Core Insights - Vsee Health Inc (NASDAQ: VSEE) saw its stock price more than double following the receipt of FedRAMP High Authority to Operate (ATO) from the US Department of Health and Human Services (HHS) [1] Company Summary - The approval from HHS allows Vsee Health to operate at a higher security level, which is crucial for providing telehealth services to government agencies and healthcare organizations [1] - This development is expected to significantly enhance Vsee Health's market opportunities and competitive positioning within the telehealth industry [1] Industry Context - The telehealth industry is experiencing rapid growth, driven by increasing demand for remote healthcare services, especially in the wake of the COVID-19 pandemic [1] - Regulatory approvals like FedRAMP ATO are becoming essential for companies looking to serve government clients and ensure compliance with stringent security standards [1]

Core Insights - VSee Health Inc. (NASDAQ:VSEE) stock is experiencing significant trading activity, with a volume of 187.07 million shares compared to an average of 5.22 million shares, indicating strong investor interest [1] - The company has received its Authority to Operate (ATO) at the FedRAMP High level from the U.S. Department of Health and Human Services, allowing other federal agencies to utilize its services [1][2] - VSee's platform enhances healthcare accessibility in remote areas and supports medical surge events, which is crucial for government partners [2] Financial Performance - In the second quarter of 2025, VSee Health reported revenue of $3.4 million, reflecting a 98% year-over-year increase, with gross profit margin rising from 45% to 47% [4] - The company has successfully eliminated over $5 million in legacy SPAC debt, strengthening its balance sheet for long-term growth [4] Operational Achievements - VSee played a critical role in maintaining operations at the only hospital on the U.S. Virgin Island of St. Croix after a cyberattack, ensuring emergency services and clearing over 250 backlogged radiology studies [3] - The company is advancing its AIMEE initiative, aimed at transforming rural hospitals and enhancing long-term health sustainability through AI-enabled digital health infrastructure [3] Stock Performance - VSEE stock has seen a remarkable increase of 204.18%, trading at $1.87 [4]

Core Insights - VSee Health, Inc. has reported record-setting revenue growth, indicating strong performance in the telehealth sector [1] - The company has successfully eliminated over $5 million in legacy SPAC debt, enhancing its financial stability [1] - VSee Health is positioning itself for long-term growth through these financial improvements [1]

Core Insights - VSee Health, Inc. has secured a multi-year teleradiology contract with a major Level 1 hospital, which is expected to double the company's annual recurring revenue [1] - The contract was executed on May 7, 2025, with service delivery commencing on June 15, 2025, marking a significant milestone for the company [1] - This deal positions VSee for substantial growth and enhances shareholder value, while also opening up future opportunities in the expanding teleradiology market [1] Company Summary - VSee Health, Inc. is recognized as a leader in telehealth innovation, and this contract represents a pivotal moment in its growth trajectory [1] - The company is poised to leverage this contract to expand its services across the United States [1] Industry Summary - The teleradiology market is rapidly expanding, and VSee's new contract is indicative of the increasing demand for telehealth services [1] - The deal highlights the trend towards integrating telehealth solutions within major healthcare systems, particularly in high-level hospitals [1]

Core Insights - VSee Health, Inc. reported its financial results for the second quarter of 2025, highlighting significant changes compared to the same period in 2024 [1] Financial Performance - The company experienced a notable increase in revenue, with a percentage change relative to the second quarter of 2024 [1] - Specific financial metrics, including net income and operating expenses, were detailed, showcasing the company's financial health and operational efficiency [1] Market Position - VSee Health, Inc. continues to lead in the telehealth solutions sector, indicating strong competitive positioning within the industry [1] - The report emphasizes the growing demand for telehealth services, which is expected to drive future growth for the company [1]

[PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents VSee Health's unaudited condensed consolidated financial statements, covering balance sheets, income statements, equity, cash flows, and accounting notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased to **$18.2 million**, liabilities increased to **$23.9 million**, and stockholders' deficit worsened to **$(5.7) million** by June 30, 2025 Key Balance Sheet Metrics (June 30, 2025 vs. December 31, 2024) | Metric | December 31, 2024 | June 30, 2025 | | :-------------------------- | :------------------ | :------------------ | | Total assets | $19,992,488 | $18,210,041 | | Total liabilities | $20,010,976 | $23,946,345 | | Total stockholders' deficit | $(18,488) | $(5,736,304) | [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Total revenues increased by **101%** to **$6.7 million**, but net loss significantly widened to **$(6.6) million** due to increased operating and other expenses Consolidated Statements of Operations (6 Months Ended June 30) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 (Restated) | YoY Change (%) | | :--------------------------------- | :----------------------------------- | :----------------------------------- | :------------- | | Total revenues | $6,711,604 | $3,332,561 | 101% | | Cost of revenues | $3,263,141 | $1,320,823 | 147% | | Gross margin | $3,448,463 | $2,011,738 | 71% | | Total operating expenses | $7,534,521 | $2,840,201 | 165% | | Net operating (loss) profit | $(4,086,058) | $(828,463) | (393%) | | Total other (expense), net | $(2,468,676) | $(1,421,277) | (74%) | | Net loss | $(6,572,723) | $(571,352) | (1050%) | | Basic and diluted loss per common share | $(0.40) | $(0.11) | (264%) | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=8&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) Total stockholders' deficit worsened to **$(5.7) million** by June 30, 2025, primarily due to a **$(6.6) million net loss**, partially offset by new paid-in capital Key Stockholders' Equity (Deficit) Metrics | Metric | December 31, 2024 | June 30, 2025 | | :--------------------------------- | :------------------ | :------------------ | | Total Stockholder's Deficit | $(18,488) | $(5,736,303) | | Net loss for the six months ended June 30, 2025 | N/A | $(6,572,723) | | Additional paid-in capital | $67,683,754 | $68,538,649 | | Accumulated deficit | $(67,703,873) | $(74,276,596) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=UNAUDITED%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash used in operating activities improved to **$(0.77) million**, while financing cash decreased to **$0.75 million**, resulting in a **$(34,520) net cash decrease** for the period Selected Cash Flow Captions (6 Months Ended June 30) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Net cash used in operating activities | $(765,094) | $(2,594,214) | | Net cash used in investing activities | $(15,466) | $(16,390) | | Net cash provided by financing activities | $746,040 | $3,597,841 | | NET CHANGE IN CASH | $(34,520) | $987,237 | | CASH, END OF PERIOD | $291,595 | $1,105,971 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20THE%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and disclosures for the condensed consolidated financial statements, covering the Company's organization, significant accounting policies, business combination with iDoc, restatement of prior financials, and specific notes on leases, debt, equity, related party transactions, commitments, and fair value measurements [Note 1 Organization and Description of Business](index=12&type=section&id=Note%201%20Organization%20and%20Description%20of%20Business) VSee Health, a telehealth software company, completed a business combination with VSee Lab and iDoc in June 2024, but faces substantial doubt about its ability to continue as a going concern due to losses - VSee Health, Inc. is a Delaware-based telehealth software company providing a scalable, API-driven platform for virtual healthcare delivery, integrating secure video streaming with medical device data, EMRs, and other health information[25](index=25&type=chunk) - On June 24, 2024, the Company completed a business combination with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc., with Digital Health Acquisition Corp. changing its name to VSee Health, Inc. The transaction was accounted for as a reverse recapitalization, with VSee Lab, Inc. identified as the accounting acquirer[26](index=26&type=chunk) - Management has determined that the liquidity condition and historical operating losses raise **substantial doubt about its ability to continue as a going concern** for at least one year after the financial statements' issuance date[29](index=29&type=chunk) - To address going concern issues, the Company is implementing revenue enhancement strategies, including new contracts and market expansion (e.g., acquisition of iDoc), and pursuing additional financing, including an existing equity line of credit (ELOC) for up to **$50 million**[31](index=31&type=chunk) [Note 2 Restatement of Previously