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What changed in Nutex Health, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Nutex Health, Inc.'s 2023 and 2024 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 2024 report.

+284 added−380 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-29)

Top changes in Nutex Health, Inc.'s 2024 10-K

284 paragraphs added · 380 removed · 215 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

70 edited+24 added−33 removed65 unchanged
Biggest changeSince 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.
Biggest changeSince the second quarter of 2022, we deconsolidated 18 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, ​ 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division revenue ​ $ 449,063,683 ​ $ 218,070,397 ​ $ 198,508,245 Population health management division revenue ​ ​ 30,884,950 ​ ​ 29,575,919 ​ ​ 20,786,061 Total revenue ​ $ 479,948,633 ​ $ 247,646,316 ​ $ 219,294,306 ​ Our hospital division receives payment for facility services rendered by us from federal agencies, private insurance carriers, and patients.
We next identify and contract with in-market physicians who will co-invest with us and become the on-site management of the new facility. ​ For each new hospital location, three entities are usually created: ​ • Real estate entity – our hospital facilities are designed and constructed to meet our specific needs and governmental regulations for micro-hospitals.
Next, we identify and contract with in-market physicians who will co-invest with us and become the on-site management of the new facility. ​ For each new hospital location, three entities are usually created: ​ • Real estate entity – our hospital facilities are designed and constructed to meet our specific needs and governmental regulations for micro-hospitals.
In addition, hospitals offer other ancillary services, including psychiatric, diagnostic, rehabilitation, home care and outpatient surgery services. ​ Patients needing the most complex care are more often served by the larger and/or more specialized urban hospitals.
In addition, hospitals offer other ancillary services, including psychiatric, diagnostic, rehabilitation, home care and outpatient surgery services. ​ Patients needing the most complex care are more often served by larger and/or more specialized urban hospitals.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. ​ Several courts have interpreted the AKS’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the AKS has been violated. ​ The AKS includes statutory exceptions and regulatory safe harbors that protect certain arrangements.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. ​ Several courts have interpreted AKS’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the AKS has been violated. ​ The AKS includes statutory exceptions and regulatory safe harbors that protect certain arrangements.
Our ability to compete successfully varies from location to location and depends on a number of factors that include, but are not limited to: the number of competing facilities in the local market and the types of services available at those facilities, our local reputation for quality care of members, the commitment and expertise of our medical staff, our local service offerings and community programs, the cost of care in each locality, and the physical appearance, location, age and condition of our facilities. ​ Our growth strategy and our business could be ‎adversely affected if we are not able to continue to access existing geographies, successfully ‎expand into new geographies or maintain or establish new relationships with ‎physician partners.
Our ability to compete successfully varies from location to location and depends on a number of factors that include, but are not limited to: the number of competing facilities in the local market and the types of services available at those facilities, our local reputation for quality care of members, the commitment and expertise of our medical staff, our local service offerings and community programs, the cost of care in each locality, and the physical appearance, location, age and condition of our facilities. ​ Our growth strategy and our business could be ‎adversely affected if we are not able to continue to operate in existing geographies, successfully ‎expand into new geographies or maintain or establish new relationships with ‎physician partners.
Our competitors typically vary by geography, and we may also encounter ‎competition in the future from other new entrants. ​ Since there are virtually no substantial capital expenditures required for providing healthcare services, there are few financial barriers to entry in the healthcare industry.
Our competitors typically vary by geography, and we may also encounter ‎competition in the future from other new entrants. ​ Since there are no substantial capital expenditures required for providing healthcare services, there are few financial barriers to entry in the healthcare industry.
The arbitrator must select one of the two proposed payment amounts taking into ‎account the ‎‎“qualifying payment amount” and additional circumstances including among other things the level of training, outcomes ‎‎measurements of the facility, the acuity of the individual treated, and the case mix and scope of services of the ‎facility ‎providing the service.
The arbitrator must select one of the two proposed payment amounts taking into ‎account the ‎‎“qualifying payment amount” (“QPA”) and additional circumstances, including, among other things, the level of training, outcomes ‎‎measurements of the facility, the acuity of the individual treated, and the case mix and scope of services of the ‎facility ‎providing the service.
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.
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 8 Table of Contents 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.
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.
According to the American Hospital Association, there are approximately 5,112 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.
The NSA addresses ‎the payment of these out-of-network providers by group health plans or health ‎insurance issuers (collectively, “insurers”). ‎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. ‎ ​ 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.
The NSA addresses ‎the payment of these out-of-network providers by 6 Table of Contents group health plans or health ‎insurance issuers (collectively, “insurers”). ‎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. ‎ ​ 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.
For example, on April 5, 2021, healthcare providers and certain other entities became subject to information blocking restrictions pursuant to the Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by the HHS as a reasonable and necessary activity.
On April 5, 2021, healthcare providers and certain other entities became subject to information blocking restrictions pursuant to the Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of electronic health information, except as required by law or specified by the HHS as a reasonable and necessary activity.
Such suits, known as qui tam actions, are pervasive in the healthcare industry. ​ Further, the Civil Monetary Penalties Statute authorizes the imposition of civil monetary penalties, assessments, and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to offering remuneration to a federal health care program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive health care items or services from a particular provider.
Such suits, known as qui tam actions, are pervasive in the healthcare industry. ​ 9 Table of Contents Further, the Civil Monetary Penalties Statute authorizes the imposition of civil monetary penalties, assessments, and exclusion against an individual or entity based on a variety of prohibited conduct, including, but not limited to offering remuneration to a federal health care program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive health care items or services from a particular provider.
Our relationships with physician partners are critical to our success. ​ • Having a scalable go-to-market strategy – Robust administrative support where key support functions including billing and collection, purchasing, marketing, human resources and financial operations are centralized allowing our physicians and hospitalists to focus on patient care.
Our relationships with physician partners are critical to our success. ​ • Having a scalable go-to-market strategy – Robust administrative support where key support functions including billing and collection, purchasing, marketing, legal and compliance, human resources and financial operations are centralized allowing our physicians and hospitalists to focus on patient care.
Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” Nutex owned and managed facilities hold CLIA Certificates of Waiver and perform certain CLIA-waived tests, which subjects such clinics to certain CLIA requirements.
Standards for testing under CLIA are based on the complexity of the tests performed by the laboratory, with tests classified as “high complexity,” “moderate complexity,” or “waived.” Nutex owned and managed facilities hold CLIA Certificates of Waiver and perform certain CLIA-waived tests, which subject such clinics to certain CLIA requirements.
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.
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.
Our hospital division develops and operates a network of micro-hospitals, specialty hospitals and hospital outpatient departments (HOPDs) providing comprehensive and high-quality 24/7 care. Our full-service care delivery model provides concierge-level care traditionally ‎offered by larger hospitals in a ‎patient-friendly and cost-effective setting.
Our hospital division develops and operates a network of micro-hospitals, specialty hospitals and HOPDs providing comprehensive and high-quality 24/7 care. Our full-service care delivery model provides concierge-level care traditionally ‎offered by larger hospitals in a ‎patient-friendly and cost-effective setting.
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.
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. ​ 1 Table of Contents Population Health Division.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue or attain growth, any of which could have a material impact on our business. ​ Further, healthcare providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information.
The implementation of cost containment measures or other 10 Table of Contents healthcare reforms may prevent us from being able to generate revenue or attain growth, any of which could have a material impact on our business. ​ Further, healthcare providers and industry participants are also subject to a growing number of requirements intended to promote the interoperability and exchange of patient health information.
If the provider disagrees with the ‎insurer’s ‎determination, the provider may initiate a thirty-day period of open negotiation with the insurer over the ‎claim. If the ‎parties cannot resolve the dispute through negotiation, the parties may then proceed to IDR ‎arbitration. ‎ ​ Independent Dispute Resolution .
If the provider disagrees with the ‎insurer’s ‎determination, the provider may initiate a thirty-day period of open negotiation with the insurer over the ‎claim. If the ‎parties cannot resolve the dispute through negotiation, the parties may then proceed to the IDR ‎process. ‎ ​ Independent Dispute Resolution .
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.
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.
Entities that are found to be in violation of HIPAA, whether 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. ​ In addition, certain state laws, such as the CMIA, the CCPA, and the CPRA, govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. ​ Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.
Entities that are found to be in violation of HIPAA, whether 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. ​ In addition, certain state laws, such as the California Confidentiality of Medical Information Act (CMIA), the California Consumer Privacy Act of 2018 (CCPA), and the California Privacy Rights Act (CPRA), govern the privacy and security of personal information, including health-related information in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. ​ Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.
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.
Once established, the IPA enrolls patients and negotiates managed care contracts with insurers to provide comprehensive care to their patients, often for a value-based fixed annual fee (capitation). The IPA entities are not owned by us but are managed by our MSO which provides management, administrative, and other support services.
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 .
These include: ​ • engaging a third-party IDR vendor for claims under IDR, • maximizing our claims coding efficiency, • increasing efforts to collect co-pays and co-insurance, 7 Table of Contents • 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. ​ Arbitration Process.
Building out IPA networks in the same communities as our micro-hospitals will drive patient volume and result in greater revenue from increased capitation and full-risk contracts.
Building out IPA networks in the same communities as our micro-hospitals help drive patient volume and result in greater revenue from increased capitation and full-risk contracts.
Financially, we are aligned with our physician partners who are co-investors with us in their community’s micro-hospitals or IPAs and, in many instances, are shareholders of Nutex.
Financially, we are aligned with our physician partners who are co-investors with us in their community’s micro-hospitals or IPAs and, in many instances, are stockholders of Nutex.
Nutex also contracts with this entity to provide administrative services including financial accounting and other responsibilities. ​ • Physician LLC entity – the in-market physicians create and independently own the physician entity. In certain states, state laws and regulations prohibit non-physician ownership of physician practices.
Nutex also contracts with this entity to provide administrative services including financial accounting and other responsibilities. 4 Table of Contents ​ • Physician LLC entity – the in-market physicians create and independently own the physician entity. In certain states, state laws and regulations prohibit non-physician ownership of physician practices.
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”).
Item 1. Business Overview ​ Nutex Health Inc. (“Nutex Health” or the “Company”) is a physician-led, healthcare services and operations company with 24 hospital facilities in 11 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”).
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.
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. 2 Table of Contents ​ • Providing a patient-centric care model – We fulfill a healthcare segment needing immediate and convenient access to primary and emergency care.
