DEFM14A: Performant Healthcare to Go Private in $7.75/Share Cash Merger

Performant Healthcare, Inc. stockholders are invited to a special meeting on October 17, 2025, to vote on a merger agreement to be acquired by Continental Buyer, Inc. for $7.75 per share in cash.

Summary

• Performant Healthcare, Inc. (Performant) will be acquired by Continental Buyer, Inc. (Continental), a portfolio company of investment funds managed by New Mountain Capital L.L.C.
• The acquisition will occur through a merger where Prevail Merger Sub, Inc., a wholly-owned subsidiary of Continental, will merge into Performant, with Performant surviving as a wholly-owned subsidiary of Continental.
• Performant stockholders will receive $7.75 in cash, without interest, for each Company Share they own.
• This merger consideration represents a premium of approximately 139% over the closing price of the Common Stock of $3.25 as of July 31, 2025, the last trading day prior to media reports regarding a potential transaction.
• The Board of Directors of Performant unanimously recommends that stockholders vote FOR the Merger Proposal, FOR the Compensation Proposal, and FOR the Adjournment Proposal.
• A special meeting of stockholders will be held virtually on October 17, 2025, at 9:00 a.m. ET, to vote on the merger.
• Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the voting power of the outstanding Company Shares entitled to vote thereon as of the Record Date (September 8, 2025).
• The merger is currently anticipated to be consummated in the fourth quarter of 2025, assuming all conditions are satisfied or waived.
• Upon consummation, Performant's common stock will be delisted from the Nasdaq Stock Market and deregistered under the Securities Exchange Act of 1934.

Sentiment

Score: 8

Explanation: The proposed acquisition price of $7.75 per share represents a substantial premium (139%) over the pre-announcement trading price and significantly exceeds the valuation ranges from various financial analyses conducted by Truist Securities. This indicates a highly favorable outcome for Performant's stockholders, providing immediate and certain cash value well above recent market performance and intrinsic valuations.

Positives

• Stockholders will receive immediate cash value and liquidity of $7.75 per share.
• The merger consideration represents a significant premium of approximately 139% over the closing price of $3.25 on July 31, 2025, prior to media reports regarding a potential transaction.
• The Board believes that $7.75 per share was the highest per share consideration reasonably obtainable from Machinify after extensive negotiations.
• The transaction offers a more attractive and certain value for stockholders compared to the risk-adjusted prospects of Performant as a standalone entity.
• The merger agreement includes provisions designed to enhance closing certainty, such as limited conditions and a commitment to use reasonable best efforts to obtain HSR Act approval.
• The merger is not conditioned upon receipt of financing by Continental, indicating a higher likelihood of completion.

Negatives

• Stockholders will not participate in any future growth potential or benefit from any future increase in Performant's value as a private company.
• There is a possibility that the merger may not be completed, which could negatively affect Performant's business, operations, financial results, and stock price.
• The public announcement and pendency of the merger could disrupt Performant's business relationships, operating results, and ability to retain key management and personnel.
• Restrictions on Performant's business conduct prior to the completion of the merger may limit its operational flexibility.
• Significant costs are involved in connection with entering into the Merger Agreement and completing the merger, many of which are payable whether or not the merger is consummated.
• Performant may be obligated to pay Continental a termination fee of $19,980,000 under certain specified circumstances.
• The cash consideration received by U.S. Holders will be a taxable transaction for U.S. federal income tax purposes.
• Performant is precluded from actively soliciting alternative acquisition proposals during the pendency of the merger, though it can respond to unsolicited superior proposals.

