Subject: ERN
NUTEX HEALTH REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS
- NET REVENUE OF $58.9 MILLION
- COMPANY EXPECTS TO OPEN 1-2 MORE HOSPITALS IN 2023 AND ANOTHER 14 BY END OF 2025
HOUSTON, Aug. 9, 2023 /PRNewswire/ -- Nutex Health Inc. ("Nutex Health" or the "Company") (NASDAQ: NUTX), a physician-led, technology-enabled integrated healthcare delivery system comprised of 22 state-of-the-art micro-hospitals in 8 states and primary care-centric, risk-bearing physician networks, today announced second quarter 2023 financial results for the three months and six months ended June 30, 2023.
Financial Highlights for the Three Months and Six Months Ended June 30, 2023:
- Net revenue of $58.9 million and $115.3 million, respectively.
- Net loss attributable to Nutex Health of $3.5 million and $8.6 million, respectively.
- Adjusted EBITDA of $4.0 million and $6.4 million, respectively.
- Net cash from operating activities of $1.1 million as of June 30, 2023.
- As of June 30, 2023, the Company had total assets of $436.2 million, including cash and cash equivalents of $32.8 million.
Note: Adjusted EBITDA is a non-GAAP financial metric. A reconciliation of non-GAAP to GAAP measures is included below in this earnings release.
Year-to-Date 2023 Highlights:
- On February 6, 2023, Nutex Health opened its second micro-hospital in Arkansas. The facility is already performing above expectations.
- On May 3, 2023, Nutex Health opened its first urgent care center in Southern California to take better and more efficient care of its 25,000 patients enrolled in its independent practice association ("IPA") in Southern California.
- On June 20, 2023, Nutex Health opened its second new micro-hospital in 2023 in New Mexico. The facility is performing above expectations.
- On July 5, 2023, Nutex Health opened its third new micro-hospital in 2023 in Louisiana. The facility is performing above expectations.
- On August 7, 2023, Nutex Health opened its fourth new micro-hospital in 2023 in Texas.
- Nutex Health expects to open 1-2 more micro-hospitals in 2023 and another 14 by end of 2025.
- Nutex Health launched three new independent practice associations ("IPAs") in 2023. IPAs are physician networks comprised of primary care physicians ("PCPs") and specialists. The three new IPAs are strategically located around existing (Houston and Phoenix) and upcoming (South Florida) Nutex Health micro-hospitals and expect to start enrolling managed care patients later this year. As of today, South Florida Physicians IPA has signed contracts with 78 primary care physicians, Houston Physicians IPA has signed contracts with over 70 primary care physicians and our newest IPA, Phoenix Physicians IPA, has signed up 12 primary care physicians. The Company anticipates starting 2-3 new IPAs per year in the vicinity of its micro-hospitals.
- In 2023, Nutex Health has spent over $500,000 enhancing its cloud-based advanced population health analytics platform called Clinigence Health. Clinigence is a pioneer in clinical data integration, clinical quality reporting and population health analytics and is in use by multiple organizations and individual physicians throughout the U.S. Our platform currently has clinical and claims data on over 3 million patients. Nutex Health intends to gain more customers for its platform going forward.
- On July 31, 2023, Nutex Health announced that its advanced population health analytics platform had been selected by Varmed Management, a Puerto Rico-based medical management company, to enhance patient care.
- On March 17, 2023, the Centers for Medicare & Medicaid Services ("CMS") issued new guidelines related to the independent dispute resolution ("IDR") process of the No Surprises Act. Nutex Health believes that these new guidelines will result in higher reimbursements. Due to the lag in normal hospital billing, our data set is still small. However, we have early evidence that reimbursements have increased. We believe that most of the increase in reimbursements are not yet reflected in our Second Quarter financial results due to the timing of the new CMS guidelines.
- On August 3, 2023, the U.S. District Court for the Eastern District of Texas granted a summary judgement in favor of the Texas Medical Association vacating the HHS' December 2022 decision to increase, without notice, the administrative fee required to initiate IDR arbitration from $50 to $350, which made filing for IDR arbitration prohibitively expensive for many providers.
- On August 4, 2023, the HHS and CMS again temporarily suspended the federal IDR process, including the ability to initiate new disputes, until the HHS and CMS can provide new instructions in response to the summary judgement. We do not expect that this IDR suspension will materially impact the reimbursement amounts we receive due to the generally low percentage of arbitrations we initiate. We do however anticipate that this additional favorable court ruling will further enhance the fairness of the reimbursement process under the NSA.
