Health In Tech, Inc.

Previous wording

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, 2025, 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.”

Current wording

You should read the following discussion of our financial condition and results of operations in conjunction with our 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, 2025, as filed with the Securities and Exchange Commission. In addition to our historical 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.”

Previous wording

Platform placed plan value represents the aggregate contractual value of self-funded health plans with stop-loss insurance (self-funded stop-loss plans) placed through our platform, covering the duration of the plans’ contractual terms. The contractual term is typically 12 months from the plan’s effective date.

Current wording

Platform Placed Plan Value represents the aggregate contractual value of self-funded health plans with stop-loss insurance (self-funded stop-loss plans) placed through our platform during the fiscal year through the applicable fiscal quarter end, measured over each plan’s full contractual term of typically 12 or 36 months from the plan’s effective date. PPPV reflects the total economic value flowing through the platform, including premium, claim funding, and administrative fees, and is a measure of platform transaction volume rather than an indication of our own revenue or take rate.

Previous wording

In the first quarter of 2026, the platform placed $82.0 million of self-funded stop-loss plans. These consist of self-funded health plans and bundled stop-loss premiums.

Current wording

As of June 30, 2026, the platform placed $84.0 million of self-funded stop-loss plans.

Previous wording

Adjusted EBITDA represents our net income (loss) before net interest expense, taxes and amortization expense, adjusted to eliminate stock-based compensation expense, including employer payroll taxes related to stock-based awards. 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 (loss), the most comparable GAAP measurements, respectively, for the three months ended March 31, 2026 and 2025. 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.

Current wording

Adjusted EBITDA represents our net income (loss) attributable to common stockholders before net interest income, taxes and amortization expense, adjusted to eliminate stock-based compensation expense, including employer payroll taxes related to stock-based awards, provision for credit losses on other receivables and other non-recurring items. 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 (loss) attributable to common stockholders, the most comparable GAAP measurements, respectively, for the three and six months ended June 30, 2026 and 2025. 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.

Previous wording

Cost of revenues primarily consists of (i) infrastructure costs to operate our platform, such as hosting fees, fees paid to various third-party partners for access to their technology and services, and amortization expenses of our capitalized internal-use software related to the platform, (ii) costs of plan administrative services provided by the TPA designated in each pre-designed plan and other vendors assigned to each TPA, and (iii) costs related to the captive management activities. 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.

Current wording

Cost of revenues primarily consists of direct costs attributable to operating its platform and delivering platform-enabled services, many of which vary with the volume of services delivered, (i) infrastructure costs to operate our platform, such as hosting fees, fees paid to various third-party partners for access to their technology and services, and amortization expenses of our capitalized internal-use software related to the platform, (ii) costs of plan administrative services provided by the TPA designated in each pre-designed plan and other vendors assigned to each TPA, and (iii) costs related to the captive management activities. 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. Personnel costs associated with underwriting oversight, claims management, enrollment support and other operational functions are classified as general and administrative expenses. These employees support the our overall operating platform and service infrastructure across our portfolio of carrier and employer relationships, rather than performing activities that are directly identifiable to a specific revenue contract or separately priced service deliverable. See Part II,*“Item 1A. Risk Factors — Risks Related to our Business and Industry”*in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 25, 2026 for additional information on the risks associated with our service offerings.

Previous wording

Sales and marketing expenses primarily consist of (i) costs associated with expanding the our distribution channels through third-party agents, which are variable and based on policies sold and fees collected, and (ii) costs related to the internal sales team responsible for onboarding agencies and agents onto the platform. These expenses include commissions, incentive compensation, salaries and benefits, and other related selling costs. 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.

Current wording

Sales and marketing expenses primarily consist of (i) costs associated with expanding our distribution channels through third-party agents, which are variable and based on policies sold and fees collected, and (ii) costs related to the internal sales team responsible for onboarding agencies and agents onto the platform. These expenses include commissions, incentive compensation, salaries and benefits, and other related selling costs. 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.

Previous wording

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.

Current wording

General and administrative expenses primarily consist of personnel-related costs and related expenses for our executives, finance, legal, human resources, technical support, and operations personnel, as well as the costs associated with professional fees for external legal, accounting, and other consulting services, and insurance premiums. Personnel in the operations division, including those providing underwriting oversight, claims management, enrollment support and other operational functions, are classified as general and administrative because they support our overall operating platform and service infrastructure across our portfolio of carrier and employer relationships, rather than performing activities directly attributable to specific revenue contracts or separately priced service deliverables.

