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What changed in Nutex Health, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Nutex Health, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+262 added−226 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-03)

Top changes in Nutex Health, Inc.'s 2023 10-K

262 paragraphs added · 226 removed · 172 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+18 added−16 removed89 unchanged
Biggest changeIn addition, the TMA on January 1, 2023, also in the U.S. Eastern District, filed a lawsuit seeking declaratory and injunctive relief to invalidate a recent 600% percent increase in the administrative fees payable in the IDR process. ​ We are supportive of industry efforts challenging NSA.
Biggest changeEastern District, filed a lawsuit seeking declaratory and injunctive relief to invalidate a recent 600% percent increase in the administrative fees payable in the IDR process. ​ Effective January 1, 2024, in consultation with the Departments of Labor and Health and Human Services, the Internal Revenue Service (IRS) announced the annual increase that health plans must apply to the calculation of the QPA for insurance reimbursements to account for inflation from 2023 to 2024 (Notice 2024-1).
On our Internet website, http://www.nutexhealth.com, we post the following recent filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. 13 Table of Contents
On our Internet website, http://www.nutexhealth.com, we post the following recent filings as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. 12 Table of Contents
The Physician LLCs receive payment for doctor services from these same sources. On average, greater than 90% of our net patient service revenue is paid by insurers, federal agencies, and other non-patient third parties. The remaining revenues are paid by our patients in the form of copays, deductibles, and self-payment.
The Physician LLCs receive payment for doctor services from these same sources. On average, greater than 90% of our net patient service revenue is paid by insurers, federal agencies, and other non-patient third parties. The remaining revenues are directly paid by our patients in the form of copays, deductibles, and self-payment.
Producing a compelling work environment for physicians and hospitalists helps us deliver superior patient experiences and clinical outcomes. ​ • Offering a differentiated provider engagement and partnership strategy – Having high satisfaction and retention rates of physicians helps us in delivering superior patient experiences.
Producing a compelling work environment for physicians helps us deliver superior patient experiences and clinical outcomes. ​ • Offering a differentiated provider engagement and partnership strategy – Having high satisfaction and retention rates of physicians helps us in delivering superior patient experiences.
Sanctions for failure to comply with 9 Table of Contents applicable state and federal licensing, certification and other regulatory requirements include suspension, revocation or limitation of the applicable authorization, significant fines and penalties and/or an inability to receive reimbursement from government healthcare programs and other third-party payors. ​ Nutex’ providers must meet minimum requirements to apply for participation or continued participation with Nutex through a credentialing process, including, without limitation, having a valid, current medical license and DEA registration, if required for the provider’s scope of practice, the absence of any debarment, suspension, exclusion or other restriction from receiving payments from any government or other third-party payor program, and clearing National Practitioner Data Bank of any reports and/or disciplinary actions.
Sanctions for failure to comply with applicable state and federal licensing, certification and other regulatory requirements include suspension, revocation or limitation of the applicable authorization, significant fines and penalties and/or an inability to receive reimbursement from government healthcare programs and other third-party payors. ​ Nutex’ providers must meet minimum requirements to apply for participation or continued participation with Nutex through a credentialing process, including, without limitation, having a valid, current medical license and DEA registration, if required for the provider’s scope of practice, the absence of any debarment, suspension, exclusion or other restriction from receiving payments from any government or other third-party payor program, and clearing National Practitioner Data Bank of any reports and/or disciplinary actions.
Competition ​ The healthcare industry is highly competitive and highly fragmented. ‎We face competition in every aspect of our business, including in offering a favorable ‎reimbursement structure for existing physician partners and attracting physician ‎partners who are not contracted with us, from a range of large and medium-sized local and ‎national companies that provide care under a variety of models that could attract patients, ‎providers, and payors.
Competition ​ The healthcare industry is highly competitive and highly fragmented. ‎We face competition in every aspect of our business, including in offering a favorable ‎payment structure for existing physician partners and attracting physician ‎partners who are not contracted with us, from a range of large and medium-sized local and ‎national companies that provide care under a variety of models that could attract patients, ‎providers, and payors.
According to the American Hospital Association, there are approximately 5,139 community hospitals in the U.S., which are not-for-profit owned, investor owned, or state or local government owned. Of these hospitals, approximately 35% are located in non-urban communities. Hospital facilities offer a broad range of healthcare services, including internal medicine, general surgery, cardiology, oncology, orthopedics, OB/GYN and emergency services.
According to the American Hospital Association, there are approximately 5,129 community hospitals in the U.S., which are not-for-profit owned, investor owned, or state or local government owned. Of these hospitals, approximately 35% are located in non-urban communities. Hospital facilities offer a broad range of healthcare services, including internal medicine, general surgery, cardiology, oncology, orthopedics, OB/GYN and emergency services.
We plan to grow our operations by expanding our innovative micro-hospital model into several more states and developing IPAs which leverage our presence and physician relationships in each community we serve. ​ • Providing a patient-centric care model – We fulfill an underserved healthcare segment needing immediate and convenient access to primary and emergency care.
We plan to grow our operations by expanding our innovative micro-hospital model into several more states and developing IPAs which leverage our presence and physician relationships in each community we serve. ​ • Providing a patient-centric care model – We fulfill a healthcare segment needing immediate and convenient access to primary and emergency care.
The physician partners’ financial participation through ownership in whole, or in part, of the above entities aligns our interests towards achieving common business goals and helps us have a high satisfaction and retention rate of physicians. ​ Having good physician relationships is also fundamental to our success in developing and operating IPAs.
The physician partners’ financial participation through ownership in whole, or in part, of the above entities aligns our interests towards achieving common business goals and helps us target a high satisfaction and retention rate of physicians. ​ Having good physician relationships is also fundamental to our success in developing and operating IPAs.
CMS anticipates that total U.S. healthcare annual expenditures will reach nearly $6.2 trillion by 2028, accounting for approximately 19.7% of the total U.S. gross domestic product. ​ Hospital services, the market within the healthcare industry in which we primarily operate, is the largest single category of healthcare expenditures.
CMS anticipates that total U.S. healthcare annual expenditures will reach nearly $7.2 trillion by 2031, accounting for approximately 19.6% of the total U.S. gross domestic product. ​ Hospital services, the market within the healthcare industry in which we primarily operate, is the largest single category of healthcare expenditures.
We contract with the physician entities to provide administrative services including claims billing and collections, financial accounting and other responsibilities. ​ • Hospital facility entity – Nutex typically has 70% or more equity ownership of new hospital facilities and in-market physicians usually own much of the remaining equity.
We contract with the physician entities to provide administrative services including claims billing and collections, financial accounting and other responsibilities. ​ • Hospital facility entity – Nutex typically has 60% or more equity ownership of new hospital facilities and in-market physicians usually own much of the remaining equity.
Unlike the AKS, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral. ​ The Federal False Claims Act, or FCA, prohibits a person from knowingly presenting, or caused to be presented, a false or fraudulent request for payment from the federal government, or from making a false statement or using a false record to have a claim approved.
Unlike the AKS, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral. 9 Table of Contents ​ The Federal False Claims Act, or FCA, prohibits a person from knowingly presenting, or caused to be presented, a false or fraudulent request for payment from the federal government, or from making a false statement or using a false record to have a claim approved.
Of particular importance are: ​ • No Surprises Act; • the federal physician self-referral law, commonly referred to as the Stark Law; • the federal Anti-Kickback Act; • the criminal healthcare fraud provisions of HIPAA; • the federal False Claims Act; • reassignment of payment rules that prohibit certain types of billing and collection; • similar state law provisions pertaining to anti-kickback, self-referral and false claims issues; • state laws that prohibit general business corporations, such as us, from practicing medicine; • laws that regulate debt collection practices as applied to our debt collection practices; ​ No Surprises Act.
Of particular importance are: 6 Table of Contents ​ • No Surprises Act; • the federal physician self-referral law, commonly referred to as the Stark Law; • the federal Anti-Kickback Act; • the criminal healthcare fraud provisions of HIPAA; • the federal False Claims Act; • reassignment of payment rules that prohibit certain types of billing and collection; • similar state law provisions pertaining to anti-kickback, self-referral and false claims issues; • state laws that prohibit general business corporations, such as us, from practicing medicine; • laws that regulate debt collection practices as applied to our debt collection practices; ​ No Surprises Act.
The survey found that in more than 90% of claims surveyed, insurance companies did comply with the NSA’s statutory and regulatory requirements for QPA disclosure and that the average claim payment declined 32% per ER Visit post-NSA. ​ 8 Table of Contents While we are working within the established processes for IDR, we have had varying successes at achieving collections at or higher than the established QPA.
The survey found that in more than 90% of claims surveyed, insurance companies did comply with the NSA’s statutory and regulatory requirements for QPA disclosure and that the average claim payment declined 32% per ER Visit post-NSA. ​ While we are working within the established processes for IDR, we have had varying successes at achieving collections at or higher than the established QPA.
In addition to establishing and maintaining strong physician relationships, our growth strategy requires significant financial resources to equip and staff new locations, fund cash needs until the location becomes profitable and provide for working capital needs.
In addition to establishing and maintaining strong physician relationships, our growth strategy requires significant financial resources to acquire, build, equip and staff new locations, fund cash needs until the location becomes profitable and provide for working capital needs.
These include:‎ ​ • ‎maximizing our claims coding efficiency,‎ • ‎‎increasing efforts to collect co-pays and co-insurance,‎ • ‎‎adding additional administrative staff to handle the increased administrative IDR burden, • ‎‎having a dedicated IDR team to accelerate resubmission of claims under the IDR process,‎ • ‎‎making appeals for additional payment of claims for periods before and after the NSA final rule was adopted through the ‎IDR process,‎ • ‎‎ making efforts to sign favorable contracts with new insurers, • working to sign more favorable contracted rates with existing contracted providers, • ‎working with both local and national legislatures to enforce the NSA rules and guidelines for Insurers,‎ and • ‎focusing on the value-base IPA side of our business, which is less affected by the NSA. ​ HHS Final Rule .
These include:‎ ​ • ‎maximizing our claims coding efficiency,‎ 7 Table of Contents • ‎‎increasing efforts to collect co-pays and co-insurance,‎ • ‎‎adding additional administrative staff to handle the increased administrative IDR burden, • ‎‎having a dedicated IDR team to accelerate resubmission of claims under the IDR process,‎ • ‎‎making appeals for additional payment of claims for periods before and after the NSA final rule was adopted through the ‎IDR process,‎ • ‎‎making efforts to sign favorable contracts with new insurers, • working to sign more favorable contracted rates with existing contracted providers, • ‎working with both local and national legislatures to enforce the NSA rules and guidelines for Insurers,‎ and • ‎focusing on the value-based IPA side of our business, which is less affected by the NSA. ​ HHS Final Rule .
Item 1. Business Nutex Health Inc. (“Nutex Health” or the “Company”) is a physician-led, healthcare services and operations company with 19 hospital facilities in eight states (hospital division), and a primary care-centric, risk-bearing population health management division. Our hospital division implements and operates innovative health care models, including micro-hospitals, specialty hospitals and hospital outpatient departments (“HOPDs”).
Item 1. Business Overview ​ Nutex Health Inc. (“Nutex Health” or the “Company”) is a physician-led, healthcare services and operations company with 20 hospital facilities in eight states (hospital division), and a primary care-centric, risk-bearing population health management division. Our hospital division implements and operates innovative health care models, including micro-hospitals, specialty hospitals and hospital outpatient departments (“HOPDs”).
Capitation revenue consists primarily of capitated fees for medical services provided by physician-owned entities we consolidate as VIEs. Capitated arrangements are made directly with various managed care providers including HMOs. Capitation revenues are typically prepaid monthly to us based on the number of enrollees selecting us as their healthcare provider.
Capitation revenue consists primarily of capitated fees for medical services provided by physician-owned entities we consolidate as VIEs. Capitated arrangements are made directly with various managed care providers including HMOs. Capitation revenues are typically prepaid 2 Table of Contents monthly to us based on the number of enrollees selecting us as their healthcare provider.
In addition, certain ancillary services such as the provision of diagnostic laboratory testing require additional state and federal licensure and regulatory oversight, including oversight by CMS, under Clinical Laboratory Improvement Amendments of 1988, or CLIA, which requires all clinical laboratories to meet certain quality assurance, quality control and personnel standards, and comparable state laboratory licensing authorities.
In addition, certain ancillary services such as the provision of diagnostic laboratory testing require additional state and federal licensure and regulatory oversight, including 8 Table of Contents oversight by CMS, under Clinical Laboratory Improvement Amendments of 1988, or CLIA, which requires all clinical laboratories to meet certain quality assurance, quality control and personnel standards, and comparable state laboratory licensing authorities.
Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order initiating a special enrollment period from February 15, 2021, through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
Supreme Court dismissed the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order initiating a special 10 Table of Contents enrollment period from February 15, 2021, through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
To complement our organic growth plans, we may, in the normal course of business, consider and review opportunistic acquisitions. ​ Our Growth Strategy We are focused on expanding patient access to quality healthcare by opening or acquiring new micro-hospital facilities in underserved areas of the United States.
To complement our organic growth plans, we may, in the normal course of business, consider and review opportunistic acquisitions. ​ Our Growth Strategy We are focused on expanding patient access to quality healthcare by opening or acquiring new micro-hospital facilities in high demand areas of the United States.
A claim includes “any request or demand” for money or property presented to the United States government. Moreover, the government may assert that a claim including items and services resulting from a violation of the AKS or the Stark Law constitutes a 10 Table of Contents false or fraudulent claim for purposes of the civil False Claims Act.
A claim includes “any request or demand” for money or property presented to the United States government. Moreover, the government may assert that a claim including items and services resulting from a violation of the AKS or the Stark Law constitutes a false or fraudulent claim for purposes of the civil False Claims Act.
In some states, statutes, regulations and/or formal guidance explicitly address whether and in what manner the state regulates the transfer of risk by a payor to a downstream entity. However, the majority of states do not explicitly address the issue, and in such states, regulators may nonetheless interpret statutes and regulations to regulate such 12 Table of Contents activity.
In some states, statutes, regulations and/or formal guidance explicitly address whether and in what manner the state regulates the transfer of risk by a payor to a downstream entity. However, the majority of states do not explicitly address the issue, and in such states, regulators may nonetheless interpret statutes and regulations to regulate such activity.
As well, t here can be no assurance that third-party payors will not attempt to further reduce the rates they pay for our services or that additional rules issued under the NSA will not have adverse consequences to our business. ​ Regulatory Licensing and Certification.
Also, t here can be no assurance that third-party payors will not attempt to further reduce the rates they pay for our services or that additional rules issued under the NSA will not have adverse consequences to our business. ​ Regulatory Licensing and Certification.
It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact the ACA or our business. ​ 11 Table of Contents In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact the ACA or our business. ​ In addition, other legislative changes have been proposed and adopted since the ACA was enacted.
The ACA required, among other things, CMS to establish a Medicare shared savings program that promotes accountability and coordination of care through the creation of ACOs.
The ACA required, among other things, CMS to establish a Medicare shared savings program that promotes accountability and coordination of care through the creation of Accountable Care Organizations (ACOs).
Once established, the IPA enrolls patients and negotiates managed care contracts with insurers to provide comprehensive care to their patients typically for a value-based fixed annual fee (capitation). The IPA entities are not owned by us but are managed by our management services organization 2 Table of Contents (MSO) which provides management, administrative, and other support services.
Once established, the IPA enrolls patients and negotiates managed care contracts with insurers to provide comprehensive care to their patients typically for a value-based fixed annual fee (capitation). The IPA entities are not owned by us but are managed by our management services organization (MSO) which provides management, administrative, and other support services.
We receive management fees that are based on gross capitation revenues of the IPAs or physician groups we manage. 3 Table of Contents ​ Our Strategy Our mission is to make exceptional concierge-level healthcare more accessible to communities.
We receive management fees that are based on gross capitation revenues of the IPAs or physician groups we manage. ​ Our Strategy Our mission is to make exceptional concierge-level healthcare more accessible to communities.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. ​ Federal and State Insurance and Managed Care Laws .
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. ​ 11 Table of Contents Federal and State Insurance and Managed Care Laws .
We anticipate launching one-to-three additional IPAs per year principally in geographic areas around our existing micro-hospitals. ​ 4 Table of Contents The following map shows our existing and planned presence across the United States: ​ Our process for opening a new micro-hospital begins with identifying underserved markets. Generally, we place our micro-hospitals in larger suburban or rural locations.
We anticipate launching one-to-three additional IPAs per year principally in geographic areas around our existing micro-hospitals. ​ 3 Table of Contents The following map shows our existing and planned presence across the United States: ​ Our process for opening a new micro-hospital begins with identifying high demand markets. Generally, we place our micro-hospitals in larger suburban or rural locations.
Our population health management division establishes and operates independent physician associations (IPAs) and offers a cloud-based platform for healthcare organizations to provide value-based care and population health management. ​ An IPA is a business entity organized and owned by a network of independent physician practices.
Our population health management division establishes and operates IPAs and offers a cloud-based platform for healthcare organizations to provide value-based care and population health management. ​ 1 Table of Contents An IPA is a business entity organized and owned by a network of independent physician practices.
