NUTEX HEALTH REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS AND ANNOUNCES COMMON STOCK PURCHASE AGREEMENT FOR A COMMITMENT TO PURCHASE UP TO $100 MILLION WORTH OF SHARES OF ITS COMMON STOCK WITH LINCOLN PARK CAPITAL

  • NET CASH FROM OPERATING ACTIVITIES OF $46.1 MILLION FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
  • COMPANY REITERATES THAT IT EXPECTS TO OPEN 20 NEW FACILITIES BY THE END OF 2024

HOUSTON, Nov. 21, 2022 /PRNewswire/ — Nutex Health Inc. (“Nutex Health” or the “Company”) (NASDAQ: NUTX), a physician-led, technology-enabled integrated healthcare delivery system comprised of 21 state-of-the-art micro hospitals in 8 states and primary care-centric, risk-bearing physician networks, today announced fiscal year 2022 3rd Quarter financial results for the three months ended September 30, 2022 and a common stock purchase agreement for a commitment to purchase up to $100 million worth of shares of its common stock with Lincoln Park Capital Fund, LLC (“Lincoln Park“), a Chicago-based institutional investor.

Committed Investment Agreement with Lincoln Park Capital:

On November 14, 2022, Nutex Health and Lincoln Park Capital Fund, LLC entered into a purchase agreement and registration rights agreement (together, the “Agreement”) pursuant to which Nutex Health will have the right, in its sole discretion, but not the obligation, to sell to Lincoln Park up to $100 million worth of shares of its common stock over the 36-month term of the Agreement, subject to terms and conditions as provided in the Agreement, including the filing and effectiveness of a registration statement.  Nutex Health controls the timing and amount of any future sales of its shares of common stock and Lincoln Park is obligated to make purchases in accordance with the Agreement, subject to various limitations including those under the Nasdaq listing rules.  Any common stock sold by Nutex Health to Lincoln Park can be sold pursuant to Regular Purchases and Accelerated Purchases, as defined in the Agreement, at purchase prices based on prevailing market prices at the time of each sale and at 97% of the market price on the date of sale under Accelerated Purchases.  There is no upper limit to the price per share that Lincoln Park may pay for future stock issuances under the Agreement, and Lincoln Park has agreed not to cause or engage in any direct or indirect short selling or hedging of Nutex Health’s common stock.  No warrants are being issued in this transaction and the Agreement does not contain any rights of first refusal, participation rights, penalties, or liquidated damages provisions in favor of any party.  Nutex Health may terminate the Agreement at any time, at its sole discretion, without any cost or penalty.  In connection with the Agreement, Nutex has agreed to file a registration statement with the U.S. Securities and Exchange Commission registering the resale of the shares issued to Lincoln Park.  Nutex Health intends to use the net proceeds from the sale of its common stock under the Agreement for working capital and general corporate purposes to support its growth.

Financial Highlights for the Three Months Ended September 30, 2022 (Unaudited):

  • Net revenue of $28.4 million. In the three months ended September 30, 2022, we reduced our estimate of the ultimate amounts of accounts receivable we will collect for prior periods. This change in estimate reduced revenue for the three months ended September 30, 2022 by approximately $29 million.
  • Net income attributable to Nutex Health of $(422.5) million. In Q3, the Company recognized a one-time non-cash impairment charge of $408.5 million to reduce the carrying amount of goodwill representing the excess over fair value of the assets acquired in the reverse business combination. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 10-Q.
  • Adjusted EBITDA of $(15.7) million.
  • As of September 30, 2022, the Company had total assets of $434.5 million, including cash and cash equivalents of $36.6 million.

Financial Highlights for the Nine Months Ended September 30, 2022 (Unaudited):


  • Net revenue of $165.6 million.
  • Net income attributable to Nutex Health of $(420.4) million. In Q3, the Company recognized a one-time non-cash impairment charge of $408.5 million to reduce the carrying amount of goodwill representing the excess over fair value of the assets acquired in the reverse business combination. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 10-Q.
  • Adjusted EBITDA of $18.5 million.
  • Net cash from operating activities of $46.1 million for the nine months ended on September 30, 2022.

Note: Adjusted EBITDA is a non-GAAP financial metric. A reconciliation of non-GAAP to GAAP measures is included below in this earnings release.

