PaySign, Inc. Class B Stock

Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Paysign, Inc.'s Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

As a reminder, this conference call is being recorded.

The comments on today's call regarding Paysign's financial results will be on a GAAP basis, unless otherwise noted. Paysign's earnings release was disseminated to the SEC earlier today and can be found on the Investors section -- 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 is summarized at the end of Paysign's earnings release and in our recent SEC filings.

Lastly, a replay of the call will be available until November 4, 2026. Please see Paysign's Second Quarter 2026 Earnings Call announcement for details on how to access the replay.

It is now my pleasure to turn the call over to Mr. Mark Newcomer, President and CEO. Please go ahead.

Thank you, Kevin, and good afternoon, everyone. Thank you for joining us for Paysign's Second Quarter 2026 Earnings Call. I'm Mark Newcomer, President and Chief Executive Officer. And I'm joined today with Jeff Baker, our Chief Financial Officer. Also with us are Matt Turner, our President of Patient Affordability; and Matt Lanford, our Chief Payments Officer, both of whom will be available for Q&A following our prepared remarks.

Earlier today, we reported second quarter results, setting new records for revenue, net income and adjusted EBITDA. In fact, it was our second consecutive quarter of exceeding our quarterly guidance. As a result, we're raising our outlook for the full year today.

The momentum we're seeing reflects the strategic decision we made a few years ago to invest in patient affordability as a business that could complement plasma and augment our overall growth trajectory. And this quarter is a good example of that we're continuing to pay off.

To put the quarter in perspective, revenue grew 48% year-over-year to $28.3 million. Net income came in at $6.8 million or $0.11 per fully diluted share, a near 5-fold increase year-over-year. Gross margin expanded 170 basis points to 63.3%. Jeff will walk you through all the financial results in the quarter, but these numbers clearly demonstrate the progress we are making in the business.

Patient affordability delivered another exceptional quarter and remains the company's principal growth engine. Revenue rose 89% year-over-year to $14.6 million, and claim volume was approximately 54% higher than the same quarter of last year. Those results reflect the compounding effect of new program wins, deeper utilization across the existing clients and the continued expansion of our largest pharmaceutical partnerships.

We are scaling the business methodically, and the combination of strong growth, margin expansion and positive contribution margin demonstrates that strategy is working. What's also encouraging is that plasma is now contributing to that same story. Both lines of business expanded margin this quarter: patient affordability compounding as it matures and plasma moving past the headwinds that weighed on it for the better part of the last 1.5 years. That's the balance we've been working toward, a steady cash generative course supporting a faster-growing, high-margin platform.

Through the first half of 2026, the platform has channeled more than $900 million in financial assistance to patients. For context, we provided close to $1 billion over the whole of 2025, and we have already come within reach of that full year figure in just 6 months. The pace reflects both widening program base and increased utilization within programs that have now been live for a year or more. And it shows how essential Paysign has become to keeping high-cost therapies within patients reach.

Our dynamic business rules technology is a meaningful part of why pharmaceutical partners are consolidating more of their business with us. Over the first half of the year, it yielded clients for more than $300 million in costs that co-pay maximizes and accumulator programs would otherwise have diverted. To frame that, the full year 2025 total was roughly $325 million. So we have nearly matched the entire year of savings in 6 months. That reflects both the scale of the platform and the continued sharpening of our detection logic.

We launched 13 new programs in the second quarter and exited the quarter with 148 active programs, up from 97 a year ago, in line with our expectations and demonstrating consistent and rapid growth. Launch activity tends to build as the year progresses, and the second quarter was a clear step-up from the insurance plan year transitions and resets that make the first quarter our most constrained. The pipeline remains healthy through the balance of 2026 and well into 2027, and we expect to match or surpass the 55 net additions we recorded in 2025.

Between the rising program count, growing utilization and assistance dollars deployed, the read is consistent. The platform scales cleanly and market demand for our patient affordability solutions continues to strengthen.

Turning to our plasma donor compensation business. Plasma contributed $13 million in revenue for the quarter, up 21.4% from $10.7 million a year ago. More telling was monthly revenue per center, which reached 7,699, the strongest rating since the third quarter of 2024. That measure reinforces our view that the recent center closures were strategic with donors moving to nearby centers inside the same network rather than leaving the system altogether.

We finished the quarter providing services to 561 centers, reflecting the 19 center closures that we flagged on last quarter's call, partially offset by 7 new additions. The trend leaves us increasingly confident that the headwinds we faced are largely behind us. Plasma also remains a dependable source of cash generation, and it gives us a natural entry point, broadened adoption of our donor management and engagement software among the collectors we serve.

Our life sciences technology suite, which we bring the market under the [ Etherion] brand continues to advance through the regulatory review process for our Blood Establishment Computer Software or BECS donor management system, and we look forward to sharing additional milestones as that work progresses. Interest in the Etherion platform remains strong both domestically and internationally. To support that international demand, we have established Etherion Technologies Limited, a wholly owned subsidiary, domiciled in Ireland, which will anchor our sales development and client support as our European hub. With roughly 1/3 of source plasma collected outside of the United States, much of it by companies that also run U.S. operations, we see substantial international runway for this business, and this step positions us to pursue it.

In summary, the second quarter validated the strategy we have been building towards the past several years. Patient affordability is scaling, plasma is steady and cash generative, and our life science technology efforts are opening another meaningful avenue for growth. We head into the back half of the year with business accelerating, margins expanding and a pipeline that reaches into 2027. This is a business that's ramping, not just beating a number, and we believe Paysign is well positioned to continue delivering sustainable growth and long-term value for our shareholders, the clients who trust us and the patients who ultimately benefit from what we build.

With that, I'll turn it over to Jeff for additional details on our second quarter results.

Thank you, Mark. Good afternoon, everyone. We delivered another strong quarter. Results in both plasma and patient affordability show the momentum we have been building. We also drove year-over-year margin improvement across the entire income statement, even excluding a onetime noncash benefit of $990,000 related to the carrying value of the Gamma acquisition earn-out liability.

Our first 2 quarters of 2026 make 2 things clear. Our patient affordability solutions are resonating with pharmaceutical companies, and our plasma business has recovered from the high inventory levels that weighed on the results throughout 2025.

For the second quarter, total revenues increased 48.1% year-over-year to $28.3 million. Pharma revenue led the way, increasing 88.9% year-over-year to $14.6 million. That growth was driven by continued program expansion, including 51 net pharma patient affordability programs launched over the last 12 months. We exited the quarter with 148 active programs and processed claims increased approximately 54% compared to the second quarter of 2025.

The revenue increase reflected higher monthly management fees, set-up fees, claim processing fees, customer service contact center support and other billable services such as dynamic business rules.

Pharma revenue against surpassed plasma revenue this year, even with the normal seasonal pattern in which claims begin to decline and plasma donations tend to increase as we move through the year. Plasma revenue increased 21.4% year-over-year to $13 million. Average monthly revenue per center increased more than 5% to $7,699, up from $7,098 in the second quarter of 2025. And the average number of loads per center again increased year-over-year.

The improvement was driven primarily by stronger utilization at existing centers rather than footprint expansion, which is an encouraging indicator of underlying donor activity. As Mark noted, we exited the quarter with 561 centers, in line with the expectations we communicated on our first quarter earnings call. These trends support our view that the 2025 inventory overhang has largely normalized.

Gross profit margin expanded to 63.3% from 61.6% a year ago, reflecting a greater mix of pharma revenue, which carries higher gross margins than our plasma business. Call center support, implementation, processing and commission costs in the aggregate grew well below our 48.1% revenue growth, which is what produced the margin expansion and demonstrates the operating leverage inherent in our model.

Total operating expenses were $10.9 million, an increase of 5.5% from $10.3 million in the second quarter of 2025. During the quarter, we recorded a nonrecurring noncash benefit of $990,000 related to the carrying value of the Gamma acquisition earn-out liability. Excluding this benefit, total operating expenses would have been $11.9 million, an increase of 15.1% over the prior year and well below our 48.1% revenue growth.

Selling, general and administrative expenses increased 4.3% to $8.5 million, including stock-based compensation of $1.3 million. Excluding the onetime benefit, selling, general and administrative expenses would have increased 16.3% to $9.5 million.

Operating leverage was one of the highlights of the quarter. Excluding the onetime Gamma earn-out benefit, adjusted operating margin, calculated as adjusted operating income divided by revenue, expanded to 21.3% from 7.5% in the second quarter of 2025, an improvement of more than 1,300 basis points. Put another way, we converted roughly half of our incremental revenue into adjusted operating income, demonstrating the scalability of the platform as pharma mix increases and plasma normalizes.

Depreciation and amortization increased $200,000 due primarily to the amortization of intangible assets from our Gamma acquisition and the capitalization of new software development costs.

Here are a few other important details for the second quarter. Income before taxes increased to $7.9 million from $2 million in the second quarter of 2025. The company reported an income tax provision of $1.1 million, resulting in an effective tax rate of 14.5%, compared to 32.1% in the second quarter of 2025. The lower rate reflects discrete item adjustments primarily related to the increase in our stock price at June 30, 2026 compared to the same period last year, which increased the tax benefit from stock-based compensation relative to the prior year period.

GAAP net income for the quarter totaled $6.8 million or $0.11 per fully diluted share, an increase from $1.4 million or $0.02 per fully diluted share in the second quarter of 2025. Adjusted EBITDA increased 113% to $9.6 million or $0.16 per fully diluted share, compared to $4.5 million or $0.08 per fully diluted share in the second quarter of 2025. Adjusted EBITDA margin expanded to 34% from 23.7% a year ago. We use adjusted EBITDA, which excludes stock-based compensation and onetime noncash adjustments, to evaluate core operating performance. The fully diluted share count used in calculating per share amounts was 62 million shares versus 57.9 million shares in the prior year period.

We exited the quarter with $27.4 million in unrestricted cash and 0 bank debt. Restricted cash increased $5.2 million from the year-end December 31, 2025 to $149 million. The increase was driven primarily by customer program deposits for plasma and pharma programs as well as higher funds on card, which represents balances loaded to cards but not yet spent by cardholders.

Before turning to our outlook, I want to note that our second quarter results once again exceeded our guidance across every line of the income statement, primarily driven by strength in our patient affordability business. Revenue of $28.3 million exceeded the high end of our $26.2 million to $26.7 million guidance range. Gross margin of 63.3% finished above our guided range of 60% to 62%. Adjusted EBITDA of $9.6 million exceeded the high end of our $7.7 million to $8.5 million range. And adjusted net margin of 20.4% exceeded the top of our 13.4% to 15% range.

The outperformance in the first 2 quarters of the year, combined with the visibility we have in the program launches and seasonal trends, supports our increased full year outlook. For full year 2026, we now expect full year revenue of $114 million to $117 million, representing 39% to 43% year-over-year growth. This is an increase of approximately $7 million at the midpoint compared to our prior guidance, primarily driven by stronger-than-expected patient affordability business and a recovery in our plasma business.

With the increase in patient affordability revenues driving continued margin expansion and operating leverage, we expect gross profit margins between 62% and 63%, an increase compared to our prior guidance of 60% to 62%. GAAP net income is expected to be in the range of $21.5 million to $23 million or $0.35 to $0.37 per diluted share. And adjusted EBITDA is expected to be in the range of $35 million to $38 million or $0.57 to $0.61 per diluted share.

These full year net income expectations include the nonrecurring noncash Gamma earn-out benefit recorded at the second quarter. Consistent with our adjusted presentation, adjusted EBITDA excludes that benefit.

For the third quarter, we expect revenue of $28.5 million to $30 million, a year-over-year increase of 32% to 38.9%, with approximately $300,000 coming from other revenue and the remaining balance being split between the patient affordability and plasma businesses. Gross margins are expected to be in the range of 61% to 63%, reflecting a greater mix of plasma revenues. Our tax for the quarter is expected to be 17%. And our GAAP net income is expected to be $5.7 million to $6.0 million or $0.09 to $0.10 per fully diluted share. Adjusted EBITDA is expected to be $9.5 million to $10 million or $0.15 to $0.16 per fully diluted share.

