LIVERMORE, Calif., Nov. 12, 2019 (GLOBE NEWSWIRE) -- Performant Financial Corporation (Nasdaq: PFMT), (the "Company"), a leading provider of technology-enabled recovery and related analytics services in the United States, today reported the following financial results for its third quarter ended September 30, 2019:
Third Quarter Financial Highlights
- Total revenues of $35.9 million, compared to revenues of $27.6 million in the prior year period, up 30.1%
- Net loss of $8.1 million, or $(0.15) per diluted share, compared to net loss of $7.6 million, or $(0.15) per diluted share, in the prior year period
- Adjusted EBITDA of $(3.1) million, compared to adjusted EBITDA of $(4.5) million in the prior year period
- Adjusted net loss of $7.3 million, or $(0.14) per diluted share, compared to an adjusted net loss of $7.1 million or $(0.14) per diluted share in the prior year period
Third Quarter 2019 Results
Total revenues in the third quarter were $35.9 million, an increase of 30.1% from revenues of $27.6 million in the prior year period. Healthcare revenues in the third quarter of 2019 were $10.8 million, an increase of 50.0% from revenues of $7.2 million in the prior year period. Combined CMS MSP and other CMS audit recovery revenues were $7.1 million in the third quarter, a 69.0% increase over the prior year period. Commercial healthcare clients contributed revenues of $3.7 million, an increase of $0.7 million or 23.3% from the prior year period. Recovery revenues in the third quarter were $20.9 million, an increase of $4.8 million, or 29.8% from revenues of $16.1 million in the prior year period. Revenues from our Customer Care / Outsourced Services in the third quarter were $4.2 million, a decrease of $56 thousand from the prior year period.
Net loss for the third quarter of 2019 was $8.1 million, or $(0.15) per share on a fully diluted basis, compared to net loss of $7.6 million or $(0.15) per share on a fully diluted basis in the prior year period. Adjusted net loss for the third quarter of 2019 was $7.3 million, resulting in $(0.14) per share on a fully diluted basis. This compares to an adjusted net loss of $7.1 million or $(0.14) per fully diluted share in the prior year period. Adjusted EBITDA for the third quarter of 2019 was $(3.1) million as compared to $(4.5) million in the prior year period.
As of September 30, 2019, the Company had cash, cash equivalents and restricted cash of approximately $8.5 million.
Business Outlook
“We continue to report good momentum overall, particularly within our Healthcare operations, which is highlighted by our strong year-over-year gains. Our Recovery business also reported healthy gains over the third quarter of last year through a combination of collecting outstanding inactive tax receivables for the IRS as well as meaningful growth with Department of Education subcontracting opportunities. However, during the quarter we did experience a slight delay in the execution and ramp of one of our contracts, which negatively impacted our revenue results. We have already begun working with the client to remedy the situation and expect to have this contract back on track in the fourth quarter,” stated Lisa Im, CEO of Performant.
“We are reiterating our full year 2019 adjusted EBITDA guidance range of ($6) million to ($2) million. However, following the identification of some data matching issues related to a single line of business within Healthcare and potential delay in the recovery of a large-dollar claim under one of our third-party-liability contracts, we are revising our 2019 revenue guidance range to $147 to $152 million, from $158 to $168 million. This change has no impact on our long-term plan to successfully execute on our strategy, and we remain committed to our long-term revenue and EBITDA margin goals of $200 million and 20% by 2021 respectively,” concluded Im.
