Elite Health Systems Inc.
For the period ended Dec 31, 2024. Filed Apr 2, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Apr 2, 2025
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What changed in Risk Factors?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-05.
0001140361-24-018303
Item 1A. Risk FactorsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-04-02.
0001437749-25-010652
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 111 current paragraphs.
73 unchanged; 15 reworded; 23 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 39 previous and 38 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
Once operational, if at all, we will operate in highly competitive markets dominated by large providers with significantly more resources than ourselves.
Current report
Our competitors include organizations ranging from startups to highly sophisticated Fortune 50 global enterprises, for-profit and non-profit companies, and private and government-sponsored entities. In some local markets, the two largest providers account for 75% of all Medicare Advantage enrollees. New entrants to our markets and business combinations among our competitors and suppliers also contribute to a dynamic and competitive environment. We expect to compete fundamentally on the quality and value we provide to those we serve which can include elements such as product and service innovation; use of technology; consumer and provider engagement and satisfaction; and sales, marketing and pricing.
Current report
CMS, the federal agency responsible for administering the Medicare program, made many changes to Medicare, including the manner in which Medicare will pay for telehealth visits, many of which relax previous requirements, including site requirements for both the providers and patients, telehealth modality requirements and others. With the 2024 election bringing change in the Federal administration and the Republican control of Congress (both the US House and Senate), there will likely be many more changes as well as new regulations, potential staff reductions, budgetary issues as well as possible entitlement cuts or disbursement delays, some of which may or may not be favorable for Medicare Advantage insurers. If regulatory or other issues or changes disrupt the Medicare Advantage marketplace or impact our ability to bill sufficiently enough to make a profit, our financial condition and results of operations may be adversely affected.
Current report
If we acquire and invest in companies, we may not realize expected business, technological or financial benefits and the acquisitions or investments could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our business, results of operations, and financial condition.
Current report
As part of our business strategy, we may evaluate and make investments in, or acquisitions of, complementary companies, services and solutions, to further grow and augment our business and service offerings. The success of any attempts to grow our business through acquisitions to complement our business depends in part on the availability of, our ability to identify, and our ability to engage and pursue suitable acquisition candidates. We may not be able to find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all.
Current report
If we do complete future acquisitions, we cannot assure you that they will ultimately strengthen our competitive position or that they will be viewed positively by customers, financial markets or investors. Furthermore, future acquisitions could pose numerous additional risks to our operations, including:
Current report
• diversion of management’s attention from existing operations;
Current report
• incurrence of acquisition-related costs, which would be recognized as a current period expense;
Current report
• difficulties in, and the cost of, integrating personnel and cultures, operations, technologies, and services which may lead to failure to achieve the expected benefits on a timely basis or at all;
Current report
• challenges in achieving strategic objectives, cost savings and other anticipated benefits;
Current report
• inability to maintain relationships with key partners, customers, suppliers, vendors and other third parties on which the purchased business relies;
Current report
• ineffective controls, procedures and policies inherited from the acquired company or during the transition and integration;
Current report
• inability to generate sufficient revenue to offset acquisition and/or investment costs;
Current report
• negative impact to our results of operations because of the depreciation of amounts related to acquired intangible assets, fixed assets, and deferred compensation;
Current report
• requirements to record certain acquisition-related costs and other items as current period expenses, which would have the effect of reducing our reported earnings in the period in which an acquisition is consummated;
Current report
• recording goodwill or other long-lived asset impairment charges (if any) in the periods in which they occur, which could result in a significant charge to our earnings in any such period;
Current report
• use of substantial portions of our available cash, issuance of dilutive equity or the incurrence of debt to consummate the acquisition;
Current report
• tax effects and costs of any such acquisitions, including the related integration into our tax structure and assessment of the impact on the realizability of our future tax assets or liabilities.
Current report
Restrictions on our ability to obtain funds from our regulated subsidiaries could materially and adversely affect our ability to reinvest in our business or and return capital to our shareholders.
