Performant Financial Corp. announced yesterday that it has sold some of its recovery contracts that are outside the healthcare industry, including its student loan agreements, to an unnamed buyer as part of the company’s decision to “fully dedicate” its resources to its healthcare business.
The impact that the COVID-19 pandemic has had on student loan collections — many loans have been put into forbearance for the duration of the pandemic — was one of the reasons cited by the company for the decision. The company also cited gains that it has made in the healthcare space as a reason why it is choosing to focus in that market. Performant’s healthcare revenues were $68.5 million in 2020, up 58% from a year earlier. The company is projecting healthcare revenue of between $83 and $90 million in 2021.
“Our decision to sell these recovery contracts reflects our plan to fully dedicate our resources and efforts on expanding our position in the Healthcare market, where we continue to demonstrate success in taking business from long-term industry incumbents,” said Lisa Im, Performant’s Chief Executive Officer, in a statement. “Our intention is to build upon our recent achievement of five consecutive quarters of positive EBITDA, while still delivering what we believe is best-in-class service that our clients have come to expect.
“The COVID-19 pandemic disrupted our legacy Recovery business, which included the acceleration of already declining student loan recovery revenues. We will continue to fulfill our current recovery contracts, but do not plan to renew or restart existing contracts, nor pursue new non-healthcare recovery opportunities. We believe that our strengthened focus on the high growth, healthcare market is in the best interest of our shareholders.”
Earlier this month, Performant notified the state of Indiana that it was laying off 75 employees from its Indianapolis office, which handles defaulted student loans. The 75 employees who are gong to be laid off starting next month are in addition to 40 employees at the office who were previously furloughed and who will not be brought back to work.