Paysign, Inc. (NASDAQ:PAYS) This autumn 2022 Earnings Convention Name March 21, 2023 5:00 PM ET
Firm Contributors
Mark Newcomer – Chief Government Officer
Jeff Baker – Chief Monetary Officer
Convention Name Contributors
Gary Prestopino – Barrington Analysis
Peter Heckmann – D.A. Davidson
Jon Hickman – Ladenburg Thalmann
Operator
Hey and welcome to the Paysign Fourth Quarter and Yr Finish 2022 Earnings Convention Name and Webcast. As a reminder, this convention name is being recorded. This name might embrace feedback that perhaps deemed to be forward-looking statements beneath federal securities legal guidelines and the corporate intends that such forward-looking statements be topic to the Secure Harbor created thereby. All statements beside statements of reality included on this name are forward-looking. Such forward-looking statements embrace, amongst others, that we’re happy with the alternatives that lie forward for us in 2023; our perception that 2023 is trying to be an thrilling yr throughout all of our product strains; and our perception that we’re all nicely ready to capitalize on new alternatives; our plans to proceed so as to add new plasma facilities; and our perception that the growing demand for plasma by the medical business will facilitate the rise in donations and gas the continued development of our plasma companies; our perception that we’re starting to see actual traction in our pharma copay enterprise the place we now have constructed an business fame of offering dependable affected person affordability applications to pharmaceutical corporations; our expectation for whole revenues, plasma revenues, new facilities, pharma revenues, gross revenue margins, working bills, anticipated authorized bills for our excellent litigation, depreciation and amortization, stock-based compensation, curiosity earnings, web earnings, web earnings per diluted share, adjusted EBITDA and adjusted EBITDA per diluted share for full yr 2023; our expectations for whole income, gross revenue margins, working bills and adjusted EBITDA for the primary quarter of 2023; our perception that inflationary pressures for meals, gasoline, hire and different services seem like driving people again into plasma donation facilities; and our incapability to estimate with affordable accuracy, COVID-19’s additional impression on our outcomes of operations, money flows or monetary situation. We warning that these statements are certified by necessary dangers, uncertainties and different components that might trigger precise outcomes to vary materially from these mirrored by such forward-looking statements.
Such components embrace, amongst others, the flexibility to proceed our present development price in future intervals {that a} downturn within the economic system, together with outcomes of COVID-19 and variants in addition to additional authorities stimulus measures, may cut back our buyer base and demand for our services, which may have an adversarial impact on our enterprise, monetary situation, profitability and money flows; working in a extremely regulated surroundings, failure by us or enterprise companions to adjust to relevant legal guidelines and laws; modifications within the legal guidelines, laws, bank card affiliation guidelines or different business requirements affecting our enterprise; {that a} knowledge safety breach may expose us to legal responsibility and protracted and expensive litigation and different threat components set forth in our Type 10-Okay for the yr ended December 31, 2022. Besides to the extent required by federal securities legal guidelines, the corporate undertakes no obligation to publicly replace or revise any statements from this convention name whether or not because of new info, future occasions or in any other case.
This convention name additionally contains feedback about adjusted EBITDA, a non-GAAP monetary measure that’s neither ready in accordance with, nor a substitute for, monetary measures ready in accordance based mostly on any standardized methodology prescribed by GAAP and isn’t essentially similar to equally titled measures offered by different corporations.
It’s now my pleasure to show the decision over to Mr. Mark Newcomer, CEO. Please go forward, sir.
Mark Newcomer
Thanks. Good afternoon, everybody and thanks for becoming a member of our name right this moment to overview Paysign’s fourth quarter and full yr 2022 outcomes. I’m Mark Newcomer, Chief Government Officer. And with me this afternoon is Jeff Baker, our Chief Monetary Officer.
Earlier right this moment, we introduced our monetary outcomes. Our fourth quarter income was $10.6 million, a rise of $1.9 million or 21% enchancment over This autumn 2021. For the complete yr, our revenues elevated 29% to $38 million. Moreover, we reported a web earnings of $713,000 or $0.01 per absolutely diluted share for the fourth quarter and $1 million or $0.02 per absolutely diluted share for the complete yr.
