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Well... the demise of one of the largest players in the plasma donation payment processing space means customers/centers will be forced to turn to us! = Massive market share gains for PAYS and near-monopoly in the payment processing in this niche space.
MR. D - agreed. This is great news for PAYS. As you correctly pointed out Wirecard and PAYS are the top 2 payment processors in the plasma donation center space. PAYS was already pulling ahead given the strong reliability/uptime of its platform, customer service, and flexible payment processing infrastructure. Missing 2B$ is nothing to blink at, there could be serious issues for Wirecard on the horizon that could make many of their clients doubt their credibility and the long term survivability of the company as this could cause them to default on many of their debts (note they are already in breach of many covenants).
E.
Thanks Mr D and WoW!
As you can imagine things are quite busy! Both with work, we have had to step up and fund more money in private company investments to help with the Covid impact, lots on the go with my real estate development firm (now trying to build a 14-16 unit rental building) so I am more sporadically checking the board.
On PAYS; still believe in the company's long term prospects though I think we will have to wait until we have another catalyst for it to run. Definitely, room for it to jump above 10$ but its more of a slow and steady play with great fundamentals and resilient market.
On RPAY/RPAYW; personally shocked at how persistent it has been; very similar story to PAYS - slow and steady, resilient with persistent growth, very acquisitive in terms of rolling up smaller payment processors and building a large platform and gaining synergies+multiple expansion from the purchase prices. Strong growth despite economic slowdown value is getting on the high end of whaty I see as FMV though it should continue to rise as growth persist and as they find other attractive assets to buy in these thougher times.
Cheers,
E.
I unfortunately did not.
I'm in the process of building myself a home for the fiance and I (pretty nice inner-city home to raise a family!) which obviously does not come cheap... That being said, I like the play and the management team is quite strong based on my analysis. Still an early stage play and there will likely be bumps on the road, they operate in a good high growth market that I believe in (and the multiples can be pretty high as seen by beyond Meat).
glad for those who got in early though!
E.
Analyst Targets/View on Company etc.
Apologies - Been drinking from the firehose with work these days and have not been able to comment.
To close the loop on a few things; I did dial-in to the Conf Call - overall great Q1 with persistent growth and the scaling has been highly accretive to the bottom line.
Some highlights I took down:
- Pharma growth persists despite the pandemic (2 new programs with one officially launched and one expected to commence shortly)
- As of April Plasma volumes are down 15%; note Q2 is seasonally weaker in terms of volumes and this is slightly more than usual due to Covid-19 (While this is hindered by the recent government checks that went out and the "stay at home" policies" we must also note they added many centers compare to last year so that will help ease the blow. In addition for those who have not seen it significant donation premiums are being given to people who are found to have Covid-19 antibodies). While this is the short term effect given Covid-19, typically recessions lead to MORE donations as more people try to find ways to come up with cash. When things open up this is likely to provide a strong tailwind to Plasma.
- Premier Card has been launched in addition to exploring other programs outside of Pharma and plasma to further diversify the business.
Current stock performance appears to be a little overdone and in my opinion likely due to some small weakness expected in Q2 - could be a great opportunity to pick it up at a discount for a longer-term growth play.
Overall the analyst community was Neutral to slightly positive on the company's outlook and Q1 results - mainly slight upgrades (1 decrease in PT):
Average Price Target is 11.50$
Ladenburg Thalmann: Q1 Points to Continued Impressive Growth Through 2021; Raising PT to 12$
Canaccord: Solid Start to the year; pharma stability to offset temporary plasma softness next quarter PT 11$
DA Davidson: Great Start to Year; Trimming Forecasts on Lower Visibility (PT: 11$ from 12$)
BTIG: PAYS Delivers Modestly Positive and Largely Uneventful 1Q20 Report, Refrains from Providing 2020 Guidance driven by Pandemic Uncertainty - Neutral No Target
Maxim Group: Revenue Beats Guidance; Solid Outlook; Maintain 2021 Revenue Estimate; Potential Covid Play - Raise PT to 12$ on valuation.
