10-Q: Health In Tech Reports Strong Q3 Revenue Growth, eDIYBS Expansion

Health In Tech, Inc. announced significant revenue growth and strategic technology advancements in its Q3 2025 report, despite a temporary pause in its HI Card service.

Summary

• Total revenues for the nine months ended September 30, 2025, increased by 77.0% to $25.8 million, up from $14.6 million in the same period of 2024.
• Net income for the nine months ended September 30, 2025, grew by 94.1% to $1.6 million, compared to $0.8 million in the prior year.
• Adjusted EBITDA for the nine months ended September 30, 2025, rose by 110.2% to $3.8 million, from $1.8 million in the same period of 2024, with the Adjusted EBITDA margin improving from 12.4% to 14.7%.
• The number of enrolled employees (EEs) increased by 44% year-over-year, reaching 25,248 as of September 30, 2025.
• The eDIYBS system was expanded in September 2025 to serve groups with over 150 employees, significantly reducing large-group underwriting time from months to approximately two weeks.
• HI Card beta testing was temporarily paused to reallocate tech resources towards enhancing eDIYBS, with development expected to resume in late 2025 or early Q1 2026.
• The company entered a non-binding Letter of Intent with AlphaTON Capital to co-develop HITChain, a blockchain-powered claims platform built on The Open Network (TON).
• A significant increase in "other receivables" to $3.87 million from $0.5 million was primarily due to the $3.48 million purchase of Deferred Administrative Surplus on March 18, 2025.
• Cost of revenues increased significantly, both in absolute terms and as a percentage of revenue, primarily due to higher captive management fees related to new products and channels launched in July 2024.
• General and administrative expenses increased due to costs associated with being a public company ($2.5 million for 9M 2025) and stock-based compensation ($0.6 million for 9M 2025).
• A contra revenue of $2,369,088 was estimated for the nine months ended September 30, 2025, related to a variable consideration "Adjustment" clause with one carrier, with a refund liability of $869,088 recorded.

Sentiment

Score: 8

Explanation: The company demonstrates strong revenue and profit growth, driven by successful product expansion and strategic technological investments. While gross margins compressed and public company costs increased, the overall financial performance and strategic initiatives are highly positive. The temporary pause of HI Card is a strategic reallocation of resources rather than a setback.

Positives

• Strong revenue growth: 90.4% for Q3 2025 ($8.5M vs $4.5M) and 77.0% for 9M 2025 ($25.8M vs $14.6M).
• Significant net income increase: 20.2% for Q3 2025 ($0.45M vs $0.38M) and 94.1% for 9M 2025 ($1.58M vs $0.81M).
• Adjusted EBITDA growth: 49.4% for Q3 2025 ($1.0M vs $0.7M) and 110.2% for 9M 2025 ($3.8M vs $1.8M).
• Improved Adjusted EBITDA margin for 9M 2025 (14.7% vs 12.4%).
• 44% increase in enrolled employees (EEs) to 25,248, indicating strong market penetration and adoption.
• Successful expansion of eDIYBS to serve 150+ employee groups, reducing large-group underwriting time from months to approximately two weeks.
• Strategic partnership with AlphaTON Capital to co-develop HITChain, a blockchain-powered claims platform.
• Effective management of accounts receivable, with a decrease of $778,475 to $868,628 due to process enhancements and automation.
• Cash and cash equivalents increased to $8,023,613 as of September 30, 2025, from $7,849,248 as of December 31, 2024.
• Net cash provided by operating activities remained stable at $2.7 million for the nine months ended September 30, 2025.

Negatives

• Gross profit margin decreased for both Q3 2025 (60.6% vs 78.0%) and 9M 2025 (65.1% vs 79.8%) due to higher cost of revenues.
• Cost of revenues increased significantly, both in absolute terms and as a percentage of revenue (39.4% for Q3 2025 vs 22.0% for Q3 2024; 34.9% for 9M 2025 vs 20.2% for 9M 2024).
• Revenues from underwriting modeling (ICE) decreased by 9.1% for Q3 2025, though offset by other revenue streams.
• HI Card service was temporarily paused, resulting in no revenue from this segment for Q3 and 9M 2025, compared to $0.7 million and $2.3 million respectively in 2024.
• General and administrative expenses increased significantly due to public company costs ($2.5 million for 9M 2025) and stock-based compensation ($0.6 million for 9M 2025), leading to a slight increase as a percentage of revenue for 9M 2025 (40.6% vs 38.6%).
• A significant contra revenue of $2,369,088 was estimated for 9M 2025 due to a variable consideration clause with one carrier, leading to a refund liability of $869,088.
• Increased reliance on a single stop-loss insurance carrier (Carrier A) for a significant portion of revenues (32.9% for Q3 2025, 29.8% for 9M 2025) and accounts receivable (39.6%).
• Increased cash used in investing activities by $2.1 million to $2.4 million for 9M 2025, primarily for software development.

Risks

• Reliance on a network of brokers, TPAs, MGUs, and other third-party agents for substantially all business referrals.
• Potential for temporary service disruptions in the event the company deems it necessary to cease use of a stop-loss insurance carrier, given the concentration with Carrier A.
• Inability to accurately perform underwriting procedures could result in increased costs, pricing for health plans, and reputational harm to the eDIYBS platform.
• Dependence on collaborations with a diverse range of insurance carriers for business growth and expanding product portfolio.
• Risks associated with limited collection experience for Deferred Administrative Surplus, especially for the 2025 Purchase which includes active policies.
• Reliance on a few primary service providers (including one AI data service provider) for a significant portion of cost of revenues.
• Seasonality of business due to health plan renewals in December and January, which may become more pronounced if growth slows.
• Forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions, including those described in the Risk Factors section of previous filings.

