Q2 2024 Performant Financial Corp Earnings Call

Operator: Good afternoon, ladies and gentlemen, and welcome to Performant Financial's second quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode.

Operator: Good afternoon, ladies and gentlemen, and welcome to Performant Financial's second quarter 2024 earnings conference call. At this time, all the lines are in a listen-only mode following the presentation.

Operator: Good afternoon, ladies and gentlemen, and welcome to Performant Financial's second quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode.

Good afternoon, ladies and gentlemen, and welcome to pre format financials second quarter 2024 earnings conference call. 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.

Operator: Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Jon Bozzuto, Head of Investor Relations. Please go ahead.

Operator: Following the presentation, we will conduct a question and answer session. This call is being recorded on Wednesday, August 7, 2024. I would now like to turn the conference over to Jon Bozzuto, Head of Investor Relations. Please go ahead. Thank you.

Operator: We will conduct a question and answer session.

Operator: This call has been reported on Wednesday, August 7th, 2024.

John <unk>: 720, 24, I would now like to turn the conference over to John <unk> 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 <unk>.

Jon Bozzuto: Thank you, operator. Good afternoon, everyone.

Jon Bozzuto: I would now like to turn the conference over to Jon Bozzuto, head of investor relations. Please go ahead.

Jon Bozzuto: 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. However, actual results may differ materially from those described during the call.

Jon Bozzuto: 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 Kohl, 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 filings with the SEC.

Jon Bozzuto: Thank you, operator.

Jon Bozzuto: 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.

Best of relations portion of our website.

Jon Bozzuto: On today's call, we'll be Simeon Kohl, Chief Executive Officer, and Rohit Ramchandani, Chief Financial Officer.

Speaker Change: On today's call will be Simeon Cole, Chief Executive Officer, and broke where I'm trying Donnie Chief Financial Officer.

Jon Bozzuto: Before we begin, I'd like to remind you that some of the comments made today, including our financial guidance, are our 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.

Jon Bozzuto: 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 Kohl. Sim?

Speaker Change: Before we begin I would like to remind you that some of the comments made today.

Speaker Change: 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.

Speaker Change: Actual results may differ materially from those described during the call.

Speaker Change: 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.

Jon Bozzuto: 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.

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.

Jon Bozzuto: I would now like to turn the call over to Simeon Kohl. Simeon Kohl.

Speaker Change: I would now like to turn the call over to Simeon coal Tim.

Simeon Kohl: Thank you, Jon.

Speaker Change: Thank you John Good afternoon, everyone and thank you for joining us for earnings call. This afternoon, we reported second quarter results highlighted by 17% growth in health care revenues compared to the second quarter of 2023.

Simeon Kohl: 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.

Unknown Executive: Thank you, Jon. Good afternoon, everyone, and thank you for joining us on our earnings call. This afternoon, we reported second quarter results highlighted by 17% growth in health care 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.

Simeon Kohl: Thank you, Jon. Good afternoon, everyone, and thank you for joining us on 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.

Speaker Change: Positive EBITDA of half a million dollars.

Simeon Kohl: 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.

Speaker Change: We'll share our operational accomplishments followed by Rohit, who will walk you through our financial results.

Speaker Change: 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.

Unknown Executive: Our strategy to deliver these results has remained unchanged: Prioritize client needs, continuously innovate, and achieve operational excellence. This past quarter, we implemented 10 statements of work, including adding two new clients to our roster. In the year to date, we have implemented 20 new statements of work, which we estimate will collectively generate approximately $9 million in annualized revenue at Stoudy State. 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. So we anticipate this more measured approach will be limited to the current election cycle.

Rohit: Our strategy to deliver these results has remained unchanged prioritize client needs continuously innovate and achieve operational excellence.

Simeon Kohl: 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 the year to date, we have implemented 20 new statements of work, which we estimate will collectively generate approximately $9 million in annualized revenue at Steudy State.

Rohit: On each of these as we highlight our second quarter results.

Rohit: 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 and year to date, we have implemented 20, new statements of work, which we estimate will collectively generate approximately <unk> <unk>.

Simeon Kohl: 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 the approximately nine million dollars in annualized revenue at Staudi State. 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.

Rohit: $9 million in annualized revenue at steady state.

Speaker Change: And despite the significant client bandwidth required for implementations at his courage you to see our clients continue to switch from their legacy partners and choose performance okay.

Speaker Change: Estimate to our ability to deliver timely and meaningful returns on their trust and investment.

Simeon Kohl: 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 up RAC Region 2.

Rohit: Our business started with a single CMS rack engagement government contracts remain 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 rack region to this election year, However presents potential uncertainty for our industry we are seeing.

Simeon Kohl: 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 Two.

Simeon Kohl: This election year, however, presents potential uncertainty for our industry. We are seeing several agencies take a more conservative approach with oversight programs, and we anticipate this more measured approach will be limited to the current election cycle.

Simeon Kohl: This election year, however, presents potential uncertainty for our industry. We are seeing several agencies take a more conservative approach with Oversight Probe. Prams, 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 governments' commitment to payment, accuracy, and transparency will likely remain unchanged no matter the election outcome.

Rohit: Several agencies take a more conservative approach with oversight programs, though we anticipate this more measured approach when we limited to the current election cycle, having navigated multiple prior elections, we are confident that both the state and federal governments commitment to payment accuracy and transparency will likely remain unchanged no matter the election outcome.

Simeon Kohl: 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 to $500 million state market. We have been active in 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 solution.

Simeon Kohl: Staying on the government theme, we continue to see an opportunity in the three to five hundred million dollar 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.

Unknown Executive: Staying on the government theme, we continue to see an opportunity in the $300 to $500 million state market. We have been active in 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 solution. One challenge we would highlight is the change healthcare outage, which has had a meaningful impact on claims processing, adjudication, and care delivery. 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.

Speaker Change: Staying on the government theme, we continue to see an opportunity in the $3 million to $500 million state market.

Speaker Change: 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.

Simeon Kohl: Change is constant within healthcare, and our client faced numerous challenges, including adjustments in 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 to change healthcare incident to impact our long-term growth strategy.

Simeon Kohl: Change is constant within health care, and our clients face numerous challenges, including adjustments and reimbursements and evolving risk pools due to Medicaid redetermination. One challenge we would highlight is the recent 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.

Speaker Change: Change is constant within healthcare and our clients faced numerous challenges, including adjustments and reimbursements and evolving risk pools due to Medicaid redetermination.

Speaker Change: One challenge we would highlight is the change healthcare outage, which has had a meaningful impact on claims processing adjudication and care delivery the.

Speaker Change: The change healthcare outage has fortunately only had a minor impact on performance to date.

Speaker Change: From an implementation 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 to change healthcare incident to impact our long term growth strategy.

Simeon Kohl: While we have seen isolated delays, the strength of our services continues to drive positive results for our clients, and we do not expect any change in healthcare incident to impact our long-term growth strategy. We initially anticipated the operational impact of the changed 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 continue to support that assessment.

Simeon Kohl: 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 and 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.

Speaker Change: 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 lost an opportunity for performance and the results. We've seen to date on our existing operations continues to support that assessment.

Unknown Executive: We will continue to monitor for downstream impacts to our operations, but again, to date, we have seen minimal operational disruption. 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.

Simeon Kohl: 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, which includes encryption, role-based access controls, anomaly detection, and comprehensive vulnerability and vendor management.

Speaker Change: We will continue to monitor for downstream impacts to our operations, but again to date, we have seen minimal operational disruption.

Simeon Kohl: 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 high-trusts, SOC and SOC, 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.

Speaker Change: 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.

Speaker Change: This includes encryption role based access controls anomaly detection and comprehensive vulnerability and vendor management.

Simeon Kohl: 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 SOX, along with an annual CMS control audit. 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.

Speaker Change: 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 high Trust Sock and Socs, along with annual CMS control audits.

Speaker Change: 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.

Simeon Kohl: 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.

Simeon Kohl: Turning to our operational efforts, in the second quarter, we achieve positive EBITDA of half a million dollars, 1.8 million ahead of a 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 of profitability is through increased revenues, we do have opportunities to drive greater efficiency, particularly in our claims-based business. The acquisition of Reckers One Technology earlier this year, which is folded in nicely to Project Toring, 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.

Simeon Kohl: 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 RecordsOne technology earlier this year, which has folded in nicely to Project Touring, will be one of the major components in achieving these margin gains.

Speaker Change: Turning to our operational efforts in the second quarter, we achieved positive EBITDA of half a million one 8 million ahead of prior year's quarter.

Unknown Executive: 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, it 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.

Rohit: To achieve this we are prioritize productivity and efficiency to drive profitability Rohit is often share 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.

Speaker Change: The acquisition of records one technology earlier, this year, which is folded in nicely to project Turing will be one of the major components and achieving these margin gains as a reminder, this artificial intelligence based solution.

Simeon Kohl: 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.

Rohit: Integrates into our audit workflow, improving the accuracy and efficiency of our medical auditors.

Simeon Kohl: 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 Performance and remain active in the integration, adoption, and development process. We remain highly encouraged by the prospects of this powerful AI technology.

