PaySign (PAYS) 26 Mar 212020 Q4 Earnings call transcript

Hello, and welcome to the Paysign Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. This presentation may include forward-looking statements to the extent that the information presented in this presentation discusses financial projections, information 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 make statements about future events. forward-looking. are statements Such can should, by estimates, may, and expects, statements words projects, use such plans as intends, proposals. be forward-looking the identified of forecasts, Such anticipates, believes,

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

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

similarly This as Forward-looking statements the to a Newcomer. prepared EBITDA, measures necessarily methodology the speak by in ahead. any forward-looking required document the measure call GAAP financial presentation and in any financial Mark to not over non-GAAP law. as other turn my prepared does they only duty is the pleasure and also go of contained in to includes except measures neither date an with not update any standardized be statements of nor based adjusted on are to that companies. undertake It's prescribed titled to which accordance is may now company Please by presented by alternative accordance comparable

today Chief Good and Thank Jeff Executive year fourth Baker, quarter Officer. XXXX you on everyone, and is afternoon, you, Co-Founder Financial for Officer. Also Kevin. call full Mark our am earnings thank and joining me with Newcomer, Paysign's new call. Chief the I

million period year. quarter revenue from down was the fourth $X.X same $X.X Our million, last

the change we the were for of of million COVID-XX our XXXX, primarily business. was the on the income and from decreases recognition impact on These this third down in pharmaceutical year million estimate revenue $XX.X our full business year of in the accounting For due plasma quarter made to the settlement XXXX. $XX.X

as economic closely to continue U.S. the U.S. continues monitor ease restrictions distribution across COVID-XX indicators vaccination We and

consumer on lasting to on consumer pandemic spending, by to spending may caused effects recession have our the the programs levels. we While return some begin saw pre-pandemic

we a pre-pandemic seen XX.X% increases our down versus XXXX, fourth the continued quarters, on the XXXX. indicating we have QX quarter-over-quarter on return programs consumer to two spending QX over was consumer Paysign spending, of the in XX% For In increase impact past quarter, the normalcy. business. XXXX In saw showing QX gradual pandemic

the we economists centers However, continue XX products conditions of improving Visa, XXXX, for XX.X%. and principal added only year of X.X% quarter first – exiting for end severe business new the XXX with the a new impacts, at centers new clients, we XXXX, add the and Paysign. the despite to consumer pandemic-related to growth to We primarily insights in of I of an by only continue our new year, This impact to be of compares to to these positive due centers plasma XXX the increase were centers. full of events. pharmaceutical at be XXXX. throughout business. in should solid spending were Despite we the quarter, in According all total signs fourth multiple the down published was believe economic weather

continue We QX. our during patient footprint expand to affordability

direct-to-pharma company resell work bringing our this the larger our hub instrumental relationships were additional industry our two partnerships expanding in at teams audience. sales as in solutions growth service are will into Our hard industry, These to partnerships. they

pharmacy were co-pay additional launched based programs in In awarded that addition, three we two launch will programs new XXXX. and

interest Direct of both in receive a our and service high level Hub pharma to solutions. continue We

to features remain nation's for launched as XXXX, will allow providers. products manufacturers efforts to XXXX some other new In expand a partner We product we additional will build the products of verticals. service our and to into continue out that pharmaceutical and operations during largest and hub we us continue preferred

enhance cardholders this features for client card additional for of lock the such We as and good XXXX ability for sub their Premier Bank program continue in clients a accounts, added new to added Digital one to to pipeline have and product XXXX. security new Account Paysign purposes. We

and retailers We directly program also enrolled online our Premier can over plasma We with and card back Paysign locations, participating in back, operating have which our incentive cashback XX,XXX and cash Home use their cardholders across such Paysign either Pays, additional deposited additional XXXX Petco, to back from program our product average, merchants clients. earn, an features rolled Walmart, Gap, offers merchant functionalities it out is use Paysign launched map. road month, rewards to and as Depot account. name for CVS, activate card and Kohl's, their on X% This by their Paysign Paysign over Each Macy's, cardholders to and from few. or a in-store cash is

