Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 12, 2015 | Jun. 30, 2014 | |
Document Documentand Entity Information [Abstract] | |||
Entity Registrant Name | Performant Financial Corporation | ||
Trading Symbol | PFMT | ||
Entity Central Index Key | 1550695 | ||
Current Fiscal Year End Date | -19 | ||
Entity Filer Category | Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | FALSE | ||
Entity Common Stock, Shares Outstanding | 49,363,366 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $297,012,377 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $80,298 | $81,909 |
Trade accounts receivable, net of allowance for doubtful accounts of $32 and $32, respectively and estimated allowance for appeals of $0 and $1,160, respectively | 15,047 | 19,649 |
Deferred income taxes | 7,605 | 6,847 |
Prepaid expenses and other current assets | 12,559 | 4,400 |
Income tax receivable | 4,394 | 0 |
Debt issuance costs, current portion | 986 | 1,055 |
Total current assets | 120,889 | 113,860 |
Property, equipment, and leasehold improvements, net | 27,647 | 26,247 |
Identifiable intangible assets, net | 29,093 | 32,513 |
Goodwill | 82,522 | 81,572 |
Debt issuance costs, net of current portion | 2,456 | 2,789 |
Other assets | 222 | 279 |
Total assets | 262,829 | 257,260 |
Current liabilities: | ||
Current maturities of notes payable | 9,820 | 10,763 |
Accrued salaries and benefits | 5,380 | 11,826 |
Accounts payable | 1,370 | 2,383 |
Other current liabilities | 8,452 | 5,311 |
Income taxes payable | 0 | 103 |
Estimated liability for appeals | 18,625 | 15,283 |
Net payable to client | 12,110 | 0 |
Total current liabilities | 55,757 | 45,669 |
Notes payable, net of current portion | 101,975 | 122,541 |
Deferred income taxes | 11,666 | 12,612 |
Other liabilities | 2,259 | 2,204 |
Total liabilities | 171,657 | 183,026 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.0001 par value. Authorized, 500,000 shares at December 31, 2014 and 2013, respectively; issued and outstanding, 49,350 and 48,316 shares at December 31, 2014 and 2013, respectively | 5 | 5 |
Additional paid-in capital | 57,329 | 49,791 |
Retained earnings | 33,838 | 24,438 |
Total stockholders’ equity | 91,172 | 74,234 |
Total liabilities and stockholders’ equity | $262,829 | $257,260 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $32 | $32 |
Estimated allowance for appeals | $0 | $1,160 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, authorized shares | 500,000,000 | 500,000,000 |
Common stock, issued shares | 49,350,000 | 48,316,000 |
Common stock, outstanding shares | 49,350,000 | 48,316,000 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Income Statement [Abstract] | |||
Revenues | $195,378 | $255,302 | $210,073 |
Operating expenses: | |||
Salaries and benefits | 93,676 | 96,762 | 83,002 |
Other operating expenses | 74,433 | 85,671 | 71,305 |
Income from operations | 168,109 | 182,433 | 154,307 |
Debt extinguishment costs | 27,269 | 72,869 | 55,766 |
Interest expense | 0 | 0 | -3,679 |
Interest income | -10,171 | -11,564 | -12,414 |
Income before provision for income taxes | 1 | 1 | 64 |
Provision for income taxes | 17,099 | 61,306 | 39,737 |
Net income | 7,699 | 24,967 | 16,786 |
Accrual for preferred stock dividends | 9,400 | 36,339 | 22,951 |
Net income available to common shareholders | 0 | 0 | 2,038 |
Net income available to common shareholders | $9,400 | $36,339 | $20,913 |
Net income per share attributable to common shareholders (in dollars per share) | |||
Basic | $0.19 | $0.77 | $0.48 |
Diluted | $0.19 | $0.74 | $0.44 |
Weighted average shares | |||
Basic | 48,816 | 47,492 | 43,985 |
Diluted | 49,834 | 49,386 | 47,599 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders' Equity (Deficit) (USD $) | Total | Due From Stockholders | Redeemable Preferred Stock Series A Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings (Deficit) |
In Thousands, except Share data | ||||||
Beginning Balance at Dec. 31, 2011 | ($15,705) | ($2,266) | $58,248 | $4 | $19,371 | ($32,814) |
Beginning Balance (in shares) at Dec. 31, 2011 | 5,296,000 | 37,667,000 | ||||
Increase in redemption value of Series A preferred stock | -2,038 | 2,038 | -2,038 | |||
Conversion of Series A preferred stock to Series B preferred stock which was immediately redeemed for cash | 0 | -60,286 | ||||
Conversion of Series B preferred stock to common (in shares) | 5,296,000 | 5,296,000 | ||||
Conversion of Series B preferred stock to common | 0 | |||||
Exercise of stock options (in shares) | 284,000 | |||||
Exercise of stock options | 175 | 175 | ||||
Issuance of stock (in shares) | 2,243,000 | |||||
Issuance of stock | 15,420 | 15,420 | ||||
Purchase of treasury stock (in shares) | -98,000 | |||||
Purchase of treasury stock | -1,225 | -1,225 | ||||
Interest on notes receivable from stockholders | -57 | -57 | ||||
Repayment of notes receivable from stockholders | 2,323 | 2,323 | ||||
Stock-based compensation expense | 1,614 | 1,614 | ||||
Income tax benefit from employee stock options | 615 | 615 | ||||
Net income | 22,951 | 22,951 | ||||
Ending Balance at Dec. 31, 2012 | 24,073 | 0 | 0 | 4 | 35,970 | -11,901 |
Ending Balance (in shares) at Dec. 31, 2012 | 0 | 45,392,000 | ||||
Exercise of stock options (in shares) | 2,924,000 | |||||
Exercise of stock options | 1,768 | 1 | 1,767 | |||
Stock-based compensation expense | 2,994 | 2,994 | ||||
Income tax benefit from employee stock options | 9,060 | 9,060 | ||||
Net income | 36,339 | 36,339 | ||||
Ending Balance at Dec. 31, 2013 | 74,234 | 0 | 0 | 5 | 49,791 | 24,438 |
Ending Balance (in shares) at Dec. 31, 2013 | 0 | 48,316,000 | ||||
Exercise of stock options (in shares) | 1,034,000 | |||||
Exercise of stock options | 610 | 610 | ||||
Stock-based compensation expense | 3,707 | 3,707 | ||||
Income tax benefit from employee stock options | 3,221 | 3,221 | ||||
Net income | 9,400 | 9,400 | ||||
Ending Balance at Dec. 31, 2014 | $91,172 | $0 | $0 | $5 | $57,329 | $33,838 |
Ending Balance (in shares) at Dec. 31, 2014 | 0 | 49,350,000 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities: | |||
Net income | $9,400 | $36,339 | $22,951 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Loss on disposal of assets | 33 | 1 | 51 |
Depreciation and amortization | 12,450 | 10,655 | 9,505 |
Write-off of unamortized debt issuance costs | 0 | 0 | 335 |
Deferred income taxes | -1,703 | -1,708 | -1,826 |
Stock-based compensation | 3,707 | 2,994 | 1,614 |
Interest expense from debt issuance costs and amortization of discount note payable | 1,177 | 1,247 | 1,272 |
Interest income on notes receivable from stockholders | 0 | 0 | -57 |
Changes in operating assets and liabilities: | |||
Trade accounts receivable | 4,602 | 3,395 | -3,646 |
Prepaid expenses and other current assets | -8,159 | -1,524 | 416 |
Income tax receivable | -4,394 | 0 | 0 |
Other assets | 57 | 451 | -71 |
Accrued salaries and benefits | -6,446 | 2,538 | 2,150 |
Accounts payable | -1,013 | 980 | 1,343 |
Other current liabilities | 1,873 | -2,941 | -1,223 |
Income taxes payable | -103 | -327 | -40 |
Deferred revenue | 0 | -2,187 | -27 |
Estimated liability for appeals | 3,342 | 10,905 | 3,928 |
Net payable to client | 12,110 | 0 | 0 |
Other liabilities | 933 | 388 | 330 |
Net cash provided by operating activities | 27,866 | 61,206 | 37,005 |
Cash flows from investing activities: | |||
Purchase of property, equipment, and leasehold improvements | -10,146 | -12,503 | -11,356 |
Purchase of perpetual software license and computer equipment | 0 | 0 | -837 |
Net cash used in investing activities | -10,146 | -12,503 | -12,193 |
Cash flows from financing activities: | |||
Borrowing under notes payable | 0 | 0 | 156,000 |
Borrowing under line of credit | 0 | 0 | 4,500 |
Redemption of preferred stock | 0 | 0 | -60,286 |
Repayment of notes payable | -21,509 | -14,465 | -103,416 |
Repayment of line of credit | 0 | 0 | -12,698 |
Debt issuance costs paid | -653 | 0 | -3,074 |
Proceeds from exercise of stock options | 610 | 1,768 | 175 |
Proceeds from issuance of stock | 0 | 0 | 12,624 |
Repayment of promissory notes from stockholders | 0 | 0 | 2,323 |
Income tax benefit from employee stock options | 3,221 | 9,060 | 615 |
Payment to stockholders | 0 | 0 | -1,761 |
Purchase of treasury stock | 0 | 0 | -1,225 |
Payment of purchase obligation | -1,000 | -1,000 | -750 |
Net cash used in financing activities | -19,331 | -4,637 | -6,973 |
Net increase (decrease) in cash and cash equivalents | -1,611 | 44,066 | 17,839 |
Cash and cash equivalents at beginning of year | 81,909 | 37,843 | 20,004 |
Cash and cash equivalents at end of year | 80,298 | 81,909 | 37,843 |
Supplemental disclosures of cash flow information: | |||
Cash paid for income taxes | 10,185 | 17,396 | 18,037 |
Cash paid for interest | 8,978 | 10,294 | 11,178 |
Cash paid as debt extinguishment | 0 | 0 | 3,344 |
Supplemental disclosure of non-cash investing and financing activities: | |||
Obligation payable to sellers of perpetual license | 0 | 0 | 3,250 |
Issuance of common stock as part of debt issuance costs | $0 | $0 | $2,796 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies | ||||||||
(a) | Organization and Nature of Business | ||||||||
Performant Financial Corporation (the Company) is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Company clients typically operate in complex and regulated environments and outsource their recovery needs in order to reduce losses on billions of dollars of defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides our services on an outsourced basis, where we handle many or all aspects of the clients’ recovery processes. | |||||||||
The Company’s consolidated financial statements include the operations of Performant Financial Corporation (PFC), its wholly owned subsidiary Performant Business Services, Inc., and its wholly owned subsidiaries Performant Recovery, Inc. (Recovery), Performant Technologies, Inc., and Performant Europe Ltd. Effective August 13, 2012, we changed the name of our wholly owned subsidiary from DCS Business Services, Inc. (DCSBS) to Performant Business Services, Inc., and DCSBS’ wholly owned subsidiaries from Diversified Collection Services, Inc. (DCS), and Vista Financial, Inc. (VFI), to Performant Recovery, Inc., and Performant Technologies, Inc., respectively. PFC is a Delaware corporation headquartered in California and was formed in 2003. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. Performant Technologies, Inc. is a California corporation that was formed in 2004. | |||||||||
The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. | |||||||||
(b) | Principles of Consolidation | ||||||||
The accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. The Company consolidates entities in which it has controlling financial interest, and as of December 31, 2014, all of the Company’s subsidiaries are 100% owned. All significant intercompany balances and transactions have been eliminated in consolidation. | |||||||||
(c) | Use of Estimates in the Preparation of Consolidated Financial Statements | ||||||||
The preparation of the consolidated financial statements in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, intangible assets, goodwill, estimated liability for appeals, accrued expenses, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates. | |||||||||
(d) | Stock Split | ||||||||
On July 26, 2012, the Company effected a two-for-one stock split of the Company’s shares of Common Stock. Accordingly, all per share amounts, average shares outstanding, shares outstanding, and equity based compensation presented in the consolidated financial statements and notes have been adjusted retroactively to reflect the stock split. Shareholders’ deficit has been retroactively adjusted to give effect to the stock split for all periods presented by reclassifying the par value of the additional shares issued in connection with the stock split to additional paid-in capital. Concurrently with the stock split, the authorized Common Stock was increased from 25,000,000 shares to 60,000,000 shares. On August 15, 2012, the authorized Common Stock was increased to 500,000,000 shares and the authorized preferred stock was increased to 50,000,000 shares. | |||||||||
(e) | Cash and Cash Equivalents | ||||||||
Cash and cash equivalents include demand deposits and highly liquid debt instruments with original maturities of three months or less when purchased. These investments can include money market funds that invest in highly liquid U.S. government and agency obligations, certificates of deposit, bankers’ acceptances, and commercial paper. | |||||||||
The Company collects monies on behalf of its clients. Cash is often held on behalf of the clients in various trust accounts and is subsequently remitted to the clients based on contractual agreements. Cash held in these trust accounts for contracting agencies is not included in the Company’s assets (Note 12(a)). | |||||||||
(f) | Hosted Service Installation and Implementation Deliverables | ||||||||
In 2008, the Company entered into a long-term contract to provide hosted services to a client beginning in March 2009. The Company determined that certain installation and implementation deliverables were not separate units of accounting within the contract, and should be combined for revenue recognition purposes with the hosted service deliverable. Accordingly, revenue for these contract elements is being taken ratably from the commencement of hosted services in March 2009 through the contract period of March 2018. Additionally, the Company deferred the direct incremental costs associated with the installation and implementation deliverables, with the costs being expensed ratably from the March 2009 commencement of services through March 2018. | |||||||||
(g) | Property, Equipment, and Leasehold Improvements | ||||||||
Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 to 7 years. Buildings are depreciated using the straight-line method over 31.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. Computer software and computer hardware are depreciated using the straight-line method over 3 years and 5 years, respectively. | |||||||||
Maintenance and repairs are charged to expense as incurred. Improvements that extend the useful lives of assets are capitalized. | |||||||||
When property is sold or retired, the cost and the related accumulated depreciation are removed from the consolidated balance sheet and any gain or loss from the transaction is included in the consolidated statements of operations. | |||||||||
(h) | Goodwill and Other Intangible Assets | ||||||||
Goodwill represents the excess of purchase price and related costs over the fair value assigned to the net assets of businesses acquired. Goodwill is not amortized, but instead is reviewed for impairment at least annually. Impairment is the condition that exists when the carrying amount of goodwill is not recoverable and its carrying amount exceeds its fair value. | |||||||||
The Company performed a qualitative assessment of whether it is more likely than not that goodwill fair value is less than its carrying amount for 2014, 2013 and 2012 and concluded that there was no need to perform an impairment test. | |||||||||
Identifiable intangible assets consist of customer contracts and related relationships, a perpetual license, and covenants not to compete. Customer contracts and related relationships are amortized over their estimated useful life of 4 to 20 years. The perpetual license is amortized over its estimated useful life of 5 years. | |||||||||
(i) | Impairment of Long-Lived Assets | ||||||||
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company did not recognize an impairment expense for intangible assets in 2014, 2013 and 2012. | |||||||||
(j) | System Developments | ||||||||
