HitCheck is offering equity at a $12.3 million valuation. This is a rather inflated price for the company’s current level of traction. HitCheck’s 2021 financials aren’t yet finalized, but a forum response by the CEO indicates that last year’s revenue came in at around $100,000. That implies a 123x revenue-to-valuation multiple, which is absolutely not justified. While HitCheck does hold a patent on its app technology, it’s a relatively simple concept in a niche market that does not merit this price without a great deal more proof of monetization.

On-the-go concussion detection technology is such a niche market that it’s difficult to determine HitCheck’s addressable market size. One thing is clear: HitCheck’s assertion that it’s attacking the relatively large sports technology market is a vast overstatement. More accurately, HitCheck fits within the global concussion market. That industry is expected to hit $8.9 billion by 2027, with a rather slow 3.6% compound annual growth rate. But HitCheck is only addressing a tiny fraction of this market, given that it is mostly driven by more medically sophisticated concussion diagnosis and treatment technology. 

Theoretically, HitCheck could make its way into the hands of every youth contact sports team, college contact sports team, and professional contact sports team in the country. That seems like one of the only ways for HitCheck to generate significant revenue within this very niche market. As such the company’s market potential is extremely limited and casts further doubt on HitCheck’s overly high valuation.

HitCheck was co-founded by Mike Piha and Dr. Jake Benford. Piha, CEO, is a longtime entrepreneur. For 20 years, he led a technology company catered toward the educational market. He is also an avid sports coach, with 30 years of youth football coaching under his belt. In fact, Piha was inducted into the American Youth Football Hall of Fame. 

Dr. Benford, part-time chief medical officer, is a seasoned emergency room physician with extensive sports medicine experience. Outside of his principal occupation in the hospital, Benford has worked with a range of athletic programs, from the San Francisco 49ers to UC Santa Cruz. 

Piha and Benford offer a strong blend of industry-specific experience in football coaching and sports medicine combined with skills in entrepreneurship and medical diagnosis. HitCheck will need to hire more sophisticated technical leadership and sales professionals as it scales. For now, though, the company has a qualified founding team.

HitCheck competes against several other concussion assessment tools. These include ImPACT, a computerized concussion assessment catered toward medical professionals, and SCAT5, a protocol developed by the International Concussion in Sport Group that is used by the NFL for in-game concussion testing. HitCheck is relatively similar to both of these tools. There are only so many ways to conduct cognitive assessments. However, HitCheck is a more on-the-go assessment catered to use on smartphones, and the test is gamified with challenges that feel more like a video game than a medical tool. As a result, HitCheck is patented (and is also an FDA-registered Class II Medical Device). 

Beyond simple concussion testing, HitCheck offers sports administrators the ability to manage multiple players and teams within the app. This feature provides a simple way to manage suspected concussions for multiple players at once as games and seasons go on. 

While HitCheck isn’t exactly a revolutionary app within the concussion testing world, it does offer marginal benefits that might make it a more attractive tool for some coaches and administrators. These benefits – particularly when combined with a patent – mean that HitCheck has a relatively strong competitive moat. 

HitCheck is a relatively young company without a great deal of revenue. In 2019, the company brought in just over $150,000 in revenue, with a net loss of roughly $420,000. Revenues plummeted in 2020, likely due to COVID-related sports season cancellations. The company only made $19,682 in 2020 and posted a net loss of almost $450,000. Its 2021 financials aren’t finalized yet, but an unofficial response from HitCheck’s CEO in the raise page comments indicates that revenues increased slightly to $100,000 in 2021. 

Compared to its lackluster revenue performance, HitCheck has succeeded at raising capital. The company brought in $2.3 million of convertible note financing in 2019. However, prospective investors should note that this previously raised capital is likely part of the reason that HitCheck’s current valuation is overinflated.

Beyond revenue and financing, HitCheck has inked some high-impact partnerships. In the sporting world, HitCheck is being used by a number of colleges and youth sports leagues, with more than 200,000 subscribers. HitCheck is also affiliated with the NFL Alumni Association and is endorsed by Davante Adams of the Green Bay Packers. HitCheck also has inroads into industries beyond sports. Development grants from the US Army and US Air Force mean that HitCheck is on the way toward serving military personnel who suffer head trauma in combat. All of these opportunities pave the way for HitCheck to continue expanding revenue in the future. 

HitCheck is a medium-risk investment. On the one hand, the HitCheck product is already live and generating revenue. That indicates a stable business that is less likely to dissolve in the near future. On the other hand, HitCheck’s financial picture is concerning. Revenue hasn’t come back up to 2019 highs, and the company is posting nearly half a million dollars in net losses each year. Convertible notes raised in 2019 still appear on the company’s balance sheet as liabilities, totalling more than $2.3 million. If HitCheck can’t quickly begin generating more revenue, it faces a serious threat.  

HitCheck has successfully secured contracts with various college and youth athletic programs and has formed a relationship with the NFL Alumni Association. But despite this success in sales and partnerships, HitCheck is still struggling with monetization. Revenue peaked in 2019 with $150,000 and hasn’t bounced back since. 2020 was a particularly bad year due to COVID, with less than $20,000 in revenue. 

HitCheck is serving a niche market of sports organizations seeking a concussion assessment tool, and the company’s lack of successful revenue generation within this niche market so far doesn’t bode well for the future. Moreover, HitCheck is currently valued at $12.3 million. That’s an extremely overinflated price for only $100,000 in revenue in 2021. Many prospective investors might feel as though that price simply isn’t worth the risk of investing in a business that hasn’t yet brought in consistent income and doesn’t have substantial market potential. 

The risk of serious head injury from contact sports has been a major storyline in recent years. Youth participation in sports like football continues to decline, and incidents involving former NFL players suffering from long-term head trauma continue. HitCheck offers a logical, modern solution to this issue. With more sophisticated cognitive assessments that are trustworthy and convenient to use on the sidelines, coaches and parents are better equipped to recognize concussions and pull players from the game before they suffer major injury. 

A number of organizations seem to agree, given that HitCheck has contracts with various college athletics programs and youth sporting leagues, plus a relationship with the NFL Alumni Association. It’s particularly promising that HitCheck’s potential use cases extend beyond sports. The company has received development grants from both the US Army and the US Air Force to help the armed forces monitor head trauma. HitCheck could also become a useful tool for seniors to measure cognitive decline. These future pathways could open up increased market opportunity – a must-have, given HitCheck’s sluggish revenue from sports alone.

HitCheck offers a cognitive assessment app that helps sports administrators and coaches perform baseline and in-game concussion tests to prevent or recognize head trauma. The smartphone app that can monitor multiple players’ concussion statuses at once is also convenient for coaches and trainers on the sidelines. HitCheck has been successful in forging relationships with potential customers in the sporting industry as well as key stakeholders in the military who also need reliable concussion testing. HitCheck is patented, more gamified than its competitors, and allows sports administrators to monitor players broadly and over time. Finally, the two co-founders have strong and complementary skill sets.

However, HitCheck is raising at an extremely overinflated valuation. At just $100,000 in 2021 revenue, a $12.3 million valuation does not make sense. Plus, HitCheck is serving a very niche market. The long-term success of the company seems highly dependent on the potential of translating HitCheck to other industries beyond sports, which is not guaranteed. Therefore, HitCheck has been rated a Neutral Deal. 

For questions regarding the KingsCrowd analyst report or rating for this company, please reach out to support@kingscrowd.com. 

Analysis written on April 1, 2022.