leading Jeff been role has and may more Chief pleased role Officer; an as and payments – as you integral me President, has and payment as product the our than Matt of industry role remains to role Financial XX XXXX named assume Chief leadership in roles Officer. successful has of payment has he's our President role of and and Executive and her – President Vice been of continue senior knowledge and in Financial a him I'm recently and Executive With of has global high-performing Officer. Attinger record have of Jeff Operating he new As assume He for industry Joan as I'm a been firms. of Joan pleased appointed with development Operations. Matt brings along Directors, have this in accolades. overall as to I'm succeeded success. with Operating changes seen, equally Officer, Herman team. Since extremely Officer. in the joined brings succeeded Chief and experience we Chief with I is track Matt Jeff as analyst has in also in of Paysign excited have Jeff years in-depth and important senior acquisitions, Chief as He Chief member mergers the Paysign the Product Lanford major integral year announced COO. experience, him extensive executive been the Board payments Mark Baker the CFO. organizations, him President CFO. to equity several of replaced Jeff's leadership my to joining February Officer. have

over would we've phase the of and the With over to our of this turn impressed leadership Jeff and results it I am And very marketing our these built like to detail. senior sales, for Baker, assembled I two team performance. C-level growth in Paysign. I and past extremely At year the will we next usher quarter CFO, discuss positions IT, have believe in best roles to with year who in experts full the their time, fourth

two you, $X.X fourth Thank the Of million $X.X the quarter pharma improve Mark. prior performance accounted revenue afternoon, in million, to Mark, was and Good everyone. revenue revenue plasma primarily $XXX,XXX by revenue and continued revenues business. our $XX,XXX. over The mentioned plasma driven by for quarters, operating of other total the was

fourth of hold margins XX.X% Importantly, XX%, the for to at continue quarter. landing north our gross

$X.XX dollar a diluted adjusted came Our share or COVID for revenue These $X.X fully of highest started results amount fully at EBITDA of per year. in of the is experienced quarter adjusted million fourth the and or the $X.X $XXX,XXX diluted million, unfavorably since last on EBITDA to basis. XX.X% This gross of per compared fourth pre-COVID results total shares. margins quarterXXXX $X.XX

sequentially but by Fourth As ago previously mentioned increased quarter reported also by XX.X%. by a period, closer volume the and increased the but dollar look from period, $X.X million Mark, in XX.X%. versus up quarter the in load quarter, second in sequentially declined gross were $X.X quarter. third versus at the volume year the quarter of pharma million fourth reported the XX% revenues declined ago million $X.X Taking X.X% year business purchase

exited we fourth As in Mark adding centers, XX quarter. XXX the pointed with XXXX out,

are items few worth Here pointing out. a important

First, below we levels, quarterly we revenue are seeing while improvements. still pre-COVID-XX gradual are plasma

revenue and lower. say the fourth per average ramp revenue for centers full the the adding benefit average to denominator per new takes new continues after each be also center XX because quarter. used said, the quarter quarter it time calculation center. being per causes despite increased with our with improve calculation the center up centers to our higher revenue our the from being so without these onboarded, quarter to third being per COVID I'd average quarter, center centers the despite in second to That new fourth onboarding, to in quarter $XX,XXX fourth revenue Second,

plasma business million we can plasma million quarter, total of the to average with $XX over the to per revenues. if then quarter million return we in increased centers year Third, revenues per number coupled approximately fourth get in $X.X added our of center from $XX,XXX, just revenue per can to $XX we or pre-COVID in

with dip in those our no tax However, factors and with let Without listeners. with QX a averages until we caution checks coupled return pre-COVID seasonality ongoing, do plasma out. unemployment as are rebates not stimulus That, me does go to expect benefits to COVID, longer us. business experience

estimate to Fourth by a primarily in Mark. of previously the driven fourth third in XXXX, revenues business. pharma decreased by quarter attention accounting $XXX,XXX your the Turning XXXX change $XXX,XXX mentioned to quarter compared the quarter

XXXX. impacted reminder, estimate compared a quarter of fourth in to the settlement the period As the that during in recognition income change same

that can that pharma to continue base. an a meaningful have our the business impact business We believe it make overall diversify investments and is business and to niche our customer attractive help in

support to $XXX,XXX of fourth increase business. increase to $X.X in in our XXXX IT perspective due was Fourth the an the depreciation us increase an mentioned, million needed grow compensation increased quarter SG&A and due in stock-based operating was $X.X significant to efficiently that and to million that expenses As the we an continue to of give in increase technological $XXX,XXX capabilities Mark and investments from to make $XXX,XXX and XXXX. business quarter was amortization. – of that versus

changes, would have XX.X%. total risen those operating $XXX,XXX or expenses Excluding

metric tax we quarter, income. remain fourth loss returns was provision our when of of decided $X.X the provision used as positive non-GAAP in million company impairment noncash future for and million same business, decreased XXXX. came compensation, depreciation, to $X.X the intangible This will EBITDA, million to operating take $XXX,XXX, on the million. evaluation tax that quarter loss and a assets. in income $X.X which we net a decrease is of benefit amortization, stock-based of to the income for plus define for Net generating at abandonment operating of by Adjusted the deferred a During gain to recording from on the available management $X performance a a period the assets asset