- On June 22, 2023 the Company paid back $3.75 million to an affiliate of Yorkville Advisors Global. The Company has approximately $7.7 million outstanding and is evaluating whether to pay off the remaining portion and terminating its pre-paid advance agreement with Yorkville.
- The Company has a committed investment agreement for up to $100 million with Lincoln Park Capital, none of which has been used.
- In 2023, as part of our Board of Director's portfolio rationalization initiative, Nutex Health closed down two hospital outpatient departments and one micro-hospital which were unprofitable. All three facilities were in Texas.
"Our balance sheet continues to remain strong with $32.8 million of cash on hand and significant capital available to handle the development of the 1-2 additional micro-hospitals we plan to open this year in addition to growing our existing IPAs. We remain cash flow positive and proud of our sequential quarter-over-quarter increase in adjusted EBITDA from $2.4 million in Q1 to $4.0 million in Q2," stated Jon Bates, Chief Financial Officer of Nutex Health.
"Our goal for the remainder of this year is to increase patient volumes as well as to create new service lines. We have recently launched a behavioral health program due to the massive need for mental health and substance use services. We are also excited to start enrolling patients in our new IPAs later this year, which we believe will bring even more volume to our facilities. In addition, we are getting a lot more adept with navigating through the NSA and the IDR process which will allow us to maximize collections from insurers," stated Tom Vo, M.D., MBA, Chairman and Chief Executive Officer of Nutex Health.
"We have delivered yet another quarter with positive net cash from operating activities and positive adjusted EBITDA. We intend to continue to execute on our growth strategy. Our improving results in the first six months of 2023 make us confident in our outlook for the remainder of the year," stated Warren Hosseinion, M.D., President of Nutex Health.
For more details on the Company's Second Quarter 2023 financial results, please refer to our Quarterly Report on Form 10-Q filed with the U.S. Securities & Exchange Commission and accessible at www.sec.gov.
NUTEX HEALTH INC. | ||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
(UNAUDITED) | ||||||
June 30, 2023 | December 31, 2022 | |||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 32,754,330 | $ | 34,255,264 | ||
Accounts receivable | 50,676,301 | 57,777,386 | ||||
Accounts receivable - related parties | 1,335,241 | 538,183 | ||||
Inventories | 2,450,776 | 3,533,285 | ||||
Prepaid expenses and other current assets | 4,858,546 | 1,869,806 | ||||
Total current assets | 92,075,194 | 97,973,924 | ||||
Property and equipment, net | 83,062,145 | 82,094,352 | ||||
Operating right-of-use assets | 17,111,817 | 20,466,632 | ||||
Finance right-of-use assets | 206,072,425 | 192,591,624 | ||||
Intangible assets, net | 20,418,551 | 21,191,390 | ||||
Goodwill, net | 17,010,637 | 17,010,637 | ||||
Other assets | 483,679 | 423,426 | ||||
Total assets | $ | 436,234,448 | $ | 431,751,985 | ||
Liabilities and Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 16,424,368 | $ | 23,614,387 | ||
Accounts payable - related parties | 3,919,114 | 3,915,661 | ||||
Lines of credit | 2,980,684 | 2,623,479 | ||||
Current portion of long-term debt | 16,412,345 | 12,546,097 | ||||
Operating lease liabilities, current portion | 1,551,655 | 1,703,014 | ||||
Finance lease liabilities, current portion | 4,105,654 | 4,219,518 | ||||
Accrued expenses and other current liabilities | 12,049,471 | 6,240,813 | ||||
Total current liabilities | 57,443,291 | 54,862,969 | ||||
Long-term debt, net | 25,106,830 | 23,051,152 | ||||
Operating lease liabilities, net | 16,256,976 | 19,438,497 | ||||
Finance lease liabilities, net | 220,473,072 | 203,619,756 | ||||
Deferred tax liabilities | 8,728,100 | 10,452,211 | ||||
Total liabilities | 328,008,269 | 311,424,585 | ||||
Commitments and contingencies | ||||||
Equity: | ||||||
Common stock, $0.001 par value; 950,000,000 shares authorized; 660,742,624 | 660,742 | 650,224 | ||||
Additional paid-in capital | 463,869,968 | 458,498,402 | ||||
Accumulated deficit | (371,912,251) | (363,285,925) | ||||
Nutex Health Inc. equity | 92,618,459 | 95,862,701 | ||||
Noncontrolling interests | 15,607,720 | 24,464,699 | ||||
Total equity | 108,226,179 | 120,327,400 | ||||
Total liabilities and equity | $ | 436,234,448 | $ | 431,751,985 | ||
NUTEX HEALTH INC. | ||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(UNAUDITED) | ||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Revenue: | ||||||||||||
Hospital division | $ | 51,611,803 | $ | 51,604,679 | $ | 100,899,967 | $ | 130,731,921 | ||||
