PaySign (PAYS) 17 Nov 202020 Q3 Earnings call transcript

Hello and welcome to the PaySign 2020 Third Quarter Earnings Conference Call. [Operator instructions] This presentation may include forward-looking statements. To the extent that the information presented in this presentation discusses financial projections, informations or expectations about the company’s business plans, results of operations, the impact of COVID-19, returns on equity, expected gross margins, markets or otherwise makes statements about future events. Such statements are forward-looking. 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.

could that on reflected a such reasonable risks uncertainties believes statements these number forward-looking company results and based actual are assumptions, that statements. the the materially in expectations forward-looking of to Although differ cause from actually there are

other heading XX-Q. You urged Risk elsewhere the Form and Factors review the statements any cautionary and and are including consider made carefully statement to disclosures, under the in

with are except the Forward-looking also and law. Generally GAAP. Principles, statements to of with presentation that as an does in undertake Accepted the contained speak required is a prepared they not includes the This accordance date non-GAAP nor company financial document measures measure, update which of U.S. adjusted EBITDA, any financial alternative Accounting as only accordance any in by to duty not forward-looking maybe statements in prepared

In to Newcomer. by addition, by to not ahead. is prescribed is my Mark now call and not turn on titled go methodology standardized pleasure the similarly over based any adjusted companies. It’s EBITDA to necessarily Please measures comparable GAAP other presented

safe all earnings you, you President I me Thank afternoon, thank XXXX and for the am of families us Mark Attinger, pandemic. the during is staying Good today COVID-XX Officer. for Officer. quarter hope third and Mark Financial everyone joining Newcomer, Also Executive We and PaySign’s with Chief you on Kevin. call. call are Chief our your

has continue an of on PaySign. company’s our operations. and the success committed and COVID-XX results stay of effect We outbreak cardholders to focus continue our employees, the to clients adverse had while to supporting ensuring safety the on will health long-term of have and The and

of around of future impact future conditions. reasonably or relaxation or the operations, the and the Given measures, potential the financial of and extent around uncertainty company’s management results timing of the flows imposition estimate mitigation COVID-XX or spread the of protective around cannot the given and the – cash uncertainty extent

did have well new the Although be with might as in we business wins disappointed in significant results, company lines. pharma, the plasma quarter’s financial as

a additional solution are completing XXX for and provider We integration patient clinical have way hub hub with Fortune affordability paving company, the research integrated with a programs. and midsized

will We new in co-pay December. X have programs that launch

executing are pharma We client space our Based on a in and approach. client extremely strategy satisfaction midsized concentrating well satisfaction, expanded on recently the we voucher consultative commercial fivefold. small program have to performance the through

in of bigger implementation offerings, confident with to XXXX. mentioned due to of in sales in previously The delays. going and and XX centers we October has that management, December the were be are blood to wins will conclude operational plasma We the our now lead are product XX in collection be to teams, begun process which centers go-live of centers client and XX all completed these will December. completed

brings donation the ready from along XX the X end of at XXX. live up total in with additional have gone XXX have for QX. Subsequently, more We centers the with have to XXX we and centers centers This X implementation. centers number of aforementioned QX,

to XX to Looking new months. our in the see ahead, we expecting plasma next clients are openings an over XX center from increase

donor incentives donation of to from continue We amounts, see dollar resulting plasma. higher increased COVID-XX and collection

remains pipeline the in plasma space. Our robust

card. expense new launched also a we product the quarter, line, This PaySign business

discuss CFO, to or would pay the small time, sized and expenses. our like including detail. turn the are phase later implementation our over while medium We go-live expected results self-employed signed targeted giving of ability proprietors and control and to third product XXXX. two in contractors to Attinger, first employees year stay and quarter I new currently it they clients, businesses, to This is in to will and who have the At to sole management which for way business-related efficient are in this for an quarter their this self-employed as Mark

results Mark. through evening. some you, quarter us Good variance provide Thank afternoon or and At will I time, commentary. third the this take

