chilar4567
1 week ago
Summary
Niche Focus: Paysign specializes in healthcare payment solutions, primarily in plasma donor compensation and patient affordability programs.
Revenue Growth: Significant growth in the patient affordability segment is now a substantial part of total revenue.
Financial Resilience: The company has shown strong revenue and margin recovery post-pandemic, with promising future growth.
Market Potential: Paysign is well-positioned to capitalize on expanding healthcare payment markets, offering a mix of stability and growth potential.
Money and healthcare policy concept. Colorful medical pills cover Benjamin Franklin"s face on one hundred american dollar bill. Macro top down view.
cagkansayin
Paysign (NASDAQ:PAYS) is a fintech company with a niche focus on healthcare, specifically Plasma donor compensation and patient affordability programs. It is a small-cap company with a quarter of a billion dollars in market cap, volatile revenue, and earnings, and it has been having a great year.
Price Revenue & EPS
Price Revenue & EPS (TrendSpider)
The pandemic hit its affordability hard, as seen in the image, but it also increased its revenue and size. It seems that it may finally be returning to its former glory, but with greater revenue, a better outlook, and improved product lines and efficiency.
The article will explore
Basics of the company and products
Financial Outlook and Valuation
Risks and considerations
The Tortoise and the Cat portfolio.
The company and its products
The company's two main segments are plasma donor compensation and patient affordability; as we can see in the chart below, Plasma has had sustainable and stable revenues with some growth. However, Patient affordability has been growing remarkably since last year.
Revenue Split and Growth
Revenue Split and Growth (Investor Relations)
This growth has been obscured in the total company growth as initially, the segment represented only a tiny part of the total revenue. Now, it represents a substantial portion of the revenue. If the segment continues to grow, it will be reflected in the total revenue.
The company expects this trend to continue and even strengthen in future years, not only in patient affordability, but also in "other" segments that currently represent a minuscule amount of revenue.
2026 US Open Loop Prepaid Market forecast
2026 US Open Loop Prepaid Market forecast (Investor relations)
Plasma cards represent less than 3% of the TAM the company is targeting. Insurance claim cards have a forecasted TAM of 3x Plasma and a CAGR of 9% vs. the 6% of Plasma. Payroll and healthcare benefits are 10 times the TAM and have growth prospects similar to Plasma's.
This is to say that while Paysign may control a substantial portion of the Plasma TAM and has relative security there as the market leader, its growth in other segments may be smothered at first, considering the size of the market and the small part and niche benefits the company has.
The company obtained AstraZeneca as a customer in Q3 of 2023, and in the last earnings call, it explained that it expanded the number of programs.
Since then, we have increased the number of programs from their initial four to a total of 12 by the end of the second quarter. The AstraZeneca programs encompass a mix of retail and specialty therapies, covering a wide array of therapeutic classes, and include both new launch and transition programs. This is only one example as we currently manage programs for six of the 20 largest pharmaceutical companies in the world. - Mark Newcomer - President and CEO
Having expanded the number of pharma companies and the programs they run seems promising for the company's growth. New programs tend to be low revenue, and scale from there, if the company manages these programs well, it could represent a higher growth in revenue than the one the market expects.
Financial Outlook
Let's look at the stock's past performance and its fundamentals. On the top part, we can see revenue growth has been increasing since 2022, and revenue is much higher than in Q1 of 2021 and 2019, both previous times when the company traded at this price.
Revenue, EBITDA, EPS
Revenue, EBITDA, EPS (TrendSpider)
The same holds true for EBITDA and gross margin, while EPS is comparable. While this alone does not show the company as undervalued when we compare its revenue prospects, we can see that revenue growth is expected to be higher than in 2021 and 2019.
Revenue estimates
Revenue estimates (My Charts)
Revenue growth prospects seem higher or comparable, even in the low range, where pharma does not shine particularly well.
Gross Margin and Profit Margin Estimates
Gross Margin and Profit Margin Estimates (My Charts)
In every scenario here, the gross margin remains within the bounds shown in previous quarters; this may be overly pessimistic, as Pharma revenue may have a higher margin than Plasma.
This translates almost directly to profit margin, considering the economics of scale that the company has shown. This is where the company's previous pandemic experience managing its operations may come in handy.