Previous wording

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:

Current wording

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

Previous wording

As of March 31, 2026, the balance of software increased by $177,667 to $6,708,561, from $6,530,894 as of December 31, 2025. This increase was mainly attributable to a $581,134 investment in software development, partially offset by a $403,467 increase in accumulated amortization for the three months ended March 31, 2026.

Current wording

As of June 30, 2026, the balance of software increased by $666,824 to $7,197,718, from $6,530,894 as of December 31, 2025. This increase was mainly attributable to a $1,390,611 investment in software development, partially offset by a $723,787 increase in accumulated amortization for the six months ended June 30, 2026.

Previous wording

As of March 31, 2026, the balance of total stockholders’ equity increased by $4,491,083 to $21,603,148, from $17,112,065 as of December 31, 2025. This increase was mainly attributable to our net proceeds of $5,928,120 from our PIPE, after deducting offering costs and placement agent fees. Please refer to our Condensed Consolidated Statements of Changes in Stockholders’ Equity for additional information.

Current wording

As of June 30, 2026, the balance of total stockholders’ equity increased by $2,512,307 to $19,624,372, from $17,112,065 as of December 31, 2025. This increase was mainly attributable to our net proceeds of $5,928,120 from our PIPE, after deducting offering costs and placement agent fees. Please refer to our unaudited Consolidated Statements of Changes in Stockholders’ Equity for additional information.

Previous wording

Cost of revenues increased by $1.6 million to $4.3 million for the three months ended March 31, 2026, from $2.7 million for the three months ended March 31, 2025. As a percentage of revenue, cost of revenues increased to 48.6% for the three months ended March 31, 2026, from 33.2% for the same period in 2025.

Current wording

Cost of revenues increased by $1.1 million to $4.1 million for the three months ended June 30, 2026, from $3.0 million for the three months ended June 30, 2025. As a percentage of revenue, cost of revenues increased to 51.3% for the three months ended June 30, 2026, from 32.3% for the same period in 2025.

Previous wording

Sales and marketing expenses were $2.3 million for the three months ended March 31, 2026, more than doubled compared to $1.1 million for the three months ended March 31, 2025. As a percentage of revenue, sales and marketing expenses increased to 26.1% for the three months ended March 31, 2026, compared to 13.6% for the same period in 2025, primarily due to the increase in sales distribution fees with agencies, which drives revenue growth without the need for a large in-house sales force.

Current wording

Sales and marketing expenses were $2.2 million for the three months ended June 30, 2026, compared to $1.2 million for the three months ended June 30, 2025. As a percentage of revenue, sales and marketing expenses increased to 27.5% for the three months ended June 30, 2026, compared to 13.2% for the same period in 2025, primarily due to the increase in sales distribution fees with agencies, which drives revenue growth without the need for a large in-house sales force.

Previous wording

Research and development expenses increased by $0.4 million to $0.9 million for the three months ended March 31, 2026, from $0.5 million for the three months ended March 31, 2025. As a percentage of revenue, research and development expenses increased to 10.5% for the three months ended March 31, 2026, from 6.7% for the same period in 2025.

Current wording

Research and development expenses increased by $0.3 million to $0.9 million for the three months ended June 30, 2026, from $0.6 million for the three months ended June 30, 2025. As a percentage of revenue, research and development expenses increased to 10.9% for the three months ended June 30, 2026, from 6.3% for the same period in 2025.

Previous wording

The personnel-related costs associated with capitalized software development decreased by $0.3 million to $0.2 million for the three months ended March 31, 2026, from $0.5 million for the same period in 2025. The decrease was primarily attributable to the changes in the composition of development projects. During the three months ended March 31, 2026, our IT remained focused on developing new functionalities and features for our next-generation platform.

Current wording

As development activities progressed, a greater portion of work during the three months ended June 30, 2026 was directed toward earlier-stage research and new feature exploration, which does not meet the criteria for capitalization. Accordingly, the personnel-related costs associated with capitalized software development decreased by $0.3 million to $0.2 million for the three months ended June 30, 2026, from $0.5 million for the same period in 2025. During the three months ended June 30, 2026, our IT remained focused on developing new functionalities and features for our next-generation platform.

