Health In Tech, Inc. (HIT)

Executive Summary / Key Takeaways

• Explosive Growth With Profitable Unit Economics: Health In Tech delivered 90% year-over-year revenue growth in Q3 2025 and 77% growth through nine months, while maintaining positive net income and expanding adjusted EBITDA margins to 14.7%, a rare combination for a sub-$100 million revenue insurtech that suggests genuine operational leverage rather than growth-at-all-costs burn.

• The Strategic "Fee Shift" Creates Durable Revenue: Management's deliberate pivot from underwriting modeling fees to higher-margin program management fees has transformed the revenue mix from 50/50 to 84/16 in favor of recurring, service-oriented revenue, indicating a stickier business model that commands premium pricing as employers prioritize quality coverage over commodity underwriting.

• Speed-to-Quote Moat Unlocks the Mid-Market: The enhanced eDIYBS platform reduces large-group underwriting from three months to 10-14 days (and potentially five days), a 90% time compression that addresses the single biggest friction point in self-funded plan adoption and opens a $242 billion addressable market that was previously inaccessible to HIT's small-business roots.

• Blockchain Moonshot Targets $300 Billion Inefficiency: The non-binding LOI with AlphaTON Capital to co-develop HITChain represents a capital-efficient bet on decentralizing healthcare claims processing, targeting the $300 billion annual administrative waste that incumbent carriers have failed to solve, with minimal cash requirements from HIT's balance sheet.

• Execution at Scale Is the Critical Variable: With less than 0.01% market share and only 25,248 billable employees, the investment thesis hinges on whether HIT can scale its broker network, technology infrastructure, and operational processes to serve tenfold growth without diluting the 67% gross margins or succumbing to larger competitors' network advantages.

Setting the Scene: A Founder’s Frustration Becomes a $6 Trillion Opportunity

Health In Tech, Inc. was formally incorporated in November 2021 in Nevada, with its principal executive offices in Stuart, Florida—a location that belies its ambition to transform the $6 trillion U.S. healthcare and insurance industry. The company emerged from founder Tim Johnson's personal frustration with healthcare accessibility, leading him to spend nearly a decade developing a technology platform that integrates all participants in the healthcare and insurance cycle to eliminate redundancies and cut costs. This origin story matters because it explains why HIT built an interdependent, integrated solution rather than a point product, consolidating three standalone entities—Stone Mountain Risk (SMR), Health Intelligence Card (HI Card), and International Captive Exchange (ICE)—into a single marketplace that addresses the entire value chain.

The business model operates through three subsidiaries that function as an integrated solution: ICE provides underwriting modeling and machine learning-driven risk services to stop-loss carriers; SMR acts as program manager designing customized self-funded benefits for small businesses; and HI Card offers optional claims negotiation and medical data access. This structure creates a flywheel where ICE's underwriting capabilities feed SMR's program management, which in turn generates data that improves ICE's models, while HI Card adds a layer of cost containment. The integration is not merely organizational—it is the moat. Competitors like GoHealth (GOCO) and eHealth (EHTH) operate as enrollment platforms without integrated risk management, while traditional carriers like UnitedHealth (UNH) lack the technology layer to coordinate brokers, TPAs, and employers seamlessly.

Health In Tech sits at the intersection of two powerful trends: the shift toward self-funding among small and mid-sized employers, and the digitization of insurance distribution. The small business self-funded medical insurance market grew from $157 billion in 2019 to $186 billion in 2023 and is projected to reach $242 billion by 2028, growing at a 5.4% CAGR. This expansion is driven by employers facing ACA carrier rate increases of 26-30% annually, creating unsustainable cost pressure that HIT's reference-based pricing model directly addresses. The company's channel-partnership model, which grew active brokers 57% year-over-year to 459 by Q1 2025, enables this growth without the heavy in-house sales force that burdens competitors like SelectQuote (SLQT) and Oscar Health (OSCR), both of which struggle with negative operating margins while HIT maintains 5.81% operating margins.