Revenue and EPS Forecast
Revenue and EPS Forecast (My Charts)
For 2024, the low range of the estimates is more pessimistic than the one shown in Seeking Alpha, as the valuation normalizes the P&L figures. Even on the high side of the valuation, 2025 EPS shows a much lower level than the one forecasted by Seeking Alpha.
Seeking Alpha Revenue EPS Estimates
Seeking Alpha Revenue EPS Estimates (My Charts)
At even extremely optimistic levels, 2027 EPS in the high range barely reaches the high side of the 2025 estimates.
Low earnings do not necessarily translate to cashflows; the firm's accounts payable are higher than its receivables, and this variation has increased for the past few years.
Cash Convertion Cycle
Cash Conversion Cycle (My Charts)
This Cash Conversion cycle would likely change as not all accounts payable are the same and depend on product mix; however, if the company maintains this cash conversion cycle structure, it could sustain its growth while generating enormous amounts of cash in the process.
FCFE Estimates
FCFE Estimates (My Charts)
Free cash to equity reflects revenue growth with relatively low margins but a highly beneficial cash conversion cycle. This is the basis of the valuation, and below-market gross margins are even considered to increase revenue and show promising cashflows.
Fair Value Estimates
Fair Value Estimates (My Charts)
With this valuation, the company would be 30% above the most pessimistic range of the estimates, while the "most likely scenario" shows a fair value of 23% above the current price. The highest side of the valuation shows remarkable upside potential.
Risks and considerations
When considering the risk of a stock, I believe it makes sense to separate the financial aspects, the industry and macro perspective, and the market risk.
Financially
The company has virtually no debt and a strong working capital position, so risks are scarce. It also has a substantial amount of cash (over 130 Million), representing about $2.4/share, which is significant and should eliminate any liquidity concerns.
Industry & Macro
The number of fintech companies seems to grow like weeds from an industry perspective. There is a relatively low barrier to entry, and the true test of them is whether they can capture a niche and facilitate services that traditional banking or low-tech solutions cannot provide.
While Paysign has demonstrated these differentiators in the plasma space, it is too early to tell for the pharma segment. While they have captured important partners, their time in the space should help them. Bigger fish and newcomers to the space will not make this easy. This may reduce the growth of the pharma segment or at least make it more bumpy than expected, which could reflect volatility in the stock price.
Market Risk
The market risk with stocks below a billion dollars is not to be neglected. Small caps, in general, are more sensitive to Macro turns as arguably they are less prepared and have narrower moats than Blue-Chip companies. So, the market tends to punish them under those circumstances.
A good example of this is Paysign's stock price performance during the pandemic. While its results took a hit, the overall picture remained quite impressive, and its financials were strong. Nevertheless, the price took a substantial dive. This was arguably because of the company's size.
The Cat, The Tortoise, and my portfolio
The stock is exciting. On the one hand, it has plasma revenue that may act as a buffer for harsh financial conditions. In economic downturns, the company would arguably have higher plasma donations and activity.
On the other hand, the pharma business seems to be growing smoothly, and it likely has the strength and edge to carve out a substantial portion of its share of the insurance and payroll areas. This shift in company segment revenue is similar to the one Aspen Aerogels (ASPN) has been experiencing since last year.
If the stock is not widely covered or the coverage is not profound, it is likely that the growth in pharma was not noticed by many, as it did not have a meaningful impact on total revenue.
Let's look at the Tortoise and Cat portfolio outlook.
The Tortoise portfolio would allocate a portion to this stock. The relatively low downside risk and the risk parameters that the plasma donation segment represents, paired with a good business model, fit well with the portfolio objectives. The only complex issue here is the company's market cap, which may make it more volatile than other stocks. For that reason, the portfolio would allocate 2/3 of the position and increase the other 1/3 if the next quarter's information confirms the investment thesis.
The Cat portfolio would take a position in the company. The risk-reward opportunity is there, and the catalysts seem to be clear and have enough upside potential for an allocation in the risk-seeking portfolio.
For my portfolio, my biggest issue with the stock is that it does not fit perfectly within the 7 most important trends in the XXI century. However, the portfolio is missing some exposure to the healthcare industry.
The closest trend in which it fits is the transformative shifts in demographics.