or plasma. $X.X $X.X in Revenue settlement increase primarily estimate, rent the the million. revenue $X.X program. to million revenue different from the resulting income due to our three $XXX,XXX ended reference or revenue a stated comparisons change XX% million the percent was a third year-on-year mergers based decrease in negative for negative unfavorable of higher included prior of decreased XXX all of quarter proceed, and Cost the XX% XX, performance $X.X of decreased of Plasma pharma cost a XX% primarily million offset period. current the The program an to revenue in in intangible management legal the mergers of trends the year remaining prior Gross to previously this the observed, and of increase compared to XXXX technologies excluding X.X% million to compared expenses the million, increase, in and Total resulted be September was million, months disease million. October pertaining was revenue XX, operating the and changing and impairment, to settlement estimate ASC recognition were the activity. $X.X change due income to XXXX legal by related for $X.X recognized reduction for ago available in settlement than The fees income dollar spending remote of estimate excluding profit of were historical $X.X decrease, or year from quarter changes recognition fees, to estimate approximately fees revenue a quarter, business. recognized an in September was XX% in dollars XXXX. XXXX by Both industries a slightly expiration was the accounting reversal balances revenue $X.X million, were This a and pharma accordance offset consisted transactions in in for in new charges a $X.X QX in as refers resulted respected coronavirus experience. by patterns, primarily negative the in million. This in decrease the programs. margin from decrease of depreciation, was revenues, at its of quarter to million a $XXX,XXX substantially of quarter versus accounting $X.X which increase Revenue, $X.X and quarter COVID-XX. were of loads compensation, X settlement income unspent novel revenue a decrease has breakage the I to resulting adjustment three XXXX. otherwise, the for whereby impacted compared the method amortization the an an of to XXXX rate increase XX% indicators of information decrease for lower XXXX stock-based accounting and acquisitions As disproportionate increase compared in change in our different company ended and constraining $X.X by regarding quarter-on-quarter decrease on in incident and cards by decrease acquisitions related to or activities, related telecom, to a with will of the all a unless to travel. quarter I offset two should staffing XX% and Revenue say sales. and QX professional for Pharma as compared a costs and to and pertaining million, variance compensation, the XXXX decrease The

period X-month prior a million year. negative the $X.XX. for or Diluted Additional share a million million or compared net $X.X compared the granularity million can a period per $X.XX in same loss a for negative was negative or basic per a basic compared the share, million Non-GAAP prior same quarter be adjusted $X.X net $X.X per share adjusted of $X.XX the year. EPS compared XX-Q basic also the prior The in negative $X.XX $X.X $X.XX the year. reviewed to a share, was share EBITDA per share $X.XX income to $X.X the to a $X.XX of quarter or $X.XX basic income compared was basic me or EBITDA section. share MD&A per to excuse a per $X.XX negative basic basic X-month a $X.X the net or or was PaySign’s negative to negative ��� million,

quarter million Our to two. was a XX% card the including liability, year, versus prior compared capital cash gross the dollar $XX.X million XXXX, the quarter income $XXX million cash From to million Unrestricted XXXX. at change $X.X $XXX XX.X% of at was increased quarter $X.X million the volume $XXX of million, loaded million versus $XX.X cards quarter. to perspective, compared compared the million three to cash $X.X and $XX.X $X.X year from the restricted compared million end by has the end resulting or consolidated settlement to impacted three. ending in sheet was million balance the change up to year-end at X.X% up funding prior XXXX Working

Our question-and-answer current at our capitalized balance begin adequately coverage will the X.Xx moderator, session. liability, and was I no coming with funding time, to to turn XXXX. for XX it over are the you. an this compared to by excluding on X.Xx At card liquidity, Thank sheet adjusted debt year coverage as measured end ratio, remain We the the cash months. restricted and back Kevin,

you. from is Moldow Genuity. Austin from question Our Canaccord coming Instructions] Thank [Operator today first

Your line is now live.

my Thanks questions. for taking

made in changing performance revenue – card recognize programs or On to adjustment, you mean the in now? changes at comment efficiently pharma revenue spend change around managing the to on addition and more exploration, the indicators does accounting

Austin. that’s Yes, correct,

I on mute. Sorry, was

is toward ones our change? one what have of all sort recent Okay. meaningful or made two is triggered that the forward? a and different do estimates or you programs that this large going factor should think we change And How something of it the into just

essentially that So quarter. than the data came to of refer kind I evaluation different the that third and about substantially were experience, and the the statements in indicators performance trends our of revenue would the

predictable balances versus the XXX, less And so with must the ratable removing you ending the by to are – to to method. revenue remote of definition, accordance constrain if ASC method by in accounting the as fully moving unspent

back Does revenue us it. million to adjustment close historical comparable to adding periods? got a $X.X to pharma Okay, number get that

correct. be would That

that X.X% what you I would I to – mentioned well compared the the unspent quarter. moved in million, method, offset think by and is, which of to revenue that And would balances. I remote be think caution the be settlement little a approximately call mentioned to $X.X because the I have as says the plasma business. frankly, income predictability bit But I as we higher higher, that we partially the have don’t during lower prior prior So quarter that’s adjustment, down

you method. models, And when that’s predict move and it constrain can’t assure the reversed, be you are to what fully that so in and requires to will that remote your no can revenues required you revenue longer no

Okay.

