Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A, "Risk Factors."

Overview

Health in Tech ("HIT") is an insurance technology platform company, which offers a marketplace that aims to improve processes in the healthcare industry through vertical integration, process simplification, and automation. By removing friction and complexities, we streamline the underwriting, sales and service process for insurance companies, licensed brokers, and TPAs.

Marketplace: We are a health insurance marketplace where insurance companies can list various stop-loss policy options for self-funded benefits plans. Licensed brokers registered on our platform can log in, upload certain required information, select policy plans, obtain a bindable quote and sell them to small businesses. In most cases, our technology enables us to medically underwrite insurance policies and produce bindable quotes within about two minutes, allowing us to deliver an integrated and seamless sales cycle.

Customizable Solutions: Beyond policy underwriting and sales, our marketplace offers customization of health benefits plans, vendors, claims, and network services. Brokers can select customized plans that suit their customers.

Accessibility and Savings: We make self-funded benefits plans and stop loss insurance accessible online for small businesses. We aim to deliver meaningful cost savings for low-risk, small employers with comparatively healthy employees through a digital medical underwriting process. We seek to deliver time savings for employers, brokers, TPAs, and carriers, by leveraging both external and internally developed technology.

As of September 30, 2025, we had clients in 42 states, with our services and platforms actively utilized by 579 brokers, 12 Third-Party Administrators (TPAs), and 258 additional third-party agencies. Our stop loss insurance policies for self-funded benefits plans were sold to 910 business clients with 25,248 employees. Notably, in the first nine months of 2025, we achieved 77% year-over-year revenue growth compared to the same period in 2024, while maintaining healthy profitability.

We currently generate most of our revenue from service fees and underwriting fees, that are associated with customers who purchase self-funded benefits plans and stop loss insurance. These plans are facilitated through a network of brokers, TPAs, MGUs, carriers, and other third-party agents. These agencies either directly engage our services or provide valuable client referrals.

Recent Developments

Partnerships and Collaborations

eDIYBS Upgrade: Expanded HIT's Enhanced Do-It-Yourself Benefit System to serve 150+ employee groups. This upgrade significantly increases HIT's addressable market and accelerates large-group underwriting from months to about 2 weeks, extending the same speed and scalability that transformed small-business underwriting into the mid- and large-employer market. It marks a major step forward in how health plans are designed, quoted, and delivered at scale.

AlphaTON Capital: Signed a non-binding strategic Letter of Intent to co-develop HITChain, a blockchain-powered claims platform built on The Open Network (TON). The partnership positions HIT at the forefront of decentralized claims infrastructure, targeting efficiency gains in the $300B+ U.S. claims market.

2026 Davos Summit: Announced to host HIT's first Independent InsurTech Summit during the World Economic Forum week in Davos. The event will convene global leaders across insurance, healthcare, and technology. The first panel, "AI and Institutional Resistance - CEOs Driving Change in Legacy Sectors," will feature TIME CEO Jessica Sibley and HIT CEO Tim Johnson. Additional panels will be announced in the coming months, highlighting HIT's expanding influence in shaping global industry dialogue.

SIIA 2025 Conference: Showcased upgraded eDIYBS to thousands of industry leaders. The event expanded broker engagement and reinforced HIT's reputation as a leader in AI-powered self-funding solutions, demonstrating real-time quoting capabilities and platform flexibility.

Key Factors Affecting our Performance

Our ability to retain and expand our network of brokers, TPAs, MGUs and other third-party agents.

While we generate our revenue primarily from small employers and insurance carriers, we currently derive substantially all of our business through brokers, TPAs, and other third-party agents who provide referrals. As a result, the size of our network is critical to our success. We have experienced significant network growth since we commenced operations, and we believe we have the opportunity to continue to grow our network by providing superior innovation in automation, great client experience, competitive pricing, access to quality providers, and competitive insurance coverage relative to other insurers in the same geographic and insurance markets.

Our ability to enter into more collaborations with insurance carriers and offer new products and plans

Our business growth will depend on our ability to collaborate with a diverse range of insurance carriers to service the excess coverage needs of our clients. These collaborations are essential for expanding our portfolio of products and services. Our growth strategy is heavily reliant on our capability to introduce innovative insurance products and plans. By collaborating with multiple insurance carriers, we can leverage their expertise and resources to develop a broader range of offerings. This not only enables us to meet the specific requirements of our clients but also helps in staying competitive in a rapidly changing market.

Our ability to accurately perform underwriting procedures

Our growth is significantly dependent on our ability to accurately perform underwriting procedures and maintain strong relationships with brokers, TPAs, carriers, MGUs, and other third-party agents who utilize our platforms. A failure to conduct precise underwriting actuarial reviews and adjustments to our underwriting tools could result in increased costs and pricing for health plans.