Speaker Change: The integration plan for this technology has been Congress. According to plan and we are pleased to be doing so alongside key team members from records one who have joined performance remained active in the integration adoption and development process.

Unknown Executive: 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. 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. And finally, from a macro perspective, the need for payment integrity solutions to help control costs within our health care 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. Okay, Rohit?

Rohit: We remain highly encouraged by the prospects of this powerful AI technology.

Simeon Kohl: 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.

Simeon Kohl: As we continue our journey to becoming a best-in-class pure play health care 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.

Speaker Change: 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.

Rohit: This initiative is a significant step towards fostering a culture of ownership, which is one of our core corporate pillars by.

Rohit: By encouraging an ownership mentality, we empower our employees to deliver the best results for our clients.

Rohit: And there is 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 Companys accomplishments I couldnt be prouder of this development and I am confident that it will strengthen our commitment to excellence and accelerate our collective success.

Simeon Kohl: 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.

Simeon Kohl: 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.

Simeon Kohl: 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.

Rohit: Overall I am encouraged by our second quarter results, we continued to deliver for our clients, which has led to more opportunities for future growth.

Rohit: Operationally, our technology investments to increase productivity and efficiency gains are paying tangible dividends.

Simeon Kohl: And finally, from a macro perspective, the need for payment integrity solutions to help control costs within our health care 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.

Rohit: And finally from a macro perspective, the need for payment integrity solutions to help control cost within our health care system remains as strong as ever.

Rohit Ramchandani: With that, I'll hand it over to Rohit Romchandani, our Chief Financial Officer, for a discussion of the financials. Rohit?

Speaker Change: With that I'll hand, it over to Rohit Rammstein, Dani, our chief financial Officer for a discussion of the financials Rohit.

Rohit Ramchandani: Thanks, Sen. Our results in the second quarter, 2024, have exceeded expectations, and we remain encouraged by our prospects for the remainder of the year. Total company revenues in the quarter were 29.4 million, which included healthcare revenues of 27.9 million. Our customer care, outdoor services business, accounted for 1.4 million of the revenue during the quarter, a decline of 0.1 million from the previous year. We are eagerly anticipating a resumption of numerous federal student loan programs, which would allow us to achieve our guided targets and the future growth expectations for this service line. Our second quarter healthcare revenue proved 17 percent year over year.

Rohit Rammstein: Thanks, Tim.

Rohit Ramchandani: Our results in the second quarter of 2024 have exceeded expectations, and we remain encouraged by our prospects for the remainder of the year. Total company revenues in the quarter were $29.4 million, which included health care revenues of $27.9 million.

Rohit Rammstein: Our results in the second quarter 2024 have exceeded expectations and we remain encouraged by our prospects for the remainder of the year.

Rohit Rammstein: Total company revenues in the quarter were $29 4 million, which included healthcare revenues of 27 9 million.

Rohit Ramchandani: Our customer care outsourced services business accounted for $1.4 million of revenue during the quarter, a decline of $0.1 million from the previous year. We are eagerly anticipating a resumption of numerous federal student loan programs, which would allow us to achieve our guided targets and future growth expectations for this service line. Our second quarter healthcare revenue grew 17% year over year as a result of successfully ramping prior year implementations. Our claims-based business, also known as claims auditing, led the way with revenues of almost $14 million in the quarter, representing an increase of roughly 40% year-over-year.

Rohit Rammstein: Our customer care outsourced services business accounted for $1 4 million of the revenue during the quarter a decline of <unk> 1 million from the previous year.

Speaker Change: Are you really anticipating a resumption of numerous federal student loan program, which would allow us to achieve our guided targets in the future growth expectations for this service line.

Rohit Ramchandani: Our second quarter health care revenue grew 17% year over year as a result of successfully ramping prior year implementations. Our claims-based business, also known as claims auditing, led the way with revenues of almost $14 million in the quarter, representing an increase of roughly 40% year-over-year. Both our government and commercial clients contributed to this growth. This quarter, we did welcome two net new clients, continuing to support our value thesis amongst middle market players.

Rohit Rammstein: Our second quarter health care revenue grew 17% year over year as a result of successfully ramping prior year implementations.

Rohit Ramchandani: I was a result of successfully ramping prior year implementations. Our claims-based business, also known as claims auditing, led the way with revenues of almost $14 million in the quarter, representing an increase of roughly 40 percent year over year. Both are government and commercial clients contributing to this growth. Within commercial, existing implementation scaled as expected to contribute to this strong top-line growth, while the RAC region 2 contracted in the government sector continued to successfully scale. We anticipate continued growth of our commercial clients, as well as continued scale of RAC Region 2, though we do recognize the more conservative approach that federal oversight programs have taken as the election draws near.

Rohit Rammstein: Our claim space business also known as claims auditing led the way with revenues of almost $14 million in the quarter, representing an increase of roughly 40% year over year, both our government and commercial clients contributed to this growth.

Rohit Ramchandani: Both our government and commercial clients contributed to this growth. Within commercial, existing implementations scaled as expected, contributing to this strong top-line growth, while the RAC Region 2 contract in the government sector continued to successfully scale. We anticipate continued growth of our commercial clients as well as continued scale of RAC Region 2, though we do recognize the more conservative approach that federal oversight programs have taken as the election draws near. Looking forward, we continue to anticipate healthy growth with commercial clients alongside a strong CMS foundation. State RAC or other federal RAC region wins would support meaningful growth in the government beyond the ebbs and flows of existing programs in the ramping up of RAC Region 2.

Rohit Rammstein: Within commercial existing implementations scaled as expected contributing to this strong top line growth, while the rack region to contract in the government sector continue to successfully scale.

Rohit Rammstein: We anticipate continued growth of our commercial clients as well as continued scale of rack region too that we do recognize the more conservative approach that federal oversight programs, you've taken as the election draws near.

Rohit Ramchandani: Looking forward, we continue to anticipate healthy growth with commercial clients alongside a strong CMS foundation. State RAC or other federal RAC region wins with support meaningful growth in the government beyond the Epson flows and existing programs in the ramping of RAC region two. Eligibility revenues for the quarter were 14.3 million, representing an increase of roughly 1% in comparison to last year. As we think about 2024, our reminder that the eligibility business includes our mature relationship with CMS-MSP, now on our new CRC contract. With our commercial eligibility clients and opportunities, we continue to refine and optimize our data assets, aiming to use our data more effectively.

Rohit Rammstein: Looking forward, we continue to anticipate healthy growth with commercial clients alongside a strong CNS Foundation.

Rohit Rammstein: Eight rack or other federal recreation wins with support meaningful growth in government beyond the ebbs and flows of existing programs and the ramping of Brac region too.

Rohit Ramchandani: Eligibility revenues for the quarter were $14.3 million, representing an increase of roughly 1% in comparison to last year. As we think about 2024, a reminder that the eligibility business includes our mature relationship with CMS MSP, now on our new CRC contract. With our commercial eligibility clients and opportunities, we continue to refine and optimize our data assets, aiming to use our data more effectively. Additionally, we leverage advanced analytics and additional services to eliminate false positives from our workflow, further improving our operational efficiency.

Rohit Rammstein: Eligibility revenues for the quarter was $14 3 million, representing an increase of roughly 1% in comparison to last year as.

Rohit Rammstein: As we think about 2020 for a reminder, that the eligibility business includes our mature relationship with CMS MSP now on our new CRC contract.

Rohit Rammstein: With our commercial eligibility clients and opportunities, we continue to refine and optimize our data assets aiming to use our data more effectively.

Rohit Ramchandani: Additionally, we leverage advanced analytics and additional services to eliminate false positives from our workflow, further improving our operational efficiency. This approach not only streamlines our processes, but also ensures we deliver high quality, accurate results to our clients. We are setting ourselves up well for sustainable future growth. As Tim mentioned, we are now at year-to-date implementations worth approximately $9 million in annualized revenues at steady state. As we've often discussed, the value of these statements of work can fluctuate on a quarterly basis. This quarter, we did welcome two net new clients, continuing to support our value thesis amongst our annual market players.

Rohit Rammstein: Additionally, we leveraged advanced analytics and additional services to eliminate false positive small workflow further improving our operational efficiency.

Rohit Ramchandani: This approach not only streamlines our processes but also ensures we deliver high-quality, accurate results to our clients. We are setting ourselves up well for sustainable future growth. As Sim mentioned, we are now at year-to-date implementations worth approximately $9 million in annualized revenues at SteadyState. However, as we've often discussed, the value of these statements of work can fluctuate on a quarterly basis.

Rohit Rammstein: This approach not only streamlines our processes, but also ensures we deliver high quality accurate results to our clients.

Rohit Rammstein: We are setting ourselves up well for sustainable future growth.

Rohit Rammstein: As Tim mentioned, we are now at year to date implementations were approximately $9 million in annualized revenues at steady state.

Tim: As we've often discussed the value of these statements of work can fluctuate on a quarterly basis.

Rohit Ramchandani: This quarter, we did welcome two net new clients, continuing to support our value thesis amongst middle market players. Our ongoing efforts to secure and execute these sticky contracts are a testament to our strong market position and commitment to growth. We remain confident in our anticipation that the total annualized revenues from new implementations in 2024 will match or exceed the $18 million in estimated annualized revenues from 2023 implementations. Shifting to operating expenses, these represented $32.1 million in the second quarter, or roughly $3 million higher when compared to the second quarter of last year.