Note Regarding Use of Non-GAAP Financial Measures
In this press release, to supplement our consolidated financial statements, the Company presents adjusted EBITDA and adjusted net loss. These measures are not in accordance with accounting principles generally accepted in the United States of America (US GAAP) and accordingly reconciliations of adjusted EBITDA and adjusted net loss to net loss determined in accordance with US GAAP are included in the “Reconciliation of Non-GAAP Results” table at the end of this press release. We have included adjusted EBITDA and adjusted net loss in this press release because they are key measures used by our management and board of directors to understand and evaluate our core operating performance and trends and to prepare and approve our annual budget. Accordingly, we believe that adjusted EBITDA and adjusted net loss provide useful information to investors and analysts in understanding and evaluating our operating results in the same manner as our management and board of directors. Our use of adjusted EBITDA and adjusted net loss has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under US GAAP. In particular, many of the adjustments to our US GAAP financial measures reflect the exclusion of items, specifically interest, tax and depreciation and amortization expenses, equity-based compensation expense and certain other non-operating expenses, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be calculated differently from similarly titled non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes.
Earnings Conference Call
The Company will hold a conference call to discuss its third quarter 2019 results today at 5:00 p.m. Eastern. A live webcast of the call may be accessed on the Investor Relations section of the Company’s website at investors.performantcorp.com. The conference call is also available by dialing 877-705-6003 (domestic) or 201-493-6725 (international).
A replay of the call will be available on the Company's website or by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13696200. The telephonic replay will be available approximately three hours after the call, through November 19, 2019.
About Performant Financial Corporation
Performant helps government and commercial organizations enhance revenue and contain costs by preventing, identifying and recovering waste, improper payments and defaulted assets. Performant is a leading provider of these services in several industries, including healthcare, student loans and government. Performant has been providing recovery audit services for more than nine years to both commercial and government clients, including serving as a Recovery Auditor for the Centers for Medicare and Medicaid Services.
Powered by a proprietary analytic platform and workflow technology, Performant also provides professional services related to the recovery effort, including reporting capabilities, support services, customer care and stakeholder training programs meant to mitigate future instances of improper payments. Founded in 1976, Performant is headquartered in Livermore, California.
Forward Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for revenues, net income (loss), and adjusted EBITDA in 2019 and 2021. These forward-looking statements are based on current expectations, estimates, assumptions and projections that are subject to change and actual results may differ materially from the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the high level of revenue concentration among the Company's largest customers and any termination in the Company’s relationship with any of our significant clients would result in a material decline in our revenues, that many of the Company's customer contracts are subject to periodic renewal, are not exclusive, do not provide for committed business volumes and may be changed or terminated unilaterally and on short notice, that the Company faces a long period to implement a new contract which may result in the incurrence of expenses before the receipt of revenues from new client relationships, that the Company may not have sufficient cash flows from operations or the availability of funds under its credit agreement to fund ongoing operations and other liquidity needs, that the Company’s indebtedness could adversely affect its business and financial condition and could reduce the funds available for other purposes and the failure to comply with covenants contained in its credit agreement could result in an event of default that could adversely affect its results of operations, that continuing limitations on the scope of our audit activity under our RAC contracts have significantly reduced our revenue opportunities with this client, that the Company faces significant competition in all of its markets, that the U.S. federal government accounts for a significant portion of the Company's revenues, that future legislative and regulatory changes may have significant effects on the Company's business, that failure of the Company's or third parties' operating systems and technology infrastructure could disrupt the operation of the Company's business and the threat of breach of the Company's security measures or failure or unauthorized access to confidential data that the Company possesses. More information on potential factors that could affect the Company's financial condition and operating results is included from time to time in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's annual report on Form 10-K for the year ended December 31, 2018 and subsequently filed reports on Forms 10-Q and 8-K. The forward-looking statements are made as of the date of this press release and the Company does not undertake to update any forward-looking statements to conform these statements to actual results or revised expectations.
