Performant Healthcare, Inc.

At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call has been recorded on Wednesday, August 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 second quarter 2024 results. If you have not, a copy is available on the investor relations portion of our website. On today's call 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 today, including our financial guidance, are forward-looking statements. These statements are subject to risks and uncertainties, including those described in the company's violence 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 Simeon Cole. Sime?

Thank you, John. Good afternoon, everyone, and thank you for joining us for our earnings call. This afternoon, we reported second quarter results highlighted by 17% growth in healthcare revenues compared to the second quarter of 2023 and positive EBITDA of half a million dollars. I will share our operational accomplishments, followed by Rohit, who will walk you through our financial results. In the second quarter, our double-digit year-over-year revenue growth and positive EBITDA demonstrate our effectiveness in penetrating the significant market opportunity that lies before us, as well as our disciplined approach to driving profitability. Our strategy to deliver these results has remained unchanged. Prioritize client needs, continuously innovate, and achieve operational excellence. I'll touch on each of these as we highlight our second quarter results. Demand for our services remains strong as we continue to effectively demonstrate our value proposition to both current and prospective clients. This past quarter, we implemented 10 statements of work, including adding two new clients to our roster. In year to date, we have implemented 20 new statements of work, which we estimate will collectively generate approximately $9 million in annualized revenue at Stouty States. And despite the significant client bandwidth required for implementations, it is encouraging to see our clients continue to switch from their legacy partners and choose performance, a testament to our ability to deliver timely and meaningful returns on their trust and investment. Our business started with a single CMS RAC engagement, and government contracts remain an important backbone of our operations today. We have built credibility through our strong relationship with CMS, and we are optimistic about growing our business with the federal government as we continue to ramp RAC Region 2. This election year, however, presents potential uncertainty for our industry. We are seeing several agencies take a more conservative approach with oversight programs. Though we anticipate this more measured approach will be limited to the current election cycle, having navigated multiple prior elections, we are confident that both the state and federal government's commitment to payment accuracy and transparency will likely remain unchanged no matter the election outcome. Staying on the government theme, we continue to see an opportunity in the $300 million to $500 million state market. We have been active with state RFPs and continue to refine our strategy as we wait for the first contract award for both our recovery audit and third-party liability solutions. Change is constant within healthcare, and our clients face numerous challenges, including adjustments and reimbursements and evolving risk pools due to Medicaid redeterminations. One challenge we would highlight is the change healthcare outage, which has had a meaningful impact on claims processing, adjudication, and care delivery. The change healthcare outage has fortunately only had a minor impact on performance to date. From an implementations and new sales standpoint, we are seeing slower decision-making by clients as they adjust their near-term priorities. While we have seen isolated delays, the strength of our services continues to drive positive results for our clients, and we do not expect the change healthcare incident to impact our long-term growth strategy. We initially anticipated the operational impact of the change healthcare outage to be temporary delays in receiving claims, likely resulting in quick restoration with no loss in opportunity for performance, and the results we have seen to date on our existing operations continues to support that assessment. We will continue to monitor for downstream impacts to our operations, but again, to date, we have seen minimal operational disruption. On the topic of data security, I'd underscore our dedication to safeguarding the data entrusted to us through our robust multi-tiered security strategy. This includes encryption, role-based access controls, anomaly detection, and comprehensive vulnerability and vendor management. We undergo regular internal and external audits and penetration tests to ensure compliance with industry standard data protection requirements and best practices. and performance rigorous security standards are validated by certifications, including HITRUST, SOC, and SOCS, along with annual CMS control audits. While there will always be challenges for our clients to contend with, I firmly believe that our value proposition remains consistent as we help our clients more accurately pay claims, yielding greater predictability and allowing them to focus on what matters most, ensuring the delivery of high-quality, cost-effective patient care. Turning to our operational efforts, in the second quarter, we achieved positive EBITDA of half a million dollars, 1.8 million ahead of the prior year's quarter. To achieve this, we have prioritized productivity and efficiency to drive profitability. Rohit has often shared that while our primary path to profitability is through increased revenues, we do have opportunities to drive greater efficiency, particularly in our claims-based business. The acquisition of records one technology earlier this year, which has folded in nicely to project touring, will be one of the major components in achieving these margin gains. As a reminder, this artificial intelligence based solution integrates into our audit workflow, improving the accuracy and efficiency of our medical auditors. The integration plan for this technology has been progressing according to plan, and we are pleased to be doing so alongside key team members from records one. who have joined Performant and remain active in the integration, adoption, and development process. We remain highly encouraged by the prospects of this powerful AI technology. As we continue our journey to becoming a best in class, pure play healthcare company, I am thrilled that our shareholders have approved an employee stock purchase plan. This initiative is a significant step towards fostering a culture of ownership, which is one of our core corporate pillars. By encouraging an ownership mentality, We empower our employees to deliver the best results for our clients. And there's palpable excitement when I speak to our team about the direction and growth of our company. This plan will enable a greater number of team members to share in that growth, aligning personal success with the company's accomplishments. I couldn't be prouder of this development, and I am confident that it will strengthen our commitment to excellence and accelerate our collective success. Overall, I am encouraged by our second quarter results. We continue to deliver for our clients, which has led to more opportunities for future growth. Operationally, our technology investments to increase productivity and efficiency gains are paying tangible dividends. And finally, from a macro perspective, the need for payment integrity solutions to help control costs within our healthcare system remains as strong as ever. With that, I'll hand it over to Rohit Ramchandani, our Chief Financial Officer, for a discussion of the financials.