Q3 2024 Earnings Summary
- Paysign's patient affordability business is experiencing rapid growth, with revenue increasing by 219% year-over-year to $3.27 million in Q3 2024. This segment is becoming a significant revenue driver, contributing approximately 20% of total revenues for the year and potentially increasing to 25% in 2025, indicating strong future growth prospects.
- The company is capturing market share by offering innovative solutions in the patient affordability space that are "light years beyond" competitors. Their unique technology and proprietary algorithms help pharmaceutical manufacturers save money, attracting attention and business from both new and existing clients.
- Paysign has secured contracts with large pharmaceutical companies, including new "cornerstone accounts," which opens up significant opportunities for growth. These strategic accounts with broad portfolios lead to increased claim volumes and revenue as additional programs are onboarded.
- The plasma donor compensation business is facing challenges due to staffing shortages and weather-related disruptions, impacting operations and potentially affecting revenue growth.
- The company is incurring one-time legal expenses related to the settlement of class action and derivative lawsuits, which were not previously anticipated and may negatively impact profitability.
- The lack of patent protection for the company's unique technology in the patient affordability business may expose it to competitive risks, as competitors could replicate their innovations without legal barriers.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +23% YoY | Total Revenue grew by $2.86 million, driven predominantly by a dramatic expansion in the pharma segment (+218% YoY) and a significant boost in Other revenue (+74% YoY), even as the Plasma segment saw only modest growth (+3% YoY). This diversification in revenue streams indicates a successful shift beyond the saturated plasma market and builds on previous period efforts to expand new programs. |
Plasma Industry Revenue | +3% YoY | Plasma Industry revenue increased from $11.06 million to $11.44 million, a modest growth that reflects improvements from previous investments such as additional centers and enhanced donation activity; however, the relatively low increase suggests that this segment may be reaching maturity or market saturation. |
Pharma Industry Revenue | +218% YoY | Pharma revenue surged from $1.03 million to $3.27 million, a change fueled by the aggressive rollout of new pharma patient affordability programs and increased fees from management, setup, and claim processing. This marks a significant turnaround from previous periods when pharma was a minor contributor, revealing a successful market expansion strategy. |
Other Revenue | +74% YoY | Other revenue advanced from $0.31 million to $0.54 million, driven by the increased usage of payroll, retail, and corporate incentive programs introduced in prior periods. This substantial improvement reflects effective diversification beyond the core plasma and pharma sectors, aligning with the company’s strategic initiatives. |
Operating Income (EBIT) | +17% YoY | Operating Income improved from $590,432 to $689,849, benefiting from revenue growth—especially in the higher-margin pharma business—outpacing the rise in operating expenses. The controlled expense environment, following previous period investments in IT and personnel, contributed to better operating leverage. |
Net Income | +30% YoY | Net Income increased from $1.10 million to $1.44 million, a result of a combination of higher revenue, improved gross margins due to the pharma segment’s impact, increased interest income, and favorable tax benefits compared to the prior period’s figures. These factors collectively enhanced the bottom line, reflecting the company’s improved profitability trajectory. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenues | FY 2024 | $56.5M to $58.5M, YOY growth of 20% to 24% | $56.5M to $58.5M, YOY growth of 20% to 24% | no change |
Gross Profit Margins | FY 2024 | 54% to 55% | 54% to 55% | no change |
Operating Expenses | FY 2024 | $30M to $32M | $30M to $32M | no change |
Interest Income | FY 2024 | $3M to $3.2M | Approximately $3.1M | no change |
Tax Rate | FY 2024 | 28% to 29% | 19% to 19.5% | lowered |
Fully Diluted Share Count | FY 2024 | 55.8M to 56.0M shares | 55.5M to 56M | lowered |
Net Income | FY 2024 | $2M to $3M or $0.04 to $0.06 per diluted share | $3M to $3.5M or approximately $0.06 per diluted share | raised |
Adjusted EBITDA | FY 2024 | $9M to $10M (15% to 17% of total revenues), $0.16 to $0.18 per share | $9M to $10M (15% to 17% of total revenues), $0.16 to $0.18 per share | no change |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Patient Affordability Business Growth | Q4 2023, Q1 2024, and Q2 2024 highlighted triple‐digit revenue growth, rapid program expansion, robust claims increases, and consistently emphasized a strong pipeline – though accompanied by uncertainties around program launch timing and drug exclusivity risks. | Q3 2024 continues to report exceptional growth (219% YoY revenue increase, expanded programs and claims volume) while underlining challenges such as seasonal effects and timing uncertainties in new program launches. | Consistent strong growth with persistent uncertainty around timing and program forecasts. |
Plasma Business | Q4 2023 and Q1 2024 focused on strong performance with increasing plasma center counts, improved revenue per center, and no major operational issues noted. | Q3 2024 revealed emerging challenges – a slight decline in revenue per center, staffing shortages, and weather‐derived disruptions impacting operational performance. | Shift from robust growth to operational challenges, indicating a negative deviation from prior performance. |
