Paysign, Inc. Common Stock 2026 Q2 Earnings Call

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. I'm joined today by 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.

This quarter is a good example of that work 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 five-fold increase year-over-year. Gross margin expanded 170 basis points to 63.3%. Jeff will walk you through all the financial results from the quarter. 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. Claim volume was approximately 54% higher than the second 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 year and a half. That's the balance we've been working toward, a steady cash generative core 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 six 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 central 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 shielded clients from more than $300 million in costs that co-pay maximizers and accumulator programs would otherwise have diverted. To frame that, the full year 2025 total was roughly $325 million. We have nearly matched an entire year of savings in six 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 in 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 reading 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 seven new additions. The trend leaves us increasingly confident that the headwinds we faced are now largely behind us. Plasma also remains a dependable source of cash generation, and it gives us a natural entry point to broaden adoption of our donor management and engagement software among the collectors we serve. Our life sciences technology suite, which we bring to market under the Apherion 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 Apherion platform remains strong both domestically and internationally. To support that international demand, we've established Apheryon Technologies Limited, a wholly owned subsidiary domiciled in Ireland, which will anchor our sales, development, and client support as our European hub. With roughly a third 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, 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 one-time non-cash benefit of $990,000 related to the carrying value of the Gamma acquisition earn-out liability. Our first two quarters of 2026 make two 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 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, setup fees, claim processing fees, customer service contact center support, and other billable services such as dynamic business rules. Pharma revenue again 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 non-recurring non-cash 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. 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 one-time 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 one-time 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.