PAYS - Earnings call transcript Q4 2019

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Operator

Greetings and welcome to the PaySign, 2019 Year End Earnings Call. At this time, all participants are in a only-listen 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, proposes. 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 XX-K. elsewhere statements and and made Form heading carefully Factors disclosures XXXX statements our

date Forward-looking contained statements speak law. of not update only the company as the statements in as undertake are by of may they forward-looking duty required to the any which does any document and except be

a measures prepared principles, accordance accepted includes measure accordance GAAP. This financial in prepared generally EBITDA that in financial nor not presentation an to accounting with also non-GAAP with U.S. alternative is adjusted

prescribed addition, adjusted and is on necessarily not is other based In standardized EBITDA to titled by measures by not companies. presented GAAP comparable similarly methodology any

host, like now our over to Newcomer. Executive ahead. Officer, the Mark conference would to Please turn go I Chief

Mark Newcomer

Thank you, you discussion joining financial Chief Officer. With PaySign. thank is our Attinger, everyone Diego, afternoon afternoon Mark a President XXXX Mark for our results. Financial Executive and full year am Newcomer, Officer at and about I us the for Chief good and me this

which changes financial Mark we point like out the to reported several to on delay data I days on that in the discussion. in to Before in can like to there detail requests was this I touch would filing several address XX. filing due more took auditor rounds for during delay on no numbers of begin my XX-K. our commentary the were would of March our I additional preliminary The the his business, to complete.

guidance. be full-year the related the revenue pleased performance able strong deliver very miss am to even with to our I to results for

our revenues compared year million, full increase the of record the $XX.X an were For a to year. XX% prior

million, adjusted million, XXX% happy up continued XXX%. of Our full-year and our I'm $X.X income their was towards was $XX.X or and results these our team contributions a proud also growth. record, extremely with net our an increase very of EBITDA

cardholders growth strong new verticals new have XX built verticals. expanded experienced including in added an X our platform. We as card line, out million other X.X we programs we XX industry in XXXX, our and new existing card now In business excess on in and into programs and a X pharma plasma, we of

pleased which our our in new to required to centralized and year. patient the in especially and growth by one With established line we have offerings services services long-standing pharmaceutical other claims million affordability with payment payment a base service well pharmaceutical expanded opportunities pharmacy include am beyond our space, as programs clients. These other and in products. revenue co-pay, payments, billing as I XXX,XXX opening services, medical over increased include new business hub processing the just from X.X

moving forward often we line. will You as quite hub from this term hearing grow the us be business

companies the of hub all during prescription to delivery are the with service hubs, define that connection patients use So a manufacturers maintain phases providers process. to pharmaceutical

a the consolidation service past years has there few been Over of providers. hub

service choose or to capabilities to providers decision in-house. In competitors, we to expectations. to provide hub creating these these increase initial made have performing to currently providers service the our hub opportunity, lack to with therefore that services programs these this cater onboarded to response not The to provide new turned offerings the an and for companies industry consolidation opportunity into in allied has us

to unique market. to human the of past personnel new meet and build a capital. of have and investment reach represented of clients out to allow best-in-class to industry affordability continued this course business and a deployed the the This from meet onboarded line space this will substantial developed Drawing new needs our into architecture, further new year designed, the Over our us experience, patient software have These the multiple onboard patient we and from into solution we development, sectors. enhanced needs affordability capabilities partners.

Matt We our have latter our XXXX, strength Lanford at out entire Sergent Product executive Officer and Chief and addition team In Kim build team bench as continued also our here to with the the Marketing of PaySign. we of our increased the strengthen part of Chief Officer. as

as them products, as pleased clients well have for our and part as features new brand. functionality instrumental They am our team. of in refreshing our I very been creating have to

I'd like to reiterate now remains that would cardholders, safety on moment and to like touch of priority highest our COVID-XX and customers. our employees, for the a

to the actions of our have We serve protect plans. continuity the well us and taken To by is immediate customers, business the and business our general crucial executing to main people, being sectors health we important on public. are especially

date, employees manage implemented have to COVID-XX. and across been real-time for our tested We entire potential positive cardholders. in mean have clients no disruptions there To with stoppages work time organizations communications measures and no

growth minimal we monitor continue on our Patient only slight to with and to Affordability which no continue impact will COVID-XX the our course, impact lines, our business excellent far situation see a The so plasma Of and has Pharma to apparent to closely. very of business been effect business.

