PaySign, Inc. (PAYS) Earnings

Management highlights

- Overall Strategic Progress: The quarter set new company records for revenue, net income, and adjusted EBITDA, marking the second consecutive quarter of beating guidance. Management confirmed the multi-year strategy of building the high-growth patient affordability segment to complement the steady cash-generating plasma business is delivering expected results, with both segments expanding margins in the quarter. - Patient Affordability Segment Milestones: Through the first half of 2026, the platform has channeled more than $900 million in patient financial assistance, nearly matching the full-year 2025 total of ~$1 billion. The company's dynamic business rules (DBR) technology saved pharmaceutical clients more than $300 million in avoidable costs in the first half of 2026, already approaching the full-year 2025 total of $325 million. The program pipeline remains healthy through 2026 and into 2027, with management expecting full-year 2026 net new program additions to match or exceed the 2025 total of 55. - Plasma Segment Recovery: The segment has largely moved past the 2025 industry inventory overhang headwinds that suppressed results for 18 months. Strategic center closures have not led to sustained donor loss, as donors shifted to other nearby centers within the network. Plasma continues to be a dependable source of operating cash flow for the company. - New Growth Initiatives: The Aetherion-branded life sciences blood establishment computer software (BACS) donor management platform continues progressing through FDA regulatory review, with strong domestic and international market interest. To support European expansion, the company has established a new Irish wholly owned subsidiary, DeFarian Technologies Limited, as its regional hub for sales, development, and client support.

Guidance

- Full-year 2026 guidance was revised upward across all key metrics, driven by stronger-than-expected performance in the first half of the year and strong program pipeline visibility. Management now expects: 1. Total revenue of $114 million to $117 million, representing 39% to 43% year-over-year growth. 2. Gross profit margin of 62% to 63%, an upward revision from the prior guidance range of 60% to 62%. 3. GAAP net income of $21.5 million to $23 million, or $0.35 to $0.37 per diluted share. 4. Adjusted EBITDA of $35 million to $38 million, or $0.57 to $0.61 per diluted share. - Q3 2026 guidance: Total revenue is expected to be $28.5 million to $30 million, representing 32% to 38.9% year-over-year growth. Gross margin is expected to be 61% to 63%, reflecting a higher mix of plasma revenue. The effective tax rate is expected to be 17%, GAAP net income is expected to be $5.7 million to $6.0 million ($0.09 to $0.10 per diluted share), and adjusted EBITDA is expected to be $9.5 million to $10 million ($0.15 to $0.16 per diluted share). Management expects to exit Q3 2026 with 165 to 170 active patient affordability programs, and a slight increase in active plasma centers from Q2 levels.

Segment performance

Total company revenue for Q2 2026 was $28.3 million, a 48.1% year-over-year increase. 1. Patient Affordability (Pharma): Revenue was $14.6 million, representing a 88.9% year-over-year increase, and accounted for 51.6% of total Q2 2026 revenue. Claim volume grew 54% year-over-year, with 13 new programs launched in the quarter and 148 active programs at quarter end (up from 97 a year prior). This segment carries higher gross margins than the plasma business, driving overall company margin expansion. 2. Plasma Donor Compensation: Revenue was $13 million, representing a 21.4% year-over-year increase, and accounted for 46% of total Q2 2026 revenue. Average monthly revenue per center increased 5% year-over-year to $7,699, the highest level since Q3 2024. The segment ended the quarter with 561 active centers, following 19 strategic center closures partially offset by 7 new center openings. 3. Other revenue (not segmented by business): Makes up the remaining ~2.4% of total Q2 2026 revenue, expected to reach approximately $300,000 in Q3 2026.

Risks & headwinds

No material new risks or operational failures were discussed on the call. The only uncertainty highlighted was the unknown timeline for FDA regulatory review of the Aetherion BACS platform, with management unable to provide a specific launch date at this time. Standard forward-looking statement disclosures note that actual future results may differ materially from projected performance, with risk factors detailed in recent company SEC filings and the Q2 2026 earnings release.

Analyst Q&A

• Q: What is the organic same-program growth for mature patient affordability programs, and what is the size of the total addressable market (TAM) for this business? /

  A: Mature programs have roughly flat organic revenue if no changes are made, but the company is seeing organic growth from existing programs by adding new billable features, expanding service offerings, and when partner drugs gain new approved indications that expand eligible patient populations. The vast majority of future growth will continue to come from adding new programs. Prior estimates of 850-900 potential programs only count drugs directly impacted by copay maximizers/accumulators; the full TAM including all branded drugs, biosimilars, medical devices, and infused products is in the tens of thousands, and the company is still in the early stages of market expansion.

• Q: Q3 2026 guidance implies strong new program additions, which seems out of line with typical seasonal slowdowns. What is driving this strong expected activity? /

  A: Q1 is always the weakest quarter for new program launches, not Q3, because of annual insurance deductible resets that create operational constraints. Q3 and Q4 are typically busier because manufacturers want to complete program transitions before Q1's annual reset, when transitions are avoided. The current strong pipeline reflects normal sales cycle timing: work started in Q1/Q2 converts to launches in Q3, and the company already added 9 new programs in the first month after Q2 ended, with the pipeline remaining very strong.

• Q: What is the company's RFP win rate for new patient affordability programs, and is there seasonal patterns for new wins? /

  A: Around 75% of new wins come from formal RFPs/RFIs, and 25% from direct word-of-mouth awards. The company's RFP win rate is over 80%, which is very high for the industry. Seasonality for transitions is driven by operational needs: almost no program transitions happen during Q1's annual insurance reset period, but new-to-market drugs launch throughout the year based on their FDA approval dates. The annual Assembia conference in April/May is the company's largest annual marketing event and drives much of the back-half pipeline, with additional smaller conferences in Q4 supporting further sales activity.

• Q: Why does full-year guidance imply a step-down in adjusted EBITDA for Q4 2026 compared to Q3, beyond normal seasonal mix shift? /

  A: Last year Q4 had an unusually high volume of new program launches, while this year new launches are more evenly spread across Q2, Q3, and Q4. Additional factors include lower software development capitalization in Q4 due to extended holiday employee time off, a higher projected effective tax rate (around 27% vs 17% in Q3) due to the timing of stock-based compensation tax deductions, and planned hiring for new account management and claims operations staff ahead of Q1's annual busy period, which increases Q4 operating expenses.