The physician entity employs or contracts with 5 Table of Contents physicians who will staff the new location.
The physician entity employs or contracts with 4 Table of Contents physicians who will staff the new location.
CMS projects that the hospital services category will grow at an average of 6.0% annually from 2022 through 2028, reaching nearly $2.1 trillion by 2028. ​ The U.S. hospital industry includes acute care, rehabilitation and psychiatric facilities that are either public (government owned and operated), not-for-profit private (religious or secular), or for-profit institutions (investor owned).
CMS projects that the hospital services category will grow at an average of 6.1% annually from 2025 through 2031, reaching nearly $2.3 trillion by 2031. ​ The U.S. hospital industry includes acute care, rehabilitation and psychiatric facilities that are either public (government owned and operated), not-for-profit private (religious or secular), or for-profit institutions (investor owned).
These facilities are either under construction or in advanced planning stages and will result in our expansion into four new states: Florida, Wisconsin, Ohio and Idaho.
These facilities are either under construction or in advanced planning stages and will result in our expansion into three new states: Florida, Wisconsin, and Idaho.
We own and operate 19 ‎healthcare facilities across eight ‎states and have an additional 17 de novo micro-hospitals under ‎development. ​ Our micro-hospitals generate revenue from both emergency services and in-patient services, providing operating leverage and high earning potential of each facility.
We own and operate 20 ‎healthcare facilities across eight ‎states and currently have an additional 12 de novo micro-hospitals under ‎development. ​ Our micro-hospitals generate revenue from both emergency services and in-patient services, providing operating leverage and high earning potential of each facility.
This platform provides SaaS solutions that enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights. Our solutions help healthcare organizations improve the quality and cost effectiveness of care, enhance population health management and optimize provider networks. ​ Real Estate Division.
This platform provides Software as a Service (“SaaS”) solutions that enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights. Our solutions help healthcare organizations improve the quality and cost effectiveness of care, enhance population health management and optimize provider networks. ​ Real Estate Division.
We also anticipate forming another IPA in 2023 in Phoenix, Arizona. We consolidate the IPA entities in our financial statements as VIEs since we manage these entities. ​ We also provided limited services to one health maintenance organization (“HMO”) and two other IPAs in Southern and Northern California. ​ Our cloud-based technology is offered by Clinigence Health, Inc.
We consolidate the IPA entities in our financial statements as VIEs since we manage these entities. ​ We also provided limited services to one health maintenance organization (“HMO”) and two other IPAs in Southern and Northern California. ​ Our cloud-based technology is offered by Clinigence Health, Inc.
Certain of the states where we currently operate or may choose to operate in the future regulate the operations and financial condition of risk bearing organizations like us and our affiliated providers. ​ Employees We had 1,150 full- and part-time employees as of December 31, 2022, including our named executive officers.
Certain of the states where we currently operate or may choose to operate in the future regulate the operations and financial condition of risk bearing organizations like us and our affiliated providers. ​ Employees ​ We had 800 full-time employees as of December 31, 2023, including our named executive officers.
We believe our business, ‎partnership and operations model enables us to compete favorably. ‎ ​ The Healthcare Industry ​ According to the Centers for Medicare & Medicaid Services, or CMS, national healthcare expenditures grew 9.7% in 2020 to $4.1 trillion.
We believe our business, ‎partnership and operations model enables us to compete favorably. ‎ ​ The Healthcare Industry ​ According to the Centers for Medicare & Medicaid Services, or CMS, national healthcare expenditures grew 4.1% in 2022 to $4.5 trillion.
The provider and insurer each submits a proposed payment amount and ‎‎explanation to the arbitrator.
The provider and insurer each submit a proposed payment amount and ‎‎explanation to the arbitrator.
Many of these entities are owned in part, and in some cases, controlled by related parties including members of our executive management team. ​ The Physician LLCs are consolidated by the Company as variable interest entities (VIEs) because they do not have significant equity at risk, and we have historically provided support to the Physician LLCs in the event of cash shortages and received the benefit of their cash surpluses. ​ Population Health Division.
Many of these entities are owned in part, and in some cases, controlled by our Chairman and Chief Executive Officer. ​ The Physician LLCs are consolidated by the Company as variable interest entities (VIEs) because they do not have significant equity at risk, and we have historically provided support to the Physician LLCs in the event of cash shortages and received the benefit of their cash surpluses. ​ Population Health Division.
The population health management division owns and operates provider networks such as independent physician associations (“IPAs”) and offers a cloud-based proprietary technology platform to IPAs which aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers. ​ We employ 1,150 full- and part-time employees and partner with over 800 physicians.
The population health management division owns and operates provider networks such as independent physician associations (“IPAs”) and offers a cloud-based proprietary technology platform to IPAs which aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers. ​ We employ 800 full-time employees, contract 230 doctors at our facilities and partner with over 1,700 physicians within our networks.
In other words, the ‎qualifying payment amount is typically the median rate the insurer would have paid for ‎the service if provided by an in-‎network provider or facility.‎ ​ Since the NSA became effective January 1, 2022, our average payment by insurers of patient claims for emergency services has declined by approximately 30% including as much as a 37% reduction for physician services.
In other words, the ‎qualifying payment amount is typically the median rate the insurer would have paid for ‎the service if provided by an in-‎network provider or facility.‎ ​ After the NSA became effective January 1, 2022, our average payment by insurers of patient claims for emergency services had declined by approximately 30%, including 37% reduction for physician services, at the end of 2022.
Our business strategy is to increase stockholder value through sustained earnings growth and cash flow generation by: ​ • Developing and operating innovative micro-hospitals – We currently operate 19 micro-hospital facilities in eight states and one IPA.
Our business strategy is to increase stockholder value through earnings growth and cash flow generation by: ​ • Developing and operating innovative micro-hospitals – We currently operate 20 micro-hospital facilities in eight states and three IPAs.
Once the physician provider network is secured, we work to contract with health insurance plans and begin enrolling patients in the new IPA. ​ We may achieve our growth strategy in part by acquiring or contracting existing healthcare facilities and IPAs. ​ There can be no assurance that we will be successful in executing our growth strategy.
Once the physician provider network is secured, we work to contract with health insurance plans and begin enrolling patients in the new IPA. ​ We may achieve our growth strategy in part by acquiring or contracting existing healthcare facilities and IPAs.
We are also establishing IPAs in many of the locales where we operate micro-hospitals in order to leverage our community presence and relationships with in-market physicians. ​ We expect to open 15 to 20 new hospital facilities by the middle of the year 2025.
We are also establishing IPAs in many of the locales where we operate micro-hospitals in order to leverage our community presence and relationships with in-market physicians. ​ We expect to open five new hospital facilities in 2024.
We believe opportunities exist in selected markets to create micro-hospitals serving the community’s emergency needs which expand the reach of healthcare services and have less wait times for care often seen in larger hospital emergency departments. ​ Physician and clinical services expenditures grew 5.4% to $809.5 billion in 2020, faster growth than the 4.2% in 2019.
We believe opportunities exist in selected markets to create micro-hospitals serving the community’s emergency needs which expand the reach of healthcare services and have less wait times for care often seen in larger hospital emergency departments. ​ Physician and clinical services expenditures grew 2.7% to $884.9 billion in 2022, slower growth than the 5.3% in 2021.
During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans, leaving three Real Estate Entities as current VIEs consolidated in our financial statements. ​ Sources of Revenue ​ The following table shows revenue for each of our operating segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2022 2021 2020 Hospital Division: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net patient service revenue ​ $ 197,254,222 ​ $ 331,531,311 $ 274,029,061 Management fees ​ ​ 1,254,023 ​ ​ - ​ ​ - Total Hospital Division revenue ​ ​ 198,508,245 ​ ​ 331,531,311 ​ ​ 274,029,061 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Population Health Management Division: ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitation revenue, net ​ ​ 15,493,432 ​ ​ - ​ ​ - Management fees ​ ​ 4,346,763 ​ ​ - ​ ​ - SaaS revenue ​ ​ 945,866 ​ ​ - ​ ​ - Total Population Health Management Division revenue ​ ​ 20,786,061 ​ ​ - ​ ​ - Total revenue ​ $ 219,294,306 ​ $ 331,531,311 ​ $ 274,029,061 ​ Our hospital division receives payment for facility services rendered by us from federal agencies, private insurance carriers, and patients.
Since the second quarter of 2022, we deconsolidated 20 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans, leaving two Real Estate Entities as current VIEs consolidated in our financial statements. ​ Sources of Revenue ​ The following table shows revenue for each of our operating segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ 2023 2022 2021 Hospital Division: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net patient service revenue ​ $ 216,329,291 ​ $ 197,254,222 $ 331,531,311 Management fees ​ ​ 1,741,106 ​ ​ 1,254,023 ​ ​ - Total Hospital Division revenue ​ ​ 218,070,397 ​ ​ 198,508,245 ​ ​ 331,531,311 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Population Health Management Division: ​ ​ ​ ​ ​ ​ ​ ​ ​ Capitation revenue, net ​ ​ 25,402,973 ​ ​ 15,493,432 ​ ​ - Management fees ​ ​ 2,913,248 ​ ​ 4,346,763 ​ ​ - SaaS revenue ​ ​ 1,259,698 ​ ​ 945,866 ​ ​ - Total Population Health Management Division revenue ​ ​ 29,575,919 ​ ​ 20,786,061 ​ ​ - Total revenue ​ $ 247,646,316 ​ $ 219,294,306 ​ $ 331,531,311 ​ Our hospital division receives payment for facility services rendered by us from federal agencies, private insurance carriers, and patients.
Presently, we manage one IPA located in Los Angeles, California having over 22,000 patients. We have established two other IPAs, in Houston and in South Florida, and are actively contracting with primary care physicians and specialists. Once this phase is completed, we expect to contract with health insurance plans and start enrolling patients in 2023.
Presently, we manage one IPA located in Los Angeles, California having over 22,000 patients. We have established two other IPAs, in Houston and in South Florida, and are actively contracting with primary care physicians and specialists.
We believe we have good relations with our employees. ​ Where You Can Find More Information We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Securities and Exchange Commission (the “SEC”).
We invest in those areas in an effort to ensure that we continue to be the employer of choice for our team members. ​ Where You Can Find More Information We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the Securities and Exchange Commission (the “SEC”).
In our experience, insurers often initially pay amounts lower than the QPA without regard for other information relevant to the claim. This requires us to make appeals using the IDR process. We submitted almost 28 thousand cases for IDR in 2022, most in the fourth quarter.
In 2023, we experienced a 5% improvement from 2022 in emergency services but a 10% reduction for physician services, for an overall impact of 3% increase combined in 2023. In our experience, insurers often initially pay amounts lower than the QPA without regard for other information relevant to the claim. This requires us to make appeals using the IDR process.
Federal expenditures for healthcare increased by 36% largely in response to the COVID-19 pandemic while private health 6 Table of Contents insurance spending decreased 1%.
Federal expenditures for healthcare increased by 1.0% due to the strong growth in federal Medicaid expenditures offset by 5 Table of Contents declines in other federal health insurance programs due to reduced COVID-19 federal funding, while private health insurance spending increased by 5.9%.
We believe that wait times are significantly lower than traditional ER settings and patients are welcomed by a friendly, attentive staff and physician team. Our hospital division generally operates as an out-of-‎network provider and, as such, does not have negotiated reimbursement rates with insurance ‎companies.
We believe that wait times are significantly lower than traditional ER settings and patients are welcomed by a friendly, attentive staff and physician team.
Our management and administrative teams provide a comprehensive suite of ‎operational and managerial services to hospitals, including management, billing, collections, recruiting ‎and marketing. Our licensed micro-hospitals average approximately 13 thousand feet and include seven to eight emergency treatment rooms, two to ten in-patient beds for short-term stays and advanced imaging equipment.
Our licensed micro-hospitals average approximately 15,000 to 25,000 square feet and include seven to eight emergency treatment rooms, two to ten in-patient beds for both short- and long-term stays and advanced imaging equipment, laboratory and pharmacy.
Our experience, like that of many other healthcare providers, is that the final rule continues to unfairly favor insurers in the determination of the QPA we receive for our healthcare services. It is difficult to predict the ultimate outcome of efforts to challenge or amend the final rule.
Under that approach, the cumulative update that must be applied to 2019 base year rates is 20.9%. ​ We are supportive of industry efforts challenging NSA. Our experience, like that of many other healthcare providers, is that the final rule continues to unfairly favor insurers in the determination of the QPA we receive for our healthcare services.
The IDR process and subsequent appeals, should we pursue them, require extensive administrative time and delays in collections. ​ Our experience is similar to that of other healthcare providers. In February 2023, the Emergency Department Physician Management Association reported survey results of its membership.
While we are working within the established processes for IDR, we have had varying successes at achieving collections at or higher than the established QPA. ​ Our experience is similar to that of other healthcare providers. In February 2023, the Emergency Department Physician Management Association reported survey results of its membership.
These contracts provide for payment to us of claims at 300% of the Medicare allowable rates for our services provided to PNA members. ​ The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology.
As noted, we generally operate as an out-of-‎network provider and, as such, do not have negotiated reimbursement rates with insurance ‎companies. ​ The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology.
These contracts provide for payment to us of claims at 300% of the Medicare allowable rates for our services provided to PNA members. ​ When developing new hospitals, we provide a turn-key process from location selection, real estate design, ‎and development of the facility to staffing, training and operations.
Our hospital division generally operates as an out-of-‎network provider and, as such, does not have negotiated reimbursement rates with insurance ‎companies. ​ When developing new hospitals, we provide a turn-key process from location selection, real estate design, ‎and development of the facility to staffing, training and operations.
Our corporate headquarters is based in Houston, Texas. We were incorporated on April 13, 2000 in the state of Delaware. ​ Merger of Nutex Health Holdco LLC and Clinigence Holdings, Inc . On April 1, 2022, the merger (the “Merger”) of Nutex Health Holdco LLC and Clinigence Holdings, Inc.
Our corporate headquarters is based in Houston, Texas. We were incorporated on April 13, 2000 in the state of Delaware. ​ Operating Segments ​ We report the results of our operations as three segments: (i) the hospital division, (ii) the population health management (PHM) division and (ii) the real estate division. ​ Hospital Division.
Our IPAs offer a trusted network of primary care physicians and specialists fostering closer patient-physician relationships. ​ COVID-19 Pandemic ​ A novel strain of coronavirus causing the disease known as COVID-19 was first identified in December 2019 and spread throughout the world.
Our IPAs offer a trusted network of primary care physicians and specialists fostering closer patient-physician relationships. ​ COVID-19 Public Health Emergency Orders ​ On May 11, 2023, the Department of Health and Human Services (“HHS”) declared the end of the public health emergency (“PHE”) for the COVID-19 pandemic.
In 2020, hospital care expenditures increased 6.4%, slightly faster than the growth rate of 6.3% in 2019, and totaled nearly $1.3 trillion. This growth reflected a substantial amount of funding from federal programs (including COVID-19 relief) and larger increases in Medicaid spending compared to prior years.
In 2022, hospital care expenditures increased 2.2%, slower than the growth rate of 4.5% in 2021, and totaled nearly $1.4 trillion. The slower growth in 2022 reflected a slowdown in spending for hospital care by private health insurance, Medicare, and Medicaid.
Removed
(“Clinigence”) was completed pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) entered on November 23, 2021 between Clinigence, Nutex Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of Clinigence, Nutex, Micro Hospital Holding LLC (solely for the purposes of certain sections of the Merger Agreement), Nutex Health Holdco LLC and Thomas Vo, M.D., solely in his capacity as the representative of the equity holders of Nutex Health Holdco LLC. ​ In connection with the Merger Agreement, Nutex Health Holdco LLC entered into certain Contribution Agreements with holders of equity interests (“Nutex Owners”) of subsidiaries and affiliates (the “Nutex Subsidiaries”) pursuant to which such Nutex Owners agreed to contribute certain equity interests in the Nutex Subsidiaries to Nutex Health Holdco LLC in exchange for specified equity interests in Nutex Health Holdco LLC (collectively, the “Contribution Transaction”).
Added
Our management and administrative teams provide a comprehensive suite of ‎operational and managerial services to hospitals, including management, billing, collections, human resources and recruiting, legal, accounting, ‎and marketing.
Removed
Nutex owners having ownership interests representing approximately 84% of the agreed upon aggregate equity value of the Nutex Subsidiaries agreed to contribute all or a portion of their equity interests, as applicable. ​ Pursuant to the Merger Agreement, each unit representing an equity interest in Nutex Health Holdco LLC issued and outstanding immediately prior to the effective time of the Merger but after the Contribution Transaction (collectively, the “Nutex Membership Interests”) was converted into the right to receive 3.571428575 shares of common stock of Clinigence, or an aggregate of 592,791,712 shares of common stock of Clinigence. ​ Potential Future Stock Issuances.
Added
As of the date of this filing, our Houston IPA enrolled over 1,900 new Medicare Advantage (“MA”) patients and our South Florida IPA enrolled over 200 new MA patients, and in California, Associated Hispanic Physicians IPA (“AHP”) enrolled 300 new MA members.
