Nutex Health Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 25, 2025

Key Takeaways

  • Positive Sentiment:Strong operational results in Q2 2025 with total revenue up 220% YoY to $244 M, gross profit margin at 51.1%, and Adjusted EBITDA of $73.3 M versus $6.8 M last year.
  • Positive Sentiment:Strategy under the No Surprises Act leveraging third-party HaloMD for independent dispute resolution drove 71% of hospital revenue, with an 85% arbitration win rate and over 75% collection rate.
  • Negative Sentiment:Company is addressing a short seller report alleging issues with its arbitration partner HaloMD, but maintains it complies with federal rules and has not been named in insurer lawsuits.
  • Positive Sentiment:The board authorized a $25 M share repurchase program over the next six months to enhance shareholder value.
  • Negative Sentiment:Management delayed filing its Q2 2025 Form 10-Q due to reclassification of certain stock-based compensation obligations to liabilities, expecting a $10–50 M increase in liabilities and amended filings forthcoming.
AI Generated. May Contain Errors.
Earnings Conference Call
Nutex Health Q2 2025
00:00 / 00:00

Transcript Sections

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Operator

Greetings, and welcome to the Newtek Health Shareholders Update Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Vivian Sanders, Corporate Director of Marketing and Business Development. Thank you. You may begin.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

Good morning, everyone, and welcome to Newtek Health Inc. Second Quarter twenty twenty five Company Update Conference Call. I'm Vivian Sanders, 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 and a replay will be available on our website.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

With me today are our key leaders, Doctor. Tom Bo, Chairman and CEO John Bates, Chief Financial Officer Doctor. Lauren Hoszinian, President and Doctor. Mike Chang, Chief Medical Officer. They will provide insights into our financial results, operational progress, clinical quality and strategic direction followed by a Q and A session.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

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 eight ks filed last week and our other SEC filings. These preliminary results being presented today remain subject to the completion of normal quarter end and fiscal end accounting procedures and closing statement adjustments and the quarterly review process conducted by our auditors.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

With that, I'm pleased to turn the call over to Doctor. Tom Vo, our Founder and CEO. Doctor. Vo, the floor is yours.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Thank you, Vivian, and good morning, everyone. I am thrilled to present Newtek Health's preliminary results for the 2025, which build on the strong momentum from our first quarter and reflect our continued execution of a patient first, high quality care model. Our micro hospital approach, combined with strong operational efficiency and effective revenue cycle management, has driven continued robust growth. Me first discuss our operational results. Then John will update everyone with our progress on the audit and interim review of our financials with our new auditor.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Operationally, Q2 twenty twenty five showed strong performance, with total patient visits reaching 45,573, a 10.6 increase from 2024. For the 2025, total patient visits were 93,842, a 15.5% increase from the 2024. Total revenue increased to $244,000,000 for the three months ended 06/30/2025, as compared to total revenue of $76,100,000 for the same period in 2024, an increase of 220%. Gross profit was $124,800,000 or 51.1% of total revenue for the three months ended 06/30/2025, as compared to gross profit of $22,600,000 or 29.7% of total revenue for the same period of 2024. Adjusted EBITDA attributed to Newtek's Health was $73,300,000 as compared to adjusted EBITDA attributed to Newtek's Health of $6,800,000 for the three months ended 06/30/2024.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Net cash from operating activities was $78,200,000 for the six months ended 06/30/2025, compared to $16,300,000 for the same period in 2024. As of sixthirtytwenty twenty five, we had $96,700,000 of cash in the bank. The strong performance was a testament to our strong fundamentals and dedication and collaboration from all the team members here at Newtek's as we strive to fulfill our core mission of providing better access to health care. One driver of our financial success, in addition to strong volume growth and higher patient acuity, is our arbitration strategy under the No Surprises Act independent dispute resolution process. Congress enacted the No Surprises Act, quote, NSA, effective 01/01/2022, to protect patients from surprise medical bills incurred when they receive emergency medical services from out of network health care providers.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Providers bill the insurers directly. And if the insurer doesn't pay or in view of the provider underpays for the medical services provided, the NSA creates the independent dispute resolution or IDR process for unresolved billing disputes between providers and insurers. The patient is not involved in this process, and payment is issued directly to the provider from the insurer. The IVR process safeguards providers by promoting fair reimbursement for payers, helping ensure their continued ability to deliver care. This process, though administrative intensive, is critical for securing fair compensation when insurers do not pay fair and reasonable awards, as is evidenced by the recent governmental data, which shows that during the 2024, 85% of arbitrary awards are in favor of the highest offers submitted by the providers.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

