chilar4567
1 week ago
here's a list of sellers:
Owner Name Date Shares Held Change (Shares) Change (%) Value (In 1,000s)
American International Group, Inc. 9/30/2024 0 -16,092 Sold Out
Aqr Capital Management Llc 12/31/2024 0 -12,987 Sold Out
Capital Performance Advisors Llp 12/31/2024 0 -125 Sold Out
Eam Investors, Llc 12/31/2024 0 -47,808 Sold Out
Federated Hermes, Inc. 12/31/2024 0 -100 Sold Out
Group One Trading Llc 12/31/2024 0 -64,645 Sold Out
Herr Investment Group Llc 6/30/2024 0 -48,857 Sold Out
Jane Street Group, Llc 12/31/2024 0 -16,128 Sold Out
Lazard Asset Management Llc 12/31/2024 0 -40,479 Sold Out
Manufacturers Life Insurance Company, The 12/31/2024 0 -14,525 Sold Out
Owls Nest Partners Ia, Llc 12/31/2024 0 -95,211 Sold Out
Parallel Advisors, Llc 12/31/2024 0 -6,000 Sold Out
Point72 (Difc) Ltd 12/31/2024 0 -1,820 Sold Out
Radnor Capital Management, Llc 12/31/2024 0 -19,293 Sold Out
State Of Wyoming 12/31/2024 0 -43,017 Sold Out
Truist Financial Corp 12/31/2024 0 -11,000 Sold Out
chilar4567
2 weeks ago
SA ARTICLE:
Paysign: Shifting Revenue Mix, Falling Stock, Compelling Opportunity
Feb. 19, 2025 3:05 AM ETPaysign, Inc. (PAYS) StockPAYS1 Comment
Taylor Irwin
851 Followers
Play
(16min)
Summary
Paysign, Inc. is a small healthcare-focused Fintech company excelling in the $500M Patient Affordability market, with 230% revenue growth in its Pharma segment over the past four quarters.
Despite a 40% stock decline in six months, Paysign's strong fundamentals and innovative solutions present a compelling investment opportunity with a fair value estimate of $3.33 per share.
Paysign's strategic focus on Plasma and Patient Affordability programs, vertical integration, and innovation has driven significant growth and improved margins, funded entirely through organic cash flow.
The company's zero debt, strategic investments, and executive team holding over 30% of outstanding stock further bolster its long-term growth prospects and investor confidence.
Woman making a mobile payment while shopping at the pharmacy
Hispanolistic/E+ via Getty Images
Investment Thesis
Paysign, Inc. (NASDAQ:PAYS), a small healthcare-focused Fintech company, has made a splash in the estimated $500M Patient Affordability market, generating average revenue growth of 230% the past 4 quarters in its Pharma segment. Despite its size, the company’s innovative solutions in the space are helping it win over larger clients with more programs and bigger budgets – all accomplished through strategic investment and funded through organic cash flow. This shifting revenue mix not only favors the topline, but has the potential to improve the company’s margin profile and cash flow.
While the firm’s fundamentals strengthen, PAYS’s stock has tumbled over 40% the last 6 months, presenting an opportunity for investors. My base case puts PAYS shares at a fair value of $3.33, garnering a nearly 30% margin of safety from current prices.
Business & Industry Overview
Paysign, formerly known as 3PEA International until 2019, was founded in 1995 as an early Internet fintech company. The company’s initial product was a hardware device designed to connect to computers and facilitate transactions while protecting a user’s card information. This concept failed to gain traction, and the company then pivoted its payment platform to prepaid debit cards.
Since then, Paysign’s prepaid card programs and payment processing platform have gained traction in the Healthcare industry, specifically Plasma donation and, most recently, Patient Affordability programs. Though a smaller operation, it also markets prepaid card programs in the corporate sphere for employee incentives and expense management. In sum, its products include corporate rewards, gift cards, general purpose reloadable cards, donor compensation, reimbursement, payment assistance and more. Behind these card programs is Paysign’s payment platform which integrates with client systems, allowing for easy program management and data & analytics. As a prepaid card program manager and payment processor, Paysign is vertically integrated, deriving revenue from all stages of the card lifecycle. Corporate customers will often adopt these card programs to increase customer loyalty, reward customers or employees, and streamline operations, while public customers simply need solutions to efficiently disperse assistance funds, which leads to greater patient enrollment, adherence, and retention.