As of today's announcement, we have 157 active patient affordability programs and expect to exit the third quarter with 165 to 170 active programs. We also expect our active plasma center count to slightly increase from the second quarter. As a reminder, pharma revenue is typically highest in the first half as claims peak with annual insurance deductible resets and then moderate throughout the balance of the year. Plasma revenue, by contrast, is typically softest in the first quarter and builds as donor activity normalizes following tax refund season. Both dynamics are fully reflected in our full year guidance.

In short, we are entering the second half of 2026 with stronger program momentum, improved plasma utilization, higher margins and a clean balance sheet. Those factors support both our revised guidance and our confidence in the long-term earnings power of the platform.

That concludes my prepared remarks. With that, I would like to turn the call back over to the operator to begin the question-and-answer session.

[Operator Instructions] Our first question today is coming from Gary Prestopino from Barrington Research.

At this point, Mark, have you contemplated or even really measured on a same-store basis what the revenue growth per program is, for programs that you've had in hand for 12 months or so?

Yes. Can you -- this is Matt. Can you repeat that? Are you talking plasma or are you talking patient affordability?

Patient affordability, please.

So you're asking like month-over-month, what it's like -- what it looks like when it normalizes?

No. Just to get an idea of if you have a program -- the programs that you have 12 -- in the end 12 months, what's been kind of -- if you look at it like on a same-store basis? What's been the, for lack of a better word, organic growth within a program or within your program?

Yes. So Gary, for the most part, all things being equal on a year-over-year basis, once it becomes a mature program, you would expect flattish revenue growth. However, we've been adding in more feature functionality into a program, a program may get an additional education. There are a number of factors that will go into. I mean we have some programs that are -- we're turning on other services for that we're now billing for. So it's kind of hard to tell you.

If we did nothing, if we did absolutely nothing, you would expect, if there were x number of claims 1 year, there would be the same number of claims next year. But we're actually seeing growth in some of our existing programs because we're adding more products and services for those programs. We've got a couple of brands that are getting more indications, meaning there's other uses for the drug, and so that expands their opportunity. So that's what we're seeing right now.

Okay. So just the bulk of the growth is going to continue to come from hitting new programs. And that's what I was trying to get at.

Absolutely.

So I think at one time or another, Jeff, we talked and you said there's between 850 and 900 potential pharmaceutical programs. Is that still a good number?

Yes, this is Matt. It's way higher. I mean, I think there's 850 drugs that currently have like maximizer, accumulator impact. But if you look at the total number of drugs in market with a co-pay program, you're in the tens of thousands, pretty much every branded product as well as most biosimilars. And then you get into some medical devices as well and you get into physician administered or infused products, there's still a tremendous TAM here for us to tap into.

We're, going back to analogies from a couple of quarters ago, we're still in the first inning year.

Okay. That's great. And then just lastly, I know you mentioned something about the Etherion program meeting approval, but could you just go into that a little bit more, what you're waiting for here before you can launch it into the market?

Yes. I mean really the regulatory process is something we're in the process of going through. There's not -- I don't have a crystal ball, so any time you're in that new process, it kind of is what it is and you just kind of roll with it. I can't really give a date for that at this point in time. But you've got to figure that we're going to continue -- we're getting lots of interest internationally and domestically, and I expect that to continue.

We'll definitely give you additional feedback as it comes down the pipe on milestones met on that.

And it's the FDA that you're waiting for the regulatory approval from, right?

Correct.

Okay. And then just lastly, the TAM there is pretty big, probably over $1 billion worldwide?

So the TAM for software, for blood and plasma software alone, globally today, it's $3.5 billion. And the estimates from third-party resource that we look at thinks that that's going to $7 billion over the next 10 years.

Our next question is coming from Jacob Stephan from Lake Street Capital Markets.

Congrats on a really nice quarter here. Maybe just on the Q3 program guide. Q3 implies roughly 20 new additions in the quarter. That's pretty strong success seasonally just given Q3 is usually a lower quarter. But when you kind of factor in that Q4 is typically stronger and correlating that with your over 55 guidance, I guess what are you seeing differently in Q3 that gives you kind of the strong sequential number of additions there?

So I want to push back on something, that Q3 is normally not a slow quarter for us. Typically, Q1 is our weakest quarter for new program launches because of insurance resetting. So I think if you look at this quarter, we only -- the first quarter of this year, we haven't launched a couple of programs. And that's really what we expect.

As you get into the end of Q1 and move into Q2, we had the Asembia conference that we talk about every year, and that starts to set the stage for the back half of this year and the first half of next year. So what we're seeing come into Q3 now is representative of sales work that was begun in Q1 we were in that launch lull, as well as things that are popping out that we kind of closed up at Asembia and were able to get through.

On the nonportfolio accounts, right, so take the giant top 10 pharmas off the table for a second. For the smaller pharmas, our sales cycle is still holding around 90 days. So as we were planning this stuff in Q2, that obviously [indiscernible] and it starts to look towards Q3. And Jeff already said, we're sitting [indiscernible] and we've already done plenty of launches in the last 30 days.

So yes, I don't think there's anything necessarily a driver other than this is just a real timing that we expect to see these types of deals come through. And Q4 always tends to be on par with Q3 because we've got a lot of people that will rush, take the programs up and live before Q1 when insurance deductibles and everything else reset, and we enter what we call the blizzard, just to where every patient is calling about everything, every pharmacy is calling about everything because they're dealing with insurance deductibles resetting, everything else. So that's really the push of Q3 and Q4, is to get everything done before Q1 because nobody wants to transition a program in Q1.

And typically, what you'll see launch-wise in Q1, and sometimes as much Q2, is new programs that are -- this is a new-to-market drug, as opposed to you won't really see us transitioning very many programs in January, February just due to resource constraints across the broader industry.

And Jacob, like I said, we sit here today, we exited July with 157 programs, so added another 9 since the end of the quarter. Look, last year, we added 28 programs in the fourth quarter. The pipeline is extremely strong. We feel good about where we're headed and the number of programs, added 13 programs. And the second quarter was very solid as well. But if you look at our guidance, I mean, we're -- we -- the pipeline is strong and the implementations keep coming and there's no slowdown.

Got it. I appreciate all the detail there. Maybe just one more. Kind of building off of the last analyst question, but how does, I guess, 1 year, I guess, first year revenue per program kind of compare with your more seasoned [indiscernible]? And do you guys typically do you land with DBR? Or is that kind of an add-on product that gets upsold later?

So we try to launch with DBR. That's our normal go to. But that's obviously for specialty products that are impacted by maximizers. It's not to say that every product that we have is impacted by maximizers. So it's a little bit of a mix.

I think it's very difficult to answer your other question around what does the program look like. And I just pulled up some quick metrics looking at a program that we transitioned back in July of '24. And if you were to look at January of '25 versus January of '26, there was about a 15% increase in claims. That has nothing to do with Paysign. That has to do with the fact that that drug received a pediatric indication in Q4 of '25. So going into Q1 of '26, their claim volume is naturally higher.

On the reverse side of that is I have another drug that's maybe doing, say, 7% less in that program year-to-year, but I'm not going to feel it because I actually have the drug that's cannibalizing that product. So a lot of times, as pharma companies will have a drug start to enter their loss of exclusivity period, they will launch another drug [indiscernible] so -- and it's for similar indications, the treatment profile of similar, adverse events and pharmacovigilance efficacy, all that stuff is very similar, but it's a new molecule. And they'll launch that product in a way that is designed to cannibalize from the product that's going -- that's losing exclusivity.

So there's -- it's -- you can't generalize that and say, this is just how programs work. It's like saying, hey, tell me how much it is for a drug and you have to account for aspirin as well as gene therapy. Gene therapy is $30 million, aspirin is sub-pennies per pill. So when we get into our programs, there is that love disparity. I've got -- we have programs that might do a couple of claims a month. I've got programs that might do 30,000 claims a month. There's no way to just give you an average and think this is what you should look at for a program and this is what they look like year-to-year. You have to really be dialed into the efficacy of the drug, the pipeline, the manufacture, everything else. And unfortunately, with our contracts, we're just not allowed to disclose our book of business.

The next question today is coming from Peter Heckmann from D.A. Davidson.

Great to see the good results back to pharma. Could you talk about maybe how these -- how do the manufacturers or the middlemen that work with manufacturers, how do they procure these? Are they typically request for proposal or is it just kind of on a one-off basis? But I guess when you look at that, is there a way to think about your win rates and kind of Paysign obviously has great momentum in the business, but this makes me wonder if your win rates really have moved quite a bit higher.

And then just thinking about seasonality of wins, just looking at the last couple of years, it doesn't seem that there's any real particular pattern, but I guess, generally, would you expect to win relatively more new programs in the first half or the second half?

So as far as win ratios, let me go back kind of the sales cycle first as that was the first question you asked, there is a pretty good mix of RFPs, RFIs versus direct reward. I would say right now, we're probably in the 75% of our wins are coming out of RFPs, RFIs, and the remaining 25% is word-of-mouth kind of direct award.

Our RFP win rate is pretty high. I don't have the exact numbers in front of me. I'd have to go back and kind of dig that out. But we don't -- I would say our RFI, RFP win rate is north of 80%. If you -- all right. That was the first question. Now I lost your second one because I didn't write it down. So sorry, what was the next one?

Just thinking about any seasonality to the wins. Just looking historically, I'm just trying to -- like, I think last fourth quarter was a great net win quarter. But in last year, you also had a very strong first quarter. So just trying to, if there's certain conferences or certain timing launch that, generally, we would expect you to add more net new in the first half than the second half or it just depends on the year?

Yes. So I think there is seasonality in the transition wins, but I don't think that's necessarily related to selling. That's more related to what makes sense as to when to actually transition the program. There's some -- quite a few programs that we may have known we won and have been sitting on it for 4, 5 months. because the launch date is the middle of the year because that's what's worked for the manufacturer. I kind of equate it to like building a house in Alaska. You don't build it in the wintertime. So we don't transition programs in the middle of the blizzard. So it kind of knocks out this whole 3 or 4-month period in the year to where you're just not going to see a lot of transitions.

But if you look at our business wins this year, we're about 50-50 on transition programs versus new to market, which is why you see some of these programs launching in the first quarter and the second quarter. They're brand new to market drugs. We've won those products through RFP or through word of mouth. And we -- those trickle in just throughout the year, and that's based on the PDUFA dates that they received from the FDA as well as their internal launch readiness around those products.

So there's certainly a seasonality to the selling. We do talk about Asembia a lot. That conference is critically important to us every year, and we throw a lot of time, energy and resources at that conference. It's -- we consider it our single largest marketing event for patient affordability throughout the year. We attend 5 to 7 other conferences as well at various levels to where we may have 1 or 2 people or some of them we have 10 or 12 folks show up. It just depends on the conference and who we think is there that's on our target list.

Asembia is in the April, May time frame, and then we get into the October, November time frame with a couple of other conferences that are in the -- typically in like the Philadelphia area, or New Jersey area every year. So those are -- that's -- I would say that's the seasonality into our sales.

One of the things I'll talk about around win rates because I just thought about this, is if you look at last year and all of the new RMs that came to market, there is a certain percentage of those that we just were -- we were never going to be in a position to win, right? They have exclusivity contracts with their current vendor or something like that, and it's -- this is going to be a small drug rolling into a massive -- a manufacturer that already has exclusivity with somebody else. But we went back and looked at that last year. Out of all the new drugs that came to market, we won over 80% of those RFIs, RFPs that came out.

So we know our win rate and conversion rate is very high overall. And if you look at comparing us to the rest of the market, I don't think you see anybody else in the market doing 50 to 60 program launches a year. I worked at another service provider prior to coming here. And I can tell you, we quite certainly did not set up on average more than 1 program a month. So I think our growth is certainly leading the industry.