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.
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 expanding our clinical services at our existing facilities and by opening or acquiring new micro-hospital facilities in high demand areas of the United States.
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 .
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 .
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.
CMS anticipates that total U.S. healthcare annual expenditures will reach nearly $7.7 trillion by 2032, 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.
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
On our Internet website, http://www.nutexhealth.com, on the “Investors” webpage under the caption “SEC Filings”, 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
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.
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 the Health Insurance Portability and Accountability Act (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.
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.
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. ​ 11 Table of Contents Employees ​ We had 800 full-time employees as of December 31, 2024, including our named executive officers.
Violations may result in penalties or other disincentives. It is unclear at this time what the costs of compliance with the new rules will be, and what additional risks there may be to our business. ​ Data Privacy and Security Laws .
Violations may result in penalties or other disincentives. It is unclear at this time what the costs of compliance with the new rules will be, and what additional risks there may be to our business.
The “qualifying payment amount” (QPA) is generally the median of the contracted ‎rates ‎recognized by the plan or issuer under such plans or coverage, respectively, on January 31, 2019, for the ‎same or a similar ‎item or service that is provided by a provider in the same or similar specialty and provided in the ‎geographic region in ‎which the items or service is furnished, with annual increases based on the consumer price ‎index.
The QPA is generally the median of the contracted ‎rates ‎recognized by the plan or issuer under such plans or coverage, respectively, for the ‎same or a similar ‎item or service that is provided by a provider in the same or similar specialty and provided in the ‎geographic region in ‎which the items or service is furnished, with annual increases based on the consumer price ‎index.
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.
Additionally, there 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.
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.
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, regulatory, legislative ‎and marketing / business development.
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).
CMS projects that the hospital services category will grow at an average of 5.6% annually from 2027 through 2032, reaching nearly $2.4 trillion by 2032. ​ 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).
It also has the added benefit of reducing healthcare costs as extended hospital stays and more costly treatments may be avoided. ​ Consumers desire affordable primary care with access to specialists as needed. We believe this need may be met by offering IPAs.
It also has the added benefit of reducing healthcare costs as extended hospital stays and more costly treatments may be avoided. ​ Consumers desire affordable primary care with access to specialists as needed. We believe this need may be met in markets we service through our IPAs.
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.
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 24 micro-hospital facilities in 11 states and four IPAs.
The provider and insurer each submit a proposed payment amount and ‎‎explanation to the arbitrator.
In the IDR process, the provider and insurer each submit a proposed payment amount and ‎‎explanation to the arbitrator.
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.
We believe our business, ‎partnership and operations model enables us to compete favorably. ‎ ​ 5 Table of Contents The Healthcare Industry ​ According to the Centers for Medicare & Medicaid Services, or CMS, national healthcare expenditures grew 7.5% in 2023 to $4.9 trillion.
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.
We own and operate 24 ‎healthcare facilities across 11 ‎states and currently have an additional 10 de novo micro-hospitals under various stages of ‎development. ​ Our micro-hospitals generate revenue from both emergency services and in-patient services, providing operating leverage and significant earning potential of each facility.
The physician entity employs or contracts with 4 Table of Contents physicians who will staff the new location.
The physician entity employs or contracts with physicians who will staff the new location.
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.
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.
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.
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 PHM division and (iii) the real estate division. ​ Hospital Division.
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.
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 lower wait times for care than often seen in larger hospital emergency departments. ​ Physician and clinical services expenditures grew 7.4% to $978.0 billion in 2023, faster growth than the 4.6% in 2022.
In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, many of which are intended to contain or reduce healthcare costs. By way of example, in the United States, the ACA substantially changed the way healthcare is financed by both governmental and private insurers.
In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes to the healthcare system, many of which are intended to contain or reduce healthcare costs.
Before entering a new state, we investigate the regulation and licensing requirements for our business and the construction design and permitting requirements of the targeted community.
Generally, we place our micro-hospitals in larger suburban or rural locations. Before entering a new state, we investigate the regulation and licensing requirements for our business and the construction design and permitting requirements of the targeted community.
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 are also seeking to establish 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 three new hospital facilities in 2025. These facilities are either under construction or in advanced planning stages.
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.
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. Capitation revenue consists primarily of capitated fees for medical services provided by physician-owned entities we consolidate as VIEs.
The Real Estate Entities own the land and hospital buildings which are leased to our hospital entities. The Real Estate Entities have mortgage loans payable to third parties which are collateralized by the land and buildings. We consolidate the Real Estate Entities as VIEs in instances where our hospital entities are guarantors or co-borrowers under their outstanding mortgage loans.
We consolidate the IPA entities in our financial statements as VIEs since we manage these entities. ​ Real Estate Division. The Real Estate Entities own the land and hospital buildings which are leased to our hospital entities. The Real Estate Entities have mortgage loans payable to third parties which are collateralized by the land and buildings.
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.
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.
The Physician LLCs employ the doctors who work in our hospitals. ‎The ‎Real Estate Entities own the land and ‎hospital buildings in ‎which the hospitals operate and lease the buildings ‎to the hospitals. We have no ownership interests in either the Physician LLCs or Real Estate Entities, but provide back office accounting for each.
The Physician LLCs employ the doctors who work in our hospitals. ‎The ‎Real Estate Entities, which generally have the same ownership as the related Physician LLCs, own the land and ‎hospital buildings in ‎which the hospitals operate and lease the buildings ‎to the hospitals.
The real estate entities often enter into mortgage loans to finance the facilities. In some instances, Nutex may participate as a co-borrower or guarantee of this indebtedness. Nutex does not own any of the real estate entities but enters into a long-term market rate lease of the facility for its operations with the real estate entity.
Nutex does not own any of the real estate entities but enters into a long-term market rate lease of the facility for its operations with the real estate entity.
As required by the NSA, the United States Department of Health and Human ‎Services (“HHS”) ‎has established an IDR process under which a certified IDR ‎entity determines the ultimate amount of payment. The HHS’ ‎final rule became effective October 25, 2022. ​ The final rule is already the subject of legal challenges.
At the beginning of each year, the IRS publishes a notice providing the applicable percentage increase of the QPA for each year. ​ HHS Final Rule . As required by the NSA, the United States Department of Health and Human ‎Services (“HHS”) ‎has established an IDR process under which a certified IDR ‎entity determines the ultimate amount of payment.
We believe that wait times are significantly lower than traditional ER settings and patients are welcomed by a friendly, attentive staff and physician team.
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 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.
There is no guarantee that any or all of the planned new hospitals or new IPAs will be successfully launched in the anticipated time frames. ​ 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.
With respect to the Company, ‎the NSA limits ‎the amount an insured patient will pay for emergency services furnished by an out-of-network ‎provider.
The No Surprises Act (“NSA”) is a federal law that took effect January 1, 2022, to protect consumers from most instances ‎of “surprise” balance billing. With respect to the Company, ‎the NSA limits ‎the amount an insured patient will pay for emergency services furnished by an out-of-network ‎provider.
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.
In total, the Company’s IPAs now have approximately 40, 000 members across its platform, including commercial and Medicaid managed care members. We are operationalizing our IPA in Phoenix, Arizona in 2025 and plan to enter one to two more new markets in 2025.
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.
In the future, we expect to contract directly with more commercial payors whose reimbursement rates for our services are more closely aligned with the value offered. ​ 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.
In addition, on January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. ​ Additionally, the Center for Medicare and Medicaid Innovation continues to test an array of value-based alternative payment models, including the Global and Professional Direct Contracting Model to allow Direct Contracting Entities to negotiate directly with the government to manage traditional Medicare beneficiaries and share in the savings and risks generated from managing such beneficiaries.
ACOs that fail to comply with such program requirements can face penalties or even termination of their participation in the Medicare shared savings program. ​ Additionally, the Center for Medicare and Medicaid Innovation continues to test an array of value-based alternative payment models, including the Global and Professional Direct Contracting Model to allow Direct Contracting Entities to negotiate directly with the government to manage traditional Medicare beneficiaries and share in the savings and risks generated from managing such beneficiaries.
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.
The population health management (“PHM”) division owns and operates provider networks such as independent physician associations (“IPAs”). ​ We employ 800 full-time employees, contract 255 doctors at our facilities and partner with over 2,100 physicians and specialists within our networks. Our corporate headquarters is based in Houston, Texas.
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.
Our population health management division establishes and operates provider networks such as IPAs. Through its Management Services Organization (“MSO”), Nutex provides management, administrative, and other support services to its affiliated hospitals and physician groups. ​ An IPA is a business entity organized and owned by a network of independent physician practices.
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.
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 future legal challenges or legislative and rulemaking efforts at the federal level.
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.
Presently, we manage one IPA located in Los Angeles, California having approximately 33,000 patients. We have established two other IPAs, in one Houston and in one South Florida. As of the date of this filing, our Houston IPA manages approximately 800 Medicare Advantage (“MA”) patients and our South Florida IPA manages approximately 5,000 members, including 400 MA patients.
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.
The IDR process, including subsequent appeals and insurance payor delays, require extensive administrative time and delays in collections, which can take up to three to five months to receive payments from when we start the open negotiation process.
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.
In 2023, hospital care expenditures increased 10.4%, faster than the growth rate of 2.2% in 2022, and totaled nearly $1.5 trillion. The faster growth in 2023 was driven by non-price factors (which include the use and intensity of services), with an increased number of hospital discharges and increased Medicare outpatient hospital utilization.
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.
Our IPAs offer a trusted network of primary care physicians and specialists fostering closer patient-physician relationships. ​ Governmental Regulation The healthcare industry is heavily regulated and closely scrutinized by federal, state and local governments.
Removed
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.
Added
Our patients with commercial insurance coverage have historically applied out of network benefits and patient co-pays to settle invoices.
Removed
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.
Added
We have no ownership interests in either the Physician LLCs or Real Estate Entities, but provide back office accounting for each.
Removed
Our proprietary cloud-based PHM platform aggregates data across multiple groups of information, which it then uses to report clinical quality measures, gaps in care, risk-stratification of patients, predictive analytics as well as providing a scorecard and utilization dashboard on every provider.
Added
We do not have direct ownership interest in these entities but they are owned and, in some instances, controlled by related parties, including our CEO. We consolidate the Real Estate Entities as VIEs in instances where our hospital entities are guarantors or co-borrowers under their outstanding mortgage loans.