New PaySign Website Launched:
https://paysign.com/
Looks good!
E.
New Paysign written article on Medium: https://medium.com/@awithers/alternative-solutions-for-your-stimulus-payment-bf3d5fd1a494
Looks like they are pushing their Premier cards as being banking solutions and alternatives to government cheque’s.
E.
To add to that - Wirecard is the other major payment processor in the plasma industry.
They own relationships with clients that PAYS does not have and also likely share some of the "big" players as those guys typically try to have 2 payment processors across their network of plasma centers for diversification/redundancies.
So if WireCard is showing weakness or potential issues in being dependable/professional they may jump to PAYS. Wirecard also has many other payment processing verticals which PAYS is going after so hopefully we can convince some of them to give PAYS a chance.
E.
can't expect a double (4->8$) with 4-5 days of back to back massive increases in the stock without a healthy pullback. I'm surprised it had not happened sooner... but its good to have a pullback to continue upwards in the weeks to come as we can't simply go up parabolic better to move in lock steps.
Big swings are expected with such a small share float (that means to the upside like we saw and to the downside, and can be easily manipulated by MMs).
For those interested in some of the technicals after Today - strong bullish patterns emerging - see analysis below:
Bullish Trend Analysis
The Momentum Indicator exceeded the 0 level on April 03, 2020. Traders may consider buying the ticker or exploring call options. In 78 of 105 cases where the ticker's Momentum Indicator exceeded 0, its price rose further within the subsequent month. The odds of a continued Uptrend are 74%.
The Moving Average Convergence Divergence (MACD) just turned positive. Considering data from situations where PAYS's MACD histogram became positive, in 32 of 46 cases, the price rose further within the following month. The odds of a continued Uptrend are 70%.
The lower Bollinger Band was broken -- a price increase is expected as the ticker heads toward the middle band, which indicates a buy or call consideration for traders. In 22 of 31 cases where PAYS's price broke its lower Bollinger Band, its price rose further in the following month. The odds of a continued Uptrend are 71%.
The Aroon Indicator entered an Uptrend today. In 83 of 104 similar cases where PAYS Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 80%.
The Stochastic Indicator suggests the ticker price trend may be in a reversal from a Downtrend to an Uptrend. 51 of 63 cases where PAYS's Stochastic Indicator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued Uptrend are 81%.
The RSI Indicator points to a transition from a Downtrend to an Uptrend -- in cases where PAYS's RSI indicator exited the oversold zone, 13 of 17 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued Uptrend are 76%.
22% Up on a day when NASDAQ/Dow is down - not too bad!
3 back to back green days on strong volume, very good TA reversal and should set the stage for a longer-term uptrend back to the 8-10$ range.
We were at 10.5M shares shorted a few weeks back, I would assume we have shaved off a good chunk of those over the past few days but likely still in the ~8M shares shorted if I had to guess (still room for some covering).
At least now the positive momentum of the earnings, CC and Q1-20 will help restore sentiment for this stock.
Note after all of the updated coverage; average analyst target is 10.50$ (ranges from 9-12$) and on a scale of 1-5 (1 being strong buy/5 strong sell) the company ranks as a 1.6 (rated "Outperform" by overall analyst community)
Best of luck,
E.
Very Bullish - Have done the average daily volume within 2 hours of trading on strong buying activity (and massive short covering). Lots of the momo and Technical guys/software will cover this.
also happy B-day Ezz - nice little birthday present today!
