Health In Tech, Inc. (HIT) Q3 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects strong financial health with improved operating expenses and positive cash flow. Strategic partnerships and product innovations are expected to drive growth. Despite some uncertainties in the large employer market, the company's initiatives like the 3-year rate hold and blockchain development are promising. The Q&A session revealed positive analyst sentiment, although some details were withheld. Overall, the positive financial performance and strategic growth plans suggest a positive stock price movement in the near term.

Key Financial Performance

Revenue Revenue reached $8.5 million, up 90% year-over-year. This growth was driven by the continued expansion of the sales distribution network.

9-Month Revenue 9-month revenue totaled $25.8 million compared to $19.5 million for the full year of 2024, showing strong momentum from strategic channel expansion.

Number of Brokers, TPAs, and Agencies The number of brokers, TPAs, and agencies grew to 849 partners, up 57% year-over-year. This increase was attributed to the adoption of the eDIYBS platform.

Number of Billed Enrolled Employees The number of billed enrolled employees reached 25,240, an increase of 7,654 employees year-over-year. This growth was due to the adoption of the eDIYBS platform and increased sales.

Adjusted EBITDA Adjusted EBITDA for the quarter was $1 million, up 49% year-over-year. For the first 9 months, adjusted EBITDA reached $3.8 million, or 167% of the full year 2024 total, reflecting operational efficiency and cost discipline.

Pretax Income Pretax income for the quarter was $0.6 million, a 48% increase year-over-year. For the first 9 months, pretax income totaled $2.1 million, or 2.4x the full year 2024 total, reflecting improved resource allocation and profitability.

Operating Expenses Total operating expenses for the third quarter were $3.7 million, 55% of revenue, down from 68% in the same period last year. This improvement was due to enhanced process automation and reduced administrative burden.

Sales and Marketing Expenses Sales and marketing expenses were $1 million, or 11.3% of revenue, essentially flat year-over-year. The channel partner model drove revenue growth without requiring a large in-house sales force.

General Administrative Expenses General administrative expenses were $3.5 million, consisting of $1.3 million in operating costs (14.9% of revenue) and $2.2 million in administrative costs (25.8% of revenue). The higher administrative costs were due to public company-related expenses.

Research and Development Expenses Research and development expenses declined to 2.8% of revenue from 16% a year ago. This was due to a shift from preliminary research to development and deployment, with associated costs being capitalized.

Cash Flow For the first 9 months, $2.7 million of positive cash flow from operations was generated. After investing $2.4 million in technology development and $0.1 million in capital markets activity, net positive cash flow was $0.2 million.

Cash and Cash Equivalents The company ended the quarter with $8 million in cash and cash equivalents, reflecting strong financial health.

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Operating Highlights

Large employer underwriting capability: Beta testing completed and officially launched with the enhanced eDIYBS platform. Enables brokers to generate fully bindable quotes for groups of 150+ employees in 2 weeks, compared to the industry norm of 3 months.

3-year rate hold program: Tested a new program offering a 3-year rate hold for groups with 150+ employees, providing predictable, stable pricing over a multiyear period. Full launch planned for Q1 2026.

HITChain blockchain-enabled platform: Announced a nonbinding letter of intent with AlphaTON Capital Corp. to co-develop HITChain, aimed at improving claims processing efficiency, reducing costs, and increasing transparency.

Sales distribution network expansion: Number of brokers, TPAs, and agencies grew to 849 partners, up 57% year-over-year. This expansion drove increased quotes and real-time sales.

National exposure through SIIA National Conference: Showcased new innovations, strengthening broker relationships and accelerating national exposure.

Revenue growth: Revenue reached $8.5 million in Q3, up 90% year-over-year. Nine-month revenue totaled $25.8 million, compared to $19.5 million for the full year of 2024.

Profitability: Adjusted EBITDA for Q3 was $1 million, up 49% year-over-year. Nine-month adjusted EBITDA reached $3.8 million, 167% of the full year 2024 total.

Cost management: Operating expenses for Q3 were 55% of revenue, down from 68% in the same period last year. Sales and marketing expenses remained flat year-over-year at 11.3% of revenue.

InsurTech Summit at Davos: Health In Tech will host its first independent InsurTech Summit during the World Economic Forum in January 2026, focusing on AI, digital transformation, and blockchain in healthcare.

AI-driven internal solutions: Integrated AI-driven solutions to enhance process automation and reduce administrative burden.

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Risk or Challenges

Market Uncertainty and Rising Healthcare Costs: Recent market uncertainty and rising healthcare costs have created mixed timing patterns for employer decisions on healthcare coverage, leading to potential shifts in sales volume from Q4 to Q1 2026. This could impact revenue predictability and operational planning.

Regulatory Dynamics: Evolving regulatory dynamics in the healthcare sector could pose challenges to the company's operations and strategic initiatives, particularly as they navigate compliance and adapt to new regulations.

Dependence on Strategic Partners: The company's reliance on strategic channel partners, brokers, and TPAs for distribution and growth could expose it to risks if these relationships weaken or fail to deliver expected results.

Implementation of New Programs: The launch of new programs, such as the 3-year rate hold and HITChain blockchain platform, involves risks related to execution, adoption, and market reception, which could impact the company's financial and operational performance.

Economic Uncertainties: Economic uncertainties, including rising medical expenses and administrative costs in the healthcare sector, could affect the company's ability to maintain cost efficiency and profitability.

