S-1: VSee Health Registers 33.8M Shares for Resale Amidst Going Concern Doubts

VSee Health is registering over 33.8 million shares for resale by selling stockholders, while its auditors express substantial doubt about the company's ability to continue as a going concern.

Summary

• VSee Health, Inc. is registering up to 33,808,195 shares of common stock for resale by selling stockholders, including Manatt, Phelps & Phillips, LLP and Armistice Capital Master Fund Ltd.
• The company will not receive proceeds from the sale of shares by selling stockholders but will receive proceeds from any cash exercises of warrants.
• VSee Health reported a net loss of $(6,862,468) for the nine months ended September 30, 2025, a significant improvement from $(54,493,913) for the same period in 2024.
• Revenue for the nine months ended September 30, 2025, increased by 60% to $10,692,259, up from $6,686,998 in the prior year, primarily driven by the iDoc acquisition.
• Operating expenses decreased by 82% to $11,665,338 for the nine months ended September 30, 2025, mainly due to the absence of a $56,675,210 goodwill impairment charge recorded in the prior year.
• The company's cash balance as of September 30, 2025, was $472,759.
• VSee Health has an accumulated deficit of $74,566,341 and a total stockholders deficit of $(5,575,498) as of September 30, 2025.
• The company has regained compliance with Nasdaq's Equity Rule, reporting a pro forma stockholders' equity of $13.2 million as of December 31, 2025.
• Recent financing activities include secured notes, warrant exchanges, a convertible note purchase agreement, and an Equity Line of Credit (ELOC) arrangement.
• The company's common stock and public warrants are listed on the Nasdaq Capital Market under symbols VSEE and VSEEW, respectively, with recent closing prices of $0.405 and $0.0801 as of December 26, 2025.

Sentiment

Score: 3

Explanation: While revenue growth is positive and the net loss has significantly decreased (due to the absence of a prior year's large impairment charge), the company faces substantial financial challenges, including a worsening stockholders' deficit, low cash reserves, ongoing operating losses, and several notes in default. The 'going concern' warning from auditors and the need for continuous financing underscore significant financial instability, despite recent capital raises and Nasdaq compliance. The lack of formalized cybersecurity measures also presents a notable operational risk.

Positives

• Revenue increased by 60% to $10,692,259 for the nine months ended September 30, 2025, driven by the iDoc acquisition and new contracts.
• Net loss significantly decreased by 87% to $(6,862,468) for the nine months ended September 30, 2025, compared to $(54,493,913) in the prior year, primarily due to the absence of a large goodwill impairment charge.
• Cash used in operating activities improved, decreasing from $(2,815,248) in the nine months ended September 30, 2024, to $(1,519,632) in the same period of 2025.
• Regained compliance with Nasdaq's Equity Rule on December 12, 2025, demonstrating a pro forma stockholders' equity of $13.2 million as of December 31, 2025.
• Secured approximately $6 million in gross proceeds from the Armistice Private Placement and may receive an additional $12 million from cash exercises of warrants.
• The company's telehealth platform (VSee Lab) and high-acuity patient care solutions (iDoc) are positioned in a rapidly transforming and growing market.
• The platform offers 'no code' and 'low code' configuration options, empowering clinicians to customize workflows without extensive IT involvement.
• iDoc provides specialized intensive care unit services (neurointensivists, cardiac intensivists, medical intensivists) addressing physician shortages.
• Received United States Employee Retention Credit (ERC) by the iDoc business, contributing $183,005 to other income.

Negatives

• The company has a history of operating losses and an accumulated deficit of $74,566,341 as of September 30, 2025.
• Total stockholders' deficit worsened significantly from $(18,488) at December 31, 2024, to $(5,575,498) at September 30, 2025.
• Cash and cash equivalents decreased from $2,327,337 at September 30, 2024, to $472,759 at September 30, 2025.
• Cost of revenues increased by 173% for the nine months ended September 30, 2025, primarily due to higher compensation expenses for independent medical providers and increased medical device procurement for the HHS contract.
• Subscription revenue declined by 16% due to reduced recurring enterprise-level subscriptions.
• Technical engineering services revenue decreased by 23% due to lower client utilization.
• Significant dilution is expected for current stockholders as a result of the issuance of shares from Series B Preferred Stock, Armistice Pre-funded Warrants, and Armistice Warrants.
• The company's common stock price was $0.405 per share on December 26, 2025, indicating a low market valuation.
• The company has no formalized cybersecurity measures, a dedicated team, or specific protocols in place, leaving it vulnerable to cyber threats.
• Several notes payable are currently in default, including a $336,983 promissory note and a $1,500,600 promissory note.
• The company's management team has limited experience managing a public company.
• The company has a significant amount of debt and convertible securities that could lead to further dilution or financial strain.

