Performant Healthcare, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Performant Healthcare, Inc. First Quarter 2025 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. This call is being recorded on Thursday, May 8, 2025. I will now like to turn the conference over to John Buzuto, Head of Investor Relations. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone. By now, you should have received a copy of the earnings release for the company's first quarter 2025 results. If you have not, a copy is available on the investor relations portion of our website. Joining me on today's call are 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. Please note page three of our earnings release, which covers forward-looking statements. Rather than reading that section aloud, we incorporated by reference into our prepared remarks. 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 first quarter 2025 earnings call. Earlier this afternoon, we reported outstanding first quarter results. which reflect 29% healthcare revenue growth compared to the same quarter of 2024, and a positive adjusted EBITDA of over 3 million, a significant improvement compared to an adjusted EBITDA loss of 1.2 million in the same quarter last year, driven by strong revenue growth across both government and commercial clients, along with a disciplined focus on cost management. These results underscore the company's unwavering commitment to driving growth and delivering value to our shareholders. This strong performance gives us increased confidence to adjust our full-year guidance, which Rohit will discuss in more detail later in this call. I'll begin by sharing our operational progress, followed by Rohit, who will walk you through our financial results and updated guidance. Our business and the broader healthcare industry is at a critical inflection point. The demand for healthcare payment integrity services, particularly those aimed at addressing fraud, waste, and abuse, has never been more urgent. This imperative has become a central focus in national discussions surrounding healthcare cost containment and the long-term sustainability of the U.S. healthcare system. Our strategy is clearly resonating. By advancing our technology and prioritizing client-centric partnerships, we've deepened relationships and further established ourselves as a trusted partner, especially as payers face rising costs and growing complexities across the healthcare system. In addition to our strong financial performance in the first quarter, we continue to prioritize strategic investments aimed at winning new business in driving sustainable, profitable, long-term growth. During the quarter, we implemented 13 commercial programs, a record number of implementations in a single quarter for us. This reflects a strong blend of expansion within existing clients and new client wins. along with the operational improvements we've implemented to streamline and accelerate our implementation process. At steady state, these implementations are expected to contribute $4.5 to $5 million in annualized revenue. We're encouraged to see early signs that our sales and implementation cycles are normalizing after the industry-wide disruptions experienced in 2024. The commercial market remains performance's largest opportunity, particularly as commercial payers continue to face a challenging landscape marked by rising patient acuity and increased utilization. In this environment, our technology-driven and client-centric approach resonates well, as evidenced by the continued expansion of our commercial pipeline. Looking ahead, we commenced the New York State Medicaid RAC implementation early in the second quarter. While still in the early stages, this implementation is progressing nicely, and we continue to anticipate double-digit annualized revenue at steady state. As we've noted previously, we are excited to demonstrate our capabilities in the state Medicaid market, which we believe has a strong appetite for new partners who can help drive meaningful savings. Continuing with our government business, I'd like to provide an update on the recent CMS RAC RFP for regions three through five. As a reminder, Performant remains committed to a growth strategy that is both sustainable and profitable. While Performant was not selected in this particular procurement, Two of the three regions represented net new opportunities, and the one region we previously held, Region 5, primarily involved low dollar DME, home health, and hospice claims, which have historically generated lower margins. Finally, as a reminder, the wind down of RAC Region 5 revenues was already contemplated in our beginning of year guidance. This shift allows us to redeploy resources toward higher value opportunities within our expanding and more profitable commercial business, where we can continue to see significant demand and compelling margins. Our federal government business continues to be a cornerstone of our strategic focus. We maintain a strong presence in this space, anchored by longstanding relationships with CMS and HHS. This includes our work across two RAC regions, where we deliver audit services in 25 states, our nationwide Medicare secondary payer contract, through which we provide comprehensive eligibility and recovery services and our national contract with the HHS Office of Inspector General. CMS remains the gold standard in policy, compliance, and payment integrity, and we're proud to be a trusted partner in supporting and advancing those priorities. As we consider the evolving actions and policies of the current administration, Performant is fortunate that our mission to reduce fraud, waste, and abuse within healthcare aligns closely with the administration's focus. We are beginning to see signs, including a rebound in government revenue, that rhetoric is translating into action, an encouraging signal for the future. To conclude on the political front, I want to emphasize that performance core offerings remain effective and relevant across all economic cycles. We deliver immediate and easily measurable ROI for our clients. Accordingly, we believe our services should be viewed as a staple particularly during periods of economic pressure when cost savings and operational efficiencies become even more critical. As an organization, we remain focused on controlling what we can, beginning with actively listening to our clients and continuously improving the solutions we deliver. A key aspect of our client-centric culture is our ability to collaborate closely with partners, adapting and evolving our offerings based on their needs and feedbacks. Take eligibility, for example, the newer of our two lines of business, which contributed 48% of revenue this quarter and grew 20% year over year. Since signing our first eligibility client in 2017, we've rapidly built the data assets and capabilities needed to compete effectively in this space, but our objective goes beyond competing. We aim to lead by delivering the highest quality results in the market. This commitment has driven us to implement rigorous checks and balances that ensure unmatched accuracy and reliability. As a result, we've successfully displaced longstanding legacy vendors and significantly expanded our footprint among commercial clients. More recently, we've leaned into data enrichment, working with clients to improve the completeness and accuracy of their data. This not only drives better outcomes, but also enables us to flag eligibility issues earlier in the payment cycle, which reduces administrative burden and improves efficiency for our clients. Our ongoing investments in innovation are driving progress across both of our core businesses and continue to distinguish Performant as a leader in the healthier payment integrity space. Our strong first quarter results and the upward revision to our guidance reflect the success of our growth strategy. We have meticulously invested in strategic initiatives that we believe position us for success. and it's gratifying to see those investments materialize. This strategy has driven a record front log of commercial programs and marked a major milestone with our first state Medicaid contract in New York. We're achieving strategic wins across every segment of our business while maintaining a clear focus on improving near-term profitability and advancing toward our long-term margin objectives. In closing, I want to extend my heartfelt gratitude to our team for their unwavering dedication. Their efforts have delivered meaningful savings and valuable insights for our clients, proving that we are on the right path. With that, I'll hand it over to Rohit Ramchandani, our Chief Financial Officer, for a discussion of the financials. Rohit? Thanks, Sam.