Speaker Change: This quarter, we did welcome to net new clients continuing to support our valued thesis amongst middle market players.

Rohit Ramchandani: Our ongoing efforts to secure and execute these sticky contracts are a testament to our strong market position in commitment to growth. We remain confident in our anticipation that the total annualized revenues from new implementations in 2024 will match or exceed the $18 million in estimated annualized revenues from 2023 implementations. Shifting to operating expenses, these represented $32.1 million in the second quarter, a roughly $2 million higher when compared to the second quarter of last year. This was primarily driven by an increased spend to scale implementations, IT investments related to project touring, and investments in sales and business development, all of which we discussed earlier this year.

Rohit Ramchandani: Our ongoing efforts to secure and execute these sticky contracts are a testament to our strong market position and commitment to growth. We remain confident in our anticipation that the total annualized revenues from new implementations in 2024 will match or exceed the $18 million in estimated annualized revenues from 2023 implementations. Shifting to operating expenses, these represented $32.1 million in the second quarter, or roughly $3 million higher when compared to the second quarter of last year.

Speaker Change: Our ongoing efforts to secure and execute the sticky contracts are a testament to our strong market position and commitment to growth we remain confident in our anticipation that the total annualized revenues from new implementations in 2024 will match or exceed the 18 million in estimated annualized revenues from 2023.

Speaker Change: Foundations.

Speaker Change: Shifting to operating expenses. These represented $32 1 million in the second quarter are roughly 3 million higher when compared to the second quarter of last year.

Rohit Ramchandani: This was primarily driven by an increased spend to scale implementations, IT investments related to project touring, and investments in sales and business development, all of which we discussed earlier this year. We are encouraged by the early results of Project Turing, as we see positive scale and incremental margin growth by adding roughly $4 million of revenues year over year, while only adding $3 million of operating expense. We have strategically positioned our business to drive profitability and sustainable growth.

Rohit Ramchandani: This was primarily driven by an increased spend to scale implementations, IT investments related to project touring, and investments in sales and business development, all of which we discussed earlier this year. We are encouraged by the early results of Project Touring as we see positive scale and incremental margin growth by adding roughly $4 million of revenues year over year, while only adding $3 million of operating expense. We have strategically positioned our business to drive profitability and sustainable growth.

Speaker Change: This was primarily driven by an increased spend to scale implementations.

Speaker Change: Investments related to project touring and investments in sales and business development all of which we discussed earlier this year.

Rohit Ramchandani: We are encouraged by the earlier results of project touring, as we see positive scale and incremental margin growth in adding roughly $4 million of revenues year over year while only adding $2 million in operating expense. We have strategically positioned our business to drive profitability and sustainable growth. We are pleased to report and adjust the top of a half a million dollars in the second quarter, or $1.8 million ahead of the prior year period. Over the past several quarters, we have emphasized our commitment to efficiency and productivity initiatives, notably through project touring, which has been noted this progressing well.

Speaker Change: We're encouraged by the early results of project touring as we see positive scale and incremental margin growth and adding roughly $4 million of revenues year over year, while only adding 3 million of operating expense.

Speaker Change: We have strategically positioned our business to drive profitability and sustainable growth.

Rohit Ramchandani: We are pleased to report an adjusted EBITDA of half a million dollars in the second quarter, or $1.8 million ahead of the prior year period. Over the past several quarters, we have emphasized our commitment to efficiency and productivity initiatives, notably through Project Turing, which, as Sim noted, was progressing well. We have focused on operational efficiency without compromising our capacity for top-line growth.

Speaker Change: We're pleased to report an adjusted EBITDA of half a million dollars in the second quarter or $1 8 million ahead of the prior year period.

Speaker Change: Over the past several quarters, we have emphasized our commitment to efficiency and productivity initiatives, notably.

Speaker Change: Notably through project during which I assume is progressing well.

Rohit Ramchandani: We have been focused on this operational efficiency without compromising our capacity for top-line growth. This balance ensures that while we streamline processes and reduce costs, we continue to expand our market presence and seize new growth opportunities. We are confident that these initiatives will not only sustain but accelerate our profitability trajectory. As we reflect on our strong first half performance, alongside taking the consideration indirect impacts of the change out there outage and this tumultuous election cycle, we are excited to reaffirm our guidance for revenues and profitability. This confidence is bolstered by the success we are seeing in our commercial growth strategies and operations.

Speaker Change: We havent focused on this operational efficiency without compromising our capacity for topline growth. This balanced share is that while we streamline processes and reduce costs. We continue to expand our market presence in these new growth opportunities. We are confident that these initiatives will not only sustain but accelerate our profitability.

Rohit Ramchandani: This balance ensures that while we streamline processes and reduce costs, we continue to expand our market presence and seize new growth opportunities. We are confident that these initiatives will not only sustain but accelerate our profitability trajectory. As we reflect on our strong first half performance, alongside taking into consideration the indirect impacts of the chained healthcare outage and this tumultuous election cycle, we are excited to reaffirm our guidance for revenues and profitability. This confidence is bolstered by the success we are seeing in our commercial growth strategies and operations.

Speaker Change: The trajectory.

Speaker Change: As we reflect on our strong first half performance alongside of taking the consideration indirect impacts of the change healthcare outage in this tumultuous election cycle. We are excited to reaffirm our guidance for revenues and profitability.

Speaker Change: This confidence is bolstered by the success, we are seeing in our commercial growth strategy and operations.

Rohit Ramchandani: To be clear, we are reiterating our guidance for 2024 healthcare revenues to be in the range of $117 to $122 million. Full company revenues to be between $124 and $129 million. And for the full year, 2024 adjusts to be the dot, to be in the range of $4 to $5 million. And looking at our balance sheet, as anticipated, we have marginally drawn down on our debt facility in support of our ongoing implementation ramps and recent technology acquisition. We are pleased to see our credit relationship with Wells Fargo continuing to grow in a positive manner. The investments we are making in our people, technology, sales, and business development efforts are on track with what we communicated earlier this year.

Rohit Ramchandani: To be clear, we are reiterating our guidance for 2024 healthcare revenues to be in the range of $117 to $122 million, full company revenues to be between $124 and $129 million, and for the full year 2024 adjusted EBITDA to be in the range of $4 to $5 million. And looking at our balance sheet, as anticipated, we have marginally drawn down on our debt facility in support of our ongoing implementation ramps and recent technology acquisition.

Speaker Change: To be clear, we are reiterating our guidance for 2020 for healthcare revenue to be in the range of $117 million to $122 million full company revenues to be between 124 and $129 million and for the full year 2024, adjusted EBITDA to be in the range of $4 million to $5 million.

Speaker Change: And looking at our balance sheet as anticipated we are marginally drawn down on our debt facility in support of our ongoing implementation ramps and recent technology acquisition.

Rohit Ramchandani: We are pleased to see our credit relationship with Wells Fargo continuing to grow in a positive manner. The investments we are making in our people, technology, sales, and business development efforts are on track with what we communicated earlier this year. This measured approach is already showing progress as we push toward our 20% plus adjusted EBITDA margin target. From a scale perspective, we anticipate being able to achieve such margins if health care revenues reach $150 to $160 million.

Speaker Change: We are pleased to see our credit relationship with Wells Fargo, continuing to grow in a positive manner.

Speaker Change: The investments we are making in our people technology sales and business development efforts are on track with what we communicated earlier this year.

Rohit Ramchandani: This measured approach is already shown progress as we push toward our 20% plus adjusted EVA DOM margin targets. From a scale perspective, we anticipate being able to achieve such margins if healthcare revenues reach $158 to $160 million. We maintain our goal of hitting our EVA DOM selection point in the near term and achieving self-sustaining cash flows at some point in the next year without sacrificing the ability to invest in future growth. I am very pleased with the revenue growth and profitability scale we have demonstrated thus far in the first half of the year, giving me confidence in the remainder of 2024.

Speaker Change: This measured approach is already showing progress as we push toward our 20% plus adjusted EBITDA margin targets.

Speaker Change: From a scale perspective, we anticipate being able to achieve such margins, if healthcare revenues reached $150 million to $160 million.

Rohit Ramchandani: We maintain our goal of hitting our EBITDA inflection point in the near term and achieving self-sustaining cash flows at some point in the next year without sacrificing the ability to invest in future growth. I'm very pleased with the revenue growth and profitability scale we have demonstrated thus far in the first half of the year, giving me confidence in the remainder of 2024. Operator, will you please open up the lines for questions?

Speaker Change: Maintain our goal of hitting our EBITDA inflection point in the near term and achieving self sustaining cash flows at some point in the next year without sacrificing the ability to invest in future growth.

Speaker Change: I am very pleased with the revenue growth and profitability scale, we have demonstrated thus far in the first half of the year, giving me confidence in the remainder of 2024.

Operator: Operator, would you please open up the lines for questions? Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Operator can you please open up the lines for questions.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from George Sutton of Craig Callum Capital Group. Please proceed.