That's great. That's very good color. And then, Jeff, I just had one for you. And I apologize if I missed it, earnings season, a lot going on here. But in the last 3 years, the difference between your EBITDA, EBITDA in the third quarter and the fourth quarter were typically pretty even. And this year, just kind of working through your third quarter and full year guidance, it appears that third quarter is going to be very strong from a margin perspective, and then fourth quarter not as strong, and on an absolute dollar basis, a pretty significant step-down in the fourth quarter. So forgive me if I missed it, but can you talk about the reasons for that? It appears to be more than just your normal revenue mix shift back to plasma?

No, that's a fair question. So if you look last year, we had so many patient affordability programs launched in the fourth quarter. I mean it was like [ freaking ] out of our hose. This year, hopefully, we're seeing a little bit more in the second quarter and more in the third quarter, some in the fourth quarter. So a little bit more even out throughout the rest of the year. So that's going to be part of it.

The thing you're going to see in the fourth quarter, also, and one of the things I've experienced is it's a holiday season. And just like anybody else, we have people that take off. So that impacts some of the capitalization rates that we would do on the software development side. So I expect it to be lower.

My tax rate, which I know it doesn't affect adjusted EBITDA, but my tax rate steps higher in the fourth quarter than the third quarter, because we have a lot of the [indiscernible] the RSUs that are coming through. We have more [indiscernible] in the third quarter than we do in the fourth quarter. So deductions go down. So right now, if you look in the fourth quarter, I would like my income tax rate in the fourth quarter to be closer to 27% versus the guidance of 17% in the third quarter. So just a number of things.

Also, this year, I mean, like I said, our pipeline is strong. We are anticipating to hire more account managers to service the patient affordability business, hire more claims people, et cetera. I mean we've got to be ready to go in Q1 when the floodgates gets open. And so you're just seeing a little bit of that as well. So I can be wrong, but right now, that's my expectations.

Our next question is from Jon Hickman from Ladenburg.

Just kind of a model question for you guys. The -- kind of going forward, is 15% year-over-year a good growth rate for your OpEx?

Jon, honestly, I don't really look at that and do a bottoms-up build. I haven't given guidance for next year, but I would expect most of our growth is coming from the -- from a hiring perspective, is coming from patient affordability, and that will continue as we add more programs. So it's -- I don't think 15% is unreasonable, maybe a little light, but probably 15% to 20%-ish isn't crazy.

I would look back and say, okay, last year, we added 51 programs. This year, we're on track to add 55 to 60 programs. You can see what the OpEx is building, adjust out stock comp and some of the DNA, if you want to look at just SG&A by itself, and I think you could probably get some good deduction from those numbers.

Okay. And then could you talk about, like are you going to be at any conferences or anything in the coming months kind of on the Investor Relations point of view?

Yes. So we've got some non-deal road shows that we're doing and we've got some conferences. The conferences that we're attending is in New York on -- in September, mid-September. We've got the -- the Lake Street Conference and there's also an Oppenheimer Conference that we're attending. We have a non-deal road show, going to Boston. We've got the IDEAS Conference in Chicago in August that we're attending. So we will be on the road quite a bit over the next couple of months.

Thank you. We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Paysign, Inc.'s First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

The comments on today's call regarding Paysign's financial results will be on a GAAP basis unless otherwise noted. Paysign's earnings release was disseminated to the SEC earlier today and can be found in 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 is summarized at the end of Paysign's earnings release and in our section of SEC recent SEC filings. Lastly, a replay of this call will be available on August 12 -- until August 12, 2026. Please see Paysign's First Quarter 2026 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, President and CEO. Please go ahead.

Thank you, Kevin. Good afternoon, everyone, and thank you for joining us today for Paysign's First Quarter 2026 Earnings Call. I'm Mark Newcomer, President and Chief Executive Officer. Joining me today is Jeff Baker, our Chief Financial Officer. Also on the call are Matt Turner, our President of Patient Affordability; and Matt Lanford, our Chief Payments Officer, both of whom will be available for Q&A following our prepared remarks.

Earlier today, we announced our first quarter financial results, which marked the strongest start to a year in Paysign's history. Revenue grew 50.8% to $28 million, exceeding the high end of guidance we provided in March. Net income increased 110% to $5.4 million and adjusted EBITDA increased 113% to $10.6 million. Most notably, operating margins increased 1,040 basis points or 10.4% year-over-year, demonstrating the operating leverage inherent in our business as we scale across health care and financial ecosystems.

We continue to see strong growth across the patient affordability business in the first quarter. Revenue grew 82% year-over-year to $15.7 million, and claim volume was approximately 49% higher than Q1 2025, driven by a combination of new programs launched over the past year, organic growth within the existing programs and the continued ramp of our largest pharmaceutical clients. As expected, this rate reflects a larger and more established revenue base than a year ago. In Q1 alone, patient affordability generated nearly as much revenue as it did in the first half of 2025. During the quarter, our patient affordability business delivered more than $540 million in financial assistance to patients, a meaningful step-up from approximately $320 million in the first quarter of last year. That growth reflects both the increased number of patients we are serving and the expanding role our business plays in supporting access to high-cost branded therapies.

Our dynamic business rules technology continues to deliver substantial economic value to our pharmaceutical clients and the patients that rely upon their therapies, demonstrating both the scale our platform now operates at and the differentiated value our technology provides in helping manufacturers navigate co-pay maximizer and accumulator programs. We launched 4 new programs in the first quarter, bringing total active programs to 135. As is typical for the industry, Q1 is the most operationally constrained period of the year as manufacturers, payers and pharmacy partners work through plan year transitions, formulary changes and deductible resets. Against that backdrop, our pipeline remains robust, and we are on track to exceed the 55 net program additions we launched in 2025.

The strength of that pipeline reflects the trust pharmaceutical manufacturers continue to place in Paysign as a partner in helping patients access and afford the therapies they need. Taken together, the increase we are seeing in program count, claim volume and benefit dollars deployed reinforce both the scalability of our platform and the durability of demand for our solutions.

Last month, we attended the Assembia Specialty Pharmacy Summit, ASX 26 in Las Vegas. Assembia is the most important annual gathering in the specialty pharmaceutical industry and consistently one of the most productive pipeline-generating events on our calendar. It is where the decision-makers across pharmaceutical manufacturers, specialty pharmacies, hub providers and payer partners come together in one place. And the conversations we had during those 3 days helped shape our commercial road map for the balance of the year. ASX 26 was no exception. We conducted more than 50 meetings over 3 days and closed new business while on site. The breadth and depth of these conversations, combined with the deals we secured in real time, reinforce our confidence in both the demand environment and the strength of our pipeline heading into the remainder of 2026.

Turning to our plasma donor compensation business. In the first quarter, plasma contributed $11.7 million in revenue, a 25% increase over $9.4 million in Q1 2025. Our plasma business also remains a strong source of cash generation, facilitating investments in high opportunity areas. Looking ahead, we expect continued revenue growth as existing centers fill excess capacity, much of which has been unlocked by recent advances in plasmapheresis hardware, bringing significant efficiencies to the plasmapheresis process. In response to that capacity gain, several of our larger collectors have consolidated operations, closing some lower-performing centers. Historically, these closures have had minimal impact on our results as donors typically transition to nearby centers, and we expect that same pattern to play out following our clients' closure of 19 centers in early May.

We exited the quarter with 573 centers, an increase of 89 centers over the previous year, but 22 less than the end of 2025 as several low-performing centers were either sold to collectors that do not utilize our services or closed. Again, we do not believe these closings will negatively affect our growth outlook, and we continue to pursue the remaining plasma collection companies that we do not currently service.

In late April, we sponsored the International Plasma Protein Congress in Milan, Italy, where we engaged with plasma collectors, device manufacturers and industry participants from the U.S., Europe and Asia. The conference generated meaningful progress for our Software-as-a-Service suite of solutions, including the discussions with plasma collection companies across all 3 regions and with plasmapheresis device manufacturers regarding direct integration to our platform. Direct integration of our software with plasmapheresis device eliminates manual steps that can introduce human error in the collection process. It also streamlines implementation and reduces friction for collection centers when transitioning to our platform, creating a clear operational benefit. Beyond the U.S., we continue to view Europe and Asia as significant long-term opportunities for our SaaS solutions across the blood and plasma collection industries.

In summary, the first quarter marked an outstanding start to 2026 and a meaningful inflection point for Paysign. We delivered record results across the business and more importantly, validated strategic direction we have set, purpose-built platforms grounded in deep industry expertise, scaling with discipline as we grow. With strong momentum in patient affordability, a robust pipeline and expanding opportunities both within and beyond health care, we are well positioned to drive sustained growth and create long-term value for shareholders, customers and the individuals we ultimately serve.

With that, I'll turn it over to Jeff for additional details on our first quarter financial results.

Thank you, Mark. Good afternoon, everyone. As Mark highlighted, our first quarter results reflect the continued momentum in our business, the growing financial impact of our patient affordability platform and the inflection point we have reached as it relates to operating leverage.

For the first quarter, total revenues increased 50.8% year-over-year to $28 million. Pharma industry revenue increased 81.9% year-over-year to $15.7 million, driven by 45 net pharma patient affordability programs launched during the past 12 months and a corresponding increase in monthly management fees, setup fees, claim processing fees and other billable services such as dynamic business rules and customer service contact center support. Process claims increased by approximately 49% compared to the first quarter of 2025. For the first time, Pharma surpassed plasma to become our largest revenue contributor in the quarter, a milestone that reflects the strategic direction we have been executing against and the growing importance patient affordability plays in our business.

Plasma revenue increased 24.9% year-over-year to $11.7 million. The average monthly revenue per center increased to $6,671 versus $6,517, and the average number of loads per center increased on a year-over-year basis for the first time since the industry experienced an inventory correction that began in 2024.

As Mark noted, we exited the quarter with 573 centers, below our guidance of 589 as one customer notified us they had sold all their centers to a competing provider. These centers contributed approximately $650,000 in 2025 revenue and averaged less than $3,500 per month in revenue, which is below the corporate average of $6,671. Gross profit margin expanded to 65% from 62.9% in the first quarter of 2025, reflecting a greater mix of Pharma revenue, which carries higher gross margins than our plasma business. Cost of revenues increased 42.2%, driven mainly by increased call center support expense associated with the growth in both our Plasma and Pharma businesses and higher processing and commission costs, all of which grew well below our revenue growth of 50.8%, demonstrating the operating leverage inherent in our business.

Total operating expenses were $11.6 million, an increase of 25.5% from $9.2 million in the first quarter of 2025, again, well below our revenue growth rate. Selling, general and administrative expenses increased 20.5% to $8.9 million, which includes stock-based compensation of $1.3 million. Depreciation and amortization increased $835,000 due primarily to the amortization of intangible assets from our Gamma acquisition and capitalization of new software development costs.

A highlight of the quarter is overall operating leverage amidst strong revenue growth. Operating margin expanded to 23.8% from 13.4% in the first quarter of 2025, an improvement of over 1,000 basis points. Put another way, we converted approximately $9.4 million in incremental revenue into $4.2 million in operating income. Here are a few other important details for the quarter. Income before taxes increased to $7.5 million from $3.3 million in the first quarter of 2025. The company recorded an income tax provision of $2 million, resulting in an effective tax rate of 27.2% compared to 20.5% in the first quarter of 2025. The higher rate reflects discrete item adjustments primarily related to the increase in our stock price at March 31, 2026, compared to the same period last year, which reduced the tax benefit from stock-based compensation relative to the prior year period.

Net income for the quarter totaled $5.4 million or $0.09 per fully diluted share, an increase from $2.6 million or $0.05 per fully diluted share in the first quarter of 2025. Adjusted EBITDA, which excludes stock-based compensation and is used by management to evaluate core operating performance, increased 113.4% to $10.6 million or $0.17 per fully diluted share versus $5 million or $0.09 per fully diluted share in the first quarter of 2025.

