EHSI

Elite Health Systems Inc.

OTC · HEALTH CARE · SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC

0.83

+0.00 +0.00%

USD · close Oct 26

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MKT CAP $23.7MP/E —DIV YIELD —FCF YIELD —REV TTM $3.7MNET INCOME −$9.8MNET DEBT $2.8M52W 0.63 – 1.50SEC XBRL · TTM TO Invalid Date

How EHSI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

69%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

−572

words, now 9,127

New in FY2025

If any of the following risks actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected.
Elite Health, the business acquired by the Company in October 2021, was recently granted a full Knox-Keene license to operate a Medicare Advantage plan in California, and is now operating such plans in California as of January, 2026.
The Company has a identified 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 maintain compliance with the license and launch and operate the business, there can be no assurance that the Company will be successful in these endeavors.
Now that the Company is operational, it is critical to its success to grow the level of subscribers and provide high quality patient care efficiently and cost effectively.
Although we raised sufficient capital to achieve our license and launch our Medicare Advantage plan, we will require additional capital, which might not be available on acceptable terms, if at all.
To this end, we raised approximately $4.8 million through a private placement in 2024 and an additional $3.7 million in 2025.
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, including in fiscal 2026.
We expect to make additional investments to support our business growth, including potential entrance into new states and offering C-SNP Plans to serve members and will require additional capital to adequately compensate employees, including officers, respond to business needs, requirements and opportunities, further develop our infrastructure, and comply with any statutory capital and risk-based capital requirements.
As previously disclosed, we have reported no revenue from 2021 through October 2025.
While PSS began reporting revenue in November 2025 and Elite Health began reporting revenue in January 2026, we will continue to report operating losses for a significant time beyond the end of 2026.
Although we raised capital in 2024 and 2025, 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 2026 when this will be required.
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.
If we are unable to maintain a Medicare Advantage license in California, acquire sufficient 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.
We expect to generate a substantial portion of our revenue from consumers enrolled in the Medicare Advantage health plans we have obtained for California.
If we fail to increase consumer enrollment or diversify and expand our portfolio of products and services or enter new states, our business and results of operations will be negatively impacted.
Our strategy requires that we successfully identify and then contract with additional care providers to ensure access to quality healthcare services for our consumers, to manage medical costs and utilization, and to better monitor and ensure the quality of care being delivered.
We operate in highly competitive markets dominated by large providers with significantly more resources than ourselves.
Where doing so is necessary to conduct our business, we will also provide sensitive personal member information, as well as proprietary or confidential information relating to our business, to our third-party service providers.
Payments from CMS, and consumer premiums, if any, for our health plans will be a material factor in our future revenue.
We will set any premiums and develop plan benefits using actuarial estimates rather than historical data and our failure to set appropriate premiums or benefits, including as a result of inaccuracies in our actuarial estimates, could adversely affect our profitability and cash flows.
Our ability to accurately estimate such costs will depend on various factors, many of which are not within our control, including: ● the utilization rates of medical facilities and services; ● the cost of medical services (including as a result of labor market constraints); ● the use or cost of prescription drugs, in particular the increased use of specialty prescription drugs; ● the introduction or widespread adoption of new or costly treatments, including new technologies; ● membership mix; ● variances in actual versus estimated levels of cost associated with new products, benefits, lines of business, product changes or benefit level changes; ● changes in the demographic characteristics of an account or market; ● changes in economic conditions; ● changes or reductions related to utilization management functions such as preauthorization of services, concurrent review, or requirements for physician referrals; ● changes in pharmacy volume rebates received from drug manufacturers; ● catastrophes, including acts of terrorism, pandemics (such as the COVID-19 pandemic and other similar unforeseen cost drivers), epidemics or severe weather (e.g., hurricanes, wildfires or earthquakes, including those as a result of climate change); ● medical cost inflation; and ● potential changes in legislation or other rules and regulations, such as changes in government mandated benefits or consumer eligibility criteria.
Because we will be a new entrant in the market, we will be forced to use demographic data rather than our own patient data from which to estimate our potential medical claims liability.
We will set our premiums and benefits for twelve-month periods several months prior to the commencement of the premium period and will not be freely able to change our premiums during such period, consistent with industry practice.
We plan to offer one or more special needs plans or SNPs in 2026.
While such plans typically result in higher payments from CMS, they also may carry greater risk in estimating the costs of such plans.
Failure to properly define the benefits so that they don’t exceed CMS payments will be critical to our success in offering such plans.
While service and breadth of benefits may be secondary to price, we believe there are certain benefits considered “table stakes” to be competitive.
The costs associated with the launch and development of Medical Advantage plans by our Elite Health business or failure to attain profitability in any newly launched or acquired businesses could negatively affect our results of operations.
If we are unsuccessful in obtaining a certificate of authority, winning the bid to provide services, building our provider network, or attracting and retaining members in sufficient numbers to cover our start-up costs, the new business could fail, or the losses we incur could impact our results of operations.
Retroactive adjustments may change amounts realized by third-party payors.
CMS, the federal agency responsible for administering the Medicare program, made many recent changes to Medicare that indicate a tightening of regulations that reduce payments to and increase oversight of Medicare Advantage plans.
CMS announced a 0.09% increase in payments to Medicare Advantage plans in 2027, an increase that falls short of historical averages.
In addition, CMS announced changes that limit certain diagnoses from risk score calculations, which will reduce patient payments from CMS and is increasing audit staff with an intent to begin auditing all Medicare Advantage plans rather than just a subset of such plans.
While CMS may relax certain of these requirements in the future, there can be no assurance that such increased costs and oversight won’t be permanent.
If regulations change that impact our ability to bill sufficiently enough to make a profit, our financial condition and results of operations may be adversely affected.
The use of artificial intelligence ( “ AI ” ), data analytics, and other technologies are expected to become a key component in the administration and management of health plans and health care delivery.
These risks include routine and non-routine governmental reviews, audits, and investigations, and compliance with government reporting requirements.
Our business is extensively regulated by the federal government and the states in which we operate.
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK Stock Price Volatility; Illiquid Trading Market An active trading market for our common stock may never develop or, if developed, may not be sustained.