2022 proved to be a yr of serious development in our plasma enterprise because the headwinds from COVID-19 and the related monetary stimulus eased and are actually comfortably behind us. We added 91 plasma facilities to our platform, of which 45 had been established facilities and the remaining had been new building. After all, there have been middle closures and consolidation, and we ended the yr with a web acquire of 78 facilities, for a complete of 444 facilities on the finish of 2022. Moreover, we benefited from same-center development in addition to from the U.S. District Courtroom’s preliminary injunction permitting for the resumption of cross-border plasma donations from Mexican nationals in late September. We predict continued robust development in plasma from each current facilities and new openings in 2023. Most of our shoppers proceed to have aggressive development plans, and we’re presently forecasting 45 to 55 new middle openings in 2023.
Turning in the direction of affected person affordability. We predict that 2022 represented a real return to normalcy as our gross sales cycles time decreased dramatically and is now averaging round 90 to 120 days. That is fairly the change from 2020 and 2021 the place the gross sales cycle was someplace between 7 to 9 months. We’ve got labored diligently with our current hub suppliers to shorten the gross sales cycle by offering upfront help early of their bid course of, leading to key wins for them and new program launches for us.
The return to in-person conferences and conferences has allowed us to have interaction with a bigger variety of shoppers than through the pandemic years. Our advertising group labored all year long to create content material that engaged a spread of potential shoppers and expose each business weaknesses and fewer than best enterprise practices. Our dedication to open, trustworthy and clear pricing generated a firestorm of business exercise and constructive suggestions for our group. Our enterprise growth group was extremely profitable at securing new enterprise and increasing partnerships throughout the business. The cornerstone of our efforts in 2022 was our tenants and sponsorship on the Asembia Summit held right here in Las Vegas in Could, which we now have spoken about beforehand. Our groups had been in a position to rapidly pivot after that convention and shut some important wins for us in 2022 and to safe our participation in large-scale RFPs within the latter a part of the yr and into 2023.
I’m joyful to report that we exited 2022 with commitments to launch applications from 3 of the highest 20 pharmaceutical corporations. To this point, we now have launched 7 further applications in 2023, a further 19 program commitments spanning within the subsequent 6 months. 2023 is trying to be an thrilling yr throughout all of our product strains, and we consider we’re nicely ready to capitalize on new alternatives. We closed 2022 with 19 lively affected person affordability applications, greater than doubling the variety of lively applications within the yr.
Along with total program numbers, claims processing related to affected person affordability applications additionally noticed a rise. For the yr, we noticed greater than 100% development in month-to-month declare quantity. We’ve got been extremely efficient at disrupting this business and bringing main gamers to the desk. I’m assured that the group we now have put in place goes to take this vertical to the following stage in 2023.
Talking of our affected person affordability group, I believe now is an efficient time to announce the appointment of Bryan Dennison as Senior Vice President of Gross sales and Merchandise for Affected person Affordability. Bryan joined our group in February and has an excellent background having frolicked at TrialCard, vitaCare Pharmacy Providers and GoodRx. Bryan’s enterprise growth efforts led TrialCard to report development numbers and helped catapult vitaCare into place for acquisition by GoodRx. We’re excited to have Bryan main our gross sales and product groups and affected person affordability and assume he’s going to do superb job serving to to convey new shoppers and partnerships to the desk. General, we couldn’t be extra happy with the progress we now have made in affected person affordability. I proceed to consider that they’ll drive worth for our shareholders by including extra diversified sources of high line income for Paysign.
Final quarter, I discussed that we had been awarded the enterprise and an RFP sponsored by a nationwide membership group to supply basic objective reloadable and present playing cards to over 440 of the brick-and-mortar places. That group was the American Car Affiliation or AAA. We launched their retail present card applications through the fourth quarter and we shall be launching their basic objective reloadable merchandise within the coming months.
