Performant Financial (PFMT) Updates Q4 Guidance

Performant Financial Corporation (Nasdaq: PFMT) today announced preliminary guidance for its financial results in the fourth quarter of 2014.

Revenues are expected to be between $38.0 million and $41.0 million, with the midpoint of the range representing substantially the same level of revenues as for the three-month period ended September 30, 2014.

(Street sees revenue of $40.91 million)

Performant expects its student lending revenues to be greater than the $28.1 million of revenues in the three months ended September 30, 2014, due primarily to the recognition of rehabilitation revenues during the three months ended December 31, 2014 that were delayed from the prior quarter due to new documentation requirements for student loan rehabilitation imposed in the third quarter by Performant's guaranty agency clients. Performant expects its healthcare revenues to be significantly lower than the $5.2 million of revenues recognized in the three months ended September 30, 2014, primarily due to RAC contract transition procedures adopted by CMS that halted all of its audit and recovery activities from June 1 until late August, 2014. Performant was permitted to re-start audit activities in late August when the RAC contract was extended through year end, though substantially all of the revenues from those activities will not be recognizable until 2015.

Net loss is estimated to be between $2.1 million and $1.5 million, compared to a net loss of $0.5 million during the three months ended September 30, 2014. This expected increase in net loss is primarily due to increases in salary and benefits expenses and other operating expenses during the fourth quarter relating to a new state tax recovery services engagement during the fourth quarter and the re-start of audit and recovery services under its RAC contract. Performant did not recognize significant revenues from the new state tax recovery services engagement or the extended RAC contract during the three months ended December 31, 2014, as operating expenses related to these activities predated related revenues.

Adjusted EBITDA is expected to be between $4.0 million and $5.5 million, representing a sequential quarterly decrease of approximately 17% at the midpoint of the range. This reduction in adjusted EBITDA is primarily due to the increase in salary and benefits expenses and other operating expenses relating to the new state tax recovery services engagement and the re-start of audit and recovery services under its RAC contract, neither of which resulted in significant revenues being recognized by Performant during the fourth quarter.

Adjusted net income (loss) is estimated to be between $(0.4) million and $0.9 million, representing a sequential quarterly decrease of approximately 66% at the midpoint of the range. This decrease in adjusted net income during the quarter is attributable to the same factors affecting net income described above.

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