Removed
Under the terms of the Contribution Agreements, contributing owners of the under construction hospitals and ramping hospitals are eligible to receive a one-time additional issuance of Company common stock. ​ ● With respect to ramping hospitals, 24 months after the opening date (the “Determination Date”) of the applicable ramping hospital, such owner is eligible to receive such owner’s pro rata share of a number of shares of Company Common Stock equal to (a)(i) the trailing twelve months earnings before interest, taxes, depreciation and amortization on the respective Determination Date, multiplied by (ii) 10, (iii) minus the initial equity value received at the Closing of the Merger, and (iv) minus such owner’s pro rata share of the aggregate debt of the applicable ramping hospital outstanding as of the closing of the Merger.
Added
In total, the Company now has over 4,500 MA members across its platform, in addition to over 6,300 commercial members and over 21,000 Medicaid managed care members. We also anticipate operationalizing our IPA in Phoenix, Arizona in 2024 and to enter 1-2 more new markets this 2024.
Removed
The number of additional shares to be issued will be determined based on the greater of (a) the price of the Company’s common stock at the time of determination or (b) $2.80. ​ ● With respect to under construction hospitals, contributing owners of under construction hospitals will be eligible to receive, on the Determination Date, such owner’s pro rata share of a number of shares of Company common stock equal to (a)(i) the trailing twelve months earnings before interest, taxes, depreciation and amortization as of the Determination Date multiplied by (ii) 10, minus (iii) the aggregate amount of such owner’s capital contribution to the under construction hospital, minus (iv) such owner’s pro rata share of the aggregate debt of the applicable under construction hospital outstanding as of the Closing of the Merger, divided by (b) the greater of (i) the price of the Company common stock at the time of determination or (ii) $2.80. ​ After completing the merger, Clinigence was renamed Nutex Health Inc. ​ Lock-up agreements.
Added
We currently have an IPA presence in the top three states for seniors, California, Florida, and Texas, which make up a quarter of the nation’s seniors. ​ We may not be successful in executing our growth strategy.
Removed
Also on April 1, 2022, each member of Nutex Health Holdco LLC entered into a Lock-up agreement agreeing not to, without the prior written consent of the Company and except in limited circumstances (i) offer, pledge, sell, contract to sell, sell 1 Table of Contents any option or contract purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of their shares of Company common stock received in the merger or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of such shares. ​ The lock-up restrictions terminated with respect to one-third of the shares of Company Common Stock on October 1, 2022.
Added
Emergency, public health and executive orders, issued, extended, or declared by the U.S. federal and state governments in response to the COVID-19 pandemic have waived numerous legal requirements while also imposing new legal restrictions which are issued, rescinded or modified with little advance notice.
Removed
The lock-up restrictions terminate for the remaining shares on April 1, 2023 (one-third) and October 1, 2023 (final one-third). ​ Registration rights agreement.
Added
These emergency, public health and executive orders have created significant uncertainty in the legal and operational duties of health care providers.
Removed
In September 2022, we filed a registration statement pursuant to a registration rights agreement dated as of April 1, 2022 and amended effective as of July 1, 2022, to register for resale one-third of the shares of Company common stock issued in the merger that were released from lockup restrictions on October 1, 2022.
Added
The declaration of the end of the public health emergency has and will continue to result in the rescission and modification of a number of regulatory requirements which will likely increase the uncertainty of the legal and operational duties of health care providers.
Removed
The registration rights agreement terminates on the earlier of (i) when the shares may be sold under Rule 144 without any restrictions or (ii) the dissolution or liquidation of the Company. ​ Operating Segments ​ We report the results of our operations as three segments: (i) the hospital division, (ii) the population health management (PHM) division and (ii) the real estate division. ​ Hospital Division.
Added
While we have taken measures to plan and prepare for the end of the public health emergency, failure to adjust our operations based upon the public health emergency reaching its end and the resulting wind down of certain regulatory measures put in place to respond to public health concerns as a result of the global pandemic could have a material adverse impact on our business. ​ Governmental Regulation The healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments.
Removed
In the fourth quarter of 2022, we signed in-network provider contracts with the Provider Network of America (PNA).
Added
We submitted 90,000 cases for IDR open negotiation in 2023 and 28,000 cases for IDR open negotiation in 2022, most in the fourth quarter. The IDR process, subsequent appeals and insurance payor delays require extensive administrative time and delays in collections.
Removed
As noted, we generally operate as an out-of-‎network provider and, as such, do not have negotiated reimbursement rates with insurance ‎companies. In the fourth quarter of 2022, we signed in-network provider contracts with the Provider Network of America (PNA).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAn inactive trading market may also impair the Company’s ability to both raise capital by selling shares of capital stock, attract and motivate employees through equity incentive awards and acquire other companies, products, or technologies by using shares of capital stock as consideration. ​ There can be no assurance that will be able to comply with the continued listing standards of Nasdaq. ​ If Nasdaq delists our Common Stock from trading on its exchange for failure to meet the listing standards, we could face significant material adverse consequences including: ​ • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that our Common Stock is a “penny stock,” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future. ​ Anti-takeover provisions under Delaware law could make an acquisition of the Company, which may be beneficial to the stockholders of the Company, more difficult and may prevent attempts by the stockholders to replace or remove management. ​ We are subject to the anti-takeover provisions of the Delaware General Corporation Law (“DGCL”), including Section 203.
Biggest changeNasdaq’s determination is based on the Company’s meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on 32 Table of Contents The Nasdaq Capital Market with the exception of the Minimum Bid Price Requirement, and the Company’s written notice of its intention to cure the deficiency during the Second Compliance Period by effecting a reverse stock split, if necessary. ​ If we fail to regain compliance or fail to continue to meet all applicable continued listing requirements for Nasdaq in the future and Nasdaq determines to delist our common stock, we could face significant material adverse consequences including: ​ • a limited availability of market quotations for our securities; • reduced liquidity for our securities; • a determination that our Common Stock is a “penny stock,” which will require brokers trading in our Common Stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; • inability to obtain financing to repay debt and fund our operations; • a decreased ability to issue additional securities or obtain additional financing in the future; and • a limited amount of news and analyst coverage. ​ We may experience additional ownership dilution as a result of the September 2023 Private Offering ​ From September 2023 to December 2023, the Company conducted a private offering of convertible notes and warrants to accredited investors (the “Holders”) as defined in Rule 501 under the 1933 Act and issued notes convertible into an aggregate of 13,462,500 shares of common stock at a conversion price of $0.40 per share and warrants to purchase an aggregate of 6,731,250 shares of common stock an exercise price of $0.40 per share.
The Company will be required to continue to expand its employee base and hire additional employees to support its operations as a public company, which will increase operating costs in future periods. ​ Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. ​ Our business and the markets in which we operate are new and rapidly evolving which make it difficult to evaluate and assess the success of our business to date, our future prospects and the risks and challenges that we may encounter.
The Company may be required to continue to expand its employee base and hire additional employees to support its operations as a public company, which will increase operating costs in future periods. ​ Our business and the markets in which we operate are new and rapidly evolving, which makes it difficult to evaluate our prospects and the risks and challenges we may encounter. ​ Our business and the markets in which we operate are new and rapidly evolving which make it difficult to evaluate and assess the success of our business to date, our prospects and the risks and challenges that we may encounter.
If our internal control over financial reporting is not effective, we may not be able to accurately report our financial results or file our periodic reports in a timely manner, which may cause adverse effects on our business and may cause investors to lose confidence in our reported financial information and may lead to a decline in the price of our Common Stock .” In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. ​ Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with the our controls or the level at which our controls are documented, designed, operated or reviewed. ​ 35 Table of Contents We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations.
If our internal control over financial reporting is not effective, we may not be able to accurately report our financial results or file our periodic reports in a timely manner, which may cause adverse effects on our business and may cause investors to lose confidence in our reported financial information and may lead to a decline in the price of our Common Stock .” In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. ​ Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may issue a report that is qualified if it is not satisfied with our controls or the level at which our controls are documented, designed, operated or reviewed. ​ 35 Table of Contents We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations.
In addition, in the event of a change in accounting rules or FASB’s interpretations thereof, or if there were an adverse determination by a regulatory agency or a court or a change in state or federal law relating to the ability to maintain present agreements or arrangements with our affiliated physician group, we may not be permitted to continue to consolidate the revenues of our VIE. ​ Risk Related to our Population Health Management Division o ​ New physicians and other providers must be properly enrolled in governmental healthcare programs before we can receive reimbursement for their services, and there may be delays in the enrolment process. ​ Each time a new physician joins us or our affiliated IPA groups, we must enroll the physician under our applicable group identification number for Medicare and Medicaid programs and for certain managed care and private insurance programs before we can receive reimbursement for services the physician renders to beneficiaries of those programs.
In addition, in the event of a change in accounting rules or FASB’s interpretations thereof, or if there were an adverse determination by a regulatory agency or a court or a change in state or federal law relating to the ability to maintain present agreements or arrangements with our affiliated physician group, we may not be permitted to continue to consolidate the revenues of our VIE. ​ Risk Related to our Population Health Management Division ​ New physicians and other providers must be properly enrolled in governmental healthcare programs before we can receive reimbursement for their services, and there may be delays in the enrolment process. ​ Each time a new physician joins us or our affiliated IPA groups, we must enroll the physician under our applicable group identification number for Medicare and Medicaid programs and for certain managed care and private insurance programs before we can receive reimbursement for services the physician renders to beneficiaries of those programs.
If the risks and uncertainties that we plan for when operating our business are incorrect or change, or if we fail to manage these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition and results of operations could be adversely affected. ​ Our limited operating history as a combined company makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. ​ We completed our merger on April 1, 2022 and we are continuing to grow our management capabilities.
If the risks and uncertainties that we plan for when operating our business are incorrect or change, or if we fail to manage these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition and results of operations could be adversely affected. ​ Our limited operating history as a combined company makes it difficult to evaluate our prospects and the risks and challenges we may encounter. ​ We completed our merger on April 1, 2022 and we are continuing to grow our management capabilities.
Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • similar state law provisions pertaining to anti-kickback, self-referral and false claims issues, some of which may apply to items or services reimbursed by any payor, including patients and commercial insurers; • laws that regulate debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose, or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and 30 Table of Contents • federal and state laws pertaining to the provision of services by nurse practitioners and physician assistants in certain settings, physician supervision of those services, and reimbursement requirements that depend on the types of services provided and documented and relationships between physician supervisors and nurse practitioners and physician assistants.
Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; • reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare or Medicaid programs; • similar state law provisions pertaining to anti-kickback, self-referral and false claims issues, some of which may apply to items or services reimbursed by any payor, including patients and commercial insurers; 29 Table of Contents • laws that regulate debt collection practices; • a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose, or refund known overpayments; • federal and state laws that prohibit providers from billing and receiving payment from Medicare and Medicaid for services unless the services are medically necessary, adequately and accurately documented, and billed using codes that accurately reflect the type and level of services rendered; and • federal and state laws pertaining to the provision of services by nurse practitioners and physician assistants in certain settings, physician supervision of those services, and reimbursement requirements that depend on the types of services provided and documented and relationships between physician supervisors and nurse practitioners and physician assistants.
Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits or investigations could be significant. ​ The impact on us of recent healthcare legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition and results of operations. ​ The impact on us of healthcare reform legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition and results of operations.
Furthermore, the legal, document production and other costs associated with complying with these inspections, reviews, audits or investigations could be significant. ​ Recent healthcare regulations, and other changes in the healthcare industry and in healthcare spending may adversely affect our business, financial condition and results of operations. ​ The impact on us of healthcare reform legislation and other changes in the healthcare industry and in healthcare spending is currently unknown, but may adversely affect our business, financial condition and results of operations.
Under current DMHC regulations, our affiliated physician groups, as applicable, are required to, among other things: ​ • Maintain, at all times, a minimum “cash-to-claims ratio” (which means the organization’s cash, marketable securities, and certain qualified receivables, divided by the organization’s total unpaid claims liability) of 0.75; and • Submit periodic reports to the DMHC containing various data and attestations regarding their performance and financial solvency, including IBNR calculations and documentation and attestations as to whether or not the organization (i) was in compliance with the “Knox-Keene Act” requirements related to claims payment timeliness, (ii) had maintained positive tangible net equity (“TNE”), and (iii) had maintained positive working capital. ​ In the event that a physician group is not in compliance with any of the above criteria, it would be required to describe in a report submitted to the DMHC the reasons for non-compliance and actions to be taken to bring it into compliance.
Under current DMHC regulations, our affiliated physician groups, as applicable, are required to, among other things: ​ • Maintain, at all times, a minimum “cash-to-claims ratio” (which means the organization’s cash, marketable securities, and certain qualified receivables, divided by the organization’s total unpaid claims liability) of 0.75; and 26 Table of Contents • Submit periodic reports to the DMHC containing various data and attestations regarding their performance and financial solvency, including IBNR calculations and documentation and attestations as to whether or not the organization (i) was in compliance with the “Knox-Keene Act” requirements related to claims payment timeliness, (ii) had maintained positive tangible net equity (“TNE”), and (iii) had maintained positive working capital. ​ In the event that a physician group is not in compliance with any of the above criteria, it would be required to describe in a report submitted to the DMHC the reasons for non-compliance and actions to be taken to bring it into compliance.
Vo, our Chairman, CEO and major stockholder, may have conflicts of interest with the Company and its public stockholders. ​ The majority of our hospital facilities have contractual relationships with separately owned real estate entities‎ (the ‎‎‎“Real Estate Entities”) and ‎each hospital has contractual relationships with separately owned professional entities (the ‎‎“Physician LLCs”). ‎ ​ The Physician LLCs, which are owned by the doctors providing services to the corresponding hospital, provide physician ‎and provider services to the hospitals, and employ the doctors and other providers. ‎ ​ The Real Estate Entities, also partially owned by the doctors providing services to the corresponding hospital, own the land and/or buildings that are leased to the our hospitals.
Vo, our Chairman, CEO and major shareholder, may have conflicts of interest with the Company and its public stockholders. ​ The majority of our hospital facilities have contractual relationships with separately owned real estate entities‎ (the ‎‎‎“Real Estate Entities”) and ‎each hospital has contractual relationships with separately owned professional entities (the ‎‎“Physician LLCs”). ‎ ​ The Physician LLCs, which are owned by the doctors providing services to the corresponding hospital, provide physician ‎and provider services to the hospitals, and employ the doctors and other providers. ‎ ​ The Real Estate Entities, also partially owned by the doctors providing services to the corresponding hospital, own the land and/or buildings that are leased to the our hospitals.
If we are unable to successfully remediate the material weaknesses or identify any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, a material misstatement in our financial statements could occur, and we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which may adversely affect our business and the price of our Common Stock may decline as a result. ​ In addition, even if we remediate the material weaknesses, we will be required to expend significant time and resources to further improve our internal controls over financial reporting, including by further expanding our finance and accounting staff to meet the demands that placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act.
If we are unable to successfully remediate the material weaknesses or identify any future significant deficiencies or material weaknesses, the accuracy and timing of our financial reporting may be adversely affected, a material misstatement in our financial statements could occur, and we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports, which may adversely affect our business and the price of our Common Stock may decline as a result. ​ 13 Table of Contents In addition, even if we remediate the material weaknesses, we will be required to expend significant time and resources to further improve our internal controls over financial reporting, including by further expanding our finance and accounting staff to meet the demands that placed upon us as a public company, including the requirements of the Sarbanes-Oxley Act.
These risks and challenges include our ability to: ​ • attract new partner physicians; • retain our current physician partners; • comply with existing and new laws and regulations applicable to our business and in our industry; 15 Table of Contents • anticipate and respond to changes in reimbursement rates and the markets in which we operate; • react to challenges from existing and new competitors; • maintain and continually enhance our reputation; • effectively manage our growth and business operations, including new geographies; • forecast our revenue, which includes reimbursements, and budget for, and manage, our expenses, including our medical expense amounts, and capital expenditures; • hire and retain talented individuals at all levels of our organization; • maintain and continually improve our infrastructure to adjust for the growth of the company, including our data protection, intellectual property and cybersecurity; and • successfully execute our ambitious growth strategy.
These risks and challenges include our ability to: ​ • attract new partner physicians; • retain our current physician partners; • comply with existing and new laws and regulations applicable to our business and in our industry; • anticipate and respond to changes in reimbursement rates and the markets in which we operate; • react to challenges from existing and new competitors; • maintain and continually enhance our reputation; • effectively manage our growth and business operations, including new geographies; • forecast our revenue, which includes reimbursements, and budget for, and manage, our expenses, including our medical expense amounts, and capital expenditures; • hire and retain talented individuals at all levels of our organization; • maintain and continually improve our infrastructure to adjust for the growth of the company, including our data protection, intellectual property and cybersecurity; and • successfully execute our ambitious growth strategy.
The existence of errors or defects in our applications and the correction of such errors could divert our resources from other matters relating to our business, damage our reputation, increase our costs, and have a material adverse effect on our business, financial condition, and results of operations. ​ 29 Table of Contents Risks Related to Our Legal and Regulatory Environment ​ We conduct business in a heavily regulated industry and if we fail to adhere to all of the complex government laws and regulations that apply to our business, we could incur fines or penalties or be required to make changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, results of operations, financial condition, cash flows, and reputation. ​ The U.S. healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments.