Contact Information
Richard Zubek
Investor Relations
925-960-4988
investors@performantcorp.com
| PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except per share amounts) | |||||||
| September 30, 2019 | December 31, 2018 | ||||||
| (Unaudited) | |||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 6,888 | $ | 5,462 | |||
| Restricted cash | 1,660 | 1,813 | |||||
| Trade accounts receivable, net of allowance for doubtful accounts of $180 and $22, respectively | 20,525 | 20,879 | |||||
| Contract assets | 1,159 | — | |||||
| Prepaid expenses and other current assets | 3,615 | 3,420 | |||||
| Income tax receivable | — | 179 | |||||
| Total current assets | 33,847 | 31,753 | |||||
| Property, equipment, and leasehold improvements, net | 19,829 | 22,255 | |||||
| Identifiable intangible assets, net | 983 | 1,160 | |||||
| Goodwill | 81,572 | 81,572 | |||||
| ROU assets | 8,413 | — | |||||
| Other assets | 1,043 | 1,019 | |||||
| Total assets | $ | 145,687 | $ | 137,759 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Current maturities of notes payable to related party, net of unamortized debt issuance costs of $143 and $126, respectively | $ | 3,182 | $ | 2,224 | |||
| Accrued salaries and benefits | 6,995 | 5,759 | |||||
| Accounts payable | 1,862 | 1,402 | |||||
| Other current liabilities | 3,206 | 3,414 | |||||
| Income taxes payable | 24 | — | |||||
| Deferred revenue | 1,566 | 1,078 | |||||
| Estimated liability for appeals | 369 | 210 | |||||
| Earnout payable | 351 | — | |||||
| Lease liabilities | 2,937 | — | |||||
| Total current liabilities | 20,492 | 14,087 | |||||
| Notes payable to related party, net of current portion and unamortized debt issuance costs of $2,664 and $2,345, respectively | 59,061 | 41,105 | |||||
| Deferred income taxes | 53 | 22 | |||||
| Earnout payable | 499 | 1,936 | |||||
| Lease liabilities | 6,566 | — | |||||
| Other liabilities | 2,272 | 3,383 | |||||
| Total liabilities | 88,943 | 60,533 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Common stock, $0.0001 par value. Authorized, 500,000 shares at September 30, 2019 and December 31, 2018 respectively; issued and outstanding 53,685 and 52,999 shares at September 30, 2019 and December 31, 2018, respectively | 5 | 5 | |||||
| Additional paid-in capital | 79,846 | 77,370 | |||||
| Accumulated deficit | (23,107 | ) | (149 | ) | |||
| Total stockholders’ equity | 56,744 | 77,226 | |||||
| Total liabilities and stockholders’ equity | $ | 145,687 | $ | 137,759 | |||
| PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenues | $ | 35,903 | $ | 27,581 | $ | 106,609 | $ | 115,938 | ||||||||
| Operating expenses: | ||||||||||||||||
| Salaries and benefits | 28,771 | 24,276 | 86,816 | 68,362 | ||||||||||||
| Other operating expenses | 12,948 | 10,505 | 37,112 | 45,924 | ||||||||||||
| Total operating expenses | 41,719 | 34,781 | 123,928 | 114,286 | ||||||||||||
| (Loss) income from operations | (5,816 | ) | (7,200 | ) | (17,319 | ) | 1,652 | |||||||||
| Interest expense | (2,166 | ) | (1,123 | ) | (5,260 | ) | (3,534 | ) | ||||||||
| Interest income | 11 | 6 | 33 | 19 | ||||||||||||
| Loss before provision for income taxes | (7,971 | ) | (8,317 | ) | (22,546 | ) | (1,863 | ) | ||||||||
| Provision for (benefit from) income taxes | 99 | (708 | ) | 412 | 882 | |||||||||||
| Net loss | $ | (8,070 | ) | $ | (7,609 | ) | $ | (22,958 | ) | $ | (2,745 | ) | ||||
| Net loss per share | ||||||||||||||||
| Basic | $ | (0.15 | ) | $ | (0.15 | ) | $ | (0.43 | ) | $ | (0.05 | ) | ||||
| Diluted | $ | (0.15 | ) | $ | (0.15 | ) | $ | (0.43 | ) | $ | (0.05 | ) | ||||
| Weighted average shares | ||||||||||||||||
| Basic | 53,665 | 52,281 | 53,366 | 51,752 | ||||||||||||
