By M. Marin

NASDAQ:HIT

READ THE FULL HIT RESEARCH REPORT

Simplifying & facilitating healthcare insurance for businesses of all sizes…

Health in Tech (NASDAQ:HIT), an insurtech company operating an AI-powered online marketplace platform designed to facilitate and improve the insurance underwriting process, provides enterprise SaaS (Software-as-a-Service) solutions for online processing and sales of insurance and benefit plans. Its third-party AI-backed technology is designed to simplify the underwriting process and make it more transparent so that customers can make informed decisions regarding what plans work best for their organizations. Licensed brokers registered on the platform can log in to review offerings and select policy plans, upload the required data to obtain a bindable quote on what the plan will cost and then sell the plan to small businesses.

The company reported 1Q25 highlights yesterday after the market close. Revenue grew 56% year-over-year to $8.0 million, compared to $5.1 million in 1Q24. Revenue in January-February 2025 came in at roughly $5.7 million, according to HIT, exceeding the full quarter of 1Q24. We modeled 1Q25 revenue of $6.7 million. All else remaining equal, this would make our 2025 revenue estimate $24.1 million, compared to our prior estimate of $22.99 million.

The company bills service fees on a monthly basis per enrolled employee (EE). The number of EEs insured via its platform therefore is considered a critical indicator of growth and market penetration. In 1Q25, the company’s platform had 24,307 EEs billed for various services, up 16.8% compared to 20,802 in 1Q24. On the higher revenue, pretax income was $0.7 million, and the pretax margin was 8.5% compared to $0.2 million and 3.7%, respectively, in 1Q24. The company expects further operating leverage as revenue ramps.

Moreover, leveraging its technology platform, Health in Tech also can shorten the time required to process insurance underwritings compared to the traditional process that relies more heavily on manual processing, thereby shortening the sales cycle. In most cases, this streamlined approach reduces processing time to approximately two minutes compared to the traditional manual quoting model that involves sending multiple documents to underwriters for manual review and return of documents before generating bindable quotes. Approximately 80% of bindable quotes provided through the Health in Tech platform use AI alone without requiring additional manual review. The company also believes its AI/ML enabled technology completes the process more efficiently and with fewer errors compared to manual processes. By comparison, competitors can often take up to two weeks to process and close underwritings, according to a Frost & Sullivan report.

HIT expects to broaden its total addressable market (TAM) as it provides solutions that enhance efficiencies and streamline healthcare insurance processes for employers regardless of their size, including enabling faster quoting. The company also expects to lower total medical expenses for business clients by aggregating critical data and records in one online location, providing easy secure access and leveraging AL/ML to seek medical professionals to improve access to comprehensive healthcare. According to the Centers for Medicare & Medicaid Services' National Health Expenditure Data, U.S. healthcare spending was about $4.5 trillion in 2022, with the U.S. spending 2X as much on health per capita compared to the average of peer nations, according to the Commonwealth Fund. Harvard Magazine notes that “The high cost of medical care in the U.S. is one of the greatest challenges the country faces and it affects everything from the economy to individual behavior…”

Given this need, HIT began developing AI-assisted underwriting solutions for mid-sized and larger businesses in 3Q24, consistent with the strategy designed to expand its TAM. HIT began beta development of a large-group third-party AI-powered underwriting platform in November 2024. Thus, while HIT’s primary customers have generally been small and medium businesses that employ from five to 150 employees, the HIT platform is also expected to make it easier for larger organizations to obtain insurance plans that are appropriate for their organizations. HIT is extremely optimistic about its prospects with larger organizations, based on interest it has generated to-date.

In 1Q25, the company delivered solutions to large employers, including one organization that employs more than 1,000 people. HIT believes its proprietary technology platform is highly scalable to support a growing customer base, as more and more businesses seek affordable and risk appropriate healthcare insurance solutions for the employees. The company believes its strengths include its ability to upgrade and innovate its technology and the products it offers backed by its AI/ML-enabled technology capabilities and deliver efficiency and security features to a growing customer base. HIT believes the infrastructure it has established in 2024 and early 2025 position the company for strong growth in 2025 and beyond. The company expects to accelerate its new program development and further expand its broker and text of insurance, TPA (third party administrator) network and its footprint going forward and expects momentum to continue as product development and service innovations advance.

Expanding its product/solutions suite, often via strategic partnerships

HIT offers a variety of tools on its platform in order to provide end-to-end solutions to support insurance underwriting. Its strategy is to expand the suite of products and software solutions it can offer the healthcare insurance industry. In addition, the company's strategy includes driving growth by continuing to add TPAs, MGUs, and brokers. HIT also expects to launch new complementary products to expand its portfolio of solutions and offerings. To further expand the services it offers, earlier this year, the company formed a partnership with MARPAI and Vitable DPC to offer competitive quotes in enhanced self-funded solutions, which HIT expects will facilitate its ability to offer competitively priced self-funded health plans.

In addition, on March 25, 2025, the company formed a strategic collaboration with DialCare, which provides telehealth and virtual care solutions, to integrate DialCare's virtual primary care, therapy, and psychiatry services into Health In Tech's self-funded health plan offerings and provide members on-demand access to licensed physicians, therapists and psychiatric providers via phone or video.

Self-funded benefits plans have traditionally been out of reach for smaller businesses

The company also expects its platforms can help broaden the number of employers that have access to self-funded benefits plans and stop loss insurance policies by making the process more efficient and cost effective. The complexity of navigating the insurance process often drives up costs unnecessarily and makes it difficult for customers – particularly smaller businesses – to find policies that are appropriate for their needs and risk profiles and to self-fund benefit plans. The company believes it offers a wider range of insurance products and options for the small employers' self-funded benefits plans compared to what competitors offer.

The company believes it is well-positioned to execute its growth strategy and monetize its platforms by offering fee-based services for products that it can white label for multiple clients. Health in Tech intends to add additional TPAs, MGUs, and brokers to its platforms and believes its free-to-use eDIYBS platform, which offers a fee based model if/when it is used by a broker, TPA or other, can gain traction and attract more agencies to use its platforms. As it moves forward, HIT intends to ramp up marketing activities to help expand its customer base while simultaneously launching new complementary products to expand its product suite.

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