HIT - NASDAQ

Good day, ladies and gentlemen. Thank you for standing by and welcome to the Health In Tech, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will follow at that time. As a reminder, we are recording today's call. Now I will turn the call over to Lori Babcock, Chief of Staff for the company. Ms. Babcock, please proceed.

Thank you, Operator, and hello, everyone. Welcome to Health In Tech, Inc.'s fourth quarter and full year 2025 earnings conference call. Joining us today are Mr. Tim Johnson, Chief Executive 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-Ks filed with the SEC. These documents will be available on our Investor Relations website at healthandtechinvestorroom.com. 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 annual report on Form 10-Ks for the period ended 12/31/2025, filed with the SEC. Please review the forward-looking and cautionary statement section at the end of our earnings release for various factors that could cause actual results to differ materially from forward-looking statements made today during our call. Except as expressly required by federal securities laws, 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 or 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 will now turn the call over to our CEO, Mr. Johnson.

Thank you, Lori, and good afternoon, everyone. We appreciate you joining us today.

2025 was a pivotal year for Health In Tech, Inc. It marked our first year as a public company. But more importantly, it was a year in which we demonstrated that our AI-enabled underwriting marketplace, distribution-led growth model, and technology platform can scale within a large, underpenetrated, self-funded health insurance market. For the full year 2025, revenue increased 71% to $333.3 million, reflecting strong execution across our core growth drivers. When we look at what drove this performance, three factors stand out: distribution expansion, platform advancement, and program innovation. First, distribution. Our business scales through distribution, with brokers and TPAs serving as the primary channel through which employers access self-funded health plans. As a result, the breadth and productivity of our distribution net are directly correlated with our growth trajectory. In 2025, we expanded our network to 858 brokers, TPAs, and agency partners, representing a 34% year-over-year increase. Importantly, we believe we remain at a very early stage of market penetration. There are approximately 1,100,000 insurance brokers in the United States, and even with over 800 distribution partners on our platform, our penetration remains well below one-tenth of 1%. Similarly, within an estimated $0.9 trillion self-funded health care market, our scale represents only a fraction of the total addressable opportunity. The key takeaway is that while we delivered strong growth in 2025, we believe that the long-term runway for expansion remains substantial, particularly as we continue to scale distribution and engagement across our partner network. Second, platform development. A core inefficiency in this industry is that underwriting remains highly manual, time intensive, and difficult to scale, particularly in the large employer segment. In 2025, we expanded our Enhanced Do-It-Yourself Benefit Systems, or EDIBS, to support employers with over 100 employees, extending our capabilities beyond the small-group market where we initially established strong product-market fit. This is a meaningful step up-market. Larger-group underwriting is characterized by long sales cycles, fragmented workflows, and significant operational friction. Our platform addresses these challenges by compressing underwriting timelines for larger employers from approximately three months to roughly two weeks, which enhances broker productivity, improves the client experience, and increases placement efficiency. We believe this speed and automation represent a durable competitive advantage, particularly as the market increasingly demands faster, data-driven decision-making. Before I move on, I want to address one of the most important questions we hear from investors: What is our AI advantage, and why is it not easily replicable? The short answer is that our advantage is not just the AI model itself. It is the combination of proprietary data and integrated workflow and distribution. On data, we have been applying AI within our platform since 2021, well before AI became a headline theme. Because we operate within employer-sponsored insurance, we have built a HIPAA-governed dataset tied directly to real underwriting activity and plan design structures, rather than relying on generic or publicly available healthcare data. As employer groups renew over time, we continuously incorporate new cohorts and real-world outcomes, which allows our models to improve through ongoing feedback loops embedded in actual production environments. On workflow, many solutions in the market focus on narrow point applications of AI, for example, automating a single administrative function or a discrete vendor process. While those tools can provide incremental efficiency, they do not address the broader structural inefficiencies in the system. What we have built is a fully integrated platform that connects underwriting, plan design, stop-loss, administration, and vendor coordination in a single workflow. This enables brokers to move from quote to bindable, execution-ready solutions significantly faster, while reducing fragmentation for employers. In other words, our AI is most valuable because it is embedded within an operating marketplace, not deployed as a stand-alone tool. On distribution, technology alone is not sufficient. Distribution is critical. We have established a growing network of brokers, TPAs, and carrier integrations actively using the platform, and that real-world usage drives continuous data generation, improves model performance, and increases platform stickiness over time. As we scale, the data becomes richer, the workflow becomes more efficient, and the competitive advantage compounds. Third, program development. We continue to advance our three-year rate stabilization program, which is designed to address one of the most persistent challenges in employer-sponsored healthcare: pricing volatility. Employers are increasingly focused on predictability, while brokers are seeking solutions to improve retention and simplify long-term planning. Our program is structured to provide greater pricing stability over a multiyear period, supported by a fixed remittance framework and stop-loss protection. Strategically, we believe this offering can deepen client relationships, improve retention, and support expansion into larger employer segments where budgeting stability is a critical decision factor. Now let's talk about 2026 strategic priorities and outlook. As we move into 2026, our priorities remain focused on scaling the platform and accelerating adoption. First, we will continue to expand our distribution footprint. Second, we are continuing to invest in platform development and AI capabilities, with a goal of evolving into a fully integrated marketplace that extends beyond underwriting to include claims administration, cost-containment solutions, and broader plan management capabilities. In January 2026, we enhanced the platform to offer more than 100 preconfigured, customized stop-loss programs, translating complex underwriting and plan design into a scalable, repeatable framework. This drives shorter sales cycles, improved conversion visibility, and greater scalability while maintaining flexibility for employer-specific needs. We are providing full year 2026 revenue guidance of $45,000,000 to $50,000,000, representing approximately 35% to 50% year-over-year growth. Our confidence is supported by our ability to compress time to revenue, enabling new features to scale within one to two quarters compared to 12 to 24 months in traditional insurance environments. We are also strengthening our technology foundation through our partnerships with Siclim, an AWS Advanced Tier Service Provider. We are building more integrated, AI-driven platforms. I will now turn the call over to Julia Qian, our CFO. Thanks, team.