Technological Innovation | Q4 2023 stressed the company’s proprietary technology and competitive edge, with little discussion in Q1 and Q2 2024. | Q3 2024 reaffirms the focus on proprietary algorithms and cost‐saving technological innovations, with deliberate avoidance of patenting to protect its “secret sauce”. | Steady and positive focus on innovation that reinforces competitive advantage. |
Total Addressable Market | Across Q4 2023, Q1 2024, and Q2 2024, executives consistently estimated the TAM for patient affordability north of $500 million, while noting challenges in clarity and precise quantification. | Q3 2024 continues to use a conservative estimate – stating TAM is north of $0.5 billion – and acknowledges the difficulty in achieving precise clarity. | Steady discussion with consistent challenges in clarity of the market size estimation. |
Pharmaceutical Client Contracts | Q1, Q2, and Q4 2023 discussed the structure of long-term contracts, transition business, and termination risks (e.g., when drugs lose exclusivity), emphasizing strong client retention practices. | Q3 2024 does not explicitly address pharmaceutical contracts or termination risks, instead focusing on business expansion and a robust pipeline. | Less emphasis on contractual risks in the current period compared to previous discussions. |
Legal Expenses and Settlements | No mention of legal expenses or settlement details was noted in Q1, Q2, or Q4 2023. | Q3 2024 introduced disclosure of one-time legal expenses related to class action and derivative lawsuit settlements, with partial cost coverage by insurance but notable six-figure out-of-pocket impacts. | Emergent topic adding new caution amid increased legal and litigation-related expenses. |
Cybersecurity Incident Response | Q4 2023 discussed a cybersecurity incident (Change Health Care disruption) and noted the company’s quick response and opportunity to capture new business. | Q3 2024 does not mention cybersecurity issues, with no discussion of incident response or disruption opportunities in the call [No citation]. | No longer mentioned in the current period, indicating reduced emphasis on cybersecurity disruptions. |
Operational Investment, Staffing, and Cost Challenges | Q4 2023, Q1, and Q2 2024 consistently highlighted significant investments in IT and personnel, workforce expansion, and rising SG&A and operating expenses to support business growth. | Q3 2024 reflects a continued commitment to investing in IT and staffing – with increased operating expenses, noted staffing challenges impacting the plasma business, and additional cost pressures from legal settlements. | Consistent emphasis on scaling investments; however, Q3 2024 shows slightly intensified cost pressures due to emerging legal expenses and operational staffing issues. |
Profitability and Operating Leverage | Q4 2023, Q1, and Q2 2024 reported strong revenue growth, improved gross profit margins, rising adjusted EBITDA, and growing operating leverage, all supporting a narrative of improved profitability with careful cost management. | Q3 2024 continued the trend with revenue and net income increases and improved gross margins, although heavy investments led to a slight decline in adjusted EBITDA margin. | Overall positive profitability trends remain, despite modest margin pressure from increased investments in growth. |
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2025 Patient Affordability Growth
Q: Any color on patient affordability growth in 2025?
A: Management anticipates the patient affordability segment to grow, potentially comprising around 25% of total revenues in 2025, up from 20% in 2024. They highlight a strong pipeline but note that growth depends on program launch timings. -
Gross Margin Outlook
Q: How will gross margins trend as patient affordability grows?
A: Gross margins are expected to improve by 100 to 200 basis points year-over-year as the higher-margin patient affordability segment expands to 25–30% of the business. This improvement depends on the mix changes and program launch timings. -
Total Addressable Market Size
Q: How big is the market for your services?
A: The total addressable market for patient affordability services is estimated to be over $500 million, offering significant growth potential for the company. -
Legal Expenses Impact
Q: What's the impact of legal expenses on adjusted EBITDA?
A: A legal settlement expense of just over $600,000 will impact adjusted EBITDA. This cost will be partially covered by insurance, but there's a six-figure expense affecting the guidance range of $9 million to $10 million for the year. -
Competitive Advantage and IP
Q: Are you gaining attention due to unique technology? Is it protected?
A: The company is attracting attention due to innovative solutions and transparent pricing. They have proprietary technology and processes that, while not patented, offer a competitive edge by being unique in the market. -
Staffing Shortages in Plasma Business
Q: What's causing staffing shortages in the plasma business?
A: Staffing shortages are due to increased competition for labor as new centers have grown and hired from competitors, making it more challenging to access experienced staff. -
Winning Business Through Takeaways or New Sign-ups
Q: Are you winning business via competitive takeaways or new sign-ups?
A: The company is growing through both competitive takeaways and new sign-ups. They're acquiring established programs from competitors and also securing new-to-market drugs, which contributes to immediate and long-term revenue growth. -
Additional Pharma Campaigns
Q: Can you provide more detail on new pharma campaigns?
A: They added a cornerstone account with a large manufacturer, opening opportunities to expand programs internally. Once initial programs prove successful, additional programs shift over, leading to increased business from current clients.
Research analysts covering Paysign.