Notes to the Financial Highlights for the Three and Nine Months Ended September 30, 2022:

  • Nutex Health recognized a one-time non-cash goodwill impairment charge of $408.5 million in Q3 to reduce the carrying amount of goodwill representing the excess over fair value of the assets acquired in the reverse business combination.
  • The Company recognized a one-time non-cash charge of $18.4 million, net to income tax expense during the three months ended June 30, 2022 for the change in tax status of Nutex Health Holdco LLC and release of acquired valuation allowance for Clinigence. Prior to the 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 will be included in its future consolidated corporate tax filings.
  • In our experience to date with the No Surprises Act (“NSA”), insurers often initially pay amounts lower than the Qualifying Payment Amount (“QPA”) which generally is the median in-network amount paid by the insurer without regard for other information relevant to the claim. This requires us to make appeals using the Independent Dispute Resolution (“IDR”) process. We are working within the established processes for the IDR and are having varying success at achieving collections higher than the established QPA. The NSA final rule, which became effective on October 25, 2022, is the subject of legal challenges. It is difficult to predict the outcome of efforts to challenge or amend the final rule. Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 10-Q.
  • The Texas Medical Association in September 2022 filed motions for summary judgement seeking to invalidate the IDR related provisions of the final rule, arguing that the QPA does not represent the fair value of the services rendered by physicians and providers and that the final rule illegally favors the QPA over the fair value of the provider services in contravention of the statutory language of the NSA. On October 19, 2022, and in addition to the amicus briefs by several other national medical associations, the American Society of Anesthesiologists, the American College of Emergency Physicians and the American College of Radiology, professional associations representing an aggregate of approximately 136,000 physicians, filed an amicus brief supporting the Texas Medical Association motion. As of November 11, 2022, the Court in the Eastern District of Texas has not yet ruled on the motions.
  • In the three months ended September 30, 2022, we reduced our estimate of the ultimate amounts of accounts receivable we will collect for prior periods due to the NSA. This change in estimate reduced revenue for the three months ended September 30, 2022 by approximately $29 million. Similar changes in estimates made in the first half of 2022 reduced accounts receivable and revenue by approximately $9.6 million.
  • Total patient visits during the nine months ended September 30, 2022 decreased 11% as compared to the same period in 2021. Total patient visits in 2021 included significant volumes of Covid-19 related cases.
  • The Company anticipates opening 20 new facilities by the end of 2024. These facilities are either under construction or in advanced planning stages. There can be no assurance that these new facilities will open in the anticipated timeframes or that they will open at all.

“Our results in the 3rd quarter were affected by a significant non-cash goodwill impairment charge as well as challenging operating dynamics that include lower net revenue per patient visit and lower patient volumes due to fewer Covid-related visits,” stated Jon Bates, Chief Financial Officer of Nutex Health.

“We have many initiatives underway intended to increase net revenue per patient and to increase patient volumes,” stated Tom Vo, M.D., MBA, Chairman and Chief Executive Officer of Nutex Health. “These include:

  • maximizing our claims coding efficiency,
  • increasing efforts to collect co-pays and co-insurance,
  • adding additional administrative staff to handle the increased administrative IDR burden
  • having a dedicated IDR team to accelerate resubmission of claims under the IDR process,
  • making appeals for additional payment of claims for periods before and after the NSA final rule was adopted through the IDR process,
  • making efforts to sign favorable contracts with insurers, and
  • working with both local and national legislatures to enforce the NSA rules and guidelines for Insurers,

We are also accelerating contracting with local physicians to join our IPAs and increasing our marketing efforts to increase patient volumes.”

“At the same time, we are intensely focused on executing on our long-term growth strategy. We are thrilled to announce the agreement with Lincoln Park Capital. The committed investment agreement for up to $100 million will provide us with the flexibility to address future growth opportunities,” stated Warren Hosseinion, M.D., President of Nutex Health.

For more details on the Company’s Third Quarter 2022 financial results, please refer to our Quarterly Report on Form 10-Q filed with the U.S. Securities & Exchange Commission and accessible at www.sec.gov.

NUTEX HEALTH INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)











September 30, 2022


December 31, 2021

Assets







Current assets:







Cash and cash equivalents


$

36,620,799


$

36,118,284

Accounts receivable



61,478,424



112,766,317

Accounts receivable – related parties



1,847,016



1,993,117

Inventories



3,213,376



2,814,178

Prepaid expenses and other current assets



4,378,923



323,283

Total current assets



107,538,538



154,015,179

Property and equipment, net



72,282,118



151,912,500

Operating right-of-use assets



20,904,971



21,829,552

Financing right-of-use assets



194,757,864



64,614,781

Intangible assets, net



21,577,810



682,649

Goodwill, net



17,010,637



1,139,297

Other assets



445,789



456,085








Total assets


$

434,517,727


$

394,650,043








Liabilities and Equity







Current liabilities:







Accounts payable


$

17,743,457


$

13,582,664

Accounts payable – related parties



3,614,326



4,070,438

Lines of credit



2,592,714



72,055

Current portion of long-term debt



4,026,942



10,158,932

Operating lease liabilities, current portion



1,485,360



1,489,997

Financing lease liabilities, current portion



4,107,853



1,452,447

Accrued expenses and other current liabilities



10,257,349



6,864,426

Total current liabilities



43,828,001



37,690,959

Long-term debt, net



24,690,473



78,821,985

Operating lease liabilities, net



20,049,121



20,820,588

Financing lease liabilities, net



204,591,022



65,735,501

Deferred tax liabilities



8,831,108



Total liabilities



301,989,725



203,069,033








Commitments and contingencies














Equity:







Common stock, $0.001 par value; 900,000,000 shares authorized; 649,770,069 and
592,791,712 shares issued and outstanding as of September 30, 2022 and December
31, 2021, respectively



649,770



592,792

Additional paid-in capital



468,802,618



11,742,891

Retained earnings (accumulated deficit)



(358,967,267)



102,315,623

Nutex Health Inc. equity



110,485,121



114,651,306

Noncontrolling interests



22,042,881



76,929,704

Total equity



132,528,002



191,581,010








Total liabilities and equity


$

434,517,727


$

394,650,043

NUTEX HEALTH INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)
















Three months ended September 30


Nine months ended September 30



2022


2021


2022


2021














Revenue:













Hospital division


$

21,244,305


$

117,971,732


$

151,976,226


$

268,129,646

Population health management division



7,150,753





13,594,007



Total revenue



28,395,058



117,971,732



165,570,233



268,129,646














Operating costs and expenses:













Payroll



27,923,404



23,118,034



76,426,084



59,144,729

Contract services



8,873,901



2,460,082



27,757,845



11,496,358

Medical supplies



2,486,083



4,942,959



9,327,114



9,915,621

Insurance expense



3,506,667



3,053,678



7,434,346



6,672,983

Depreciation and amortization



4,330,167



1,871,799



9,859,513



5,873,439

Other



7,743,282



6,516,712



21,843,273



15,230,873

Total operating costs and expenses



54,863,504



41,963,264



152,648,175



108,334,003














Gross profit (loss)



(26,468,446)



76,008,468



12,922,058



159,795,643














Corporate and other costs:













Acquisition costs







3,885,666



Impairment of goodwill



408,466,575





408,466,575



General and administrative expenses



4,077,255



1,545,685



11,721,597



5,067,725

Total corporate and other costs



412,543,830



1,545,685



424,073,838



5,067,725














Operating income (loss)



(439,012,276)



74,462,783



(411,151,780)



154,727,918














Interest expense, net



3,402,606



1,260,187



9,628,189



4,251,277

Other expense (income)



(630,450)



(1,745,277)



346,873



(5,666,633)

Income (loss) before taxes



(441,784,432)



74,947,873



(421,126,842)



156,143,274














Income tax expense (benefit)



(8,543,880)



453,621



11,285,729



1,091,975














Net income (loss)



(433,240,552)



74,494,252



(432,412,571)



155,051,299














Less: net income (loss) attributable to
noncontrolling interests



(10,722,749)



20,700,975



(12,052,765)



36,436,485














Net income (loss) attributable to Nutex Health Inc.


$

(422,517,803)


$

53,793,277


$

(420,359,806)


$

118,614,814














Earnings (loss) per common share













Basic


$

(0.65)


$

0.09


$

(0.67)


$

0.20

Diluted


$

(0.65)


$

0.09


$

(0.67)


$

0.20

NUTEX HEALTH INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)










Nine months ended September 30



2022


2021

Cash flows from operating activities:







Net income (loss)


$

(432,412,571)


$

155,051,299

Adjustment to reconcile net income (loss) to net cash from operating activities:







Depreciation and amortization



9,859,513



5,873,439

Impairment of goodwill



408,466,575



Stock-based compensation expense



135,415



Other income – gain on PPP loan forgiveness





(5,200,835)

Deferred tax expense



3,375,106



Debt accretion expense



1,719,572



Non-cash lease expense



18,775



(72,193)

Changes in operating assets and liabilities:







Accounts receivable



52,921,095



(35,601,637)

Accounts receivable – related party



1,846,887



(150)

Inventories



(399,198)



(4,880)

Prepaid expenses and other current assets



(5,629,042)



(415,003)

Accounts payable



4,147,170



6,040,929

Accounts payable – related party



(630,490)



(299,489)

Accrued expenses and other current liabilities



2,712,011



1,673,501

Other current assets



(29,704)



(36,643)

Net cash from operating activities



46,101,114



127,008,338








Cash flows from investing activities:







Acquisitions of property and equipment



(22,512,464)



(25,206,117)

Acquired cash in reverse acquisition with Clinigence



12,716,228



Cash related to deconsolidation of Real Estates Entities



(2,421,212)



Net cash from investing activities



(12,217,448)