Technology, Products, and Strategic Differentiation: Speed as a Weapon

The core technology is the eDIYBS (Enhance Do It Yourself Benefit System) platform, a web-based SaaS quoting system that has already cut the small-group purchase process from 14 days to about two minutes. This 99% time reduction matters because it eliminates the administrative friction that prevents brokers from serving smaller accounts profitably, unlocking a segment that traditional carriers ignore due to high acquisition costs. For large employers with 150+ employees, the September 2025 upgrade reduces quoting from the industry norm of three months to 10-14 days, with management indicating further enhancements could compress this to five days. This is not incremental improvement—it is a fundamental redesign of how healthcare insurance is bought at scale, creating a switching cost for brokers who become dependent on HIT's speed to compete.

The economic impact of this speed advantage is measurable. HIT's billable enrolled employees grew 44% to 25,248 as of September 30, 2025, while revenue per employee increased due to the shift toward program fees. The platform's AI-backed underwriting capabilities, which integrate third-party data feeds and proprietary machine learning algorithms, enable this velocity while maintaining risk accuracy. Unlike competitors who rely on manual underwriting processes that scale linearly with headcount, HIT's technology creates operating leverage—sales and marketing expenses remained flat at 11.3% of revenue in Q3 2025 despite 90% revenue growth, while general and administrative expenses increased only due to $1.1 million in public company costs (D&O insurance, board compensation, investor relations). This cost structure implies that every incremental dollar of revenue beyond current scale will flow disproportionately to operating income, a dynamic that traditional insurers with 3-5% margins cannot replicate.

Research and development expenses decreased to 2.8% of revenue in Q3 2025 from 16.1% in the prior year, not because innovation slowed but because development costs for eDIYBS 3.0 are being capitalized, increasing the software balance by $2.22 million to $6.18 million. This accounting treatment reflects a shift from research phase to heavy development and deployment, indicating the technology is moving from experimental to commercial-ready. The immediate implication is that near-term earnings are artificially depressed by capitalization, creating a future amortization burden. However, the asset being built has genuine economic value that should generate returns well above the cost of capital if the platform achieves scale.

The strategic decision to pause HI Card development and prioritize eDIYBS resources reveals management's capital discipline. HI Card generated $2.26 million in revenue in 2024 but was temporarily shelved because it offered lower incremental returns than expanding the core platform. This matters because it shows management is not chasing top-line growth at any cost but is allocating resources to the highest-return opportunities, a discipline often lacking in early-stage insurtechs that burn cash pursuing multiple initiatives simultaneously.

Financial Performance & Segment Dynamics: The Fee Shift Creates Margin Power

Total revenues for the three months ended September 30, 2025, reached $8.49 million, up 90.4% from $4.46 million in the prior year, driven by a 44% increase in billable enrolled employees and the strategic shift toward program fees. The nine-month revenue of $25.82 million already represents 132% of full-year 2024 revenue, indicating acceleration despite the deliberate slowdown in 2024 to build infrastructure. This performance validates the 2024 strategy: by moderating growth and reducing headcount from 91 to 80 employees, management strengthened organizational structure, expanded IT, and built internal controls, creating the foundation for sustainable 70%+ growth in 2025.

The segment mix shift is the most important financial dynamic. Revenues from fees generated by SMR surged 215.5% to $7.10 million in Q3 2025, representing 83.6% of total revenue, up from 50.5% in the prior year. This $4.80 million increase more than offset the $0.10 million decline in ICE underwriting modeling revenue, which fell to $1.39 million (16.4% of revenue) from $1.53 million (34.3% of revenue). Management explicitly states this reflects "more employers prioritizing higher-quality coverage and enhanced service offerings," indicating a willingness to pay premium program fees for better networks and benefits. The implication is profound: HIT is moving up the value chain from commodity underwriting to sticky program management, increasing customer lifetime value and reducing revenue volatility.

HI Card revenues were zero for both Q3 and the nine-month period, compared to $0.70 million and $2.26 million in the prior year, respectively. While this creates a near-term revenue headwind, the strategic rationale is sound—resources were redeployed to eDIYBS, which drives immediate higher revenue. The company expects to resume HI Card development toward the end of 2025 or early 2026, suggesting this is a temporary pause rather than abandonment. For investors, this creates a call option on future revenue streams that is not currently valued in the stock.

