PaySign, Inc. (NASDAQ:PAYS) Q1 2024 Earnings Call Transcript

PaySign, Inc. (NASDAQ:PAYS) Q1 2024 Earnings Call Transcript May 11, 2024

PaySign, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Paysign Inc. First Quarter 2024 Earnings Conference Call [Operator Instructions]. 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 can be found on the Investor Relations section of our Web site, 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 these forward-looking statements. 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 August 7, 2024. Please see Paysign's first quarter earnings call announcement for details on how to access the replay. It's now my pleasure to turn the call over to Mr. Mark Newcomer, CEO. Please go ahead.

Mark Newcomer: Thank you, Kevin. Good afternoon, everyone, and welcome to our first quarter earnings call. I'm Mark Newcomer, President and Chief Executive Officer. Joining me today is Jeff Baker, our Chief Financial Officer. Also available for Q&A session are Matt Turner, our President of Patient Affordability; and Matt Lanford, our Chief Payments Officer. Earlier today, we released our financial results for the first quarter of 2024. I'm delighted to report that we have seen substantial growth in both our top and bottom lines. Our first quarter revenue reached $13.2 million, marking a robust 30% increase year-over-year. Most impressively, our adjusted EBITDA increased by 135% to $1.7 million, or $0.03 per fully diluted share, up from $720,000, or $0.01 per fully diluted share in the previous year.

We also observed significant improvements across other key performance indicators, including a 13% rise in gross dollar load volume and an 11% increase in gross spend volume. In our previous earnings call, we highlighted the Patient Affordability business as a key growth driver for the company. I am pleased to affirm that its growth trajectory has not only continued but accelerated, exhibiting a remarkable 305% revenue increase from the same period last year from $590,000 in Q1 2023 to roughly $2.4 million in Q1 2024. This segment contributed 59% of our total year-over-year revenue growth. During the quarter, we added a net total of 10 patient affordability programs, concluding with 53 active programs. Many of the new programs were well established ones that transitioned from another provider, delivering claims immediately upon onboarding.

As we continue to demonstrate the value of our solutions to pharmaceutical manufacturers in the specialty drug space, we have successfully expanded into the retail drug programs, which typically have higher claims volumes. This expansion led to the addition of 4 retail programs in Q1, and we expect further launches throughout the year. Our claims process in the first quarter increased by 235% compared to Q1 2023, a trend we expect to continue. Our sales cycle remains steady at 90 to 120 days, and our pipeline remains exceptionally robust, further enriched by our recent participation in the Asembia Summit held annually in late April to early May here in Las Vegas. This event has proven to be crucial for our marketing, sales and client management efforts.

And this year's summit was our most productive yet. We engaged in over 50 targeted meetings, addressing specific potential client concerns with overwhelming positive feedback. We are highly optimistic that the interactions from this year's Asembia Summit will lead to many long-term wins and further relationships with major pharmaceutical companies. Based on our current sales pipelines and the response from the summit, we expect patient affordability revenue will increase sequentially throughout the remainder of the year. Our plasma donor compensation business also continued its growth trajectory, with revenue increasing to $10.4 million, up 11% from last year's first quarter. As typical of the first quarter, we experienced some seasonality due to the effects of donors receiving their tax refunds when many donors take a break from donating.

Nevertheless, revenue per center grew by 5% from $7,066 in Q1 2023 to $7,414 in Q1 2024. During the quarter, we added six new centers, one center was closed and we ended the quarter servicing 469 centers. We anticipate adding 15 to 25 new centers throughout 2024. We expect moderate but stable growth in our plasma compensation business as the plasma collection industry stabilizes after a period of rapid expansion. In summary, Q1 2024 has been another quarter of outstanding growth, particularly for our patient affordability business. We remain committed to our mission to bring innovative fintech solutions to the forefront of the patient affordability in health care ecosystems. Our team has developed what we believe to be a truly disruptive product portfolio that continues to attract significant interest from major pharmaceutical companies.

