Transcript
Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Health In Tech Third Quarter of 2025 Earnings Conference Call. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Lori Babcock, Chief of Staff of the company. Ms. Babcock, please proceed.
Thank you, operator, and hello, everyone. Welcome to Health In Tech's Third Quarter of 2025 Earnings Conference Call. Joining us today are Mr. Tim Johnson, Chief Executive Officer; Mr. Dustin Plantholt, Chief AI and Marketing Officer; and Ms. Julia Qian, Chief Financial Officer. Full details of our results can be found in our earnings press release and in our related Form 10-Q to be filed with the SEC. These documents will be available on our Investor Relations website. As a reminder, today's call is being recorded, and a replay will be available on our IR website as well. Before we continue, please note that today's discussion includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based on information available as of today and involve risks, uncertainties, and assumptions that could cause actual results to differ materially from those expressed or implied, including those discussed in our quarterly report on Form 10-Q for the period ended September 30, 2025, to be filed with the SEC. Please review the forward-looking and cautionary statements section at the end of our earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information of the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles, such as adjusted EBITDA for comparison purposes only. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I now turn the call over to our CEO, Mr. Tim Johnson.
Thank you, and good afternoon, everyone. I appreciate you joining us today. I'm pleased to share our third quarter results which were well aligned with our expectations as we continue to invest in strategic channel partners and rapidly expand our distribution network. At a high level, we delivered another quarter of strong revenue growth. Revenue reached $8.5 million, up 90% year-over-year, bringing the nine-month revenue to $25.8 million compared to $19.5 million for the full year of 2024. This momentum was driven by the continued expansion of our sales distribution network. The number of brokers, TPAs, and agencies grew to 849 partners, up 57% year-over-year. As more brokers and agencies adopt our eDIYBS platform, we're seeing more quotes bound and sold in real-time. By the end of the third quarter, the number of billed enrolled employees reached 25,240, an increase of 7,654 employees year-over-year. The third quarter is typically a development and deployment period for us, a time to introduce new programs and features. Most notably, we completed beta testing and officially launched the large employer underwriting capability with our enhanced eDIYBS platform. This is a major milestone that scales our reach across the full employer spectrum, positioning Health In Tech as a true insurance marketplace for businesses of all sizes. The new capability enables brokers to generate fully bindable quotes for groups of 150 or more employees in as little as two weeks compared to the industry norm of about three months. This advancement dramatically expands our addressable market and establishes Health In Tech among the few platforms serving both small and large employers seamlessly. Soon after the launch, we showcased this innovation at the SIIA National Conference in October 2025, one of the most influential events in the self-insurance industry. Our participation there helped accelerate national exposure and strengthen broker relationships, key catalysts for future growth. As we look to the fourth quarter and into Q1 2026, we're entering our peak enrollment period when employers review or switch their health care coverage. Recent market uncertainty and rising health care costs have created mixed timing patterns with some employers making early planned selections in late Q3, while others are delaying decisions into January. As a result, we delivered much better year-over-year growth in Q3 and are anticipating a sales volume shift from Q4 into Q1, but still expect healthy year-over-year overall growth. To help employers navigate cost volatility, we're testing a new program offering a three-year rate hold, a solution that provides predictable, stable pricing over a multiyear period. The program allows groups with 150 or more employees to lock in health care costs for three years through a fixed remittance model backed by an A-rated stop-loss carrier. It brings real value to clients looking for cost stability amid rising medical expenses while also strengthening our relationships with brokers and TPAs. By providing cost certainty amid rising medical expenses, we're giving brokers and TPAs powerful retention tools and helping employers plan long-term with greater confidence. We completed initial testing in October and plan to fully launch the program in the first quarter of 2026. Beyond underwriting innovation, we're setting our sights on one of the largest inefficiencies in U.S. health care claims processing, which consumes more than $300 billion annually in administrative costs and delays. This quarter, we announced a nonbinding letter of intent with AlphaTON Capital Corp. to co-develop HITChain, a blockchain-enabled platform designed to bring real-time visibility, accuracy, and accountability to claims workflows across the ecosystem. Under this LOI, both companies plan to contribute distinct strengths. Health In Tech brings domain expertise in insurance and health care data standards, established broker and carrier relationships, proven go-to-market channels, and leadership in health technology design. AlphaTON Capital contributes to blockchain development, expertise on open network smart contract architecture, cybersecurity, stable coin integration for secured payments, and capital resources for enterprise-scale deployment. Together with AlphaTON's blockchain infrastructure and Brittany Kaiser's leadership in data ethics, we are building HITChain, a decentralized, verifiable claims system aimed at compressing timelines, eliminating duplication, reducing costs, and creating a transparent system of record for payers and providers alike. By combining insurance domain expertise with blockchain innovation, AlphaTON is positioned at the forefront of decentralized health care insurance technology infrastructure, a market opportunity of meaningful scale and long-term impact. Lastly, we're thrilled to share that Health In Tech will host the InsurTech Summit at Davos during the World Economic Forum week in January 2026. This event will convene global thought leaders to discuss AI technology and the transformation of critical business sectors, including health care and insurance. With that, I will now turn it over to Dustin, who will walk through our latest marketing and partnership innovations in greater detail.
