Introduction to Health in Tech HIT

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Health in Tech HIT, is an insurance technology platform streamlining self funded health plans for small employers. It offers an automated quoting and underwriting platform for brokers to refer clients. The list of brokers is growing fast as they are moving up-market. Brokers are incentivized to get clients for Health in Tech.

The company is a microcap company with a market cap of about 80M, founded in 2014 and IPO’d 8 months ago in December 2024. They are an 80 employee company based out of Florida. Cash on their balance sheet is 8.1M which grew 0.5M this quarter with 0.2M of debt.

Yesterday on July 21, they reported an impressive set of numbers. Revenue was 9.3M which was +86% yoy when analysts had expected revenue around 7M. This revenue number is growing sequentially from 8M in Q1, when Q1 is their seasonally strongest quarter, showing the accelerating adoption of their platform. Adj EBITDA was 1.6M, +134% yoy.

Looking at the chart on March 11 the stock price was around $7.5 and dropped to $1.3 on a single day. Normally an 80% drop like that would be on some crazy news or fraud, but in this case it seems like it was on general market healthcare fears. It looks like there were simply no traders to bid up the price and it just kept falling that day on heavy volume. Insider buys and sells since IPO, show only insider buying and no selling. Despite that trading, the company said on its latest earnings that the market uncertainty is actually a huge opportunity for them and it is great timing for their platform.

I have a small position in HIT that I started before their earnings after reviewing their Q1 report. I added to my position today after their Q2 report which I considered incredibly impressive.

First reviewing their financials over the last year,

Revenue and yoy growth rate,

5M → 4 → 4.9 → 8 → 9.3

10% → -15% → -6% → 56% → 86%

Net income

0.3M → 0.4 → -0.1 → 0.5 → 0.6

My data provider did not have EBITDA numbers listed, and gross margin came in at 68% in Q2.

Reviewing their Q2 report,

CEO

  • Truly exceptional quarter, acceleration for monumental year, redefining trajectory
  • Deep adoption across growing network
  • Easy adoption and intuitive
  • New high impact relationships
  • Q2 & Q3 are typically slowest seasons
  • Welcomed multiple large brokers in the quarter
  • Verdegard partnership, owned by MedImpact, largest in US pharmacy benefit manager, lowers drug costs for plans
  • Enhanced eDIP platform with automated large group underwriting on track to fully launch in Q3
  • A “few” new products to be Beta tested in Q3

Chief Growth Officer

  • Can create customized health care plans for employers, underwritten by the platform in 2 minutes was 12-14 days before
  • Internal proprietary tech, lowers costs for businesses and payroll deduction
  • Extensive network of partners
  • Verdegard, deep integration with scale, unlocking value
  • Partnered with Unified Health Plans, premier TPA (Third Party Administrator) recognized for provider network in Kansas, bringing on schools in this past month
  • Alliance with HUB Group, top 25 ranked insurance broker, access to broader base of small and mid tier employers, national and amplifies reach
  • Bailey insurance, another partner
  • Aligning with market leaders

CFO

  • Significant positive operating leverage
  • More income in first half of 2025 than all of 2024
  • S&M 13.2% of revenue, was 19.5% year ago
  • G&A 40.5% of revenue, from 36.3% year ago, added cost for going public
  • R&D 6.3% of revenue, 14% year ago
  • 1.5M cash flow from operating activity

Q&A

  • “Tremendous quarter”
  • Companies moving off competitor policies on effective date and proactive
  • January is high season but able to build more momentum now through year
  • Going up-stream, working for with more national agencies
  • “Uptick in 1000+ life cases”
  • Past month request for 1,400 life case (already indicating strong Q3)
  • Lots of requests for 100-300 employee companies, “I think we are going to see more of that going forward”
  • Broker partners, TPAs, helping get exposed to more cases
  • New process for underwriting is way more efficient, game changing for medium size businesses
  • Brokers can bring on new employers, system shows how much more efficient they can be
  • Bringing on largest brokers in the country, they have thousands of self funded employer groups, Health in Tech will really benefit
  • “Unified, we have a really phenomenal month with them on the TPA side”, unique niche supporting schools, “this month alone in July writing lots of business with them”, will keep getting stronger results in that relationship (again hinting at strong Q3)
  • Verdegard, first case with them signed on July 1 (more Q3 strength)
  • Tapping into distribution channel we did not have before
  • Last Q revenue was split with underwriting fees and program fees with larger employers willing to pay more for enhanced benefits
  • Analyst, “You guys are the text book case for operating leverage”
  • Very disciplined in expenses spending
  • There is a cost to being public but revenue momentum makes this a “non-event”
  • HiCard early 2026 launch, ahead of timeline and picked up pace, big part will be done in August, revenue in Q1 2026
  • CFO was on podcast, new product talked about is “very big opportunity” and “that one will be put together very quickly”
  • Other new products are very close to launch, do not want to jinx it
  • Management recommends “Keep a close eye on our press releases”
  • Analyst, “You significantly beat my estimates on revenue and bottom line, given the run rate, your numbers are pretty likely going to be way higher than where I was expecting”, “you did a great job”
  • Going after business that may already be on Cigna, BCBS, and Aetna
  • Getting better product, pivot as needed, listening to customers
  • Customers can see data and react in real time where they could not see before
  • Market uncertainty = huge opportunity
  • Other competitor carriers want 30% price increases which management says is crazy, will create a big opportunity for HIT
  • Help bringing answers to a complex market