The existence of errors or defects in our applications and the correction of such errors could divert our resources from other matters relating to our business, damage our reputation, increase our costs, and have a material adverse effect on our business, financial condition, and results of operations. ​ Risks Related to Our Legal and Regulatory Environment ​ We conduct business in a heavily regulated industry and if we fail to adhere to all of the complex government laws and regulations that apply to our business, we could incur fines or penalties or be required to make changes to our operations or experience adverse publicity, any or all of which could have a material adverse effect on our business, results of operations, financial condition, cash flows, and reputation. ​ The U.S. healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments.
A non-permitted use or disclosure of PHI is presumed to be a breach under HIPAA unless the covered entity or business associate establishes that there is a low probability the information has been compromised consistent with requirements enumerated in HIPAA. ​ Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by HHS may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
A non-permitted use or disclosure of PHI is presumed to be a breach under HIPAA unless the covered entity or business associate establishes that there is a low probability the information has been compromised consistent with requirements enumerated in HIPAA. ​ 22 Table of Contents Entities that are found to be in violation of HIPAA as the result of a breach of unsecured PHI, a complaint about privacy practices or an audit by HHS may be subject to significant civil, criminal and administrative fines and penalties and/or additional reporting and oversight obligations if required to enter into a resolution agreement and corrective action plan with HHS to settle allegations of HIPAA non-compliance.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI. ​ 23 Table of Contents Even when HIPAA does not apply, according to the Federal Trade Commission, or the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act.
While HIPAA does not create a private right of action allowing individuals to sue us in civil court for violations of HIPAA, its standards have been used as the basis for duty of care in state civil suits such as those for negligence or recklessness in the misuse or breach of PHI. ​ Even when HIPAA does not apply, according to the Federal Trade Commission, or the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair and/or deceptive acts or practices in violation of Section 5(a) of the Federal Trade Commission Act.
As a result, adequate professional liability insurance may not be available to us and our partner professionals in the future at acceptable costs or at all, which may negatively impact our and our partner professionals’ ability to provide services to our hospitals, and thereby adversely affect our overall business and operations. ​ Any claims made against us or our partner professionals that are not fully covered by insurance could be costly to defend against, result in substantial damage awards, and divert the attention of our management and our partner professional entities from our 21 Table of Contents operations, which could have a material adverse effect on our business, financial condition and results of operations.
As a result, adequate professional liability insurance may not be available to us and our partner professionals in the future at acceptable costs or at all, which may negatively impact our and our partner professionals’ ability to provide services to our hospitals, and thereby adversely affect our overall business and operations. ​ Any claims made against us or our partner professionals that are not fully covered by insurance could be costly to defend against, result in substantial damage awards, and divert the attention of our management and our partner professional entities from our operations, which could have a material adverse effect on our business, financial condition and results of operations.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. ​ 34 Table of Contents If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price and trading volume of our securities could decline. ​ The trading market for our securities depends in part on the research and reports that securities or industry analysts publish about us or our business.
A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future. ​ 34 Table of Contents If securities or industry analysts do not publish research or publish inaccurate or unfavourable research about our business, the price and trading volume of our securities could decline. ​ The trading market for our securities depends in part on the research and reports that securities or industry analysts publish about us or our business.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our earnings and leading analysts or potential investors to reduce their expectations of our performance, which could reduce the market price of our Common Stock. ​ Changes in U.S. tax laws, and the adoption of tax reform policies could adversely affect our operating results and financial condition. ​ We are subject to federal and state income and non-income taxes in the United States.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our earnings and leading analysts or potential investors to reduce their expectations of our performance, which could reduce the market price of our Common Stock. ​ 23 Table of Contents Changes in U.S. tax laws, and the adoption of tax reform policies could adversely affect our operating results and financial condition. ​ We are subject to federal and state income and non-income taxes in the United States.
We are dependent on our physicians and other healthcare professionals to effectively manage the quality and cost of care. ​ Our success depends upon our continued ability to collaborate with and expand the number of highly qualified physicians and other healthcare professionals, which are key drivers of our profitability. ​ 20 Table of Contents We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition and results of operations will be harmed. ​ Our industry is competitive and we expect it to attract increased competition.
We are dependent on our physicians and other healthcare professionals to effectively manage the quality and cost of care. ​ Our success depends upon our continued ability to collaborate with and expand the number of highly qualified physicians and other healthcare professionals, which are key drivers of our profitability. ​ We operate in a competitive industry, and if we are not able to compete effectively, our business, financial condition and results of operations will be harmed. ​ Our industry is competitive and we expect it to attract increased competition.
We are required to take positions regarding the interpretation of complex statutory and regulatory tax rules and on valuation matters that are subject to uncertainty, and tax authorities may challenge the positions that we take. ​ 24 Table of Contents Our quarterly results may fluctuate significantly, which could adversely impact the value of our Common Stock. ​ Our quarterly results of operations, including our revenue, net loss and cash flows, has varied and may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful.
We are required to take positions regarding the interpretation of complex statutory and regulatory tax rules and on valuation matters that are subject to uncertainty, and tax authorities may challenge the positions that we take. ​ Our quarterly results may fluctuate significantly, which could adversely impact the value of our Common Stock. ​ Our quarterly results of operations, including our revenue, net loss and cash flows, has varied and may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful.
Should any of our hospitals or their affiliated professional entities be found to be noncompliant with these requirements, we could be assessed fines and penalties, could be required to refund reimbursement amounts or could lose our licensure or Medicare and/or Medicaid certification or accreditation so that we or our hospitals are unable to receive reimbursement from third-party payors, which could materially adversely affect our business, financial condition, cash flows or results of operations.
Should any of our hospitals or their affiliated professional entities be found to be noncompliant with these 19 Table of Contents requirements, we could be assessed fines and penalties, could be required to refund reimbursement amounts or could lose our licensure or Medicare and/or Medicaid certification or accreditation so that we or our hospitals are unable to receive reimbursement from third-party payors, which could materially adversely affect our business, financial condition, cash flows or results of operations.
To 27 Table of Contents the extent that we need to provide additional capital to our affiliated physician group in the future in order to comply with DMHC regulations, we would have less cash available for other parts of our operations. ​ Primary care physicians may seek to affiliate with our and our competitors’ IPAs at the same time. ​ It is common in the medical services industry for primary care physicians to be affiliated with multiple IPAs.
To the extent that we need to provide additional capital to our affiliated physician group in the future in order to comply with DMHC regulations, we would have less cash available for other parts of our operations. ​ Primary care physicians may seek to affiliate with our and our competitors’ IPAs at the same time. ​ It is common in the medical services industry for primary care physicians to be affiliated with multiple IPAs.
If these third-party vendors or subcontractors fail to protect their information technology systems and our confidential and proprietary information, we may be vulnerable to disruptions in service and unauthorized access to our confidential or proprietary information and we could incur liability and reputational damage. ​ The secure processing, storage, maintenance and transmission of information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
If these third-party vendors or 21 Table of Contents subcontractors fail to protect their information technology systems and our confidential and proprietary information, we may be vulnerable to disruptions in service and unauthorized access to our confidential or proprietary information and we could incur liability and reputational damage. ​ The secure processing, storage, maintenance and transmission of information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
The actions that we are taking are subject to ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the remaining material weakness in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness.
The actions were subject to senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the remaining material weakness in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness.
State corporate practice and fee-splitting prohibitions also often impose penalties on healthcare professionals for aiding in the improper 31 Table of Contents rendering of professional services, which could discourage physicians and other healthcare professionals from providing clinical services to our hospitals. We face inspections, reviews, audits and investigations under federal and state government programs and contracts.
State corporate practice and fee-splitting prohibitions also often impose penalties on healthcare professionals for aiding in the improper rendering of professional services, which could discourage physicians and other healthcare professionals from providing clinical services to our hospitals. We face inspections, reviews, audits and investigations under federal and state government programs and contracts.
In January 32 Table of Contents 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
If we are not timely paid in full or if we need to refund some payments, our revenues, cash flows, and financial condition could be adversely affected. ​ Decreases in payor rates could adversely affect us. ​ Decreases in payor rates, either prospectively or retroactively, could have a significant adverse effect on our revenues, cash flows, and results of operations.
If we are not timely paid in full or if we need to refund some payments, our revenues, cash flows, and financial condition could be adversely affected. 25 Table of Contents ​ Decreases in payor rates could adversely affect us. ​ Decreases in payor rates, either prospectively or retroactively, could have a significant adverse effect on our revenues, cash flows, and results of operations.
Moreover, material performance problems, defects, or errors in our existing or new applications and services may arise in the future and may result from, among other things, the lack of interoperability of our applications with systems and data that we did not develop and the function of which is outside of our control or undetected in our testing.
Moreover, material performance problems, defects, or errors in our existing or new applications and services may arise in the future and may result from, among other things, the lack of interoperability of our applications with systems and data that we did not develop and the function of 28 Table of Contents which is outside of our control or undetected in our testing.
If we fail to understand fully or adequately address these challenges that we may encounter in the future, including those challenges described here and elsewhere in this “ Risk Factors ” section, our business, financial condition and results of operations could be adversely affected.
If we fail to understand fully or adequately address these challenges that we may encounter in the future, including those challenges described here and elsewhere in this “ Risk Factors ” section, our business, financial condition and results of operations could be 14 Table of Contents adversely affected.
Although we and our partner professionals carry insurance covering medical malpractice claims in amounts that we believe are appropriate in light of the risks attendant to the services rendered, successful medical liability claims could result in substantial damage awards that exceed the limits of our and those partner professionals’ insurance coverage.
Although we and our partner professionals carry insurance covering medical malpractice claims in amounts that we believe are appropriate in light of the risks attendant to the services rendered, 20 Table of Contents successful medical liability claims could result in substantial damage awards that exceed the limits of our and those partner professionals’ insurance coverage.
If a jurisdiction’s prohibition on the corporate practice of medicine or fee-splitting is interpreted in a manner that is inconsistent with our practices, we would be required to restructure or terminate our arrangements with our physician partners to bring our activities into compliance with such laws.
If a jurisdiction’s prohibition on the corporate practice of medicine or fee-splitting is 30 Table of Contents interpreted in a manner that is inconsistent with our practices, we would be required to restructure or terminate our arrangements with our physician partners to bring our activities into compliance with such laws.
We do not have direct ownership interests in any of our VIEs and are not able to exercise rights as an equity holder to directly change the members of the boards of directors of these entities so as to affect changes at the management and operational level.
We do not have direct ownership interests in any of our VIEs and are not able to exercise rights as an equity holder to directly change 24 Table of Contents the members of the boards of directors of these entities so as to affect changes at the management and operational level.
An event of default under the term loans could harm our business, and creditors having security interests over the hospital assets as well as the leased real estate would be able to foreclose on such assets. ​ Each of our Hospital Subsidiaries is a party to term loans and lines of credit guaranteed by Nutex Holdco to finance hospital equipment and related assets, for aggregate borrowings of approximately $23.3 million as of December 31, 2022. ​ In addition, Nutex Holdco has assumed in the Merger and subsequently entered into guarantees of finance lease obligations of each of the Hospital Subsidiaries and mortgage debt of Real Estate Entities affiliated with Dr.
An event of default under the term loans could harm our business, and creditors having security interests over the hospital assets as well as the leased real estate would be able to foreclose on such assets. ​ Each of our Hospital Subsidiaries is a party to term loans and lines of credit guaranteed by Nutex Holdco to finance hospital equipment and related assets, for aggregate borrowings of approximately $34.0 million as of December 31, 2023. ​ In addition, Nutex Holdco has assumed in the Merger and subsequently entered into guarantees of finance lease obligations of each of the Hospital Subsidiaries and mortgage debt of Real Estate Entities affiliated with Dr.
Therefore, such 26 Table of Contents agencies may not be successful in collecting payments owed to us and our affiliated physician groups. If practices of collection agencies utilized by us are inconsistent with these standards, we may be subject to actual damages and penalties.
Therefore, such agencies may not be successful in collecting payments owed to us and our affiliated physician groups. If practices of collection agencies utilized by us are inconsistent with these standards, we may be subject to actual damages and penalties.
These agreements may not effectively prevent disclosure of our confidential information, and it may be possible for unauthorized parties to copy our software or other proprietary technology or information, or to develop similar software independently without our having an adequate remedy for unauthorized use or disclosure of our confidential information.
These agreements may not effectively prevent 27 Table of Contents disclosure of our confidential information, and it may be possible for unauthorized parties to copy our software or other proprietary technology or information, or to develop similar software independently without our having an adequate remedy for unauthorized use or disclosure of our confidential information.
To the extent we expand our international activities, our exposure to unauthorized copying, transfer and use of our proprietary technology or information may increase. ​ 28 Table of Contents Our means of protecting our intellectual property and proprietary rights may not be adequate or our competitors could independently develop similar technology.
To the extent we expand our international activities, our exposure to unauthorized copying, transfer and use of our proprietary technology or information may increase. ​ Our means of protecting our intellectual property and proprietary rights may not be adequate or our competitors could independently develop similar technology.
As 19 Table of Contents described below, we are subject to audits by such payors, including governmental audits of our Medicare claims, and may be required to repay these payors if a finding is made that we were incorrectly reimbursed.
As described below, we are subject to audits by such payors, including governmental audits of our Medicare claims, and may be required to repay these payors if a finding is made that we were incorrectly reimbursed.
Further, attacks upon information technology systems are increasing in their frequency, levels of persistence, 22 Table of Contents sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.
Further, attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise.
Our growth initiatives in our existing geographies depend, in part, on our physician partners’ ability to increase their capacity and to effectively meet increased patient demand. We may encounter difficulties in recruiting additional physicians to work at our hospitals due to many factors, including significant competition in their geographies.
Our growth 17 Table of Contents initiatives in our existing geographies depend, in part, on our physician partners’ ability to increase their capacity and to effectively meet increased patient demand. We may encounter difficulties in recruiting additional physicians to work at our hospitals due to many factors, including significant competition in their geographies.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, 16 Table of Contents systems and procedures, which could have an adverse effect on our business, reputation and financial results.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results.
As a rapidly growing company, we may be unfamiliar with the regulatory requirements in each geography that we 18 Table of Contents enter, and we may be forced to incur significant expenditures to ensure compliance with requirements to which we are subject.
As a rapidly growing company, we may be unfamiliar with the regulatory requirements in each geography that we enter, and we may be forced to incur significant expenditures to ensure compliance with requirements to which we are subject.
Vo, our Chairman, CEO and ‎major stockholder holding approximately 41% of our outstanding Common Stock.
Vo, our Chairman, CEO and ‎major stockholder holding approximately 36% of our outstanding Common Stock.
Staffing, equipment, and medical supplies shortages may also impact our ability to serve patients at our centers. ​ In addition, our results and financial condition may be adversely affected by future federal or state laws, regulations, orders, or other governmental or regulatory actions addressing the current COVID-19 pandemic or the U.S. health care system, which, if adopted, could result in direct or indirect restrictions to its business, financial condition, results of operations and cash flow. 17 Table of Contents ​ Disruptions to our business as a result of the continuing COVID-19 pandemic (including the potential resurgences of COVID-19) could have a material adverse effect on our results of operations, financial condition and cash flows. ​ We rely on our management team and key employees and our business, financial condition, cash flows and results of operations could be harmed if we are unable to retain qualified personnel. ​ Our success depends largely upon the continued services of key members of senior management, including our chief executive officer.
Staffing, equipment, and medical supplies shortages may also impact our ability to serve patients at our centers. ​ In addition, our results and financial condition may be adversely affected by future federal or state laws, regulations, orders, or other governmental or regulatory actions addressing public health emergencies such as a COVID-19 or the U.S. health care system, which, if adopted, could result in direct or indirect restrictions to its business, financial condition, results of operations and cash flow. ​ We rely on our management team and key employees and our business, financial condition, cash flows and results of operations could be harmed if we are unable to retain qualified personnel. ​ Our success depends largely upon the continued services of key members of senior management, including our chief executive officer.
The Company may have to record a significant goodwill impairment in the future, which could materially adversely affect its reported financial results and negatively impact the trading value of its Common Stock. ​ The laws and regulations applicable to public companies are complex and may require an increasing amount of our management’s time and increase staffing and compliance costs. ​ We face significant challenges in managing the transition of Nutex’ legacy private held operations to a publicly traded company, which is subject to significant and increasing regulatory oversight and reporting obligations under federal securities laws.
The Company may have to record a significant goodwill impairment in the future, which could materially adversely affect its reported financial results and negatively impact the trading value of its Common Stock. ​ The laws and regulations applicable to public companies are complex and may require an increasing amount of our management’s time and increase staffing and compliance costs. ​ As a publicly traded company, we are subject to significant and increasing regulatory oversight and reporting obligations under federal securities laws.
As a result of the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
We may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees who are working remotely, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare.
The executive order also instructed certain governmental agencies to review and 31 Table of Contents reconsider their existing policies and rules that limit access to healthcare.
