Filing Details

*SEE INSTRUCTIONS BEFORE FILLING OUT

*SEE INSTRUCTIONS BEFORE FILLING OUT

*SEE INSTRUCTIONS BEFORE FILLING OUT

*SEE INSTRUCTIONS BEFORE FILLING OUT

*SEE INSTRUCTIONS BEFORE FILLING OUT

This Schedule 13D (this “Schedule 13D”) is being filed on behalf of Prescott Group Capital Management, L.L.C., an Oklahoma limited liability company (“Prescott Capital”), Prescott Group Aggressive Small Cap, L.P., an Oklahoma limited partnership (“Prescott Small Cap”), Prescott Group Aggressive Small Cap II, L.P., an Oklahoma limited partnership (“Prescott Small Cap II”, and, together with Prescott Small Cap, the “Small Cap Funds”), Prescott Group Aggressive Small Cap Master Fund, G.P., an Oklahoma general partnership (“Master Fund”) and Phil Frohlich, the principal of Prescott Capital, relating to Common Stock, par value $0.0001 per share (the “Common Stock”), of Performant Financial Corporation, a Delaware corporation (the “Issuer”).

This Schedule 13D relates to shares of Common Stock of the Issuer held in the account of the Master Fund, of which the Small Cap Funds are general partners. Prescott Capital serves as the general partner and investment manager of the Small Cap Funds and may direct the Small Cap Funds, the general partners of the Master Fund, to direct the vote and disposition of the 12,545,261 shares of Common Stock held by the Master Fund. As the principal of Prescott Capital, Mr. Frohlich may direct the vote and disposition of the 12,545,261 shares of Common Stock held by the Master Fund.

The class of equity security to which this statement on Schedule 13D relates is the Common Stock of the Issuer, a Delaware corporation. The address of the principal executive offices of the Issuer is 333 North Canyons Parkway, Livermore, CA 94551.

Information given in response to each item shall be deemed incorporated by reference in all other items, as applicable.

(a)  The persons filing this Schedule 13D (collectively, the “Reporting Persons”) are:

1. Prescott Capital

2. Prescott Small Cap

3. Prescott Small Cap II

4. Master Fund

5. Phil Frohlich

(b)  The principal place of business for each of the Reporting Persons is 1924 South Utica Ave., Suite #1120, Tulsa, Oklahoma, 74104.

(c)  The principal occupation of Phil Frohlich is serving as the managing member of Prescott Capital.  The principal business of Prescott Capital is acting as the general partner and investment manager of the Small Cap Funds.  The principal business of the Small Cap Funds is serving as general partners of the Master Fund.  The principal business of the Master Fund is investing in securities.

(d)  During the last five years, none of the Reporting Persons have been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e)  During the last five years, none of the Reporting Persons have been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding were or are subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f)  Prescott Capital, the Small Cap Funds and the Master Fund are organized under the laws of the State of Oklahoma.  Mr. Frohlich is a citizen of the United States of America.

As of March 26, 2020, the Master Fund had invested $17,080,322 (inclusive of brokerage commissions) in shares of Common Stock of the Issuer.  The source of these funds was the working capital of the Master Fund.

The Reporting Persons purchased the shares of Common Stock directly held by the Master Fund based on the belief that such securities, when purchased, were undervalued and represented an attractive investment opportunity.  The purpose of the acquisition of the Common Stock was for investment, and the acquisitions of the Common Stock were made in the ordinary course of business and were not made for the purpose of acquiring control of the Issuer.

The Reporting Persons intend to review their investment in the Issuer on a continuing basis and may from time to time and at any time in the future depending on various factors, including, without limitation, the Issuer’s financial position and strategic direction, actions taken by the Issuer’s Board of Directors, price levels of the Issuer’s securities, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, take such actions with respect to the investment in the Issuer as they deem appropriate. These actions may include: (i) acquiring additional shares of Common Stock and/or other equity, debt, notes, other securities, or derivative or other instruments that are based upon or relate to the value of securities of the Issuer (collectively, “Securities”) in the open market or otherwise; (ii) disposing of any or all of their Securities in the open market or otherwise; (iii) engaging in any hedging or similar transactions with respect to the Securities; or (iv) proposing or considering one or more of the actions described in subsections (a) through (j) of Item 4 of Schedule 13D.

