PaySign Inc. Q1 2023 Earnings Call

Good afternoon, everyone. My name is Kevin and I'll be your conference operator today.

This time I'd like to welcome everyone to the peso, Inc. First quarter 2023 earnings conference call.

After the Speakers' remarks, there will be a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad as a reminder, this conference call is being recorded.

The comments on today's call regarding pay side its financial results will be on a non-GAAP basis, unless otherwise noted pesos earnings release was disseminated to the SEC earlier today and can be found on the Investor Relations section of our website pay sign Dot 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 piece on the future performance actual performance could differ materially from these forward looking statements information about the factors that could affect future performance is summarized in the end of <unk> earnings release.

And in our recent SEC filings.

Lastly, a replay of this call will be available until August 10 2023.

She pacings earnings release 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 and good afternoon, everyone and thank you for joining our first quarter 2023 earnings call.

I'm, Mark newcomer Chief Executive Officer, and I'm pleased to share our results with you today.

We've seen solid growth in this quarter and I will be discussing our high level results and providing updates on our plasma and patient affordability verticals, then hand, it over to our CFO , Jeff Baker for further details.

First quarter is typically our weakest quarter of the year as plasma donors receive their tax refunds I am pleased to report that our Q1 revenue reached $10 1 million, representing a 23% increase compared to Q1 2022.

Our load volumes increased 17% and our spend volumes increased 31% compared to the first quarter of last year.

During the quarter, we expanded our center count to 439, we added 10, new centers from existing clients saw 11 centers closed for nonperformance in four centers sold to a non client.

Our negotiations with one of the four largest plasma collection companies are ongoing following an RFP win.

We have also executed contracts with two new entrants in the plasma space with expected center launches in Q3 2023.

The global plasma fractionation market as estimated by growth plus reports was worth 29.83 billion in 2022.

The market revenues is projected to grow at a CAGR of six 9% from 2023 to 2031, reaching 54.37 billion. The United States continues to be the leading provider of plasma supply and two thirds of the world's demand with an annual growth rate of 6% to 8%.

We maintain our forecast for 45 to 55, New center openings and expect strong year over year growth in plasma from both existing and new clients.

Moving on to our patient affordability business in 2021, we saw continued growth in this vertical with seven new programs launching over the last two quarters, we have experienced a consistent increase in new program acquisition and claim volume and we expect to maintain this positive momentum throughout the year.

Three of the programs that launch in the first quarter were from a top 25 pharmaceutical manufacturer. This unique program offers free goods to specific patient populations covering more than 10 brands and supports a portfolio of free drug programs.

Our success in winning new business is directly related to our innovative products addressing critical industry issues, such as co pay accumulators and maximizes we are expanding the therapeutic classes addressed by our services, which is crucial for winning new business and larger programs. This year.

The selling cycle for small to midsized programs remains close to 90 days, indicating strong reception of our products in the marketplace. We recently participated in the annual Assembly of summit in Las Vegas, where we held over 45 in person meetings with potential clients. Our team secured meetings with 10 of the top 20 pharmaceutical.

It was in the United States, we believe our innovative solutions subject matter expertise and superior service are attracting decision makers controlling broad portfolios of pharmaceuticals.

We're making headway in winning portfolio contracts, which would significantly increase our topline revenue claim volume and market position.

Our agility dedicated teams and focused product offerings allow us to outperform larger competitors with decades of experience.

Our clients consistently provide positive feedback on the quality of our services and our ongoing innovation. Many of the programs. We are launching our transition programs, where we are replacing existing competitors.

This success demonstrates our ability to begin dominating the market I.

I am confident in our patient affordability team's ability to continue adding long lasting and diversified revenue streams, Jeff over to you.

Thank you Mark good afternoon, everyone as Mark pointed out we are beginning to build real momentum with our patient affordability business, while our plasma business continues to show steady and improved growth for those are familiar with our patient affordability business. This is the same as our pharma co pay business, which is reported in our financials under our pharma line of business. The most.

Minimum and our patient affordability business can be confirmed by looking at the seven new programs. We added during the quarter, bringing our total number of active programs to 'twenty six patient affordability revenues more than doubled to $590000 versus $261000. During the same period last year.

Our year over year increase of 5.9%.

We are encouraged by this growth as the first quarter has typically been our weakest quarter of the year. Thus we believe we have established a good baseline for the rest of the year.

As in previous calls with all the details we provided in the press release and that will be available on our <unk> Tomorrow morning, I will simply hit the financial highlights for the first quarter of 2023.