Thank you, Tim, and good afternoon, everyone. As Tim mentioned, we will take Health In Tech to the center of the global innovation stage by hosting our very first independent InsurTech Summit on January 20, 2026, during the week of the Annual World Economic Forum in Davos, Switzerland. It's interesting because the World Economic Forum, which is held each year in Davos, is really considered one of the world's most prestigious gatherings of global leaders across business, government, academia, and civil society, and it serves as a powerful platform for shaping global, regional, and industry agendas. And this year, Health In Tech will be among the organizations leading that dialogue. Our Summit will feature a curated lineup of panels on artificial intelligence, digital transformation in health care, and blockchain-enabled system reform, all focused on redefining how technology can drive transparency, efficiency, and equity across the $4.5 trillion health care economy. The first session we've announced, 'AI and Institutional Resistance: CEOs Driving Change in Legacy Sectors', brings together Time CEO, Jessica Sibley, alongside our very own CEO, Tim Johnson, for a dynamic discussion on how top executives are embedding AI within large traditional organizations. This dialogue will not be just about innovation; it's going to highlight the leadership mindset and operational courage required to modernize industries that have historically resisted change. Our second session, 'First Ladies: Backing Women Who Build', will feature Lady Cherie Blair, founder of the Cherie Blair Foundation for Women. The panel will spotlight global leaders advancing women's entrepreneurship, leadership, and access to capital across the industries, exploring how innovation, education, and technology can close gender gaps in business creation and economic opportunity. And this aligns perfectly with Health In Tech's broader mission of expanding access and inclusion through technology-driven ecosystems. Additional sessions focusing on other strategic themes will be announced in the next weeks and months ahead. Together, these sessions are going to elevate Health In Tech's visibility among insurers, investors, and yes, even policymakers, reinforcing our leadership in shaping conversations at the intersection of AI, health care, and financial inclusion. For investors, Davos represents a strategic inflection point, amplifying our institutional reach, strengthening our brand presence on the world stage, and showcasing how our technology and partnerships are modernizing the health care system here in the United States. As I've often said, legacy sectors like health care, finance, and insurance are where AI meets its toughest test and delivers its greatest rewards. By leading these discussions, Health In Tech is demonstrating that responsible data-driven innovation can scale sustainably while earning trust from both partners and regulators. With that, I'll turn the call over to our Chief Financial Officer, Julia Qian, to walk you through the financial results in more detail.