Current report
Because we operate as a holding company, we expect to be dependent on dividends and administrative expense reimbursements from our subsidiaries to fund our obligations. Many of these subsidiaries are regulated by state departments of insurance or similar regulatory authorities. We are also required by law or regulation to maintain specific prescribed minimum amounts of capital in these subsidiaries. The levels of capitalization required depend primarily on the volume of premium revenues generated by the applicable subsidiary. We may be required to seek approval by state regulatory authorities before we transfer money or pay dividends from our regulated subsidiaries exceeding specified amounts. An inability of our regulated subsidiaries to pay dividends to their parent companies in the desired amounts or at the time of our choosing could adversely affect our ability to meet our obligations or invest in our business through capital expenditures or business acquisitions. If we are unable to obtain sufficient funds from our subsidiaries to fund our obligations, our results of operations, financial position and cash flows could be materially and adversely affected.
Current report
Negative public perception of health insurers could reduce our access to capital, cause our stock price to decline, limit enrollment of members or increase risk to our facilities or key employees.
Current report
Denial of health claims by insurers and other negative publicity has resulted in widespread anger and mistrust of health insurers by the public. Following the targeted killing of UnitedHealthcare CEO Brian Thompson this risk has been received much greater national awareness. Negative sentiment in the future could harm our business
Removed paragraphs (1)
Previous report
In response to the COVID-19 pandemic, the CMS, the federal agency responsible for administering the Medicare program, made several changes in the manner in which Medicare will pay for telehealth visits, many of which relax previous requirements, including site requirements for both the providers and patients, telehealth modality requirements and others. State law applicable to telehealth, particularly licensure requirements, has also been relaxed in many jurisdictions as a result of the COVID-19 pandemic. It is unclear which, if any, of these changes will remain in place permanently and which will be rolled-back following the COVID-19 pandemic. If regulations change to restrict our ability to or prohibit us from delivering care through telehealth modalities, our financial condition and results of operations may be adversely affected.
Reworded paragraphs (15)
Previous wording
The risks described in the following section are not the only risks facing our Company. Additional risks that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. If any of the following risks actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected. In that event, among other effects, the trading price of our common stock could decline, and you could lose part or all of your investment.
Current wording
The risks described in the following section are not the only risks facing our Company. Additional risks that we are unaware of, or that we currently believe, are not material, may also become important factors that adversely affect our business. If any of the following risks occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected. In that event, among other effects, the trading price of our common stock could decline, and you could lose part or all of your investment.
Previous wording
Elite Health, the business acquired by the Company in October 2021, has recently applied to offer Medicare Advantage plans in Nevada, and is in the planning stages for the application for a full Knox-Keene license to operate a Medicare Advantage plan in California. Such application process may be protracted, and approval is not assured. The Company has taken preliminary steps toward identifying a network of providers who are well-versed in the healthcare needs of seniors in the communities in which they practice. While the Company believes that the Elite Health founders and affiliates have the required experience and network of professionals to obtain the license and launch and operate the business if it is successful in obtaining the license, there can be no assurance that the Company will be successful in these endeavors. The Company and Elite Health understand that the keys to success with a managed care organization are delivering comprehensive patient care and containing costs. In addition to developing a plan to obtain necessary approvals, gaining access to a competent network of providers and enrolling a critical level of subscribers, it will be necessary for the plan to provide high quality patient care efficiently and cost effectively. For these reasons, and the reasons noted in the balance of Item 1A – Risk Factors, there can be no assurance that the Company and Elite Health will be effective in developing and executing this business plan, the success of which will be critical to the Company and the value of its common stock.
Current wording
Elite Health, the business acquired by the Company in October 2021, has recently applied for a full Knox-Keene license to operate a Medicare Advantage plan in California, and expects to operate such plan in California beginning in 2026 and Nevada in 2027. Such application process may be protracted, and approval is not assured. The Company has taken preliminary steps toward identifying a network of providers who are well-versed in the healthcare needs of seniors in the communities in which they practice. While the Company believes that the Elite Health founders and affiliates have the required experience and network of professionals to obtain the license and launch and operate the business if it is successful in obtaining the license, there can be no assurance that the Company will be successful in these endeavors. The Company and Elite Health understand that the keys to success with a managed care organization are delivering comprehensive patient care and containing costs. In addition to developing a plan to obtain necessary approvals, gaining access to a competent network of providers and enrolling a critical level of subscribers, it will be necessary for the plan to provide high quality patient care efficiently and cost effectively. For these reasons, and the reasons noted in the balance of Item 1A – Risk Factors, there can be no assurance that the Company and Elite Health will be effective in developing and executing this business plan, the success of which will be critical to the Company and the value of its common stock.
