Q2 2022 Paysign Inc Earnings Call
$5,625 versus $5,633 last year. We added 62 centers during the quarter, ending with 437 centers versus 356 centers at the end of Q2 2021. Also of note, we have added an additional 6 centers since the end of June , bringing our total number of donation centers to 443. We're currently at CPS REAL
Gross profit margin for the quarter was 54.6% vs. 47.4%, an increase of over 7 percentage points.
SG&A increased 22.5% to $4.3 million and total operating expenses were up 21.5% to $5 million.
Adjusted EBITDA, which adds back stock compensation to EBITDA, was $930,000 or 2 cents per diluted share and marks the 5th consecutive quarter of positive adjusted EBITDA.
Regarding the health of our company, we exited the quarter with $6.5 million in unrestricted cash and zero debt, which is a decrease of $860,000 from our fourth quarter ending cash balance. The decline was mainly driven by upfront costs required to launch the new donation centers I mentioned, and the timing of payables related to our pharma vendors. Our adjusted current ratio, which excludes restricted cash, was 2.2 times, as compared to chemicals used to run our
versus 2.1 times at the end of the fourth quarter. Now turning your attention to our adjusted guidance for the remainder of the year.
We now expect our total revenue to grow 27.5% over 2021, coming at the high end of our guidance range of 35.25 million to 38.35 million, with upside to that range if some of the headwinds around the tight labor market at donation centers and Mexican nationals with tourist visas being allowed to donate plasma abate.
Plasma is estimated to make up about 92% of total revenues for 2022.
We expect Q3 2022 total revenue to be approximately $10.2 million and Q4 2022 total revenue to be approximately $10.5 million, despite two pharma prepaid programs ending in mid-November.
Full year gross profit margins are expected to be between 56 and 57 percent, with operating expenses expected to be approximately $22 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 $3 million while stock-based compensation is expected to be approximately $2.3 million. Adjusted EBITDA is expected to be $4.7 million to $5.3 million with Q3 2022 adjusted EBITDA being slightly higher than Q4 2022 due to the end of the pharma prepaid programs mentioned above.
and the sequential increases in operating expenses. Lastly, with operating losses narrowing and interest income increasing due to higher bank balances and interest rates, we expect our tax provision to be approximately $55,000 for 2022. With that, I would like to turn the call back over to the moderator for questions and answers.
We will now be conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 1. One moment please while we poll for questions.
Our first question today is coming from Gary Prestabino from Barrington Research. The deadline is now live.
Thank you. Good afternoon all.
really good solid results. I guess the question that I would have to you Don and Jeff is, I mean you're putting up phenomenal new business awards here. And could you maybe go through what are you doing to drive that? What's going on in the industry that's giving you the ability to get these new plasma centers? And what do you bring to the table that's allowing you to do this or enabling you to do this?
Yeah, I'd be happy to address that. Primarily, the difference is we're participating in RFPs. There's a lot of clients that have had the same providers for a long period of time and really with no value-added services that have been brought on. So they may be dealing with the same product they've been dealing with since the beginning of the relationship. And one of the things that we're doing that's very different.
As we consistently strive to add new value added services, such as cash back rewards, pharmacy discount cards, we've added a number of features and functionalities to our products. That combined with our uptime and really just our service of the product, I think, has gone a long ways to winning us additional business.
Okay, that's positive. Are you at the cusp now of shifting the market share in the business? I believe at one time it was 3,367 or something like that in favor of the- Yeah, we believe that with this quarter we have become the premier provider of plasma services to the marketplace.
And are you scary on that?
I'm sorry, go ahead, Jeff. I'm sorry. No, I was just going to say on the actual numbers, based on the public information that's out there, we've gone from 33% over 40% just with this last quarter.
Okay, 240%. Okay.
That's over 40 over 40 to greater than 40, okay
Let's point, and then.
If you didn't, you said most of the expenses on the cost of goods or the increase in cost of goods was really a function of these new centers. Is that kind of alluding to the fact that you would have been able to keep your cost of goods relatively flat with Q2 or Q1 if you hadn't had these new centers come on board?
They wouldn't have been as high as Q1. Remember, we had given guidance there were some moving pieces in Q1 that caused the numbers to be that high, but they would have probably been higher. What happened, Gary, is that these centers were launched all after the 15th of June , so let's say 15 days left in the quarter. We had to get cards to all the centers. We had a FedEx cost over there, so that hit that balance sheet. And then the expense side of it...
When a card was issued and a donation was placed on that card, that card moves out of inventory off the balance sheet and the cost of sale. Every one of these centers
40 plus of those centers, every person that came in to donate had to get a new card. So we had very little revenue and a lot of expense hitting the P&L this quarter. So we've given guidance to those full year gross profits being between 56-57% around there.
So from the time that a center is connected to your system, when does it start reaching the...
you know average revenue percenter that uh
more mature sites.
generally.
You know, there is a bleed in. So the best thing to, you know, get back in the envelope is for De Novo centers, and there were De Novo centers in our numbers this quarter. You're talking at least six to nine months to get up to what we would call is a more of a healthier center. Some of these centers were already pretty active. And so when we brought those on, that's why I gave the guidance little read through that.
we actually saw in the month of July , average revenue per center up over $7,000 in July . And then, you know, if you run through all the numbers with the number of centers over $7,000, our revenue for plasma, plasma revenue for July was over $3 million.
