Nutex Health Aktie

Greetings, and welcome to the Nutex Health's 2026 Second Quarter 10-Q Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Vivian Sanders, Corporate Director of Marketing. Please go ahead.

Good morning, everyone, and welcome to Nutex Health, Inc.'s Second Quarter 2026 Earnings Call. My name is Vivian Sanders, and I'm happy to serve as your moderator today. We're truly grateful for your participation and your continued interest in our company as we share the highlights of another exceptional quarter. Please note that this call is being recorded for future reference.

Joining me this morning are the key leaders driving Nutex Health forward. Our Chairman and CEO, Dr. Tom Vo; our Chief Financial Officer, Jon Bates; our President, Dr. Warren Hosseinion; and our Chief Operating Officer, Wes Bamburg. Together, they'll provide prepared remarks to give you a comprehensive view of our performance, strategies and vision, after which we'll open the floor for your questions.

Before I turn things over to Dr. Vo, I'd like to take a moment to address a few important points. Today's discussion may include forward-looking statements, which reflect management's current expectations about our future performance. These statements are based on what we know today, but they are subject to risks, uncertainties and other factors that could cause our actual results to differ from what we'll share. For a deeper dive into these forward-looking statements and the factors that may influence them, I encourage you to review the press release and Form 10-Q filed earlier this week as well as our various SEC filings. You'll find all the details there.

Additionally, we may reference non-GAAP financial measures such as adjusted EBITDA during the call. For those interested in how these metrics reconcile to GAAP standards, please refer to the press release and Form 10-Q, where that information is included.

With those housekeeping items out of the way, it's my pleasure to hand the call over to Dr. Tom Vo, our Founder and Chief Executive Officer.

Dr. Tom Vo, the floor is yours.

Thank you, Vivian, and good morning, everyone. I am happy to join you today to review Nutex Health's second quarter 2026 results. It was an active quarter, marked by strong financial results, important reimbursement developments and continued progress on our growth pipeline, both internally with hospital volume and acuity as well as new pipeline developments.

Let me begin with our first 6 months financial and operational performance. For the first 2 quarters of 2026, total revenue reached $427.2 million, a slight 6% decrease from $455.8 million for the same period in 2025. This is primarily due to timing from accrual to cash collections, as Jon will further explain. Net income attributable to Nutex increased to $112.6 million for the first 2 quarters of 2026, a 3,100% increase from $3.5 million for the same period in 2025. Adjusted EBITDA increased 2% from $144.4 million to $147.5 million for the first half of 2026.

On the volume side, for the first 2 quarters of 2026, our hospitals recorded 99,700 total patient visits, up 6.2% from 93,800 during the same visit -- same period in 2025. Same hospital growth was 3.4% in the first 6 months of 2026. Notably, same-hospital visits grew 6.3% in the second quarter of 2026, reflecting strong operational execution and the impact of our internal investment over the past year.

On the balance sheet, net long-term debt increased from $29.2 million at December 31, 2025, to $31.1 million at the end of Q2 2026, still very low relative to our revenue and expansion pace. Cash on hand grew to $207.1 million as of June 30, 2026, up from $185.9 million at year-end 2025. Net cash from operating activity was $109.7 million for the first 2 quarters of 2026 compared to $78.2 million in 2025, a 40% increase.

Our strong first half performance was driven by several factors: continued growth in inpatient volume and acuity due to renewed internal initiatives and investments, lower earn-out expenses as most legacy facilities that were in development as of 2022 have vested. Reduced arbitration-related costs following a catch-up reconciliation and sustained collection strength from both our internal and external revenue cycle teams.

In addition, we are seeing more stabilization of revenue this year compared to this time last year. Jon will also discuss these details in his report. On the reimbursement side, the quarter was highly active with important provider wins in federal courts as well as the final federal ruling improving the administration of the IDR process.

So let us start on the legal side. During the first half of 2026, courts in California, Florida, Pennsylvania, Texas, Connecticut and Georgia all issued decisions reinforcing the finality of the IDR awards and limiting insurers' ability to challenge arbitration outcomes in court. The court further indicated that insurers objection to the high IDR loss rates are matters for Congress, not the federal courts.

For Nutex, these rulings are important because they support the integrity of the IDR process and provide additional precedent for a fair federal dispute resolution system. In fact, in the Georgia ruling, the judge stated and I quote, "It is highly improbable to infer from these facts that there is a vast conspiracy of providers and IDREs that have conspired to defraud the plaintiff of millions of dollars in thousands of IDR NSA proceedings over many years." He further stated, "It is highly possible to infer that the plaintiff engages in a consistent practice of submitting lowball offers to out-of-network providers in an effort to maximize its profits."

Insurers have largely executed this low provider payment strategy very successfully as reflected in the record profitability during the first half of 2026, where profits were in the billions. And while we are very happy for the financial successes of the insurance companies, our position is very simple. Nutex seeks fair market-based reimbursement for comparable care. Patients treated at our facilities should be reimbursed consistent with the cost of similar services delivered at comparable facilities. A functional IDR process promotes fair free market competition, protects access to high-quality care, and reduce unnecessary disputes.

If insurers pay appropriate rates at the offset, fewer claims would need to proceed through the IDR process. On the regulatory side, on May 28 of this year, CMS and other federal agencies released the final IDR rules, which focuses on improving the efficiency and transparency of the IDR process without changing the core reimbursement framework. Key improvements include better disclosures from insurers to prevent and limit future ineligible charts, a more efficient electronic portal to encourage open negotiations, lower administrative fees from $115 to $15, expanded batching for certain claims and shorter cooling off period.

Overall, we view the final rule as constructive for providers and for Nutex. Congress and the Centers for Medicare and Medicaid Services, or CMS, recognize that the independent dispute resolution process remains the only available meaningful mechanism through which providers may contest inadequate insurer reimbursement. In its absence and without the IDR process, insurers would have unchecked pricing authority and a monopoly position within the market.

Lastly, the final rule reflects CMS' intent to create a more streamlined, user-friendly system that providers and payers can use effectively when needed. We believe that this underscores CMS view that the IDR process will remain in place for the foreseeable future. On the vendor front, earlier this month, we announced an amendment with HaloMD that shifts the fee structure to pay on a collective basis, retroactive to the original agreement.

This helped reduce IDR costs in the quarter and gives us more flexibility to manage dispute resolution services going forward. Combine this with a lower CMS IDR cost, this amendment will result in lower total arbitration-related costs in the future. In addition, we now have additional options to utilize other arbitrator vendors going forward if necessary.

Turning to growth. We remain very excited about our hospital development pipeline and opportunities ahead. We have started internalizing the real estate development capabilities, giving us better control over timelines, cost and scalability. Our strategy is not to be a long-term real estate owner. We plan to develop facilities, stabilize operations and then monetize the real estate through a sale-leaseback transactions upon hospital opening or stabilization.

Looking ahead, our current pipeline in 2026 includes West Little Rock, Arkansas; San Antonio, Texas; and Jacksonville, Florida. All 3 are expected to open in the third and fourth quarter of 2026. For 2027, our pipeline includes new hospital developments in South and Central and East Florida as well as Oklahoma. Notably, 2 of these projects are expected to be initially owned and developed by Nutex. Beyond 2027, we have already approved additional Nutex owned and Nutex-led projects in Idaho, Florida, Pennsylvania, Ohio and Arkansas.

As a public company, we are very fortunate to have the ability to continue growing through de novo hospital developments. Because building large-scale hospitals present significant challenges and costs, larger healthcare systems are often limited to volume growth as the primary expansion strategy. Nutex, on the other hand, can grow both internally as well as de novo by advancing a focused national pipeline of smaller, scalable facilities. Together, these 2 projects provide a clear road map for long-term growth and great shareholder value creation.

Operationally, Wes will provide more details, but we remain focused on increasing volume, expanding service lines and growing appropriate observation and inpatient care within our hospitals. Patients often tell us they prefer to remain in our hospital rather than be transferred to another hospital for higher level of care. We also continue to invest in technology, diagnostic capabilities and differentiated patient service, which are key elements of the Nutex model. Patient satisfaction remains a key strength of our model as reflected in our continued recognition through multiple hospital awards as well as our reputation as a trusted hospital of choice for healthcare providers and their families in the communities we serve.

So with that, I'll turn the call over to Jon Bates, our Chief Financial Officer, to walk through the financials in more detail.

Jon?

Thanks, Tom. And good morning, everyone. Let me go through some of the details on the financials for Nutex Health's second quarter and first half of 2026. Another strong period where our earnings are strong and our cash flow continues to build as we plan for 3 future openings later this year and continue to prove out our growth model year-over-year.

Now Tom has given you a little bit of the big picture, and I'll attempt to provide a little more detail. I'm going to start with the 3 months ended June 30, 2026, compared to the 3 months ended June 30, 2025. So total revenue for Q2 of '26 decreased 13.6% to $210.8 million compared to $244 million for the same period in '25. Of the total revenue decrease, hospital division revenue decreased 14.6% to $201.9 million from $236.3 million, while same hospitals decreased their revenue by 12.1% for the same -- for the second quarter of 2026 compared to the same period in 2025.

Now the main reason for the revenue decrease period-over-period was due to the larger positive increase in revenue in the 2025 period as the IDR process began showing stronger realization of revenue in the first half of 2025 with us experiencing the early success with the IDR process. If you recall, the revenue per visit, which does include both the ER and the inpatient services back during the second quarter of 2025 was approximately $5,185 per visit. While the cumulative net revenue per visit from when we started the IDR process in July of 2024 through June of 2025 was closer to $4,200 a visit, which is much more in line with what we have continued to see since then and into 2026.

Now revenue per visit in Q2 of '25 was positively impacted by adjustments to our collection percentage from 65% at the end of December 31, 2024, up to 75% by June 30, 2025. And this positive adjustment was a result of additional historical collection history as it was being recognized in early 2025. As the historical collection percentage leveled out to the current average of just over 80%, fewer adjustments have been recognized in 2026. Now this helps explain why current revenue per visit is more in line with the historical average measured from the start of the IDR process.

And if there are no significant fluctuations in our collection percentage and other key metrics used to record revenue moving forward, we would expect the revenue per visit metric to remain similar. Hospital Division visits increased by 9.6% or 4,389 visits to 49,962 visits in quarter 2 of 2026 versus 45,573 visits in the same period in '25, with the same hospital visits growing at 6.3% over the same period, as Tom indicated earlier. With regard to the Population Health division, it had revenue growth of approximately 16% to $8.9 million for quarter 2 of '26 versus $7.7 million for the same period in 2025.

Now in addition to the visit growth noted above, facility corporate level costs also showed improvement for the second quarter of '26 relative to the same period in '25. Total facility level operating costs and expenses decreased 49.6% -- sorry, $49.6 million during the period, representing 33% or $69.5 million of total revenue for Q2 of '26 versus 48.8% or $119.1 million for the same period in 2025. Now of the $49.6 million decrease for the period, approximately $52 million of the decrease was reflected within our contract services line and resulted from 2 major positive items that took place in the second quarter of 2026.

The first item was the impact from the federal IDR operations final rule that was signed in May of 2026, which reduced the CMS nonrefundable administrative fee from $115 to $15 per party per dispute initiated on or after June 11, 2026. And this contributed to about $4.3 million of this total decrease. The other major item was the June 2026 amendment we negotiated to our original HaloMD contract that was signed in May of 2024.

Among several other positive changes in this amendment, 2 of the larger items were, number one, it transitioned the applicable fee payment structure to a pay-on-collected basis rather than payment being due upon award determination with it being retroactive to the effective date of the original agreement in 2024, and this contributed about $38.4 million of that total decrease.

Secondly, it favorably amended the service fee structure applicable to various federal and state net settlement amounts obtained on or after July 1, 2026. And this contributed around $9.6 million of the total decrease. One last thing was the contract renegotiation provided the company with the right to perform dispute resolution services either in-house or through the engagement of another third-party vendor or service provider with respect to certain future hospital facilities, which Tom indicated before.

Now regarding the contract services, based upon current expectations, we anticipate the CMS fee rate reduction and the amendment to the Halo contract will lead to approximately 25% to 30% decrease in our historical normalized costs in future periods, assuming our current IDR metrics continue. Because the pay on collection basis is our new reality, we will not have to record 100% of the IDR costs on every potential legal determination win, as we will now be only accruing costs using a similar collection percentage that we use for our accrual of revenue. Plus, we were able to get this change done retroactive to when we signed the original agreement in 2024.

So we believe we will better match our costs for this to the corresponding revenue we record, which should make the analysis much easier in the future periods. Now regarding arbitration-related revenue, we have continued to submit between 50% to 60% of our claims through the IDR process. And when an award determination is made, we currently prevail in over 85% of those determinations, and we currently have an average collection rate of over 80% of determination wins.

Moving on, talk a little bit about stock-based compensation for the 3 months ended June 2026. It was $2.9 million compared to $78.7 million of expense for the same period in 2025, which was a $75.9 million decrease in Q2 of 2026. Currently, there are only 2 facilities that are part of the major expense that goes in this line item with both of them completing their earn-out period in the fourth quarter of 2026. Gross profit for the 3 months ended June 30, 2026, was $141.3 million or 67% of total revenue as compared to $124.9 million or 51.2% of total revenue in the same period in '25, a 15.8% increase for the 3 months ended June 30, 2026 versus 2025.

From a corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the 3 months ended June of '26 increased to 7.9% or $16.7 million from 5.1% or $12.5 million for the same period in 2025. Operating income for the 3 months ended June 30 of '26 was $121.7 million compared to $33.7 million for the same period in '25, which is an increase of $88 million. Net income attributable to Nutex Health was $65.8 million for 2026 compared to a net loss of $17.7 million for the 2025 period, which was an increase of $83.5 million. Adjusted EBITDA attributable to Nutex increased $18.4 million or 25.7% from $71.6 million in Q2 of '25 to $90 million in Q2 of '26.

So now let's move on and talk a little bit about the 6-month period ended June 30 compared to the 6 months of June of '25. Total revenue for the first 6 months of '26 decreased 6.3% to $427.2 million compared to $455.8 million for the same period in '25. Of the revenue decrease, hospital division revenue decreased 7% to $409.4 million from $440.2 million, while same hospitals decreased their revenue by 6% for the first 6 months of '26 compared to the same period in '25.

As discussed earlier in the second quarter explanation for the decrease in revenue for the period, the main reason for the revenue decrease period-over-period was due to the larger positive increase in revenue in the 2025 period as the IDR process began showing stronger realization of revenue in the first half of 2025, with us experiencing early success in the IDR process. From a hospital division visit perspective, it increased by 6.2% or 5,862 visits to 99,704 visits in the first 6 months of 2026 versus 93,842 visits in the same period in 2025, with same hospital visits growing at 3.4% over the same period.

With regard to the Population Health division, had revenue growth of approximately 15% to $17.8 million for the first 6 months of '26 versus $15.5 million for the same period in '25. Now in addition to the visit growth noted above, and facility and corporate level costs also showed improvement for the first half of '26 relative to 2025. Total facility level operating expenses decreased $18.3 million during the period, representing 45.5% or $194.2 million of total revenue for the first 6 months of 2026 versus 46.6% or $212.5 million for the same period in '25. And as discussed, for the second quarter of 2026, similarly, the main reason for most of the overall decrease in this line was due to the contract services decrease during the period, primarily resulting from the reduction in the CMS fee and the impact from the amendment to the HaloMD contract that we signed in the second quarter of 2026.

Moving on to the stock-based compensation. Again, for the 6 months ended June of '26, it was a $1 million gain compared to $106.4 million expense for the same period in 2025, which was $107.4 million decrease in costs comparably in 2026. Now we did finalize one earn-out at March 31, 2026, as we talked in our first quarter call, and we have 2 more facilities currently in their measurement periods with both of them completing their measurement period in the fourth quarter of 2026. The gross profit for the 6 months ended June 30, 2026, was $233 million or 54.5% of total revenue as compared to $243.3 million or 53.4% of total revenue for the same period in '25, a 1.2% increase for the 6 months ended June of '26.

From a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the 6 months ended June of '26 increased to 7.3% or $31.1 million from 4.9% or $22.5 million for the same period in 2025. Operating income for the 6 months ended June 30, 2026, was $203 million compared to $114.3 million for the same period in 2025, which was an increase of $88.6 million. Net income attributable to Nutex Health, Inc. was $112 million for 2026 compared to only $3.5 million for 2025, an increase of $109.1 million. And adjusted EBITDA attributable to Nutex increased $3.1 million or 2.2% from $144.4 million for the 6 months ended June 30, '25 to $147.5 million for the same period in 2026.

Now looking at our balance sheet continues to remain very strong with cash and cash equivalents at June 30, 2026 to $205.2 million, up $19.6 million or 10.6% from $185.6 million at December 31, 2025. Additionally, accounts receivable increased by $32 million to $351.7 million at June 30 of '26 from $319.4 million at December 31 of '25. We had another strong collection quarter, which provides us continued confidence in this increase. Regarding cash flow, net income from operating activities increased by $31.5 million for the 6 months ended June 26 to $109.7 million as compared to $78.2 million for the same period in '25.

And Tom talked about this earlier, but on the liability side, our total bank and equipment type debt decreased by $3.6 million to $39.9 million at June 30, 2026, from $43.5 million at December 31, 2025, with the majority of this debt related to equipment loans at our hospitals for such items as MRIs, X-rays, ultrasounds and CT scans. With all that said, our balance sheet remains very solid, and we provided our company the flexibility to execute on our growth plan in 2026 and beyond.

Now on to Warren Hosseinion, our President, for a population health update.

Warren?

Thank you, Jon, and good morning, everyone. It's great to be with you today to discuss how Nutex Health is advancing population health management. In the first half of 2026, we continue to make strides in this area. This morning, I would like to again focus on our strategy and our upcoming goals.

Let's start with where we are today. Our Population Health Management division now oversees a diverse group of almost 40,000 patients across our platform, including a mix of Medicare Advantage, commercial and Medicaid managed care members. Revenue for the division was up 15% for the 6 months ended June 30, 2026, from the same period in 2025. Each of our IPAs in Southern California, Houston and Phoenix were profitable for the 6 months ended June 30, 2026, while our IPA in South Florida was slightly cash flow negative for the same period.