The Company follows the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-40, Internal-Use Software, which specifies that costs incurred during the application stage of development should be capitalized. All other costs are expensed as incurred. During 2014, 2013 and 2012, costs of $7.2 million, $4.9 million and $5.4 million respectively, were capitalized for projects in the application stage of development, with depreciation expense of $4.0 million, $2.6 million and $2.4 million respectively, for completed projects. | |||||||||
(k) | Debt Issuance Costs | ||||||||
Debt issuance costs represent loan and legal fees paid in connection with the issuance of long-term debt. Debt issuance costs are amortized to interest expense in accordance with key terms of the notes as amended. | |||||||||
(l) | Revenues, Accounts Receivable, and Estimated Liability for Appeals | ||||||||
Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. Under the Company’s RAC contract with CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or has agreed to an offset against other claims by the provider. Providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. The Company accrues an estimated liability for appeals at the time revenue is recognized based on the Company's estimate of the amount of revenue probable of being refunded to CMS following successful appeal. In addition, if the Company's estimate of the liability for appeals with respect to revenues recognized during a prior period changes, the Company increases or decreases current period accruals based on such change in estimated liability. At December 31, 2014, a total of $18.6 million was presented as an allowance against revenue, representing the Company’s estimate of claims that may be overturned. Of this amount, $0.0 million was related to amounts in accounts receivable and $18.6 million was related to commissions which had already been received. The zero allowance against accounts receivable at December 31, 2014 is due to the fact that the receivable from CMS is netted against an offsetting payable for overturned audits, and at December 31, 2014, the amount of the payable exceeded the amount of the receivable as discussed in note 1(m). The total accrued liability for appeals of $18.6 million has therefore been presented in the caption estimated liability for appeals at December 31, 2014. At December 31, 2013, the total appeals-related liability was $16.4 million, comprised of an estimated liability for appeals of $15.3 million and a contra-accounts-receivable estimated allowance for appeals of $1.1 million. The $18.6 million balance at December 31, 2014 and the $15.3 million balance as of December 31, 2013, represents the Company’s best estimate of the probable amount of losses related to appeals of claims for which commissions were previously collected. In addition to the $18.6 million amount accrued at December 31, 2014, the Company estimates that it is reasonably possible that it could be required to pay an additional amount up to approximately $5.4 million as a result of potentially successful appeals. To the extent that required payments by the Company exceed the amount accrued, revenues in the applicable period would be reduced by the amount of the excess. | |||||||||
For the year ended December 31, 2014, the Company had 4 clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the 4 clients is summarized in the table below (in thousands): | |||||||||
Rank | 2014 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $53,211 | 27.20% | |||||||
2 | 29,444 | 15.10% | |||||||
3 | 29,171 | 14.90% | |||||||
4 | 24,855 | 12.70% | |||||||
For the year ended December 31, 2013, the Company had 4 clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the 4 clients is summarized in the table below (in thousands): | |||||||||
Rank | 2013 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $66,820 | 26.20% | |||||||
2 | 51,566 | 20.20% | |||||||
3 | 42,056 | 16.50% | |||||||
4 | 30,902 | 12.10% | |||||||
For the year ended December 31, 2012, the Company had 5 clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the 5 clients is summarized in the table below (in thousands): | |||||||||
Rank | 2012 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $54,130 | 25.80% | |||||||
2 | 39,183 | 18.70% | |||||||
3 | 29,027 | 13.80% | |||||||
4 | 25,469 | 12.10% | |||||||
5 | 22,397 | 10.70% | |||||||
Revenue from the largest three customers was 57%, 63% and 58% of total revenue in 2014, 2013 and 2012, respectively. Accounts receivable due from these three customers were 39%, 59% and 63% of total trade receivables at December 31, 2014, 2013 and 2012, respectively. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts was $0.0 million for both December 31, 2014 and December 31, 2013, respectively. | |||||||||
(m) | Net Payable to Client | ||||||||
The Company nets outstanding accounts receivable invoices from an audit & recovery contract against payables for overturned audits. The overturned audits are netted against current fees due on the invoice to the client when they are processed by the client’s system. The “Net payable to client” balance of $12.1 million represents the excess of payables of $14.2 million for overturned audits offset by outstanding accounts receivable of $2.1 million at December 31, 2014. At December 31, 2013, the net of the outstanding accounts receivable invoices of $12.8 million was offset against a payable for overturned audits of $5.9 million for a net receivable of $6.9 million, presented in Accounts receivable. The Company expects that the net payable-to client balance will be paid to the client within the next twelve months. | |||||||||
(n) | Prepaid Expenses and Other Current Assets | ||||||||
At December 31, 2014, Prepaid expenses and other current assets includes $5.6 million of amounts estimated to become due from subcontractors. The Company employs subcontractors to audit claims as part of an audit & recovery contract, and to the extent that audits by these subcontractors are overturned on appeal, the fees associated with such claims are contractually refundable to the Company. At December 31, 2014, the receivable associated with estimated future overturns of subcontractor audits was $5.6 million. In addition, at December 31, 2014, Prepaid expenses and other current assets includes a net receivable of $3.0 million for subcontractor fees for already overturned audits refundable to the Company once the Company refunds its fees to the client as prime contractor. By comparison, at December 31, 2013, there was a net subcontractor payable under this contract of $3.7 million that was offset by a subcontractor receivable for estimated future overturns of subcontractor audits of $5.2 million, with the net asset of $1.5 million included in Other liabilities. | |||||||||
(o) Legal Expenses | |||||||||
The Company recognizes legal fees related to litigation as they are incurred. | |||||||||
(p) Comprehensive Income | |||||||||
The Company has no components of comprehensive income other than its net income. Accordingly, comprehensive income is equivalent to net income. | |||||||||
(q) Fair Value of Financial Instruments | |||||||||
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short-term debt and long-term debt. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values based on or due to their short-term maturities. The carrying values of short-term debt and long-term debt approximate fair value, in which their variable interest rates approximate market rates. | |||||||||
(r) Income Taxes | |||||||||
The Company accounts for income taxes under the asset-and-liability method. Deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying value of assets and liabilities for financial reporting purposes and for taxation purposes. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
(s) Preferred Stock | |||||||||
The carrying amounts of preferred stock are periodically increased by amounts representing dividends not currently declared or paid, but which would be payable under certain redemption features. Such increases in carrying amounts are recorded against retained earnings. | |||||||||
(t) Stock Options | |||||||||
The Company accounts for its employee stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the financial statements and that for equity-classified awards, such cost is measured at the grant date fair value of the award. The Company estimates grant date fair value using the Black-Scholes-Merton option-pricing model. | |||||||||
FASB ASC Topic 718 also requires that excess tax benefits recognized in equity related to stock option exercises are reflected as financing cash inflows. The Company recognized income tax benefits resulting from the exercise of stock options in 2014, 2013 and 2012 of $3.2 million, $9.1 million and $0.6 million, respectively. | |||||||||
(u) Earnings per Share | |||||||||
For the years ended December 31, 2014 and 2013, basic earnings per share is calculated by dividing net income available to common shareholders by the sum of the weighted average number of common shares outstanding during the year. For the year ended December 31, 2012, basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year plus the weighted average number of shares of Series A Convertible Preferred Stock outstanding during the period. The Series A Convertible Preferred Stock are included in the basic denominator because they could be converted into common shares for no cash consideration (via conversion units as further described in Note 7), and were thus considered outstanding common shares in computing basic earnings per share. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares and dilutive common shares equivalents outstanding during the period. The Company’s common share equivalents consist of stock options and restricted stock units. | |||||||||
The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): | |||||||||
Years Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Weighted average shares outstanding – basic | 48,816 | 47,492 | 43,985 | ||||||
Dilutive effect of stock options | 1,018 | 1,894 | 3,614 | ||||||
Weighted average shares outstanding – diluted | 49,834 | 49,386 | 47,599 | ||||||
For the year ended December 31, 2014, the Company excluded 2,894,013 options from the calculation of diluted earnings per share for the year ended December 31, 2014 because the options’ combined exercise price, unamortized fair value and excess tax benefits were greater during the year than the average price for the Company's common stock because their effect would be anti-dilutive. | |||||||||
(v) Recent Accounting Pronouncements | |||||||||
In May 2014, FASB issued an ASU that amends the FASB ASC by creating a new Topic 606, Revenue from Contracts with Customers. The new guidance will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance on revenue recognition throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |||||||||
Step 1: Identify the contract(s) with a customer. | |||||||||
Step 2: Identify the performance obligations in the contract. | |||||||||
Step 3: Determine the transaction price. | |||||||||
Step 4: Allocate the transaction price to the performance obligations in the contract. | |||||||||
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |||||||||
In addition, an entity should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. We are currently evaluating the impact of the adoption of this guidance to our consolidated financial statements. | |||||||||
In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ("ASU 2014-12"). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014-12 is effective for annual reporting periods (including interim periods) beginning after December 15, 2015, with early adoption permitted. The adoption of this guidance will not have a material effect on our consolidated financial statements. |
Acquisition
Acquisition | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Business Combinations [Abstract] | ||||
Acquisition | Acquisition | |||
In February 2012, the Company purchased a perpetual software license and computer equipment from HOPS, a non-public Florida company, in a transaction valued at $3.7 million. The purchase agreement calls for a total of $4.0 million in cash payments to be made over an approximate 3 year period, beginning with an initial payment of $0.8 million which was made in February 2012, followed by quarterly payments of $0.3 million. As part of the transaction valuation, these payments were discounted to a present value using an estimate of our incremental borrowing rate. | ||||
The HOPS proprietary software platform provides data filtering services for government and commercial health plans to help identify improper payments made to health providers, and enhances our existing service offering in recovery of improper payments. | ||||
The purchase is being treated as a business combination for accounting purposes; the following table summarizes the estimated fair values of the assets acquired at the acquisition date (in thousands): | ||||
February 1, | ||||
2012 | ||||
Computer equipment | $ | 280 | ||
Perpetual license | 3,250 | |||
Customer relationships | 150 | |||
Total identifiable assets acquired | $ | 3,680 | ||
The acquired intangible assets will be amortized over their estimated useful lives, which are 5 and 4 years for the perpetual license and customer relationships, respectively. |
Property_Equipment_and_Leaseho
Property, Equipment, and Leasehold Improvements | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements | |||||||
Property, equipment, and leasehold improvements consist of the following at December 31, 2014 and 2013 (in thousands): | ||||||||
December 31, | December 31, 2013 | |||||||
2014 | ||||||||
Land | $ | 1,767 | $ | 1,767 | ||||
Building and leasehold improvements | 5,966 | 5,773 | ||||||
Furniture, equipment, and automobile | 5,193 | 4,932 | ||||||
Computer hardware and software | 60,229 | 52,021 | ||||||
73,155 | 64,493 | |||||||
Less accumulated depreciation and amortization | (45,508 | ) | (38,246 | ) | ||||
Property, equipment and leasehold improvements, net | $ | 27,647 | $ | 26,247 | ||||
Depreciation and amortization expense of property, equipment and leasehold improvements was $8.7 million, $6.9 million and $5.8 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Identifiable_Intangible_Assets
Identifiable Intangible Assets | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||||||||||
Identifiable Intangible Assets | Identifiable Intangible Assets | |||||||||||
Identifiable intangible assets consist of the following at December 31, 2014 and 2013 (in thousands): | ||||||||||||
December 31, 2014 | Gross | Accumulated | Net | |||||||||
Amounts | Amortization | |||||||||||
Amortizable intangibles: | ||||||||||||
Customer contracts and related relationships | $ | 62,451 | $ | (34,774 | ) | $ | 27,677 | |||||
Perpetual license | 3,313 | (1,897 | ) | 1,416 | ||||||||
Total intangible assets | $ | 65,764 | $ | (36,671 | ) | $ | 29,093 | |||||
December 31, 2013 | Gross | Accumulated | Net | |||||||||
Amounts | Amortization | |||||||||||
Amortizable intangibles: | ||||||||||||
Customer contracts and related relationships | $ | 62,198 | $ | (31,689 | ) | $ | 30,509 | |||||
Perpetual license | 3,250 | (1,246 | ) | 2,004 | ||||||||
Total intangible assets | $ | 65,448 | $ | (32,935 | ) | $ | 32,513 | |||||
For the years ended December 31, 2014, 2013 and 2012, amortization expense related to intangible assets amounted to $3.7 million, $3.7 million and $3.7 million, respectively. | ||||||||||||
The estimated aggregate amortization expense for each of the five following fiscal years is as follows (in thousands): | ||||||||||||
Year Ending December 31, | Amount | |||||||||||
2015 | $ | 3,803 | ||||||||||
2016 | 3,768 | |||||||||||
2017 | 3,167 | |||||||||||
2018 | 3,094 | |||||||||||
2019 | 3,090 | |||||||||||
Thereafter | 12,171 | |||||||||||
Total | $ | 29,093 | ||||||||||
Credit_Agreement
Credit Agreement | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Debt Disclosure [Abstract] | ||||
Credit Agreement | Credit Agreement | |||
