Good day, everyone. And welcome to today’s PaySign 2020 First Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later you will have an opportunity to ask questions during the question-and-answer session. [Operator Instructions] This presentation may include forward-looking statements. To the extent that the information presented in this presentation discusses financial projections, information or expectations about the company’s business plans, results of operations, the impact of COVID-19, returns on equity, expected gross margins, markets or otherwise make statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as should, may, intends, anticipates, believes, estimates, projects, forecasts, expects, plans, and proposes. Although, the company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. You are urged to carefully review and consider any cautionary statements and other disclosures, including the statements made under the heading Risk Factors and elsewhere in our 2019 Form 10-K. Forward-looking statements speak only as of the date of the document in which they are contained and the company does not undertake any duty to update any forward-looking statements, except as may be required by law. This presentation also includes adjusted EBITDA, a non-GAAP financial measure that is not prepared in accordance with, nor an alternative to, financial measures prepared in accordance with the U.S. Generally Accepted Accounting Principles, GAAP. In addition, adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies. Please note this call is being recorded. It is now my pleasure to turn today’s program over to CEO, Mark Newcomer. Please go ahead.

Thank you, Pricilla. Good afternoon, everyone. And thank you for joining us for a discussion about our first quarter 2020 financial results. I am Mark Newcomer, President and Chief Executive Officer here at PaySign. With me this afternoon is Mark Attinger, our Chief Financial Officer. Before I begin my commentary on the business with regards to COVID-19 pandemic, we hope all of you and your families are staying safe during this unprecedented time. We continue to work hard to best ensure the health and welfare of the PaySign team and continue to provide the highest level of service to both our customers and our cardholders. I remain very pleased with the company’s performance and extremely proud of everyone here at PaySign and our exceptional contributions toward our continued growth, which has contributed to strong results on all fronts. For the first quarter, our revenues were a record $10.6 million, an increase of 48% compared to the prior year, net income was $1.5 million, an increase of 77% and our adjusted EBITDA was $2.6 million, an increase of 52%. In the first quarter, we added two pharmaceutical programs to the Patient Affordability business line and added several pharma and patient affordability programs to the pipeline. Our pipeline remains robust in all segments. In the first quarter, we began offering digital banking solutions, which include use of the PaySign Premier Card for corporate use, all which is being well received. Our plasma pipeline has expanded and now includes blood and blood product collection centers. We now have in excess of 3.1 million cardholders on our platform. We did not see much of an effect during Q1 related to the COVID-19 pandemic. Although, we are beginning to see some effect, which Mark will address during his remarks. That being said, many centers have…

Thank you, Mark. So I will take us through the first quarter results, provide some variance commentary and touch briefly on April. Before I begin, I did want to mention that while our results have been released through Business Wire, the issuance to all registered investors by our Investor Relations team has been submitted to NASDAQ, but it appears to be slowed in the, excuse me, in the distribution by NASDAQ due to volumes. So you should see that come out shortly. As I proceed, references to year-on-year improvements, percentage changes or comparisons to 2019, unless stated otherwise refers to quarter one 2020, as compared to quarter one 2019. Revenue for the quarter ending March 31, 2020, was $10,576,473, an increase of 46%, compared to the prior year of $7,257,290. Revenue consisted of $7.3 million or 69% in support of the plasma industry, a 25% year-on-year improvement, $3.0 million or 29% pharma, 120% improvement and $0.2 million or 2% in other revenue. Gross profit increased 51.5% to $5.7 million or 54.1% of revenues, compared to $3.8 million and 52% of revenues in 2019. The 207-basis-point improvement was primarily driven by a favorable mix toward higher-margin programs. Total operating expenses were $4.3 million, an increase of 42.5% versus $3.0 million in 2019. The increase consisted primarily of $0.7 million in salaries and benefits, $0.2 million in outside professional services, $0.2 million in depreciation and amortization and $0.1 million as an increase in stock-based compensation. Reflecting the impact of the reduction in the fed funds rate occurring intra-quarter, our income was just $62,000, compared to $119,000 the prior year, interest income. Net income for the year was $1,540,965 or $0.03 per basic share, an increase of 76.8%, compared to $871,671 or $0.02 per basic share the prior year. Fully diluted EPS was…

[Operator Instructions] And we will go first to Peter Heckmann from Davidson. Your line is open.

Hey. Good afternoon, everyone. Thanks for taking my question. I was hoping you could dig in a little bit more within pharma. The two campaigns or programs that you added intra-quarter when might those start, and then, as well, you went over some of the new opportunities within Patient Affordability fairly quickly and if you could go over those a little bit in more detail and if you have had some early success today in those areas [inaudible]?

