Paysign, Inc. Q3 FY2024 earnings call

Key Points

• Revenue for Q3 was $15.3 million, up 23% y-o-y and 6.5% q-o-q. Adjusted EBITDA rose 20.6% to $2.8 million. Gross margins improved to 55.5% (up 440 bps y-o-y).
• Patient affordability business saw 219% y-o-y revenue growth, with 66 programs and continued launches, including a cornerstone account. Pipeline remains strong with diverse programs.
• Plasma business faced challenges from hurricanes and staffing, but revenue still grew 3.4% y-o-y to $11.4 million. Added 1 plasma center, with plans to add 2 more by year-end.
• Made significant investments in IT and personnel, exited Q3 with 164 employees (vs. 112 y-o-y). Unrestricted cash was $10.3 million with 0 debt.

Plasma Donor Compensation

• Revenue was $11.4 million, a 3.4% increase year-over-year. Revenue per center decreased to $7,991 from $8,041 due to hurricanes and staffing shortages. Added 1 plasma center during the quarter, with 478 total centers, and plans to add 2 more by year-end. Contributed approximately 74.5% of total revenue.

Patient Affordability

• Revenue grew 219% year-over-year to $3.3 million in Q3, representing 21.5% of total revenue. Had 66 patient affordability programs, with continued launches, including a cornerstone account with a large pharmaceutical company. Revenue contribution from this segment is increasing and is on track to be a primary driver.

Guidance

• Total revenues expected to be $56.5M-$58.5M (20%-24% y-o-y growth).
• Full year gross profit margins expected 54%-55%.
• Operating expenses expected $30M-$32M, with depreciation/amortization ~$6M and stock-based comp ~$2.6M.
• Anticipate interest income ~$3.1M. Full year tax rate 19%-19.5%. Fully diluted share count 55.5M-56M.
• Net income expected $3M-$3.5M ($0.06 per diluted share), adjusted EBITDA $9M-$10M (15%-17% of total revenues).

Risks

• Hurricanes and staffing shortages impacting plasma operations, potentially affecting Q4 plasma revenue growth.
• Onetime legal expenses in Q4 related to settlement of class action and derivative lawsuits.

Q: Could you elaborate on additional pharma campaigns and the large pharmaceutical account?

A: Matt Turner discussed cornerstone accounts (larger manufacturers with broad product portfolios) and new programs launched, noting revenue per program varies by claim volume. Jeff Baker mentioned patient affordability to be ~20% of total revenues for the year, with stronger growth expected in Q1/Q2 2025 due to claim resets.

Q: On plasma staffing shortages, cause?

A: Mark Newcomer said it's due to increased competition for labor as new centers grow, making it harder to access labor.

Q: Size of patient affordability market?

A: Matt Turner stated TAM is north of $0.5 billion, with Paysign winning business via competitive takeaways and innovative solutions vs. competitors.

Q: Legal expense impact on adjusted EBITDA?

A: Jeff Baker said legal expense is ~$600k, paid by insurance, and the company still expects adjusted EBITDA to be in $9M-$10M range.

Q: Gross margin outlook for later years?

A: Jeff Baker said margins could add 100-200 bps y-o-y as patient affordability mix changes, but plasma margins also improving with operational efforts.