Business Wire | Nov 9, 2021 04:06PM EST

Performant Financial Corporation Announces Financial Results for Third Quarter 2021

Nov. 09, 2021

LIVERMORE, Calif.--(BUSINESS WIRE)--Nov. 09, 2021--Performant Financial Corporation (Nasdaq: PFMT), (the "Company"), a leading provider of technology-enabled audit, recovery, and related analytics services in the United States with a focus in the healthcare payment integrity services industry, today reported the following financial results for its third quarter ended September 30, 2021:

Third Quarter Financial Highlights

* Total revenues of $28.6 million, compared to revenues of $36.2 million in the prior year period. * Net loss of approximately $1.7 million, or $(0.03) per diluted share, compared to net income of $2.0 million, or $0.04 per diluted share, in the prior year period. * Adjusted net income was $0.1 million, or $0.00 per diluted share, compared to adjusted net income of $3.2 million or $0.06 per diluted share in the prior year period. * Adjusted EBITDA of $2.7 million, compared to $3.8 million in the prior year period.

Third Quarter 2021 Results

Total revenues in the third quarter were $28.6 million, a decrease of $7.6 million, or 21% from revenues of $36.2 million in the prior year period. Healthcare revenues in the third quarter of 2021 were $20.0 million, an increase of $2.4 million, or 14%, from revenues of $17.6 million in the prior year period. Within Healthcare, claims-based services revenue in the third quarter of 2021 was $7.3 million, while revenue from eligibility-based services in the third quarter was $12.7 million.

Recovery revenues in the third quarter were $5.5 million, a decrease of $9.9 million, or 64%, from revenues of $15.4 million in the prior year period. Revenues from our Customer Care / Outsourced Services in the third quarter were $3.1 million, a decrease of $0.1 million, or 3%, from revenues of $3.2 million in the prior year period.

Net loss for the third quarter was $1.7 million, or $(0.03) per share on a diluted basis, compared to net income of $2.0 million, or $0.04 per share on a diluted basis, in the prior year period. Adjusted net income for the third quarter was $0.1 million, or $0.00 per share on a diluted basis, compared to adjusted net income of $3.2 million, or $0.06 per diluted share, in the prior year period. Adjusted EBITDA for the third quarter was $2.7 million as compared to $3.8 million in the prior year period.

As of September 30, 2021, the Company had cash, cash equivalents, and restricted cash of approximately $53.5 million.

Equity Offering

On August 20, 2021, the Company completed a registered public offering of 12,103,750 shares of common stock, which resulted in the Company receiving net proceeds of approximately $42.6 million. The Company intends to use the net proceeds from this offering for working capital and other general corporate purposes, which may include the repayment of outstanding indebtedness.

Business Commentary and Outlook

"Our third quarter showcased the strength of our technology platform and demonstrated our ability to continue to increase our healthcare market share by winning business away from legacy providers, despite a challenging operating environment. From a macro perspective, core hospital utilization rates have still not returned to pre-COVID levels, and the delays that have impacted the healthcare industry are showing flow-down impact on our operations. In light of these delays amongst other movements we've updated our 2021 healthcare revenue guidance to a range of $77 - $80 million with nearly double digit EBITDA for the full year," stated Lisa Im, CEO of Performant.

Note Regarding Use of Non-GAAP Financial Measures

In this press release, to supplement our consolidated financial statements, the Company presents adjusted EBITDA, adjusted net income (loss), and adjusted net income (loss) per diluted share. These measures are not in accordance with accounting principles generally accepted in the United States of America (US GAAP) and accordingly reconciliations of adjusted EBITDA and adjusted net income (loss) to net income (loss) determined in accordance with US GAAP are included in the "Reconciliation of Non-GAAP Results" table at the end of this press release. We have included adjusted EBITDA and adjusted net income (loss) in this press release because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends and to prepare and approve our annual budget. Accordingly, we believe that adjusted EBITDA and adjusted net income (loss) provide useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and board of directors. Our use of adjusted EBITDA and adjusted net income (loss) has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under US GAAP. In particular, many of the adjustments to our US GAAP financial measures reflect the exclusion of items, specifically interest, tax and depreciation and amortization expenses, equity-based compensation expense and certain other non-operating expenses, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be calculated differently from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.