On each conversion any revenue provide you the of the rates, in like-for-like the segments? changes commentary on can

conversion Austin. I revenue Yes, we me. the into segment I I offline rates have that category do do for the in handy call, have. breakout some segment detail with apologize, to that particular further. probably on should not can out But this And

And my last for sequentially you plasma, what industry-wide question Okay. trend is then year-over-year volume or quarter? plasma last on maybe seen have from

press year-on-year about when year. been the previously. And what is is the prior when and down. industry was still was But somewhat like the percentage that mean yourselves, whole as indicative that we to our I – this industry we’ve the month lowest just watermark the at, is releases we a in May plasma talked for probably this think seen from reading is to XX% compare look we the I prior now that in year is the October example, we’ve when low May we in the August, ourselves our So ourselves me, continuing better is recent But but excuse month to plasma down it’s most down year. XX% still even better the approximately July, month, improving the the relatively the indicated as for September prior we on improvement quarter, compared in year. revenue, get – to recent the and by prior in to the but and year-on-year and or comparison compare it’s in year, most the

my understood. very for much Thanks Okay, taking questions.

Davidson. from Thank is [Operator coming Our Peter from question Heckmann D.A. Instructions] you. next

is line live. Your now

everyone. afternoon, Good

annual to going in revenue terms campaigns was I think annual recognition, that have on you every large and required forward, plans have in my stop amount will programs in other how of I the revenue campaigns So expect pharma they perception times? were different that for fourth year we start guess, those the for of or quarter other for, revenue recognized it estimates January about I a will would December. that guess that there should started see be, of most mean, Are

have first XXXX, programs end so, in So second the the and we of at the months the ending different and in latter, Pete, quarter, quarter, as in well.

So X-year life, time be the in different those they recognized be and programs end. will when so revenue have and programs those those will at points were secured programs a the typically – when recognized

physician talk campaigns you many more Can end it. about quarter at pharma opportunities Got clinical and mentioned you about and little how research you affordability some then the then the a of recently? of the talk had that bit planning

Sure.

end that the have, space actually that and But bit have to XX, of do the finished pharma and in will you of been add signing be I will September, of programs. eight would settlement But recognized that? are those those live, let actually are the end and of and programs three go were now that them co-pay a Mark’s October. comments, have successful we those programs to the a and programs at and further, do we X comment Mark, to in want So XX him have with of at are other preparing signed had additional total will in co-pay income little

card are obviously obviously expected and go to we going are little that business which to year. and the more as – pay that line forward that’s they that end product product us line, the And is we business than of the more live have well. commercial Nothing interchange before to looking the product expense

Okay, okay.

pay fixed how would end? when the on rate on the left campaign to is of the So you cash that to nomenclature, more not type where much that’s basis the define just at co-pay, say uncertainty are cards a there of you be going

in versus income. transactional more settlement more Yes, transactional in nature nature,

earn those have fees, load Now have fees, keep in interchange. mind, programs settlement income monthly and that management still have

at And programs so and profitable income, still recognize have you still end, just very so paint the picture have you. settlement them those and are still to that just you wanted for you

got the One before it, get it. question queue. last I in Got

signed T&E type said additional quarter, that and think at the had of at these would terms second then programs, have of other the X. end I something had have In the been Where you you September the you of time? like of the since you any end business programs

crystal the So programs. clear, end of XXX September, to we have plasma be at just

We have up that plasma others, one and program than programs, new pharma that that We pharma, incentive had less – X X included new X XX XX had – X, and programs in ended. from was the quarter. corporate we

of and at you, programs have to end Plasma just we pharma. programs. signed But referenced end September of should after the as a in year XXX So end additional total Mark three mentioned with XXX, of September, the those we the we

which the from were fourth quarter us two of other other XX. nine on gets programs, that signed seven. active So actually to a also bringing we pretty pipeline to new And have in

December. securing Mark on based without to the that us essentially under – pipeline, programs in programs we increase September right get executed know on the take new from the assumption any indicated what be plasma will XXX we XXX those things the and to in quarter So in in again, fourth XXX the business and will side, that now

very the helpful. back That’s you. in it. Got queue. I get Thank will

You bet.

question Maxim Michael Diana Our Instructions] Thank from you. next [Operator is Group. from coming

Your line live. now is

Okay, hey, Mark Attinger.

in of the new revenues $X.X is method your using recognition or million said you old? think I were that October, the

that the talk release method press all That Q, press the forward, back we recognition with are adjusted GAAP of table release. results in EBITDA of going the of and the exception in new the are GAAP that in new and and entirely reflected and only is the will exhibit very

Okay, great. And then XQ?

new method. $X.X million for the is

Thank you.

