Performant Financial Corp (PFMT), Magellan Health Services Inc (MGLN): A Small Cap Company Making Waves in the Business Services Industry

I want to make reference to Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) and how its acquisition of Eclipsys adversely affected the company’s cash flow and halted its growth. The negative effect of that acquisition was such that the company lost most of its business to competitors, and, in the end, it cost the then CEO of the company his job.

Allscripts Healthcare Solutions Inc (NASDAQ:MDRX) is actively involved in the development of clinical, connectivity, financial and information solutions for the health sector in the United States. On July 10, the company’s management made it clear that the company expects its second quarter bookings to grow above $200 million in comparison to $194 million reported in the same quarter of the previous fiscal year. According to the present CEO, Paul Black, “We are seeing a healthy mix of new agreements with existing clients as well as new client wins, growing our recurring revenue backlog as well as bookings.”

Conclusion

With the spending in healthcare projected to increase annually by 6%, there will also be increase in improper payments. In 2011, Medicare spent $554 billion out of which an estimated $43 billion was improper payment. The more the healthcare sector records improper payment, the more they engage in outsourcing of recovery services and that puts Performant Financial Corp (NASDAQ:PFMT) in line of generating more revenue. This is especially true with the healthcare sector spending projected to grow 5% annually through 2021.

Even with the reported increase in insider selling of the company’s stocks a few months ago, based on the company’s several years of operating experience, I firmly believe Performant Financial Corp (NASDAQ:PFMT) has strongly positioned itself in the Business Service industry for further growth.

The article A Small Cap Company Making Waves in the Business Services Industry originally appeared on Fool.com.

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