Our new IPAs in Dallas and San Antonio are still contracting with primary care physicians and specialists and will begin enrolling patients in 2027. Our overarching strategy revolves around physician networks. Our IPAs, or independent physician associations are comprised of networks of contracted and credentialed primary care physicians and specialists located around our facilities. Building strong partnerships with local doctors is critical. By forming these IPAs, we are building awareness of our hospitals among the local community doctors and their patients.

Why do physicians join our IPAs? We offer these physicians ownership in our IPAs. They can also participate in the Board and committees of the group. We offer them to get on the staff of our hospitals so they can admit and follow patients. We also incentivize the physicians to achieve high-quality metrics. We believe that over time, these relationships will not only increase the volume of both IPA and non-IPA patients to our hospitals, but also create a web of care that's seamless for patients.

Our vision is that our hospitals and IPAs will work hand-in-hand to amplify our reach and effectiveness. We are fostering collaboration, sharing best practices and ensuring every provider is aligned with our patient-first culture. We're growing our IPA strategically, focusing on areas near our hospitals to leverage existing relationships and infrastructure.

With that, I'll turn it over to Wes Bamburg, our Chief Operating Officer.

Thank you, Warren, and good morning, everyone. I'll focus my comments on our operational performance during the second quarter, including patient volume growth, service line expansion and patient experience. Our hospitals continue to see demand across the markets we serve. As previously mentioned, during the quarter, we recorded nearly 50,000 patient visits, an increase of 9.6% compared to the prior year, while same hospital visits increased 6.3%. For the 6 months of 2026, total hospital visits increased 6.2% to nearly 100,000 patients served across the enterprise.

These results reflect continued growth across both our newer and more mature facilities and demonstrate the ongoing strength of our model. We also continue to expand patient access and increase our ability to care for more patients within our hospitals. As facilities mature, we're able to offer a broader range of services, retain more patients locally and further strengthen our continuity of care within our communities. During the quarter, we also made progress on service line expansion, including the launch of endoscopy services. This will allow us to provide critically needed services to the communities we serve, such as colonoscopies and diagnostic EGDs.

As we evaluate performance and demand, we see opportunities to expand additional service lines across our facilities over time. As Tom discussed earlier, we also remain focused on supporting growth across our development pipeline. With several facilities expected to open later this year, we continue to leverage the infrastructure, experience and the operating playbook developed across our existing network to efficiently ramp new hospitals and support consistent execution from day 1.

Patient satisfaction remains a key strength during the quarter with our hospitals maintaining an average Google rating of 4.8 stars across more than 2,300 reviews. We believe those results reflect the commitment of our physicians, nurses and staff to delivering high-quality patient experience every day. Workforce stability also remains a competitive advantage. Employee turnover was just 6.8% during the first 6 months of 2026, significantly below published hospital industry benchmarks, supporting consistent execution and high-quality patient care across our network.

From a cost management perspective, we remain disciplined as volumes grew, maintaining focus on staffing efficiency, resource utilization and operational standardization. We believe our ability to combine growth with operational discipline continues to be an important differentiator as we scale the organization. Overall, the second quarter reflected continued operational momentum across the enterprise. We delivered strong volume growth, expanded clinical capabilities, maintained excellent patient satisfaction and continue to position the organization for future growth through both service line expansion and our new hospital development.

Thank you, everyone, and I'll turn the call back over to Vivian.

Thank you, Wes, and team for those updates. I will now turn it over to our operator, who will begin the Q&A portion of the call.

[Operator Instructions] Our first question is from Anderson Schock with B. Riley Securities.

So previously, the arbitration costs were expected to run about 25% of arbitration-related revenue. I guess excluding the credit, what did this look like in the second quarter? And how should we think about the new go-forward rate after the May IDR final ruling and the renegotiated HaloMD agreement?

Anderson, yes, great question. If you think about it from the standpoint of the way we look at it, first of all, we talk about contract services and how that looks. And you talked about that 25% in the past, if we're just talking about specifically arbitration. So normally, it was a range of in that mid-24% to 25%, 26% in the past. Now currently, as we move forward, you should expect that to be just that specific piece, probably down more into the high teens to low 20s, comparatively. So -- but on the overall contract services rate reduction, as we talked about, it should be more into the 25% to 30%. That's on overall contract services. But arbitration, you would see that correspondingly work its way down.

Okay. Got it. And then is the second quarter revenue per visit a fair steady state run rate? Or should this further normalize in the back half as the IDR catch-up rolls off the 2025 base?

So as we talked about in the past, I mean, if you look back at -- I think you talked about it here, the cumulative rough estimate of where reimbursement has been since we started the process overall was really in that $4,000 to $4,200 range. And that's remained pretty consistent. So even for this period, yes, I think it's in line. There'll be some variability up and down. I know as we continue to have more inpatients, which I think that's one of the improvements we're starting to see, you'll see a little bit higher in that area.

But I think in the range that we've seen cumulatively since we started the process through June of '26 and which is very similar to what we have in the quarter and first 6 months of '26, I think, is a fair number to be looking at as you move forward for now.

Okay. Got it. And then with the opening cadence for the next 2 years kind of at the higher end of your historic range and your new self-financing strategy funding the opening of half these next year, should we expect an increase from the historic range of 3 to 5 hospitals openings per year in the future?

Anderson, I could take that question. No, we're still basically focusing on 3 to 5 hospitals per year. That has not changed yet at this point. Obviously, we will continue to evaluate new locations. As you know, we get requests to open these hospitals on a weekly basis. And so as we discuss internally and in accordance with our financials, we will reevaluate that 3 to 5 hospitals per year.

Our next question is from Ben Haynor with Lake Street Capital Markets.

First off for me, with these recent court cases that have gone in the right direction for you guys, do you see any change to insurer behavior with regards to collection rates based upon those?

Ben, I can take this and maybe Jon can chime in. So far, it's pretty much steady state from an insurance company payment. We are seeing more commissions to go in contract with health insurance company. The rates are slowly creeping up, but it's still nowhere near where we should be.

Okay. So does that also imply that QPAs have come up a little bit and QPA multiples coming down or no?

So far, we have not seen a drastic change at this point. QPA is still relatively low. Hence, our having -- hence our submission rate of roughly 60%.

Okay. That makes sense. And then I guess on the submission rate, with the lower $15 fee, kind of the newer HaloMD rate and terms, I mean, do you see yourselves starting to challenge some of the ones that may have previously been considered marginal or maybe good enough?

Yes, I can talk about that. I mean, look, at the end of the day, $100 per submission is great, and it helps all providers and it does lower the barrier entry, I think, across the board for providers in general to hopefully get a better fair payment if they want -- if they choose to do it. We've looked at that, $100 difference on that piece.

There are a few that might -- that we might now take through the process that risk-wise, we might not have before. But I think generally, we'll keep a similar cadence and then just watch for opportunities in those situations where, yes, maybe we'll go in on some that we haven't in the past. But I don't think it will be a material change for us. I think it might be for some other providers.

Our next question is from Thomas McGovern with Maxim Group.

So a couple of my questions were already touched on, but I do want to piggyback off of the last question regarding the insurer behavior based on these court cases and the changing regulation around arbitration. So it sounds like maybe there's some progress on that front, but it's been pretty slow. I'm just curious from your strategic perspective, are you guys going to be proactively pursuing in-network agreements with payers? Or are you guys kind of say, hey, look, we're going to focus on our business and continue operating, and wait for payers to come to the table with you?

Thomas, so the answer is we are always looking to go in network with the insurance company, always. And so we're still continuing to evaluate any contracts that comes in. And like I mentioned earlier, the rates have come up a little bit over the past quarter or so, but still nowhere near where we need to be.

Understood. And then looking at the patient volume and acuity growth that you guys commented on in your prepared remarks, I just want to understand a little bit better what drove that success in the quarter? And then how should we look at it as acuity, like as you are adding service line items and increasing in-house patient visits, how should we expect the revenue per patient to trend over time?

Yes. So I could answer that. I think it's a 2-part question. So -- and maybe Wes could chime in also from an operational standpoint. But over the past couple of quarters, I think we have talked about increasing investment in our internal processes by getting more business development folks on the team using AI, talking with more physicians using the IPA network to increase volume. And then once we get patients through the door, then our focus is on keeping the patients in the hospital to increase inpatient volume.

And as you know, inpatient pays a lot better than ER payments. And so if we continue to execute this, theoretically, the revenue per patient should increase because we would have more inpatient visits in the future. And then on top of that, as Wes mentioned, we are also starting to do more procedures. So for example, we're doing colonoscopy right now in one of our hospitals, and we're looking at essentially any potential procedures that we can do at our hospital just based on the needs of the community.

Wes, do you have anything else to add?

Tom, I think you covered it. As we continue to evolve, we are centralizing and focusing on our business development kind of as an enterprise level and looking across all of our hospitals to see where there's opportunities. And that may be different at different locations. But we're focusing on those opportunities, evaluating them and bringing them in-house when we can. And then secondarily, we continue to add the ability to take care of sicker patients. So that is increasing our inpatient volumes, which will have a positive net impact overall.

So one more thing that I'd like to expand is that because of the flexibility of our hospital, you could think of our hospital as like a car. We could take that car and we could drive it in any direction we want as long as it's best for the community and meeting certain needs of the community. But the hospital, even though it's small, it's got most of the tools necessary to relieve a lot of pain points in each of the communities that we serve.

Understood. And then finally for me, I just want to unpack this HaloMD renegotiation of the amendment to your agreement just a bit. Just kind of high level, what drove that conversation? What made you guys come to the table with them and say, hey, look, we need to reevaluate these terms? And my second question to that would be, under what circumstances would you guys exercise your newly gained optionality in terms of pursuing arbitration claims in-house or using a third party for some of these newer facilities?

Yes. Maybe I could start with the first part and then Jon may be able to answer the second part. So if you remember, we started arbitration back in July of 2024. But before that, we were investigating and researching whether or not arbitration would even work. And so going back 2 years to the beginning of 2024, if you remember, arbitration at that time was in its infancy stage. We did not have any of the beautiful portals or any of the system set up. We didn't have the final rules at that time. So at that time, it was a bit of a shot in the dark, so to speak.

But just based on all the research that we did, at that time, we found that arbitration was potentially a very good way for us to get back at a reasonable rate. And at that time, HaloMD was, and they still are, I would say, the preeminent vendor in that space. And so when we signed the contract in, I would say, early 2024, we didn't have a lot of knowledge nor do we have a lot of data like we do now. And so fast forward to this year, obviously, what happened in mid-2024 was ancient history in terms of the evolution of the IDR process. And so it was just a normal time to renegotiate the contract based on what we know now versus what we knew back in beginning of 2024.

Yes. And I'll add to that, Tom. Yes, absolutely. First of all, HaloMD is a great partner. They've done a great job. I mean they are, as Tom indicated, the leader in this. And we've learned a ton over the last -- I can't believe it's been 2 years, 8 quarters since we really started this process. And they have as well. And the industry is improve across the board. There's a lot more groups out there. There's a lot more data out there. I think everyone is smarter, both on the government side and on the provider and for that matter, probably payer side.

So I think we all realize as we've been going through this process that there's probably things that we can do or we really like done that makes sense for both us and even Halo as we move forward from the partnership perspective, and they were amenable to that. So going through and trying to better clarify kind of the original agreement and look for things that made sense for both sides. So at the end of the day, that was -- it was just a really good partnership decision to kind of go through that process. And yes, it gives us flexibility as we move forward, as we indicated earlier, to either use third party, do it ourselves, for some select few facilities as we move forward.

So I think it's a win-win, and it puts us in a really good position as we move forward to be able to pivot if things do change one way or the other, which is one of the things I would say that as a company, we've done a fantastic job of -- if you look back 2, 2.5, 3 years ago, where we were and where we are now, we've done a lot of that in many different areas, not just on this piece of our business.

Remember, we don't use IDR for every visit. So -- and I do believe that we'll be using it for fewer and fewer as we move forward because we are getting some contracts we talked about earlier, and there is some better paying happening by the payers, but it's just been a little slower than we would expect, and we're just watching the process and we submit to the process when we feel like we're not paid fairly and equitably, and that's exactly what it's set up for. So hopefully, that helps explain it, but great question.

Our next question is from Bill Sutherland with the Benchmark Company.

Great progress. Jon, just to follow up on that question somewhat. Would you ballpark kind of the numbers or the percentage of things going in negotiation that are being handled in negotiation? I mean, I guess what I'm trying to ask is, has there been some movement on that, that's measurable, better...

Bill, say it again. What are you asking again? As we go into the process or what?

As I think about it the twofold, it's a 2-part question. One is, are you -- because you alluded to some progress with negotiated settlement. And also, I'm curious about the degree to which you're beginning to go in that work?

Okay. Well, first of all, and I think we talked about this earlier. And just to remind everybody, in the process of going through the IDR process, the submission side and communication that goes to the IDRE from our end always includes a discussion about to the payer, we would like to do an in-network negotiation. That's why we do have open negotiations and ultimately only go to the arbitration side if we're not able to settle. But there -- in every brief that's submitted, there is a request and an interest because we do have an interest in finding something that makes sense. So that piece of it is continual.

And yes, we do -- I mean, every day, we have communication with multiple different payers out there that have expressed interest or we have also reached out to some as well in some of the local areas that we have access and knowledge of, and try to do the same. And we've had some scenarios where we've been successful. And I would say more than not, though, there's still a feeling that the payers don't necessarily really want to actively provide the fair and reasonable in some -- payment in some cases. So therefore, we leave it alone. But it's an active effort, and I think we will continue to get more and more of this and we hope to get them all done.

So -- sorry to interrupt. And so nothing's changed, really. I mean, as you said, you have the same kind of percentages on your side in terms of what's going to IDR.

Yes, that's fair. I think it definitely has improved, but it's a slight improvement. And as we watch some of these regulatory communications, I think we're starting to see more that support a reason for where we can come up with something that makes more sense and get agreements in place down the road. But it takes time in this industry, as we all know.

Well, there wasn't too much in that final rule that really focused on the open negotiation part other than make it streamlined, but didn't really encourage the 2 parties to really make it happen. And you would say your percentage of revenue that's in network hasn't changed either?

Percentage of revenue that's in-network as in our visits and our revenue related to in-network patient and inpatient?

Yes. Yes, in-network versus out-of...

Yes, it's -- I mean, we've had a few more, but yes, it's a slight increase in the in-network scenario, I think it's what you're asking, but yes, improved a little bit.

Yes, it's definitely not material for sure. But Bill, I want to...

That's what I was trying to get at.

Yes. But one of the things I wanted to reiterate and one of the things that I'd like to sort of, like, clarify for all the investors is that, yes, we are out-of-network. However, with our business model, we can stay out-of-network and still do well. So the No Surprises Act, basically states that if you have an emergency, you can go to any hospital, whether or not it's in-network or out-of-network. And still, we expect it to get paid at the in-network rates. And so that's essentially how we have been operating for the past 15 years or so.

And so yes, the -- No Surprises Act encourages us to go in-network, which we are once again looking at every single contract that comes in and make strong consideration about whether or not we accept the contract or not. But even if the contract terms are not in line with what we would like, we can still stay out-of-network. And obviously, the IDR process is a tool for us to get that fair and reasonable rate. And then one more thing that I'd like to bring up is that just because you go in-network, it doesn't mean that all of your troubles are resolved.

And in fact, and I'm sure you know this, but every single hospital system has an in-network disputes with the health insurance company, every single one. I mean every -- I would say, every quarter, you hear a big hospital system that goes out-of-network because of a big dispute with the health insurance company because of all the contractual obligations that they have in the in-network contract. And so my point is that just because you're in-network doesn't mean that everything is rosy. And so we're still going to take a look at every single submission for the insurance company, but the great thing about our model is that we can stay out-of-network if we need to.

And then one last one. Just thinking about quarterly cadence in terms of your hospital activity levels each quarter. I noticed patient visits were pretty flat sequentially. So remind us about the seasonality as we think about patient visits going forward.

Typically, the second and third quarter are the lowest and the fourth quarter and the first quarter is the highest because of the colder season and the flu season.

There are no further questions at this time. I'd like to hand the floor back over to Vivian Sanders for any closing comments.

Thank you all for those valuable questions and answers. For all of those joining us today, if you have more questions, e-mail us at [email protected], and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our second quarter 2026 earnings call. We've covered a lot growth, strategy, challenges and our vision, and we appreciate your time and interest. A recording of this call will be available on our website for a limited time. So feel free to revisit it. Take care, everyone, and we look forward to keeping you updated on our journey.

This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.

Greetings, and welcome to the Nutex Health's 2026 First Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jennifer Rodriguez, Investor Relations Manager. Thank you. You may begin.

Good morning, everyone, and welcome to Nutex Health Inc.'s First Quarter 2026 Earnings Call. My name is Jennifer Rodriguez, and I'm happy to serve as your moderator today. We're truly grateful for your participation and your continued interest in our company as we share the highlights of another exceptional quarter. Please note that this call is being recorded for future reference.

Joining me this morning are some of the key leaders driving Nutex Health forward: our Chairman and CEO, Dr. Tom Vo; our Chief Financial Officer, Jon Bates; our President, Dr. Warren Hosseinion; and our Chief Operating Officer, Wes Bamburg. Together, they'll will provide prepared remarks to give you a comprehensive view of our performance, strategies and vision, after which we'll open the floor for your questions.

Before I turn things over to Dr. Vo, I'd like to take a moment to address a few important points. Today's discussion may include forward-looking statements, which reflect management's current expectations about our future performance. These statements are based on what we know today, but they're subject to risks, uncertainties and other factors that could cause our actual results to differ from what we'll share. For a deeper dive into these forward-looking statements and the factors that might influence them, I encourage you to review the press release and Form 10-Q filed earlier this week as well as our various SEC filings. You'll find all the details there.

Additionally, we may reference non-GAAP financial measures such as adjusted EBITDA during the call. For those interested in how these metrics reconcile to GAAP standards, please refer to the press release and Form 10-Q where we've included that information.

With those housekeeping items out of the way, it's my pleasure to hand the call over to Dr. Tom Vo, our Founder and Chief Executive Officer. Dr. Vo, the floor is yours.

Thank you, Jen, and good morning, everyone. It's a pleasure to be with you as to review Nutex Health's First quarter 2026 results. This first quarter has been one of renewed energy and vigor as we continue our mission of delivering high-quality concierge level accessible health care to the communities we serve.