New Text undertakes extensive labor and cost intensive efforts to comply with all applicable laws and regulations in each of the jurisdictions in which it operates, including the eligibility rules in effect at the time a claim is being submitted to federal arbitration. For more information on the NSA and IDR process, please go to our Form eight k filed on 08/22/2025 under term 8.01 and to cms.gov under independent dispute resolution. On 07/01/2024, we engaged HaloMD, a third party expert, to work with us in challenging underpaid out of network claims. HaloMD specializes in independent dispute resolution through the NSA and state regulation for out of network health care providers. Newtek's health determines which claims to submit to arbitration.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Given the complexity of the federal arbitration process and its interaction with state surprise billing laws, it is crucial for for providers like Newtek Health to seek tech enabled expert assistance in the highly complex submission process. This third party expertise, such as that provided by Halo Halo HaloMD, is essential for navigating the the complexity of submission of claims in bifurcated states where either state or federal law may apply, depending on the insurance coverage and services provided. As such, independent federal arbitration is now my necessity and an integral part of our revenue cycle management operating procedure. Next, I'd like to address a few items that were published in a recently highly misleading short seller report revolving around mainly HaloMD and allegations made by large insurers and several lawsuits against HaloMD. We strongly disagree with the allegations in the short seller report.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Further, we believe that the report misrepresents Newtek's business, its claim process and its ability to collect revenue. Further, we believe the short seller completely misunderstands the regulatory framework underpinning the independent federal arbitration system implemented under the No Surprises Act. New Text Health has not been named in any lawsuit filed by Blue Cross Anthem or any other insurer against HaloMD. And New Text Health has no hospital locations in jurisdiction where HaloMD is subject to a radiation initiated by insurers. In a press release issued on 06/04/2025, with respect to the lawsuit filed by Blue Cross Blue Shield of Georgia, HaloMD states that it is prepared to vigorously defend itself in this litigation in a manner that will highlight the lawsuit's meritless nature.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Patient eligibility seemed to have been to have been a large point of contention in the lawsuit, so a few clarifying points related to our situation. Newtek Health undertakes extensive labor and cost intensive effort to comply with all applicable laws and regulations in each of the jurisdiction in which it operates, including the eligibility rules in effect at the time a claim is being submitted to the federal arbitration. The claims process for out of network claims differ from state to state and is highly complex due to mainly the bifurcated nature of many states, which have their own surprise billing rules for fully insured claims and for certain types of providers. Further, there are different rules in each state governing the determination whether individual claims may be bundled or batched when submitting to the certified independent dispute resolution entity. The short seller, extrapolating from the HaloMD lawsuit, which does not apply to Newtek Health, seeks to allege that Newtek Health participate in an intentional flooding of the arbitration system, fraudulently obtains large payment and could be subject to revenue clawback.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

As we have outlined in detail in our Form eight ks filed on August, the eligibility determination for the submission of out of network claims to the federal arbitration process are complex. We believe we meticulously meticulously adhere to the existing rules underlying those eligibility criteria. As further detailed in Form eight ks, according to the data published by CMS, VuTech is part of an industry wide trend, resulting in a large increase in the number of claims submitted for arbitration. During the 2024, providers initiated 1,500,000 disputes, which represents more than 70 times the predicted annual caseload. Of those, 85% were decided in favor of the provider, the higher offer, resulting in a median winning offer of over four times the median in network rate of each insurer.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Contrary to the allegations contained in the in the short seller report, we believe that New Tex Health complies with the federal arbitration rules as currently in effect. With respect to revenue collection, the CMS has recently allowed the reopening of awards made prior to June based purely on narrowly defined clerical, jurisdictional, or procedural errors by the independent federal arbitration entity. Neither insurers nor providers may challenge prior awards based on their own errors or or on substantial grounds. Further, to address the potential of nonpayment by insurers in violation of the No Surprises Act, the No Surprises Act Enforcement Act has been recently reintroduced in Congress and the Senate. In addition, almost all claims are for auto network services, and the percentages of Medicare and Medicaid of our patients are less than five percent.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Since our claims process and revenue cycle management team are all in house, we believe we expand significant resources to review and determine which claims are sent to the independent dispute resolution entity. Lastly, our short seller report also mentioned Neighbors Emergency Center bankruptcy in 02/2018. Neighbors Emergency Center was indeed cofounder by myself in 02/2008. However, I left Neighbors in 2011 to start Newtek Health. The two models are completely different.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Nabors was a freestanding ER model located only in Texas, whereas New Tex Health is a micro hospital model with facilities on a national level. Neighbors did eventually file for bankruptcy around 02/2018, seven years after I left its management team. On the regulatory front, we are not seeing any significant legislative changes to either the NSA or the IDR process. We feel that Congress is currently content with the NSA because it has done its job to protect the American public from surprise bills. Any changes to the NSA may potentially put the American public at risk.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

We expect the federal arbitration process for auto network services will continue to evolve and become more efficient and less complex. As an example, on 07/01/2025, the federal IDR portal was upgraded to streamline the arbitration process and enhance the quality of data submitted. We believe the proposed No Surprise Act Enforcement Act will also be beneficial to providers such as new New Text Health. It was reintroduced on July 23 by a bipartisan, bicameral group, including representative Greg Murphy of North Carolina, Raul Ruiz and Jimmy Panetta of California, John Joyce of Pennsylvania, Kim Schrier of Washington, and Bob Under of Missouri. A companion legislation was also introduced by the senate by senators Roger Marshall of Kansas and senator Michael Bennett of Colorado.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

If enacted, either version would offer significant benefit to providers participating in the NSA's IDR process. Importantly, both bills impose penalties for late or nonpayments with a nonprevailing party fails to make the required payment within thirty days of an IDR determination. The penalty imposed will be 3x the difference between the initial payment and the IDR determination per claim. Interest will also apply to late or nonpayments. The bills authorize the imposition of civil monetary penalties on health plans and insurers for violation of the NSA's balance billing provision.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

