By Michael Kim
READ THE FULL HCTI RESEARCH REPORT
On 11/6/25, Healthcare Triangle (NASDAQ:HCTI) filed the company’s 10-Q for the three months ended September 30, 2025. For the quarter, HITI generated $3.5 million of revenue, up 45% compared to $2.4 million in 3Q24, and bringing YTD revenues to $10.8 million. The year-over-year growth in 3Q25 reflected higher software services fees (shorter-term engagements focused on consulting and development) partially offset by lower managed services revenue (recurring cloud hosting/disaster recovery and monitoring contracts). After factoring in cost of revenue of $2.9 million, gross profit totaled $0.6 million for 3Q25 representing a gross margin of 17.7%, or up 380 basis points on a sequential-quarter basis. In aggregate, operating expenses totaled $3.2 million for 3Q25 compared to $1.9 million for the year-ago quarter. Much of the year-over-year increase can be attributed to higher general & administrative and sales & marketing expenses primarily related to integrating technology from the recent acquisitions of Niyama Healthcare, a SaaS platform focused on mental health solutions, and Ezovion Solutions, a Hospital Information System (HIS) and EHR company servicing healthcare providers in India, Southeast Asia, and Europe.
Putting it all together, HCTI reported a net loss of $1.9 million for the quarter, versus a net loss of $1.2 million for the year-ago period. Net loss per share came in at $0.43 for 3Q25 compared to our net loss estimate of $0.22 per share, and compared to $54.78 (skewed by the recent 1-for-249 reverse stock split) for 3Q24. Relative to our model, the EPS miss was largely a function of a revenue shortfall, higher operating expenses, and lower shares, partially offset by more favorable non-operating income (Exhibit 1).
Turning the balance sheet, as of September 30, 2025, cash and cash equivalents totaled $1.6 million compared to $28,000 as of September 30, 2024. Furthermore, the company recently received $2.6 million of net proceeds from the exercise of 1.4 million Series A warrants at a reduced $2 conversion price. HCTI maintained a $1.5 million balance on the company’s Seacoast National Bank credit facility as of September 30, 2025, up from $589,000 as of December 31, 2024. The facility carries an interest rate of 8.5% on advances against accounts receivables.
Our updated model calls for slowing net losses of ($1.83) and ($0.53) per share for 2025 and 2026, respectively, followed by ($0.22) in 2027. Looking out to 2028, we forecast EPS to hit $0.20. Key modeling inputs include reaccelerating revenue growth and rising margins. From a top line perspective, we forecast total net revenues of $16.9 million in 2025, up 44% from $11.7 million in 2024 reflecting a sizeable backlog. Beyond this year, we look for ongoing growth, with revenues of $24.4 million, $29.3 million, and $35.2 million in 2026, 2027, and 2028, respectively. Importantly, our model does not incorporate accretion related to the potential acquisition of Teyame.AI, a leading provider of AI-powered customer experience solutions projected to generate $34 million of revenue and $4+ million of EBITDA in 2025.
At a high level, strong revenue growth combined with rising margins likely translates into a favorable inflection in profitability followed by accelerating growth in operating income. More specifically, we look for gross margins to expand from 18% in 3Q25 to 35% in 2028 reflecting an ongoing mix shift in favor of highly-scalable/higher-margin subscription services and platform revenues. Target gross margins remain elevated across HCTI’s key verticals including EHR (30%+), Healthcare Cloud (40%+), and AI Solutions (70%+). In fact, management remains steadfast in eschewing lower-margin (sub-25%) contracts. Following through, we expect rising gross profits combined with ongoing cost optimization to drive a powerful inflection in profitability, with key drivers likely including stepped up operational efficiencies, streamlined expenses, and rising economies of scale.
Turning to valuation, we are taking down our DCF-derived price target by $1.00 to $5.00, still representing meaningful upside potential from current levels. The stock’s current depressed valuation likely reflects declining revenues in 2024 and limited top-line growth thus far in 2025, ongoing net losses, and the potential for dilutive equity capital raises to fund growth. That said, we look for a considerable upward revaluation for the stock, as awareness and appreciation of the company’s unique business model, accelerating/sustainable growth prospects, competitive positioning across high-growth markets, revenue profile remix, profitability inflection, and valuation disconnect increasingly take hold. Indeed, we look for a substantial step up in HCTI’s earnings power, as well as a steadier revenue growth profile, which we believe are not reflected in the stock at current levels. Moreover, further acquisitions of strategically complementary assets at attractive valuations likely represent powerful catalysts for HCTI.