Two More Analysts come out with Buy Ratings:
Maxim Group PT 10$ Maintain Buy
Ladenburg Thalman PT 9$ - Buy Rating
Canaccord Initiates Buy Rating with 11$ Price Target
Late last week, PAYS filed its delayed 10-K and announced its Q4/19 financial results, which were unchanged from its preliminary results, before hosting its conference call on Monday, 4/6. After thoroughly combing through the numbers and digesting comments from the company, we once again view PAYS positively and believe the company will be able to drive above-average top-line growth from a combination of its plasma, pharma, and new verticals. In fact, this experience has given us more confidence and we think investors should find some reassurance from the heightened scrutiny and additional transparency. Though we are taking down our estimates somewhat meaningfully, in part from our conservatism in regards to COVID-19, we think the company will be able to deliver long-term growth at a 30%+ CAGR and 30%+ EBITDA margins. We resume our BUY rating with an $11 price target.
DaDavidson re-iterates 12$ Target and Buy Rating.
PAYS - Constructive Tone on 2020, 1Q Off to a Good Start
This morning, management hosted a call to review 4Q and full-year 2019 results, announce some preliminary 1Q figures, and discuss the outlook. Management elected to defer providing formal 2020 guidance due to the viral pandemic but, on the call, management relayed total revenue increased 43%-45% in the first quarter to $10.4M-$10.5M (on a preliminary basis). We have updated our forecasts but the changes on the bottom-line are relatively modest. We are maintaining our BUY rating with a $12 price target.
To answer part of your question WOW;
one of the main reasons for the lower margins in Q4-19 are since they onboarded a large amount of plasma donation centers (38 if I remember correctly). When onboarding centers there is an income curve whereby income must ramp up over time as centers mature. In the early days of onboarding, you have all the set-up expenses and the fees with less income, as this grows your profit per center increases. This is one of the reasons the dollar conversion was lower in Q4-19.
I don't like looking at Net Income, I prefer looking at EBITDA and gross margins as NI is blurred by non-cash items (D&A) and non-operating income/expenses (interest - which is growing as "other income" these days due to larger cash balances):
GM%/EBITDA %, respectively - below:
FY 2018:48.7% / 15.2%
Q1 2019: 52% / 14.7%
Q2 2019: 58.3% / 23.5%
Q3 2019: 59.6% / 28.9%
Q4 2019: 51.8% / 19.3%
I expect GM% to stabilize around 56-58% over the longer term this assumes some GM% expansion due to optimization w/ bank partners but not necessarily fetching the 59-60% seen in Q3-19 as we add some slightly lower margin programs for growth. As for EBITDA, I would have to model out the SG&A (will see if I have time next weekend to do a more fullsome analysis) but based on my prelim analysis. I expect we see EBITDA revertying towards 28% (or higher) as we gain operating leverage (ie. revenue and gross income grows quicker than SG&A as they have added alot of benchstrengh in terms of personel over the last years and don't expect them to increase this as much going forward)
Hope this helps.
E.
Here's my summary of the CC - Lots of Positives:
- Dan Henry remains as Chairman and continues to be committed to PAYS even with new role as Greendot CEO
- Note the Auditors did not provide a qualified opinion on the financial results, numbers were accepted as reported, and SOX audit resulted in significant operational improvements internally (improved documentation, improved systems, and controls)
- While no guidance was provided; Q1 is expected to come in at $10.4-10.5M, representing a ~44% increase yoy; pharma cash loaded up 70% over last year; restricted cash up significantly ending the Q1 with 54-55M unrestricted and peaking in Feb with ~60M.
- Ended the year with 8 Pharma programs: Onboarded 7 new ones on top of the 3 they ended last year with and 2 ended; onboarded 2 new ones in Q1 but should bolster next Q's - large pipeline which they are currently in discussion with.
- Expect meaningful Pharma growth in 2020 where mix will further diversify to ~60% Plasma/5-10% Other/30% pharma
- Expect conversion rates to remain similar to 2019 but they did negotiate improved terms with their bank partners improving gross margins
- CAPEX spend expected to be close to the same as last year (3.2-3.3M) with 2020 expected in the range of $3.2-3.7M
-Have sensitized all worst-case scenarios and remain CF positive in all of them
- Despite Covid-19 situation, both Pharma and Plasma are quite countercyclical with no meaningful change in plasma volumes to date (and if anything with plasma being touted as a cure and more people out of work it could result in an increase later on but TBD/ Pharma has continued to grow despite the Virus)
This was helpful in providing improved transparency to the analyst and retail investor commmunity alike and will show that the large cdrop in stock price was unwarranted given their continued growth (at a time when everyone else is reporting negative growth rates!).