HHS would have discretion to assess penalties of up to $10,000 per violation, the same maximum penalty currently applicable to providers who violate these requirements. The bills also include the new HHS labor and treasury requirements aimed at better reporting transparencies for insurers and health plans. Please refer to our current report on Form eight ks dated 08/20/2025, for additional information. Our growth strategy remains robust with over 15 hospital projects in development, including two confirmed opening by the 2025 and a potential third. These projects target high growth markets with strong demand for our micro hospital model, as discussed in Q1.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

We are also advancing our population health management division, planning to launch one to two independent physician association, IPAs, annually, particularly near our micro hospitals to enhance care coordination and synergies. To drive organic growth, we're investing in existing facilities by expanding clinical services and optimizing workflow, a strategy we find from Q1 feedback to boost performance. Our combination of organic growth, new market entries and strategic acquisitions position Newtek for sustained success. To further enhance shareholder value, on 07/30/2025, the Board of Directors has authorized a stock repurchase program of up to $25,000,000 of the company's common stock over the next six months. In summary, Q2 twenty twenty five was a transformative quarter with strong volume growth, strong cash generation and a clear development pipeline.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

We remain committed to delivering value to patients and shareholders while navigating industry trends. I will now turn the call over to John Bates, our Chief Financial Officer.

Jon Bates
CFO at Nutex Health

Thank you, Tom, and good morning, everyone. I was gonna go over a couple different topics today, some Tom discussed and and some others as well. First of all, I wanna provide some background and color on the recent delay in the filing of our second quarter two thousand twenty five ten q and our timeline for completing all the necessary filings. Then I'll follow-up with some key financial data for the second quarter June two thousand twenty five and the six month ended June 2025 period that we believe will be unaffected by the accounting issue that led to this delay, highlighting the continued positive trend the company has experienced since the 2024 with no fundamental changes in our operational model. So let's first discuss the details around the delay in our second quarter twenty twenty five ten Q filing that was noted in our current report on Form eight ks dated 08/20/2025.

Jon Bates
CFO at Nutex Health

During the preparation of our financials to be included in the company's second quarter two thousand five ten Q filing, we reevaluated the accounting treatment of stock based compensation obligations for certain under construction and ramping hospitals under U. S. GAAP accounting standards. In our go public merger transaction with Clinigen back in April 2022, we entered into earn out agreements with the former owners of those hospitals for payments of additional consideration after these facilities become operational. These obligations were recorded to equity and stock compensation expense.

Jon Bates
CFO at Nutex Health

However, based on our reevaluation of the accounting treatment, we have determined that the obligation should be classified as liability and not equity along the way. We are also making changes in how the accounting recorded for those obligations are determined. But based upon this work, while the adjustments we are anticipating are noncash in nature, the quantitative impacts of these changes are material to the financial statements filed in our 10 Q for the quarter ended 03/31/2025 and filed in our Form 10 k for the year end 12/31/2024. So on 08/24/2025, we filed the Form eight k saying that these SEC statements should not be relied upon until we complete correct complete corrections and make amended filings with the SEC. And we're working on the with the auditors on this restatement at present.

Jon Bates
CFO at Nutex Health

But based on our preliminary calculations, just to give you some perspective, the estimated impact of the corrections is as follows. Total liabilities as of 12/31/2024 would increase by approximately a range of 10 to $20,000,000 with the corresponding decrease in reported equity on the balance sheet. And then total liabilities as of 03/31/2025 would increase by approximately a range of 20 to $50,000,000 with the corresponding decrease in reported equity in the balance sheet. And the net income for the three months ended 03/31/2005 '25 is expected to increase by a range of between 2 and $10,000,000 as a result of this. And these obligations and expenses are noncash as they are exclusively for stock based compensation.

Jon Bates
CFO at Nutex Health

The corrections have no impact on previously reported amounts for key financial statement line items such as revenue, gross profit, liquidity, working capital, short and long term debt, operating cash flow, adjusted EBITDA, or the number of of pacing visits, just to name a a few. While adjusted EBITDA is a non GAAP measure, we feel it highlights the important trend in our operating results by excluding significant noncash items reported in net income as required by GAAP. So we are working to to address the corrections quickly while we continue to execute our company's operating and growth plans. Now as mentioned before, on 08/20/2025, I'll mention now, the company did receive a notice from Nasdaq notifying the company that due to the company's failure to to timely file its 06/30/2025 form 10 q with the SEC, the company has sixty calendar days or until 10/20/2025 from the date of the notice to file its 06/30/2025 Form 10 Q. The company plans to complete this process within this timeline and will provide updates as necessary along the way if anything changes.

Jon Bates
CFO at Nutex Health

Next, let's discuss some of the key financial data for the second quarter two thousand, '25 and then the six month ended June 2025 period that we believe will be unaffected by the accounting issue that led to this delay. First of all, financial highlights for the three months ended 06/30/2025. As Tom mentioned earlier, total revenue was 244,000,000 for the three months ended June '25 as compared to total revenue of 76,100,000.0 for the same period in 02/2024, an increase of 220%. The hospital division drove most of this growth, generating 236,300,000.0, up 350% from 76,100,000.0 in the 2024. Now of the 236,000,000 in in hospital revenue, 167,700,000.0 related to the independent dispute resolution revenue, which amounts to approximately 71%.