On March 19, 2012, the Company recapitalized entering into a credit agreement (the Agreement) consisting of a Term A Loan of $57.0 million, a Term B Loan of $79.5 million, and a revolving credit facility of $11.0 million. In connection with the recapitalization, our old credit facility, scheduled to mature in 2012, was extinguished, and our indebtedness on the old facility was paid in full. As of December 31, 2011, the indebtedness on the old facility consisted of $33.2 million under the Term A-2 Loan, $62 million under the Term B Loan and $8.2 million under the line of credit. On June 28, 2012, the Agreement was amended to increase the Term B Loan to $99 million. Payments under the Agreement are as follows (in thousands): | ||||
Year Ending December 31, | Amount | |||
2015 | $9,820 | |||
2016 | 9,820 | |||
2017 | 9,119 | |||
2018 | 83,036 | |||
Total | $111,795 | |||
Proceeds from the new Term A, Term B, and revolving credit facility borrowings were used along with $14.5 million of our cash to repay our old notes payable and line of credit in the amount of $103.4 million and to redeem 3,897,000 shares of Series A Convertible Preferred Stock plus accrued dividends for a total of $44.0 million. Fees paid in conjunction with the credit agreement totaled $8.1 million, including an agency fee for $1.5 million to an entity associated with our majority stockholder, and an agreement to grant 215,000 shares of Common Stock valued at approximately $2.8 million to an investment bank acting as advisor. | ||||
Proceeds from the additional Term B borrowings were used to redeem the remaining 1,399,000 shares of Series A Convertible Preferred Stock outstanding plus accrued dividends for a total of $16.3 million. Fees paid in conjunction with the credit agreement totaled $0.8 million, including an agency fee for $0.2 million to an entity associated with our majority stockholder. Remaining proceeds of $2.3 million were used along with existing cash to pay off the line of credit balance of $4.5 million. | ||||
The Term A Loan is charged interest either at Prime (subject to a 2.5% floor) +4.25% or LIBOR (subject to a 1.5% floor) +5.25%, which was 6.75% at December 31, 2014. The Term A loan requires quarterly payments of $2.5 million beginning in June 2012, with the remaining outstanding principal balance due March 19, 2017. As of December 31, 2014, the Term A loan ending balance, including the current portion was $26.1 million. | ||||
The Term B loan is charged interest at Prime +4.75% (subject to a 2.50% floor) or LIBOR (subject to a 1.50% floor) +5.75% which was 7.25% at December 31, 2014. The Term B loan requires quarterly payments of $0.2 million beginning in June 2012, with the outstanding principal balance due March 19, 2018. As of December 31, 2014, the Term B loan ending balance, including the current portion was $85.7 million. | ||||
The Company has a line of credit under the Agreement which allows for borrowings of up to $11 million. Borrowings accrue interest at Prime +4.25% or LIBOR +5.25%, which was 6.75% at December 31, 2014. Both the Prime and the LIBOR alternatives are subject to minimum rate floors. In addition, a facility fee of 0.5% is assessed on the commitment amount. There were no outstanding borrowings under this line of credit at December 31, 2014, but there are letters of credit outstanding in the amount of $2.0 million, leaving remaining borrowing capacity under the line of credit of $9.0 million at December 31, 2014. The line of credit expires in March 19, 2017. | ||||
The Agreement contains certain restrictive financial covenants, which require, among other things, that we meet a minimum fixed charge coverage ratio of 1.20 and maximum total debt to EBITDA ratio of 3.25. Additionally, these covenants restrict the Company and its subsidiaries’ ability to incur certain types or amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of its business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into certain restrictive agreements, or engage in certain transactions with affiliates. We were in compliance with all such covenants at December 31, 2014. | ||||
The Agreement contains a prepayment provision which requires the Company to perform an annual excess cash flow computation based on earnings before interest, taxes, depreciation and amortization compared to changes in working capital. Based on the results of this computation, in May 2014 and May 2013, the Company made payments of $11.5 million and $3.6 million, respectively, to the lenders. | ||||
During our March 19, 2012 recapitalization, debt issuance costs of $5.0 million were capitalized, including $1.5 million of agent fees paid to an entity associated with our majority stockholder, and $0.8 million paid to third parties for legal and other services and a grant of 215,000 shares of Common Stock issued as compensation to an investment bank acting as financial advisor valued at approximately $2.8 million, based upon a price of $13 per share. These costs are being amortized to expense over the life of the new loans. | ||||
The Company capitalized an additional $0.8 million related to our June 28, 2012 amendment to the Agreement, which included $0.2 million of agent fees paid to an entity associated with our majority stockholders, and $0.0 million paid to third parties for legal and other services. Debt issuance costs are being amortized to interest expense over the life of the new loans. Accumulated amortization of debt issuance costs amounted to $3.1 million at December 31, 2014. | ||||
Debt extinguishment costs of $3.7 million were expensed, including $3.3 million of fees paid to the lenders, and $0.3 million of unamortized debt issuance costs associated with the old credit facility. | ||||
On November 4, 2014, the Company entered into Amendment No. 2 to its Credit Agreement (Second Amendment) in which certain financial covenants were amended and additional financial covenants were added. Under the Second Amendment, the total debt to EBITDA ratio, which required the Company to maintain a ratio of 3.25 to1.0 as of September 30, 2014 was revised as follows: | ||||
• | for the computation periods ending December 31, 2014, March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015, the Company must maintain a total debt to EBITDA ratio of 5.00 to1.0 | |||
• | for the computation periods ending March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016, the Company must maintain a total debt to EBITDA ratio of 4.75 to1.0; and | |||
• | for each computation period ending March 31, 2017 and thereafter, the Company must maintain a total debt to EBITDA ratio of 3.25 to1.0 | |||
In addition, the fixed charge coverage ratio of 1.20 to1.0, which was in effect for every computation period under the Credit Agreement as of September 30, 2014, has been revised under the Second Amendment to apply only to the computation periods ending September 30, 2014, March 31, 2017, and each computation period thereafter. | ||||
The Second Amendment also added an interest coverage ratio, defined as the ratio of EBITDA compared to interest expense paid in cash for the computation period. Under this new financial covenant, the Company is required to maintain: | ||||
• | an interest coverage ratio not to be less than 2.25 to1.0 for the computation periods ending December 31, 2014, March 31, 2015, June 30,2015, September 30, 2015, and December 31, 2015; and | |||
• | an interest coverage ratio not to be less than of 2.50 to1.0 for the computation period ending March 31, 2016, June 30, 2016, September 30, 2016 and December 31, 2016. | |||
In addition, among other things, under the Second Amendment, the Company is now required to maintain minimum adjusted cash balances of $35.0 million from November 4, 2014 through December 31, 2015, and minimum adjusted cash balances of $30.0 million from January 1, 2016 through December 31, 2016. Further, under the Second Amendment, the Company must maintain EBITDA for any trailing twelve month period of not less than $20.0 million beginning with the month ending November 30, 2014 through the month ending December 31, 2016. Also, pursuant to the terms of the Second Amendment, the lenders are not required to make new loans or issue new letters of credit under the Company's line of credit when the total debt to EBITDA ratio exceeds 3.25 to 1.0. Lastly, under the Second Amendment, capital expenditures of the Company in the years ending December 31, 2014, December 31, 2015, and December 31, 2016, are not permitted to exceed $12.5 million . | ||||
Interest charged under the Credit Agreement as revised by the Second Amendment is a function of the total debt to EBITDA ratio, adjusted quarterly. When the total debt to EBITDA ratio is greater than 4.0 to1.00, the Term A loan is charged interest either at Prime + 4.75% or LIBOR + 5.75% , while the Term B loan is charged interest either at Prime + 5.25% or LIBOR + 6.25% . When the total debt to EBITDA ratio is equal to or less than 4.0 to1.00, the Term A loan is charged interest either at Prime + 4.25% or LIBOR + 5.25% , while the Term B loan is charged interest either at Prime + 4.75% or LIBOR + 5.75% . | ||||
Fees for the Second Amendment of $0.5 million were paid to the lenders on November 4, 2014. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Commitments and Contingencies | Commitments and Contingencies | |||
The Company leases office facilities and certain equipment. In August 2013, we entered into a new lease agreement for office space for approximately 15,667 square feet in Grants Pass, Oregon. In January 2012, we renewed two of our facilities leases and entered into a new lease agreement for approximately 6,000 square feet in Livermore, California. | ||||
Future minimum rental commitments under non-cancelable leases as of December 31, 2014 are as follows (in thousands): | ||||
Year Ending December 31, | Amount | |||
2015 | $ | 2,290 | ||
2016 | 1,938 | |||
2017 | 1,485 | |||
2018 | 668 | |||
2019 | 601 | |||
Thereafter | 815 | |||
Total | $ | 7,797 | ||
Lease expense was $2.9 million, $2.6 million and $2.4 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Capital_Stock
Capital Stock | 12 Months Ended | |
Dec. 31, 2014 | ||
Equity [Abstract] | ||
Capital Stock | Capital Stock | |
Prior to August 15, 2012, the total number of shares of capital stock that the Company had authority to issue was 96,000,000, consisting of 18,000,000 shares of Series A Participating Senior Preferred Stock (Series A Preferred Stock), $0.0001 par value per share (Series A Preferred Stock); 18,000,000 shares of Series B Redeemable Senior Preferred Stock, $0.0001 par value per share (Series B Preferred Stock); and 60,000,000 shares of Common Stock, $0.0001 par value per share. On August 15, 2012, the authorized Common Stock was increased to 500,000,000 shares and the authorized preferred stock was increased to 50,000,000 shares. | ||
(a) | Series A Preferred Stock | |
Issuance – On May 23, 2006, the Company sold 5,295,676 shares of Series A Preferred Stock to shareholders at a price of $5.67 per share, receiving gross proceeds of $30,000,000, and net proceeds of $29,925,000 after issuance costs of $75,000. | ||
Retirement of Series of A Preferred Stock - On March 19, 2012, the Company recapitalized. As part of the recapitalization, 3,897,000 shares of Series A Convertible Preferred Stock were converted into conversion units, which consisted of one share of Series B Preferred Stock and one share of Common Stock. The Series B Preferred shares plus accrued dividends were redeemed for cash of $44 million, and 3,897,000 shares of Common Stock were issued to the holders of the redeemed Series A Convertible Preferred Stock. | ||
In June 2012, the remaining 1,399,000 shares of Series A Convertible Preferred Stock were converted into conversion units of one share of Series B Preferred Stock and one share of Common Stock. The shares Series B Preferred Stock plus accrued dividends were redeemed for cash of $16.3 million and 1,399,000 shares of Common Stock were issued to the holders of the redeemed Series A Convertible Preferred Stock. | ||
Dividends – The holders of Series A Preferred Stock were entitled to receive dividends as declared by the board of directors. The dividends accrued on a daily basis at the rate of 12% per annum on the sum of the Liquidation Value plus accumulated dividends and accrued and unpaid dividends thereon from the date of issuance of the Preferred Stock. As of December 31, 2011, the Company had accrued dividends payable of $28,248,000 recorded as an increase to the Series A Preferred Stock. | ||
Voting – Each share of Series A Preferred Stock entitled the holder to cast a number of votes per share equal to the number of votes that the holder would be entitled to cast assuming that such shares of Series A Preferred Stock had been converted into shares of Common Stock. | ||
Liquidation – In the event of any liquidation, dissolution, or winding up of the Company, before any distribution or payment to holders of Common Stock, but on parity with the holders of Series B Preferred Stock, holders of shares of Series A Preferred Stock were entitled to be paid an amount equal to the Liquidation Value of $5.67 per share plus any accumulated or accrued but unpaid dividends thereon. In addition to the payments set forth above, the holders of shares of Series A Preferred Stock were entitled to participate, on a parity and ratably on a per-share basis with the holders of Common Stock, with respect to all such distributions or payments that the holders of Series A Preferred Stock would have been entitled to receive with respect to the number of shares of Common Stock into which such holders’ shares of Series A Preferred Stock were convertible immediately prior to any relevant record date or payment date in connection with liquidation, dissolution, or winding up, but only to the extent that shares of Common Stock would have participated in such distributions or payments (and such payment shall be junior to all equity securities of the Company that rank senior to the Common Stock, including without limitation the Series B Preferred Stock). | ||
Conversion – The Series A Preferred Stock was convertible into Conversion Units (as defined below), at a rate of one Conversion Unit for one share of Series A Preferred Stock. A Conversion Unit consisted of (i) the number of shares of Common Stock determined by dividing the Liquidation Value of the Series A Preferred Stock by the Conversion Price then in effect (the Common Portion) and (ii) one share of Series B Preferred Stock (the Series B Portion) subject to adjustments. If upon conversion there were any unpaid, accrued, or accumulated dividends due on the shares of Series A Preferred Stock, such dividends continued to be deferred, but were considered unpaid, accrued, or accumulated dividends (as the case may be) due on the Series B Preferred Stock. | ||
• | Optional conversion – Each share of Series A Preferred Stock was convertible, at the option of the holder thereof, into a Conversion Unit at any time after the date of issuance of such share. | |
• | Automatic conversion – Each share of Series A Preferred Stock automatically could have been converted into Conversion Units on the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A Preferred Stock. | |
• | Conversion price – The initial Conversion Price of the shares issued in May 2006 was $5.67 per share. In order to prevent dilution of the conversion rights granted to the holders of the Series A Preferred Stock, the Conversion Price was subject to adjustment from time to time under certain circumstances. If the Company (i) declared a dividend on the Common Stock payable in shares of its capital stock (including Common Stock), (ii) subdivided the outstanding Common Stock, (iii) combined the outstanding Common Stock into a smaller number of shares, or (iv) issued any shares of its capital stock in a reclassification of the Common Stock, then, in each such case, the Conversion Price was to be proportionately adjusted so that, in connection with a conversion of the shares of Series A Preferred Stock after such date, the holder of shares of Series A Preferred Stock would have been entitled to receive the aggregate number and kind of shares of capital stock, which, if the conversion had occurred immediately prior to such date, the holder would have owned upon such conversion and been entitled to receive by virtue of such dividend, subdivision, combination, or reclassification. | |