| Diluted | 53,665 | 52,281 | 53,366 | 51,752 | ||||||||||||
| PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statement of Changes in Stockholders’ Equity (In thousands) (Unaudited) | |||||||||||||||||||||||||||||||||||||
| Three Months Ended September 30, 2019 | Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at beginning of period | 53,648 | $ | 5 | $ | 78,980 | $ | (15,037 | ) | $ | 63,948 | 51,920 | 5 | $ | 73,642 | $ | 12,725 | $ | 86,372 | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | 37 | — | (21 | ) | — | (21 | ) | 56 | — | (55 | ) | — | (55 | ) | |||||||||||||||||||||||
| Stock-based compensation expense | — | — | 525 | — | 525 | — | — | 814 | — | 814 | |||||||||||||||||||||||||||
| Shares issued in conjunction with agreement to purchase Premiere Credit of North America | — | 1,000 | — | 2,420 | — | 2,420 | |||||||||||||||||||||||||||||||
| Recognition of warrant issued in debt financing | — | — | 362 | — | 362 | — | — | — | — | — | |||||||||||||||||||||||||||
| Net loss | — | — | — | (8,070 | ) | (8,070 | ) | — | — | — | (7,609 | ) | (7,609 | ) | |||||||||||||||||||||||
| Balances at end of period | 53,685 | 5 | $ | 79,846 | $ | (23,107 | ) | $ | 56,744 | 52,976 | 5 | $ | 76,821 | $ | 5,116 | $ | 81,942 | ||||||||||||||||||||
| Nine Months Ended September 30, 2019 | Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Total | ||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||
| Balances at beginning of period | 52,999 | $ | 5 | $ | 77,370 | $ | (149 | ) | $ | 77,226 | 51,085 | 5 | $ | 72,459 | $ | 7,861 | $ | 80,325 | |||||||||||||||||||
| Common stock issued under stock plans, net of shares withheld for employee taxes | 686 | — | (432 | ) | — | (432 | ) | 891 | — | (461 | ) | — | (461 | ) | |||||||||||||||||||||||
| Stock-based compensation expense | — | — | 1,743 | — | 1,743 | — | — | 2,403 | — | 2,403 | |||||||||||||||||||||||||||
| Shares issued in conjunction with agreement to purchase Premiere Credit of North America | — | — | 1,000 | 2,420 | — | 2,420 | |||||||||||||||||||||||||||||||
| Recognition of warrant issued in debt financing | — | — | 1,165 | — | 1,165 | — | — | — | — | — | |||||||||||||||||||||||||||
| Net loss | — | — | — | (22,958 | ) | (22,958 | ) | — | — | — | (2,745 | ) | (2,745 | ) | |||||||||||||||||||||||
| Balances at end of period | 53,685 | 5 | $ | 79,846 | $ | (23,107 | ) | $ | 56,744 | 52,976 | 5 | $ | 76,821 | $ | 5,116 | $ | 81,942 | ||||||||||||||||||||
| PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Nine Months Ended September 30, | |||||||
| 2019 | 2018 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (22,958 | ) | $ | (2,745 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Loss on disposal of assets | 7 | 44 | |||||
| Release of net payable to client related to contract termination | — | (9,860 | ) | ||||
| Release of estimated liability for appeals due to termination of contract | — | (18,531 | ) | ||||
| Derecognition of subcontractor receivable for appeals due to termination of contract | — | 5,535 | |||||
| Derecognition of subcontractor receivable for overturned claims | — | 1,536 | |||||
| Provision for doubtful accounts for subcontractor receivable | — | 1,868 | |||||
| Depreciation and amortization | 6,698 | 7,601 | |||||
| ROU assets amortization | 1,913 | — | |||||
| Deferred income taxes | 31 | 130 | |||||
| Stock-based compensation | 1,743 | 2,403 | |||||
| Interest expense from debt issuance costs | 896 | 963 | |||||
| Earnout mark-to-market | (1,086 | ) | — | ||||
| Changes in operating assets and liabilities: | |||||||
| Trade accounts receivable | 354 | (463 | ) | ||||
| Contract asset | (1,159 | ) | |||||
| Prepaid expenses and other current assets | (195 | ) | 958 | ||||
