Q1 2021 Paysign Inc Earnings Call
[music].
Hello, and welcome to the peace sign the first quarter 2021 conference call and webcast at this time all participants are in listen only mode.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
Question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.
This presentation may include forward looking statements to the extent of the information presented in this presentation discusses financial projections information or expectations about the company's business plans results of operations for the impact of COVID-19.
Returns on equity expected gross margins markets or otherwise make statements about future events such statements are forward looking statements.
Such forward looking statements can be identified by the use of words, such as should May intends anticipates believes estimates projects forecasts expects plans and proposals.
Although the company believes that the expectations reflected in these forward looking statements are based on reasonable assumptions for a number of risks and uncertainties that could cause actual results to differ materially from such forward looking statements for urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading risk factors.
And elsewhere in the form 10-K.
Forward looking statements speak only as of the date of the document and what share of contained and the company does not undertake any duty to update any forward looking statements, except as may be required by law.
This presentation also includes adjusted EBITDA and non-GAAP financial measure that is neither prepared in accordance with nor and alternative to financial measures prepared in accordance based on any standardized methodology prescribed by GAAP and is not necessarily comparable the similarly titled measures presented by other companies. It's now my pleasure to turn the call over.
The CEO Mark newcomer. Please go ahead Sir.
Thank you Kevin Good afternoon, everyone and thank you for joining us for <unk> first quarter 2021 earnings call I, and Mark Newcomer and Chief Executive Officer, and joining me. This afternoon is Jeff Baker, our Chief Financial Officer.
The first quarter is typically a seasonally weaker quarter for our business due to the timing of tax refunds and the impact they have on plasma donations.
This weakness was intensified this quarter due to the added effects of the pandemic related stimulus payments and unemployment benefit extensions.
Our first quarter plasma from funds loaded was down 2.5 per cent from the year ago period, and down six 8% from the previous quarter. We believe the plasma donations will return to normal levels as we stimulus packages expire and consumers returned to the plasma centers in the quarter, we on boarded three new plasma centers, bringing our.
Total number of centers for 343. Additionally, we signed four new plasma clients. They were all new entrants and the plasma collection space and each of the aggressive growth plans with initial centers expected to go live and the second quarter, our plasma pipeline remains strong and we remain optimistic and the future of of the segment's gross.
We are seen and increase of new center of builds from our existing plasma clients.
We expect to add a total of 16, new plasma centers. This year exiting 2021 with at least 400 centers.
Our patient affordability offerings continue to grow we are seeing very positive feedback from the market related to our product offerings and partnership strategy and that is reflected in our sales pipeline.
During the first quarter, we developed and launched a new voucher program for an existing client. This program addition reflects upon the ability of our sales and client services and operational teams to build trust and confidence and our offerings, allowing us to capture additional revenue from existing clients. We officially launched two additional programs and the first.
Quarter of Pharmacy claims based program and the hybrid pharmacy and medical claims based program, we believe that hybrid and medical claims based programs represent and underserved portion of the patient affordability market.
Our product development continues to focus on the unique products services and relationships, we can build to accommodate the needs of this growing vertical overall, we are pleased with the continued growth of the patient affordability vertical and are excited about the continued pipeline growth we of the utmost confidence and our sales and client services and operational teams to retain and grow.
So our existing patient affordability portfolio of clients by continuing to provide industry, leading insights and and outstanding client and patient experience.
We're beginning to see traction with our digital bank account product pace on Premier and we signed three new clients this quarter and have additional deals and the pipeline. We continue to execute on our product strategy to enhance the product features by adding the account to account transfers.
Additionally, we signed two new deals for our business expense product to be used for teenie per diem vendor payments and small expense purchases. While it is still early days for these products and it will take some time for them to ramp up we are excited about the interest in them and the opportunity it brings us to expand into other verticals with that.
And I'll pass it over to Jeff to give you a breakdown of our numbers good afternoon, and the revenue and operating performance and the first quarter were in line with our expectations given the seasonal weak period, driven by tax rebates, coupled with the impact of government stimulus measures related to COVID-19 of our total revenues of $6 3 million plasma revenue accounted.
For $5 4 million or 86% pharma revenue was 883000 and other revenue was 13000 of.
Gross margin for the quarter was 45, 1%, reflecting a decrease and pharma revenues.
We continue to hold SG&A expenses flat as an absolute dollar amount despite severance related expenses and legal fees relating to our class action defense that negatively impacted the quarter by $450000 and.
<unk> and these expenses our adjusted EBITDA for the first quarter came in at a loss of $397000 or a loss of one penny per fully diluted share of <unk>.
Adjusted EBITDA, which we defined as operating income plus depreciation and amortization and stock based compensation and is a non-GAAP metric used by management to gauge the operating performance of the business. These results compared unfavorably to pre COVID-19 first quarter 2020 results of total revenues of $10 6 million.
Gross margins of $54, one per cent and adjusted EBITDA of $2 6 million or five cents per fully diluted share.
First quarter gross dollar volume declined 15, 2% versus the year ago period, but increased sequentially by two 2% first quarter purchase volume declined 13, 1% versus the year ago period and was unchanged versus the previous quarter, we did experience a sequential decline and our revenue conversion rate.
As we experienced a decrease and the number of cardholder purchase transactions, which negatively impacted our core cardholder fees for the quarter. We believe this is the seasonal trend as we experienced the same behavior during the same period last year.