at the expecting time see in growth are plasma this year-over-year we However, business. to continued

donation and pharmaceutical being that of critical category Department of donation infrastructure document pharmaceutical from general centers the directives. plasma healthcare supply Security XX, of Homeland the guidance XXXX closure as March On supply or lockdown are the infrastructure. essential released classified within part exempted that is as a and enumerated being source U.S. critical Plasma

donations, to things; month frequent from a be expect the can people of that therapies secondly, forward extra of of compensation any Looking other general donor the found the both if to in side were the antibody increase current the plasma in and and with fallout component we that virus increase to donors; a number donors collected pandemic, see will as two from a an the treated to would from of expect public. plasma the economic the pandemic the the lead we to first, an bring is donor COVID-XX demographic $XXX number is sizable

broaden we seek and our will programs new continue for ahead, products. will Looking focus introduce market to to we diversify our card and

Pharma We are our applications solutions, and business and mobile Patient offerings. building enhancing developing web Affordability new and divisions customer and new

plasma and continued to growth new Pharma into continue expect We in markets. expand to and

the regards we deploy have expansion plasma we expense resources date, the the on of clients. premier, our card chosen PaySign the of refine our focus With initiatives. through have to premier majority one as continue the to previously mentioned to To our we marketing for offered that is of product and minimized

evaluate continue acquisition opportunities in will we XXXX. Lastly, to

evaluated however, there to have definitive several We is to nothing this candidates share date; at time.

would address I the Dan it to I of Before turn like question Henry. over,

PaySign Independent to be has appointed as decided the know, the all it of Mr. as Mr. President would and you is with an Executive Chief and XX, XXXX. Corporation. Henry was Mr. was since announced After Director. unanimously there with PaySign and As and remains Mr. as served an Henry Henry's Chairman company. as that Mr. status with Director GreenDot Independent a change Henry March Board Member no Officer, was Henry, Chairman our it On Board our discussion

will us and it to the more in touch time, over At CFO, take our Attinger to SOX like Mark turn through I'd briefly numbers XXX(b). will this on who detail

Mark Attinger

Thank you, Mark.

I'm into some take So us insights you've enhanced bit XXX(b) sure on touch the to give earnings I'm you disaggregated XX-K, some and going through and year we've provide In results, our performance. revenue our full quarter commentary. SOX to digesting commentary, the noticed various and a one

the year. XXXX XX% the refers support compared other Revenue in XX.X% ending an or of of XXXX. industry, as XX% references As stated in year-over-year the X.X compared year Revenue year proceed, X% and consisted the changes to unless XX, to million full or million December $XX I increase $XX,XXX,XXX or million revenue. was of or percentage for in improvements XXXX the $X.X plasma to $XX,XXX,XXX, otherwise Pharma prior to

unexpected to loaded versus on the as spend performed conversion contributed from X.X% rate card shortfall Pharma to This expected, of guidance. full-year combined lighter was X quarter QX. revenue degradation the Although down X.XX% revenue in dollars plasma with

increased due to primarily of of to XXXX. compared revenues million towards in and $XX.X was $XX.X mix improvement to XX.X% revenues XX.X% margin XX.X% driven profit point favorable million card or This Gross higher XXX basis programs.

benefits, increase the consisted and in income amortization. $XXX,XXX The The card XX.X% from operating expenses versus in increase compared salaries $X.X million $XX.X stock-based $XXX,XXX depreciation million of $X.X $X.X million, in prior were was $X.X balances interest compensation to million XXXX. an and primarily in year. higher million of and Benefiting increase

$X,XXX,XXX share, prior diluted per or per to or $X,XXX,XXX in was year share of the for share year XXX.X% $X.XX to $X.XX an year. basic increase income compared basic $X.XX. the per was Fully compared Net $X.XX

increased prior an loaded conversion dollars basic adjusted final basis margin or up pharma the XXX million of and both cards versus our increased also card basis adjusted basis Non-GAAP compared XXXX million point $XXX out compared and to for rate in , would versus XXXX. XXX year. to prior loaded significant year. EBITDA or share, to We and the XXX% volume XXX illustrates This XX.X% loaded growth. seasonal Furthermore like on improved year year-over-year quarter to was loaded to X,XXX,XXX the XX% increase $XXX quarter points X, the near prior the of points share gross X.XX% per or XX.X% $X.XX XXXX $XX,XXX,XXX from our the quarter the prior to the revenue per EBITDA net dollar of I was X.XX% approximately loads. or nature $X.XX XXX.X% pharma business card points that versus first