Transformative Shifts in Demographics and Healthcare: As demographic conditions evolve, the healthcare industry undergoes a radical transformation propelled by technological and data-driven innovations.
While the company does not perfectly fit these, Plasma's antifragile nature, paired with its strong undervaluation, makes a compelling case to include it in the portfolio, at least for a while.
This article was written by
Mauro Solis Vazquez Mellado, CFA profile picture
Mauro Solis Vazquez Mellado, CFA
3.53K Followers
Hello there! I'm an M&A Manager by day and a passionate financial analyst by night. As a Chartered Financial Analyst (CFA), I've seamlessly merged my background in Mechanical Engineering with a decade of experience in the Fast Moving Consumer Goods Supply chain.My mission? To harness the power of engineering and financial analysis, breathing life into numbers and charts and uncovering value in the most sustainable and insightful ways possible. With a diverse portfolio of projects under my belt, ranging from automation to zero waste initiatives, I've honed my skills in managing, controlling, and constructing portfolios, all while keeping a keen eye on sustainability.My philosophy is simple: I believe in the alchemy of engineering, mathematics, and statistics blended seamlessly with rigorous financial analysis. I don't just see stocks; I understand the companies behind them, delving deep to decode the DNA of every investment opportunity.I'll take you on a journey transcending stock tickers and charts in my articles. I'll unravel the intricate tapestry of risk, examining it from myriad perspectives and shedding light on the cognitive and emotional biases that can sway even the savviest investor.Join me as we explore the world of finance, where numbers come to life and investments become more than just assets on paper. Together, we'll navigate the exciting realm of sustainable wealth creation, always focusing on what truly matters to me – the future and sustainability.
Show more
Show more
Analyst’s Disclosure: I/we have a beneficial long position in the shares of ASPN, 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.
I recently became a TrendSpider Affiliate, and I received an account for free.
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.
Like
Saved
Share
Print
Comments (2)
Recommended For You
Comments (2)
Sort by
Newest
About PAYS Stock
Symbol Last Price % Chg
PAYS
4.72 -1.36%
Post 4.98 5.59%
1D
5D
1M
6M
1Y
5Y
10Y
Market Cap
$254.27M
PE (FWD)
100.74
Yield
-
Rev Growth (YoY)
26.45%
Short Interest
0.82%
Prev. Close
$4.79
More on PAYS
Paysign GAAP EPS of $0.01 in-line, revenue of $14.33M beats by $0.33M
Paysign Q2 2024 Earnings Preview
Paysign: Expect Rapid Growth In Its Pharma Business
Paysign: Expect Rapid Growth In Its Pharma Business
Sandeep Nital David
Paysign GAAP EPS of $0.01, revenue of $13.2M beats by $0.81M
3P
Symbol Price % Chg
PAYS
4.72
-1.36%
Give yourself the b
chilar4567
2 weeks ago
Exercise of options & Sales:
Interesting to note they all sold @ $4.54 on the same day (8/5). Did anyone notice a huge sale on 8/5, or did the company "buy the shares" on the buyback program?
Insider Activity
Ownership
Insider Activity
Show All Types of Transactions
3 Months
6 Months
1 Year
Weekly Insider Transactions Award of Options Exercise of Options Planned Sale Purchase Sale Stock Gift
Mouseover chart for more detail
Insider Sentiment
MINA BRUCE A. purchased a total of 1,206 shares on May 14, 2024. Presumably, insiders expect the stock price increase to continue. Over the last 3 years insiders have on average purchased 8,333 shares each year.
Insider Transaction History
Date Name-Position Transaction Shares Price Range ($) Shares Held Mkt Value
8/5/24 Newcomer Mark
Chief Executive Officer Sale 69,593 4.54 – 4.54 9,548,886 $316.0 K
Herman Joan M.
Officer and Director Sale 15,854 4.54 – 4.54 799,743 $72.0 K
Strobo Robert
Officer Sale 29,690 4.54 – 4.54 209,811 $134.8 K
Lanford Matthew Lou...
Officer and Director Sale 29,340 4.54 – 4.54 135,091 $133.2 K
Baker Jeffery Bradf...
