Paysign, Inc.

Hello, and welcome to the PaySign 3rd Quarter 2022 Earnings Conference Call. As a reminder, this conference call is being recorded. This call may include statements that may be deemed to be forward-looking under federal securities laws, and the company intends that such forward-looking statements be subject to the safe harbor created thereby. All statements besides statements of fact included on this call are forward-looking. Such forward-looking statements include, among others, that our unrestricted cash anticipated revenues and operating profits will be sufficient to sustain operations for the next 12 months. That the expected total revenue, gross profit margins, operating expenses, depreciation and amortization, stock-based compensation, adjusted EBITDA, plasma revenues, and pharma revenues for 2022 meet our expectations. That the company will continue to post year-over-year improvements. That the company's growth prospects in plasma, pharma, and other prepaid business materialize. and that the company will continue to be affected by COVID-19. We caution that these statements are qualified by important risks, uncertainties, and other factors that could cause actual results to differ materially from those reflected by such forward-looking statements. Such factors include, among others, the inability to continue our current growth rate in future periods, that a downturn in the economy, including as a result of COVID-19 and variants, as well as further government stimulus measures, could reduce our customer base and demand for our products and services, which could have an adverse effect on our business. Financial condition, profitability, and cash flows. Operating in a highly regulated environment, failure by us or business partners to comply with applicable law and regulations, changes in the laws, regulations, credit card association rules, or other industry standards affecting our business. That a data breach, data security breach could expose us to liability and protracted and costly litigation. and other risk factors set forth in our Form 10-K for the year ended December 31, 2021. Except to the extent required by federal securities laws, the company undertakes no obligation to publicly update or revise any statements made today, whether as a result of new information, future events, or otherwise. This conference call also includes comments about adjusted EBITDA, a non-GAAP financial measure that is neither prepared in accordance with nor an alternative to financial measures prepared in accordance based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies. It is now my pleasure to turn the call over to Mr. Mark Newcomer, CEO. Please go ahead, sir.

Thank you, Kevin. Good afternoon, and thank you for joining today's call to review PaySign's outstanding third quarter 2022 results. I'm Mark Newcomer, Chief Executive Officer, and with me this afternoon is Jeff Baker, our Chief Financial Officer. Earlier today, we announced our financial results. Third quarter revenue was $10.6 million, an increase of $2.8 million, a 36% improvement from Q3 2021, and an increase of $2 million from the previous quarter, which translates to a 23% improvement. Additionally, we reported net income of $852,000, or $0.02 per fully diluted share. Our third quarter results reflect the hard work and dedication of the entire PaySign team as we achieve our goal to return to profitability. During the quarter, we onboarded an additional 13 plasma centers, exiting the quarter with a total of 450 centers utilizing our services. We benefited from both the organic growth of our existing centers and the increase in revenue generated from centers added at the tail end of the second quarter. We also began to see the effects of the U.S. District Court's preliminary injunction on September 16th, allowing Mexican nationals with a valid B-1, B-2 visa to resume donating plasma in the U.S., as the affected centers began to ramp up donations shortly after this decision. Source plasma collection companies continue to execute their aggressive growth strategies, and we continue to have confidence in our growth prospects for this segment. Looking at the remainder of the year, we expect to onboard an additional three to four centers each month for a total of 90 to 95 new centers in 2022. Throughout the quarter, we continue to see our load and spend trends improve as the number of plasma donations increase. Funds loaded on card was up 57.6% over third quarter last year and up 23.1% over last quarter. The third quarter spend volume increased 58.6% from last year and was up 22.9% over last quarter. Turning to our patient affordability business, Q3 saw two additional program launches for this vertical. We continue to see daily claims volume increase as we add more retail and specialty pharmaceutical products to our list of active programs. In addition to onboarding new programs, we have completed integrations with additional hub service providers. Hub service providers are critical partners in our success. and we are thrilled to have gained the trust of these providers. We are confident that we will continue to build on that trust and form lasting partnerships that encourage continued growth. Our patient affordability teams have been busy fielding inquiries and conducting data analysis for potential clients based on the webinar we hosted in Q2 related to spread pricing in the industry. If you haven't seen the webinar, I would encourage you to visit our website for the link to the webinar and a white paper we published on this topic. Our transparent pricing strategies are having a positive impact on potential new business, I think, forcing the industry to rethink how these pricing strategies are impacting the U.S. healthcare ecosystem. The Q4 pipeline for patient affordability looks robust, with several program launches in process and several additional planned for Q4. Looking ahead to 2023 and beyond, we believe we are poised to see continued growth in this vertical with the ability to position PaySign as one of the leading providers of patient affordability solutions. We are always looking for new ways to support our existing clients as well as to expand our business into other payment verticals. In the third quarter, we signed two new prepaid disbursement programs. The first program is for an employer per diem card for one of our existing plasma clients, and the second is an additional corporate payout program. Additionally, we were awarded the business in an RFP sponsored by a nationwide membership organization to provide general purpose reloadable and gift cards to over 440 of their brick and mortar locations. We expect to launch these programs during the fourth quarter. Overall, we are very pleased with the third quarter results, and we believe we have the building blocks in place to ensure the long-term growth of PaySign and the enhancement of our shareholder value. With that, I'll pass it over to Jeff to give you more insight into our financials for the quarter.

