Nutex Health's Q3 2025: Contradictions Emerge on IDR Process, Hospital Openings, Inpatient Utilization, and Buyback Plans

Date of Call: November 19, 2025

Financials Results

• Revenue: $267.8M in Q3 2025, up 240% YoY (increase of $189.0M vs $78.8M in Q3 2024)
• EPS: $7.76 per diluted share in Q3 2025, compared to a loss of $1.72 per share in Q3 2024 (increase of $9.48)
• Gross Margin: 57.8% in Q3 2025, compared to 27.8% in Q3 2024 (gross profit $154.9M vs $21.9M)
• Operating Margin: 48.7% in Q3 2025 (operating income $130.4M) versus 12.3% in Q3 2024 (operating income $9.7M)

Guidance:

• On track to open three new hospitals in 2025: Red River opened, Houston and St. Louis scheduled by year-end.
• 2026 pipeline includes 3–4 hospitals; planning already underway for 2027–2028 openings.
• Expect 2025 audit process to be more efficient after completing 2024 restatement and dual PCAOB audits.
• Strategic priorities: expand inpatient/observation services, grow IPAs, pursue opportunistic acquisitions and share buybacks, and invest in service-line/capability expansion (e.g., behavioral health).

Business Commentary:

• Revenue and Patient Volume Growth:
• Nutex Health reported revenue of $267.8 million for Q3 2025, reflecting a 240% increase from Q3 2024.
• Total patient visits reached 46,232, up 11% from the previous year.

• Growth was driven by an increase in inpatient services, optimization of cost management, and improved revenue cycle management.

• Inpatient Revenue and Utilization:

• Revenue from inpatient services increased significantly, with higher acuity claims and success through the independent dispute resolution (IDR) process contributing to 70% of the $260.2 million in hospital revenue.
• 

• The company's efforts to improve inpatient utilization led to a significant increase in revenue per visit despite a slight decrease in mature hospital visits.

• Financial Strength and Cash Position:

• Nutex Health's cash and cash equivalents rose to $166 million from $40.6 million at year-end 2024.
• Operating cash flow totaled $177.8 million for the first three quarters of 2025, compared to $23 million in the prior year.

• This financial strength is attributed to successful collection efforts through the IDR process and improved operating efficiencies.

• Expansion and Strategic Growth:

• Nutex Health plans to open three new hospitals in 2025, with the first one, Red River, having reopened recently.
• The company's strategy involves expanding inpatient services and establishing an integrated healthcare delivery system through partnerships with primary care physicians and specialists.
• The expansion is supported by strong reimbursement environments and a focus on improving patient outcomes and care coordination.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management highlighted strong operational and financial momentum: Q3 revenue $267.8M (up 240% YoY), Adjusted EBITDA $98.5M (vs $9.7M prior year), net income $55.4M (vs $8.8M loss prior), cash $166M (up from $40.6M). Management emphasized hospital openings, pipeline growth and improved collections via IDR as drivers of performance.

Q&A:

• Question from Anthony Vendetti (Maxim Group): High-level question on what happened at Red River Micro Hospital (why it was closed and recently reopened); overview of contracting with physicians across the 25 facilities now open in 11 states—are physician contracts the same template, do physicians earn equity stakes and are there targets to reach to get equity; any additional color on the Red River reopening?
  Response: Red River closed in 2020 after a ~35% revenue decline post–No Surprises Act and was loss-making; reopened due to improved reimbursement via IDR and local economic growth. New physician group (new contract) with Nutex owning ~70% and physicians ~30%; structure is generally consistent across facilities. Earnout hospitals receive one-time stock issuance after a two-year measurement period based on hospital earnings; physicians also earn on professional-entity profits and hourly pay.

• Question from Bill Sutherland (The Benchmark Company): As the IDR process progresses, are you having different/more productive negotiations with payers to avoid arbitration and reach better network rates?
  Response: Yes—payers have increasingly engaged on network-rate negotiations over the past 3–4 months; management evaluates offers case-by-case and will accept fair contracts because avoiding IDR reduces arbitration fees (~24–26% of arbitration revenue) and should yield net results broadly similar to current realized rates; still early-stage.

• Question from Carl Burns (Northland Capital Markets): Given IDR experience, what timeline do you budget to break even on startups going forward? Also update on Homer G. Phillips (St. Louis) timing and whether similar opportunistic acquisition targets exist over the next 12–24 months?
  Response: Typical budgeted break-even is ~12–15 months (may shift by a quarter); IDR cash realization takes ~5–7 months with initial payments in 30–60 days. Homer G. Phillips (St. Louis) targeted to open mid/late December; company is selectively pursuing opportunistic existing-micro-hospital acquisitions if they meet criteria.