Previous wording
Although we raised capital in early 2024, we will require additional capital, which might not be available on acceptable terms, if at all. If capital is not available to us, our business and financial condition may be impaired, and we may not be able to continue as a going concern.
Current wording
Although we raised capital in 2024, we will require additional capital, which might not be available on acceptable terms, if at all. If capital is not available to us, our business and financial condition may be impaired, and we may not be able to continue as a going concern.
Previous wording
We are investing significant amounts in our business. To this end, we raised approximately $2 million through a private placement early in 2024. However, we will be required to make future commitments of capital resources and will require substantial addition funding which we plan on raising through equity or debt financings. Beyond the application process for the Medicare Advantage plans in Nevada and California, we expect to make additional investments to support our business growth and may require additional capital to respond to business needs, requirements and opportunities, further develop our infrastructure, and comply with any statutory capital and risk-based capital requirements. In addition, we may continue to make strategic acquisitions as the opportunities arise, some of which may be important to support our operations.
Current wording
We are investing significant amounts in our business. To this end, we raised approximately $5.8 million through a private placement in 2024 that closed in January of 2025. . However, we will be required to make future commitments of capital resources and will require substantial additional funding which we plan on raising through equity or debt financings. Beyond the application process for the Medicare Advantage plans in California and Nevada, we expect to make additional investments to support our business growth and will require additional capital to respond to business needs, requirements and opportunities, further develop our infrastructure, and comply with any statutory capital and risk-based capital requirements. In addition, we may continue to make strategic acquisitions as the opportunities arise, some of which may be important to support our operations.
Previous wording
As previously disclosed, we have reported no revenue since 2021, do not expect revenue during 2024, and will report operating losses for a significant time beyond the end of 2024. Although we raised capital in the first quarter of 2024, our business plan will require additional capital and our financial position or the state of the capital markets could make it difficult to raise capital in late 2024 or early 2025 when this will be required.
Current wording
As previously disclosed, we have reported no revenue since 2021, do not expect revenue during 2025, and will report operating losses for a significant time beyond the end of 2025. Although we raised capital in 2024, our business plan will require additional investment and capital and our financial position, the state of the capital markets or the political posture or uncertainty surrounding Medicare and other federal entitlement programs could make it difficult to raise capital in 2025 when this will be required.
Previous wording
While we have actively engaged with our board and other marketplace participants to evaluate financing opportunities, we may not be able to obtain required financing on acceptable terms, as any potential financing will be subject to market conditions that are not within our control. In the event we are unable to obtain financing or take other management actions to alleviate these concerns, among other potential consequences, we may be unable to satisfy our financial obligations as they become due or continue as a going concern.
Current wording
While we have actively engaged with our board and other marketplace participants to evaluate financing opportunities, we may not be able to obtain the required financing on acceptable terms, as any potential financing will be subject to market conditions that are not within our control. In the event we are unable to obtain financing or take other management actions to alleviate these concerns, among other potential consequences, we may be unable to satisfy our financial obligations as they become due or continue as a going concern.
Previous wording
If we are unable to secure a Medicare Advantage license in Nevada in a timely manner, acquire managed health consumers in Nevada, expand consumer enrollment beyond this initial state, or diversify and expand our portfolio of products and services, our business and results of operations will be significantly impaired.
Current wording
If we are unable to secure a Medicare Advantage license in California in a timely manner, acquire managed health consumers in California, expand consumer enrollment beyond this initial state, or diversify and expand our portfolio of products and services, our business and results of operations will be significantly impaired.
Previous wording
We expect to generate a substantial portion of our revenue from consumers enrolled in the Medicare Advantage health plans we have applied for in Nevada and expect to apply for in California. As a result, the future enrollment of individuals into and adoption of our health plans, through our platform, our broker network, employees, or other third parties, is paramount to our future growth and success. If we fail to increase consumer enrollment, or diversify and expand our portfolio of products and services, our business and results of operations may be negatively impacted. In addition, if we do not grow our membership, we could find it difficult to retain or increase the number of contracted network providers at favorable rates or at all, which could jeopardize our ability to provide health plan products in our target markets and our ability to expand into new markets in a cost-efficient manner.