In addition, the ACA, which was enacted in 2010, made major changes in how healthcare is delivered and reimbursed, and it increased access to health insurance benefits to the uninsured and underinsured populations of the United States. Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S.
In addition, the Affordable Care Act (“Act”) ACA, which was enacted in 2010, made major changes in how healthcare is delivered and reimbursed, and it increased access to health insurance benefits to the uninsured and underinsured populations of the United States. Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
In addition, our hospital division generally operates as an out-of-‎network provider and, as such, does not have negotiated reimbursement rates with insurance ‎companies, adding to the complexity and potential uncertainty of the estimation process. ​ Our estimates with respect to the claims processing by insurance companies and our resulting cash collections may differ from previous estimated results and we may be required to make periodic adjustments to our estimation process for new facts ‎or circumstances. ​ Ultimate amounts collected may differ from anticipated collections, and, as a result, may impact our ability to generate revenue at expected levels. ​ The continuing COVID-19 global pandemic could negatively affect our operations, business and financial condition, and our ability to generate revenue could be negatively impacted if the U.S. economy remains unstable for a significant amount of time. ​ The continuing COVID-19 crisis is still rapidly evolving and much of its impact remains unknown and difficult to predict.
In addition, our hospital division generally operates as an out-of-‎network provider and, as such, does not have negotiated reimbursement rates with insurance ‎companies, adding to the complexity and potential uncertainty of the estimation process. ​ Our estimates with respect to the claims processing by insurance companies and our resulting cash collections may differ from previous estimated results and we may be required to make periodic adjustments to our estimation process for new facts ‎or circumstances. ​ Ultimate amounts collected may differ from anticipated collections, and, as a result, may impact our ability to generate revenue at expected levels. ​ 16 Table of Contents Public health emergencies could negatively affect our operations, business and financial condition, and our ability to generate revenue could be negatively impacted if the U.S. economy remains unstable for a significant amount of time. ​ As a front-line provider of health care services, we have been and will be affected by the health and economic effects of public health emergencies such as COVID-19.
In connection with the audits of our financial statements for the years ended December 31, 2021 and 2020, we concluded that there were material weaknesses in our internal control over financial reporting.
In connection with the preparation of the Company’s annual consolidated financial statements for the years ended December 31, 2023, we concluded that there were material weaknesses in our internal control over financial reporting.
As such, Section 203 of the DGCL could prohibit or delay mergers or a change in control and may discourage attempts by other companies to acquire the Company. 33 Table of Contents ​ Additionally, certain provisions in our Charter, such as advance notice provisions for matters to be included in the proxy statement for annual meetings, could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our stockholders.
As such, Section 203 of the DGCL could prohibit or delay mergers or a change in control and may discourage attempts by other companies to acquire the Company. ​ Additionally, certain provisions in our Charter, such as advance notice provisions for matters to be included in the proxy statement for annual meetings, could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our stockholders. ​ We may not be able to maintain compliance with the continued listing requirements of The Nasdaq Global Market. ​ Our common stock is listed on the Nasdaq Capital Market.
Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order initiating a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
Prior to the Supreme Court’s decision, President Biden issued an executive order initiating a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace.
Our limited combined operating history, evolving business and anticipated rapid growth make it difficult to evaluate our future prospects and the risks and challenges we may encounter, and we may not continue to grow at or near anticipated rates. ​ We may need to raise additional capital to expand our operations. ​ We may need to spend significant amounts to expand our existing operations, including expansion into new geographies.
Our limited combined operating history, evolving business and anticipated rapid growth make it difficult to evaluate our future prospects and the risks and challenges we may encounter, and we may not continue to grow at or near anticipated rates. ​ Our current business plans require a significant amount of capital.
Although our Management Services Agreements (MSAs) with these affiliates provide that they will be binding on successors of current owners, as the successors are not parties to the MSAs, it is uncertain in case of the death, bankruptcy, or divorce of a current owner whether their successors would be subject to such MSAs. 25 Table of Contents If there is a change in accounting principles or the interpretation thereof affecting consolidation of VIEs, it could impact our consolidation of total revenues derived from our affiliated physician groups . ​ Our financial statements are consolidated and include the accounts of our majority-wholly owned AHP subsidiary, non-owned affiliated physician groups and real estate entities that each is a VIE, which consolidation is effectuated in accordance with applicable accounting rules promulgated by the Financial Accounting Standards Board (“FASB”).
If there is a change in accounting principles or the interpretation thereof affecting consolidation of VIEs, it could impact our consolidation of total revenues derived from our affiliated physician groups . ​ Our financial statements are consolidated and include the accounts of our majority-wholly owned AHP subsidiary, non-owned affiliated physician groups and real estate entities that each is a VIE, which consolidation is effectuated in accordance with applicable accounting rules promulgated by the Financial Accounting Standards Board (“FASB”).
Any sustained decline in the collections we receive for our emergency services could have a material adverse effect on our operations and financial performance and may negatively affect the trading value of our Common Stock. ​ The estimates and assumptions we are or Nutex Health Holdco was required to make in connection with the preparation of our financial statements may prove to be inaccurate. ​ The preparation of financial statements in conformity with GAAP requires management to make estimates ‎and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets ‎and liabilities at the date of the financial statements and the reported amounts of revenues and expenses ‎during the reporting period. ​ We apply ASC 606 – Revenue from Contracts with Customers in making estimates of its earned ‎revenue and accounts receivable at each reporting date.
We are currently unable to estimate the extent of the delays such disruptions will have on our ability to collect payments. ​ The estimates and assumptions we are required to make in connection with the preparation of our financial statements may prove to be inaccurate. ​ The preparation of financial statements in conformity with GAAP requires management to make estimates ‎and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets ‎and liabilities at the date of the financial statements and the reported amounts of revenues and expenses ‎during the reporting period. ​ We apply ASC 606 – Revenue from Contracts with Customers in making estimates of its earned ‎revenue and accounts receivable at each reporting date.
Accordingly, the failure to adequately predict and control medical costs and expenses could have a material adverse effect on our business, results of operations, financial condition and cash flows. Additionally, the medical expenses of patients may be outside of our physician partners’ control in the event that patients take certain actions that increase such expenses, such as unnecessary hospital visits.
Accordingly, the failure to adequately predict and control medical costs and expenses could have a material adverse effect on our business, results of operations, financial condition and cash flows.
Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. ​ Our operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could harm our business, reputation, financial condition, and operating results. ​ Risks Related to Nutex Health Inc. ​ Sales of a substantial amount of our Common Stock by our stockholders could cause the price of our Common Stock to fall. ​ As of February 15, 2023, there were 650,929,125 shares of Common Stock outstanding, including ‎267,322,776 shares of Common Stock held by Thomas T.
Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. ​ Our operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could harm our business, reputation, financial condition, and operating results. ​ Risks Related to Nutex Health Inc. ​ Sales of a substantial amount of our Common Stock by our stockholders could cause the price of our Common Stock to fall. ​ As of March 25, 2024, there were 745,426,859 shares of Common Stock outstanding, including 287,929,244 shares of Common Stock held by our affiliates, including our Chairman and Chief Executive Officer. ‎ Sales of substantial amounts of our Common Stock in the public market, or the perception that such sales will occur, could ‎adversely affect the market price of our Common Stock and make it difficult for us to raise funds through securities ‎offerings in the future.‎ ​ For the year ended December 31, 2023, we identified material weaknesses in our internal control over financial reporting.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and other third-party payers will pay for healthcare products and services, which could adversely affect our business, financial condition and results of operations. ​ Risks Related to Our Common Stock ​ An active, liquid trading market for the Company’s Common Stock may not be sustained. ​ The Company may not be able to maintain an active trading market for its Common Stock on NASDAQ or any other exchange in the future.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments and other third-party payers will pay for healthcare products and services, which could adversely affect our business, financial condition and results of operations. ​ Risks Related to Our Common Stock ​ Anti-takeover provisions under Delaware law could make an acquisition of the Company, which may be beneficial to the stockholders of the Company, more difficult and may prevent attempts by the stockholders to replace or remove management. ​ We are subject to the anti-takeover provisions of the Delaware General Corporation Law (“DGCL”), including Section 203.
General Risk Factors ​ Because we have no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it. ​ We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future.
While the holder of a warrant is prohibited from exercising any such warrants to the extent that such exercise would result in the number of shares of common stock beneficially owned by such holder and its affiliates exceeding 4.99% (or, upon election by the holder prior to the issuance of any warrants, 9.99%) of the total number of shares of common stock outstanding immediately after giving effect to the exercise, the partial or full exercise of the warrants would cause significant ownership dilution to our existing holders of common stock. ​ General Risk Factors ​ Because we have no current plans to pay cash dividends on our Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Common Stock for a price greater than that which you paid for it. ​ We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the foreseeable future.
We plan to employ additional experienced personnel in our accounting and financial reporting teams as well. ​ 14 Table of Contents While we believe that these efforts will improve our internal control over financial reporting, our remediation efforts are ongoing and will require validation and testing of the design and operating effectiveness of internal controls.
We added key senior management positions including a Chief Operating Officer and have made additions to our accounting and financial reporting teams in 2023. ​ While we believe that these efforts will improve our internal control over financial reporting, our remediation efforts are continuous and is subject to validation and testing of the design and operating effectiveness of internal controls in 2023.
It could potentially negatively impact our financial performance in 2022 and beyond. ​ We experienced, and in the future could experience, supply chain disruptions, including shortages and delays, and could experience significant price increases, in equipment and medical supplies, particularly personal protective equipment or PPE.
If the COVID-19 virus and its potentially more contagious variants cause an additional resurgence of infection of COVID-19, or if new variants continue to develop resistance to government approved COVID-19 vaccinations, or if an influenza or other pandemic were to occur, our business, results of operations, financial condition and liquidity could be negatively impacted. ​ As a result of public health emergencies, we experienced, and in the future could experience, supply chain disruptions, including shortages and delays, and could experience significant price increases, in equipment and medical supplies, particularly personal protective equipment or PPE.
Removed
Vo, M.D., our Chairman and Chief Executive ‎Officer, 41,964,832 shares of Common Stock held by Matthew S. Young, a director, and 12,008,523 shares of Common Stock held by Michael Chang, our Chief Medical Officer.
Added
These material weaknesses related to our logical access controls for certain financially relevant systems, our financial reporting processes, and key spreadsheets supporting the financial statements. ​ Throughout 2023, the Company designed and implemented internal control measures to remediate material weaknesses.
Removed
An additional approximately 271,326,203 shares of Common Stock are held by former holders of member interests in Nutex Health Holdco LLC, who are non-affiliates. ​ Of the 592,791,712 shares issued in the merger, 395,194,476 shares are subject to lock-up as of the date hereof. On October 1, 2022, the lockup with respect to one-third, or ‎197,597,237‎ of those shares, expired.
Added
The Company’s efforts include the implementation of a new enterprise-wide system in the first quarter of 2023, reducing reliance on manual processes and spreadsheets supporting the financial statements. The Company engaged an accounting firm to assist in the proper design, implementation and testing of internal controls over financial reporting.
Removed
An additional 197,597,237 shares will be released from lockup on April 1, 2023 and the lockup with respect to the remaining 197,597,237 shares will expire on October 1, 2023.‎‎ ​ Upon the ‎expiration of the lock-up periods, large amounts of our ‎Common Stock may be sold into the open market or in privately negotiated transactions, which could have the effect of increasing the ‎volatility in the share price of our Common Stock or putting significant downward pressure on the price of our Common ‎Stock.‎ ​ Sales of substantial amounts of our Common Stock in the public market, or the perception that such sales will occur, could ‎adversely affect the market price of our Common Stock and make it difficult for us to raise funds through securities ‎offerings in the future.‎ ​ We have identified material weaknesses in our internal control over financial reporting.
Added
If we are unable to obtain sufficient funding or do not have access to capital, we may not be able to execute our business plans and our prospects, financial condition and results of operations could be materially adversely affected. ​ We have experienced operating losses and expect to continue to incur operating losses as we implement our business plans.
Removed
These material weaknesses related to our revenue estimation process, recordation of leases in accordance with newly adopted accounting standards and other matters caused by having inadequate accounting close processes. ​ The Company has started the process of designing and implementing effective internal control measures to remediate these material weaknesses.
Added
We anticipate making significant capital expenditures for the foreseeable future as we expand our business, including the development of new hospital facilities and acquisition of additional IPAs. ​ In addition to the net proceeds from recent capital raise offerings, we expect to continue to seek other sources of funding, including by offering additional equity, and/or equity-linked securities, through one or more credit facilities and potentially by offering debt securities, to finance a portion of our future expenditures. ​ The sale of additional equity or equity-linked securities could dilute our stockholders.
Removed
The Company’s efforts include the employment of our new chief financial officer, engagement of an accounting specialist to assist in our accounting close and reporting processes, process documentation and supervisory reviews of our revenue estimate and accounting close processes.
Added
The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations or our ability to pay dividends to our stockholders.
Removed
Based upon our current operating plan, we believe that our existing cash, cash equivalents and restricted cash will be sufficient to fund our operating and capital needs for at least the next twelve months.
Added
Our ability to obtain the necessary additional financing to carry out our business plans or to refinance, if necessary, any outstanding debt when due is subject to a number of factors, including general market conditions and investor acceptance of our business model.
Removed
This estimate and our expectation regarding the sufficiency of funds are based on assumptions that may prove to be incorrect, and the revenue we generate may not be sufficient to support our growth strategy.
Added
These factors may make the timing, amount, terms and conditions of such financing not commercially viable or unavailable to us. ​ If we are unable to raise sufficient funds on favorable terms, we may have to significantly reduce our spending, delay or cancel our planned activities or substantially change our corporate structure.
Removed
We also may finance our cash needs through a combination of equity offerings and debt financings or other sources, pending market conditions. ​ Our present and future funding requirements will depend on many factors, including: ​ • our ability to achieve revenue growth; • our ability to effectively manage medical expense amounts; • the cost of expanding our operations, including our geographic scope, and our offerings, including our marketing efforts; • our rate of progress in launching, commercializing and establishing adoption of our services; and • the effect of competing technological and market developments. ​ To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a securityholder.
Added
We may not be able to obtain any such funding or have sufficient resources to conduct our business as projected, both of which could mean that we would be forced to curtail or discontinue our operations and our business, financial condition and results of operation could be materially adversely affected. ​ We may decide to close underperforming hospitals which may result in a temporary decrease in overall revenues. ​ In the ordinary course of business, we continuously review the individual performance of each of our hospital facilities.
Removed
In addition, debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Added
As previously disclosed, we have historically closed underperforming facilities. Our commitment to providing high-quality healthcare services demands that we continually assess the performance of our hospitals. In some instances, we may find it necessary to make the difficult decision to close underperforming facilities.
Removed
If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate development efforts. ​ We may experience difficulties in managing our growth and expanding our operations. ​ We are targeting significant growth in the scope of our operations.
Added
This could be due to various factors such as declining patient admissions, increasing operational costs, or changes in healthcare regulations. The closure of any hospital within our portfolio carries inherent risks, including a potential negative impact on our overall revenues. The closure process may involve staff reallocation or severance, and asset dispositions, all of which can be complex and costly.
Removed
If an active market for the Common Stock is not maintained after the Merger, or if the Company fails to satisfy the continued listing standards of NASDAQ for any reason and its securities are delisted, it may be difficult for the Company’s securityholders to sell their securities without depressing the market price for the securities or at all.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, our hospital division operated 21 micro-hospitals, specialty hospitals and HOPDs in eight states in the U.S. We lease each of these locations. We consolidate three Real Estate Entities which own facilities leased to our hospital division. Our population health management division manages two IPAs and two MSOs which operate from leased locations in two states.
Biggest changeAs of December 31, 2023, our hospital division operated 20 micro-hospitals, specialty hospitals and HOPDs in eight states in the U.S. We lease each of these locations. Our population health management division manages two IPAs and two MSOs which operate from leased locations in two states.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time-to-time, the Company is involved in litigation and proceedings as part of its normal course of business. The Company is not a party to any litigation that we believe would have a material effect on our business or financial condition. Item 4. Mine Safety Disclosures Not applicable. ​ 36 Table of Contents PART II
Biggest changeItem 3. Legal Proceedings From time-to-time, the Company is involved in litigation and proceedings as part of its normal course of business. The Company is not a party to any litigation that we believe would have a material effect on our business or financial condition. Item 4. Mine Safety Disclosures Not applicable. ​ 37 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRefer to Note 13 to the consolidated financial statements included in this annual report for additional information relating to outstanding warrants. ​ Equity Compensation Plans In 2022, the Company adopted the Amended and Restated Nutex Health Inc. 2022 Equity Incentive Plan (the "2022 Plan").
Biggest changeRefer to Note 13 to the consolidated financial statements included in this annual report for additional information relating to outstanding warrants. ​ Equity Compensation Plans In 2023, the Company adopted the Amended and Restated Nutex Health Inc. 2023 Equity Incentive Plan (the "2023 Plan").‎ The 2023 Plan became effective June 29, 2023 upon stockholder approval and amends and restates the Amended and Restated Nutex Health Inc. 2022 Equity Incentive Plan (the "2022 Plan”).
Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters. Our common stock is quoted on NASDAQ Capital Market under the symbol “NUTX.” Shareholders As of the date of this report, there are approximately 953 shareholders of record of our common stock based upon our transfer agent’s report.
Item 5. Market for Registrant’s Common Equity and Related Shareholder Matters. Our common stock is quoted on NASDAQ Capital Market under the symbol “NUTX.” Shareholders As of the date of this report, there are approximately 870 shareholders of record of our common stock based upon our transfer agent’s report.
A total of 2,416,221 shares were available for issuance under the 2022 Plan at December 31, 2022. Awards granted under the 2022 Plan have a ten-year term and may be incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units or performance shares.
A total of 11,013,943 shares were available for issuance under the 2023 Plan at December 31, 2023. Awards granted under the 2023 Plan shall not exceed a ten-year term and may be incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units or performance shares.
The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a four-year period. ​ At December 31, 2022, there were 5,147,770 options outstanding for the purchase of Common Stock.
No more than 20,000,000 Shares may be issued pursuant to the exercise of Incentive Stock Options. The awards are granted at an exercise price equal to the fair market value on the date of grant and generally vest over a four-year period. ​ At December 31, 2023, there were 4,137,149 options outstanding for the purchase of Common Stock.
Warrants At December 31, 2022, there were 11,033,015 warrants outstanding for the purchase of Company common stock.
Warrants At December 31, 2023, there were 20,343,562 warrants outstanding for the purchase of Company common stock.
Removed
The maximum aggregate number of shares that may be issued under the 2022 Plan is 5,000,000 shares, subject to increases on January 1st of each calendar year through January 1, 2027 of up to 5% annually at the discretion of the compensation committee of our Board of Directors.
Added
The maximum aggregate number of shares that may be issued under the 2023 Plan is the sum of (a) 10,000,000 Shares, and (b) an annual increase on the first day of each calendar year beginning on and including January 1, 2024 and ending on and including January 1, 2033 equal to the lesser of (i) 1% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of Shares as is determined by the Board.
Removed
Refer to Note 12 to the consolidated financial statements included in this annual report for additional information relating to outstanding options.
Added
Refer to Note 12 to the consolidated financial statements included in this annual report for additional information relating to outstanding options. 38 Table of Contents Recent Sales of Unregistered Securities ​ From September to December 2023, the Company issued in a private offering exempt from the registration requirements under Section 4(a)(2) of the Securities Act promissory notes convertible into 13,462,500 shares of common stock at a conversion price of $0.40 per share and (b) six-year warrants to purchase up to 6,731,250 shares of common stock at an exercise price of $0.40 per share, as such conversion price and exercise price, respectively, with such conversion and exercise prices reduced by the parties on March 26, 2024 to $0.20 per shares of common stock.
Removed
Recent Sales of Unregistered Securities On November 14, 2022, the Company and Lincoln Park Capital Fund, LLC (the “Investor”) entered into a purchase agreement pursuant to which we have the right, in our sole ‎discretion, but not the obligation, to sell to the Investor up to $100 million worth of shares of Common Stock, over ‎the 36-month term of the Agreement.
Added
The notes mature on October 31, 2025 and the warrants expire on December 31, 2029.
Removed
We will control the timing and amount of any future sales of our Common Stock and the Investor is obligated to make purchases in accordance with the Agreement, subject to ‎various limitations including those under the Nasdaq listing rules. ​ In connection with the execution of such purchase agreement, the Company issued ‎1,356,318‎ shares of Common Stock to the Investor as a commitment fee, in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. ​ No other shares of Common Stock have been sold under the purchase agreement with the Investor.
Added
On March 26, 2024, the company and the notes and warrant holders agreed to amend the conversion price of the notes and the exercise of the warrants to $0.20 each, resulting in the notes becoming convertible into 26,925,000 shares of common stock and the warrants becoming exercisable for 13,462,500 shares of common stock.
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers In November 2022, we agreed to the rescission of the May 2022 exercise of 819,000 common stock warrants by a third-party.
Added
In addition, the Company issued to the placement agent warrants to purchase 8,077,500 shares of common stock at the same terms and conditions. ​ The notes bear an annual interest rate of 8% if paid in cash or an annual interest rate of 10% if paid in the form of common stock.
Removed
For accounting purposes, this was treated as a repurchase of the issued common stock for $588 thousand and modification of the warrant agreement for $561 thousand. 37 Table of Contents Item 6. Reserved Not applicable. ​
Added
The payment of interest in the form of common stock is at the discretion of the Company. When paid in common stock, the number of shares is equal to the quotient of the total accrued interest due divided by the last reported sale price of the Company’s common stock on the last complete trading day of such quarter.
Added
The noteholders have the option, at any time, to convert all or any portion of the unpaid principal and interest outstanding in common stock at the conversion price of $0.40 per share.
Added
If the Company fails to pay the outstanding principal amount and all accrued interest within 30 days of the maturity date, the interest rate payable is adjusted to 12%. Item 6. Reserved Not applicable. ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeGAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 2021 2020 Reconciliation of net income (loss) attributable to Nutex Health Inc. to Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to Nutex Health Inc. ​ $ (424,780,446) ​ $ 132,593,328 ​ $ 105,969,885 Depreciation and amortization ​ ​ 13,131,374 ​ ​ 7,662,464 ​ ​ 5,898,361 Interest expense, net ​ ​ 12,490,260 ​ ​ 6,196,026 ​ ​ 6,432,941 Income tax expense ​ ​ 13,090,905 ​ ​ 965,731 ​ ​ 181,341 Allocation to noncontrolling interests ​ ​ (4,837,514) ​ ​ (5,751,066) ​ ​ (3,615,787) EBITDA ​ ​ (390,905,421) ​ ​ 141,666,483 ​ ​ 114,866,741 Stock-based compensation expense ​ ​ 189,581 ​ ​ - ​ ​ - Rescission of warrant exercise ​ ​ 1,243,059 ​ ​ - ​ ​ - Impairment of goodwill ​ ​ 398,135,038 ​ ​ - ​ ​ - Acquisition costs ​ ​ 3,885,666 ​ ​ 3,553,716 ​ ​ - Adjusted EBITDA ​ $ 12,547,923 ​ $ 145,220,199 ​ $ 114,866,741 ​ ​ Significant Accounting Policies ​ Revenue recognition . ​ Hospital division – Our hospital division recognizes net patient service revenue for contracts with patients and in most cases a third-party payor (commercial insurance, workers compensation insurance or, in limited cases, Medicare/Medicaid).
Biggest changeGAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 2022 2021 Reconciliation of net income (loss) attributable to Nutex Health Inc. to Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to Nutex Health Inc. ​ $ (45,786,614) ​ $ (424,780,446) ​ $ 132,593,328 Depreciation and amortization ​ ​ 17,591,572 ​ ​ 13,131,374 ​ ​ 7,662,464 Interest expense, net ​ ​ 16,317,869 ​ ​ 12,490,260 ​ ​ 6,196,026 Income tax expense ​ ​ (5,067,084) ​ ​ 13,090,905 ​ ​ 965,731 Allocation to noncontrolling interests ​ ​ (5,546,263) ​ ​ (4,837,514) ​ ​ (5,751,066) EBITDA ​ ​ (22,490,520) ​ ​ (390,905,421) ​ ​ 141,666,483 Facility closing costs ​ ​ 217,266 ​ ​ - ​ ​ - Acquisition costs ​ ​ 43,464 ​ ​ 3,885,666 ​ ​ 3,553,716 Stock-based compensation ​ ​ 2,835,971 ​ ​ 189,581 ​ ​ - Rescission of warrant exercise ​ ​ - ​ ​ 1,243,059 ​ ​ - Impairment of assets ​ ​ 29,082,203 ​ ​ - ​ ​ - Impairment of goodwill ​ ​ 1,139,297 ​ ​ 398,135,038 ​ ​ - Adjusted EBITDA ​ $ 10,827,681 ​ $ 12,547,923 ​ $ 145,220,199 ​ 50 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Three months ended ​ ​ December 31, 2023 ​ December 31, 2022 ​ ​ Unaudited ​ Unaudited Reconciliation of net income (loss) attributable to Nutex Health Inc. to Adjusted EBITDA: ​ ​ ​ ​ ​ ​ Net loss attributable to Nutex Health Inc. ​ $ (31,617,897) ​ $ (14,752,177) Depreciation and amortization ​ ​ 4,682,724 ​ ​ 3,271,861 Interest expense, net ​ ​ 4,236,553 ​ ​ 2,862,071 Income tax expense ​ ​ (2,998,554) ​ ​ 1,805,176 Allocation to noncontrolling interests ​ ​ (2,045,390) ​ ​ (392,290) EBITDA ​ ​ (27,742,564) ​ ​ (7,205,359) Stock-based compensation ​ ​ 637,159 ​ ​ 54,166 Rescission of warrant exercise ​ ​ - ​ ​ 1,243,059 Impairment of assets ​ ​ 29,082,203 ​ ​ - Impairment of goodwill ​ ​ 1,139,297 ​ ​ - Adjusted EBITDA ​ $ 3,116,095 ​ $ (5,908,134) ​ ​ ​ ​ Significant Accounting Policies ​ Revenue recognition . ​ Hospital division – Our hospital division recognizes net patient service revenue for contracts with patients and in most cases a third-party payor (commercial insurance, workers compensation insurance or, in limited cases, Medicare/Medicaid).
Such leases are typically on a triple net basis where our hospital division is responsible for all operating costs, repairs and taxes on the facilities. Finance lease income is recognized outside of segment operating income as other income by the Real Estate Entities.
Such leases are typically on a triple net basis where our hospital division is responsible for all operating costs, repairs and taxes on the facilities. Finance lease income is recognized outside of segment operating income as other income by the Real Estate Entities.
In particular, the NSA requires insurers to reimburse out-of-network ‎providers at a statutorily calculated “out-of-network rate.” In states without an all-payor model agreement or ‎specified state law, the out-of-network rate is either the amount agreed to by the insurer and the out-of-network ‎provider or an amount determined through an independent dispute resolution (“IDR”) process. ​ 40 Table of Contents Under the NSA, insurers must issue an initial payment or notice of denial of payment to a provider within ‎thirty days after the provider submits a bill for an out-of-network service.
In particular, the NSA requires insurers to reimburse out-of-network ‎providers at a statutorily calculated “out-of-network rate.” In states without an all-payor model agreement or ‎specified state law, the out-of-network rate is either the amount agreed to by the insurer and the out-of-network ‎provider or an amount determined through an independent dispute resolution (“IDR”) process. ​ 41 Table of Contents Under the NSA, insurers must issue an initial payment or notice of denial of payment to a provider within ‎thirty days after the provider submits a bill for an out-of-network service.
Our 2022 results were principally affected by: ​ • A non-cash impairment charge of $398.1 million to reduce the carrying amount of goodwill for the population health management division reporting unit acquired in the reverse business combination; • Decrease in revenue caused by legislative changes reducing the amounts we are able to collect for patient services to median in-network rates; • Start-up costs associated with five new facilities opened since April 2021 which are experiencing favorable market acceptance but not yet fully achieving break-even profitability; • Higher overall costs of employees and independent contractors. ​ Adjusted EBITDA for 2022 was $12.5 million as compared $145.2 million for 2021.
Our 2022 results were principally affected by: ​ • A non-cash impairment charge of $398.1 million to reduce the carrying amount of goodwill for the population health management division reporting unit acquired in the reverse business combination; • Decrease in revenue caused by legislative changes reducing the amounts we are able to collect for patient services to median in-network rates; • Start-up costs associated with five new facilities opened since April 2021 which are experiencing favorable market acceptance but not yet fully achieving break-even profitability; • Higher overall costs of employees and independent contractors. 46 Table of Contents ​ Adjusted EBITDA for 2022 was $12.5 million as compared $145.2 million for 2021.
As discussed in Item 8, “Financial Statements – Note 20 – Quarterly Financial Data, we made a retrospective adjustment to reduce the amount of goodwill impairment expense from the $408.5 million previously recognized in our quarterly report on Form 10-Q for the period ended September 30, 2022 to $398.1 million. ​ We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that would be used by other marketplace participants.
As discussed in Item 8, “Financial Statements – Note 20 – Quarterly Financial Data, we made a retrospective adjustment to reduce the amount of goodwill impairment expense from the $408.5 million previously recognized in our quarterly report on Form 10-Q for the period ended September 30, 2022 to $398.1 million. ​ 52 Table of Contents We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that would be used by other marketplace participants.
As discussed above, in periods before our merger with Clinigence, Nutex Health Holdco LLC and the Nutex Subsidiaries were pass-through entities treated as partnerships for U.S. federal income tax purposes. No provision for federal income taxes was provided for these periods as federal taxes were obligations of these companies’ members.
In periods before our merger with Clinigence, Nutex Health Holdco LLC and the Nutex Subsidiaries were pass-through entities treated as partnerships for U.S. federal income tax purposes. No provision for federal income taxes was provided for these periods as federal taxes were obligations of these companies’ members.
During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans. ​ Revenue and operating expenses of consolidated Real Estate Entities are not significant since the extent of these entities’ operations is to own facilities leased to our hospital division entities which are financed by a combination of contributed equity by related parties and third-party mortgage indebtedness.
During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans. ​ Revenue and operating expenses of consolidated Real Estate Entities are not significant since the extent of these entities’ operations is to own facilities leased to our hospital division entities which are financed by a combination of contributed equity by related parties 47 Table of Contents and third-party mortgage indebtedness.
There is no financing component associated with payments due from insurers or patients. ​ Population health management division – The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology. ​ Capitation revenue consists primarily of capitated fees for medical services provided by physician-owned entities we consolidate as VIEs.
There is no financing component associated with payments due from insurers or patients. ​ 51 Table of Contents Population health management division – The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology. ​ Capitation revenue consists primarily of capitated fees for medical services provided by physician-owned entities we consolidate as VIEs.
Because all the Company’s performance obligations relate to contracts with a duration of less than one-year, certain disclosures are limited. ​ The transaction price is determined based on gross charges for services provided, reduced by contractual adjustments provided to third-party payors, discounts and implicit e concessions provided primarily to uninsured patients in accordance with the Company’s 48 Table of Contents policy.
Because all the Company’s performance obligations relate to contracts with a duration of less than one-year, certain disclosures are limited. ​ The transaction price is determined based on gross charges for services provided, reduced by contractual adjustments provided to third-party payors, discounts and implicit e concessions provided primarily to uninsured patients in accordance with the Company’s policy.
During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans, leaving three Real Estate Entities as current VIEs consolidated in our financial statements. ​ The Company has no direct or indirect ownership interest in the Physician LLCs or Real Estate Entities, so 100% of the equity for these entities is shown as noncontrolling interest in the consolidated balance sheets and statements of operations. ​ The population health management division includes our management services organizations and a healthcare information technology company providing a cloud-based platform for healthcare organizations.
Since the second quarter of 2022, we deconsolidated 18 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans, leaving three Real Estate Entities as current VIEs consolidated in our financial statements. ​ The Company has no direct or indirect ownership interest in the Physician LLCs or Real Estate Entities, so 100% of the equity for these entities is shown as noncontrolling interest in the consolidated balance sheets and statements of operations. ​ The population health management division includes our management services organizations and a healthcare information technology company providing a cloud-based platform for healthcare organizations.
The Company has the right at any time for any reason to terminate the Agreement.‎‎ ​ Off-Balance Sheet Arrangements ​ As of December 31, 2022, we had no material off-balance sheet arrangements. ​ Non-GAAP Financial Measures ​ Adjusted EBITDA.
The Company has the right at any time for any reason to terminate the Agreement.‎‎ ​ Off-Balance Sheet Arrangements ​ As of December 31, 2023, we had no material off-balance sheet arrangements. ​ Non-GAAP Financial Measures ​ Adjusted EBITDA.
These entities are consolidated by the Company as VIEs because they do not have significant equity at risk, and we have historically provided support to the Physician LLCs in the event of cash shortages and received the benefit of their cash surpluses. ​ 38 Table of Contents The Real Estate Entities own the land and hospital buildings which are leased to our hospital entities.
These entities are consolidated by the Company as VIEs because they do not have significant equity at risk, and we have historically provided support to the Physician LLCs in the event of cash shortages and received the benefit of their cash surpluses. ​ The Real Estate Entities own the land and hospital buildings which are leased to our hospital entities.
Beginning with the second quarter of 2022, our financial statements are presented on a consolidated basis and include Clinigence. ​ Except where the context indicates otherwise, (i) references to “we,” “us,” “our,” or the “Company” refer, for periods prior to the completion of the Merger, to Nutex Health Holdco LLC and its subsidiaries, (ii) references the “Nutex Health” for periods following the completion of the Merger, refer to Nutex Health Inc. and its subsidiaries and (ii) references to “Clinigence” refer to Clinigence Holdings, Inc. and its subsidiaries prior to the completion of the Merger. ​ Overview ​ Nutex Health Inc. is a physician-led, healthcare services and operations company with 19 hospital facilities in eight states (hospital division), and a primary care-centric, risk-bearing population health management division.
