Q2 2023 PaySign Inc Earnings Call
Good afternoon, My name is Kevin and I'll be your conference operator today at this time I'd like to walk to the pace on eight second quarter 20 twenty-three earnings conference call.
The speaker's remarks, there will be a question and answer session.
If you like few places a question Q you May press star one at any time as.
As a reminder, this conference call is being recorded.
The comments on today's call regarding pay sinus financial results will be on a gap basis, unless otherwise noted.
Besides earnings release was disseminated to the S. E C earlier today and it can be found on the Investor Relations section of our website <unk> Dot com, which includes reconciliations of non got measures to gape reported amounts. Additionally, I've set forth a more detailed our earnings release I'd like to remind everyone that today's call will include forward looking.
Statements regarding pay science future performance actual performance could differ materially from these forward looking statements information about the factors that critics Act of future performance just summarize at the end of pay size earnings release isn't a recent S E C filings.
I've seen a replay of this call will be available until November 8th 20 twenty-three police. He paces earnings release for details on how to access the replay if somehow pleasure to turn the call over to Mister Mark Newcomer C. E. O. Please go ahead mark.
Thank you kill them. Good afternoon, everyone. Thank you for joining our second quarter 2023 earnings cool.
I'm, Mark newcomer Chief Executive Officer, and I'm pleased to show our quarterly results with you.
I will briefly discuss our performance and provide updates on our plasma patient affordability verticals before handing it over to our CFO , Jeff Baker for further details. Additionally, Matt Turner, President and a patient affordability will be joining us for the question and answer session.
We experienced solid revenue growth this quarter up 28% from last year's second quarter reach 11 million as we continue to add new programs throughout our business segments.
Are low volumes increased 8% in our spin volumes increased 11% compared to the second quarter of last year.
We've witnessed healthy growth in our plasma compensation business, which has rebounded from the normal seasonal downturn, mostly associated with Q1 tax refunds.
During the second quarter, we Onboarded six new centers well two centers were closed leaving us with a total of 443 centers by the end of the quarter. The average monthly revenue per cent or increased 13% compared to Q2 of last year.
Donors keep returning post pandemic our growth remains steady we were awarded 16 additional mature centers from an existing client and they went live in mid July bringing our total center count to 461 centers.
During the quarter, we concluded contract negotiations following our R. F P. When with one of the four largest plasma collection companies. We expect the onboard the initial center in queue for with more centers to follow in 2024, given our progress and our clients expansion plans were expecting to hit the high end of our forecasts to open for.
The five to 55 additional centers in 2023.
Today, I'd like to delve deeper into our patient affordability segment, highlighting our excitement and the potential of this business vertical and 2019, we reentered the space with the goal of expanding our offerings. We invested in a dedicated team both the business and I T side aiming to develop industry, leading solutions that prioritized cuss.
Summer experience and pricing transparency with a total addressable market, which we believe dwarfs the plasma industry, we invested heavily into the infrastructure necessary to successfully introduced and deliver these solutions.
As pharma companies recognize the value cost savings and disruption are solutions could bring our traction in the market has grown.
Much like our approach to plasma we first surveyed and understood the market identified pain points and developed targeted solutions. Initially our offerings were met with skepticism due to our status as a new entrant in the space. We heard a lot of euro a small company and untested, but you have an interesting solution here's a tiny piece let.
See if you can do something and just like our plasma business. We proved our capabilities and began to take business from established competitors are patient affordability segment is showing growth reminiscent of our plasma segment, we've launched five new patient affordability programs in the second quarter, bringing our total to 31 active programs and any.
Kris of 107% compared to Q2 2022 [noise].
Moreover, our revenue from patient affordability saw 133% increase in the same period of the 31 current programs [noise] 13 or mature programs transition from established vendors [noise] nine of which went live. This year. We believe we will continue to win contracts for both new launches and mature programs as our pipeline as <unk>.
Extremely robust.
We anticipate our program count to approach 40 to 50 programs by the end of the year.
