Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the PaySign, Inc. Third Quarter 2023 Earnings Conference Call. After the speaker’s remarks, there will be a question-and-answer session.

[Operator Instructions] As a reminder, this conference call is being recorded, but comments on today's call regarding PaySign's financial results will be on a GAAP basis unless otherwise noted, PaySign's earnings release was disseminated to the SEC earlier today and can be found on the Investor Relations section of our website, paysign.com, which includes reconciliations of non-GAAP measures to GAAP reported amounts.

Additionally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding PaySign's future performance. Actual performance could differ materially from those forward-looking statements.

Information about the factors that could affect future performance as summarized at the end of PaySign's earnings release and in our recent SEC filings. Lastly, a replay of this call will be available until February 7, 2024. Please see PaySign's earnings release for details on how to access the replay. It's now my pleasure to turn the call over to Mr.

Mark Newcomer, CEO. Please go ahead..

Thank you, Kevin, good afternoon, everyone, thank you for joining PaySign's third quarter 2023 earnings call. I'm Mark Newcomer, Chief Executive Officer, and I'm pleased to share our third quarter financial results with you.

I will briefly discuss our performance and provide updates on our plasma and patient affordability verticals before handing over to our CFO, Jeff Baker. Additionally, Matt Turner, President of patient affordability, will be joining us for the question-and-answer session.

We delivered solid top and bottom-line growth this quarter, with revenue up 17% from last year's third quarter to $12.4 million and net profit improving by 29%,with all business segments contributing to our growth.

We continued to see healthy growth in our plasma donor compensation businesses as we added a total of 19 new centers in the quarter, of which 16 are fully mature. We did not experience any center closures during the third quarter, and we exited the quarter servicing 462 centers.

The average monthly revenue per center increased 7.8% compared to Q3 of last year and 6.7% from Q2 2023 to approximately $8,100. It should be noted that this level of eclipse the $8,000 per center milestone last seen prior to the COVID-19 pandemic as our clients are focusing on increasing donations at the existing centers.

We believe we will see this pattern continue into Q4 and beyond. As a result of a shift in client focus, we are adjusting our forecast of new center onboards in 2023 to 38 to 42 as many of the new center openings scheduled for Q4 have been pushed into next year.

We continue to bring new value adds in the plasma collection industry, including new interactive reporting features and portals designed to streamline center and managerial processes, further strengthening our product offering with the goal of improving user engagement and increasing stickiness with special attention to helping our clients maximize the donor experience.

The patient affordability vertical shows strong growth in the third quarter, reaching some important milestones. As we mentioned in our press release, this quarter saw us earn more than $1 million in top-line revenue in this segment.

While we were excited about this number, we are more excited about the current pipeline we have built for the remainder of this year and into next. During the quarter, we launched three programs, two of which were transitions.

One of the programs is the result of a yearlong selling cycle that resulted in PaySign being identified as the vendor of choice by this manufacturer for all future programs. This manufacturer has a very strong biosimilar portfolio and a long-term 10 plus year pipeline.

I'm especially excited to announce that we completed contract negotiations to launch a program for the nation's second largest pharmaceutical company. This will be our second program for that manufacturer. The program launched in October and immediately began delivering claims volume.

This was a mid-size transition program, with a substantial claim volume that provides benefit for an established product. We also completed contracts to transition the entire oncology portfolio for the nation's ninth largest pharmaceutical manufacturer. This represented four mature programs, with consistent claims volume.

Those four programs launching in October as well, and will be contributing to our increasing revenue in this vertical. This manufacturer has also awarded us two additional programs, that will launch in Q4 pending FDA approval.

These are just a few examples, where our product offerings and subject matter expertise are leading to major wins and strong growth in this vertical. Overall, we are seeing consistent increases in our claims volume and expect to double our average by end of the year.

With the addition of three new programs and others that launched in the beginning of October, we are now at 39 active patient affordability programs and expect to end the year, with over 40 programs. This represents strong year-over-year growth in this program acquisition, claim volume and top line revenue.

At the close of the fourth quarter, we plan to share some information with you around our overall client mix, therapeutic class concentrations and some of the points that may give you a better understanding of this vertical. With that, I'll turn it over to Jeff..

Thank you, Mark. Good afternoon, everyone. My comments today will be brief given all of the information Mark shared with you and all of the information in our press release and 10-Q, which will be filed before the market opens tomorrow. As Mark said, we had a solid quarter and reached a number of milestones across our business.

In our plasma business, our average revenue per plasma center per month grew to $8,102 versus $7,512, a year-over-year increase of 7.8%. This metric has not been over $8,000 since before the COVID-19 pandemic began in the first quarter of 2020. More importantly, we've seen this trend continue through October.