Beginning with the second quarter of 2022, our financial statements are presented on a consolidated basis and include Clinigence. ​ Except where the context indicates otherwise, (i) references to “we,” “us,” “our,” or the “Company” refer, for periods prior to the completion of the merger, to Nutex Health Holdco LLC and its subsidiaries, (ii) references the “Nutex Health” for periods following the completion of the merger, refer to Nutex Health Inc. and its subsidiaries and (ii) references to “Clinigence” refer to Clinigence Holdings, Inc. and its subsidiaries prior to the completion of the merger. ​ 39 Table of Contents Overview ​ Nutex Health Inc. is a physician-led, healthcare services and operations company with 20 hospital facilities in eight states (hospital division), and a primary care-centric, risk-bearing population health management division.
Interest expense is expected to decline in future periods as a 44 Table of Contents result of the deconsolidation of 17 Real Estate Entities and their associated mortgage indebtedness during the second quarter of 2022 as well as due to the elimination of accretion costs related to the conversion of notes payable assumed in the Clinigence transaction. ​ Income tax expense.
Interest expense is expected to decline in future periods as a result of the deconsolidation of 17 Real Estate Entities and their associated mortgage indebtedness during the second quarter of 2022 as well as due to the elimination of accretion costs related to the conversion of notes payable assumed in the Clinigence transaction. ​ Income tax expense.
Refer to Non-GAAP Financial Measures discussed below for a definition and reconciliation of Adjusted EBITDA. The items affecting revenue and start-up costs contributed significantly to the decline in Adjusted EBITDA in the 2022 period. ​ A discussion of our segment results is included below. ​ Hospital Division.
Refer to Non-GAAP Financial Measures discussed below for a definition and reconciliation of Adjusted EBITDA. The items affecting revenue and start-up costs of two new hospitals in 2022 contributed significantly to the decline in Adjusted EBITDA in the 2022 period. ​ A discussion of our segment results is included below. ​ Hospital Division.
The Company regularly is in the process of constructing new facilities. Generally, our ER Entities are responsible for the leasehold buildout and equipment while the associated Real Estate Entity procures the land, if any, and constructs a new or remodeled facility.
The Company regularly is in the process of constructing new facilities. Generally, our hospital facilities are responsible for the leasehold buildout and equipment while the associated Real Estate Entity procures the land, if any, and constructs a new or remodeled facility.
We do not have an equity interest in this VIE but consolidate it 43 Table of Contents since we are the primary beneficiary of its operations under our management services contract with them.
We do not have an equity interest in this VIE but consolidate it since we are the primary beneficiary of its operations under our management services contract with them.
The Company’s indebtedness at December 31, 2022 is presented in Item 8, “Financial Statements – Note 8 – Debt” and our lease obligations are presented in Item 8, “Financial Statements—Note 9 – Leases.” 46 Table of Contents ​ We have entered into private debt arrangements with banking institutions for the purchase of equipment and to provide working capital and liquidity through cash and lines of credit.
The Company’s indebtedness at December 31, 2023 is presented in Item 8, “Financial Statements – Note 8 – Debt” and our lease obligations are presented in Item 8, “Financial Statements—Note 9 – Leases.” ​ We have entered into private debt arrangements with banking institutions for the purchase of equipment and to provide working capital and liquidity through cash and lines of credit.
During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans. ​ Certain outstanding debt arrangements require minimum debt service coverage ratios and other financial covenants.
Since the second quarter of 2022, we deconsolidated 18 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans. ​ Certain outstanding debt arrangements require minimum debt service coverage ratios and other financial covenants.
We also earn management fees under our management services contracts with other IPAs and MSOs which are reported as revenue. ​ The population health management division had $387 thousand of operating income for 2022 since completion of the reverse business combination.
We also earn management fees under our management services contracts with other IPAs and MSOs which are reported as revenue. ​ The population health management division had $0.4 million of operating income for 2022 since completion of the reverse business combination.
Therefore, Nutex Health Holdco LLC was treated as the accounting acquirer in the Merger. Our financial statements presented for periods prior to the Merger Date are those of Nutex Health Holdco, LLC, as the Company’s predecessor entity.
Therefore, Nutex Health Holdco LLC was treated as the accounting acquirer in the merger. Our financial statements presented for periods prior to April 1, 2022 are those of Nutex Health Holdco LLC, as the Company’s predecessor entity.
Under the final rule, the certified IDR entity must instead select the offer that best reflects the value of the item or service provided, by first considering the QPA and then considering “additional information” that is relevant to the dispute. ​ Since the NSA became effective January 1, 2022, our average payment by insurers of patient claims for emergency services has declined by approximately 30% including as much as a 37% reduction for physician services.
Under the final rule, the certified IDR entity must instead select the offer that best reflects the value of the item or service provided, by first considering the QPA and then considering “additional information” that is relevant to the dispute. ​ After the NSA became effective January 1, 2022, our average payment by insurers of patient claims for emergency services had declined by approximately 30%, including 37% reduction for physician services, at the end of 2022.
We expect that in many of these locations we will lease facilities from newly established entities partially owned by related parties. ​ We routinely enter into equipment lease agreements to procure new or replacement equipment and may also finance these purchases with term debt‎.
Our growth plans include the development of new hospital locations. We expect that in many of these locations we will lease facilities from newly established entities partially owned by related parties. ​ We routinely enter into equipment lease agreements to procure new or replacement equipment and may also finance these purchases with term debt‎.
The population health management division owns and operates provider networks such as independent physician associations (“IPAs”) and offers a cloud-based proprietary technology platform to IPAs which aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers. ​ We employ 1,150 full- and part-time employees and partner with over 800 physicians.
The population health management division owns and operates provider networks such as independent physician associations (“IPAs”) and offers a cloud-based proprietary technology platform to IPAs which aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers. ​ We employ 800 full-time employees, contract 230 doctors at our facilities and partner with over 1,700 physicians within our networks.
We plan to expand our operations by entering new market areas either through development of new hospitals, formation of new IPAs or by making acquisitions. We expect to open 15 to 20 new hospital facilities by the middle of the year 2025.
We plan to expand our operations by entering new market areas either through development of new hospitals, formation of new IPAs or by making acquisitions. We expect to open 5 to 10 new hospital facilities by the end of the year 2025.
Our operating activities are financed with cash on hand which is generated from revenues. Most of our hospital facilities are leased from various lessors including related parties. These leases are presented in our consolidated balance sheets unless the lease is from a consolidated Real Estate Entity. Our growth plans include the development of new hospital locations.
Future sources and uses of cash. Our operating activities are financed with cash on hand which is generated from revenues. Most of our hospital facilities are leased from various lessors including related parties. These leases are presented in our consolidated balance sheets unless the lease is from a consolidated Real Estate Entity.
This includes interest expense associated with the mortgage indebtedness of consolidated Real Estate Entities and interest expense on outstanding term notes and lines of credit for financing operating equipment and working capital needs. ​ Income tax expense.
This includes interest expense associated with the mortgage indebtedness of consolidated Real Estate Entities, interest expense on outstanding term notes and lines of credit for financing operating equipment and working capital needs, interest expense for financing leases and the accretion costs related to the conversion of notes assumed in the Clinigence transaction. ​ Income tax expense.
We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Explanatory Note ​ On April 1, 2022 (the “Merger Date”), Nutex Health Holdco LLC and Clinigence Holdings, Inc.
We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Explanatory Note ​ On April 1, 2022, Nutex Health Holdco LLC merged with Clinigence Holdings, Inc., a publicly traded Delaware corporation, which was renamed Nutex Health Inc. after the merger.
This division reports the operations of consolidated Real Estate Entities where we provide guarantees of their indebtedness or are co-borrowers. ​ Revenue and operating expenses of consolidated Real Estate Entities are not significant since the extent of these entities’ operations is to own facilities leased to our hospital division entities which are financed by a combination of contributed equity by related parties 45 Table of Contents and third-party mortgage indebtedness.
During 2023, we deconsolidated one Real Estate Entity after the third-party lenders released our guarantees of associated mortgage loans. ​ Revenue and operating expenses of consolidated Real Estate Entities are not significant since the extent of these entities’ operations is to own facilities leased to our hospital division entities which are financed by a combination of contributed equity by related parties and third-party mortgage indebtedness.
On average, greater than 90% of our net patient service revenue are paid by insurers, federal agencies, and other non-patient third parties. The remaining revenues are paid by our patients in the form of copays, deductibles, and self-payment. We generally operate as an out-of-‎network provider and, as such, do not have negotiated reimbursement rates with insurance ‎companies.
On average, greater than 90% of our net patient service revenue are paid by insurers, federal agencies, and other non-patient third parties. The remaining revenues are paid by our patients in the form of copays, deductibles, and self-payment.
At December 31, 2022, we were not in compliance with the debt service coverage ratio for term loan with an outstanding balance of $1.0 million. This balance has been included in current liabilities. At December 31, 2022, we had remaining availability of $2.1 million under outstanding lines of credit. ​ Committed Investment Agreement with Lincoln Park Capital.
At December 31, 2023, we were not in compliance with the debt service coverage ratio for term loan with an outstanding balance of $0.3 million. This balance has been included in current liabilities.
These contracts provide for payment to us of claims at 300% of the Medicare allowable rates for our services provided to PNA members. ​ The following tables present the allocation of the estimated transaction price with the patient between the primary patient classification of insurance coverage: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Insurance ​ ​ 89% ​ ​ 96% ​ ​ 96% Self pay ​ ​ 9% ​ ​ 3% ​ ​ 3% Workers compensation ​ 1% ​ ​ 1% ​ ​ 1% Medicare/Medicaid ​ ​ 1% ​ ​ 0% ​ ​ 0% Total ​ ​ 100% ​ ​ 100% ​ ​ 100% ​ The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology.
We generally operate as an out-of-‎network provider and, as such, do not have negotiated reimbursement rates with insurance ‎companies. ​ The following tables present the allocation of the transaction price with the patient between the primary patient classification of insurance coverage: ​ 40 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Insurance ​ ​ 93% ​ ​ 89% ​ ​ 96% Self pay ​ ​ 4% ​ ​ 9% ​ ​ 3% Workers compensation ​ 2% ​ ​ 1% ​ ​ 1% Medicare/Medicaid ​ ​ 1% ​ ​ 1% ​ ​ 0% Total ​ ​ 100% ​ ​ 100% ​ ​ 100% ​ The population health management division recognizes revenue for capitation and management fees for services to IPAs and physician groups and for the licensing, training, and consulting related to our cloud-based proprietary technology.
Activity within our business segments is significantly impacted by demand for healthcare services we provide, competition for these services in each of the market areas we serve, and the legislative changes discussed above. ​ Following is our results of operations for the periods shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2022 2021 2020 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ $ 198,508,245 ​ $ 331,531,311 ​ $ 274,029,061 Population health management division ​ ​ 20,786,061 ​ ​ - ​ ​ - Total revenue ​ ​ 219,294,306 ​ ​ 331,531,311 ​ ​ 274,029,061 Segment operating income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ ​ 13,064,913 ​ ​ 179,280,958 ​ ​ 157,606,159 Population health management division ​ ​ 387,469 ​ ​ - ​ ​ - Total segment operating income ​ ​ 13,452,382 ​ ​ 179,280,958 ​ ​ 157,606,159 Corporate and other costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ Acquisition costs ​ ​ 3,885,666 ​ ​ 3,553,716 ​ ​ - Impairment of goodwill ​ ​ 398,135,038 ​ ​ - ​ ​ - General and administrative expenses ​ ​ 18,030,832 ​ ​ 5,462,344 ​ ​ 4,432,272 Total corporate and other costs ​ ​ 420,051,536 ​ ​ 9,016,060 ​ ​ 4,432,272 Interest expense ​ ​ 12,490,260 ​ ​ 6,196,026 ​ ​ 6,432,941 Other expense (income) ​ ​ 559,299 ​ ​ (5,422,144) ​ ​ 1,001,711 Income before taxes ​ ​ (419,648,713) ​ ​ 169,491,016 ​ ​ 145,739,235 Income tax expense ​ ​ 13,090,905 ​ ​ 965,731 ​ ​ 181,341 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ ​ (432,739,618) ​ ​ 168,525,285 ​ ​ 145,557,894 Less: net income (loss) attributable to noncontrolling interests ​ ​ (7,959,172) ​ ​ 35,931,957 ​ ​ 39,588,009 Net income (loss) attributable to Nutex Health Inc. ​ $ (424,780,446) ​ $ 132,593,328 ​ $ 105,969,885 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ $ 12,547,923 ​ $ 145,220,199 ​ $ 114,866,741 ​ 42 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 ​ We reported a net loss attributable to Nutex Health Inc. of $424.8 million, or a loss of $0.67 per share, for 2022 as compared with net income attributable to Nutex Health Inc. of $132.6 million, or $0.22 per diluted share, for 2021.
Activity within our business segments is significantly impacted by demand for healthcare services we provide, competition for these services in each of the market areas we serve, and the legislative changes discussed above. ​ 43 Table of Contents Following is our results of operations for the periods shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 2022 2021 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ $ 218,070,397 ​ $ 198,508,245 ​ $ 331,531,311 Population health management division ​ ​ 29,575,919 ​ ​ 20,786,061 ​ ​ - Total revenue ​ ​ 247,646,316 ​ ​ 219,294,306 ​ ​ 331,531,311 Segment operating income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ ​ 36,332,772 ​ ​ 15,034,269 ​ ​ 179,280,958 Population health management division ​ ​ (1,558,601) ​ ​ 387,469 ​ ​ - Total segment operating income ​ ​ 34,774,171 ​ ​ 15,421,738 ​ ​ 179,280,958 Corporate and other costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ Facilities closing costs ​ ​ 217,266 ​ ​ - ​ ​ - Acquisition costs ​ ​ 43,464 ​ ​ 3,885,666 ​ ​ 3,553,716 Stock-based compensation ​ ​ 2,835,971 ​ ​ 189,581 ​ ​ - Impairment of assets ​ ​ 29,082,203 ​ ​ - ​ ​ - Impairment of goodwill ​ ​ 1,139,297 ​ ​ 398,135,038 ​ ​ - General and administrative expenses ​ ​ 33,229,718 ​ ​ 19,810,607 ​ ​ 5,462,344 Total corporate and other costs ​ ​ 66,547,919 ​ ​ 422,020,892 ​ ​ 9,016,060 Interest expense ​ ​ 16,317,869 ​ ​ 12,490,260 ​ ​ 6,196,026 Other expense (income) ​ ​ 399,182 ​ ​ 559,299 ​ ​ (5,422,144) Income (loss) before taxes ​ ​ (48,490,799) ​ ​ (419,648,713) ​ ​ 169,491,016 Income tax expense (benefit) ​ ​ (5,067,084) ​ ​ 13,090,905 ​ ​ 965,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ ​ (43,423,715) ​ ​ (432,739,618) ​ ​ 168,525,285 Less: net income (loss) attributable to noncontrolling interests ​ ​ 2,362,899 ​ ​ (7,959,172) ​ ​ 35,931,957 Net income (loss) attributable to Nutex Health Inc. ​ $ (45,786,614) ​ $ (424,780,446) ​ $ 132,593,328 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ $ 10,827,681 ​ $ 12,547,923 ​ $ 145,220,199 ​ Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 ​ We reported a net loss attributable to Nutex Health Inc. of $45.8 million, or a loss of $0.07 per share, for 2023 as compared with a net loss attributable to Nutex Health Inc. of $424.8 million, or a loss of $0.67 per share, for 2022.
Significant estimates and assumptions inherent in the valuations 49 Table of Contents reflect a consideration of other marketplace participants, and include the amount and timing of future cash flows (including expected growth rates and profitability).
We use an income method to estimate the fair value of these assets, which is based on forecasts of the expected future cash flows attributable to the respective assets. Significant estimates and assumptions inherent in the valuations reflect a consideration of other marketplace participants and include the amount and timing of future cash flows (including expected growth rates and profitability).
Eastern District of Texas, Tyler Division, seeking to invalidate the IDR related provisions of the final rule, arguing that the QPA does not represent the fair value of the services rendered by the physicians and providers and that the final rule illegally favors the QPA over the fair value of the provider services in contravention of the statutory language of the NSA. 41 Table of Contents On October 19, 2022, and in addition to amicus briefs by several other national medical associations, the American Society of Anesthesiologists, the American College of Emergency Physicians, and the American College of Radiology, professional associations representing an aggregate of approximately 136,000 physicians, filed an Amicus brief supporting the TMA Motion. ​ On February 6, 2023, the U.S.
On October 19, 2022, and in addition to amicus briefs by several other national medical associations, the American Society of Anesthesiologists, the American College of Emergency Physicians, and the American College of Radiology, professional associations representing an aggregate of approximately 136,000 physicians, filed an Amicus brief supporting the TMA Motion. ​ On February 6, 2023, the U.S.
We recorded a non-cash benefit of $2.4 million to income tax expense to remove the acquired valuation allowance after we concluded that the associated deferred tax assets would be realizable. ​ Each of the discrete items above, as well as the non-deductible goodwill impairment expense also recognized 2022, are one-time, non-cash items. ​ Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 ​ We reported net income attributable to Nutex Health Inc. of $132.6 million, or $0.22 per diluted share, for the year ended December 31, 2021 as compared with $106.0 million, or $0.18 per diluted share, for 2020.