Let's first discuss the first quarter 2026 financial and operational performance. Total revenue reached $216.5 million, a 2% increase from $211.8 million in Q1 2025. Net income increased to $46.8 million compared to $21.2 million in Q1 2025. Adjusted EBITDA dropped to $57.6 million, down 21% from $72.8 million in the prior period. Jon can discuss more, but this has to do with the timing of recognition for IDR expenses in the first quarter of 2025 compared to the same period in 2026.

On the volume side, our hospital recorded 49,700 total patient visits, up 3.1% from 48,300 patients in Q1 2025. 0.6% of that growth came from same hospitals, demonstrating their resilience and continued relevance in their markets. Please note that this year's flu season was much milder compared to 2025's flu season.

On the balance sheet, net long-term debt decreased from $29.2 million at December 31, 2025, to $24.3 million at the end of Q1 2026, very low relative to our revenue and expansion pace.

Net cash from operating activities was $75.5 million for Q1 2026 compared to $51 million in 2025, a 48% increase.

Cash on hand grew to $207.3 million as of March 31, 2026, up from $185.6 million at year-end 2025. In the first quarter of 2026, we completed our inaugural $25 million share repurchase program, retiring approximately 119,000 shares. We also initiated a second $25 million share repurchase program during the quarter, reflecting our continued confidence in the intrinsic value of Nutex Health.

Our share repurchase activity underscores management's strong conviction in the long-term intrinsic value of Nutex Health and our disciplined approach to capital allocation. Operationally, we continue to invest in infrastructure that will support sustained growth in both emergency room and inpatient volumes. These investments are focused on scalability, efficiency and long-term operating leverage. We are also strengthening our leadership team with targeted additions in business development, IT, AI to support our next phase of growth.

On the business development side, our focus is increasing community awareness and engagement, ensuring patients and physicians clearly understand the differentiated and unique care delivered at Nutex hospitals.

From a technology standpoint, we are investing in both AI and IT to enhance patient care, streamline clinical workflows and enable innovation within our micro hospital model, while preserving the personalized concierge level experience that defines Nutex.

Technology is advancing at an unprecedented pace, and we believe Nutex is exceptionally well positioned to harness these innovations to meaningfully improve patient outcomes while driving sustainable patient volume growth across our platform. As a smaller, more agile organization, we are able to adapt quickly and deploy new technologies far more efficiently than larger, more bureaucratic health care systems.

In parallel, we continue to develop and grow new service lines, including medical detach programs, behavioral health sciences, outpatient imaging, outpatient procedures, personal injury services. Wes will add more on his operational report.

With respect to our de novo pipeline, a significant development this quarter was the Board's approval for Nutex to begin directly investing in the development and construction of new hospital facilities. Historically, Real Estate development was undertaken by third-party developers alongside local physician partners. By internalizing this capability, Nutex can build a more secure, cost-efficient and scalable development pipeline while reducing reliance on external credit markets and alleviating the financial historically placed at physician partners.

Nutex does not intend to hold these real estate assets on a longer-term basis. Our strategy is to invest capital upfront to develop and construct the facilities. And once a hospital is completed or has reached operational stabilization, we expect to monetize the asset through a sale-leaseback transaction with a third-party owner such as a real estate investment trust or REIT. And while a specific REIT partner has not yet been identified, proceeds from these transactions are expected to be recycled into future developments, allowing us to efficiently redeploy capital and continue to expand our footprint in a disciplined and capital-efficient manner.

On the IPA front, we are expanding internal resources to bring additional management functions in-house, further reducing our dependence on third-party service providers and improving operational control and efficiency. Warren will discuss more on this later.

From a payer strategy perspective, we continue to carefully evaluate all in-network contract opportunities. Each proposal is assessed against our existing reimbursement outcome under the IDR process. Our objective remains consistent. We are not seeking to collect more than peer hospitals offering similar services. We simply aim to receive comparable reimbursement for comparable care. Our goal is not to increase cost to insurers, but to ensure fair and equitable payment.

On the legislative front, we continue to closely monitor development related to the Murphy Bill, formerly known as The No Surprises Act Enforcement Act and we will adjust our strategy as appropriate as that process evolves.

More broadly, we are actively monitoring legislative and legal developments nationwide that could impact our business. We have seen several recent core decisions in states such as California, Florida and Pennsylvania, but may be constructive for providers like Nutex. While these matters remain fluid, we believe these developments reinforce the importance of staying engaged in the regulatory and legal landscape, and we will continue to evaluate their potential implications for the company.

Today, Nutex Health operate 27 hospital facilities across 12 states. In 2026, we remain on track to open 3 additional hospitals in the third and fourth quarter, located in San Antonio, Texas; Jacksonville, Florida; and West Little Rock, Arkansas. Demand for the Nutex Health model remains strong. Physicians and community leaders across the country continue to approach us weekly, with request to bring new Nutex facilities to their markets.

So with that, I'll turn it over to Jon Bates, our CFO, to walk through the financials in more detail. Jon?

Thanks, Tom, and good morning, everyone. I'm going to provide a little more color on the financials for Nutex Health's first quarter of 2026, another strong quarter where we are continuing to grow the business and improve our micro hospital model while we build the infrastructure to handle that growth each year-over-year. As Tom has given you a little bit of the big picture, and I'm going to attempt to provide a little more detail.

Going forward, when we do talk about comparisons between periods for metrics like visits and revenue, I wanted to bring your attention, we're going to begin using the term same hospital in our analytics, which basically means that the hospital data being compared period-to-period will have been fully opened in both periods presented. So in this case, hospitals in each period being compared under the same hospital definition were fully opened by December 31, 2024.

Starting with revenue. So total revenue for Q1 of 2026 increased by 2.2% or $4.7 million to $216.5 million versus $211.8 million in the first quarter of 2025, with the Hospital division revenue being $207.6 million in 2026. Of the total revenue increase, Hospital division revenue grew 1.8% to $207.6 million from $203.9 million, while same hospitals increased their revenue by 0.2% for the first quarter of 2026 compared to the same period in '25.

Hospital division visits increased by 3.1% or 1,473 visits to 49,742 visits in the quarter 1 of '26 versus 48,269 visits in the same period in '25, with same hospital visits growing at 0.6% over the same period.

With regard to the Population Health division, it had revenue growth of approximately 14% to $8.9 million for the quarter 1 of 2026 versus $7.8 million for the same period in 2025.

Now in addition to the revenue and visit growth noted above, facility and operating level costs also showed improvement for the first quarter of '26 compared to the same period in '25. Total facility level operating costs and expenses increased $31.3 million during the period, representing 57.6% or $124.8 million of the total revenue for Q1 of 2026 versus 44.1% or $93.5 million for the same period in 2025. Now of the $31.3 million increase for the period, $19.8 million of it related to arbitration costs for the arbitration -- additional arbitration revenue recorded during the period. An increase in these costs is primarily due to less settlement in open negotiations in the prior period as the company was increasing its IDR submissions beginning in the first quarter of 2025.

And regarding arbitration level revenue, we've continued to submit between 50% to 60% of our claims through the IDR process. And when an award determination is made, we currently prevail in over 85% of those determinations and we currently have an average collection rate of over 80% of those determination wins.

Now regarding arbitration costs, we do anticipate we ultimately will finalize around 24% to 26% of the overall revenue realized. But as a reminder, we currently are recording 100% of the anticipated cost of the arbitration effort, but only recording revenue based upon our current 80-plus percent collection rate. But during the current period, these costs approximated a higher percentage of 35% of the arbitration-related revenue, which we anticipate moving back to our lower averages in future periods.

Total stock compensation expense for the 3 months ended March of 2026 was a $3.9 million gain compared to a $27.6 million expense for the same period in 2025, which was a $31.6 million increase in Q1 of 2026. We did finalize 1 hospital earn-out at March 31, 2026, and have 2 more facilities currently in their measurement periods with both of them completing their measurement period in the fourth quarter of 2026.

Gross profit for the 3 months ended March 31, 2026, was $91.7 million or 42.4% of total revenue as compared to $118.3 million or 55.9% of total revenue in the same period in 2025, a 13.5% increase -- excuse me, decrease for the 3 months ended March of '26 versus 2025.

From a corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the 3 months ended March of 2026 increased to 6.6% or $14.4 million from 4.7% or $10 million for the same period in 2025.

Operating income for the 3 months ended March of 2026 was $81.3 million compared to $80.7 million for the same period in 2025, an increase of $0.6 million. Net income attributable to Nutex Inc. was $46.8 million for 2026 compared to net income of $21.2 million for the period in 2025, which was an increase of $25.6 million.

Adjusted EBITDA attributable to Nutex increased 15 -- decreased $15.3 million or 21% from $72.8 million in Q1 of 2025 to $57.6 million in Q1 of '26.

Looking at our balance sheet, it remains very strong with cash and cash equivalents at March 31, '26, of $207.3 million, up $21.8 million or 11.7% from the $185.6 million we had at the end of December of 2025. Additionally, accounts receivable increased by $20.2 million to $339.6 million at March 31, 2026, from $319.4 million at December 31, 2025. We had another strong collection quarter, which provides us continued confidence in this increase.

Regarding cash flow. Net cash from operating activities increased by $24.6 million for the 3 months ended March 31, '26, to $75.5 million as compared to $51 million for the same period in 2025.

And as Tom had mentioned earlier on the liability side, our total bank equity type debt decreased by $2.1 million to $41.3 million at March 31, '26, from $43.5 million at December 31, 2025. With the majority of that debt, as we've talked about before, relating to equipment loans at our hospitals for such items as our MRIs, X-rays, ultrasounds and CT machines. With all that said, our balance sheet remains very solid, and we have provided our company the flexibility to execute on our growth plan in 2026 and beyond.

Now with that, on to Warren Hosseinion, our President, for Population Health update. Warren?

Thank you, Jon, and good morning, everyone. It's great to be with you today to discuss how Nutex Health is advancing Population Health Management. In the first quarter of 2026, we continue to make strides in this area. This morning, I would like to again focus on our strategy and our upcoming goals.

Let's start with where we are today. Our Population Health Management division now oversees a diverse group of almost 40,000 patients across our platform, including a mix of Medicare Advantage, commercial and Medicaid managed care members. Revenue for the division was $8.9 million in Q1, up from $7.8 million in Q1 2025.

Our strategy revolves around physician networks. Our IPAs or Independent Practice Associations, are comprised of networks of contracted and credentialed primary care physicians and specialists located around our facilities. Building strong partnerships with local doctors is critical. By forming these IPAs, we are building awareness of our hospitals among the local community doctors and their patients.

Why do physicians join our IPA? We offer these physicians ownership in our IPA entities. They can also participate in the Board and committees of the IPA. We offer them to get on the staff of our hospitals so they can admit and follow their own patients if they choose to. We also incentivize the physicians to achieve high-quality metrics. We believe that over time, these relationships will not only increase the volume of both IPA and non-IPA patients to our hospitals, but also create a web of care that's seamless for patients. Our vision is that our hospitals and IPAs will work hand-in-hand to amplify our reach and effectiveness. We are fostering collaboration, sharing best practices and ensuring every provider is aligned with our patient-first culture. We're growing our IPA strategically focusing on areas near our hospitals to leverage existing relationships and infrastructure.

Going forward, our growth strategy focuses on 3 areas: one, provider network expansion by partnering with primary care physicians and specialists; second, value-based contract growth by increasing the number of covered lives under management; and three, technology scaling by enhancing our analytics and care management platform.

With that, I'll turn it over to Wes Bamburg, our Chief Operating Officer.

Thank you, Warren. I'll focus my remarks on the operational drivers behind our first quarter performance and how we continue to balance growth, efficiency and execution as we scale the platform. Operationally, overall hospital visits increased year-over-year, reflecting continued demand across our markets and steady contributions from both newer and more established facilities. More importantly, we continue to improve patient acuity and drive a higher mix of observation and inpatient patients.

On the care delivery side, we continue to strengthen coordination across clinical and care management teams. These actions are improving patient retention, supporting stronger clinical outcomes and reinforcing the operating leverage built into our model.

From a cost management perspective, operating expenses increased during the quarter, driven primarily by higher patient volumes, increasing acuity and intentional staffing investments. Labor cost increased to $41.4 million for the quarter, representing approximately 19.1% of net revenue. This reflects deliberate staffing decisions tied directly to demand, including expanded clinical coverage and support resources required to manage higher acuity observation and inpatient services. As in prior periods, our focus remains on aligning staffing models with real-time volume rather than fixed assumptions, supported by centralized analytics, scheduling discipline and cross-training.

Medical supply costs increased modestly to approximately $4 million or 5% during the quarter, reflecting higher utilization rather than pricing pressure. Over the past year, we have continued to benefit from vendor standardization and group purchasing initiatives, which have created a more stable and controlled supply cost foundation. As facilities continue to develop and utilization patterns normalize, we expect these efforts to continue supporting operating leverage and margin stability.

In parallel, we remain focused on targeted technology investments that enhance operational efficiency and scalability. These include tools designed to improve patient access, documentation efficiency, coding accuracy and workforce productivity. So what does this all mean for the patient? During the quarter, we received over 2,400 patient reviews, delivering an average Google rating of 4.8 out of 5. This feedback underscores the distinct experience we deliver, one defined by minimal to no emergency room wait times, high-touch service and personalized care. These patient-centric principles remain core to our mission and a key differentiator for Nutex.

In summary, the first quarter reflects continued progress in executing on our operating strategy and reinforcing the scalability of the micro hospital model. We remain focused on reliability, standardization and consistent execution, ensuring that every Nutex facility delivers high-quality patient-centered care that supports long-term value creation.

Thank you for your time. Back to you, Jen.

Thank you, Wes and team, for those updates. I will now turn it over to our operator, who will begin the Q&A portion of the call.

[Operator Instructions] Our first question comes from the line of Bill Sutherland with The Benchmark Company.

Exciting news, Tom, about taking on the hospital development internally. When will that probably initiate? And what -- how should we think about the balance sheet impact as you get into that?

Bill, thanks for asking, and great to have you on the call. So yes, the process has already started with 3 new projects in Florida. And typically, these project takes roughly 18 to 24 months to develop and open. So in other words, even if we start today, we may not open these for another 2 years. So once the facility opens at that time, we will then flip it to a REIT, like I mentioned, or some kind of a long-term real estate vehicle.

Now as far as the balance sheet change, Jon could probably chime in, but each of these projects cost roughly $20 million to $30 million to build. Our thought is to have Nutex invest the down payments, get a financing vehicle of some type. And then once we flip it, get all that reinvested back.

Jon, any further thoughts on the balance sheet question?

Yes. I mean, I think -- that's a great question, Bill. The -- I mean, obviously, when you have the asset on the books at the point you have it on the books, you're going to have the land and the building, then you'll have a mortgage of some kind or whatever cost to potentially finance it. So outside of that, then we'll decide and move on to the REIT concept and there'll be some slight changes there. But the main point at the start is going to be your asset and, of course, the mortgage.

So Tom, thanks for that. And so the current state of development, obviously, they're financed externally. The ones planned for '27, would that include Florida? No, that would be too soon, right?

Yes. For the ones that are opening this year in '26, those all have been financed externally. You're correct. In 2027, we have roughly 4 to 5 new projects, and I would say half of those were financed externally, and we're still working on 1 or 2 that will be financed by Nutex. And some of the 2027 projects have been in development for roughly 6 to 12 months now. And so we're getting to a point of starting construction. And so the project in 2027 is essentially starting construction now. And we have a peer window so that Nutex could start investing in those.

Got it. The court cases, et cetera, I'm not sure what the status is of the Murphy Bill is. But it seems like insurance -- the payer side is not getting any wins basically. And I'm just curious if there's a change in -- as you guys approach negotiating process prior to arbitration or even just discussions outside of that. Any change in you feel like how they want to approach this whole process and maybe even being more realistic about what in-network should look like for you?

Yes. The answer is that we are constantly and always looking at new contracts that are submitted by payers. And we are always trying to get in-network, if possible. And you are correct that recently, we've had 3 very positive court cases that are pro providers in California, Florida and Pennsylvania. So those are all fantastic news for us. However, it is a long war, so to speak. So we just won a few battles, but this will be a continuing process as insurance companies are always trying to fight back. And this is consistent with our experience with the insurance company for the past 15 years. That's always been the case. So that will not change anytime soon. Having said that, however, the good news is that we are looking -- we are seeing more and, I would say, better offer from the insurance company, and we are looking at all of them.

Okay. One housekeeping question, if I might, on the stock-based comp. I'm just trying to understand how that -- what's in that number? You probably discussed it in the Q, but I just haven't gotten there yet.

Bill, so your question is what -- how is the makeup of that number for the quarter?

Yes, it's a negative number. And 4Q was as well. I'm trying to...

Yes. Yes. So if you recall -- yes, the detail is in the Q, we're happy to talk more about it. But effectively, what we do is, remember, we do the math on along the way. what the earnings in the last 12 months is of each of those facilities that are in an earn-out. And then we -- there's a multiplier on that based on the share price at the time and the value of their business. And so it can go up or down based on where their EBITDA is and/or the price at the time. And then -- so that -- we accrue that along the way. And then like in this case in March, we actually had one that finalized. So it actually then gets resolved to exactly what the number is. And then whatever that changes could be up or down, runs through the stock-based comp and ultimately through equity. And so that's what that is, just so happens, it just went down slightly cumulatively based on those factors and push through in the current period.

So does that answer your question?

9

Yes, yes, it does. And then how should we think about the effective tax rate for the rest of the year?

Yes. Actually, it's a great question. I think as you look at the first quarter, to me, it's probably more in line with what I would expect. There's some ups and downs in that. But generally, I think this first quarter is probably more representative of what we would see. So somewhere in that high teens to 20% from an effective rate, and then we'll watch it as we go. But some of the variables that sort of swung it from previous year's higher numbers, there were some permanent differences, I'm not getting into too much detail, but the way it works in taxing. But permanent differences that were making that a little bit higher. And now those have resolved themselves a lot. A big piece of that was actually impacting the stock comp expense kind of now finalizing and becoming much less of an impact as we move forward. So I think where we're at is not a bad way to start somewhere in that high teens to 20%.

Our next question comes from the line of Thomas McGovern with Maxim.

So first, on the arbitration cost, right, increased to 35%. And historically, it's been that mid-20% range. Jon, you indicated that you expected to return to that 24% to 26% range. Just curious what gives you confidence in that and returning back down to lower levels? Do you have an internal time line on when you expect these figures to return back to stable levels? And also, if you could talk about what drove the increase in the quarter, that would be appreciated.