Cost of revenues increased to $3.30 million (39.4% of revenue) from $1.00 million (22% of revenue) due to higher captive management fees associated with new products and channels launched in July 2024. This margin compression is concerning but explainable: the shift to program fees carries higher pass-through costs for network management and carrier services. The key question is whether gross margins stabilize as these programs mature. The 67.07% gross margin on a TTM basis suggests the underlying SaaS economics remain intact, but investors must monitor whether cost of revenues grows slower than program fee revenue in 2026.

Adjusted EBITDA increased 49% to $1.0 million in Q3, representing 11.8% of revenue, down from 15% in the prior year due to the higher captive management fees. However, nine-month adjusted EBITDA grew $2.0 million to $3.8 million, improving margins to 14.7% from 12.4%. This indicates that HIT is achieving scale economies while absorbing public company costs that will not recur at the same intensity, suggesting margin expansion potential as revenue continues to grow.

The balance sheet provides strategic flexibility. With $7.6 million in cash and cash equivalents at quarter-end, a current ratio of 2.87, and debt-to-equity of just 0.01, HIT has the liquidity to fund operations and invest in growth without diluting shareholders. Net accounts receivable decreased 47% to $868,628 despite 90% revenue growth, demonstrating improved working capital management through process enhancements and automation. This cash conversion efficiency is critical for a company scaling rapidly, as it reduces the risk of growth-induced liquidity squeezes that have plagued competitors like GoHealth.

Outlook, Management Guidance, and Execution Risk

Management anticipates Q4 2025 revenue growth of around 50% year-over-year, reflecting solid performance despite timing shifts where some employers are delaying decisions into January 2026 due to market uncertainty and rising healthcare costs. For the full year, HIT expects to deliver approximately 70% revenue growth, reaching $32-33 million, with net income growth near 90% outpacing revenue on a percentage basis. This guidance implies Q4 revenue of $6.2-7.2 million, a deceleration from Q3's torrid pace but still exceptional for a company of this size.

The guidance assumptions are ambitious but grounded in tangible catalysts. The large employer underwriting capability, fully launched in Q3 2025, is expected to "capture an entirely new segment of the self-funded market that often lacks comparable technology solutions." With 459 active brokers (up 57% year-over-year) and partnerships with major TPAs like Vertigard (owned by MedImpact, managing $40 billion in annual drug transactions) and Unified Health Plans, HIT has the distribution capacity to convert its technology advantage into market share gains. This means that management is not relying on market expansion alone but is actively building the channels to reach mid-market employers who are underserved by traditional carriers.

The three-year rate hold program, pilot-tested in October/November 2025 and planned for full launch in 2026, addresses the primary concern of municipalities and government entities with tight budgets. As CEO Tim Johnson noted, "when we can give them a three year rate guarantee, municipalities and government entities love this type of product." This innovation creates a multi-year revenue lock-in that improves predictability and reduces churn, a significant advantage over competitors who operate on annual renewal cycles. The program's success could accelerate HIT's penetration of the public sector, a sticky customer segment that values budget certainty.

The HITChain blockchain initiative, announced via non-binding LOI with AlphaTON Capital in Q3 2025, targets the $300 billion annual administrative waste in U.S. healthcare claims processing. While still in development, the partnership structure—where AlphaTON contributes blockchain expertise and capital while HIT provides domain knowledge and carrier relationships—minimizes HIT's cash requirements while maximizing potential upside. This matters because it demonstrates capital efficiency at a time when many insurtechs are burning cash on speculative ventures. If successful, HITChain could create a new revenue stream and further entrench HIT's ecosystem, but investors should view this as a call option rather than a core thesis component.