Thanks, Dustin, and good afternoon, everyone. It's my pleasure to talk you through the financial results that underpin the strong operational achievements Tim just discussed. Our third quarter and the first nine months of 2025 reflect continued execution across all the business fronts, from the expansion of our sales distribution network to launching new platform features, while maintaining disciplined cost management and operational efficiency in revenue performance. For the third quarter, total revenue reached $8.5 million, bringing year-over-year revenue growth to $25.8 million, representing 132% of our full year 2024 total. This growth clearly demonstrates our accelerated momentum and the effectiveness of our strategy for channel expansion through the brokers, TPAs, and agencies, combined with our strong customer acquisition activities. Beyond the top line, our profitability metrics show significant operating leverage. Adjusted EBITDA for the quarter was $1 million, up 49% year-over-year. For the first nine months, adjusted EBITDA reached $3.8 million or 167% of the full year 2024 total. This strong EBITDA performance demonstrates our ability to scale efficiency while maintaining cost discipline. Pretax income for the quarter was $0.6 million, a 48% increase year-over-year. For the first nine months, pretax income totaled $2.1 million or 2.4 times the full year 2024 total. Importantly, pretax income represents around 8% of revenue. It's a 135 basis points improvement year-over-year and reflects our consistent balance between resource allocation for growth and bottom line profitability. On the expenses side, we continue to improve operating efficiencies with scale. Total operating expenses for the third quarter were $3.7 million, 55% of revenue, down from 68% in the same period last year. For the first nine months, operating expenses represented 59% of revenue, an improvement of 12 basis points from 71% a year ago. We continue to integrate AI-driven internal solutions to enhance process automation and reduce administrative burdens. Breaking this further down, sales and marketing expenses were $1 million or 11.3% of the revenue, essentially flat year-over-year. Our channel partner model continued to drive revenue growth without the need for a large in-house sales force. General administrative expenses totaled $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 reflect the expenses associated with being a public company, including D&O insurance, Board compensation, investor relations, and media outreach. Research and development expenses declined to 2.8% of revenue from 16% a year ago. Our tech results have shifted from the preliminary maintenance phase to a heavy development phase. As a result, the tech costs associated with software development are capitalized, leading to reduced expenses. For the first nine months, we generated $2.7 million of positive cash flow from operations. We invested $2.4 million in technology development and $0.1 million in capital markets activity, resulting in a net positive cash flow of $0.2 million. We ended the quarter with a solid $8 million in cash and cash equivalents. Our collaboration with AlphaTON Capital also provides additional capital leverage for the HITChain initiative. With AlphaTON's investment contribution, we expect to build this transformative blockchain-enabled platform with minimal cash requirement from our end, maximizing our capital efficiency. As we enter the fourth quarter, we are navigating a period of market uncertainties related to rising health care costs and evolving regulatory dynamics. Some employers accelerated their planned selection decision into late Q3, which contributed to a stronger-than-expected performance in the quarter; at the same time, other employers are shifting purchase decisions into January and early Q1 of 2026. Q4 is typically when we launch our major marketing broker initiatives and PR campaigns to build momentum for the peak sales season. In line with the strategy, we intentionally reinvest a portion of our gross profit into market expansion activities to support continued long-term growth. We anticipate Q4 revenue growth of around 50% year-over-year, reflecting solid performance given leasing timing shifts. For the full year 2025, we're expecting to deliver around 70% year-over-year revenue growth, reaching an estimated $32 million to $33 million in revenue. Importantly, full year net income growth is expected to be near 90%, outpacing revenue growth on a percentage basis. As we're balancing disciplined profitability with purposeful reinvestment, given our market share is less than 0.01% of the market potential, the long-term growth runway remains substantial. Our strategy is to thoughtfully redeploy a portion of earnings to scale distribution, drive product adoption, and deepen our competitive position. As Tim mentioned, we began pilot testing our three-year rate hold program in late October and early November. This offering is very innovative and designed to provide possibilities for employers to manage health care costs more effectively; this is appealing to companies with a large number of employees. We will share more details with you upon full launch in Q1 of 2026. In summary, the third quarter marked a pivotal point of technology progress and product innovation. The fourth quarter is focused on market activities, program testing, and our year-end sales campaigns, positioning us for accelerated momentum heading into 2026. We are laying the foundation for an AI-enabled multi-program health care insurance marketplace that can serve employers of all sizes and segments. I now turn it back to the operator for Q&A.
Our first question today is from Marla Marin with Zacks.
So this was obviously a strong quarter of growth. I know you talked a little bit about some pull forward and maybe some timing differences versus general patterns in past years, but still, we're seeing very strong growth. You've been operating now for a very brief period in the large employer market. Is the response that you're seeing tracking along the lines that you had anticipated? And are there any things that you're seeing in that market that distinguish it from the small and medium market that you have traditionally looked at or focused on?
