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Performant Healthcare Inc (PHLT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered 22% revenue growth to $33.27M, with healthcare revenue up 29% to $33.19M; GAAP net loss narrowed to $0.08M (diluted EPS $0.00) and adjusted EBITDA turned positive to $3.32M from a loss last year .
  • Results were above internal expectations and ahead of Street consensus: revenue $33.27M vs $29.92M* and EPS $0.02 vs -$0.03*, driven by strong commercial execution and balanced government/commercial demand; management raised FY25 guidance .
  • FY25 guidance increased to healthcare revenue $133–$135M and adjusted EBITDA $9–$10M (prior: total revenue $131–$135M and adjusted EBITDA $8–$9M), citing momentum in commercial programs and a growing backlog .
  • Strategic catalysts: record 13 commercial programs implemented in Q1 (estimated $4.5–$5.0M annualized), continued claims-based strength (+38% YoY), and anticipated NY State RAC ramp; government volumes showed early signs of rebound per call commentary .
  • Watch items: election-cycle conservatism on RAC programs normalizing; not selected on CMS RAC Regions 3–5 RFP; near-term OpEx elevation tied to scaling and IT investments (Project Turing) .

What Went Well and What Went Wrong

What Went Well

  • “Our first quarter revenue and profitability exceeded expectations,” reflecting robust demand and a resilient business model across government and commercial clients; 13 commercial implementations add $4.5–$5.0M annualized at steady state .
  • Segment strength: claims-based services revenue grew 38% YoY to $17.1M; eligibility-based rose 20% YoY to $16.1M, evidencing balanced growth drivers .
  • Raised FY25 guidance: healthcare revenue to $133–$135M and adjusted EBITDA to $9–$10M, citing healthy pipeline, successful implementations, and backlog not yet fully scaled .

What Went Wrong

  • GAAP profitability remains a work-in-progress: net loss was $0.08M (EPS $0.00) amid elevated OpEx from scaling and technology investments; adjusted EBITDA improved but still modest at $3.32M .
  • Government RAC program volumes were tamped down through the election cycle, creating short-term headwinds; management expects normalization as new administration sets priorities .
  • Contracting outcome: not selected for CMS RAC Regions 3–5, reducing near-term government revenue opportunities; management aims to offset via commercial momentum and NY State RAC ramp .

Financial Results

GAAP and Non-GAAP Summary

MetricQ1 2024Q4 2024Q1 2025
Total Revenue ($USD Millions)$27.33 $34.77 $33.27
Healthcare Revenue ($USD Millions)$25.80 $34.28 $33.19
Net Income (Loss) ($USD Millions)$(4.02) $(0.50) $(0.08)
Diluted EPS (GAAP)$(0.05) $(0.01) $0.00
Adjusted EBITDA ($USD Millions)$(1.23) $3.12 $3.32
Adjusted EPS$(0.04) $0.02 $0.02

Actuals vs Wall Street Consensus (S&P Global)

MetricConsensus (Q1 2025)Actual (Q1 2025)
Revenue ($USD Millions)$29.92*$33.27
Primary EPS ($USD)-$0.03*$0.02

Values marked with * retrieved from S&P Global.

Margins

MetricQ4 2024Q1 2025
EBIT ($USD Millions)$(0.69) $0.15
EBITDA ($USD Millions)$0.67*$1.60*
EBIT Margin (%)-1.98%*0.45%*
EBITDA Margin (%)1.91%*4.82%*
Net Income Margin (%)-1.43%*-0.24%*

Values marked with * retrieved from S&P Global.

Segment Breakdown (Revenue)

Segment ($USD Millions)Q1 2024Q4 2024Q1 2025
Eligibility-based$13.39 $18.14 $16.08
Claims-based$12.41 $16.14 $17.10
Healthcare Total$25.80 $34.28 $33.19
Customer Care / Outsourced$1.53 $0.49 $0.08
Total Company$27.33 $34.77 $33.27

KPIs

KPIQ1 2024Q4 2024Q1 2025
Commercial Implementations (#)10 42 in 2024 13
Estimated Annualized Revenue from New Implementations ($USD Millions)$5–$6 >$18 in 2024 implementations $4.5–$5.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY 2025$131–$135 n/a (company reframed to healthcare revenue)n/a
Healthcare Revenue ($USD Millions)FY 2025n/a$133–$135 Introduced; higher midpoint vs prior total revenue framing
Adjusted EBITDA ($USD Millions)FY 2025$8–$9 $9–$10 Raised