Good afternoon, everybody. I appreciate you joining us today. I will work through our fourth quarter and the full year 2025 financial performance, then provide additional context around our operating model, margin profile, capital allocation priorities, and ongoing product investments. Before continuing to the numbers, I want to briefly address seasonality and timing dynamics. Employer decision cycles, particularly around renewals, do not always align cleanly with the calendar quarter, which can create some variance in quarterly results. As such, we believe year-over-year performance is a more meaningful way to evaluate the business rather than sequentially. On that basis, our trends remained strong throughout 2025. Importantly, our revenue model is contractually driven and recognized over a 12-month policy period, which supports forward-looking revenue visibility and an increased recurring revenue profile. Turning to revenue now. For the full year 2025, total revenue increased 71% year over year to $33,300,000. In the fourth quarter, revenue increased 53% to $7,500,000. This performance reflects continued adoption of our AI-enabled underwriting marketplace, supported by expansion in both distribution and enrolled employees. Our distribution network grew to 885 brokers, TPAs, and agencies, an increase of 34% year over year. Enrolled employees increased to 22,515, up 23% year over year. As more partners onboarded to the platform, we are seeing increased quoting activity, higher bind ratio, and improved conversion efficiency, reinforcing the scalability of our model. As Tim mentioned, we are providing full year 2026 revenue guidance of $45,000,000 to $50,000,000, representing about 35% to 50% growth year over year. This is supported by the visibility in how our recurring revenue flows through from the prior year and the remainder of the year, as well as strong distribution and fully deployed platform capability. When we look at profitability, we continue to demonstrate operating leverage as the business scales. Adjusted EBITDA for the full year was $4,100,000, which is about 12.3% of revenue, an increase of 81% year over year. Net income, our most comparable GAAP measure for the full year, was $1,200,000, representing about 4% of revenue, an increase of 91% year over year. For the fourth quarter, adjusted EBITDA was $300,000, compared to $500,000 in the prior year. Net income for the fourth quarter was negative $300,000, compared with negative $100,000 in the prior year. Again, our GAAP results and the reconciliation of GAAP to non-GAAP measures can be found in our earnings release. The fourth quarter reflects planned reinvestment in go-to-market initiatives, broker engagement, and program development, along with peak enrollment activity as well as investments supporting new product launches. Full year pre-tax income was $1,700,000. Fourth quarter pre-tax loss was $400,000, reflecting the timing of investments. Turning to operating expenses, we continue to drive improved operating efficiency while maintaining disciplined investment in growth initiatives. Total operating expenses were $19,400,000 for the full year, representing 58% of revenue, a 16% improvement year over year. In the fourth quarter, operating expenses were $4,300,000, or 57% of revenue. Breaking these down, for the full year, sales and marketing expenses were $4,200,000, about 13% of revenue, reflecting our efficiency in the distribution-led go-to-market strategy. General and administrative expenses were $13,700,000, 41% of revenue, improved year over year as we scale. Research and development investment included $3,200,000 in capitalized software development and $1,600,000 expensed, representing approximately 5% of revenue. Our R&D investments are focused on platform expansion, underwriting automation, and scalability across the marketplace ecosystem. As we think about growth beyond 2025, we are continuing to increase high-value capability into our existing platform. We plan to initiate the beta test of a new data-driven solution that integrates physiological and claims data to generate actionable value insights. We believe these represent a very meaningful step forward, enhancing decision-making across underwriting and plan management. More broadly, these initiatives reflect our strategy of building additional value-added services on top of an already commercialized, scalable platform, which we expect to support the durability of growth and increase operating leverage even further. AI remains a core investment initiative alongside our other programs. We believe that applying AI within a regulated employer-sponsored insurance environment can materially improve the speed, consistency, and decision quality across both underwriting and member-facing work. We will continue investing in AI-driven automation and underwriting support, while maintaining proper human oversight where it matters most. From a financial perspective, when these investments are directly aligned with our model, they support faster adoption, higher retention, improved efficiency, and greater operating leverage as we scale. Turning to cash flow and the balance sheet. For the full year 2025, we generated $3,100,000 of positive operating cash flow. Accounts receivable days reduced to 14 days in 2025 from an already efficient 29 days in 2024, demonstrating the predictability and efficiency of cash collection in our business model. We invested $3,200,000 in platform development software and still generated positive cash flow from operations, ending the year with $7,700,000 in cash and cash equivalents. With that, I now turn back to the Operator for Q&A.