(b) Issuance of Shares of Common Stock as Compensation | ||
As part of the March 19, 2012 recapitalization, the Company issued to its financial advisor as compensation in connection with the debt portion of the recapitalization 215,000 shares of Common Stock valued at approximately $2.8 million based upon a price of $13 per share. This amount represents debt issuance costs and is being amortized to expense over the 5 to 6 year life of the loans described in Note 5. | ||
(c) Initial Public Offering | ||
In August 2012, the Company completed its initial public offering (IPO) in which we issued and sold 1,924,000 shares of Common Stock at a public offering price of $9.00 per share. The Company received net proceeds of $12.6 million after deducting underwriter discounts and commissions of $1.0 million and other offering expenses of approximately $3.6 million. In addition, a financial advisor to the Company was paid $0.9 million through the issuance of 103,500 shares of Common Stock valued at $9.00 per share. |
Stockbased_Compensation
Stock-based Compensation | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Stock-based Compensation | Stock-based Compensation | ||||||||||||
(a) | Stock Options | ||||||||||||
The Company established the 2004 DCS Holdings Stock Option Plan, the DCS Holdings, Inc. 2004 Equity Incentive Plan (Performant Financial Corporation is the new name of DCS Holdings, Inc.), the Performant Financial Corporation 2007 Stock Option Plan, and the Performant Financial Corporation 2012 Stock Incentive Plan (the Plans). Under the terms of the 2004 DCS Holdings Stock Option Plan, stock options may be granted for up to 4,000,000 shares of the Company’s authorized but unissued Common Stock. The 2004 DCS Holdings Stock Option Plan was terminated on the completion of the Company’s initial public offering in August 2012. No shares of our common stock are available under our 2004 Stock Option Plan other than for satisfying exercises of stock options granted under this plan prior to termination. | |||||||||||||
Under the terms of the DCS Holdings, Inc. 2004 Equity Incentive Plan, incentive and nonqualified stock options, stock bonuses, and rights to acquire restricted stock may be granted for up to 3,600,000 shares of the Company’s authorized but unissued Common Stock. Options granted under the DCS Holdings, Inc. 2004 Equity Incentive Plan generally vest over a four-year period. The Company’s DCS Holdings, Inc. 2004 Equity Incentive Plan was terminated on the completion of its initial public offering in August 2012. No shares of our common stock are available under our 2004 Equity Incentive Plan other than for satisfying exercises of stock options granted under this plan prior to termination. | |||||||||||||
Under the terms of the Performant Financial Corporation 2007 Stock Option Plan, incentive and nonqualified stock options may be granted for up to 4,000,000 shares of the Company’s authorized but unissued Common Stock. Options granted under the Performant Financial Corporation 2007 Stock Option Plan generally vest over a five-year period. Performant Financial Corporation 2007 Stock Option Plan was terminated on the completion of its initial public offering in August 2012. No shares of our common stock are available under our 2007 Stock Option Plan other than for satisfying exercises of stock options granted under this plan prior to termination. | |||||||||||||
The terms of the Performant Financial Corporation 2012 Stock Incentive Plan provide for the granting of incentive stock options within the meaning of Section 422 of the Code to employees and the granting of nonstatutory stock options, restricted stock, stock appreciation rights, stock unit awards and cash-based awards to employees, non-employee directors and consultants. The Company has reserved 4,300,000 shares of common stock under the 2012 Plan. Options granted under the Performant Financial Corporation 2012 Stock Incentive Plan generally vest over periods of four or five-years. | |||||||||||||
The exercise price of incentive stock options shall generally not be less than 100% of the fair market value of the Common Stock subject to the option on the date that the option is granted. The exercise price of nonqualified stock options shall generally not be less than 85% of the fair market value of the Common Stock subject to the option on the date that the option is granted. Options issued under the Plans have a maximum term of 10 years and vest over schedules determined by the board of directors. Options issued under the Plans generally provide for immediate vesting of unvested shares in the event of a sale of the Company. | |||||||||||||
Total stock-based compensation expense charged as salaries and benefits expense in the consolidated statements of operations was $3.7 million, $3.0 million and $1.6 million for the years ended December 31, 2014, 2013, and 2012, respectively. | |||||||||||||
The following table sets forth a summary of our stock option activity for the year ended December 31: | |||||||||||||
Outstanding | Weighted | Weighted | Aggregate | ||||||||||
Options | average | average | Intrinsic Value | ||||||||||
exercise price | remaining | (in thousands) | |||||||||||
per share | contractual life | ||||||||||||
(Years) | |||||||||||||
Outstanding at December 31, 2011 | 5,664,750 | $ | 0.8 | 5.2 | |||||||||
Granted | 2,549,109 | 10.32 | |||||||||||
Forfeited | (19,077 | ) | 7.99 | ||||||||||
Exercised | (285,058 | ) | 0.61 | ||||||||||
Outstanding at December 31, 2012 | 7,909,724 | 3.85 | 5.89 | ||||||||||
Granted | 313,600 | 11.85 | |||||||||||
Forfeited | (102,381 | ) | 10.05 | ||||||||||
Exercised | (2,908,122 | ) | 0.6 | ||||||||||
Outstanding at December 31, 2013 | 5,212,821 | 6.03 | 6.62 | ||||||||||
Granted | 254,000 | 9.69 | |||||||||||
Forfeited | (410,625 | ) | 10.53 | ||||||||||
Exercised | (1,032,813 | ) | 0.62 | ||||||||||
Outstanding at December 31, 2014 | 4,023,383 | $ | 7.18 | 6.41 | $ | 7,641 | |||||||
Vested, exercisable, and expected to vest(1) at December 31, 2014 | 3,980,118 | $ | 7.16 | 6.38 | $ | 7,634 | |||||||
Exercisable at December 31, 2014 | 2,475,868 | $ | 5.32 | 5.47 | $ | 7,510 | |||||||
-1 | Options expected to vest reflect an estimated forfeiture rate. | ||||||||||||
The weighted-average grant-date exercise price of stock options granted during the years ended December 31, 2014, 2013 and 2012 was $9.69, $11.85 and $10.32, respectively, per share. The aggregate intrinsic value of our stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during the years ended December 31, 2014, 2013 and 2012, was $8.8 million, $31.3 million and $2.9 million, respectively. At December 31, 2014, 2013, and 2012, there was $7.5 million, $10.5 million and $12 million, respectively, of unrecognized stock-based compensation expense related to non-vested stock-based compensation arrangements, which the Company expects to recognize over a weighted-average period of 2.74 years as stock-based compensation expense. | |||||||||||||
Net cash proceeds from the exercise of stock options were $0.6 million, $1.8 million and $0.2 million during 2014, 2013 and 2012, respectively. For the years ended December 31, 2014, 2013 and 2012, we realized a $3.2 million, $9.1 million and $0.6 million tax benefit from the exercise of stock options, respectively. | |||||||||||||
The fair value of each option grant was estimated using the Black-Scholes option pricing model. Expected volatilities are calculated based on the historical volatility data of comparable peer companies over a term comparable to the expected term of the options issued. The expected term of the award is determined based on the average of the vesting term and the contractual term. Management monitors share option exercise and employee termination patterns to estimate forfeiture rates within the valuation model. Separate groups of employees that have similar groups of employees with similar historical exercise behavior are considered separately for valuation purposes. | |||||||||||||
We estimated the fair value of options granted using a Black-Scholes option pricing model with the following assumptions: | |||||||||||||
For the Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected volatility | 51.00% | 54.20% | 48.30% | ||||||||||
Expected dividends | —% | —% | —% | ||||||||||
Expected term (years) | 6.1 | 6.2 | 6.5 | ||||||||||
Risk-free interest rate | 1.90% | 1.50% | 1.00% | ||||||||||
Weighted-average estimated fair value of options granted during the year | $4.85 | $6.23 | $5.22 | ||||||||||
Valuation and Amortization Method – The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option pricing model. The fair value is then amortized on a straight line basis over the requisite service periods of the awards, which is generally the vesting period. Stock options typically have a ten year life from the grant date and vesting periods of four to five years. The fair value of the Company’s common stock is based on the market price of the stock on the date of grant. | |||||||||||||
Expected Term – The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For awards granted subject only to service vesting requirements, the Company utilizes the simplified method under the provisions of FASB ASC 718-10-S99-1 (Staff Accounting Bulletin No. 107) for estimating the expected term of the stock-based award. | |||||||||||||
Expected Volatility – Because there is insufficient history of the Company’s stock price returns, the Company lacks sufficient historical volatility data for its equity awards. Accordingly, the Company calculates the expected volatility using a composite made up of comparable peer companies and an approximate 38% company weighting over a term comparable to the expected term of the options issued. | |||||||||||||
Expected Dividend – The Company has never paid dividends on its common shares and currently does not intend to do so. Accordingly, the dividend yield percentage is zero for all periods. | |||||||||||||
Risk-Free Interest Rate – The risk-free interest rate used in the Black Scholes valuation method is based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options. | |||||||||||||
(b) | Restricted Stock Units | ||||||||||||
The following table summarizes restricted stock unit activity for the year ended December 31: | |||||||||||||
Weighted | |||||||||||||
average | |||||||||||||
Number of | grant date | ||||||||||||
Awards | fair value | ||||||||||||
Outstanding at December 31, 2012 | — | $ | — | ||||||||||
Granted | 5,263 | 10.59 | |||||||||||
Forfeited | — | — | |||||||||||
Vested and converted to shares | — | — | |||||||||||
Outstanding at December 31, 2013 | 5,263 | $ | 10.59 | ||||||||||
Granted | 488,545 | 9.27 | |||||||||||
Forfeited | (30,900 | ) | 9.26 | ||||||||||
Vested and converted to shares | (1,316 | ) | 10.59 | ||||||||||
Outstanding at December 31, 2014 | 461,592 | $ | 9.28 | ||||||||||
Expected to vest at December 31, 2014 | 438,510 | $ | 9.28 | ||||||||||
At December 31, 2014 and 2013, there was $3.5 million and $0.1 million of compensation expense yet to be recognized related to non-vested restricted stock units. The unrecognized expense as of December 31, 2014 is expected to be recognized over the remaining weighted-average vested period of 3.3 years. 1,316 and none of the restricted stock units vested during the years ended December 31, 2014 and 2013, respectively. Restricted stock units granted under the Performant Financial Corporation 2012 Stock Incentive Plan generally vest over periods between one and four years. The company did not realize any tax benefits related to the restricted stock units during the year ended December 31, 2014 and 2013. |
Employee_Benefit_Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2014 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan |
The Company has a 401(k) Salary Deferral Plan (the Plan) covering all full-time employees who have met certain service requirements. Employees may contribute a portion of their salary up to the maximum limit established by the Internal Revenue Code for such plans. Employer contributions are discretionary. No matching contributions were made during 2014, 2013 and 2012. |
Income_Taxes
Income Taxes | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Income Taxes | Income Taxes | |||||||||||
The Company’s income tax expense (benefit) consists of the following (in thousands): | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Current: | ||||||||||||
Federal | $ | 6,802 | $ | 21,526 | $ | 15,142 | ||||||
State | 2,600 | 5,149 | 3,470 | |||||||||
9,402 | 26,675 | 18,612 | ||||||||||
Deferred: | ||||||||||||
Federal | $ | (1,625 | ) | $ | (866 | ) | $ | (1,599 | ) | |||
State | (78 | ) | (842 | ) | (227 | ) | ||||||
(1,703 | ) | (1,708 | ) | (1,826 | ) | |||||||
Total Expense (Benefit) | $ | 7,699 | $ | 24,967 | $ | 16,786 | ||||||
A reconciliation of the income tax expense calculated using the applicable federal statutory rates to the actual income tax expense for the years ended December 31, 2014, 2013 and 2012 is as follows: | ||||||||||||
2014 | 2013 | 2012 | ||||||||||
Federal income at the statutory rate | 35 | % | 35 | % | 35 | % | ||||||
State income tax, net of federal benefit | 10 | % | 5 | % | 5 | % | ||||||
Permanent differences | 2 | % | 1 | % | 2 | % | ||||||
Other | (2 | )% | — | % | — | % | ||||||
45 | % | 41 | % | 42 | % | |||||||
The following table summarizes the components of the Company’s deferred tax assets and liabilities as of December 31, 2014, and 2013 (in thousands): | ||||||||||||
2014 | 2013 | |||||||||||
Deferred tax assets: | ||||||||||||
Bad debt reserve | $ | 13 | $ | 13 | ||||||||
Vacation accrual | 685 | 1,020 | ||||||||||
Nonqualified stock options | 3,059 | 1,526 | ||||||||||
Debt issuance costs | 643 | 848 | ||||||||||
Acquisition costs | 630 | 158 | ||||||||||
State tax deferral | 934 | 1,474 | ||||||||||
Deferred revenue | 273 | 352 | ||||||||||
State tax credits | 305 | 290 | ||||||||||
Net operating loss | 110 | 47 | ||||||||||
Estimated liability for appeals | 5,313 | 4,277 | ||||||||||
Other | 304 | 118 | ||||||||||
Total deferred tax assets | 12,269 | 10,123 | ||||||||||
Valuation allowance | (349 | ) | (147 | ) | ||||||||
Total deferred tax assets net of valuation allowance | 11,920 | 9,976 | ||||||||||
Deferred tax liabilities: | ||||||||||||
Identifiable intangible assets | (10,227 | ) | (11,176 | ) | ||||||||
Fixed assets | (5,732 | ) | (4,543 | ) | ||||||||
Other | (22 | ) | (22 | ) | ||||||||
Total deferred tax liabilities | (15,981 | ) | (15,741 | ) | ||||||||
Net deferred tax liabilities | $ | (4,061 | ) | $ | (5,765 | ) | ||||||
The Company believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets, except for certain state tax credits. Income tax expense is allocated to the subsidiaries included in the consolidated tax return on the basis of the subsidiaries’ stand-alone tax provision. | ||||||||||||
The Company has a valuation allowance of approximately $0.3 million and $0.1 million, as of December 31, 2014 and December 31, 2013, respectively, primarily related to California enterprise zone tax credits for which it is not more likely than not that the tax benefit will be realized. | ||||||||||||
The Company has state tax credits of $0.3 million, which, due to the Assembly Bill 93 and Senate Bill 90 signed on July 11, 2013, are now limited to a 10 year carryforward, and will expire in 2024. The Company has state net operating loss carryforwards of $0.4 million which expire in 2020. | ||||||||||||
