalents totaled $10.0 million as of March 31, 2025, an increase from $9.3 million as of December 31, 2024[124]. - As of March 31, 2025, $8.0 million was outstanding under the new $25 million Credit Agreement, with $14.2 million available for additional borrowings[125]. - The Credit Agreement with Wells Fargo Bank includes a $25 million revolving loan commitment, with $8.0 million outstanding as of March 31, 2025[132][134]. - The annual interest rate under the Credit Agreement was 7.1% as of March 31, 2025[134]. - The company has $14.2 million of additional available credit under the Credit Agreement as of March 31, 2025[134]. - The Credit Agreement matures on October 27, 2026, with the option for the company to prepay borrowings without penalty[135][136]. Compliance and Financial Covenants - The company is subject to financial covenants requiring a minimum liquidity and a fixed charge coverage ratio of not less than 1.25 to 1.00[138]. - As of March 31, 2025, the company was in compliance with all financial covenants under the Credit Agreement[139]. Risks and Economic Factors - The company faces risks related to client contract cancellations, which could significantly impact revenues due to high client concentration[103]. - Macroeconomic factors, including fluctuations in Medicare expenditures, may influence the company's business and results of operations[105]. - The company has exposure to interest rate changes, with a potential increase of $80 thousand in annual interest expense if rates rise by 100 basis points[140]. - Future investments of excess cash may be made in short-term investments, which could be affected by market interest rate changes[141]. Growth Outlook - The company anticipates continued growth in its healthcare services as it expands its technology-enabled services platform[93]. - The company’s revenue model is primarily success-based, earning fees based on the amount of funds recovered for clients[82].

Financial Data and Key Metrics Changes - The company reported a 29% growth in healthcare revenue compared to Q1 2024, with adjusted EBITDA of over $3 million, a significant improvement from an adjusted EBITDA loss of $1.2 million in the same quarter last year [5][6][26] - Total company revenues reached $33.3 million, reflecting a year-over-year growth of 22%. Excluding $1.5 million of customer care revenue from the prior year, revenue grew almost 30% [18][19] - Adjusted EBITDA for the quarter was $3.3 million, compared to a loss of $1.2 million in Q1 2024, indicating strong revenue growth and efficiency gains [26][27] Business Line Data and Key Metrics Changes - Claims-based business revenue was $17.1 million, showing a 38% year-over-year growth, while eligibility revenue was $16.1 million, representing a 20% increase compared to last year [19][20] - The company implemented 13 commercial programs in the quarter, expected to contribute $4.5 million to $5 million in annualized revenue at steady state [9][21] Market Data and Key Metrics Changes - The commercial market remains a significant opportunity, with a robust pipeline of both existing and new client opportunities [9][22] - The company is seeing a rebound in government revenue, indicating a positive trend in the healthcare payment integrity market [12][20] Company Strategy and Development Direction - The company is focused on strategic investments to drive sustainable, profitable long-term growth, with a commitment to technology advancements and client-centric partnerships [7][15] - The implementation of the New York State Medicaid RAC contract is a key focus, with expectations of double-digit annualized revenue at steady state [10][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth strategy and the alignment of its mission with the current administration's focus on reducing fraud, waste, and abuse in healthcare [12][13] - The company anticipates each quarter to be EBITDA positive moving forward, with expectations of achieving positive free cash flow by the end of 2025 [26][27][28] Other Important Information - Operating expenses were approximately $33 million, driven by spending to operationalize new implementations and technology investments [24] - The company is well insulated from tariff pressures, with 100% domestic revenue and expense structure [23] Q&A Session Summary Question: What was the main driver for the faster growth in claims-based services revenue compared to eligibility-based revenue? - The main driver was the mix of implementations, with a stronger focus on claims-based business in recent years [31] Question: What should be expected regarding adjusted EBITDA guidance and potential declines in the middle of the year? - Management does not anticipate losses but expects a slight decline due to investments in the New York RAC implementation and the wind down of Region 5 [33] Question: Can an update on project turning and tech initiatives be provided regarding ROI expectations? - Initial product integrations are expected to start operationalizing this quarter, leading to higher efficiency and expanded EBITDA margins [34]