Taking a closer look at the plasma business for the quarter revenues of $5 4 million were down $2 2 million from the same period last year. The average revenue per plasma center was $5260 versus 8000 and $589 last year, we exited the quarter with three.
<unk> hundred 43 centers versus 285 at the end of Q1 last year.
Turning your attention to the pharma business first quarter 2021 revenues of $768000 decreased $2 $1 million compared to first quarter 2020, primarily driven by the change in accounting estimate last year and the termination of one program in December we continue to win new mandates and the <unk>.
Pharma business and expect new programs to launch and the third and fourth quarters of this year, giving us good momentum into 2022.
Cost of revenues for the period decreased $1 4 million compared to the same period and the prior year, primarily due to the decline and plasma transactions as many of the plasma transaction costs are variable in nature.
<unk> profit for the quarter decreased $2 9 million compared to the same period last year, resulting from the reduction in plasma and pharma revenue and the associated cost of sales as mentioned.
We continue to make significant investments and our business to give us the support and technological capabilities needed to efficiently grow the business and launch new prepaid programs the.
Thus depreciation and amortization increased 18, 6% year over year to $596000.
Regarding the health of our company, we exited the quarter with $6 6 million and unrestricted cash and zero debt, which is $1 2 million below our December ending balance.
Based on our forecast, we believe we remain well capitalized and positioned to weather any further impacts from COVID-19.
Lastly, I wanted to direct your attention to the press release, where we have laid out our thoughts for 2021.
For the full year, we expect total revenue to be and the range of 29 million to $32 million, reflecting growth of 20% to 32% and adjusted EBITDA of 350000 to $1 9 million.
Gross profit margins are expected to be 45% or increased 640 basis points over 2020.
Operating expenses are expected to increase modestly to 18 to $18 5 million or two to four 9% the.
This outlook presumes that the second quarter results are slightly better than the first quarter results and that we began to receive a recovery and the business and the third quarter. When unemployment subsidies are scheduled to and in early September with the non COVID-19 impacted fourth quarter, we estimate our plasma revenue could reach 27 five.
And dollars for the full year 2021, and increase by an additional $10 million and 2022.
With that I would like to turn the call over to the moderator for Q&A.
Thank you well now be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one on your telephone keypad.
Once again thats far one to be placed and the question queue.
And from the speaker phone may be necessary to pick up per handset before pressing the star keys.
Yeah, the star one to be placed and the question queue. One moment. Please while we poll for questions.
Our first question today is coming from Jon Hickman from Ladenburg Thalmann. Your line is now live.
Hey, Thanks for taking my call can you hear me.
We can win for you John.
Okay.
Just wondering are.
Are you noticing any.
Different and different areas of the country based on COVID-19.
Are some areas, mainly the south east or something doing.
Is the business doing better.
In California, it's kind.
And your comment on that.
Well this is mark I would say John the eye.
Can't I haven't really seen anything that stood out to me that would show me Theres a big difference on a regional basis, it seems to be kind of impacted across the boards.
Okay and then.
So your main competitor now they're owned by a different outfit.
Is there anything youre seeing.
The competitive wise.
And.
Six months ago.
We're seeing we're seeing additional opportunities for us to get our foot and the doors of additional companies.
And outside of that there's not too much I can say about it but.
We're also seeing new entrants and the space.
More so than we've seen in the past.
And more successfully and.
Engaging with those new entrants.
Okay. That's it for me thanks.
Yeah.
Thank you as a reminder of that star one to be placed and the question Q1 moment. Please while we poll for further questions.
Okay.
Once again Thats star one to be placed and the question queue and fair to speaker phone may be necessary to pick up the handset before pressing star one.
Our next question is coming from Michael Diana from Maxim Group. Your line is now live.
Okay. Thank you.
Jeff I just wanted to be clear on your.
Plasma revenue guidance for 2022.
Are you, saying 21 could be.
27.5, and then 'twenty two to be 37 five.
Yeah, Michael that's exactly right. So if you look at what's happened you know you'll see first quarter this year.
The second quarter and into most of the third quarter. When we think it's gonna be impacts from COVID-19, when we come into the fourth quarter of the four quarter number you get should be a non COVID-19 impacted our quarter.
So you know, obviously, you'll build that and to say, let's at least one right normal quarter and like we had prior to COVID-19 and then you layer of that and so you'll have easier comps and the first quarter second quarter and third quarter of 2022, and then fourth quarter, you get kind of your industry growth. So.
Say for all of the <unk>.
Any of the centers the additional centers, we add during the period right, Okay, great and your.
<unk> expenses for severance and the losses this quarter the velocity of expenses continue.
So you know the it depends and when we disclosed the the.
The lawsuits and our and our filings that are out there.
And you know, we'll have to just play and see how that plays out.
Yeah, that's about all I can say about it because it's you know it's an ongoing issue but.
Yeah.
Yeah.
Okay, great. Thank you.
Alright, Michael.
Thank you as a reminder of that star one to be placed and the question queue. One moment. Please while we poll for further questions.
We have reached the end of our question and answer session and I'd like to turn the floor back over to Mark for any further closing comments.
Thank you very much Kevin I'd like to reiterate that we are very pleased with our growing sales pipeline and the strides we've made and our patient affordability offerings.
To think the pace of my team for their dedication of all of their hard work.
Thank you for your continued interest your questions and your participation of this earnings call and stay safe and have a nice evening and we look forward to next quarter's call.
Thanks for that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.