Current wording
We expect to generate a substantial portion of our revenue from consumers enrolled in the Medicare Advantage health plans. We initially applied in Nevada and subsequently withdrew our application in favor of applying in California first. We have now applied in California and expect to re-apply in Nevada at a later date. As a result, the future enrollment of individuals into and adoption of our health plans, through our platform, our broker network, employees, or other third parties, is paramount to our future growth and success. If we fail to increase consumer enrollment or diversify and expand our portfolio of products and services, our business and results of operations may be negatively impacted. In addition, if we do not grow our membership, we could find it difficult to retain or increase the number of contracted network providers at favorable rates or at all, which could jeopardize our ability to provide health plan products in our target markets and our ability to expand into new markets in a cost-efficient manner.
Previous wording
The impact of many of these items on the ultimate costs for claims is difficult to estimate, and they could have a material impact on our future business. In addition, the historical data on which our assumptions will be based may not necessarily be indicative of the actual costs of claims due to our rapid growth in consumer enrollment and our recent expansion into new businesses and markets. Because we will be a new entrant in the market, we will have limited information from which to estimate our potential medical claims liability.
Current wording
The impact of many of these items on the ultimate costs for claims is difficult to estimate, and they could have a material impact on our future business. In addition, the lack of historical data on which our assumptions will initially be based may not necessarily be indicative of the actual costs of claims due to our rapid growth in consumer enrollment and our recent expansion into new businesses and markets. Because we will be a new entrant in the market, we will forced to use demographic data rather than our own patient data from which to estimate our potential medical claims liability.
Previous wording
Conversely, if we set our premium rates too high, our existing membership may decline or we may not grow our membership. We will operate in a competitive industry, and while health plans compete on the basis of many factors, including service, breadth of benefits, and the quality and depth of provider networks, we believe that price is and will continue to be the most significant driver in our and our competitors’ ability to attract consumers. If we do not appropriately price our products, our results of operations and financial condition could be materially and adversely affected.
Current wording
Conversely, if we set our premium rates too high, our existing membership may decline or we may not grow our membership. We will operate in a competitive industry, and while health plans compete on the basis of many factors, including service, breadth of benefits, and the quality and depth of provider networks, we believe that price is and will continue to be the most significant driver in our and our competitors’ ability to attract consumers. If we do not appropriately price our products, our results of operations and financial condition could be materially and adversely affected. While service and breadth of benefits may be secondary to price, we believe there are certain benefits considered “table stakes” in order to be competitive.
Previous wording
We will attempt to partner with third parties to support our information technology systems. This will make our operations vulnerable to adverse effects if such third parties fail to perform adequately. If any licensor or vendor of any technology which is integral to our operations were to become insolvent or otherwise fail to support the technology sufficiently, our operations could be negatively affected. Additionally, our operations will be vulnerable to adverse effects if such third parties are unable to perform due to forces outside of their control, such as a natural disaster or serious weather event.
Current wording
We have and will attempt to enter into further partner relationships with third parties to support our information technology systems. This will make our operations vulnerable to adverse effects if such third parties fail to perform adequately. If any licensor or vendor of any technology which is integral to our operations were to become insolvent or otherwise fail to support the technology sufficiently, our operations could be negatively affected. Additionally, our operations will be vulnerable to adverse effects if such third parties are unable to perform due to forces outside of their control, such as a natural disaster or serious weather event.
Previous wording
We will be subject to various risks inherent in the government contracting process. These risks include routine and non-routine governmental reviews, audits, and investigations, and compliance with government reporting requirements. Violation of the laws, regulations, or contract provisions governing our operations, or changes in interpretations of those laws and regulations, could result in the imposition of civil or criminal penalties, the cancellation of our government contracts, the suspension or revocation of our licenses, the exclusion from participation in government sponsored health programs, or the revision and recoupment of past payments made based on audit findings. If we are unable to correct any noted deficiencies, or become subject to material fines or other sanctions, we could suffer a substantial reduction in profitability, and could also lose one or more of our government contracts. In addition, government receivables are subject to government audit and negotiation, and government contracts are vulnerable to disagreements with the government.