Yes, sure. No problem. I mean -- so it's just one slice in time on that piece. And as we talk about in my earlier discussions, and we talked about before, revenues on accrual based on collection basis, our costs because of the way we're laid out, are -- we record 100%. So technically, when that calculation comes out at being slightly higher in our financials, when the realization happens, cash ultimately goes out, will only be going out at the point at which there's a win.

But right now, we're anticipating 100% of every single win on the cost side, but only whatever our average collection rate is on the revenue side. So that inherently brings that percentage up. So -- and I think if you look back over the last 4 or 5 quarters, it actually -- it's averaging in that mid- to high 20%, which is where I think it will ultimately land when the dust settles on realization. So that's kind of the technical aspect of the answer. And I do think over the second, third and fourth quarter, you'll see it will start probably working its way back into that area we were talking about, but I think just for this one period, just with the math on where the costs are, just getting everything kind of in line and recorded in the quarter relative to revenue was slightly higher, but that's not the -- I don't anticipate that being the case as we move forward. But another quarter or 2, and we'll look at it over the last 3, 4 quarters, I think you're going to see that it's going to resolve itself back into that lower number. But great question, Thomas.

Understood. Appreciate that. And then I also want to take a look at revenue per visit declined again this quarter slightly, but just still notable. Is that just a function of the IDR award dynamics? Or are we seeing something with payer mix, patient acuity? And just if we look forward to 2026, how do you expect this metric to trend over time? I know you guys had some initiatives to hopefully drive this, but just kind of curious if we can get an update on that front. Will the new service offerings play a role? Or are you mostly just looking to increase the inpatient visit rate?

Yes. No, good question as well. The -- and we talked about this before. Remember, 2025 had more of an aggregation of the beginning of the IDR process. End of '24 was kind of the first piece. And as you know, collection percentages increased throughout each period, which is what we're using to accrue revenue in 2025. It's gotten to a pretty solid rate now. But so there was a lot more if you look at just pure revenue per visit in 2025, which makes that piece look a little bit higher when probably some of that, if you look back and say, okay, if you were to collect it -- if you would have the higher percentage collection rate at the end of 2024, which ultimately resolved itself, then we would have had more revenue back then, which would have shifted some of the kind of net revenue per visit in those periods and even this out a little bit more.

So I think we talked about at year-end that if you looked at the rate per visit from when we really started the arbitration process back in July of '24, it was averaging right around in that -- between 4,000, 4,200 range. And so that's -- I think that's where the normalization really is on a steady state. And I know we're working in a lot of areas on acuity and improving in those areas. I know Wes mentioned earlier about the observation and inpatient piece. That's happening. So I think the rate that we're seeing, even look back the 6 quarters prior to December of '25 and then add this one in another seventh quarter, I think you're looking at kind of where we're at on the steady state assuming the same types of visits walk in the door yesterday that they do tomorrow.

So I think the rate is probably in a pretty good spot there, and we're going to continue to work in the efforts that were mentioned earlier on finding ways to get some higher acuity and improving also on the realization side as we work hard with the payers, whether it's through the IDR process or just in normal negotiations, so making sure we're getting paid fairly, which I think things are improving in that area. And as we move through this year, I do think some positive things will happen and reimbursement should continue to stay pretty strong.

Got it. Appreciate that response. Final question for me is going to be on the selective self-development of some of these de novo facilities. Just curious, do you guys have an internal target for the mix of how many of these facilities will be invested in by new techs versus having the real estate partner? And does this impact how you guys look at long-term expansion strategies? Does this open the door for more rapid expansion, more selective expansion in particular markets or anything on that front?

Yes, Thomas, great question. And by the way, thank you for joining the call. But the answer is that, yes, we are looking at each location selectively on a one-by-one case-by-case basis. And so we're going to essentially develop based on what we think will bring the most value to our shareholders.

Having said that, there will be an option for all the developers to come in and invest with us. And so all that is still open at this point. But the whole reason we're doing this, once again, is to, number one, ensure a steady pipeline as well as decrease costs and ensure that the pipeline remains robust, so that we consistently could still do 3 to 5 per year.

Our next question comes from the line of Gene Mannheimer with Freedom Capital Markets.

Congrats on a good start to the quarter and year. I wanted to ask a little bit about patient volumes. The 3% growth year-on-year seems a little modest to me considering that you opened 3 hospitals last year. And I'm just wondering was it that the openings were skewed toward year-end, which is why we didn't see more throughput there on the volume side?

Yes. Gene, thanks for joining us. So the answer is multifold. But yes, you're correct in the sense that the 3 openings were earlier this year. And in fact, 2 of them opened, I would say, in late December of 2025, and the last one opened in January. So they are still developing. They are growing. They are, in essence, growing as projected, but they are fairly new. And so I think that was one of the reasons why volume has been a little bit flattish.

The second reason is last year, we had a very robust and I would say, a very heavy flu season compared to this year. And so the flu season just didn't hit as hard as we thought it would be, and so hence, leading to a slightly flatter volume. But having said that, it's still growing. We're still developing internal processes, so that we could accommodate more patients. So it's a never-ending job to increase volume and increase acuity.

Yes. No, that makes a lot of sense, Tom. And I wanted to ask, I guess, the prior question a different way on the IDR process. Do you -- or can you still quantify the revenue from IDR in the quarter? And how about that pivot towards higher acuity? Is that manifesting in the numbers today?

Jon, do you want to add?

Yes, yes, yes. I can talk to some of that. I mean so we talk about we're submitting 50% to 60% of our claims going through there. So I think that's a general -- a pretty good idea of the piece of it. I mean we look at this as part of our overall business now. So we don't break it out as much as we used to because of the day-to-day.

And to your point of, yes, it's certainly in the acuity certainly in our numbers when it comes to the revenue side of it. And as you can see in the reimbursement rate, it stayed relatively consistent with kind of where we looked at from almost inception of July of '24 all the way through even December '25 kind of reimbursement rate pretty close to what it is now when you go into the first quarter of this year. So I think that will continue, and I think there's opportunity for that to improve based on some of the initiatives that we have.

Great. Great. And I have one last one, if I could. I don't want to exclude Warren from the discussion. So growth in the Population Health segment, I mean, Q1 was strong at 14% year-on-year, but revenues have been very lumpy there. And it seems like that your most profitable IPA, like L.A. does not even have a hospital around it. So I'm just wondering how do we think about this population segment longer term in terms of growth and of both lives and contracted physicians.

Gene, thanks for that question. So actually, in 2025, each of our IPA so in Southern California, in Houston and in Southern Florida, they generated cash on a stand-alone basis. So I just want to start with that. Our goal, again, is to build these networks of physicians around our facilities. And it's not just to bring IPA volume. But once these doctors join our IPAs, they're aware of our facilities, our services. Some of them become owners in the IPA medical entities. They -- we have seen anecdotally that they send their non-IPA PPO/commercial patients to our ERs. So the goal is not to build the largest IPAs. It's to just build these networks, build awareness and take really good care of our patients, bring volumes, both IPA, non-IT volume to our facilities. So really, that's the goal.

Yes. And Bill (sic) [ Gene ], I want to add that the L.A. IPA is our most mature and our most established. And so that's one reason why they're more profitable than the others. But Houston and Phoenix are coming along nicely, like Warren said they are profitable. And we do have hospitals around both of those. The Miami location is also slightly profitable, but we do have a hospital opening in the Hallandale area in 2027 that would complement that nicely as well as West Palm Beach hospital that will also complement the South Miami. And so we're also expanding to both Dallas and San Antonio, where we have planned hospitals opening. So the strategy is to surround the hospital with a network of primary care and specialist physicians.

We have reached the end of the question-and-answer session. Ms. Rodriguez, I'd like to turn the floor back over to you for closing comments.

Thank you all for those valuable questions and answers. For all those joining us today, if you have more questions, please e-mail us at [email protected], and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our first quarter 2026 earnings call. We've covered a lot, growth, strategy, challenges and our vision. And we appreciate your time and interest. A recording of this call will be available on our website for a limited time. So feel free to revisit it there. Take care, everyone, and we look forward to keeping you updated on our journey.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Greetings. Welcome to Nutex Health's Fourth Quarter and Full Year 2025 10-K Earnings Call. [Operator Instructions] Please note this conference is being recorded.

At this time, I'll now turn the conference over to Jennifer Rodriguez, Investor Relations Manager. Thank you, Jennifer. You may now begin.

Good morning, everyone, and welcome to Nutex Health, Inc. Fourth Quarter and Full Year 2025 Earnings Call. My name is Jennifer Rodriguez, and I'm happy to serve as your moderator today. We're truly grateful for your participation and your continued interest in our company as we share the highlights of another exceptional year. Please note that this call is being recorded for future reference.

Joining me this morning are some of the key leaders driving Nutex Health Forward, our Chairman and CEO, Dr. Tom Vo; our Chief Financial Officer, Jon Bates; our President, Dr. Warren Hosseinion; and our Chief Operating Officer, Wes Bamburg. Together, they'll provide prepared remarks to give you a comprehensive view of our performance, strategies and vision, after which we'll open the floor for your questions.

Before I turn this over to Dr. Vo, I'd like to take a moment to address a few important points. Today's discussion may include forward-looking statements, which reflect management's current expectations about our future performance. These statements are based on what we know today, but they are subject to risks, uncertainties and other factors that could cause our actual results to differ from mobile share. For a deeper dive into these forward-looking statements and the factors that might influence them, I encourage you to review the press release and Form 10-K filed earlier this week as well as our various SEC filings. You'll find all the details there.

Additionally, we may reference non-GAAP financial measures such as adjusted EBITDA during the call. For those interested in how these metrics reconcile to GAAP standards. Please refer to the press release and Form 10-K, where we've included that information.

With those housekeeping items out of the way, it's my pleasure to hand the call over to Dr. Tom Vo, our Founder and Chief Executive Officer. Dr. Vo, the floor is yours.

Thank you, Jennifer, and good morning, everyone. Thank you for joining us today. It's a pleasure to meet with you as we review Nutex Health's fourth quarter and full year 2025 results. This past year has been one of exceptional growth, operational discipline and continued innovation as we advance our mission of delivering high-quality, concierge level accessible health care to the communities we serve. Our organization remains deeply committed to a patient-first culture and I'm really excited to walk you through the accomplishments, strategies and opportunities that shape our year.

First, let's discuss the full year 2025 financial and operational performance. Total revenue reached $875.3 million, an 82% increase from $479.9 million in 2024. Net income increased to $7.8 million to $52.1 million during '24. Note that this includes a noncash expense of $117 million for stock-based compensation for 2025 in the form of a onetime obligations of earnout shares issuable to qualifying under construction and ramping hospitals. This expense would decrease drastically in future years as most of the under construction facilities from 2022 have already vested. Adjusted EBITDA, which includes the add-back of the stock-based compensation rose $25.6 million, up 152.6% from $102.8 million in the prior year.

On the volume side, our hospitals recorded a 188,300 total patient visits up 11.8% from 168,400 in 2024. 1.3% of that growth came from mature facilities, demonstrating their resilience and continued relevance in their markets. On the balance sheet, even with 3 new hospitals opening in 2025 and early 2026, the current portion of long-term debt decreased slightly to $14.4 million to $13.2 million. Net long-term debt increased from $22.5 million to $29.2 million, still very low relative to our revenue and expansion pace. Net cash from operating activities of $248.1 million for the 12 months ended December 25, 2025. And cash on hand grew dramatically to $186 million as of 12/31 2025, up from $41 million a year earlier.

Next, I'd like to touch on the fourth quarter financial [indiscernible] During the fourth quarter, we did recognize a onetime $55 million revenue reduction related to the cumulative true-up of 18, 950 arbitration claims that were deemed ineligible by our traders under the IDR process. The periods involved for July 2024, and we first started through an arbitration and IDR through the end of December 2025. 18-month reconciliation resulted from a mid-2025 CMS directive instruction IDRs to resolve and clear the existing backlog of disputes. Fortunately, this process was very slow. On the inefficient side, and involve a lot other providers, including itself. This catch-up period reduced the number of active disputes compared to the same period last year and consequently lower reported net revenue for the quarter.

It's important to emphasize that this was a onetime reconciliation driven by CMS mandate. So to put this number into perspective, approximately 18,950 cars deemed ineligible equate to an average of roughly 1,050 cards per month. And according to Halo MD, our IDR consultant, an ineligible rate for Nutex Health is roughly 8%, all the charts that we submit. This is significantly better than the national average of approximately 19%, indicating that our processes are performing well above industry norms. Additionally, Halo MD is continuing to challenge the ineligibility determinations for a portion of these charts. Should any of these disputes be resolved in our favor associated revenues will be added to future monthly and quarterly financial results.

The good news, though, is that excluding the impact of this adjustment, our Q4 2025 adjusted revenue would be approximately $206.7 million, just consistent and in line with revenue levels from previous quarters However, even with a slight decrease in accrual revenue, operating cash flow remained very strong. Net cash provided by operating activities was $70.4 million in the fourth quarter compared to only $100,000 in the same quarter last year, demonstrating that cash collection continues to perform very well. We encourage investors seeking a deeper financial understanding of our business to focus on the full period from 2024 and through December 2026.

Quarterly results can appear lumpy to the natural rate constraints of accrual-based accounting, which can shift the timing of revenue and expense recognition. Jon will provide additional insights into these dynamics later in the presentation. In terms of arbitration and IDR process performance, we continue to perform well within the IDR framework. It is now a normal part of our revenue cycle process. 50% to 60% of our claims are submitted through the IDR process. When a determination is issued eval in over 85% of those cases, demonstrating that insurers are still underpaying in 85% of the cases that we sent to arbitration. We are also currently realizing an average cash collection rate of more than 85% and our legal determination wins. We are actively monitoring the forthcoming IDR final rules from the office of management and budget and other federal agencies.

At this time, we do not expect any material changes to the current process and remain optimistic that the final rule will further strengthen and streamline the IDR process with additional end dates for insurers to comply. An example of a more efficient IDR system would be avoidance such as the 18-month true-up that we just experienced for the fourth quarter in the future. On the regulatory and legislative outlook front, we are closely watching the progress of the No Surprises Act -- I'm sorry, no Surprises Enforcement Act, also known as the Murphy Act. It is designated as HR 4710 in the house and S-2420 in the Senate.

These mills are currently under review in the following committees in the house, the energy and on commerce, education and workforce and ways and means. And in the Senate, it is currently being reviewed in the health, education, labor and pension it otherwise known as helped. Our 2025 financial and operational results demonstrate the strength of our model, the scalability of our platform and our disability focused on 3 core metrics: ER visit growth inpatient volume growth and revenue per patient. Many of you know, Nutex Health has operated since 2010. More than a decade as a private company, our micro hospital model built on concierge level, high-accessible care, deliver consistent and respectable profitability.

After going public in 2022, we faced challenges, primarily driven by the faulty implementation of the No Surprises Act or the NSA which materially reduced reimbursement across our industry. The authors of No Surprises Act are credit anticipated that insurers might use the payment process to underpay smaller providers like us. That reason, Congress included the independent dispute resolution IDR process as an essential safeguard, giving providers a meaningful avenue challenge unfair reimbursement. Now this mechanism insurers would have the unchecked ability to dictate payments unilaterally, effectively determining winners and losers in the marketplace and undermining fair competition resulting imbalance with Stifel free trade, in small operators and distort the health care ecosystem. In many ways, this is truly a David and Goliath [indiscernible].

As we enter the next phase for our growth, we are fortunate to have strong liquidity and adequate cash on hand. This financial position allows us to remain disciplined and highly return focused. Our capital allocation strategy continues to center on 4 priority areas: number one, share repurchases. Share repurchases activity underscore our conviction in the intrinsic value of new Excel, launched a $25 million repurchase program in late 2025 and completed it in early 2026. Earlier, we authorized an additional $25 million for further repurchases. These programs reflect our commitment to delivering shareholder value, prudent accretive capital deployment. For two, growth at existing hospitals, our existing micro hospital footprint remains a powerful engine for organic growth.

We are heavily investing in both the ER and inpatient volume initiatives to expand capacity on service lines and enhanced revenue quality. In terms of ER volume initiative, we are strengthening community engagement, expanding referral pathways and diversifying service offerings. Targeted investment including services such as medical detach programs favor health services, outpatient imaging or patient procedures, personal injury services. These initiatives are in addition to our normal ER volume and will help expand patient access and improve the overall revenue mix.

On the inpatient volume initiative, and to capture more high acuity cases and reduce unnecessary transfers, we are enhancing specialized equipment. We are very excited because with advances such as AI, medical device, biopharma, there are more cases that we could treat at our micro hospital than ever before. We have also expanded inpatient nursing and ancillary capacity. And to top it off, we are adding a tele specialist, I'm sorry, tell a hospitalist and tell a specialist coverage for all of our hospitals in the coming year. These upgrades allow us to manage high-acuity patients within our own facilities, increased retention and strengthening contribution markets. Wes, our COO, will discuss more on this operational part later.

Early expansion of our IPA and published and Health division. Our independent physician Association currently operating in Los Angeles, Phoenix, Houston and South Florida continue to be a strategic advantage, strengthen our relationship with PV physicians enhanced care coordination and support by directional referrals and to expand our IP footprint into markets surrounding our hospitals, enabling more efficient care pathways, stronger physician alignment and by direction referrals between IPAs and the Nutex Hospital. This expansion also position us more effectively within the risk-based and value-based reimbursement models and our goal will be to operate as many IPAs around our existing hospitals as possible.

Warren will discuss this more in detail when he speaks later. Lastly, real estate development strategy. We are evaluating opportunities to develop micro hospitals using a capital-efficient real estate model. Will we develop and own the facilities during the stabilization period build both operational and real estate value and possibly eventually execute a sale-leaseback transaction to recycle capital into future. This approach preserves strategic control of early-stage operations while enabling accelerated expansion without over leveraging the balance sheet. Today, Nutex Health operates 27 hospital facilities across 12 states. In 2025 and early 2026, we opened new hospitals in Sherman, Texas, St. Louis, Missouri and Amble, Texas.

We are actively building a pipeline of new hospitals for later in 2026, 2027, 2028, starting in 2029. Each facility is designed around the same principles. [indiscernible] level care little to no emergency wait times and tailored inpatient and outpatient services that meet the needs of the local community and remains very strong. Physicians and community leaders across the country continue to approach us weekly using new facilities in their markets. We're trying to keep up with demand. In addition, we are in ongoing communication with payers and continually reviewing their in-network contracts to evaluate whether the terms are offered are fair and reason. Good news is that we are now receiving better offers than we have in the past.

