- Fourth-quarter adjusted EBITDA of $0.8 million, or diluted
adjusted EBITDA per share of $0.01
- Fourth-quarter net loss of $4.3 million, or diluted earnings
per share (EPS) of ($0.09), which includes a $4.0 million tax
provision for recording a valuation on our deferred tax asset which
remains available for future benefit
- Fourth-quarter total revenues of $7.3 million, a decrease of
$2.5 million from fourth-quarter 2019
- Fourth-quarter gross dollar load volume declined 2.2% versus
the year-ago period and increased 15.9% versus the previous
quarter
- Fourth-quarter purchase volume decreased 12.0% versus the
year-ago period and increased 14.4% versus the previous
quarter
Paysign, Inc. (NASDAQ: PAYS), a leading provider of
prepaid card programs, digital banking services, and payment
processing, today reported financial results for the fourth-quarter
and fiscal year 2020.
“2020 was a difficult year for our business due to the COVID-19
pandemic, as it negatively impacted our clients in the pharma and
plasma industries. The month of May marked the low point for our
plasma business and we have continued to see improvements
throughout the year as states loosen restrictions on businesses.
While COVID-19 and government stimulus measures will likely
continue to impact our business into 2021, we remain cautiously
optimistic that our business will continue to rebound as
vaccinations become more prevalent and business restrictions are
lifted,” said Paysign CEO Mark Newcomer. “During the year we added
55 new plasma programs and experienced a net growth in card
programs of 61. With $7.8 million of unrestricted cash and zero
debt on our balance sheet, the company remains well-capitalized and
positioned to weather any further impacts from the pandemic.”
PAYSIGN, INC.
SUMMARY OF CONSOLIDATED FINANCIAL
RESULTS
Quarter Ended December 31,
Year Ended December 31,
(Unaudited)
(Audited)
2020
2019
2020
2019
Revenues Plasma industry
$ 6,298,653
$ 7,630,631
$ 23,401,068
$ 26,994,929
Pharma industry
921,644
1,835,610
326,699
7,372,990
Other
33,140
298,734
392,667
298,734
Total revenues
7,253,437
9,764,975
24,120,434
34,666,653
Cost of revenues
3,541,270
4,703,409
14,817,028
15,425,178
Gross profit
3,712,167
5,061,566
9,303,406
19,241,475
Gross margin %
51.2
%
51.8
%
38.6
%
55.5
%
Operating expenses Selling, general and administrative
3,792,396
3,172,799
15,091,432
11,656,681
Impairment of intangible asset
-
-
382,414
-
Loss on abandonment of assets
-
-
42,898
-
Depreciation and amortization
578,117
435,361
2,124,762
1,483,140
Total operating expenses
4,370,513
3,608,160
17,641,506
13,139,821
Income (loss) from operations
$ (658,346
)
$ 1,453,406
$ (8,338,100
)
$ 6,101,654
Net income (loss) attributable to Paysign, Inc.
$ (4,311,158
)
$ 1,883,779
$ (9,141,562
)
$ 7,454,319
The following additional details are provided to aid in
understanding Paysign’s fourth-quarter 2020 results, versus the
year-ago period:
- Revenues decreased $2.5 million (25.7%).
- Plasma revenue decreased $1.3 million (17.5%), primarily due to
the impact of COVID-19 which resulted in a decrease in plasma
donations and dollars loaded to card. Average revenue per center
declined 25.7%. We added 36 new plasma centers during the quarter,
exiting the year with 340 centers. This compares to 285 centers at
the end of 2019.
- Pharma revenue decreased $0.9 million (49.8%), primarily driven
by the change in accounting estimate that occurred in the third
quarter which impacted the recognition of settlement income during
the fourth quarter compared to the same period in 2019.
- Cost of revenues decreased $1.2 million (24.7%). Cost of
revenues are comprised of transaction processing fees, data
connectivity and data center expenses, network fees, bank fees,
card production costs, customer service, program management,
application integration setup and sales and commission expense. The
decrease was primarily due to the decrease in transaction
volumes.
- Gross profit decreased $1.3 million (26.7%) due to the
reduction in revenues, and the disproportionate decrease in cost of
revenues. Gross margin was 51.2% compared to 51.8% in the same
period the prior year.
- Operating expenses increased $0.8 million (21.1%) from the
fourth-quarter 2019 but decreased $0.6 million (12.4%) compared to
the third-quarter 2020. The year-over-year increase was primarily
related to an increase in staffing and compensation, professional
services, stock-based compensation, technologies and telecom,
depreciation, amortization and rent costs, slightly offset by a
decrease in travel.
- Net income decreased $6.2 million to a loss of $4.3 million.