Removed
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.
Added
We anticipate launching one-to-three additional IPAs per year principally in geographic areas around our existing micro-hospitals.
Removed
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.
Added
The real estate entities often enter into mortgage loans to finance the acquisition of the associated land or purchase the build out of facilities. In some instances, Nutex may participate as a co-borrower or guarantor of this indebtedness.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs 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.
Biggest changeAs 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. ​ 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 in excess of the purchase price. ​ 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.
Laws pertaining to public companies, including new regulations proposed by the SEC, are increasingly complex and could force management to devote increasing amounts of time to the compliance with such laws and potentially impact time available to the management of our business.
Laws pertaining to public companies, including new regulations proposed by the SEC, are increasingly complex and could force management to devote increasing amounts of time to compliance with such laws and potentially impact time available to the management of our business.
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.
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 regulatory requirements to which we are subject.
If one or more of the analysts who covers us downgrades our securities, publishes incorrect or unfavorable research about us, ceases coverage of us, or fails to publish reports on us regularly, demand for and visibility of our securities could decrease, which could cause the price or trading volumes of our securities to decline. ​ We will continue to incur significantly increased costs and devote substantial management time as a result of operating as a public company. ​ As a public company, we will continue to incur significant legal, accounting and other expenses.
If one or more of the analysts who covers us downgrades our securities, publishes incorrect or unfavorable research about us, ceases coverage of us, or fails to publish reports on us regularly, demand for and visibility of our securities could decrease, which could cause the price or trading volumes of our securities to decline. ​ We will continue to incur significantly increased costs and devote substantial management time as a result of operating as a public company. ​ As a public company, we incur significant legal, accounting and other expenses.
Since we do not have any contractual arrangements with insurance companies, we cannot predict the timing and amount of the payments we ultimately receive for our services and estimates and assumptions, which are based on historical insurance payment amounts and timing. ​ In addition, as a result of the NSA becoming effective on January 1, 2022, we experienced a significant decline in collections of patient claims for emergency services and have had only limited success at achieving collections at or higher than the established qualifying payment amount, which is the median in-network contracted rate for the same insurance market.
Since we do not have any contractual arrangements with insurance companies, we cannot predict the timing and amount of the payments we ultimately receive for our services and estimates and assumptions, which are based on historical insurance payment amounts and timing. ​ In addition, as a result of the NSA becoming effective on January 1, 2022, we initially experienced a significant decline in collections of patient claims for emergency services and have had only limited success at achieving collections at or higher than the established qualifying payment amount, which is the median in-network contracted rate for the same insurance market.
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.
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 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.
In addition, in the event that a significant number of our management personnel were unavailable in the event of a disaster, our ability to effectively conduct business could be adversely affected. ​ In the ordinary course of our business, we, our partner physicians or other physician partners collect and store sensitive data, including personally identifiable information, protected health information, or PHI, intellectual property and proprietary business information owned or controlled by us or our employees, members and other parties.
In addition, in the event that a significant number of our management personnel were unavailable in the event of a disaster, our ability to effectively conduct business could be adversely affected. ​ In the ordinary course of our business, we, our partner physicians or other physician partners collect and store sensitive data, including personally identifiable information, protected health information, intellectual property and proprietary business information owned or controlled by us or our employees, members and other parties.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: ​ • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to respond to competitive developments; • security or data privacy breaches and associated remediation costs; and • the timing of expenses related to the development or acquisition of additional hospitals or businesses. ​ Any fluctuation in our quarterly results may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our Common Stock. ​ Obligations under the term loans of our Hospital Subsidiaries, and our related loan and leases guarantees could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions.
Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of our control, including, without limitation, the following: ​ • the timing of recognition of revenue, including possible delays in the recognition of revenue due to sometimes unpredictable implementation timelines; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • our ability to respond to competitive developments; • security or data privacy breaches and associated remediation costs; and • the timing of expenses related to the development or acquisition of additional hospitals or businesses. ​ Any fluctuation in our quarterly results may not accurately reflect the underlying performance of our business and could cause a decline in the trading price of our Common Stock. ​ Obligations under the term loans of our hospitals, and our related loan and leases guarantees could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions.
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.
Although the Management Services Agreements (MSAs) of our hospitals 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.
In addition, third-party payors may disallow, in whole or in part, requests for reimbursement based on determinations that the patient is not eligible for coverage, certain amounts are not reimbursable under plan coverage, were for services provided that were not medically necessary, or additional supporting documentation is necessary. Retroactive adjustments may change amounts realized from third-party payors.
Third-party payors may disallow, in whole or in part, requests for reimbursement based on determinations that the patient is not eligible for coverage, certain amounts are not reimbursable under plan coverage, were for services provided that were not medically necessary, or additional supporting documentation is necessary. Retroactive adjustments may change amounts realized from third-party payors.
Any failure to comply with these rules could have a material adverse effect on our business, results of operations and financial condition. ​ Our business and operations would suffer in the event of information technology system failures, security breaches, or other deficiencies in cybersecurity. ​ Our information technology systems facilitate our ability to conduct our business.
Any failure to comply with these rules could have a material adverse effect on our business, results of operations and financial condition. ​ Our business and operations could suffer in the event of material information technology system failures, security breaches, or other deficiencies in cybersecurity. ​ Our information technology systems facilitate our ability to conduct our business.
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.
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 • 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.
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.
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.
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.
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. ​ 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.
The failure to maintain or to secure new cost-effective provider contracts may result in a loss of or inability to staff existing or new facilities, higher costs, less attractive service for patients and/or difficulty in meeting applicable regulatory requirements, any of which could have a material adverse effect on our business, financial condition and results of operations. ​ If any of our physician partners lose their regulatory licenses, permits and/or accreditation status, or become ineligible to receive reimbursement under Medicare or Medicaid or from other third-party payors, there may be a material adverse effect on our business, financial condition, cash flows, or results of operations. ​ The operations of our hospitals through our physician partners are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate-setting and compliance with building codes and environmental protection.
The failure to maintain or to secure new cost-effective provider contracts may result in a loss of or inability to staff existing or new facilities, higher costs, less attractive service for patients and/or difficulty in meeting applicable regulatory requirements, any of which could have a material adverse effect on our business, financial condition and results of operations. ​ If any of our physician partners lose their regulatory licenses, permits and/or accreditation status, or become ineligible to receive reimbursement under Medicare or Medicaid or from other third-party payors, there may be a material adverse effect on our business, financial condition, cash flows, or results of operations. ​ The operations of our hospitals through our physician partners are subject to extensive federal, state and local regulation relating to, among other things, the adequacy of medical care, equipment, personnel, operating policies and procedures, fire prevention, rate- 19 Table of Contents setting and compliance with building codes and environmental protection.
Should any of our hospitals 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 so that we or our partner physicians and other healthcare professionals are unable to receive reimbursement from such programs and possibly from other third-party payors, any of which could materially adversely affect our business, financial condition, cash flows or results of operations. ​ If our arrangements with our partner physicians and other physician partners are found to constitute the improper rendering of medical services or fee splitting under applicable state laws, our business, financial condition and our ability to operate in those states could be adversely impacted. ​ Our contractual relationships with our partner physicians may implicate certain state laws that generally prohibit non-professional entities from providing licensed medical services or exercising control over licensed physicians or other healthcare professionals (such activities generally referred to as the “corporate practice of medicine”) or engaging in certain practices such as fee-splitting with such licensed professionals.
Should any of our hospitals 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 so that we or our partner physicians and other healthcare professionals are unable to receive reimbursement from such programs and possibly from other third-party payors, any of which could materially adversely affect our business, financial condition, cash flows or results of operations. ​ 29 Table of Contents If our arrangements with our partner physicians and other physician partners are found to constitute the improper rendering of medical services or fee splitting under applicable state laws, our business, financial condition and our ability to operate in those states could be adversely impacted. ​ Our contractual relationships with our partner physicians may implicate certain state laws that generally prohibit non-professional entities from providing licensed medical services or exercising control over licensed physicians or other healthcare professionals (such activities generally referred to as the “corporate practice of medicine”) or engaging in certain practices such as fee-splitting with such licensed professionals.
If we underestimate or do not correctly predict the cost of the care our partner physicians furnish to patients, we might be underpaid for the care that must be provided to patients, which could have a negative impact on our results of operations and financial condition. ​ We primarily depend on reimbursement by third-party payors, as well as payments by individuals, which could lead to delays and uncertainties in the timing and process of reimbursement, including any changes or reductions in Medicare reimbursement rates or rules. ​ The reimbursement process is complex and can involve lengthy delays.
If we underestimate or do not correctly predict the cost of the care our partner physicians furnish to patients, we might be underpaid for the care that must be provided to patients, which could have a negative impact on our results of operations and financial condition. ​ We primarily depend on reimbursement by third-party payors, as well as payments by individuals, which could lead to delays and uncertainties in the timing and process of reimbursement, including any changes or reductions in Medicare reimbursement rates or rules. ​ The reimbursement and associated arbitration process is complex and can involve lengthy delays.
Despite our implementation of a variety of security measures, our information technology systems could be subject to physical or electronic break-ins, and similar disruptions from unauthorized tampering or any weather-related disruptions where our headquarters is located.
Despite our implementation of a variety of reasonable security measures, our information technology systems could be subject to physical or electronic break-ins, and similar disruptions from unauthorized tampering or any weather-related disruptions where our headquarters is located.
If the DMHC were to determine that we have been inappropriately taking risk for institutional and professional services as a result of our various hospital and physician arrangements without having any Knox-Keene license or applicable regulatory exemption, we may be required to obtain a Knox-Keene license and could be subject to civil and criminal liability, any of which could have a material adverse effect on our business, results of operations, and financial condition. ​ A Knox-Keene Act license or exemption from licensure, where applicable, is required to operate a healthcare service plan, e.g., an HMO, or an organization that accepts global risk, i.e., accepts full risk for a patient population, including risk related to institutional services, e.g., hospital, and professional services. ​ If our affiliated physician group is not able to satisfy California financial solvency regulations, they could become subject to sanctions and their ability to do business in California could be limited or terminated. ​ The DMHC has instituted financial solvency regulations.