Issued Financial Statements](index=13&type=section&id=Note%202%20Restatement%20of%20Previously%20Issued%20Financial%20Statements) The Company restated its June 30, 2024, financial statements due to material misstatements in tax accruals, revenue, and compensation, significantly impacting key financial items - The Company restated its previously issued VSee Lab, Inc. condensed consolidated financial statements for June 30, 2024, due to material misstatements, including errors in sales and use tax accruals, revenue recognition, accrued expenses for DHAC and iDoc, and compensation obligations[32](index=32&type=chunk) Impact of Restatement on Consolidated Balance Sheet (June 30, 2024) | Metric | As Reported | Adjustment | As Restated | | :--------------------------------- | :---------- | :--------- | :---------- | | Accounts receivable | $2,513,855 | $(1,590,596) | $923,259 | | Prepaids and other current assets | $760,789 | $(500,000) | $260,789 | | Total current assets | $5,166,549 | $(2,090,596) | $3,075,953 | | Goodwill | $59,900,694 | $1,691,210 | $61,591,904 | | Total assets | $78,987,750 | $(399,386) | $78,588,364 | | Accounts payable and accrued liabilities | $6,752,985 | $1,291,896 | $8,044,881 | | ELOC Note | $500,000 | $(500,000) | $- | | Common stock issuance obligation | $- | $447,930 | $447,930 | | Total current liabilities | $22,879,867 | $1,239,826 | $24,119,693 | | Deferred tax liability | $- | $67,378 | $67,378 | | Total liabilities | $24,177,194 | $1,307,204 | $25,484,398 | | Additional paid-in-capital | $64,582,130 | $(906,436) | $63,675,694 | | Accumulated deficit | $(9,773,056) | $(800,154) | $(10,573,210) | | Total stockholders' equity (deficit) | $54,810,556 | $(1,706,590) | $53,103,966 | Impact of Restatement on Consolidated Statement of Operations (6 Months Ended June 30, 2024) | Metric | As Reported | Adjustment | As Restated | | :--------------------------------- | :---------- | :--------- | :---------- | | Revenues, technical engineering fees | $352,889 | $125,000 | $477,889 | | Total Revenue | $3,207,561 | $125,000 | $3,332,561 | | Cost of revenues | $872,893 | $447,930 | $1,320,823 | | Gross margin | $2,334,668 | $(322,930) | $2,011,738 | | Compensation and related benefits | $1,811,988 | $(5,668) | $1,806,320 | | General and administrative expenses | $660,398 | $118,838 | $779,236 | | Transaction expenses | $1,007,145 | $(752,500) | $254,645 | | Total operating expenses | $3,479,531 | $(639,330) | $2,840,201 | | Net operating (loss) profit | $(1,144,863) | $316,400 | $(828,463) | | Interest expense | $(359,005) | $7,860 | $(351,145) | | Total other income (expense), net | $(1,429,137) | $7,860 | $(1,421,277) | | (Loss) income before income taxes | $(2,574,000) | $324,260 | $(2,249,740) | | (Provision for) benefit from income tax | $2,241,208 | $(562,820) | $1,678,388 | | Net loss | $(332,792) | $(238,560) | $(571,352) | | Net loss attributable to stockholders | $(332,792) | $(238,560) | $(571,352) | | Basic and diluted net loss per common share | $(0.07) | $(0.04) | $(0.11) | [Note 3 Summary of Significant Accounting Policies](index=17&type=section&id=Note%203%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the Company's significant accounting policies, covering consolidation, segment reporting, revenue recognition, and fair value measurements - The Company's condensed consolidated financial statements are prepared in accordance with U.S. GAAP and include VSee Health, VSee Lab, iDoc, Encompass Healthcare Billing, LLC, and This American Doc, Inc. (TAD)[37](index=37&type=chunk)[38](index=38&type=chunk) - The Company operates in two consolidated operating segments: Healthcare Technology (VSee Lab) and Telehealth Services (iDoc), with management evaluating performance and allocating resources based on these segments[41](index=41&type=chunk)[42](index=42&type=chunk) - Revenue is recognized in accordance with ASC 606, based on a five-step model, for various services including subscription fees, professional services, technical engineering fees, patient fees, telehealth fees, and institutional fees[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk) Net Loss Per Common Share (6 Months Ended June 30) | Metric | 2025 | 2024 (Restated) | | :--------------------------------- | :--------- | :-------------- | | Net loss | $(6,572,723) | $(571,352) | | Weighted average shares outstanding – basic and diluted | 16,368,254 | 4,971,066 | | Net loss per share – basic and diluted | $(0.40) | $(0.11) | - The allowance for credit losses increased from **$2,393,033** as of December 31, 2024, to **$2,639,917** as of June 30, 2025, with credit loss expense recognized as **$246,884** for the six months ended June 30, 2025[80](index=80&type=chunk)[81](index=81&type=chunk) - Goodwill impairment assessment is performed annually and when triggering events occur. A non-cash goodwill impairment charge of **$56,675,210** was recorded for the year ended December 31, 2024, related to the Telehealth Services reporting unit. No impairment indicators were identified for the three and six months ended June 30, 2025[95](index=95&type=chunk) Intangible Assets, Net (June 30, 2025 vs. December 31, 2024) | Asset Type | June 30, 2025 | December 31, 2024 | | :------------------- | :-------------- | :---------------- | | Customer relationships | $2,115,000 | $2,100,000 | | Developed technology | $10,000,000 | $10,000,000 | | Less: Accumulated amortization | $(2,224,998) | $(1,105,000) | | Intangible assets, net | $9,890,002 | $10,995,000 | [Note 4 Business Combination](index=29&type=section&id=Note%204%20Business%20Combination) VSee Health completed a business combination with VSee Lab and iDoc on June 24, 2024, acquiring iDoc for **$68.9 million**, resulting in **$61.6 million** goodwill, later impaired by **$56.7 million** - On June 24, 2024, VSee Health, Inc. completed a Business Combination with VSee Lab and iDoc, a provider of tele-intensive acute and neurocritical care services. The transaction was accounted for as a reverse recapitalization with VSee Lab as the accounting acquirer[107](index=107&type=chunk) - The acquisition of iDoc enhanced the Company's platform by integrating iDoc's clinical capabilities in managing critically ill patients and supported the Company's strategy to expand its telehealth offerings[108](index=108&type=chunk) - At closing, the Company issued **5,542,500 shares of common stock** and **300 shares of Series A preferred stock** (convertible into 150,000 common shares), totaling **5,692,500 common shares** on an as-converted basis, with an aggregate consideration of **$68.9 million**[109](index=109&type=chunk) - The purchase price allocation included **$10 million** for developed technology and **$2.1 million** for customer relationships, resulting in approximately **$61.6 million in goodwill**. A goodwill impairment charge of **$56.7 million** was recorded in December 2024[110](index=110&type=chunk) [Note 5 Leases](index=29&type=section&id=Note%205%20Leases) Operating lease assets decreased to **$337,770** and liabilities to **$307,850**, while finance lease liabilities, now fully current, decreased to **$234,673** by June 30, 2025 Operating Lease Right-of-Use Assets, Net | Metric | June 30, 2025 | December 31, 2024 (Restated) | | :-------------------------- | :-------------- | :--------------------------- | | Office lease | $433,173 | $433,173 | | Less: Accumulated amortization | $(95,403) | $(53,588) | | Right-of-use assets, net | $337,770 | $379,585 | Operating Lease Liabilities | Metric | June 30, 2025 | December 31, 2024 (Restated) | | :-------------------------- | :-------------- | :--------------------------- | | Office lease | $307,850 | $342,174 | | Less: current portion | $(81,132) | $(72,836) | | Long term portion | $226,718 | $269,338 | Finance Lease Liabilities | Metric | June 30, 2025 | December 31, 2024 (Restated) | | :-------------------------- | :-------------- | :--------------------------- | | Equipment lease | $234,673 | $328,833 | | Less: Current portion | $(234,673) | $(328,833) | | Long term portion | $— | $— | - The entirety of the finance lease liability has been reclassified to current liabilities as of June 30, 2025, and December 31, 2024, due to a revised forbearance agreement with a repayment expected by November 2025[118](index=118&type=chunk)[123](index=123&type=chunk) [Note 6 Accounts Payable and Accrued Liabilities](index=32&type=section&id=Note%206%20Accounts%20Payable%20and%20Accrued%20Liabilities) Total accounts payable and accrued liabilities increased to **$9.6 million** by June 30, 2025, driven by higher sales and use tax and financing lease liabilities, partially offset by lower compensation accruals Components of Accounts Payable and Accrued Liabilities | Component | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Accounts payable | $4,402,224 | $4,283,397 | | Accrued compensation and benefits | $2,090,240 | $2,176,070 | | Accrued interest | $536,796 | $558,358 | | Accrued sales and use tax | $1,157,346 | $999,547 | | Accrued financing lease | $543,770 | $446,890 | | Other accrued liabilities | $890,513 | $879,397 | | **Total** | **$9,620,889** | **$9,343,659** | [Note 7 Factoring Payable](index=32&type=section&id=Note%207%20Factoring%20Payable) The Company assumed **$143,220** in unsecured, non-interest-bearing factoring payables from iDoc as part of the June 2024 business combination, subject to weekly adjustments - The Company assumed factoring payable liabilities from iDoc as a result of the June 24, 2024, Business Combination. These agreements are generally unsecured, non-interest-bearing, and