E.
Mr. D your comments were passed along - and they were addressed -in the CC: No change in Dan Henry's status as Chairman.
E.
Not sure if they will answer that one in the CC.
That being said I’ve been told that as of right now he has no plans to leave as chairman of PAYS and that there might be synergies to be gained from his role and learnings at Greendot.
E.
I’ve flipped your comments/questions to them - let’s see if they address some of it in the MD&A otherwise happy to probe for some of it.
E.
Yea I’ll be on the call - I’ve already passed along some of my questions to be integrated into their Q&A/addressed pro-actively during the management discussion.
Please share with me any questions you may have and I can communicate them to the IR/Management.
E.
Expect the Conference Call on Monday to kick the week off with a bang.
Should have more transparency through the update and Q&A.
Overall strong report and continued growth - will comment back later with a summary and best of all no material impact as of yet from Covid19.
E.
To provide my perspective on this, completely agree it could/should have been messaged better and with more notice. To note these are the accountants that were scolded in that short report some while ago and I assume they are not taking their job lightly and likely over doing it IMO so that is the source of the problem...
Let’s see the release when it actually comes out and more so I’m looking forward to the earnings call where there will be more colour provided.
1- no dividend will be provided that I can almost assure and likely not the best use of funds for a high growth company with better places to reinvest the cash at a better rate of return.
2- I would not provide much of guidance and if I did it would have a large range or be a very conservative estimate. In this environment you do not want to shoot yourself in the foot if all he’ll truly breaks loose and they decide to close everything including plasma centers.
What I would do which I assume they will...is provide more of a status update on how the business is performing during these chaotic times (likely better than most businesses) and likely shed some light on programs on the go as of Q1 and new initiatives which would be enough to have people draw their own conclusions on businesses growth expectations.
E.
Quarter and YE financials were done.
They were waiting on final sign-off from the auditor which was expected by this afternoon but as usual, everything and everyone is slammed and taking longer than what they say... for ex: I called the bank to get a refi and they told me to expect 25 days until someone actually looks at my file because they can't manage the influx of requests/auditors likely fielding thousands of calls about stimulus measures, taxes, etc..
Once sign-off is received, expect them to release the PR in the next few days to come with earnings call likely the day after that to allow people to read through it.
Not impressed with the last-minute delay either but I do understand the reality they are dealing with as I'm living it with some of the other companies I manage (private companies) - auditors have been delayed by over 2-3 weeks and constantly harassing them to get it done so we can provide audited financials to bankers, etc...
As noted, since the SEC knows this reality they extended the deadlines.
Note the SEC is providing up to 45 day extensions past the original deadline to report https://www.sec.gov/news/press-release/2020-73 (this would mean they have 45 days past March 16th) apparently with no in-person meetings happening the YE closing processes are taking significantly longer.
While I'm not impressed with the last minute notice, the SEC is allowing this and I've seen a few other companies do it (especially smaller ones where it's their first SOX review are getting even more hit as its a very long drawn out process that is best done in person.)
E.
Dan Henry (PAYS Chairman) Appointed as CEO of GreenDot
https://newsfilter.io/a/d4e6689be2e4940b6ea96032cfe21d46
More Promising PR's from Partners in the Plasma Space
While many businesses are being forced to close their doors - Plasma donation centers are deemed essential services and remain operational which means those who support that sector (PAYS) continue to benefit as well. Also to remind everyone that PAYS added 32 new plasma centers September 31st, 2019 (Q3/Q4 2019) and a major portion of their revenue comes from this sector - they are the market leader payment processor in this niche industry.
