Paysign Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025

There are 3 speakers on the call.

Operator

Good afternoon. My name is Chelsea, and I will be your conference operator today. At this time, I would like to welcome everyone to the PaySign, Inc. First Quarter twenty twenty five Earnings Conference Call. After the speakers' remarks, there will be a question and answer session.

Operator

As a reminder, this conference 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 could 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 would like to remind everyone that today's call will include forward looking statements regarding PaySign's future performance. Actual performance could differ materially from these forward looking statements.

Operator

Information about the factors that could affect future performance is summarized at the end of PaySign's earnings release and in our recent SEC filings. Lastly, a replay of this call will be available until 08/08/2025. Please see PaySign's first quarter twenty twenty five earnings call announcement for details on how to access the replay. It is now my pleasure to turn the call over to Mr. Mark Newcomer, CEO.

Operator

Please go ahead.

Speaker 1

Thank you, Chelsea, and good afternoon, everyone. We appreciate you joining us today to go over our first quarter twenty twenty five results. I'm Mark Newcomer, President and Chief Executive Officer, and I'm joined by our CFO, Jeff Baker. Also with us for Q and A portion are Matt Turner, President of Patient Affordability and Matt Lanford, our Chief Payments Officer. Earlier today, we released our Q1 results, and I'm pleased to say it was another record setting quarter for PaySign.

Speaker 1

We are continuing to see strong momentum across the board. Revenue, operating income and adjusted EBITDA all hit new highs and the fundamentals of our business remains exceptionally healthy. Let's dive into the Q1 numbers. Revenue grew 41% year over year to 18,600,000 up from $13,200,000 in Q1 of last year. Net income surged to $2,590,000 that's a 737% increase over Q1 twenty twenty four.

Speaker 1

Adjusted EBITDA jumped 193% to 4,900,000 and we saw a major boost in gross margin, which expanded over 10 points to 62.9%. That's not just growth, it's efficient high quality growth. Our Patient Affordability business continued to outperform expectations. Revenues rose 261% year over year to $8,600,000 Claims processed grew by more than 160%, and we added 14 new programs this quarter, already outpacing the 10 new programs we added in the same period last year. We now support 90 active programs spanning retail and specialty therapies, including pharmacy and medical benefit designs across a wide range of therapeutic areas.

Speaker 1

This is a real vote of confidence for the demand for our solutions and in the value we bring with our Dynamic Business Rules technology. In 2024, Dynamic Business Rules saved our clients more than 100,000,000 by mitigating the impact of co pay maximizers. As of today, we've already topped last year's savings total, which speaks volume about the tangible return on investments our platform delivers to pharmaceutical manufacturers. At the April, our team attended the Assembia Summit twenty twenty five here in Las Vegas. It's a flagship event for our industry, bringing together pharmaceutical manufacturers, hub service providers, specialty pharmacies, payers and technology vendors.

Speaker 1

We brought a full cross functional team to engage with current prospective clients. We hosted more than 40 meetings and events that provided direct access to key decision makers and the response to our solutions was extremely positive. Thanks to this engagement and the strong execution of our sales teams, our sales cycle continues to be efficient, typically ranging between ninety and one hundred and twenty days. Based on what we are seeing in the pipeline and results from this quarter, we believe patient affordability revenue will more than double again in 2025. Now let's touch on the plasma donor compensation.

Speaker 1

Revenue in this segment came in at $9,400,000 down 9.2% from $10,300,000 in Q1 twenty twenty four. We ended the quarter with four eighty four centers, adding four new centers during the period, and we expect to onboard five to 10 more during the remainder of this year. As we've mentioned before, this segment is facing headwinds due to continued source plasma supply surpluses and improved collection efficiencies at the center level. We expect these conditions to persist throughout the rest of the year. That said, we're investing in innovation here too.

Speaker 1

In late March, we acquired Gamma Innovation, a move that strengthens our tech stack and positions us to offer a full front end engagement platform integrated with our core payment solutions starting with the plasma industry. This includes a donor engagement app, a plasma specific CRM and a donor management system, all seamlessly integrated with our existing payments infrastructure. The industry response has been enthusiastic. We will be showcasing these solutions at the International Plasma Protein Congress later this month. This is a key and strategic opportunity to expand our presence in the plasma market and introduce new capabilities to both existing and prospective clients.

Speaker 1

We believe this enhanced offering positions us to unlock additional revenue streams, expand our total addressable market and strengthen our competitive differentiation in the plasma space. We see the opportunity to take this integrated model beyond plasma and into the broader pharmaceutical and healthcare sectors where engagement, patient adherence and retention is mission critical for drug manufacturers, providers and payers alike. Operationally, the Gamma acquisition is already paying off. We're implementing a set of efficiency measures that once fully realized are expected to add 4,000,000 to $5,000,000 in annual cash flow. To wrap up, Q1 was a strong start to the year.

Speaker 1

We're scaling efficiently, solving real world problems for our customers and executing with discipline. I'm incredibly proud of the team and excited about what lies ahead. We're confident in our growth trajectory and committed to delivering long term value to our shareholders. With that, I'll hand it over to Jeff to walk you through the financials in more details.

Speaker 2

Thank you, Mark. Good afternoon, everyone. As Mark said, we had a solid first quarter driven by momentum we're experiencing with our Patient Affordability business. Our results for the quarter exceeded our expectations despite weakness in our plasma business related to excess industry wide inventory levels as we discussed on our last conference call. Our plasma business declined 9.2% to $9,400,000 and our revenue per plasma center declined to $6,517 We added four net plasma centers exiting the quarter with four eighty four centers.