Execution risks are material and thesis-relevant. Management acknowledges that "the rate of growth slows, seasonal or cyclical variations in operations may become more pronounced," which could adversely affect the business if HIT cannot manage capacity during peak enrollment periods. The company reduced headcount from 91 to 80 in 2024 to strengthen organizational structure, but with broker partners growing 57% and billable employees up 44%, the operational leverage that drives margin expansion could reverse if service quality degrades. This implies that HIT must prove it can scale from 25,000 to 250,000+ employees without proportional increases in headcount, a challenge that has broken many B2B SaaS models.

Risks and Asymmetries: What Could Break the Thesis

The most material risk is execution at scale. HIT's market share is "less than 0.01% of the market potential," which creates enormous runway but also exposes the company to operational strain. If the company cannot automate customer onboarding, claims processing, and broker support at the same pace it grows distribution, the 40.7% G&A expense ratio could balloon, compressing margins and eroding the profitability that distinguishes it from money-losing peers. The risk mechanism is clear: every 1,000 new employees requires incremental underwriting, program management, and customer service capacity; if technology does not automate these tasks, headcount must grow, destroying the operating leverage thesis.

Competition from larger, well-capitalized players poses a structural threat. UnitedHealth Group's Optum division, HR tech platforms like Gusto, and direct primary care models are all converging on the small-to-mid employer segment. While HIT's speed-to-quote provides a temporary advantage, competitors could replicate the technology or acquire similar capabilities. The asymmetry is that HIT's $60 million market cap and $7.6 million cash balance provide limited resources for defensive M&A or massive R&D spending, while Oscar Health with its $4.8 billion market cap or SelectQuote with its $260 million valuation have greater strategic optionality. If a competitor launches a similar platform with broader network access, HIT's growth could stall.

Regulatory and carrier dependency risks are acute. HIT's model relies on relationships with A-rated stop-loss carriers; if these carriers withdraw from the self-funded market or change terms, HIT's program fees could evaporate. Management notes that "we may experience temporary service disruptions if we cease use of a stop-loss insurance carrier," and the collection of Deferred Administrative Surplus carries risks due to limited prior experience. The company mitigates this by purchasing these receivables at 20-53% of face value, but this also caps upside and exposes HIT to credit risk if claims experience deteriorates.

The HITChain initiative, while promising, faces adoption headwinds. Blockchain in healthcare has been attempted and failed by larger, better-funded entities. As CEO Tim Johnson acknowledged, "this type of product has been tried and failed by other people with considerably larger recognition than we are." The differentiation—decentralizing the entire claims ecosystem rather than single-hospital systems—may not be enough to overcome industry inertia and regulatory compliance hurdles. If HITChain consumes management attention and capital without generating revenue by 2026, it could distract from the core business at a critical growth juncture.

Market timing and seasonality create quarterly volatility. Management noted that "recent market uncertainty and rising healthcare costs have created mixed timing patterns with some employers making early plan selections in late Q3, while others are delaying decisions into January." This shift could cause Q4 revenue to miss the 50% growth target, creating a narrative of slowing momentum that pressures the stock despite healthy underlying demand. The asymmetry is that HIT's small scale amplifies the impact of timing shifts—losing two large group deals could meaningfully impact quarterly results, while larger competitors would barely notice.

Valuation Context: Premium for Profitable Growth in a Broken Sector

Trading at $1.06 per share, Health In Tech commands a market capitalization of $60.32 million and an enterprise value of $52.46 million, representing 1.71 times trailing twelve months revenue of $19.49 million. This revenue multiple stands at a premium to direct competitors: GoHealth trades at 0.12 times sales, SelectQuote at 0.17 times, eHealth at 0.25 times, and Oscar Health at 0.42 times. This indicates that HIT's 1.96 price-to-sales ratio reflects market recognition of its superior growth trajectory (90% vs. negative to low-teens for peers) and profitability (4.68% net margin vs. -26.96% for GOCO, 3.94% for SLQT, -9.27% for EHTH, and -2.16% for OSCR).

The price-to-earnings ratio of 53.0 appears elevated for a company of this size, but it must be contextualized against earnings quality and growth. HIT generated $670,477 in net income over the trailing twelve months, with quarterly net income of $452,176 in Q3 2025 representing 5.3% of revenue. This profitability, combined with a return on equity of 11.94% and return on assets of 5.33%, demonstrates that HIT is not burning cash to buy growth. The valuation multiple reflects a scarcity premium: profitable insurtechs growing at 70%+ annually with 67% gross margins are exceptionally rare.