Earnings Conference Call

The Company will hold a conference call to discuss its third quarter 2021 results today at 5:00 p.m. Eastern. A live webcast of the call may be accessed on the Investor Relations section of the Company's website at investors.performantcorp.com. The conference call is also available by dialing 877-344-8082 (domestic) or 213-992-4618 (international).

A replay of the call will be available on the Company's website or by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 147424. The telephonic replay will be available approximately three hours after the call, through November 16, 2021.

About Performant Financial Corporation

Performant provides technology-enabled audit, recovery, and analytics services in the United States with a focus in the healthcare payment integrity industry. Performant works with healthcare payers through claims auditing and eligibility-based (also known as coordination-of-benefits) services to identify improper payments. The Company engages clients in both government and commercial markets. The Company also has a call center which serves clients with complex consumer engagement needs. Clients of the Company typically operate in complex and highly regulated environments and contract for their payment integrity needs in order to reduce losses on improper healthcare payments.

Powered by a proprietary analytic platform and workflow technology, Performant also provides professional services related to the recovery effort, including reporting capabilities, support services, customer care and stakeholder training programs meant to mitigate future instances of improper payments. Founded in 1976, Performant is headquartered in Livermore, California.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for revenues, net income (loss), and adjusted EBITDA in 2020 and beyond. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the material adverse impact of the COVID-19 pandemic on our business, results of operations and financial condition as well as on the business operations and financial performance of many of our customers, that the Company may not have sufficient cash flows from operations to fund ongoing operations and other liquidity needs, that the Company's indebtedness could adversely affect its business and financial condition and could reduce the funds available for other purposes and the failure to comply with covenants contained in its credit agreement could result in an event of default that could adversely affect its results of operations, that the Company faces a long period to implement a new contract which may result in the incurring of expenses before the receipt of revenues from new client relationships, the high level of revenue concentration among the Company's largest customers and any termination in the Company's relationship with any of our significant clients would result in a material decline in our revenues, that many of the Company's customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes and may be changed or terminated unilaterally and on short notice, that the Company may not be able to manage its potential growth effectively, that the Company faces significant competition in all of its markets, that continuing limitations on the scope of our audit activity under our RAC contracts have significantly reduced our revenue opportunities with this client, that the U.S. federal government accounts for a significant portion of the Company's revenues, that future legislative and regulatory changes may have significant effects on the Company's business, that failure of the Company's or third parties' operating systems and technology infrastructure could disrupt the operation of the Company's business and the threat of breach of the Company's security measures or failure or unauthorized access to confidential data that the Company possesses. More information on potential factors that could affect the Company's financial condition and operating results is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's annual report on Form 10-K for the year ended December 31, 2020 and subsequently filed reports on Forms 10-Q and 8-K. The forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements to conform these statements to actual results or revised expectations.

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except per share amounts)

September December 30, 31, 2021 2020

(Unaudited)

Assets

Current assets:

Cash and cash equivalents $ 51,323 $ 16,043

Restricted cash 2,203 2,253

Trade accounts receivable, net of allowance for 18,203 23,216 doubtful accounts of $49 and $49, respectively

Contract assets 4,950 4,466

Prepaid expenses and other current assets 2,539 3,784

Income tax receivable 3,453 4,758

Total current assets 82,671 54,520

Property, equipment, and leasehold improvements, net 16,280 17,497

Identifiable intangible assets, net - 689

Goodwill 47,372 47,372

Right-of-use assets 3,630 5,043

Other assets 986 1,106

Total assets $ 150,939 $ 126,227

Liabilities and Stockholders' Equity

Current liabilities:

Current maturities of notes payable to related party,net of unamortized debt issuance costs of $4,500 and $ 47,925 $ 59,957 $906, respectively