Concerns

My biggest concern for the business is regarding the number of enrolled employees, in Q1 it was 24,307 versus 20,802 a year ago and in Q2 it was 24,839 not a huge increase.

Additionally the number of “business clients” in their slides presentation has gone from 890 → 936 → 942 the last couple quarters which doesn’t seem impressive.

However there are some other positive stats, “Brokers, TPAs, and Agencies” since public seems like a strong trend of, “600+” → “650+” → 778

Accounts receivables was 1.3M, down 0.2M yoy which shows efficient collections, keeping in mind revenue grew 86% versus this number.

Overall I am finding the risk/reward of this company attractive. The stock lost nearly 80% of its value from a heavy sell day which seems unrelated to any real news. Meanwhile the underlying business is showing incredible momentum and accelerations in a market ripe for disruption.

I am looking to review the S1 next, and the podcast that the CFO was on. I will likely make a video about this company on my Youtube channel at some point but was away this week from my setup for creating the video. Any feedback on the company is welcome.

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wpr101,
You have me intrigued. At first I was concerned about the stock drop and potential for this to be a penny stock. But it seems OK from that standpoint.

My biggest concern is how does it stack up against eHealth.

https://www.ehealthinsurance.com/?allid=ggl328864000&callSchedule=mon-sun(3-23)&accountid=6509828329&accounttype=GOOGLE&campaign=GGL-SEM-MED-Con-MasterBrand-Brand-TXT-All&campaignid=20556528902&adgroupid=158786533812&matchtype=e&extensionid=&targetid=kwd-295861082546&device=c&gclid=CjwKCAjw7fzDBhA7EiwAOqJkh712LFjehtQDoAfZ8Fh67Rk-Llt_Y77c9JzDwmh_eMbrEes6jQ4c2hoCSt0QAvD_BwE&keyword=ehealth%20insurance&creative=715574992001&placement=&gad_source=1&gad_campaignid=20556528902&gbraid=0AAAAAD4IUaOpF82pRFp-2WZvtcOr6LAUV

It seems like they are possibly more established.

Thoughts?

bulwnkl

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Nice, I was skeptical at first too see this huge stock price drop on heavy volume, but I wasn’t able to find that any news happened that day. It’s interesting they decided to IPO at this small size already, but they seem to be able to absorb the new filing expenses while scaling up.

First time hearing of eHealth, they trade under EHTH. Taking a look at their financials it seems like they take the policy risk themselves while HIT is more of a B2B platform.

Was pinging a few questions off of Perplexity to see how HIT vs EHTH stack up, and how the general competition situation looks. They didn’t mention any competition in either of the last two earnings calls, but it is a crowded space. At the same time the legacy providers seem stuck in their ways, and as management noted this last call some of the legacy providers plan to raise prices 30%+.

Here’s the summary I got from Perplexity,

HIT vs eHealth
HIT vs eHealth1664×1210 395 KB

HIT competition
HIT competition1680×280 57.2 KB

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I agree. Thanks so much for bringing this to the board. Fascinating. I took a position based on the numbers and what I understood after listening to the conference call, but I admit, with such a tiny company I’m just not sure how to build a ton of conviction. Please share anything that adds to your confidence as you research more!

I just want to say, I am very impressed with your process. You seem to have a ton of energy and curiosity in getting into the weeds (and deep into the search results) to really turn over all the rocks you can in researching companies. Probably this is what it takes to find the opportunities out there when the “no brainers” I seek are scarce, as they often are. Kudos.