Speaker Change: Thank you and he would like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Formation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue.

Operator: Good afternoon, ladies and gentlemen, and welcome to Performant Financial's second quarter, 2024 Earnings Conference call. At this time, all the lines are in a listen-only mode following the presentation. We will conduct a question and answer session.

Speaker Change: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

George Sutton: Our first question is from George Sutton with Craig Calum Capital Group. Please proceed.

Operator: Our first question is from George Sutton with Craig Callum Capital Group. Please proceed.

Speaker Change: Our first question is from George Sutton with Craig Hallum Capital Group. Please proceed.

Operator: This call has been reported on Wednesday, August 7th, 2024.

George Sutton: Thank you, good afternoon guys. I wondered if you could walk through the Medicaid opportunities more broadly that you are seeing now. You mentioned some activity there. Obviously, we know New York is coming up. So, has there been any changes to the New York timing? I assume not.

George Sutton: Thank you. Good afternoon, guys.

Jon Bozzuto: I would now like to turn the conference over to Jon Bozzuto, head of investor relations, please go ahead. Thank you, operator. Good afternoon, everyone.

George Sutton: Thank you good afternoon, guys. So I wondered if you could walk through the Medicaid opportunities more broadly that youre seeing now you mentioned some activity. There obviously, we know new York's coming up.

George Sutton: So I wondered if you could walk through the Medicaid opportunities more broadly that you're seeing now. You mentioned some activity there. Obviously, we know New York's coming up. So have there been any changes to the New York timing? I assume not. And I'm just curious about other opportunities outside of New York.

Jon Bozzuto: 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.

George Sutton: So as there been any any changes to the New York timing I assume not and I'm just curious about other opportunities outside of New York.

Simeon Kohl: And I am just curious about other opportunities outside of New York.

Jon Bozzuto: On today's call, we'll be Simeon Kohl, Chief Executive Officer in 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, our forward-looking statements. These statements are subject to risks and uncertainties, including those described in the company's violence with the SEC.

Simeon Kohl: Yeah, hi, George. So, specific to New York, to your point that did get redid, and we went ahead and submit our proposals. The timeframe on that looks to be what they originally committed sometime early September for decisioning, with implementation early next year. So, that looks to be on track. We remain excited about that. Look, anytime you go through a rebid, there are things that you have to step through, etc. But I think we were pretty confident on the first round for good reasons, and we continue to be cautiously optimistic on the rebid. And yes, we are actually seeing quite a bit of activity with other states.

George Sutton: Yeah. Hi George.

Simeon Kohl: Yeah. Hi George.

Operator: Yeah, Hi, George So specific to New York to your point we.

George Sutton: That did get rebid and we went ahead and submit our proposals are the timeframe on that is it looks to be what they originally committed sometime early September for Decisioning with implementation early next year, so that looks to be on track.

Jon Bozzuto: 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-gap financial measures discussed during this call are reconciled to the most directly comparable gap measures in the table attached to our press release.

Simeon Kohl: So, specific to New York, to your point, that did get rebid, and we went ahead and submitted our proposals. The timeframe on that looks to be what they originally committed to sometime in early September for decisioning with implementation early next year. So, that looks to be on track. We remain excited about that. Look, anytime you go through a rebid, there's things that you have to step through, et cetera, but I think we were pretty confident in the first round for good reasons, and we continue to be cautiously optimistic about the rebid.

Unknown Executive: So specific to New York, to your point, that did get rebid, and we went ahead and submitted our proposals. The timeframe on that looks to be what they originally committed to sometime early September for decisioning with implementation early next year. So that looks to be on track. We remain excited about that. Look, anytime you go through a rebid, there's things that you have to step through, et cetera. But I think we were pretty confident in the first round for good reasons. And we continue to be cautiously optimistic about the rebid. And yes, we are actually seeing quite a bit of activity with other states.

Unknown Executive: We remain excited about that look anytime you go through a rebid, there's things that you have to step through et cetera, but.

Unknown Executive: I think we were pretty confident on the first round for good reasons and we continue to be cautiously optimistic on the rebid.

Unknown Executive: And yes, we are actually seeing quite a bit of activity with other states.

Simeon Kohl: And yes, we are actually seeing quite a bit of activity with other states, and so our team is working very closely to respond. We have a few proposals out right now with other states. We're watching closely with additional states, et cetera. So, as we indicated on the last call, our team is really focused on making sure that we are closely watching new opportunities as well as kind of refining our proposals and our response.

Simeon Kohl: And so, our team is working very closely in responding. We have a few proposals out right now with other states for watching closely with additional states, etc. So, as we've indicated on the last call, you know, the team is really focused and making sure that we are closely watching new opportunities as well as kind of refining our proposals and our response. of the Elections.

Unknown Executive: And so our team is working very closely and responding we have a few proposals out right now with other states, we're watching closely with with additional states et cetera. So as we've indicated on the last call.

Simeon Kohl: I would now like to turn the call over to Simeon Kohl. Simeon Kohl. Thank you, Jon.

Speaker Change: <unk> is really focused in making sure that we are hosting watching new opportunities as well as kind of refining our proposals in our responses.

Simeon Kohl: 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.

Simeon Kohl: Great. I wondered if you could explain the conservative oversight that we might see relative to the election, just what's happened in past election cycles, and what exactly do you mean by the more conservative oversight? Yeah. So, and look, we've seen this before, right? Any time there is an election period, especially when you're dealing with some of these oversight programs that the agencies are managing through. You have legislative constituents that are involved. You have folks that are being audited, pushing back a little bit. You have policy determination. You have concepts that get reviewed, etc. And so, you know, history has shown that when you get into those cycles, things tend to delay a little bit more.

Simeon Kohl: Great. I wondered if you could explain the conservative oversight that we might see relative to the election, just what happened in past election cycles, and what exactly do you mean by the more conservative oversight?

George Sutton: Great, I wondered if you could explain the conservative oversight that we might see relative to the election, just what happened in past election cycles, and what exactly do you mean by the more conservative oversight?

Speaker Change: Great I wondered if you could.

George Sutton: Explain the.

Speaker Change: Conservative oversight that we might see relative to the election, just what's happened in past election cycles on what what exactly do you mean by the the more conservative oversight.

Unknown Executive: Yeah, so and look, we've seen this before, right? Anytime there is an election period, especially when you're dealing with some of these oversight programs that the agencies are managing through, you have legislative constituents that are involved, you have folks that are being audited, pushing back a little bit, you have policy determination, you have concepts that get reviewed, et cetera. And so, you know, history has shown that when you get into those cycles, things tend to delay a little bit more.

Simeon Kohl: Yeah, so and look, we've seen this before, right? Anytime there is an election period, especially when you're dealing with some of these oversight programs that the agencies are managing through, you have legislative constituents that are involved, you have folks that are being audited, pushing back a little bit, you have policy determination, you have concepts that get reviewed, et cetera. And so, you know, history has shown that when you get into those cycles, things tend to delay a little bit more.

Speaker Change: Yes, so and look we we've seen this before right anytime there is an election period, especially when you're dealing with some of these these oversight programs that the agencies are managing through you have legislative constituents that are involved you have.

Simeon Kohl: 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 the approximately nine million dollars in annualized revenue at Staudi State.

Unknown Executive: Folks that are being audited pushing back a little bit you have policy determination of concepts to get reviewed et cetera, and so history has shown that when you get into those cycles things tend to delay a little bit more.

Simeon Kohl: There's some more sensitivities. There's lots of eyes on things, if you will. And so, as you move through that cycle, you know, it gets a little bit more and more focused around some of those concerns. And having the eyes on the agency.

Unknown Executive: There are some more sensitivities; there are lots of eyes on things, if you will. And so as you move through that cycle, you know, it gets a little bit more and more focused around some of those concerns and having eyes on the agency. And I think this particular cycle, just how unique it is, which I don't think anyone will doubt, is disproportionately driving it. But as I said in the prepared remarks, and we've been through this, regardless of the administration change, we fully believe that whether it's CMS, HHS, or any federal government agency, the focus on payment accuracy and transparency is likely always to remain.

Simeon Kohl: There are some more sensitivities; there are lots of eyes on things, if you will. And so, as you move through that cycle, you know, it gets a little bit more and more focused around some of those concerns and having eyes on the agency. And I think this particular cycle, just how unique it is, which I don't think anyone will doubt, is disproportionately driving it. But as I said in the prepared remarks, and we've been through this, regardless of the administration change, we fully believe that whether it's CMS, HHS, or any federal government agency, the focus on payment accuracy and transparency is likely always to remain.

Unknown Executive: There is some more sensitivities theres lots of eyes on things, if you will and so as you move through that cycle.

Unknown Executive: Gets a little bit more and more.

Unknown Executive: Our focus around some of those concerns and having the eyes on the agency and I think this this particular cycle just how unique it is which I don't think anyone without that I think is disproportionately driving it.

Simeon Kohl: And I think this, this particular cycle, just how unique it is, which I don't think anyone will doubt that I think is disproportionate; we're driving it. But, as I said in the prepared remarks, and we've been through this, regardless of the administration change, we, you know, we fully believe that whether it's CMS, HHS, or any federal government agency, the focus on payment accuracy and transparency is, like we always to remain.