Yes. Marla, thanks for the question. This is Tim. You're right. We really just got started. We haven't been able to see a trend yet because the process usually takes for our brokers to get established and trained on the system. The effective date is usually about, at a minimum, 60 days. It's usually 90 to 120 days out. So although the process has sped up and helped our distribution sources get their proposals and their quotes faster, we haven't seen them start to bind anything yet because they're quoting groups that are further out from when we started, if that makes sense. But we are seeing a lot more activity. We started at about two quotes a day. Now, we're up to five quotes a day that our underwriters are able to get out. So a big improvement from where it was.
Okay. Understood. Switching gears a little bit. Your enrolled employees, which is a metric that I look at from quarter to quarter, as I'm sure others do, it continues to increase. I think in the past, you've talked about there's a level of stickiness with that number, just because of the difficulties sometimes in switching to other coverage providers or other solutions. Can you give us any color on whether or not you think that is true?
Yes, that's a great question, Marla. I think that is true. That's why when we're looking at the three-year rate hold program, we aim to enhance retention even further. With the uncertainties that come with health care costs, providing a product with a flat rate for three years could significantly change how the market dynamics operate. Yes, the health care insurance product itself is already quite sticky, and with the speed and benefits we offer, we believe adding more products will increase that stickiness.
Okay. Got it. And then last question for me. The blockchain initiative, I think, is very interesting. As you continue to innovate in this space and you continue to use technology to streamline processes and make things simpler for the customer base. In terms of blockchain right now, is there anyone else in the space that is using blockchain? Or will this be something that you're going to be relatively amongst the lead innovators?
I would let Tim address that.
Yes. Dustin, you can address that if you want. That would be a good one for you.
I would love to. So it's interesting, the space of health care and now putting these records on chain, but doing it in a way that it still remains de-identified so we don't have any compliance issues. We will really be the first at the scale that we will be launching the HITChain, bringing in an entire ecosystem over the next 12, 24, 36 months. So it has not been done at that level ever because of all the moving pieces involved. When we look at the friction point, Tim and I discussed the friction our providers feel, the friction that hospital systems feel, and even the friction at times the patients feel to be able to have a real-time ledger that they can track. So I'm excited over the next several months; Mr. Tim Johnson will be rolling out some of the areas that we see Health In Tech being able to receive revenue opportunities and also strategic growth, not just in North America; our plan would be long term for HITChain to become the number one in health care blockchain, including tokenization.
Yes, Marla, this type of product has been attempted by others with much greater recognition than we have, and they have failed. We have created a much wider network of people who understand the full cycle of this process. Everyone at Health In Tech and AlphaTON is experienced in every aspect, from the moment a patient visits the doctor to when the bill is settled. There are numerous parties involved in that process with various transactions taking place. By simplifying that system, as Dustin mentioned, and allowing anyone to participate in this blockchain, we are doing something that has never been done on this scale. While some hospitals manage their internal processes this way, we are uniquely decentralizing it for public access.
The next question is from James Lieberman with American Trust Investment Services.
I want to congratulate you on the terrific year of execution and the vision that you're putting in place. I wonder, can you share a little bit more about this three-year lock program for health care? How do you manage to do that? Or is that your secret sauce and you'd rather not say at this point?
Yes. It's a good question. Since this is public, you're right; we really don't want others to know how we're going about it from an underwriting perspective. I will tell you, though, that there has been a year's worth of work with different financial institutions, bankers, underwriters, and insurance carriers, along with distribution sources to get comfortable with this model. It has taken a lot of effort from everyone involved. I apologize I can't provide much more detail than that.
No, I think it's kind of extraordinary, and I commend you for being able to bring all the players together to even present that vision. Congratulations.
Yes, Jim. Just wait for the full launch news; then we will have more details at that time. We have combined insurance sector expertise with carriers and various investment banks and funds. It has taken a lot to put together, and there will be renowned institutions joining forces to make this happen. We're very excited, but more details will be shared with everyone during the Q1 full launch.
The next question is from Allen Klee with Maxim Group.
It's great to see your degree of innovation. Following up on the three-year rate hold product, I think it could be powerful for employers. It’s surprising that an insurance company would take that risk given the challenges of underwriting results. Was that maybe the hardest part to get over how an insurance company could get comfortable taking a three-year risk?