Yes. So I will touch on the two pharma programs that Mark referenced -- we referenced on the last call that were added in the first quarter. If you recall, Pete, we talked about ending the year with eight but adding back two, getting back to 10. And so those two programs that we referenced, one of them is live but the other one has not gone live. They both started up and have generated a little bit of start-up fees kind of professional fees to make those programs active. But one of them is loading a little bit. The other one has is giving themselves a little bit more time before they begin loading. So that’s the status of those two programs. With respect to Patient Affordability, our CEO is better suited to answer that.

Yeah. With -- in respect to Patient Affordability, we are talking along the lines of pharmacy, co-pay cards and vouchers. I mean, most of what we are providing is in support of our hub service providers and other folks that are providing co-pay sales and other co-pay sales organizations. So, basically, we are providing tools for them to meet brand needs and the goals of the brands, such as pharmacy co-pay cards and vouchers, virtual debit cards, physical debit cards, medical claims, such as processing of payments of paper and electronic medical claims and patient affordability programs, centralized billing solutions used to deliver solutions to limited network medical practices and to address patient specific needs such as travel and/or per diems, and also patient prescriber portals designed to deliver affordability products direct to a prescriber or patient, these portals can show various levels of detail to enhance the patient or prescriber’s awareness. So those are some of -- it’s obviously a large topic of conversation to cover, but those are some of -- just some of the solutions that we are offering.

Got it. That’s helpful. And then whether this is related or not I thought I’d also heard you said you had started offering digital banking services enabled by the PaySign Premier Card, did you say for corporate accounts, so that would be like for travel or for Diem, is that correct?

Yeah. Digital banking services around very similar to the PaySign Premier card that we are offering. It would be -- being offered to other businesses and that could be, I mean, you could think of that in the way of insurance companies or other companies that might have a need for those types of services for distribution of funds.

Got it. And so, generally, one-time use cards or was those reloadable?

Those would be reloadable in most situations or one-time. I mean it depends on the opportunity.

Okay. Great. I will get back in queue. Thank you.

[Operator Instructions] We will go next to Austin Moldow from Canaccord. Your line is open.

Thanks very much for taking my questions. Can you talk about the gross margin in your -- in just the plasma segment and how it compares to the last quarter when you noted you had some less favorable transactions that led to a bit of contraction there?

Yeah. Give me a moment to take a look at that, Austin. So we did see an improvement in both revenue conversion rate and gross margin for plasma in quarter one relative to quarter four. So we are seeing some normalcy there. We see a -- what’s interesting is typically we see a slightly lower revenue conversion rate in the first quarter as customers receive other tax benefits and other monies that they don’t have as much of a need in February, March timeframe to convert the revenue that they donate. So you see a little bit lower spend and revenue conversion rate in the first quarter. However, that said, and I think, partly addressing some of the, I would say, lackluster performance in the fourth quarter on the revenue conversion rate for plasma, we actually saw an increase in the first quarter compared to the fourth quarter and our margin improved several hundred basis points on the plasma business relative to the fourth quarter.

Got it. Thanks for that parity. And I think I heard a comment on blood -- working with blood centers, can you sort of clarify what you meant when you mentioned that and if it means you are partnering with other kinds of donation centers?

Mark?

Yeah. In relation to blood collection and blood product collection centers, those are just some new product lines that have come into our pipeline and something we are pursuing.

Okay.

So those are opportunities that are available to the company.

Got you. And one last question, if I can. Can you mentioned that, I think, the pipeline is robust for plasma and pharma. Is there any more color you can give to form a contract as you did last quarter kind of maybe anticipated signings or closing?

Yeah. Probably not, I mean, what we can say and we don’t like to talk about things until they occur. We indicated to you when we did our call last even though we hadn’t closed the first quarter, since we had that slight delay in the year end call, we mentioned to you in the first quarter that we signed new pharma -- two new pharma clients. If we had something signed in the month of April or the beginning of May, we would certainly want to go ahead and tell you about that. We have several opportunities that we are well into but it would be premature to say more than that.

Okay. Thanks very much.

You bet.

[Operator Instructions] We will go next to Jon Hickman with Ladenburg. Your line is open.

Could I get a little color on the what you expect for your SG&A levels to kind of grow this year on a year-over-year basis?

Yeah. Taking a look at it, Jon, I have a general idea, but let me just take a peek one more time.

Okay.

I mean, we have talked a little bit about this.

I am asking because there was a fairly healthy jump from Q1 to Q -- Q4 to Q1.