subject to weekly adjustments based on future receipts[125](index=125&type=chunk) Factoring Payable Balances | Agreement Date | June 30, 2025 | December 31, 2024 | | :------------------- | :-------------- | :---------------- | | June 21, 2023 | $51,300 | $59,527 | | June 28, 2023 | $17,320 | $34,315 | | October 13, 2023 | $74,600 | $85,166 | | **Total Factoring Payable** | **$143,220** | **$179,007** | [Note 8 Line of Credit and Notes Payable](index=34&type=section&id=Note%208%20Line%20of%20Credit%20and%20Notes%20Payable) This note details various notes payable and lines of credit, including defaulted notes, new convertible notes, and an ELOC, with many financial instruments measured at fair value due to embedded features Summary of Notes Payable (June 30, 2025 vs. December 31, 2024) | Note Payable | June 30, 2025 | December 31, 2024 (Restated) | | :--------------------------------- | :-------------- | :--------------------------- | | Note payable issued Nov 29, 2021 | $336,983 | $336,983 | | Note payable issued Dec 1, 2021 | $1,500,600 | $1,500,600 | | Note payable issued Aug 18, 2023 | $64,000 | $64,000 | | Note payable issued Nov 29, 2023 | $33,000 | $33,000 | | **Total notes payable and line of credit** | **$1,934,583** | **$1,934,583** | | Less: Current portion | $(433,983) | $(433,983) | | Less: Fair value adjustment for debt | $(906,659) | $(906,659) | | **Total notes payable, net of current portion** | **$593,941** | **$593,941** | - Several assumed notes payable (November 29, 2021; December 1, 2021; August 3, 2023; August 18, 2023) are currently in default, leading to increased interest rates (e.g., **26% per annum** for some defaulted notes) and full classification as current liabilities[130](index=130&type=chunk) - The March 2025 Convertible Note (**$108,696 principal**) and May 2025 Convertible Note (**$216,871 principal**) were issued in 2025, both accounted for at fair value due to embedded features, with significant losses recognized on initial recognition or extinguishment of prior notes[132](index=132&type=chunk)[137](index=137&type=chunk)[149](index=149&type=chunk) - The Exchange Note, Quantum Convertible Note, and September 2024 Convertible Note are share-settled debt instruments accounted for as liabilities under ASC 480 and re-measured at fair value each reporting period, with significant changes in fair value recognized in earnings[166](index=166&type=chunk)[182](index=182&type=chunk)[204](index=204&type=chunk) - The Equity Line of Credit (ELOC) Agreement allows the Company to sell up to **$50,000,000** of common stock over 36 months. It is classified as a liability under ASC 815 and re-measured at fair value, with a floor price of **$1.25 per share** as of March 20, 2025[185](index=185&type=chunk)[187](index=187&type=chunk)[191](index=191&type=chunk) [Note 9 Related Party](index=47&type=section&id=Note%209%20Related%20Party) This note details various related party transactions, including loans from VSee Lab's CEO, a note receivable from iDoc's CEO, and advances from DHAC's Sponsor, many converted to equity - VSee Lab incurred several promissory notes from its then CEO, Milton Chen, totaling **$323,000** in principal, with default interest rates of **26% per annum**. Accrued interest balances as of June 30, 2025, were **$64,991**, **$72,459**, and **$27,253** respectively[210](index=210&type=chunk) - iDoc had a related party balance due from its then CEO, Imoigele Aisiku, of **$241,122** as of June 30, 2025, which is unsecured and non-interest-bearing. A **$336,000** note receivable from Mr. Aisiku was written off in 2024, resulting in a **$245,500 loss**[209](index=209&type=chunk)[211](index=211&type=chunk) - DHAC had various loans and advances from its Sponsor and affiliates, totaling **$1,268,000**, which were converted into Series A Preferred Stock at the closing of the Business Combination. Additionally, **$405,000** in working capital advances from SCS (a Sponsor affiliate) were converted into **202,500 shares of Common Stock**, treated as a troubled debt restructuring[212](index=212&type=chunk)[213](index=213&type=chunk)[219](index=219&type=chunk) - SCS Capital Partners LLC, a Sponsor affiliate, owns approximately **40.74%** of the Quantum Investor, which subscribed for the **$3,000,000 Quantum Convertible Note**[213](index=213&type=chunk) [Note 10 Commitments, Contingencies, and Concentration Risk](index=51&type=section&id=Note%2010%20Commitments,%20Contingencies,%20and%20Concentration%20Risk) The Company faces legal proceedings, commitments for robots and reseller agreements, and credit risk concentrations with key customers, alongside a significant sales tax liability - The Company is involved in a pending lawsuit for alleged breach of contract and unjust enrichment, with settlement discussions actively ongoing. The Company believes the resolution will not have a material adverse effect on its business[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Commitments include an unpaid **$179,900** for telepresence robots, a **$200,000** promissory note with a related party where payments are based on **80% of monthly revenue** from deployed robots, and a **$413,731** commitment on a reseller agreement for international market expansion[223](index=223&type=chunk) - The Company faces concentrations of credit risk in cash and trade accounts receivables. As of June 30, 2025, **two customers represented 35% of total accounts receivable**, and **one customer accounted for approximately 29% of total revenue** for the three months ended June 30, 2025[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk) - A sales tax liability of **$1,157,346** was recorded as of June 30, 2025, with **$89,885** in sales tax expense recognized for the three months ended June 30, 2025[228](index=228&type=chunk) [Note 11 Income Taxes](index=54&type=section&id=Note%2011%20Income%20Taxes) For the six months ended June 30, 2025, the Company reported a **$(6.5 million) loss before taxes** and an income tax expense of **$17,989**, resulting in a **(0.27%) effective tax rate** Loss Before Income Taxes (6 Months Ended June 30) | Geographic Area | 2025 | 2024 | | :-------------- | :----------- | :----------- | | United States | $(6,544,734) | $(2,249,740) | | Total | $(6,544,734) | $(2,249,740) | Income Tax Expense and Effective Tax Rate (6 Months Ended June 30) | Metric | 2025 | 2024 | | :-------------------- | :--------- | :----------- | | Income tax expense (benefit) | $17,989 | $(1,678,388) | | Effective tax rate | (0.27%) | 74.6% | | Statutory federal income tax rate | 21.0% | 21.0% | - The effective tax rate varied from the statutory federal income tax rate primarily due to state income taxes, adjustments for meals, entertainment and penalties, changes in fair value of financial instruments, stock compensation expenses, and changes to valuation allowance[229](index=229&type=chunk)[230](index=230&type=chunk) [Note 12 Equity](index=56&type=section&id=Note%2012%20Equity) The Company has authorized preferred and common stock, with **6,158 Series A Preferred** and **16.4 million common shares** outstanding, alongside stock options and a common stock issuance obligation - The Company has **10,000,000 authorized preferred shares** (**$0.0001 par value**), with **6,158 Series A Preferred Stock shares** issued and outstanding as of June 30, 2025. These shares have voting rights, cumulative participating dividends, and are convertible into common stock at the holder's option[232](index=232&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) - The Company is authorized to issue **100,000,000 shares of common stock** (**$0.0001 par value**), with **16,422,690 shares outstanding** as of June 30, 2025, an increase from **16,297,190 shares** at December 31, 2024[239](index=239&type=chunk) - The 2024 Equity Incentive Plan reserves **2,544,021 shares of common stock**, with **803,646 stock options** granted at the closing of the Business Combination on June 24, 2024, at an exercise price of **$12.11**[240](index=240&type=chunk) - A common stock issuance obligation of **$59,383** as of June 30, 2025 (down from **$69,621** at December 31, 2024) for iDoc employees is classified as a liability and re-measured at fair value each reporting date[243](index=243&type=chunk) [Note 13 Warrants](index=58&type=section&id=NOTE%2013%20Warrants) The Company has **12.99 million** equity-classified warrants outstanding, including Public, Private, Bridge, Extension, and September 2024 Warrants, with a weighted average exercise price of **$9.65** - The Company's Public, Private, Bridge, Extension, and September 2024 Warrants are classified as equity instruments under ASC 480 and ASC 815, as they meet the requirements for equity classification[245](index=245&type=chunk) Summary of Warrants Outstanding (June 30, 2025) | Warrant Type | Outstanding (Shares) | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | | :------------------- | :------------------- | :------------------------------ | :-------------------------------------- | | Public Warrants | 11,500,000 | $11.50 | 3.98 | | Private Warrants | 557,000 | $11.50 | 3.98 | | Bridge Warrants | 173,913 | $11.50 | 2.26 | | Extension Warrants | 26,086 | $11.50 | 2.85 | | September 2024 Warrants | 740,741 | $2.25 | 4.25 | | **Total** | **12,997,740** | **$9.65** | **3.46** | - Public and Private Warrants have an exercise price of **$11.50** and expire on the fifth anniversary of the business combination. They are redeemable by the Company at **$0.01 per warrant** if the common stock price equals or exceeds **$18.00** for 20 trading days within a 30-day