The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2014 from its unrecognized tax benefits as of December 31, 2012 (in thousands): | ||||||||||||
Unrecognized tax benefits balance at December 31, 2012 | $ | 279 | ||||||||||
Increase related to prior year tax positions | 357 | |||||||||||
Increase related to current year tax positions | 49 | |||||||||||
Settlements | (139 | ) | ||||||||||
Unrecognized tax benefits balance at December 31, 2013 | 546 | |||||||||||
Increase related to prior year tax positions | 444 | |||||||||||
Decrease related to prior year tax positions | (42 | ) | ||||||||||
Unrecognized tax benefits balance at December 31, 2014 | $ | 948 | ||||||||||
At December 31, 2014 and 2013, we had approximately $0.9 million and $0.5 million of unrecognized tax benefits, respectively. We do not expect any significant change in unrecognized tax benefits during the next twelve months. The Company records interest expense and penalties related to unrecognized tax benefits in income tax expense. The amount of accrued interest was not material at December 31, 2014 and 2013, respectively. No penalties were recognized in 2014 or accrued at December 31, 2014, and 2013 respectively. Unrecognized tax benefits of approximately 0.9 million which, if recognized, would favorably affect the Company’s effective income tax rate. | ||||||||||||
The Company files federal and state income tax returns. For years before 2010, the Company is no longer subject to California, Texas, and certain state state tax examinations. For tax year before 2011, the Company is no longer subject to Federal and certain other state tax examinations. |
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions |
Our notes payable, both before and after the recapitalization of March 19, 2012, are held by a number of lenders, some of whom also invested in and held our stock during 2012 and 2013. As a result, these entities are considered related parties. Interest expense under these arrangements totaled $10.3 million and $11.1 million for the years ended December 31, 2013 and 2012, respectively, and the debt extinguishment expense associated with the recapitalization totaled $3.3 million for the year ended December 31, 2012. | |
In an agreement dated April 13, 2012, the Company and an affiliate of Parthenon Capital Partners terminated an existing advisory services agreement, which called for quarterly payments of $0.1 million. As part of the April 13, 2012 termination agreement, the Company agreed to pay Parthenon Capital $1.3 million in equal quarterly installments of $0.1 million beginning in April 2012, provided that the remaining balance will become due and payable immediately upon the closing of an IPO or the sale of the Company. The Company paid two quarterly installments of $0.1 million and paid the remaining balance of $1.1 million on August 15, 2012, the date the IPO closed. In addition, the agreement specifies that the affiliate will be due a fee equal to 1% of the aggregate gross proceeds of an IPO offering or 1% of the aggregate consideration paid in connection with the sale of the Company, as applicable. The Company expensed and paid $0.9 million to Parthenon Capital Partners in August 2012 upon successful closing of the IPO. |
Other_Commitments_and_Continge
Other Commitments and Contingencies | 12 Months Ended | |
Dec. 31, 2014 | ||
Disclosure Commitments And Contingencies Additional Information [Abstract] | ||
Other Commitments and Contingencies | Other Commitments and Contingencies | |
(a) | Trust Funds | |
The Company collects principal and interest payments and collection costs on defaulted loans for various contracting agencies. Cash collections for some of the Company’s customers are held in trust in bank accounts controlled by the Company. The Company remits trust funds to the contracting agencies on a regular basis. The amount of cash held in trust and the related liability are separated from and not included in the Company’s assets and liabilities. Cash held in trust for customers totaled $9.7 million and $1.1 million at December 31, 2014 and 2013, respectively. | ||
(b) | Litigation | |
The Company, during the ordinary course of its operations, has been named in various legal suits and claims, several of which are still pending. In the opinion of management and the Company’s legal counsel, such legal actions will not have a material effect on the Company’s financial position or results of operations or cash flows. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
On January 28, 2015, we entered into an Agreement and Plan of Merger (“Merger Agreement”) with Premier Healthcare Exchange, Inc., a Delaware corporation (“PHX”), pursuant to which, PHX would become our wholly-owned indirect subsidiary. The Merger Agreement contains customary closing conditions, including completion of a financing by us to fund the consideration payable under the terms of the Merger Agreement. The purchase price under the Merger Agreement is approximately $108 million in cash, subject to certain adjustments, and certain PHX stockholders will also exchange shares for $22 million of our common stock. We also could be obligated to pay up to an additional $19.1 million in cash pursuant to an earnout arrangement based on PHX in revenues in 2015. On January 28, 2015 we announced proposed concurrent public offerings of $80 million aggregate principal amount of convertible senior notes due 2020 and $50 million of shares of our common stock to finance the cash portion of the consideration payable under the Merger Agreement. On January 30, 2015, we announced our decision to withdraw the proposed public offerings of convertible senior notes and common stock. The Merger Agreement is currently terminable by either us or PHX without penalty, except that we are obligated to pay an expense termination fee of $750,000 in the event the merger is not completed due to our failure to complete the required financing of the consideration payable under the Merger Agreement. |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Text Block [Abstract] | |||||||||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS | ||||||||||||||||
For the years ended December 31, 2014, 2013 and 2012 | |||||||||||||||||
Allowance for doubtful accounts (in thousands): | |||||||||||||||||
Description | Balance at | Additions | Recoveries | Charge-offs | Balance at | ||||||||||||
Beginning of | Charged | End of Period | |||||||||||||||
Period | against Revenue | ||||||||||||||||
2014 | $ | 32 | — | — | — | $ | 32 | ||||||||||
2013 | $ | 65 | — | 2 | (35 | ) | $ | 32 | |||||||||
2012 | $ | 77 | — | 2 | (14 | ) | $ | 65 | |||||||||
Estimated allowance and liability for appeals – RAC Contract (in thousands): | |||||||||||||||||
Description | Balance at | Additions | Appeals found | Balance at | |||||||||||||
Beginning of | Charged | in Providers | End of Period | ||||||||||||||
against Revenue | Favor | ||||||||||||||||
2014 | $ | 16,443 | 8,624 | (6,442 | ) | $ | 18,625 | * | |||||||||
2013 | $ | 5,577 | 12,791 | (1,925 | ) | $ | 16,443 | * | |||||||||
2012 | $ | 934 | 8,589 | (3,946 | ) | $ | 5,577 | * | |||||||||
* | Includes $0, $1,160 and $1,199 related to the estimated allowance for appeals that apply to uncollected accounts receivable as of 2014, 2013 and 2012, respectively. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Organization and Nature of Business | Organization and Nature of Business |
Performant Financial Corporation (the Company) is a leading provider of technology-enabled recovery and analytics services in the United States. The Company's services help identify, restructure and recover delinquent or defaulted assets and improper payments for both government and private clients in a broad range of markets. Company clients typically operate in complex and regulated environments and outsource their recovery needs in order to reduce losses on billions of dollars of defaulted student loans, improper healthcare payments and delinquent state tax and federal treasury receivables. The Company generally provides our services on an outsourced basis, where we handle many or all aspects of the clients’ recovery processes. | |
The Company’s consolidated financial statements include the operations of Performant Financial Corporation (PFC), its wholly owned subsidiary Performant Business Services, Inc., and its wholly owned subsidiaries Performant Recovery, Inc. (Recovery), Performant Technologies, Inc., and Performant Europe Ltd. Effective August 13, 2012, we changed the name of our wholly owned subsidiary from DCS Business Services, Inc. (DCSBS) to Performant Business Services, Inc., and DCSBS’ wholly owned subsidiaries from Diversified Collection Services, Inc. (DCS), and Vista Financial, Inc. (VFI), to Performant Recovery, Inc., and Performant Technologies, Inc., respectively. PFC is a Delaware corporation headquartered in California and was formed in 2003. Performant Business Services, Inc. is a Nevada corporation founded in 1997. Recovery is a California corporation founded in 1976. Performant Technologies, Inc. is a California corporation that was formed in 2004. | |
The Company is managed and operated as one business, with a single management team that reports to the Chief Executive Officer. | |
Principles of Consolidation | Principles of Consolidation |
The accompanying consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. The Company consolidates entities in which it has controlling financial interest, and as of December 31, 2014, all of the Company’s subsidiaries are 100% owned. All significant intercompany balances and transactions have been eliminated in consolidation. | |
Use of Estimates in the Preparation of Consolidated Financial Statements | Use of Estimates in the Preparation of Consolidated Financial Statements |
The preparation of the consolidated financial statements in conformity with U.S. GAAP, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, primarily accounts receivable, intangible assets, goodwill, estimated liability for appeals, accrued expenses, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Our actual results could differ from those estimates. | |
Stock Split | Accordingly, all per share amounts, average shares outstanding, shares outstanding, and equity based compensation presented in the consolidated financial statements and notes have been adjusted retroactively to reflect the stock split. Shareholders’ deficit has been retroactively adjusted to give effect to the stock split for all periods presented by reclassifying the par value of the additional shares issued in connection with the stock split to additional paid-in capital. |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash and cash equivalents include demand deposits and highly liquid debt instruments with original maturities of three months or less when purchased. These investments can include money market funds that invest in highly liquid U.S. government and agency obligations, certificates of deposit, bankers’ acceptances, and commercial paper. | |
The Company collects monies on behalf of its clients. Cash is often held on behalf of the clients in various trust accounts and is subsequently remitted to the clients based on contractual agreements. Cash held in these trust accounts for contracting agencies is not included in the Company’s assets (Note 12(a)). | |
Hosted Service Installation and Implementation Deliverables | Hosted Service Installation and Implementation Deliverables |
In 2008, the Company entered into a long-term contract to provide hosted services to a client beginning in March 2009. The Company determined that certain installation and implementation deliverables were not separate units of accounting within the contract, and should be combined for revenue recognition purposes with the hosted service deliverable. Accordingly, revenue for these contract elements is being taken ratably from the commencement of hosted services in March 2009 through the contract period of March 2018. Additionally, the Company deferred the direct incremental costs associated with the installation and implementation deliverables, with the costs being expensed ratably from the March 2009 commencement of services through March 2018. | |
Property, Equipment, and Leasehold Improvements | Property, Equipment, and Leasehold Improvements |
Property, equipment, and leasehold improvements are stated at cost, net of accumulated depreciation. Furniture and equipment are depreciated using the straight-line method over estimated useful lives ranging from 5 to 7 years. Buildings are depreciated using the straight-line method over 31.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated life of the asset or the remaining term of the lease. Computer software and computer hardware are depreciated using the straight-line method over 3 years and 5 years, respectively. | |
Maintenance and repairs are charged to expense as incurred. Improvements that extend the useful lives of assets are capitalized. | |
When property is sold or retired, the cost and the related accumulated depreciation are removed from the consolidated balance sheet and any gain or loss from the transaction is included in the consolidated statements of operations. | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets |
Goodwill represents the excess of purchase price and related costs over the fair value assigned to the net assets of businesses acquired. Goodwill is not amortized, but instead is reviewed for impairment at least annually. Impairment is the condition that exists when the carrying amount of goodwill is not recoverable and its carrying amount exceeds its fair value. | |
The Company performed a qualitative assessment of whether it is more likely than not that goodwill fair value is less than its carrying amount for 2014, 2013 and 2012 and concluded that there was no need to perform an impairment test. | |
Identifiable intangible assets consist of customer contracts and related relationships, a perpetual license, and covenants not to compete. Customer contracts and related relationships are amortized over their estimated useful life of 4 to 20 years. The perpetual license is amortized over its estimated useful life of 5 years. | |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets |
Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets or intangibles may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. | |
System Developments | System Developments |
The Company follows the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Subtopic 350-40, Internal-Use Software, which specifies that costs incurred during the application stage of development should be capitalized. All other costs are expensed as incurred. | |
Debt Issuance Costs | Debt Issuance Costs |
Debt issuance costs represent loan and legal fees paid in connection with the issuance of long-term debt. Debt issuance costs are amortized to interest expense in accordance with key terms of the notes as amended. | |
Revenues, Accounts Receivable, and Estimated Liability for Appeals | Revenues, Accounts Receivable, and Estimated Liability for Appeals |
Revenue is recognized upon the collection of defaulted loan and debt payments. Loan rehabilitation revenue is recognized when the rehabilitated loans are sold (funded) by clients. Incentive revenue is recognized upon receipt of official notification of incentive award from customers. Under the Company’s RAC contract with CMS, the Company recognizes revenues when the healthcare provider has paid CMS for a given claim or has agreed to an offset against other claims by the provider. Providers have the right to appeal a claim and may pursue additional appeals if the initial appeal is found in favor of CMS. The Company accrues an estimated liability for appeals at the time revenue is recognized based on the Company's estimate of the amount of revenue probable of being refunded to CMS following successful appeal. | |
To the extent that required payments by the Company exceed the amount accrued, revenues in the applicable period would be reduced by the amount of the excess. | |
