Paysign Q3 2023 Earnings Report

Paysign EPS Results

• Actual EPS: $0.02
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Paysign Revenue Results

• Actual Revenue: $12.40 million
• Expected Revenue: $11.76 million
• Beat/Miss: Beat by +$640.00 thousand
• YoY Revenue Growth: N/A

Paysign Announcement Details

• Quarter: Q3 2023
• Date: 11/7/2023
• Time: N/A
• Conference Call Date: Tuesday, November 7, 2023
• Conference Call Time: 5:00PM ET

Paysign (NASDAQ:PAYS) provides prepaid card programs, comprehensive patient affordability offerings, digital banking services, and integrated payment processing services for businesses, consumers, and government institutions. Its product offerings include solutions for corporate rewards, prepaid gift cards, general purpose reloadable debit cards, employee incentives, consumer rebates, donor compensation, clinical trials, healthcare reimbursement payments and pharmaceutical payment assistance, and demand deposit accounts accessible with a debit card. The company markets its prepaid card solutions under the Paysign brand. Its primary market focus is on companies and municipalities that require a streamlined payment solution for rewards, rebates, payment assistance, and other payments to their customers, employees, agents, and others. The company was formerly known as 3PEA International, Inc. and changed its name to Paysign, Inc. in April 2019. Paysign, Inc. was incorporated in 1995 and is headquartered in Henderson, Nevada.

Paysign Q3 2023 Earnings Call Transcript

Key Takeaways

• Revenue rose 17% year-over-year to $12.4 million with net profit up 29%, driven by contributions across all business segments.
• The plasma donor compensation segment added 19 new centers this quarter (16 fully mature), exiting Q3 with 462 centers and achieving an average monthly revenue per center of ~$8,100—the highest since pre-COVID levels.
• In the patient affordability vertical, Q3 revenue exceeded $1 million, with three new programs launched (including transitions for two major pharma clients) and a pipeline that supports 39 active programs, expected to surpass 40 by year-end.
• Gross profit margin was 51.1% (down from 54.3% last year) due to inflationary pressures, while SG&A rose 7% to $4.7 million and the company held $9.9 million in cash with zero debt.
• Management reaffirmed full-year guidance of $44–46 million in revenue and $6–7.5 million in adjusted EBITDA, anticipating continued growth in Q4.

[Operator]

Afternoon. My name is Kevin, and I will be your conference operator today. At this time, I'd like to welcome everyone to the PaySign, Inc. Third Quarter 2023 Earnings Conference Call. After the speakers' remarks, there will be a question and answer session.

[Operator]

As a reminder, this conference call is being recorded. The comments on today's call regarding Paysign's financial results will be on a GAAP basis unless otherwise noted. PaySign's earnings release was disseminated to the SEC earlier today and can be found on the Investor Relations section of our website, paysign.com, which includes reconciliations of non GAAP measures to GAAP reported amounts. Additionally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward looking statements regarding Paysign's future performance. Actual performance could differ materially from those forward looking statements.

[Operator]

Information about the factors that could affect future performance is summarized at the end of Payside's earnings release and in our recent SEC filings. Lastly, a replay of this call will be available until February 7, 2024. Please see Paysign's earnings release for details on how to access the replay. It's now my pleasure to turn the call over to Mr. Mark Newcomer, CEO.

[Operator]

Please go ahead.

[Speaker 1]

Thank you, Kevin. Good afternoon, everyone. Thank you Thank you for joining Paysign's Q3 2023 earnings call. I'm Mark Newcomer, Chief Executive Officer, and I'm pleased to share our Q3 financial results with you. I will briefly discuss our performance and provide updates on our plasma and patient affordability verticals before handing it over to our CFO, Jeff Baker.

