Paysign, Inc. Reports Fourth-Quarter and Full-Year 2020 Financial Results

  • 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

 

HENDERSON, Nev.–(BUSINESS WIRE)–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

 

 

Contacts

Investor Relations

888.522.4810

[email protected]

Media Relations

Alicia Ches

Director, Marketing

[email protected]
702.749.7257

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