Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Paysign, Inc.'s Third Quarter 2024 Earnings Conference Call. [Operator Instructions]. The comments on today's call regarding Paysign's financial results will be on a GAAP basis unless otherwise noted. Paysign's earnings release will be disseminated to the SEC earlier today and can be found on the Investor Relations section of our website, paysign.com, which includes reconciliations of non-GAAP measures to GAAP reported amounts. Additionally, as set forth in more detail in our earnings release, I'd like to remind everyone that today's call will include forward-looking statements regarding Paysign's future performance. Actual performance could differ materially from these forward-looking statements. Information about the factors that could affect future performance are summarized at the end of Paysign's earnings release and in our recent SEC filings. Lastly, a replay of this call will be available until February 5, 2025. Please see Paysign's third quarter earnings call announcement for details on how to access the replay. It's now my pleasure to turn the call over to Mr. Mark Newcomer, CEO. Please go ahead.

Thank you, Kevin. Good afternoon, everyone, and welcome to Paysign's third quarter earnings call. I'm Mark Newcomer, President and CEO of Paysign. Joining me today is Jeff Baker, our Chief Financial Officer. Later during our Q&A session, we will also be joined by Matt Turner, our President of Patient Affordability; and Matt Lanford, our Chief Payments Officer. Today, we announced our financial results for the third quarter of 2024, and I'm pleased to report that Paysign has demonstrated meaningful growth in both revenue and profitability consecutively and year-over-year. Revenue for the third quarter was $15.3 million, an increase of 23% compared to the same period in 2023 and a 6.5% increase from the prior quarter. Our adjusted EBITDA rose 20.6% to $2.8 million or $0.05 per fully diluted share, up from $2.4 million or $0.04 per fully diluted share a year earlier. Gross margins also improved significantly, increasing by 440 basis points to 55.5% compared to 51.1% in the same period last year, driven largely by the expansion of our patient affordability business. Revenue from our patient affordability business grew by an impressive 219% year-over-year, reaching $3.3 million in the third quarter, up from roughly $1 million in the same quarter last year. Claims processed rose by 430% compared to the same period last year. This marks the fourth consecutive quarter of triple-digit year-over-year revenue growth for patient affordability, which continues to be a major contributor to our overall success. We finished the quarter with 66 patient affordability programs, with additional launches continuing throughout the remainder of the year. We are encouraged by the trend of existing clients bringing additional programs to us, which not only shortens the sales cycle but also reduces the program acquisition cost while creating immediate revenue opportunities as many of these additional programs are transition…

Thank you, Mark. Good afternoon, everyone. As Mark said, we executed on another good quarter. Plasma donor compensation revenue increased $378,000 versus the same period last year or 3.4% to $11.44 million. This was primarily driven by increases in the number of plasma centers, 478 versus 462 and, to a lesser extent, modest increases in gross dollar cards loads of 1.8% and gross spend volume of 0.4%. This was offset by a modest decline in the average load amounts. Net-net, the year-over-year average monthly revenue per plasma center declined slightly to $7,991 versus $8,041. As Mark mentioned, our centers experienced reduced availability related to weather and staffing shortages, and we expect these same issues to have an impact on the growth of our Q4 plasma donor compensation revenue. Free cash flow from this business remains strong, which is helping to support the rapid growth in our pharma patient affordability business. Pharma patient affordability revenue increased $2.25 million or 219% to $3.27 million, primarily driven by the addition of 32 net new pharma patient affordability programs launched over the past 12 months. Pharma patient affordability revenue equated to 21.5% of total revenue during the quarter versus 8.3% during the same period last year. We exited the quarter with 66 active pharma patient affordability programs, an increase of 23 programs since the end of 2023. Other revenue increased $230,000 or 73.5% to $542,000 due to the growth in our payroll, retail, and other corporate incentive businesses. We continue to look for ways to improve the profitability of this other revenue stream, which lacks the scale of our other businesses and experiences higher fraud costs as a percentage of revenue. As in previous calls, with all the details we provided in the press release and that will be available in our 10-Q filing…

[Operator Instructions] Our first question today is coming from Pete Heckmann from D.A. Davidson.

I wanted to see if you could go back and talk a little bit about the additional pharma campaigns added during the quarter and then some of the comments you made around the certain types of pharma campaigns as well as the comment about, I think it was a very large -- I don't think you used the word large, but an important campaign from one of the largest drug manufacturers. Could you just go into that in a little bit more detail? That went by really quickly. I didn't have the time to take all the notes, and I'd like to get any incremental detail we could in terms of where you are now having success and where you're moving to with these patient assistance programs.

So this is Matt Turner. Let's kind of start with the cornerstone account. If you kind of look at the business as a whole right now, we're sitting on 3 or 4, what we would consider, cornerstone or strategic accounts. These typically represent larger manufacturers that have broad portfolios of products covering a variety of therapeutic classes. So they may have specialty drugs, which typically come from a specialty pharmacy. These are high-cost drugs, $10,000 and up most times. Then they'll have retail products. These are your typical brick-and-mortar stores. And then most of them will also have products that are hybrid programs where they're run on the -- like the medical insurance side, not the pharmacy side, kind of the legacy stuff we used to call buy-and-bill. So we added -- we completed a contract with 1 and we'll launch programs for them in this quarter of this year. Your other question was around the -- like the new programs that we launched. Can you kind of repeat that part of the question because I didn't understand exactly what you were asking there?