Future Outlook

The company anticipates resuming HI Card development in late 2025 or early Q1 2026. It expects to continue its growth trajectory by expanding its network of brokers and carriers, introducing innovative products, and investing in technology. The final amount of a significant variable consideration adjustment with one carrier is expected to be finalized in May 2026, with quarterly updates to the estimate. The company believes its cash generated from operating activities will allow it to continue as a going concern for at least the next twelve months.

Management Comments

• "Achieved 77% year-over-year revenue growth compared to the same period in 2024, while maintaining healthy profitability."
• "The eDIYBS upgrade significantly increases our addressable market and accelerates large-group underwriting from months to about 2 weeks, extending the same speed and scalability that transformed small-business underwriting into the midand large-employer market."
• "Our channel-partnership model continues to drive revenue growth without the need for a large in-house sales force."
• "We made strategic decisions to temporarily pause HI Card beta testing and prioritize tech resource toward enhancing eDIYBS that drives immediate higher revenue. This disciplined allocation of resources has strengthened our near-term growth trajectory while positioning HI Card for a more robust relaunch."
• "Our ongoing commitment to investing in technology is crucial for driving advancements in automation and enhancing operational efficiency across all aspects of our business."

Industry Context

The company operates in the rapidly evolving InsurTech sector, leveraging technology like AI and potentially blockchain (HITChain) to streamline complex healthcare and insurance processes. Its focus on self-funded benefits plans for small to mid-sized businesses aligns with a trend towards cost-saving and customizable solutions in employer-sponsored health coverage. The expansion of eDIYBS to larger groups positions it to capture a broader market share, while the planned Davos Summit participation indicates an ambition to influence global industry dialogue on technology adoption in legacy sectors. The temporary pause of HI Card to focus on eDIYBS suggests a strategic prioritization of core revenue-driving platforms in a competitive environment.

Comparison to Industry Standards

• The 44% year-over-year increase in enrolled employees to 25,248 suggests strong customer acquisition and retention, potentially outperforming industry averages for InsurTech platforms in the self-funded health plan segment.
• The reduction of large-group underwriting time from months to approximately two weeks via the eDIYBS upgrade sets a high standard for efficiency and speed in the insurance industry, which traditionally faces lengthy underwriting processes.
• The strategic Letter of Intent to co-develop HITChain, a blockchain-powered claims platform, positions the company at the forefront of innovation in claims processing, targeting efficiency gains in the $300B+ U.S. claims market. This initiative, if successful, could significantly differentiate the company from traditional insurance providers and even many InsurTech competitors.
• The company's channel-partnership model, which drives revenue growth without a large in-house sales force, indicates an efficient sales and marketing strategy that may lead to lower customer acquisition costs compared to traditional models.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not presently party to any legal proceedings the resolution of which it believes would have a material adverse effect on its business, prospects, financial condition, liquidity, results of operation, cash flows or capital levels.
• The company may be involved in legal proceedings or subject to claims incidental to the ordinary course of business, which can have an adverse impact due to defense and settlement costs, diversion of resources, and other factors.

Stakeholder Impact

• Shareholders: Positive impact from strong revenue and net income growth, increased Adjusted EBITDA, and strategic technology advancements (eDIYBS expansion, HITChain). Potential dilution from increased authorized shares in the 2024 Equity Incentive Plan.
• Employees: Benefit from stock-based compensation plans (2022 and 2024 Equity Incentive Plans) and new executive officer appointment.
• Customers (Small Business Employers): Benefit from accessible, customizable, and potentially cost-saving self-funded benefits plans through the platform, along with faster underwriting for larger groups.
• Brokers, TPAs, MGUs, Carriers: Benefit from streamlined sales, service processes, and reduced sales cycle time through the platform, leading to increased network engagement.
• Creditors: The company believes it has sufficient liquidity from operating activities for at least the next 12 months, indicating a stable financial position for creditors.

Next Steps

• Resume HI Card development towards the end of 2025 or early in the first quarter of 2026.
• Continue to assess the variable consideration "Adjustment" with one carrier quarterly, with finalization expected in May 2026.
• Co-develop HITChain, a blockchain-powered claims platform, with AlphaTON Capital.
• Host the first Independent InsurTech Summit during the World Economic Forum week in Davos in 2026.
• Assess the potential impact of new accounting standards (ASU 2023-09, ASU 2024-03, ASU 2025-06) on financial statement disclosures.

Key Dates

Recommendation

The company demonstrates exceptional growth in both revenue and net income, significantly outpacing prior periods. Strategic investments in technology, such as the eDIYBS expansion and the planned HITChain blockchain platform, position it for continued innovation and market leadership in the InsurTech space. While gross margins saw some compression due to increased costs of revenue and public company expenses rose, the underlying operational leverage and strong customer adoption (44% increase in enrolled employees) are highly encouraging. The temporary pause of HI Card is a strategic reallocation of resources to higher-impact areas, indicating disciplined management. The overall trajectory suggests strong future performance and market capture.

Keywords

InsurTech, Health Insurance, Self-funded benefits, Stop-loss insurance, Underwriting modeling, eDIYBS, Blockchain claims, AI data services, Financial results, SEC filing, Q3 2025, Health In Tech