Accrued salaries and benefits 5,060 8,799

Accounts payable 829 407

Other current liabilities 3,295 3,841

Deferred revenue - 867

Estimated liability for appeals, disputes, and 2,254 1,014 refunds

Lease liabilities 2,105 2,327

Total current liabilities 61,468 77,212

Notes payable to related party, net of currentportion and unamortized debt issuance costs of $0 and - - $0, respectively

Lease liabilities 2,029 3,442

Other liabilities 3,055 3,593

Total liabilities 66,552 84,247

Commitments and contingencies (note 3 and note 4)

Stockholders' equity:

Common stock, $0.0001 par value. Authorized, 500,000shares at September 30, 2021 and December 31, 2020respectively; issued and outstanding 69,144 and 7 5 54,764 shares at September 30, 2021 and December 31,2020, respectively

Additional paid-in capital 132,990 82,933

Accumulated deficit (48,610 ) (40,958 )

Total stockholders' equity 84,387 41,980

Total liabilities and stockholders' equity $ 150,939 $ 126,227

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Revenues

$

28,582

$

36,228

$

92,814

$

115,901

Operating expenses:

Salaries and benefits

19,686

23,522

67,071

74,493

Other operating expenses

8,781

10,813

29,896

32,075

Impairment of goodwill

-

-

-

27,000

Total operating expenses

28,467

34,335

96,967

133,568

Income (loss) from operations

115

1,893

(4,153

)

(17,667

)

Gain on sale of certain recovery contracts

579

-

2,428

-

Interest expense

(2,394

)

(1,569

)

(5,866

)

(5,827

)

Interest income

-

6

-

18

Income (loss) before provision for (benefit from) income taxes

(1,700

)

330

(7,591

)

(23,476

)

Provision for (benefit from) income taxes

(9

)

(1,644

)

61

(5,767

)

Net income (loss)

$

(1,691

)

$

1,974

$

(7,652

)

$

(17,709

)

Net income (loss) per share

Basic

$

(0.03

)

$

0.04

$

(0.13

)

$

(0.33

)

Diluted

$

(0.03

)

$

0.04

$

(0.13

)

$

(0.33

)

Weighted average shares

Basic

62,127

54,684

57,512

54,299

Diluted

62,127

54,710

57,512

54,299

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Revenues $ 28,582 $ 36,228 $ 92,814 $ 115,901

Operating expenses:

Salaries and benefits 19,686 23,522 67,071 74,493

Other operating expenses 8,781 10,813 29,896 32,075

Impairment of goodwill - - - 27,000

Total operating expenses 28,467 34,335 96,967 133,568

Income (loss) from 115 1,893 (4,153 ) (17,667 )operations

Gain on sale of certain 579 - 2,428 - recovery contracts

Interest expense (2,394 ) (1,569 ) (5,866 ) (5,827 )

Interest income - 6 - 18

Income (loss) beforeprovision for (benefit (1,700 ) 330 (7,591 ) (23,476 )from) income taxes

Provision for (benefit (9 ) (1,644 ) 61 (5,767 )from) income taxes

Net income (loss) $ (1,691 ) $ 1,974 $ (7,652 ) $ (17,709 )

Net income (loss) per share

Basic $ (0.03 ) $ 0.04 $ (0.13 ) $ (0.33 )

Diluted $ (0.03 ) $ 0.04 $ (0.13 ) $ (0.33 )

Weighted average shares

Basic 62,127 54,684 57,512 54,299

Diluted 62,127 54,710 57,512 54,299

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended September 30,

2021

2020

Cash flows from operating activities:

Net loss

$

(7,652

)

$

(17,709

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Impairment of long-lived assets

718

88

Impairment of goodwill

-

27,000

Depreciation and amortization

3,883

4,072

Right-of-use assets amortization

1,413

1,886

Stock-based compensation

1,963

1,997

Interest expense from debt issuance costs

2,453

1,145

Earnout mark-to-market

-

(162

)

Gain on sale of certain recovery contracts

(2,428

)

-

Changes in operating assets and liabilities:

Trade accounts receivable

4,270

4,756

Contract assets

(484

)

(1,523

)