increased end million to cash at including $XX.X $XX.X XX.X% million million compared XXXX. cash balance From restricted perspective, sheet year a has or to $XX.X consolidated

haven’t consolidated ending our point and million Also, for including approximately million. $X.X was $XX month of February cash $XX cash a million to $XX.X peak seasonal we of consistent current expect although consolidated quarter approximately at cash unrestricted our million end. year we programs, As reference reconciliation, completed our be with end to a

at to to million million funding $X.X increased offset improvement consolidated partially was increase The in Working capital compared cash primarily XXXX. due by $XX.X liability. $X.X XX, increased December the to million card an

up reflected current funds of coverage X.X card at year-end measured both restricted the excluding as XXXX Our by an adjusted ratio, from XXXX. respectively, times from liquidity balance at sheet X.X sides

prevent the an controls speak that the controls internal Sarbanes-Oxley being help in your and resulted the framework COSO to our processes reporting. of to a inaccuracies and reporting, and subject classified to to of is our like accelerated At market our I'd XXX(b). an end The your filer i.e. regarding of objective any as make financial sure Sarbanes-Oxley financial X, moment of for quarter audit cap independent in XXX(b).

companies many as in to in So firm, do, in brought party preparation a third XXX(b). for aid we us advisory preparing

PaySign to identified to reporting. and We weakness separation implemented auditors internal very with strengthened our systems material for over remediate seriously and control. controls have aid and weakness. to immediate appropriate our added identified have or staff We access the Subsequently, documentation financial this use take We our the an and in responsibilities. improved assessments. We respect of processes steps taken change

XX-K during Please to will We make refer XXXX. more for item continue to the improvements XA information. of

XX, the light statements completion states our In extra in again year of once of upon cash the financial company of all financial This principles. generally weaknesses, and stated the with were flows present the in the and their control the identified to assessment XXXX an the leading material auditors fairly conformity opinion third in the opinion December extended audit further accepted diligent accounting duration. of of results position our the respects current as operations with of audit auditors financial resulted

interested activity. looking our our those you less and for more do financial full earnings roll. X, of results year-to-date in September QX at does Also financial Therefore of quarter course year closely reflect

gross similar refrain critical our As at benefit from issuing plasma to stated. deemed will further guidance infrastructure. revenue we any do to look has our and continued CEO both business. has impact Plasma in are this expect been nature on defensive to margins time a to allow revenue growth We XXXX, XXXX. from COVID-XX for and also evaluation of as we and Pharma

We sales, also we growth expect to operations as to and make OpEx our select continue capabilities. experience investments in and technologies moderate sound

do our we quarter the to quarter million, the $XX.X not for approximately we have year. versus million of and Although to XX% revenue $X.X XX% completed first up end procedures, closing $XX.X end million prior anticipate month

this you. at remarks our it begin my concludes that turn over think to I question-and-answer I'm to our to going moderator, session. time. back Thank

Operator

Please question. Thank first Heckmann you. question from your [Operator Instructions] comes Peter with Our Davidson. state

Heckmann Peter

the and of a of on popped to in – in implies background may good the going. get talked in next gentlemen, the us the morning mix quarter, anything What what of that you that that that, conversion couple give fourth how rate bit little revenue and about, can terms you Good for changed quarters? more call terms issue that have up

Mark Attinger

Pete. the Yes, question. Thank you hey for

So quoted revenue lower all that plasma and on was see centers we the interchange expecting, versus But on cardholder particular behavior the revenue the rate and in were less the we at those they more revenue new fee September conversion fact that specifically due same did transaction customers QX conversion up little and loads were those where up conversion XX% turned for revenue. a XXth rate plasma located, we loads that loads. the a were I significantly of QX to rate the to than saw time. in We brought of led those

been procedures changed. first quarter how that that we're not see have to just our able for may have evaluate yet since We to closing in

just We make place those did expect cost those. QX. should But improve putting gross margin for up closely Mexico that of beyond that performances to and I help our conversion that yet changes revenue rate in our to agreement bilateral look overall some will in margins improve on banking the transactions with help centers that those a partners we can't the with on as at ATM gross actually too in