• Question from Bradford Seagraves (Northbank Capital Management): Update on share buyback (how much bought and at what price), capital allocation priorities for the growing cash balance, and update on inpatient utilization (current level and outlook)?
  Response: No shares have been repurchased yet; buyback program is in place and under active consideration. Capital priorities: share buybacks, selective acquisitions of existing facilities, expand IPA footprint, invest in service-line upgrades (e.g., behavioral health) and hospital capability expansion. Inpatient utilization is ~25–30% systemwide today (up from materially lower two years ago); management aims to increase admissions as hospitalist/specialist coverage ramps.

• Question from Gene Mannheimer (Freedom Capital Markets): Why not break out arbitration/IDR revenue this quarter (was it similar to Q2), comment on mature hospital visits declining ~0.5%, and guidance on modeling stock-based compensation volatility going forward?
  Response: IDR-related revenue is now integral to the business; collections and realized rates have improved (legal determination wins >85%, average collection on wins >80%), so arbitration contribution is similar or improved versus prior quarter. The modest mature-hospital visit dip is not explained by operations—possible factor was lower seasonal COVID last year; management will monitor. Most large earnouts are complete; remaining earnouts create some variability but management expects stock-comp expense to decline over time though timing of final true-ups can cause quarter-to-quarter swings.

Contradiction Point 1

IDR Process and Financial Impact

It involves the company's strategy and progress in dealing with the Independent Dispute Resolution (IDR) process, which impacts financial outcomes and operational efficiency.

Have discussions with payers on the IDR process improved, and is the financial impact comparable to previous periods? - Bill Sutherland (The Benchmark Company)

2025Q3: Yes, there are discussions with payers to negotiate better contracts and avoid IDR. The financial impact varies, but the aim is to achieve similar revenue without IDR-related fees. - Tom Vo and John Bates

Can you provide more color on your progress with the NSA arbitrations or negotiations? - Unknown Analyst (Maxim Group)

2024Q3: Arbitration revenue is part of our business model, with improvements in collection rates contributing to increased revenue. - Jon Bates

Contradiction Point 2

Hospital Opening and Construction Timeline

It involves the company's timeline and certainty regarding the opening of newly constructed hospitals, which affects revenue projections and operational plans.

Are there other Homer G. Phillips-like opportunities in St. Louis, and what should we expect moving forward? - Carl Burns (Northland Capital Markets)

2025Q3: St. Louis hospital opening is expected by December. There are opportunities to acquire existing hospitals fitting Nutex criteria. - John Bates

Are there any current factors that could delay the December 2024 hospital openings to 2025, or are you confident they will occur by year-end? - Unknown Analyst (Maxim Group)

2024Q3: Our first opening in November is pretty certain... The second opening, I think, to your question is slightly not as certain. - Thomas Vo

Contradiction Point 3

Inpatient Utilization and Strategy

It reflects changes in the company's strategy regarding inpatient utilization, which is a critical component of their financial performance and patient care model.

What is the current inpatient utilization, how does it compare to a year ago, and where do you expect it to go over the next 12-24 months? - Gene Mannheimer (Freedom Capital Markets)

2025Q3: Inpatient utilization is increasing to about 25-30% capacity, with a focus on admitting more patients to boost revenue and improve patient care. - Tom Vo(CEO)

Can you provide an update on new hospital openings and initiatives to boost patient visits at established hospitals? - Anthony V. Vendetti (Maxim Group LLC, Research Division)

2025Q2: Inpatient utilization is now at about 17% of current capacity, with a focus on increasing inpatient admissions. - Tom Vo(CEO)

Contradiction Point 4

Capital Allocation and Share Buyback

It involves the company's plans for capital allocation, particularly regarding share buybacks, which impacts shareholder value and financial strategy.

Can you provide an update on the buyback, including the amount repurchased and the average price paid? - Bradford Seagraves (Northbank Capital Management)

2025Q3: No shares have been bought back yet. The buyback is planned, with capital allocation considering investments, IPA expansion, and service improvements. - John Bates

Can you provide an update on your progress with NSA arbitration and negotiations? - William Sutherland (Benchmark Company)

2024Q3: It is in the works. It's just with the winding down of the construction part and the ramp up of the operation and all that, we just want to keep the powder dry for as long as possible. - Joshua DeTillio

Contradiction Point 5

IDR Collection and Recognition

It involves changes in the company's approach to recognizing and collecting revenue from IDR awards, which directly affects financial reporting and investor expectations.

Are you recognizing 100% of the IDR award upon collection or only the amount actually paid? - Anthony V. Vendetti (Maxim Group LLC, Research Division)

2025Q3: We recognize revenue based on the average collection rate, which is currently around 75%. - Jon C. Bates(CFO)

Do you recognize 100% of the award upon collection, or only the amount actually paid? - Anthony V. Vendetti (Maxim Group LLC, Research Division)

2025Q2: We recognize revenue based on the average collection rate, which is currently around 75%. - Jon C. Bates(CFO)