In abstract, we delivered one other robust quarter of development, and we’re happy with our fourth quarter and full yr outcomes. In plasma, we noticed important development in new facilities and anticipate that development to proceed into 2023. We’re gaining traction in affected person affordability, profitable substantial new enterprise within the quarter and doubling the variety of lively applications. We proceed to diversify our product portfolio into new verticals corresponding to payroll, retail present and GPR. We are going to proceed to put money into our folks and programs, and I consider we’re nicely positioned for the alternatives that lie forward of us.
Jeff, over to you for extra perception into our financials for the quarter and year-end.
Jeff Baker
Thanks, Mark. Good afternoon, everybody. As Mark identified, we’re happy with our full yr and fourth quarter 2022 working outcomes and the traction we’re seeing throughout our two main enterprise strains of plasma and pharma. Revenues, earnings from operations, EBITDA, adjusted EBITDA and transactional developments all confirmed significant enchancment for the fourth quarter and full yr versus the prior intervals. With the entire particulars we offered within the press launch and that shall be out there in our 10-Okay filed tomorrow, I’ll merely hit the monetary highlights for the fourth quarter and full yr of 2022.
Full yr 2022 whole revenues of $38 million elevated $8.6 million or 29%. Of that quantity, plasma revenues elevated 34% to $8.8 million; pharma revenues declined 10.6% to $3 million; and different income elevated 56% to $289,000. Fourth quarter whole revenues of $10.6 million elevated $1.9 million or 21%. Of that quantity, plasma revenues elevated $2.2 million to $9.7 million; pharma revenues decreased $443,000 and different revenues elevated $142,000. The typical income monthly per plasma middle for 2022 was 6,994 versus 6,058 in 2021, a rise of 15%. For the fourth quarter, the common income per plasma middle elevated 7% to $7,293 versus $6,798 throughout the identical interval final yr.
As we had beforehand communicated, certainly one of our shoppers closed 13 facilities within the fourth quarter. With the addition of seven new facilities through the quarter, we exited 2022 with 444 facilities, a rise of 84 web new facilities through the yr.
Gross revenue margin for 2022 was 55.1% versus 49.9% in 2021, a rise of 520 foundation factors. For the fourth quarter 2022, the gross revenue margin was 51.9% versus 54.3% in 2021, a decline of 240 foundation factors. The fourth quarter year-over-year decline was virtually completely attributable to the combination shift in our pharma enterprise as we transition from the legacy pay as you go enterprise to the brand new copay enterprise. This margin decline was offset by a year-over-year growth of 250 foundation factors of margin in our plasma enterprise through the quarter.
SG&A for the yr elevated 22% to $15.4 million, with whole working bills growing 18% to $20.6 million. Fourth quarter SG&A elevated 8% to $3.8 million, with whole working bills growing 12% to $5.2 million. We made important investments in 2022 to help the continued development of our enterprise and endured inflationary pressures, primarily in labor, insurance coverage and journey through the second half of 2022.
For 2022, we posted web earnings of $1 million or $0.02 per diluted share versus a web lack of $2.7 million or $0.05 per share. For the fourth quarter, we posted web earnings of $713,000 or $0.01 per diluted share versus $111,000 or breakeven per share for a similar interval final yr. 2022 adjusted EBITDA, which provides again inventory compensation to EBITDA, was $5.5 million or $0.10 per diluted share versus $2 million or $0.02 for 2021. Fourth quarter adjusted EBITDA was $1.7 million or $0.03 per diluted share versus $1.3 million or $0.02 for a similar interval final yr.
Concerning the well being of our firm, we exited the yr with $9.7 million in unrestricted money and nil debt, which is a rise of $2.3 million from our 2021 ending money stability. Given this money enhance and our expectations to additional generate constructive money circulate from operations and from a wholesome enhance in curiosity earnings the place we profit from growing financial institution balances and better rates of interest, we now have introduced Board approval of a share repurchase plan of as much as $5 million over the following 36 months.