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The Company determines the allowance for doubtful accounts by specific identification. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. | |
Legal Expenses | Legal Expenses |
The Company recognizes legal fees related to litigation as they are incurred. | |
Comprehensive Income | Comprehensive Income |
The Company has no components of comprehensive income other than its net income. Accordingly, comprehensive income is equivalent to net income. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short-term debt and long-term debt. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values based on or due to their short-term maturities. The carrying values of short-term debt and long-term debt approximate fair value, in which their variable interest rates approximate market rates. | |
Income Taxes | Income Taxes |
The Company accounts for income taxes under the asset-and-liability method. Deferred income tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying value of assets and liabilities for financial reporting purposes and for taxation purposes. Deferred income tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred income tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |
Preferred Stock | Preferred Stock |
The carrying amounts of preferred stock are periodically increased by amounts representing dividends not currently declared or paid, but which would be payable under certain redemption features. Such increases in carrying amounts are recorded against retained earnings. | |
Stock Options | Stock Options |
The Company accounts for its employee stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation – Stock Compensation. FASB ASC Topic 718 requires that all employee stock-based compensation is recognized as a cost in the financial statements and that for equity-classified awards, such cost is measured at the grant date fair value of the award. The Company estimates grant date fair value using the Black-Scholes-Merton option-pricing model. | |
FASB ASC Topic 718 also requires that excess tax benefits recognized in equity related to stock option exercises are reflected as financing cash inflows. | |
Earnings per Share | Earnings per Share |
For the years ended December 31, 2014 and 2013, basic earnings per share is calculated by dividing net income available to common shareholders by the sum of the weighted average number of common shares outstanding during the year. For the year ended December 31, 2012, basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the year plus the weighted average number of shares of Series A Convertible Preferred Stock outstanding during the period. The Series A Convertible Preferred Stock are included in the basic denominator because they could be converted into common shares for no cash consideration (via conversion units as further described in Note 7), and were thus considered outstanding common shares in computing basic earnings per share. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares and dilutive common shares equivalents outstanding during the period. The Company’s common share equivalents consist of stock options and restricted stock units. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In May 2014, FASB issued an ASU that amends the FASB ASC by creating a new Topic 606, Revenue from Contracts with Customers. The new guidance will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance on revenue recognition throughout the Industry Topics of the Codification. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: | |
Step 1: Identify the contract(s) with a customer. | |
Step 2: Identify the performance obligations in the contract. | |
Step 3: Determine the transaction price. | |
Step 4: Allocate the transaction price to the performance obligations in the contract. | |
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. | |
In addition, an entity should disclose sufficient qualitative and quantitative information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. This amendment is to be either retrospectively adopted to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this ASU recognized at the date of initial application. We are currently evaluating the impact of the adoption of this guidance to our consolidated financial statements. | |
In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ("ASU 2014-12"). ASU 2014-12 brings consistency to the accounting for share-based payment awards that require a specific performance target to be achieved in order for employees to become eligible to vest in the awards. ASU 2014-12 is effective for annual reporting periods (including interim periods) beginning after December 15, 2015, with early adoption permitted. The adoption of this guidance will not have a material effect on our consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Accounting Policies [Abstract] | |||||||||
Details of Revenue by Major Customers | The dollar amount and percent of total revenue of each of the 4 clients is summarized in the table below (in thousands): | ||||||||
Rank | 2014 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $53,211 | 27.20% | |||||||
2 | 29,444 | 15.10% | |||||||
3 | 29,171 | 14.90% | |||||||
4 | 24,855 | 12.70% | |||||||
For the year ended December 31, 2013, the Company had 4 clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the 4 clients is summarized in the table below (in thousands): | |||||||||
Rank | 2013 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $66,820 | 26.20% | |||||||
2 | 51,566 | 20.20% | |||||||
3 | 42,056 | 16.50% | |||||||
4 | 30,902 | 12.10% | |||||||
For the year ended December 31, 2012, the Company had 5 clients whose individual revenues exceeded 10% of the Company’s total revenues. The dollar amount and percent of total revenue of each of the 5 clients is summarized in the table below (in thousands): | |||||||||
Rank | 2012 Revenue | Percent of | |||||||
total revenue | |||||||||
1 | $54,130 | 25.80% | |||||||
2 | 39,183 | 18.70% | |||||||
3 | 29,027 | 13.80% | |||||||
4 | 25,469 | 12.10% | |||||||
5 | 22,397 | 10.70% | |||||||
Reconciliation of Basic to Diluted Weighted Average Shares Outstanding | The following table reconciles the basic to diluted weighted average shares outstanding using the treasury stock method (shares in thousands): | ||||||||
Years Ended December 31, | |||||||||
2014 | 2013 | 2012 | |||||||
Weighted average shares outstanding – basic | 48,816 | 47,492 | 43,985 | ||||||
Dilutive effect of stock options | 1,018 | 1,894 | 3,614 | ||||||
Weighted average shares outstanding – diluted | 49,834 | 49,386 | 47,599 | ||||||
Acquisition_Tables
Acquisition (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Business Combinations [Abstract] | ||||
Estimated Fair Values of Assets Acquired at Acquisition Date | The purchase is being treated as a business combination for accounting purposes; the following table summarizes the estimated fair values of the assets acquired at the acquisition date (in thousands): | |||
February 1, | ||||
2012 | ||||
Computer equipment | $ | 280 | ||
Perpetual license | 3,250 | |||
Customer relationships | 150 | |||
Total identifiable assets acquired | $ | 3,680 | ||
Property_Equipment_and_Leaseho1
Property, Equipment, and Leasehold Improvements (Tables) | 12 Months Ended | |||||||
Dec. 31, 2014 | ||||||||
Property, Plant and Equipment [Abstract] | ||||||||
Property, Equipment and Leasehold Improvements | Property, equipment, and leasehold improvements consist of the following at December 31, 2014 and 2013 (in thousands): | |||||||
December 31, | December 31, 2013 | |||||||
2014 | ||||||||
Land | $ | 1,767 | $ | 1,767 | ||||
Building and leasehold improvements | 5,966 | 5,773 | ||||||
Furniture, equipment, and automobile | 5,193 | 4,932 | ||||||
Computer hardware and software | 60,229 | 52,021 | ||||||
73,155 | 64,493 | |||||||
Less accumulated depreciation and amortization | (45,508 | ) | (38,246 | ) | ||||
Property, equipment and leasehold improvements, net | $ | 27,647 | $ | 26,247 | ||||
Identifiable_Intangible_Assets1
Identifiable Intangible Assets (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||||||||||
Identifiable Intangible Assets | Identifiable intangible assets consist of the following at December 31, 2014 and 2013 (in thousands): | |||||||||||
December 31, 2014 | Gross | Accumulated | Net | |||||||||
Amounts | Amortization | |||||||||||
Amortizable intangibles: | ||||||||||||
Customer contracts and related relationships | $ | 62,451 | $ | (34,774 | ) | $ | 27,677 | |||||
Perpetual license | 3,313 | (1,897 | ) | 1,416 | ||||||||
Total intangible assets | $ | 65,764 | $ | (36,671 | ) | $ | 29,093 | |||||
December 31, 2013 | Gross | Accumulated | Net | |||||||||
Amounts | Amortization | |||||||||||
Amortizable intangibles: | ||||||||||||
Customer contracts and related relationships | $ | 62,198 | $ | (31,689 | ) | $ | 30,509 | |||||
Perpetual license | 3,250 | (1,246 | ) | 2,004 | ||||||||
Total intangible assets | $ | 65,448 | $ | (32,935 | ) | $ | 32,513 | |||||
Schedule of Estimated Aggregate Amortization Expense | The estimated aggregate amortization expense for each of the five following fiscal years is as follows (in thousands): | |||||||||||
Year Ending December 31, | Amount | |||||||||||
2015 | $ | 3,803 | ||||||||||
2016 | 3,768 | |||||||||||
2017 | 3,167 | |||||||||||
2018 | 3,094 | |||||||||||
2019 | 3,090 | |||||||||||
Thereafter | 12,171 | |||||||||||
Total | $ | 29,093 | ||||||||||
Credit_Agreement_Tables
Credit Agreement (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Debt Disclosure [Abstract] | ||||
Payments Under Credit Agreement | Payments under the Agreement are as follows (in thousands): | |||
Year Ending December 31, | Amount | |||
2015 | $9,820 | |||
2016 | 9,820 | |||
2017 | 9,119 | |||
2018 | 83,036 | |||
Total | $111,795 | |||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Commitments and Contingencies Disclosure [Abstract] | ||||
Future Minimum Rental Commitments Under Non-Cancelable Leases | Future minimum rental commitments under non-cancelable leases as of December 31, 2014 are as follows (in thousands): | |||
Year Ending December 31, | Amount | |||
2015 | $ | 2,290 | ||
2016 | 1,938 | |||
2017 | 1,485 | |||
2018 | 668 | |||
2019 | 601 | |||
Thereafter | 815 | |||
Total | $ | 7,797 | ||
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Stock Option Activity | The following table sets forth a summary of our stock option activity for the year ended December 31: | ||||||||||||
Outstanding | Weighted | Weighted | Aggregate | ||||||||||
Options | average | average | Intrinsic Value | ||||||||||
exercise price | remaining | (in thousands) | |||||||||||
per share | contractual life | ||||||||||||
(Years) | |||||||||||||
Outstanding at December 31, 2011 | 5,664,750 | $ | 0.8 | 5.2 | |||||||||
Granted | 2,549,109 | 10.32 | |||||||||||
Forfeited | (19,077 | ) | 7.99 | ||||||||||
Exercised | (285,058 | ) | 0.61 | ||||||||||
Outstanding at December 31, 2012 | 7,909,724 | 3.85 | 5.89 | ||||||||||
Granted | 313,600 | 11.85 | |||||||||||
Forfeited | (102,381 | ) | 10.05 | ||||||||||
Exercised | (2,908,122 | ) | 0.6 | ||||||||||
Outstanding at December 31, 2013 | 5,212,821 | 6.03 | 6.62 | ||||||||||
Granted | 254,000 | 9.69 | |||||||||||
Forfeited | (410,625 | ) | 10.53 | ||||||||||
Exercised | (1,032,813 | ) | 0.62 | ||||||||||
Outstanding at December 31, 2014 | 4,023,383 | $ | 7.18 | 6.41 | $ | 7,641 | |||||||
Vested, exercisable, and expected to vest(1) at December 31, 2014 | 3,980,118 | $ | 7.16 | 6.38 | $ | 7,634 | |||||||
Exercisable at December 31, 2014 | 2,475,868 | $ | 5.32 | 5.47 | $ | 7,510 | |||||||
-1 | Options expected to vest reflect an estimated forfeiture rate. | ||||||||||||
Assumptions to Estimate Fair Value Options | We estimated the fair value of options granted using a Black-Scholes option pricing model with the following assumptions: | ||||||||||||
For the Years Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Expected volatility | 51.00% | 54.20% | 48.30% | ||||||||||
Expected dividends | —% | —% | —% | ||||||||||
Expected term (years) | 6.1 | 6.2 | 6.5 | ||||||||||
Risk-free interest rate | 1.90% | 1.50% | 1.00% | ||||||||||
Weighted-average estimated fair value of options granted during the year | $4.85 | $6.23 | $5.22 | ||||||||||
Schedule of Share-based Compensation, Restricted Stock Units Award Activity | The following table summarizes restricted stock unit activity for the year ended December 31: | ||||||||||||
Weighted | |||||||||||||
average | |||||||||||||
Number of | grant date | ||||||||||||
Awards | fair value | ||||||||||||
Outstanding at December 31, 2012 | — | $ | — | ||||||||||
Granted | 5,263 | 10.59 | |||||||||||
Forfeited | — | — | |||||||||||
Vested and converted to shares | — | — | |||||||||||
Outstanding at December 31, 2013 | 5,263 | $ | 10.59 | ||||||||||
Granted | 488,545 | 9.27 | |||||||||||
Forfeited | (30,900 | ) | 9.26 | ||||||||||
Vested and converted to shares | (1,316 | ) | 10.59 | ||||||||||
Outstanding at December 31, 2014 | 461,592 | $ | 9.28 | ||||||||||
Expected to vest at December 31, 2014 | 438,510 | $ | 9.28 | ||||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | |||||||||||
Dec. 31, 2014 | ||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||
Income Tax Expense (Benefit) | The Company’s income tax expense (benefit) consists of the following (in thousands): | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Current: | ||||||||||||
Federal | $ | 6,802 | $ | 21,526 | $ | 15,142 | ||||||
State | 2,600 | 5,149 | 3,470 | |||||||||
9,402 | 26,675 | 18,612 | ||||||||||
Deferred: | ||||||||||||
Federal | $ | (1,625 | ) | $ | (866 | ) | $ | (1,599 | ) | |||
State | (78 | ) | (842 | ) | (227 | ) | ||||||
(1,703 | ) | (1,708 | ) | (1,826 | ) | |||||||
Total Expense (Benefit) | $ | 7,699 | $ | 24,967 | $ | 16,786 | ||||||
Reconciliation of Federal Statutory Income Tax Expense to Actual Income Tax Expense | A reconciliation of the income tax expense calculated using the applicable federal statutory rates to the actual income tax expense for the years ended December 31, 2014, 2013 and 2012 is as follows: | |||||||||||
2014 | 2013 | 2012 | ||||||||||
Federal income at the statutory rate | 35 | % | 35 | % | 35 | % | ||||||
State income tax, net of federal benefit | 10 | % | 5 | % | 5 | % | ||||||
Permanent differences | 2 | % | 1 | % | 2 | % | ||||||
Other | (2 | )% | — | % | — | % | ||||||
45 | % | 41 | % | 42 | % | |||||||
Components of Deferred Tax Assets and Liabilities | The following table summarizes the components of the Company’s deferred tax assets and liabilities as of December 31, 2014, and 2013 (in thousands): | |||||||||||
2014 | 2013 | |||||||||||
Deferred tax assets: | ||||||||||||
Bad debt reserve | $ | 13 | $ | 13 | ||||||||
Vacation accrual | 685 | 1,020 | ||||||||||
Nonqualified stock options | 3,059 | 1,526 | ||||||||||
Debt issuance costs | 643 | 848 | ||||||||||
Acquisition costs | 630 | 158 | ||||||||||
State tax deferral | 934 | 1,474 | ||||||||||
Deferred revenue | 273 | 352 | ||||||||||
State tax credits | 305 | 290 | ||||||||||
Net operating loss | 110 | 47 | ||||||||||
Estimated liability for appeals | 5,313 | 4,277 | ||||||||||
Other | 304 | 118 | ||||||||||
Total deferred tax assets | 12,269 | 10,123 | ||||||||||
Valuation allowance | (349 | ) | (147 | ) | ||||||||
Total deferred tax assets net of valuation allowance | 11,920 | 9,976 | ||||||||||
Deferred tax liabilities: | ||||||||||||
Identifiable intangible assets | (10,227 | ) | (11,176 | ) | ||||||||
Fixed assets | (5,732 | ) | (4,543 | ) | ||||||||
Other | (22 | ) | (22 | ) | ||||||||
Total deferred tax liabilities | (15,981 | ) | (15,741 | ) | ||||||||
Net deferred tax liabilities | $ | (4,061 | ) | $ | (5,765 | ) | ||||||
Unrecognized Tax Benefits | The following table reconciles the Company’s unrecognized tax benefits as of December 31, 2014 from its unrecognized tax benefits as of December 31, 2012 (in thousands): | |||||||||||