period[246](index=246&type=chunk)[247](index=247&type=chunk) - September 2024 Warrants, issued to an institutional investor, are exercisable at **$2.25 per share** for five years and are subject to standard and down-round antidilution adjustments[253](index=253&type=chunk) [Note 14 Reportable segments](index=59&type=section&id=NOTE%2014%20Reportable%20segments) The Company operates in Healthcare Technology and Telehealth Services segments; for H1 2025, Technology generated **$4.46 million** revenue with a **$(83,969) loss**, while Telehealth generated **$2.25 million** revenue with a **$(1.3 million) loss** - The Company has two reportable segments: Healthcare Technology (VSee Lab) and Telehealth Services (iDoc), which align with how the Co-CEOs review results and allocate resources[254](index=254&type=chunk)[257](index=257&type=chunk)[258](index=258&type=chunk) Segment Revenues and Operating Income (Loss) (6 Months Ended June 30, 2025) | Metric | Technology | Telehealth | Total | | :--------------------------------- | :----------- | :----------- | :----------- | | Total revenues | $4,458,800 | $2,252,805 | $6,711,604 | | Cost of revenues | $2,435,618 | $827,523 | $3,263,141 | | Segment gross margin | $2,023,181 | $1,425,282 | $3,448,463 | | Segment operating income (loss) | $(83,969) | $(1,300,001) | $(1,383,970) | Segment Total Assets (June 30, 2025 vs. December 31, 2024) | Segment | June 30, 2025 | December 31, 2024 | | :-------------------- | :-------------- | :---------------- | | Technology | $1,016,971 | $1,503,995 | | Telehealth | $17,138,696 | $18,271,724 | | Non-operating corporate | $54,374 | $216,769 | | **Total** | **$18,210,041** | **$19,992,488** | Segment Depreciation and Amortization (6 Months Ended June 30) | Segment | 2025 | 2024 | | :---------- | :------- | :------- | | Technology | $4,888 | $1,716 | | Telehealth | $1,289,749 | $375 | | **Total** | **$1,294,636** | **$2,091** | Segment Interest Expense (6 Months Ended June 30) | Segment | 2025 | 2024 | | :-------------------- | :--------- | :--------- | | Technology | $21,155 | $47,205 | | Telehealth | $112,170 | $3,941 | | Non-Operating corporate | $837,919 | $299,999 | | **Total** | **$971,244** | **$351,145** | [Note 15 Fair Value Measurements](index=64&type=section&id=NOTE%2015%20Fair%20Value%20Measurements) This note details fair value measurements for financial liabilities, primarily Level 3 instruments like convertible notes, valued using Monte Carlo models, while common stock issuance obligation is Level 1 Fair Value of Financial Liabilities (June 30, 2025) | Liabilities | Fair Value | Level 1 | Level 2 | Level 3 | | :--------------------------------- | :--------- | :------ | :------ | :--------- | | Exchange Note | $2,485,636 | $— | $— | $2,485,636 | | Equity line of credit | $59,843 | $— | $— | $59,843 | | Quantum Convertible Note, related party | $3,580,612 | $— | $— | $3,580,612 | | September 2024 Convertible Note | $2,918,875 | $— | $— | $2,918,875 | | Common stock issuance obligation | $59,383 | $59,383 | $— | $— | | March 2025 Convertible Note | $194,791 | $— | $— | $194,791 | | May 2025 Convertible Note | $342,996 | $— | $— | $342,996 | - The Quantum Convertible Note, Exchange Note, ELOC Agreement, September 2024 Convertible Note, March 2025 Convertible Note, and May 2025 Convertible Note are classified within **Level 3** of the fair value hierarchy due to the use of unobservable inputs in their valuation models (e.g., Monte Carlo model)[269](index=269&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk) - The common stock issuance obligation is classified within **Level 1** of the fair value hierarchy as its fair value is estimated based on the observable closing price of the Company's common stock[278](index=278&type=chunk) Level 3 Changes in Fair Value of Derivatives (December 31, 2024 to June 30, 2025) | Metric | Quantum Convertible Note | Exchange Note | ELOC | September Convertible Note | Common Stock Issuance Obligation | March 2025 Convertible Note | May 2025 Convertible Note | Total | | :--------------------------------- | :----------------------- | :------------ | :----- | :------------------------- | :------------------------------- | :-------------------------- | :------------------------ | :---------- | | Fair value as of December 31, 2024 | $3,248,000 | $1,499,000 | $80,000 | $2,094,000 | $69,621 | $— | $— | $6,990,621 | | Initial fair value at issuance | $— | $— | $— | $— | $— | $238,020 | $342,996 | $581,016 | | (Gain) Loss on change in fair value | $332,612 | $986,636 | $(20,157) | $824,875 | $(10,238) | $(43,229) | $— | $2,070,499 | | Fair value as of June 30, 2025 | $3,580,612 | $2,485,636 | $59,843 | $2,918,875 | $59,383 | $194,791 | $342,996 | $9,642,136 | [Note 16 Subsequent Events](index=68&type=section&id=Note%2016%20Subsequent%20Events) Subsequent events include the issuance of the ELOC Commitment Fee Note, Quantum Note maturity extension, conversions of bridge and exchange notes, and new loan agreements with Change Capital and an October 2025 Note - On July 2, 2025, the Company issued the ELOC Commitment Fee Note (**$500,000 principal**) payable in common stock. On July 3, 2025, the Quantum Note's maturity date was extended to June 30, 2026, with **18 months of guaranteed interest**[284](index=284&type=chunk)[285](index=285&type=chunk) - In August 2025, Additional Bridge Notes (**$32,408 principal**) and the Exchange Note (**$500,000 principal**) were converted into **14,199** and **213,759 shares of common stock**, respectively[286](index=286&type=chunk)[287](index=287&type=chunk) - On September 5, 2025, the Company entered a Master Business Loan Agreement (MBLA) with Change Capital Holdings I, LLC for up to **$2,500,001** in advances. An initial advance of **$525,000** was secured by a junior lien on all Company assets and personal guarantees from Co-CEOs and CFO[288](index=288&type=chunk) - On October 9, 2025, the Company issued a secured, non-convertible promissory note (October 2025 Note) for **$133,333** (purchase price **$120,000**), bearing **5% annual interest** and secured by all Company assets, subordinated to existing debt[289](index=289&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses VSee Health's financial condition and operations, focusing on the impact of the June 2024 business combination, revenue growth, increased expenses, net loss, and liquidity [Overview](index=70&type=section&id=Overview) VSee Health, formed by the June 2024 business combination of VSee Lab and iDoc, provides a scalable telehealth software platform and high-acuity patient care solutions - VSee Health, Inc. completed a business combination with VSee Lab and iDoc on June 24, 2024, transforming from a blank check company into a telehealth software and services provider[291](index=291&type=chunk) - VSee Lab's core platform is a highly scalable, API-driven technology for virtual healthcare delivery, offering customizable and white-labeled solutions with deep integration across the healthcare ecosystem, enabling clinicians to configure workflows with low-code/no-code tools[292](index=292&type=chunk)[293](index=293&type=chunk)[294](index=294&type=chunk) - iDoc, a wholly-owned subsidiary, provides high-acuity patient care solutions, including elite physician services in intensive care units, specializing in neuro-critical care, general tele-critical care, and specialty e-consults to various hospital systems and facilities[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) [Implications of Being an Emerging Growth Company](index=72&type=section&id=Implications%20of%20Being%20an%20Emerging%20Growth%20Company) As an emerging growth and smaller reporting company, VSee Health benefits from reduced reporting requirements and an extended transition period for new accounting standards - VSee Health is an 'emerging growth company' and 'smaller reporting company,' allowing it to take advantage of exemptions from certain reporting requirements, such as auditor attestation for Section 404 of Sarbanes-Oxley and reduced executive compensation disclosures[298](index=298&type=chunk)[300](index=300&type=chunk) - The Company has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards, meaning it will adopt new standards at the same time as private companies, which may impact comparability with other public companies[299](index=299&type=chunk) [Performance Factors](index=72&type=section&id=Performance%20Factors) VSee Health's future performance depends on capitalizing on the telehealth market, expanding customer base through industry relationships, and continuous innovation to address existing solution limitations - Future performance depends on capitalizing on the rapid transformation of the telehealth market, which is characterized by strong future growth and an attractive value proposition from the Company's current offerings[301](index=301&type=chunk) - The Company aims to expand within the market and attract new customers by leveraging industry relationships with government, hospital systems, and insurance providers, as telehealth is still in its infancy stages[302](index=302&type=chunk) - Innovation and new product offerings are critical for long-term success, as existing telehealth solutions often lack healthcare-specific design, device integration, optimized backend coordination, and robust functionality, which the Company's technology aims to address[304](index=304&type=chunk)[305](index=305&type=chunk) [Critical Accounting Estimates](index=74&type=section&id=Critical%20Accounting%20Estimates) This section outlines critical accounting estimates requiring significant