Sure. I'm just trying to get a better feel as you grow the total number of campaigns or programs. Are we getting closer to being able to have kind of an average revenue per program or an average term? Or are we still seeing that the combination of these very, very expensive kind of in-office treatments versus retail, it just makes it so that an average is just not really that relevant?

Yes. An average, it's not relevant here. And it also depends on the types of claims that we're running as to the revenue per claim, things like that. So you may have 1 program that's going to run 30,000, 40,000, 50,000 claims a month, and you could have another program that's going to run 2 if it's in a rare disease state. So obviously, those aren't priced exactly the same. So there's not really a place to put an average to where it would make sense to really say, "Hey, every program you're going to bring on now is going to effectively add X thousands of dollars a month." There's obviously some kind of minimums that are in there around some administrative fees and things like that. But when you get into the transactional area, there's no real way to average that out.

Got it, okay. And then last question and I'll get back in the queue. But just based upon the really strong growth that you've seen in pharma year-to-date, and I'm sure you have some decent visibility to the fourth quarter, I guess, is there any type of color or early color you can give us, preliminary color on how you think this segment might grow in 2025?

I mean, if you're asking for a number, I'll have to defer that 1 to Jeff and let him issue the numbers guidance. I think I'd kind of stand by the comment that we have a really strong pipeline. These additional -- the cornerstone accounts that we currently have and the 1 that we just added really open up the ability to what we call pharm inside. So if you were to be able to see everything we're doing over here, you would see 1 or 2 programs come over. It's kind of a test bed for them to make sure we know what we're doing, that our solutions work the way we say they're going to work. And the moment that comes along and we start saving them money or execute really well, we start to see other programs shift over. And that's -- we're going to see -- I think we're going to see increased business from current clients moving into next year. That's what has helped fuel some of the growth this year. Certainly not all of it but it has helped. And then as we move into -- we're already selling for -- we've been selling for 2025 for the last 2 quarters now as we look at FDA approvals and things like that. So I mean, next year, I'd say it looks strong and I'll let Jeff kind of deal with the numbers if that pops up.

Yes, Pete. So I mean, we obviously haven’t given any guidance. This year, it’s looking like for the full year, we still stand by that patient affordability is going to be about 20% of total revenues for the year. It was 21.5% for the quarter. Next year, that’s obviously going to increase. Whether that’s 25-ish percent or so, I think, is definitely doable. We do have a strong pipeline, like Matt just mentioned, but a lot of it comes into timing when some of these programs launch. Also keep in mind, as far as guidance goes, keep in mind, first quarter is going to be strong for this business because of everything resets at 12/31 from a claims perspective. Some of these programs, the claims, because people reach their out-of-pocket maximums, they don’t get paid as you go through the remainder, as you get towards the second half of the year. So typically, this business will show stronger growth in the first and the second quarter if we weren’t going to add any more businesses throughout the rest of the year, which I don’t think that’s a very good assumption. But definitely you should see some pretty strong numbers in the first and second quarter, for sure. And we’ll get more – I’ll give more information as we get closer to giving guidance as we get through the first quarter and we have some more visibility on what programs exactly have launched as we go through the year.

Next question today is coming from Gary Prestopino from Barrington Research.

Just a question on the plasma business, not really with the hurricanes as much. But what is going on with the staffing shortages? Is it just that the economy is so strong, they can't get people to work in these centers? Mark Newcomer Co-Founder, President, CEO & Chairman Yes, Gary, it's Mark. I would say -- I don't know that I would say it's because the economy is strong that we can't get people to work. It's just there's a lot -- as new centers have grown over time, they've kind of picked and pulled from their competitors, and it's just become more competitive to get access to that labor.

Okay. And then switching over to the specialty business or the patient affordability business. Could you give us an idea of as you size the market, how big is it for the services that you provide?

Yes. I think the last call, we covered a little bit of this. I think our conservative estimate that we're looking at right now, we consider this TAM to be north of $0.5 billion. So again, we really have to work hard to piece together some numbers, but that's where we're pretty confident saying that we feel like this TAM is north of $500 million.

So is this all -- this market right now, is this a situation where you're winning this business through competitive takeaways? Are you winning this business because various pharmaceuticals are signing up for your program because they can see the benefit it gives to them?