Okay, I'll let somebody else go.
Thank you. Next question is coming from John Hickman from Lattenberg-Thalman. Your line is now live. Your line is now live.
Hi, 9th quarter.
Looks like things are turning around for you guys. Could you comment and maybe there's nothing to say but this new legislation, what, in reduced inflation legislation has some healthcare provisions in it and most notably Medicare can now
negotiate with pharma companies for...
pricing is that going to do anything to your pharma business and copays and
Do you anticipate anything really changing with this legislation or?
Is everything going to stay the same?
Matt Turner here with PaySign. So that should not have an impact on our business. Government funded beneficiaries are excluded from utilizing copay assistance. So that shouldn't have any impact on our business model at all. I think there are some other industry concerns that could have a positive impact on our business model.
increase the number of services that we're able to provide to pharmaceutical manufacturers, such as the AMPCAP being removed in 2004. But nothing out of this most recent legislation is either a threat to us or necessarily is going to drive any additional business.
Okay.
Thank you. Is there a... I wanted to go back to the previous questioner. Is there some target...
revenue per center that you would like to reach that's kind of optimal?
Well, I mean, we've always said pre-COVID, I mean, the average revenue per center was up over $8,000. But as long as we still have the few headwinds that are remaining out there, the two I mentioned in my prepared remarks, one being the Mexican nationals not being able to come across the border with a tourist visa and give plasma before COVID, they were able to do that. Now they're not able to do that.
pushing on that is inflationary pressures. I mean, we are definitely seeing where our cardholders look like they are being negatively impacted by the inflationary pressures. And we saw that through just the sequential increase and the plasma donations per center. So I think that coupled with increased dollar per load that these plasma centers are being, are offering individuals, because there's really a supply and demand imbalance in the marketplace. So.
You know, a lot of it's not just one factor. There's multiple factors pushing on one another. But yeah, we would love it to be north of eight thousand dollars per center on a constant basis. Hopefully we're reaching that plateau with over seven thousand. So we'll see how the rest of your turns out.
Okay, thank you so much. Appreciate it.
Thank you. Next question is a follow-up from Gary Presipino from Barrington Research. Your line is now live. Ready?
Yeah, Jeff, can you go back, there's a lot of statistics here, I couldn't copy them down, but what was your revenue per plasma center in Q2?
The total...
Yeah, yeah, yeah, the total was 6,000, let me find my notes here, 6,000, 6,000, 6,000.
$25.
for Q2 2022.
6,625, what was it for Q1?
Q.
Q1 was 6,672.
Okay, and then it just jumped up to 7,000 in July .
Correct. Over 7,000. Yep.
greater than 7,000. Okay. Again, you have, you know, with all those centers coming on, literally in the last 15 days of the month, I mean, you really had more in the denominator and not enough in a numerator.
No, no, I'm just trying to get an idea of the ebbs and flows and the shifts. I mean, it's an interesting comment that, which you said about the, what's going on with the economy that's driving people to donate more plasma, which, you know, is a thesis that should play out here. So you are definitely seeing something like that coming through the doors. Once you add these new centers, though, and they mature.
Does your business on the southern border, it should become a much smaller percentage of the whole, right? What was it, like about 7% before all these centers came in on a revenue basis?
It was it was seven percent no no not our revenue on a plot on a center person or location basis It was seven percent of our locations. It was more in revenues. It was closer to 12 to 15 percent of
of the revenues. Okay. All right. So that's where the impact comes in.
All right, so and obviously your pipeline looks pretty good as far as you're adding
sites
So I mean, you know, as you step back, things are really improving overall for the company. Safe to say.
We're optimistic about the future. Like I said, we've laid a pretty good foundation for 2022 and 2023. And Mark mentioned the RFP that we were awarded and that plasma company should start boarding in 2023. And that's a very good opportunity.
Yeah, that's one thing I didn't get a chance to write down. I was trying to write and listen. So what is that? That's an RFP that you've won, and those are going to start boarding in 2023, Mark.
That's correct.
Okay, are you at liberty to say how many sites that is?
You know, I mean, I'm not, you know, obviously it's one of the two larger companies that were currently not servicing. So, you know, if you could, you could probably, you could probably come up that it's over 100, but I mean, I don't know what that's going to mean to us right now. So, we do not know at this point in time how many centers are going to be allocated to us. So, it would be purely speculation on my part.
Okay. It's very akin to what happened this quarter, Gary. We were hopeful we were going to get some of these sites that we received. We just didn't know the timing. We built it into our numbers and the initial guidance that we gave. Fortunately, we were awarded a large portion.
Okay, great. Thank you very much. I appreciate it.
Yep.
Thank you. We reach the end of our question and answer session. I'd like to turn the floor back over for any further closing comments.
I want to thank everybody for their participation in today's conference. You know, again, we feel that we're making great strides towards recovery, and we want to thank you all, and we will see
Thank you. That does conclude today's teleconference and webcast. We disconnect the line at this time and have a wonderful day. We thank you for your participation today.