Current wording
We will be subject to various risks inherent in the government contracting process. These risks include routine and non-routine governmental reviews, audits, and investigations, and compliance with government reporting requirements and these risks may be heightened with the 2024 election bringing change in the Federal administration and the formation of the Department of Government Efficiency, a non-cabinet-level department of the federal government which is focused on among other things reducing perceived waste and fraudulent spending and eliminating excessive regulation. Violation of the laws, regulations, or contract provisions governing our operations, or changes in interpretations of those laws and regulations, could result in the imposition of civil or criminal penalties, the cancellation of our government contracts, the suspension or revocation of our licenses, the exclusion from participation in government sponsored health programs, or the revision and recoupment of past payments made based on audit findings. If we are unable to correct any noted deficiencies, or become subject to material fines or other sanctions, we could suffer a substantial reduction in profitability, and could also lose one or more of our government contracts. In addition, government receivables are subject to government audit and negotiation, and government contracts are vulnerable to disagreements with the government.
Previous wording
The Company’s common stock is thinly traded. and at present, trades are reported on the OTC Pink marketplace only several days a month. This thin trading and relatively small non-affiliate float lead to a high level of volatility in reported sale prices. Investors in the Company’s common stock will have a limited ability to trade shares on the open market and, even if able to sell shares, could suffer significant market losses due to large swings in the prices of the shares.
Current wording
The Company’s common stock is thinly traded and while we have applied for listing on the OTCQB marketplace at present, trades are reported on the OTC Pink marketplace only several days a month. This thin trading and relatively small non-affiliate float lead to a high level of volatility in reported sale prices. Investors in the Company’s common stock will have a limited ability to trade shares on the open market and, even if able to sell shares, could suffer significant market losses due to large swings in the prices of the shares. Many brokerage firms have significant restrictions related to depositing formerly restricted shares into investor accounts, which further impact an investors’ ability to sell their shares.
Previous wording
We have not reported revenue for the past two years, and it is likely that will not report revenues until at least 2025. Thus it is likely that our operating results will fluctuate from quarter to quarter in the future. While results of any one fiscal quarter are not a reliable indication of results to be expected for any other fiscal quarter or for any year, if we fail to show improvement in results in future periods, or to meet the expectations of investors or securities analysts, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance. Results may be affected by various factors, including those described in these risk factors.
Current wording
We have not reported revenue for the past several years, and it is likely that will not report revenues until at least 2026. Thus it is likely that our operating results will fluctuate from quarter to quarter in the future. While results of any one fiscal quarter are not a reliable indication of results to be expected for any other fiscal quarter or for any year, if we fail to show improvement in results in future periods, or to meet the expectations of investors or securities analysts, our stock price may decline, and the decrease in the stock price may be disproportionate to the shortfall in our financial performance. Results may be affected by various factors, including those described in these risk factors.
Previous wording
The success of our business and the ability to execute our strategy are highly dependent on the efforts of Dr. Prasad Jeereddi, who is leading the effort to apply for and build the necessary infrastructure for Medicare Advantage plans in Nevada and California, and our other key executive officers and employees. It will also be essential for the Company and its operating subsidiaries to broaden their base of knowledgeable executives in the near term to support its business growth and ultimately achieve profitability. The loss of the leadership, expertise, and experience of existing and future executives could negatively impact our operations. Our ability to replace them or any other key employee may be difficult and may take an extended period of time because of the limited number of individuals in the healthcare industry who have the breadth and depth of skills and experience necessary to operate and lead a business such as ours. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain, or motivate these personnel. If we are unsuccessful in recruiting, retaining, managing, and motivating such personnel, our business, financial condition, cash flows, or results of operations could be adversely affected.
Current wording
The success of our business and the ability to execute our strategy are highly dependent on the efforts of Dr. Prasad Jeereddi, who is leading the effort to apply for and build the necessary infrastructure for Medicare Advantage plans in California and Nevada, and our other key executive officers and employees. It will also be essential for the Company and its operating subsidiaries to broaden their base of knowledgeable executives in the near term to support its business growth and ultimately achieve profitability. The loss of the leadership, expertise, and experience of existing and future executives could negatively impact our operations. Our ability to replace them or any other key employee may be difficult and may take an extended period of time because of the limited number of individuals in the healthcare industry who have the breadth and depth of skills and experience necessary to operate and lead a business such as ours. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain, or motivate these personnel. If we are unsuccessful in recruiting, retaining, managing, and motivating such personnel, our business, financial condition, cash flows, or results of operations could be adversely affected.