Paysign, Inc.

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. second quarter 2024 earnings conference call. After the speaker's remarks, there will be a question and answer session. If you'd like to be placed in the question queue, you may press star 1 on your telephone keypad at any time. As a reminder, this conference call is being recorded. The comments on today's call regarding PaySign's financial results will be on a gap 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 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 October 29, 2024. Please see Paysign's second 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.

Thank you, Kevin. Good afternoon, everyone, and welcome to Paysign's second quarter earnings call. I'm Mark Newcomer, the President and CEO of PaySign. Alongside me today for our discussion is Jeff Baker, our Chief Financial Officer. Later during the question and answer session, we will be joined by Matt Turner, our President of Patient Affordability, and Matt Lanford, our Chief Payments Officer. Today we shared our financial results for the second quarter of 2024. I'm pleased to report that we've achieved remarkable growth, both sequentially and year over year, and in both our top and bottom lines. Our revenue for the second quarter reached $14.3 million, a robust increase of nearly 30% compared to the second quarter of 2023, and an 8.7% increase from the first quarter of 2024. Our adjusted EBITDA increased 96% to $2.24 million, translating to $0.04 per fully diluted share, a substantial rise from $1.14 million or $0.02 per fully diluted share a year earlier. A significant highlight of this quarter is the exceptional performance of our patient affordability business, which has proven to be a major catalyst for our growth. The revenue from this segment has impressively increased by 267% from the same quarter last year, from $730,000 in the second quarter of 2023 to roughly $2.7 million in the same quarter this year. The number of claims processed increased by 365% versus the same quarter last year. Patient affordability alone contributed to 59% of our total revenue growth year over year and has been pivotal in our 200 basis point increase in gross margin. We expect to see this margin expansion continue as patient affordability remains the dominant growth driver of the company. During this period, we added eight new patient affordability programs, including both retail and specialty brands, bringing our total to 61 active programs. We are particularly proud of the confidence our clients have in our solutions, which has led to multiple wins from many of them. For example, in the third quarter of 2023, we onboarded a new cornerstone client, AstraZeneca. Since then, we have increased the number of programs from their initial four to a total of 12 by the end of the second quarter. The AstraZeneca programs encompass a mix of retail and specialty therapies covering a wide array of therapeutic classes and include both new launch and transition programs. This is only one example as we currently manage programs for six of the 20 largest pharmaceutical companies in the world. Our sales pipeline remains extremely robust, filled with promising opportunities slated for launch later this year and into 2025. This forward momentum positions us to continue scaling our patient affordability solutions as we secure our leadership position in the market. We are confident that our operational cash flow will robustly support these ambitions. Additionally, our plasma donor compensation business also showed strong performance this quarter, with plasma revenues rising to $11.3 million, a 13% increase from the same quarter last year, and an 8.7% increase over first quarter of this year. This revenue growth is supported by a 4.4% increase in revenue per center from 7,581 in the second quarter of last year to 7,916 in this year. We added eight new plasma centers this quarter, reaching a total of 477 centers, and we plan to add another five to 10 centers by year end. Our expansion underscores our commitment to helping our clients focus on enhancing center productivity after a period of rapid expansion. We are anticipating moderate and stable growth in our plasma donor compensation business in the foreseeable future. To conclude, the second quarter of 2024 marks another period of significant growth, particularly for our patient affordability business. The investments we are making in that business is poised to yield substantial long-term revenue growth, enhancing shareholder value considerably. We remain dedicated to pioneering advanced and innovative FinTech solutions that address key challenges in patient affordability and healthcare payments and beyond. With our steady growth in the plasma business and ongoing exploration of new opportunities in the evolving payments landscape, we are well positioned to capitalize on future opportunities and deliver substantial value for our shareholders. I would like to extend my deepest thanks to every member of the PaySign team for their relentless effort and commitment. It is your hard work and dedication that propels our success. I will now pass the call over to Jeff, who will delve deeper into our financial details for the quarter.