Previous wording

Income before income taxes decreased by $2.8 million to a loss of $2.1 million for the three months ended March 31, 2026, from income of $0.7 million for the three months ended March 31, 2025. This decrease was primarily attributable to the plan administrative service costs and distribution fees, which were not incurred in the same period in 2025.

Current wording

Income before income taxes decreased by $4.1 million to a loss of $3.3 million for the three months ended June 30, 2026, from income of $0.8 million for the three months ended June 30, 2025. This decrease was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.

Previous wording

Provision for income taxes decreased by $0.7 million to an income tax benefit of $0.5 million for the three months ended March 31, 2026, from an income tax expense of $0.2 million for the three months ended March 31, 2025. The decrease in provision for income taxes was primarily attributable to the loss before income taxes, driven by the plan administrative service costs and distribution fees, which were not incurred in the same period in 2025.*** ***

Current wording

Provision for income taxes decreased by $1.0 million to an income tax benefit of $0.8 million for the three months ended June 30, 2026, from an income tax expense of $0.2 million for the three months ended June 30, 2025. The decrease in provision for income taxes was primarily attributable to the loss before income taxes, driven by temporarily lower revenues due to the onboarding of a new carrier, higher plan administrative service costs, and increased investment in sales, marketing and technology.*** ***

Previous wording

Adjusted EBITDA decreased by $2.5 million to negative $1.3 million for the three months ended March 31, 2026, from $1.2 million for the three months ended March 31, 2025. As a percentage of revenue, adjusted EBITDA decreased to negative 14.7% for the three months ended March 31, 2026, from 15.3% for the same period in 2025. The decrease in adjusted EBITDA was primarily attributable to the plan administrative service costs and distribution fees, which were not incurred in the same period in 2025.

Current wording

Adjusted EBITDA decreased by $2.9 million to negative $1.3 million for the three months ended June 30, 2026, from $1.6 million for the three months ended June 30, 2025. As a percentage of revenue, adjusted EBITDA decreased to negative 16.5% for the three months ended June 30, 2026, from 16.8% for the same period in 2025. The decrease in adjusted EBITDA was primarily attributable to temporarily lower revenues due to the onboarding of a new carrier, the plan administrative service costs associated with the pre-designed self-funded plan administration services launched in January 2026, and increased investment in sales, marketing and technology to support long-term growth.

Previous wording

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 $0.9 million to $1.5 million, this decline was more than offset by a $1.6 million increase in revenues from fees generated from SMR, leading to a net increase in the revenues from the integrated solution.

Current wording

Although the services provided by SMR and ICE are delivered as an interdependent and integrated solution and we evaluate their performance based on the total revenues generated, we provide the following breakdown for transparency. While revenues from underwriting modeling generated from ICE decreased by $1.7 million to $2.7 million, this decline was partially offset by a $1.2 million increase in revenues from fees generated from SMR, resulting in a net decrease of $0.5 million in total revenues from the integrated solution.

Previous wording

Revenues from fees continue to outpace revenues from underwriting modeling as SMR launched the pre-designed self-funded plan administration services effective on January 1, 2026. SMR enhance its services to offer pre-designed self-funded plans to employers, leveraging years of experience selecting and managing the vendors that are essential to the plan. This new service model provides employers with more streamlined, differentiated and flexible self-funded plan arrangements.

Current wording

Revenues from fees continue to outpace revenues from underwriting modeling as SMR launched the pre-designed self-funded plan administration services effective on January 1, 2026. SMR enhances its services to offer pre-designed self-funded plans to employers, leveraging years of experience selecting and managing the vendors that are essential to the plan. This new service model provides employers with more streamlined, differentiated and flexible self-funded plan arrangements.

Previous wording

Net cash used in operating activities was $3.3 million for the three months ended March 31, 2026, compared to $0.5 million of net cash provided by operating activities for the same period in 2025. This shift was primarily due to the net loss in the three months ended March 31, 2026, compared to net income in the same period in 2025, along with increased working capital requirements. Cash used in operating activities for the three months ended March 31, 2026, principally resulted from net loss of $1.6 million, offset by $0.4 million in adjustments for non-cash items primarily related to amortization, deferred tax benefits and stock-based compensation expense. This also included $2.1 million of cash used to fund changes in working capital, including an increase in accounts receivable of $3.0 million, a decrease in prepaid expenses and other assets of $0.5 million, an increase in accounts payable and accrued expenses of $1.4 million, and a decrease in other current liabilities of $1.0 million.

