Paysign, Inc. (PAYS) - Q1 2026 10-Q Summary
Business Context and Reporting Period
Paysign, Inc. is a vertically integrated provider of prepaid card products, processing services, and life science software solutions (Apherion brand). The company serves corporate, consumer, and government entities, with a focus on plasma industry compensation and pharmaceutical patient affordability programs. This report covers the quarterly period ended March 31, 2026.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $28,038,424 | $18,598,149 |
| Net Income | $5,438,918 | $2,586,100 |
| Diluted EPS | $0.09 | $0.05 |
| Gross Margin | 65.0% | 62.9% |
| Net Margin | 19.4% | 13.9% |
| Operating Cash Flow | $18,785,758 | $(6,033,177) |
| Cash & Restricted Cash | $179,495,451 | $111,490,368 |
| Total Assets | $312,725,628 | $276,253,203 |
| Total Liabilities | $257,712,213 | $227,763,032 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 50.8% year-over-year. The Pharma industry segment drove the majority of growth with an 81.9% increase ($15.7M vs $8.6M), attributed to 45 net new patient affordability programs. The Plasma industry segment grew 24.9% ($11.7M vs $9.4M) due to 89 net new centers and normalized donation volumes.
- Profitability: Net income more than doubled (110.3% increase) to $5.4M. Operating income surged 167.9% to $6.7M, benefiting from higher gross margins and operational leverage.
- Cost Structure: Cost of revenues rose 42.2%, primarily due to increased network fees, call center support costs, and sales commissions associated with business expansion. Operating expenses increased 25.5%, driven by stock-based compensation ($1.3M vs $0.7M) and depreciation/amortization ($2.6M vs $1.8M) related to the Gamma Innovation acquisition.
- Liquidity: Operating cash flow turned strongly positive ($18.8M) compared to a negative $6.0M in the prior year, driven by net income growth and changes in working capital (specifically customer card funding and accounts payable).
Outlook, Risks, and Unusual Items
- Acquisition Impact: The company acquired Gamma Innovation LLC in March 2025. While no new revenue was generated from this segment in Q1 2026, the acquisition contributed significantly to depreciation and amortization expenses. The company recorded $0 in fair value adjustments to the contingent consideration liability for the quarter.
- Capital Allocation: The company repurchased 56,247 shares of common stock for approximately $200,000 during the quarter. A new $5 million stock repurchase program was authorized on May 8, 2026, following the expiration of the prior program.
- Liquidity Outlook: Management believes available cash (excluding restricted cash of ~$159M) and forecasted cash flows are sufficient to sustain operations for the next 24 months.
- Risks: The company notes concentration risk in accounts receivable, with two pharma customers representing 16% and 15% of the balance as of March 31, 2026. Additionally, the company maintains cash balances exceeding federally insured limits, relying on deposit swapping programs for FDIC coverage.
- Tax Rate: The effective tax rate increased to 27.2% from 20.5% in the prior year, primarily due to discrete items and stock price appreciation impacts.
Investor Verification Checklist
- Verify the sustainability of the 81.9% revenue growth in the Pharma segment and the retention rates of the 45 new programs launched.
- Monitor the concentration risk in accounts receivable, specifically the exposure to the two largest pharma customers (31% combined).
- Assess the impact of the Gamma Innovation acquisition on future revenue generation, as it has not yet contributed to top-line growth.
- Review the company's reliance on deposit swapping programs to insure cash balances exceeding FDIC limits.
- Track the execution of the new $5 million stock repurchase program authorized in May 2026.