Jon Bates
CFO at Nutex Health

And revenue from mature hospitals, are hospitals opened prior to 12/31/2021, increased by 203% in 2025 compared to 02/2024. Now additionally, the population health division revenue increased by 800,000.0 or 9.2% to 7,700,000.0 in the '25 from 8,500,000.0 in the same period in 02/2024. Now with regard to arbitration related revenue, we have continued to submit between 60 to 70% of our business through the independent dispute resolution process. We have also won a legal determination on 85 plus percent of the claims submitted, and we currently have an average collection rate of 75 plus percent of the legal determination wins. And arbitration costs have remained relatively consistent, approximating between 26% to 28% of the arbitration revenue reflected.

Jon Bates
CFO at Nutex Health

From a corporate cost perspective, the G and A expenses as a percentage of total revenue for the 2025 decreased to 5.1% compared to 14% for the 2024, showing our continued focus on controlling costs while improving revenue. Gross profit was 125,000,000 for this time period or 51.1 percent of total revenue as compared to the gross profit of 22,600,000.0 or 29.7% of total revenue for the same period in 02/2024. Regarding visits at the hospital division, they were 45,573 for the three months ended June '25 as compared to forty one thousand two zero eight for the same period in '24, an increase of 4,365 visits or 10.6%. And visits in mature hospitals increased by point six percent in the three months ended June as compared to the same period in 02/2024. And then for the for the three months ended June, the company did collect 175,000,000 on hospital revenue, which was the highest collection amount for any quarter, and 109,000,000 or roughly 62% of the collections related to the arbitration revenue.

Jon Bates
CFO at Nutex Health

Adjusted EBITDA was 71,600,000.0 for the three months ended June 2025 as compared to 6,800,000.0 for the same period in 02/2024. And then operating cash flow was 27,100,000.0 for the three months ended June as compared to 13,300,000.0 for the same period in 02/2024. Now I'll move on to the some of the highlights for the six months ended June 2025. Total revenue was 455,800,000.0 for the six months as compared to total revenue of 143,500,000.0 for the same period of 02/2024, an increase of 217 and a half percent. Hospital division drove most of this growth, generating $440,200,000 up 244.9% from $127,600,000 in the 2024.

Jon Bates
CFO at Nutex Health

Of the 440,200,000.0 in in hospital revenue, 280,800,000.0 related to IDR revenue, which amounts to approximately 64%. Revenue from the mature hospitals, which are hospitals open prior to 12/31/2021, increased by a 195.2% in '25 compared to '24. Additionally, the population health division, niche revenue decreased by 400,000.0 or 2.4% to 15,500,000.0 in the '25 from 15,900,000.0 in 02/2024. Related to arbitration costs, again, approximately 26 to 28% of the arbitration revenue was attributed to the cost of arbitration. Gross profit was a very strong 243,100,000.0 or 53.3% of total revenue for the six months ended June 2025 as compared to a gross profit of 32,700,000.0 or 22,800,000.0 of total revenue for the same period in 02/2024.

Jon Bates
CFO at Nutex Health

From a corporate cost perspective, g and a, again, as a percentage of total revenue for the 2025 decreased to 4.9% from 13.4% for the 2024, ensuring our continued focus on the controlling costs and, again, improving that revenue. Total revenue at the hospital division excuse me. Total visits at the hospital division were 93,842 for the six months ended June 25 as compared to 81,276 for the same period in 02/2024, an increase of 12,566 visits or 15.5%, and visits at mature hospitals increased by 3% in the six months ended June '25 as compared to the same period in '24. For the six months ended June '25, the company did collect 311,000,000 in cash, the highest collection amount for the first two quarters of any year, a 172,000,000 or roughly 55% of the collections related to arbitration revenue. Adjusted EBITDA was a 144,400,000 for that six month period as compared to 6,400,000.0 for the same period in '24.

Jon Bates
CFO at Nutex Health

Operating cash flow was 78,100,000.0 for the six month ended June '25 as compared to 16.1 for the same period in 02/2024. As of 06/30/2025, the company had total assets of just under 855,000,000, including cash of 96,400,000.0 and accounts receivable of 349,200,000.0. During the six month period, we did have some larger tax payments made related to the 2024 tax year along with our estimated payments for 2025 that amounted to around just under $51,000,000 along with other member distribution payments of around 18,800,000.0 during the six month period, helping explain some of the larger outflows during the period. Current portion of long term debt, current portion of the long term debt and the long term debt itself was 15,000,000 and 20,500,000.0, respectively, at June 2025. Now as we look at some of these key financial data, we feel strong about the company and the direction it's headed with a very strong balance sheet, continued solid cash flow, and limited true debt, which allows us to comfortably handle all the current needs, whether it is opening a hospital, supporting our existing hospitals, buying back shares, as Tom mentioned earlier in the discussion, or looking for other accretive opportunities for our shareholders.