[Speaker 1]

Additionally, Matt Turner, President of Patient Affordability will be joining us for the question and answer session. We delivered solid top and bottom line growth this quarter with revenue up 17% From last year's Q3 to $12,400,000 and net profit improving by 29% with all business segments contributing We continue to see healthy growth in our plasma donor compensation business as we added a total of 19 new centers in the quarter of which 16 are fully mature. We We did not experience any center closures during the Q3 and we exited the quarter servicing 4 62 centers. The average monthly revenue per center increased 7.8% compared to Q3 of last year and 6.7% from Q2 2023 to approximately $8,100 It should be noted that this level eclipse the $8,000 per center milestone last seen prior to the COVID-nineteen pandemic As our clients are focusing on increasing donations at the existing centers, we believe we will see this pattern continue into Q4 and beyond. As a result in the shift in client focus, we are adjusting our forecast of new center onboards in 2023 to 38 to 42 as many Including new interactive reporting features and portals designed to streamline center and managerial processes, further strengthening product offering with the goal of improving user engagement and increasing stickiness with special attention to helping our clients maximize the donor The patient affordability verticals showed strong growth in the 3rd quarter reaching some important milestones.

[Speaker 1]

As we mentioned in our press release, this quarter Earned more than $1,000,000 in top line revenue in this segment. While we were excited about this number, we are more excited about the current pipeline we have For the remainder of this year and into next. During the quarter, we launched 3 programs, 2 of which were transitions. One of the programs is the result of a year long selling cycle that resulted in Payson being identified as the vendor of choice by this manufacturer This manufacturer has a very strong biosimilar portfolio and a long term 10 plus year pipeline. I'm especially excited to announce that we completed contract negotiations to launch a program for the nation's 2nd largest pharmaceutical company.

[Speaker 1]

This will be our This will be our 2nd program for that manufacturer. The program launched in October and immediately began delivering claims This was a midsized transition program with a substantial claim volume that provides benefit for an established product. We also completed contracts to transition the entire oncology portfolio for the nation's 9th largest pharmaceutical manufacturer. This manufacturer has also awarded us 2 additional programs that will launch in Q4 pending FDA approval. These are just a few examples of where our product offerings and subject matter expertise are leading to major wins and strong growth in this vertical.

[Speaker 1]

Overall, we are Seeing consistent increases in our claims volume and expect to double our average by end of the year. With the addition of 3 new programs and others that Launched in the beginning of October, we are now at 39 active patient affordability programs and expect to end the year with over 40 programs. This represents strong Overall client mix, therapeutic class concentrations and some of the points that may give you a better understanding of this vertical. With that, I'll turn it over to Jeff.

[Speaker 2]

Thank you, Mark. Good afternoon, everyone. My comments today will be brief given all the information Mark shared with you quarter and reached a number of milestones across our business. In our plasma business, our average revenue per plasma center per month This metric has not been over $8,000 since before the COVID-nineteen pandemic began in the Q1 of 2020. More importantly, we've seen this trend continue through October.

[Speaker 2]

We exited the quarter with 4 62 plasma centers and now expect Exit the year with approximately 465 plasma centers as customers have shifted their strategy to collections versus new openings as their financing costs In our pharma patient affordability business, we exited Q3 with 34 active patient affordability programs And currently have 39 active programs, having launched an additional 5 programs in October. For the 3rd quarter, patient affordability revenues 3 versus the same period last year, total revenues of $12,400,000 increased $1,800,000 or 17%. Gross profit margin for the quarter was 51.1% versus 54.3% during the same period last year due mainly to inflationary pressures and the lack Pharma prepaid revenue this year, which was a 2.4% drag. SG and A for the quarter increased 7% to $4,700,000 With total operating expenses increasing 12 percent to $5,700,000 we exited this quarter with 112 employees versus 95 employees during the same period last year to support the growth across our business. For the quarter, we posted net income of 1.1 The 2nd quarter adjusted EBITDA, which is a non GAAP measure that adds back stock compensation to EBITDA was $2,300,000 or $0.04 per diluted share versus $1,900,000 $0.04 per diluted share for the same period last year.

