Performant Financial (PFMT)2025-05-08 22:00Financial 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]