If the DMHC were to determine that we have been inappropriately taking risk for institutional and professional services as a result of our various hospital and physician arrangements without having any Knox-Keene license or applicable regulatory exemption, we may be required to obtain a Knox-Keene license and could be subject to civil and criminal liability, any of which could have a material adverse effect on our business, results of operations, and financial condition. ​ A Knox-Keene Act license or exemption from licensure, where applicable, is required to operate a healthcare service plan, e.g., an HMO, or an organization that accepts global risk, i.e., accepts full risk for a patient population, including risk related to institutional services, e.g., hospital, and professional services. 25 Table of Contents ​ If our affiliated physician group is not able to satisfy California financial solvency regulations, they could become subject to sanctions and their ability to do business in California could be limited or terminated. ​ The DMHC has instituted financial solvency regulations.
The government may also assert that a claim including items or services resulting from a violation of the AKS or Stark Law constitutes a false or fraudulent claim for purposes of the FCA; • the Civil Monetary Penalties Statute, which prohibits, among other things, an individual or entity from offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; • the criminal healthcare fraud provisions of HIPAA and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The government may also assert that a claim including items or services resulting from a violation of the AKS or Stark Law constitutes a false or fraudulent claim for purposes of the FCA; 28 Table of Contents • the Civil Monetary Penalties Statute, which prohibits, among other things, an individual or entity from offering remuneration to a federal healthcare program beneficiary that the individual or entity knows or should know is likely to influence the beneficiary to order or receive healthcare items or services from a particular provider; • the criminal healthcare fraud provisions of HIPAA and related rules that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying, concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations. ​ Any future litigation against us could be costly and time-consuming to defend. ​ We may become subject, from time to time, to legal proceedings, federal and state audits, government investigations, and payor audits, investigations, overpayments, and claims that arise in the ordinary course of business such as claims brought by our clients in connection with commercial disputes or employment claims made by our current or former associates.
Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators, or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation, and adversely affect our business and results of operations. ​ 22 Table of Contents Any future litigation against us could be costly and time-consuming to defend. ​ We may become subject, from time to time, to legal proceedings, federal and state audits, government investigations, and payor audits, investigations, overpayments, and claims that arise in the ordinary course of business such as claims brought by our clients in connection with commercial disputes or employment claims made by our current or former associates.
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.
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, have varied and may vary significantly in the future, and period-to-period comparisons of our results of operations may not be meaningful.
If we fail to abide by such policies or submit incorrect or incomplete data, we may be exposed to liability to a client, court, or government agency that concludes that our storage, handling, submission, delivery, or display of health information or other data was wrongful or erroneous. ​ Our proprietary applications may not operate properly, which could damage our reputation, give rise to a variety of claims against us, or divert our resources from other purposes, any of which could harm our business and operating results. ​ Proprietary software and application development is time-consuming, expensive, and complex, and may involve unforeseen difficulties.
If we fail to abide by such policies or submit incorrect or incomplete data, we may be exposed to liability to a client, court, or government agency that concludes that our storage, handling, submission, delivery, or display of health information or other data was wrongful or erroneous. 27 Table of Contents ​ Our proprietary applications may not operate properly, which could damage our reputation, give rise to a variety of claims against us, or divert our resources from other purposes, any of which could harm our business and operating results. ​ Proprietary software and application development is time-consuming, expensive, and complex, and may involve unforeseen difficulties.
Our hospitals and their affiliated professional entities are subject to periodic inspection by licensing authorities and accreditation organizations to assure their continued compliance with these various standards. There can be no assurance that these regulatory authorities will determine that all applicable requirements are fully met at any given time.
Our hospitals and their affiliated professional entities are subject to periodic inspection by licensing authorities and accreditation organizations to ensure their continued compliance with these various standards. There can be no assurance that these regulatory authorities will determine that all applicable requirements are fully met at any given time.
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.
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.
We must continue to improve our existing systems for operational and financial management, including our reporting systems, procedures and controls. These improvements could require significant capital expenditures and place increasing demands on our management. We may not be successful in managing or expanding our operations or in maintaining adequate financial and operating systems and controls.
We must continue to improve our existing systems for operational and financial management, including our reporting systems, procedures and controls. These improvements could require significant capital expenditure and place increasing demands on our management. We may not be successful in managing or expanding our operations or in maintaining adequate financial and operating systems and controls.
If we do not successfully manage these processes, our business, financial condition, cash flows and results of operations could be harmed. ​ In his capacity as the co-owner of the real estate entities that lease the land and buildings to our hospital facilities, Dr.
If we do not successfully manage these processes, our business, financial condition, cash flow and results of operations could be harmed. ​ In his capacity as the co-owner of the real estate entities that lease the land and buildings to our hospital facilities, Dr.
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.
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 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 our hospitals.
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.
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 hospitals 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, 2024. ​ In addition, Nutex Holdco has assumed in the Merger and subsequently entered into guarantees of finance lease obligations of each of our hospitals and mortgage debt of Real Estate Entities affiliated with Dr.
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.
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.
If we are unable or unwilling to incur such costs, our growth in new geographies may be less successful than in our current geographies. ​ Our growth to date has increased the significant demands on our management, operational and financial systems, infrastructure and other resources.
If we are unable or unwilling to incur such costs, our growth in new geographies may be less successful than in our current geographies. ​ Our growth to date has significantly increased the demands on our management, operational and financial systems, infrastructure and other resources.
If we are not able to successfully execute upon our growth strategies, there may be a material adverse effect on our business, financial condition, cash flows and results of operations. ​ Our business depends on our ability to identify and develop successful geographies and relationships with physician partners and healthcare professionals, and to successfully execute upon our growth initiatives to increase the profitability of our physician partners and healthcare professionals.
If we are not able to successfully execute upon our growth strategies, there may be a material adverse effect on our business, financial condition, cash flows and results of operations. 17 Table of Contents ​ Our business depends on our ability to identify and develop successful geographies and relationships with physician partners and healthcare professionals, and to successfully execute upon our growth initiatives to increase the profitability of our physician partners and healthcare professionals.
If our affiliated entities or their equity holders fail to perform as expected, we may have to incur substantial costs and expend additional resources to enforce such arrangements. ​ Any failure by our affiliated entities or their owners to perform their obligations under their agreements with us would have a material adverse effect on our business, results of operations and financial condition. ​ Our affiliated physician practice groups are owned by individual physicians who could die, become incapacitated, or become no longer affiliated with us.
If our affiliated entities or their equity holders fail to perform as expected, we may have to incur substantial costs and expend additional resources to enforce such arrangements. ​ Any failure by our affiliated entities or their owners to perform their obligations under their agreements with us would have a material adverse effect on our business, results of operations and financial condition. ​ The Physician LLCs are owned by individual physicians who could die, become incapacitated, or become no longer affiliated with us.
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.
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 uncertain, but may adversely affect our business, financial condition and results of operations.
As a result, you may not receive any return on an investment in our Common Stock unless you sell your Common Stock for a price greater than that which you paid for it. ​ The market price and trading volume of our Common Stock may be volatile and could decline significantly. ​ Securities markets worldwide experience significant price and volume fluctuations.
As a result, you may not receive any return on an investment in our Common Stock unless you sell your Common Stock for a price greater than that which you paid for it. ​ 31 Table of Contents The market price and trading volume of our Common Stock may be volatile and could decline significantly. ​ Securities markets worldwide experience significant price and volume fluctuations.
If we are unable to recruit and retain physicians and other healthcare professionals, it would have a material adverse effect on its business and ability to grow and would adversely affect the results of operations.
If we are unable to recruit and retain physicians and other healthcare professionals, it would have a material adverse effect on our business and ability to grow and would adversely affect the results of operations.
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 subsidiary AHP Health Management Services Inc., 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”).
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.
In connection with the preparation of the Company’s annual consolidated financial statements for the years ended December 31, 2024, we concluded that there were material weaknesses in our internal control over financial reporting.
While we intend to carefully plan and execute our closure strategies, there can be no assurance that such strategies will successfully offset the temporary revenue decrease resulting from hospital closures. 15 Table of Contents ​ We may experience difficulties in managing our growth and expanding our operations. ​ We are targeting significant growth in the scope of our operations.
While we intend to carefully plan and execute our closure strategies, there can be no assurance that such strategies will successfully offset the temporary revenue decrease resulting from hospital closures. ​ We may experience difficulties in managing our growth and expanding our operations. ​ We are targeting significant growth in the scope of our 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 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 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. ​ 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.
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.
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.
Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all of the specific market segments that we serve now or in the future. However, the timing and impact of developments in the healthcare industry are difficult to predict.
Even if general expenditures by industry participants remain the same or increase, developments in the healthcare industry may result in reduced spending in some or all of the specific market segments that we serve now or in the future. However, the timing and impact of developments in the healthcare industry are 20 Table of Contents difficult to predict.
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.
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.
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.
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.
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 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. ​ 16 Table of Contents Additionally, our estimates with respect to arbitration wins and our resulting cash collections from arbitration may differ due to significant administrative time built into the federal arbitration process and delays in collections. ​ Ultimate amounts collected may differ from anticipated collections, and, as a result, may impact our ability to generate revenue at expected levels. ​ 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.
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.
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.
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.
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 flow, and results of operations.
We may also conclude that additional measures may be required to remediate the material weakness in our internal control over financial reporting.
We may also conclude that additional measures may be required to remediate the material weaknesses in our internal control over financial reporting.
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.
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 is vital to our operations and business strategy, and we devote significant resources to protecting such information.
Litigation may be necessary in the future to enforce our intellectual property rights, determine the validity and scope of our proprietary rights or those of others, or defend against claims of infringement or invalidity.
Litigation may be necessary in the future to enforce our intellectual property rights, determine the validity and scope 26 Table of Contents of our proprietary rights or those of others, or defend against claims of infringement or invalidity.
These obligations may limit our flexibility in our operations, and breaches of these obligations could result in defaults under the term loans or guarantees, even if we had satisfied our payment obligations.
These obligations may limit our flexibility in our operations, and breaches of these obligations could result in defaults under the term loans 23 Table of Contents or guarantees, even if we had satisfied our payment obligations.
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.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, 15 Table of Contents systems and procedures, which could have an adverse effect on our business, reputation and financial results.
The estimates and forecasts in this prospectus relating to the size and expected growth of the market for our services and the estimates of our market opportunity may prove to be inaccurate. ​ Changes in our anticipated ratio of medical expense to revenue can significantly impact our financial results.
