Executive Summary / Key Takeaways

• Strategic Pivot to Bitcoin Treasury: KindlyMD has undergone a profound transformation, merging with Nakamoto Holdings to establish an institutional-grade Bitcoin treasury, aiming to leverage Bitcoin as a long-term strategic asset and a new pillar for capital generation.
• Healthcare Core Undergoing Shift: While revenues in its patient-first healthcare services declined due to reduced cash-pay services and a clinic closure, KindlyMD is strategically shifting towards higher-reimbursement insurance billing, evidenced by a significant 150%+ increase in insurance reimbursements.
• Substantial Capital Infusion: The company secured over $760 million in PIPE financing and convertible debt, alongside $9.22 million from warrant exercises, providing robust liquidity to fund its Bitcoin acquisition strategy and support ongoing operations.
• Technological Edge in Healthcare: KindlyMD's Enterprise Data Management (EDM) system remains a core differentiator, enabling data-driven, personalized care plans aimed at reducing opioid use and improving health outcomes, thereby strengthening its competitive position in specialized healthcare.
• High-Risk, High-Reward Outlook: The dual strategy presents both immense opportunity through Bitcoin's potential appreciation and significant risks, including Bitcoin price volatility, the capital-intensive nature of the treasury strategy, and the need to achieve profitability in its evolving healthcare segment.

The Genesis of a Dual-Identity Enterprise

KindlyMD, Inc. (NASDAQ:NAKA), initially established in 2019 as Utah Therapeutic Health Center, LLC, began its journey as a patient-first healthcare and data company. Its foundational mission was to redefine value-based care by leveraging data analytics to deliver personalized solutions, notably in reducing opioid dependency and guiding alternative medicine use. This integrated approach to medical evaluation, mental health, and compliant alternative therapies, including medical cannabis and Ketamine infusion, positioned KindlyMD as an innovator in specialized outpatient clinical services.

The company's competitive advantage in healthcare stems from its deep commitment to capturing and utilizing patient data through its Enterprise Data Management (EDM) system. This proprietary technology, which saw $231,523 in capitalized software additions for the six months ended June 30, 2025, is designed to develop internal systems and cloud-based solutions. The EDM system's tangible benefit lies in its ability to analyze valuable data on alternative treatments and biopsychosocial factors, leading to evidence-based care decisions and faster, improved health outcomes for patients. For investors, this technological differentiation underpins KindlyMD's long-term strategy to become a leading source of evidence-based assessment in the fight against the opioid epidemic, enhancing its market positioning and potential for sustained patient satisfaction.

However, a pivotal strategic transformation unfolded on May 12, 2025, with the announcement of a definitive merger agreement with Nakamoto Holdings Inc., a Bitcoin-native holding company. This merger, which closed on August 14, 2025, fundamentally reshaped KindlyMD into a dual-identity enterprise: an integrated healthcare services provider and an institutional-grade Bitcoin treasury vehicle. David Bailey, a prominent figure in the crypto space, now leads the combined company as CEO, signaling a bold new direction.

Competitive Dynamics: Healthcare and the Bitcoin Frontier

In its original healthcare domain, KindlyMD operates within a competitive landscape populated by established players like Teladoc Health (TDOC), CVS Health (CVS) through its clinics, UnitedHealth Group (UNH) via its Optum division, and Amwell (AMWL). KindlyMD's strength lies in its specialized, patient-centric, and holistic care model, particularly its data-driven approach to chronic pain, addiction therapy, and alternative medicine. This contrasts with Teladoc's broader digital scale and virtual care offerings, CVS's extensive retail footprint, and UnitedHealth's vast data analytics and payer relationships. While KindlyMD's integrated service model fosters strong customer loyalty and potentially superior margins through efficient, personalized care, its smaller scale and less mature financial profile represent vulnerabilities against these larger, more resource-rich competitors.

Comparing financial metrics, KindlyMD's TTM gross profit margin of 98.72% is exceptionally high, indicating very low cost of revenue relative to its services. However, this impressive gross margin is overshadowed by deeply negative operating and net profit margins of -245.80% and -244.09% respectively, reflecting substantial operating expenses. This contrasts sharply with Teladoc's 71% gross margin and less severe negative operating margins, or the positive, albeit lower, margins of CVS and UnitedHealth. KindlyMD's high Price-to-Sales (P/S) ratio of 34.40, significantly higher than its healthcare peers (e.g., TDOC at 0.60, CVS at 0.15, UNH at 1.17), suggests that the market is already pricing in substantial future growth, likely driven by the new Bitcoin treasury strategy rather than its current healthcare performance.