Claim volume has increased month over month for the first two quarters compared to last year or more than 85% increase that increase represents the mature programs onboarding and they're established claim volumes.
To shed more light on our former clientele 18 of the top 20 U S. Pharmaceutical companies by 20 twenty-two revenue is published by fears pharma could benefit from our solutions of those we currently have programs running with three just executed an additional agreement with another N where an active collaboration or.
Negotiation with an additional five we have seen significant growth in our patient affordability revenue more than doubling and project further strong growth starting in Q4 and throughout 2024 [noise]. Many of the programs were preparing for launch are mature, which will contribute to immediate claim volumes.
By the end of this year, we anticipate more than doubling our claim volume from January [noise] I want to reiterate.
We are on seeding vendors with 20 years in this space with long lasting relationships with many of these clients. The journey to this point has been challenging, but our successes evident and growing.
I hope these insights can bear enthusiasm about the patient affordability segment.
2023 March the continuation of what has been and should continue to be an accelerated growth phase for this division give.
Given the current state of our pipeline, we're optimistic our shareholders will share our excitement.
It's worth pausing to consider the human impact of our work.
We're part of a mission that provides extended life possibilities to cancer patients and offers financial access to critical therapy for patients with rare diseases.
Each patient Reenrollment signifies that our efforts may have helped extend their lives. We're proud to support these patients and look forward to helping many more with that I'll turn it over to Jeff.
Thank you Mark good afternoon, everyone or plasma business continues to be the foundation for business [noise], providing us opportunity to invest in diversify our business and other attractive vertical markets such as our fast growing farm a patient affordability channel is mark just elaborated since beginning this journey in 2019, and exiting 2020 with four programs and Red.
The news of $168000, we're beginning to see the fruit of this investment payoff [vocalized-noise] with patient affordability revenues expected to more than double to over $3.5 million and 20 twenty-three for.
For the second quarter patient affordability revenues increased 133% to $729000 versus $313000. During the same period last year.
Our plasma business continues its growth exiting the quarter with 443 centers versus 437 centers during the same period last year.
Our average revenue per plasma center per month also grew to $7587 versus $6716 a.
A year over year increase of 13% as.
As Mark mentioned since the end of the corridor, we transition 16 mature centers in mid July and added two additional dinovo centers during the month, bringing the total number of centres to 461 at the end of July .
Our expectation is exit this year with approximately 480 centers, which includes the centers that have been added and the ones that have been sold or closed during the year.
For the second quarter plasma revenues increased $2.2 million or 28.3% over the same period last year.
As in previous calls with all the details we provided in the press release and that will be available in our 10-Q filing tomorrow morning, I will simply at the financial highlights for the second quarter of 2023 [noise] versus the same period last year Sir.
Second quarter, 2023, total revenues of $11 million increase $2.4 million or 28.4%.
Gross profit margin for the quarter was 50.9% versus 54.6% during the same period last year [noise] do you mainly to inflationary pressures president this year that were not present last year and lack of farm a prepaid revenue this year, which was at 1.9% drag SG&A for the quarter increased 20th.
4.6% to $5.3 million [noise] with total operating expenses, increasing 26% to $6.3 million.
In addition to inflationary wage pressures across the company is Mark mentioned, we have made significant investments in I T and employees over the past year to support the continued growth of our business exiting this quarter with 108 employees versus 90 during the same period last year.
For the quarter, we posted a net loss of $104000 versus a net loss of $228000 earnings per share for both periods were just under breakeven.
The second quarter, adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA was $1.1 million or two cents per diluted share versus $930000 also two 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 [noise] was 54.5 million and 52.4 million respectfully.
Regarding the health of our company, we exited the quarter with $7.7 million in unrestricted cash and zero debt, a 1.3 million dollar increase over the first quarter and a 2 million dollar decrease from the year and 2022.
Year today, we have used just under $1 million to repurchase 319558 shares of our common stock.
We're expecting continued growth in our plasma farm a patient affordability business and are on track to meet our revenue and adjusted EBITDA Goddess. We provided in March [noise], principally revenue to be in the range of 44.