and 8 more.

Gone since FY2024

If any of the following risks occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected.
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.
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.
Although we raised capital in 2024, we will require additional capital, which might not be available on acceptable terms, if at all.
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.
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.
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.
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.
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.
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.
Our strategy requires that we successfully identify and then contract with care providers to ensure access to quality healthcare services for our consumers, to manage medical costs and utilization, and to better monitor and ensure the quality of care being delivered.
Once operational, if at all, we will operate in highly competitive markets dominated by large providers with significantly more resources than ourselves.
Where doing so is necessary in order to conduct our business, we will also provide sensitive personal member information, as well as proprietary or confidential information relating to our business, to our third-party service providers.
The premiums we set for our health plans will be a material factor in our future revenue.
We will set our premiums using actuarial estimates and our failure to set appropriate premiums, including as a result of inaccuracies in our actuarial estimates, could adversely affect our profitability and cash flows.
Our ability to accurately estimate such costs will depend on various factors, many of which are not within our control, including: ● the utilization rates of medical facilities and services; ● the cost of medical services (including as a result of labor market constraints); ● the use or cost of prescription drugs, in particular the increased use of specialty prescription drugs; ● the introduction or widespread adoption of new or costly treatments, including new technologies; ● membership mix; ● variances in actual versus estimated levels of cost associated with new products, benefits, lines of business, product changes or benefit level changes; ● changes in the demographic characteristics of an account or market; ● changes in economic conditions (including as a result of the ongoing COVID-19 pandemic); ● changes or reductions related to utilization management functions such as preauthorization of services, concurrent review, or requirements for physician referrals; ● changes in pharmacy volume rebates received from drug manufacturers; ● catastrophes, including acts of terrorism, pandemics (such as the ongoing COVID-19 pandemic and other similar unforeseen cost drivers), epidemics or severe weather (e.g., hurricanes, wildfires or earthquakes, including those as a result of climate change); ● medical cost inflation; and ● potential changes in legislation or other rules and regulations, such as changes in government mandated benefits or consumer eligibility criteria.
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.
We will set our premiums for twelve-month periods several months prior to the commencement of the premium period and will not be freely able to change our premiums during such period, consistent with industry practice.
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.
The costs associated with the launch and development of Medical Advantage plans by our Elite Health subsidiaries or failure to attain profitability in any newly launched or acquired health plans could negatively affect our results of operations.
If we are unsuccessful in obtaining a certificate of authority, winning the bid to provide services, building out our provider network, or attracting and retaining members in sufficient numbers to cover our start-up costs, the new business could fail, or the losses we incur could impact our results of operations.
Retroactive adjustments may change amounts realized from third-party payors.
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.
The use of artificial intelligence ( “ AI ” ), data analytics, and other technologies are expected in the future to become a key component in the administration and management of health plans and health care delivery.
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.
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.
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: • diversion of management’s attention from existing operations; • unanticipated costs or liabilities associated with the acquisition; • incurrence of acquisition-related costs, which would be recognized as a current period expense; • 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; • challenges in achieving strategic objectives, cost savings and other anticipated benefits; • inability to maintain relationships with key partners, customers, suppliers, vendors and other third parties on which the purchased business relies; • ineffective controls, procedures and policies inherited from the acquired company or during the transition and integration; • inability to generate sufficient revenue to offset acquisition and/or investment costs; • negative impact to our results of operations because of the depreciation of amounts related to acquired intangible assets, fixed assets, and deferred compensation; • 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; • 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; • use of substantial portions of our available cash, issuance of dilutive equity or the incurrence of debt to consummate the acquisition; • potential write-offs of acquired assets or investments, and potential financial and credit risks associated with acquired customers; and • 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.

and 12 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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