Prepaid expenses and other current assets and other assets

1,245

298

Income tax receivable

1,305

(3,555

)

Other assets

120

-

Accrued salaries and benefits

(3,739

)

(1,081

)

Accounts payable

422

(1,160

)

Deferred revenue and other current liabilities

(1,363

)

1,664

Estimated liability for appeals, disputes, and refunds

1,240

15

Lease liabilities

(1,635

)

(1,907

)

Other liabilities

(445

)

2,168

Net cash provided by operating activities

1,286

17,992

Cash flows from investing activities:

Purchase of property, equipment, and leasehold improvements

(2,695

)

(2,862

)

Proceeds from sale of certain recovery contracts

3,171

-

Net cash provided by (used) in investing activities

476

(2,862

)

Cash flows from financing activities:

Repayment of notes payable

(8,438

)

(2,588

)

Debt issuance costs paid

(150

)

-

Taxes paid related to net share settlement of stock awards

(633

)

(260

)

Proceeds from exercise of stock options

41

-

Proceeds from public offering, net of costs

42,648

-

Net cash provided by (used in) financing activities

33,468

(2,848

)

Net increase in cash, cash equivalents and restricted cash

35,230

12,282

Cash, cash equivalents and restricted cash at beginning of period

18,296

4,995

Cash, cash equivalents and restricted cash at end of period

$

53,526

$

17,277

Reconciliation of the Consolidated Statements of Cash Flows to the

Consolidated Balance Sheets:

Cash and cash equivalents

$

51,323

$

15,655

Restricted cash

2,203

1,622

Total cash, cash equivalents and restricted cash at end of period

$

53,526

$

17,277

Non-cash financing activities:

Recognition of earnout shares issued

$

801

$

-

Recognition of warrants associated with notes payable

$

5,237

$

-

Supplemental disclosures of cash flow information:

Cash paid (received) for income taxes

$

(683

)

$

(2,280

)

Cash paid for interest

$

3,413

$

4,616

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended September 30,

2021 2020

Cash flows from operating activities:

Net loss $ (7,652 ) $ (17,709 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Impairment of long-lived assets 718 88

Impairment of goodwill - 27,000

Depreciation and amortization 3,883 4,072

Right-of-use assets amortization 1,413 1,886

Stock-based compensation 1,963 1,997

Interest expense from debt issuance costs 2,453 1,145

Earnout mark-to-market - (162 )

Gain on sale of certain recovery contracts (2,428 ) -

Changes in operating assets and liabilities:

Trade accounts receivable 4,270 4,756

Contract assets (484 ) (1,523 )

Prepaid expenses and other current assets and other 1,245 298 assets

Income tax receivable 1,305 (3,555 )

Other assets 120 -

Accrued salaries and benefits (3,739 ) (1,081 )

Accounts payable 422 (1,160 )

Deferred revenue and other current liabilities (1,363 ) 1,664

Estimated liability for appeals, disputes, and refunds 1,240 15

Lease liabilities (1,635 ) (1,907 )

Other liabilities (445 ) 2,168

Net cash provided by operating activities 1,286 17,992

Cash flows from investing activities:

Purchase of property, equipment, and leasehold (2,695 ) (2,862 )improvements

Proceeds from sale of certain recovery contracts 3,171 -

Net cash provided by (used) in investing activities 476 (2,862 )

Cash flows from financing activities:

Repayment of notes payable (8,438 ) (2,588 )

Debt issuance costs paid (150 ) -

Taxes paid related to net share settlement of stock (633 ) (260 )awards

Proceeds from exercise of stock options 41 -

Proceeds from public offering, net of costs 42,648 -

Net cash provided by (used in) financing activities 33,468 (2,848 )

Net increase in cash, cash equivalents and restricted 35,230 12,282 cash

Cash, cash equivalents and restricted cash at beginning 18,296 4,995 of period

Cash, cash equivalents and restricted cash at end of $ 53,526 $ 17,277 period



Reconciliation of the Consolidated Statements of CashFlows to the

Consolidated Balance Sheets:

