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. Fourth Quarter and Full Year 2024 Earnings Conference Call. After the speaker's remarks, there'll be a question and answer session. If you'd like to be placed into question queue, you may press star one 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 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 these forward-looking statements. Information about the factors that could affect future performance is summarized at the end of PaySign's earnings release in our recent SEC filings. Lastly, replay of this call will be available until June 25, 2025. Please see PaySign's fourth quarter and full year 2024 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 thank you for joining us on today's earnings call. We are excited to share PaySign's results for the fourth quarter and full year 2024. I'm Mark Newcomer, President and Chief Executive Officer, and joining me today is Jeff Baker, our Chief Financial Officer. Additionally, Matt Turner, our President of Patient Affordability, and Matt Lanford, our Chief Payments Officer, will be available during the Q&A session. Earlier today, we announced our fourth quarter and full year financial results for 2024, which demonstrated continued strength and exceptional momentum in revenue growth and adjusted EBITDA. For the full year, revenue increased by 23.5% to $58.4 million, and adjusted EBITDA increased 43.3% to $9.6 million. Equally impressive, Our adjusted EBITDA margins improved by 230 basis points to 16.5% as we continue to demonstrate operating leverage in our business model. In 2024, our patient affordability business firmly established itself as our primary growth driver, delivering exceptional results across all key performance indicators. Annual revenue in this segment grew 212% year over year. reaching 12.7 million compared to 4.1 million in 2023. Claims processed increased by an impressive 272%, and we added 33 net programs, representing a 77% increase over the previous year. These new programs consisted of both new and transition programs across various therapeutic classes, including both retail and specialty drugs, covering pharmacy and medical benefits. Our continued ability to win additional programs from our current customers is a testament to our excellent processes, exceptional service, and the tangible cost savings exceeding $100 million that our proprietary dynamic business rules delivered to our clients in 2024. Our sales cycle remains efficient within the 90 to 120-day range, and our sales pipeline continues to be robust. We fully expect our patient affordability business to sustain its strong growth trajectory in 2025, projecting to at least double in revenue once again this year. Turning to our plasma donor compensation business, this segment contributed $43.9 million in revenue for the year, representing a 4.6% increase over 2023's $42 million. We exited 2024 with 480 centers, an increase of 16 centers over the previous year, and anticipate adding an additional 10 to 15 centers in 2025, with four centers already added to date. Fourth quarter plasma revenue was down 6.2%, primarily driven by fractionators working through an oversupply of source plasma, a natural outcome following rapid industry expansion of centers from 2020 to 2023. Another contributing factor was increased donation yields resulting from the latest plasmapheresis hardware upgrade cycle, leading to reduced donor compensation payments and fewer overall donations in the fourth quarter. We expect these conditions to persist through at least the remainder of the year. As this is a high variable cost business, we believe that we can effectively manage through this downturn. Our long-term strategy remains focused on expanding the depth and breadth of our solutions to create new revenue streams, especially in the maturing segments of our business. We envision payments as a component of the overall consumer engagement ecosystem and not just the completion of a monetary transaction. To that end, we announced the acquisition of Gamma Innovation LLC and the appointment of Michael Ngo as Paysign's Chief Innovation Officer, as outlined in a press release earlier today. I encourage you to read the announcement if you haven't already done so. Michael and his talented team bring considerable expertise and an innovative product portfolio of existing applications that target both the plasma collection and pharmaceutical industries. This strategic acquisition significantly enhances our capability to offer integrated solutions for plasma donor and pharmaceutical patient engagement, adherence, resource management, and market intelligence. This marks our entry into the high margin software as a service market and meaningfully expands our total addressable market. This is certainly an exciting time at Paysign, and we look forward to capitalizing on these opportunities as we enter 2025 and beyond. With that, I'll turn the call over to Jeff for additional details on our quarterly and full year financial results.