For the year ended December 31, 2022 we recorded a non-cash benefit of $2.4 million to income tax expense to remove the acquired valuation allowance after we concluded that the associated deferred tax assets would be realizable. ​ Each of the discrete items above, as well as the non-deductible goodwill impairment expense recognized in 2023 and 2022, are one-time, non-cash items. ​ As of December 31, 2023, a valuation allowance was established against the net deferred tax asset because the Company determined it was more likely than not that future earnings will not be sufficient to realize the corresponding tax benefits.
In our experience, insurers often initially pay amounts lower than the QPA without regard for other information relevant to the claim. This requires us to make appeals using the IDR process. We submitted almost 28 thousand cases for IDR in 2022, most in the fourth quarter.
In 2023, we experienced a 5% improvement from 2022 in emergency services but a 10% reduction for physician services, for an overall impact of 3% increase combined in 2023. In our experience, insurers often initially pay amounts lower than the QPA without regard for other information relevant to the claim. This requires us to make appeals using the IDR process.
Our experience, like that of many other healthcare providers, is that the final rule continues to unfairly favor insurers in the determination of the QPA we receive for our healthcare services. It is difficult to predict the ultimate outcome of efforts to challenge or amend the final rule.
Under that approach, the cumulative update that must be applied to 2019 base year rates is 20.9%. ​ We are supportive of industry efforts challenging NSA. Our experience, like that of many other healthcare providers, is that the final rule continues to unfairly favor insurers in the determination of the QPA we receive for our healthcare services.
Immediately following the completion of the Merger, Clinigence amended its certificate of incorporation and bylaws to change its name to “Nutex Health Inc.” In connection with the Merger, each outstanding equity interest of Nutex Health Holdco LLC was exchanged for 3.571428575 shares of Clinigence common stock. The Merger was accounted for as a reverse business combination under U.S. GAAP.
Immediately thereafter, in the merger, each unit representing an equity interest in Nutex Health Holdco LLC was converted into the right to receive 3.571428575 shares of common stock, or an aggregate of 592,791,712 shares of common stock. ​ The Merger was accounted for as a reverse business combination under U.S. GAAP.
The IDR process and subsequent appeals, should we pursue them, require extensive administrative time and delays in collections. ​ Our experience is similar to that of other healthcare providers. In February 2023, the Emergency Department Physician Management Association reported survey results of its membership.
While we are working within the established processes for IDR, we have had varying successes at achieving collections at or higher than the established QPA. ​ Our experience is similar to that of other healthcare providers. In February 2023, the Emergency Department Physician Management Association reported survey results of its membership.
No warrants are being issued the Investor and the ‎Agreement does not contain any rights of first refusal, participation rights, penalties, or liquidated damages provisions ‎in favor of any party. ​ In connection with the execution of the Agreement, the Company issued ‎1,356,318‎ shares of Common Stock to the Investor as a commitment fee, in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. 47 Table of Contents ​ Under the Agreement, issuances of Common Stock may be suspended upon the occurrence of customary events, including the unavailability of the resale registration statement.
Nutex will control the timing and amount of any future sales of its Common Stock and the Investor is obligated to make purchases in accordance with the purchase agreement, subject to ‎various limitations including those under the Nasdaq listing rules. ​ Nutex intends to use the ‎net proceeds from the future sale of its Common Stock for working capital and general corporate ‎purposes to support its growth.‎ ​ In connection with the execution of the Yorkville agreement, the Company issued ‎1,356,318‎ shares of Common Stock to the Investor as a commitment fee, in a private transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. ​ Under the Agreement, issuances of Common Stock may be suspended upon the occurrence of customary events, including the unavailability of the resale registration statement.
These facilities are either under construction or in advanced planning stages and will result in our expansion into four new states: Florida, Wisconsin, Ohio and Idaho.
These facilities are either under construction or in advanced planning stages and will result in our expansion into five new states: Florida, Wisconsin, Ohio, Pennsylvania and Idaho. We anticipate launching one-to-three additional IPAs per year principally in geographic areas around our existing micro-hospitals. ​ Overview of Legislative Developments ​ The U.S.
In addition, the TMA on January 1, 2023, also in the U.S. Eastern District, filed a lawsuit seeking declaratory and injunctive relief to invalidate a recent 600% percent increase in the administrative fees payable in the IDR process. ​ We are supportive of industry efforts challenging NSA.
Eastern District, filed a lawsuit seeking declaratory and injunctive relief to invalidate a recent 600% percent increase in the administrative fees payable in the IDR process. ​ Effective January 1, 2024, in consultation with the Departments of Labor and Health and Human Services, the Internal Revenue Service (IRS) announced the annual increase that health plans must apply to the calculation of the QPA for insurance reimbursements to account for inflation from 2023 to 2024 (Notice 2024-1).
Removed
(“Clinigence”) completed the merger (the “Merger”) contemplated by the Agreement and Plan of Merger (the “Merger Agreement”) dated as of November 23, 2021 between Clinigence, Nutex Acquisition LLC, a Delaware limited liability company and wholly-owned subsidiary of Clinigence, Nutex, Micro Hospital Holding LLC (solely for the purposes of certain sections of the Merger Agreement), Nutex Health Holdco LLC and Thomas Vo, M.D., solely in his capacity as the representative of the equity holders of Nutex.
Added
Immediately prior to the merger, holders of 84% of the aggregate equity interests in subsidiaries and affiliates of Nutex Health Holdco LLC contributed these ownership interests to Nutex Health Holdco LLC in exchange for Nutex Health Holdco LLC equity interests.
Removed
In the fourth quarter of 2022, we signed in-network provider contracts with the Provider Network of America (PNA).
Added
We submitted 90,000 cases for IDR open negotiation in 2023 and 28,000 cases for IDR open negotiation in 2022, most in the fourth quarter. The IDR process, subsequent appeals and insurance payor delays require extensive administrative time and delays in collections.
Removed
We anticipate launching one-to-three additional IPAs per year principally in geographic areas around our existing micro-hospitals. ​ 39 Table of Contents COVID-19 Pandemic ​ A novel strain of coronavirus causing the disease known as COVID-19 was first identified in December 2019 and spread throughout the world.
Added
Eastern District of Texas, Tyler Division, seeking to invalidate the IDR related provisions of the 42 Table of Contents final rule, arguing that the QPA does not represent the fair value of the services rendered by the physicians and providers and that the final rule illegally favors the QPA over the fair value of the provider services in contravention of the statutory language of the NSA.
Removed
While vaccines and booster shots for the COVID-19 virus became widely available in the United States during 2021, COVID-19 continued to result in a significant number of hospitalizations. ​ As a provider of healthcare services, we were significantly affected by the public health and economic effects of the COVID-19 pandemic.
Added
In addition, the TMA on January 1, 2023, also in the U.S.
Removed
Our hospitals, medical personnel, and employees have been actively caring for COVID-19 patients. We implemented considerable safety measures for treatment of COVID-19 patients and have incurred, and may continue to incur, certain increased expenses arising from the COVID-19 pandemic, including additional labor, supply chain, capital and other expenditures.
Added
Under the No Surprises Act, QPAs are calculated based on median contracted rates for the same or similar service as they existed in 2019. Treasury Regulations direct the IRS to anchor the annual inflationary update in the Consumer Price Index for All Urban Consumers (CPI-U).
Removed
Moreover, in recent months, the COVID-19 pandemic resulted in general inflationary pressures and significant disruptions to global supply networks. In this regard, we have experienced disruptions in connection with the provision of equipment, construction services, as well as inflationary pressures in connection with labor, supply chain, capital and other expenditures.
Added
In Notice 2024-1, the IRS directs health plans to update QPAs in 2024 by an increase of 5.4% over 2023 QPAs. Alternatively, to update 2023 rates, health plans may return to the original 2019 calculation and apply a cumulative update factor to account for the IRS inflationary updates from 2019 to 2024.
Removed
We also experienced a delay in billing and collection of patient claims during this period. ​ The COVID-19 pandemic affected, and may continue to affect, our service mix, revenue mix, payor mix and/or patient volumes, as well as our ability to collect outstanding receivables.
Added
It is difficult to predict the ultimate outcome of efforts to challenge or amend the final rule.
Removed
Pandemic-related factors may continue to adversely affect demand for our services, as well as the ability of patients and other payors to pay for services rendered. ​ While we are not able to fully quantify the impact that the COVID-19 pandemic will have on our future financial results, we expect developments related to COVID-19 to continue to affect our financial performance.
Added
Our 2023 results were principally affected by: ​ • A non-cash asset impairment charge of $29.1 million and a non-cash goodwill impairment charge of $1.1 million due to the closures of two facilities in January 2023 and two facilities in January 2024; • Increase in revenue primarily related to increased collections and improved acuity; • Issuance in March 2023 of 1,000,000 common shares for total expense of $1.9 million to Apollo Medical Holdings, Inc. for IPA managerial services; • Higher interest expense in 2023 principally as a result of the Yorkville Pre-paid Advance issuance; • Higher overall costs in general and administrative costs due primarily to increased corporate staffing and support to meet the Company’s public company obligations. ​ Adjusted EBITDA for 2023 was $10.8 million as compared to $12.5 million for 2022.
Removed
Moreover, the COVID-19 pandemic may otherwise have material adverse effects on our results of operations, financial position, and/or our cash flows if economic and/or public health conditions in the United States deteriorate. ​ Overview of Legislative Developments ​ The U.S.
Added
Refer to Non-GAAP Financial Measures discussed below for a definition and reconciliation of Adjusted EBITDA. The items affecting revenue and start-up costs of four new hospitals in 2023 contributed significantly to the decline in Adjusted EBITDA in the 2023 period. ​ 44 Table of Contents A discussion of our segment results is included below. ​ Hospital Division.
Removed
Our 2021 results benefited from higher patient volumes including COVID-19 related cases. ​ Adjusted EBITDA for 2021 was a $145.2 million as compared with $114.9 million for 2020. Refer to Non-GAAP Financial Measures discussed below for a definition and reconciliation of Adjusted EBITDA. ​ A discussion of our segment results follows. ​ Hospital Division.
Added
Our revenue for 2023 totaled $218.1 million as compared to $198.5 million for 2022, an increase of 10% caused by an increase in collection amounts, offset by a decrease in the number of patient visits.
Removed
Our revenue for 2021 totaled $331.5 million as compared to $274.0 million for 2020, an increase of 21% principally caused by higher patient volumes including COVID-19 related cases.
Added
The following table shows the number of patient visits during the periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2023 ​ 2022 Patient visits: ​ ​ ​ ​ ​ ​ Hospital ​ ​ 144,058 ​ ​ 161,014 ​ Total revenue increased $19.6 million in 2023 from 2022 primarily due to increase in improved collections and higher patient acuity, offset by a 11% drop in COVID related visits. ​ In 2022, the average payment by insurers for patient claims for emergency services declined by approximately 30% compared to prior periods principally because of the NSA compared to prior periods. ​ The hospital division’s operating income was $36.3 million during 2023, up 142% as compared $15.0 million in the same period of 2022.
Removed
The following table shows the number of patient visits during the periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2021 ​ 2020 Patient visits: ​ ​ ​ ​ ​ ​ Hospital ​ ​ 189,016 ​ ​ 168,443 ​ Total patient visits increased 12% in 2021 as compared with 2020.
Added
Our operating income for 2023 was positively affected by an increase in net revenue. We have made significant progress with the IDR process for both the NSA (Federal) as well as the Texas Department of Insurance, resulting in higher average payments in 2023 as compared to 2022.
Removed
Patient visits each year included significant volumes of COVID-19 related cases each year. The number and acuity of patient visits in the fall of 2021 increased significantly due to the emergence of the Omicron variant of the COVID-19 virus.
Added
Our operating income was adversely impacted by $1.4 million due to the opening of four new locations in 2023. Start-up and operating expenses at new facilities often exceed our revenue at these facilities until they achieve stabilized volumes of patient visits. ​ Population Health Management Division. We completed our reverse business combination with Clinigence in April 2022.
Removed
These higher volumes began to subside in early-2022. ​ Collections during the years 2020 and 2021 benefited from provisions of the CARES Act which waived insurance copayments, coinsurance, and annual deductibles for laboratory tests and visits at an emergency department of a hospital to diagnose COVID-19. These provisions of the CARES Act expired on June 30, 2021.
Added
Legacy Clinigence’s operations are reported as the population health management division. Our total revenue for 2023 for this division was $29.6 million consisting of capitation revenue of $25.4 million, management fees of $2.9 million and SaaS revenue of $1.3 million.
Removed
While these provisions were effective, we experienced higher levels of revenue due to a shift of payor mix. The hospital division’s operating income was $179.3 million during 2021, up $21.7 million or almost 14% from $157.6 million reported for 2020. Our operating income for 2021 benefited from the higher revenues discussed above. ​ Real Estate Division.
Added
The increase in revenue is attributed to three quarters of revenues being reported in 2022 due to the reverse merger versus a full year of revenues in 2023, contributing $7.0 million of the increase. The remaining increase is attributed to increases in capitation revenue in 2023. Capitation revenue is recognized by our consolidated VIE, AHISP.
Removed
However, these amounts are largely eliminated in the consolidation of these entities into our financial statements. ​ Corporate and other costs. Corporate and other costs in 2021 included general and administrative expenses totaling $5.5 million as compared with $4.4 million for 2020. Acquisition costs totaled $3.6 million in 2021.
Added
We also earn management fees under our management services contracts with other IPAs and MSOs which are reported as revenue. ​ The population health management division had $1.6 million of operating loss for 2023 driven by losses in our MSOs and technology platform.
Removed
These acquisition costs and higher levels of general and administrative expenses in 2021 were incurred as we prepared for our reverse business combination with Clinigence and added corporate staffing in preparation for our public listing. ​ Nonoperating items ​ Interest expense. Interest expense totaled $6.2 million in 2021 as compared with $6.4 million for 2020.
Added
Strategically, we are focused on the growth of this division principally through the addition of new independent physician associations and have staffed our organization to manage larger numbers of such organizations. In August 2023, we completed the acquisition of two IPAs in Florida. ​ Real Estate Division.
Removed
Reported amounts for income tax expense in these periods were for Texas state tax obligations. ​ Liquidity and Capital Resources ​ As of December 31, 2022, we had $34.3 million of cash and equivalents, compared to $36.1 million of cash and equivalents at December 31, 2021. ​ Significant sources and uses of cash during 2022. ​ Sources of cash: ​ • Cash from operating activities was $50.6 million, which included $64.3 million from the primary components of our working capital (receivables, inventories, accounts payable and expenses). • Clinigence’s balance sheet at the merger date included $12.7 million of cash. • We received net proceeds of $3.4 million from borrowings under notes payable and lines of credit. • We received net proceeds of $4.2 million from the exercise of common stock warrants and options. • Non-controlling members made cash capital contributions of $4.5 million. ​ Uses of cash: ​ • Capital expenditures were $14.6 million. • We made distributions to our owners related to operations prior to the merger with Clinigence and to noncontrolling interest owners totaling $51.2 million. • Cash associated with the 17 deconsolidated Real Estate Entities totaled $2.4 million. ​ Future sources and uses of cash.
Added
This division reports the operations of consolidated Real Estate Entities where we provide guarantees of their indebtedness or are co-borrowers. During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans.
Removed
Nutex will control the timing and amount of any future sales of its Common Stock and the Investor is obligated to make purchases in accordance with the purchase agreement, subject to ‎various limitations including those under the Nasdaq listing rules. ​ Nutex intends to use the ‎net proceeds from the future sale of its Common Stock for working capital and general corporate ‎purposes to support its growth.‎ ​ Regular Purchases: At any time after the satisfaction of certain conditions including the effectiveness of a registration statement, the Company ‎has the right, but not the obligation, to require the Investor to purchase on any particular trading day (“Purchase Date”) up to: ● 300,000 shares of Common ‎Stock provided that the closing price is not below ‎‎$0.10; ● ‎‎600,000 shares if the closing price is not below $0.75; and ● 900,000 shares if the closing price is not ‎below $1.50. ​ The Investor’s committed obligation under each Regular Purchase shall not exceed $3,000,000.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeQuantitative and Qualitative Disclosure About Market Risk ​ We are exposed to market risk related to changes in interest rates, primarily as a result of the line of credit facilities which bear interest based on floating rates. ​ The estimated fair value of our long-term debt approximates the carrying amount at December 31, 2022 due to its relatively short maturity.
Biggest changeQuantitative and Qualitative Disclosure About Market Risk ​ We are exposed to market risk related to changes in interest rates, primarily as a result of the line of credit facilities which bear interest based on floating rates. ​ The estimated fair value of our long-term debt approximates the carrying amount at December 31, 2023 due to its relatively short maturity.
To mitigate the impact of fluctuations in interest rates, we generally target our debt portfolio to be maintained at fixed rates. ​ ​ 50 Table of Contents
To mitigate the impact of fluctuations in interest rates, we generally target our debt portfolio to be maintained at fixed rates. ​ ​ 53 Table of Contents

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