Heckmann Peter

some helpful. little you followup of terms as to investment And in about That's but spend, question, it. harder just Got then can is a just talk quantify, it a bit didn’t you're spend had you the how corporate on in much items XXXX and PaySign then things XXXX? for that that premier, loyalty, like generally about generate that revenue investment thinking of number

Mark Attinger

our on out that Affordability. and CEO the think hires build touched Patient I new So of

capital million cash You statement in $X.X also to you of investments about see look million. can at as see you our flow the expenditures $X.X

anticipated year little last $X.XX higher million investments were than was in $X.XX there to year So million. about I the earlier of

more little we look a XXXX, $X.X to million you give $X.X we've CapEx to to Just in modeled insight, as of million.

Peter Heckmann

the back in Great, get I'll queue. thank you.

Operator

Thank you.

comes Our question. next Genuity. from your question Please Austin with Moldow Canaccord state

Austin Moldow

XXXX many Of have for rest Hi, impact look X the Pharma thanks renewing contracts questions. for this what contracts my for remainder XXXX many in the in and if there those active signed or been from of Pharm are still the taking the virus? year of like how does XXXX how and any for pipeline new the and is

Mark Newcomer

to added just ended had little X programs XXXX with X with added year ended Parma, ended, give to a X so we and respect XX. the of that in to bit us two Sure, we've with X XXXX you history, XXXX we three programs quarter programs. We programs We taking additional programs. so in

Moldow Austin

through like and of year? numbers the it. those exactly I'd can underwent to you be Pharma the what repeat or cadence And you related to Okay, you got and QX mentioned also load what growth growth the rates Pharma to you are expect expect, how

Mark Newcomer

we've back Still, for versus The of increased versus notes, is the in continued with one understanding to us into of ask about things the cash that and to loads they those that reiterate our changes XXXX my back loads increased QX looking comments. I'm and Pharma XXX% going XX%. their fourth quarter, follow and this to up The questions loads as translate to on how business. just balances my the QX roughly analysts step

be payment providing you will. pharmaceutical about And pocket seasonal is that that for standing in As assistance since business manufacturers having their in the the first the at you we've to talked co-pay in met prior see solution and greatest that tends assistance, consumers of before, the Pharma if quarter point, our to out deductibles.

mentioned, tends for I $XX Last cash million, be February. February to appears a to So, peak balance hitting in current year it as be customers was in least seasonal peak. it year is in seasonal This the our that at March.

this have in will forward, onboarded. as a we in additional contracting As Those we pipeline just several clients And new clients we contribute the look of have to we actually Pharma do we speak. that couple year.

onboarding new year expecting combination Pharma. the net-net basis on the business some on of Pharma business strong with growth a degradation should lead for we're along clients on Pharma to So seasonality the slow of full existing additional and wins

share an in I growth We million to the of year. roughly a arose. saw And to that our was a do We increase couple $X if this little things flavor thought would business XX% Pharma and and drop expect you questions a a solid XXXX. of give at only just bit look I down

XX% business. are We full roughly XX% be and expecting X% XX% year Pharma approximately the other Plasma, to XX% mix to to

Moldow Austin

sneak last one stay Pharma I the to the one XXXX? sorry, rate could and roughly do conversion same expect if in in, revenue Great, you

Attinger Mark

Yes, performance change, comes onboard how that it at relative based is It is frankly. of each the current the had upward those I there would I indicates to mean, nothing but programs, hard little on a exactly predict. but bit moment and it program that programs to is the

Moldow Austin

for Got it, much my thanks very questions. taking

Operator

next state Our Hickman [Operator question Please comes Jon Ladenburg from question. Thalmann. Instructions] with your

Hickman Jon

Hi, do give that some idea I pretty us of where us cost and itself was you it about the give it could so in that QX, the you of some to my SOX but what take audit, cost won't your with, repeat has you in extensive, since could QX? question idea XXX(b)

Mark Attinger

that time the the believe imagine, about engagement our an that If somewhere incurred quarter. the probably in encountered regular an not and a I $XX,XXX signed So, upped additional had auditors in we higher accelerated they in first after financial by XXXX that cap We market of $XX,XXX period around filer. the XXXX became as conduct to was assessment. year you we would XXX(b) of the early tripped auditors additional our in where extended I they audit last can mistaken, the and given middle engage am on year we an with

Hickman Jon

team? And then the control

Mark Attinger

The firm was third-party advisory $XX,XXX.