Simeon Kohl: 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 two.

Unknown Executive: But as I said in the prepared remarks, and we've been through this regardless of the administration change we fully believe that.

Unknown Executive: Whether it's CMS HHS or any federal government agency the focus on payment accuracy and transparency is like we always do remain.

Simeon Kohl: Gotcha. One other thing, I wondered if you could give us a broader update on project touring and, in particular, any impacts you're starting to see from the records, one integration. Yeah.

George Sutton: One other thing, I wondered if you could give us a broader update on Project Turing and, in particular, any impacts you're starting to see from the Records I integration.

Simeon Kohl: One other thing, I wondered if you could give us a broader update on Project Turing and, in particular, any impacts you're starting to see from the Records I integration.

Speaker Change: Got you one other thing I wondered if you could give us a broader update on project touring and.

George Sutton: In particular any.

George Sutton: E impacts you're starting to see from the records one integration.

Simeon Kohl: Yeah, I think, as Rohit called out, we have a number of initiatives underway that are kind of grouped under Project Touring, all driving all aspects of our business, right, trying to drive greater efficiencies. The records one AI piece, the team has done a fantastic job tightly integrating that into the overall architecture of Project Touring.

Simeon Kohl: This election year, however, presents potential uncertainty for our industry. We are seeing several agencies take a more conservative approach with Oversight Probe. Prams, 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 governments' commitment to payment, accuracy, and transparency will likely remain unchanged no matter the election outcome.

Unknown Executive: Yeah, I think, as Rohit called out, we have a number of initiatives underway that are kind of grouped under Project Touring, all driving all aspects of our business, trying to drive greater efficiencies. The records one AI piece, the team has done a fantastic job tightly integrating that into the overall architecture of Project Touring.

Simeon Kohl: I think, as Rohit called out, we, you know, we have a number of initiatives underway that are grouped under the project Touring, all driving all aspects of our business. I was trying to drive greater efficiencies. The records won AI piece. The team has done a fantastic job, tightly integrating that into the overall architecture of Project Touring. And so, as we talked about, it's not just simply one claims aspect; we're really excited about how this technology could be broadly applicable to our business. And so we're already seeing it's going to be a bit of an iterative process, right.

George Sutton: Yes, I think as Rohit called out.

Unknown Executive: We have a number of initiatives underway that are kind of grouped under the project touring.

Unknown Executive: All driving all aspects of our business really trying to drive greater efficiencies.

Unknown Executive: <unk> Records one aip's the team has done a fantastic job tightly integrating that.

Speaker Change: Into the overall architecture of project touring and so as we've talked about it's not just simply one claims aspect. We're really excited about how this technology could be broadly applicable to our business and so we're already seeing it's going to be a bit of an editor of process right theres not a big Bang. It's complete on ex dates right. We are.

Simeon Kohl: And so, as we've talked about, it's not just simply one claims aspect; we're really excited about how this technology could be broadly applicable to our business. And so we're already seeing it's going to be a bit of an iterative process, right, there's not a big bang, it's complete on X dates, right, we are working through a process really trying to prioritize areas that we think we get the largest bang for our buck.

Unknown Executive: And so as we've talked about, it's not just simply one claims aspect; we're really excited about how this technology could be broadly applicable to our business. And so we're already seeing, it's going to be a bit of an iterative process, right? There's not a big bang, it's complete on X dates, right?

Simeon Kohl: Staying on the government theme, we continue to see an opportunity in the three to five hundred million dollar 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.

Simeon Kohl: There's not a big bang. It's, it's complete on X states, right. We are working through a process, really trying to prioritize areas that we think we get the largest bang for our buck. And I think Rohit noted that the claims business probably is the first one out of the gate. And we are already seeing some impact and some value props in terms of how we are selecting claims and how the technology is helping us just improve the process. But again, we're, you know, we have lots of areas of spend. And so we're prioritizing where we think we get the largest bang for the buck out of the gate.

Unknown Executive: Working through a process really trying to prioritize areas that we think we get the largest bang for our Buck.

Simeon Kohl: Change is constant within healthcare, and our client faced numerous challenges, including adjustments in 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.

Unknown Executive: We are working through a process really trying to prioritize areas that we think we get the largest bang for our buck. And I think Rohit noted that the claims business probably is the first one out of the gate. And we are already seeing some impact and some value propositions in terms of how we are selecting claims and how the technology is helping us just improve the process. But again, we have lots of areas of spend, and so we're prioritizing where we think we get the largest bang for the buck out of the gate.

Simeon Kohl: And I think Rohit noted that the claims business probably is the first one out of the gate, and we are already seeing some impact and some value props in terms of, you know, how we are selecting claims and how the technology is helping us just improve the process. And again, we're, you know, we have lots of areas of spend. And so we're prioritizing where we think we get the largest bang for the buck out of the gate.

Unknown Executive: I think Rohit noted that the claims business probably is the first one out of the gate and we are already seeing some impact and some value props in terms of how we are selecting claims and how the technology is helping us just improve the process and but again, where we have lots of areas of spend and so we're prioritizing.

Operator: Our next question is from Kyle Bowser with O'Reilly Securities. Please proceed.

George Sutton: Perfect. Thank you, guys.

Operator: Where we think we get the largest bang for the Buck out of the gate.

Simeon Kohl: Perfect.

Kyle Bowser: Perfect. Thank you guys.

Simeon Kohl: Thank you, guys. Sure.

Operator: Sure.

Simeon Kohl: While we have seen isolated delays, the strength of our services continues to drive positive results for our clients, and we do not expect to 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 and 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.

Kyle Bauser: Our next question is from Kyle Bowser with the Riley Securities. Please proceed.

Operator: Our next question is from Kyle Bauser with O'Reilly Securities. Please proceed.

Speaker Change: Our next question is from Kyle <unk> with B Riley Securities. Please proceed.

Kyle Bauser: Great. Thanks for the updates and for taking my questions. So you implemented 21 commercial programs in 2022 and then 41 and 23 and 20 year to date. So really strong tail, and that should just get stronger over time, given the ramp to scale is about 12 to 24 months.

Kyle Bauser: Great. Thanks for the updates and for taking my questions. So you implemented 21 commercial programs in 2022 and then 41 in 23 in 20 years to date. So, a really strong tailwind that should just get stronger over time given the ramp to scale is about 12 to 24 months. Going forward, can we expect kind of quarter over quarter steps up, a step up in earnings leverage? I know there's seasonality, but perhaps the tailwinds are strong enough that we could potentially see a step up. And maybe a follow-up to that is, do you expect to kind of continue at this clip of 10-ish per quarter? I'm kind of curious about how we should think about that too.

Kyle Bowser: Great. Thanks for the update and for taking my questions.

Kyle Bowser: So you implemented 21 commercial programs in 2022 and then 41 in 23 in 20 years to date. So, a really strong tailwind that should just get stronger over time given the ramp to scale is about 12 to 24 months. Going forward, can we expect a kind of quarter over quarter step up in earnings leverage? I know there's seasonality, but perhaps the tailwinds are strong enough that we could potentially see a step up. And maybe a follow-up to that is, do you expect to kind of continue at this clip of 10-ish per quarter? Just kind of curious about how we should think about that too.

Speaker Change: So he implemented 21 commercial programs in 2022, and <unk> 41 in 'twenty, three and 'twenty year to date so.

Unknown Executive: Got it. I appreciate that.

Kyle Bowser: Yeah.

Unknown Executive: Really strong tailwind that should just get stronger over time, given the ramp to scale. It's about 12 months to 24 months.

Kyle Bauser: Going forward, can we expect kind of quarter of a quarter steps up step up and earning leverage. I know there's seasonality, but perhaps the tail winds are strong enough that we could potentially see a step up and maybe a fall to that. Do you expect to kind of continue at this clip of 10-ish per quarter? It's kind of curious on how we should think about that too.

Unknown Executive: Going forward can we expect kind of quarter over quarter steps up.

Simeon Kohl: 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 high-trusts, SOC and SOC, along with annual CMS control audits.

Unknown Executive: Step up and earning leverage I know there's seasonality but.

Unknown Executive: Perhaps the tailwind there are strong enough that we could potentially see a step up.

Speaker Change: And and maybe a follow up today.

Unknown Executive: Do you expect to kind of continue at this clip of 10 ish per quarter.

Unknown Executive: Just kind of curious on how we should think about that too.

Rohit Ramchandani: Yeah, Kyle. Good questions. Happy to take those. So, in terms of your first piece of the question, I think, yes, we do anticipate that leverage to start clipping up. It kind of aligns with what I was mentioning, the prepared remarks about getting close to an EBITDA inflection point. At some point next year, if the self-sustaining cash flows are enough, what that means, right, is as we continue to sign up new implementations, the old existing ones have generated enough profitability to start paying for themselves.

Simeon Kohl: Yeah, Kyle. Good question. I'm happy to take those. So, in terms of your first piece of the question, I think yes, we do anticipate that leverage to start clipping up. It kind of aligns with what I was mentioning, the prepared remarks about getting close to an even don collection point and at some point next year of the self sitting cash flows. What that means right is, as we continue to sign up new implementations, that the old existing ones have generated enough profitability to start paying for itself. So we do see that coming in the near-term horizon here with some of those older implementations.