Financial Data and Key Metrics Changes - The company reported a total revenue of $33.3 million for Q1 2025, reflecting a year-over-year growth of 22% [17] - Excluding $1.5 million of customer care revenue from the prior year, revenue growth was nearly 30% [17] - Adjusted EBITDA was positive at $3.3 million, a significant improvement from an adjusted EBITDA loss of $1.2 million in Q1 2024 [24][26] - The company generated positive cash flow of $1.4 million in the quarter, compared to a negative cash flow of $3.6 million in the same quarter last year [26] Business Line Data and Key Metrics Changes - Claims-based business revenue was $17.1 million, showing a year-over-year growth of 38% [18] - Eligibility revenue for the quarter was $16.1 million, representing a 20% increase compared to the previous year [19] - The company implemented 13 commercial programs in the quarter, expected to contribute $4.5 million to $5 million in annualized revenue at steady state [20] Market Data and Key Metrics Changes - The commercial market remains a significant opportunity, with a robust pipeline of both existing and new client opportunities [21] - The company is seeing a rebound in government revenue, indicating a positive trend in the healthcare payment integrity market [11] Company Strategy and Development Direction - The company is focused on advancing technology and client-centric partnerships to drive growth and deliver value [6] - Strategic investments are being prioritized to win new business and ensure sustainable, profitable long-term growth [7] - The company aims to lead in the eligibility space by delivering high-quality results and has successfully displaced legacy vendors [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth strategy and the positive impact of recent operational improvements [14] - The company anticipates continued positive adjusted EBITDA in future quarters and aims to achieve free cash flow generation by the end of 2025 [25][26] - Management noted that the demand for healthcare payment integrity services is at a critical inflection point, emphasizing the urgency of addressing fraud, waste, and abuse [6] Other Important Information - The company is well insulated from tariff pressures, as all revenue is domestic and does not rely on foreign goods or services [22] - The New York State Medicaid RAC implementation is progressing well, with expectations of double-digit annualized revenue at steady state [9] Q&A Session Summary Question: What was the main driver for the faster growth in claims-based services revenue compared to eligibility-based revenue? - The main driver was the mix of implementations, with a stronger focus on claims-based business in recent years [30] Question: What should be expected regarding adjusted EBITDA guidance and potential declines in the middle of the year? - The company anticipates maintaining positive adjusted EBITDA every quarter, with some fluctuations due to investments in the New York RAC implementation and the decline of Region 5 [32][33] Question: Can an update on project turning and tech initiatives be provided, specifically regarding ROI expectations? - Initial product integrations are expected to yield results as soon as this quarter, with operationalization across 2025 leading to higher efficiency and expanded EBITDA margins [34]

[Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) Performant Healthcare reported strong Q1 2025 financial results, with total revenue increasing 22% year-over-year to **$33.3 million**, driven by a 29% rise in healthcare revenue, significantly improving profitability to a net loss of **$0.1 million** from **$4.0 million** and achieving a positive Adjusted EBITDA of **$3.3 million** from a **$1.2 million** loss Q1 2025 Key Financial Metrics (in millions) (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $33.3M | $27.3M | +22.0% | | Healthcare Revenue | $33.2M | $25.8M | +28.7% | | Net Loss | $(0.1)M | $(4.0)M | +97.5% | | Net Loss per Share | $0.00 | $(0.05) | +100% | | Adjusted EBITDA | $3.3M | $(1.2)M | N/A | | Adjusted Net Income | $1.2M | $(3.0)M | N/A | Q1 2025 Healthcare Revenue Breakdown (in millions) (vs. Q1 2024) | Service Line | Q1 2025 Revenue | YoY Growth | | :--- | :--- | :--- | | Claims-based | $17.1M | +38% | | Eligibility-based | $16.1M | +20% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed strong satisfaction with the first quarter's performance, highlighting that both revenue and profitability surpassed expectations, with growth broad-based across government and commercial clients and significant momentum from the commercial sector, reinforced by 13 new commercial programs expected to generate substantial annualized revenue - CEO Simeon Kohl stated that Q1 revenue and profitability exceeded expectations, driven by strong demand for the company's services and solid growth across both government and commercial clients[3](index=3&type=chunk) - The company implemented **13 new commercial programs** during the quarter, which are estimated to contribute between **$4.5 million and $5.0 million in annualized revenue** once they reach a steady state[3](index=3&type=chunk) - CFO Rohit Ramchandani noted that the strong start to the year is a testament to the execution of the strategy set