(25,206,117)








Cash flows from financing activities:







Proceeds from lines of credit



2,592,714



320,430

Proceeds from notes payable



10,126,130



14,970,896

Repayments of lines of credit



(72,055)



(863,196)

Repayments of notes payable



(4,720,737)



(17,488,009)

Repayments of finance leases



(923,321)



(856,422)

Common stock issued for exercise of warrants



4,119,141



Common stock issued for exercise of options



644,974



Members’ contributions



4,825,377



12,521,879

Members’ distributions



(49,973,374)



(101,683,740)

Net cash from financing activities



(33,381,151)



(93,078,162)








Net change in cash and cash equivalents



502,515



8,724,059

Cash and cash equivalents – beginning of the period



36,118,284



25,514,275

Cash and cash equivalents – end of the period


$

36,620,799


$

34,238,334








Supplemental disclosures of cash flow information
















Nine months ended September 30



2022


2021

Cash paid for interest


$

3,402,606


$

9,628,189

Cash paid for income taxes


$

7,595,105


$

336,697

Non-cash investing and financing activities:







Acquisition of financing leases


$

23,603,817


$

14,445,400


Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are used as supplemental non-GAAP financial measures by management and external users of our financial statements, such as industry analysts, investors, lenders, and rating agencies. We believe EBITDA and Adjusted EBITDA are useful because these measures allow us to more effectively evaluate our operating performance.

We define Adjusted EBITDA as net income (loss) attributable to Nutex Health Inc. plus net interest expense, income taxes, depreciation and amortization, further adjusted for stock-based compensation, any acquisition related costs and impairments. A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as an alternative to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.
















Three months ended September 30


Nine months ended September 30



2022


2021


2022


2021

Reconciliation of net income (loss) attributable to
Nutex Health Inc. to Adjusted EBITDA:













Net income (loss) attributable to Nutex Health Inc.


$

(422,517,803)


$

53,793,277


$

(420,359,806)


$

118,614,814

Depreciation and amortization



4,330,167



1,871,799



9,859,513



5,873,439

Interest expense, net



3,402,606



1,260,187



9,628,189



4,251,277

Income tax expense (benefit)



(8,543,880)



453,621



11,285,729



1,091,975

Allocation to noncontrolling interests



(922,792)



(1,658,061)



(4,445,224)



(4,361,990)

EBITDA



(424,251,702)



55,720,823



(394,031,599)



125,469,515

Stock-based compensation expense



81,249





135,415



Impairment of goodwill



408,466,575





408,466,575



Acquisition costs







3,885,666



Adjusted EBITDA


$

(15,703,878)


$

55,720,823


$

18,456,057


$

125,469,515


About Nutex Health Inc.

Headquartered in Houston, Texas and founded in 2011, Nutex Health Inc. (NASDAQ: NUTX) is a healthcare management and operations company with two divisions: a Hospital Division and a Population Health Management Division.

The Hospital Division owns, develops, and operates innovative health care models, including micro-hospitals, specialty hospitals, and hospital outpatient departments (HOPDs). This division owns and operates 21 facilities in 8 states.

The Population Health Management division owns and operates provider networks such as Independent Physician Associations (IPAs). Through our Management Services Organization (MSO), we provide management, administrative and other support services to our affiliated hospitals and physician groups. Our cloud-based proprietary technology platform aggregates clinical and claims data across multiple settings, information systems and sources to create a holistic view of patients and providers, allowing us to deliver greater quality care more efficiently.

Forward-Looking Statements

Certain statements and information included in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. When used in this press release, the words or phrases “will”, “will likely result,” “expected to,” “will continue,” “anticipated,” “estimate,” “projected,” “intend,” “goal,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, known and unknown, and uncertainties, many of which are beyond the control of the Company. Such uncertainties and risks include, but are not limited to, our ability to successfully execute our growth strategy, changes in laws or regulations, including the interim final and final rules implemented under the No Surprises Act , economic conditions, dependence on management, dilution to stockholders, lack of capital, the effects of rapid growth upon the Company and the ability of management to effectively respond to the growth and demand for products and services of the Company, newly developing technologies, the Company’s ability to compete, conflicts of interest in related party transactions, regulatory matters, protection of technology, lack of industry standards, the effects of competition and the ability of the Company to obtain future financing. An extensive list of factors that can affect future results are discussed in the Current Report on Form 10-Q for the period ended June 30, 2022 under the heading “Risk Factors” in Part I, Item IA thereof, and other documents filed from time to time with the Securities and Exchange Commission. Such factors could materially adversely affect the Company’s financial performance and could cause the Company’s actual results for future periods to differ materially from any opinions or statements expressed within this press release.

SOURCE Nutex Health, Inc.