Speaker 2

Gross dollars loaded to cards decreased 4.5%, total number of loads decreased 9.3% and gross spend volume decreased 9.4%. Moving to our patient affordability business, first quarter pharma revenues of $8,600,000 was up 260.8% and accounted for 46.3% of quarterly revenues. This is a significant increase from the 18.1% of revenues that Pharma represented during the same period last year. We added 14 net programs exiting the quarter with 90 Pharma patient affordability programs. Early operating efficiencies from our Gamma acquisition are very promising as we look to reduce the reliance of third party professional services that have historically been capitalized as part of our platform development costs.

Speaker 2

By the end of our second quarter, we expect to be on an annual run rate for cash cost savings of $4,000,000 to $5,000,000 As in previous calls, with all the details we provided in the press release and that will be available in our 10 ks filing tomorrow morning, I will simply hit the financial highlights for the first quarter of twenty twenty five versus the same period last year. First quarter twenty twenty five total revenues of $18,600,000 increased $5,400,000 or 41%. Gross profit margin for the quarter was 62.9% versus 52.6% during the same period last year. SG and A for the quarter, excluding depreciation and amortization and stock based compensation increased 28.2% to $6,700,000 with total operating expenses increasing 27.8% to $9,200,000 We have made significant investments in IT and employees over the past year to support the continued growth of our businesses, exiting the quarter with 190 employees versus 132 employees during the same period last year. For the quarter, we posted a net income of $2,600,000 or $05 per fully diluted share versus $300,000 or $01 per fully diluted share for the same period last year.

Speaker 2

First quarter adjusted EBITDA, which is a non GAAP measure that adds back stock compensation to EBITDA was $5,000,000 or $09 per diluted share versus $1,700,000 or $03 per diluted share for the same period last year. The fully diluted share count for the quarters used in calculating the per share amounts was $55,100,000 and $54,800,000 respectively. Regarding the health of our company, we exited the quarter with $6,900,000 in unrestricted cash and zero debt. The first quarter is typically our highest uses of cash as we pay accrued liabilities from the previous year. This year also included a $2,000,000 cash payment for our Gamma acquisition and the repurchase of 100,000 shares of stock for approximately $376,000 Now turning your attention to our revised guidance for 2025, which now incorporates Q1 actuals and the substantially completed purchase price allocation related to the Gamma acquisition.

Speaker 2

We expect total revenues to be in the range of $72,000,000 to $74,000,000 reflecting year over year growth of 25% at the midpoint. Plasma is estimated to make up approximately 57% of total revenue representing a year over year decline of 8% to 10%, while pharma revenue is expected to make up approximately 43% of total revenue representing year over year growth of over 135%. Given the seasonality we see with our patient affordability business and trends in our pharma business, we continue to forecast revenue to be slightly higher in the first half of the year compared to the second half of the year with a corresponding impact on operating income. Full year gross profit margins are expected to be between 62 to 64% reflecting stable margins in our plasma business and increased revenue contribution from our higher margin pharma patient affordability business. Operating expenses are being revised lower due to operational synergies driven by the Gamma acquisition as well as revisions to stock compensation and amortization following the purchase price allocation for Gamma.

Speaker 2

Operating expenses are now expected to be between $41,000,000 and $43,000,000 with depreciation and amortization expense of approximately $8,000,000 and stock based compensation of approximately $3,800,000 Interest income is expected to be approximately $2,900,000 Taking all the factors above into consideration, we now expect net income to be between 6,000,000 and $7,000,000 for the year or $0.10 to $0.12 per fully diluted share. Adjusted EBITDA is expected to be in the range of 16,000,000 to $17,000,000 or $0.28 to $0.30 per fully diluted share. The diluted share count for the year is estimated to be around 56,000,000 shares. For the second quarter of twenty twenty five, we expect total revenue to be in the range of $18,500,000 to $19,000,000 reflecting continued strength from our patient affordability business offset by weakness with our plasma business. We expect plasma revenues to be approximately 54% to 55% of revenue and patient affordability to be approximately 41% to 42% of revenue.

Speaker 2

Gross profit margins are expected to be 63% to 64%. Operating expenses are expected to be between $10,000,000 and $11,000,000 of which depreciation and amortization will be approximately 2,000,000 and stock based compensation will be approximately $1,000,000 Adjusted EBITDA is expected to be in the range of 4,500,000.0 to $5,000,000 or approximately 25.5% of revenue. With that, I would like to turn the call back over to Chelsea for questions and answers.

Operator

Thank All right. Well, we have no questions in the queue at this time. Ladies and gentlemen, I'd like to thank you for your participation. This does conclude today's program, and you may disconnect your line at any time.

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Key Takeaways

  • PaySign reported a record‐setting Q1 with revenue up 41% year-over-year to $18.6 M, net income soaring 737% to $2.59 M, adjusted EBITDA rising 193% to $4.9 M, and gross margin expanding over 10 points to 62.9%.
  • The Patient Affordability segment delivered exceptional momentum, with revenue up 261% to $8.6 M, over 160% growth in claims processed, 14 new programs added, and management expecting pharma revenue to more than double in 2025.
  • Plasma donor compensation revenue declined 9.2% to $9.4 M amid supply surpluses, but PaySign added four new centers and completed the Gamma acquisition to launch an integrated donor engagement platform, targeting $4–5 M in annual cash flow synergies.
  • For 2025, PaySign raised guidance for total revenue to $72–74 M (25% growth at midpoint), gross margins of 62–64%, net income of $6–7 M, and adjusted EBITDA of $16–17 M, driven by over 135% growth in pharma offsetting an 8–10% decline in plasma.
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Earnings Conference Call
Paysign Q1 2025
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