Paysign, Inc. (PAYS) stock intrinsic value fair value estimate & owner earnings analysis

Paysign is a prepaid-card program manager and payment processor. Its revenue comes from cardholder fees, interchange, program management fees, claims-processing fees, breakage and settlement income. In 2025 revenue was $82.0 million (up 40.5%): plasma-collection programs $45.6 million (up 4.0%), pharma patient-affordability programs $33.9 million (up 167.8%) and other programs $2.5 million. Growth came from 115 net new plasma centers and 55 net new pharma programs, and claims processed rose 79%. Gross margin rose to 59.4% from 55.1% as higher-margin pharma work grew. Net income was $7.6 million in 2025 versus $3.8 million in 2024. How we measure earnings. We start from operating cash flow and remove two things. First, the swings in receivables, payables and customer card funding. Paysign holds cardholder money that sits in restricted cash ($143.9 million of $165.0 million total cash at the end of 2025), and its receivables largely reflect pass-through pharma claim reimbursements. These balances made operating cash flow $29.5 million larger than underlying earnings in 2025, so we treat them as timing and not as profit. Second, we deduct stock compensation ($4.3 million in 2025) as a real cost. We then deduct the part of capital spending, mostly capitalized software, that maintains the business. Result: owner earnings of about $13.2 million, or $0.22 per share, in 2025. The prior years were $0.04 (2024), $0.01 (2023) and $0.02 (2022), and 2020 and 2021 were negative. Depreciation and amortization ($8.3 million in 2025) is largely capitalized software, whose ongoing replacement cost is already deducted as capital spending, so it is not treated as free profit. Amortization of the Gamma Innovation intangibles acquired in March 2025 (a 10-year life) is a non-cash charge that we do not deduct. Why we anchor on 2025. The pharma business was the driver of the step-up: pharma revenue was $12.7 million in 2024 and $33.9 million in 2025. Earlier years describe a smaller business without that program base, so we use 2025 as the starting level ($0.22 per share) instead of an average that includes them. Growth check: owner earnings rose sharply in 2025 (from $0.04 to $0.22), and we assume no growth in year one, which is below that. Results filed for the first half of 2026 (revenue $56.3 million versus $37.7 million a year earlier; net income $12.2 million versus $4.0 million) corroborate that the 2025 level is not a peak, but we do not lift the base case level on two quarters. Base case, about $2.07 per share: owner earnings hold flat at $0.22 per share for ten years, then decline in a straight line to zero over the following ten years. We credit no further growth. The programs already launched are reflected in the 2025 level, and new programs, higher plasma volumes and margin expansion are not yet demonstrated over many years, so they are left out. After year ten we do not see a named, evidenced source that keeps earnings going, so the stream fades. Bear case, about $0.33 per share: earnings fall back to the 2024 level of $0.04 per share, then fade to zero over five years after year ten. The filings identify the pressures. Plasma inventory levels were elevated through much of 2025, which reduced revenue per plasma center. One pharma program customer accounted for 31% of receivables at year-end 2025, and two accounted for 17% and 15% at year-end 2024. Paysign also warns that it may be unable to maintain or renew its issuing-bank relationships on similar terms. Some of the 2025 profit is interest-type other income ($2.7 million, versus $3.1 million in 2024), which is not tied to the operating programs. Bull case, about $3.76 per share: owner earnings run at $0.40 per share, roughly the pace implied by the first half of 2026, for ten years, then fade over ten years. This assumes the launched pharma programs keep processing at the recent pace and margins hold. It is the strongest outcome we can tie to results already reported, not a forecast of further launches. What could make this estimate wrong: a loss of one of the large pharma program customers, a weak plasma market, or loss of bank sponsorship would push results toward the bear case. We could not reconcile the first-half 2026 owner earnings on the same detail as annual filings (only summary cash-flow lines were reviewed), which is why we treat that period as corroboration and not as the base level. The margin-of-safety price of $1.05 per share is set at roughly half of base value because the company is small, has concentrated customers and a short record of meaningful owner earnings.