In closing, it has taken approximately 2.5 years to recalibrate our operational and reimbursement strategies. I am very pleased to share that in 2025, return to the level of profitability that our model has historically produced. Over the years, we have operated 4 different administrations, navigated the complexities of the Affordable Care Act drive through COVID, overcame the challenges of the No Surprises Act and are now actively optimizing our approaches to the IDR process. While no one can predict the future, our longevity and experience across multiple health care cycle give me confidence that Nutex can continue to pivot effectively against any geopolitical or regulatory headwinds. We are very excited while the trajectory of Nutex Health as we enter 2026. We are carrying significant momentum and we believe we are very well positioned to continue our disciplined, profitable growth.

So with that, I'll turn it over to Jon Bates, our CFO, walk through the financials in more detail. Jon?

Thanks, Tom. Appreciate that, and good morning, everyone. I'm very excited to break down the financials for Nutex Health's fourth quarter and full year 2025, a year where we didn't just grow, but we continue to improve our business model while delivering on a record year for the company. Tom has given you some of the big picture, and I will zoom in a little more detail, beginning with the full year of 2025 results, and then we'll discuss the fourth quarter of '25 as well. So starting with the 12 months ended December 31, '25 compared to the same period in 2024.

I wanted to start by highlighting the fact that the company worked very hard in 2025 to continue to improve our overall controls environment and that effort enabled us to remediate all previously disclosed material weaknesses in internal controls over financial reporting in 2025. It's a huge accomplishment that shows our commitment to having a solid control environment that can be relied upon by our shareholder base and the investment community.

Now on to some of the numbers. Total revenue for the full year of 2025, as Tom indicated earlier, increased by 82.4% or $39.5 million, up to $875.3 million versus $479.9 million for the full year of 24% with the hospital division revenue being $844.2 million in 2025. Of the $844.2 million in the hospital revenue $7.8 million or approximately 63% related to a combination of both higher acuity claims as well as success through the IDR process. For some perspective, we reduced this 7% from the third quarter of 2025 when we were closer to 70%. Regarding arbitration-related revenue, we have submitted between 50% to 60% of our claims through the RDR process, which came down approximately 10% from the third quarter as well.

And when an award determination is made, we currently prevail in over 85% of those determinations, and we currently have an average collection rate of over 85% of those determination wins. From an arbitration cost perspective, it's approximately about 26% of that arbitration related revenue. And of the total revenue increase mature hospitals increased their revenue by 73.4% for the year of 25% versus the same period in '24. Hospital visits, as Tom indicated earlier, increased by 11.8% or 19,891 visits to 188,279 visits in 2025, and versus 168,388 visits in the same period in '24, with those mature hospitals growing at 1.3% over the same period.

Additionally, the Population Health division had a slight revenue growth of 0.7% to $31 million for the year of 2025 versus 30.9% for the same period in '24. So in addition to the revenue and visit growth note and above, facility and corporate costs also showed improvement for the year of '25 relative to '24. Total facility level operating costs and expenses increased $147.3 million during the period but only represented 49.2% or $431 million of total revenues for 2025 versus 59.1% or $283.7 million for the same period in so effective decrease of just under 10%. Of the $147 million increase for the period, $138.3 million related to the arbitration costs for the arbitration -- additional arbitrational revenue booked during this period.

Total stock compensation expense for the 12 months ended December 31, 2025, was $117 million compared to only $16.6 million in the same period of $24 million, which is $100.4 million increase in '25 and just so you know, almost all of this increase was related to the 3 hospitals that completed their earn-out periods during the third quarter of '25. Now we do have 3 more facilities currently in the earn-out period with one of them completing the earn-out period in the first quarter of '26 in the remaining 2 completing their periods earn-out periods in the fourth quarter of '26. The gross profit for the 12 months in 2025, was $444.3 million or 50.8% of total revenue as compared to $196.3 million or only 40.9% of total revenue in the same period in again, just under 10% increase for the 12-month period ended December '24 versus 2025.

From a corporate and other cost perspective, general and administrative expenses as a percentage of total revenue for the 12 months ended '25 decreased to 5.9% or $51.7 million from 8.7% or $41.9 million for the same period in 2024. Operating income for the 12 months ended December 2025 was $275.6 million compared to $130.7 million for the 12 months ended 2024, which is an increase of $144.9 million. Net income attributable to new tax was $70.8 million for 2025 compared to net income of $52.1 million for the 2024 period, an increase of $18.7 million. Adjusted EBITDA attributable to Nutex increased $156.8 million or 152.6% from $102.8 million in 2024 and to $259.6 million in 2025.

So now let's move on to discuss more the fourth quarter of December 2025 and compare those results to the fourth quarter in December 31, 2024. And Tom indicated some of this on his earlier discussion. But for the fourth quarter of 2025, our total revenue did technically decrease by 41.1% or $105.9 million to $151.7 million versus $257.6 million for the fourth quarter of 2024.

With a little more context, the company attributes $105 million decrease primarily to 2 items that we disclosed in our press release. Number one, was the onetime $55 million cumulative true-up of 8,950 arbitration claims that arbitrator is determined to be ineligible for the in the fourth quarter of 2025 under the independent dispute resolution process. These claims were submitted for the period from July '24 through all through December '25. So cumulatively, we believe the onetime cumulative arbitration true-up resulted from a mid-2025 CMS directed instructing the certified independent dispute resolution entities to address and clear any backlog they had of their disputes.

The associated kit up reduced the number of active disputes compared to the same period in '24 and contributed to lower net revenue for the quarter. Now we believe the backlog has been materially addressed, but we'll continue to watch the process very closely. The second item was arbitration revenues of $69 million, and this is for the previous year 2024, that related to submissions that were in that related to the third quarter of 2024 that were recorded in Avenue in the fourth quarter of 2024. As you probably recall, prior to September 30 of 2024, the company did not have any sufficient historical data to determine the likelihood of a prevailing determination of potential award amount or the collectibility of such awards.

But after considering the impact of the adjustments above, including that $69 million, our 2025 4th quarter revenue would be $206.7 million and the 2024 4th quarter revenue would be $188.6 million, which would result in a revenue increase of $18.1 million period-to-period, primarily driven by higher patient business in the fourth quarter of 2025 compared to the fourth quarter of 2024.

So I just want to take a step back on how we accrue revenue for the company for those that maybe aren't as familiar with it, which hopefully will explain some of this situation and its impact as we move forward. So if you look at it, as the company has been predominantly out of network for over a decade with the billing process. Therefore, we have to negotiate most of the claims that are sent to payers based on what we believe we should be paid using market industry payment data. In our accrual process, there were 3 key items that we use in this process, and it is all based upon the historical results we have regarding payments by 3 items, payments by each specific payer, by each specific physical location of the visit and thirdly, by the specific acuity level of that visit. And the averages of those results over the recent past, let's say, 1 to 2 years of activity.

And then we take those averages at that specific detail and then they're attached to a current period visit with similar characteristics of those averages, which then sets our accrual of realizable AR and revenue in the month of the visit. And then as payments come in, we adjust the accruals up and down, up or down based upon the results with the net impact being recorded to revenue in the period when the payment is ultimately received. So these numbers and the history we're talking about here are continually updated as each payment is made and our updated averages will affect the new current period visits as we move forward. And this is exactly how we've been doing it. since inception.

So in the case of the arbitration activity, we added a layer to our standard revenue accrual process that is very similar to our baseline process. But because the process has been new to us since we began the process in July of 2024, we have continued to build this additional layer as we have more and more data. And in the case of the ineligible claim write-down or claims write-down in the fourth quarter of 2025, there had been a nominal number of items like that, small, nominal that we had seen and accounted for in our normal accruals up through the third quarter of 2025. But certainly, there was nothing material in there. And so we were not aware of any material indications in this area that ultimately led to the onetime true-up of outstanding disputes in the fourth quarter of 2025 that the RDR had in backlog until the fourth quarter of 2025.

So that's the first time we understood what was going on. And so we're continuing to work to better understand the overall situation as it is so recent to that process. And now we believe we have a much better understanding of this and we'll monitor it as we go forward. Now as we have gotten this recent information and continue to fine-tune our accrual process, we believe that this situation did resolve a majority of their backlog of claims that would be deemed ultimately ineligible, but anticipate this will continue to be a part of the process as we move forward, but just at a much more nominal consistent rate. Now the industry data that we have seen indicates that ineligible claims within the entire IDR process have been closer to 19% of submissions. While our current data that we have through now, Nutex shows were cumulatively showing less than an 8% ineligible claims submission rate since we started the process in July of 2025.

So we realize this is part of the overall arbitration process now, and we haven't included within the way we do our accrual process as we move forward. Now we'll finish with the rest of the fourth quarter 2025 discussion. For hospital division visits, we saw an increase during the quarter of 6.1% or 2,761 visits to 48,205 visits in the fourth quarter of 2025 versus 45,444 in the same period of 24 with mature hospitals slightly decreasing 0.3% in the fourth quarter of '25 compared to 2024. Additionally, the Population Health division revenue increased by $0.1 million or 1% to $8 million in the fourth quarter of 2025 from $7.9 million in the similar period of '24. Now we discussed the growth in the hospital revenue visits that we've seen in the fourth quarter.

And now let's discuss the overall facility and corporate costs. Total facility level operating costs and expenses increased $10.5 million for the fourth quarter of '25 versus the fourth quarter of '24 to $105 million from $116 million for the same period in 2024. Total stock-based compensation for the 3 months ended December 31, 2025, was a credit of $2.6 million compared to an expense of $14.6 million for the same period in '24. Operating income for the fourth quarter of 2025 was $30.9 million compared to $114 million in the fourth quarter of '24, representing a decrease of $83.4 million quarter-to-quarter. Net income attributable to new tax was $11.8 million in the fourth quarter of '25. The comparable net income attributable to new tax was $61.6 million for the fourth quarter of in showing a $49.6 million decrease quarter-to-quarter.

Adjusted EBITDA attributable to Nutex decreased $70.1 million from $86.7 million in the fourth quarter of $24 million to $16.6 million in the fourth quarter of '25. But as discussed above, we believe that the fourth quarter numbers aren't necessarily representative of a typical quarter because of the effect of the onetime cumulative arbitration true-up discussed previously. We believe that looking at the year-to-date numbers represents a much better picture of the company's strength as we continue to grow in visits and volume, and our cash flow continues to be extremely strong, with over $207 million in a hospital receipts collected in the fourth quarter of 2025 alone.

Looking at our balance sheet, it remains very strong with cash and cash equivalents at December 31 of '25 at $185.6 million. It's up $144.9 million or 356.6% from just $40 million -- $40.6 million at the end of December '24. The other size will increase at the end of 2025 is the accounts receivable balance, which was a $319.4 million compared to $232.4 million at the end of '24 and our consistent strong collections throughout the year provides us continued confidence in this increase.

Regarding cash flow. Net cash from operating activities increased by $225 million for the 12 months ended December of 2025 to $248.1 million as compared to only $23.2 million for the same period in 2024. On the liability side, as Tom indicated, our total bank debt increased by $2.1 million to $43.5 million at December '25 from $41.4 million at December of 2024, with the majority of this debt really just relating to equipment loans at our hospitals for such items as MRIs, x-rays, ultrasound and CTs, the main equipment that runs our facilities. So this is a very slight increase in 2024 with the overall balance being a relatively small amount of true operating debt for a company of our size, especially with opening 2 new facilities in 2025 and with another one in the early part of 2026. With all this said, our balance sheet remains very solid, and we have provided our company the flexibility to execute on our growth plan in 2026 and beyond.

Now on to Warren Hosseinion, our President for a population health update. Warren?

Thank you, Jon, and good morning, everyone. It's great to be with you today to discuss how Nutex Health is advancing population health management, an important piece of our mission to deliver sustainable, impactful health care. In 2025, we made strides in this area, and I'm excited to share the progress, the strategies driving it and our plans to keep pushing forward.

Let's start with where we are today. Our Population Health Management division now oversees a diverse group of approximately 40,000 members across our platform including a mix of Medicare Advantage, commercial and Medicaid managed care members. That's a broad reach, and it's growing because of the trust we've built through our independent physician associations or IPA I am happy to report that each of our 4 operational IPAs were profitable in 2025. Our strategy revolves around physician networks our IPAs are comprised of networks of contracted and credentialed primary care physicians and specialists located around our facilities building strong partnerships with local doctors is critical.

By forming these IPAs, we are building awareness of our hospitals among the local community doctors and their patients. Why do the physicians join our IPA. We offer these physicians ownership in our IPAs, they can also participate in the Board and committees of the ITA, we offer them to get on the staff of our hospitals so they can admit and follow patients we also incentivize the physicians to achieve high-quality metrics. We believe that over time, these relationships will not only increase the volume of patients to our hospital but also create a web of care that's seamless for patients. Our vision is that our hospitals and IP will work hand-in-hand to amplify our reach and effectiveness.

We are fostering collaboration, sharing best practices and ensuring every provider is aligned with our patient-first culture. We're growing our IP strategically focusing on areas near our hospitals to leverage existing relationships and infrastructure. In 2025, we launched the new IP in Phoenix. In 2026, we plan on launching 2 IPAs, one in Dallas and one in San Antonio. Going forward, our strategy focuses on 3 areas: provider network expansion by partnering with physicians in high-value markets value-based contract growth by increasing the number of covered lives under management and technology scaling by enhancing our analytics and care management platform.

With that, I'll turn it over to Wes Bamburg, our Chief Operating Officer.

Thank you, Warren, and good morning, everyone. As mentioned earlier, volume is up. For the year 2025, total patient visits were up 11.8% from 2024, with mature hospital visits growing at 1.3% over the same period. This performance highlights solid demand and the disciplined execution behind our ER and inpatient initiatives. From an operational standpoint, our focus throughout the year has been ensuring that our investments translate into consistent execution across every facility as we broaden our service offerings ranging from medical detox and behavioral health to advanced outpatient imaging and procedures, we have been building the operational infrastructure required to support higher throughput and a more diversified patient mix. That includes standardizing workflows, strengthening our intake in triage processes and enhancing staffing models to seamlessly accommodate increased ER demand while protecting the patient experience.

On the inpatient side, the expansion of specialized equipment and tele specialist capabilities has allowed us to manage more complex patients safely and effectively within our hospitals. Operationally, we've paired these enhancements with stronger clinical governance, upgraded care pathways and expanded training to ensure that higher acuity care is delivered with consistency and quality across the enterprise. These efforts are already improving patient retention, reducing avoidable transfers and supporting stronger contribution margins. From a cost management perspective, 2025 was a transformative year, driven largely by the ongoing advancement of our corporate purchasing and supply chain teams.

Excluding arbitration expenses, operational costs were 33.4% of total revenue for 2025, down from 47.1% in 2024. Over the past year, this function has become far more centralized disciplined and data-driven giving us greater ability to engage more effectively with key vendors. As a result, we secured significantly better pricing on major imaging equipment, including MRI and CT scanners as well as improved rates on lab instruments and reagents. These categories have historically been among our highest cost items, so the impact on margins is meaningful. Lastly, during 2025, Nutex received more than 8,700 patient reviews averaging an enterprise rating of 4.8 out of 5, a level of satisfaction that continues to set us apart in the health care industry.

This performance reflects the strength of our model and mission, which are built around delivering concierge-level service, little to no ER wait times and a highly personalized patient experience. As we scale, we are advancing system-wide standardization, both in how we engage with patients and in the care we deliver, ensuring that every Nutex facility delivers consistent outcomes, service and a best-in-class experience. These foundational elements continue to differentiate Nutex in a sector where patient satisfaction and reliability are critical drivers of long-term value. Across the organization, our teams remain deeply focused on reliability, scalability and disciplined execution. As we grow, we are firmly committed to ensuring that every new tech facility delivers the same high-quality patient-centered care that defines our brand and supports our long-term growth.

Thank you, everyone, for your time, and back to you, Jen.

Thank you, Wes and team for those updates. I will now turn it over to our operator, Rob, who will begin the Q&A portion of the call.

[Operator Instructions] And our first question will be coming from the line of Thomas McGovern from Maxim Group.

I want to start with some high DR-related questions, right? So historically, and on today's call, you've discussed IDR submission rates in the range of 60% to 70% with historical collection rates hovering around 80%. If we look at the press release, it actually says that the submission rates were 50% to 60% with that with an improved collection of around 85%. So I just wanted to see if you guys could help us reconcile the shift, is this a reflection of maybe higher quality, fewer submissions but higher quality and that's leading to an improved collection? And how should we look at this dynamic moving forward?

Jon, do you want to get -- yes, go ahead, Jon.

No, I was just going to say -- no, you're right, Thomas. Obviously, we've seen -- and the whole goal here in the independent dispute resolution is, ultimately, if we can get to a situation where we're able to get these claims resolved prior to it, that's a win. So of course, up through now to the third quarter, we were submitting a higher percentage. And actually, historically, it was around that 60% to 70%. But what we saw I've seen in the last quarter, now cumulatively sort of the impact is a little bit less in which we hope that will be the trend with the trend being that ultimately that would go down and we'd still be able to get what we believe to be fair and reasonable payments. And we believe that's still happening.

And as we look to try to get in contracts with payers, which we're always looking to try to do, if we can find one that's reasonable, we'll continue to do that. So I think it's partly some of that going on for sure, and it's something we're going to watch real closely as we look and continue to watch reimbursement rates, which have stayed very strong throughout the year, as you've probably seen. And as you can tell, even the collection piece as you referenced was where we were kind of close on in the second and third quarter. Now we're collecting it 85-plus, continuing to have a strong legal determination wins of high -- mid- to high 80s. And so all of that, we anticipate hopefully even improving and we'll watch it as we go, but it's been a consistent pattern of an improvement there.

So I think that's what we're seeing is that we're able to resolve more either with contracts or in open negotiations earlier on. It's still a smaller percentage, right, that we want there to be more of that on the front end. But for now, I think the trend is actually positive and the more watch reimbursement is affected with that. And as you know, and you and I have talked about this before, even if we are able to settle some of these earlier in the process was in open negotiations specifically open negotiations if they don't pay us well at the beginning, even if it's slightly less than even though we feel that we're getting is paid fair and reasonable, if it's slightly less than that, when you remove the cost component, from a net perspective, it ends up being similar or maybe even more positive.