Risks

• The risk that the Merger may not be completed in a timely manner, or at all, including as a result of the failure to obtain the required approval of the Company Stockholders or to satisfy other closing conditions.
• The failure to satisfy any of the conditions to the consummation of the Merger, including the receipt of certain regulatory approvals, which may delay the consummation or result in the imposition of conditions that could cause the parties to abandon the Merger.
• The occurrence of any fact, event, change, development or circumstance that could give rise to the termination of the Merger Agreement, including the risk that Performant may be required to pay the Company Termination Fee of $19,980,000.
• The effect of the announcement or pendency of the Merger on Performant's business relationships, operating results, and business generally, including the ability to retain or recruit key employees and maintain relationships with key business partners and customers.
• Risks related to diverting management's attention from Performant's ongoing business operations.
• The amount of the costs, fees, expenses, and charges incurred by Performant related to the Merger Agreement or the Merger.
• Potential litigation relating to the Merger that could be instituted against the parties or their respective directors, managers, or officers, including the effects of any outcomes related thereto.
• Certain restrictions during the pendency of the Merger that may impact Performant's ability to pursue certain business opportunities or strategic transactions.
• Uncertainty as to the timing of completion of the Merger.
• Legislative, regulatory, and economic developments affecting Performant's business.
• Risks related to the potential impact of public health crises, macroeconomic conditions such as inflation and fluctuating interest rates, tariffs, shifts in consumer preferences, geopolitical instability, acts of terrorism, war or hostilities, changes in legislative, regulatory and economic developments affecting Performant's business and overall market uncertainty.
• If the Merger is not consummated, the price of the Common Stock may decline significantly, and it is uncertain when, if ever, the price would return to the current trading price.
• The fair value of shares determined by the Delaware Court of Chancery in appraisal rights could be more than, the same as, or less than the merger consideration.

Future Outlook

The filing primarily focuses on the proposed merger and does not provide a standalone future outlook for Performant beyond the Projections used for valuation. If the merger is consummated, Performant will become a private company, and its stock will be delisted, ceasing public reporting. If the merger is not consummated, the Board will continue to evaluate and review the business, operations, assets, financial condition, prospects, and business strategy to enhance stockholder value, but there is no assurance of other transactions or that the business will not be adversely impacted.

Management Comments

• Simeon M. Kohl, CEO and Director: "You are cordially invited to attend a special meeting of stockholders of Performant Healthcare, Inc. ... At the Special Meeting, you will be asked to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger..."
• Simeon M. Kohl, CEO and Director: "The Board unanimously recommends that holders of Common Stock vote FOR the Merger Proposal, FOR the Compensation Proposal and FOR the Adjournment Proposal."
• Simeon M. Kohl, CEO and Director: "It is important that your Company Shares be represented and voted at the Special Meeting, regardless of the size of your holdings."
• Simeon M. Kohl, CEO and Director: "We cannot consummate the Merger unless the Merger Proposal is approved by the Merger Proposal Vote as of the Record Date."
• Performant's management (as advised to Truist): "the Projections were reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of such management as to the future financial results and condition of the Company."
• Performant's management (to Special Committee): "the minimum price they would consider appropriate at this stage for proceeding with further negotiations regarding a potential transaction and due diligence would be $6.00 per Company Share."
• Performant's management (to Special Committee): "a target date of mid to late July, 2025 should be anticipated for revised indications of interest from each of the three interested counterparties."

Industry Context

Performant operates in the healthcare industry, specializing in identifying, preventing, and recovering waste and improper payments for payers using advanced technology and analytics. The Board noted an "uptick in M&A activity within the payment integrity market, with target companies recently seeing stronger valuations." Truist Securities also observed that "certain larger companies in the healthcare market had recently expanded through acquisitions and that multiple entities within the healthcare market appeared to be tracking the Company's performance." This merger with Continental (Machinify) suggests a strategic move within the consolidating healthcare technology and payment integrity sector, leveraging Performant's specialized services and market position.

Comparison to Industry Standards

• Truist Securities' Selected Companies Analysis, comparing Performant to Definitive Healthcare Corp., Evolent Health, Inc., Health Catalyst, Inc., OptimizeRx Corp., Progyny, Inc., Talkspace, Inc., and TruBridge, Inc., indicated implied value reference ranges of $1.63 to $5.09 per Company Share based on 2025E Revenue and $1.50 to $3.83 per Company Share based on 2025E Adjusted EBITDA.
• Truist's Selected Transactions Analysis for scaled target companies (Adjusted EBITDA margin > 10%), including Convey Health Solutions Holdings, Inc., Tivity Health, Inc., HMS Holdings Corp., and Cotiviti Holdings, Inc., indicated an implied value reference range of $1.78 to $2.93 per Company Share based on LTM EBITDA.
• Truist's Selected Transactions Analysis for scaling target companies (Adjusted EBITDA margin < 10%), including Accolade, Inc., Sharecare, Inc., and Castlight Health, Inc., indicated an implied value reference range of $1.94 to $3.27 per Company Share based on LTM Revenue.
• Truist's Discounted Cash Flow Analysis indicated an implied value reference range of $4.26 to $7.16 per Company Share.
• The Merger Consideration of $7.75 per share is significantly higher than the implied value ranges derived from all of Truist's comparative financial analyses, suggesting a favorable valuation for Performant's shareholders relative to industry benchmarks and intrinsic valuations.