Jon Bates
CFO at Nutex Health

Now lastly, I wanted to provide a little more insight into the 21 named hospitals that had contribution agreements signed when the company went public back on 04/01/2022 with certain owners of hospitals that we either determined to be what we call ramping hospitals, which there were four of them, or under construction hospitals, which there were 17 of them. Where once any of the hospitals were open for two years, the owners of each hospital would be eligible to receive a onetime additional issuance of company common stock based upon the earnings of the hospital in the second year of their operations, which we denote as the earn out period. Give you a little more specifics on those. So as of 06/30/2025, we talked about there was 21 total. And then of those, there were four ramping hospitals at that point when we went public.

Jon Bates
CFO at Nutex Health

Of those four ramping hospitals, all of them, of course, were opened, but none of them met the criteria for an earn out shares. So they went through the process with no earn out. So of the 17 under construction hospitals, four hospitals had their development plans abandoned, so obviously no shared dilution at all, so they're out of the picture. Of the remaining 13 under construction hospitals, six of those had measurement periods that ended on or before 06/30/2025, and two of those six did not meet the criteria for an earnout share. One of the hospitals had a measurement period that ended on '2 on 02/28/2024.

Jon Bates
CFO at Nutex Health

One of the hospitals had a measurement period, on February the February in 02/2025, and then two other hospital has met had a measurement period that ended on 06/30/2025. And so for the three hospitals that had measurement period ends in the first six months of 02/2025, their dilution approximates the number of shares of dilution approximates to about 1,000,000 shares, one third of those shares vesting six months after issuance, one third after twelve months of issuance, and then the remaining one third vesting after eighteen months of issuance. So over three tranches of one third each of six month periods. Of the remaining seven under construction hospitals, four hospitals have measurement periods ending after 06/30/2025. One hospital has a measurement period ending in August 2025.

Jon Bates
CFO at Nutex Health

One has a measurement period ending in March 2026, and then two hospitals have measurement periods ending in the 2026. And all that leaves is that that leaves the remaining three named hospitals, each of which have not opened yet, with one scheduled to open later in 2025 and the two others potentially opening later in 02/1926. With that, I'm gonna turn over the call to Warren Husainian, our president, to talk more about the population health side of the business. Warren?

Warren Hosseinion
Warren Hosseinion
President & Director at Nutex Health

Thank you, John, and good morning, everyone. I'm pleased to update you on Newtek's Health Population Health Management division, a key pillar of our value based care strategy. Building on our Q1 discussion, we've refined our focus on growth and operational efficiency to drive long term success. As outlined previously, our strategy integrates hospitals and independent physician associations, or IPAs, to deliver coordinated cost effective care. Our IPAs comprising primary care physicians and specialists near our facilities now manage over 41,000 patients in risk based arrangements.

Warren Hosseinion
Warren Hosseinion
President & Director at Nutex Health

In Q2 twenty twenty five, the division generated $7,700,000 down slightly from $8,500,000 in Q2 twenty twenty four, reflecting the divestiture of two noncore assets in mid-twenty twenty four. For the 2025, revenue was 15,500,000.0 compared to $15,900,000 in 2024. Operating income for the first half improved to $100,000 from $600,000 loss in 2024. Our strategic focus remains on expanding our IPA network, targeting one to two new IPAs annually near our micro hospitals to leverage synergies as discussed in Q1. In 2025, we expand and now have over 300 primary care physicians and over 900 specialists contracted in our network supported by a team equipped to manage this larger network.

Warren Hosseinion
Warren Hosseinion
President & Director at Nutex Health

The division is well positioned to capitalize on value based care trends with growth driven by organic expansion, partnerships and potential acquisitions. In conclusion, our improved profitability and strategic investments positioned the division for growth. We're excited to expand our IPA network and enhance our value based offerings. I'll now turn the call over to Doctor. Michael Chang, our Chief Medical Officer.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

Thank you, Warren, and good morning, everyone. I'm pleased to provide an update on Newtek's health clinical quality and patient experience, which remain at the core of our mission to to deliver high quality patient centric care. Building on our Q1 focus, we continue to prioritize clinical excellence and exceptional patient satisfaction, which sets us apart in the healthcare industry. Our commitment to clinical quality is reflected in our rigorous standards and outcomes. In q two twenty twenty five, we maintained a patient satisfaction rate exceeding ninety six percent across our facilities as measured by internal surveys.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

This is complemented by our outstanding Google ratings, which average above 4.7 out of five in every market, with most facilities achieving 4.9 or five point o. Such high satisfaction levels are nearly unheard of in health care today, underscoring the strength of our micro hospital model, which emphasizes personalized concierge style care in a low wait time environment. These metrics reflect our dedication to meeting patient needs with efficiency and compassion, a priority we've consistently highlighted in our prior calls. And as Tom already mentioned, Newtek continues growing patient volume. Q2 twenty twenty five total patient visits increased 10.6% to 45,573 compared to q two twenty twenty four, which reflects growth in both new and mature hospitals.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

