Paysign, Inc. (NASDAQ: PAYS), a vertically integrated provider
of innovative prepaid card programs and processing services for
corporate, consumer and government applications, today reported
financial results for the second quarter ended June 30, 2020.
“During this pandemic, we have been focused first and foremost
on the safety of our employees while supporting the business
continuity needs of our customers. While our financial results were
significantly impacted by the economic slowdown caused by the
COVID-19 pandemic, we executed well, and are confident that this
second quarter will prove to be the most challenging.” said Mark
Newcomer, Chief Executive Officer, Paysign. “We are confident that
we will emerge from this pandemic related slowdown a stronger
company and resume a trajectory of growth. To this point, we
continued to expand our footprint in the Plasma collection space.
Late in the second quarter, we began onboarding an expected total
of 49 plasma and blood collection centers with go-lives to be
completed by early fourth quarter. In addition to these 49 centers,
we have successfully onboarded 104 plasma centers in support of a
client’s business continuity plan. Our pipeline remains robust,
strengthened by changes in the competitive landscape. We continue
to take actions to navigate the near-term challenges presented by
the pandemic, while innovating for our customers, launching new
products and investing for the future to deliver long-term value
for our shareholders.”
Financial Highlights
PAYSIGN, INC.
SUMMARY OF CONSOLIDATED FINANCIAL
RESULTS
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019
2020
2019
Revenues Plasma industry
$
4,572,439
$
6,542,655
$
11,915,849
$
12,427,232
Pharma industry
1,768,565
2,093,616
4,788,942
3,466,329
Other
102,061
-
314,747
-
Total revenues
6,443,065
8,636,271
17,019,538
15,893,561
Cost of revenues
3,138,350
3,598,038
7,993,870
7,080,174
Gross profit
3,304,715
5,038,233
9,025,668
8,813,387
Gross margin %
51.3
%
58.3
%
53.0
%
55.5
%
Operating expenses Selling, general and administrative
3,401,501
3,012,972
7,228,825
5,717,921
Loss on abandonment of assets
42,898
-
42,898
-
Depreciation and amortization
506,477
395,510
1,008,853
729,271
Total operating expenses
3,950,876
3,408,482
8,280,576
6,447,192
Income (loss) from operations
$
(646,161
)
$
1,629,751
$
745,092
$
2,366,195
Net income (loss) attributable to Paysign, Inc.
$
(219,234
)
$
1,738,791
$
1,321,731
$
2,610,462
Three Months Ended June 30, 2020 and 2019
The decrease in total revenues of $2.2 million for the three
months ended June 30, 2020 compared to the same period in the prior
year approximating 25%, consisted of a 30% reduction in Plasma
revenue and a 16% reduction in Pharma revenue. This decrease was
primarily due to a significant decrease in plasma donations and
dollars loaded to card; combined with a smaller decrease in Pharma
revenues resulting from lower unspent balances and improved client
program management. Both industries were impacted by a novel
coronavirus and the incidence of the related disease COVID-19.
Cost of revenues for the three months ended June 30, 2020
decreased $460 thousand compared to the same period in the prior
year, and constituted approximately 49% and 42% of total revenues
for the three months ended June 30, 2020 and 2019, respectively.
Cost of revenues is comprised of transaction processing fees, data
connectivity and data center expenses, network fees, bank fees,
card production costs, customer service and program management
expenses, application integration setup, and sales and commission
expense. There was a favorable volume variance of $914 thousand due
to the decrease in transactions, offset by an unfavorable rate
variance of $454 thousand resulting from a decrease in higher
margin revenue business.
Gross profit for the three months ended June 30, 2020 decreased
$1.7 million compared to the same period in the prior year
resulting from the reduction in revenue aforementioned, and the
disproportionate decrease in cost of sales. The decrease of 705
basis points (“bps”) in gross margin resulted from an unfavorable
cost of revenue rate variance and a lower revenue conversion
rate.
Selling, general and administrative expenses (“SG&A”) for
the three months ended June 30, 2020 increased $389 thousand or 13%
compared to the same period in the prior year and consisted
primarily of an increase in staffing and compensation of $329
thousand, technologies and telecom of $87 thousand, and rent of $65
thousand; offset by a decrease in travel of $103 thousand.
The net income (loss) attributable to Paysign, Inc. for the
three months ended June 30, 2020 decreased $2.0 million. The
overall change in net income (loss) attributable to Paysign, Inc.
relates to the aforementioned factors.
Six Months Ended June 30, 2020 and 2019
Total revenues for the six months ended June 30, 2020 increased
$1.1 million compared to the same period in the prior year. The
increase in revenue approximating 7% was primarily due to an
approximate increase of 20% in new card programs year on year,
contributing to a strong first quarter, offset primarily due to the
effects of COVID-19 in the second quarter.