Adjusted EBITDA margin expanded to 37.8% from 26.7% a year ago. The fully diluted share count used in calculating per share amounts was $61 million versus $55.1 million in the prior year period. We exited the quarter with $20.5 million in unrestricted cash and 0 bank debt. Restricted cash increased $15 million to $159 million, primarily related to customer program deposits for our Plasma and Pharma customers and an increase in funds on card.

Now turning to our outlook. Our first quarter results exceeded our guidance across every line of the income statement. Revenue of $28 million exceeded the high end of our $27 million to $27.5 million guidance range. Operating margin of 23.8% finished above our guided range of 20% to 22% and net margin of 19.4% exceeded the top of our 17% to 19% range. Based on our strong start to the year, we are increasingly confident in our ability to achieve the upper end of our 2026 guidance ranges. We continue to expect full year revenue of $106.5 million to $110.5 million, representing 30% to 35% year-over-year growth with gross profit margins between 60% and 62%. Net income is expected to be in the range of $13 million to $16 million or $0.21 to $0.26 per diluted share, and adjusted EBITDA is expected to be in the range of $30 million to $33 million or $0.49 to $0.53 per diluted share.

As of today, we have 141 active patient affordability programs and expect to exit the quarter with 147 to 150 active programs. We also expect our active plasma center count to decline to 555 to 560 centers as a customer closed 19 underperforming centers in May. As in the past, we do not expect any financial impact from these closures as we expect cardholders from these underperforming centers to transition to other centers. As a reminder, there is seasonality in both our main businesses. Pharma revenues are typically highest in the first quarter as patient affordability claims peak with annual insurance deductible resets and then moderate throughout the balance of the year. Plasma revenues by contrast, tend to be softest in the first quarter and build through the remainder of the year as donor activity normalizes following tax refund season. These seasonal dynamics are anticipated and fully reflected in our full year guidance.

Overall, our first quarter results validate the financial framework we laid out in March and the operating leverage we are generating gives us confidence in our ability to continue delivering on the forecast we have outlined for 2026.

With that, I would like to turn the call back over to Kevin for question and answers.

[Operator Instructions] Our first question is coming from Jacob Stephan from Lake Street Capital Markets.

Congrats on a nice quarter here. Mark, you made a comment that in the beginning of the call, you said you expect to exceed 55 net program adds that you did in 2025. I guess for starters, what's kind of driving the confidence in the strength in the pipeline? Is there a onetime event out there that you're seeing? Or is this mostly -- and maybe the Part B, is this mostly new or existing customers that are additive in the back half of the year?

This is Matt Turner. So I think if you were to look at what the pipeline looks right now, there's a pretty good mix, probably around 50-50 when you look at the program count that we're talking about now like going over 55, where half are going to be entirely new clients and the other half is going to be growth inside of existing clients. I don't think it's any -- there's not one moment of inflection point. Last time on the call, we talked about kind of what inning were we in. And I think this is showing that what we've built on in the first inning, right, is coming through now. So we've got a larger client base. So we're going to continue to see new programs from those clients and then also selling never stops. So we're always trying to bring new clients onto the platform.

Got it. And I mean, if I'm wrong on the numbers, that kind of implies like 190 programs exiting 2026. I guess from a capacity standpoint, you guys feel like you have the extra bandwidth? I guess, what's needed to fully add those programs?

I don't think there's anything else needed. I mean we'll continue to hire people to support the business on the account management side. From an IT perspective, the systems are robust and well positioned to handle the growth that we have this year and any years coming. So we've built systems that are high availability, high demand. The partners that we have in the space are all used to higher claim volumes like this. So we're confident that we have everything in place that we need to continue to scale the growth year after year.

Got it. And then maybe if we could just touch on the -- some of the guidance commentary. I know you guys said you expect revenue to be roughly equal. Looking at kind of the plasma centers, obviously, you're expecting a decline in Q2 here. I think that implies a pretty significant ramp in the back half for plasma revenue, if I'm catching that right?

No. revenue for plasma should be up sequentially and continue to grow throughout the rest of the year. So the centers that we called out for the quarter that were sold were garbage centers, to be quite honest with you, and they were below our corporate averages. And then the centers that were consolidated or shut down, that company has other centers within the proximity of the ones that they closed. So what's going to happen is those cardholders are just going to move over. But we -- there are some -- the -- I put some comments out there to give you kind of a heads up. I mean we saw average loads per center up for the first time since 2024 on a year-over-year basis. So we talked about the inventory overhang that we experienced all throughout 2025, and we're seeing early indications that we're through that.

Now what you're seeing is some of the plasma companies trying to become more efficient. They're closing underperforming centers. We've run the numbers on those centers. They should have closed them a long time ago, to be honest with you. But as a matter of fact that we've gone through this before pretty much every year, and it doesn't impact the numbers. So we expect plasma to continue to grow throughout the year and hold to that 50-50 mix right now as we see it, subject to change as we move forward.

Next question is coming from Gary Prestopino from Barrington Research.

Jeff, you guys are throwing around a lot of numbers here. I want to make sure that I've got this right. By your press release, you say you have 135 pharma programs right now, correct?

No. Per the press release for the quarter, we exited the quarter with 135 programs. As I sit here today at 5:20, we have 141 active programs. By the end of the second quarter, I have told you that we will have between 147 to 150 active programs.

Okay. That's what I was confused about. And then for the plasma, you got 573 and you're going to be between 550 and 560.

Right. We were at 573 at the end of the quarter. And then we had a customer notify us that they were shutting centers on May 5, 19 centers. And then I said that we expect to end the second quarter with between 555 and 560 because we have some other new centers opening in the pipeline.

Okay. That's helpful. I just want to make sure I got that right. So you talked a little bit, Mark, about your plasma platform, how you're integrating into these providers. What are the competitive advantages to an entity integrating into the platform, number one. How does that work in conjunction with the app that you've developed? And then are there any other players out there that have a platform with your technological capabilities?

If we look at our entire ecosystem of what we've built, the platform with the various modules of the app, the CRM, the qualitative analysis and everything else, we do not see any other peers that are out there that have built anything like we've built. It's kind of some of the feedback we've gotten, the pieces of the software can communicate together and feed off one another is definitely a step-up from what folks have had. So if you look at it from a plasma center perspective, it provides less friction for what they have currently and allows for a center to really not only have less friction, but just more ease of use and how they interact with the donors, engagement all the way through. So it's really about less friction and just better capabilities.

And then just a couple of more, and I'll jump off. I believe one of the individuals, and I forgot your name on this is that you're talking about the pharma programs and about 50% are takeaways, 50% are new programs. Is that about how your new wins are playing out?

So well, there's a difference in a transition versus a launch product, right? So there's quite a bit of a difference there. I mean you're talking -- but he was asking questions about new clients versus existing clients, right? So we look at a client as being a manufacturer, the manufacturer may have 30 drugs. So if they've given us 5, right, last year, and then they add another 2 or 3 programs this year, right? So we're going to say that's existing client additions. That would be different than transitions versus launches. I don't really have a set number right now that I can tell you, hey, here's how we think that's going to line up because the pipeline is the pipeline, right? It's living and breathing. I think we will see a larger number of transitions than we see new product launches this year. But that's where we're sitting right now in May. But at the end of the day, the outcome is still going to be the same where we're looking at hitting our guidance targets.

Okay. And then just last one, just real quick and I'll let somebody else get on. It looks like you talked about the conversion of incremental revenue to incremental operating income. I'm measuring it differently. I'm looking at it incremental adjusted EBITDA conversion. And it looked like that was close to 60% in the quarter, Jeff. And then if you look at your guidance going forward, I'm just looking at my numbers, it drops down considerably over the next 3 quarters. Now is that just a function of mix because you're going to get more plasma revenue in the mix versus patient affordability?

Correct.

That's just it. There's no increase in spending for anything beyond just normal growth and stuff like that?

No. I mean it's all baked into the guidance. So if you go down and go back through all the guidance that we laid out in the tabular format that's in the press release, nothing's changed. So it's really just a mix shift as we go throughout the year. Patient affordability should go down a little bit as we have claims that go down, just like it did last year, offset by new programs that we add in. And then plasma will continue to grow, should continue to grow throughout the year, just like it did every year since we've been in the business. So the seasonal factors unchanged, but that's what -- that will obviously cause a little shift on the margin side. The comment that we're making about the margin for the purists out there who want to look at operating margin, including depreciation, amortization, stock comp, that's what the numbers were. But your numbers are absolutely correct when you look at adjusted EBITDA.

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

Can you hear me okay?

Yes, Jon, we can hear you.

Congrats on the quarter, pretty impressive. Could you elaborate a little more on the SaaS and the app? Is that live? Are you getting revenues now? Has it been approved by the FDA?

Currently, we're having discussions back and forth with the FDA, and that's really all I can say right now. We continue the process and looking forward to giving you guys updates as soon as we can.

Okay. So you're not generating revenues with it right now?

Currently, right now, no.

And then -- can you comment a little bit -- you said something about non-pharmaceutical programs on the payment side. Any further comments on that?

No. Really, what we're -- I mean, it's our mix of other business and plasma, but that's really what we have in relation to non-pharmaceutical business at this point. We do have targets that we're going after, but it's kind of premature to discuss those at this point in time. But hopefully, we'll be discussing those in the near future.

You have your net cash slowly creeping up almost $21 million in the quarter. Do you have any material obligations beyond the -- I think there's something like $5 million or $6 million perhaps in future payments to the founders of Gamma. But beyond that, do you have any obligations on that cash? And if not, I guess, how are you thinking about allocating some of that cash over the next couple of years?

Pete, we don't have any obligations for cash payments other than the $6 million remaining to Gamma, which will be paid out annually on the next 3 anniversary dates in March. So right now, we're just -- we're holding on the cash, and we'll continue to do that until we find a better use for those funds. But the company has never been in this situation -- in this good of a situation before where we've had such high cash levels, and we'll continue to build that out there for either acquisitions or redistribution to shareholders or typically what you would do to large cash balances.

Yes. Yes. And I didn't see it in the press release and haven't seen the Q yet, but were there any share repurchases in the quarter?

There were not, not this quarter.

We 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. Thank you again for joining us today. We look forward to updating you on our continued progress next quarter. You all have a wonderful rest of your day.

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.

Good afternoon. My name is Kevin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Paysign Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The comments on today's call regarding Paysign's financial results will be on a GAAP basis unless otherwise noted. Paysign's earnings release was 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 is 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 June 24, 2026. Please see Paysign's Fourth quarter and full year 2025 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, President and CEO. Please go ahead.

Thank you, Kevin. Good afternoon, everyone, and thank you for joining us today for Paysign's year-end 2025 Earnings Call. I'm Mark Newcomer, President and Chief Executive Officer. Joining me today is Jeff Baker, our Chief Financial Officer. Also on the call are Matt Turner, our President of Patient Affordability and Matt Lanford, our Chief Payments Officer, both of whom will be available for Q&A following our prepared remarks.

Earlier today, we announced our fourth quarter and full year financial results for 2025, which demonstrated continued strength and exceptional growth across all key metrics. For the full year, revenue increased 40.5% to $82 million. Net income increased 98% to $7.6 million, and adjusted EBITDA increased 107% to $19.9 million. Importantly, operating margins increased 723 basis points, providing clear evidence that we've reached a key inflection point where future revenue growth should drive increasing operating leverage and profitability.

We continue to deliver strong growth in our patient affordability business. Annual revenue grew 168% year-over-year, reaching $33.9 million compared to $12.7 million in 2024 and claims processed increased by approximately 79%. For those newer to our story, our patient affordability platform helps pharmaceutical companies ensure patients can access high-cost medications by administering co-pay assistance programs.