management judgment, including revenue recognition, fair value measurements, goodwill impairment, and income taxes, which can materially affect financial statements - Critical accounting estimates involve significant management judgment and affect reported amounts, including revenue recognition (ASC 606), fair value of financial instruments (ASC 820), goodwill impairment (ASC 350), impairment of long-lived and intangible assets (ASC 360-10), and income taxes (ASC 740-10)[306](index=306&type=chunk)[307](index=307&type=chunk)[308](index=308&type=chunk) - Revenue recognition follows a five-step model under ASC 606, involving identifying contracts, performance obligations, transaction price, allocation, and timing of recognition for various service types (subscription, professional, patient, telehealth, institutional fees)[310](index=310&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) - Goodwill is evaluated for impairment at the reporting unit level, with a non-cash goodwill impairment charge of **$56,675,210** recorded in 2024 for the Telehealth Services unit. No impairment indicators were identified for the three and six months ended June 30, 2025[340](index=340&type=chunk)[341](index=341&type=chunk) [Financial Statement Components (Results of Operations)](index=80&type=section&id=Financial%20Statement%20Components) For H1 2025, total revenue increased by **101%** to **$6.7 million**, but net loss widened by **1050%** to **$(6.6) million** due to surging cost of revenues and operating expenses Results of Operations (6 Months Ended June 30) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--------------------------------- | :----------- | :----------- | :----------- | :----------- | | Revenue | $6,711,604 | $3,332,561 | $3,379,043 | 101% | | Cost of revenues | $3,263,141 | $1,320,823 | $1,942,318 | 147% | | Gross margin | $3,448,463 | $2,011,738 | $1,436,725 | 71% | | Operating expenses | $7,534,521 | $2,840,201 | $4,694,320 | 165% | | Other income (expense) | $(2,468,676) | $(1,421,277) | $(1,047,399) | 74% | | Net loss before taxes | $(6,554,734) | $(2,249,740) | $4,304,994 | 191% | | Income tax benefit | $(17,989) | $1,678,388 | $(1,696,377) | 101% | | Net loss | $(6,572,723) | $(571,352) | $(6,001,371) | 1050% | - Total revenue increased by **101%** for the six months ended June 30, 2025, driven by a **3,501% increase in iDoc revenue** (primarily patient and telehealth fees) from its acquisition, and higher professional services and technical engineering fees related to the HHS contract. This was partially offset by an **18% decline in subscription revenue**[351](index=351&type=chunk) - Cost of goods sold increased by **147%** for the six months ended June 30, 2025, mainly due to **146% higher compensation expenses** (from HHS contract support and iDoc acquisition) and **623% higher procurement of medical devices** for the HHS project[354](index=354&type=chunk) - Operating expenses rose by **165%** for the six months ended June 30, 2025, primarily due to a **440% increase in general and administrative expenses** (from iDoc acquisition, amortization, bad debt, insurance, and DHAC recapitalization professional fees) and **84% higher compensation-related expenses**[357](index=357&type=chunk) - Other expense increased by **74%** for the six months ended June 30, 2025, driven by a **$1,964,396 loss on change in fair value of debt and derivative financial instruments** and a **$620,099 increase in interest expense**, partially offset by the absence of a prior period initial fair value loss on the Quantum Note and **$183,007 in other income (ERC)**[359](index=359&type=chunk) [Cash Flows](index=84&type=section&id=Cash%20Flows) Net cash used in operating activities improved to **$(0.77) million**, while financing cash decreased to **$0.75 million**, resulting in a **$(34,520) net cash decrease** for H1 2025 Selected Cash Flow Captions (6 Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :--------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(765,094) | $(2,594,214) | | Net cash used in investing activities | $(15,466) | $(16,390) | | Net cash provided by financing activities | $746,040 | $3,597,841 | | Change in cash | $(34,520) | $987,237 | - Cash used in operating activities improved to **$(765,094)** for the six months ended June 30, 2025, from a net loss of **$(6,572,723)**, adjusted by **$4,027,812** in non-cash items and a **$1,779,817 increase in net changes in operating assets and liabilities** (primarily accounts payable and deferred revenue)[364](index=364&type=chunk) - Cash provided by financing activities for the six months ended June 30, 2025, was **$746,040**, mainly from **$816,871 in proceeds from new notes** (M2B, Ascent, FWE Capital) offset by payments to shareholders, factoring payables, and finance lease liabilities[367](index=367&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, VSee Health, Inc. is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, VSee Health, Inc. is exempt from providing quantitative and qualitative disclosures about market risk[369](index=369&type=chunk) [Item 4. Controls and Procedures](index=85&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, VSee Health's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting. These weaknesses include insufficient accounting personnel for segregation of duties, ineffective IT General Controls (access controls), lack of formalized control environment, and inadequate accounting for significant or non-recurring transactions. Management believes these issues will persist without additional funding for the accounting department, though they assert the financial statements fairly represent the Company's condition - As of June 30, 2025, the Company's disclosure controls and procedures were not effective due to **material weaknesses in internal control over financial reporting**[370](index=370&type=chunk) - Material weaknesses include insufficient accounting personnel for segregation of duties, ineffective IT General Controls (access controls), lack of formalized control environment and oversight, and inadequate accounting for significant or non-recurring transactions[371](index=371&type=chunk) - Management anticipates these material weaknesses will not be remediated without additional funding for the accounting department, but believes the consolidated financial statements fairly represent the Company's financial condition[372](index=372&type=chunk)[373](index=373&type=chunk) - Subsequent to quarter-end, the Company has enhanced processes to identify and apply accounting requirements, including improved access to accounting literature and increased communication, though remediation will take time[376](index=376&type=chunk) [PART II — OTHER INFORMATION](index=86&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=86&type=section&id=Item%201.%20Legal%20Proceedings) The Company is subject to claims, lawsuits, and other legal and administrative proceedings in the ordinary course of business. While defending such proceedings is costly and burdensome, management does not believe that any currently pending litigation, if determined adversely, would individually or in aggregate have a material adverse effect on the Company's business, operating results, cash flows, or financial condition - The Company is subject to claims, lawsuits, and legal proceedings in the ordinary course of business, which can be costly and burdensome[378](index=378&type=chunk) - Management believes that no currently pending litigation would individually or in aggregate have a material adverse effect on the Company's business, operating results, cash flows, or financial condition[378](index=378&type=chunk) [Item 1A. Risk Factors](index=86&type=section&id=Item%201A.%20Risk%20Factors) The Company refers readers to the risk factors discussed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and does not believe there have been any material changes to these risks. Additional unknown or currently immaterial risks may also adversely affect the business - Readers should consider the risk factors discussed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[379](index=379&type=chunk) - The Company does not believe there have been any material changes to the previously disclosed risk factors, but acknowledges that additional unknown or immaterial risks could adversely affect the business[379](index=379&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) For the fiscal quarter ended June 30, 2025, there were no unregistered securities to report that had not been previously disclosed in prior SEC filings - No unregistered sales of equity securities or use of proceeds were reported for the fiscal quarter ended June 30, 2025, that had not been previously disclosed[380](index=380&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[381](index=381&type=chunk) [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[382](index=382&type=chunk) [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) During the six months ended June 30, 2025, no directors or officers informed the Company of the adoption or termination of any Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements - No directors or officers reported the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the six months ended June 30, 2025[383](index=383&type=chunk) [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL taxonomy documents - The exhibits filed include the Second Amended and Restated Certificate of Incorporation, Certificate of Designation of Series A Convertible Preferred Stock, Amended and Restated Bylaws, CEO and CFO certifications, and XBRL taxonomy documents[386](index=386&type=chunk) [Signatures](index=88&type=section&id=Signatures) The report is signed by Imoigele Aisiku, Co-Chief Executive Officer and Chairman of the Board, and Jerry Leonard, Chief Financial Officer and Secretary, on October 15, 2025, certifying its submission in accordance with the Exchange Act - The report is signed by Imoigele Aisiku, Co-Chief Executive Officer and Chairman of the Board, and Jerry Leonard, Chief Financial Officer and Secretary, on October 15, 2025[390](index=390&type=chunk)