Thank you, Mark. Good afternoon, everyone. As Mark said, we had another solid quarter. Plasma donor compensation revenue increased $1.26 million versus the same period last year, or 12.6%, to $11.27 million, driven by more plasma centers, 477 versus 443, an increase in the average monthly revenue per plasma center of $7,916 versus $7,581, a 12.7% increase in gross dollar card loads, and an 11.2% increase in the gross spend volume, all while the average load amounts remain fairly steady. Pharma patient affordability revenue increased $1.95 million, or 267%, to $2.67 million, primarily driven by the addition of 30 net new pharma patient affordability programs launched over the past 12 months. Pharma patient affordability revenue equated to 18.7% of total revenue during the quarter versus 6.6% during the same period last year. We exited the quarter with 61 active pharma patient affordability programs, an increase of 18 programs since the end of 2023. Other revenue increased $86,000 or 28.9% to $383,000 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 it will be available in our 10Q filing tomorrow morning, I will simply hit the financial highlights for the second quarter of 2024 versus the same period last year. First, second quarter 2024 total revenues of $14.3 million increased $3.3 million or up 29.8% versus the same period last year. Gross profit margin for the quarter was 52.9% versus 50.9% during the same period last year, an improvement of 200 basis points. SG&A for the quarter increased 13.5% to $6 million, with total operating expenses increasing 19.1% to $7.5 million. We continue to make significant investments in IT and personnel to support the continued growth of our business, especially our patient affordability business. We exited this quarter with 149 employees versus 108 during the same period last year. For the quarter, we posted a net income of $697,000 or one cent per fully diluted share versus a net loss of $104,000 or just under break even per share for the same period last year. We recorded a tax expense of $242,000 during the quarter for an effective tax rate of 25.8%. Our fully diluted share count for the quarter was 55.9 million shares. The second quarter adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA, was $2.2 million or 4 cents per diluted share versus $1.1 million or 2 cents per diluted share for the same period last year. This equates to a 96% year-over-year growth in our adjusted EBITDA. The fully diluted share count for the quarters used in calculating the per share amount was 55.9 million shares and 54.5 million shares, respectfully, which reflects additional in-the-money options that were previously out of the money. The adjusted EBITDA margin improved to 15.6% versus 10.3% during the same period last year, further highlighting the positive operating leverage in our business model. Regarding the health of our company, we exited the quarter with an adjusted $8.6 million in unrestricted cash and zero debt. This was a $1.7 million decline from the adjusted unrestricted cash balance of $10.3 million at the end of 2023, but an increase of $1.6 million from the adjusted unrestricted cash balance of $7 million at the end of Q1 2024. The adjusted amounts take out the impact of accounts receivable, accounts payable, and cash collections related to pass-through invoicing of our patient affordability business. As discussed in the past, patient affordability customers are invoiced at the end of the period to reimburse refunds used to cover related copay amounts for the 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 $10 million to $102.2 million from December 31, 2023, primarily due to the increases in funds on cards of $3.7 million and customer deposits for our plasma and pharma customers of $6.3 million. Restricted cash are funds used for customer card funding and pharmaceutical claims with a corresponding offset under current liabilities. As we did not complete any share repurchases during the second quarter, $3.9 million remains outstanding under our share repurchase program. Now turning your attention to our full year 2024 guidance. Due to the outperformance of our business during the first two quarters of the year relative to our initial expectations, we are raising our full year guidance as follows. Total revenues are estimated to be in the range of $56.5 million to $58.5 million reflecting year over year growth of 20% to 24%. Plasma revenues are estimated to account for approximately 78% of total revenue, while pharma revenue is estimated to account for approximately 20% of total revenue. Full year gross profit margins are expected to be between 54% and 55%, reflecting increased revenue contribution from our patient affordability business. Operating expenses are expected to be between $30 million and $32 million as we continue to make investments in people and technology to support the growth of our business. Of this amount, depreciation and amortization are expected to remain unchanged between $6 million and $6.5 million, while stock-based compensation is expected to remain unchanged between $2.7 million and $3 million. Given the continued increases in our average daily balance of unrestricted and restricted cash and the current interest rate environment, we expect to generate interest income of $3 million to $3.2 million. We expect our tax rate to be between 28% and 29% and our fully diluted share count outstanding to be 55.8 million to 56.0 million shares. Taking all of the factors above into consideration, We expect net income to be in the range of $2 million to $3 million, or $0.04 to $0.06 per diluted share, and adjusted EBITDA to be in the range of $9 million to $10 million, which is 15% to 17% of total revenues, or $0.16 to $0.18 per diluted share. With that, I would like to turn the call back over to Kevin for questions and answers.