In 2025, our platform helped deliver nearly $1 billion in financial assistance to patients supporting access to high-cost therapies for more than 840,000 individuals. At the same time, we help manufacturers better control how those dollars are spent, which is one of the key value propositions we provide.

A key differentiator of our platform is our dynamic business rules technology, which helps pharmaceutical manufacturers avoid unnecessary costs associated with co-pay maximizer programs. In 2025 alone, the solution saved our clients over $325 million, and this year, we have already saved our clients almost $150 million. That level of savings represents a meaningful economic benefit for our customers and highlights the value of our platform.

We added 55 programs during the year, bringing total active programs to 131 across more than 70 patient affordability clients. A mix of transition programs and new launches contributed to both immediate and long-term revenue growth. Our programs span both retail and specialty pharmacy as well as in-office administered and infused products. Oncology and other cancer treatment products remain a significant portion of our program base, and biologics represent approximately 50% of claim volume across the platform.

We continue to see strong expansion within our existing client relationships. For example, following the onboarding of one of the nation's largest pharmaceutical manufacturers in 2024, those programs scaled successfully throughout 2021. And we added 4 additional programs from that same manufacturer during the year. This type of expansion within large pharmaceutical clients highlights both the scalability of our platform and the durability of demand. Paysign now has active programs with 6 of the top 10 U.S. pharmaceutical manufacturers ranked by revenue.

Next month, we attend the Asembia's Specialty Pharmacy Summit here in Las Vegas. As in prior years, we are seeing strong interest from potential clients evaluating our solutions, and we enter the conference with a robust pipeline. Over the past several months, we've had conversations with shareholders, analysts and prospective investors to help them better understand the patient affordability business and the broader industry landscape in which we operate.

Increasingly, those discussions have touched on legislative, regulatory and policy-related topics. So I thought it would be helpful to ask Matt Turner, our President of Patient Affordability, to provide some additional context.

Thank you, Mark. Before addressing some of the questions we've been hearing from investors and analysts about potential headwinds to our business, I want to briefly give an overview of how our Patient Affordability business fits within the broader health care ecosystem.

Our platform is focused on helping pharmaceutical manufacturers support patient access to high-cost branded therapies, primarily within the commercially insured patient population. These are typically branded medications where out-of-pocket cost can be significant and where co-pay assistance programs are essential to ensuring patients can begin and stay on therapy.

At the same time, our platform helps manufacturers better manage how those assistance dollars are deployed, particularly in an environment where payer dynamics can introduce inefficiencies into the system. That combination of improving access while also driving economic value is what underpins the demand for our solutions.

With that context, I'll address a few areas we've been asked about. First, on the expansion of the direct-to-consumer also known as DTC and cash pay models. These programs have existed in various forms for over a decade and are not new. They were built primarily for products with little or no commercial insurance coverage. That is a very different segment from where we operate today.

For the types of high-cost branded therapies on our platform where list prices can be tens of thousands of dollars, which represents approximately 90% of the drugs in our platform, cash pay and discount alternatives are simply not a viable solution for most patients. Commercial insurance, combined with manufacturer co-pay assistance remains the most effective model for patients. As a result, we view DTC expansion as a complementary solution in certain cases. but not a meaningful substitute for our core business.

Second, regarding pharmacy discount programs such as GoodRx, TrumpRx, Cost Plus or similar offerings. These products have existed for more than 20 years and serve an important role in reducing cost for lower-priced generic medications or for those patients without insurance. They are not designed for nor do they compete with branded specialty medications where commercial insurance and co-pay programs are the standard of care. Our business is squarely focused on that branded drug segment and the more than 850 specialty drugs. So these programs are simply not relevant to what we do.

Third, and perhaps most important, given the current policy environment on legislative and regulatory considerations, most of the activity around co-pay accumulator and maximizer programs have taken place at the state level. And despite ongoing discussions and congressional committees, there has been no meaningful federal action to date nor do we expect any in the foreseeable future.

The key reason is simply structural. As a large portion of commercially insured Americans are covered under employer-sponsored health plans governed by ERISA, which limits the impact of state-level regulations, we do not see that as changing. As a result, these programs continue to operate despite changes in state laws. Importantly, demand for our dynamic business rule solutions which helps manufacturers navigate maximizer programs continues to grow. As Mark said, this year, we have already saved our clients almost $150 million that would otherwise have been absorbed by those programs.

So stepping back, we continue to monitor the competitive and regulatory landscape closely. But based on what we see today, we do not view these dynamics as a material threat to our business. If anything, they continue to reinforce the need for solutions like ours, which is reflected in the continued growth of our business and pipeline. Our differentiated dynamic business rules capability is a driving tangible ROI for our pharma customers while we enhance affordability for hundreds of thousands of consumers.

Back to you, Mark.

Thank you, Matt. Turning to our plasma donor compensation business. In 2025, plasma compensation contributed $45.6 million in revenue, representing a 4% increase over 2024's $43.9 million. We believe the business will continue to exhibit revenue growth driven primarily by center filling excess capacity rather than new center openings. That said, we do expect a modest number of new center openings in 2026, maintaining our market share of just under 50%. We exited 2025 with 595 centers an increase of 115 centers over the previous year, and we continue to engage the remaining plasma collection companies who are currently not our customers. We believe our expanded suite of donor management and engagement tools we acquired last year creates additional opportunities to grow our footprint in this space.

As we await FDA 510(k) review of our donor management system, also known as a BECCS or Blood Establishment Computer System, we are actively working to integrate the BECCS with a number of plasmapheresis device and strengthen our relationship with those manufacturers to make installations and transitions to our solution as seamless as possible. This integration is included in our latest filing with the FDA.

Our broader suite of solutions continue to receive positive feedback from blood and plasma collection organizations across the United States, Europe, and Asia, and we are highly encouraged by the long-term growth potential of this business.

2025 marked a meaningful step forward as our Patient Affordability business scaled and became a central driver of growth and profitability while our plasma business continued to provide a stable foundation. We believe we are still in the early stages of our patient affordability opportunity and enter 2026 with strong momentum in which to build upon.

With that, I'll turn it over to Jeff for additional details on our quarterly and full year-end financial results.

Thank you, Mark. Good afternoon, everyone. As Mark highlighted, the fourth quarter and full year results reflect both strong growth in our Patient Affordability business and the early benefits of operating leverage across the platform.

For 2025, total revenues increased 40.5% to $82 million. Pharma industry revenue increased 167.8% to $33.9 million driven by the addition of 55 net patient affordability programs launched during the past 12 months and a corresponding increase in monthly management fees, setup fees, claim processing fees and other billable services such as dynamic business rules and customer service contact center support. Process claims increased over 79%. This growth reflects continued expansion of our platform and increasing demand for solutions that improve patient access while helping manufacturers better manage their co-pay assistance spend.

Plasma revenue increased 4% to $45.6 million, primarily due to the addition of 115 net plasma centers added during the past 12 months, offset by a decline in average plasma donations per center as plasma inventory levels were elevated throughout much of 2025. This led to a reduction in our average monthly revenue per center as compared to the same period in the prior year. We exited the year with 595 centers versus 480 centers at the end of 2024. Other revenue increased by $671,000 or 36.2% and primarily due to the growth in usage and the number of cardholders of our payroll, retail and corporate incentive programs.

More importantly, we are beginning to see the benefits of operating leverage across the business. Total operating expenses were $41.4 million, an increase of 32.6% well below the revenue growth we experienced, which coupled with our improved gross profit margin to 59.4% versus 55.1% drove our operating margins to 9% versus 1.7% the prior year.

We have reached an important inflection point where our fixed cost can support meaningful scalability without commensurate increased expenses, so we expect further improvements in these metrics throughout 2026. This is consistent with what Mark described earlier as patient affordability becomes a larger part of our business, we expect to see continued improvement in margins and operating leverage.

Here are a few other important details to point out for the fourth quarter and full year results. For the fourth quarter, our earnings before taxes increased to $2.5 million versus $1.2 million the same period last year. Fourth quarter net income was impacted by a higher effective tax rate of 45.4%, which reduced earnings per share by $0.02 per fully diluted share since the prior period.

The fourth quarter adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA was $5.4 million or $0.09 per diluted share versus $2.9 million or $0.05 per diluted share for the same period last year. The fully diluted share count for the quarter is used in calculating the per share amounts was $61.6 million and $55.5 million, respectively.

We exited the year with $21.1 million in cash, almost double from the prior year. This excludes any impact to pass-through receivables and payables we periodically have related to our pharma patient affordability business. We also continue to have 0 bank debt funding operations and our Gamma acquisition through operating cash flow.

Turning to our outlook for 2026. We expect revenue of $106.5 million to $110.5 million, representing 30% to 35% year-over-year growth, with plasma and pharma contributing equally and other revenue contributing $2.5 million. Considering the seasonality in both our main health care businesses, we expect plasma revenue to be the lowest in the first quarter with tax refunds going out and ramp up throughout the remainder of the year while we expect pharma revenues to be the highest in the first quarter and declined throughout the remaining of the year as patient affordability claims ramp down. This outlook reflects continued momentum in our Patient Affordability business which we expect to remain the primary driver of growth.

Gross profit margins are expected to be between 60% to 62%, reflecting increased revenue contribution from our pharma patient affordability business. Operating expenses are expected to increase 20% over 2025 as we continue to make investments in people and technology. Of this amount, depreciation and amortization expense is expected to be between $9.5 million and $10 million, while stock-based compensation is expected to be approximately $5.5 million. Given our large unrestricted and restricted cash balances and the current interest rate environment, we expect to generate interest income of approximately $3.1 million.

Our full year tax rate is estimated to be between 22.5% and 25%. Net income is estimated to nearly double over 2025 and reaching a range of $13 million to $16 million or $0.21 to $0.26 per diluted share and adjusted EBITDA to be in the range of $30 million to $33 million or $0.49 to $0.53 per diluted share. The number of fully diluted shares for the year is estimated to be 62.3 million. For the first quarter of 2026, we expect revenue of $27 million to $27.5 million, representing a 45.2% to 47.8% growth over first quarter 2025 and expect to have 137 active patient affordability programs and 589 plasma centers exiting the quarter.

Margins are expected to expand across the income statement versus the same period last year, equating to an operating margin between 20% to 22%, and net margin between 17% to 19% and adjusted EBITDA margin between 34.5% to 36.5%. Fully diluted earnings per share is estimated to be $0.07 to $0.08, while adjusted EBITDA per share is estimated to be $0.15 to $0.16.

Overall, our outlook reflects continued strong growth, driven primarily by our patient affordability business, along with further margin expansion as we scale. With that, I would like to turn the call back over to Kevin for questions and answers.

[Operator Instructions] Our first question is coming from Jacob Stephan from Lake Street Capital Markets.

Congrats on a really nice quarter here. I appreciate all the color on the pharma industry. One thing I kind of wanted to touch on a little bit. So we're kind of hearing some pharma services providers and -- that the drug manufacturers have actually been kind of less active recently with regards to new initiatives. I'm wondering if you're seeing any difference in behavior with your pharma manufacturers over the last few months here?

No. I mean this is Matt Turner. I would argue that it's just the opposite. If you were at JPMorgan and listening to the conversations there, nobody is slowing down anything. We were sooner listening to Dave Ricks, the CEO of Lilly, and he was talking about the billions of dollars they're pumping into AI and the fact of doing a deal every 9 days and almost all the presentations there really pointed to not a slowdown by any means. Everybody's pipelines are really strong right now. Almost every manufacturer has some form of a weight loss or GLP-1 type product in line. FDA calendar for PDUFA this year looks really good.

So I mean I don't really see a slowdown. I would say that the push for innovation is growing overall. And I think that's obviously what we've been trying to provide for the last 7 years as we built out this vertical really is the innovation side of things. So no, I don't see a slowdown from our perspective at all, especially not in the patient affordability business.