While we are not bound by any agreements that would necessitate paying fees exceeding estimated insurance costs, nor do we have agreements that require indemnification of the carrier, such a failure could cause reputational harm to our eDIYBS platform. This could lead to increased premiums for plans accessed through our platform, potentially affecting our financial standing and market competitiveness.

Our ability to continue invest in technology and innovation

Our ongoing commitment to investing in technology is crucial for driving advancements in automation and enhancing operational efficiency across all aspects of our business. We are dedicated to regularly updating and developing new technology. This continuous investment in technology and innovation will position us at the forefront of the insurance technology.

Seasonality

Our business is generally affected by the seasonal patterns of our enrollment and medical expenses. Usage of our underwriting and quoting platform is seasonal, primarily due to the common renewal of health plan policies in December and January. While we believe we have visibility into the seasonality of our business, our rapid growth rate over the last couple years may have made seasonal fluctuations more difficult to detect. If our rate of growth slows over time, seasonal or cyclical variations in our operations may become more pronounced, and our business, results of operations, and financial position may be adversely affected.

Key Financial and Operating Performance Metrics

We regularly monitor a number of financial and operating metrics in order to measure our current performance and project our future performance. These metrics help us develop and refine our growth strategies and make strategic decisions. We discuss revenues, cost of revenues, and the components of operating expenses. We utilize other key metrics as described below.

Number of Enrolled Employees (EEs) Medical Health Plan Billed

Our primary customer base consists of small business with 5 to 150 employees, and we have expanded to include medium-sized enterprises with more than 150 employees. Our service fee is billed to such business customers on a per enrolled employee (EE) per month (PEPM) basis, which ranges from $2 to $35 depending on selected services - and generates underwriting revenue as a percentage of the monthly premium paid on a PEPM basis. Accordingly, we use the number of EEs as a key indicator of our market penetration and growth, as compared to simply tracking the total number of our business customers, which can vary depending on the number of employees (and their family) enrolled at the business customer. The number of EEs is an employment-based count, and not only would include a single employee, but also an employee's family (spouse and/or children), if the family is also insured on the plan.

The following table sets forth the number of EEs billed for the periods indicated:

		Nine months ended September 30,								Period-to-Period Change
		2025				2024				EEs				Percentage
Number of EEs billed (End of period)			25,248				17,594				7,654				44	%

As of September 30, 2025, the number of enrolled employees reached 25,248, representing a 44% increase from 17,594 in the same period of 2024. This growth reflects strong market demand and the expanded adoption of our self-funded health plan solutions facilitated by continued channel expansion through brokers, TPAs, and agencies.

Adjusted EBITDA

Adjusted EBITDA represents our net income before net interest expense, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense. Adjusted EBITDA is not a measure calculated in accordance with United States Generally Accepted Accounting Principles, or GAAP. Please refer to "Results of Operations" in this item for a discussion of the limitations of adjusted EBITDA and reconciliations of adjusted EBITDA to net income, the most comparable GAAP measurements, respectively, for the three and nine months ended September 30, 2025 and 2024. We exclude certain non-recurring or non-cash items when calculating Adjusted EBITDA, and we believe this approach provides a more meaningful measure by offering a clearer view of our underlying operational performance.

Components of Operating Results

Revenues

While we generate our revenue primarily from small employers and insurance carriers, we grow our business primarily from offering solutions that streamline sales processes, enhance service delivery, and reduce the sales cycle duration for TPAs, MGUs, and Brokers. We offer our services through our three subsidiaries. Program services provided by SMR and MGU activities provided by ICE (including eDIYBS) are interdependent, as they cannot function effectively without being combined. Services provided by HI Card is an optional add-on to our other services, and it cannot be offered on a standalone basis. Brokers that utilize the program services on behalf of the small employer provided by SMR and MGU activities provided by ICE, are not obligated to utilize our HI Card service. Currently ICE does not offer underwriting services as a standalone service. In the future, we may consider offering it as a standalone service.

(i)

SMR is a program manager specializing in customized self-funded benefits programs for small businesses. It creates health plans, selects networks and manages vendors, and sets up benefits plans on the marketplace, including benefits structures, coverage options, and provider networks. Licensed brokers log in to the marketplace to select and sell self-funded benefits plans to small businesses. Our offerings encompass reference-based pricing, group insurance captives, community health plans, and association health programs. SMR collaborates with TPAs and licensed brokers to design health plans that meet the specific needs of employers. The revenue from SMR is derived from a set fee charged per enrolled employee (EE) per month (PEPM). The fee varies depending on the type of program selected by the broker. SMR's fees are paid by small employers.