[Speaker 2]

The fully diluted share count Regarding the health of our company, we exited the quarter with $9,900,000 in unrestricted cash and 0 debt, A $2,200,000 increase over the Q2 of 2023 and a $228,000 increase from the end of 2022. Year to date, we have used $1,100,000 to repurchase 394,005 We expect operating improvements to continue in the 4th quarter with year over year revenue growth slightly better than this quarter's revenue growth 17% and operating expenses equivalent to our Q2 2023 operating expenses of $6,300,000 which reflects seasonal costs relative to the Q3. We are on track to meet our revenue and adjusted EBITDA guidance we provided in March, Principally revenue to be in the range of $44,000,000 to $46,000,000 and adjusted EBITDA to be in the range of $6,000,000 $7,500,000 With that, I would like to turn the call back over to Kevin for question and answers.

[Operator]

Thank you. Our first question is coming from Gary Prestopino from Barrington Research. Your line is now live.

[Speaker 3]

I'm hearing a lot of static back there. Is that somebody moving paper? Hello.

[Operator]

Gary, your line is now live.

[Speaker 3]

Okay. Hey, guys, I kind of jumped on to the call just a little bit late. So and I Some of the narrative around the centers. You added 19 plasma centers this quarter, is that correct?

[Speaker 4]

That is correct.

[Speaker 3]

Okay. And then you're only adding how many in Q4?

[Speaker 4]

It's about 5 ish, Gary. What's happened, we had 1 customer shut a center down because it was too risky for them from A safety perspective, and then we've added we're adding others. What we've Seeing is a lot of our pretty much across the board, all the plasma guys have stopped opening new centers because the Cost of finance the new centers has gone significantly up for them. So what they've done is refocus and instead of opening new centers to get To the number of leaders that they need, they are increasing their payouts to attract continue to attract customers in.

[Speaker 3]

Okay. So what about that one you won a large Contract and you hadn't really been putting any new centers on the books. And you said that that was going to maybe be a 2020

[Speaker 5]

That is still out there. However, we've been informed that they have delays with their organization on some technology points That is probably going to delay this anywhere between 6 12 months. So for us, it's not something I think we should We baked into the mix here, which probably pulled that out.

[Speaker 3]

Okay. So and again, I don't know, there's a lot of static on the line, so I'm kind of trying to hear these answers. But does that as we go into 2024 then, Is it safe to assume that because these players have kind of pulled back on their expansion that Your response to that, you wouldn't have to be investing more money into growth to Service these new centers, is that a correct assumption?

[Speaker 4]

Well, it's not the money. What you're seeing is just a pullback in the number of new openings that are out there. So in 2020 this year, 2023, There are about from what we've been told through the end of the Q3 about 80 new openings. We'll see where everything lands. I mean, we're still maintaining our market share, Which is it.

[Speaker 4]

I mean, we can't control what the industry is doing. We can only control what we're doing. In 2024, If interest rates stay where they are and financing costs stay where they are, our guess is that we will probably see a slowdown in the number of new openings. But like I said earlier, that's being offset because they're transitioning instead of Trying to reduce their payout like that was the strategy after COVID reduce the payout and more people would come back. We're actually seeing them increase the payout back to the COVID levels and people are coming back because As they try to supplement their income and do other things, and you saw that in our Average revenue per center per month go up.

[Speaker 4]

So it's just really a shift in strategy. We should maintain our market share. It's about 40% This year, next year and going forward, as long as unless we win a big contract, which there are some out there, We'll look at depending on the pricing.

[Speaker 3]

Okay. Thank you.

[Speaker 5]

Thank you.

[Operator]

We reached the end of our question and answer session. I'd like to turn the floor back over for any further or closing

[Speaker 5]

Thank you, Kevin. I want to thank everybody for joining us today. We look forward to seeing you on the next quarterly call.

[Operator]

Thank you. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.