Financial Performance - Total revenues for Q1 2025 were $3,321,485, a significant increase of 104.3% compared to $1,620,995 in Q1 2024[17] - Subscription fees decreased to $827,345 in Q1 2025 from $1,005,202 in Q1 2024, representing a decline of 17.7%[17] - Professional services and other fees increased to $896,680 in Q1 2025 from $327,843 in Q1 2024, marking a growth of 173.5%[17] - Net loss for Q1 2025 was $3,959,440, compared to a net income of $94,750 in Q1 2024[17] - The company reported a gross margin of $1,859,971 for Q1 2025, compared to $1,234,742 in Q1 2024, indicating a growth of 50.6%[17] - Operating expenses for Q1 2025 were $3,691,289, significantly higher than $1,130,682 in Q1 2024, an increase of 226.5%[17] Cash and Liabilities - Cash at the end of Q1 2025 was $410,122, up from $326,115 at the end of Q4 2024, reflecting a 25.7% increase[20] - Total current liabilities increased to $21,982,860 as of March 31, 2025, compared to $19,010,320 as of December 31, 2024, an increase of 15.5%[15] - The Company reported total liabilities of $5,635,549 as of March 31, 2024, after adjustments, reflecting an increase of $821,292[30] Business Combinations and Financing - The company completed a business combination with VSee Lab, Inc. and iDoc Virtual Telehealth Solutions, Inc. on June 24, 2024, which was accounted for as a reverse recapitalization[23] - The company has entered into an equity line of credit agreement for up to $50 million over a 36-month period following the business combination[23] - The Company is negotiating additional financing to support working capital needs and growth initiatives[28] - The Company has an equity line of credit purchase agreement allowing for the issuance of up to $50,000,000 in common stock[28] Revenue Recognition and Accounting - The Company recognizes revenue in accordance with ASC 606, reflecting the expected consideration received for services provided[42] - Revenue from telemedicine care services is recognized when administrative, business, and medical records are provided as required[64] - Revenue is presented net of estimated contractual adjustments, service credits, and expected credit losses, reflecting historical collection experience and market conditions[58] Intangible Assets and Impairment - As of March 31, 2025, the net intangible assets amounted to $10,442,500, after accounting for accumulated amortization of $1,657,500 for the three months ended March 31, 2025[90] - The Company recorded non-cash goodwill impairment charges of $56,675,210 for the year ended December 31, 2024, due to the fair value of the Telehealth Services reporting unit being less than its carrying value[88] - The Company performed a qualitative analysis for impairment indicators as of March 31, 2025, concluding that no adverse indicators were identified[88] Lease Liabilities - The Company has operating lease liabilities of $325,396 as of March 31, 2025, with future minimum rent payments totaling $436,350[103] - For the three months ended March 31, 2025, the Company recorded operating lease expenses of $35,635[105] - The finance lease liabilities amounted to $282,877 as of March 31, 2025, with total future minimum lease payments of $319,302[108] Shareholder Equity and Stock Issuance - The Company issued 5,542,500 shares of common stock and 300 shares of Series A preferred stock as part of the business combination, totaling 5,692,500 shares on an as-converted basis[99] - The Company has 10,000,000 shares of preferred stock authorized, with 6,158 shares of Series A Preferred Stock issued and outstanding as of March 31, 2025[209] - Series A preferred stockholders are entitled to cumulative participating dividends when declared, prior to any dividends to common stockholders[211] Taxation - For the three months ended March 31, 2025, the Company reported an income tax expense of $13,505, compared to $0 for the same period in 2024[206] - The effective tax rate for the three months ended March 31, 2025, was (0.35%), compared to 0.00% for the same period in 2024[206] - The Company does not have any uncertain income tax positions as of March 31, 2025, and December 31, 2024[208] Customer and Vendor Relationships - The Company has two major customers whose accounts receivable represented 58% of total accounts receivable as of March 31, 2025[202] - One customer accounted for approximately 26% of the Company's total revenue for the three months ended March 31, 2025, compared to 12% for the same period in 2024[203] - One vendor represented 21% of the Company's total accounts payable and accrued liabilities as of March 31, 2025, down from 22% as of December 31, 2024[204]

Business Combination and Company Overview - VSee Health completed a Business Combination on June 24, 2024, merging with VSee Lab and iDoc, and subsequently changed its name to VSee Health, Inc.[286] - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to take advantage of certain reporting exemptions[294][296]. Market Potential and Growth Strategy - The telehealth market is experiencing rapid transformation, with significant growth potential as major customers seek to enhance capabilities, indicating a strong future market outlook[298]. - The company aims to leverage industry relationships to expand its customer base, particularly within hospital systems, which are expected to drive most of the growth in telehealth utilization[299]. - VSee Health's technology solutions aim to address existing limitations in telehealth, such as integration challenges and the need for optimized backend software coordination[300]. - The company emphasizes the importance of innovation and new product offerings to capture a larger share of the telehealth market, which currently represents less than 1% of total healthcare spending[301]. Revenue Recognition and Financial Reporting - The company recognizes revenue in accordance with ASC 606, focusing on the transfer of promised goods or services to customers[306]. - Revenue from third-party payors is presented net of an estimated provision for contractual adjustments, with patient revenues net of service credits and expected credit losses[326]. - The Company recognizes revenue for telemedicine services when performance obligations are met, with payments from Medicare, Medicaid, and commercial insurance providers based on established rates[329][330][331]. - Subscription services are treated as a series of distinct performance obligations, with revenue recognized over time as services are delivered[316]. - The Company estimates variable consideration for revenue recognition based on expected value or the most likely amount method, ensuring that significant reversals in revenue recognized are unlikely[333]. - Fixed monthly fees are charged for telemedicine consultation services, EEG professional interpretation services, and platform software services, providing a predetermined number of physician hours[336]. - Deferred revenue consists of unamortized nonrefundable upfront fees, classified as current and non-current based on expected revenue recognition timing[316]. - The Company evaluates the nature of professional services arrangements to determine appropriate timing for revenue recognition, ensuring it reflects the transfer of goods or services[323]. - Performance obligations for patient fee services are satisfied when professional medical services are rendered, with revenue recognized upon satisfaction of these obligations[324]. Financial Performance - Revenue for the year ended December 31, 2024, was $10,421,352, an increase of $4,655,463 or 81% compared to $5,765,889 in 2023[347]. - The acquisition of iDoc contributed $2,217,733 or 49% of the total revenue increase, primarily from patient and telehealth fees[349]. - Operating expenses increased by $63,622,142 or 1,115%, driven by goodwill impairment charges of $56,675,210 and higher general and administrative expenses[355]. - Net loss for the year ended December 31, 2024, was $57,702,015, an increase of $53,976,561 or 1,449% compared to the previous year[357]. - Cash used in operating activities was $5,789,542 for the year ended December 31, 2024, compared to $632,595 in 2023[362]. - Cash provided by financing activities for the year ended December 31, 2024, was $6,023,067, primarily from proceeds of the Quantum Note and Convertible Note[368]. - The company had an accumulated deficit of $67,703,873 as of December 31, 2024, raising substantial doubt about its ability to continue as a going concern[359]. - Cash on hand as of December 31, 2024, was $326,115, insufficient to meet operating cash needs for the next 12 months[360]. - The increase in cost of revenues for the year ended December 31, 2024, was $1,310,577 or 68%, primarily due to the acquisition of iDoc[351]. Investment and Valuation - The Company uses a fair value hierarchy to measure investments, prioritizing unadjusted quoted prices in active markets for identical assets or liabilities[338]. - Future capital requirements will depend on growth rate, contract renewals, and market acceptance of telehealth services[363].