Risks

• Substantial sales of shares by selling stockholders may diminish the value of common stock held by current stockholders.
• Commitments to issue common stock or convertible/exercisable securities may cause significant dilution to stockholders.
• The commitment to issue common stock could encourage short sales, contributing to a decline in stock price.
• History of losses and anticipated increases in operating expenses mean profitability may not be achieved or maintained.
• Failure to maintain an effective system of internal control over financial reporting could adversely affect financial statements and reputation.
• The company may require additional financing to sustain operations, and terms of future financings may adversely impact stockholders.
• Uncertainty regarding the company's ability to continue as a going concern.
• Operating in a competitive and rapidly evolving telemedicine industry, with potential for pricing pressures and difficulty competing effectively.
• Long and unpredictable sales cycles, requiring considerable time and expense, making revenues and cash flows difficult to predict.
• Potential medical malpractice risks inherent in providing healthcare services.
• Dependence on existing clients renewing contracts and purchasing additional services.
• Reliance on relationships with affiliated professional entities for medical services, which could be disrupted by corporate practice of medicine prohibitions.
• Inability to develop and release new solutions or enhance existing ones in a timely manner could harm the business.
• Failure to offer high-quality technical support services may harm client relationships and financial results.
• Difficulty attracting and retaining highly skilled employees due to intense competition.
• Potential for acquisitions to divert management attention, result in dilution, and disrupt operations.
• Subject to heavy governmental regulation in the U.S. healthcare industry, with potential for fines, penalties, or operational changes for non-compliance.
• Evolving state legislative and regulatory changes specific to telehealth law may increase compliance costs and operational complexity.
• Collection, use, and disclosure of personally identifiable information (PII) and protected health information (PHI) are subject to federal and state privacy and security regulations, with failure to comply leading to significant liability or reputational harm.
• Failure to comply with laws governing claim submissions to government healthcare programs or commercial insurance programs could result in civil/criminal penalties.
• Physician licensing and credentialing costs can negatively impact margins, especially when expanding to new jurisdictions.
• Certain software products related to telemedicine platforms may be subject to FDA regulatory review and oversight.
• Failure to keep pace with advances in technology could cause solutions to become obsolete.
• Reliance on telecommunications and internet service providers, with interruptions or failures harming the business.
• Failure to protect or enforce intellectual property rights could impair the ability to protect technology and brand.
• Risk of incurring substantial costs from claims of infringement of another party's intellectual property rights.
• Software platforms may not perform properly due to errors, damaging reputation or leading to claims.
• As an emerging growth company, reduced disclosure requirements may make securities less attractive to investors.
• No substantial combined operating history for VSee Lab and iDoc, with potential integration failures.
• Failure to maintain effective disclosure controls and internal control over financial reporting could impair ability to produce timely and accurate financial statements.
• Restatement of previously issued financial statements resulted in unanticipated costs and may affect investor confidence.
• Risk of delisting from Nasdaq if continuing listing requirements are not met.
• Significant costs from operating as a public company and management devoting substantial time to compliance.
• Management team has limited experience managing a public company.
• Securities litigation risk due to volatile market price.
• If shares become subject to penny stock rules, it would be more difficult to trade.
• No anticipation of paying cash dividends in the foreseeable future; capital appreciation is the sole source of gain.

Future Outlook

The company anticipates continued losses for the foreseeable future as it expends substantial financial and other resources to enhance services and platform, grow its business, and operate as a public company. Future performance depends on the rapid transformation of the telehealth market, the ability to expand market share and attract new customers, and continuous innovation in new product offerings. The company plans to focus future research and development on new products and enhancing existing solutions' functionality, performance, and flexibility, despite current capital constraints limiting active R&D spending. The company expects to leverage industry relationships to increase its customer base.

Management Comments

• "We put telehealth software tools in the hands of clinicians to enable them to make changes without programming so that they can achieve the best patient outcomes."
• "We empower clinicians to create the workflow they want without waiting for IT; where today, most clinicians feel helpless given that IT departments often cannot give clinicians what they want."
• "We strive to be the solutions provider of access to the shortage of intensivists across the care continuum utilizing sophisticated telehealth solutions to bridge the care gap."
• "In a post-Covid health care system, we aim to provide a solution to physician burnout and to a lack of patient access to quality intensive care."
• "Our core service delivers general critical care, neurology, EEG reading, and neuro critical care through a custom internal virtual health care technology platform."