Chief Financial Officer Sale 34,032 4.54 – 4.54 187,065 $154.5 K
7/31/24 Newcomer Mark
Chief Executive Officer Exercise of Options 150,000 -- – -- 9,618,479 $--
Herman Joan M.
Officer and Director Exercise of Options 36,000 -- – -- 815,597 $--
Strobo Robert
Officer Exercise of Options 64,000 -- – -- 239,501 $--
Lanford Matthew Lou...
Officer and Director Exercise of Options 64,000 -- – -- 164,431 $--
Baker Jeffery Bradf...
Chief Financial Officer Exercise of Options 64,000 -- – -- 221,097 $-
chilar4567
2 weeks ago
Getting exposure (twice)
Paysign, Inc. to Participate in the August 2024 Sidoti Micro-Cap Virtual Conference
4:15 PM ET 8/8/24 | BusinessWire
Related Quotes
4:00 PM ET 8/9/24
Symbol Last % Chg
PAYS
4.55 -0.55%
Real time quote.
HENDERSON, Nev.--(BUSINESS WIRE)--August 08, 2024--
Paysign, Inc. (NASDAQ: PAYS), a leading provider of prepaid card programs, comprehensive patient affordability offerings, digital banking services, and integrated payment processing, today announced their participation in the Sidoti Micro-Cap Virtual Conference, taking place August 14-15, 2024. Jeff Baker, Paysign's Chief Financial Officer, will be available for one-on-one and small group meetings with investors during the event.
Paysign is scheduled for a group presentation on Wednesday, August 14, at 4:00 p.m. EDT.
To register or learn more about the conference, investors may visit the event website or visit the webinar registration page to attend the live group presentation.
Forward-Looking Statements
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934 and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the companies, are forward-looking statements that involve risks and uncertainties. There is no assurance that such statements will prove to be accurate, and actual results and future events could differ materially. Paysign undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.
chilar4567
2 weeks ago
Paysign, Inc. to Present at the Oppenheimer Technology, Internet & Communications Conference
4:15 PM ET 8/7/24 | BusinessWire
Related Quotes
4:00 PM ET 8/9/24
Symbol Last % Chg
PAYS
4.55 -0.55%
Real time quote.
HENDERSON, Nev.--(BUSINESS WIRE)--August 07, 2024--
Paysign, Inc. (NASDAQ: PAYS), a leading provider of prepaid card programs, comprehensive patient affordability offerings, digital banking services and integrated payment processing, today announced they will be presenting at the Oppenheimer 27(th) Annual Technology, Internet & Communications Conference to be held August 12-14, 2024, through a virtual format.
The focus of the virtual conference is to provide an expansive look across the dynamic sector of the world economy at existing and emerging technologies and provide potential investors the opportunity to evaluate public companies at the forefront of these technological innovations.
Paysign's Chief Financial Officer, Jeff Baker, is scheduled to present on Tuesday, August 13, at 3:45 p.m. EDT.
Investors may learn more about the conference here.
Forward-Looking Statements
Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934 and are subject to the safe harbor created by those rules. All statements, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the companies, are forward-looking statements that involve risks and uncertainties. There is no assurance that such statements will prove to be accurate, and actual results and future events could differ materially. Paysign 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
Paysign, Inc. is a leading provider of prepaid card programs, comprehensive patient affordability offerings, digital banking services and integrated payment processing designed for businesses, consumers and government institutions. Incorporated in 1995 and headquartered in southern Nevada, the company creates customized, innovative payment solutions for clients across all industries, including pharmaceutical, healthcare, hospitality and retail. Built on the foundation of a reliable payments platform, Paysign's end-to-end technologies securely enable digital payout solutions and facilitate the distribution of funds for donor compensation, copay assistance, customer incentives, employee rewards, travel expenses and per diem, reimbursements, gift cards, rebates, and countless other exchanges of value. Paysign's solutions lower costs, streamline operations and improve customer, employee and partner loyalty. To learn more, visit paysign.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807446992/en/
CONTACT: Investor Relations
ir@paysign.com
888.522.4853
paysign.com/investors
Media Relations
Alicia Ches
888.522.4850
pr@paysign.com
SOURCE: Paysign, Inc.
Copyright Business Wire 2024
> Dow Jones Newswires
August 07, 2024 16:15 ET (20:15 GMT)
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
Hot Features
Premium