(ii)

ICE develops and maintains all underwriting models. It defines risk criteria based on risk guidelines provided by carriers, manages underwriting of risk, manages claims activity, ensures reinsurance reporting, and handles monthly reinsurance filings. The revenue from ICE is derived as a specific percentage from the premium received, in our capacity as the Managing General Underwriter (MGU) of insurance companies (Carriers). ICE's fees are paid by carriers.

(iii)

HI Card provides medical claims access data and claims negotiation for SMR's program members who select such services and provides 24/7 accessibility to all incurred medical data for employees who enroll in the HI Card service. Accordingly, all of the revenue we generate from HI Card is from SMR's program members, which are enrolled employees of the small employer. The revenue generated from HI Card is derived from a set fee charged per enrolled employee (EE) per month (PEPM). The fee may vary depending on services or the network selected by the broker. Brokers are not obligated to utilize the HI Card service for the small employers. HI Card's fees are paid by small employers.

The following table sets forth the components of our revenues by subsidiaries and percentages of our total revenues for the periods presented:

		Three Months Ended September 30,																Nine Months Ended September 30,
		2025				% of revenue				2024				% of revenue				2025				% of revenue				2024				% of revenue
Revenues
Revenues from underwriting modeling (ICE)		$	1,389,604				16.4	%		$	1,528,451				34.3	%		$	5,832,164				22.6	%		$	4,952,191				34.0	%
Revenues from fees			7,100,489				83.6	%			2,930,470				65.7	%			19,986,762				77.4	%			9,634,151				66.0	%
SMR			7,100,489				83.6	%			2,250,549				50.5	%			19,986,762				77.4	%			7,379,016				50.5	%
HI Card			-				-	%			679,921				15.2	%			-				-	%			2,255,135				15.5	%
Total revenues			8,490,093				100.0	%			4,458,921				100.0	%			25,818,926				100.0	%			14,586,342				100.0	%

Cost of revenues

Cost of revenues primarily consists of infrastructure costs to operate our platform such as hosting fees and fees paid to various third-party partners for access to their technology, services and amortization expenses of our capitalized internal-use software related to our platform. We mainly outsource captive management services and data services from the third-party companies. Our internal proprietary system seeks to consistently improve underwriting and services results through machine learning and data feeds. The captive management activities include introducing new carriers, conducting due diligence on carriers, conducting feasibility studies to determine the viability to be a stop-loss carrier on the platform, negotiating terms and contracts, coordinating audit requests, managing relationship with unrelated carriers and their regulators and auditor firms to ensure that our risk associated with our service offerings is minimized. See Part II, "Item 1A. Risk Factors - Risks Related to our Business and Industry" for additional information on the risks associated with our service offerings.

Sales and marketing expenses

Sales and marketing expenses primarily consist of personnel-related costs including salaries, stock-based compensation expense, benefits and commissions cost for our sales and marketing personnel. Sales and marketing expenses also include the costs for advertising, promotional and other marketing activities, as well as certain fees paid to various third-party for sales and customer acquisition.

General and administrative expenses

General and administrative expenses primarily consist of personnel-related costs and related expenses for our executives, finance, legal, human resources, technical support, and administrative personnel as well as the costs associated with professional fees for external legal, accounting, and other consulting services, insurance premiums.

Research and development expenses

Research and development expenses primarily consist of personnel-related costs, including salaries, stock-based compensation expense and benefits for our research and development personnel. Additional expenses include costs related to the software development, quality assurance, and testing of new technology, and enhancement of our existing platform technology.

Provision for income taxes

Provision for income taxes consists primarily of changes to our current and deferred federal and state tax assets and liabilities. Deferred income taxes are recognized for the tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities. Our deferred tax assets and liabilities are calculated by applying the current tax rates and laws to taxable years in which such differences are expected to reverse.

We continually review the need for, and the adequacy of, valuation allowances, and recognize benefits from our deferred tax assets only when an analysis of both positive and negative factors indicates that it is more likely than not such benefits will be realized.

Results of Operations

The following table sets forth our condensed consolidated statements of operations for the periods presented, both in absolute amount and as a percentage of our total revenues for the periods presented:

		Three Months Ended September 30,																Nine Months Ended September 30,
		2025				% of revenue				2024				% of revenue				2025				% of revenue				2024				% of revenue
Revenues
Revenues from underwriting modeling (ICE)		$	1,389,604				16.4	%		$	1,528,451				34.3	%		$	5,832,164				22.6	%		$	4,952,191				34.0	%
Revenues from fees			7,100,489				83.6	%			2,930,470				65.7	%			19,986,762				77.4	%			9,634,151				66.0	%
SMR			7,100,489				83.6	%			2,250,549				50.5	%			19,986,762				77.4	%			7,379,016				50.5	%
HI Card			-				-	%			679,921				15.2	%			-				-	%			2,255,135				15.5	%
Total revenues			8,490,093				100.0	%			4,458,921				100.0	%			25,818,926				100.0	%			14,586,342				100.0	%
Cost of revenues			3,346,277				39.4	%			979,628				22.0	%			9,009,841				34.9	%			2,944,266				20.2	%
Gross profit		$	5,143,816				60.6	%		$	3,479,293				78.0	%		$	16,809,085				65.1	%		$	11,642,076				79.8	%
Operating expenses
Sales and marketing expenses			962,567				11.3	%			508,467				11.4	%			3,279,560				12.7	%			2,526,197				17.3	%
General and administrative expenses			3,451,907				40.7	%			1,813,520				40.7	%			10,474,125				40.6	%			5,629,393				38.6	%
Research and development expenses			235,819				2.8	%			718,424				16.1	%			1,356,149				5.3	%			2,180,246				14.9	%
Total operating expenses			4,650,293				54.8	%			3,040,411				68.2	%			15,109,834				58.6	%			10,335,836				70.8	%
Other income (expense):
Interest income			111,699				1.3	%			38,460				0.9	%			305,263				1.2	%			94,111				0.6	%
Interest expenses			-				-	%			(165,000	)			(3.7	)%			-				-	%			(495,000	)			(3.4	)%
Other income			-				-	%			157,156				3.5	%			118,399				0.5	%			157,156				1.1	%
Other expense			(5,000	)			(0.1	)%			(62,759	)			(1.4	)%			(5,000	)			-	%			(62,759	)			(0.4	)%
Total other income (expense), net			106,699				1.2	%			(32,143	)			(0.7	)%			418,662				1.7	%			(306,492	)			(2.1	)%
Income before income tax expense		$	600,222				7.0	%		$	406,739				9.1	%		$	2,117,913				8.2	%		$	999,748				6.9	%
Provision for income taxes			(148,046	)			(1.7	)%			(30,653	)			(0.7	)%			(536,514	)			(2.1	)%			(185,119	)			(1.3	)%
Net income		$	452,176				5.3	%		$	376,086				8.4	%		$	1,581,399				6.1	%		$	814,629				5.6	%
Other Financial Data:
Adjusted EBITDA(1)		$	999,056				11.8	%		$	668,863				15.0	%		$	3,796,283				14.7	%		$	1,805,795				12.4	%

(1)

We define adjusted EBITDA as net income before net interest expense, taxes, and depreciation and amortization expense, adjusted to eliminate stock-based compensation expense. See "Adjusted EBITDA" below for more information and for a reconciliation of adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Adjusted EBITDA

		Three Months Ended September 30,								Nine Months Ended September 30,
		2025				2024				2025				2024
Reconciliation from Net Income to Adjusted EBITDA:
Net income		$	452,176			$	376,086			$	1,581,399			$	814,629
Interest (income) expenses			(111,699	)			126,540				(305,263	)			400,889
Depreciation and amortization			217,981				135,584				489,947				405,158
Income tax expense			148,046				30,653				536,514				185,119
Stock-based compensation expense			292,552				-				1,493,686				-
Total net adjustments			546,880				292,777				2,214,884				991,166
Adjusted EBITDA		$	999,056			$	668,863			$	3,796,283			$	1,805,795

Condensed Consolidated Balance Sheet Data

		September 30, 2025				December 31, 2024
Cash and cash equivalents		$	8,023,613			$	7,849,248
Accounts receivable, net			868,628				1,647,103
Other receivables			3,871,106				500,252
Software			6,182,691				3,962,461
Total assets			22,755,844				15,768,489
Total liabilities			5,596,881				2,599,461
Total stockholders' equity			17,158,963				13,169,028

Cash and cash equivalents

As of September 30, 2025, the balance of cash and cash equivalents was $8,023,613, representing a modest increase compared to $7,849,248 as of December 31, 2024.

Accounts receivable, net

As of September 30, 2025, net accounts receivable decreased by $778,475 to $868,628, from $1,647,103 as of December 31, 2024. This reduction mainly resulted from process enhancements and automation of our accounts receivable (AR) system.

Other receivables

As of September 30, 2025, the balance of other receivables increased by $3,370,854 to $3,871,106, from $500,252 as of December 31, 2024. This increase was mainly attributable to the purchase of Deferred Administrative Surplus for $3,481,684 on March 18, 2025.

Software

As of September 30, 2025, the balance of software increased by $2,220,230 to $6,182,691, from $3,962,461 as of December 31, 2024. This increase was mainly attributable to a $2,951,949 increase in the expansion of eDIYBS systems completed in September 2025, partially offset by a $489,947 increase in accumulated amortization for the nine months ended September 30, 2025.