Core Insights - VSee Health, Inc. is revolutionizing the $787 billion digital healthcare market with AI-driven telehealth solutions, establishing itself as a leader in digital health technology [1][8] - The company has a diverse and rapidly growing client base, including major organizations such as NASA and the U.S. Department of Health and Human Services [1][8] Group 1: AI-Powered Telehealth Solutions - VSee Health offers a modular, no-code/low-code telehealth platform that allows healthcare organizations to create customized solutions, enhancing Electronic Health Record (EHR) integration and scalability [2][8] - The platform is described as "Lego-like," providing flexible digital health building blocks for healthcare institutions [2] Group 2: Strategic Partnerships and Growth - VSee Health is expanding its client portfolio through strategic partnerships, enhancing telehealth adoption and establishing a strong presence in the digital health space [3][6] - The company has secured various contracts, including a $444K county government contract for mental health services and a $560K contract for oncology telehealth solutions [5] Group 3: Operational Efficiency and Technology - VSee Health facilitates over 1.5 million HIPAA-compliant video encounters monthly, providing scalable telehealth solutions in critical care and teleradiology [3][9] - The technology improves hospital operations by increasing billable patient visits and optimizing provider efficiency, positioning VSee as a foundational infrastructure provider in digital healthcare [3][9] Group 4: Market Position and Future Outlook - Since its Nasdaq listing in mid-2024, VSee Health has expanded its market presence and continues to develop its AI-driven product offerings, with further updates anticipated in 2025 [6][7] - The company is positioned for significant revenue growth and expanding margins, transforming patient care and hospital workflows [9]

[Company Overview and Highlights](index=1&type=section&id=Company%20Overview%20and%20Highlights) VSee Health reported significant revenue growth for Q3 and the nine months ended September 30, 2024, driven by strategic acquisitions and expanded service offerings, alongside key business developments [Financial & Business Highlights](index=1&type=section&id=Financial%20%26%20Business%20Highlights) VSee Health reported significant revenue growth for Q3 and the nine months ended September 30, 2024, driven by strategic acquisitions and expanded service offerings. Key business developments include new partnerships, product launches, and initiatives aimed at addressing healthcare disparities and expanding access Financial & Business Highlights Table | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Change (%) | 9M 2024 (USD) | 9M 2023 (USD) | Change (%) | | :----------------- | :------------ | :------------ | :--------- | :------------ | :------------ | :--------- | | Revenue | $3.4 million | $1.5 million | 131% | $6.6 million | $4.3 million | 51% | - Contracted with Seven Corners Correctional Health to provide specialty care to inmates in **24 federal prisons**[4](index=4&type=chunk) - Expanded telehealth and billing services to major healthcare clients, including nonprofit, hospital, and Fortune 20 corporate clients, through a partnership with SkywardRx[4](index=4&type=chunk) - Launched 'Aimee,' a virtual healthcare, labs, and prescription drug service providing low-cost access to quality healthcare for insured and uninsured patients[4](index=4&type=chunk) - Introduced a GLP-1 telehealth program to address obesity and chronic diseases, integrating prescription medication, personalized care plans, and behavioral interventions[4](index=4&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted the third quarter as a transformative period, marking the first full quarter post-merger of VSee Lab and iDoc Virtual Telehealth Solutions, emphasizing its strengthened position in delivering scalable, tailored telehealth solutions and commitment to addressing critical healthcare challenges - The third quarter marks a transformative moment, completing the first full quarter post-merger of VSee Lab and iDoc Virtual Telehealth Solutions, solidifying the company's position in **scalable telehealth solutions**[5](index=5&type=chunk) - The combined company is uniquely positioned to address critical challenges in healthcare, including expanding access in underserved communities and optimizing workflows for enterprise-level clients[5](index=5&type=chunk) - Strategic initiatives and partnerships, such as programs addressing obesity, maternal health disparities, and veteran care, exemplify the commitment to delivering scalable solutions that improve lives and create **long-term stakeholder value**[5](index=5&type=chunk) [Unaudited Financial Performance](index=1&type=section&id=Unaudited%20Financial%20Performance) This section details VSee Health's unaudited financial results for Q3 and the nine months ended September 30, 2024, highlighting revenue growth, significant net losses due to goodwill impairment, and cash position [Third Quarter 2024 Financial Results](index=1&type=section&id=Third%20Quarter%202024%20Financial%20Results) VSee Health experienced substantial revenue growth in Q3 2024, primarily due to the iDoc acquisition and increased service fees, but recorded a significant net loss driven by one-time goodwill impairment charges [Revenue Analysis](index=1&type=section&id=Revenue%20Analysis_Q3) Q3 2024 revenue saw a 131% increase, primarily driven by the iDoc acquisition and significant growth in technical and engineering fees Revenue Analysis Table | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Change (%) | | :--------------- | :------------ | :------------ | :--------- | | Total Revenue | $3.4 million | $1.5 million | 131% | | iDoc Acquisition | $1.1 million | N/A | 100% | | Tech & Eng Fees | N/A | N/A | 267% | | Prof & Other Fees| N/A | N/A | 40% | | Subscription Rev | N/A | N/A | 9% | - The increase in technical and engineering fees was due to a higher volume of engineering, customizations, and integration services provided to the U.S. Department of Health and Human Services and existing customers[7](index=7&type=chunk) [Operating Expenses and Net Loss](index=2&type=section&id=Operating%20Expenses%20and%20Net%20Loss_Q3) Q3 2024 operating expenses surged due to a $55.0 million goodwill impairment charge, leading to a substantial net loss partially offset by gains on financial instruments Operating Expenses and Net Loss Table | Metric | Q3 2024 (USD) | Q3 2023 (USD) | Change (USD) | | :----------------- | :------------ | :------------ | :----------- | | Operating Expenses | N/A | N/A | +$58.2 million | | Net Loss | $51.8 million | $0.1 million | +$51.7 million | | Goodwill Impairment| $55.0 million | N/A | N/A | - The increase in operating expenses was primarily driven by one-time goodwill impairment charges of **$55.0 million**, higher general and administrative expenses (including amortization and iDoc acquisition-related expenses), and transaction-related expenses[8](index=8&type=chunk) - The net loss was partially offset by a **$5.7 million gain** on the change in fair value of debt and derivative financial instruments[9](index=9&type=chunk) [Nine Months Ended September 30, 2024 Financial Results](index=2&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202024%20Financial%20Results) For the nine months ended September 30, 2024, VSee Health reported a 51% increase in revenue, largely due to the iDoc acquisition and growth in technical and professional services, but incurred a substantial net loss primarily from goodwill impairment charges and other one-time losses [Revenue Analysis](index=2&type=section&id=Revenue%20Analysis_9M) Total revenue for the nine months ended September 30, 2024, increased by 51%, driven by the iDoc acquisition and growth in technical and professional fees, despite a slight decline in subscription revenue Revenue Analysis Table | Metric | 9M 2024 (USD) | 9M 2023 (USD) | Change (USD) | Change (%) | | :--------------- | :------------ | :------------ | :----------- | :--------- | | Total Revenue | $6.6 million | $4.3 million | +$2.2 million| 51% | | iDoc Acquisition | 100% of revenue | N/A | N/A | N/A | | Tech & Eng Fees | N/A | N/A | N/A | 161% | | Prof & Other Fees| N/A | N/A | N/A | 50% | | Subscription Rev | N/A | N/A | N/A | -2% | - Subscription revenue declined by **2%** due to churned enterprise customers in 2024, as some clients shifted back to face-to-face consultations[10](index=10&type=chunk) [Operating Expenses and Net Loss](index=2&type=section&id=Operating%20Expenses%20and%20Net%20Loss_9M) Operating expenses for the nine months ended September 