| Income tax receivable | 179 | 483 | |||||
| Other assets | (24 | ) | 68 | ||||
| Accrued salaries and benefits | 1,236 | 1,723 | |||||
| Accounts payable | 460 | 306 | |||||
| Deferred revenue and other current liabilities | 280 | 713 | |||||
| Income taxes payable | 24 | — | |||||
| Estimated liability for appeals | 159 | 16 | |||||
| Net payable to client | — | (2,940 | ) | ||||
| Lease liabilities | (2,066 | ) | — | ||||
| Other liabilities | 132 | 326 | |||||
| Net cash used in operating activities | (13,376 | ) | (9,866 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchase of property, equipment, and leasehold improvements | (4,101 | ) | (6,319 | ) | |||
| Premiere Credit of North America, LLC working capital cash acquired | — | 1,669 | |||||
| Net cash used in investing activities | (4,101 | ) | (4,650 | ) | |||
| Cash flows from financing activities: | |||||||
| Repayment of notes payable | (1,750 | ) | (1,100 | ) | |||
| Debt issuance costs paid | (68 | ) | — | ||||
| Taxes paid related to net share settlement of stock awards | (466 | ) | (647 | ) | |||
| Proceeds from exercise of stock options | 34 | 186 | |||||
| Borrowings from notes payable | 21,000 | — | |||||
| Net cash provided by (used in) financing activities | 18,750 | (1,561 | ) | ||||
| Effect of foreign currency exchange rate changes on cash | — | — | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 1,273 | (16,077 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 7,275 | 23,519 | |||||
| Cash, cash equivalents and restricted cash at end of period | $ | 8,548 | $ | 7,442 | |||
| Non-cash investing activities: | |||||||
| Recognition of contingent consideration in acquisition | — | 1,876 | |||||
| Non-cash financing activities: | |||||||
| Recognition of shares issued in acquisition | $ | — | $ | 2,420 | |||
| Recognition of warrants issued in debt financing | $ | 1,165 | $ | — | |||
| Supplemental disclosures of cash flow information: | |||||||
| Cash paid for income taxes | $ | 87 | $ | 98 | |||
| Cash paid for interest | $ | 4,363 | $ | 1,748 | |||
| Reconciliation of the Consolidated Statements of Cash Flows to the Consolidated Balance Sheets: | |||||||
| Cash and cash equivalents | $ | 6,888 | $ | 5,654 | |||
| Restricted cash | 1,660 | 1,788 | |||||
| Total cash, cash equivalents and restricted cash at end of period | $ | 8,548 | $ | 7,442 | |||
| PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES Reconciliation of Non-GAAP Results (In thousands, except per share amount) (Unaudited) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Adjusted Loss Per Diluted Share: | ||||||||||||||||
| Net loss | $ | (8,070 | ) | $ | (7,609 | ) | $ | (22,958 | ) | $ | (2,745 | ) | ||||
| Plus: Adjustment items per reconciliation of adjusted net (loss) income | 734 | 520 | 1,477 | (11,195 | ) | |||||||||||
| Adjusted net loss | (7,336 | ) | (7,089 | ) | (21,481 | ) | (13,940 | ) | ||||||||
| Adjusted Loss Per Diluted Share | $ | (0.14 | ) | $ | (0.14 | ) | $ | (0.40 | ) | $ | (0.27 | ) | ||||
| Diluted avg shares outstanding | 53,665 | 52,281 | 53,366 | 51,752 | ||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Net loss | $ | (8,070 | ) | $ | (7,609 | ) | $ | (22,958 | ) | $ | (2,745 | ) | ||||
| Provision for income taxes | 99 | (708 | ) | 412 | 882 | |||||||||||
| Interest expense (1) | 2,166 | 1,123 | 5,260 | 3,534 | ||||||||||||
| Interest income | (11 | ) | (6 | ) | (33 | ) | (19 | ) | ||||||||
| Depreciation and amortization | 2,141 | 2,489 | 6,698 | 7,601 | ||||||||||||
| Non-core operating expenses (7) | 244 | — | 309 | — | ||||||||||||
| Earnout mark-to-market (6) | (174 | ) | — | (1,086 | ) | — | ||||||||||