in 2021 to become a pure-play healthcare company, with commercial clients being the largest growth area[4](index=4&type=chunk) [2025 Full-Year Guidance](index=1&type=section&id=2025%20Full-Year%20Guidance) Buoyed by the strong first-quarter results and a positive outlook for the remainder of the year, the company has raised its full-year 2025 financial guidance, projecting higher healthcare revenues and increased adjusted EBITDA Updated Full-Year 2025 Guidance (in millions) | Metric | Guidance Range | | :--- | :--- | | Healthcare Revenues | $133M - $135M | | Adjusted EBITDA | $9M - $10M | [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position as of March 31, 2025, and its performance for the first quarter, showing growth in total assets to **$105.4 million**, a significant improvement from a **$3.9 million** operating loss to a **$0.15 million** operating income, and positive cash flow from operations at **$2.9 million** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to **$105.4 million** from **$101.8 million** at year-end 2024, driven by increases in cash, trade accounts receivable, and contract assets, while total liabilities grew to **$27.2 million** and total stockholders' equity rose to **$78.1 million** Balance Sheet Summary (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $41,970 | $38,358 | | Total assets | $105,365 | $101,774 | | Total current liabilities | $16,401 | $13,971 | | Total liabilities | $27,233 | $25,275 | | Total stockholders' equity | $78,132 | $76,499 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended March 31, 2025, the company generated **$33.3 million** in revenue, up from **$27.3 million**, with operating income of **$0.15 million**, a significant improvement from a **$3.9 million** operating loss, and a net loss narrowed dramatically to **$81 thousand** from **$4.0 million** year-over-year Statement of Operations Summary (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $33,269 | $27,334 | | Total operating expenses | $33,119 | $31,255 | | Income (loss) from operations | $150 | $(3,921) | | Net loss | $(81) | $(4,017) | | Net loss per share (Basic & Diluted) | $0.00 | $(0.05) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash provided by operating activities was **$2.9 million**, a strong reversal from **$0.1 million**, with net cash used in investing activities decreasing to **$1.5 million**, and the company ending the quarter with **$10.0 million** in cash and cash equivalents, up from **$3.8 million** Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,904 | $121 | | Net cash used in investing activities | $(1,450) | $(3,652) | | Net cash used in financing activities | $(765) | $(14) | | Net increase (decrease) in cash | $689 | $(3,545) | | Cash and cash equivalents at end of period | $9,981 | $3,788 | [Reconciliation of Non-GAAP Measures](index=2&type=section&id=Reconciliation%20of%20Non-GAAP%20Results) The company provides reconciliations for its non-GAAP financial measures, Adjusted EBITDA and Adjusted Net Income, to the most comparable GAAP measure, Net Loss, with Q1 2025 net loss of **$0.1 million** adjusted for items like stock-based compensation (**$1.7 million**) and depreciation & amortization (**$1.5 million**) to arrive at an Adjusted EBITDA of **$3.3 million** and Adjusted Net Income of **$1.2 million** - The company uses non-GAAP measures like **Adjusted EBITDA** and **Adjusted Net Income** to evaluate core operating performance, excluding items such as interest, taxes, depreciation, amortization, and stock-based compensation[6](index=6&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(81) | $(4,017) | | Adjustments (Taxes, Interest, D&A, etc.) | $3,403 | $2,787 | | **Adjusted EBITDA** | **$3,322** | **$(1,230)** | Reconciliation of Net Loss to Adjusted Net Income (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss | $(81) | $(4,017) | | Adjustments (Stock comp, tax adj., etc.) | $1,293 | $979 | | **Adjusted net income (loss)** | **$1,212** | **$(3,038)** | [Historical Revenue Breakdown](index=8&type=section&id=Quarterly%20and%20Annual%20Revenues) Historical data shows a clear strategic shift towards healthcare services, with total healthcare revenue consistently growing to **$33.2 million** in Q1 2025, while revenue from 'Customer Care / Outsourced Services' has been systematically reduced, reflecting the company's focus on its core healthcare payment integrity business Q1 2025 Revenue Breakdown (in thousands) | Service Line | Revenue | | :--- | :--- | | Eligibility-based | $16,082 | | Claims-based | $17,104 | | **Healthcare Total** | **$33,186** | | Customer Care / Outsourced Services | $83 | | **Total Revenue** | **$33,269** | - Historical data from 2022 to 2024 shows a consistent increase in **total healthcare revenue year-over-year**, from **$94.7 million in 2022 to $118.3 million in 2024**[22](index=22&type=chunk) - Revenue from non-healthcare services like 'Customer Care / Outsourced Services' has steadily declined from **$14.3 million in 2022 to $4.7 million in 2024**, and only **$83 thousand in Q1 2025**, indicating a successful transition to a pure-play healthcare company[22](index=22&type=chunk)