The Bitcoin treasury strategy introduces a new competitive dimension. While KindlyMD aims to build a "global network of Bitcoin treasury companies" in partnership with BTC Inc, it enters a space where MicroStrategy (MSTR) is the most recognized public entity with a substantial Bitcoin holding. KindlyMD's partnership with Anchorage Digital, a federally chartered digital asset bank, provides institutional-grade custody and trading services, a critical differentiator in this emerging field. This move positions KindlyMD not just as a healthcare provider, but as a player in the evolving landscape of corporate Bitcoin adoption, a trend highlighted by industry experts as a "defining moment" for Bitcoin's institutional acceptance.

Financial Performance: A Strategic Rebalancing

KindlyMD's financial results for the second quarter and six months ended June 30, 2025, reflect a company in transition. Net revenues for the three months ended June 30, 2025, decreased by 36.1% to $408,527 from $639,057 in the prior year period. Similarly, for the six months ended June 30, 2025, net revenues fell 32.7% to $988,182 from $1.47 million. This decline was primarily attributed to a decrease in cash-pay patient care service pricing and the closure of its Bountiful location.

However, a strategic shift is evident in the company's payer mix. Reimbursements from insurance payers surged by 153.1% to $231,726 in Q2 2025 and by 150.9% to $316,999 for the six-month period, as KindlyMD actively expands its medical services and shifts towards insurance billing with commercial and governmental payers. This indicates a deliberate move towards a more sustainable and scalable revenue model.

Operating expenses increased substantially, rising 67% to $2.80 million in Q2 2025 and 61.2% to $4.42 million for the six-month period. This was driven by a 106.4% increase in salaries and wages in Q2 to $1.66 million, reflecting stock-based compensation, additional contracting labor for medical services expansion, and support as a public company. General and administrative expenses also soared by 152.6% to $1.12 million in Q2, primarily due to increased legal fees, investor relations, director and officer insurance, and marketing costs associated with public company status and the merger. Notably, research and development expenses decreased by 100% to a nominal $4 in Q2, as resources were redirected towards the merger and the enterprise data management project was scaled back.

The cumulative effect of these factors resulted in a net loss of $2.41 million for Q2 2025, compared to $1.32 million in Q2 2024, and a net loss of $3.45 million for the six months ended June 30, 2025, versus $1.60 million in the prior year. A new item, an unrealized loss of $39,019 on digital assets, was recognized in Q2 2025 following the initial purchase of 21 Bitcoin.

Capital Strength and Future Outlook

KindlyMD's liquidity position has been significantly bolstered by recent financing activities. As of June 30, 2025, the company held $6.02 million in cash and cash equivalents, up from $2.27 million at year-end 2024, with total working capital of $5.88 million. This improvement was largely driven by $9.22 million in proceeds from warrant exercises during the six-month period.

The company has secured substantial capital to fund its Bitcoin treasury strategy. This includes approximately $563.2 million from PIPE financings and a $200 million senior secured convertible note offering. These proceeds are explicitly earmarked for Bitcoin purchases and general corporate purposes. Management anticipates this capital infusion will provide liquidity for at least 12 months following August 5, 2025, enabling the implementation of strategic operational business plans. While acknowledging a decrease in working capital, management remains focused on increasing cash reserves and liquidity through strategic transactions.

The outlook for KindlyMD is defined by its dual strategic pillars. In healthcare, the focus remains on optimizing revenue by increasing sales, improving margins, and controlling operating expenses, particularly through the ongoing shift to insurance billing. For the Bitcoin treasury, the company views its holdings as long-term and intends to continue accumulating Bitcoin, though without a specific target, while exploring strategies to generate income from these assets.

However, this ambitious strategy is not without risks. The company faces inherent volatility in Bitcoin prices, which could significantly impact its balance sheet. The capital-intensive nature of acquiring substantial Bitcoin holdings requires continuous access to financing. Furthermore, the company reported material weaknesses in its internal control over financial reporting as of June 30, 2025, a critical area for improvement as it manages a more complex financial structure. The ability to successfully integrate the new Bitcoin treasury operations with its existing healthcare business, while achieving profitability in both, will be paramount.

Conclusion

KindlyMD is undergoing a transformative period, evolving from a specialized healthcare data company into a unique hybrid entity with a significant Bitcoin treasury. This strategic pivot, catalyzed by the merger with Nakamoto Holdings, represents a bold move to harness the potential of digital assets as a core component of its financial strategy. While its foundational healthcare business navigates a strategic shift towards insurance-based revenues, the substantial capital raised for Bitcoin acquisitions positions KindlyMD for a potentially high-growth, albeit high-risk, future.

The investment thesis hinges on the successful execution of this dual strategy: the continued growth and operational efficiency of its data-driven healthcare services, coupled with the long-term appreciation and strategic management of its Bitcoin treasury. Investors must weigh the significant capital infusion and the innovative nature of its Bitcoin strategy against the current unprofitability of its healthcare operations, the inherent volatility of digital assets, and the need for robust internal controls. KindlyMD's journey is a compelling narrative of adaptation and ambition, offering a distinctive proposition in the evolving market landscape.