Now turning your consideration to our preliminary steering for the primary quarter and full yr 2023 within the press launch. The primary quarter steering displays quite a lot of transferring components that’s not indicative of a development for the yr. First quarter revenues are all the time decrease than This autumn as tax rebates exit and donations sluggish. Additionally, as beforehand mentioned, final yr’s first quarter mirrored some one-time advantages to our gross revenue margin that we are going to not have this yr, plus you’ve got the combination shift in our pharma enterprise to 100% copay because the pay as you go enterprise resulted in mid-November.
Lastly, we’re absorbing further expenditures associated to our class motion protection and audit and tax charges that may trigger SG&A expenditures for the yr to be extra closely weighted to Q1 versus the remainder of the yr. The online impression of those and different components talked about within the press launch leads us to information Q1 revenues to be within the vary of $10.1 million to $10.3 million, a rise of 23% to 25% over the identical interval final yr. We anticipate gross revenue margins between 52.5% and 53.5% and working bills to be between $6.2 million and $6.4 million. Curiosity earnings is anticipated to be in extra of $500,000 with a web lack of $50,000 to $150,000. Adjusted EBITDA is anticipated to be within the vary of $700,000 to $800,000.
For the complete yr 2023, whole revenues are anticipated to be within the vary of $44 million to $46 million, a rise of 16% to 21%, with plasma making up roughly 90% of whole income. This displays ongoing development in our plasma enterprise, including between 45 and 55 new facilities through the yr, offset by 16 facilities we anticipate to lose, as we mentioned within the press launch.
As Mark mentioned, we’re excited concerning the traction we’re experiencing in our pharma copay channel and anticipate pharma revenues to develop a minimum of 30% over final yr regardless of the lack of $1.5 million of pharma pay as you go income we booked in 2022. Full yr gross revenue margins are anticipated to be between 52.5% and 55% and working bills are anticipated to be between $23 million and $25 million. Depreciation and amortization is anticipated to be between $3.5 million and $3.7 million, whereas stock-based compensation is anticipated to be roughly $2.5 million. We anticipate to generate curiosity earnings of $2 million to $2.5 million. Taking the entire components above into consideration, we anticipate web earnings to be within the vary of $2.5 million to $3.5 million or $0.05 to $0.06 per diluted share and adjusted EBITDA to be within the vary of $6 million to $7.5 million or $0.11 to $0.14 per diluted share.
With that, I wish to flip the decision again over to the moderator for query and solutions.
Query-and-Reply Session
Operator
[Operator Instructions] Our first query right this moment is coming from Gary Prestopino from Barrington Analysis. Your line is now dwell.
Gary Prestopino
Good morning everybody – good afternoon everybody, sorry, not morning. A few questions right here. You had – it appears to be like such as you say you had a web acquire – you added 91 facilities, a web acquire of 78 to 13. So, there may be nonetheless three extra to be closed down in Q1 of this yr. However you mentioned you will lose 16, am I studying that accurately?
Jeff Baker
No. So, Gary, this was all final yr. There have been 13 facilities that had been closed within the fourth quarter. This yr, within the Q1, we now have a couple of facilities that acquired offered. We’ve got some facilities which can be being closed in March. After which one other middle goes to get offered within the fourth quarter. So, when you learn the – have a look at the press launch, it sort of lays out by quarter when every little thing hits, but it surely’s 16 facilities which can be impacted in 2023.
Gary Prestopino
Okay. That’s what I used to be making an attempt, 16 facilities in 2023, okay. After which what is that this, when you find yourself speaking concerning the enterprise, you had a factor in there, the gross margin was affected by supporting a brand new fee community. What was that each one about?
Jeff Baker
Sure. We’ve got – as we introduced final quarter, we stood up Direct Connect with Mastercard. So, now we now have connections, Visa, Mastercard, Pulse…
Mark Newcomer
Uncover.
Jeff Baker
Uncover, etcetera. So, as you’ll be able to think about, till we get numerous quantity on that platform, there’s a fairly huge sunk value, simply month-to-month charges that we’re having to eat.
Gary Prestopino
Okay. After which only a couple extra right here. Are the Southern border places, are they again to pre-COVID ranges or are they nonetheless ramping up?