To $46 million and adjusted EBITDA to be in the range of 6 million to $7.5 million with that I would like to turn the call back over to Kevin for questions and answers.
Thank you and I will be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your <unk> and the question queue. He May press star Q, if you'd like to move your question from the queue.
One moment, please while we pull for questions.
Our first question today is to me from Gary Press, the Penal from Barrington Research. Your line is not alive.
Hey, good afternoon, everyone, Jeff I know this will be in the queue, but I'm just wondering if you have the load values and spend values handy.
Yeah, just give me one two seconds.
So our.
Total load value total number of loads was 6 million.
And.
Total dollar value loaded was $404.7 million.
Okay.
Alright, that's great. Thank you and then could you.
[laughter] help us out here with the the the differential gross margin dollars versus plasma versus patient affordability I mean, how much more of an uplift on gross margin dollars per dollar of sales do you get on patient affordability versus.
Plasma. So are are patient affordability mall margins are running an atheist per cent range.
The gross that the plasma gross margins are in upper forties to low 50 per cent range. There's more third party costs associated with the farm aside I mean with the plasma side versus the farm aside.
Okay. So obviously then I should grow this patient affordability, it's gonna be a very positive impact your margins.
It will do the growth of our does what I will caution you with is that the you know it's not the fully loaded margins in the business, where if you look at I T. Also individuals it's more of an in house solution versus a third party you know use them more third party vendors. So there's more costs associated there just below the line.
Okay.
That's that's good to know.
Did I get here, you're right Mark that you said the claims volumes were up 85 per cent on these patient affordability programs and a quarter is that correct or is that.
For me.
What is that measurement Trump.
Yeah that that well that's correct. It was for the first half.
<unk>, Okay yeah.
Thank you, okay, and let's see what else jumped in.
Thanks, you as a reminder, that star one can be placed into question Q. Our next question is coming from John Hickman provided Burger line is now alive.
Hi, Thanks for taking my question I'm, sorry, I didn't quite catch you made a comment.
About I think this is mark speaking about a new plasma customer and you got one.
Center in this quarter and you expect.
More at the end of the year. So you can reach your 480 cents or a goal.
Can you reiterate what you said about that you.
Alright.
Yeah, the what what I was talking about was it was one of the R. F. P wins, we had with one of the top four plasma companies in the country. We spoke about it in previous quarters. Finally finished.
Can they come in here.
It did it came in towards the end of last year. That's correct. So it's obviously bad it's moved fairly slow we now have our first center going live in Q4.
Okay, and then subsequent centres will lodge in 2024.
Okay can you tell us anything more about what's going on at the border.
I know those were reopened for you health traffic.
Yeah, John I mean, they're believe it or not traffic is finally, starting come back it's kind of inching up every every month, we but it's still not back to where it was pre COVID-19, but we are definitely see them more Mexican nationals donating then they.
Then they have been it's about just about 50 50 between Mexican nationals and U S citizens that are donating their.
Okay.
I think that's it for me.
Thank you next question is a follow up from Gary press the payment for banks to research. Your line is in my life.
Yeah, you talked about the you you one this large R F P and you're going to be.
Getting at least one Santa on by <unk> by the end of this year is that correct.
That's correct.
Can you give us some idea of the magnitude of how many centers.
Came will will be.
Uhm activated in 2024, <unk> give me winning this <unk>.
So D. R. P. I mean, not really I I can't I mean, it's it's one of the fourth largest plasma accompany so as you can imagine they have hundreds of centers.
Really we're putting up are offering and they will dictate which centers they will push over to us. So it's hard for me to give you an accurate count at this point in time, we do expect subsequent centers to start falling in 2024, I think at that point, we'll be able to probably give a little better guidance on that.
Okay.
That will be very helpful.
And then <unk>.
Marcie tossing your narrative about your initial forays into patient affordability.
Clients looked at you and said Hey, you are a small company, but we'll give you a little piece of it.