Thank you, Mark. Good afternoon, everyone. As Mark said, we closed 2024 with a solid fourth quarter driven by momentum we're experiencing with our patient affordability business. Our results for the quarter and year were in line with our expectations despite some weakening in our plasma business due to excess inventory supplies that we started to see in the third quarter and expect to last through year-end 2025. And last week, we closed on a very exciting acquisition that should help expand our presence in the plasma and pharmaceutical industries as well as bring cost savings to our own organization. I will talk more about that later. Our plasma business grew 4.6% in 2024 to $43.9 million as we added 16 net plasma centers and maintain our market share of just under 40%. We exited the year with 480 plasma centers and thus far in 2025, we have already added an additional four net programs. For the fourth quarter, revenues declined 6.2% to $10.8 million with two net centers added. Gross dollars loaded to cards decreased 6.4%, total number of loads decreased 7.8%, gross spend volume decreased 7.8%, and the average revenue per plasma center decreased 9.5% to $7,510. The guidance for 2025 that I will provide in just a moment reflects the slowdown We expect to continue for the remainder of the year. Moving to our pharma patient affordability business. You heard Mark talk about the traction we experienced in 2024, which has continued into 2025. Fourth quarter pharma revenues of $12.7 million were 21.7% of total revenue versus 8.6% during the same period last year. We added 10 net programs in the fourth quarter exiting the year with 76 pharma patient affordability programs, an increase of 33 net programs over 2023. Thus far in 2025, we have already added an additional 14 net programs in the first quarter of 2025. With the hyper growth we have experienced in our pharma patient affordability business, we expect it will continue to make up a greater percentage of total revenue in 2025. As in previous calls, With all the details we provided in the press release and that will be available in our 10-K filing tomorrow morning, I will simply hit the financial highlights for the fourth quarter of 2024 versus the same period last year. Fourth quarter 2024 total revenues of $15.6 million increased $1.9 million or 14%. Gross profit margin for the quarter was 58.9%. versus 52.2% during the same period last year. SG&A for the quarter, excluding depreciation and amortization and stock-based compensation, increased 36.7% to $6.3 million, with total operating expenses increasing 34.2% to $8.7 million. We have made significant investments in IT and employees over the past year to support the continued growth of our businesses. exiting this year with 171 employees versus 123 employees during the same period last year. For the quarter, we posted a net income of $1.4 million or two cents per fully diluted share versus $5.6 million or five cents per fully diluted share for the same period last year. 2023's net income included a tax benefit of $4.3 million as we released the valuation allowance on our deferred tax assets related to both federal and state taxes. The fourth quarter adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA, was $2.9 million or 5 cents per diluted shares versus $2.5 million or 5 cents 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 $55.5 million and 53.8 million, respectfully. Regarding the health of our company, we exited the year with $10.8 million in unrestricted cash and zero debt, a $6.3 million decrease over the year 2023. If you recall, we have passed through receivables and payables related to our pharma patient affordability business that causes large swings in our cash balance. Adjusting for those movements, our cash balance at the end of 2024 was $11.1 million versus $10.3 million the prior year. We repurchased 36,700 shares in the fourth quarter for approximately $135,000, and for the year we repurchased 136,700 shares for approximately $495,000. Now turning your attention to our initial guidance for 2025, which incorporates various assumptions related to the acquisition of gamma. We expect Total revenues to be in the range of $68.5 million to $70 million, reflecting year-over-year growth of 17.5% to 20%. Plasma is estimated to make up approximately 57.5% of total revenue, while pharma revenue is expected to continue its growth of at least 100% year-over-year as we receive a full-year benefit for all pharma patient affordability programs added in 2024. and we continue to add new pharma patient affordability programs throughout 2025. Given the early trends we are seeing with the year-over-year decline in our plasma business and the seasonality we see with our patient affordability business, we expect revenue to be 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% and 64% reflecting increased revenue contribution from our pharma patient affordability business. Operating expenses are expected to be between $47.5 million and $50 million as we continue to make investments in people and technology. This amount also includes the labor costs, estimated goodwill amortization, and stock expense associated with the acquisition we announced this morning. But it does not include operating synergies we expect to benefit from during the second half of the year. We plan on giving an update to the acquisition-related operating expense assumptions and anticipated synergies on our Q2 2025 earnings call after we have completed our purchase price allocation. Depreciation and amortization expense is expected to be between $10.5 million and $11.5 million, while stock-based compensation is expected to be approximately $6 million. Given our large unrestricted and restricted cash balances in the current interest rate environment, we expect to generate interest income of approximately $2.8 million. Taking all of the factors above into consideration, we expect net income to be approximately break even for the year and adjusted EBITDA to be in the range of $12.5 million and $13.5 million or 22 cents to 24 cents per diluted share. The diluted share count for the year is estimated to be 56.5 million shares. For the first quarter of 2025, We expect total revenue to be in the range of $17.5 million to $18 million, reflecting the seasonally strong period for our patient affordability business, offset by the seasonally weak period for our plasma business. We expect patient affordability revenues to be 40 to 45% of revenue for the quarter. Gross profit margins are expected to be between 63 and 64%, driven largely by increased revenue contribution from our pharma patient affordability business. Operating expenses are expected to be between $10.5 million and $11 million, of which depreciation and amortization will be approximately $1.9 million, and stock-based compensation will be approximately $2.1 million. Adjusted EBITDA is expected to be in the range of $4 million and $5 million, or 21.7% to 27.2% of revenue. For those looking for more information on the structure of the gamma acquisition, which included a combination of cash and stock and a contingent consideration related to gross revenue performance targets, I would point you to our disclosure in our 8K and 10K filings. With that, I would like to turn the call back over to Kevin for question and answers.