Management attributed the raise to strong Q1 execution, commercial momentum, healthy pipeline, and backlog yet to scale .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Commercial implementations & pipeline32 YTD programs; $13–$14M annualized expected; industry challenges incl. Change Healthcare breach causing timing conservatism 42 implementations in 2024; commercial clients drove double-digit growth 13 programs implemented; $4.5–$5.0M annualized; majority of growth from commercial Strong, sustained momentum
Government RAC program volumesElection-cycle conservatism tamped down volumes; normalization expected post-election Anticipated stair-step growth from NY State RAC; double-digit $M potential at steady state Early signs of government revenue rebound; focus on NY RAC ramp Improving trajectory
Project Turing / tech investmentEfficiency initiatives underway; balancing OpEx with growth Emphasized tech innovation driving EBITDA expansion; target 20% adjusted EBITDA margin at $150–$160M healthcare revenue scale Continued disciplined cost management; non-GAAP improvements tied to scaling and IT Ongoing execution
CMS RAC RFP outcome——Not selected for Regions 3–5; mitigating via commercial wins and NY RAC Near-term headwind
Cybersecurity ecosystem impactClients reassessing security posture after Change breach; timing impacts to implementations —No fresh issues noted in Q1; commercial growth remained strong Stabilizing

Management Commentary

  • CEO: “Our first quarter revenue and profitability exceeded expectations… We saw solid growth across both government and commercial clients… we implemented 13 commercial programs, estimated to contribute between $4.5 million and $5.0 million in annualized revenue at steady state” .
  • CFO: “We expect to deliver 2025 healthcare revenues in the range of $133 million to $135 million and adjusted EBITDA in the range of $9 million to $10 million” and noted momentum from a healthy pipeline and backlog .
  • Year-ahead framing (Q4 release): Technology innovation and execution expected to nearly double adjusted EBITDA YoY at midpoint; target 20% adjusted EBITDA margin at scale with continued success of Project Turing .

Q&A Highlights

  • Government RAC normalization: Management expects election-related conservatism to ease, with early signs of government revenue rebound and a focus on NY State RAC ramp .
  • Commercial implementations cadence: Temporary Q2 dip expected as teams focus on NY RAC ramp; full-year commercial implementation targets unchanged (meeting/exceeding ~$18M steady-state annualized) .
  • Macro/tariffs: Company insulated from tariff pressures with domestic revenue/cost structure; no material impact expected .
  • Capital and liquidity: Continued disciplined cost management and utilization of existing credit facility to support implementations and IT investments; positive adjusted EBITDA trend .

Estimates Context

  • Q1 2025 beat vs consensus: Revenue $33.27M vs $29.92M*; EPS $0.02 vs -$0.03*. Expect sell-side to reflect raised FY25 guidance (healthcare revenue $133–$135M; adj. EBITDA $9–$10M) in models .
  • Next-quarter estimates: Attempted retrieval for the next quarter showed no available consensus at this time; we will update when S&P Global publishes [GetEstimates result unavailable].

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Top-line strength with balanced growth: Claims-based +38% YoY and eligibility +20% YoY drove a clean revenue beat and positive adjusted EBITDA, supporting raised FY25 guidance .
  • Narrative shift to healthcare revenue guidance signals confidence in core mix and scalability; EBITDA guide raised to $9–$10M, implying continued margin progress as implementations scale .
  • Commercial engine is the primary driver: 13 new programs in Q1 and robust backlog/pipeline provide visibility into near-term growth and 2H ramp potential .
  • Government tailwinds emerging: Early rebound commentary and NY State RAC ramp should mitigate the CMS RAC RFP outcome; watch for sequential improvement in government volumes .
  • Non-GAAP to GAAP bridge improving: Adjusted EPS $0.02 vs GAAP EPS $0.00 reflects operating leverage and scaling benefits; sustained focus on OpEx discipline and IT efficiency (Project Turing) should continue to compress losses .
  • Tactical positioning: Near-term trading likely centers on estimate revisions and validation of NY RAC ramp; medium-term thesis hinges on commercial share gains, margin expansion, and achieving self-sustaining cash flows under existing capital framework .
  • Risk monitor: Government policy changes (RAC), implementation timing, and elevated OpEx from scaling/tech investments remain key sensitivities; management’s raised guidance and backlog provide offsetting confidence .

Citations:

  • Q1 2025 8-K press release and financials:
  • Q4 2024 8-K press release and financials:
  • Prior-quarter call commentary:
  • Q1 2025 earnings call transcript and summary:
  • Company IR press release page (Q1 2025):

Values marked with * retrieved from S&P Global.