Unrecognized tax benefits balance at December 31, 2012 | $ | 279 | ||||||||||
Increase related to prior year tax positions | 357 | |||||||||||
Increase related to current year tax positions | 49 | |||||||||||
Settlements | (139 | ) | ||||||||||
Unrecognized tax benefits balance at December 31, 2013 | 546 | |||||||||||
Increase related to prior year tax positions | 444 | |||||||||||
Decrease related to prior year tax positions | (42 | ) | ||||||||||
Unrecognized tax benefits balance at December 31, 2014 | $ | 948 | ||||||||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies - Additional Information (Detail) (USD $) | 0 Months Ended | 12 Months Ended | ||||
Jul. 26, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 15, 2012 | Jul. 26, 2012 | |
Customer | Customer | Customer | ||||
Property, Plant and Equipment [Line Items] | ||||||
Stock split conversion ratio | 2 | |||||
Common stock, authorized shares | 60,000,000 | 500,000,000 | 500,000,000 | 500,000,000 | 60,000,000 | |
Preferred stock, Authorized shares | 50,000,000 | |||||
Capitalized internal use software | $7,200,000 | $4,900,000 | $5,400,000 | |||
Capitalized internal use software, depreciation expense | 4,000,000 | 2,600,000 | 2,400,000 | |||
Allowance against accounts receivable | 18,600,000 | |||||
Estimated allowance for appeals | 0 | 1,160,000 | ||||
Estimated liability for appeals | 18,625,000 | 15,283,000 | ||||
Probable amount of losses | 18,600,000 | 15,300,000 | ||||
Estimated additional liability for appeals | 5,400,000 | |||||
Number of clients whose individual revenues exceeded 10% of total revenues | 4 | 4 | 5 | |||
Allowance against accounts receivable | 32,000 | 32,000 | ||||
Tax benefit from the exercise of stock options | 3,200,000 | 9,100,000 | 600,000 | |||
Antidilutive securities excluded from computation of earnings per share amount | 2,894,013 | |||||
Net payable to client | 12,110,000 | 0 | ||||
Payable for overturned audits | 14,200,000 | 5,900,000 | ||||
Outstanding accounts receivable | 2,100,000 | 12,800,000 | ||||
Net receivable | 6,900,000 | |||||
Due from subcontractors | 5,600,000 | |||||
Future overturns of subcontractor audits | 5,600,000 | |||||
Subcontractor fees for already overturned audits | 3,000,000 | 5,200,000 | ||||
Subcontractor payable | 3,700,000 | |||||
Net asset | 1,500,000 | |||||
Furniture Fixtures And Equipment | Minimum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Estimated useful lives of property (in years) | 5 years | |||||
Furniture Fixtures And Equipment | Maximum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Estimated useful lives of property (in years) | 7 years | |||||
Building | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Estimated useful lives of property (in years) | 31 years 6 months | |||||
Computer hardware and software | Minimum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Estimated useful lives of property (in years) | 3 years | |||||
Computer hardware and software | Maximum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Estimated useful lives of property (in years) | 5 years | |||||
Scenario, Previously Reported | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Common stock, authorized shares | 25,000,000 | 25,000,000 | ||||
Customer contracts and related relationships | Minimum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Identifiable intangible assets estimated useful lives (in years) | 4 years | |||||
Customer contracts and related relationships | Maximum | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Identifiable intangible assets estimated useful lives (in years) | 20 years | |||||
Perpetual license | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Identifiable intangible assets estimated useful lives (in years) | 5 years | |||||
The largest three customers | Revenue | Customer Concentration Risk | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Concentration risk percentage | 57.00% | 63.00% | 58.00% | |||
The largest three customers | Accounts Receivable | Customer Concentration Risk | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Concentration risk percentage | 39.00% | 59.00% | 63.00% | |||
Collectibility of Receivables | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Appeals-related liability | 16,400,000 | |||||
Estimated Liability for Appeals | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Appeals-related liability | 15,300,000 | |||||
Contra-Accounts-Receivable Estimated Allowance for Appeals | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Appeals-related liability | $1,100,000 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies Details of Revenue by Major Customers (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Revenue, Major Customer [Line Items] | |||
Revenues | $195,378 | $255,302 | $210,073 |
Customer 1 | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 53,211 | 66,820 | 54,130 |
Customer 1 | Revenue | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Percent of total revenue | 27.20% | 26.20% | 25.80% |
Customer 2 | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 29,444 | 51,566 | 39,183 |
Customer 2 | Revenue | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Percent of total revenue | 15.10% | 20.20% | 18.70% |
Customer 3 | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 29,171 | 42,056 | 29,027 |
Customer 3 | Revenue | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Percent of total revenue | 14.90% | 16.50% | 13.80% |
Customer 4 | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Revenues | 24,855 | 30,902 | 25,469 |
Customer 4 | Revenue | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Percent of total revenue | 12.70% | 12.10% | 12.10% |
Customer 5 | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Revenues | $22,397 | ||
Customer 5 | Revenue | Customer Concentration Risk | |||
Revenue, Major Customer [Line Items] | |||
Percent of total revenue | 10.70% |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies Reconciliation of Basic to Diluted Weighted Average Shares Outstanding (Detail) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | |||
Weighted average shares outstanding – basic | 48,816 | 47,492 | 43,985 |
Dilutive effect of stock options | 1,018 | 1,894 | 3,614 |
Weighted average shares outstanding – diluted | 49,834 | 49,386 | 47,599 |
Acquisition_Additional_Informa
Acquisition - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | |
In Millions, unless otherwise specified | Feb. 29, 2012 | Dec. 31, 2014 | Feb. 01, 2012 |
Business Acquisition [Line Items] | |||
Purchased transaction valued | $3.70 | ||
Purchase agreement, cash payments | 4 | ||
Purchase agreement payment maturity period (in years) | 3 years | ||
Initial payment | 0.8 | ||
Quarterly payments | $0.30 | ||
Perpetual license | |||
Business Acquisition [Line Items] | |||
Estimated useful lives (in years) | 5 years | ||
Customer relationships | |||
Business Acquisition [Line Items] | |||
Estimated useful lives (in years) | 4 years |
Acquisition_Estimated_Fair_Val
Acquisition Estimated Fair Values of Assets Acquired at Acquisition Date (Detail) (USD $) | Feb. 01, 2012 |
In Thousands, unless otherwise specified | |
Business Combinations [Abstract] | |
Computer equipment | $280 |
Perpetual license | 3,250 |
Customer relationships | 150 |
Total identifiable assets acquired | $3,680 |
Property_Equipment_and_Leaseho2
Property, Equipment, and Leasehold Improvement (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Gross | $73,155 | $64,493 |
Less accumulated depreciation and amortization | -45,508 | -38,246 |
Property, equipment and leasehold improvements, net | 27,647 | 26,247 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Gross | 1,767 | 1,767 |
Building and leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Gross | 5,966 | 5,773 |
Furniture, equipment, and automobile | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Gross | 5,193 | 4,932 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property Plant and Equipment Gross | $60,229 | $52,021 |
Property_Equipment_and_Leaseho3
Property, Equipment, and Leasehold Improvements - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | |||
Depreciation and amortization expense of property, equipment and leasehold improvements | $8.70 | $6.90 | $5.80 |
Identifiable_Intangible_Assets2
Identifiable Intangible Assets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | $65,764 | $65,448 |
Accumulated Amortization | -36,671 | -32,935 |
Net | 29,093 | 32,513 |
Customer contracts and related relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | 62,451 | 62,198 |
Accumulated Amortization | -34,774 | -31,689 |
Net | 27,677 | 30,509 |
Perpetual license | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Amounts | 3,313 | 3,250 |
Accumulated Amortization | -1,897 | -1,246 |
Net | $1,416 | $2,004 |
Identifiable_Intangible_Assets3
Identifiable Intangible Assets - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Amortization expense | $3.70 | $3.70 | $3.70 |
Identifiable_Intangible_Assets4
Identifiable Intangible Assets Schedule of Estimated Aggregate Amortization Expense (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
2015 | $3,803 | |
2016 | 3,768 | |
2017 | 3,167 | |
2018 | 3,094 | |
2019 | 3,090 | |
Thereafter | 12,171 | |
Net | $29,093 | $32,513 |
Credit_Agreement_Additional_In
Credit Agreement - Additional Information (Detail) (USD $) | 0 Months Ended | 12 Months Ended | |||||
Jun. 28, 2012 | Mar. 19, 2012 | Mar. 19, 2012 | Dec. 31, 2014 | 31-May-14 | 31-May-13 | Dec. 31, 2011 | |
Line of Credit Facility [Line Items] | |||||||
Credit facility, amount outstanding | $4,500,000 | ||||||
Repayments of notes payable and line of credit | 103,400,000 | ||||||
Agent fee to an entity associated with majority stockholders | 1,500,000 | ||||||
Grant of common stock to investment bank acting as advisor (in shares) | 215,000 | ||||||
Value of granted shares to investment bank | 2,800,000 | ||||||
Remaining proceeds from borrowings | 2,300,000 | ||||||
Excess Cash Flow for Prepayment of Debt | 11,500,000 | 3,600,000 | |||||
Capitalized debt issuance cost | 800,000 | 5,000,000 | 5,000,000 | ||||
Payments to third parties for legal and other services | 0 | ||||||
Grant of shares based on price (in dollars per share) | $13 | ||||||
Accumulated amortization of debt issuance costs | 3,100,000 | ||||||
Payments of debt extinguishment costs | 3,700,000 | ||||||
Fees paid to lenders | 3,300,000 | ||||||
Unamortized debt issuance cost | 300,000 | ||||||
Term B Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Recapitalized amount under credit agreement | 79,500,000 | 79,500,000 | 85,700,000 | ||||
Credit facility, amount outstanding | 62,000,000 | ||||||
Amendment of agreement to increase Term B Loan | 99,000,000 | ||||||
Interest rate terms | The Term B loan is charged interest at Prime +4.75% (subject to a 2.50% floor) or LIBOR (subject to a 1.50% floor) +5.75% | ||||||
Interest rate (as a percent) | 7.25% | ||||||
Quarterly payments of principal | 200,000 | ||||||
Expiry date of line of credit | 19-Mar-18 | ||||||
Term B Loan | Prime Rate Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Floor rate (as a percent) | 2.50% | ||||||
Basis spread on variable rate (as a percent) | 4.75% | ||||||
Term B Loan | LIBOR Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Floor rate (as a percent) | 1.50% | ||||||
Basis spread on variable rate (as a percent) | 5.75% | ||||||
Term B Loan | Series A Preferred Stock | |||||||
Line of Credit Facility [Line Items] | |||||||
Redemption of shares (in shares) | 1,399,000 | ||||||
Payment of accrued dividends | 16,300,000 | ||||||
Fees paid in conjunction with the credit agreement | 800,000 | 800,000 | 800,000 | ||||
Agent fee to an entity associated with majority stockholders | 200,000 | 200,000 | |||||
Term A, Term B and revolving credit facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Cash and cash equivalents | 14,500,000 | ||||||
Payment of accrued dividends | 44,000,000 | ||||||
Fees paid in conjunction with the credit agreement | 8,100,000 | ||||||
Agent fee to an entity associated with majority stockholders | 1,500,000 | ||||||
Grant of common stock to investment bank acting as advisor (in shares) | 215,000 | ||||||
Value of granted shares to investment bank | 2,800,000 | ||||||
Term A, Term B and revolving credit facility | Series A Preferred Stock | |||||||
Line of Credit Facility [Line Items] | |||||||
Redemption of shares (in shares) | 3,897,000 | ||||||
Term A Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Recapitalized amount under credit agreement | 57,000,000 | 57,000,000 | 26,100,000 | ||||
Interest rate terms | The Term A Loan is charged interest either at Prime (subject to a 2.5% floor) +4.25% or LIBOR (subject to a 1.5% floor) +5.25%, | ||||||
Interest rate (as a percent) | 6.75% | ||||||
Quarterly payments of principal | 2,500,000 | ||||||
Expiry date of line of credit | 19-Mar-17 | ||||||
Term A Loan | Prime Rate Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Floor rate (as a percent) | 2.50% | ||||||
Basis spread on variable rate (as a percent) | 4.25% | ||||||
Term A Loan | LIBOR Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Floor rate (as a percent) | 1.50% | ||||||
Basis spread on variable rate (as a percent) | 5.25% | ||||||
Revolving credit facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Recapitalized amount under credit agreement | 11,000,000 | 11,000,000 | |||||
Credit facility, amount outstanding | 8,200,000 | ||||||
Term A-2 Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility, amount outstanding | 33,200,000 | ||||||
Line of Credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate terms | Borrowings accrue interest at Prime +4.25% or LIBOR +5.25%, which was 6.75% | ||||||
Interest rate (as a percent) | 6.75% | ||||||
Borrowing under line of credit, maximum | 11,000,000 | ||||||
Facility commitment fee (as a percent) | 0.50% | ||||||
Letter of credit outstanding | 2,000,000 | ||||||
Remaining borrowing capacity under the line of credit | $9,000,000 | ||||||
Line of Credit | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Fixed charge coverage ratio | 1.2 | ||||||
Line of Credit | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Total debt to EBITDA ratio | 3.25 | ||||||
Line of Credit | Prime Rate Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 4.25% | ||||||
Line of Credit | LIBOR Plus | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate (as a percent) | 5.25% |
Credit_Agreement_Payment_Under
Credit Agreement Payment Under Credit Agreement (Detail) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Debt Disclosure [Abstract] | |
2015 | $9,820 |
2016 | 9,820 |
2017 | 9,119 |
2018 | 83,036 |
Total | $111,795 |
Credit_Agreement_Amendment_No_
Credit Agreement Amendment No. 2 (Details) (USD $) | 0 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 15 Months Ended | 25 Months Ended | 27 Months Ended | |||
Jun. 28, 2012 | Nov. 04, 2014 | Sep. 30, 2014 | Dec. 31, 2014 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||||||||||
Debt issuance cost | $0 | |||||||||
Amendment Number Two to Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Covenant, Total Debt to EBITDA ratio | 4 | 3.25 | 3.25 | |||||||
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum | 1.2 | |||||||||
Debt issuance cost | 500,000 | |||||||||
Scenario, Forecast | Amendment Number Two to Credit Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Covenant, Total Debt to EBITDA ratio | 3.25 | 4.75 | 5 | |||||||
Debt Instrument, Covenant, Capital Expenditures, Maximum | 12,500,000 | |||||||||
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum | 2.5 | 2.25 | ||||||||
Debt Instrument, Covenant, Cash Balances, Minimum | 30,000,000 | 35,000,000 | 35,000,000 | 30,000,000 | 30,000,000 | |||||
Debt Instrument, Covenant, EBITDA | $20,000,000 | |||||||||
Maximum | Term A-2 Loan | Amendment Number Two to Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | |||||||||