Cash and cash equivalents $ 51,323 $ 15,655

Restricted cash 2,203 1,622

Total cash, cash equivalents and restricted cash at end $ 53,526 $ 17,277 of period



Non-cash financing activities:

Recognition of earnout shares issued $ 801 $ -

Recognition of warrants associated with notes payable $ 5,237 $ -

Supplemental disclosures of cash flow information:

Cash paid (received) for income taxes $ (683 ) $ (2,280 )

Cash paid for interest $ 3,413 $ 4,616

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Adjusted EBITDA:

Net income (loss)

$

(1,691

)

$

1,974

$

(7,652

)

$

(17,709

)

Provision for (benefit from) income taxes

(9

)

(1,644

)

61

(5,767

)

Interest expense (1)

2,394

1,569

5,866

5,827

Interest income

-

(6

)

-

(18

)

Stock-based compensation

540

657

1,963

1,997

Depreciation and amortization

843

1,277

3,883

4,072

Impairment of goodwill (4)

-

-

-

27,000

Impairment of long-lived assets

-

-

636

-

Earnout mark-to-market (5)

-

-

-

(162

)

Severance expenses (6)

380

-

1,876

-

Non-core operating expenses (7)

775

-

2,683

-

Gain on sale of certain recovery contracts (8)

(579

)

-

(2,428

)

-

Adjusted EBITDA

$

2,653

$

3,827

$

6,888

$

15,240

Three Months Ended September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Adjusted Net Income (Loss):

Net income (loss)

$

(1,691

)

$

1,974

$

(7,652

)

$

(17,709

)

Stock-based compensation

540

657

1,963

1,997

Amortization of intangible assets (2)

72

58

689

176

Amortization of debt issuance costs (3)

1,320

249

2,453

1,145

Impairment of goodwill (4)

-

-

-

27,000

Impairment of long-lived assets

-

-

636

-

Earnout mark-to-market (5)

-

-

-

(162

)

Severance expenses (6)

380

-

1,876

-

Non-core operating expenses (7)

775

-

2,683

-

Gain on sale of certain recovery contracts (8)

(579

)

-

(2,428

)

-

Tax adjustments (9)

(690

)

265

(2,165

)

(8,293

)

Adjusted net income (loss)

$

127

$

3,203

$

(1,945

)

$

4,154

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Adjusted EBITDA:

Net income (loss) $ (1,691 ) $ 1,974 $ (7,652 ) $ (17,709 )

Provision for (benefit (9 ) (1,644 ) 61 (5,767 )from) income taxes

Interest expense ^(1) 2,394 1,569 5,866 5,827

Interest income - (6 ) - (18 )

Stock-based compensation 540 657 1,963 1,997

Depreciation and 843 1,277 3,883 4,072 amortization

Impairment of goodwill ^(4) - - - 27,000

Impairment of long-lived - - 636 - assets

Earnout mark-to-market ^(5) - - - (162 )

Severance expenses ^(6) 380 - 1,876 -

Non-core operating expenses 775 - 2,683 - ^ (7)

Gain on sale of certain (579 ) - (2,428 ) - recovery contracts ^(8)

Adjusted EBITDA $ 2,653 $ 3,827 $ 6,888 $ 15,240

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Adjusted Net Income (Loss):

Net income (loss) $ (1,691 ) $ 1,974 $ (7,652 ) $ (17,709 )

Stock-based compensation 540 657 1,963 1,997

Amortization of intangible 72 58 689 176 assets ^(2)

Amortization of debt 1,320 249 2,453 1,145 issuance costs ^(3)

Impairment of goodwill ^(4) - - - 27,000

Impairment of long-lived - - 636 - assets

Earnout mark-to-market ^(5) - - - (162 )

Severance expenses ^(6) 380 - 1,876 -

Non-core operating expenses 775 - 2,683 - ^ (7)

Gain on sale of certain (579 ) - (2,428 ) - recovery contracts ^(8)

Tax adjustments ^(9) (690 ) 265 (2,165 ) (8,293 )

