Health and Tech (HIT) Q2 2025: Distribution Partners Up 87%, Unlocking Small Business Health Platform Scale
Health and Tech’s Q2 marked a decisive inflection in its platform reach, as distribution partners surged and operational leverage widened margins. The company’s AI-powered benefits platform is now embedded with a growing roster of national and regional partners, accelerating market penetration even in the industry’s low season. With new product launches and deeper integration with top-tier TPAs on deck, HIT is positioning to outpace sector disruption as small business demand for flexible, cost-saving health solutions intensifies.
Summary
- Distribution Channel Expansion: Broader partner network is driving faster small business client acquisition.
- Operating Leverage Realized: Margin gains reflect disciplined scaling and tech-driven cost control.
- AI Underwriting Rollout: Automated platform sets up HIT to capture mid-market growth in coming quarters.
Performance Analysis
Health and Tech delivered an 86% year-over-year revenue increase in Q2, with first-half revenue already at 89% of last year’s full total—a clear signal of accelerating adoption. Distribution partners reached 778, up 87% YoY, expanding the company’s reach far beyond traditional broker channels and into third-party administrators (TPAs), benefit platforms, and high-profile brokerage firms. This network effect is translating directly into customer wins, with billed enrolled employees up 30% to nearly 25,000.
Profitability metrics showed even sharper improvement: Adjusted EBITDA for the first half more than doubled year-over-year, outpacing revenue growth and highlighting strong operating leverage. General and administrative expenses rose as a percentage of revenue due to new public company costs, but underlying expense ratios improved when normalized for these items. Operating cash flow was positive, and working capital discipline was evident in accounts receivable days well below 30.
- Distribution-Led Growth: New partnerships, including with VertiGuard and Unified Health Plans, are both expanding reach and directly delivering new business.
- AI Platform Efficiency: Underwriting for small groups now takes minutes, and large group cases are being processed in under five days, compared to industry norms of weeks or months.
- Expense Discipline: Sales and marketing spend declined as a percent of revenue, reflecting the leverage from partner-driven distribution over direct sales force expansion.
The company’s ability to grow lives and revenue during the industry’s low season underscores the stickiness and utility of its platform. With a pipeline of large group cases and new product launches scheduled, the growth trajectory appears supported by both market demand and operational execution.
Executive Commentary
"We've strategically broadened our distribution network, reaching 778 partners, an impressive 87% increase year-over-year. This expansion goes far beyond traditional broker channels. We are actively forging partnerships with cutting-edge third-party administrators, offering technology-driven solutions, forward-thinking regional healthcare benefit providers, and service platforms that cater to unique needs of small businesses."
Tim Johnson, Chief Executive Officer
"Our profitability metrics demonstrate significant positive operating leverage... Adjusted EBITDA for the first quarter was $1.6 million, an outstanding 134% increase year-over-year. These showcase our enhanced ability to maintain expense discipline and the strategy allocation to the resource that drives both top line expansion and the bottom line profitability."
Julia Chen, Chief Financial Officer
Strategic Positioning
1. Distribution Channel Scale and Network Effects
HIT’s platform-centric model leverages distribution partners, such as TPAs and national brokers, to reach small and mid-sized employers at scale. These partners, including VertiGuard (owned by MedImpact, a major pharmacy benefit manager) and Unified Health Plans, not only expand HIT’s market access but also bring their own client bases, accelerating adoption and reducing the need for direct sales force investment. The network effect is deepening as partners increasingly embed HIT’s platform in their offerings, positioning the company as a backbone for modern benefits delivery.
2. AI-Driven Underwriting and Product Innovation
The eDIPS platform, an automated large group underwriting tool, is on track for full Q3 launch, with beta tests showing underwriting cycle times dropping from weeks to days. For small groups, HIT’s AI-powered underwriting delivers customized health plans in minutes, enabling brokers to rapidly tailor solutions and reduce friction in the sales process. This speed and automation are critical differentiators, especially as the company targets larger groups and more complex cases through its partner channels.