The overall change in net income attributable to Paysign, Inc.
relates to a $4.0 million tax provision for recording a valuation
on our deferred tax asset and the aforementioned factors.
- Adjusted EBITDA, which is operating income plus depreciation,
amortization, stock-based compensation, impairment of an intangible
asset and loss on the abandonment of assets, and is a non-GAAP
metric used by management to gauge the operating performance of the
business, decreased $1.8 million to $0.8 million due to the
aforementioned factors.
2020 Year Milestones
- As of December 31, 2020, we had approximately 3.5 million
cardholders and 360 card programs.
- We added 55 plasma programs, five new pharma programs, and one
additional corporate incentive program.
- We remediated all material weaknesses in internal control over
financial reporting disclosed in our 2019 Form 10-K.
COVID-19 Update
The outbreak of a novel coronavirus and the incidence of the
related disease (COVID-19) starting in late 2019 has continued,
spreading throughout the United States and much of the world
beginning in the first quarter of 2020. In March 2020, the World
Health Organization declared the outbreak a pandemic. While the
disruption is currently expected to be temporary, there is
uncertainty about the duration. The COVID-19 outbreak and
government stimulus measures to help individuals and business most
impacted by COVID-19, has had and will continue to have an adverse
effect on the company's results of operations into 2021. While we
remain cautiously optimistic, given the uncertainty around the
extent and timing of the potential future spread or mitigation of
COVID-19 and around the imposition or relaxation of protective
measures, management cannot reasonably estimate the impact on the
company's future results of operations, cash flows, or financial
condition.
Material Weakness Remediation
We implemented our remediation plan for the previously reported
material weaknesses in internal control over financial reporting,
described in Part II, Item 9A, of our 2019 Form 10-K, which
included taking steps to improve the design and methods for testing
internal controls, adding resources to carry out such practices,
and instituting new procedures for managing system user access and
change control. As previously described in Part I, Item 4, of our
Forms 10-Q for the quarters ended March 31, 2020, June 30, 2020,
and September 30, 2020, our remediation was ongoing throughout
2020.
The following actions contributed to the remediation
efforts:
- Strengthened the technology department, including hiring a new
chief technology officer and creating and filling a new information
security manager position.
- Secured technical training on COSO’s Internal Control –
Integrated Framework, cybersecurity and regulatory compliance.
- Engaged a SOX advisory accounting firm to aid in refining our
narratives and independently test the design and operating
effectiveness of our internal control over financial
reporting.
- Substantially refined process narratives and created
risk-control matrices as a basis for the design of our internal
control over financial reporting, including IT general
controls.
- Defined and implemented multiple user roles to enhance access
controls to our core processing platform.
- Refined the change-control process for system changes,
including forming an IT change review board and implementing
software monitoring of production system changes.
As of December 31, 2020, management concluded that the
remediated controls were operating effectively and the deficiencies
that contributed to the material weaknesses had been effectively
corrected.
Other than the changes related to our remediation efforts
described above, we made no changes in our internal control over
financial reporting during the quarter ended December 31, 2020,
that have materially affected, or are reasonably likely to
materially affect, our internal control over financial
reporting.
Fourth-Quarter and Year-end 2020 Financial Results Conference
Call Details
At 5:00 p.m. Eastern time today, the company will host a
conference call to discuss its fourth-quarter and year-end 2020
results. The conference call may include forward-looking
statements. The dial-in information for this call is 877.407.2988
(within the U.S.) and 201.389.0923 (outside the U.S.). A replay of
the call will be available until June 25, 2021, and can be accessed
by dialing 877.660.6853 (within the U.S.) and 201.612.7415 (outside
the U.S.), using passcode 13716772.
Forward-Looking Statements
Certain statements contained in this press release may be deemed
to be forward-looking statements under federal securities laws, and
the company intends that such forward-looking statements be subject
to the safe-harbor created thereby. All statements, other than
statements of fact, included in this release, are forward-looking
statements. Such forward-looking statements include, among others,
that the pandemic continues to have a meaningful impact on the
company’s business and operations; the company’s optimistic outlook
in the recovery of the pharma and plasma industries; the company’s
ability to return to year-over-year growth; the company remains
well-capitalized and positioned to weather impacts from the
pandemic; and that the company expects an upturn in the second half
of 2021 resulting from vaccinations becoming more prevalent and
business restrictions being lifted. We caution that these
statements are qualified by important risks, uncertainties, and
other factors that could cause actual results to differ materially
from those reflected by such forward-looking statements. Such
factors include, among others, the inability to continue our
current growth rate in future periods; that a downturn in the
economy, including as a result of COVID-19, as well as government
stimulus measures, could reduce our customer base and demand for
our products and services, which could have an adverse effect on
our business, financial condition, profitability, and cash flows;
operating in a highly regulated environment; failure by us or
business partners to comply with applicable laws and regulations;
changes in the laws, regulations, credit card association rules or
other industry standards affecting our business; that a data
security breach could expose us to liability and protracted and
costly litigation; and other risk factors set forth in our Form
10-K for the year ended December 31, 2020. Except to the extent
required by federal securities laws, the company undertakes no
obligation to publicly update or revise any statements in this
release, whether as a result of new information, future events, or
otherwise.