Mature hospitals grew by 0.6% in the second quarter. And for six months ended 06/30/2025, total visits were 93,842 as compared to 81,276 for the same period in 2024, an increase of 15.5%. This continued growth reflects our leadership team's ongoing efforts in community engagement, business development, and adding specialists and service lines to manage more complex cases. Our capacity to provide high quality around the clock, ER observation, and inpatient stays is a key strength and positions Newtek as a trusted provider in the communities we serve. Cost discipline remains a priority.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

Excluding arbitration costs, operating costs remained stable despite higher volumes and new hospitals this year. Labor costs did increase 31% from 27,000,000 to 34,900,000.0, which was comprised of increased payroll and benefits for opening four new hospitals in 2024 and staffing for higher ER volumes and an increased volume of higher acuity observation and inpatients. Overall, costs continue to be a much smaller percentage of net revenue than most hospital companies at 14.7% for the second quarter, which exemplifies our lean, high quality model. Supply costs continue to be a very good story for us. Supply costs did increase 34% from $33,600,000 to $4,800,000 in the quarter, in part due to our anticipated opening of two more new hospitals in Q4 twenty twenty five, as well as growth in the overall volume and services.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

Despite the uptick, our overall medical supply spend is actually lower by 3% year to date compared to the same period 2024. We will continue to see supply cost savings throughout 2025 as a result of our GPO and vendor realignment as previously stated in the third quarter twenty twenty four earnings call. We're continuing to explore technology investments, including AI for patient check ins, staffing optimization, provider note writing and coding. Our clinical and operational teams remain focused on delivering high quality care while supporting a sustainable revenue cycle. By integrating clinical excellence with strategic revenue management, we ensure that our patient first mission translates into both exceptional outcomes and financial stability.

Michael Chang
Michael Chang
Chief Medical Officer at Nutex Health

I will now turn the call back to Vivian for Q and A. Thank you.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

Thank you, Tom, John, Warren and Mike for those updates. We'll move over to Q and A. Operator, please provide instructions for our analysts.

Operator

Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Anthony Vendetti with Maxim. Please proceed with your question.

Anthony Vendetti
Executive MD - Research at Maxim Group

Thank you. Thank you for all that information the call. Very helpful. I was wondering, in terms of the restatement process, do you have a time line for when you think you'll get the audited results and be able to file the amended twenty four ten k and and the first quarter twenty five ten q?

Jon Bates
CFO at Nutex Health

Yeah. Anthony, I can I can thank you for the question? So we're working through it right now. Right? Engagement's already be begun in that process.

Jon Bates
CFO at Nutex Health

And so I know we have, as I mentioned before, the sixty days to file the second quarter, which to do that, you gotta you have to finish out, 2024 and then make sure the '25 are there. So we're working actively to try to get all that done in that time period. And as things evolve and change, if that looks like it it wouldn't happen for some reason, we will let everybody know. But our our focus right now is all hands on deck to get that done, especially when, you know, our main focus, if you you talk about what the that restatement is really for is is really mostly reclassifications of, you know, equity to debt and just making sure that everything else remains, you know, consistent. So that's that's where we're at right now.

Jon Bates
CFO at Nutex Health

We're gonna be working hard in the sixty days. And then as things change, we'll definitely let everyone be made aware if it's gonna go outside of that.

Anthony Vendetti
Executive MD - Research at Maxim Group

Alright, John. Yeah. That's helpful. And just I just wanna make sure I had these numbers correct. So, you mentioned 75% of the IDR awards have been collected.

Anthony Vendetti
Executive MD - Research at Maxim Group

And I think in the second in the second quarter, 62 or 64% of those war awards have been collected. And I know there's a penalty if if, you know, if if these insurers do do not pay according to the current legislation. Is there any recourse for them to appeal the the arbitration award? And and how do you is there any any other methodology to to force them to pay other than, you know, a potential government penalty? So maybe just get into that and then and then the revenue recognition.

Anthony Vendetti
Executive MD - Research at Maxim Group

Are you recognizing a 100 of the award, or are you recognizing the amount that has, been paid? Thanks.

Jon Bates
CFO at Nutex Health

Okay. Great questions. I'll start backwards, and then, of course, Tom and the rest of team might jump in as well. But let me just as I'm reiterating kinda what we talked about. So, it starts out with, you know, the the number of of claims ultimately going to the independent fee resolution.

Jon Bates
CFO at Nutex Health

And we've been somewhat consistent since we started the process that it turns out that about 60 to 70% of the payments that we get from from payers, we believe we are under underpaid, in a lot of cases, materially underpaid. So the 60 to 70% is the amount that's physically going, you know, through this process. And of those, we talked about the when it goes to the arbitrator for win or a loss, we've continued to see, like the industry has shown, a very, very high success rate on winning and getting a legal determination. So in this quarter and now, you know, collectively, we feel like we're up and around 85% plus of what we submit to the audit to the independent dispute resolution process that we're winning on. Then so you win 85 plus percent of the time, which is fantastic, we believe.

Jon Bates
CFO at Nutex Health

And then you gotta collect. And so that has continued to improve as well. I do think that's you know, industry even shows that, you know, you'll you'll get up to, you know, maybe eighty, eighty five, 90%, and you're always gonna fight for the last, you know, 10 to 15% with the payers. And so we've progressively improved and actually been able to get, you know, over 75% of those determinations in in in a timely fashion. And now we're still we're still focusing hard on trying to, you know, get the rest of those.