Total liabilities

As of September 30, 2025, the balance of total liabilities increased by $2,997,420 to $5,596,881, from $2,599,461 as of December 31, 2024. This increase was driven by the higher accounts payable and accrued expenses reflecting the expansion of our business scale. Notably, the first nine months of 2025 revenues have reached approximately 132% of full-year 2024 revenues, which led to higher liabilities in line with operational growth.

Total stockholders' equity

As of September 30, 2025, the balance of total stockholders' equity increased by $3,989,935 to $17,158,963, from $13,169,028 as of December 31, 2024. This increase was mainly attributable to our net income and stock-based compensation. Please refer to our Condensed Consolidated Statements of Changes in Stockholders' Equity for additional information.

Comparison of Three Months Ended September 30, 2025 and 2024

Revenues

		Three Months Ended September 30,
		2025								2024
						Percentage of								Percentage of				Period-to-Period Change
		Amount				Revenue				Amount				Revenue				Amount				Percentage
Revenues from underwriting modeling (ICE)			1,389,604				16.4	%			1,528,451				34.3	%			(138,847	)			(9.1	)%
Revenues from fees			7,100,489				83.6	%			2,930,470				65.7	%			4,170,019				142.3	%
SMR			7,100,489				83.6	%			2,250,549				50.5	%			4,849,940				215.5	%
HI Card			-				-	%			679,921				15.2	%			(679,921	)			(100.0	)%
Total revenues			8,490,093				100.0	%			4,458,921				100.0	%			4,031,172				90.4	%

Total revenues for the three months ended September 30, 2025 reached $8.5 million, up 90.4% from $4.5 million in the same period of 2024. This growth was primarily driven by strong demand for our new product offerings facilitated by continued channel expansion through brokers, TPAs, and agencies.

This growth was supported by a 44% increase in total billable enrolled employees, which rose to 25,248 as of September 30, 2025, compared to 17,594 for the same period in 2024.

As the services provided by SMR and ICE are delivered as an interdependent and integrated solution, we evaluate their performance based on the total revenues generated. While revenues from underwriting modeling generated from ICE decreased by $0.1 million to $1.4 million, this decline was more than offset by a $4.8 million increase in revenues from fees generated from SMR, leading to a net increase in the revenues from the integrated solution. Revenues from fees continue to outpace revenues from underwriting modeling as more employers prioritize higher-quality coverage and enhanced service offerings.

No revenues were generated from HI Card, provided as an optional service, for the three months ended September 30, 2025, compared to $0.7 million for the same period in 2024. We made strategic decisions to temporarily pause HI Card beta testing and prioritize tech resource toward enhancing eDIYBS that drives immediate higher revenue. This disciplined allocation of resources has strengthened our near-term growth trajectory while positioning HI Card for a more robust relaunch. We currently expect to resume HI Card development toward the end of 2025 or early in the first quarter of 2026.

Cost of revenues

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Cost of revenues			3,346,277				39.4	%			979,628				22.0	%			2,366,649				17.4	%

Cost of revenues increased by $2.3 million to $3.3 million for the three months ended September 30, 2025, from $1.0 million for the three months ended September 30, 2024. As a percentage of revenue, cost of revenues increased to 39.4% for the three months ended September 30, 2025, from 22.0% for the same period in 2024.

The increase was primarily attributable to higher captive management fees related to the new products and new channels launched in July 2024, as we continued to expand our business scale.

Sales and marketing expenses

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Sales and marketing expenses			962,567				11.3	%			508,467				11.4	%			454,100				(0.1	)%

Sales and marketing expenses increased by $0.5 million to $1.0 million for the three months ended September 30, 2025, from $0.5 million for the three months ended September 30, 2024. As a percentage of revenue, sales and marketing expenses remained stable at 11.3% for the three months ended September 30, 2025, compared to 11.4% for the same period in 2024. Our channel-partnership model continues to drive revenue growth without the need for a large in-house sales force.

General and administrative expenses

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
General and administrative expenses:
Operations division			1,260,832				14.9	%			1,013,628				22.8	%			247,204				(7.9	)%
Administrative division			2,191,075				25.8	%			799,892				17.9	%			1,391,183				7.9	%
Total General and administrative expenses			3,451,907				40.7	%			1,813,520				40.7	%			1,638,387				-	%

We bifurcate general and administrative expenses as follows:

Administrative division - The administrative division mainly represents payroll, stock-based compensation expense and benefits expenses incurred related to Executives, Human Resources, Accounting, and Finance related personnel.

Operations division - The operations division mainly consists of payroll, stock-based compensation expense and benefits expenses incurred related to our underwriting, claims management, operations development, enrollment, nursing and strategic program development personnel.

General and administrative expenses increased by $1.6 million to $3.4 million for the three months ended September 30, 2025, from $1.8 million for the three months ended September 30, 2024. The overall increase was primarily attributable to the expenses associated with being a public company of $1.1 million, including D&O insurance, board compensation, investor relations, etc. However, as a percentage of revenue, general and administrative expenses remained stable at 40.7% for the three months ended September 30, 2025, compared to the same period in 2024. This stability as a percentage of revenue was because the ratio impact of costs associated with being a public company were offset by improved operating leverage in our operations division.