First quarter 2023, total revenues of $10 1 million increased $1 $9 million or 23%.

Of that amount plasma revenues increased 27% to $9 $4 million pharma revenues declined 27% to $590000 and other revenue increased 883% to $194000. It is important to note that all of the pharma revenue.

As reported this quarter and all quarters going forward are made up 100% of our patient affordability or pharma co pay business.

Thus there was no pharma prepaid revenue this quarter, but there was $545000 of pharma prepaid revenue during the same period last year.

As previously disclosed all pharma prepaid business ceased in November of 2022.

Gross profit margin for the quarter was 49.8% versus 68% during the same period last year. There are a number of moving pieces to explain the decline, including the lack of revenue from our highest margin pharma prepaid business.

A one time timing benefit of commission obligations due that were related to a contract renewal last year price increases by our service providers implemented in the second half of last year and internal inflationary wage pressures related to our customer service representatives.

SG&A for the quarter increased six 6% to $4 $9 million with total operating expense, increasing eight 8% to $5 $8 million. In addition to inflationary wage pressures across the company, we made significant investments over the past year to support the continued growth in our business.

Exiting this year with 112 employees versus 80 employees during the same period last year for.

For the quarter, we posted a net loss of $160000 or just under breakeven per diluted share versus a net loss of $309000 or a net loss of one cent per share that.

First quarter, adjusted EBITDA, which adds back stock compensation to EBITDA was $720000 or one penny per diluted share versus $927000 or two cents for the same period last year.

Regarding the health of our company, we exited the quarter was $6 $4 million in unrestricted cash and zero debt, which is a decrease of $3.3 million from our December 2022, ending cash balance $666000 of the cash usage was related to our share repurchase.

We expect the first quarter to be a high watermark for cash usage after adjusting for working capital needs related to our pharma co pay business now.

Now turning your attention to our guidance in the press release, we are not changing our guidance for full year 2023 that has been previously provided for the second quarter of 'twenty 'twenty. Three we expect total revenue to increase 15% to 20% and adjusted EBITDA to increase 5% to 10%.

The second quarter of 2022.

Again, we are excited about the traction and growth we are experiencing in our patient affordability business and our ongoing growth in our plasma business. The success in both of these businesses is being driven by our innovative solutions subject matter expertise and superior service with that I would like to turn the call back over to.

Kevin for question and answers.

Thank you well now be conducting a question and answer session if you'd like to be placed into question in queue. Please press star one at this time a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to move or a question from the queue for participants using speaker equipment may be necessary to pick up a handset before pressing.

<unk> one moment, please while we poll for questions.

Once again Thats star one to be placed in the question queue.

Our first question today is coming from Jon Hickman from Ladenburg. Your line is now live.

Yeah.

Hello.

Hey can you refresh my memory the difference in gross margins between your plasma in your pharma business.

Like just on average.

Yes.

The plasma business gross margin is going to be.

Around.

Upper forties low fifty's.

Depending on volumes and then pharma.

It's going to be.

Around that.

<unk>, 80% range.

Okay.

And.

[laughter] until I I heard what you said about your competitive advantages in our pharma.

And Hum on the pharma business your patient affordability is there one of those things. It's I mean, there's something happened in the industry or anything like that too.

I'll start this business.

Okay.

Hi, John Matt Turner here.

So I think thanks.

We've been focusing on is solutions that are related to combating co pay accumulator and maximize our programs and.

And we started working on those solutions last year.

And now we're really seeing those take hold and we're able to get additional programs from from larger clients.

Coming out of last year and in the first quarter of this year and then moving moving forward to this year.

So you said you added seven new programs this quarter.

That's correct yes.

Can you give us any idea of the pipeline.

Thanks.

Is it a couple of dozen or.

Yes.

I can give a number right here, but I think we are.

We feel very strongly up pipeline.

We've got a variety of different size manufacturers in different sized programs in the pipeline for this year.

We've got programs are bringing up this quarter and we do have programs scheduled to launch throughout the remainder of the year John .

Last call we gave we.

We did give a little insight in that.

We either were in line with customers, which will include the seven that went in the first quarter.

Sure.

The contract we had.

For a total of 19.

It took us through the end of <unk>.

Timber.

Yes, most of the program.

You are done.

Earlier in the year versus late in the year. So.

And we feel pretty.

Well I said, we launched seven.

The pipeline back then was 19.

Okay well. Thank you appreciate it.

My pleasure.

Thank you.

Reach end of our question and answer session I'll turn the floor back over for any further or closing comments.

Thanks, very much for joining everyone look forward to speaking to you next quarter you'll have.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.