So we don't view it as negative at all, I just view it as kind of the opportunity as we move forward to watch this with our goal, ultimately, of getting everything resolved more timely, quickly and if we can have contracts across the board, we would do that. We just have not been able to successfully execute those and find reasonable fair payments yet from many of the payers. Tom, you might have more to add.

No, that's correct, Thomas. And in essence, as you know, health care is all about ebb and flow. Some quarters higher, some quarters lower. But to Jon's point, it is definitely moving in the right direction with less submissions, which may mean that the payers are paying better and more correctly,first time. So we will continue to monitor that progress.

It sounds like solid improvement with open negotiations. And obviously, you don't have to do a whole drawn out arbitration process. That's great for you guys. Great. So next question for me. You guys recently reopened a hospital in Texas is back in January. First part of this question is, what led to that decision? What are you seeing in that market now that leads you to believe this is the right time to do so? And then a follow-up to that is, do you believe that you're on track -- you remain on track rather to open the 5 to 6 facilities you've discussed in the past in 2026. And maybe if you could -- Tom, you mentioned a new real estate strategy at [indiscernible]. So maybe if you could touch on that and how that might impact your planned openings in the year.

Yes. No, thank you, Thomas. So the first question, our Ambo Hospital, we did have to close it. when we were going through the No Surprises Act issue. And after we established the IDR process, reimbursement get better. And so when that happened, it became a correct move to reopen it simply because we knew that there was volume there. And so the volume that we saw prior to the IDR was maybe not enough make it a profitable operation. But with the IDR process and better collection, better fair and reasonable collection that business made sense. And on top of that, as you know, we've essentially focus on more of an inpatient side. And so we became much better at it when we weren't as good at it back then. And so now that we're much better at the inpatient side, opening a slightly bigger hospital with more inpatient bed just made better sets and made a better business sense with a better projection. Does that answer the first question, Thomas?

Yes, yes. And then just a reminder, the second part of that question is, do you believe you remain on track for the 5 to 6 openings in '26 that we've discussed in the past? And then just how your new real estate strategy might influence the timing or the scope of these openings?

Yes. So the 5 to 6 locations are both for '26 and '27. So in 2026, the 3 locations that are on track to be open are Jacksonville, West Little Rock and San Antonio. And so those are the 3 for sure this year that are essentially will be finished with construction, I would say, probably by third quarter. And then on top of that, we're already working on '27 and '28 and so we protect probably another 4 hospitals to open in '27 and probably another 4 after that. And then in terms of the real estate strategy, yes, now that we're fortunate enough to have some cash in the bank, the idea is to explore ways where new tax could essentially start the development on the new hospitals.

And once the hospital has stabilized and convert it to a REIT or sell it to a real estate investor and take that cash out and we invest in the 3 to 4 new projects going forward. So essentially to recycle the cash. The idea is that, that cash would essentially be accrual, and it would be essentially profitable for the company, whenever we cycle that cash again. The initial investment is that cost but hopefully, when we do a sale leaseback, we would make a small profit on it and then use that to recycle the cash to continue with the pipeline. And by the way, we have not formalized anything yet, but that is under discussion as an additional way to maximize our cash and return some investor maximal shareholder returns.

The next question is from the line of Gene Mannheimer with Freedom Capital.

So Tom, Jon, when did you -- when exactly did you learn about the true-up adjustments? And have you given any thought to preannouncing?

Yes, I can talk to that.

Go ahead, Jon.

Yes. So the earliest indication we were getting was in and that was just information we were seeing on the early ineligible information was the middle part of the fourth quarter, and it was very, very new to us trying to understand it. In fact, a lot of it is it comes to us, we look at it and say, there we might even, in a lot of cases, disagree with it being deemed ineligible and there's a process we didn't talk about here, but that we're going back on some of these and saying, hey, there's -- we disagree with that. But long story short is we were getting information in the middle part of the quarter, but it was very, very new. So then us trying to understand exactly the impact, understand exactly the legitimacy of it has taken us a couple of months to go through and analyze it.

So that's the reason we -- there was nothing -- we didn't know what to report because it was new. And as quickly as we got our clarity on it, then we had to -- we started to roll it through our numbers, which was as we were finishing out the year. And then from a timing perspective, this was the best opportunity based on the data we have. to when we would communicate it because we didn't really know much sooner than this exactly that impact.

Got you. That makes sense, Jon. And when we think about those 19,000 or so claims that were deemed ineligible, you do the math on that. I think it's about $2,900 a claim. So is it safe that these were mostly confined to ER visits and not any inpatient volumes?

Yes. That's good insight. So yes, a majority of those would be more. It was a little bit of the lower we call it, tier or acuity. And so yes, most were more relative to our -- what you call more and more standard ER-type visit, maybe with blending to maybe one step forward, maybe an observation or a couple inpatient, but majority of them were EOR-related.

Got you. And one more for me. In terms of any future true-ups that might happen, should there be any -- would those also likely to be reserved in the fourth quarter like what you had yesterday? Or could they be trued up anytime?

Absolutely. I mean it's -- we don't control that, but I can tell you that as we see the information, if we see any activity that shows and there's going to be, as I mentioned, there's going to be ineligibles in this process. I think a year ago, they were talking about it being a much higher percentage even what the industry says they finished with recently, which was 19-ish percent of every claim going through is deemed to be an eligible and we're significantly less than that as we're seeing, but we just became known in a material nature of it in the fourth quarter. There were smaller ones that came to us earlier in the period, not material and we addressed those and they went through our natural accrual process.

And then this sort of sprung up on us in the fourth quarter was a big surprise, but now with more knowledge and more understanding of the communication from, say, CMS to a lot of those independent dispute resolution and user arbitrators I think they were almost threatening them to say, you guys don't catch up if you're behind, then we're going to find someone else to do it. And as a result, I think they got caught up. They also have added more arbitrators, certified arbitrators at this point as well. So we believe that the backlog concept is probably something more of the past. There will be some at all times. And then more importantly, we'll find out if there is something sooner in the process, and then we certainly will account for that as soon as we know it.

But also, as we talked about in that whole description of how we accrue for revenue, the more data we have like this, now we incorporate that into our model, so there will even be some level of ineligible assumption in a current day visit based on what we're finding out now based on our percentages. So -- and then we'll adjust that like everything else every single month, which is a complex process, but I think we have a really phenomenal team that has been doing this for 3 or 4 years now in [indiscernible] and many auditors and banks have spent a ton of time analyzing our process, and they've all come away saying, what you guys are doing seems very solid. So it's just new.

It's a new process, and I think we're getting better at this for the IDR side and who knows what's going to be next, but this looks to be the latest, newest situation that's happened, and we feel like we've addressed it and don't feel like it will be a material issue going forward, but we'll watch it and see. And to your point, we don't wait to record it at some later point as soon as we know it or see any indication of it happening, we're going to do our best to try to reflect it within the current numbers that we have so that we're properly recording our revenue costs and keeping in line with the accrual-based approach. Good question.

At this time, I'll hand the floor back to Jennifer Rodriguez for closing comments.

Thank you all for those valuable questions and answers. For all those joining us today, if you have more questions, please email us at [email protected], and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our fourth quarter and full year 2025 earnings call. We've covered a lot, growth, strategy, challenges and our vision, and we appreciate your time and interest. A recording of this call will be available on our website for a limited time. So feel free to revisit it. Take care, everyone, and we look forward to keeping you updated on our journey.

Thank you. You may now disconnect your lines at this time, and have a wonderful day.

Greetings, and welcome to the Nutex Health 2Q and 3Q 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Jennifer Rodriguez of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to Nutex Health's combined Second and Third Quarter 2025 Earnings Call. I'm Jennifer Rodriguez, and I'm pleased to moderate today's discussion. Thank you for joining us as we review our performance and outline our plans for the future. This call is being recorded for future reference.

With me today are our key leaders, Dr. Tom Vo, Chairman and CEO; Jon Bates, Chief Financial Officer; Dr. Warren Hosseinion, President; and we would like to formally welcome our new Chief Operating Officer, Wesley Bamburg. They will provide insights into our financial results, operational progress and strategic direction, followed by a Q&A session.

Before we begin, a few reminders. Today's discussion may include forward-looking statements based on management's current expectations. These are subject to risks and uncertainties that could cause actual results to differ. For details, please refer to our press release and Form 10-Q and our other SEC filings. We'll also discuss non-GAAP measures like adjusted EBITDA with reconciliations available in our press release and Form 10-Q. With that, I'm pleased to turn the call over to Dr. Tom Vo, our Founder and CEO. Dr. Vo, the floor is yours.

Thank you, Jen, and good morning, everyone. I am pleased to report Nutex Health's second and third quarter 2025 results, which reflect continued momentum following a strong 2024 and first quarter of this year. Our commitment to accessible, high-quality patient-centered care remains the foundation of our growth and operational stability. We have completed the restatement of 2024 and first quarter of 2025 with only minor adjustments that did not materially impact revenue, adjusted EBITDA or cash positions.

Jon will further provide details. However, with these amendments finalized, our financials now benefit from independent verification by 2 PCAOB audit firms. Having completed a full year audit for 2024, we expect the 2025 audit process to be significantly more efficient.

Operationally, Q3 2025 shows steady progress with total patient visits reaching 46,232, an 11% increase from 41,668 in Q3 of 2024. Financially, revenue reached $267.8 million, up $240 million from Q3 2024. Adjusted EBITDA grew to $98.5 million from $9.7 million, and net income was $55.4 million compared to an $8.8 million loss of last year.

Our balance sheet remains strong with cash increasing to $166 million from $40.6 million at year-end 2024 and operating cash flow through the first 3 quarters totaling $177.8 million versus $23 million in the prior year. Our long-term debt remains low at $25.6 million. These results reflect our focus on increasing patient volume, expanding inpatient services, optimizing cost and improving revenue cycle management.

Looking ahead, we are well positioned for 2026 and beyond. We remain on track to open 3 new hospitals in 2025. Red River opened last week and Houston and St. Louis are both scheduled to be opened by year-end. Our 2026 pipeline includes 3 to 4 hospitals with planning already underway for new hospital openings in 2027 and 2028.

To provide a little bit more context for Jon's discussion on the share earn-outs, I'd like to give a brief history on Nutex Health. We have evolved through 3 distinct phases since 2011. The initial growth as a freestanding ER management company where we were instrumental in the opening of 23 freestanding ERs, of which 7 were later converted into micro hospitals.

Note that Nutex did not have any equity ownership in these early ERs. The second phase began in 2027 when Nutex expanded into micro hospitals and where we opened 14 hospitals as a managed company, again, without any equity ownership in any of these hospitals.

In 2022, we successfully consolidated 21 hospitals and hospital outpatient departments to transform into a publicly traded company through a share exchange program, where former hospital owners exchanged the hospital shares for Nutex shares. In addition to the 21 facilities at merger, there were 17 additional hospitals that were under development as of 2022.

These underdevelopment hospitals were given the same considerations as the open hospital and have the right to roll their local shares up to Nutex shares at the conclusion of their second year anniversary. Note that all new future hospitals that began development after April 2022 will not and did not have the share exchange option.

Jon will also explain this in more details later. Today, Nutex Health owns and operates 25 locations across 11 states, over 15 facilities in the pipeline under development. Building micro hospitals require significant capital, regulatory expertise and operational discipline, creating a very high barrier to entry. This is one reason why our model is very unique in the marketplace and why we have so much demand around the country to develop and operate these hospitals.

Despite these challenges, we have maintained a strong track record of growth and profitability with physician retention exceeding 95%. Our facilities have improved the lives of hundreds of physicians, thousands of health care workers and hundreds of thousands of patients.

Integrity and resilience define us, and we will continue to adapt and thrive amid changing conditions. I am extremely proud of everything that we have accomplished in the past 4 years, and we look forward to building on this success for years to come. I will now turn the call over to Jon Bates, our CFO. Jon?

Thank you, Tom, and good morning, everyone. I'm happy to present Nutex Health's financial performance for the periods, including the full year of 2024 with the restated 10-K/A that we filed on Tuesday, November 18, the first quarter of 2025 with the restated 10-Q/A filed on Tuesday, November 18 as well, the second quarter of 2025 with the 10-Q filed on Tuesday, November 18; and then finally, the third quarter of 2025 with the 10-Q that we filed on Wednesday, November 19, with the completion of these filings bringing us into full compliance with NASDAQ.

First, we will discuss the full year of 2024. The good news with this filing is that the changes from the original ‘24 10-K filed were noncash in nature with most of all the changes being just reclassifications within the balance sheet. To highlight those, the major balance sheet accounts that were affected by these noncash adjustments were: number one, we corrected the reclassification of noncash stock compensation obligations totaling $16.4 million related to under construction and ramping hospitals from equity to liability.

And we reclassified related party accounts payable balances of $3.5 million from liabilities to equity. Third, we reclassified $2.9 million of restricted balances out of cash and cash equivalents and into short-term investments. And finally, number four, we increased accrued income taxes by $0.5 million.

When compared to the previously issued financial statements, the changes resulted in an overall increase to liabilities of $13.4 million, a decrease in equity of same amount, $13.4 million and a very nominal increase in net income of $0.5 million. These adjustments, as noted before, were noncash in nature, had no material effect on key metrics, including revenue, liquidity, short- and long-term debt, operating cash flow, adjusted EBITDA or number of patients as of and for the periods presented therein and had an immaterial impact on net income.

As we mentioned when this restatement work began, we believe there was no fundamental impact to the operations of the business. And after completing the work, we confirm that belief. You can see that the 2024 year was a record year for the company with 93.8% revenue growth, adjusted EBITDA of $124.1 million and a 464.4% increase in gross profit, which laid a really strong foundation for what we will discuss shortly for each of the first 3 quarters of 2025.

So next, we'll go through the first quarter of 2025 relatively briefly as well. Like discussed previously for the 2024 period, the changes from the original 10-Q that was filed were again noncash in nature and had no fundamental impact to the operations of the business.

But the major change -- major balance sheet accounts that were affected by these noncash adjustments for the first quarter of '24 -- excuse me, first quarter of '25 were, number one is, we corrected the classification of noncash stock compensation obligations totaling $20.7 million related to under construction and ramping hospitals from equity to liability, just like we did in 2024.

Similarly, number two, we reclassified related party accounts payable of $3.5 million from liabilities to equity, which was the same exact line item in the '24 work above. We were just carrying it forward into this period. Third item was the reclassification of $2.9 million of restricted balances out of cash and cash equivalents into short-term investments.

Again, same exact item in 2024 that we were just carrying forward into this period. And then the last item was we increased the accrued income tax expense by $2.4 million. So when compared to the previously issued financial statements, the changes resulted in an overall net increase to liabilities of $19.6 million and with a similar decrease to equity of $19.6 million and an increase in net income of $6.6 million.

These adjustments were noncash in nature, had no material effect on key metrics, including revenue, liquidity, short- and long-term debt, operating cash flow, adjusted EBITDA or number of patients as of and for the periods presented therein and included a small positive impact on net income.

As we mentioned when this restatement work began, just like in 2024, we believe there was no fundamental impact to the operations of the business and after completing the work, we confirmed that belief.

Therefore, we aren't going to spend much more time discussing the first quarter of '25 as it was materially the same as originally reported with a solid net income attributable to Nutex of $21.2 million, a record high gross profit of 55.9% in the quarter, a record high $51 million in net cash from operating activities and a record high cash balance of $84.7 million at the end of the quarter.

So now let's discuss the key financial metrics for the second quarter and year-to-date June '25 period versus the same period in '24, and then we'll follow that with a discussion of the third quarter and year-to-date December '25 period versus the same period in '24.

Highlighting percentage changes across revenue, adjusted EBITDA, net income, EPS and other indicators, all that were detailed in our Form 10-Q for the quarter ended June '25 filed on November 18 and our 10-Q for the third quarter ended September 30, 2025, filed on November 19.

So to start, we're going to start on the second quarter of June '25 and compare that to the second quarter period in 2024. So for the second quarter of 2025, total revenue grew 217.5% or $167.9 million to $244 million versus $76.1 million for the same period in 2024.

Of the revenue increase, mature hospitals, which are hospitals that were opened prior to December 31, 2021, and therefore, provided 2 full years of comparative results, increased their revenue by 203% for the second quarter of '25 versus a similar period for '24.

For the Hospital Division visits, we saw growth as well during the quarter as they increased by 10.6% or 4,365 visits to 45,573 visits in the second quarter of '25 versus 41,208 visits in the same period in 2024, with mature hospitals growing at 0.6% in the second quarter 2024 versus second quarter of [Technical Difficulty] excuse me, in the second quarter '25 versus second quarter of '24.

Additionally, Population Health division had a revenue reduction of [Technical Difficulty] million to $7.7 million in the second quarter of '25 from $8.5 million in the similar period in '24 due mostly to the divestiture of one small entity within the division in the third quarter of 2024.

Now we discussed the growth in the hospital revenue and visits that we've seen in the second quarter of '25. Now, let's discuss the facility. What was that? Okay. So we discussed the growth in the hospital revenue and visits we have seen in the second quarter of 2025. Now let's discuss the overall facility and cost structure and improvements in that area.

Total facility level operating costs and expenses represented only 48.8% or $119 million of total revenue for the second quarter of '25 versus 70.3% or $53.5 million for the same period in '24. As a result of the revenue and facility cost improvement, our 2025 second quarter gross profit was $124.9 million or 51.2% of total revenue as compared to $22.6 million or 29.7% of revenue in the 2024 period. It's a 454% improvement in the second quarter of 2025 versus the second quarter of '24.

From a corporate cost -- corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the second quarter of 2025 decreased to 5.1% compared to 14% for the second quarter of 2024. Now additionally, on our second quarter 2025 income statement, you will see a line item for stock-based compensation, the amount for the second quarter of '25 being [Technical Difficulty] In that note, we explained the impact of hospitals subject to the contribution agreement as Tom indicated earlier before.

In connection with the merger on April 1, 2022, Nutex [Technical Difficulty] entered into certain contribution agreements with holders of equity interest of [Technical Difficulty] and affiliates. These agreements [Technical Difficulty] to contribute certain equity interest in subsidiaries to Holdco in exchange for equity interest in Holdco. Included in these transactions were [Technical Difficulty] at the time of merger.

Excuse me, Jon, your line is breaking up.

Okay. Are you able to hear now or not?

Yes. Please continue.