Jon Hickman

Okay.

Mark Attinger

XXXX. that incurred And in was

Hickman Jon

Oh, okay.

Mark Newcomer

that and… to So expense we've tried limit

Hickman Jon

pretty you did job. a like good Sounds

other answered. the asked Thank So have questions been and I you, so had much.

Operator

Peter Please Our question. question D.A. Davidson. state with comes your next from Heckmann

Heckmann Peter

lot first is the just through it as were pharmaceutical had a quarter, approximately quarter, XX it ended I so see quarter you information at gentlemen. of in the of in number first Hey you and quarter, to assistance had let's one, if in quickly, end of wanted first X XX sounds X fourth went clearly, the fairly payment really the the the but at you X, end that correct? added

And loaded that then first XX% Was number the chart X, end cash, correct? in kind number represent the Pharma that up of the you from value but somewhere the million at $XX million give restricted cash. all that March December around million $XX the March, $XX to in of that quarter us can walk reflects to of would

Mark Attinger

our were we have added clients, does two the Yes, the you generated are ended with right, in that really that $XX on activity very are so million to is cash, date, $X.X first results. is so first and unrestricted $XX little to XX that quoted – to those restricted And million million, quarter correct. reflected the quarter you million yes, $X.X in roughly not balance

Heckmann Peter

marketing And initiative. PaySign in just some other premier, like had directed some it great. sounded the dollars then Okay, you of to terms

partners through on of the more just business this the year, potential feel In other terms side? rolling see see Pharma term of like in there we relatively terms may do business to or near you be or you grow there opportunities how returns affiliates out the

Mark Newcomer

we in as drive before to how and larger existing clients further. one economically stated, of continuing our best customer So, most to it customers with are marketing it Mark we test expanding to conversions are partnership

work front will on of been card has larger to also. focus but premier the of our kind on in continue the us, we However, opportunities

Heckmann Peter

helpful. it, Got that's okay,

Operator

comes Austin Thank next Genuity. Moldow Please you. [Operator question Instructions] your Our with Canaccord state from question.

Austin Moldow

cards it Though you that too? card are more the is what programs or in still and Hi, DDA just just X% there please. other two means that, QX incentives small, which about total loyalty concentrate revenues other in in that revenue. Can programs just revenue is are XXXX talk

Newcomer Mark

programs, of combination any Yes, card not it a single is it is program.

Moldow Austin

loaded how conversion about that about you funds Okay, and there the have is those they those can same a you revenue there take in revenue, loaded any is other the on and what color dynamic with did whether top are funds small kind and of revenue programs programs? associates at talk and

Mark Newcomer

bit revenue at it a looked card of Part on So transaction to of has rate programs. yes, of card hybrid. conversion you've we're that doing as processing programs, it it is traditional of and is a other the dollars part loaded kind

Austin Moldow

last any of worst the have the you question, headwinds and with from you expense the maybe reductions if or model flexibility is scenario? there topline virus, did Okay, there case sort to see tested

Newcomer Mark

absolutely. Yes

definitely have analyses. done So sensitivity some

our through those that look anticipated that cash government and One the questions closely all to that with can we however, SBA will being cash loan contingency. of positive. the employees paycheck do at said, less we have available at, anticipate looked the flows and flow access scenarios the was burn process we that since XXX around funds we've cash of than as employers a in announced,

We are expect as considerations also other flow. again at positive as we, continued cash although levers well, looking

Austin Moldow

All right, very much. thanks

Operator

will further remarks. Thank I Management are for closing you. back time. this There turn it questions at to no

Mark Newcomer

world good loved is for and protect and ever And to executing and please country difficult as no safe growth our and our evening. your interest, We valuable questions, that? we now our did and Thank on and your who participations digesting this each call that services what make and and ones you work day add want to for and are profitability. for and and focused and have So again your customers you look time we occurring delivering Mark, a clients week the about each remain be a families to as in continuing for it those our said, how it. with. With all to right is and mistake

Mark Attinger

quarters. look you stay out we and you day touch Have thank again there. all everyone Yes, and take a staying and care today Diego forward thanks safe in us future nice to in joining and for

Operator

today's conference. great concludes may a this All parties disconnect. you, day. Have Thank

PaySign (PAYS) 6 Apr 202019 Q4 Earnings call transcript