Thank you, Mark. Good afternoon, everyone. As Mark pointed out, we are pleased with our third quarter operating results and the foundation we have built for 2022 and into 2023. Revenue, income from operations, EBITDA, adjusted EBITDA, and transactional trends all improved sequentially and year-over-year. This was the best quarter in the company's history for our plasma business as we continue to grow our market share and benefit from individuals' needs to supplement their incomes. With all of the details we provided in the press release and that will be available in our 10Q tomorrow, I will simply hit the financial highlights for the third quarter 2022 relative to the third quarter in 2021. Total revenue of $10.6 million increased $2.8 million, or 36% versus the year-ago period. Of that amount, plasma revenue was $9.8 million, an increase of 40%. Pharma revenue was $693,000, an increase of 5%. And other revenue was $73,000, an increase of 3%. The average revenue per month per plasma center was $7,384 versus $6,542 last year. This marks our highest revenue per month per plasma center since COVID began in the first quarter of 2020. We added 13 centers during the quarter, ending with 450 centers versus 359 centers at the end of Q3 2021. Gross profit margin for the quarter was 54.3% versus 51.1%, an increase of 320 basis points. SG&A increased 21.2% to 4.4 million, and total operating expenses were up 20.7% to 5.1 million. As Mark mentioned, We post a net income of $852,000, or $0.02 per diluted share, versus a net loss of $271,000, or a penny per diluted share. Adjusted EBITDA, which adds back stock compensation to EBITDA, was $1.9 million, or $0.04 per diluted share, and marks the sixth consecutive quarter of positive adjusted EBITDA. It is also more than double the adjusted EBITDA we posted during the same period last year. Regarding the health of our company, we exited the quarter with $8 million in unrestricted cash and zero debt, which is an increase of $595,000 from our fourth quarter ending cash balance. Our adjusted current ratio, which excludes restricted cash and card funding liability, was 2.21 versus 2.14 at the end of the fourth quarter. Now turning your attention to our updated guidance for 2022. We now expect total revenue to grow 29 to 30 percent over 2021 to a range of 38.15 million dollars to 38.35 million dollars. Plasma is estimated to make up over 90% of total revenue for 2022. These expectations account for one of our plasma customers consolidating and closing 13 of their centers and two pharma prepaid programs ending in mid-November. We expect to end the year with over 445 plasma centers and over 20 active pharma prepaid programs. Full-year gross profit margins are expected to be approximately 56%, with operating expenses expected to be between $21 million and $21.25 million, as we continue to invest in people and technology and experience higher costs in insurance, travel, and entertainment and other inflationary pressures. Within total operating expenses, depreciation and amortization is expected to be approximately $2.91 million, while stock-based compensation is expected to be approximately $2.28 million. Adjusted EBITDA is expected to be $5.5 million to $5.6 million. We expect our tax provision to be approximately $107,000 for 2022. We plan on providing guidance for 2023 during our Q4 earnings call in March. With that, I would like to turn the call back over to the moderator for questions and answers.