| CMS Region A contract termination (5) | — | (599 | ) | — | (19,415 | ) | ||||||||||
| Stock-based compensation | 525 | 814 | 1,743 | 2,403 | ||||||||||||
| Adjusted EBITDA | $ | (3,080 | ) | $ | (4,496 | ) | $ | (9,655 | ) | $ | (7,759 | ) | ||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Adjusted Net Loss: | ||||||||||||||||
| Net loss | $ | (8,070 | ) | $ | (7,609 | ) | $ | (22,958 | ) | $ | (2,745 | ) | ||||
| Stock-based compensation | 525 | 814 | 1,743 | 2,403 | ||||||||||||
| Amortization of intangibles (2) | 65 | 203 | 176 | 608 | ||||||||||||
| Deferred financing amortization costs (3) | 353 | 299 | 896 | 963 | ||||||||||||
| Non-core operating expenses (7) | 244 | — | 309 | — | ||||||||||||
| Earnout mark-to-market (6) | (174 | ) | — | (1,086 | ) | — | ||||||||||
| CMS Region A contract termination (5) | — | (599 | ) | — | (19,415 | ) | ||||||||||
| Tax adjustments (4) | (279 | ) | (197 | ) | (561 | ) | 4,246 | |||||||||
| Adjusted Net Loss | $ | (7,336 | ) | $ | (7,089 | ) | $ | (21,481 | ) | $ | (13,940 | ) | ||||
(1) Represents interest expense and amortization of issuance costs related to the refinancing of our indebtedness.
(2) Represents amortization of capitalized expenses related to the acquisition of Performant by an affiliate of Parthenon Capital Partners in 2004.
(3) Represents amortization of capitalized financing costs related to our Credit Agreement for 2018.
(4) Represents tax adjustments assuming a marginal tax rate of 27.5%.
(5) Represents the net impact of the termination of our 2009 CMS Region A contract during the first quarter and third quarter of 2018, comprised of release of an aggregate of $28.4 million of the estimated liability for appeals and the net payable to client balances into revenue, net of derecognition of $9.0 million of prepaid expenses and other current assets with a charge to other operating expenses, reflecting accrued receivables associated with amounts due from subcontractors for decided and yet-to-be decided appeals.
(6) Represents the change from prior reporting periods in the fair value of the potential earnout consideration payable to ECMC Group in connection with the Premiere acquisition.
(7) Represents professional fees related to strategic corporate development activities.
We are providing the following preliminary estimates of our financial results for the year ended December 31, 2019:
| Nine Months Ended | Three Months Ended | Year Ended | ||||||||||||
| September 30, 2019 | December 31, 2019 | December 31, 2018 | December 31, 2019 | |||||||||||
| Actual | Estimate | Actual | Estimate | |||||||||||
| Adjusted EBITDA: | ||||||||||||||
| Net loss | $ | (22,958 | ) | $ | 3,755 to (4,210) | $ | (8,010 | ) | $ | (19,183) to (27,168) | ||||
| Provision for (benefit from) income taxes | 412 | (412) to 588 | 1,542 | 0 to 1,000 | ||||||||||
| Interest expense (1) | 5,260 | 2,240 to 3,240 | 4,699 | 7,500 to 8,500 | ||||||||||
| Interest income | (33 | ) | (7) to (22) | (28 | ) | (40) to (55) | ||||||||
| Depreciation and amortization | 6,698 | 1,803 to 2,803 | 10,234 | 8,500 to 9,500 | ||||||||||
| Impairment of goodwill and customer relationship (8) | — | — | 2,988 | — | ||||||||||
| Non-core operating expenses (7) | 309 | — | — | 309 | ||||||||||
| Earnout mark-to-market (6) | (1,086 | ) | — | (218 | ) | (1,086) | ||||||||
| CMS Region A contract termination (5) | — | — | (19,415 | ) | — | |||||||||
| Stock-based compensation | 1,743 | 257 to 1,257 | 2,750 | 2,000 to 3,000 | ||||||||||
| Adjusted EBITDA | $ | (9,655 | ) | $ | 7,656 to 3,656 | $ | (5,458 | ) | $ | (2,000) to (6,000) | ||||
(1) Represents interest expense and amortization of issuance costs related to the refinancing of our indebtedness.