The estimates and forecasts in this prospectus relating to the size and expected growth of the market for our services, and the estimates of our market opportunity may prove to be inaccurate. ​ Changes in our anticipated ratio of medical expenses to revenue can negatively impact our financial results.
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.
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 respective geographies.
As a result, our market opportunity estimates and financial forecasts developed as we enter into a new geography, are subject to significant uncertainty, and are based on assumptions and estimates that may not prove to be accurate.
As a result, our market opportunity estimates and financial forecasts developed as we enter into a new 18 Table of Contents geography, are subject to significant uncertainty, and are based on assumptions and estimates that may not prove to be accurate.
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.
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 board of directors of these entities so as to affect changes at the management and operational level.
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.
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, or the perception that such sales could occur, could cause the price of our Common Stock to fall. ​ As of March 24, 2025, there were 5,528,448 shares of Common Stock outstanding, including 1,949,581 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, 2024, we identified material weaknesses in our internal control over financial reporting.
These applications and data encompass a wide variety of business-critical information, including research and development information, customer information, commercial information and business and financial information.
These applications and data encompass a wide 21 Table of Contents variety of business-critical information, including research and development information, customer information, commercial information and business and financial information.
Under current accounting standards, our goodwill, including acquired goodwill, is tested for impairment on an annual basis and may be subject to impairment losses as circumstances change (e.g., after an acquisition). ​ For example, in 2022, we recorded 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 in connection with the Merger.
Under current accounting standards, our goodwill, including acquired goodwill, is tested for impairment on an annual basis and may be subject to impairment losses as circumstances change (e.g., after an acquisition). ​ For example, in 2023, we incurred 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 and, in 2022, we recorded 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 in connection with the Merger.
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.
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 experienced operating losses in 2022 and 2023 and could incur operating losses in the future as we implement our business plans.
These practices result in delayed reimbursement that may adversely affect our cash flows. ​ We may have difficulty collecting payments from third-party payors in a timely manner. ​ We derive significant revenue from third-party payors, and delays in payment or refunds to payors may adversely impact our net revenue. We assume the financial risks relating to uncollectible and delayed payments.
These practices result in delayed reimbursement that may adversely affect our cash flows. 24 Table of Contents ​ We may have difficulty collecting payments from third-party payors in a timely manner. ​ We derive significant revenue from third-party payors, and delays in payment or refunds to payors may adversely impact our net revenue.
In particular, we rely on some key governmental payors. Governmental payors typically pay on a more extended payment cycle, which could require us to incur substantial expenses prior to receiving corresponding payments.
We assume the financial risks relating to uncollectible and delayed payments. In particular, we rely on some key governmental payors. Governmental payors typically pay on a more extended payment cycle, which could require us to incur substantial expenses prior to receiving corresponding payments.
In addition, we could face criminal liability, damages for contract breach and incur significant costs for remedial measures to prevent future occurrences and mitigate past violations.
In addition, we could face criminal liability, damages for contract breach, reputational harm that could impact our ability to compete, and incur significant costs for remedial measures to prevent future occurrences and mitigate past violations.
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.
These material weaknesses are related to our logical access controls for certain financially relevant systems, our financial reporting processes, and key spreadsheets supporting the financial statements. ​ Throughout 2024, the Company designed and implemented internal control measures to remediate material weaknesses. The Company’s efforts include reducing reliance on manual processes and spreadsheets supporting the financial statements.
General reductions in expenditures by healthcare industry participants could result from, among other things: ​ • government regulations or private initiatives that affect the manner in which healthcare providers interact with patients, payors or other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services; • consolidation of healthcare industry participants; • federal amendments to, lack of enforcement or development of applicable regulations for, or repeal of the ACA; • reductions in government funding for healthcare; and • adverse changes in business or economic conditions affecting healthcare payors or providers or other healthcare industry participants. ​ Any of these changes in healthcare spending could adversely affect our revenue.
General reductions in expenditures by healthcare industry participants could result from, among other things: ​ • regulatory uncertainty regarding the implementation of and reimbursement processes under the NSA; • government regulations or private initiatives that affect the manner in which healthcare providers interact with patients, payors or other healthcare industry participants, including changes in pricing or means of delivery of healthcare products and services; • consolidation of healthcare industry participants; • reductions in government funding for healthcare; and • adverse changes in business or economic conditions affecting healthcare payors or providers or other healthcare industry participants. ​ Any of these changes in healthcare spending could adversely affect our revenue.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. We may also experience security breaches that may remain undetected for an extended period.
Furthermore, because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures, which could result in an incident that compromises the security of our networks or information and is undetected for an extended period.
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.
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. 14 Table of Contents 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.
Our revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending, reimbursement and policy. The healthcare industry is subject to changing political, regulatory and other influences. ​ On January 1, 2022, the NSA and the associated HHS interim final rule becoming effective.
Our revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending, reimbursement and policy. The healthcare industry is subject to changing political, regulatory and other influences.
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.
We added key personnel to our accounting and financial reporting teams in 2024. ​ While we believe that these efforts will improve our internal control over financial reporting, our remediation efforts are continuing and subject to validation and testing of the design and operating effectiveness of internal controls in 2024.
Although we recognize revenue when we provide services to patients, we may from time-to-time experience delays in receiving reimbursement for the service provided.
Although we recognize revenue when we provide services to patients, we may from time-to-time experience delays in receiving reimbursement for the service provided, in particular as a result of the federally mandated independent dispute resolution process.
Accordingly, we are at risk that cyber-attackers exploit these known vulnerabilities before they have been addressed. ​ Any access, breach, or other loss of information could result in legal claims or proceedings, and liability under federal or state laws that protect the privacy of personal information, and corresponding regulatory penalties.
Each time a new vulnerability is identified we are at risk that cyber-attackers exploit such known vulnerability before we have been able to address it. ​ Any unauthorized access, breach, or loss of personal information could result in the disruption of our operations, legal claims or proceedings, and liability under federal or state laws that protect the privacy of personal information, and corresponding regulatory penalties.
The Real Estate Entities incur debt to purchase or construct the hospital facility. Lease payments received from our hospitals are used by the Real Estate Entities to make payments on their debt. Each hospital facility’s lease ‎payments are guaranteed by the Company. ‎ In addition to its doctor owners, each Real Estate Entity is partially owned or controlled by Dr.
The Real Estate Entities incur debt to purchase or construct the hospital facility. Lease payments received from our hospitals are used by the Real Estate Entities to make payments on their debt.
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.
Appeals to district court rulings disallowing portions of regulations implementing the NSA are ongoing, and regulatory uncertainty continues to delay claims resolution and may negatively impact our ability to receive appropriate revenue for the services our hospitals provide. ​ 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.
In particular, we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company.
In particular, we incur significant expenses and devote substantial management 32 Table of Contents effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act.
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.
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 patients take certain actions that increase such expenses, such as unnecessary hospital visits.
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. ​ Further, our reimbursements may be delayed due to cyberattacks on electronic payment system providers.
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 federal regulations promulgated under the NSA, including those establishing the IDR process, have been and continue to be subject to legal challenges.
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.
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. ​ ​ 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.
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.
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 current business plans require a significant amount of capital.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations. We expect that continued compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our results of operations or cause us to fail to meet our reporting obligations.
Unauthorized access, loss or dissemination could also disrupt our operations and damage our reputation, any of which could adversely affect our business. ​ Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, financial condition and results of operations. ​ Numerous state and federal laws, regulations, standards and other legal obligations, including consumer protection laws and regulations, which govern the collection, dissemination, use, access to, confidentiality, security and processing of personal information, including health-related information, could apply to our operations or the operations of our partners.
Despite our implementation of security measures reasonably designed to prevent unauthorized access, there is no guarantee we can protect our data from breach. ​ Actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements, including contractual obligations, could adversely affect our business, financial condition and results of operations. ​ Numerous state and federal laws, regulations, standards and other legal obligations, including consumer protection laws and regulations, which govern the collection, dissemination, use, access to, confidentiality, security and processing of personal information, including health-related information, could apply to our operations or the operations of our partners. ​ These privacy and security laws and regulations (including our contractual obligations) are constantly evolving, may conflict with each other, and can result in investigations, procedures, or actions that lead to significant civil and criminal penalties and operational restrictions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Information Technology Manager has 17 years of information technology experience across multiple industries before joining Nutex Health. 36 Table of Contents ​ As of December 31, 2023, the Company has not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition, but there can be no assurance that any such risk will not materially affect the Company in the future.
Biggest changeThe Chief Operating Officer has more than 20 years of in-depth knowledge of our business operations that helps integrate the cybersecurity program into the overall business operations. ​ As of December 31, 2024, the Company has not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition, but there can be no assurance that any such risk will not materially affect the Company in the future.
As part of this process, the Audit Committee receives regular updates from the Information Technology Manager and Chief Operating Officer on critical issues related to our information security risks, cybersecurity strategy, supplier risk and business continuity capabilities. ​ The Company’s framework includes an incident management and response program that continuously monitors the Company’s information systems for vulnerabilities, threats and incidents; manages and takes action to contain incidents that occur; remediates vulnerabilities; and communicates the details of threats and incidents to management, including the Information Technology Manager and Chief Operating Officer, as deemed necessary or appropriate.
As part of this process, the Audit Committee receives regular updates from the Director of Information Technology and Chief Operating Officer on critical issues related to our information security risks, cybersecurity strategy, supplier risk and business continuity capabilities. ​ The Company’s framework includes an incident management and response program that continuously monitors the Company’s information systems for vulnerabilities, threats and incidents; manages and takes action to contain incidents that occur; remediates vulnerabilities; and communicates the details of threats and incidents to management, including the Director of Information Technology and Chief Operating Officer, as deemed necessary or appropriate.
The framework allows us to identify, assess and mitigate the risks we face, and assists us in establishing policies and safeguards to protect our systems and the information of those we serve. ​ Our cybersecurity program is managed by our Information Technology Manager and Chief Operating Officer.
The framework allows us to identify, assess and mitigate the risks we face, and assists us in establishing policies and safeguards to protect our systems and the information of those we serve. ​ Our cybersecurity program is managed by our Director of Information Technology and Chief Operating Officer.
These assessments complement our other assessment work by evaluating our cybersecurity program as a whole. ​ We complete an enterprise information risk assessment as part of our overall enterprise information security risk management assessment, which is overseen by our Information Technology Manager and Chief Operating Officer.