Population health management division | 7,312,651 | 6,443,254 | 14,353,904 | 6,443,254 | ||||||||
Total revenue | 58,924,454 | 58,047,933 | 115,253,871 | 137,175,175 | ||||||||
Operating costs and expenses: | ||||||||||||
Payroll and benefits | 24,860,702 | 24,356,184 | 50,697,375 | 49,966,401 | ||||||||
Contract services | 9,747,873 | 13,060,447 | 18,937,204 | 17,979,079 | ||||||||
Medical supplies | 3,264,202 | 2,581,552 | 7,288,084 | 6,841,031 | ||||||||
Depreciation and amortization | 4,169,160 | 3,132,485 | 8,162,907 | 5,529,346 | ||||||||
Other | 7,235,594 | 8,279,344 | 15,673,655 | 14,405,901 | ||||||||
Total operating costs and expenses | 49,277,531 | 51,410,012 | 100,759,225 | 94,721,758 | ||||||||
Gross profit | 9,646,923 | 6,637,921 | 14,494,646 | 42,453,417 | ||||||||
Corporate and other costs: | ||||||||||||
Facilities closing costs | - | - | 217,266 | - | ||||||||
Acquisition costs | - | 3,885,666 | - | 3,885,666 | ||||||||
Stock-based compensation expense | 249,645 | 54,166 | 2,149,645 | 54,166 | ||||||||
General and administrative expenses | 9,759,816 | 4,076,566 | 16,935,360 | 10,653,089 | ||||||||
Total corporate and other costs | 10,009,461 | 8,016,398 | 19,302,271 | 14,592,921 | ||||||||
Operating income (loss) | (362,538) | (1,378,477) | (4,807,625) | 27,860,496 | ||||||||
Interest expense, net | 4,843,048 | 4,369,609 | 7,983,137 | 6,225,583 | ||||||||
Other expense (income) | (123,528) | (1,403,222) | 123,927 | 977,323 | ||||||||
Income (loss) before taxes | (5,082,058) | (4,344,864) | (12,914,689) | 20,657,590 | ||||||||
Income tax expense (benefit) | (815,612) | 19,653,286 | (1,726,271) | 19,829,609 | ||||||||
Net income (loss) | (4,266,446) | (23,998,150) | (11,188,418) | 827,981 | ||||||||
Less: net loss attributable to noncontrolling interests | (787,399) | (4,713,304) | (2,562,092) | (1,417,475) | ||||||||
Net income (loss) attributable to Nutex Health Inc. | $ | (3,479,047) | $ | (19,284,846) | $ | (8,626,326) | $ | 2,245,456 | ||||
Earnings (loss) per common share | ||||||||||||
Basic | $ | (0.01) | $ | (0.03) | $ | (0.01) | $ | 0.00 | ||||
Diluted | $ | (0.01) | $ | (0.03) | $ | (0.01) | $ | 0.00 | ||||
NUTEX HEALTH INC. | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(UNAUDITED) | ||||||
Six Months Ended June 30, | ||||||
2023 | 2022 | |||||
Cash flows from operating activities: | ||||||
Net income (loss) | $ | (11,188,418) | $ | 827,981 | ||
Adjustment to reconcile net income (loss) to net cash from operating activities: | ||||||
Depreciation and amortization | 8,162,907 | 5,529,346 | ||||
Stock-based compensation expense | 2,149,645 | 54,166 | ||||
Deferred tax expense (benefit) | (1,724,111) | 12,013,748 | ||||
Debt accretion expense | 953,236 | 722,536 | ||||
Loss on lease termination | 58,211 | - | ||||
Non-cash lease expense | 61,734 | 629,094 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 6,921,239 | 19,745,666 | ||||
Accounts receivable - related party | (797,058) | 602,068 | ||||
Inventories | 1,082,509 | (93,004) | ||||
Prepaid expenses and other current assets | (3,048,993) | (2,002,401) | ||||
Accounts payable | (7,189,929) | 6,358,427 | ||||
Accounts payable - related party | 3,453 | (630,490) | ||||
Accrued expenses and other current liabilities | 5,619,907 | 9,645,922 | ||||
Net cash from operating activities | 1,064,332 | 53,403,059 | ||||
Cash flows from investing activities: | ||||||
Acquisitions of property and equipment | (7,446,902) | (16,621,726) | ||||
Acquired cash in reverse acquisition with Clinigence | - | 12,716,228 | ||||
Cash related to deconsolidation of Real Estate Entity | (1,039,157) | (2,421,212) | ||||
Net cash from investing activities | (8,486,059) | (6,326,710) | ||||
Cash flows from financing activities: | ||||||
Proceeds from lines of credit | 1,949,919 | 2,592,714 | ||||
Proceeds from notes payable | 16,952,905 | 4,865,974 | ||||
Repayments of lines of credit | (1,592,714) | (72,055) | ||||
Repayments of notes payable | (7,481,893) | (4,338,567) | ||||
Repayments of finance leases | (1,870,670) | (305,134) | ||||
Common stock issued for exercise of warrants | - | 4,119,141 | ||||
Common stock issued for exercise of options | - | 644,974 | ||||
Members' contributions | 649,550 | 4,731,117 | ||||
Members' distributions | (2,686,304) | (47,832,176) | ||||
Net cash from financing activities | 5,920,793 | (35,594,012) | ||||
Net change in cash and cash equivalents | (1,500,934) | 11,482,337 | ||||
Cash and cash equivalents - beginning of the period | 34,255,264 | 36,118,284 | ||||
Cash and cash equivalents - end of the period | $ | 32,754,330 | $ | 47,600,621 | ||
Non-GAAP Financial Measures
Adjusted EBITDA. Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.