Adjusted net income (loss) $ 127 $ 3,203 $ (1,945 ) $ 4,154

Three Months Ended

September 30,

Nine Months Ended

September 30,

2021

2020

2021

2020

(in thousands)

(in thousands)

Adjusted Net Income (Loss) Per Diluted Share:

Net income (loss)

$

(1,691

)

$

1,974

$

(7,652

)

$

(17,709

)

Plus: Adjustment items per reconciliation of adjusted net income (loss)

1,818

1,229

5,707

21,863

Adjusted net income (loss)

$

127

$

3,203

$

(1,945

)

$

4,154

Adjusted net income (loss) per diluted share

$

-

$

0.06

$

(0.03

)

$

0.08

Diluted average shares outstanding (10)

67,948

54,710

57,512

54,363

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

(in thousands) (in thousands)

Adjusted Net Income (Loss) Per Diluted Share:

Net income (loss) $ (1,691 ) $ 1,974 $ (7,652 ) $ (17,709 )

Plus: Adjustment items perreconciliation of adjusted 1,818 1,229 5,707 21,863 net income (loss)

Adjusted net income (loss) $ 127 $ 3,203 $ (1,945 ) $ 4,154

Adjusted net income (loss) $ - $ 0.06 $ (0.03 ) $ 0.08 per diluted share

Diluted average shares 67,948 54,710 57,512 54,363 outstanding ^(10)

(1)

Represents interest expense and amortization of debt issuance costs related to our Credit Agreement.

(2)

Represents amortization of intangibles related to the acquisition of Performant by an affiliate of Parthenon Capital Partners in 2004.

(3)

Represents amortization of debt issuance costs related to our Credit Agreement.

(4)

Represents a noncash goodwill impairment charge in 2020 mainly due to the decrease of our market capitalization in the first half of 2020.

(5)

Represents the change from prior reporting periods in the fair value of the potential earnout consideration payable to ECMC group in connection with the Premiere acquisition.

(6)

Represents severance expenses incurred in connection with a reduction in force for our non-healthcare recovery services.

(7)

Represents professional fees related to strategic corporate development activities.

(8)

Represents gain on the sale of certain non-healthcare recovery contracts in 2021.

(9)

Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.

(10)

While net loss for the three months ended September 30, 2021 is ($1,691), the computation of adjusted net income (loss) results in adjusted net income of $127. Therefore, the calculation of the adjusted earnings per diluted share for the three months ended September 30, 2021 includes dilutive common share equivalents of 5,821 added to the basic weighted average shares of 62,127. While net income (loss) for the nine months ended September 30, 2020 was ($17,709), the computation of adjusted net income (loss) results in adjusted net income of $4,154. Therefore, the calculation of the adjusted net income per diluted share for the nine months ended September 30, 2020 includes dilutive common share equivalents of 64 added to the basic weighted average shares of 54,299.

(1) Represents interest expense and amortization of debt issuance costs related to our Credit Agreement.

(2) Represents amortization of intangibles related to the acquisition of Performant by an affiliate of Parthenon Capital Partners in 2004.

(3) Represents amortization of debt issuance costs related to our Credit Agreement.

(4) Represents a noncash goodwill impairment charge in 2020 mainly due to the decrease of our market capitalization in the first half of 2020.

Represents the change from prior reporting periods in the fair value of(5) the potential earnout consideration payable to ECMC group in connection with the Premiere acquisition.

(6) Represents severance expenses incurred in connection with a reduction in force for our non-healthcare recovery services.

(7) Represents professional fees related to strategic corporate development activities.

(8) Represents gain on the sale of certain non-healthcare recovery contracts in 2021.

(9) Represents tax adjustments assuming a marginal tax rate of 27.5% at full profitability.

While net loss for the three months ended September 30, 2021 is ($1,691), the computation of adjusted net income (loss) results in adjusted net income of $127. Therefore, the calculation of the adjusted earnings per diluted share for the three months ended September 30, 2021 includes dilutive common share equivalents of 5,821 added to the basic weighted(10) average shares of 62,127. While net income (loss) for the nine months ended September 30, 2020 was ($17,709), the computation of adjusted net income (loss) results in adjusted net income of $4,154. Therefore, the calculation of the adjusted net income per diluted share for the nine months ended September 30, 2020 includes dilutive common share equivalents of 64 added to the basic weighted average shares of 54,299.