Competition and Market Positioning: The company faces competitive pressures in the insurance and healthcare technology markets, which could impact its ability to sustain growth and market share.

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Guidance & Outlook

Revenue Growth: Anticipate Q4 revenue growth of around 50% year-over-year. Full year 2025 revenue growth expected to be around 70%, reaching an estimated $32 million to $33 million.

Net Income Growth: Full year net income growth is expected to be near 90%, outpacing revenue growth on a percentage basis.

Market Expansion: Q4 will focus on major marketing broker initiatives and PR campaigns to build momentum for the peak sales season.

3-Year Rate Hold Program: Testing a new program offering a 3-year rate hold for groups with 150 or more employees, providing stable pricing over a multiyear period. Full launch planned for Q1 2026.

HITChain Initiative: Developing a blockchain-enabled platform to improve claims processing efficiency, reduce costs, and enhance transparency. Collaboration with AlphaTON Capital minimizes cash requirements for this initiative.

InsurTech Summit: Hosting the InsurTech Summit at Davos during the World Economic Forum week in January 2026 to discuss AI, digital transformation in healthcare, and blockchain-enabled system reform.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Is the response in the large employer market tracking as anticipated, and are there differences compared to the small and medium market?

A:Tim Johnson explained that they have just started in the large employer market and have not yet observed a trend due to the time it takes for brokers to get established and trained. However, there has been an increase in activity, with underwriters now processing 5 quotes a day compared to 2 previously.

Q:Is the enrolled employees metric showing stickiness, and what contributes to it?

A:Julia Qian confirmed that the health care product is inherently sticky due to the challenges of switching providers. The 3-year rate hold program further enhances retention by offering stability and benefits.

Q:Is blockchain being used by others in the space, and what is the company's position in this innovation?

A:Dustin Plantholt and Tim Johnson stated that their HITChain initiative is unique and unprecedented at its scale. It aims to decentralize and streamline processes in health care, addressing friction points for providers, hospital systems, and patients. They plan to lead in health care blockchain innovation.

Q:Can you share more about the 3-year lock program for health care?

A:Tim Johnson and Julia Qian mentioned that the program required over a year of collaboration with financial institutions, underwriters, and carriers. They refrained from sharing specific underwriting details but emphasized the effort and partnerships involved. More details will be shared during the official launch in Q1.

Q:How did insurance companies get comfortable with the 3-year rate hold product?

A:Tim Johnson explained that the program includes targeted medical management initiatives to manage conditions over time, making it profitable for carriers. The extended time frame allows for better management of conditions compared to a typical 12-month period.

Q:Who are the customers for the claims processing blockchain opportunity?

A:Tim Johnson and Dustin Plantholt stated that the blockchain solution will benefit all stakeholders in the health care chain, including hospitals, patients, employers, brokers, and administrators. It aims to reduce administrative costs and improve efficiency.

Q:Is there an update on the pharmacy benefit management (PBM) initiatives?

A:Julia Qian and Tim Johnson indicated that there is no significant progress on PBM initiatives this year. They are focusing on enhancing systems and launching new programs, with potential PBM developments being revisited in 2026.

Q:How are broker relationships contributing to sales growth?

A:Dustin Plantholt and Julia Qian highlighted that brokers find the system convenient and easy to use, which drives sales. They are training brokers and deepening relationships with large agencies, which is expected to accelerate outreach and adoption.

Q:What is the audience for the Davos conference, and how does it benefit the company?

A:Julia Qian stated that the Davos conference targets significant players in the insurance tech space. It provides visibility and networking opportunities without high marketing costs.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details about the underwriting process for the 3-year lock program, citing competitive reasons. They also did not elaborate on the pharmacy benefit management initiatives, stating that it is not a focus for this year.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

HIT Transcript

Health In Tech, Inc. (HIT) Q3 2025 Earnings Call Transcript

Positive11-11

Health In Tech, Inc. (HIT) Q2 2025 Earnings Call Transcript

Positive7-23

The earnings call summary indicates strong financial performance with positive cash flow, effective cost management, and strategic partnerships driving growth. The Q&A reveals management's proactive approach in leveraging partnerships and technology for market expansion, despite some vague responses about new products. The company's solid financial health and growth strategy, coupled with a significant market opportunity, suggest a positive stock price movement. However, the lack of specific guidance on new products and potential expansion limits the sentiment from being 'strong positive.'

Health In Tech, Inc. (HIT) Q1 2025 Earnings Call Transcript

Positive4-16

The earnings call highlights strong financial performance with 56% revenue growth, improved operating leverage, and a solid cash position. The company's strategic focus on AI-backed underwriting and channel distribution supports future growth. Despite competitive pressures and economic risks, management's confidence in maintaining gross margins and operating leverage is positive. The lack of a share repurchase program is a neutral factor. Overall, the positive financial metrics, strategic initiatives, and optimistic guidance suggest a positive stock price movement in the next two weeks.

Health In Tech, Inc. (HIT) Q4 2024 Earnings Call Transcript

Unknown3-21

The earnings call presented mixed signals: strong early 2025 revenue momentum and disciplined capital management were positives, but declining margins, increased expenses, and lack of shareholder returns were concerns. The Q&A highlighted management's cautious approach to guidance, which could dampen investor enthusiasm. Overall, the financial results and cautious outlook suggest a neutral stock price reaction in the near term.

HIT Slides

Health In Tech Q2 2025 slides: revenue soars 86% as AI platform drives growth

2025-07-21

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