Okay. And maybe -- I mean, you did kind of touch on the GLP-1 opportunity. I'm wondering what that looks like for you guys? Do you have any current GLP-1s on the platform? And how are you thinking about attacking that market going forward?

Yes. So that's -- we don't have any of the 2 larger GLP-1s that are for weight loss [indiscernible] we have the diabetes products. Those are largely retail plays, and we're certainly making a push. We've been making a push in that area. Those drugs have been in market now for a little bit. If you look at those products as well, they're very much -- they're much more of a DTC product than they are a traditional co-pay-type product. It's not necessary that co-pay offers aren't out there, they are. But it represents a very small subset of that actual volume is going through co-pay. So there's not a ton of upside on a GLP-1 product used for weight loss.

There would be, if you're looking at the diabetes side, we have one client that has a GLP-1 product. I think we're in -- that's coming to market. I think we're in an excellent position to win that business as we do have a very good portion of their retail as well as almost all of their specialty products. So I think we're in a very good spot to pick up a GLP-1 in the next 12 to 18 months. And I think that's as much as I can really say there. I don't -- we don't have any commitment saying that it's ours or anything, and plus we don't know what the volume is going to look like there. But yes, we're certainly trying to make inroads to get access to more of those programs.

Got it. And then maybe just last one for me. Jeff, you made an interesting comment about fixed cost, potentially kind of plateauing, minimal additions kind of needed. I'm wondering from just looking at the math, that looks like around a $22 million to $23 million quarterly kind of cost basis. I'm wondering if you could kind of give me some more color on that?

Yes. So the comment really on the -- when we talk about fixed cost is like the base cost of what our business has been in 2025. So we looked at our OpEx of $41 million. The incremental cost that we have to add going forward as the business grows is certainly a lot less than what it has been historically. If you look at 2024, we were pushing SG&A growth was pretty much tracking with revenue growth. 2025, really strong improvements there. In 2026, we think there's even more operating leverage to win out of that business.

So when you look at it, we're going to do a good job trying to control our costs. We're only looking for SG&A to grow 20% -- 20%. And when you peel the onion back, keep in mind, some of that growth is related to the acquisition we did in March, [indiscernible] end for a full year in 2025. So you have a full year of amortization in 2026. And then you have some stock comp increase about $1.5 million year-over-year. So take those 2, if you -- however you want to look at that and adjust it out or whatever, but our controllable SG&A is really looking very leverageable.

Our next question today comes from Gary Prestopino from Barrington Research.

I couldn't write down fast, did you say you were going to exit Q1 with about 137 pharma programs?

Yes, that's correct.

And then -- and what did you say for the plasma? Was it 589?

589. Yes, we had -- in the first quarter, we had 5 centers get sold to a competitor. So they left us and then one center closed. So those are the 6 centers.

Okay. Okay. That's fine. And then just getting back to when you're talking about like the GLP-1s versus your high-cost branded pharmaceuticals, is there any difference in the revenue per claim process there, if you're doing basically kind of lack of a better word, it's not really a specialty drug, like say, a cancer and oncology drug?

Yes. So each claim type, right, is going to have different potential transactional fees that will attach to it. If you look at the special -- and I would say that overall, if you just look at a base, say, pharmacy claim or medical claim, it doesn't really matter for specialty or pharmacy, we're going to make on that claim processing fee, we're going to make about the same. But when you look at the bolt-ons that can happen in the specialty space, they compound pretty quickly.

A dynamic business rule claim is worth far more to us than just the singular co-pay claim. So while the volume around retail products like GLP-1s or any of the cardiovascular drugs, if you go back historically and look at like [indiscernible] sure, there's a lot of volume there, but your chance to make -- to kind of add on the additional functionality that can generate larger revenue, it's just not there on the retail side, which is one of the reasons we highly target the specialty space because we can make far more money on 1,000 DBR claims than we can on, say, 20,000 retail claims. So profit potential and even bottom line margin is far superior in the specialty space. That being said, we are working to bring on more retail brands so that we have a very weighted and comprehensive portfolio of products.

Our next question is coming from Jon Hickman from Ladenburg Thalmann.

Our next question is coming from Peter Heckmann from D.A. Davidson.

Had a follow-up, Jeff, on -- in terms of thinking about the guidance for 2026, you talk about equal contribution from plasma and pharma. I assume you were talking about from a dollar of revenue perspective. And if so, that still represents a pretty significant acceleration on the plasma side. I didn't hear in your prepared comments why that might be so if you could provide a little bit of additional color in terms of whether that's increase in revenue percent or in anticipation of a big addition of net centers for the year.

Yes. So -- sorry.

No, go ahead.

The revenue comment -- the comment on the equal business was revenue both from the plasma and the patient portability or pharma side. The -- one of the main drivers in the plasma, if you recall, we had 132 centers in June and July. So we're going to have those uncomped until that time, so midyear. So you're going to see the growth plasma with those numbers for the first half of the year to be much stronger than the second half of the year, obviously. My expectations haven't changed with plasma is that in a normalized year, it's about a 5% grower, and it's a very good cash cow and we manage the business accordingly.

And let me give a little more color on the plasma revenue growth. The increase in collection efficiencies associated with the latest hardware upgrades effectively gives the average plasma center approximately 10% greater capacity. So a good way to look at that would be for every 10 centers, a collector can now get 11 centers worth of capacity, which is reducing the demand for new center openings. So that just -- it gives them the ability to collect more.

That's helpful. Okay. And then just going back to the new BECCS system. Any feedback so far from the FDA or any thoughts in terms of the potential time line there for the completion of the review?

Yes. I mean it's currently under review. We expect to hear back from them within the next 60 days. And that's kind of about as much as I'll go into at this point. But so far, everything is very positive. We've gone into our substantive review with them.

Our next question is coming from Jon Hickman from Ladenburg Thalmann.

Could you give us some sense of where you are on the pharma side with your kind of part of the market? What's the TAM here? And where like -- are you in the second inning, third inning of growth here? Or can you elaborate?

Yes. So we -- this is Matt. We always hesitate to give the TAM because it's very difficult for us to give a TAM for something that you can't -- you just -- there's no way to exactly tell the dollars are wrapped up in marketing amounts and everything else and nobody discloses exactly how much money they're paying these vendors. So we estimate the TAM is somewhere between $500 million to $850 million at any given time. We think with some of the offerings that we have, specifically with dynamic business rules that we are pushing that TAM higher as we're able to generate revenue from some of these unique offerings that we're bringing to the table. Also, as we continue to build this out and add more features, add more products, we think the TAM can expand even further upwards to $1 billion.

Asking about it for kind of what inning we're in, I think we're in the first inning. There's still a lot of growth potential here. We don't see anything slowing down when it comes to new program acquisition. And if you look at the growth that we're doing year-over-year and not just from a dollar perspective, right, just from also throwing in the number of programs that we're heading in. Last year, it was the one every 6-point-something days, we were putting the new program up. And hopefully, this year, we have similar metrics as far as the number of programs that we're pulling in. But it's we're nowhere near the middle of this at all. We're very much in the beginning. And I think we'll continue to see very strong growth out of this vertical for many years to come.

Follow-up. So are you inviting competition here? Like are people starting to pay attention to the way you're doing?

I mean...

Yes, there's always really been competition.

Yes, there is...

I mean, we've come into the market and really gone up against the competition. And by bringing new functionality, new features to the market, that's part of the reason why we're winning the business.

Yes. This is a very stale business that had become almost commoditized. It was treated like just picking something off of the shelf. And that made it very easy for some manufacturers. And of course, they enjoy that when things like maximizes and accumulators [indiscernible] an actual threat to their bottom line. It has -- that has emerged as a bigger threat. The need for innovation was there. Unfortunately, kind of the legacy data source in the industry just never reacted. So yes, there's some new players popping up. It just -- that happens every time there's an industry that's ripe for disruption. I would say the good thing for us is we were ahead of that, and we also helped to cause a lot of the disruption.

If you look at how we have sold into this industry, we have -- we've really shaken a lot of things up and forced manufacturers to rethink how co-pay program should function as a whole, how they should pay for them. The open book pricing that we brought to the table where we're not making shady money that we can't tell people how we're getting paid, like that really was a disruptor to this marketplace.

And if you kind of look at our -- the catapult that we had for growth, you go back to, I think it was 2023 when we -- in June, July, when we put out a webinar around pricing transparency and a lot of things in that area, that was really part of the lift off for us because we did show the industry there's a better way to do this. You can still make money. You can still have everything that you need, just we can do it in a way to where we're not robbing you blind behind your back, which is what a lot of other competitors were doing.

And another thing, Jon, when we look at our competitive advantage, certainly, that's one very important one. Another one is -- and we take it for granted as a payments company, but our competitors don't have the same say, insight into -- for their pharma customers' programs like we do. I mean we give our customers a web portal. They come in, they can see bank balances, they can see transaction data. They see a lot of information that we're able to provide them so they could figure out if their program is successful or not. And we take that as for granted. It's kind of table stakes as a payments company, but there are our other competitors don't have that because they're not payments companies.

And then the last thing is the dynamic business rules. I can't stress enough the fact that with 97% efficacy on first fill that's completely agnostic to the consumer that is getting their drug that we're able to identify whether that transaction is related to a maximizer program or not, that's huge. It's unheard of and nobody else in the market has that technology.

Okay. One more question. So Matt, what are you most worried about here on this side of the business?

That's a tough one. I don't know that right now, we really have a lot of worries. We -- it's pretty positive on our side. If you look at what we've built out, I would say, going back 3 years, it was a lot around personnel and how would we scale this inside with people. It was about finding talent at that point that we could bring in and that could help the organization grow. And we spent the last few years really doing that. We invested a lot of time and energy in bringing the right people in creating a pathway for people that were really good to be able to grow inside the organization.

And now that we have that in place, as you look at over the 55 programs that we brought in last year, we didn't have a growth issue when it came to dealing with people. We had already naturally built the systems around that. So we were able to just drag people in drop them into the right place. We have established training curriculums now. It's become a much easier lift for us. So I would say, I don't really have any fears at the moment. It's all positive for us right now. And we look forward to the continued growth that we have. We're looking forward to expanding on the partnerships that we currently have.

Our next question is coming from Gary Prestopino, Barrington Research.

Yes. I just have a follow-up. Did you give -- Mark, did you give any indication of your pipeline on the patient affordability side? I mean at times, you've have said that you feel pretty confident you're going to exit the year at x amount of programs. Could you maybe just comment on that.

This is Matt. So I don't know that we've ever given that guidance this early in the year, and I'll also kind of point back to our selling cycle is for most of our opportunities in the 90-day area. We know what the pipeline looks like right now for a number of opportunities. I think we would probably comment on that as we got a little more further down the year, exited the Asembia conference, things like that. That's really where we kind of start to narrow down what we think the pipeline will look like between now and the end of the year, plus it gives us a chance to do a better evaluation of the FDA PDUFA calendar and what opportunities out of that, we believe, are truly winnable for us. So yes, I don't think we can give a number of programs this early in the year, but hopefully, we can do that in the next quarter if everything lands up right.

All right. And you guys are doing really well. And obviously, the stock market has been a miniature disaster over the last couple of months here. Doesn't look like, obviously, the fundamentals of the business are reflected in the stock price. And I'm just wondering, as you go around and talk to investors, is it that they don't understand what's going on with your company? Is there, say, a feel that artificial intelligence is going to usurp maybe your ability with your dynamic business rules? What can you pinpoint as to what is some of the hesitation among investors to grasp the story?

Yes, Gary. So when we talk to investors, everybody obviously understands the plasma business. It's kind of like retail same-store sales type stuff. And I think the biggest the market's been in a show-me state sort of stake with the operating leverage from the patient affordability business. Now there's a lot of noise out there, always with direct-to-consumer. If you remember back when Donald Trump was going to solve all the pricing issues. He had his own Donald Trump pharmacy and he had his direct-to-consumer initiative. And quite frankly, I mean, they announced it, I think there were 30 drugs or something whatever. We had 2 of them on there. And the pricing -- the pricing on the direct-to-consumer side for -- and again, those are cash paying customers, was cheaper if you had insurance than if you pay directly to the consumer.