About Paysign, Inc.
Paysign, Inc., (NASDAQ: PAYS), is a vertically integrated
provider of prepaid card products and processing services for
corporate, consumer, and government applications. Our payment
solutions are utilized by our corporate customers as a means to
increase customer loyalty, increase patient adherence rates, reduce
administration costs, and streamline operations. Public sector
organizations can utilize our payment solutions to disburse public
benefits or for internal payments. We market our prepaid card
solutions under our Paysign brand. As we are a payment processor
and prepaid card program manager, we derive our revenues from all
stages of the prepaid card lifecycle. We provide a card processing
platform consisting of proprietary systems and software
applications based on the unique needs of our clients. We have
extended our processing business capabilities through our
proprietary Paysign platform. Through the Paysign platform, we
provide a variety of services including transaction processing,
cardholder enrollment, value loading, cardholder account
management, reporting, and customer service. The Paysign platform
is built on modern cross-platform architecture and is designed to
be highly flexible, scalable and customizable. The platform has
allowed the company to significantly expand its operational
capabilities by facilitating our entry into new markets within the
payments space through its flexibility and ease of customization.
The Paysign platform delivers cost benefits and revenue-building
opportunities to our partners. We have developed prepaid card
programs for corporate incentives and rewards including, but not
limited to, consumer rebates and rewards, donor compensation,
clinical trials, healthcare reimbursement payments, and
pharmaceutical payment assistance. We have expanded our product
offerings to include additional corporate incentive products and
demand deposit accounts accessible with a debit card. In the
future, we expect to further expand our product offerings into
other prepaid card offerings such as payroll cards, travel cards,
and expense reimbursement cards. Our cards are sponsored by our
issuing bank partners. For over 15 years healthcare companies,
major pharmaceutical companies, multinationals, prestigious
universities, and social media companies have relied on Paysign to
provide state-of-the-art prepaid payment programs tailored to their
unique requirements. Paysign® is a registered trademark of Paysign,
Inc. in the United States and other countries. For more information
visit us at paysign.com or follow us on LinkedIn,
Twitter, and Facebook.
PAYSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
Quarter Ended December 31,
Year Ended December 31,
(Unaudited)
(Audited)
2020
2019
2020
2019
Revenues Plasma industry
$ 6,298,653
$ 7,630,631
$ 23,401,068
$ 26,994,929
Pharma industry
921,644
1,835,610
326,699
7,372,990
Other
33,140
298,734
392,667
298,734
Total revenues
7,253,437
9,764,975
24,120,434
34,666,653
Cost of revenues
3,541,270
4,703,409
14,817,028
15,425,178
Gross profit
3,712,167
5,061,566
9,303,406
19,241,475
Operating expenses Selling, general and administrative
3,792,396
3,172,799
15,091,432
11,656,681
Impairment of intangible asset
-
-
382,414
-
Loss on abandonment of assets
-
-
42,898
-
Depreciation and amortization
578,117
435,361
2,124,762
1,483,140
Total operating expenses
4,370,513
3,608,160
17,641,506
13,139,821
Income (loss) from operations
(658,346
)
1,453,406
(8,338,100
)
6,101,654
Other income Interest income
13,245
76,464
90,720
441,116
Income (loss) before income tax provision (benefit)
(645,101
)
1,529,870
(8,247,380
)
6,542,770
Income tax provision (benefit)
3,666,057
(353,908
)
894,182
(909,976
)
Net income (loss) before noncontrolling interest
(4,311,158
)
1,883,778
(9,141,562
)
7,452,746
Net loss attributable to noncontrolling interest
-
1
-
1,573
Net income (loss) attributable to Paysign, Inc.