I mean, it's both. There's quite a bit of what we're doing is what we call transition programs so that's a product that's already been out there. It's in the marketplace, but the incumbent vendor is either maybe not living up to the standards that the pharma manufacturer is looking for or they're not being innovative. We've come out with some very innovative stuff in this space. There hasn't really been a lot of innovation for the better part of a decade. And the solutions that we're bringing in some areas are -- I mean, I guess, the best way to put it, we're light years beyond where some of our competitors are, even though they've been in the space longer. So we've got a good mix of, hey, brand new-to-market drug, never been seen before. We're going to be the first vendor touching that product and as well as established products. And that's also what's helping to drive the claim volume is that the programs that we're acquiring now have a good mix of transition, so we're not waiting for that drug to ramp up patient acquisition. The patient acquisition has already been done over the last 2 or 3 years, and so now they're established. And when we onboard that program, we might immediately onboard 15,000 claims day 1 as opposed to, it took them 2 years to get to 15,000 claims. And our sales team focuses on both, right? We're not just looking for new-to-market products and we're not just looking for transitions. It's really part of a rounded-out diversification of our revenue streams to where we know there's programs we're going to bring that have immediate impact on revenue and then there's some that is just going to take a while to build.

And then just once again, who are some of the other players in this space?

So we're pretty unique in the space in the fact that we only do patient affordability. There may be 1 or 2 other companies out there that are just doing patient affordability. But if you kind of look at the broader market of who else offers the services that we offer, you would see companies like ConnectiveRx, TrialCard, Eversana. Those are all, I think, private equity-backed companies. And then IQVIA and McKesson. McKesson has a subsidiary called CoverMyMeds. Both of those companies are publicly traded. But again, it's kind of important to mention that those people offer a breadth of services and to the marketplace appear like big box stores, whereas we offer expertise in 1 specific area of this, which is why we think we're being as effective as we are capturing this business.

Okay. And then lastly, Jeff, is there any reason we have to wait until the 10-Q is published to get what that legal expense was for the quarter or if that's going to hit in Q4? Or can you give it to us now?

Well, there's disclosure in the 10-Q that's coming out tomorrow morning on the settlement piece, which is, if memory serves me right, just over $600,000 if I recall. And that will be paid by our insurance company. They're still finalizing documentation and other things like that. So without saying too much, some of that cost is on us. It's 6 figures and that's about all I'm going to say about it right now.

Okay. So without these legal fees, it's safe to say we would have got a raise in the range of adjusted EBITDA for the year?

Well, I mean, the range we gave right now, Gary, I mean, the range we gave last quarter was we raised it to $9 million to $10 million. We still feel comfortable coming in that for the full year. Through this quarter, we’re in at $6.7 million so you kind of can extrapolate back from that. But we’ll still be in that range. There’s a couple of moving pieces but there will be an expense in there, that 6 figures that was not there when we gave this $9 million to $10 million.

[Operator Instructions] Our next question is coming from Jon Hickman from Ladenburg Thalmann.

I was just wondering if you -- Jeff, if you could elaborate a little bit on where you think gross margins might go for later this year and into next as the patient affordability stuff becomes 25%, 30% of the business.

Yes, sure. So for the year, we've given guidance of 54% to 55%. Obviously, we're lower in the first half of the year and higher in the second half of the year because of the percentage of revenue coming from patient affordability. So I think it will be up sequentially over where we were this quarter. And going forward, as that mix changes, I think we could probably add 100 to 200 bps in margin on a blended basis year-over-year. We just -- there's a lot of moving pieces, like I said, patient affordability, when the programs launch, et cetera, what's going on with plasma. We think fourth quarter is going to see some impacts from the weather again and employment. So margins in the plasma business were up sequentially and up year-over-year. We're trying to do everything we can to continue to maximize the operating performance out of that business and garner the cash to help deploy that in other growth areas of our company. But yes, looking at my crystal ball, it's about all I can say.

Okay. So 1 other question. Are you starting to attract some attention in those market space because of your unique technology? And are you -- is that technology protected somehow, patents, or is there just secret sauce?

So we have -- there's a couple of things. One, we talked about this in the past. I mean we -- one thing that we do differently than our competitors, we've opened book pricing to our customers. This industry in the past really hasn't been that transparent on pricing. We're very transparent on pricing, number one. Number two, we do have some IP that our competitors don't have. It is not patented per se, but I think the best way to say it is we're the only ones privy to that technology because we've put it in our message so no one else has it. I don't know, Matt, if there's anything else you want to add?

Yes. No, I mean there's -- it's processes and process patents are rife with problems. We did look at patenting what we were doing and after some discussion determined it wasn't an appropriate use of funds. So I think if you look at what we're doing, we've got a group of people here that have worked together to figure out a way to write some algorithms and do some stuff with claims that nobody else figured out. And that's the industry. But that's where we're attracting that interest is in the amount of money we're able to save some of our manufacturer clients that are trying to combat some things that insurance companies and PBMs are doing.

And I’d say that – I’d also say the last thing is that we’re really the only company out there that you’re going to find is paying electronic claims via ACH or virtual debit card or paying claims via checks or – I mean, we’re a payments company, and that’s the value that we bring to our customers so we can pay those claims regardless, where historically, the industry has been mostly paper-based through check and other means.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

Thank you, Kevin, and thank you all for joining today’s call. Your continued support and interest inspire us to transform health care payments and improve patient access to essential treatments. We look forward to sharing more updates in the coming quarters. Have a great day, everyone. Thank you.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.