So -- and keep in mind, there's roughly 160 million people out there on private insurance. That's what these co-pay programs are for. It's not for the cash paying customer. So I think there has -- I think people don't necessarily understand co-pay. I know for a fact, they don't understand co-pay. And we're going to work really hard in 2026 to tighten that message to make sure people understand that there is a co-pay. The co-pay really exists. There's a market for co-pay. We have a better mousetrap that nobody else has, and it's showing up in the numbers.

And now this year in 2025, you definitely saw the operating leverage possible. I mean, our operating margin goes from 1.7% to 9%, and that's not insignificant. And then based on the guidance that I've given, we expect that to go up substantially in 2026 and beyond. So I can't control the stock price or the investor community or whatever, but I think the numbers speak for themselves and eventually the market is efficient over the long term.

And one thing I'll add to, if you look at the other competitors that we have in the marketplace, if you go and look at [indiscernible], you look at McKesson, they both own co-pay offerings, right? But it's such a small part of their balance sheet that it never gets brought up in an earnings call. So we're really the first public company that's out here talking about this to where analysts are trying to absorb this information because for us, it's not a rounding year. For McKesson, for [indiscernible], this represents a de minimis part of their overall portfolio.

So I think it's also given the Street a chance to catch up to see this as a new a new offering in the market. And hopefully, they'll get behind this, and we'll have more people understand.

And I think the private equity market understands as well. There's a number of private equity funds that have purchased assets like this privately. If you were to go look at the private markets, there's a lot of M&A activity happening in this space, not just the co-pay space but patient services as a whole. It's constantly changing. So we had a chance to go down to the Cantor HCIT conference and meet with a bunch of people and just listen to what they had to say. And it's -- there's a lot of activity in this space. It's just not in the public market. So I think that's part of the headwind for us, too, is explaining that and having people understand that this is a -- there's a bigger amount of money at play here than what it just seems like on our side.

What about from the standpoint of your competitive advantages, those dynamic business rules, is there a feeling out there? And I guess this is a stupid AI question. Could AI somehow usurp what you're doing in the market?

So I mean, I kind of -- I joke with clients when we talk on the phone that AI can do anything that you can dream up. I just don't know when it's going to be able to do it. I mean, AI -- we don't view AI as a threat. We're working internally to build out our own AI-based systems to help us make our algorithm stronger so that we spot maximizers and accumulators easier.

I think the other part of that to say is that just because they change what they're doing onetime doesn't mean that we won't be right there changing it to find it and not to go into a ton of detail. But once I have one patient, and I know that patient is impacted by a maximizer, I can -- it doesn't matter what the plan does, I can back into that patient because I know they were a maximizer patient yesterday. They're probably a maximizer patient today.

So we don't think that's really a threat to our business model. We see AI on our side is actually a positive, and we're going to be implementing more of that on the patient affordability side to help us have a stronger, more robust product across our vertical.

We reached 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. In closing, we delivered strong results in 2025. We remain confident in our long-term strategy. I want to thank you all for joining us today, and we look forward to speaking with you again in Q1.

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.

Good afternoon. My name is Shamali, and I will be your conference operator today. At this time, I would like to welcome everyone to the Paysign, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

The comments on today's call regarding Paysign's financial results will be on a GAAP basis, unless otherwise noted. Paysign's earnings release was 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 the earnings release, I would 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 is summarized at the end of Paysign's earnings release in its recent SEC filings.

Lastly, a replay of this call will be available until February 12, 2026. Please see Paysign's Third Quarter 2025 Earnings Call announcement for details on how to access the replay.

It is now my pleasure to turn the call over to Mr. Mark Newcomer, President and CEO. Please go ahead.

Thank you, and good afternoon, everyone. I appreciate you joining us as we review our third quarter 2025 results. I'm Mark Newcomer, President and CEO of Paysign. Joining me today is our CFO, Jeff Baker. Also on the call are Matt Turner, President of Patient Affordability; and Matt Lanford, our Chief Payments Officer, both of whom will be available for Q&A following our prepared remarks.

I'm pleased to report another outstanding quarter of growth for Paysign. Earlier today, we announced record revenue of $21.6 million, up 41.6% year-over-year. Adjusted EBITDA reached a record $5 million, an increase of 78%, and net income rose 54% to $2.2 million or $0.04 per fully diluted share. Alongside these financial results, we achieved meaningful operational efficiencies that Jeff will discuss in more detail shortly.

Our Patient Affordability business continues its exceptional growth trajectory, generating $7.9 million in revenue, up 142% from the prior year's quarter. We ended the quarter with 105 active programs and expect to add 20 to 30 more by year-end, including 13 launched in October. This would bring us to a 125 to 135 active programs by the end of the year compared to 76 at the end of 2024, a clear indicator of our sustained momentum and future growth potential.

During the quarter, we announced the opening of our new 30,000 square foot patient support center, a major milestone for Paysign. This expansion quadruples our support capacity, enabling us to meet growing demand and deliver an exceptional service experience for our clients, patients and providers. This facility also supports a growing high-value offering, dedicated patient support representatives which has become increasingly popular across our client base.

Our growth is driven by comprehensive product offerings, best-in-class service, transparent pricing and our proprietary dynamic business rules technology. By integrating dynamic business rules into the traditional commoditized pharmacy claims process, our pharmaceutical clients save hundreds of millions of dollars while unlocking new revenue streams across the patient affordability ecosystem. Our success in specialty pharmaceutical programs continues to open doors in the retail pharmaceutical space were higher claims volumes and multiproduct manufacturer engagements present significant opportunities. Expanding our presence in this area remains a top priority of our sales teams.

Our pipeline remains robust, fueled by both new and existing clients across retail and specialty. We anticipate activity from new drug launches and transition programs already in the queue with sales cycle holding steady at roughly 90 days, a strong signal of consistent execution and demand.

Our mission extends well beyond payments. We're redefining how financial support is delivered across health care, removing cost barriers to treatment and generating measurable savings for patients and our pharmaceutical partners alike. The continued strength of our patient affordability business underscores the power and scalability of our model.

Turning to our plasma donor compensation business. Revenue grew 12.4% year-over-year to a record $12.9 million, despite a net loss of 12 centers, leaving us with a total of 595 active centers at quarter end. As we have previously discussed, the plasma industry continues to face an oversupply of sourced plasma, which we expect to normalize in the first half of 2026. Encouragingly, average donor compensation per donation increased during the quarter, and that trend is carried into Q4. Combined with positive client discussions, we see potential for organic growth at the center level sooner than previously anticipated.

We are executing on our strategy to expand our role in the blood and plasma ecosystem, evolving from a trusted payments provider to a technology partner. Our software-as-a-service engagement platform, which includes a donor app, plasma specific CRM and the donor management system, also known as a blood establishment computer system or BEC, continues to generate strong interest both domestically and internationally. As we await FDA 510(k) clearance for the BEC, we are actively showcasing the platform to the blood and plasma industry who are eager to find efficient user-friendly, cost-effective alternatives to the current offerings. The reception has been overwhelmingly positive, reinforcing our confidence in the long-term opportunity for this business line.

In summary, Q3 was a stellar quarter of strong execution and innovation. We're scaling efficiently, expanding into new markets and delivering transformative value across both patient affordability and plasma, 2 sectors where we're redefining expectations and disrupting the status quo.

I'm incredibly proud of our team's continued focus and discipline. Their dedication to delivering results with purpose continues to drive our momentum. Looking ahead, we remain confident in our growth trajectory and firmly committed to building long-term value for our shareholders.

With that, I'll turn it over to Jeff for a closer look at the financials.

Thank you, Mark. Good afternoon, everyone. As Mark said, we had another strong quarter as we continue to build momentum heading into 2026. We had some nice wins in our Patient Affordability business from both new relationships bringing us multiple programs to existing customers bringing us additional programs. Our plasma business posted year-over-year growth during the quarter with the additions of the new centers we won in the second quarter. We exited the quarter with 595 active plasma centers and 105 active patient affordability programs. More importantly, we ended October with 118 active patient affordability programs with additional programs being added weekly.

Our consolidated gross profit margins continue to improve on a year-over-year basis despite the new plasma centers weighing on the margin due to their lack of maturity. We expect improvement from these levels as the new centers mature over the next 6 to 9 months. We also expect improvement in our consolidated gross profit margins as we ramp up our new customer service contact center that we opened in September. As our business continues to grow, and we continue to make the necessary investments in people and infrastructure to ensure the success of our growing business, we expect our operating margins and adjusted EBITDA margins to continue to expand on a year-over-year basis, demonstrating the operating leverage inherent in our business.

In summary, we could not be more excited about the prospects of our business for the remainder of this year and throughout 2026. I encourage everyone to read our 10-Q for more details about our financial results, which is expected to be filed tomorrow morning before the market opens.

Now turning your attention to the results for the third quarter. Revenue and adjusted EBITDA results exceeded the guidance we provided last quarter. Third quarter 2025 total revenues of $21.6 million increased $6.3 million or 41.6% and adjusted EBITDA of $5 million increased $2.2 million or 78.1%. Plasma revenue increased 12.4% to $12.9 million, while our revenue per plasma center declined to $7,122 as the new plasma centers added in the second quarter have not reached full maturity and our legacy centers continue to be impacted by the industry-wide oversupply of plasma.

Gross dollars loaded to cards increased 21%. Total number of loads increased 19.3% and gross spend volume increased 19.2%, due mainly to the new centers added in the second quarter. Patient affordability revenues increased 142% to $7.9 million and accounted for 36.7% of quarterly revenues. This is a significant increase from the 21.5% of revenue that pharma represented just during the same period last year. We added 8 net programs exiting the quarter with $105 pharma patient affordability programs and grew the number of claims processed by over 60% versus the same period last year.

Gross profit margin for the quarter improved 72 basis points to 56.3%. SG&A, excluding depreciation and amortization and stock-based compensation improved by 410 basis points to 32.9% of revenue, while total operating expenses improved by 210 basis points to 48.9% of revenue.

Having made significant investments in our employee base over the past year to support the continued growth in our businesses, compensation and benefits increased 20.3% to $7.2 million. We exited this quarter with 222 employees versus 162 during the same period last year. Stock compensation increased 32% to $1.3 million related to the issuance of additional restricted stock units for new hires and employee retention. Depreciation and amortization expense increased 39.9% to $2.2 million due primarily to the amortization of continued enhancements in our technology platform.

Net income for the quarter was $2.2 million or $0.04 per fully diluted share versus $1.4 million or $0.03 per fully diluted share for the same period last year. Positively impacting net income was a lower income tax provision, resulting mainly from the recent changes in tax code, offset by lower net interest income mainly related to the implied interest expense of future cash payments for the Gamma acquisition.

Third quarter adjusted EBITDA, which is a non-GAAP measure that adds back stock compensation to EBITDA was $5 million or $0.08 per diluted share versus $2.8 million or $0.05 per diluted share for the same period last year. The fully diluted share count for the quarter is used in calculating the per share amounts was 61.8 million and 56.1 million, respectively, an increase of 5.7 million shares.

Regarding the health of our company, we exited the quarter with an adjusted unrestricted cash balance of $16.9 million and zero debt as we generated strong operating cash flow and continued to experience operational benefits of our gamma acquisition. Just a reminder, the adjustment to our unrestricted cash balances reflects the short-term impact of our account receivable and account payable balances related to our pharma patient affordability business.

Now turning your attention to our revised guidance for 2025, which now incorporates Q3 actuals. We are raising our revenue guidance to a range of $80.5 million to $81.5 million, reflecting year-over-year growth of 38.7% at the midpoint. Plasma is estimated to make up approximately 57% of total revenue, representing a modest year-over-year growth, while pharma patient affordability revenue is expected to make up approximately 41% of total revenue, representing year-over-year growth of over 155%.