To help support this - look to some of the PR's of publicly traded plasma donation center providers.
Grifols (GRFS) - the largest player in the US and EU provided a press release March 18th about Covid-19 reiterating their commitment to continue to serve the market with increased health protocols and that "At this stage all Grifols’ facilities are operational". They also mentioned the power of plasma in helping to cure viruses.
Also note: Over the last years, Grifols reported a plasma volume increase year-over-year of 28% and 13% in 2018 and 2019, respectively. Increased volumes =more money for PAYS.
https://www.grifols.com/en/view-news/-/news/grifols-reinforces-its-commitment-to-all-stakeholders-as-a-response-to-the-covid-19-outbreak
Haemonetics, another major player release a similar PR:
https://haemonetics.gcs-web.com/static-files/86d17b9a-a4ea-4455-87cb-4113090ab15d
The underlying demand for plasma-derived therapies remains strong. Despite the rapidly changing situation with COVID-19, patients are in constant need of these necessary drugs. The U.S. remains the primary source of plasma collection and represents more than 90% of Haemonetics’ commercial plasma revenues. We have ample inventory levels of all disposables to meet our delivery obligations, and we are working on appropriate contingency plans, should the need arise. We remain in close
dialog with our customers who remain focused on collecting plasma as usual while taking appropriate steps to adequately protect both their employees and their donors.
Additionally, the PPTA has stated that the outbreak is not a concern for the safety of plasma protein therapies manufactured by PPTA member companies.
E.
Breaking News: Great News for Plasma Donation Payment Processors
The FDA will allow doctors across the country to begin using plasma donated by coronavirus survivors to treat patients who are critically ill with the virus, under new emergency protocols approved Tuesday.
The treatment, known as convalescent plasma, dates back centuries and was used during the flu pandemic of 1918, in an era before modern vaccines and antiviral drugs. Some experts have argued that it might be the best hope for combating the coronavirus until more sophisticated therapies can be developed, which could take several months.
https://www.nbcnews.com/news/us-news/fda-will-allow-doctors-treat-critically-ill-coronavirus-patients-blood-n1167831
Spoke to IR still not a big deal... The reason is the following:
All of HQ and full SOX audit has to be done virtually as HQ and Nevada all on lockdown... note the business still can operate as usual since everything is done virtually and as you can see from publicly traded plasma center companies blood plasma centers are essential services and continue to operate (and plasma donations are being encouraged).
More buying opportunities ahead...
E.
A strong positive release from PaySign about continuing to process payments and actions taken for Covid-19 from their Facebook page - https://www.facebook.com/1602190070008718/posts/2818952224999157/?d=n
ASP I brought this up and received confirmation that blood donation cancelations has no correlation to blood plasma. The blood donations are just that “donations” where you get a cookie for your services these are everyday people and those vans going around to people have decreased. However blood plasma donations are only done via the centres and have not stopped if anything they have increased as more people need the money since many have lost their jobs.
Investor Day webcast shortly after Earnings call and words of reassurance:
While we are all not too happy with the share price performance at the moment I have had some time to re-evaluate and here are certain things to consider:
1) Good news and addition clarification is on the horizon through i) The earnings call on the 25th and official release and ii) The investor Day Webcast expected in the 1-2 weeks after the earnings - see the PR of the earnings release date “The Company will announce a webcast similar in format to the webcast conducted in February 2019. The Company will address areas such as Paysign’s history, active markets, and the Company’s growth strategy.” - the Company cannot release much information at the moment and even that press release with prelim numbers was likely them threading lightly to not be in breach of reporting laws. They will be as transparent as possible when they can starting the 25th and on top of that are being pro-active to appease concerns and reiterate their business model through a webcast format with a fully updated investor deck to be expected. This is for both institutional and individual investors which will be great to get the word out.