Bear
sub-1% HIT (but eager to learn more about it)

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Ditto, and worth reiterating.

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In poking around a little bit and considering a buy, I see this at my broker.

"Please note that the issuer of this security is deficient in meeting the Exchange’s continued listing requirements. You may want to consider doing further research before placing this order. "

Any thoughts?

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Maybe because it was under $1/share until a couple weeks ago?

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@wpr101 would you mind sharing a link to your youtube channel or letting us know what is the name of the channel? Thank you.

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@PaulWBryant @stocknovice I appreciate the feedback! It’s been really helpful for myself to get thoughts from the board on new stock ideas and see if they are generating interest.

One of the big takeaways I got from Saul’s Knowledge Base back in 2020 when I discovered the board was that long stock investing is not a zero sum game, as opposed to options trading. Basically everyone can be a winner in this style of investing without hurting your own results. I had seen many other financial info services give a tiny amount of free information, and then look to upsell on an expensive package to continue getting the info. Saul’s board was in direct contrast to that upselling approach.

I had played poker professionally for five years, and poker is completely a zero sum game. In poker to win, you have to take from someone else. In the poker community revealing your strategy makes it so others can exploit your strategy when you are at the same table. One of the things I prefer in investing over poker is that is there is no harm in revealing your portfolio.

@stocknovice There’s a Nasdaq listing requirement that if a stock closes below $1 for 30 consecutive days they will get a deficiency notice. I’m guessing when management priced their offering at $5 and knew the strength of their business, they never imagined they would encounter this issue. Looking at the chart, it was below $1 per share for 30+ days starting after their big drop in March.

However, this doesn’t seem like it will be any issue going forward. I found this description online of the process to get back in compliance. The brokerages are just covering with their due diligence to provide that compliance warning.

The “immediate delisting” concern applies ONLY if the bid price falls below $1 and the company fails to come back into compliance in the allowed timeframe, or within one year of a reverse stock split.

@MoneySpin Here’s a link to my channel,

I’m putting my monthly summaries on the channel, growth investing strategy videos, stock introductions and earnings reviews on the channel. Will be releasing a video next week on my earnings preparation process with earnings season coming up. I’m expecting to be busy the first week of August with the channel as well because most of my top holdings are reporting then.

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Thanks for presenting this company. Primarily based on your post, I too took a small position today. My timing was bad as the stock price faded after I bought some shares, but my total investment in HIT stands at about 1% so it was more frustrating than damaging.

I seem to have a knack for selling a stock when the price continues to rise after I sell and buying only to see the stock price slide after I buy.

I suppose I could use limit orders . . .

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I will need to do my own valuation of the company, but it seems like a company where you can get in and out, as it becomes cheaper and more expensive. You could do it technically, or based on valuations.

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Thanks for introducing this company. A brief look into all of their public financial data shows that their revenue each quarter was pretty much flat (~$5 million) since 2023 until the 2025Q1, when the revenue sharply spiked to $8 million. The earnings from operation is still less than 2023 right now.

This made me wondering whether the current growth is a one-time thing.

Luffy

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  • Health In Tech (NASDAQ:HIT) has received confirmation from Nasdaq that it has regained compliance with the $1 minimum bid price requirement.
  • The company’s stock maintained a closing bid price of $1.00 or more for 10 consecutive business days from July 10 to July 23, 2025.
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Analyst estimates. No guidance given.

end of 2025. Rev. 32.8, earnings 2.7, end of 2026 rev. 53.6, earnings 9.7, end of 2027, rev. 75, earnings 16.2

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I would be remiss in not telling you that the analysts also predict a future p/e of 6.7 and a future p/fcf of 6.9 at the end of 2027.

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As an FYI to people looking at this… HIT had an 8-K filing out yesterday saying their COO Chris Kurtenbach was terminated as of July 22. He just started as COO in March so this doesn’t look great.. I imagine this is why the stock is taking a bit of a dive.

Bnh

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That’s unfortunate - did they make an explanation on this or did the COO go to a Cold Play concert with the HR manager too?

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The COO did in fact go to a Cold Play concert, but without the HR manager. It was still a fireable offense.

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How can you get fired for going to a concert that is with a band that is not very controversial? Or are you just being facetious?

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The stock dove on March 12th. News sources link the drop to news from the White House that half a trillion dollars in annual healthcare spending might be eliminated.

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