Unknown Executive: Yeah, Kyle good questions happy to take those so in terms of your first piece of the question I think yes.

Speaker Change: Dissipate that leverage to start clipping up and it kind of aligns with what I was mentioned in the prepared remarks about getting close to an EBITDA inflection point and at some point next year at the self sustaining cash flows what that means right is as we continue to sign up new implementations.

Simeon Kohl: 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 achieve positive EBITDA of half a million dollars, 1.8 million ahead of a prior year's quarter.

Speaker Change: The old existing ones have generated enough profitability to start paying for itself. So.

Rohit Ramchandani: And so, we do see that coming in the near term horizon here with some of those older implementations. As we think about the go forward implementations, we have been sort of reorienting due to the fact that, you know, they can range in size and scale, focusing more on the dollar impact of the estimated ACVs. And so that's where, as I shared last year, our estimate was $18 million in annualized revenues added from implementations.

Speaker Change: So we do see that coming in the near term horizon here with some of those older implementations.

Simeon Kohl: As we think about the go for implementations, we have been sort of reorienting due to the fact that they can range in size and scale of focusing more on the dollar impact of the estimated ACVs. And so that's where, as I shared, you know, last year our estimate was 18 million annualized revenues added from implementations. This year with nine in the first half, we remain committed to meeting, repeating that 18. As we think about what we bring on this year and then into next year. So I can't tell you whether it's going to be 10 a quarter.

Speaker Change: As we think about the go forward implementations, we have been sort of reorienting.

Speaker Change: Due to the fact that they can range in size and scale.

Speaker Change: Of focusing more on the dollar impact of the estimated Smes and so that's why as I shared last year. Our estimate was 18 million annualized revenues added from implementations. This year with nine in the first half we remain committed to meeting or beating that 18.

Simeon Kohl: To achieve this, we have prioritized productivity and efficiency to drive profitability. Rohit has often shared that while our primary path of profitability is through increased revenues, we do have opportunities to drive greater efficiency, particularly in our claims-based business. The acquisition of Reckers One Technology earlier this year, which is folded in nicely to Project Toring, 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.

Rohit Ramchandani: This year, with nine in the first half, we remain committed to meeting or beating that 18, as we think about what we bring this year and then into next year. And so I can't tell you whether it's going to be 10 in the quarter. But as we do look at the year, we're committed to getting ahead of that 18 number.

Speaker Change: As we think about what we bring on this year and then into next year. So I can't tell you, whether it's going to be 10, a quarter, but as we do look at the year we're committed to.

Kyle Bauser: But as we do look at the year, we're committed to getting ahead of that 18 number. Got it.

Speaker Change: Getting ahead of that 18 number.

Kyle Bauser: Got it. I appreciate that.

Kyle Bowser: And maybe just following up there, is capacity an issue? I mean, it's a lot. It's, you know, a really impressive number of new implementations over the past couple years. Do you feel like you've got the ability to add headcount, and you've got the infrastructure to kind of support this clip?

Unknown Executive: Got it I appreciate that and maybe just following up there.

Simeon Kohl: I appreciate that, and maybe just following up, there is capacity in issue. I mean, it's a lot of really impressive number of new implementations over the past couple of years. Do you feel like you've got the ability to add headcount, and you've got the infrastructure to kind of support this clip? Yes, we do, and I think you might be remembering. I know some previous years' hiring would come up from time to time, but we're not having any of those capacity issues in the current macro climate. And as we think about the implementation, I think we've already seen a lot of good work in the fact that we were able to hit that 40 plus with the similar size team that was doing the 20th and the other years he mentioned.

Speaker Change: Its capacity.

Kyle Bowser: In issue I mean, it's a lot. It's you know a really impressive number of new implementations over the past couple of years.

Simeon Kohl: 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 Performance and remain active in the integration, adoption, and development process. We remain highly encouraged by the prospects of this powerful AI technology.

Kyle Bowser: Do you feel like you've got the.

Rohit Ramchandani: And maybe just following up there, is capacity an issue? I mean, it's a lot. It's, you know, a really impressive number of new implementations over the past couple years. Do you feel like you've got the ability to add headcount, and you've got the infrastructure to kind of support this clip?

Kyle Bowser: The ability to add head count and you've got the infrastructure to kind of support.

Speaker Change: This clip.

Rohit Ramchandani: Yes, we do. And I think you might be remembering, I know, in previous years, hiring would come up from time to time, but we're not having any of those capacity issues in the current macro climate. And as we think about the implementation, I think we've already seen a lot of good work in the fact that we were able to hit that 40 plus with a similar-sized team that was doing the 20s in the other years you mentioned.

Speaker Change: Yes, we do and I think you might be remembering.

Speaker Change: Some previous years.

Simeon Kohl: 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.

Speaker Change: Hiring would come up from time to time, but we're not having any of those capacity issues. The current macro climate and as we think about the implementation, but I think we've already seen a lot of good work and the fact that we were able to hit that 40, plus with a similar sized team that was doing the <unk> and the other areas you mentioned.

Simeon Kohl: 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.

Simeon Kohl: And so I think from that standpoint, we're feeling pretty good from a capacity point as well. Now, if you were to say, you know, go do 80, 90, 100 implementations a year, then I think that will require the completion of some of the pieces of project touring to be able to handle, but it's well underway.

Speaker Change: And so I think from that standpoint, we're looking pretty good from a capacity point as well now if you were to say go do 80 9100 limitations in a year, then I think that will require the.

Rohit Ramchandani: And so I think from that standpoint, we're feeling pretty good from a capacity point as well. Now, if you were to say, you know, go do 80, 90, 100 implementations in a year, then I think that will require the completion of some of the pieces of project touring to be able to handle, but it's well underway.

Speaker Change: The completion of some of the pieces of project tooling to be able to handle that.

Speaker Change: Well underway.

Kyle Bauser: Okay, appreciate that.

Kyle Bowser: Okay, appreciate that. Maybe just lastly, your goal of 20%, even a margin on, guessing in the next few years, will the commercial side of the business have an inherently higher profit margin than the government side? Just curious if you could talk about how these businesses would differ from a margin perspective at the moment.

Kyle Bauser: Okay, appreciate that. Maybe just lastly, your goal of 20%, even a margin on, guessing, in the next few years. Will the commercial side of the business have an inherently higher profit margin than the government side? Just curious if you could talk about how these businesses would differ from a margin perspective at the moment.

Kyle Bowser: Okay I appreciate that and maybe just lastly, your your goal of 20% EBITDA margin.

Kyle Bauser: Maybe just lastly, your goal of 20% even a margin on guessing in the next few years. Well, the commercial side of the business hasn't inherently higher profit margin than the government side.

Speaker Change: I'm guessing in the next few years.

Simeon Kohl: 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.

Kyle Bowser: Well the commercial side of the business have an inherently higher profit margin than the government side. Just curious if you could talk about how these businesses would differ from a margin perspective at scale.

Simeon Kohl: Just curious if you could talk about how these businesses would differ from a margin perspective at scale. Thank you.

Kyle Bowser: Okay.

Simeon Kohl: Yeah, great question. I think we generally view them similar. Now, I think one typically would have expected that our government side would have a slightly lower margin, but I think where that balances itself out is the efficacy of how much of our work converts into a final dollar back in the door, if you will.

Rohit Ramchandani: Yeah, great question. I think we generally view them similarly. Now, I think one would typically expect that our government side would have a slightly lower margin. But I think where that balances itself out is the efficiency of how much of our work converts into a final dollar back in the door, if you will. And that's where the government tends to follow a stricter rules engine and some of the commercial plans. And so they tend to end up pretty balanced.

Unknown Executive: Yeah, great question. I think we generally view them similarly. Now, I think one would typically expect that our government side would have a slightly lower margin. But I think where that balances itself out is the efficiency of how much of our work converts into a final dollar back in the door, if you will. And that's where the government tends to follow a stricter rules engine and some of the commercial plans. And so they tend to end up pretty balanced.

Speaker Change: Yeah, Great question I think we generally view them similar now I think one typically you would have expected that our government side will have a slightly lower margin, but I think.

Rohit Ramchandani: With that, I'll hand it over to Rohit Romchandani, our chief financial officer for a discussion of the financials. Rohit?

Unknown Executive: That balances itself out as the efficacy of how much of our work converts into a final.

Rohit Ramchandani: Thanks, Sen. Our results in the second quarter, 2024, have exceeded expectations, and we remain encouraged by our prospects for the remainder of the year. Total company revenues in the quarter were 29.4 million, which included healthcare revenues of 27.9 million.

Unknown Executive: Dollar back in the door, if you will and that's where the government tends to follow a stricter rules engine and some of the commercial plans and so they tend to end up pretty balanced.

Simeon Kohl: And that's where the government tends to follow a stricter rules engine than some of the commercial plans. And so they tend to end up pretty balanced. Okay.

Unknown Executive: Okay.

Kyle Bauser: Thanks to all for the updates and for taking my questions. I'll jump back in.

Kyle Bauser: Thank you. Thanks all for the updates and for taking my questions.