Yes, Allen, it was very challenging. But there are two sides to consider here. Insurance carriers want to get profitable business and hold it. In this case, we're making it profitable by implementing targeted medical management programs. We're trying to manage every possible instance that can arise. If someone has diabetes, we have a program for that. If someone has another condition, we have very specific programs to manage that because, as you know, a carrier will pick someone up for a year and try to implement changes. But 12 months isn't enough time to see real progress. We sold our carriers on the concept that we can manage these conditions better over time.
That makes a lot of sense. And for the claims processing, who are you selling this to? Who is your customer?
The customers are large employers—that is, those with 150 lives on their plan and greater. For example, municipalities love this product because they typically don't have a lot of money from their tax base, and they try to budget tightly. Offering them a three-year rate guarantee is very appealing.
Right. Okay. And then—for the blockchain opportunity to manage claims processing—who are you selling that to?
Well, that's going to be sold to everyone. Everyone that touches health care—hospitals, patients, employers, brokers, third-party administrators, and networks—everyone will participate. There is a win-win for all involved. A significant part of health care costs stems from administrative expenses, which are huge. We're trying to cut that down dramatically, and we hope that those savings reflect in lower health care expenses over time.
Additionally, for those who have experienced issues with claims, our ideal client will include insurance carriers, health plans, and benefit administrators—companies that process millions of claims a year or tens of thousands of claims. They will benefit from the HITChain because it will reduce fraudulent claims, expedite processing, and minimize disputes. Ultimately, it drives their operational costs down, resulting in happier providers and a win for Health In Tech and everyone within the ecosystem. I can't give too much detail, but we have a tremendous opportunity here, and we're hearing from large organizations worldwide, including major hospital systems, that we are onto something significant. I'm excited to embark on this journey with all of you.
Once we formalize our collaboration with AlphaTON from the nonbinding letter of intent into a definitive agreement, we will be able to provide more detailed updates on our business model and the benefits mentioned by Tim and Dustin. There are many more areas where we can continue to discover benefits beyond just transparency and speed. The opportunity to remove redundancy, such as ensuring clients only need to process claims once rather than multiple times, is significant. There’s also potential to streamline payment processes. Thus, the collaboration maximizes our cash efficiency and combines our strengths with theirs.
And Julia, I think it's good to note because we have mentioned it in press releases regarding AskTim, our AI-driven benefits counselor that will also be unveiled in 2026, with more details to be shared at Davos on January 20, 2026.
You mentioned in the last few months some efforts on the pharmacy benefit management side to try to reduce drug costs. Any updates on that?
Julia?
Allen, we do not have much more developed in terms of pharmacy benefits currently. Our focus this year has been to enhance the system, produce new programs, and create new products. While the PBM opportunity has been evolving, it's heavily linked to market conditions and our partnerships. In 2026, we might revisit what additional services we can build.
Yes. The current administration has made a serious push for solutions, and they've been quite vocal about it. We've determined that our time and energy could be better spent focusing on underwriting and claims rather than on PBMs.
One of the things you've focused on is your partners and how that's been driving sales. You're getting distribution through your partnerships. Last quarter, you mentioned gaining some larger insurance brokers as partners. Could you elaborate on your broker relationships and how you manage them during the major renewal season?
We're growing our distribution sources because once they see the system, it's so convenient and easy to use that it makes their lives easier and allows them to make more sales. Our Alpha house consists of larger brokerage firms across the country. Products like the three-year rate guarantee have them focused on larger groups, and with this new program, they are increasingly excited to gain access to these products we're innovating for the large group segment.
Yes, Allen, we also actively begin training brokers. The larger broker agencies have regional offices, and they initially pilot test our solutions before rolling them out to all their agencies in various states. This allows us not only to increase the number of agencies but also to deepen our relationships. Our sales team has done a great job facilitating training and showcasing how easy our system is to use, which we believe will continue to accelerate our outreach. Additionally, the event in Davos, led by Dustin and all our PR efforts, will significantly increase our visibility in the market and help us attract more large agencies.
Seeing no more questions in the queue, let me turn the call back to Mr. Johnson for closing remarks.
Thank you, operator, and thank you all for joining the call today. If anyone has follow-up questions, please do not hesitate to reach out to us. We appreciate your interest and look forward to keeping the dialogue open. Thanks, everyone.
Thank you again. This concludes the call. You may now disconnect.