Except as set forth herein, the Reporting Persons do not have present plans or proposals at this time that relate to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

(a) and (b) Items 7 through 11 and 13 of each of the cover pages of this Schedule 13D are incorporated herein by reference.  Such information is based on 53,899,601 shares of Common Stock outstanding as of December 18, 2019, as reported in the Issuer’s Form S-3 filed with the Securities and Exchange Commission on December 20, 2019.

As of March 26, 2020, the Master Fund directly held and beneficially owned 12,545,261 shares of Common Stock, representing approximately 23.3% of the outstanding Common Stock.  As general partners of the Master Fund, the Small Cap Funds may be deemed to beneficially own the shares of Common Stock held by the Master Fund.  As the general partner of the Small Cap Funds, Prescott Capital may also be deemed to beneficially own the shares of Common Stock held by the Master Fund.  As managing member of Prescott Capital, Phil Frohlich may be deemed to beneficially own the shares of Common Stock held by the Master Fund.

The filing of this statement on Schedule 13D shall not be construed as admission that any of Prescott Capital, the Small Cap Funds or Mr. Frohlich is for the purposes of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any of the 12,545,261 shares of Common Stock held by the Master Fund and pursuant to Rule 13d-4, Prescott Capital, the Small Cap Funds and Mr. Frohlich disclaim all such beneficial ownership.

(c) Transactions by or on behalf of the Reporting Persons effected during the past 60 days are set forth in Schedule A below and such information is incorporated herein by reference.

(d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock.

(e) Not applicable.

Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

After reasonable inquiry and to the best of their knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated:  March 26, 2020

Prescott Group Capital Management, L.L.C.
By:		/s/ Phil Frohlich
		Phil Fohlich, Managing Member
Prescott Group Aggressive Small Cap, L.P.
By:		Prescott Group Capital Management, L.L.C., its general partner
By:		/s/ Phil Frohlich
		Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap II, L.P.
By:		Prescott Group Capital Management, L.L.C., its general partner
By:		/s/ Phil Frohlich
		Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap Master Fund, G.P.
By:		Prescott Group Aggressive Small Cap, L.P., general partner
By:   By:		Prescott Group Aggressive Small Cap II, L.P., general partner   Prescott Group Capital Management, L.L.C., general partner
By:		/s/ Phil Frohlich
		Phil Frolich, Managing Member
By:		/s/ Phil Frohlich
		Phil Frohlich

SCHEDULE A

TRANSACTIONS

The following table sets forth all transactions by or on behalf of the Reporting Persons with respect to shares of Common Stock effected in the last 60 days, inclusive of any transactions effected through 4:00 p.m., New York City time, on March 26, 2020. Except as otherwise noted below, all such transactions were purchases of Common Stock effected in the open market, and the table excludes commissions paid in per share prices.

 

EXHIBIT 99.1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of this Schedule 13D (including additional amendments thereto) with respect to the shares of Common Stock, par value $0.0001 per share, of Performant Financial Corporation. This Joint Filing Agreement shall be filed as an Exhibit to such Statement. The undersigned acknowledge that each shall be responsible for the timely filing of any amendments to such joint filing and for the completeness and accuracy of the information concerning him or it contained herein and therein, but shall not be responsible for the completeness and accuracy of the information concerning the others.

Dated: March 26, 2020

Prescott Group Capital Management, L.L.C.
By:		/s/ Phil Frohlich
		Phil Fohlich, Managing Member
Prescott Group Aggressive Small Cap, L.P.
By:		Prescott Group Capital Management, L.L.C., its general partner
By:		/s/ Phil Frohlich
		Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap II, L.P.
By:		Prescott Group Capital Management, L.L.C., its general partner
By:		/s/ Phil Frohlich
		Phil Frohlich, Managing Member
Prescott Group Aggressive Small Cap Master Fund, G.P.
By:		Prescott Group Aggressive Small Cap, L.P., general partner
By:   By:		Prescott Group Aggressive Small Cap II, L.P., general partner   Prescott Group Capital Management, L.L.C., general partner
By:		/s/ Phil Frohlich
		Phil Frolich, Managing Member
By:		/s/ Phil Frohlich
		Phil Frohlich