Speaker Change: Got it well thanks, all for the update and for taking my questions I'll jump back in queue.

Simeon Kohl: I'll jump back. Thank you.

Rohit Ramchandani: Our customer care, outdoor services business, accounted for 1.4 million of the revenue during the quarter, a decline of 0.1 million from the previous year. We are eagerly anticipating a resumption of numerous federal student loan programs, which would allow us to achieve our guided targets and the future growth expectations for this service line. Our second quarter healthcare revenue proved 17 percent year over year. I was a result of successfully ramping prior year implementations.

Jacob Stephan: Our next question is from Jacob Stephan with Leak Street. Please proceed.

Operator: Our next question is from Jacob Stephan with Lake Street. Please proceed.

Unknown Executive: Our next question is from Stephen with Lake Street. Please proceed.

Jacob Stephan: Hey guys, thanks for taking my question. Apologies if I double-cover something here. But yeah, I just kind of wanted to get an update on Project Turing.

Jacob Stephan: Thanks for taking my question. Apologies if I double cover something here. But yeah, I just kind of wanted to get an update on projecturing. You know, obviously, records won. It sounds like things are integrating nicely. You're kind of finding new things that may provide kind of synergies across the business. But I'm curious; you know, is there any kind of additional things that you're finding that, you know, may you may not have expected originally. Any color there.

Speaker Change: Hey, guys. Thanks for taking my question apologies, if I double cover something here, but.

Speaker Change: But yeah I was just kind of wanted to get an update on project here and you know obviously records one it sounds like things are integrating nicely you're kind of finding new things that are made provide kind of synergies across the business, but I'm curious you know what.

Jacob Stephan: You know, obviously, records one, it sounds like things are integrating nicely. You're kind of finding new things that may provide kind of synergies across the business. But I'm curious, are there any kind of additional things that you're finding that, you know, you may not have expected originally?

Speaker Change: Is there any kind of additional things that you are finding that the you know may you may not have expected originally.

Rohit Ramchandani: Our claims-based business, also known as claims auditing, led the way with revenues of almost $14 million in the quarter, representing an increase of roughly 40 percent year over year. Both are government and commercial clients contributing to this growth. Within commercial, existing implementation scaled as expected to contribute to this strong top-line growth, while the RAC region 2 contracted in the government sector continued to successfully scale. We anticipate continued growth of our commercial clients, as well as continued scale of RAC region 2, though we do recognize the more conservative approach that federal oversight programs have taken as the election draws near.

Jacob Stephan: and any color there. Hey, Jacob. Not at this point, right? I mean, I think we should

Speaker Change: And any color there.

Simeon Kohl: Hey, Jacob. Not at this point, right? I mean, I think we have a pretty good handle on how the technology can help us as we think about kind of our core offerings that we have today. As we discussed, kind of driving efficiencies in various selections and then how the technology can help us, you know, decision if you will.

Simeon Kohl: Hey Jacob, Not at this point, right? I mean, I think we have a pretty good handle on how the technology can help us as we think about kind of our core offerings that we have today, as we've discussed kind of driving efficiencies in various selections, and then how the technology can help us, you know, make decisions, if you will. There are some interesting opportunities downstream, but I think, you know, it's too early in the game yet, and we're so focused on really trying to apply the technology where we know there's some immediate benefit.

Jacob: Hey, Jacob.

Unknown Executive: Not at this point right I mean, I think we are we have a pretty good handle.

Speaker Change: On how the technology can help us as we think about kind of our core offerings that we have today as we've discussed kind of driving efficiencies and various selections and then how the technology can help us.

Unknown Executive: A decision if you will.

Simeon Kohl: There's some interesting opportunities downstream, but I think, you know, it's too early in the game yet and we're so focused at really trying to apply the technology where we know there's some immediate benefit.

Unknown Executive: There's some interesting opportunities down downstream, but I think it's too early in the game yet and we're so focused at really trying to apply the technology, where we know there are some immediate benefit.

Rohit Ramchandani: Looking forward, we continue to anticipate healthy growth with commercial clients alongside a strong CMS foundation. State RAC or other federal RAC region wins with support meaningful growth in the government beyond the Epson flows and existing programs in the ramping of RAC region two. Eligibility revenues for the quarter were 14.3 million, representing an increase of roughly 1% in comparison to last year. As we think about 2024, our reminder that the eligibility business includes our mature relationship with CMS-MSP now on our new CRC contract.

Operator: If there are no further questions from Jacob, we will conclude the question-and-answer session.

Operator: If there are no further questions from Jacob, we will conclude the question and answer session. I would like to hand the conference back over to Simeon for closing remarks.

Unknown Executive: If there are no further questions from Jacob we will conclude the question and answer session.

Simeon Kohl: I would like to hand the conference back over to Samian for closing remarks.

Simeon Kohl: And I would like to hand the conference back over to Simeon for his closing remarks.

Unknown Executive: I would like to hand, the conference back over to Simon for closing remarks.

Simeon Kohl: Thanks, operator. We wrap our Q2 earnings call.

Simeon Kohl: Thanks, operator.

Simeon Kohl: As we wrap up our Q2 earnings call, I really want to extend my gratitude to our dedicated team, our customers, and our shareholders for their unwavering support. We're so proud of the accomplishments this quarter, and we remain super focused on driving growth, innovation, and continued value for our stakeholders. So, thank you again, everyone, for joining us, and we look forward to reconnecting in Q3. Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Simeon Kohl: No because we wrap our Q2 earnings call I really want to extend my gratitude to our tour dedicated team our customers our shareholders are.

Simeon Kohl: I really want to extend my gratitude to our dedicated team, our customers, and our shareholders for their unwavering support. We're so proud of the accomplishments this quarter, and we remain super focused on driving growth, innovation, and continued value to our stakeholders. So thank you again, everyone, for joining us, and we look forward to reconnecting in Q3.

Simeon Kohl: For their unwavering support and we're so proud of the accomplishments this quarter and we remain super focused on driving growth innovation and continued value to our stakeholders. So thank you again, everyone for joining us and we look forward to reconnecting in Q3.

Rohit Ramchandani: With our commercial eligibility clients and opportunities, we continue to refine and optimize our data assets, aiming to use our data more effectively. Additionally, we leverage advanced analytics and additional services to eliminate false positives from our workflow, further improving our operational efficiency. This approach not only streamlines our processes, but also ensures we deliver high quality accurate results to our clients. We are setting ourselves up well for sustainable future growth. As Tim mentioned, we are now at year-to-date implementations worth approximately $9 million in annualized revenues at steady state.

Operator: Thank you.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Operator: This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Thank you.

Simeon Kohl: Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Operator: Okay.

Operator: Okay.

Rohit Ramchandani: As we've often discussed, the value of these statements of work can fluctuate on a quarterly basis. This quarter, we did welcome two net new clients, continuing to support our value thesis amongst our annual market players. Our ongoing efforts to secure and execute these sticky contracts are a testament to our strong market position in commitment to growth. We remain confident in our anticipation that the total annualized revenues from new implementations in 2024 will match or exceed the $18 million in estimated annualized revenues from 2023 implementations.

Operator: Okay.

Operator: Okay.

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Rohit Ramchandani: Shifting to operating expenses, these represented $32.1 million in the second quarter, a roughly $2 million higher when compared to the second quarter of last year. This was primarily driven by an increased spend to scale implementations, IT investments related to project touring, and investments in sales and business development, all of which we discussed earlier this year. We are encouraged by the earlier results of project touring as we see positive scale and incremental margin growth in adding roughly $4 million of revenues year over year while only adding $2 million in operating expense.

Operator: Okay.

Operator: [music].

Operator: Okay.

Rohit Ramchandani: We have strategically positioned our business to drive profitability and sustainable growth. We are pleased to report and adjust the top of a half a million dollars in the second quarter, or $1.8 million ahead of the prior year period. Over the past several quarters, we have emphasized our commitment to efficiency and productivity initiatives, notably through project touring, which has been noted this progressing well. We have been focused on this operational efficiency without compromising our capacity for top-line growth.

Operator: Okay.

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Operator: Yeah.

Operator: [music].

Rohit Ramchandani: This balance ensures that while we streamline processes and reduce costs, we continue to expand our market presence and seize new growth opportunities. We are confident that these initiatives will not only sustain but accelerate our profitability trajectory.

Rohit Ramchandani: As we reflect on our strong first half performance, alongside taking the consideration indirect impacts of the change out there outage and this tumultuous election cycle, we are excited to reaffirm our guidance for revenues and profitability. This confidence is bolstered by the success we are seeing our commercial growth strategies and operations. To be clear, we are reiterating our guidance for 2024 healthcare revenues to be in the range of $117 to $122 million.

Operator: Hum.

Unknown Executive: John George Sutton, Kyle Bauser, Simeon Kohl, James Rush, Jacob Stephan, Unknown Executive, George Sutton, Kyle Bauser, Simeon Kohl, James Rush, Jacob Stephan, Unknown Executive, Rohit Ramchandani, Jon Bozzuto.

Operator: [music].

Operator: Okay.

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Operator: Yeah.

Operator: [music].