Understood. Understood. Yeah. I haven’t rolled up into a consolidated line. So let me just back let me take a look specifically at SG&A. I have to make sure I give you halfway decent direction on that. Nothing mysterious about that and actually I was going to say 42.5%, it looks like it’s about 42.6% at the moment is what we have got modeled. There’s some play in that as we look at different opportunities. And we are making sure we make the investments for the future of the company, and as Mark just talked about, the Patient Affordability business. That’s a tremendous opportunity, a very significant total addressable market and we are making investments in people, in infrastructure, in technology capabilities. And so that’s something we don’t want to be light on to achieve a short-term objective. We want to make the right investments and build it right from the get-go. So that’s what you are seeing in that first quarter, but we should see about kind of in that 40% to 45% range is what we are projecting for this year.

Okay. And then can I ask a little bit about the competitive environment for the plasma? Your main competitor is having some, I don’t know, maybe financial difficulties, it looks like, is anything changing there, do you see plasma centers unhappy or I mean I know you have gathered quite a few last year, can you talk about that at all?

I mean, I understand what you are saying about our competitor that is having the problems and I can’t really speak too much to that at this point in time. I mean we are going to do what we always do, which is continue to go out and try to take market share. In relation to pre-empting that with anything further, I think, we are going to take a pass at this point.

Okay. So you can’t comment if it’s getting easier or harder to take market share?

I mean, right now I don’t think it’s currently making too much of a difference. I am sure that it’s not wearing well on our competitors. But, yeah, I don’t have too much else to say about it.

At the very end of your comments about growth for the year, did you say that you expect similar revenue growth year-over-year as in 2019? Is that what I heard you say or not?

No. Similar gross margins, we expect to see continued growth and as a separate statement, similar gross margins to 2019. Revenue growth…

Okay.

…I think we haven’t changed anything, if you go back and look at the prior call, we gave a range on guidance for revenue growth. That was about all we said.

Okay. Thank you. That’s it from me.

You bet, Jon.

And we will take a follow-up question from Peter Heckmann with Davidson. Your line is open.

Hey. Just a couple of quick follow-up, could you give us a projection, maybe a range of what we might see in terms of net new plasma centers this year. You have some in the contracted few, you can talk about it and so kind of the timing that they might come on through the year.

Yeah. Don’t have a projection. As you know, we added 32 to 40 centers something like that last year. This year, at the moment, I think, we are sitting with 287 centers, 10 pharma programs and four other programs. So that’s where we sit right now at 301 combined programs. Difficult to project, we would be guessing. There’s obviously conversation occurring for new business. In some cases those can be a handful of centers. In other case that can be a large number of centers, and therefore, picking exactly which item in the pipeline is going to be secured is a bit tenuous.

Got it. Got it. And just in terms of the decline then in terms of when you talk about plasma in April, I believe that was a revenue figure was down about 15% and that would -- so that be almost exclusively units, number of units were down, the same amount as revenue or were there other changes in terms of revenue conversion or anything else you should think about?

Yeah. I didn’t go back and look specifically at the conversion rates for the month of April last year. We did look at revenue. We did look at the current conversion rate for April of this year. We did look at the quarter and the fourth quarter and the quarter last year. But not specifically at April’s conversion rate last year. So I can’t comment on that. I would tend to think it’s probably dollars loaded, i.e. donations being down and similar conversion rates, and therefore, just that trickling through to overall revenue being down.

Great. Great. But I…

But I -- go ahead.

Yeah. Go ahead.

So that’s good. And so, Mark Newcomer, you are the only one on the call, I think, who has a reference for the financial crisis. But, historically, when you have seen spikes in unemployment and a slowing economy, has that generally resulted in core volumes coming through the system, and if so, does that have any effect on the compensation that plasma centers are giving or does that stay constant volume for those?

I mean there are several factors that change the compensation that they are giving. I mean whether or not it’s specialized plasma and things like that. It’s quite possible that it could raise some of the prices that they are offering as they try to collect more plasma and they try to -- and they try, I mean, it’s a very competitive market out there to collect the plasma. So -- but I can’t speak too much to what they will do. Typically, in these downturn markets, however, that from what we have seen we have done fairly well and we haven’t seen much of an effect. If anything, it seemed to be an upturn not a downturn.

Yeah. I mean, obviously, COVID-19 is a completely different animal.

Well, I think, we are still trying to understand…

Yeah.

…and get our hands around the COVID-19 and until that starts to stabilize a little bit, it’s hard to say.

Got it. That’s helpful. Thank you.

You are welcome.

[Operator Instructions] And I am showing that we have no further questions at this time. I will turn the call back for any additional or closing remarks today.

Thank you, Pricilla. Again, I am very pleased with the result -- with the strength of this quarter. We will continue to focus on our mission to grow the company. Thank you for your continued interest, your questions and your participation in the earnings call and you all have a nice evening.

This does conclude today’s program. Thank you for your participation. You may disconnect at any time.