We highlight the following key takeaways from 3Q25 results:
1. Setting the stage for growth: Despite the revenue shortfall relative to our expectations in 3Q25, we look for growth to reaccelerate driven by a number of key drivers. Stepping back, healthcare organizations continue to face various operational headwinds including ongoing transitions to technology-focused/value-based care models, reimbursement challenges, as insurance plans continue to evolve, mounting data entry/management administrative burdens, and staffing turnover/shortages. As such, we believe HCTI remains well positioned to capitalize on healthcare providers increasingly looking to leverage technology, specifically AI, to drive operational efficiencies. Drilling down, HCTI’s key verticals each maintain large Total Addressable Markets (TAMs). Indeed, compiling data from various studies suggests HCTI can increasingly tap into an estimated $128 billion revenue opportunity in aggregate. The EHR industry currently represents a $42 billion market that is projected to generate a Compound Annual Growth Rate (CAGR) of 7%, Healthcare Cloud services providers booked $66 billion of annual revenue that is forecast to grow 15% per year, while AI solutions are expected to deliver a 38% revenue CAGR across the sector. In fact, AI adoption rates are forecast to hit 30% to 45% across various healthcare industry constituencies by 2030.
More specific to HCTI, the company’s technology-enabled services span scalable cloud architecture, data analytics, AI/Machine Learning integration, proprietary security and compliance frameworks, and governance designed to improve patient and consumer outcomes and drive operational efficiencies. Furthermore, management remains focused on increasingly leveraging the team’s strong domain expertise to further expand the company’s geographic reach beyond the U.S. In fact, HCTI recently announced QuantumNexis secured strategic partnerships with an on-demand lifestyle digital insurer and a Third-Party Administrator (TPA) in Malaysia. Finally, a key focus remains further expanding HCTI’s wallet share with existing software services clients by increasingly activating higher-margin/recurring managed services solutions post initial deployment periods, as well maintaining high contract renewal rates. Indeed, senior officials continue to deepen engagements by deploying a broader set of solutions or tapping incremental divisions and/or geographies within existing healthcare provider clients.
2. Strategic M&A: Healthcare Triangle maintains a strong track record of accretive strategic acquisitions that have expanded the company’s footprint and augmented growth via revenue synergies. In fact, HCTI recently announced a Letter of Intent (LOI) to acquire Teyame.AI, a leading provider of AI-powered Customer Experience (CX) solutions based in Spain. More specifically, Teyame offers call center/telemarketing, KPI reporting/data analytics, and marketing strategy services, along with omnichannel CX platforms leveraging Agentic AI, or autonomous systems incorporating Large Language Models (LLMs) that independently plan/execute multi-step workflows. Stepping back, Teyame will likely transition into a separate subsidiary of Healthcare Triangle assuming the acquisition closes, with management focused on cross-selling Teyame’s CX solutions to enhance patient engagement across HCTI, as well as leveraging Teyame’s presence in Spain to increasingly penetrate the LatAm and U.S. markets. While terms of the transaction have not yet been announced, we suspect the acquisition will align with HCTI’s typical deal structure involving an upfront consideration comprised of cash and stock combined with earnout payments.
3. Revenue remix: From a mix perspective, the senior management team continues to focus on building recurring subscription/platform fees via SaaS offerings and multi-year contracts across target markets (as opposed to software advisory/implementation/development fees that remain more one-time in nature), thereby driving rising customer growth, upselling & cross-selling opportunities, and client retention, as well as a more stable/predictable revenue trajectory. Cloud-based platform applications include CloudEz, DataEz, and Readabl.ai. Moreover, senior management remains focused on further building out the salesforce and broadening marketing initiatives to stoke demand for the company’s Managed Services & Support and Platform Services solutions.
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