We exited the quarter with 462 plasma centers and now expect to exit the year with approximately 465 plasma centers as customers have shifted their strategy to collections versus new openings as their financing costs have significantly increased. In our pharma patient affordability business.

We exited Q3 with 34 active patient affordability programs and currently have 39 active programs, having launched an additional five programs in October. For the third quarter, patient affordability revenue surpassed the $1 million mark increasing 142% versus the same period last year.

Our strategy to diversify our business into other health care payment verticals is starting to come to fruition. As for the financial highlights of the third quarter of 2023 versus the same period last year. Total revenues of $12.4 million increased $1.8 million or 17%.

Gross profit margin for the quarter was 51.1% versus 54.3% during the same period last year, due mainly to inflationary pressures and the lack of pharma prepaid revenue this year, which was a 2.4% drag. SG&A for the quarter increased 7% to $4.7 million, with total operating expenses increasing 12% to $5.7 million.

We exited this quarter with 112 employees versus 95 employees during the same period last year to support the growth across our business. For the quarter, we posted net income of $1.1 million versus net income of $852,000. Earnings per share for both periods were $0.02 per share.

The second quarter adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA, was $2.3 million or $0.04 per diluted share versus $1.9 million and $0.04 per diluted share for the same period last year.

The fully diluted share count for the quarters used in calculating the per-share amounts was $53.5 million and $53.4 million, respectively.

Regarding the health of our company, we exited the quarter with $9.9 million in unrestricted cash and zero debt, a $2.2 million increase over the second quarter of 2023 and a $228,000 increase from the end of 2022. Year to date, we have used 1.1 million to repurchase 394,558 shares of our common stock.

We expect operating improvements to continue in the fourth quarter with year-over-year revenue growth slightly better than this quarter's revenue growth of 17% and operating expenses equivalent to our second quarter 2023 operating expenses of $6.3 million, which reflects seasonal costs relative to the third quarter.

We are on track to meet our revenue and adjusted EBITDA guidance, we provided in March, principally revenue to be in the range of $44 million to $46 million and adjusted EBITDA to be in the range of $6 million to $7.5 million. With that, I would like to turn the call back over to Kevin for question and answers..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Gary Prestopino from Barrington Research. Your line is now live..

That's -- I'm hearing a lot of static factors.

Somebody move on paper Hello?.

Gary, your line is now live..

Okay. Hey, guys. I kind of jumped on the call just a little bit late, so and I caught some of the narrative around the centers, you added 19 plasma centers this quarter.

Is that correct?.

That is right..

Okay.

And then you're only adding how many in Q4?.

It is like five-ish, Gary, what happened, we had one customer [indiscernible]] because it was too risky from them from a safety perspective and then we've added, we are adding others.

What we seen is a lot of our pretty much across the board, all the plasma guys have stopped opening new centers because the cost of financing new centers has gone significantly up for them.

So what they done is, we focused and instead of opening new centers to get to the number of leaders that they need they are increasing their payouts to continue to track pastrogen..

Okay. So the one about that one, you won a large contract and you hadn't really been putting any new centers on the books. And you said that that was going to maybe be a 2024 event.

Is that Phil applicable?.

Yeah Gary. It's marked. That is still out there however, we've been informed that they have the lays with the organizations on some technology points that is probably going to be delayed anywhere between six or 12 months. So for us, it's not something, I think, we should keep digging into the mixer, we should probably pull that out..

Okay. So -- and again, I don't know there's a lot of static on the line.

So I'm kind of trying to hear these answers, but is that -- as we go into 2024 then, is it safe to assume that because these players have kind of pulled back on their expansion, that your response to that, you wouldn't have to be investing more money into growth to service these new centers, is that a correct assumption?.

Well, it's not the money. What you have seen is the pullback in the number of new openings that are out there. So in -- this year 2023 there are about, I've already been told through the end of the third quarter about 80 new openings, we'll see where everything lands. I mean, we still maintain our market share.

We can't control what the industry is doing, we can only control what we are doing. In 2024, industry stays where they are. Financial cost stays where they are.

Our guess is that the world will probably see the we will slowed down in the number of new openings, but like I said earlier, that's been offset, because they are kind-ish instead of kind of reduced in the payout like, that was the strategy after COVID, reduce the payout and more people would come back, we are actually seeing them increase the payout back at the COVID levels.

People are coming back, because they try to supplementtheir income and do other things. And you saw that our average revenuepercentage per month went up.

So it just really should in the a strategy, that we should maintain a market share about 40% this year, next year and going forwardas long as, unless we win a big contract, well there is some out there. And we will look at it depending on the pricing..

Okay. Thank you..

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

Thank you, gentlemen and I want to thank everybody for joining us today. We'll look forward to seeing you on the next quarterly call. Take care..

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today..