Thank you.

We will now begin the question-and-answer session. The first question will come from Allen Klee with Maxim Group. Please go ahead.

Yes, hi. Good quarter. I wanted to start with your larger employer offering you have rolled out. Could you give us the feedback you have gotten and what you are hearing from your partners that are involved in selling it? Thank you.

Sure, Allen. I can cover that. Yes, Tim can talk about the business part, and I can talk about the financials. We announced the entry to the large employer space last year. The financial contribution is very fresh in 2025 because that is starting in the fourth quarter and officially launched this September, and you will see more benefits in 2026. So Tim can answer business-related questions.

Yes. As Julia said, the sales cycles on those are pretty long, so we are just now really starting to pick up some sales through it. We have a product launch coming up at the end of next month where it really helps speed the process up for the large groups. Right now, we just agreed to underwrite large group, bring them in to make sure that we had a really good process, and then the system that we have built is coming up next month. We have tested it a lot with a lot of brokers and internally, and the speed with which it is performing is really helpful for anybody that uses it.

Okay. Thank you. And then for the three-year rate stabilization offering, which is extremely valuable in today's market, what is the feedback? You are in beta right now. So anything you can say about the feedback and how you're thinking about potential interest and when? When that interest—I know you said second half—but any thoughts of how you think about the inflection of how that might ramp?

Yes. It is really an attention-grabber for government entities, municipalities, these entities that rely on budgeting heavily. So they have to understand, through a tax base, what they have to budget for. When you can do that for three years, there are a lot of cities, states, governments, counties—they are all interested in looking at it, and we are right now just starting to put together some information so we can gather some of their submission data, start to put some programs together for them, making sure that it looks right and fine-tune it. So there is a lot of attention around it. Seriously, we just got it started a month, month and a half ago, where we could go out and talk about it with our partner—our insurance carrier—that was putting it up and we are working with. So there is a lot of attention around it, but you are right. We have not really started the quoting process yet where we have got much going on that we can put some business on the books.

Yes. So, Allen, that is exactly what we said before. We anticipate it is going to go well. The beta test has a lot of traction. It should be officially launched and announced with all the partners involved in the second half of the year. I think it is still on track. Yes. We will try to see whether we can do a Q3.