3. Operating Leverage and Cost Structure Discipline
Partner-led distribution is driving operating leverage, with sales and marketing costs declining as a share of revenue despite rapid top-line growth. While public company costs have temporarily lifted general and administrative expenses, normalized ratios are improving. The R&D spend as a percent of revenue is falling as major platform investments move from development to deployment, freeing up resources for new product development and market expansion.
4. Product Suite Expansion and Market Penetration
HIT is preparing to launch new offerings, including a relaunch of the iCard line and additional health insurance products, with several in late-stage development and expected to be beta tested by the end of Q3. The company’s current penetration in the small business market remains extremely low relative to total addressable market size, indicating substantial headroom for growth as distribution partners ramp up adoption and as the platform moves upmarket into larger employer segments.
Key Considerations
HIT’s Q2 demonstrated the compounding effects of a platform model in a fragmented, high-friction market. Investors should focus on the sustainability of distribution-led growth, the operational limits of AI underwriting, and the pace of product innovation as the company scales.
Key Considerations:
- Distribution-Driven Scale: The company’s ability to sign and activate large TPAs and brokers gives it leverage to expand without heavy direct sales costs.
- AI Underwriting as Competitive Moat: Cycle time reductions and customization capabilities could create high switching costs for partners and clients.
- Margin Expansion Potential: Positive operating leverage is being realized, but future margin gains will depend on continued expense discipline and the absorption of public company costs.
- Product Roadmap Execution: Timely delivery and adoption of new offerings (e.g., iCard relaunch, new insurance products) will be critical to sustaining growth into 2026 and beyond.
Risks
Key risks include the potential for slower-than-expected partner activation, regulatory shifts in the health benefits space, and execution risk around new product launches. Public company costs are now a permanent part of the expense base, and any delays in ramping revenue or margin could compress profitability. The sector’s uncertainty, driven by rising ACA carrier rates and policy changes, could both help and hinder HIT’s disruptive approach depending on market dynamics.
Forward Outlook
For Q3 2025, Health and Tech management expects:
- Full launch of the enhanced eDIPS large group underwriting platform
- Beta testing of new health insurance product offerings by end of quarter
For full-year 2025, management reaffirmed confidence in maintaining strong growth momentum, citing:
- Continued partner expansion and deeper integration with national brokers and TPAs
- Ongoing margin improvement as operating leverage scales
Management emphasized that the company’s revenue run rate already surpasses last year’s total, and that new product rollouts and deeper partner relationships are expected to drive further acceleration even during seasonally slower periods.
Takeaways
HIT’s Q2 results showcase a platform business gaining critical mass in a disrupted market.
- Distribution Network as Growth Engine: The rapid expansion and activation of partner channels is enabling outsized customer acquisition and revenue growth with minimal incremental expense.
- AI Platform Unlocks Efficiency: Underwriting automation is compressing sales cycles and enabling partners to deliver more value to clients, driving both adoption and retention.
- Product Pipeline Sets Up Multi-Year Growth: Execution on the new product roadmap, especially with the iCard relaunch and large group tools, will be a key driver of future upside.
Conclusion
Health and Tech’s Q2 was a pivotal quarter for platform scale and operational leverage, with distribution partnerships and AI automation driving both top-line acceleration and margin gains. As the company moves upmarket and deepens its product suite, the foundation is set for continued disruption in the small and mid-sized employer health benefits space.
Industry Read-Through
HIT’s results highlight the rising importance of platform distribution and automation in the health benefits sector. The company’s ability to scale through partner networks, combined with AI-driven product delivery, signals a broader shift away from legacy broker and carrier models toward tech-enabled, customizable solutions for small and mid-sized businesses. Other industry participants—especially traditional TPAs and health insurers—face mounting pressure to digitize, partner, or risk losing share to nimble platform players. The surge in ACA carrier rate hikes and regulatory volatility may accelerate client migration to alternative platforms like HIT, intensifying competition and raising the bar for speed, transparency, and cost control across the sector.