Performant Financial (US:PFMT)2021-05-14 02:53Financial Data and Key Metrics Changes - For Q1 2021, the company reported revenues of over $31 million, a decrease from $45.9 million in the prior year period due to the impact of the COVID-19 pandemic [7][12] - Adjusted EBITDA for Q1 2021 was essentially breakeven, compared to $7.1 million in the prior year period, reflecting the ongoing challenges from the pandemic [7][12] - The company anticipates achieving annual healthcare revenue in the range of $83 million to $90 million and positive EBITDA for 2021, with over 95% of revenue expectations contracted [8][17] Business Line Data and Key Metrics Changes - Claims-based revenue for Q1 2021 was over $5.3 million, down from $6.6 million in Q1 2020 but up from $4.7 million in Q4 2020, indicating a potential upward trend as activities normalize [13] - Revenue from eligibility services in Q1 2021 was approximately $8 million, down from $10.9 million in Q1 2020 and lower than $14 million in Q4 2020, with expectations for growth as programs ramp up [14][16] - Total non-healthcare recovery revenue in Q1 2021 was $14.5 million, while customer care outsourced services revenues were $3.6 million, both lower than the prior year period [20] Market Data and Key Metrics Changes - The healthcare payment integrity market is expected to grow at a mid-single-digit rate, with the company focusing on taking market share from incumbents like HMS and Cotiviti [33][34] - The company has launched 10 new healthcare programs in Q4 2020 and 5 additional programs in Q1 2021, indicating a strong pipeline for future growth [22][51] Company Strategy and Development Direction - The company is shifting its focus entirely to the healthcare market, winding down non-healthcare recovery operations and dedicating resources to healthcare payment integrity [5][6] - The strategy includes maintaining customer care outsourced services operations to leverage growth opportunities through integration with healthcare offerings [5][20] - The company plans to continue investing in technology and attracting industry talent to scale its healthcare business [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the healthcare business, citing strong visibility into future revenues due to contracted expectations [30] - The company anticipates significant growth in the second half of 2021 as existing programs expand and new programs are implemented [17][19] - Management noted that the competitive landscape is based on quality rather than pricing, emphasizing the importance of delivering superior results to clients [42][46] Other Important Information - The company has accrued a $3.3 million liability against revenues due to discrete exposure on eligibility work, which is expected to close out in the coming year [15] - Operating expenses in Q1 2021 were $34.4 million, reflecting a decrease due to cost reductions in response to the pandemic [21] Q&A Session Summary Question: Can you walk me through the timeline for new program implementations? - The company expects all new programs to be fully operational by the end of 2021, with material impacts anticipated in 2022 [29] Question: How confident is the company in its revenue guidance for 2021 and beyond? - The company has strong visibility into future revenues, with over 95% contracted for 2021, and anticipates sustainable double-digit growth rates in the future [30][31] Question: What is the growth rate of the end market, and is the company taking market share? - The healthcare market is growing at mid-single digits, and the company is successfully taking market share from incumbents [33][34] Question: How does the company view pricing competition in the industry? - The company believes that competition is based on quality rather than pricing, as clients prioritize results over lower fees [42][46] Question: How easy is it to expand within the existing customer base? - Expansion opportunities exist within nearly all clients, with a significant portion of new programs being expansions rather than new clients [51]