Research and development expenses

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Research and development expenses			235,819				2.8	%			718,424				16.1	%			(482,605	)			(13.3	)%

Research and development expenses decreased by $0.5 million to $0.2 million for the three months ended September 30, 2025, from $0.7 million for the three months ended September 30, 2024. As a percentage of revenue, research and development expenses decreased to 2.8% for the three months ended September 30, 2025, from 16.1% for the same period in 2024.

The decrease was primarily attributable to the capitalization of development costs related to the buildout of eDIYBS 3.0. During the three months ended September 30, 2025, our IT focused on deployment and feature enhancement phases for this next-generation platform. The expansion of eDIYBS systems to serve groups with more than 150 employees was completed in September 2025.

Income before income tax expense

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Income before income tax expense			600,222				7.0	%			406,739				9.1	%			193,483				(2.1	)%

Income before income tax expense increased by $0.2 million to $0.6 million for the three months ended September 30, 2025, from $0.4 million for the three months ended September 30, 2024. This increase was primarily attributable to our strong revenue growth and disciplined cost management.

Provision for income taxes

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Provision for income taxes			(148,046	)			(1.7	)%			(30,653	)			(0.7	)%			(117,393	)			(1.0	)%

Provision for income taxes increased by $0.12 million to $0.15 million for the three months ended September 30, 2025, from $0.03 million for the three months ended September 30, 2024. The increase in provision for income taxes was attributable to the increased income before income taxes, primarily driven by our strong revenue growth and disciplined cost management.

Adjusted EBITDA

		Three Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Adjusted EBITDA			999,056				11.8	%			668,863				15.0	%			330,193				(3.2	)%

Adjusted EBITDA increased by $0.3 million to $1.0 million for the three months ended September 30, 2025, from $0.7 million for the three months ended September 30, 2024. As a percentage of revenue, adjusted EBITDA decreased to 11.8% for the three months ended September 30, 2025, from 15.0% for the same period in 2024. The decrease in adjusted EBITDA was primarily due to the increase in cost of revenues, mainly driven by higher captive management fees related to the new products and new channels launched in July 2024.

Comparison of Nine Months Ended September 30, 2025 and 2024

Revenues

		Nine Months Ended September 30,
		2025								2024
						Percentage of								Percentage of				Period-to-Period Change
		Amount				Revenue				Amount				Revenue				Amount				Percentage
Revenues from underwriting modeling (ICE)			5,832,164				22.6	%			4,952,191				34.0	%			879,973				17.8	%
Revenues from fees			19,986,762				77.4	%			9,634,151				66.0	%			10,352,611				107.5	%
SMR			19,986,762				77.4	%			7,379,016				50.5	%			12,607,746				170.9	%
HI Card			-				-	%			2,255,135				15.5	%			(2,255,135	)			(100.0	)%
Total revenues			25,818,926				100.0	%			14,586,342				100.0	%			11,232,584				77.0	%

Total revenues for the nine months ended September 30, 2025 reached $25.8 million, up 77.0% from $14.6 million in the same period of 2024. This growth was primarily driven by strong demand for our new product offerings facilitated by continued channel expansion through brokers, TPAs, and agencies.

This growth was supported by a 44% increase in total billable enrolled employees, which rose to 25,248 as of September 30, 2025, compared to 17,594 in the same prior last year.

As the services provided by SMR and ICE are delivered as an interdependent and integrated solution, we evaluate their performance based on the total revenues generated. Revenues from underwriting modeling generated from ICE increased 17.8% to $5.8 million, compared to $5.0 million for the same period in 2024, reflecting expanding adoption of our solutions. Revenues from fees generated from SMR increased 170.9% to $20.0 million, compared to $7.4 million for the same period in 2024. Revenues from fees continue to outpace revenues from underwriting modeling as more employers prioritize higher-quality coverage and enhanced service offerings.

No revenues were generated from HI Card, provided as an optional service, for the nine months ended September 30, 2025, compared to $2.3 million for the same period in 2024. We made strategic decisions to temporarily pause HI Card beta testing and prioritize tech resource for enhancing eDIYBS that drives immediate higher revenue. This disciplined allocation of resources has strengthened our near-term growth trajectory while positioning HI Card for a more robust relaunch. We currently expect to resume HI Card development toward the end of 2025 or early in the first quarter of 2026.