With health believe that that, We I'd to million $X.X to turn Q&A. well the COVID-XX. weather moderator we the over our and further regarding exited and in the debt. to we of year zero call positioned like cash with impacts Lastly, remain for the company, any unrestricted from capitalized

We’ll Thank Instructions] you. is session. from now question Davidson. be from Our question-and-answer first a Peter [Operator conducting Heckmann coming today

now line Your live. is

questions. Good afternoon, taking Thanks gentlemen. for the

Peter. Hey,

a just on? And about you or little fairly any other current plasma, scheduled Can ones little – one you're if change that are working there's that significant there's of talk about bit within sales your to to your pipeline competitors. a convert centers bit ownership then a

dynamics Just competitive the talk about if you've seen any in change there?

that, year into at go I'll beating than point. won't detail for address year and our go on last par more that looking Pete. I this for Yes. much pretty much I would that with pipeline, say last at we're XXXX. too ahead or

additional looking been competitive have landscape, out there talking. been are that Regarding some yes, the people There and have changes.

So all ramifications. think yes, will there things some be considered, I

how Okay. in go that would a that And how this quarter, have if as the I thinking campaigns about onetime quarters? next few we the true-up? true-ups now we're terms but any of of in did were had think kind the me guess a Or revenue. that about wrong, those Correct ending just $XXX,XXX should pharma we then I'm over onetime include

Pete. Yes,

will have as of change It's forward mean, be dollars another like bit. a So now, and program be, little is millions I still, with – make that. going it right like contribution from does but in said, come a did to program low. little huge. quite overall we material pharma lumpy, anything be accounting, massively business, like of we'll have It the it's – that see I an or will you in but some XXXX, benefited There not wasn't the go small a in. we the it lumpiness in

Thanks. Got get the in it, now. I’ll got it. for back queue

Thanks.

from coming is Canaccord Genuity. question from next Our Austin Moldow

Your is line now live.

my for questions. Hi, thanks taking

just were want bit kinds for? and the in also quickly, of And kind us programs you in they new began On pharma five just to XXXX, programs can refresh of in a programs terms many of services, clarify what what how QX? ended

to – the space. the products of Yes. patient mix really it's in affordability regards patient In

bill, to have probably can get different So that have combined mean some up of to and those information get co-pay, on nature. we to to get we notes have – to we – of back certainly the products some I'd for, you you're that. bring out speed you I looking go

Yes, sorry. Okay.

exited programs, bring that Well, the But I'm just on not in say the XXX, started. going we did I number you. to number back to quarter get we'll of Austin. where

In the and in that you quarter, that quarter? be were give pharma, program would the for able launched to ended programs that number

We do then you know? launched, only new And ones had as end. one as far

number, I'm again, a it. for real landed And two that not additional know I the about sure – with I hopper they comfortable XXXX. there was an I'm saying and big different believe XXX% – not into two

me let you we'll defer get that. and back to So on

Okay. can the funds just to the for Again, you pharma the speak quarter? loaded pharma, in growth segment on in

it I'm Say Austin, again, sorry?

pertains pharma able As would funds? for you the pharma-loaded just be to it segment, quarter to in growth saw to you the the speak

for I gross pharma fell. Yes. dollar the for quarter, mean, the loads

the at my chart million $XX some during around do about calculation, but quarter. me look number of the was I'll was – total Let here. loads

XXXX Okay, is question line. are or And contribution? other you give just color a Can what's of revenue little got programs other expectation here which business to on the it. And those the line contributing contributing of kind last revenue? what for on other business

XXXX. $XX,XXX it any on give the you relates down XXXX was was quarter, I is to from $XXX,XXX revenue quarter to What the in specifics. as guidance of programs tell going and can roughly this not – that other We’re fourth

time the it’s certainly So in new around range. a take been $XX,XXX-ish up that sales those to going on It’s to it’s the ramp I but expectations. think group, us focus bouncing and

metrics you it’s that time, of of better irrelevant in we nature. point kind to and this until kind see at guidance pipeline So that of give any around things

types. thing I tell you, address kind some Austin, can of product the One I is can of

some see rewards to we’ll account, functionalities I features additional I think the new For with we’re think banking instance, growth that. we’ll see the growth some and And our around also of sector. as digital adding in

very great. Thanks Okay, much.

