HIT

• Business Model and Positioning

  • Health and Tech operates in the nearly $1 trillion U.S. self-funded health insurance market, which can deliver 20-30% savings for employers compared to traditional fully-insured plans. The company has built a native AI-powered end-to-end platform for stop-loss insurance quoting, underwriting, and binding, rather than adding a thin automation layer on top of legacy infrastructure.
  • Current market penetration is less than 0.1% of the total addressable market, leaving enormous long-term growth headroom.

• Distribution and Platform Updates

  • Distribution partners (brokers, third-party administrators, agencies) grew 19.9% year-over-year to 933 at the end of Q2 2026, driven by a capital-light, partner-led growth model that keeps fixed cost increases linear as scale grows.
  • The company completed front and back end platform architecture upgrades this quarter, unifying quoting, underwriting, administration, and analytics into a single environment to support scalable future AI capability additions. Key feature updates included enhanced census insights, expanded large group quoting functionality, automated experience data parsing, AI-driven risk insights, and in-platform broker-to-underwriter messaging.

• Key Milestones and New Product Development

  • The company secured its first bound employer group under its three-year rate stabilization program, which delivers multi-year healthcare cost budget certainty for large enterprises, government agencies, and municipalities. Several high-profile government organizations are currently evaluating participation, with additional updates expected in the coming months.
  • The new Hittrix marketplace platform for large group self-funded stop-loss is on track to launch in the second half of 2026 (expected in 2-3 weeks of the call date). Hittrix is purpose-built for the large group segment, which has a historically manual, fragmented process that has not changed in decades, and it includes proprietary data parsing, simultaneous access to multiple underwriters, real-time comparison tools, and a same-day binding capability that opens a large new growth avenue for the company.

• Revenue Reporting Update

  • Management is shifting focus to contracted revenue (contractually committed revenue not yet recognized under GAAP) and pipeline revenue (policies in quoting/binding status plus post-quarter-end contracted policies) as leading indicators of business momentum, because GAAP revenue is a lagging indicator due to ratable recognition over 12-36 month policy terms. The Q2 2026 GAAP revenue decline was entirely due to a timing shift from new carrier onboarding, not weak demand or platform issues. As of the end of the first half 2026, total contracted revenue was $32.3 million, with $17.3 million already recognized, $14 million expected to be recognized in the second half of 2026, and $1 million expected to be recognized in 2027. As of July 31, 2026, total pipeline revenue was $66.3 million, with a historical conversion rate of 15% to 40%. Platform-placed plan value (total aggregate contractual value of plans placed through the platform) was $84 million as of June 30, 2026.

• Balance Sheet Health

  • The company ended Q2 2026 with $6.5 million in cash and cash equivalents, $11.8 million in working capital, and total stockholder equity of $19.4 million. The balance sheet remains healthy and fully positioned to execute on product and development plans.

• Management reaffirmed its full year 2026 GAAP revenue guidance range of $45 million to $50 million, supported by existing contracted revenue and remaining pipeline conversion opportunity with five months left in the year.
• The $14 million in unrecognized contracted revenue and expected 15-40% conversion of the $64.4 million July 2026 pipeline does not include additional new sales expected over the remaining five months of 2026, which will bridge to the full year guidance range.
• Securing the A-rated carrier partnership expected to close in the next 30 days could increase 2026 revenue projections by 20% to 30% if completed quickly ahead of the January 2027 renewal season, though current guidance does not include this incremental upside.
• Management expects gross margin to stabilize between 45% and 50% going forward, reflecting the tradeoff of partner-led distribution for faster scalable growth.

Health and Tech operates two core platform segments: the existing eDevs platform for the small group self-funded stop-loss market, and the upcoming Hittrix platform for the large group (100+ lives) self-funded stop-loss market. No separate segment-level revenue breakdown was provided. Aggregate GAAP revenue for Q2 2026 was $8.1 million, down 13.5% year-over-year from $9.3 million. Aggregate first half 2026 GAAP revenue was $16.8 million, compared to $17.3 million in the first half of 2025. Aggregate adjusted EBITDA was negative $1.3 million for Q2 2026 and negative $2.6 million for the first half 2026, compared to positive $1.6 million and positive $2.8 million respectively in the prior year period. Aggregate net loss was $2.5 million ($0.04 per diluted share) for Q2 2026 and $4.1 million ($0.07 per diluted share) for the first half 2026, compared to net income of $0.6 million ($0.01 per diluted share) and $1.1 million ($0.02 per diluted share) respectively in the prior year. Total operating expenses were $7.3 million in Q2 2026, up from $5.6 million year-over-year, with sales and marketing expenses increasing to $2.2 million from $1.2 million, general and administrative expenses increasing to $4.3 million from $3.8 million, and R&D expenses totaling $0.9 million with $0.8 million capitalized in software development costs. Gross margin for Q2 2026 was 48.7%, down from 51.4% in Q1 2026, and management expects future gross margin to stabilize in the 45% to 50% range.

• GAAP revenue can fluctuate quarter-to-quarter due to timing shifts related to carrier onboarding and policy effective date changes, which do not reflect underlying business demand but can create short-term volatility in reported results.
• Product launch timelines are subject to development and testing delays; while Hittrix is on track for imminent launch, management notes it would have preferred an earlier launch to capture more of the upcoming renewal season.
• Pipeline revenue conversion is inherently uncertain, with a wide historical range of 15% to 40%, and actual conversion can differ from expected rates based on market conditions, broker adoption, and carrier availability.
• All forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in the company's SEC filings.

Q: What is the rationale for the upcoming A-rated carrier onboarding, and what impact will it have on the business? / A: Many large brokerage firms (called alpha houses) require carriers to hold an A rating per their internal rules and error and omissions policies. Health and Tech did not previously have an A-rated carrier partner, so it was locked out of this large segment of business. The A-rated carrier onboarding is expected to close within 30 days, and management notes there is already significant pent-up demand from these brokers waiting to place business with the company. /

Q: When will Hittrix launch, and how quickly will it add users and grow the business? / A: Hittrix is on track to launch in 2-3 weeks of the call date, after completing final user acceptance testing. All 933 existing distribution partners will get immediate access to the platform at launch. There is already strong pre-launch interest from managing general underwriters that have completed demos, and the platform opens the much larger large group employer segment that Health and Tech could not previously address. /

Q: What is the pipeline and outlook for the three-year rate stabilization program for municipalities and large enterprises? / A: Program partner Ascend has hired dedicated sales staff for the program, and internal sales teams have completed training. Management expects roughly 30 new submissions per month, all from large, well-known public entities that have already started discussions. The program addresses strong demand for multi-year budget certainty, which is particularly attractive for government groups. /

Q: Why does the sum of existing contracted and projected pipeline revenue not yet hit the full year guidance range, and when will incremental new sales be added? / A: The published pipeline figure is only current as of July 31, and there are five additional months left in 2026 for the expanded sales team to continue adding new pipeline and converting existing pipeline. The current numbers do not include this incremental future sales activity, which will close the gap to the full year guidance range. /

Q: How long is the sales cycle for different group sizes, and how does that impact pipeline conversion? / A: Small groups typically have a very fast sales cycle, with decisions made in as little as one day thanks to the platform's fast automated quoting. Large groups have a longer sales cycle of roughly 90 days from initial conversation to binding. The 15-40% conversion rate range for pipeline is based on actual historical conversion from the first half of 2026, and management expects conversion to improve with the addition of the A-rated carrier and Hittrix launch.