Business Context and Reporting Period
Company: Paysign, Inc. (PAYS)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Paysign is a vertically integrated provider of prepaid card products and processing services for corporate, consumer, and government entities. Key segments include the plasma industry (donor compensation), pharmaceutical industry (patient affordability solutions), and other prepaid programs (corporate incentives, payroll). The company also offers life science technology solutions under the Apherion brand.
Key Financial Metrics
| Metric | 2025 | 2024 | Variance |
|---|---|---|---|
| Total Revenues | $82,028,176 | $58,384,552 | +40.5% |
| Gross Profit | $48,716,953 | $32,197,334 | +51.3% |
| Gross Margin | 59.4% | 55.1% | +430 bps |
| Operating Income | $7,362,839 | $1,021,508 | +620.8% |
| Net Income | $7,551,613 | $3,815,907 | +97.9% |
| Net Margin | 9.2% | 6.5% | +270 bps |
| Adjusted EBITDA | $19,943,694 | $9,621,083 | +107.3% |
| Cash from Operations | $52,450,867 | $22,947,120 | +128.6% |
| Unrestricted Cash | $21,067,651 | $10,766,982 | +95.7% |
| Restricted Cash | $143,917,060 | $111,576,204 | +29.0% |
Note: Restricted cash consists of funds held for card programs and pharma patient affordability claims.
Material Changes vs. Prior Period
- Revenue Growth: Driven primarily by a 167.8% increase in Pharma industry revenue ($21.2M increase) due to 55 net new patient affordability programs and a 79% increase in claims processed. Plasma revenue grew 4.0% despite elevated inventory levels reducing revenue per center, offset by adding 115 net plasma programs.
- Cost Structure: Cost of revenues increased 27.2%, largely due to higher call center support ($2.1M), network fees ($2.8M), and third-party variable costs ($1.1M) associated with business growth.
- Operating Expenses: SG&A increased 31.2% due to compensation/benefits ($3.8M), stock-based compensation ($1.7M), and technology investments ($0.8M). Depreciation and amortization rose 38.8% due to capitalized software and intangible assets from the Gamma acquisition.
- Acquisition: Completed the acquisition of Gamma Innovation LLC on March 19, 2025, for total consideration of $15.6M (cash, equity, and earn-out), adding donor engagement and management technology.
- Liquidity: Operating cash flow more than doubled to $52.5M, driven by net income growth and changes in working capital (specifically customer card funding and accounts payable).
Guidance, Outlook, and Risks
- Outlook: Management expects available cash ($21.1M unrestricted) and forecasted cash flows to sustain operations for the next 24 months. Plans for 2026 include continued investment in technology, sales, marketing, cybersecurity, and regulatory compliance.
- Key Risks:
- Regulatory: Highly regulated environment (AML, HIPAA, banking laws); changes could increase costs or restrict operations.
- Cybersecurity: Risk of data breaches affecting sensitive customer and financial data.
- Concentration: One pharma customer represented 31% of accounts receivable as of Dec 31, 2025.
- Banking Relationships: Reliance on third-party banks to issue cards; loss of relationships could disrupt business.
- Legal: Pending resolution of stockholder derivative actions (settled in principle in late 2024/2025).
- Unusual Items: The company recorded a $3.75M settlement for a securities class action in 2024, fully covered by D&O insurance. No similar unusual items were reported for 2025.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 167.8% growth in Pharma revenue and the impact of elevated plasma inventory on future plasma revenue per center.
- Customer Concentration: Assess the risk associated with one pharma customer comprising 31% of accounts receivable.
- Acquisition Integration: Monitor the performance of Gamma Innovation LLC assets and the realization of projected synergies.
- Liquidity Position: Confirm the distinction between unrestricted cash ($21M) and restricted cash ($144M) to understand true working capital availability.
- Legal Contingencies: Review the final status of the stockholder derivative settlements approved in late 2025.
- Stock-Based Compensation: Note the increase in stock-based compensation expense ($4.3M in 2025 vs $2.6M in 2024) and its impact on future dilution.