VSee Health Inc: Delisting Risks, Restatement Complexities, and the Path to Recovery

VSee Health Inc. (VSEE) faces a critical juncture as it navigates Nasdaq delisting threats and the fallout from a complex financial restatement. The company’s failure to file its 2024 Annual Report (Form 10-K) and Q1 2025 Quarterly Report (Form 10-Q) has triggered regulatory scrutiny, with Nasdaq initiating delisting proceedings on August 5, 2025 [1]. A subsequent notice on August 20, 2025, highlighted continued non-compliance with Nasdaq Listing Rule 5250(c)(1), further escalating the risk of removal from the exchange [4]. While VSee has secured a 15-day stay by requesting a hearing with the Nasdaq Listing Qualifications Panel, the outcome remains uncertain, with a potential move to the OTC Bulletin Board looming [3].

The delisting risk has already eroded investor confidence, with VSEE’s stock plummeting 36.6% intraday as traders anticipated liquidity constraints and valuation volatility [2]. Such a shift to over-the-counter trading would likely exacerbate the company’s challenges, limiting access to institutional investors and amplifying price swings. However, VSee’s appeal process—scheduled for September 9, 2025—offers a narrow window to delay delisting, contingent on demonstrating progress toward compliance [4].

Compounding these regulatory hurdles is the scope of VSee’s financial restatement, rooted in its June 2024 business combination with Digital Health Acquisition Corp. (DHAC) and iDoc Virtual Telehealth Solutions, Inc. The restatement involves reclassifying DHAC’s indebtedness into Series A Preferred Stock of VSee Health and converting existing shares of VSee Lab and iDoc into common stock of the merged entity [3]. This structural overhaul, while strategically significant, has added layers of complexity to financial reporting, contributing to delayed filings and raising questions about the company’s internal controls [4].

Despite these headwinds, VSee Health’s operational momentum in 2024 suggests a foundation for recovery. The company secured a $6 million government contract for AI-driven telehealth systems and a $560,000 deal with a major oncology network, underscoring demand for its solutions [1]. Strategic partnerships with AbundaBox and Ava Robotics further diversify its offerings into health record management and telepresence robotics [3]. Additionally, its involvement in a NIH-funded Phase 3 stroke recovery trial reinforces its credibility in high-impact healthcare applications [5]. These achievements highlight VSee’s potential to leverage its technological expertise even amid regulatory turbulence.

The path forward hinges on VSee’s ability to resolve its compliance issues while maintaining operational focus. A successful appeal to Nasdaq could buy time to file overdue reports and regain compliance, while a delisting to OTC would test the company’s resilience in a fragmented market. Investors must weigh the immediate risks of regulatory penalties and liquidity constraints against the long-term value of VSee’s telehealth innovations.

Source:
[1] VSee Health Appeals NASDAQ Staff Delisting Notice [https://www.cbs42.com/business/press-releases/ein-presswire/839074820/vsee-health-appeals-nasdaq-staff-delisting-notice]
[2] VSee Health Plunges 36.6%, Nasdaq Delisting Looms [https://www.ainvest.com/news/vsee-health-plunges-42-4-fueling-freefall-2508/]
[3] VSEE HEALTH, INC. (Form: 8-K, Received [https://content.edgar-online.com/ExternalLink/EDGAR/0001104659-24-076308.html?dest=tm2416788d4_ex3-1_htm&hash=06725a98c482ef9f220562959e27ff36bf4f2e6c808c5aab8475cecb546c5601]
[4] VSee Health, Inc. Receives Nasdaq Notice Regarding Delayed Form 10-K Filing [https://www.businesswire.com/news/home/20250512437182/en/VSee-Health-Inc.-Receives-Nasdaq-Notice-Regarding-Delayed-Form-10-K-Filing]
[5] VSee Powers Groundbreaking NIH Stroke Recovery Study in Phase 3 Clinical Trial [https://www.businesswire.com/news/home/20250630877663/en/VSee-Powers-Groundbreaking-NIH-Stroke-Recovery-Study-in-Phase-3-Clinical-Trial]