(5) Represents the net impact of the termination of our 2009 CMS Region A contract during the first quarter of 2018, comprised of release of $27.8 million of the estimated liability for appeals and the net payable to client balances into revenue, net of derecognition of $9.0 million of prepaid expenses and other current assets with a charge to other operating expenses, reflecting accrued receivables associated with amounts due from subcontractors for decided and yet-to-be decided appeals.
(6) Represents the change from prior reporting periods in the fair value of the potential earnout consideration payable to ECMC Group in connection with the Premiere acquisition.
(7) Represents professional fees related to strategic corporate development activities.
(8) Represents intangible assets impairment charge related to Great Lakes Higher Education Guaranty Corporation customer relationship.
PERFORMANT FINANCIAL CORPORATION AND SUBSIDIARIES
Reconciliation of Non-GAAP Results
(In thousands, except per share amount)
(Unaudited)
We are providing the following historical breakdown of the quarterly and annual revenue contributions under the new contribution breakdowns of our revenue results for the years ended December 31, 2017 and December 31, 2018, and nine months ended September 30, 2019:
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| March 31, 2017 | June 30, 2017 | September 30, 2017 | December 31, 2017 | December 31, 2017 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Recovery | $ | 28,223 | $ | 30,911 | $ | 23,094 | $ | 25,640 | $ | 107,868 | ||||||||||
| Healthcare | 1,647 | 2,088 | 2,627 | 3,624 | 9,986 | |||||||||||||||
| Outsourced Services | 3,239 | 2,909 | 4,023 | 4,024 | 14,195 | |||||||||||||||
| Total | $ | 33,109 | $ | 35,908 | $ | 29,744 | $ | 33,288 | $ | 132,049 | ||||||||||
| For the Three Months Ended | For the Year Ended | |||||||||||||||||||
| March 31, 2018 | June 30, 2018 | September 30, 2018 | December 31, 2018 | December 31, 2018 | ||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Recovery | $ | 21,940 | $ | 20,491 | $ | 16,162 | $ | 25,192 | $ | 83,785 | ||||||||||
| Healthcare (1) | 3,523 | 6,095 | 6,553 | 9,893 | 26,064 | |||||||||||||||
| Outsourced Services | 3,768 | 4,750 | 4,266 | 4,645 | 17,429 | |||||||||||||||
| Total | $ | 29,231 | $ | 31,336 | $ | 26,981 | $ | 39,730 | $ | 127,278 | ||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| March 31, 2019 | June 30, 2019 | September 30, 2019 | September 30, 2019 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Recovery | $ | 21,375 | $ | 22,107 | $ | 20,936 | $ | 64,418 | ||||||||
| Healthcare | 9,020 | 9,263 | 10,757 | 29,040 | ||||||||||||
| Outsourced Services | 4,481 | 4,460 | 4,210 | 13,151 | ||||||||||||
| Total | $ | 34,876 | $ | 35,830 | $ | 35,903 | $ | 106,609 | ||||||||
(1) Excludes $27.8 million for the three months ended March 31, 2018, and $0.6 million for the three months ended September 30, 2018, related to the termination of the 2009 CMS Region A contract.