The prepaid card market is in the trillions by volume globally. Paysign primarily offers cash access open-loop cards, network branded (Visa, Mastercard, etc.) and can be used anywhere, which is a market expected to reach $836 billion by 2027 averaging 8% annual growth. Prepaid cards are most often used by under or unbanked households, which makes up around 14% and 4% of US households in 2023. Cash payments have also been on the decline, making up only 16% of transactions in the US, down from 35% in 2015. Yet, the total percentage of households using prepaid cards dropped from about 7% in 2023 to 6% in 2024. Even so, a steady share of underbanked households, which tend to also have difficulty accessing credit, and the decline of cash transactions help to support some usage of prepaid cars, which are easily accessible and cashless. This is especially prevalent within the Healthcare industry, as households in lower economic bands rely heavily on assistance programs. What bodes well for Paysign is vertical integration as a card program manager and processor – a strategy that covers all customer demands, better integrates with customer systems, and creates sticker products overall. Paysign has deployed this strategy across an underdeveloped and complex niche in healthcare payments. Let’s narrow in on these core business segments: Plasma and Pharma.
Strategy and Catalysts
Since entering the Plasma donations market in 2011, Paysign has captured a commanding 40% share of the plasma collection centers in the US. Plasma is vital to many lifesaving therapies and has had steady growth in the past decade. Paysign offers a comprehensive payment solution for these centers which makes donor compensation more efficient and streamlines payment operations. Paysign has managed to maintain and even grow its share of Plasma centers serviced from 359 in Q3 2021 to 478 in Q3 2024 and averaging 20%+ revenue growth over that period. This segment has provided a supply of cash for investment in other business initiatives like Patient Affordability Programs.
Paysign’s Patient Affordability solutions help address financial barriers for patients by facilitating access to drug manufacturers’ affordability programs, which are standard practice for brand-name drugs looking to increase market share. Paysign’s key value-add here is helping to identify and mitigate the impact of copay maximizers and accumulators, which act as middlemen to increase the profitability of insurance companies. Here is how copay maximizers and accumulators typically work:
Maximizers: Ensure insurance companies receive the maximum amount of assistance from drug manufacturers by setting patient copays equal to the maximum assistance available but does not apply it toward the patient’s out-of-pocket maximum. Even though this lowers a patient’s monthly costs, it delays when maximums are reached and thus reduces what insurers must pay long-term.
Accumulators: Similar to maximizers but instead simply prevents manufacturer copay assistance from counting toward a patient’s out-of-pocket maximum, resulting in a similar outcome on patients.
Overall, maximizers and accumulators work to help insurers pocket as much money as possible from drug manufacturers while minimizing payouts to patients, negatively impacting both. Paysign mitigates these middlemen by processing assistance claims directly between the patient and manufacturer, allowing for speedier processing and the assistance to count towards the patient’s out-of-pocket maximum. The result is lower costs for patients and greater patient adherence and brand awareness for drug manufacturers. The company also offers customizable affordability programs for clinical based therapies and program performance data for clients on their platform. Not only have these solutions boosted Paysign’s topline, as we’ll see, but the impact across its clientele has been tremendous:
Patient Affordability Success
Business Wire
While we don’t have visibility into the market share of these programs, Paysign competes against only a handful of providers: ConnectiveRx, TrialCard, Eversana (all Private Equity backed), IQVIA, and McKesson (public). Paysign’s key differentiator in the space is its pure player status and focus on innovation. Many of the competitors mentioned operate segments across a wide swath of the healthcare industry. This comes with scale benefits like larger budgets and networks, but can also be a disadvantage when competing against a smaller company heavily focused on one or two key markets like Paysign. Winning, and nurturing, a few key accounts in this market means much more for a sub-$200 million company like Paysign compared to a $75 billion behemoth like McKesson.
Paysign’s position and strategy has enabled it to expand Pharma revenues an average of 230% in the past four quarters. Since rolling out Patient Affordability solutions in 2022, the company has expanded from under 10 programs to now almost 70. Patient Affordability claims volume growth has also been accelerating each quarter of 2024 from 266% in Q1 to 430% in Q3. Each quarter, management has attributed the success to winning cornerstone accounts with large pharmaceutical companies that typically start with 1–2 programs, but eventually expand to other drug programs. One example is AstraZeneca, which has expanded from 4 to 12 programs over the past two years. Management has even pointed to Paysign’s relative product quality, winning large contracts from competitors who’ve lacked innovation. Here they allude to two examples of this: transition accounts and the cyber-outage last February:
It is very important to call out that transition programs are far more difficult to win. Transitioning a patient affordability program requires a detailed and comprehensive approach with zero margin for error. As a seamless transition is of the utmost importance to the program sponsor and the patients that rely on a well-run program. We are pleased that we have been able to provide solutions where the value offered is so compelling that our clients are willing to change mid-program. I want to take a moment to talk about the recent disruptions to the patient affordability sector. On February 21, there was an unprecedented cyberattack on the U.S. health system and the change health care claims and payment infrastructure. This had a substantial impact to consumers, providers and many of our competitors, leaving their pharmaceutical manufacturer clients scrambling for a solution to the prolonged outage. As a result of the fallout, we were able to secure and launch 8 new programs from 2 manufacturers in less than ten days, adding substantial revenue and approximately 1 million additional claims to our 2024 claims volume.