Third quarter.

Hopefully the end of second quarter and the beginning of third quarter. This is something we are looking at.

Maybe just following up on my first two questions, what are your thoughts in terms of the amount of renewals you think will be available for both the large employer and the three-year rate stabilization? Do you think that most of it will come more at the end of 2026 when plans renew, or do you think that there is good opportunity in 2026?

So, Allen, today we do not have renewals in the large group business. Most of our business is small- and medium-sized groups, but we only started last year, September, and when we have functionality going on, we start to pick up some pace this year. So we do not really have a renewal from any prior-year business book, but we can see we gain share from other places. So we get new customers. Those will be all new customers.

Three-year both, three-year in the large group. Yes. But what I meant is that plans—if most plans renew in January—does that mean that there will not be a lot available that you can sell to?

You are correct. July 1 and January 1 are, especially for municipalities, their effective dates. They start on July and January. So again, we are probably not going to get a lot of business on July with the municipalities in that. We will pick up some other clients. But January is clearly going to be the biggest effective date for us on that.

Okay. That is great. And then just one more, then I will get back in the queue. You mentioned you initiated beta testing of physiological data and claims data to get insights. Could you just expand on that a little more?

Yes. So physiological data is when people wear devices to track their physiological information—heart rate and blood pressure—and then we have, as claims data, a lot associated with individuals’ health information. So when we get the data, hopefully it can produce insights. We just got to the start and the beta test for this year. That is something the product will watch for. It can be very interesting. And on the data part, it will really help the user get more additional insights on the correlation of their health condition versus their medical condition. So we just got to the beta test, and we will share with the market the due cost.

Thank you so much.

The next question will come from M Marin with

Thank you. So I am wondering, you were talking a little bit about your entrance now into the large organizations spectrum of sales. And the sales cycle, as you said, is long. Do you expect that there will be any difference versus smaller organizations in terms of stickiness or retention, or from what you know about the overall industry, do you think it will be pretty much comparable to what you have already experienced in your business?

Yes, I think that the stickiness will come because of the ease of use of the system—the tool, EDIBS. It is extremely easy and efficient. It is easier for a broker to provide a submission to an underwriter through the system. The system uses a lot of AI technology to organize all of that and parses the data into an organized fashion for the underwriter. It is a layup for the underwriter to, when it eventually comes out the other end of the system, underwrite and do their job, which is all they want to do. So once we can show that the turnaround time on getting the information in, understanding the information, and then getting a proposal back—we are really trying to reduce that timeframe significantly. And if you are in this business, you know that a lot of times it takes a long time for various reasons. But the system that we have built, we really think we can dramatically—I say we are going to easily cut it in half, if not more.

Okay. And so I know it is very early in the process because you just really completed the beta testing not that long ago, but are you surprised at the level of interest or potential interest that you are expecting or seeing in your pipeline amongst that sector of the overall customer base?

Yes. We were just talking about that earlier today. In fact, the way that we have positioned ourselves and the people that we are already talking to about it—just trying to get feedback and get through all the beta—you know, internally, my underwriter can now look at and quote up to 20 groups in a week. She used to be able to do that in a month, and now she does it in a week. And just conversations like that around other people in that space, in the underwriting space, they are very excited to see it and test it out. So yes, we hope it is going to be a big splash.

Switching gears a little bit, over the past several quarters you have announced a number of different partnerships or business affiliations to expand the services you can offer or expand distribution. Do you have an ongoing pipeline of other potential affiliations that you are looking at and considering in order to further expand your service offerings?

Yes. The tool itself has really expanded who we traditionally thought our market was. So now, besides just brokers and TPAs using the system to quote groups, we are looking at other industries or other vendors within our industry that want to use the tool because it makes their job even easier. We are all in this business, and we designed the product to help us, because we underwrite—we do all these things. But it is expanding beyond just us to where other people want to use the tool. And that kind of goes back to my other answer on the other question you asked. But yes, it is expanding a lot.

