Paysign, Inc.

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. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question to join the queue, you may press star one on your telephone keypad. 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 four linking statements regarding Paysign's future performance, Actual performance could differ materially from these four linking statements. Information about the factors that could affect future performance is summarized at the end of PaySign's earnings release and in its recent SEC filings. Lastly, a replay of this call will be available until February 12th, 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 Lamford, 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 4 cents 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 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 where higher claims volumes and multi-product 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 healthcare, 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 source 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 a donor management system, also known as a blood establishment computer system, or BECCS, continues to generate strong interest both domestically and internationally. As we await FDA 510K clearance for the BECCS 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, two 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 six to nine 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 in 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 eight 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 4 cents per fully diluted share, versus $1.4 million or 3 cents 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 quarters used in calculating the per share amounts was $61.8 million and $56.1 million, respectfully, 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 continue 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.