Okay. So as we were talking about those 17 subsidiaries considered to be under construction at the time of the merger, the under construction hospitals are hospitals that at the time of the merger had not started accepting patients and did not have any operating results to serve as a basis for valuation.

So once these hospitals have opened for 2 full years, which we note is the measurement period, the equity holders of these hospitals are eligible to receive a onetime additional issuance of common company common stock based upon the earnings of the hospital in the second year of their operations.

So of the 17 under construction hospitals, 6 hospitals had measurement periods that ended on or before June 30, 2025, 4 of those hospitals had measurement periods that end after June of '25, and there were 3 hospitals with no defined measurement period as the 3 hospitals had not opened as of June 30.

The remaining 4 hospitals have no measurement period as their hospital development plans have been abandoned. So for the second quarter of 2025, the former equity holders of 2 hospitals are to receive an additional issuance of 602,798 common stock shares based on the trailing 12 months results of the hospitals at the end of their measurement periods.

With 4 of these hospitals in their measurement period currently, we are accruing for the stock issuance for each in current liabilities. And in the second quarter of 2025, that accrual amounted to $24.2 million that will be trued up each quarter until we get to the end of year 2 for each hospital, at which time a final calculation will be done and payment will be made 100% in company stock and recorded as noncash stock expense, comp expense.

So let's talk about operating income real quick. So operating income, including the negative impact of the $78.7 million in noncash stock-based compensation for the second quarter of 2025 was $33.7 million compared to $5.3 million in the second quarter of '24, representing a $28.4 million improvement quarter-over-quarter.

Net loss attributable to Nutex was $17.7 million for the second quarter of '25, which included the negative impact of the $78.7 million of noncash stock comp expense noted previously. The comparative net loss attributable to Nutex was $0.4 million for the second quarter of '24, showing a $17.3 million decrease period-over-period.

From an earnings per share perspective, our diluted EPS for the second quarter of 2025 was a loss of $2.95 a share compared to a loss of $0.07 a share in the second quarter of 2024. Adjusted EBITDA attributable to Nutex, which increased $64 million from $6.8 million in the second quarter of 2024 to $71.6 million in the second quarter of 2025. So now we finished the second quarter -- let's move -- the second quarter of 2025, we'll do the 6 months ending June of '25 compared to the 6 months of '24.

Total revenue for the first 6 months of ' 25 grew by 218% or $312 million to $455 million versus $143.5 million for the first 6 months of '24. Of the total revenue increase, mature hospitals increased revenue by 195.2% for the first 6 months of '25 versus the same period in '24.

Hospital Division visits saw a similar growth as they increased by 15.5% or 12,566 visits to 93,842 visits in the first 6 months of '25 versus 81,276 visits in the same period in '24, with mature hospital visits growing at 15.5% in the 6 months ended June versus the same period in 2024.

Additionally, the Population Health division had increased -- had a revenue decrease by 2% to $15.5 million in the first 6 months of '25 from $15.9 million in the first 6 months of '24. From a facility and corporate cost perspective, it also showed improvement for the first 6 months of '25 relative to the same period in '24.

Total facility level operating costs and expenses represented 46.6% or $212.5 million of total revenue for the 6 months ended June of '25 versus 77.2% or $110.8 million for the same period in '24, which is a decrease of 30.6%. The gross profit for the 6 months ended June of '25 was $243 million or $53.4 million of total revenue as compared to $32.7 million or 22.8% of total revenue in the same period in '24.

A $210 million increase for the 6 months ended June of '25 for the same 6 months of '24. From a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the 6 months ended '25 decreased to 4.9% or $22.5 million from 13.5% or $19.3 million for the same period in '24.

Operating income for the 6 months ended June of '25 was $114 million compared to $6.7 million for the 6 months ended June of '24, and net income attributable to Nutex Inc., improved by $4.2 million from a loss of $0.7 million for the 6 months of '24 to income of $3.5 million in the first 6 months of '25. And adjusted EBITDA attributable to Nutex increased $138 million or 2,144% from $6.4 million in the first 6 months of '24, up to $144.4 million in the first 6 months of '25.

Now lastly, let's go on to the results for the third quarter ended September 30 of '25 and compare those results to the third quarter of 2024. For the third quarter of 2025, our total revenue grew 240% or $189 million to $267 million versus $78.8 million for the third quarter of '24. The Hospital Division drove most of this growth, generating $260.2 million, up 262.8% from $71.1 million for the same quarter in 2024. Now of the total revenue increase, mature hospitals, which are hospitals that were opened prior to December 31, 2021 and therefore, provided 2 full years of comparative results, increased their revenue by 208.9% for the third quarter of '25 for the same quarter in '24.

Excuse me, Jon. Sorry, Jon, your line is distorting again.

Okay. Is that better or not right now? Can you hear me?

No, it's still breaking up.

Okay. All right. Let’s see. Tell me if that’s any better at this point.

No.

Okay. I can continue if you’d like, or would you like me to hold off? I’m not able to hear anything right now.

No. Sorry, Jon, we still can't hear you.

So I can attempt to call back. Can you hear me better now?

Yes, you're clear now.

All right. Is that better now?

Yes, it is.

Can you hear me now? Okay. So I'll continue from here and tell me if you can't hear me. So we were just talking about of the total revenue increase, this is in the third quarter of -- I'll start back over for the third quarter. So for the third quarter of 2025, our total revenue grew 240% or $189 million to $267.8 million versus the $78.8 million for the third quarter of '24. The Hospital Division drove most of this growth, generating $260.2 million, up 262.8% from $71.7 million for the same quarter in '24.

Of the total revenue increase, mature hospitals, which are hospitals are opened prior to December 31, 2021, increased their revenue by 208.9% for the third quarter of '25 versus the third quarter of '24. Of the $260.2 million in hospital revenue, $182.1 million or approximately 70% related to a combination of both higher acuity claims as well as success in the dispute resolution process.

With regard to arbitration-related revenue, due to the continued payment from payers, we have continued to submit between 60% to 70% of our business through the IDR process. And we have [Technical Difficulty] on over 85% of the claims submitted.

Excuse me, Jon, sorry, again, it happened again. Should I hand – should I just let Tom -- I hand it back to Tom.

Yes. Why don't you hand it back to Tom at this point and move from there.

Okay. Dr. Vo?

Apologize about technical difficulties. You hear me okay?

Yes.

Okay. Perfect. Okay. I think Jon was talking about the -- let's see here.

So Tom, we were talking about the -- can you hear me at all, the third quarter of '25. Were you able to hear that at all or not?

Yes, we heard a little bit. We can hear you now, Jon, but I'm not sure what happened there. Go ahead, Jon.

Yes, I'll try to log back. I'll try to call back in through my cell phone and see if maybe that works better. Okay? Give me one second.

Apologize, everyone.

And again, ladies and gentlemen, thank you for your patience as we work through the technical difficulties. We will resume again shortly.

Are you there? Can you hear me or not? Do you hear me okay?

Yes.

All right. So I'm back. I'm going to start back over again with this last piece. Can you hear me okay? Tom, is it able to be heard?

Okay.

All right. I'm almost done.

You can go over the stock-based compensation expense because we can’t hear you at that and for the second quarter [indiscernible].

So Tom, are you ready for me to continue?

Yes.

Can you hear me okay? Okay. I'm going to continue right now. You let me know if it's -- if you can hear me okay. All right. So I'm going to finish with the third quarter. We were talking about just on the revenue side, we're talking about on revenue of the $260.2 million in hospital revenue, $182.1 million or 70% related to the combination of both higher acuity claims as well as success through the IDR process.

And with regard to the arbitration-related revenue, due to the continued underpayment from payers, we have continued to submit between 60% to 70% of our business through the IDR process. And we have won a legal determination on over 85% of the claims submitted, and we currently have an average collection rate of over 80% of the legal determination wins. Arbitration costs approximate between 24% to 26% of the arbitration revenue.

Now for Hospital Division visits, we saw growth as well during the quarter as they increased 11% or 4,564 visits to 46,232 visits in the third quarter of '25 versus 41,668 visits in the same period in '24, while mature hospitals increased by 0.6% in the third quarter or decreased by 0.6% in the third quarter of 2025 versus the third quarter of '24.

Additionally, the Population Health division had a revenue increase of $0.5 million to $7.6 million in the third quarter of '25 from $7.1 million in the similar period in '24. So we discussed the growth in the hospital revenue visits that we've seen in the third quarter of '25.

Now let's discuss the overall facility and cost structure and improvements in that area. Total facility level operating costs and expenses represented only 42.2% or $112.9 million of total revenue for the third quarter of '25 versus 72.2% or 56.9% for the same period in '24. As a result of the revenue and facility cost improvement, our 2025 third quarter gross profit was $154.9 million or 57.8% of total revenue as compared to $21.9 million or 27.8% of total revenue in '24, which was a 606.7% improvement in the third quarter of '25 versus the third quarter of '24.

And from a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the third quarter of '25 decreased to 4.2% compared to 12.5% for the same period in 2024. And so similar to what we talked about in the second quarter, on the third quarter income statement, you're going to see that same stock-based comp line item with the amounts for the third quarter of 2025 being $13.2 million.

And most of that expense is explained in the third quarter of 2025 10-Q, again, within Note 11. So I'm not going to read through all the specifics on it. But what I wanted to highlight was, remember, we had talked about of the 17 under construction hospitals that we started with currently as the end of September, 7 hospitals had measurement periods that had ended on or before September 30 of '25, 3 hospitals had measurement periods that end after September 30 of '25.

And there are 3 hospitals with no defined measurement periods as the 3 hospitals have not opened yet as of September 30, then the remaining 4 hospitals out of that 17 have no measurement period as their hospital development plans had been abandoned.

So for the third quarter of '25, the former equity holders of hospital are to receive an additional issuance of 307,700 shares based on the trailing 12 months results of the hospitals at the end of their measurement period. With 3 of these hospitals in their measurement period currently, we are accruing for the stock issuance for each in our current liabilities.

And in the third quarter of 2025, that accrual amounted to $11.2 million that will be trued up each quarter until we get to the end of the year 2 for each hospital at which time a final calculation will be done and payment will be made 100% in company stock and recorded as a noncash stock comp expense.

Now with related to operating income for the quarter, including the negative impact of $13 million of noncash non-stock-based compensation expense for the third quarter was $130.4 million compared to $9.7 million in the third quarter of '24, representing a $120.7 million improvement quarter-over-quarter.

So net income attributable to Nutex Health was $55.4 million for the third quarter of '25, including the negative impact of the $13.2 million noncash stock-based compensation expense noted previously. The comparative net loss attributable to Nutex Inc. was $8.8 million for the third quarter of '24, showing a $64.2 million increase period-over-period.

From an earnings per share perspective, our diluted EPS for the third quarter was $7.76 a share compared to a loss of $1.72 per share in the third quarter of '24, which is a $9.48 per share increase period-to-period. And lastly, related to adjusted EBITDA attributed to Nutex, it increased $88.9 million from $9.7 million in the third quarter of '24 to $98.5 million in the third quarter of '25.

And now as the last item to discuss is going to be the 9 months of September 30, 2025 compared to the same 9 months ended September 30, 2024. And total revenue for the 9 months of '25 grew by 225% or $501.2 million to $723.6 million versus $222.3 million for the first 9 months of '24. The Hospital Division drove most of this growth, generating $700.5 million, up 251.4% from $199.4 million for the same period in '24.

So of the total revenue increase, mature hospitals increased their revenue by 200% for the first 9 months of '25 versus the same period in '24. So of the $700 million in hospital revenue, $462.9 million or approximately 66.1% related to a combination of both higher acuity as well as success through the independent dispute resolution process. And with regard to the arbitration-related costs, similar results that we discussed in the quarter. Due to the continual underpayment from payers, we have continued to submit between 60% to 70% of our visits through the IDR process.

We have won legal determinations in over 85% of the claims, and we have an average collection rate of over 80% on those legal determination wins. Again, arbitration costs approximate somewhere in the 24% to 26% of that revenue. When it comes to visits, Hospital Division visits saw similar growth as they increased by 13.9% or 17,130 visits to 140,074 visits in the first 9 months of '25 versus 122,944 visits in the same period of '24, with mature hospital visits growing at 1.8% in the 9 months ended September 2025 versus the same period in 2024.

Population Health had revenue increased by 1% to $23.1 million in the first 9 months of '25 from $23 million in the first 9 months of '24. Facility and corporate level costs continued to show improvement in the first 9 months of '25 compared to the same period in '24. And you look at total facility level operating costs represented about 45% or $325.4 million of total revenue for the 9 months ended September '25 versus 75.4% or $167.7 million for the same period in 2024, which was a decrease of 30.4%.

The gross profit for the 9 months ended September '25 was $398.1 million or 55% of revenue as compared to $54.6 million or 24.6% of revenue in the same period in '24, which was a $343 million increase for the 9 months of '25 versus same period in '24. From a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the 9 months ended September of '25 decreased to 4.7% or $33.8 million from 13.1% or 29.2% for the same period in '24.

Operating income for the 9 months ended September 30 of '25 was $244.7 million compared to $16.4 million in the same -- in the 9 months of '24. And net income attributable to Nutex improved by $68.5 million from a loss of $9.5 million for the first 9 months of '24 to income of $59 million in the first 9 months of '25. And adjusted EBITDA attributable to Nutex increased $226.9 million or over 1,400% from $16.1 million in the first 9 months of 2024 to $243 million in the first 9 months of 2025.

Finally, our balance sheet remains very strong with cash and cash equivalents at September 30, 2025, at a record high of $166 million, up $125.4 million from $40.6 million as of the end of 2024. Our continued success with the collection efforts related to the independent dispute resolution process is allowing us to get paid more fairly for the services we provide and was a big part of this process.

With regard to accounts receivable, our balance at September 30 was $387.4 million, an increase of $155 million from the $232.4 million at the end of December. With regard to cash flow, Net cash from operating activities was very strong at $177.7 million for the 9 months of 2025, which was an increase of $154.6 million from the same period in 2024.

And then on the liability side of our balance sheet, total bank or equity type debt increased by $7.7 million to $49.1 million as of September 30 from $41.4 million at December 31, 2024, with the majority of this debt relating to items like equipment loans from our hospitals for MRIs, x-rays, ultrasound and CT machines.

Outside of this $40-plus million of bank type debt, the only other items materially that look like debt on the balance sheet are the liabilities related to financing and operating lease liabilities, which are just future lease payments due to landlords on our hospital facilities. We've discussed these in the past, so I'm not going to belabor this now, but I will say that most investors and analysts don't view these right-of-use liabilities as real operating debt. So I wanted to clarify that for you.

With all of this said, our balance sheet remains very solid, and we continue to strengthen it with our positive operating performance. And our current financial position has put us in a very great spot to be able to execute on all of our initiatives in our 2025 operating plan, including the opening of the 3 new hospitals later this year, as Tom mentioned earlier. With that said, I apologize for any of the technical difficulties today, but I'm now going to turn it over to Warren Hosseinion, our President.

Thank you, Jon, and good morning, everyone. Thank you for joining us today. I'm pleased to provide an update on Nutex Health Population Health division, which supports our commitment to value-based care. As a reminder, our overarching strategy at Nutex Health is to build an integrated health care delivery system combining hospitals and medical groups, also referred to as IPAs. Our IPAs are comprised of networks of primary care physicians and specialists located around our facilities.

The IPAs enroll patients from different health plans and are responsible for the total care of these patients. By combining hospitals and IPAs, we believe we will be able to deliver care that is coordinated, cost-effective and with better outcomes for our patients. Our IPAs would send patients to our hospitals and our hospitals would deliver more efficient and cost-effective care, reducing the medical loss ratios in our IPAs.

This is a long-term strategy that will take several years to bear fruit, but we are in this for the long run at Nutex Health. One thing we would like to note is that the physicians in our IPAs can refer their non-IPA patients to our emergency rooms as well, and we are already starting to see this in Phoenix.

We currently have over 40,000 patients enrolled in our IPAs in various risk-based arrangements. Of note, I am happy to report that we now have more than 1,900 Medicare Advantage members in our Houston Physicians IPA. In Phoenix, we now have over 30 primary care physicians and a robust specialist network.

Phoenix is now currently in its first Medicare annual enrollment period, and we will find out soon how many patients we have enrolled. Our IPA in Los Angeles is still very profitable. Houston is now profitable as well, and Florida continues to be profitable. Margins continue to be moderated by ongoing investments in our new markets such as Phoenix and Dallas and soon San Antonio. With that, I will now turn it over to Wes Bamburg, our Chief Operating Officer.

Thank you, Warren, and good morning, everyone. I'm pleased to share the company's operational results, which demonstrate our ability to deliver high-quality care while achieving steady growth in service line development.

As previously reported, our overall visits increased by 13.9% in the first 9 months of 2025 compared to the same period in 2024, and our mature hospital visits increased by 1.8% in the first 9 months of 2025 versus the same time period in 2024. Our continued growth reflects the successful execution of our core model.

Specifically, this success is powered by our leadership team's focus on our key strategic growth objectives, increasing overall volume, developing new service lines and expanding our observation and inpatient services to safely manage more complex patient needs.

By leveraging our efficient operating model, we achieved superior patient outcomes and satisfaction, fueling our continued growth. Having joined Nutex Health in early October and with over 20 years of experience working across the largest publicly traded health care companies in the U.S., I have developed a comprehensive understanding of the critical elements required for sustained outperformance in the industry. My initial observations confirm that Nutex possesses the fundamental strengths necessary to thrive in this evolving landscape.

With a sound operational model, financial discipline and uncompromising patient-centered philosophy, Nutex is exceptionally well positioned for the future. These positive attributes are the key elements that will allow us to navigate industry challenges, expand our market share and continue to serve as a trusted high-value provider for the communities we support. I am confident that our best years of strategic growth and value creation lie ahead. Thank you, and back to you, Jen.

Thank you, Wes, and thank you to Tom, Jon and Warren for those updates. We'll now move to the Q&A section. Operator, please provide instructions for our callers.

[Operator Instructions] And the first question comes from the line of Anthony Vendetti with Maxim Group.

Maybe just -- I'll start with just a high-level question and then ask you a little bit about what happened at Red River Micro Hospital, why was it closed? And I saw you just recently reopened it. Maybe just talk about the process there? And then just in terms of the relationships you have with the 25 facilities now that you have open in 11 states. If you could just, maybe, Tom, provide like an overview of how you contract with the physicians.