These assessments complement our other assessment work by evaluating our cybersecurity program as a whole. ​ We complete an enterprise information risk assessment as part of our overall enterprise information security risk management assessment, which is overseen by our Director of Information Technology and Chief Operating Officer.
We evaluate our enterprise information security risk to ensure we address any unexpected or unforeseen changes in the risk environment or our systems and the resulting impacts are communicated to the Company’s overall enterprise risk management program. ​ We believe our Information Technology Manager and Chief Operating Officer have the appropriate knowledge and expertise to effectively manage our cybersecurity program.
We evaluate our enterprise information security risk to ensure we address any unexpected or unforeseen changes in the risk environment or our systems and the resulting impacts are communicated to the Company’s overall enterprise risk management program. ​ We believe our Director of Information Technology and Chief Operating Officer have the appropriate knowledge and expertise to effectively manage our cybersecurity program.
Pursuant to the Company’s incident response plan, incidents are reported to the Audit Committee, appropriate government agencies and other authorities, as deemed necessary or appropriate, considering the actual or potential impact, significance and scope. ​ We work to require our third-party partners and contractors to handle data in accordance with our data privacy and information security requirements and applicable laws.
Pursuant to the Company’s incident response plan, 33 Table of Contents incidents are reported to the Audit Committee, appropriate government agencies and other authorities, as deemed necessary or appropriate, considering the actual or potential impact, significance and scope. ​ We work to require our third-party partners and contractors to handle data in accordance with our data privacy and information security requirements and applicable laws.
Added
The Director of Information Technology has more than 25 years of information technology experience across the healthcare industry before joining Nutex Health.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeAs of December 31, 2024, our hospital division operated 24 micro-hospitals, specialty hospitals and HOPDs in 11 states in the U.S. We lease each of these locations. Our population health management division manages three 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. ​ 37 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.
Added
Mine Safety Disclosures Not applicable. ​ 34 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 changeOn 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.
Biggest changeRecent Sales of Unregistered Securities ​ On March 26, 2024, the Company and the Holders agreed to amend the conversion price of the Unsecured Convertible Term Notes and exercise price of the Warrants to $30.00 each ($0.20 prior to the 2024 Reverse Stock Splits), resulting in the Unsecured Convertible Term Notes being convertible into 179,500 shares of common stock (26,925,000 prior to the 2024 Reverse Stock Splits), the Warrants exercisable for 89,750 shares of common stock (13,462,500 prior to the 2024 Reverse Stock Splits) and the placement agent Warrants exercisable for 53,850 shares of common stock (8,077,500 prior to the 2024 Reverse Stock Splits).
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.
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.” Stockholders As of the date of this report, there are approximately 841 stockholders of record of our common stock based upon our transfer agent’s report.
Warrants At December 31, 2023, there were 20,343,562 warrants outstanding for the purchase of Company common stock.
Warrants At December 31, 2024, there were 207,338 warrants outstanding for the purchase of Company common stock.
Refer 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”).
Refer 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 stockholders of the Company approved the Amended and Restated Nutex Health Inc. 2023 Equity Incentive Plan (the “2023 Plan”), providing a total of 73,426 shares of Common Stock (11,013,943 prior to the 2024 Reverse Stock Splits) for issuance.
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.
Awards granted under the 2023 Plan 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.
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.
The 2023 Plan is subject to annual increases on January 1st of each calendar year through January 1, 2033 of up to 1% of the issued and outstanding shares of the Company’s Common Stock on the final day of the preceding calendar year, at the discretion of the Compensation Committee of our Board of Directors.
Removed
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.
Added
During the second quarter of 2024, the number of shares to be issued under the 2023 Plan increased to 118,563 shares, most of which were issued as restricted stock units in June 2024. Shares available for issuance as of December 31, 2024, were 30,648. ​ At December 31, 2024, there were 21,965 options outstanding for the purchase of Common Stock.
Removed
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.
Added
Refer to Note 12 to the consolidated financial statements included in this Annual Report for additional information relating to outstanding options.
Removed
The notes mature on October 31, 2025 and the warrants expire on December 31, 2029.
Added
These warrants were issued in a private placement in reliance on section 4(a)(2) of the Securities Act.
Removed
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
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.
Removed
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.
Removed
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, ​ ​ 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).
Biggest changeGAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies. ​ 45 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 2023 2022 Reconciliation of net income (loss) attributable to Nutex Health Inc. to Adjusted EBITDA: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to Nutex Health Inc. ​ $ 52,179,168 ​ $ (45,786,614) ​ $ (424,780,446) Depreciation and amortization ​ ​ 18,971,972 ​ ​ 17,591,572 ​ ​ 13,131,374 Interest expense, net ​ ​ 19,932,015 ​ ​ 16,317,869 ​ ​ 12,490,260 Income tax expense (benefit) ​ ​ 14,476,821 ​ ​ (5,067,084) ​ ​ 13,090,905 Allocation to noncontrolling interests ​ ​ (7,176,312) ​ ​ (5,546,263) ​ ​ (4,837,514) EBITDA ​ ​ 98,383,664 ​ ​ (22,490,520) ​ ​ (390,905,421) Facility closing costs ​ ​ - ​ ​ 217,266 ​ ​ - Acquisition costs ​ ​ - ​ ​ 43,464 ​ ​ 3,885,666 Loss on warrant liability ​ ​ 1,608,973 ​ ​ - ​ ​ - Stock-based compensation ​ ​ 16,631,898 ​ ​ 2,835,971 ​ ​ 189,581 Rescission of warrant exercise ​ ​ - ​ ​ - ​ ​ 1,243,059 Impairment of assets ​ ​ 3,887,216 ​ ​ 29,082,203 ​ ​ - Impairment of goodwill ​ ​ 3,197,391 ​ ​ 1,139,297 ​ ​ 398,135,038 Adjusted EBITDA ​ $ 123,709,142 ​ $ 10,827,681 ​ $ 12,547,923 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Three months ended ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ Unaudited ​ Unaudited Reconciliation of net income (loss) attributable to Nutex Health Inc. to Adjusted EBITDA: ​ ​ ​ ​ ​ ​ Net income (loss) attributable to Nutex Health Inc. ​ $ 61,695,604 ​ $ (31,617,897) Depreciation and amortization ​ ​ 5,280,488 ​ ​ 4,682,724 Interest expense, net ​ ​ 5,052,081 ​ ​ 4,236,553 Income tax expense (benefit) ​ ​ 8,608,746 ​ ​ (2,998,554) Allocation to noncontrolling interests ​ ​ (2,195,888) ​ ​ (2,045,390) EBITDA ​ ​ 78,441,031 ​ ​ (27,742,564) Loss on warrant liability ​ ​ 536,264 ​ ​ - Stock-based compensation ​ ​ 14,680,454 ​ ​ 637,159 Impairment of assets ​ ​ (11,640) ​ ​ 29,082,203 Impairment of goodwill ​ ​ - ​ ​ 1,139,297 Adjusted EBITDA ​ $ 93,646,109 ​ $ 3,116,095 ​ ​ ​ ​ Significant Accounting Policies ​ Revenue recognition . ​ Hospital division – Our hospital division recognizes patient service revenue for contracts with patients, and in most cases, patients with out of network benefits with a third-party payor, such as, 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 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.
After the merger, Nutex Health Holdco LLC became a wholly-owned subsidiary of Clinigence and is included in its consolidated corporate tax filings. We recognized a non-cash charge of $21.3 million to income tax expense during 2022 for the change in tax status of Nutex Health Holdco LLC.
After the merger, Nutex Health Holdco LLC became a wholly-owned subsidiary of Clinigence and is included in its consolidated corporate tax filings. We recognized a non-cash charge of $21.3 million to income tax expense during 2022 for the change in tax status of Nutex Health Holdco LLC.
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.
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.
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.
Our 2023 results were principally affected by: ​ 41 Table of Contents • 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.
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.
The Company’s indebtedness at December 31, 2024 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 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.
During 2023, we deconsolidated one Real Estate Entity after the third-party lenders released our guarantees of associated mortgage loans. 42 Table of Contents ​ 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.
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.
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.
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.
The Company has the right at any time for any reason to terminate the Agreement. ​ ​ Off-Balance Sheet Arrangements ​ As of December 31, 2024, we had no material off-balance sheet arrangements. ​ Non-GAAP Financial Measures ​ Adjusted EBITDA.
In such instances, we may be required to consolidate these new Real Estate Entities in our financial statements as VIEs. ​ 45 Table of Contents Corporate and other costs. Corporate and other costs in 2023 included general and administrative expenses totaling $33.2 million, impairment losses of $30.2 million due to facility closures and stock-based compensation of $2.2 million.
In such instances, we may be required to consolidate these new Real Estate Entities in our financial statements as VIEs. ​ Corporate and other costs. Corporate and other costs in 2023 included general and administrative expenses totaling $33.2 million, impairment losses of $30.2 million due to facility closures and stock-based compensation of $2.2 million.
This charge provides for the accumulated net deferred tax liabilities representing the differences between the book and tax bases of Nutex Health Holdco LLC’s assets and liabilities as of the April 1, 2022 change in tax status. ​ 48 Table of Contents At the time of our merger with Clinigence, Clinigence had a full valuation allowance against its deferred tax assets.
This charge provides for the accumulated net deferred tax liabilities representing the differences between the book and tax bases of Nutex Health Holdco LLC’s assets and liabilities as of the April 1, 2022 change in tax status. ​ At the time of our merger with Clinigence, Clinigence had a full valuation allowance against its deferred tax assets.
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.
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. ​ A discussion of our segment results is included below. ​ Hospital 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.
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 24 hospital facilities in 11 states (hospital division), and a primary care-centric, risk-bearing population health management division.
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.
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. 36 Table of Contents ​ 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.
These amounts are net of appropriate discounts giving recognition to differences between the Company’s charges and reimbursement rates from third party payors. ​ Patient service net revenues earned by the Company are recognized at a point in time when the services are provided, net of adjustments and discounts.
These amounts are net of appropriate discounts giving recognition to differences between the Company’s charges and reimbursement rates from third party payors. ​ 46 Table of Contents Hospital revenues earned by the Company are recognized at a point in time when the services are provided to patients, net of adjustments and discounts.