Cost of revenues

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Cost of revenues			9,009,841				34.9	%			2,944,266				20.2	%			6,065,575				14.7	%

Cost of revenues increased by $6.1 million to $9.0 million for the nine months ended September 30, 2025, from $2.9 million for the nine months ended September 30, 2024. As a percentage of revenue, cost of revenues increased to 34.9% for the nine months ended September 30, 2025, from 20.2% for the same period in 2024.

The increase was primarily attributable to higher captive management fees related to the new products and new channels launched in July 2024, as we continued to expand our business scale.

Sales and marketing expenses

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Sales and marketing expenses			3,279,560				12.7	%			2,526,197				17.3	%			753,363				(4.6	)%

Sales and marketing expenses increased by $ 0.8 million to $3.3 million for the nine months ended September 30, 2025, from $2.5 million for the nine months ended September 30, 2024. However, as a percentage of revenue, sales and marketing expenses declined to 12.7% for the nine months ended September 30, 2025, compared to 17.3% for the same period in 2024. This reduction was primarily due to our channel partnership model, which continues to drive revenue growth without the need for a large in-house sales force.

General and administrative expenses

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
General and administrative expenses:
Operations division			4,047,296				15.7	%			3,207,139				22.0	%			840,157				(6.3	)%
Administrative division			6,426,829				24.9	%			2,422,254				16.6	%			4,004,575				8.3	%
Total General and administrative expenses			10,474,125				40.6	%			5,629,393				38.6	%			4,844,732				2.0	%

We bifurcate general and administrative expenses as follows:

Administrative division - The administrative division mainly represents payroll, stock-based compensation expense and benefits expenses incurred related to Executives, Human Resources, Accounting, and Finance related personnel.

Operations division - The operations division mainly consists of payroll, stock-based compensation expense and benefits expenses incurred related to our underwriting, claims management, operations development, enrollment, nursing and strategic program development personnel.

General and administrative expenses increased by $4.8 million to $10.4 million for the nine months ended September 30, 2025, from $5.6 million for the nine months ended September 30, 2024. The overall increase in general and administrative expenses for the nine months ended September 30, 2025 was primarily attributable to the increased expenses associated with being a public company of $2.5 million, including D&O insurance, board compensation, investor relations, media outreach, etc. An additional $0.6 million was associated with stock-based compensation expenses, and the remainder of the increase reflected higher personnel-related expenses.

As a percentage of revenue, general and administrative expenses increased slightly to 40.6% for the nine months ended September 30, 2025, from 38.6% for the same period in 2024. The increase in the percentage of revenue was primarily attributable to expenses associated with being a public company, the impact of which was partially offset by improved operating leverage in our operations division.

Research and development expenses

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Research and development expenses			1,356,149				5.3	%			2,180,246				14.9	%			(824,097	)			(9.6	)%

Research and development expenses decreased by $0.8 million to $1.4 million for the nine months ended September 30, 2025, from $2.2 million for the nine months ended September 30, 2024 As a percentage of revenue, research and development expenses decreased to 5.3% for the nine months ended September 30, 2025, from 14.9% for the same period in 2024.

The decrease was primarily attributable to the capitalization of development costs related to the buildout of eDIYBS 3.0. During the nine months ended September 30, 2025, our IT remained focused on enhancing features for this next-generation platform. The expansion of eDIYBS systems to serve groups with more than 150 employees was completed in September 2025.

Income before income tax expense

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Income before income tax expense			2,117,913				8.2	%			999,748				6.9	%			1,118,165				1.3	%

Income before income tax expense increased by $1.1 million to $2.1 million for the nine months ended September 30, 2025, from $1.0 million for the nine months ended September 30, 2024. This increase was primarily attributable to our strong revenue growth and disciplined cost management.

Provision for income taxes

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Provision for income taxes			(536,514	)			(2.1	)%			(185,119	)			(1.3	)%			(351,395	)			(0.8	)%

Provision for income taxes increased by $0.3 million to $0.5 million for the nine months ended September 30, 2025, from $0.2 million for the nine months ended September 30, 2024. The increase in provision for income taxes was attributable to the increased income before income taxes, primarily driven by our strong revenue growth and disciplined cost management.

Adjusted EBITDA

		Nine Months Ended September 30,
		2025								2024								Period-to-Period Change
		Amount				Percentage of Revenue				Amount				Percentage of Revenue				Amount				Percentage of Revenue
Adjusted EBITDA			3,796,283				14.7	%			1,805,795				12.4	%			1,990,488				2.3	%

Adjusted EBITDA increased by $2.0 million to $3.8 million for the nine months ended September 30, 2025, from $1.8 million for the nine months ended September 30, 2024. As a percentage of revenue, adjusted EBITDA improved to 14.7% for the nine months ended September 30, 2025, from 12.4% for the same period in 2024. The increase in adjusted EBITDA was primarily attributable to robust revenue growth, driven by strong demand for our new product offerings facilitated by continued channel expansion through brokers, TPAs, and agencies.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have funded our operations primarily through cash from operating activities, short-term loans, our IPO completed in December 2024, and our issuance of Series A Convertible Preferred Stock for $2 million to an institutional investor, which was converted into shares of Class A Common Stock in August 2023 on a one for one basis.