Similar to Paysign’s success in Plasma, understanding client pain points and solving with innovation has led to outperformance – outperformance which looks to continue. Paysign estimates its Patient Affordability market at about $500 million and currently does less than $10 million in Pharma revenues – quite a nice runway. Additionally, the segment has gone from single digits as a percent of total revenue to about 21% and management expects that it could exceed 25% in the next few years.
Revenue mix
Author's visual, data from Paysign filings
Fundamentals & Valuation
Growth
Paysign has generated strong revenue growth historically, averaging over 15% annually the past 5 years; excluding a 31% drop in 2020, the number jumps to 28%. Pharma has been the bright spot for Paysign’s topline, as previously mentioned, making up for headwinds in its Plasma business.
Revenue growth
Author compiled, Paysign Filings
Plasma has experienced volume headwinds due to a tighter labor market in donation centers and closures during the hurricanes in 2024 which weighed on overall volume. Yet, the ramping of Paysign’s Patient Affordability solutions should support continued robust growth.
KPIs
Author Compiled, Data from Paysign Filings
Profitability & Cash Flow
Paysign’s shifting revenue mix has the potential to further leverage its overall margin profile. Its Patient Affordability is a higher gross margin product, helping to widen margins by 400 bps in Q3. As this segment becomes the primary revenue driver, I expect margins to hold in the mid-50s, which outpaces similar sized comps. Operating and net margins have been much more volatile as the company has leaned into software and personnel investments the past few years, specifically focused on Patient Affordability. This has driven higher amortization expenses as software investments are capitalized and headcount has grown from 112 to 164 in the last quarter. But on an adjusted EBITDA basis, the company is beginning to reap the benefits of tremendous growth in its Pharma segment – which I expect to positively impact operating margins as investments wrap-up. Keep in mind, this figure includes stock-based-compensation (‘SBC’), which has held steady at around 6% of revenues.
Adj EBITDA
Author Visual, Data from Paysign Filings
Not only are these investments paying off by accelerating revenue growth and expanding margins, but they have been funded entirely through organic cash flow.
In addition to zero debt and growth through strategic investment, management repurchased over $1 million in stock through 2023 when PAYS was reaching two-year lows and resumed repurchases in Q3 2024. This same executive team and board holds over 30% of Paysign’s outstanding stock.
Valuation
Being a small company addressing a fairly small market, close comparable companies are tougher to come by. Still, it trades at reasonable multiples compared to similar sized fintech peers operating in adjacent industries, especially given its superior growth.
multiples
Seeking Alpha
Growth
Seeking Alpha
Historically, PAYS is also trading well below its 5-year averages as multiples have compressed while fundamentals have strengthened.
Valuation
Morningstar
On a discounted cash flow basis, PAYS also looks undervalued with an estimated intrinsic value per share of $3.33, representing a 27% margin of safety from its current price. My base case holds the following key operational assumptions:
Key assumptions
Author Estimates
I conservatively expect revenue to hold in the 20s the next three years as Paysign further penetrates the Patient Affordability market and investments pay off. I expect gross margin stability in the low to mid-50s and widening operating margins to the low teens as the revenue mix continues to shift to Pharma. I held investment close to historical 5-year averages, then slightly tapering off as the company concludes platform updates but commits to continued investment overall. I calculated WACC using the CAPM model with a risk-free rate of 4.3%, equity risk premium of 4.2% and beta of 1.0. And I took an average terminal value estimate using both the terminal growth rate and exit multiple methods.
DCF
Author Estimates
Risks
The key risks of an investment in Paysign are size and industry-specific risks. Paysign is a small-cap stock with relatively low liquidity and volume, which can bite investors if the economy contracts. The company’s balance sheet awards it with durability in my view, as it carries no debt and ample cash. The prepaid card market has been in an overall decline the past few years, which could threaten parts of Paysign’s core operations. Still, the prevalence of prepaids in Paysign’s core markets and the company’s strategic focus on innovation should help shield it long-term. Its platform-processor integrated approach gives it flexibility on the types of solutions it deploys should prepaids continue to decline.
Summary
Paysign’s success in the Patient Affordability market is driving a revenue sea change that supports continued long-term growth and improved margins. Much of this improvement is due to strategic investment and innovative solutions winning customers, funded exclusively through organic cash flow. Despite a healthy outlook for the company, the stock has fallen. This divergence creates an opportunity for investors, in my view.
This article was written by
Taylor Irwin
851 Followers
Fundamental research on quality growth stocks with big potential. Passed CFA Level 3.
Analyst’s Disclosure: I/we have a beneficial long position in the shares of PAYS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
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About PAYS Stock
Symbol Last Price % Chg
PAYS
2.98 13.74%
Pre 3.19 7.05%
Market Cap
$159.57M
PE (FWD)
49.67
Yield
-
Rev Growth (YoY)
27.75%
Short Interest
0.92%
Prev. Close
$2.62
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3P
SymbolSort by Symbol in descending order Price % Chg
PAYS
2.98
13.74%
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