Performant Healthcare, Inc.

Greetings and welcome to the Performant Financial Court fourth quarter 2020 earnings call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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.

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 M., 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. In addition, any forward-looking statements are made as of today, and the company does not undertake to update any forward-looking statements based on new circumstances or revised expectations. Also, all non-GAAP financial measures discussed during this call are reconciled to the most directly comparable GAAP measures in the tables attached to our press release. I would now like to turn the call over to Lisa Im. Lisa?

Thank you, Rich. Good afternoon, everyone, and thank you for joining us for our earnings call. Coming into 2020, we were on course to report a transformative year following multiple years of hard work, transitioning performance from a company's arriving at 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 website 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 had 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 a 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. We believe this growth trend will continue as our suite of payment integrity services further matures and scales. More specifically, we launched 10 new healthcare programs during the fourth quarter of 2020. These implementations represent a mix of new logos and the expansion of both audit and eligibility services within existing clients. As we look forward, we have a steady pipeline of implementation for much of 2021 with a similarly diverse mix of new clients and expansion of services within our current customers. Overall, revenue from our healthcare business in 2020 increased nearly 60% over 2019, and accounted for almost half of our total revenue in 2020. This marks a dramatic increase from 2017 when our healthcare business accounted for just 7.5% of our total revenue. Going forward, we anticipate that our healthcare business will drive the majority of overall company revenue and growth. Conversely, our recovery operations accounted for 47% of total revenue less than half of total company revenues for the first time due to the continued growth of the healthcare business as well as COVID-19 related impacts. As healthcare revenues continue to grow at a strong rate, we anticipate that the recovery business revenues will continue to decline for the foreseeable future. As a reminder, some of our recovery clients, including federal and state governments, requested that we implement the complete stoppage of our outbound recovery services in that spanned multiple quarters of 2020, which had a negative impact on our operating results. Due to these continued delays within our recovery business, we took the necessary steps to furlough employees from contracts and found ways to reduce our expense footprint, such as moving our workforce fully remote with the exception of a handful of essential employees. These pauses on activity and furloughing employees did not negatively impact student loan revenues, and related cash flows during 2020 because we earn revenues for a number of months from existing in-process borrower rehabilitation agreements. However, the prolonged student loan payment pause is expected to have significant impacts on our real-over-year recovery revenue results in 2021. With that, I'd like to turn the call over to Rohit Ramchandani, our Senior Vice President of Finance and Strategy, to walk you through the results of the quarter. Rohit?