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of the proxy statement, there are no pending lawsuits challenging the Merger.
• Performant has received four demand letters from purported Company stockholders alleging deficiencies or omissions in the preliminary proxy statement filed on August 28, 2025.
• The Company believes that the allegations in these demand letters are without merit.
• Purported Company stockholders may also file lawsuits challenging the Merger in the future, with uncertain outcomes.

Related Party Transactions

• Performant's directors and executive officers hold equity-based awards (stock options, RSUs, PRSUs) that will be converted into cash payments upon merger consummation, providing them with financial benefits.
• Certain executive officers (Simeon M. Kohl and Rohit Ramchandani) have been awarded success bonuses contingent upon the consummation of the merger.
• Messrs. Kohl and Ramchandani are party to pre-existing Change of Control and Severance Agreements that provide for severance payments and benefits in the event of an involuntary termination of employment in connection with a change of control.
• Performant's directors and executive officers are entitled to continued indemnification and insurance coverage following the merger under the Merger Agreement.
• As of the date of the proxy statement, no executive officer has entered into any agreement or understanding with Continental or its affiliates regarding post-merger employment or equity participation.

Stakeholder Impact

• Shareholders will receive $7.75 in cash per share, providing immediate liquidity and a significant premium over recent trading prices, but will cease to have any ownership interest in Performant.
• Employees who continue with the Surviving Corporation will receive base pay/wage rates and annual target cash incentive bonus opportunities no less favorable than prior to closing for 12 months, and credit for prior service for eligibility and vesting in Parent Benefit Plans.
• Certain executive officers are eligible for success bonuses and severance benefits, providing them with significant financial incentives related to the merger.
• Directors and executive officers will have continued indemnification and insurance coverage, protecting them from potential liabilities.
• Customers, partners, and suppliers may experience disruptions due to the change in ownership, though Performant is committed to preserving business relationships.
• Regulatory bodies will be involved in the approval process, particularly regarding antitrust laws, ensuring compliance and fair market practices.

Next Steps

• Performant will establish a record date and duly call, give notice of, convene, and hold a special meeting of stockholders to consider the adoption of the Merger Agreement and approval of the Transactions.
• The Special Meeting will be held virtually on October 17, 2025, at 9:00 a.m. ET.
• Stockholders will vote on the Merger Proposal, the Compensation Proposal (non-binding advisory), and the Adjournment Proposal.
• Performant will prepare and file a preliminary Proxy Statement with the SEC as soon as reasonably practicable (no later than 20 business days after July 31, 2025).
• The Company and Continental will cooperate to resolve SEC comments and mail the definitive Proxy Statement to stockholders.
• The merger is anticipated to be consummated in the fourth quarter of 2025, assuming satisfaction or waiver of all conditions.
• Upon consummation, Performant's common stock will be delisted from Nasdaq and deregistered under the Exchange Act.
• If the merger is not consummated, Performant will remain a public company and the Board will continue to evaluate and review the business.

Key Dates

Recommendation

The proposed acquisition price of $7.75 per share represents a substantial premium of 139% over the pre-announcement closing price and significantly exceeds the valuation ranges derived from various financial analyses by Truist Securities. This indicates a highly favorable and certain cash exit for current shareholders. The unanimous recommendation by the Board, following an extensive strategic review and negotiation process, further supports the attractiveness of the offer. While there are standard risks associated with merger completion, the terms appear robust, and the financing is committed. For investors seeking immediate, above-market returns, this represents a compelling opportunity.

Keywords

Healthcare technology, Payment integrity, Merger and acquisition, SEC filing, Proxy statement, PHLT, Performant Healthcare, Continental Buyer, New Mountain Capital, Stockholder vote, Cash acquisition, Corporate governance, Risk management, Financial analysis