Health In Tech, Inc. (HIT) - 10-K Filing Summary
Business Context and Reporting Period
Company: Health In Tech, Inc. (HIT)
Filing Type: Form 10-K (Annual Report)
Period Ended: December 31, 2025
Business Overview: HIT is an AI-enabled insurance technology platform facilitating self-funded benefits plans and stop-loss insurance for employers, primarily small businesses. The company operates through three subsidiaries: Stone Mountain Risk (SMR) for program management, International Captive Exchange (ICE) for underwriting, and HI Card for claims data access. The company completed its IPO in December 2024 and is classified as an Emerging Growth Company and Smaller Reporting Company.
Key Financial Metrics
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Total Revenue | $33.33 million | $19.49 million | +71.0% |
| Gross Profit | $20.94 million | $15.44 million | +35.6% |
| Gross Margin | 62.8% | 79.2% | -16.4 pts |
| Net Income | $1.28 million | $0.67 million | +90.7% |
| Adjusted EBITDA | $4.11 million | $2.27 million | +81.1% |
| Cash & Equivalents | $7.67 million | $7.85 million | -2.3% |
| Total Assets | $23.09 million | $15.77 million | +46.4% |
| Total Liabilities | $5.98 million | $2.60 million | +130.0% |
Operational Metrics: As of December 31, 2025, the company served 795 business clients with 22,515 enrolled employees (EEs), a 23% increase year-over-year. The network includes 583 brokers and 12 Third-Party Administrators (TPAs) across 40 states.
Material Changes vs. Prior Period
- Revenue Composition Shift: Revenue from SMR fees surged 168.7% to $26.46 million, becoming the dominant revenue stream (79.4% of total). Conversely, revenue from HI Card dropped to $0 in 2025 from $2.99 million in 2024 due to a strategic decision to pause beta testing and reallocate resources to the eDIYBS platform.
- Margin Compression: Gross margin decreased from 79.2% to 62.8%. This was driven by a 206% increase in Cost of Revenues ($12.39M vs $4.05M), primarily due to higher captive management fees associated with new product launches and channel expansion.
- Expense Management: While General and Administrative (G&A) expenses increased by 61% to $13.65 million (partially due to public company costs of $3.0 million), they decreased as a percentage of revenue from 43.5% to 41.0%. Research and Development expenses decreased by 44% to $1.57 million as significant software development costs were capitalized.
- Balance Sheet Activity: "Other receivables" increased significantly to $3.47 million, driven by a $3.48 million purchase of "Deferred Administrative Surplus" collection rights. Total liabilities rose to $5.98 million, reflecting higher accounts payable and accrued expenses aligned with business scale expansion.
Guidance, Outlook, and Risks
Outlook & Strategy: Management expects to resume HI Card development in Q1 2026. The company plans to expand its marketplace to include Property & Casualty (P&C) and workers' compensation products. Growth is driven by channel expansion through brokers and TPAs and the adoption of AI-driven underwriting (eDIYBS), which generates bindable quotes in approximately two minutes for 80% of cases.
Key Risks:
- AI & Underwriting Accuracy: Reliance on third-party AI for underwriting carries risks of inaccurate risk profiling, which could lead to higher insurance costs or carrier refusal to use the platform.
- Concentration Risk: One stop-loss carrier ("Carrier A") accounted for 27.3% of total revenue in 2025. Additionally, the company relies heavily on a single third-party AI data service provider.
- Regulatory & Compliance: The business is subject to evolving regulations regarding data privacy (HIPAA), cybersecurity, and insurance laws. The company faces potential liability if it fails to assist carriers in regulatory compliance.
- Liquidity & Capital: While the company maintains profitability, it continues to invest heavily in technology. It does not intend to pay dividends in the foreseeable future.
Investor Verification Checklist
- Revenue Quality: Verify the sustainability of the 168% growth in SMR fees and the impact of the discontinued HI Card revenue stream on future projections.
- Carrier Concentration: Assess the risk associated with "Carrier A" representing over 27% of revenue and the terms of the agreement regarding the "Adjustment" clause that resulted in a $3.89 million contra-revenue provision.
- Deferred Administrative Surplus: Review the collectability of the $3.48 million "Deferred Administrative Surplus" asset, noting the company has only limited historical collection experience and recorded a $377k credit loss provision in 2025.
- AI Vendor Dependency: Confirm the terms and stability of the agreement with the single third-party AI data provider, which is critical to the eDIYBS platform's functionality.
- Capitalization of R&D: Analyze the $3.47 million in capitalized software costs versus expensed R&D to understand the true operational leverage and future amortization impact.