Cash flow metrics provide further support. HIT trades at 28.04 times operating cash flow and generated $1.28 million in free cash flow over the trailing twelve months. While these multiples are not cheap, they are justified by the company's capital efficiency. The channel-partnership model drives revenue growth without large in-house sales force costs, as evidenced by sales and marketing expenses declining to 11.3% of revenue in Q3 2025 from 11.4% in the prior year despite 90% revenue growth. This efficiency means that incremental revenue converts to cash at high rates, a dynamic that should compress the P/OCF multiple over time if growth continues.

Balance sheet strength is a critical valuation support. With $7.6 million in cash, a current ratio of 2.87, and debt-to-equity of just 0.01, HIT has zero financial distress risk and ample liquidity to fund growth. This contrasts sharply with GoHealth's debt-to-equity of 12.59 and negative operating margins, or Oscar Health's moderate debt and losses. The net cash position provides strategic optionality for acquisitions, technology investments, or weathering downturns without diluting shareholders—a significant advantage for a company operating in a cyclical industry.

The enterprise value-to-revenue multiple of 1.71x appears reasonable when adjusting for growth. HIT's 70% expected revenue growth for 2025 implies a PEG ratio (using EV/Revenue divided by growth) of approximately 0.024, suggesting the market is not fully pricing the growth trajectory. However, this metric must be tempered by execution risk and scale limitations. The valuation leaves little room for missteps; any slowdown in broker adoption, margin compression from competitive pressure, or delays in large employer platform rollout could trigger a severe multiple re-rating toward peer levels of 0.1-0.4x sales.

Conclusion: A Small Company With Large Ambitions and Measured Risks

Health In Tech has engineered a rare combination in the insurtech landscape: profitable, high-velocity growth driven by a technology moat that solves the industry's most persistent friction—speed to quote. The company's integrated model, which consolidates underwriting, program management, and optional cost containment into a single platform, creates switching costs that are already evident in the 44% growth in billable employees and 57% expansion of broker partners. The strategic pivot from underwriting fees to program fees has transformed the revenue mix toward stickier, higher-margin services, while the eDIYBS platform's ability to compress large-group quoting from months to days unlocks a mid-market segment that was previously uneconomical to serve.

The investment thesis hinges on two critical variables: execution at scale and the successful commercialization of adjacent innovations. HIT must prove it can grow from 25,000 to 250,000+ employees without proportional increases in headcount, preserving the operating leverage that distinguishes it from loss-making peers. The large employer platform launch in Q3 2025 and the three-year rate hold program set for 2026 are the near-term catalysts that will determine whether HIT can capture meaningful share in the $242 billion small-to-mid employer self-funded market. Simultaneously, the HITChain blockchain initiative, while still speculative, offers asymmetric upside with minimal capital risk if it can address even a fraction of the $300 billion claims processing inefficiency.

Valuation at 1.96 times sales and 53 times earnings reflects a premium for profitable growth in a sector littered with failures, but it also demands near-perfect execution. The company's strong balance sheet, capital-efficient partnership model, and management's demonstrated discipline in pausing HI Card to focus on core growth provide confidence that resources will be allocated rationally. However, competition from larger players, regulatory changes affecting stop-loss carriers, and the inherent seasonality of insurance enrollment create risks that could compress margins and slow growth.

For investors, the question is whether HIT's technology advantage and first-mover position in the small-group self-funded niche can scale into a durable franchise. The evidence from Q3 2025—90% revenue growth, 14.7% EBITDA margins, and a 90% reduction in quoting time—suggests the foundation is solid. The next twelve months will reveal whether this tiny disruptor can become a significant player in healthcare's digital transformation, or if it will remain a niche solution vulnerable to larger competitors' strategic responses. The risk/reward is compelling for those who believe speed and integration will trump scale in the next wave of insurtech innovation.