Our cash and cash equivalents as of September 30, 2025 were held in order to fund our working capital needs. We do not enter into investments for trading or speculative purposes. Our policy is to invest any cash in excess of our immediate requirements in investments designed to preserve the principal balance and provide liquidity. Accordingly, our cash and cash equivalents are invested primarily in demand deposit and money market accounts that are currently providing minimal returns. We believe that our cash generated from our operating activities will allow us to continue as a going concern at least twelve months from the date of this Quarterly Report on Form 10-Q.

Summary of Cash Flows

		Nine Months Ended September 30,
		2025				2024
Cash provided by (used in):
Operating activities		$	2,682,602			$	2,707,376
Investing activities			(2,358,213	)			(294,634	)
Financing activities			(150,024	)			(3,081,864	)
Increase (decrease) in cash and cash equivalents		$	174,365			$	(669,122	)

Operating Activities

Net cash provided by operating activities remained stable at $2.7 million for the nine months ended September 30, 2025, compared to the same period in 2024. Cash provided by operating activities for the nine months ended September 30, 2025, principally resulted from our net income of $1.6 million, $4.3 million in adjustments for non-cash items primarily related to amortization, provision for refund liability and stock-based compensation expense, and offset by $3.2 million of cash used to fund changes in working capital, including a decrease in accounts receivable of $0.8 million, an increase in other receivables of $3.4 million, an increase in prepaid expenses and other current assets of $0.7 million, an increase in long-term prepaid expenses of $0.2 million, an increase in accounts payable and accrued expenses of $2.0 million, a decrease in income taxes payable of $0.2 million and a decrease in other current liabilities of $1.5 million.

Cash provided by operating activities for the nine months ended September 30, 2024, principally resulted from our net income of $0.8 million, $0.8 million in adjustments for non-cash items primarily related to amortization, deferred tax benefits, amortization of debt discount and interest income, and $1.1 million of cash provided by changes in working capital, including a decrease in accounts receivable of $1.3 million, a decrease in other receivables of $1.2 million, an increase in prepaid expenses and other current assets of $0.2 million, a decrease in accounts payable and accrued expenses of $1.1 million and a decrease in income taxes payable of $0.1 million.

Investing Activities

Cash used in investing activities increased by $2.1 million to $2.4 million for the nine months ended September 30, 2025, compared to $0.3 million for the same period in 2024. The primary use of cash used in investing activities for the nine months ended September 30, 2025 and 2024 were both related to the development of our internal-use software, reflecting our continued investment in enhancing all our technology platforms.

Financing Activities

Cash used in financing activities decreased by $2.9 million to $0.2 million for the nine months ended September 30, 2025, compared to $3.1 million for the same period in 2024. The decrease was primarily driven by a $2.1 million repayment of notes payable during the 2024 period, which did not recur in 2025. Cash used in financing activities for the nine months ended September 30, 2025 consisted primarily of payments of deferred offering cost for our public offering.

Contractual Obligations and Commitments

Our principal commitments consist of obligations under our non-cancellable lease for our office. The following table summarizes the contractual obligations as of September 30, 2025. Future events could cause actual payments to differ from these estimates.

		Payment due by period
		Total				Less than 1 year				1 - 3 years				3 - 5 years				More than 5 years
Operating lease obligations			173,909				85,669				88,240				-				-

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The purpose of this guidance is to enhance the transparency and usefulness of income tax disclosures and provide comprehensive income tax information, particularly in relation to rate reconciliation and income taxes paid in the U.S. and foreign jurisdictions. This standard will be applicable for our Annual Report on Form 10-K for the year ending December 31, 2025 and annual periods thereafter. Currently, we are assessing the potential impact of this guidance on our consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This standard calls for enhanced disclosures about components of expense captions on the face of the income statement. This standard will be effective for fiscal years beginning after December 15, 2026, with the option to apply it retrospectively. Early adoption is allowed. Currently, we are assessing the potential impact of this guidance on our condensed consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-05 Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs under ASC 350-40. The new standard is effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is allowed. The new standard may be applied prospectively, retrospectively, or via a modified prospective transition method. Currently, we are assessing the potential impact of this guidance on our condensed consolidated financial statement disclosures.

We do not believe that any other recently issued but not yet effective accounting pronouncements are expected to have a material effect on our condensed consolidated financial statements.

JOBS Act

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. We have elected to early adopt certain new accounting standards, as disclosed herein. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A Common Stock that is held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to emerging growth company will have the meaning associated with it in the JOBS Act.