Industry Context

The telehealth market is characterized by rapid transformation, with major customers and hospital systems seeking to build or enhance capabilities, and legacy competitors addressing historical limitations. This indicates strong future growth potential for the market. The company positions itself to address two significant trends: the need for better patient engagement and the growing shortage of clinicians (nurses and physicians) across America, particularly in intensive care units. The industry is seeing increased demand for specialized tele-intensive care and telemedicine solutions due to the complexity of ICUs, surgical options for stroke, and the proliferation of stroke centers. The company believes its "no code" and "low code" platform approach differentiates it from more rigid EMR-built tools and generic video conferencing solutions like Zoom or Microsoft Teams, which are not healthcare-specific. Competition is intense from incumbent providers, specialized software providers, large healthcare providers developing in-house solutions, and major technology/retail companies entering the space.

Comparison to Industry Standards

• The company's 'no code' and 'low code' telehealth platform is presented as a competitive advantage against EMRs with built-in telehealth tools (e.g., Epic, Cerner) which are described as more rigid and time-consuming for workflow changes.
• The platform offers more comprehensive productivity and patient engagement features compared to generic video conferencing software like Zoom and Microsoft Teams, which are limited to video-only interactions.
• The company's iDoc subsidiary competes with specialized neuro and ICU telehealth providers such as Hicuity Health, INTELEICU, and enVision teleICU, differentiating itself by focusing on an extensive network of board-certified physicians and highly configurable workflows on a low-code development platform.
• The company's solutions are designed to meet performance and compliance standards in healthcare, including HIPAA and SOC2 external audits, and GDPR compliance, supporting single-sign-on (SSO) and multi-factor authentication (MFA).
• The company aims to provide access to intensivists, addressing a shortage across the care continuum, and offers solutions for physician burnout and lack of patient access to quality intensive care, which are broader industry challenges.

Management Changes

Corporate Governance

Legal Proceedings

• On July 25, 2024, the company was notified of a lawsuit alleging breach of contract and unjust enrichment. Plaintiffs seek payment under promissory notes, payments related to the Encompass Acquisition Agreement, interest, and attorneys' fees.
• The company denied allegations and filed a counterclaim for breach of contract (failure to pay amounts owed for services, corporate credit card bill), promissory estoppel, and unjust enrichment.
• The lawsuit is pending in federal court (US District Court for the District of Colorado), and parties are actively engaged in settlement discussions.
• The company believes the resolution of this matter will not have a material adverse effect on its business, results of operations, cash flows, or financial condition, but the range of loss cannot be reasonably estimated, and no reserve was established as of December 31, 2024.
• iDoc defaulted on a forbearance agreement related to a promissory note and line of credit in December 2023. This litigation was resolved by an Agreed Judgment on June 24, 2024, under which iDoc was ordered to pay a total principal of $1,499,409 plus prejudgment interest. The forbearance agreement was revised on December 13, 2024, and again on August 27, 2025, with payments scheduled through December 10, 2025.

