ARM Firm Performant Scales Back IPO; Shares Rise in Trading

Shares of accounts receivable management firm Performant Financial Corp. began trading Friday morning on the NASDAQ stock exchange after the company scaled back its initial public offering (IPO) and priced its shares below a previous announced expected range.

Livermore, Calif.-based Performant (NASDAQ: PFMT), formerly known as Diversified Collection Services, offered nine million shares for trading Friday at $9 per share, below the 11.5 million it had anticipated and at a price below the $12-14 range it announced last week.

But traders quickly sent the price higher when trading began at 11am. At noon Friday, the stock was trading for around $10 per share on volume of more than four million.

Performant, which is backed by private equity firm Parthenon Capital Partners, reported net income of $2.5 million on revenue of $45.9 million for the quarter ended March 31, according to recent SEC filings. For the full year 2011, Performant had revenues of $163 million.

The company specializes in ARM services in markets with large creditors. It noted its strong position in the education and healthcare ARM space, holding up as examples its long-running Dept. of Education debt collection contract and its position as one of four prime Medicare Recovery Audit Contractors for the Centers for Medicare and Medicaid Services. Performant has nearly 1,300 employees in offices in five states.

The company is now one of a handful of publicly traded ARM companies.