$ (4,311,158
)
$ 1,883,779
$ (9,141,562
)
$ 7,454,319
Net income (loss) per share Basic
$ (0.09
)
$ 0.04
$ (0.19
)
$ 0.16
Diluted
$ (0.09
)
$ 0.03
$ (0.19
)
$ 0.14
Weighted average common shares Basic
49,918,782
48,092,931
49,272,494
47,436,754
Diluted
49,918,782
54,437,309
49,272,494
54,550,369
PAYSIGN, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Audited)
December 31,
December 31,
2020
2019
ASSETS Current assets Cash
$ 7,829,453
$ 9,663,746
Restricted cash
48,100,951
35,908,559
Accounts receivable
654,859
891,936
Prepaid expenses and other current assets
1,375,364
1,413,208
Total current assets
57,960,627
47,877,449
Fixed assets, net
1,849,164
937,185
Intangible assets, net
3,699,033
3,816,232
Operating lease right-of-use asset
4,324,682
-
Deferred tax asset
-
917,480
Total assets
$ 67,833,506
$ 53,548,346
LIABILITIES AND EQUITY Current liabilities Accounts
payable and accrued liabilities
$ 2,162,256
$ 1,523,604
Operating lease, current portion
320,636
-
Customer card funding
48,100,951
32,723,227
Total current liabilities
50,583,843
34,246,831
Operating lease liability, long term portion
4,013,598
-
Total liabilities
54,597,441
34,246,831
Stockholders' equity Common stock: $0.001 par value;
150,000,000 shares authorized, 50,251,607 and 48,577,712 issued at
December 31, 2020 and 2019, respectively
50,252
48,578
Additional paid-in-capital
14,388,890
11,577,539
Treasury stock at cost, 303,450 shares
(150,000
)
(150,000
)
Retained earnings
(1,053,077
)
8,088,485
Total Paysign, Inc. stockholders' equity
13,236,065
19,564,602
Noncontrolling interest
-
(263,087
)
Total equity
13,236,065
19,301,515
Total liabilities and equity
$ 67,833,506
$ 53,548,346
Paysign, Inc. Non-GAAP Measures
To supplement Paysign’s financial results presented on a GAAP
basis, we use non-GAAP measures that exclude from net income the
following cash and non-cash items: interest, taxes, amortization
and depreciation, stock-based compensation, impairment of
intangible asset, and loss on the abandonment of assets. We believe
these non-GAAP measures used by management to gauge the operating
performance of the business help investors better evaluate our past
financial performance and potential future results. Non-GAAP
measures should not be considered in isolation or as a substitute
for comparable GAAP accounting, and investors should read them in
conjunction with the company’s financial statements prepared in
accordance with GAAP. The non-GAAP measures we use may be different
from, and not directly comparable to, similarly titled measures
used by other companies.
“EBITDA” is defined as earnings before interest, taxes,
depreciation, and amortization expense. “Adjusted EBITDA” reflects
the adjustment to EBITDA to exclude stock-based compensation
charges, impairment of an intangible asset and loss on the
abandonment of assets.
Adjusted EBITDA is not intended to represent cash flows from
operations, operating income (loss), or net income (loss) as
defined by U.S. GAAP as indicators of operating performances.
Management cautions that amounts presented in accordance with
Paysign’s definition of Adjusted EBITDA may not be comparable to
similar measures disclosed by other companies because not all
companies calculate Adjusted EBITDA in the same manner.
PAYSIGN, INC.
RECONCILIATION OF ADJUSTED EBITDA
TO NET INCOME (LOSS)
Quarter Ended December 31,
Year Ended December 31,
(Unaudited)
(Audited)
2020
2019
2020
2019
Net income (loss) attributable to Paysign, Inc.
$ (4,311,158
)
$ 1,883,779
$ (9,141,562
)
$ 7,454,319
Income tax benefit
3,666,057
(353,908
)
894,182
(909,976
)
Interest income
(13,245
)
(76,464
)
(90,720
)
(441,116
)
Depreciation and amortization
578,117
435,361
2,124,762
1,483,140
EBITDA
(80,229
)
1,888,768
(6,213,338
)
7,586,367
Impairment of intangible asset
-
-
382,414
-
Loss on abandonment of assets
-
-
42,898
-
Stock-based compensation
847,970
662,726
2,971,777
2,528,613
Adjusted EBITDA
$ 767,741
$ 2,551,494
$ (2,816,249
)
$ 10,114,980
Non-GAAP EPS - basic
$ 0.02
$ 0.05
$ (0.06
)
$ 0.21
Non-GAAP EPS - diluted
$ 0.01
$ 0.05
$ (0.06
)
$ 0.19
Weighted average common shares Basic
49,918,782
48,092,931
49,272,494
47,436,754
Diluted
53,671,904
54,437,309
49,272,494
54,550,369
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210325005898/en/
Investor Relations 888.522.4810 ir@paysign.com
Media Relations Alicia Ches Director, Marketing pr@paysign.com
702.749.7257
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