Jon Bates
CFO at Nutex Health

So we believe that will continue to improve. You also asked about so from an accrual perspective, so because we wanted to be conservative on the in the process, but it's fairly accurate with what we're seeing, since we're since we're seeing it, we're currently getting, paid, collection rates have been around 75% or so. That's what we're we're accruing from a revenue perspective on a visit that walks in the door, on average today. And so as that improves, obviously, that would change up or down as well. Obviously, it goes down.

Jon Bates
CFO at Nutex Health

That could it can adjust that way. But, currently, we've we've seen sort of a steady uptick in that that collection rate up to 75 plus percent, and we're con gonna continue to force, you know, trying to make sure we're getting a 100% of that when the dust settles. So there are you know, there's different approaches you can take. Obviously, we're working hard to get information back to, you know, CMS if there's an issue with a determination where they've come back and said, you know, we won, we're not getting paid. So there's communication directly to some of the payers.

Jon Bates
CFO at Nutex Health

And in some cases, it's just they have to be reminded, and then they turn around and make that payment. But I think there's always gonna be a push pull there until, you know, one of the enforcement items that Tom alluded to earlier was if and when that gets in place here, that will really help with this process. So we're watching it closely. We what can we do? You can always attempt to litigate.

Jon Bates
CFO at Nutex Health

And but in a lot of cases, that doesn't necessarily have any sort of immediate impact. And so we we look for opportunities where we can, if that makes sense. But, generally, we're working just one on one back through, our our third party provider, Halo, plus the payers directly to try to get feedback and try to get those payments coming in a little bit quicker. That'll Kyle might have some more information on that, but that's that's kind of our approach.

Anthony Vendetti
Executive MD - Research at Maxim Group

Okay. If Tom, if you don't have anything to add there, just one last question, and for the team maybe and so whoever wants to respond. So on the new hospital openings, any any update there, or is everything on track based on the schedule you you've outlined? And then and then on the mature hospitals in terms of I know that's obviously based on patients that come in, and that can vary quarter to quarter. But is there anything that you're doing internally to try to ensure that the mature hospitals continue to see growth in terms of patient visits?

Anthony Vendetti
Executive MD - Research at Maxim Group

And then I'll hop back in the queue. Thank you.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Yes. Anthony, thank you for the question, and thank you once again for covering us. But to answer to your first question, in terms of the opening schedule for this year, yes, originally have three hospitals scheduled for this year, but it looks like two of them will be open for sure. The third one is suspect, and it's all 100% dependent construction. So, Sherman, Texas will probably open in October.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Houston, will probably open in November. And then San Antonio, we're still working with the contractor to see if they could speed up the process and open in 2025. But if not, then probably 2026. So that's basically the the schedule. And then in 2026, we have probably four more hospitals that are opening, including Jacksonville, West Little Rock, Bixby, and, I think one more, later in 2026.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

So the pipeline is very robust. And then on top of that, for 2027, we have four more, and then we're already working on the 2028. So that's the pipeline. Now in terms of the mature hospitals, we we market twenty four seven, to our to our own patients, and the community that we serve. And, obviously, the goal is to, get higher volume.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

But, like I mentioned last time last quarter, we are doing, everything we can to keep those patients that are in their hospital once they get to the ER. So in other words, instead of transferring people out to other hospitals, we do everything we can to keep patients, in house through either observation or inpatient. And so far, we're we're seeing good results. And so even though the mature hospital has only increased by about point 5% quarter over quarter, the number of observation and admissions, from the mature hospitals are going up, quarterly. And so that you should see that in the in the year over year financial because, obviously, the reimbursement for inpatient is a lot higher than ER.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

And so that's that one of the that's one of the reason why the revenue year over year is higher even though the patient, increase may not be as dramatic.

Anthony Vendetti
Executive MD - Research at Maxim Group

Okay. That's very helpful. I'll hop back in the queue. Thank you so much. Appreciate it.

Jon Bates
CFO at Nutex Health

Yes. Thank you, Anthony.

Operator

Our next question comes from the line of Gene Mannheimer with Freedom Capital. Please proceed with your question.

Gene Mannheimer
MD & Senior Research Analyst at Freedom Capital Markets

Hey, thanks, and good morning. Thank you for doing the call and providing all that information. So as I look at your preliminary results, I think the implied EBITDA margin is about 30% for the quarter, and that's a little bit down from what we've seen the last couple of quarters, though your gross margin was strong, 51%. So I'm just trying to reconcile that. Is there anything that was compressing EBITDA margins this quarter relative to the last couple of quarters, John?

Jon Bates
CFO at Nutex Health

Yes. I mean, that's a great question, Gene. I mean, there's obviously some more supplier payments. I know as we start to potentially look at opening some of the facility these newer facilities later in the year, you're gonna have costs that are happening early on in that later first quarter, second quarter. We'll have some more in the third quarter as well as we get ready to open up.

Jon Bates
CFO at Nutex Health

So some of that will will come into play there. And then, you know, obviously, with the improvement in in the arbitration side, there's certainly some more, arbitration type costs period to period. So that's something that's in there. So it's there's nothing there's there's nothing, I'd say, dramatic about, that when it comes to, say, the EBITDA side. I know when you're talking about cash flow and, you know, the the cash impact we did have, and you didn't ask about this, but we talked about it earlier.