Full year gross profit margins are expected to be approximately 60%. We expect operating expenses to be between $41.5 million and $42.5 million with depreciation and amortization expense of approximately $8.4 million and stock-based compensation of approximately $4.3 million. We expect interest income to be approximately $2.6 million. Our full year tax rate to be 18.7%, and our fully diluted share count to be 59.76 million shares.

Taking all the factors above into consideration, we have raised our net income estimates to be between $7 million and $8 million for the year or $0.12 to $0.13 per diluted share. Adjusted EBITDA is now expected to be in the range of $19 million to $20 million or $0.32 to $0.34 per diluted share.

With that, I would like to turn the call back over to the moderator for questions and answers.

[Operator Instructions] Our first question comes from the line of Jacob Stephan with Lake Street Capital Markets.

Congrats on a nice quarter here. Maybe just first, wondering if you could help us think through some of the comments Mark made on retail versus specialty pharmacy. Do you have a current mix number you maybe could give us? Or I mean, maybe you could talk through pipeline mix a little bit as well between the two?

This is Matt Turner. We don't -- I don't have that information in front of me. We can -- Jeff can follow back up with you on that. And we'd probably want to give more of a maybe a percentage there. But we do have a decent mix right now of retail versus specialty. As you look at the pipeline moving into next year, there is the addition of more retail programs. I don't know the exact number if you were to look at overall program count. But it's a higher percentage moving into next year in the pipeline, and that would kind of be all stages of the pipeline that would have a retail versus a specialty component.

Okay. Got it. Maybe -- so it sounds like this is a little bit bigger opportunity, maybe higher claims volumes on the retail side. Maybe you could just kind of elaborate on that a little bit?

Yes. So retail products due to their cost and the propensity are to be prescribed because they're dealing with a lot more what I would call generic types of ailments, you tend to see just a higher percentage of people be prescribed those drugs. Sometimes it's for acute issues, sometimes it's for chronic. If you were to look at the retail programs right now that we have, we have some in the -- in like the pulmonary space, so some inhalers, things like that. There's a component of people who will be written inhaler because they have asthma and they're going to have an inhaler every day for the rest of their life, and then you have people that come down with bronchitis, and they'll use it for a month or 2 and then they're off of it.

So the mix that you see of utilization tends to be a little bit higher, so you get a higher patient count inside of those programs, whereas a specialty drug, a lot of times, the number of people that are taking that drug is obviously lower because it's a specialty product. And you don't typically get an acute indication for a specialty drug that we would represent or that would have a program with us. So it's just the ability to onboard more patients in the programs tend to be higher with retail products than it does with specialty.

So that's why you'll see the increased claim volumes as well as the offer value on a retail product is going to be substantially different. So patients will not necessarily burn through their out-of-pocket max on a retail product like they would on a specialty product. The specialty product is $25,000 and a patient has a $7,000 out-of-pocket max. They can get through their entire out-of-pocket maximum in a couple of fields, whereas with a retail product where the offer value is, say, $200 they could use that 12 times a year. So instead of only getting 2 or 3 claims for that patient in the specialty space, we would get 12 in the retail space.

Okay. Got it. That's very helpful. Maybe second one, Jeff, you kind of talked a little bit about gross profit margins expanding as you know the patient success center continues to ramp. I'm wondering if you could kind of help us think through current capacity utilized and maybe where you expect to be with these 22 new centers online in the second half -- or in the last quarter here.

Well, this -- I think you're kind of mixing the centers. We didn't say there would be 22. We're saying in the second half of the year on the patient affordability pharma side, where we would have between 20 and 30. The centers, we don't really -- we're going into the end of the year. I don't really expect those to change too much, plus or minus a couple here or there. And -- but the comment about the maturity of those relates to those centers coming up to the average of our core base.

So there are fees that typically don't kick in for 90-plus days afterwards where we start to see the benefit of a fully mature centers. The centers have been open for quite some time. But from our revenue opportunity, it just takes time for them to come through, for example, in activity fees or things of that nature. So as those become more mature, as we see -- also see a return to growth, et cetera, I expect the gross profit margins in the plasma business to improve from where they were this quarter.

Okay. Got it. And then maybe just last one. I think when you kind of run the numbers as you look at Q4 here and what you're communicating with pharma revenue growth it implies a sequential step down in average quarterly revenue per program. Maybe you could kind of help us think through what the difference is between last year when it was actually a sequential step-up from Q3 to Q4? And maybe contrast that with what you see this year.

Yes. I mean last year, we had more newer programs with fewer claims. Now this year, we have a lot more programs with claims and the claims will fall off in the second half of the year. It's a seasonal business, as Matt alluded to earlier, when everything resets. So that's the difference. We just have -- we have more -- we have -- it's a mix issue where the mix is more geared towards claims versus initial launch fees.

And the other thing I would say, Jacob, is you can't look , but I appreciate you calling this out. You cannot look sequentially at these numbers. you have to look on a year-over-year basis. So last year, we did $56,700 in the fourth quarter revenue per program. That will be up year-over-year versus last year. This year, we did in the third quarter, $75,434. Last year, we did just under $50,000. So you have to look at this business on a year-over-year basis. Sequential numbers are absolutely meaningless.

Our next question comes from the line of Gary Prestopino with Barrington Research.

Is there -- well, first of all, could you kind of tell us what a mature program would do in an average revenue basis versus you say, $75,000 now, but you've got -- obviously got some programs that are just coming into the mix or have just coming in the mix. What does the mature program do per quarter?

Gary, it really depends. I don't mean to skip or overlook the question, but I mean, we have programs that do $2,000 a month, and we have programs that do that. It just -- it really depends on the program. So when it's mature, I mean we see it coming into the numbers. And there are things that a drug may do it may get another indication, which causes that the claims to go up on a year-over-year basis. Some of the programs is just pretty much flat year-over-year once it becomes mature, it's really hard to say. But to say what a mature program is it's too variable.

Well, how about this, is there a difference between a specialty versus just a regular retail program in terms of the average revenues?

Gary, this is Matt. So when you look at the different product suites that those programs would use, we would typically value a specialty program as being worth more money provided it has the appropriate indications. But again, it's all in the mix, right? So I can name off 20 drugs right now that you've never once heard of, right? You've never heard of these drugs. Then I could name off 5 that you've heard of. and you'd be like, "Oh, if you have that drug because I've seen 500 TV ads for it. You've got to be making a ton of money with that drug."

And that could be right or it could be wrong. It depends on the patient population of that drug. How old are they? They mostly on Medicare, they mostly own Medicaid. It's a very complex saying to look at this and say, okay, well, I've heard of insert name of giant drug and you think of the golf people talking about their psoriatic arthritis. And you think, "Oh, well, that's a great drug." Yes, that could be because that's not impacting the lion's share of the patients taking that drug aren't 70 years old on Medicare. So that could be a good one. But then I bring up other drugs that you've heard about that are cancer therapies and -- or for Alzheimer's. And even though those are huge drugs for their companies, right, for the manufacturer, they're not going to make us any money. So you really have to look at how big a program is going to be based on what's the patient population, right, what's the cohort of the patient population that can utilize our products and then what other additional pieces can we stack on top of.

Mark talked about dynamic business rules. That's in the specialty space. we currently don't have that active on any of our retail programs. So a specialty program utilizing dynamic business rules is going to be far more profitable to us and have higher top line revenue numbers than a retail program that could be doing 10x the claim book. So it's a -- you really have to understand the drug specifically, their patient populations, the cohorts of those patients that would potentially utilize co-pay inside of the overall -- the overall numbers of the patients.

Okay. I mean, that's helpful. And that you can't really peg a drug to -- are you -- it's hard for us to ascertain what's going to add way. Are you just on a drug basis or a program basis or retail versus specialty? As Jeff said, just look at the average revenue program quarter-over-quarter, right?

Yes. And I think, look, if we were able to -- if our clients would let us just come out and tell you, we won this brand I think you guys would be in a much better situation, right? Because you'd say, "Oh, seeing it on TV." Can the people that take that drug or most of them are going to be under -- so hey, Paysign is probably going to do really well with that. Or hey, this is an oncology product, and it's tiered towards breast cancer. So in that instance, hey, we're probably going to do really well with that program.

And you can also look at the information coming out of the manufacturers to far as how big is that drug, how much revenue are they generating from it. Unfortunately, we don't -- we can't do that. Almost every one of our master services agreement requires us to not disclose who our clients are and the brands that we represent. And it's certainly not for trying on our part to get them to allow us to talk about those brands. And I think if you look back at previous earnings calls, where we've been able to discuss specific brands or discuss specific clients, if you kind of ChatGPT some questions out there, you might be able to get a better indication of the types of programs that we have running right now.

Okay. And then just -- Mark, you mentioned something about this BEC, which I hadn't heard of that at all. So could maybe you could go into that and how that's going to help you going forward?

Yes. That is what we refer to as it's a blood establishment computer system or a [BEC] really a donor management system, and it allows us to place into the plasma blood space. We have a suite of products that we have built out a software as a service that is -- we're dealing with a donor app, a plasma specific CRM and the donor management system. And so what that allows us to do is gain really an additional business line that is going to allow us once approved with the FDA, it is going to allow us to start running down that path.

Our next question comes from the line of Peter Heckmann with D.A. Davidson.

I'm just curious in the plasma business. It's probably hard to disaggregate, but I guess, have you sensed any uptick in donors given some of the issues around withholding SNAP benefits as part of the government shutdown? And then conversely, what type of headwind are you feeling in terms of just the increased ICE activity with detaining immigrants and departing immigrants in terms of donors? Do you think on a net basis, do you think those offset each other? Or could you just comment on any dynamics you're seeing?

Pete, on the latter question, I can tell you haven't seen any change. Remember, when you give plasma, you have to present an ID. So they can track you and do everything else. So people that are here illegally in the states without the proper identification are given plasma. So there's been zero impact related to the change of our immigration population. As for the other -- with the shutdown, the shutdown has only been around a couple of weeks. We -- I haven't seen -- maybe Mark seen, but we really haven't seen any change and the donors on that. Mark, have you -- what have you seen anything?

No, we haven't seen it.

Okay. Haven't seen it. All right.

No. Not really expecting to at this point. We -- obviously, we've seen -- in the past, we've seen kind of -- it looks like it's starting to loosen up a little bit coming into the fourth quarter, and we expect it to loosen up probably the second half of the year, and that is around the donor that is around the donor, what we're doing with the donors in regards to payments. So we're seeing the payments that we're sending out are starting to go up. And we would expect that to continue for probably the next 6 to 12 months.

Okay. I see. And then just on that latter question on the donor management, CRM engagement platform. I guess any insights into the timing for when that approval might come through? And then in terms of like just sizing that opportunity, is that something where there's hundreds of customers and a system could be hundreds of thousands of dollars? Or how should we be thinking about that in terms of the potential benefit?

Yes. I mean we were expecting to get through the FDA approval sometime in fourth quarter. Going into first quarter, we obviously didn't expect the shutdown, and we certainly didn't expect it to last as long as it has. Obviously, that will push us back probably first quarter, second quarter, hopefully, the earlier. And regarding how to think about it, no, there's not -- in the U.S. market, you can -- it's a readily available number of how many clients are out there. I wouldn't call it hundreds of clients in the U.S. market. However, there are -- there is a center-by-center basis that we would license. But it's early days, and I don't really want to get into the model by which we're going to go out at this point in time.

[Operator Instructions] And we have reached the end of the question-and-answer session. I'd like to turn the floor back to Mark Newcomer for closing remarks.

Thank you. Obviously, we're proud of our progress, optimistic about the future, dedicated to delivering substantial growth and long-term shareholder value. And we look forward to updating you again next quarter. Thank you.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.