Yes. That is multiple. We are looking at these as multiple different legs to grow for the company. So in terms of sales distribution, just to remind everybody, there are 1,100,000 of these sales agents in the country, and we only scratched the surface. So whatever works, we will continue to build a high-functional sales team, continue to acquire brokers, and provide education. One part of entering the large group space will help us to get the larger brokerage houses, because the more product offered, the more stickiness—people are more inclined to deal with one system to use it. So this is part of the strategy for us to offer more services and try to get more brokers onboard. We do not have some particular list, because now we consider the entire universe is 1,100,000, and there are particular things we want to think about and where our high-functional salespeople have the most relationships. Then we would go down the list of the rest in the country. We really do not have particular things. Additionally, the new functionality we are building, we are surprised to see, can be offered as additional sales to generate more revenue, as the capability is needed by other users as well. Mhmm.

Which would also further enhance your operating leverage, you think?

Yes, definitely. Look, when we started, I often say we are the Amazon selling the bookstore and sell the books at our bookstore, and then we realized people really like to put the store online. So we are like, okay. Now, with a lot of functionality we are developing for our own internal use—because we are part of the customer zero, using the functionality to deal with the manual process, make our automation, make that easier, simpler, use AI—and then we realized a lot of companies like ours on the market also suffer from the manual process. Then we can offer that as an additional service.

Okay. Thanks so much. Thanks for taking my questions.

The next question is a follow-up from Allen Klee of Maxim Group. Please go ahead.

Yes, hi. You talked about how you want to expand to roll out cost containment and claims paying. Is the business model here that kind of what you said of the—like, you are the store, and these are the different things that get added—and you would take a fee or a percent? How do you envision—like, you are partnering with other firms—or how do you envision how you get paid on it?

So, Allen, we are building—we are the marketplace. So today, the marketplace does two things: create self-funded products, self-funded programs, and put programs together, and also does the underwriting and bundles together through the AI process. In the near future, as the marketplace function expands, we will offer that as a service for other carriers, other MGUs, other people who want to come to the marketplace—not just purchase the product. They also want to use the functionality doing their underwriting. They want to create their customized product. So these are the things we are thinking about, which we already get quite a lot of traction on. It has not launched currently, has not launched this year, has not been in the business model last year. But with more and more traction, we think we will make that available in the very near future. We have not thought about the pricing because there are so many different pricing models we can charge. We can have set pricing. We can have different features, different pricing. There are so many ways people are willing to pay for different functionality. So since this has not been launched and we have not finalized the price, we have a lot of ideas through the conversation with potential customers.

Okay. You announced a partnership on the prescription side, I think. Could you talk about what that can do for your offering? What I am referring to is the Vertical Art Administrators.

Oh, yes. They are a TPA. They just happen to be owned by a PBM. So it is just another distribution source for us.

Okay. So on the prescription side, that is not an area of focus right now, I assume, right?

Not really. I mean, we are going to do what we can to manage the drug costs, but as you recently saw, the government is stepping in to try to make some corrections. So it is kind of in flux right now. We do not want to commit to anything and then have something taken away from us. So we are just going to sit back and watch what happens for a while.

Okay. That makes sense. Is there any feedback on the conference you held in Davos and any relationships that you got out of it, or just thoughts on how it went?

Yes. I thought it went great. We met a lot of good people. Those relationships are still fruitioning. We are trying to figure out how we take advantage of all of them. We got a lot of good attention from that. A lot of people are still talking about it, in fact.

Okay.

And then maybe lastly on the AI side, just in terms of how you are looking to apply it in 2026, what would you say the biggest initiatives will be?

The biggest initiatives for AI in 2026? Yes. It is going to be continually improving our own processes. We are really the proof of concept for a lot of these things, and we test it before we take it out. But our system continually needs improvement. We are talking about the claims—I want to clarify—those are the stop-loss claims. Those are not first-dollar TPA claims that we are looking at. We are looking at how MGUs intake claims, and how AI can be used to make that more efficient, because it is a very manual process. So everything we touch, we are looking at applying AI to it to see if we can solve the issue by speeding it up or eliminating intervention by having people get in the middle of it. There are all sorts of different ways that we are looking at AI, but it is improving that entire process of getting information: how you get it, when you get it, what you do with it, where it goes, and where it is stored, and how fast can I get access to it?

Okay. Great. Thank you so much.

Thanks, Allen.

Thank you. Seeing no more in the queue, let me turn the call back to Mr. Johnson for closing remarks.

Thank you, Operator, and I thank all of you. I appreciate everyone joining the call today. If anyone has any 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.