1 - Key Statistics
Name: insurance Innovations “HII” or “HPIH”
Location: Hollywood, Florida
MCap: $500 million
Current Price: $29.90
52w Low: $4.00
Avg. Daily Vol: 650k shares ($20 million)
LTM Rev: $215 million
LTM internet Inc: $12 milion
Cash balance: $27.5 million (≈$2.00 money per share)
2 - Business Description
Health Insurance Innovations develops, distributes, and administers individual health and family insurance plans (“IFP”), together with short medical (“STM”) insurance plans and secured issue and underwritten Health profit Insurance Plans (also referred to as “hospital indemnity” plans).
HIIQ styles these plans on behalf of insurance carriers Associate in Nursingd discount profit suppliers so markets them primarily through its internal distribution network and an external distribution network of severally owned decision centers.
3 - Investment Thesis
The theme i will be able to show repeatedly below is one amongst “delay, downplay, dismiss, deny” that then permits insiders to sharply dump their shares.
Over the past seven months, shares of HIIQ rose from below $5.00 to over $35.00 – a seven bagger – despite solely marginal apparent enhancements in its business.
During this point, revenue has magnified slightly, and HIIQ has with success managed to lower its significant dependence upon memory plans. however this will nothing to absolve HIIQ of its large undetermined liabilities stemming from fraud investigations that currently span totally forty two states. And, the issues then exasperate from there.
HIIQ is currently set to quickly plunge by a minimum of eightieth to $6.00 or below. Such a decline would extremely simply place HIIQ back to wherever it had been right at the time of the 2016 USA election. (see chart above) essentially, I powerfully expect that there's a high chance that HIIQ ultimately plunges to below $1.00 and faces delisting. No, this can be not Associate in Nursing exaggeration. Keep reading.
Consider the following:
HIIQ is currently facing fraud investigations or stop and refrain orders from forty two completely different states.
Recently emerged information points currently indicate that legal liability are within the vary of $100 million or additional (as against the mere $1 million range that has been printed by sure authors WHO recently spoke to HIIQ management).
On the heels of those mounting state fraud investigations, in June of 2017, HIIQ was simply rejected for licensure in its home state of FL. In its charm to the regulator (also from June of 2017), HIIQ then in private cited to the regulator the specter of a black “domino effect” from this rejection by that licensing denials can then unfold to the opposite states within which HIIQ will business.
These were the particular terribly direful words employed by HIIQ to the regulator in June of 2017, nevertheless this impact wasn't disclosed to investors within the most up-to-date 10-Q or anyplace else for that matter.
The scalding letter from the regulator cited multiple reasons for the denial of the license, in direct contradiction with speech act to investors by HIIQ. as an example, as a part of its freelance background check, the regulator uncovered multiple unrevealed legal actions against multiple HIIQ insiders. once confronted with this by the regulator, HIIQ refused to reply. Again, HIIQ disclosed one thing terribly completely different to investors.
Delay, downplay, dismiss, deny
HIIQ has maintained a rich business firm and has currently submitted, re-submitted, and appealed for this license a minimum of fourfold over the course of 2016 and 2017. currently that the ultimate rejection is close at hand, HIIQ has somehow tried to counsel that it doesn’t even want such a license within the initial place.
As of the foremost recent speech act, the FL regulator is ready to publish its final determination in October 2017 (a few weeks from now). For the sake of completeness, I actually have already sent a duplicate of this complete article to the FL regulator.
The slew of large legal and regulative issues facing HIIQ is ready to unravel within the terribly close to term. There ar multiple near-term catalysts. the foremost visible catalyst is returning in mere a couple of weeks in October 2017.
HIIQ has repeatedly tried to counsel that it's really another party (such as HCC) that's being investigated or is guilty. nevertheless anyone WHO reads the particular legal filings will forthwith see otherwise. within the fraud complaints from forty two state governments, the recurrent theme is that HIIQ has engaged in dishonorable sales practices whereas in operation while not a license. And now, HIIQ has overtly tried to counsel to investors that perhaps it simply doesn’t want such licenses in the least.
And here is wherever it gets extremely interesting:
Even as HIIQ turbulently encourages investors to shop for, the insiders are sharply merchandising their own shares. up to now in 2017, HIIQ insiders have drop countless shares taking in over $50 million. confine mind that simply a couple of months past, the market cap of the complete company was but $200 million. In Nov of 2016, the market cap was simply $70 million.
Notice that insiders were sharply merchandising a large volume of shares even once the worth was quite five hundredth below the present level, at simply $14. marketing has come back from all corners, together with the founder, the CFO, CTO, and also the corporate executive of its Healthpocket division.