You are welcome.

you. question next from Ladenburg [Operator Our Thalmann. is Hickman Thank from Instructions] Jon coming

now Your line is live.

this are variability that some recognition up is evolution This as put like to a of forecast. makes difficult then on you a the this talking us or is you sense, you it around can in lot of, programs more to method contract range business a bit about XXX. question, us? kind size give for an there program for actually Graham Jon. with How variability, or much of Can in XXX seems up secondly, revenue And kind guess earlier to following I new Hickman

guess I of So when might giving change feel what would or need you. Thank to comfortable sort you again? guidance some

those Graham. are – Yes, questions, I really good those mean both are

little bit you there much are the is plasma to and number tend business contributors to be incentive but bit read program, side, of business a those, at much particular better They given the size, a disparate variability of in when deal and so could headed. they we where that not quite all, between look First size real closer the on centers. non-plasma card secured, of like have and in XXXX in are is we a programs on quite the the a corporate be in new

is there a for So visibility are It bit uncertainty much due the process live give and we probably too call client on because from would those you and variability. learning quite of and a are difficult this, wouldn’t basing any as the perform contracting your of to very it what ways on you observing will like us, are you in be performance. frankly and how are then you to going

Right, right, okay.

income sizes that these have we are on are, remember dates. then had do And have historically that expiration that settlement differing are programs and your second that question, of

Therefore approach. more priced been. end are the the XX see outcome when card. the the reliance of our revenue work will pharma those team that’s are more that and be predictable upon differently new tremendous left money coming different to think months conclude. from are on And than to a partnering you settlement revenues having streams is uncertainty alluding of side, the recognized that they to the months programs on at than what in coming the have all begin programs we I in we earnings new that on than XX Other much business income As you success on that to where

diversification I load what mentioned – fees, management happening. that’s is kind I at guess of Yes, is of I there you Yes, there getting that are kind there know and – fees am

settlement needs kind and is fees around Is I kind a the smaller could kind thinking So, of are feel be. am there. you or wrong putting of that range of become what that it will comfortable to me then percentage about if you maybe correct a of range how outcomes

I of It’s right. for still but much revenues visibility with those and as breakage don’t end what to be be ASC mean compliance we that’s estimates we become in therefore had at less think I make XXX. have the think that will we might to programs, constrain predictable.

be well. affects the will business. very the based that we a business on And challenge – issue, see we That’s than COVID-XX, the But on Plasma and the the pipeline Mark’s that PaySign we right based bigger how in as bigger, see I estimates. on So around and projecting bigger in the that’s now. uncertainty on are and based comments executing but challenge this more conservative is those I what what on of see,

crystal Mark’s ball. have we on don’t unfortunately a Yes, point, to

in timely future states. a look make us. And very We of much vaccine comes difficult manner. various out does helps very towards reduce that the for that that hoping So the the closures it

going it’s we you that. hard happen pinpoint an to know to with what’s continue on. just So keep it’s eye But something to

Right.

I in. Okay, will back jump thanks.

Instructions] Heckmann is Thank Peter from Davidson. question follow-up from Our D.A. you. [Operator next a

is line Your now live.

or impressions whether any North early improves potential the thoughts improve the on Wirecard not sale for of have of share? position buyer terms of America? and or gaining Any in management in the competitive doesn’t Does your that U.S. market

has not the just I Wirecard believe to here continuously wheelhouse. Syncapay, That the that much I I’m after in division have gone approach set. and am it is sure they not believe their does. help does of I said, North the Lane how market. – plasma It sure,

and harder XX The is before to opportunities. business buyer thing would Yes. in the digest competing and Wirecard I the to industry transpire. us harder will transaction the We with find securing who pull down resulted centers that those whole is ourselves additional one as what and that conclusion could Mark’s comment a letting was add of happening

that the of and was to will clearing if us And helpful year. so week client letting provide you on opportunity that that first actually particular the December.

not continue are a out that to convinced not we therefore, I’m place. talk out in – that’s clients and folks make is there said, while transition with And looking that there to that the market other

pharma million a would the campaigns Got $X.X point you it. recognized income settlement that amount on $X.X significantly the be And did finer an been to all of completed and million? $X.X million that had revenue within the reversal still existing will just recognize as to overestimate still expect majority the be put or you that of are revenue that find the to than lower of

is why Yes. revert the visibility on We and and that that had don’t methodology. to the constrain revenues we have

So not would to speculate. want I

We will certainly settlement have income.

you. Thank Okay.

Thank turn you. reach floor over our closing end to or like for back of the to We Instructions] management any session. would further question-and-answer I [Operator comments.

evening. of to that although make be the us will the our investments Again, business in beyond. continue adversely to Thank COVID-XX you. effect to impacted trajectory nice this by growth resume your we enable safe long-term your and participation Kevin. interest, our pandemic, Stay company you questions Thanks, Thank and continues your in in have a for and our continued call. XXXX earnings

teleconference Thank webinar. you. today’s That does conclude

You thank participation. this wonderful may for you day. at line time have your and your We disconnect a