And it's starting to really gain some traction could you maybe go into what you are doing.
That is.
Allowing or or enabling you to gain this traction in market share maybe versus the competition.
Yeah. So this is this is better I.
I think we've won started developing solutions to some industry problems such as the accumulator maximize our problems. That's a really kind of a deep rabbit hole will get into on this call, but it represents kindler maximize your programs represent a risk to our clients financially because.
It could cause their copay programs to just cost way too much money and so we develop some incredibly successful targeted solutions to address that and yeah. I think there's a good part of what we're doing is just really focusing on kind of a white glove client experienced right.
A lot of the competitors in the market space walked away from that day you over Commoditized I guess is the best way you can put it in so we're we're focusing more on the expertise that it takes to do the job.
And bringing new solutions to the table combining that with you know a really solid client experience.
Is there anything along the technology basis, you have that's a competitive advantage in this market that can't be duplicated by a computer.
Yeah. So have I mean, there's a lot of technology involved in what we do right.
[laughter].
I mean, that's it's kind of a it's a it's a complex ecosystem.
As far as somebody else never being able to duplicate it I I don't know that that's necessarily the case, but we.
It took us awhile to kind of get the solution up and running and I don't think we're gonna see anybody successfully imitate us for some time you know they've had they've had years to jump on top of this and they failed. So you know and and 24 months, we launched our newest.
Solution and events began selling it now and to top that pharma companies. So I don't I'm not overly concerned that they're gonna, they're gonna be able to imitate us anytime soon.
How big is your sales force right now for this market I mean, if it's bigger than the plasma pocket or you're going to be pushing more resources into this market and adding sales strength.
Yeah. So at last call, we talked about Brian <unk>, who was brought on Saint credit in February as senior V. P for sales for US and then he has to folks that are you know kind of the bulk of the sales force and they have they have a support person there with them.
You know will continue to evaluate the need for additional salespeople right now the two that we have are doing an amazing job in keeping everybody here very very busy so you know and when we hired.
You know, we we've hired top talent on the sales side. This is you know we haven't gone in and looked at you know tried to have entry level people and training them and becoming a salesperson. These are industry veterans that have a lot of connections and you know a very sick of <unk>, so they're incredibly successful though.
What they are doing now and.
Maybe towards the startup next year, we'd evaluate adding more more salespeople, but I think right now we're right sized and the and the sales staff the bigger Gary the bigger.
Employ are cost is kind of gonna come in the client management support.
And the salespeople and and dedicated support I mean, these pharmaceutical companies were signing up like Matt mentioned, you know they lack the white glove service from their old provider, we're giving them. The white glove service, we can do that cost effectively but we're going to have to see how we continue to bring.
And these customers, which we are we're going to have to continue to add at that level. So it's not the senior level, but definitely the client support side level.
I also I also think it's important to say that you know we still have our <unk>, our hub strategy Uhm and that hub strategy allows us to kind of play off some of our help partnerships that are bringing a lot of business to the table for us.
So I think that's no.
Okay and then just one last question more of a modeling question.
This business here is taking the place of another business that you had I forget what that was called but <unk>.
When we're all of those revenues out of the equation on a comparable <unk> quarterly basis is it starting in Q3 or is it more Q4.
No. So that was your friend our prepay business. So the last prepaid revenues yeah. The last prepaid revenues and farm. We're in Q4 of last year. So starting in Q1 of 2024, you'll have an apples to apples, but I will point to our investor presentation.
In our website, we have a split out the revenues from the prepaid business and our patient affordability business. So you can see a true apples to apples comparison.
Alright, I'll take a look at that thank you very much.
Yep.
Thank you we reached the end of our question and answer session I'd like to turn of Florida back over to management for any further our closing comments.
Thanks, Kevin. Thank you all for joining us today, and we look forward to updating you on our continued progress in the next door needs call Y'all have a wonderful day.
Thank you that does conclude today's teleconference webcast may disconnect. The line at this time and have a wonderful day, we thank you for your participation today.