Performant Healthcare, Inc.

Greetings, ladies and gentlemen, and welcome to Performant Financial Corporation first quarter 2024 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Tuesday, May 7, 2024. I would now like to turn the conference over to John Pizzuto, Head of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon, everyone. By now, you should have received a copy of the earnings release for the company's first quarter 2024 results. If you have not, a copy is available on the investor relations portion of our website. On today's call, we will be Simeon Cole, Chief Executive Officer, and Rohit Ramchandani, Chief Financial Officer. Before we begin, I'd like to remind you that some of the comments made on today's call, including our financial guidance, are forward-looking statements. These statements are subject to risks and uncertainties, including those described in the company's filings with the SEC. Actual results may differ materially from those described during the call. In addition, all 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 table attached to our press release. I would now like to turn the call over to Simi and Cole. Sim?

Thank you, John. Good afternoon, everyone, and thank you for joining us for our earnings call. We are pleased with our first quarter results and are encouraged by our prospects, which gives us the confidence to reiterate expectations for the remainder of the year. I will share our operational accomplishments, and then Rohit will walk you through our financial results. Our double-digit year-over-year revenue growth, as well as our double-digit implementations for the first quarter of 2024, are a result of the consistent execution of our growth strategy. We recognize that we need to be innovative and disciplined in order to penetrate our large addressable market. Core to our strategy has been our client-centric and technology-driven approach. I will dive into each as we highlight our first quarter results. Being client-centric at Performant means that we partner with our clients to build and optimize payment integrity programs tailored to their respective needs today and into the future. Our commitment to partnership as the market shifts and evolves has led to Performant having completed 10 new implementations in the first quarter, collectively expected to generate between $5 and $6 million of revenue on an annualized basis. And all 10 implementations were additional opportunities within existing clients. I often tell our team that acquiring new clients is certainly rewarding, but expansion within existing clients is a testament to the value of our services and our ability to cultivate enduring partnerships. Our consistent cadence of implementations is proof that our client-centric approach and results-driven culture are effectively serving our clients. Partnering with clients to navigate the complexities of the healthcare industry lies at the heart of performance value proposition. When navigating the payment integrity landscape, numerous factors influence decision making. Amongst these is the recent change healthcare outage, a complex challenge that disproportionately strained the payer-provider relationship. Throughout this period of instability, we worked with our clients to delicately navigate the situation while also minimizing provider abrasion. We continue to see evidence that the impact of the outage on performance should be temporary. Certain products that are introduced early in the claim lifecycle experience several weeks of decreased volume, but then return to normal levels as claims processing restarted. For some clients, we can quickly catch up on volumes. For others, we would redeploy resources to work age inventory to minimize impact, and there may be a few that will take longer for us to catch up on productive volumes. Our eligibility business continues to perform well with growth of 7% in the first quarter. Certain commercial clients have shown significant expansion in addition to new clients coming on board. Our MSP premium solution, which supports Medicare Advantage programs in identifying the most suitable payer, has seen noticeable success amidst industry challenges. Medicare Advantage has faced many industry headwinds, including adjustments to star ratings and reduction in Medicare Advantage reimbursement rates, with each putting additional pressure on MCOs operating Medicare Advantage plans. Demonstrating our client-centric approach, we quickly identified this challenge for certain of our MCO partners by leveraging our MSP premium solution as an avenue to further contain costs. Furthermore, our expansion into cost avoidance solutions within the eligibility business has proven successful. Leveraging our robust data assets and expertise, and in response to clients requesting that we coordinate benefits earlier in the payment cycle, we've successfully launched new cost avoidance offerings to the commercial market. Our ability to work closely with clients to understand their evolving needs has been instrumental in driving our growth. I am confident that this strategic approach will continue to reap dividends as the performance story progresses, while also providing a welcome product diversification and growth to offset the growth headwind of our longstanding CMS MSP contract. Demand for our clinical audit business has been strong. with a 19% increase in the first quarter through continued scaling of commercial client implementations and our CMS RAC Region 2 contract. We continue to capitalize on efficiency gains in this segment of our business. In previous quarters, we have discussed reconfiguring the factory workflow with larger audit-based clients to optimize workflows, data exchanges, and client collaboration and communication. This effort began with a select group of clients, primarily with readmission audits. Encouraged by the outcomes, we've expanded our scope to include outpatient audits as well. This strategic shift not only enhances our operational efficiency, but also offers our clients a more streamlined experience, enabling them to optimize their allocation of resources. Turning to technology, I'm excited to welcome the RECORDS ONE team to performance. Cutting-edge technology has been core to both performance identity and strategy. And while our existing technology uses machine learning to effectively manage and score large clusters of data, the addition of records one technology incorporates more advanced AI technology that uses large language models and natural language processing. We've previously piloted and licensed this technology to enhance our audit workflow process and quickly realize its potential to improve our accuracy and efficiency. The use case today centers around our ability to ingest and score large amounts of claims, identifying those with a higher likelihood of findings, and equally as important, those without. We are also exploring how natural language processing may improve the speed and accuracy with which our audit teams review medical records. Today, nurses and coders spend a significant amount of time combing through data necessary to assess clinical outcomes. We believe this technology will empower our clinical teams to review claims and extract pertinent information more quickly. We see numerous strategic benefits from bringing this technology in house. We believe being able to couple the technology with performance rich data assets should provide numerous opportunities to expand the technology well beyond its current scope. And perhaps more importantly, we can now guide the development of this new AI platform to align with performance existing technology roadmap. Our core principles of client centricity and technology enabled solutions have driven results and afforded us unique credibility in this industry. We continue to make significant inroads with commercial payers, our largest opportunity. We have also expanded our operations and bolstered our credibility to be competitive in the state Medicaid market, a new space for performance and one with significant upside. This new state market opportunity is only made possible through well proven solutions, highly adaptable workflows, and a robust information security infrastructure that our clients can rely on. Our ability to compete was illustrated by one of the largest state Medicaid RAC programs, New York, awarding us their Medicaid Recovery Audit Contract in October of 2023. While the award was protested and ultimately overturned, the decision to do so was not based on performance capabilities or qualifications. It was a technicality relating to a referenced that we cited in our proposal. The good news, however, is that New York State has decided to reissue all three cost containment RFPs, including the RAC, TPL, and subrogation. We are actively pursuing the RAC and TPL opportunities, applying the lessons learned from our original proposal submissions. While the protest outcome was unfortunate, we're confident in our ability to demonstrate the value of our services and overall partnership to New York State once again. Meanwhile, we continue to pursue other state RFPs and we maintain significant enthusiasm for the potential this market holds. Our commitment to client centricity and innovative technology is the bedrock on which performance value proposition stands. These principles are not just integral to our culture, but have also been instrumental in driving our strong first quarter growth, a trend we anticipate continuing throughout 2024. It's crucial to note that financial metrics are just one aspect of our growth narrative. Our strategic approach has improved our efficiency. We've implemented new opportunities for future growth and are aggressively pursuing new market opportunities. I'm excited about our present standing and the promising trajectory we're charting for the future. With that, I'll hand it over to Rohit Ramchandani, our Chief Financial Officer, for a discussion of the financials. Rohit?