Mark Newcomer
I’d say a few of them are again to pre-COVID ranges. A few of them are nonetheless ramping up. So, we anticipate to see them proceed to extend in volumes.
Gary Prestopino
Okay. And I’m simply making an attempt to rises on them. Alright. I’ll let someone else bounce in.
Operator
The following query is coming from Peter Heckmann from D.A. Davidson. Your line is now dwell.
Peter Heckmann
Good afternoon gents. I wished to follow-up on the plasma – the operator of plasma assortment facilities that you simply famous final quarter. I consider that you simply gained for the primary time. I assume how are you anticipating that to contribute to your web new of roughly 30 facilities to 40 facilities in 2023?
Mark Newcomer
Sure. At this level, that new RFP that we had gained, we’re nonetheless going by the contract section of that. So, there was a slight delay in bringing these facilities dwell within the first quarter as we anticipated. So, these usually are not baked into our numbers at this level, and we are going to bake them in as we get nearer to a decided launch date.
Peter Heckmann
Okay. Understood. After which when it comes to the AAA deal, that sounds fairly attention-grabbing. If I heard you accurately, you’ve got launched the present card enterprise, which – and you intend to launch the overall objective reloadable, any means to consider what number of playing cards which may signify or the contribution that you simply would possibly anticipate? I assume it can develop over a number of years, however that sounds prefer it could possibly be important, however I don’t wish to get forward of ourselves.
Mark Newcomer
Sure. And neither can we at this time limit. So, we now have been fairly snug in speaking concerning the present card aspect of it, however we actually don’t have the numbers at this level to actually get into the place it might go. So, we’re sort of ready on some further element at this level.
Peter Heckmann
Okay. Alright. After which final one for me is it feels like there may be some transfer inside Canada to start out compensating the donation of plasma, and perhaps you’ve got already began a pilot program there, however do you see alternative there, or would that require a big funding to accommodate the Canadian market?
Mark Newcomer
Sure. We actually may. I don’t know what the numbers really – we must do an evaluation to see if that’s going to satisfy the wants and examine what the numbers are. However sure, there could be an funding in an effort to help that marketplace for certain.
Jeff Baker
Proper now, I imply Pete, when you go and also you have a look at the variety of plasma facilities which can be in Canada, they’re pretty benign. So, there must be an enormous funding there. And we want to different areas to construct out our plasma facilities. So, we are going to add extra within the first quarter than Canada will in all probability add all subsequent – all this yr, so.
Peter Heckmann
That’s truthful. Alright. Respect it.
Operator
[Operator Instructions] Our subsequent query is coming from Jon Hickman from Ladenburg Thalmann. Your line is now dwell.
Jon Hickman
Hello. Only one fast query. For those who guys add 45 to 55 new facilities this yr, what share of the market will that provide you with? It looks as if it might be over 50% now.
Jeff Baker
No, Jon, these – the newest figures that we now have out there may be just below 1,100 facilities within the U.S. We exited at 40 – 444 facilities. I did the maths for the 10-Okay, we needed to disclose it. It was round 40%. So, if we add one other – sure. So, if we add one other 45 to 55, much less the 16 that we’re going to lose, so what’s that, put us round 29 to 39. So, we’re in all probability going to carry market share as a result of there may be different – they open up about 100 facilities a yr within the U.S., give or take.
Jon Hickman
Okay. Thanks.
Mark Newcomer
Sure.
Operator
Thanks. We reached the tip of our question-and-answer session. I wish to flip the ground again over to administration for any additional or closing feedback.
Mark Newcomer
Thanks Kevin. Wish to thank everyone this night for becoming a member of us. A particular thanks goes out to all of our staff and to our Board for the help that we now have had and the help that we are going to get by 2023. I consider that 2023 shall be an thrilling yr for Paysign, and we’re wanting ahead to updating you on the following name. Thanks all very a lot and have a terrific day.
Operator
Thanks. That does conclude right this moment’s teleconference and webcast. Chances are you’ll disconnect your line presently and have a beautiful day. We thanks in your participation right this moment.