The Company’s performance obligations are to provide emergency health care services primarily on an outpatient basis. Net patient service revenues are recorded at the amount that reflects the consideration to which the Company expects to be entitled in exchange for providing patient care.
The Company’s performance obligations are to provide emergency health care services primarily on an outpatient basis. Patient service revenues are recorded at the amount that reflects the consideration that the Company expects to be paid for providing patient care.
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.
Capitation revenue is recognized by our consolidated VIE, AHISP. 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 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.
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.
As there are no contractual rates established with insurance entities, revenues are estimated based on the “usual and customary” charges allowed by insurance payors using historical collection experience, historical trends of refunds and payor payment adjustments (retractions).
As there are no contractual rates established with insurance entities, revenues are estimated based on the “usual and customary” charges allowed by insurance payors using historical collection experience, historical trends of refunds and payor payment adjustments (retractions). Revenue from the Medicare program is based on reimbursement rates set by governmental authorities.
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.
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. ​ At December 31, 2024, we employed approximately 800 full-time employees, contracted 255 doctors at our facilities and partnered with over 2,100 physicians within our networks.
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.
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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Insurance ​ ​ 94% ​ ​ 93% ​ ​ 89% Self pay ​ ​ 3% ​ ​ 4% ​ ​ 9% Workers compensation ​ 2% ​ ​ 2% ​ ​ 1% Medicare/Medicaid ​ ​ 1% ​ ​ 1% ​ ​ 1% Total ​ ​ 100% ​ ​ 100% ​ ​ 100% ​ The population health management division recognizes revenue for capitation and management fees for services to IPAs.
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.
Immediately thereafter, in the merger, each unit representing an equity interest in Nutex Health Holdco LLC was converted into the right to receive shares of common stock of Clinigence Holdings, Inc. (n/k/a Nutex Health, Inc.). ​ The Merger was accounted for as a reverse business combination under U.S. GAAP.
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.
As of December 31, 2024, we provided guarantees to the indebtedness of two Real Estate Entities. ​ 40 Table of Contents 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.
Revenue from the Medicare program is based on reimbursement rates set by governmental authorities. ​ Patients who have health care insurance may also have discounts applied related to their copayment or deductible. Estimates of contractual adjustments and discounts are determined by major payor classes for outpatient revenues based on historical experience.
The Company is reimbursed from third party payors under various methodologies based on the level of care provided. ​ Patients who have health care insurance may also have discounts applied related to their copayment or deductible. Estimates of contractual adjustments and discounts are determined by major payor classes for outpatient revenues based on historical experience.
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.
Activity within our business segments is significantly impacted by the demand for healthcare services we provide, competition for these services in each of the market areas we serve, and the legislative changes discussed above. ​ 38 Table of Contents Following is our results of operations for the periods shown: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 2023 2022 Revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ $ 449,063,683 ​ $ 218,070,397 ​ $ 198,508,245 Population health management division ​ ​ 30,884,950 ​ ​ 29,575,919 ​ ​ 20,786,061 Total revenue ​ ​ 479,948,633 ​ ​ 247,646,316 ​ ​ 219,294,306 Segment operating income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Hospital division ​ ​ 195,539,009 ​ ​ 36,336,211 ​ ​ 15,035,130 Population health management division ​ ​ 1,380,659 ​ ​ (1,558,601) ​ ​ 387,469 Real estate division ​ ​ (658,391) ​ ​ (3,439) ​ ​ (861) Total segment operating income ​ ​ 196,261,277 ​ ​ 34,774,171 ​ ​ 15,421,738 Corporate and other costs: ​ ​ ​ ​ ​ ​ ​ ​ ​ Facilities closing costs ​ ​ - ​ ​ 217,266 ​ ​ - Acquisition costs ​ ​ - ​ ​ 43,464 ​ ​ 3,885,666 Stock-based compensation ​ ​ 16,631,898 ​ ​ 2,835,971 ​ ​ 189,581 Impairment of assets ​ ​ 3,887,216 ​ ​ 29,082,203 ​ ​ - Impairment of goodwill ​ ​ 3,197,391 ​ ​ 1,139,297 ​ ​ 398,135,038 General and administrative expenses ​ ​ 41,923,972 ​ ​ 33,229,718 ​ ​ 19,810,607 Total corporate and other costs ​ ​ 65,640,477 ​ ​ 66,547,919 ​ ​ 422,020,892 Interest expense ​ ​ 19,932,015 ​ ​ 16,317,869 ​ ​ 12,490,260 Loss on warrant liability ​ ​ 1,608,973 ​ ​ - ​ ​ - Other expense (income) ​ ​ (668,930) ​ ​ 399,182 ​ ​ 559,299 Income (loss) before taxes ​ ​ 109,748,742 ​ ​ (48,490,799) ​ ​ (419,648,713) Income tax expense (benefit) ​ ​ 14,476,821 ​ ​ (5,067,084) ​ ​ 13,090,905 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ ​ 95,271,921 ​ ​ (43,423,715) ​ ​ (432,739,618) Less: net income (loss) attributable to noncontrolling interests ​ ​ 43,092,753 ​ ​ 2,362,899 ​ ​ (7,959,172) Net income (loss) attributable to Nutex Health Inc. ​ $ 52,179,168 ​ $ (45,786,614) ​ $ (424,780,446) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted EBITDA ​ $ 123,709,142 ​ $ 10,827,681 ​ $ 12,547,923 ​ Year December 31, 2024 Compared to Year December 31, 2023 ​ We reported a net income attributable to Nutex Health Inc. of $52.2 million, or earnings of $9.71 per share, for 2024 as compared with a net loss attributable to Nutex Health Inc. of $45.8 million, or a loss of $10.39 per share, for 2023.
Revenue is recognized and received monthly for our services. In addition, we provide consultant services that are charged as a flat fixed rate and recognized as revenue when the service is performed.
Revenue is recognized and received monthly for our services. In addition, we provide consultant services that are charged as a flat fixed rate and recognized as revenue when the service is performed. Consultant services revenues represent a small portion of our total revenue. ​ Construction in Progress. The Company regularly is in the process of constructing new facilities.
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.
We plan to expand our operations by expanding our clinical services at our existing facilities, by entering new market areas either through development of new hospitals, formation of new IPAs or by making acquisitions. We expect to open three new hospital facilities by the end of the year 2025. These facilities are either under construction or in advanced planning stages.
A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S.
Interest expense includes interest on lease liabilities, which is a component of total finance lease cost. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S.
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.
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 $1.4 million of operating income for 2024 driven by our divestiture of Procare and Clinigence Health Inc. entities. These two entities were negatively impacting the population health management division’s operating performance.
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.
For insured patients, the transaction price is determined based on gross charges for services provided, reduced by adjustments provided to third-party payors, discounts and implicit price concessions provided primarily to uninsured patients in accordance with the Company’s policy. For uninsured patients, the Company recognizes revenue based on established rates, subject to certain discounts and implicit price concessions.
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.
Refer to Non-GAAP Financial Measures discussed below for a definition and reconciliation of Adjusted EBITDA. ​ 39 Table of Contents A discussion of our segment results is included below. ​ Hospital Division.
We incur additional annual expenses related to these matters and, among other things, additional directors’ and officers’ liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. ​ In 2022, we recognized a non-cash impairment charge of $398.1 million, as revised, to reduce the carrying amount of goodwill for the population health management division reporting unit acquired in the reverse business combination.
We incur additional annual expenses related to these matters and, among other things, additional directors’ and officers’ liability insurance, director fees, reporting requirements of the SEC, transfer agent fees, hiring additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. ​ Nonoperating items ​ Interest expense.
In 2022, we have made staffing additions commensurate with our operational growth and made key additions to our executive management team. ​ As a public company, we must comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the continued listing requirements of the NASDAQ, with which we were not required to comply with as a private company.
General and administrative costs increased $8.6 million attributed to increases in accrued bonus expense ($2.7 million), professional services ($2.3 million), insurance expense ($2.3 million) and in other ($1.3 million). ​ As a public company, we must comply with new laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC and the continued listing requirements of the NASDAQ, with which we were not required to comply with as a private company.
Unanticipated market or macroeconomic events and circumstances may occur, which could affect the accuracy or validity of the estimates and assumptions. ​ During the three months ended September 30, 2022, we determined that the estimated fair value of our population health management division reporting unit which was acquired in the reverse business combination with Clinigence was less than its carrying value.
No goodwill impairment was recognized for year ended December 31, 2024. ​ On December 31, 2023, we recognized an impairment loss of $1.1 million in a reporting unit within our Hospital Division for the closure of a facility in January 2024. ​ During the three months ended September 30, 2022, we determined that the estimated fair value of our population health management division reporting unit which was acquired in the reverse business combination with Clinigence was less than its carrying value.
As well, there 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. ​ Results of Operations ​ We report the results of our operations as three segments in our consolidated financial statements: (i) the hospital division, (ii) the population health management division and (ii) the real estate division.
Any reduction in the rates that we can charge or amounts we can receive for our services will reduce our total revenue and our operating margins. ​ Results of Operations ​ We report the results of our operations as three segments in our consolidated financial statements: (i) the hospital division, (ii) the population health management division and (iii) the real estate division.
The residual fair value after this allocation was compared to the goodwill balance with the excess goodwill charged to expense. Based on this analysis, we recognized a non-cash impairment charge of $398.1 million, as revised, to reduce the carrying amount of goodwill for the population health management division reporting unit.
Based on this analysis, we recognized a non-cash impairment charge of $398.1 million, as revised, to reduce the carrying amount of goodwill for the population health management division reporting unit. ​ 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.
In determining the appropriate valuation allowance, the Company considered the projected realization of tax benefits based on expected levels of future taxable income, available tax planning strategies and reversals of existing taxable temporary differences. ​ 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.
In determining the appropriate valuation allowance, the Company considered the projected realization of tax benefits based on expected levels of future taxable income, available tax planning strategies and reversals of existing taxable temporary differences. ​ As of December 31, 2024, we recorded a non-cash benefit of $6.5 million to income tax expense to remove the majority of the valuation allowance after we concluded that the associated deferred tax assets would be realizable.
We completed our reverse business combination with Clinigence in April 2022. Clinigence’s operations are reported as the population health management division. Our total revenue for 2022 for this division was $20.8 million consisting of capitation revenue of $15.5 million, management fees of $4.3 million and SaaS revenue of $946 thousand. Capitation revenue is recognized by our consolidated VIE, AHISP.
