CEO Lisa Im took over in 2004 after serving as managing director of the predecessor firm for two years. She came to Performant from the food products industry. The company currently has 1,300 employees in five states around the country. Performant's services are provided on an outsourced basis, in which it handles a portion or even all of a client's recovery processes. Most of its clients operate in regulated industries and look to third parties for these operations, rather than taking on additional personnel and expenses. Another benefit to clients is Performant's success-based revenue model, which doesn't require any significant upfront investments. It earns revenue based on the success it has recovering payments from delinquent accounts. The company went public on Aug. 10 at $9 per share and has largely traded above $10 since then. Private equity sponsor Parthenon Capital received more than 80% of the proceeds, in addition to a $1 million management termination fee. Parthenon led a $167 million recapitalization of the company in 2004, and has held its stake through the public offering. Revenue has climbed 48% in the past three years while net income has risen 147% during that same span. As I said, it is a fast-growing field. The company is now trading at a market cap of $456 million with a relatively clean post-IPO balance sheet fortified with $154 million cash. Consider purchasing around $9.50 to $10, and prepare to collect. At the time of publication, Markman had no positions in the stocks mentioned.
Investors considering a purchase of Performant Financial Corp shares, but cautious about paying the going market price of $5.81/share, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the July put at the $5 strike, which has a bid at the time of this writing of 30 cents.