Thank Instructions] you. [Operator Palmer question from from today is BTIG. Mark next coming Our

Your line is now alive.

see who you the plasma to changes attitudinal plasma pandemic. question. additional benefit plasma reported of willingness rebound Yes. Yes. cards? A the donation use donate Thank and a the who What be would the company as therefore you have believes taking those for recently donated gives large to confidence forward continue that we’re in your from historically a headwind of and to and and my thanks space that come in a going could volumes, among those plasma result cash

Yes.

back people in I think you’re easing start the some and donation as normalcy think restrictions, see arriving to we see going I at to return centers. the

reasons. A altruistic income. this doing people people, these future believe continue will a for and citizen this to well. donate. good not You lot these got happen doing are not of in lot their of understand, They’re to as I this supplement a be to that they’re And the to doing

plasma. that I And supply me We know Mark, thing even are go there card today of add therapies per and let a using dollar is more that’s we loaded And average one are continues factor up. mean that demand. that that to seeing the this. are

make not of that as So fees and per nature. money that’s goes going interchange us be there. to and plasma And benefit is things to is going that as a on up, demand revenue load average away. The we

of checks And lot plasma so and will business on to centers and this. did like their people it’s and bills to to there seeing benefits, price But forced those if COVID. the more else, just back coming they drive go stop and because weaken of think, clearly, stimulus Washington, I or drive. raise to whether at got forth into me to centers. not we ongoing number out as beyond, we’re the an Las seeing they’re unemployment they incentivize people to get what sitting like a plasma no are get can be then donations, that So that drivers, absolute it’s our because pick out fly home prior out to commuting can’t even And a up incentivized car to actually and we’re get I’m I their pay just Vegas. I not work anything

it we’ll as hopefully, at from time. but all – we will this normalize, that benefit and all So know,

Thank you.

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

line Your now is live.

okay? hear you Can me Sorry.

you. Hey, Jon. can Yes. We hear

Sure. questions. I have of couple a

quarter, operating compliant, finished were accounting get you for do the was line in you that any weaknesses you’re onetime what there with expense to all, that, there get expenses fully this of the of now? guys call material First – it, rid

– There XXXX the worked year any weren’t perspective, quarter. SG&A were items throughout we material not there in in onetime weaknesses from the any on all this compliance. and onetime an But exited

in that firm, You back we work. the would outside they when year of in their seen have earlier the part starting brought did and

– So no expenses quarter. this onetime but

the you consumer or people Okay. you report because how how programs. used change And changed are historical know being on the then et you? cards can’t seeing on much are and the it your are But I pharma on cards, there you’ve norms leaving your behavior like in any changed cetera? accounting Has

No, not at all. It’s the same.

the that patterns same us quarter, estimate to the the in today. even seeing change third cause We’re

the clarify think question-and-answer one in comment Okay. And you period. I then to – so made just

were trying to roughly centers we to for like XX what Is to you this year, you expect communicate? you signed that your is pipeline new XX add last to So said plasma what that centers equal year?

that. believe Yes. will I be

it That’s from Thanks. me. Okay.

you. Thank

is Peter from Our next follow-up Davidson. a Heckmann from question

now is live. line Your

first given in you about maybe with can comments qualitative give consensus up, there, your only numbers? relative week us a first comfort the we’ve got some of level following left quarter, quarter the Just

And their first mid-March comments, cetera. checks et gave of fourth again, lower – to the out, – to is hit be usually think giving in season, getting prepared then had due I quarter rebates. then, out. excuse some things Stimulus we’re not you just aware people went quarter stimulus big that which my I need or course, of, tax guys the seasonally, is, guidance of you

to So it’s remember, had quarter. Pete, was see are and factors the year I do first it, those And if influence crystal give last quarter you quarter. ball, very guidance, hard how I first I a would could a going to but strong

So the COVID go effect. really didn’t full into

watermark in low was Our May.

So you you’re just at models. be cognizant looking as that of your

it. Got

Okay. Thank you.

you. to Thank over end like comments. We or the reached turn our the management question-and-answer further to of I’d for any back floor session. closing

your Again, an evening. building we safe, and Stay have Kevin. support with pipeline end amazing Thank along of the questions and in with robust and Thanks, the for your continued you call. a I on have interest, emphasis earnings this in assembled want your are to participation teams we XXXX beyond. nice

you. conclude That Thank webcast. today’s and does teleconference

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