Maximum | Term A-2 Loan | Amendment Number Two to Credit Agreement | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | |||||||||
Maximum | Term B Loan | Amendment Number Two to Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.25% | |||||||||
Maximum | Term B Loan | Amendment Number Two to Credit Agreement | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | |||||||||
Minimum | Term A-2 Loan | Amendment Number Two to Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.25% | |||||||||
Minimum | Term A-2 Loan | Amendment Number Two to Credit Agreement | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.25% | |||||||||
Minimum | Term B Loan | Amendment Number Two to Credit Agreement | London Interbank Offered Rate (LIBOR) | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | |||||||||
Minimum | Term B Loan | Amendment Number Two to Credit Agreement | Prime Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 1 Months Ended | 12 Months Ended | 1 Months Ended | ||
In Millions, unless otherwise specified | Jan. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 31, 2013 |
facility | sqft | ||||
Commitment And Contingencies [Line Items] | |||||
Facilities renewed | 2 | ||||
Lease expense | $2.90 | $2.60 | $2.40 | ||
California | |||||
Commitment And Contingencies [Line Items] | |||||
New lease agreement (in square feet) | 6,000 | ||||
Oregon | |||||
Commitment And Contingencies [Line Items] | |||||
New lease agreement (in square feet) | 15,667 |
Commitments_and_Contingencies_2
Commitments and Contingencies Future Minimum Rental Commitments Under Non-Cancelable Leases (Detail) (USD $) | Dec. 31, 2014 |
In Thousands, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
2015 | $2,290 |
2016 | 1,938 |
2017 | 1,485 |
2018 | 668 |
2019 | 601 |
Thereafter | 815 |
Total | $7,797 |
Capital_Stock_Additional_Infor
Capital Stock - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | 0 Months Ended | 1 Months Ended | ||||||
Mar. 19, 2012 | Aug. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2011 | 23-May-06 | Jun. 30, 2012 | Dec. 31, 2013 | Aug. 15, 2012 | Aug. 14, 2012 | Jul. 26, 2012 | 31-May-06 | |
Capital Stock [Line Items] | |||||||||||
Capital stock, Authorized shares | 96,000,000 | ||||||||||
Convertible preferred stock, Authorized shares | 50,000,000 | ||||||||||
Common stock, authorized shares | 500,000,000 | 500,000,000 | 500,000,000 | 60,000,000 | |||||||
Common stock, par value (in dollars per share) | 0.0001 | $0.00 | $0.00 | ||||||||
Redemption of series B Preferred stock | $44,000,000 | 16,300,000 | |||||||||
Common stock issued as compensation (in shares) | 215,000 | ||||||||||
Value of granted shares to investment bank | 2,800,000 | ||||||||||
Grant of shares based on price (in dollars per share) | $13 | ||||||||||
Common stock, issued (in shares) | 1,924,000 | 49,350,000 | 48,316,000 | ||||||||
Offering price of common stock (in dollars per share) | $9 | ||||||||||
Proceeds from issuance initial public offering | 12,600,000 | ||||||||||
Underwriters discounts and commissions | 1,000,000 | ||||||||||
Other offering expenses | 3,600,000 | ||||||||||
Amount paid to financial advisor | 900,000 | ||||||||||
Financial Advisor | |||||||||||
Capital Stock [Line Items] | |||||||||||
Common stock, issued (in shares) | 103,500 | ||||||||||
Minimum | |||||||||||
Capital Stock [Line Items] | |||||||||||
Amortization of debt issuance costs (in years) | 5 years | ||||||||||
Maximum | |||||||||||
Capital Stock [Line Items] | |||||||||||
Amortization of debt issuance costs (in years) | 6 years | ||||||||||
Series A Preferred Stock | |||||||||||
Capital Stock [Line Items] | |||||||||||
Convertible preferred stock, Authorized shares | 18,000,000 | ||||||||||
Convertible preferred stock, par value | $0.00 | ||||||||||
Stock issued (in shares) | 5,295,676 | ||||||||||
Preferred stock, initial conversion price | $5.67 | ||||||||||
Preferred stock, gross proceeds | 30,000,000 | ||||||||||
Preferred stock, net proceeds | 29,925,000 | ||||||||||
Preferred stock, issuance costs | 75,000 | ||||||||||
Conversion of Series A Convertible Preferred Stock into one share of Series B Preferred Stock and one share of Common Stock | 3,897,000 | 1,399,000 | |||||||||
Preferred stock, dividend accrual rate | 12.00% | ||||||||||
Preferred stock, accrued dividends payable | 28,248,000 | ||||||||||
Preferred stock, liquidation preference (in dollars per share) | 5.67 | ||||||||||
Stock price (in dollars per share) | $5.67 | ||||||||||
Series B Preferred Stock | |||||||||||
Capital Stock [Line Items] | |||||||||||
Convertible preferred stock, Authorized shares | 18,000,000 | ||||||||||
Convertible preferred stock, par value | $0.00 | ||||||||||
Common Stock issued to holders of Redeemed Series A Convertible Preferred Stock | 3,897,000 | ||||||||||
Common Stock | |||||||||||
Capital Stock [Line Items] | |||||||||||
Common stock, authorized shares | 60,000,000 | ||||||||||
Preferred stock conversion basis | 1 | 1 |
Stockbased_Compensation_Additi
Stock-based Compensation - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $3.70 | $3 | $1.60 |
Granted | $9.69 | $11.85 | $10.32 |
Aggregate intrinsic value of stock options exercised | 8.8 | 31.3 | 2.9 |
Unrecognized stock-based compensation expense related to non-vested stock options | 7.5 | 10.5 | 12 |
Unrecognized stock-based compensation expense related to non-vested stock options, weighted-average recognition period (in years) | 2 years 8 months 27 days | ||
Proceeds from exercise of stock options | 0.6 | 1.8 | 0.2 |
Tax benefit from the exercise of stock options | 3.2 | 9.1 | 0.6 |
Estimated life of stock options (in years) | 10 years | ||
Expected volatility, company weighting (as a percent) | 38.00% | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 5 years | ||
2004 DCS Holdings Stock Option Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 4 years | ||
2007 Stock Option Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 5 years | ||
Nonqualified Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price of stock options, percentage of common stock fair market value | 85.00% | ||
2012 Stock Incentive Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 4 years | ||
2012 Stock Incentive Plan | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 5 years | ||
Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise price of stock options, percentage of common stock fair market value | 100.00% | ||
Stock Option | 2004 DCS Holdings Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of common stock shares available for future issuance | 4,000,000 | ||
Stock Option | 2007 Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of common stock shares available for future issuance | 4,000,000 | ||
Stock Option | 2012 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of common stock shares available for future issuance | 4,300,000 | ||
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Compensation expense that has yet to be recognized | $3.50 | $0.10 | |
Remaining weighted average vesting period (in years) | 3 years 3 months 18 days | ||
Restricted Stock | 2004 DCS Holdings Stock Option Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of common stock shares available for future issuance | 3,600,000 | ||
Restricted Stock | 2012 Stock Incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Vesting period (in years) | 4 years | ||
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of units vested (in shares) | 1,316 | 0 |
Stock_Option_Activity_Detail
Stock Option Activity (Detail) (USD $) | 12 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Weighted average exercise price per share (in dollars per share) | ||||
Granted | $9.69 | $11.85 | $10.32 | |
Options | ||||
Outstanding Options (in shares) | ||||
Options Outstanding | 5,212,821 | 7,909,724 | 5,664,750 | |
Granted | 254,000 | 313,600 | 2,549,109 | |
Forfeited | -410,625 | -102,381 | -19,077 | |
Exercised | -1,032,813 | -2,908,122 | -285,058 | |
Options Outstanding | 4,023,383 | 5,212,821 | 7,909,724 | 5,664,750 |
Vested or expected to vest | 3,980,118 | |||
Exercisable | 2,475,868 | |||
Weighted average exercise price per share (in dollars per share) | ||||
Options Outstanding | $6.03 | $3.85 | $0.80 | |
Granted | $9.69 | $11.85 | $10.32 | |
Forfeited | $10.53 | $10.05 | $7.99 | |
Exercised | $0.62 | $0.60 | $0.61 | |
Options Outstanding | $7.18 | $6.03 | $3.85 | $0.80 |
Vested or expected to vest | $7.16 | |||
Exercisable | $5.32 | |||
Weighted average remaining contractual life (Years) | ||||
Options Outstanding | 6 years 4 months 28 days | 6 years 7 months 13 days | 5 years 10 months 21 days | 5 years 2 months 12 days |
Vested or expected to vest | 6 years 4 months 17 days | |||
Exercisable | 5 years 5 months 19 days | |||
Aggregate Intrinsic Value | ||||
Options Outstanding | $7,641 | |||
Vested or expected to vest | 7,634 | |||
Exercisable | $7,510 |
Stockbased_Compensation_Assump
Stock-based Compensation Assumptions to Estimate Fair Value Options (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Expected volatility (as a percent) | 51.00% | 54.20% | 48.30% |
Expected dividends (as a percent) | 0.00% | 0.00% | 0.00% |
Expected term (years) | 6 years 29 days | 6 years 2 months 12 days | 6 years 6 months |
Risk-free interest rate (as a percent) | 1.90% | 1.50% | 1.00% |
Weighted-average estimated fair value of options granted during the year (in dollars per share) | $4.85 | $6.23 | $5.22 |
Stockbased_Compensation_Restri
Stock-based Compensation Restricted Stock Units Activity (Details) (Restricted Stock Units, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Restricted Stock Units | ||
Number of Awards | ||
Balance, beginning of period | 5,263 | 0 |
Granted | 488,545 | 5,263 |
Forfeited | -30,900 | 0 |
Vested and converted to shares | -1,316 | 0 |
Balance, end of period | 461,592 | 5,263 |
Expected to vest | 438,510 | |
Weighted average grant date fair value (in dollars per share) | ||
Balance, beginning of period | $10.59 | $0 |
Granted | $9.27 | $10.59 |
Forfeited | $9.26 | $0 |
Vested and converted to shares | $10.59 | $0 |
Balance, end of period | $9.28 | $10.59 |
Expected to vest | $9.28 |
Income_Taxes_Income_Tax_Expens
Income Taxes Income Tax Expense (Benefit) (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Current: | |||
Federal | $6,802 | $21,526 | $15,142 |
State | 2,600 | 5,149 | 3,470 |
Current, total | 9,402 | 26,675 | 18,612 |
Deferred: | |||
Federal | -1,625 | -866 | -1,599 |
State | -78 | -842 | -227 |
Deferred, total | -1,703 | -1,708 | -1,826 |
Total Expense (Benefit) | $7,699 | $24,967 | $16,786 |
Income_Taxes_Reconciliation_of
Income Taxes Reconciliation of Federal Statutory Income Tax Expense to Actual Income Tax Expense (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | |||
Federal income at the statutory rate | 35.00% | 35.00% | 35.00% |
State income tax, net of federal benefit | 10.00% | 5.00% | 5.00% |
Permanent differences | 2.00% | 1.00% | 2.00% |
Other | -2.00% | 0.00% | 0.00% |
Total income tax expense, percentage | 45.00% | 41.00% | 42.00% |
Income_Taxes_Components_of_Def
Income Taxes Components of Deferred Tax Assets and Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ||
Bad debt reserve | $13 | $13 |
Vacation accrual | 685 | 1,020 |
Nonqualified stock options | 3,059 | 1,526 |
Debt issuance costs | 643 | 848 |
Acquisition costs | 630 | 158 |
State tax deferral | 934 | 1,474 |
Deferred revenue | 273 | 352 |
State tax credits | 305 | 290 |
Net operating loss | 110 | 47 |
Estimated liability for appeals | 5,313 | 4,277 |
Other | 304 | 118 |
Total deferred tax assets | 12,269 | 10,123 |
Valuation allowance | -349 | -147 |
Total deferred tax assets net of valuation allowance | 11,920 | 9,976 |
Deferred tax liabilities: | ||
Identifiable intangible assets | -10,227 | -11,176 |
Fixed assets | -5,732 | -4,543 |
Other | -22 | -22 |
Total deferred tax liabilities | -15,981 | -15,741 |
Net deferred tax liabilities | ($4,061) | ($5,765) |
Income_Taxes_Unrecognized_Tax_
Income Taxes Unrecognized Tax Benefits (Detail) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized tax benefits, beginning balance | $546 | $279 |
Increase related to prior year tax positions | 444 | 357 |
Decrease related to prior year tax positions | -42 | |
Increase related to current year tax positions | 49 | |
Settlements | -139 | |
Unrecognized tax benefits, ending balance | $948 | $546 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax [Line Items] | |||
Valuation Allowance | $349,000 | $147,000 | |
Unrecognized tax benefits | 948,000 | 546,000 | 279,000 |
Unrecognized tax benefits that would impact effective tax rate | 900,000 | ||
State | |||
Income Tax [Line Items] | |||
Valuation Allowance | 300,000 | 100,000 | |
Tax credits carried forward | 300,000 | ||
Net operating loss carryforward | $400,000 | ||
Net operating loss carryforward, expiration year | 2020 |
Related_Party_Transactions_Add
Related Party Transactions - Additional Information (Detail) (USD $) | 0 Months Ended | 1 Months Ended | 12 Months Ended | |||
In Millions, unless otherwise specified | Aug. 15, 2012 | Apr. 13, 2012 | Aug. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Aug. 15, 2012 |
Related Party Transactions [Abstract] | ||||||
Interest expense under these arrangements | $10.30 | $11.10 | ||||
Debt extinguishment expense | 3.3 | |||||
Transaction date | 13-Apr-12 | |||||
Quarterly installments of related party transaction | 1.1 | 0.1 | ||||
Payment to related party termination of agreement | 1.3 | |||||
Aggregate gross proceeds of an IPO offering (as a percent) | 1.00% | |||||
Fee paid to the affiliate upon successful closing of the IPO | $0.90 |
Other_Commitments_and_Continge1
Other Commitments and Contingencies - Additional Information (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Disclosure Other Commitments And Contingencies Additional Information [Abstract] | ||
Cash held in trust for customers | $9.70 | $1.10 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 1 Months Ended | 0 Months Ended |
Feb. 29, 2012 | Jan. 28, 2015 | |
Subsequent Event [Line Items] | ||
Purchase price | $4,000,000 | |
Premier Healthcare Exchange, Inc. | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Purchase price | 108,000,000 | |
Purchase price, contingent | 19,100,000 | |
Potential penalty | 750,000 | |
Premier Healthcare Exchange, Inc. | Subsequent Event | Performant Financial Corporation | ||
Subsequent Event [Line Items] | ||
Purchase price, shares | 50,000,000 | |
Premier Healthcare Exchange, Inc. | Subsequent Event | Premier Healthcare Exchange, Inc. | ||
Subsequent Event [Line Items] | ||
Purchase price, shares | 22,000,000 | |
Premier Healthcare Exchange, Inc. | Subsequent Event | Senior Notes | Convertible Senior Notes Due 2020 | ||
Subsequent Event [Line Items] | ||
Debt issued | $80,000,000 |
Valuation_and_Qualifying_Accou
Valuation and Qualifying Accounts (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Estimated Allowance and Liability for Appeals - RAC Contract | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Period | $16,443 | $5,577 | $934 |
Additions Charged against Revenue | 8,624 | 12,791 | 8,589 |
Appeals found in Providers Favor | -6,442 | -1,925 | -3,946 |
Balance at End of Period | 18,625 | 16,443 | 5,577 |
Allowance for doubtful accounts | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Period | 32 | 65 | 77 |
Additions Charged against Revenue | 0 | 0 | 0 |
Recoveries | 0 | 2 | 2 |
Charge-offs | 0 | -35 | -14 |
Balance at End of Period | $32 | $32 | $65 |
Valuation_and_Qualifying_Accou1
Valuation and Qualifying Accounts (Additional Information) (Detail) (Estimated Allowance and Liability for Appeals - RAC Contract, USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Estimated Allowance and Liability for Appeals - RAC Contract | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Estimated allowance for appeals that apply to uncollected accounts receivable | $0 | $1,160,000 | $1,199,000 |