Financial Performance - For the year ended December 31, 2024, the company generated approximately $123.0 million in revenues, with a net loss of $9.9 million and adjusted EBITDA of $4.4 million[22]. - The company's eligibility services represented 50% of total revenue for the year ended December 31, 2024, down from 54% in 2023[39]. - A substantial majority of the company's revenues are derived from a limited number of large clients, and any deterioration in these relationships could materially harm revenues[88]. - Revenues depend on the scope of potentially improper claims that can be audited, and restrictions on these claims could adversely affect revenue generation[92]. - The U.S. federal government accounts for a significant portion of revenues, and any loss of business from federal contracts could lead to a substantial decrease in revenues[96]. Market Trends - U.S. healthcare spending grew by 7.5% to $4.9 trillion in 2023, projected to grow at an average annual rate of 5.6% from 2023 to 2032[23]. - Federal spending on Medicare increased by 8.1% to $1,029.8 billion in 2023, projected to grow at an average rate of 7.8% per year from 2025 to 2031[24]. Strategic Initiatives - The company plans to pursue strategic alliances and acquisitions to enhance existing capabilities and enter new markets[36]. - The company has expanded its sales and marketing team to better capitalize on new business opportunities and align with operational growth[59]. - The company may pursue strategic transactions, including acquisitions or divestitures, which could strain resources and affect financial results[124]. Regulatory and Compliance Risks - The company is subject to extensive regulations regarding the use and disclosure of confidential personal information, which could lead to significant liabilities and expenses if not complied with[120]. - Future legislative or regulatory changes could materially affect the company’s business and operations, particularly in the Medicare program[119]. - The company’s legacy student loan recovery business was subject to various state and federal regulations, which may still impose liabilities despite exiting the business in 2022[121]. Operational Challenges - The company faces significant risks related to long implementation periods for new contracts, which can lead to substantial upfront expenses before revenue is generated[87]. - Most contracts allow clients to unilaterally terminate or change the amount of work available, leading to potential revenue instability[90]. - The company operates in a highly competitive market, and failure to maintain service levels could result in loss of contracts and negatively impact financial performance[91]. - The company may face challenges in managing growth effectively, which could increase expenses and negatively impact results[97]. - The ability to hire and retain specialized employees is critical for growth in the healthcare business, and failure to do so could hinder revenue growth[99]. Technology and Security - The company maintains a comprehensive enterprise-wide information security program certified by third-party auditors, ensuring compliance with industry standards[74]. - The company utilizes encryption technologies certified to FIPS 140-2 to protect sensitive data, ensuring compliance with HIPAA and related laws[60]. - The company’s IT systems are critical for operations, and vulnerabilities could lead to significant operational impairments and cybersecurity risks[108]. - The company’s data security measures are crucial, and any breaches could result in reputational damage and financial losses[107]. - The company holds Authorization to Operate (ATO) licenses for RAC Regions 1, 2, and 5, and is in the process of obtaining an ATO for the MSP contract[73]. Human Resources - As of December 31, 2024, the company had 964 employees, all based in the United States, with no union membership[81]. - Retaining key management and employees is critical for future success, as their loss could adversely affect the company's financial condition[126]. Financial Risks - Interest rate changes could impact annual interest expenses; a 100 basis point increase would raise expenses by approximately $80,000[225]. - Future investments of excess cash may be affected by market interest rates, influencing interest income and expenses[226]. - The company relies on third-party providers for software and network services, and any failure in their performance could adversely affect business operations[110]. Litigation and Governance - Ongoing litigation may lead to substantial costs, potentially impacting business operations and financial performance[125]. - Anti-takeover provisions in corporate governance documents may deter beneficial acquisitions and affect stockholder interests[127]. Stock Performance - The price of the common stock has fluctuated between a low of $0.54 on June 1, 2020, and a high of $14.09 on March 4, 2013, indicating significant volatility since the IPO in August 2012[122]. - Significant stockholders include Prescott Group Management (20.2%), First Light Asset Management (15.4%), and others, collectively influencing corporate decisions[123].