Legacy Clinigence’s operations are reported as the population health management division. Our total revenue for 2024 for this division was $30.9 million consisting of capitation revenue of $27.8 million, management fees of $2.1 million and SaaS revenue of $1 million. The increase in revenue is attributed to increases in capitation revenue in 2024.
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.
Therefore, Nutex Health Holdco LLC was treated as the accounting acquirer in the merger.
The non-cash impairment charge reduced the excess carrying amount of goodwill for the population health management division that were greater than its residual fair value.
On June 30, 2024, we determined that the fair value of our Population Health Management Division was greater than its carrying value. Therefore, no goodwill impairment was recognized for the quarter ended June 30, 2024.
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.
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.
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. ​ Real Estate Division. This division reports the operations of consolidated Real Estate Entities where we provide guarantees of their indebtedness or are co-borrowers.
This strategic move contributed to improved gross margins from 2024 onward, reinforcing the organization's long-term profitability. ​ Real Estate Division. This division reports on the operations of consolidated Real Estate Entities where we provide guarantees of their indebtedness or are co-borrowers.
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. ​ Liquidity and Capital Resources ​ As of December 31, 2023, we had $22.0 million of cash and equivalents, compared to $34.3 million of cash and equivalents at December 31, 2022. ​ Significant sources and uses of cash during 2023. ​ Sources of cash: ​ • Cash from operating activities was $1.3 million. • We received net proceeds of $6.1 million from borrowings under notes payable, lines of credit and convertible notes.
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. ​ 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 would not be sufficient to realize the corresponding tax benefits.
Removed
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.
Added
We anticipate launching one-to-three additional IPAs per year, principally in geographic areas around our existing micro-hospitals. ​ 37 Table of Contents Industry Trends ​ The demand for healthcare services continues to be impacted by the following trends: ​ ● Regulatory uncertainty; ● A growing focus on healthcare spending by consumers, employers and insurers, who are actively seeking lower-cost care solutions; ● A shift in patient volumes from inpatient to outpatient settings due to technological advancements and demand for care that is more convenient, affordable and accessible; ● The growing aged population, which requires greater chronic disease management and higher-acuity treatment; and ● Ongoing consolidation of providers and insurers across the healthcare industry. ​ The healthcare industry, particularly emergency care hospitals, continues to be subject to ongoing regulatory uncertainty.
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Congress and many state legislatures have introduced and passed a large number of proposals and legislation designed to make major changes in the healthcare system, including changes that have impacted access to health insurance. The most prominent of these efforts, the Affordable Care Act , affects how healthcare services are covered, delivered and reimbursed.
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Changes in federal or state healthcare laws, regulations, funding policies or reimbursement practices, especially those involving reductions to government payment rates or limitations on what providers may charge, could significantly impact future revenue and operations.
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The Affordable Care Act increased health insurance coverage through a combination of public program expansion and private sector health insurance reforms. There is uncertainty regarding the ongoing net effect of the Affordable Care Act due to the potential for continued changes to the law’s implementation and its interpretation by government agencies and courts.
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For example, the No Surprises Act prohibits providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to limited exceptions. For services for which balance billing is prohibited, the No Surprises Act includes provisions that may limit the amounts received by out-of-network providers from health plans.
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There is also uncertainty regarding the potential impact of other health reform efforts at the federal and state levels. ​ In response to the COVID-19 pandemic, federal and state governments passed legislation, promulgated regulations, and have taken other administrative actions intended to assist healthcare providers in providing care to COVID-19 and other patients during the public health emergency and to provide financial relief.
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Our 2024 results were principally affected by: ​ • Revenue growth of approximately $169.7 million was primarily driven by successful participation in arbitration through the Independent Dispute Resolution ("IDR") process under the No Surprises Act ("NSA"). • Increased revenue was also attributed to higher utilization of more complex clinical services, including increased observation and in-patient stays. • Patient visits rose by 16.9% for the year ended December 31, 2024, compared to the same period in 2023.
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Among these, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) had the most impact on our business. ​ The CARES Act included a waiver of insurance copayments, coinsurance, and annual deductibles for laboratory tests to diagnose COVID-19 and visits to diagnose COVID-19 at an emergency department of a hospital.
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Mature hospitals experienced an average visit growth of 6.5% year-over-year, alongside the impact of four new hospital openings in 2024. • Our operating expenses increased primarily due the revenue generated from the IDR process in addition to the opening of new facilities and volume growth. ​ Adjusted EBITDA for 2024 was $123.7 million as compared to $10.8 million for 2023.
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These provisions of the CARES Act expired on June 30, 2021. While these provisions were effective, we experienced higher levels of revenue due to a shift of payor mix.
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Our revenue for 2024 totaled $449.1 million as compared to $218.1 million for 2023, an increase of 106% caused by successful participation in arbitration through the IDR process under the NSA and by an increase in the number of patient visits associated with higher utilization of premium services.
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The larger number and acuity of patient claims for COVID-19 also resulted in higher revenue. ​ No Surprises Act ​ The No Surprises Act (“NSA”) is a federal law that took effect January 1, 2022, to protect consumers from most instances of “surprise” balance billing.
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The following table shows the number of patient visits during the periods: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ 2024 ​ 2023 Patient visits: ​ ​ ​ ​ ​ ​ Hospital ​ ​ 168,388 ​ ​ 144,058 ​ Total revenue increased $231.0 million in 2024 from 2023 primarily due to successful participation in arbitration through the IDR process, contributing $169.7 million to the increase, and by an increase in the number of patient visits and the number of visits associated with higher utilization of more complex clinical services. ​ On July 1, 2024, we engaged with a third-party IDR vendor to further support our out of network claims appeals and determine which claims would be beneficial to arbitrate.
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The legislation was included in the Consolidated Appropriations Act, 2021, which was passed by Congress and signed into law by President Trump on December 27, 2020. With respect to the Company, ‎the NSA limits the amount an insured patient will pay for emergency services furnished by an out-of-network ‎provider.
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The IDR process can take up to three to five months to receive payments relative to the start of a claim’s open negotiation process.
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The NSA addresses the payment of these out-of-network providers by group health plans or health ‎insurance issuers (collectively, “insurers”).
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In order to facilitate the dispute arbitration process, the Company incurred fees to the Centers for Medicare and Medicaid Services (“CMS”), the organizations that arbitrate the payment amount between the plan and providers (“IDRE”), and commission and fees to the third-party IDR vendor.
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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.
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Total accrued arbitration expenses are $47.7 million as of December 31, 2024. ​ For these reasons, we refined our estimates of variable consideration and revenue recognition timing, particularly to claims subject to arbitration. Our methodology now incorporates historical arbitration outcomes, payor behavior, and expected resolution timing in determining the expected transaction price for applicable claims.
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If the provider disagrees with the ‎insurer’s determination, the provider may initiate a thirty-day period of open negotiation with the insurer over the ‎claim. If the parties cannot resolve the dispute through negotiation, the parties may then proceed to IDR ‎arbitration. ‎ ​ Independent Dispute Resolution.
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The result of this change in estimate increased our estimate of the ultimate amounts of accounts receivable we will collect for the current and prior periods.
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The provider and insurer each submits a proposed payment amount and ‎explanation to the arbitrator.
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This change in estimate increased revenue and net income before tax for the year ended December 31, 2024 by approximately $169.7 million and $112.0 million, respectively. ​ The hospital division’s operating income was $195.5 million during 2024, up 438.0% as compared to $36.3 million in the same period of 2023.
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The arbitrator must select one of the two proposed payment amounts taking into ‎account the “qualifying payment amount” and additional circumstances including among other things the level of training, outcomes ‎measurements of the facility, the acuity of the individual treated, and the case mix and scope of services of the ‎facility providing the service.
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Our operating income for 2024 was positively affected by an increase in net revenue as noted above. Our contract services expense increased $57.6 million due to the cost associated with the IDR process. Our payroll expense increased due to the opening of four facilities in 2024 as well as due to the accrual of bonus payable in 2025.
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The NSA prohibits the arbitrator from considering the provider’s usual and ‎customary charges for an item or service, or the amount the provider would have billed for the item or service in ‎the absence of the NSA. ‎ ​ Qualifying Payment Amount .
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Our operating income was adversely impacted by $4.1 million from the opening of four new hospital locations in 2024. 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.
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The “qualifying payment amount” (QPA) is generally the median of the contracted ‎rates recognized by the plan or issuer under such plans or coverage, respectively, on January 31, 2019, for the ‎same or a similar item or service that is provided by a provider in the same or similar specialty and provided in the ‎geographic region in which the items or service is furnished, with annual increases based on the consumer price ‎index.
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During the second quarter of 2022, we deconsolidated 17 Real Estate Entities after the third-party lenders released our guarantees of associated mortgage loans. During 2023, we deconsolidated one Real Estate Entity after the third-party lenders released our guarantees of associated mortgage loans.
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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.‎ ​ HHS Final Rule.
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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 2024 included general and administrative expenses totaling $41.9 million, impairment losses of assets and goodwill of $7.1 million due to facility closures and stock-based compensation of $16.6 million.
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As required by the NSA, the United States Department of Health and Human ‎Services (“HHS”) has established an IDR process under which a certified IDR ‎entity determines the ultimate amount of payment. The HHS’ final rule became effective October 25, 2022.
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Our corporate costs for 2023 included general and administrative costs of $33.2 million, a non-cash impairment charge of $30.2 and stock-based compensation of $2.8 million.
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The final rule eliminated the rebuttable presumption that the qualified payment amount is the correct price and also abandoned the requirement that the certified IDR entity must select the offer closest to the qualifying payment amount. These key provisions were initially part of the interim rule issued in 2021 and were challenged by several court cases.
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Interest expense totaled $19.9 million in 2024 as compared with $16.3 million for 2023. The increase in interest expense is primarily due to leases entered into in 2024 for the opening four facilities throughout the year. ​ Income tax expense.

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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 changeTo mitigate the impact of fluctuations in interest rates, we generally target our debt portfolio to be maintained at fixed rates. ​ ​ 53 Table of Contents
Biggest changeTo mitigate the impact of fluctuations in interest rates, we generally target our debt portfolio to be maintained at fixed rates. ​ ​
Quantitative 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.
Quantitative 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, 2024 due to its relatively short maturity.

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