Our plasma business continues to grow steadily, and we remain optimistic about its future. We are also actively exploring other markets to enter and are investing in our people and systems to meet the rapidly growing demand for our products and services. This positions us well to capitalize on numerous opportunities ahead and deliver long-term value to our shareholders. Jeff will now provide more insight to our financial performance for the quarter.

Jeff Baker: Thank you, Mark. Good afternoon, everyone. As Mark said, we started off 2024 with a solid start, fueled by continued growth across all of our businesses. Plasma donor compensation revenue increased $1 million or 11% to $10.4 million, driven by more plasma centers, 469 versus 439, at the end of the period; an increase in the average monthly revenue per plasma center of $7,414 versus $7,066; a 13% increase in gross dollar card loads; and an 11% increase in gross dollar spend volume, all while the average load amounts remain fairly steady. Pharma patient affordability revenue increased $1.8 million or 305% to $2.4 million, primarily driven by the addition of 27 net new pharma patient affordability programs launched over the past 12 months.

Pharma patient affordability revenue equated to 18% of total revenue during the quarter versus 6% during the same period last year. We exited the quarter with 53 active pharma patient affordability programs, an increase of 10 programs since the end of 2023. Other revenue increased $240,000 or 124% due to the growth in our payroll, retail and other corporate incentive businesses. As in previous calls, with all of the details we provided in the press release and that will be available in our 10-Q filing tomorrow morning, I will simply hit the financial highlights for the first quarter of 2024 versus the same period last year. First quarter 2024 total revenues of $13.2 million increased $3 million or 30% versus the same period last year. Gross profit margin for the quarter was 52.6% versus 49.8% during the same period last year, an improvement of 280 basis points.

SG&A for the quarter increased 19.5% to $5.9 million with total operating expenses increasing 24.3% to $7.2 million. We continue to make significant investments in IT and personnel to support the continued growth of our businesses. We exited this quarter with 132 employees versus 112 during the same period last year. For the quarter, we posted a net income of $309,000 or $0.01 per fully diluted share versus a net loss of $160,000 or just under breakeven per share for the same period last year. We recorded a tax expense of $164,000 during the quarter for an effective tax rate of 34.7%. We expect the effective tax rate for the remaining quarters to be 25.65%. For the first quarter, adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA, was $1.7 million or $0.03 per diluted share versus $720,000 or $0.01 per diluted share for the same period last year.

This equates to 135% year-over-year growth in our adjusted EBITDA. The fully diluted share count for the quarter used in calculating the per share amount was 54.8 million shares, which reflects additional in-the-money options that were previously out of the money. The adjusted EBITDA margin was 12.8% versus 7.1% during the same period last year. Regarding the health of our company. We exited the quarter with $7 million in unrestricted cash and zero debt. This was a $10 million decline from the end of 2023, primarily due to the timing of accounts receivable and accounts payable payments related to our patient affordability business of $9.6 million. As discussed in the past, patient affordability customers are invoiced at the end of the period to reimburse funds used to cover related co-pay amounts for monthly patient affordability claims.

The changes in these balances do not equate to the revenue per claim we charge the pharmaceutical companies for paying such claim amounts. We expect that as the business grows, so will the fluctuations in AR, AP and unrestricted cash. Restricted cash increased $16 million to $108.3 million from the December 31, 2023, primarily due to increases in funds on cards of $2.7 million and customer deposits for our plasma and pharma customers of $13.2 million. Restricted cash or funds used for customer card funding and pharmaceutical claims with the corresponding offset under current liabilities. As we did not complete any share repurchases during the first quarter, $3.9 million remains outstanding under our share repurchase program. Now turning your attention to our second quarter 2024 guidance.

We expect total revenues to increase by approximately 27.5% over the second quarter of 2023 with pharma revenue accounting for approximately 18% of the total. We expect adjusted EBITDA to increase 65% to 70% from the second quarter of 2023 with an adjusted EBITDA margin in the range of 13.5% to 14%. With that, I would like to turn the call back over to Kevin for question and answers.

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