Revenue Performance - Fourth quarter 2024 healthcare revenues were $34.3 million, an increase of 10.3% from $31.1 million in the prior year period[3]. - Full year 2024 revenues totaled $123.0 million, up 8.9% from $113.7 million in the prior year[5]. - The company achieved an 18% increase in healthcare revenue from commercial clients, which now represent over 57% of total healthcare revenue[8]. - For the year ended December 31, 2024, total healthcare revenue reached $118,291,000, representing an increase from $106,444,000 in 2023, which is a growth of approximately 11.3%[29]. - Claims-based revenue for the year ended December 31, 2024, was $56,431,000, compared to $45,265,000 in 2023, reflecting a growth of approximately 25%[29]. - The healthcare total revenue for the three months ended December 31, 2024, was $34,279,000, up from $31,133,000 in 2023, indicating a growth of approximately 10.3%[29]. - The company reported a total of $34,766,000 in revenue for the year ended December 31, 2024, which is an increase from $32,567,000 in 2023, reflecting a growth of about 6.7%[29]. - The eligibility-based revenue for the year ended December 31, 2024, was $61,860,000, compared to $61,179,000 in 2023, showing a slight increase of about 1.1%[29]. - Total revenue for the three months ended June 30, 2024, was $29,362,000, an increase from $25,485,000 in the same period of 2023, marking a growth of about 7.4%[29]. - For the three months ended March 31, 2024, total revenue was $27,334,000, compared to $25,729,000 in the same period of 2023, showing an increase of about 6.2%[29]. - For the three months ended September 30, 2024, eligibility-based revenue was $16,070,000, up from $18,165,000 in the same period of 2023, indicating a decrease of about 6%[29]. Financial Performance - Net loss for the fourth quarter of 2024 was $0.5 million, or $(0.01) per diluted share, compared to net income of $1.3 million, or $0.02 per diluted share in the prior year[4]. - Adjusted EBITDA for the fourth quarter was $3.1 million, down 31.1% from $4.5 million in the prior year[4]. - Full year adjusted EBITDA was $4.4 million, an increase of 29.4% from $3.4 million in the prior year[6]. - Adjusted EBITDA for the year ended December 31, 2024, was $4,372 million, compared to $3,393 million in 2023, representing a 28.9% increase[26]. - The diluted adjusted earnings per share for the three months ended December 31, 2024, was $0.02, down from $0.05 in the same quarter of 2023[28]. - Total operating expenses for the year ended December 31, 2024, were $132,481 million, compared to $119,871 million in 2023, marking a 10.5% increase[22]. - Operating expenses for the three months ended December 31, 2024, rose to $35,455 million, compared to $30,657 million in the prior year, reflecting a 15.8% increase[22]. Cash and Assets - Cash, cash equivalents, and restricted cash as of December 31, 2024, were approximately $9.3 million, up from $7.3 million in the prior year[9]. - The company had cash, cash equivalents, and restricted cash of $9,292 million at the end of the year, up from $7,333 million at the beginning of the year[24]. - Total assets as of December 31, 2024, were $101.8 million, compared to $99.0 million in the prior year[20]. - Cash provided by operating activities for the year ended December 31, 2024, was $6,178 million, an increase from $3,860 million in 2023[24]. - The company reported a net cash used in investing activities of $(7,010) million for the year ended December 31, 2024, compared to $(4,140) million in 2023[24]. Future Guidance - The company provided full-year 2025 revenue guidance in the range of $131 million to $135 million, and adjusted EBITDA guidance of $8 million to $9 million[10]. - The company has completed over 100 commercial implementations since 2022, including 42 in 2024[8].

Group 1 - The focus has shifted towards offshore drilling, supply industry, and shipping, including tankers, containers, and dry bulk [1] - The fuel cell industry is being monitored as it is still in its early stages of development [1] Group 2 - The individual has extensive experience in navigating significant market events such as the dotcom bubble, the aftermath of the World Trade Center attacks, and the subprime crisis [2] - The individual has a background in auditing with PricewaterhouseCoopers before transitioning to day trading [2]