We define Adjusted EBITDA as net income (loss) attributable to Nutex Health Inc. plus net interest expense, income taxes, depreciation and amortization, further adjusted for stock-based compensation, certain defined items of expense, any acquisition-related costs and impairments. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||
Reconciliation of net income (loss) attributable to Nutex | ||||||||||||
Net income (loss) attributable to Nutex Health Inc. | $ | (3,479,047) | $ | (19,284,846) | $ | (8,626,326) | $ | 2,245,456 | ||||
Depreciation and amortization | 4,169,160 | 3,132,485 | 8,162,907 | 5,529,346 | ||||||||
Interest expense, net | 4,843,048 | 4,369,609 | 7,983,137 | 6,225,583 | ||||||||
Income tax expense (benefit) | (815,612) | 19,653,286 | (1,726,271) | 19,829,609 | ||||||||
Allocation to noncontrolling interests | (972,655) | (1,696,226) | (1,727,965) | (3,521,488) | ||||||||
EBITDA | 3,744,894 | 6,174,308 | 4,065,482 | 30,308,506 | ||||||||
Facilities closing costs | - | - | 217,266 | - | ||||||||
Acquisition costs | - | 3,885,666 | - | 3,885,666 | ||||||||
Stock-based compensation expense | 249,645 | 54,166 | 2,149,645 | 54,166 | ||||||||
Adjusted EBITDA | $ | 3,994,539 | $ | 10,114,140 | $ | 6,432,393 | $ | 34,248,338 | ||||
About Nutex Health Inc.
Headquartered in Houston, Texas and founded in 2011, Nutex Health Inc. (NASDAQ: NUTX) is a healthcare management and operations company with two divisions: a Hospital Division and a Population Health Management Division.
The Hospital Division owns, develops and operates innovative health care models, including micro-hospitals, specialty hospitals, and hospital outpatient departments (HOPDs). This division owns and operates 22 facilities in 8 states.
The Population Health Management division owns and operates provider networks such as Independent Physician Associations (IPAs). Through our Management Services Organization (MSO), we provide management, administrative and other support services to our affiliated hospitals and physician groups. Our cloud-based proprietary technology platform aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers, allowing us to deliver greater quality care more efficiently.
Forward-Looking Statements
Certain statements and information included in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. When used in this press release, the words or phrases "will", "will likely result," "expected to," "will continue," "anticipated," "estimate," "projected," "intend," "goal," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, many of which are beyond the control of the Company. Such uncertainties and risks include, but are not limited to, our ability to successfully execute our growth strategy, changes in laws or regulations, including final rules implemented under the No Surprises Act and related regulatory guidance, economic conditions, dependence on management, dilution to stockholders, lack of capital, the effects of rapid growth upon the Company and the ability of management to effectively respond to the growth and demand for products and services of the Company, newly developing technologies, the Company's ability to compete, conflicts of interest in related party transactions, regulatory matters, protection of technology, lack of industry standards, the effects of competition and the ability of the Company to obtain future financing. An extensive list of factors that can affect future results are discussed in the Current Report on Form 10-Q for the period ended June 30, 2023 under the heading "Risk Factors" in Part I, Item IA thereof, and other documents filed from time to time with the Securities and Exchange Commission. Such factors could materially adversely affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed within this press release.
SOURCE Nutex Health, Inc.
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