I know I think Jon mentioned on the call after the first year, they get an equity stake. Are they all pretty much follow the same template in terms of how you negotiate with the physicians that staff that hospital? Are there targets they need to reach to get that equity stake? Maybe just talk about that high level and then just talk about the situation at Red River.

Great. Thank you very much, Anthony, for that question. So I'll tackle the first question with Red River. So yes, you're correct. Red River was one of the 21 hospitals that came with us when we merged. However, if you remember in 2020, that was a relatively tough year for us with the introduction of the No Surprises Act, which resulted in a roughly 35% reduction in revenue. And because of the reduction in revenue at that time, Red River was not in a position to be profitable.

And in fact, it sustained operating losses, and so subsequently, we had to close down Red River in addition to 4 other hospitals in 2020. Now that our reimbursement environment is better with arbitration, and on top of that, Sherman, as a town, has grown quite a bit in the past 2 years. There have been multiple IT companies moving in there. As an example, just right down the street from us, there is a company that is making chips.

Not the chips, but they make the waffles that the chip sits on. Lots of economic development, a lot of new employers moving in. A combination of that and better reimbursement, we just felt that it was time to reopen the hospital. Does that answer your question, Anthony?

And in terms of just maybe just a follow-up to that on the physicians. So the physician group that you contracted with when you reopened that hospital, is that a new group? Did you -- how did that come about?

Okay. Can you hear me okay?

You cut out just a little bit, Tom, but go ahead.

Okay. I’m sorry about that. In any event, so yes, the physician group is a brand new group, not the old group that was running it before. And the way that we’ve structured this is that Nutex Health owns 70%, the physician group owns 30%, and we also structured a physician staffing service contract with the physicians to essentially run the hospital and staff the hospital with us.

And so when we rolled up our hospitals, Nutex Health owned an average of 80% of the hospitals. The minority shareholders owned roughly 20%. This model is very consistent with our previous structures that we contracted with the physicians.

Okay. Does that sort of answer my second part of the question. Is this the template for most of the other micro hospitals or are there some situations where that template is different depending on the state that you’re in?

Excuse me. Pardon me, Anthony, but I think Tom disconnected real quick. One moment. We’ll be right back.

Anthony, can you hear me okay? This is Jon.

Jon, I can hear you fine. Yes, totally clear.

Yes. So I think the answer to your last question is the structure is very similar. There's no material differences in the structure. In fact, so there's not a lot that you would expect to change state by state. I mean, certainly, there's different relationships with some of the doctor groups in general. But across the board, there's not really a major change or differentiator because of a certain state when we open these up.

So -- and there's a lot that's improved and changed, as Tom indicated at the Sherman location, both with the companies that are building in and of around it and just the whole structure and the way where Nutex is now versus where it was a couple of years ago. So there's a lot of positives that support the concept for reopening it, and we're pretty excited about it being opened.

Okay. And then just lastly, Jon, in terms of the structure, like you said, the template is most -- pretty similar across your micro hospitals. Maybe just talk about the incentives the physicians have to get to profitability? Does their equity stake depend on that? Or what metrics does it depend on after like the first year or the second year? Maybe just give a little more color on that, that would be helpful.

So Anthony, are you talking about the non-earn-out type ones? The ones that now are just opening up as in position without the earn-out concept? Is that what you're asking? Or are you asking specifically about those?

Both. If you can talk about the earn-out ones versus the non-earn-out, that would be great.

By the way, Jon, I'm back on. I apologize about that, Anthony. Really bad technical difficulties today. Okay.

Yes, I answered the first part. He's asking now about the structure of the earn-out facilities, how it's different from, say, one like Sherman or something that's opening up. And so Anthony, as I know we've talked about in the past, the earn-outs, which we've described in pretty in detail in the queues. Remember, those are -- we calculate the number of shares at the end of that 2-year period, right, to go through and value what their position would be.

There is in the scenarios, if they have a 20% stake or 30% stake, which is normally the case somewhere in that arrangement, somewhere around that amount, that on the earn-outs, they ultimately resolve themselves at the end of the 2-year period and where that earnings structure is at the same multiple, of course, that the original companies when the company went public back in 2022, the same calculator and all that.

That's how they get given their shares based on their defined ownership at the beginning. And so you talk about incentives, certainly, they're incented to do as well as they can, not only in the first 2 years, that's just to get the stock. But they're -- in most scenarios, they're also operators and employees of the facility. So they benefit from working in the facility and seeing the profit from that as well and giving good outcomes, of course. So they're tied in.

In some cases, they have a relationship on the asset entity, which is the private side. Then of course, their employees and owners in the actual hospital side of it. And then they're also, in a lot of cases, tied into the doctor billing side, which the doctor billing side, which we do the billing for them, but the doctors own 100% of that, they have a benefit on that side. So that's for the earn-out ones, right?

And then these others that aren't affiliated with an outrun. I think everything else we just described, I mean, they are -- they have an ownership in that facility. As it becomes profitable, they benefit from that, and they share in the ups and the downs of the corporate group, which is the whole idea.

We want everyone to be lockstep side by side with each other as we grow, and it takes time to do that. And I think we have a great partnership in place, specifically in Sherman, along with all the other facilities as well. I think that's going pretty well. Tom, you can add to that.

Yes. Anthony, so you're right. I think Jon has already hit the nail on the head for most. But for the ones that earn out and receive Nutex's share, in essence, their success is dependent on Nutex success now, so that when the ocean rises, all the boat rise. And so I think that, that is a very nice privilege and for physicians to have because that is very unique in health care.

Not too many companies could offer stocks like that to health care employees. And then on top of that, like Jon said, the physician also has an equity ownership on the professional entity, which is a physician entity. And so the physician makes an hourly wage when they work.

But then if the professional entity is profitable, then they will also be profitable in addition to owning Nutex stock. For the physicians that did not roll up their Nutex shares, then they stay at the local level. And if the facility is profitable, then they get a minority distribution quarterly on top of their potential profitability on the physician side as well as hourly work.

So we treat the physicians very fairly. And as you can see on our financials, we did a fair amount of minority equity distribution in the first 9 months. And then you can see on the minority profit, the physicians also did very well.

The next question comes from the line of Bill Sutherland with The Benchmark Company.

I think I'll just leave it at one question in the interest of time. I'm curious, as this process moves ahead in the IDR process, are you starting to have any different kinds of discussions with some of the payers as far as just wanting to have more productive negotiation talks prior to moving to the claims process?

Yes. Bill, thank you for covering us, and thank you for being on the call. But yes, the answer is yes. Over the past, I would say, 3 to 4 months, we're hearing a lot more from payers to try to negotiate better in-network rate contracts. And we evaluate every single one of them, and we take these very, very seriously. And if the contract is fair and reasonable, we would definitely take it. And so we're in the evaluating all of us. That's right.

And in that -- in the course of doing that, as you move a payer away from realizing these -- the claim wins, will it really result in the same kind of financial impact in terms of the margins on that business?

Yes, I can speak to that, Tom.

Yes, go ahead, Jon.

So the reality -- we'll see, right, as we go through it, it depends on where the price points land. But remember, even when you determine a fair and reasonable payment, which hopefully we will be able to get and avoid having to go through the IDR process, one of the benefits of avoiding it is the fees related to going through it.

So as we're early stage in some of these where we have been able to get a reasonable contract and avoid the necessity of going into the IDR process, so far, the perception is that the net impact when it comes to bottom line should be nominal because of the revenue, in some cases, you'll get similar revenue, maybe slightly less, but very close, but you're removing 24% to 26% of the cost. So it ends up being, I think, in a very similar position. But it's early stage.

And I think as we finish out the year and walk into the first part of next year with all the other activity going on from a regulatory standpoint, I think we'll start to see movement one way or the other, and we're watching it very closely. We're very interested, as Tom indicated, in having contracts if we can because that we all would like to avoid the process of having to go through the time and effort and cost of going through the audit process if we can avoid it.

The next question comes from the line of Carl Byrnes with Northland Capital Markets.

Congratulations on your success and progress. I'm just wondering, now that you've got greater history with respect to the IDR process, what are you thinking in terms of budgeting relative to time line to breakeven on start-ups going forward? And then I have one quick follow-up.

Yes. Carl, it's a great question. Thanks for raising it. So yes, no, there's no doubt that with the movement in the direction of we feel like the requirement to have to go through the IDR process, it's been a very successful process for us. Now it does, as we mentioned before, it takes time to get those dollars in. So it can be anywhere between, say, 5 to 7 months to fully realize and get paid on a claim that does go through the process, you get the first payment within 30 to 60 days and then you have to go through that process.

So the long answer to your short question is the breakeven process is moving up, certainly, but -- and I think we'll continue to watch that closely. But we budget for something taking somewhere between 12 to 15 months normally to get to a breakeven position. It probably shifts easily by a quarter if we continue to be successful in open these up. But remember, it still takes from day 1, 5 to 7 months for those -- the dollars to come in at the fair and reasonable rate.

So as a result, you really can't see it prior to that point if you still end up having to submit 60% to 70% of our claims through the process. So -- but it certainly does improve. And actually, what it gives us probably more is it might be a little bit of an improvement on getting to breakeven, but the bigger impact is on the back end in year 1 and year 2, where you're just -- you're at a more solid, more reasonable, what we would expect level of profitability a little bit sooner on the back end, but you still have to wait probably that first 9 months to a year to get to a breakeven scenario. So hopefully, that helps to answer your question, Carl.

No, great. Excellent. That's very helpful. And then shifting gears a little bit. Are you seeing other opportunities like Homer G. Phillips in St. Louis? And what might we expect over the next 12, 24 months there?

So yes, Carl, are you referencing our St. Louis Hospital, the former Homer H. Phillip hospital?

Exactly, yes.

Yes. So that is on the agenda to be opened this year, and we hope to open either mid or late December. But the strategy is essentially the same, providing the best customer service, providing accessibility care to that population. And the location of where that hospital is, is essentially very close to downtown St. Louis, which is essentially a health care desert. And so we hope to capitalize on that by providing the best care so that people can start using us. Does that answer your question, Carl?

Yes, yes. I'm wondering if there's other opportunities that you've presented with that are similar to that, that could be opportunistic going forward.

Yes. The problem with micro hospitals are that they just don't exist. Or if they do exist, they are located in areas where it is very difficult to make profitable. And so that's why historically, we've had to build these from the ground up. And I think we mentioned this because if a hospital doesn't exist, then Nutex Health does not have a hospital to operate in.

However, there are certain hospitals that are existing out there that we strategically look to acquire. And so yes, we are essentially in the lookout to acquire any of those existing hospitals, assuming that they fit all of our criteria. And so yes, there are opportunities out there, a few and far in between, but you just have to look.

The next question comes from the line of Bradford Seagraves with Northbank Capital Management.

Can you please provide an update on the buyback? How much you've bought and at what price?

Brad, I'm sorry are you talking about buyback -- of the share buyback? Is that what you're asking?

Yes.

Okay. No. At this point, we're in the process of putting that in place. So at this point, no shares have been bought back.

Okay. Understood. And then more broadly, can you talk about capital allocation priorities? The cash is growing on the balance sheet. And curious to see what your thoughts are on what the uses of that cash might be.

Yes, I can start on that, and then Tom can add to it as well. But certainly, the buyback concept that you referenced is something that's we've already announced it. So it's something that we're very serious about. And we'll look at that very, very closely in the very short term.

Certainly, there's opportunities that we try to grow and add good situations when it comes to opening up hospitals. We talked about, yes, from time to time, we can find existing ones that we could potentially spend that money on. So I think that's a big one. And then we'll look at some other opportunities outside of investments for now. So we have -- are there other opportunities to look at service line improvements? There's the IPA business, which Warren talked about as well. So there's opportunities in those areas. So that's kind of the direction that we're looking right now.

And we'll watch as we finish out the year to see cash continues to be strong and look for some of those situations to pop up and make good decisions on where we spend that money.

Yes. So to answer your question, Brad, excellent question, by the way. And this is definitely a good problem to have. But in essence, we are -- well, the cash buyback program, as mentioned. And we may or may not increase that in the future. That is to be determined.

But on top of that, we are looking hard for existing facilities like Carl brought up to acquire so that we don't have to go through the buildup ground-up process. And then thirdly, as Warren mentioned, we are looking to expand our IPA business so that we could have an IPA surrounding each of the hospital.

And the reason for that really is just a very good symbiotic relationship between the hospital and the IPA business, which once again is very unique in the health care industry. And then fourthly, we would like to invest into our current hospital to expand additional services capabilities. So as an example, I think I mentioned behavioral health. We are investing quite a bit in upgrading our hospitals so that we are -- we can see more behavioral health patients on the medical side as an example.

And so with those types of investments, we have to find specialists. We have to find the correct equipment. We have to find people that are skilled at handling behavioral health as an example. So those are all essentially capital allocations that we have currently. I'm sure there will be more need for capital allocation in the future, but those are basically the existing ones that we have at this point. Does that answer your question, Brad?

Yes. And last one for me. Can you talk about the inpatient utilization, where it was a year ago, where it is today and where you think it can go over the next 12 to 24 months?

Yes, absolutely. Over the past actually 2 years, we have begun a push to admit more patients into our own hospital. And this is not an easy process or a straightforward process because in order to get more patients admitted, we need specialists. We need hospitalists. We need people that could take care of patients in the hospital.

And so over the past 2 years, we've been relatively successful at ramping more patients into our hospital and not have to transfer them out to other hospitals. And so we're doing very well from that standpoint. And as you can see from the revenue, that partly explains why the revenue has increased substantially more than the patient visit. And so that's one variable and one factor. But for now, as of today, I would say that we're only at roughly 25% to 30% inpatient capacity. And as we increase more, that number will only get better.

And we have a system-wide initiative to admit as many patients as we can to our hospital so that we don't -- these patients don't need to go up to other hospitals. And in fact, patients really love to stay at our hospital. none of them want to be transferred to other big system hospitals because the care that they receive at our hospital is probably superior and second to none.

But unfortunately, sometimes we just don't have the expertise and the specialists to take care of these patients. And that's why we have to transfer them out. But if we can keep them in our hospital, we will definitely do that.

The next question comes from the line of Gene Mannheimer with Freedom Capital Markets.

A lot to digest here. Congrats on getting the numbers current. I wanted to just -- I think that last question segues well into the revenue per visit being up so much. It sounds like you're not breaking out the arbitration revenue this quarter specifically. What is the reason for that? And maybe you can share at a minimum, was it similar to last quarter or greater or less than Q2?

Yes, I can speak to that. I mean, we don't -- we're not breaking that specifically out because it's really part of our business now is the main reason. So comparatively, I think you've seen period to period to period, an improvement there. So it's of a similar nature. I know that we talked about how, if you remember back in the first quarter when the collection percentages play into this, too. So that we only were seeing -- it was early in the process at the end of the year and into the first quarter where the collection percentages were new. And so we're only in the 70-ish percent range.

And now we've worked our way up into the 80% range. So some of that revenue is just the natural progression of going back and realizing, okay, instead of 70% or 75%, which we were seeing kind of in the middle -- early middle part of the year. Now we're at 80%. So the collection percentage is a decent amount of that uptick, which is a little bit of a cumulative impact going back and addressing that as realization continues to improve. So -- but in the revenue discussion, we talk about how much of our revenue within the quarter and the year related to the IDR process. So that's kind of the direction we plan to go with that.

So outside of that, I don't -- I think it's -- we'll watch it closely and see if we can get more detail. We're more than happy to provide it. But I think we've been pretty transparent on that piece, at least the last couple of quarters now. And I think today earlier, and you saw in the releases a discussion about the piece of our revenue that relates to that. So we'll watch that closely and continue to work it from there.

That's helpful, Jon. Appreciate it. And just going back to that inpatient utilization. So -- I think, Tom, you're saying your occupancy is now about 25% to 30% across all your hospitals. How does that compare to, say, 2 years ago?

Two years ago, it was a lot less than that, Gene, unfortunately. And I think partly because of the reduction in revenue back in 2022, we started this initiative. And so now this initiative is a part of our normal operating procedure now. And we hope to grow that inpatient volume to be much higher than that over the next few years.

That's excellent. Okay. And one more statistic I want to just mention. The -- it sounds like the mature hospitals visits decreased by about 0.5%. Normally, I mean, I think we'd want to see that marginally higher. Can you -- was there anything to call out that led to a decrease year-over-year?

Yes. We're scratching our head on that also, Gene. Nothing materially has changed in terms of operations. Our business development, marketing, physician outreach, physician care, everything is pretty much the same. The only thing that potentially could have occurred this year versus last year was that there was a COVID spike last year around late summer, whereas we're not seeing quite a high COVID spike this year.

That may have been it, I'm not sure. But yes, it's a head scratcher for sure. But we're definitely going to continue to watch it and definitely going to focus on that. so that we could continue the growth quarter-over-quarter.

Okay. That makes a lot of sense. Okay. And last question, with respect to stock-based comp, obviously, a lot of discussion around that. In terms of modeling that going forward, I realize there are a number of factors to consider. But that Q3 number was relatively low. Is that the right way to think about it going forward? Or could we continue to see some big swings there?

Yes. I mean, I would say, Gene, great question. First of all, I think we're definitely through the big portion of all the earn-outs. We only have a few left as we described in the queue. And I think you're referencing in the table that we've provided in Note 11, where it talks about the 3 that are currently open and in the period where they can be calculated that run through kind of the deadline.

And I think that the way that calculation is done, which is all we can do is use the data that we have so far with some level of a projection on that. And if they continue to move in the direction or similar to what the others have done, it should be better than that. But we didn't want to be in a position to assume that at this point.

So I think the numbers you have there are certainly ones that you can use from a projection standpoint, and we are optimistic that maybe we can do better in that case. And they have a long -- a decent amount of period in all 3 cases left before they get to the final stage, I believe one is -- the earliest one is the end of the first quarter of next year.

And so that's still another 6 months of going into prime time kind of maturity stage and then the other 2 that are out there all the way until the end of next year. So they're very, very early stage. So I think it should improve from where you see it right now.

This concludes the question-and-answer session. And I'll hand the call back over to Jennifer Rodriguez for closing remarks.

Thank you all for those valuable questions and answers. For all those joining us today, if you have more questions, please e-mail us at [email protected], and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our second and third quarter 2025 earnings call, and we apologize for the technical difficulties.

We've covered a lot, and we appreciate your time and interest. A recording of this call will be available on our website for a limited time, so feel free to revisit it. Take care, everyone, and we look forward to keeping you updated on our journey.

Thank you. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.