Cost of revenues for the six months ended June 30, 2020
increased $914 thousand compared to the same period in the prior
year. Cost of revenues constituted approximately 47% and 45% of
total revenues for the six months ended June 30, 2020 and 2019,
respectively. Cost of revenues is comprised of transaction
processing fees, data connectivity and data center expenses,
network fees, bank fees, card production costs, customer service
and program management expenses, application integration setup, and
sales and commission expense. Our cost of revenues as a percentage
of revenues increased due to an unfavorable rate variance resulting
from a change in transaction mix, combined with an unfavorable
volume variance.
Gross profit for the six months ended June 30, 2020 increased
$212 thousand compared to the same period in the prior year. Our
overall gross margins were 53% and 55% during the six months ended
June 30, 2020 and 2019, respectively, a decrease of 242 bps
consistent with the change in cost of revenues as a percent of
revenues.
Selling, general and administrative expenses for the six months
ended June 30, 2020 increased $1.5 million or 26% compared to the
same period in the prior year. The increase in SG&A consisted
primarily of an increase in staffing and wages of $1.0 million,
professional services for tax, audit, and consultants of $252
thousand, stock-based compensation of $110 thousand, and rent of
$94 thousand.
Net income attributable to Paysign, Inc. for the six months
ended June 30, 2020 decreased $1.3 million or 49%. The overall
change in net income attributable to Paysign, Inc. relates to the
aforementioned factors.
Our revenue conversion rates for the three months ended June 30,
2020 and 2019 were 3.53% or 353 bps, and 4.21% or 421 bps,
respectively, of gross dollar volume loaded on cards. Our gross
profit conversion rates for the three months ended June 30, 2020
and 2019 were 1.81% or 181 bps, and 2.45% or 245 bps, respectively,
of gross dollar volume loaded on cards. Our net profit conversion
rates for the three months ended June 30, 2020 and 2019 were -0.12%
or -12 bps, and 0.85% or 85 bps, respectively, of gross dollar
volume loaded on cards. Our revenue conversion rates for the six
months ended June 30, 2020 and 2019 were 3.35% or 335 bps, and
3.78% or 378 bps, respectively, of gross dollar volume loaded on
cards. Our gross profit conversion rates for the six months ended
June 30, 2020 and 2019 were 1.77% or 177 bps, and 2.10% or 210 bps,
respectively, of gross dollar volume loaded on cards. Our net
profit conversion rates for the six months ended June 30, 2020 and
2019 were 0.26% or 26 bps, and 0.62% or 62 bps, respectively, of
gross dollar volume loaded on cards.
“While we have seen a partial recovery related to the easing of
government restrictions in the latter portion of the second
quarter, we anticipate similar results for the current quarter,
followed by an upturn in Q4 resulting from onboarding a number of
new client programs”, stated Mark Attinger, Chief Financial
Officer, Paysign.
COVID-19 Update
Impact of COVID-19 Pandemic
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 as a pandemic. While the
disruption is currently expected to be temporary, there is
uncertainty around the duration. The COVID-19 outbreak has had and
will continue to have an adverse effect on the Company's results of
operations. 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 to the Company's future
results of operations, cash flows, or financial condition.
Conference Call
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About Paysign, Inc.
Paysign, Inc., (NASDAQ: PAYS), is an experienced and trusted
prepaid debit card payment solutions provider as well as an
integrated payment processor that has managed millions of prepaid
debit cards in its portfolio. Paysign conceptualizes, develops and
manages payment solutions, prepaid card programs, and customized
payment services. Paysign’s corporate incentive prepaid cards are
changing the way corporations reward, motivate, and engage their
current and potential customers, employees, and agents. Paysign’s
customizable solutions offer significant cost savings while
improving brand recognition and customer loyalty. 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.
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,
the company’s belief in its ability to ensure continuity during the
COVID-19 outbreak; that the company continues to see growth in our
patient affordability solutions; that we will emerge from this
pandemic related slowdown a stronger company and resume a
trajectory of growth; that we are confident this second quarter
will prove to be the most challenging; that gross margins are
important indicator of predictability; and that the company expects
to onboard and go-live with new blood and plasma centers. 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; identified
material weaknesses in our internal control over financial
reporting which could, if not remediated, adversely affect our
ability to report our financial condition and results of operations
in a timely and accurate manner; that a downturn in the economy,
including as a result of COVID-19, 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, 2019. 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.
PAYSIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS
OF INCOME
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019
2020
2019
Revenues Plasma industry
$
4,572,439
$
6,542,655
$
11,915,849
$
12,427,232
Pharma industry
1,768,565
2,093,616
4,788,942
3,466,329
Other
102,061
-
314,747
-
Total revenues
6,443,065
8,636,271
17,019,538
15,893,561
Cost of revenues
3,138,350
3,598,038
7,993,870
7,080,174
Gross profit
3,304,715
5,038,233
9,025,668
8,813,387
Gross margin %
51.3
%
58.3
%
53.0
%
55.5
%
Operating expenses Selling, general and administrative
3,401,501
3,012,972
7,228,825
5,717,921
Loss on abandonment of assets
42,898
-
42,898
-
Depreciation and amortization
506,477
395,510
1,008,853
729,271
Total operating expenses
3,950,876
3,408,482
8,280,576
6,447,192
Income (loss) from operations
(646,161
)
1,629,751
745,092
2,366,195
Other income Interest income
3,130
131,812
65,291
250,985
Total other income
3,130
131,812
65,291
250,985
Income (loss) before income tax provision (benefit)
(643,031
)
1,761,563
810,383
2,617,180
Income tax provision (benefit)
(423,797
)
23,276
(511,348
)
7,786
Net income (loss) before noncontrolling interest
(219,234
)
1,738,287
1,321,731
2,609,394
Net loss attributable to noncontrolling interest
-
504
-
1,068
Net income (loss) attributable to Paysign, Inc.
$
(219,234
)
$
1,738,791
$
1,321,731
$
2,610,462
Net income (loss) per share Basic
$
0.00
$
0.04
$
0.03
$
0.06
Diluted
$
0.00
$
0.03
$
0.02
$
0.05
Weighted average common shares Basic
49,015,686
47,310,209
48,864,424
47,136,608
Diluted
54,396,850
54,967,595
54,542,458
54,739,483
PAYSIGN, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
June 30,
December 31,
2020
2019
(Unaudited)
(Audited)
ASSETS Current assets Cash
$
7,633,149
$
9,663,746
Cash restricted
39,921,183
35,908,559
Accounts receivable
663,584
891,936
Prepaid expenses and other current assets
1,440,621
1,413,208
Total current assets
49,658,537
47,877,449
Fixed assets, net
1,753,368
937,185
Intangible assets, net
4,008,794
3,816,232
Operating lease right-of-use asset
4,526,089
-
Deferred tax assets
1,417,179
917,480
Total assets
$
61,363,967
$
53,548,346
LIABILITIES AND EQUITY Current liabilities Accounts
payable and accrued liabilities
$
1,136,821
$
1,523,604
Operating lease, current portion
301,233
-
Customer card funding
33,845,620
32,723,227
Total current liabilities
35,283,674
34,246,831
Operating lease liability, long term portion
4,176,314
-
Total liabilities
39,459,988
34,246,831
Stockholders' equity Common stock: $0.001 par value;
150,000,000 shares authorized, 49,373,707 and 48,577,712 issued at
June 30, 2020 and December 31, 2019, respectively
49,374
48,578
Additional paid-in-capital
12,594,389
11,577,539
Treasury stock at cost, 303,450 shares
(150,000
)
(150,000
)
Retained earnings
9,410,216
8,088,485
Total Paysign, Inc. stockholders' equity
21,903,979
19,564,602
Noncontrolling interest
-
(263,087
)
Total equity
21,903,979
19,301,515
Total liabilities and equity
$
61,363,967
$
53,548,346
Paysign, Inc. Non-GAAP Measures
To supplement Paysign’s financial results presented on a GAAP
basis, we use non-GAAP measures of net income that excludes the
following cash and non-cash items – interest, taxes, amortization
and depreciation, stock-based compensation, and loss on abandonment
of assets. We believe these non-GAAP measures 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
of net income 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 and loss on 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)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2020
2019
2020
2019
Net income (loss) attributable to Paysign, Inc.
$
(219,234
)
$
1,738,791
$
1,321,731
$
2,610,462
Income tax provision (benefit)
(423,797
)
23,276
(511,348
)
7,786
Interest income
(3,130
)
(131,812
)
(65,291
)
(250,985
)
Depreciation and amortization
506,477
395,510
1,008,853
729,271
EBITDA
(139,684
)
2,025,765
1,753,945
3,096,534
Loss on abandonment of assets
42,898
-
42,898
-
Stock-based compensation
600,775
567,910
1,324,958
1,214,620
Adjusted EBITDA
$
503,989
$
2,593,675
$
3,121,801
$
4,311,154
Adjusted EBITDA per share Basic
$
0.01
$
0.05
$
0.06
$
0.09
Diluted
$
0.01
$
0.05
$
0.06
$
0.08
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200813005747/en/
Paysign, Inc. Jim McCroy, 1-702-749-7269 Investor Relations
ir@paysign.com www.paysign.com
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