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

We are providing the following historical breakdown of the quarterly and annual revenue contributions under the new contribution breakdowns of our healthcare revenue results for the years ended December 31, 2019 and December 31, 2020, and six months ended June 30, 2021:

For the Three Months Ended

For the Year Ended

March 31, 2019

June 30, 2019

September 30, 2019

December 31, 2019

December 31, 2019

(in thousands)

Eligibility-based

$

7,742

$

7,042

$

8,005

$

9,987

$

32,776

Claims-based

1,278

2,221

2,752

4,301

10,552

Healthcare Total

9,020

9,263

10,757

14,288

43,328

Recovery

21,375

22,107

20,936

25,208

89,626

Customer Care / Outsourced Services

4,481

4,460

4,210

4,327

17,478

Total

$

34,876

$

35,830

$

35,903

$

43,823

$

150,432

PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES

Reconciliation of Non-GAAP Results

(In thousands, except per share amount)

(Unaudited)

We are providing the following historical breakdown of the quarterly and annualrevenue contributions under the new contribution breakdowns of our healthcarerevenue results for the years ended December 31, 2019 and December 31, 2020,and six months ended June 30, 2021:

For the Three Months Ended For the Year Ended

March 31, June 30, September December December 2019 2019 30, 2019 31, 2019 31, 2019

(in thousands)

Eligibility-based $ 7,742 $ 7,042 $ 8,005 $ 9,987 $ 32,776

Claims-based 1,278 2,221 2,752 4,301 10,552

Healthcare Total 9,020 9,263 10,757 14,288 43,328

Recovery 21,375 22,107 20,936 25,208 89,626

Customer Care /Outsourced 4,481 4,460 4,210 4,327 17,478 Services

Total $ 34,876 $ 35,830 $ 35,903 $ 43,823 $ 150,432

For the Three Months Ended

For the Year Ended

March 31, 2020

June 30, 2020

September 30, 2020

December 31, 2020

December 31, 2020

(in thousands)

Eligibility-based

$

10,949

$

11,292

$

13,480

$

14,126

$

49,847

Claims-based

6,575

3,301

4,086

4,739

18,701

Healthcare Total

17,524

14,593

17,566

18,865

68,548

Recovery

24,265

16,167

15,443

17,521

73,396

Customer Care / Outsourced Services

4,099

3,025

3,219

3,650

13,993

Total

$

45,888

$

33,785

$

36,228

$

40,036

$

155,937

For the Three Months Ended For the Year Ended

March 31, June 30, September December December 2020 2020 30, 2020 31, 2020 31, 2020

(in thousands)

Eligibility-based $ 10,949 $ 11,292 $ 13,480 $ 14,126 $ 49,847

Claims-based 6,575 3,301 4,086 4,739 18,701

Healthcare Total 17,524 14,593 17,566 18,865 68,548

Recovery 24,265 16,167 15,443 17,521 73,396

Customer Care /Outsourced 4,099 3,025 3,219 3,650 13,993 Services

Total $ 45,888 $ 33,785 $ 36,228 $ 40,036 $ 155,937

For the Three Months Ended

For the Nine Months Ended

March 31, 2021

June 30, 2021

September 30, 2021

September 30, 2021

(in thousands)

Eligibility-based

$

7,911

$

11,577

$

12,727

$

32,215

Claims-based

5,375

7,025

7,280

19,680

Healthcare Total

13,286

18,602

20,007

51,895

Recovery

14,491

11,091

5,490

31,072

Customer Care / Outsourced Services

3,613

3,149

3,085

9,847

Total

$

31,390

$

32,842

$

28,582

$

92,814

View source version on businesswire.com: https://www.businesswire.com/news/home/20211109006389/en/

CONTACT: Richard Zubek Investor Relations 925-960-4988 investors@performantcorp.com