Paysign(US:PAYS)2025-05-09 12:28PART I. FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements for Q1 2025, showing $205.1 million in total assets and $2.6 million net income Condensed Consolidated Balance Sheet Highlights | Account | March 31, 2025 (Unaudited) | December 31, 2024 (Audited) | | :--- | :--- | :--- | | Total Current Assets | $167,153,858 | $158,836,633 | | Goodwill | $5,512,637 | $– | | Total Assets | $205,118,026 | $179,028,197 | | Total Current Liabilities | $155,678,621 | $146,106,495 | | Total Liabilities | $165,843,762 | $148,586,565 | | Total Stockholders' Equity | $39,274,264 | $30,441,632 | Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $18,598,149 | $13,190,074 | +41.0% | | Gross Profit | $11,690,828 | $6,939,251 | +68.5% | | Income (loss) from operations | $2,489,066 | $(258,352) | NM | | Net Income | $2,586,100 | $309,096 | +736.7% | | Diluted EPS | $0.05 | $0.01 | +400.0% | Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,033,177) | $8,244,499 | | Net cash used in investing activities | $(4,443,855) | $(2,273,081) | | Net cash used in financing activities | $(375,786) | $– | | Net change in cash and restricted cash | $(10,852,818) | $5,971,418 | - On March 19, 2025, the company acquired substantially all assets of Gamma Innovation LLC, a software and services company in the plasma collection industry, for a preliminary purchase consideration of $17,758,637, consisting of cash, equity, and contingent consideration6162 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 financial results, highlighting 41.0% revenue growth to $18.6 million and $5.0 million Adjusted EBITDA Overview Paysign is a vertically integrated provider of prepaid card programs, patient affordability offerings, and digital banking services - Paysign is a vertically integrated provider of prepaid card products, patient affordability offerings, and digital banking services for businesses, consumers, and government institutions2288 - Revenue sources include cardholder fees, interchange, program management fees, transaction processing fees, breakage, and settlement income91 - The company is focusing its marketing on corporate incentive and expense cards, particularly in healthcare, patient affordability, clinical trials, and donor compensation, and will also market new donor engagement applications following the Gamma acquisition99 Results of Operations Total revenues increased 41.0% to $18.6 million in Q1 2025, driven by pharma revenue, with gross margin improving to 62.9% Revenue by Industry (Three Months Ended March 31) | Industry | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Plasma | $9,409,880 | $10,368,034 | $(958,154) | (9.2%) | | Pharma | $8,618,653 | $2,388,644 | $6,230,009 | 260.8% | | Other | $569,616 | $433,396 | $136,220 | 31.4% | | Total | $18,598,149 | $13,190,074 | $5,408,075 | 41.0% | - The increase in pharma revenue was primarily due to the launch of 14 net new patient affordability programs in Q1 2025 and the full-quarter impact of 33 net programs launched in 2024103 - Gross margin increased to 62.9% in Q1 2025 from 52.6% in Q1 2024, primarily due to a greater revenue contribution from the higher-margin pharma patient affordability business103105 - Selling, general and administrative (SG&A) expenses increased by 25.2% to $7.4 million, mainly due to a $1.5 million rise in compensation and benefits to support business growth106 Key Performance Indicators and Non-GAAP Measures Key performance indicators show $407 million gross dollar volume and Adjusted EBITDA reaching $5.0 million in Q1 2025 - Gross dollar volume loaded on cards was $407 million for Q1 2025, compared to $426 million for Q1 2024112 - The total revenue conversion rate on gross dollar volume increased to 4.57% (457 bps) in Q1 2025 from 3.09% (309 bps) in Q1 2024113 Reconciliation of Net Income to Adjusted EBITDA (Three Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income | $2,586,100 | $309,096 | | EBITDA | $4,290,069 | $1,028,053 | | Adjusted EBITDA | $4,962,387 | $1,692,004 | Adjusted EBITDA Margin Reconciliation (As a percentage of revenue) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net income margin | 13.9% | 2.3% | | EBITDA margin | 23.1% | 7.8% | | Adjusted EBITDA margin | 26.7% | 12.8% | Liquidity and Capital Resources Net cash usage was $10.9 million in Q1 2025, with $6.8 million available cash expected to sustain operations for 24 months - Net cash used in operating activities was $6.0 million in Q1 2025, a decrease of $14.3 million from the prior year, mainly due to changes in accounts receivable, accounts payable, and customer card funding tied to pharma business growth119 - Net cash used in investing activities was $4.4 million, which included $2.0 million for the Gamma acquisition and $2.4 million for capitalization of internally developed software120 - The company believes its available cash of $6,847,021 at March 31, 2025, along with forecasted revenues and cash flows, will be sufficient to sustain operations for the next twenty-four months122 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Paysign is exempt from providing market risk disclosures - The company is exempt from providing market risk disclosures as it qualifies as a smaller reporting company126 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025127 - No material changes to the company's internal control over financial reporting were identified during the quarter ended March 31, 2025128 PART II. OTHER INFORMATION Legal Proceedings Details the $3.75 million settlement of a securities class action and pending preliminary approval for stockholder derivative actions - A securities class action was settled for $3,750,000, with the entire amount paid from the company's directors-and-officers insurance policy, and the court approved the settlement on April 18, 202480131 - Four stockholder derivative actions have been consolidated or related, and the parties agreed in principle to a settlement on October 4, 2024, with a Motion for Preliminary Approval currently pending84135 Risk Factors As a smaller reporting company, Paysign is exempt from providing risk factor disclosures in its Form 10-Q - The company is exempt from providing risk factor disclosures in its Form 10-Q as it qualifies as a smaller reporting company136 Unregistered Sales of Equity Securities and Use of Proceeds Issued 500,000 shares for acquisition and repurchased 100,000 shares, with $3.0 million available for future repurchases - Issued 500,000 shares of common stock in connection with the purchase agreement with Gamma Innovations LLC137 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Weighted Average Price Paid Per Share | Approx. Value of Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Jan 2025 | – | – | $3,377,071 | | Feb 2025 | 100,000 | $3.76 | $3,001,285 | | Mar 2025 | – | – | $3,001,285 | Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the quarter140 Exhibits Lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL documents - The report includes certifications from the principal executive and financial officers (Exhibits 31.1, 31.2, 32.1, 32.2) and Inline XBRL data files (Exhibit 101 series)143 Signatures - The Form 10-Q report was duly signed on May 9, 2025, by Mark Newcomer, President and Chief Executive Officer, and Jeff Baker, Chief Financial Officer147