Jon Bates
CFO at Nutex Health

But for the year, when you have the buildup of the the accrued tax amount at the end of last year and as we had started to make those payments more so into the second quarter, we had a a pretty large tax amount paid, almost 50 something million dollars, in that first six months and mostly in the second half of, of this first six months. So that was one of the things that played in, you know, some of the cash draw, if you wanna call it, but with incredible cash collections and a continued trend, we're we're still very optimistic there.

Gene Mannheimer
MD & Senior Research Analyst at Freedom Capital Markets

That's great color. Thank you, John. And then, as I look at the revenue per visit, thanks for giving us that arbitration contribution in the quarter. If I back that out, if I back out the IDR related revenue this quarter and the prior year quarter, is it correct to say that revenue per visit was up low single digits from an organic perspective, if you will?

Jon Bates
CFO at Nutex Health

Yeah. I think that's about right. As you think about it, that's probably true. And and you have to look now over now we have a little bit longer time period, which is nice to see when we started the arbitration process. So now that we have roughly a year's worth of of data, you can kinda see the the overall reimbursement that's been in place.

Jon Bates
CFO at Nutex Health

So now you're a little over $4,000, almost $4,200 over the time period since we started, overall revenue divided by visits for that almost twelve month period. So that's is that people have asked before kinda where you're gonna settle. It will depend on Acuity and everything else around that. But, you know, we're starting, I think, to see kind of a better idea of of what we would expect as as we look going forward. But, I mean, I think your your assumption is probably accurate as we go through this, and we'll we'll more specifically, you know, watch that as we move forward too, Dean. But thank you for the for the insight.

Gene Mannheimer
MD & Senior Research Analyst at Freedom Capital Markets

That's great. Thanks. Thanks, guys. Congratulations.

Jon Bates
CFO at Nutex Health

Thanks, Xi.

Tom Vo
Tom Vo
CEO & Chairman of The Board at Nutex Health

Thank you, Xi.

Operator

Our next question comes from the line of Bradford Seagraves with North Bank Capital. Please proceed with your question.

Bradford Seagraves
Founder & CIO at Northbank Capital Management

Hi. Thank you, guys. Just a couple of quick ones. One, we're halfway through Q3. Can you provide any commentary to the market on how q three to date is going, specifically on kind of the free cash flow side?

Jon Bates
CFO at Nutex Health

Well, Tim, we haven't reported on the q three, so I'll hold back a little bit. But I can tell you that what we've seen since '24, '25, '25, what we've talked about in each of of sort of these calls, I think you can see where we feel things, you know, are headed in that respect. And I think things remain very, very consistent and and very, very strong in relation to that is how I would answer that question.

Bradford Seagraves
Founder & CIO at Northbank Capital Management

Okay. Thank you. And then also, are you going to be able to provide to the market are you gonna be able to publish unaudited financial statements for q two? Because, you know, you mentioned the the tax payment, but still would be curious to see the rest of the the cash flow statement.

Jon Bates
CFO at Nutex Health

Yeah. So, I mean, the answer is, you know, any anything even in a in a quarter is is unaudited, but I know what you're asking to be able to put all the specific information out there. And we'll look and see how much more we can provide. We wanted to be sensitive to the fact that we were going back and and, you know, going through that review process and looking back at 2024 as well. So, we're pretty happy that this information very comfortably, you know, should not be changing, and it gives some perspective.

Jon Bates
CFO at Nutex Health

So we'll look and see, you know, how much more we can provide. But, really, the focus of what we were trying to communicate here is, you know, most of what you have, you know, related to the delay and the the review around that delay is more of the noncash items around the stock based comp expense. So the rest of the fundamentals are not we have not seen any sort of, changes, material changes in the operations.

Bradford Seagraves
Founder & CIO at Northbank Capital Management

Thank you.

Operator

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

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

Thank you all for your valuable questions and answers. For those joining us today, if you have additional questions, email us at investorsnewtekshealth dot com, and we'll respond promptly. On behalf of the Newtek's management team, thank you for joining our q two twenty twenty five company update call. We've covered growth, strategy, clinical quality, and our vision, and we appreciate your interest. A recording of this call will be available on our website for a limited time.

Vivian Sanders
Vivian Sanders
Corporate Director of Marketing & Business Development at Nutex Health

Take care, and we look forward to keeping you updated.

Operator

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.

Executives
    • Vivian Sanders
      Vivian Sanders
      Corporate Director of Marketing & Business Development
    • Tom Vo
      Tom Vo
      CEO & Chairman of The Board
    • Warren Hosseinion
      Warren Hosseinion
      President & Director
    • Michael Chang
      Michael Chang
      Chief Medical Officer
Analysts
    • Jon Bates
      CFO at Nutex Health
    • Anthony Vendetti
      Executive MD - Research at Maxim Group
    • Gene Mannheimer
      MD & Senior Research Analyst at Freedom Capital Markets
    • Bradford Seagraves
      Founder & CIO at Northbank Capital Management
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