Current wording

Cash used in operating activities for the six months ended June 30, 2026, principally resulted from a net loss of $4.1 million, offset by $1.6 million in adjustments for non-cash items primarily related to amortization, deferred tax benefit, stock-based compensation expense, and provision for credit losses on other receivables. This also included $3.7 million of cash used to fund changes in working capital, including an increase in accounts receivable of $7.8 million, a decrease in prepaid expenses and other assets of $0.8 million, an increase in accounts payable and accrued expenses of $4.3 million and a decrease in other current liabilities of $1.0 million.

Previous wording

Cash provided by operating activities for the three months ended March 31, 2025, principally resulted from net income of $0.5 million, $1.3 million in adjustments for non-cash items primarily related to amortization, provision for refund liability and stock-based compensation expense, and offset by $1.3 million of cash used to fund changes in working capital, including an increase in accounts receivable of $0.4 million, an increase in other receivables of $3.5 million, an increase in prepaid expenses and other assets of $1.0 million, an increase in accounts payable and accrued expenses of $3.4 million, and an increase in income taxes payable of $0.2 million.

Current wording

Cash provided by operating activities for the six months ended June 30, 2025, principally resulted from our net income of $1.1 million, $2.3 million in adjustments for non-cash items primarily related to amortization, provision for refund liability and stock-based compensation expense, and offset by $1.4 million of cash used to fund changes in working capital, including a decrease in accounts receivable of $0.4 million, an increase in other receivables of $3.4 million, an increase in prepaid expenses and other current assets of $0.2 million, an increase in long-term prepaid expenses of $0.4 million, an increase in accounts payable and accrued expenses of $2.3 million and a decrease in income taxes payable of $0.1 million.

Previous wording

Cash used in investing activities decreased by $0.3 million to $0.4 million for the three months ended March 31, 2026, compared to $0.7 million for the same period in 2025. The primary use of cash in investing activities for the three months ended March 31, 2026 and 2025 were both related to the development of our proprietary AI-enabled platform, reflecting our continued investment in enhancing our technology platforms.

Current wording

Cash used in investing activities decreased by $0.6 million to $1.0 million for the six months ended June 30, 2026, compared to $1.6 million for the same period in 2025. The decrease was partially attributable to the timing of payments for capitalized software development costs. The primary use of cash in investing activities for the six months ended June 30, 2026 and 2025 were both related to the development of our proprietary AI-enabled platform, reflecting our continued investment in enhancing our technology platforms.

Previous wording

Net cash provided by financing activities was $6.3 million for the three months ended March 31, 2026, compared to $0.1 million of net cash used in financing activities for the same period in 2025. The increase was primarily attributable to proceeds from the issuance of Class A Common Stock in connection with our PIPE financing. For the three months ended March 31, 2025, the primary use of cash in financing activity was related to the payments of deferred offering cost for our IPO.

Current wording

Net cash provided by financing activities was $6.0 million for the six months ended June 30, 2026, compared to $0.1 million of net cash used in financing activities for the same period in 2025. The increase was primarily attributable to proceeds from the issuance of Class A Common Stock in connection with our PIPE financing. For the six months ended June 30, 2025, the primary use of cash in financing activity was related to the payments of deferred offering cost for our public offering.

Previous wording

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. We also have other key accounting policies, none of these policies or estimates are considered critical accounting policies or critical accounting estimates.

Current wording

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The critical accounting estimate discussed below is one we believe involves a significant level of estimation uncertainty and has had a material impact on our results of operations during the current period. Although management believes its assumptions and estimates are reasonable, actual results could differ from those estimates.

Previous wording

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.

Current wording

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 consolidated financial statement disclosures.

Previous wording

In September 2025, the FASB issued ASU 2025-06 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.

Current wording

In September 2025, the FASB issued ASU 2025-06 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 consolidated financial statement disclosures.

Previous wording

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.

Current wording

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