Rohit Ramchandani: Full company revenues to be between $124 and $129 million. And for the full year, 2024 adjusts to be the dot, to be in the range of $4 to $5 million. And looking at our balance sheet, as anticipated, we have marginally drawn down on our debt facility in support of our ongoing implementation ramps and recent technology acquisition. We are pleased to see our credit relationship with Wells Fargo continuing to grow in a positive manner.

Rohit Ramchandani: The investments we are making in our people, technology, sales and business development efforts are on track with what we communicated earlier this year. This measured approach is already shown progress as we push toward our 20% plus adjusted EVA DOM margin targets. From a scale perspective, we anticipate being able to achieve such margins if healthcare revenues reach $158 to $160 million. We maintain our goal of hitting our EVA DOM selection point in the near term and achieving self-sustaining cash flows at some point in the next year without sacrificing the ability to invest in future growth.

Rohit Ramchandani: I am very pleased with the revenue growth and profitability scale we have demonstrated thus far in the first half of the year, giving me confidence in the remainder of 2024.

Operator: Operator, would you please open up the lines for questions? Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue and for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

George Sutton: Our first question is from George Sutton with Craig Calum Capital Group. Please proceed. Thank you, good afternoon guys.

Simeon Kohl: I wondered if you could walk through the Medicaid opportunities more broadly that you are seeing now. You mentioned some activity there. Obviously, we know New York is coming up. So, has there been any changes to the New York timing? I assume not. And I am just curious about other opportunities outside of New York. Yeah, hi, George. So, specific to New York to your point that did get redid and we went ahead and submit our proposals.

Simeon Kohl: The timeframe on that is looks to be what they originally committed sometime early September for decisioning with implementation early next year. So, that looks to be on track. We remain excited about that. Look, anytime you go through a rebid, there's things that you have to step through, etc. But I think we were pretty confident on the first round for good reasons and we continue to be cautiously optimistic on the rebid. And yes, we are actually seeing quite a bit of activity with other states.

Simeon Kohl: And so, our team is working very closely in responding. We have a few proposals out right now with other states for watching closely with additional states, etc. So, as we've indicated on the last call, you know, the team is really focused and making sure that we are closely watching new opportunities as well as kind of refining our proposals and our response, of the Elections.

George Sutton: Great.

Simeon Kohl: I wondered if you could explain the conservative oversight that we might see relative to the election, just what's happened in past election cycles, and what exactly do you mean by the more conservative oversight? Yeah. So, and look, we've seen this before, right? Any time there is an election period, especially when you're dealing with some of these these oversight programs that the agencies are managing through. You have legislative constituents that are involved.

Simeon Kohl: You have folks that are being audited pushing back a little bit. You have policy determination. You have concepts that get reviewed, etc. And so, you know, history has shown that when you get into those cycles, things tend to delay a little bit more. There's some more sensitivities. There's lots of eyes on things, if you will. And so as you move through that cycle, you know, it gets a little bit more and more focused around some of those concerns.

Simeon Kohl: And having the eyes on the agency. And I think this, this particular cycle, just how unique it is, which I don't think anyone will doubt that I think is disproportionate, we're driving it. But as I said in the prepared remarks, and we've been through this, regardless of the administration change, we, you know, we fully believe that whether it's CMS, HHS or any federal government agency, the focus on payment accuracy and transparency is like we always to remain. Gotcha.

Simeon Kohl: One other thing, I wondered if you could give us a broader update on project touring and in particular, any impacts you're starting to see from the records, one integration. Yeah. I think as Rohit called out, we, you know, we have a number of initiatives underway that are grouped under the project touring, all driving all aspects of our business. I was trying to drive greater efficiencies. The records won AI piece. The team has done a fantastic job, tightly integrating that into the overall architecture of project touring.

Simeon Kohl: And so as we talked about, it's not just simply one claims aspect, we're really excited about how this technology could be broadly applicable to our business. And so we're already seeing it's going to be a bit of an iterative process, right. There's not a big bang. It's, it's complete on X states, right. We are working through a process, really trying to prioritize areas that we think we get the largest bang for our buck.

Simeon Kohl: And I think Rohit noted that the claims business probably is the first one out of the gate. And we are already seeing some impact and some value props in terms of how we are selecting claims and how the technology is helping us just improve the process. But again, we're, you know, we have lots of areas of spend. And so we're prioritizing where we think we get the largest bang for the buck out of the gate. Perfect. Thank you guys. Sure.

Kyle Bauser: Our next question is from Kyle Bowser with the Riley Securities. Please proceed. Great. Thanks for the updates and for taking my questions. So you implemented 21 commercial programs in 2022 and then 41 and 23 and 20 year to date. So really strong tail and that should just get stronger over time given the ramp to scale is about 12 to 24 months. Going forward, can we expect kind of quarter of a quarter steps up step up and earning leverage.

Kyle Bauser: I know there's seasonality, but perhaps the tail winds are strong enough that we could potentially see a step up and maybe a fall to that. Do you expect to kind of continue at this clip of 10-ish per quarter? It's kind of curious on how we should think about that too.

Simeon Kohl: Yeah, Kyle. Good question. I'm happy to take those. So in terms of your first piece of the question, I think yes, we do anticipate that leverage to start clipping up. It kind of aligns with what I was mentioning, the prepared remarks about getting close to an even don collection point and at some point next year of the self sitting cash flows. What that means right is as we continue to sign up new implementations that the old existing ones have generated enough profitability to start paying for itself.

Simeon Kohl: So we do see that coming in the near term horizon here with some of those older implementations. As we think about the go for implementations, we have been sort of reorienting due to the fact that they can range in size and scale of focusing more on the dollar impact of the estimated ACVs. And so that's where as I shared you know, last year our estimate was 18 million annualized revenues added from implementations.

Simeon Kohl: This year with with nine in the first half, we remain committed to meeting repeating that 18. As we think about what we bring on this year and then into next year. So I can't tell you whether it's going to be 10 a quarter. But as we do look at the year, we're committed to getting ahead of that 18 number. Got it.

Simeon Kohl: I appreciate that and maybe just following up there is capacity in issue. I mean, it's a lot of really impressive number of new implementations over the past couple of years. Do you feel like you've got the ability to add headcount and you've got the infrastructure to kind of support this clip? Yes, we do and I think you might be remembering I know some previous years hiring would come up from time to time, but we're not having any of those capacity issues and the current macro climate.

Simeon Kohl: And as we think about the implementation, I think we've already seen a lot of good work in the fact that we were able to hit that 40 plus with the similar size team that was doing the 20th and the other years he mentioned. And so I think from that standpoint, we're feeling pretty good from a capacity point as well.

Simeon Kohl: Now if you were to say, you know, go do 80, 90, 100 implementations a year, then I think that will require the completion of some of the pieces of project touring to be able to handle, but it's well underway. Okay, appreciate that.

Kyle Bauser: Maybe just lastly your goal of 20% even a margin on guessing in the next few years. Well, the commercial side of the business haven't inherently higher profit margin than the government side.

Simeon Kohl: Just curious if you could talk about how these businesses would differ from a margin perspective at scale. Thank you. Yeah, great question. I think we generally view them similar. Now, I think one typically would have expected that our government side would have a slightly lower margin, but I think where that balances itself out is the efficacy of how much of our work converts into a final dollar back in the door, if you will.

Simeon Kohl: And that's where the government tends to follow a stricter rules engine and some of the commercial plans. And so they tend to end up pretty balanced. Okay. Thank you. Thanks all for the updates and for taking my questions. I'll jump back. Thank you.

Jacob Stephan: Our next question is from Jacob Stephan with Leak Street. Please proceed. Thanks for taking my question. Apologies if I double cover something here. But yeah, I just kind of wanted to get an update on projecturing. You know, obviously records won. It sounds like things are integrating nicely. You're kind of finding new things that may provide kind of synergies across the business. But I'm curious, you know, what is there any kind of additional things that you're finding that, you know, may you may not have expected originally. Any color there.

Simeon Kohl: Hey, Jacob. Not at this point, right? I mean, I think we we have a pretty good handle on how the technology can help us as we think about kind of our core offerings that we have today as we discussed kind of driving efficiencies in various selections and then how the technology can help us, you know, decision if you will. There's there's some interesting opportunities down downstream, but I think, you know, it's too early in the game yet and we're so focused at really trying to apply the technology where we know there's some immediate benefit.

Operator: If there are no further questions from Jacob, we will conclude the question and answer session.

Simeon Kohl: I would like to hand the conference back over to Samian for closing remarks. Thanks operator.

Simeon Kohl: We wrap our Q2 earnings call. I really want to extend my gratitude to our dedicated team, our customers, our shareholders for their unwavering support. We're so proud of the accomplishments this quarter and we remain super focused on driving growth, innovation, and continued value to our stakeholders. So thank you again everyone for joining us and we look forward to reconnecting in Q3. Thank you.

Operator: This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation. Thank you.

Unknown Executive: John George Sutton, Kyle Bauser, Simeon Kohl, James Rush, Jacob Stephan, Unknown Executive, George Sutton, Kyle Bauser, Simeon Kohl, James Rush, Jacob Stephan, Unknown Executive, Rohit Ramchandani, Jon Bozzuto,