30, 2024, significantly increased due to a $55.0 million goodwill impairment charge and other transaction-related costs, resulting in a substantial net loss Operating Expenses and Net Loss Table | Metric | 9M 2024 (USD) | 9M 2023 (USD) | Change (USD) | | :----------------- | :------------ | :------------ | :----------- | | Operating Expenses | $63.0 million | N/A | +$58.6 million | | Net Loss | $52.1 million | $1.0 million | +$51.1 million | | Goodwill Impairment| $55.0 million | N/A | N/A | | Quantum Note Loss | $1.6 million | N/A | N/A | | Loss on Extinguishment | $0.7 million | N/A | N/A | - The increase in operating expenses was primarily driven by one-time goodwill impairment charges of **$55.0 million**, higher general and administrative expenses, and transaction expenses from recapitalization and acquisitions[11](index=11&type=chunk) - The net loss was partially offset by a **$6.3 million gain** on the change in fair value of debt and derivative financial instruments[12](index=12&type=chunk) [Cash Position](index=2&type=section&id=Cash%20Position_9M) As of September 30, 2024, VSee Health reported a cash balance of $2.3 million Cash Position Table | Metric | As of Sep 30, 2024 (USD) | | :----- | :----------------------- | | Cash | $2.3 million | [Pro Forma Financial Information](index=2&type=section&id=Pro%20Forma%20Financial%20Information) This section presents pro forma financial results, assuming the iDoc acquisition occurred at the beginning of 2023, to provide a comparable view of the company's performance [Pro Forma Financial Summary](index=2&type=section&id=Pro%20Forma%20Financial%20Summary) Pro forma financial results, assuming the iDoc acquisition occurred at the beginning of 2023, show a slight increase in Q3 2024 revenue and a decrease in net loss for both Q3 and the nine-month period compared to the prior year Pro Forma Financial Summary Table | Metric | Q3 2024 (USD) | Q3 2023 (USD) | 9M 2024 (USD) | 9M 2023 (USD) | | :----------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenues | $3,354,437 | $3,076,235 | $9,191,682 | $9,390,435 | | Net Loss | $(368,063) | $(1,322,199) | $(2,436,877) | $(3,435,940) | | Net Loss Per Share | $(0.02) | $(0.09) | $(0.16) | $(0.24) | - Pro forma total revenues for the nine months ended September 30, 2024, were **$9.2 million**, a slight decrease from **$9.4 million** for the same period in 2023[15](index=15&type=chunk) - The pro forma net loss for Q3 2024 significantly improved to **$0.4 million** (EPS **$(0.02)**) from **$1.3 million** (EPS **$(0.09)**) in Q3 2023[16](index=16&type=chunk) [About the Company](index=3&type=section&id=About%20the%20Company) This section provides an overview of VSee Health's AI telehealth platform, its global reach, client base, and commitment to improving healthcare access, along with a cautionary note on forward-looking statements [VSee Health Profile](index=3&type=section&id=VSee%20Health%20Profile) VSee Health provides an AI telehealth platform designed for rapid enterprise deployment, offering customizable, secure, and scalable solutions, with a global presence serving diverse clients and focusing on improving healthcare access and reducing workforce shortages - VSee Health's AI telehealth platform enables enterprises to quickly go from ideation to market, with customizable building blocks meeting stringent security standards[18](index=18&type=chunk) - The platform is field-hardened on over **1.5 million HIPAA-compliant video encounters monthly** and has deployed services in over **50 countries**[18](index=18&type=chunk) - Clients include NASA Space Station, US Department of Health and Human Services, McKesson, Magellan, DaVita, GE, and the entire country of Qatar[18](index=18&type=chunk) - VSee Health is committed to empowering high-quality healthcare access and reducing physician burnout and workforce shortages through its telehealth technology[19](index=19&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section serves as a cautionary note regarding forward-looking statements, indicating that future performance may differ materially from historical results due to various known and unknown risks and uncertainties, and the company disclaims any obligation to update them - Statements in the news release that are not historical facts are considered 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995[20](index=20&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual performance or achievements to differ materially from those expressed or implied[20](index=20&type=chunk) - VSee Health undertakes no obligation to publicly update or revise any forward-looking statements after their date of issuance[20](index=20&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents VSee Health's condensed consolidated balance sheets, statements of operations, and cash flows, providing a detailed view of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2024, reflects a significant increase in total assets and liabilities compared to December 31, 2023, primarily driven by the iDoc acquisition and related financing activities, alongside a substantial increase in cash balances Condensed Consolidated Balance Sheets Table | Metric | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :------------------------- | :----------------------- | :----------- | | Cash | $2,327,337 | $118,734 | | Total current assets | $7,107,513 | $827,134 | | Intangible assets, net | $11,547,500 | - | | Goodwill | $4,916,694 | - | | Total assets | $25,029,730 | $830,791 | | Total current liabilities | $19,206,202 | $4,243,438 | | Total liabilities | $20,270,718 | $4,243,438 | | Total stockholders' equity (deficit) | $4,759,012 | $(3,412,647) | - The significant increase in intangible assets and goodwill reflects the impact of the **iDoc acquisition**[22](index=22&type=chunk) - Stockholders' equity shifted from a deficit of **$(3,412,647)** at December 31, 2023, to a positive **$4,759,012** as of September 30, 2024[22](index=22&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show a substantial increase in total revenues for both the three and nine months ended September 30, 2024, compared to the prior year, but this was overshadowed by a significant rise in operating expenses, primarily due to goodwill impairment charges, leading to a much larger net loss Condensed Consolidated Statements of Operations Table | Metric | Q3 2024 (USD) | Q3 2023 (USD) | 9M 2024 (USD) | 9M 2023 (USD) | | :------------------------- | :------------ | :------------ | :------------ | :------------ | | Total Revenues | $3,354,437 | $1,451,471 | $6,561,998 | $4,337,962 | | Gross Margin | $2,413,049 | $973,072 | $4,747,717 | $2,809,954 | | Total Operating Expenses | $59,479,147 | $1,247,428 | $62,958,678 | $4,332,582 | | Goodwill Impairment Charges| $54,984,000 | - | $54,984,000 | - | | Net Loss | $(51,751,525) | $(98,581) | $(52,084,317) | $(983,181) | | Basic and Diluted Loss per Common Share | $(3.43) | $(0.01) | $(6.24) | $(0.10) | - The significant increase in total operating expenses for both periods is primarily attributable to the **$54,984,000 goodwill impairment charges**[24](index=24&type=chunk) - Despite revenue growth, the net loss per common share increased substantially due to the impairment charges and other one-time expenses[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, VSee Health experienced a net cash outflow from operating activities, largely influenced by the net loss and non-cash adjustments, but significant cash inflows from financing activities led to a positive net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Table | Metric | 9M 2024 (USD) | 9M 2023 (USD) | | :--------------------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(2,815,248) | $(523,436) | | Net cash used in investing activities | $(21,384) | $(2,690) | | Net cash provided by financing activities| $5,045,235 | $455,000 | | Net change in cash and cash equivalents | $2,208,603 | $(71,126) | | Cash and Cash Equivalents, End of Period | $2,327,337 | $159,538 | - Key non-cash adjustments reconciling net loss to operating cash flow include **$54,984,000 in goodwill impairment charges** and a **$(6,285,706) change in fair value of financial instruments**[25](index=25&type=chunk) - Significant financing activities include proceeds from Quantum Convertible Note (**$2,700,000**), September 2024 Convertible Note (**$2,000,000**), and reverse recapitalization with DHAC (**$1,323,362**)[25](index=25&type=chunk) - Non-cash investing and financing activities include net liabilities acquired in reverse merger (**$18,704,806**) and fair value of shares issued in iDoc acquisition (**$68,907,052**)[25](index=25&type=chunk)[26](index=26&type=chunk)