2) Business model is quite recession proof (barring any crazy forced closures or other force majeures) more people need money now and are out of a job which means more people will go give plasma to get a little cash in their pockets. I would also like to reiterate that giving plasma is not the same as giving blood and these plasma centres continue to have robust volumes (See other publicly listed companies such as Grifols), donors will get paid (using PAYS) and afterwards the blood is tested to make sure it is usable and does not have a virus or other things in it. While some could also argue using plasma from corona patients could be used as a cure, that’s another story... Overall when all companies have reduced earnings we can likely expect continued growth from PAYS.
3)Compelling valuation - now more than ever the company is trading at a ridiculous valuation given its growth profile. Even on conventional TTM PE multiples used for slow growth companies it’s starting to look attractive. Then if you look at projected EV/EBITDA multiples that most analyst are using you would get to a minimum of 10$ (most targets of analyst are between 10-15$)
4) Adding additional financial and technological controls are part of the “growing pains” for a company that has grown quickly and moved up from the OTC exchange to the NASDAQ and it a good thing. While I’m sure they weren’t allowed to elaborate on it for legal reasons until the 25th this is the first comprehensive SOX audit as a NASDAQ listed company which is quite strenuous (knowing from experience) but after the fact we should have more confidence that the company has the proper controls in place to support further growth.
Keep your head up all - it might swing around a little more but I’m hopeful once they’ve prided the additional transparency to the market that it will rebound sharply. Ignore the “ambulance chaser legal firms” they always show up after large stock price drops and never materialize into much.
Cheers,
E.
It’s now starting to look very attractive on a valuation basis if they do 0.06 EPS adjusted in Q4 and annualized than you are ~16-18 PE for a company growing at 40%+ it’s quite incredible.
While this is a pretty sad story right now with the market not helping I do think you could get a massive spike back post conference call and when this is all put to bed and explained.
The usual ambulance chasers - no cause for concern.
Possibly, though maybe we see a sigh of relief if they simply do a small extension and announce the earnings release date (and the fact that the uncertainty is gone and we have a confirmed date - especially given we have dropped so much already).
So to answer your question, yes you are correct their deadline is Monday but they would also have the right to extend it to the end of the month should they file an extension by Monday (also a strong possibility IMO) they are then not in breach and can find any time in the 14 days that follow.
I must agree with the MR. D with the thousands of people loosing their job I can almost guarantee that a large portion of them will start giving plasma for money. This is not blood drives, these are centers where people who need money to get buy will continue to go in and provide their plasma - it’s a more recession proof business than most.
Also if you look at all years before last year they have always reported near the end of March. I trust the management and think they are not doing this without good reason and to make sure there is an extremely thorough review of the company and it’s just causing unwarranted panic.
Let’s see what Monday brings.
E.
Where did you find that date?
If its from a broker, its likely just "estimates" NASDAQ has the 16th while seeking alpha 17th - I had heard form the company by around Monday next week as well.
The reality is they have grown very quickly and only now have had a full year reporting as a NASDAQ listed Company which leads to many requirements as part of the annual compliance - so they will use all the time they are given to make sure they have crossed all T's and dotted all I's. The irrationality is due to unsubstantiated "expected earnings dates" which the brokers simply came up with based on best guesses (and then people are getting mad they have not reported based on a date that was not even provided by the company).
E.
Deadline for reporting is next Week - ignore the broker estimates. We should see a PR in the coming days announcing the conference call and likely report on Monday to kick things off right!
knowing the company, guidance are in the cards and I think we will all be happy with 2019FYE results. until then sit tight.... Within the context of everyone lowering guidance or having tempered earnings i'm sure we will all be happy with sustained growth from PAYS.
E.
Yep that’s me!
FYI There is New Article out on Seeking Alpha: https://seekingalpha.com/article/4329880-paysign-earnings-shoot-up?utm_medium=email&utm_source=seeking_alpha&mail_subject=pays-paysign-earnings-shoot-up&utm_campaign=rta-stock-article&utm_content=link-0
I also commented on it (see comment section of article).
E.