Related Party Transactions

• Milton Chen (Co-CEO) provided VSee Lab with three promissory notes totaling $330,000 (original principal) between March and December 2023, with outstanding balances of $121,000, $132,000, and $70,000 respectively as of September 30, 2025, all currently in default with 26% interest rates.
• Milton Chen, Dr. Imoigele Aisiku (Co-CEO), and Jerry Leonard (CFO) personally guaranteed the Initial MBLA Note of $525,000 from Change Capital Holdings I, LLC on September 5, 2025.
• A related party balance of $284,614 was due from Imoigele Aisiku as of September 30, 2025, for cash transferred through a controlled company (unsecured, non-interest-bearing).
• iDoc issued a $200,000 promissory note on May 15, 2023, to an unnamed board member, with an outstanding balance of $141,651 as of September 30, 2025. Payments are based on 80% of monthly revenue from 8 telepresence robots.
• iDoc issued a $224,000 secured convertible promissory note to David L. Wickersham (Director) on March 28, 2024, which was fully satisfied by the issuance of 114,000 common stock shares on June 30, 2024.
• Digital Health Sponsor, LLC and its affiliates (SCS Capital Partners LLC, SCS, LLC, M2B) converted various loans and office expenses totaling $1,268,000 into Series A Preferred Shares on June 24, 2024.
• SCS Capital Partners LLC owns approximately 40.74% of Quantum Investor, which holds the $3,000,000 Quantum Convertible Note.
• SCS, LLC entered a Consulting Services Agreement on June 21, 2024, for $12,500/month for services and $2,500/month for office space, plus stock issuances.
• As of September 30, 2025, $51,900 of working capital advances from the Sponsor and certain Sponsor affiliates remain due and payable.
• Dominion Capital LLC (Bridge Investor) holds the Exchange Note ($1,028,158 fair value as of Sep 30, 2025) and converted $1,255,299 of it into 1,673,733 common stock shares between October 16-21, 2025.
• Ascent Partners Fund LLC (Ascent), an affiliate of the Bridge Investor, holds the September 2024 Convertible Note ($2,043,760 fair value as of Sep 30, 2025) and Ascent Warrants, and exchanged a $611,878.22 promissory note for 941,352 common stock shares on November 13, 2025.
• Quantum Investor (Quantum Assets SPV, LLC) converted its full Quantum Convertible Note balance ($1,196,203 interest, $3,000,000 principal) into 4,400,000 common stock shares between October 16-30, 2025, and was to receive 500,000 restricted common shares for facilitating emergency funding on August 28, 2025.
• Manatt, Phelps & Phillips, LLP cancelled approximately $2.132 million of unpaid legal fees and accrued interest in exchange for 3,000,000 common shares and 2,000 Series B Preferred Stock on December 9, 2025 (amended Dec 29, 2025).

Stakeholder Impact

• Shareholders face significant dilution risk from the large number of shares registered for resale and potential future conversions/exercises of warrants and preferred stock. The 'going concern' warning and history of losses pose substantial investment risk, with the low stock price ($0.405) and potential for further decline due to overhang being major concerns.
• Employees, particularly NEOs, have deferred salary payments due to the company's financial difficulties, and future compensation and job security could be impacted. Stock-based compensation is part of the incentive plan.
• Customers (hospitals, enterprises, federal prison system) rely on the company's telehealth and high-acuity patient care solutions; continued financial instability could impact service delivery or innovation.
• Creditors face repayment challenges, with several notes payable currently in default. Recent financing activities, while providing liquidity, also alter the company's capital structure and risk profile for existing creditors.
• Regulatory authorities (Nasdaq, SEC, FDA, HHS, FTC) maintain scrutiny over financial reporting (material weaknesses, restatements) and compliance with extensive healthcare laws, with cybersecurity vulnerabilities potentially leading to fines.

Next Steps

• The company will use commercially reasonable efforts to have the S-1 Resale Registration Statement declared effective as soon as possible and keep it effective until all Registrable Securities are sold or eligible for Rule 144 sale.
• The company is required to hold a meeting of stockholders on or prior to 90 days following the Armistice Private Offering Closing (December 1, 2025) to obtain stockholder approval for the issuance of Armistice Warrants and underlying shares. If not obtained, meetings must be called every 90 days thereafter.
• The company is in the process of evaluating cybersecurity needs and developing appropriate measures, including considering external experts, vulnerability assessments, and an incident response strategy.
• The company will continue to assess and update cybersecurity measures in response to emerging threats.
• The company is currently assessing the impact of the One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements.
• The 2025 annual meeting of stockholders will be held on December 30, 2025.
• The company intends to make deferred salary payments to NEOs as soon as it is able.

Key Dates

Recommendation

Despite a significant reduction in net loss year-over-year (primarily due to the absence of a large goodwill impairment charge in the current period) and notable revenue growth, the company faces severe financial distress. The 'going concern' warning from its independent auditors, a worsening stockholders' deficit, critically low cash reserves, and multiple defaulted debt obligations indicate a precarious financial position. The substantial number of shares registered for resale by selling stockholders, coupled with a very low current stock price ($0.405), creates a significant overhang that is highly likely to exert further downward pressure on the share price. While recent capital raises provide some liquidity, they also contribute to substantial dilution. The lack of formalized cybersecurity measures adds another layer of operational risk. Given the high degree of financial uncertainty, the significant dilution risk, and the ongoing operational challenges, a seasoned investor would likely recommend selling to mitigate further potential losses.

Keywords

Telehealth, Telemedicine, Healthcare Technology, Virtual Care, SEC Filing, S-1, VSee Health, iDoc, Nasdaq, Private Placement, Warrants, Convertible Notes, Dilution, Financial Performance, Net Loss, Revenue Growth, Going Concern, Risk Factors, Corporate Governance, HIPAA Compliance, Medical Devices, Patient Monitoring, Clinician Staffing, Digital Health