Nutex Health (NUTX) Q3 2026 Earnings Call Transcript

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DATE

Friday, Nov. 6, 2026

CALL PARTICIPANTS

• Chairman and Chief Executive Officer-Dr. Tom Vo
• Chief Financial Officer-Jon Bates
• President-Dr. Warren Hosseinion
• Chief Operating Officer-Wes Bamburg
• Moderator-Vivian Sanders

TAKEAWAYS

• Total Revenue -- $644.9 million for the first nine months of 2026, representing a 10.9% decrease from the prior-year period due to historical collection adjustments that elevated 2025 results.
• Net Income -- $152.9 million for the first nine months, a 159% increase reflecting a significant reduction in stock-based compensation and contract service expenses.
• Diluted EPS -- $21.50 for the first nine months of 2026, compared to $8.87 in the same period in 2025.
• Adjusted EBITDA -- $211.4 million for the nine-month period, a 13% decrease primarily attributed to the non-cash reduction in contract services expense.
• Hospital Division Visits -- 154,326 visits in the first nine months, a 10.2% increase driven by new internal initiatives and investments in hospital growth.
• Cash and Cash Equivalents -- $249.9 million as of Sept. 30, 2026, up from $185.6 million at year-end 2025.
• Net Long-Term Debt -- $34.2 million as of Sept. 30, 2026, compared to $29.2 million at Dec. 31, 2025, reflecting low leverage relative to expansion pace.
• Net Cash from Operating Activities -- $188.1 million for the first nine months, a 6% increase from $177.7 million in the prior year.
• IDR Submission and Determination Rates -- 50% to 60% of billable visits are submitted to the independent dispute resolution process, with 40% to 50% of visits reaching an award determination.
• IDR Win Rate -- Over 80% during the last nine months when an award determination was made, according to management reports.
• IDR Collection Rate -- Over 80% on average for award amounts from inception through March 2026, reflecting the company's ability to recover calculated award amounts from payers.
• Revenue Per Visit -- Approximately $4,000 for the first nine months of 2026, which is consistent with the historical average of $4,200 compared to $5,600 in the third quarter of 2025.
• Population Health Revenue -- $26.3 million for the nine-month period, a 14% increase as the company expands its provider networks across multiple states.
• Stock-Based Compensation Expense -- $6.4 million for the first nine months, down from $119.6 million as legacy facilities completed their earn-out periods.
• General and Administrative Expenses -- 7.5% of revenue or $48.1 million for the first nine months, compared to 4.7% of revenue in the prior year.
• Total Facility Level Operating Costs -- $310.3 million for the nine-month period, representing 48.1% of revenue versus 45% in 2025, reflecting lower overall revenue offset by reduced contract services.
• Employee Turnover -- 9.6% through the first nine months of 2026, contributing to operational consistency and patient experience.
• Hospital Google Rating -- 4.76 stars on average across the facility network, reflecting high levels of patient satisfaction.
• Population Health Membership -- Almost 40,000 members across Medicare Advantage, commercial, and Medicaid plans as of the third quarter.
• Accounts Receivable -- $356.1 million at Sept. 30, 2026, an increase of $36.6 million from year-end 2025.
• Arbitration Costs -- $61.4 million for the first nine months, a decrease from $116.2 million in 2025 following the renegotiation of the HALO MD contract.
• Contract Services Reduction -- $52.3 million non-cash credit in the first nine months, reflecting a change in estimate from the amended HALO MD agreement and lower federal administrative fees.
• Same Hospital Revenue -- 11.2% decrease for the first nine months, reflecting the normalization of revenue recognition compared to elevated 2025 levels.

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RISKS

• Dr. Vo stated, "Physician fee collections are slightly down compared to hospital collection in the third quarter," noting that management is monitoring this trend as it may contribute to revenue decreases.
• Dr. Vo warned that the Pallone bill "would eliminate the IDR process beginning in 2028 and generally make the payer calculate the QPA the final reimbursement amount," which the company firmly opposes as it may limit access to fair market values.
• Dr. Vo indicated that the independent dispute resolution process "is still between four to six months," necessitating sufficient cash flow for providers waiting for reimbursement determinations.

SUMMARY

Nutex Health Inc. (NASDAQ:NUTX) reported a decline in total revenue for the first nine months of 2026 compared to the prior year, attributing the change to adjustments in historical collection data and revenue recognition patterns from 2025. Management emphasized a 159% increase in net income for the period, which reflected lower stock-based compensation expenses and a non-cash reduction in contract services. The company reported continued growth in hospital volumes and highlighted a construction pipeline of new facilities scheduled for completion through 2028. Strategic objectives include establishing new provider networks to improve patient care coordination and utilizing federal dispute resolution frameworks to secure fair market-based reimbursement rates.

• On the call, management said it expected two hospital projects in San Antonio, Texas, and Jacksonville, Florida, to open by the end of the fourth quarter.
• The company is monitoring the Murphy bill, which would preserve independent arbitration while strengthening enforcement mechanisms and adding penalties for payers that do not timely satisfy awards.
• President Hosseinion stated, "our goal is to build one to two new IPAs around our hospitals every year," to increase facility awareness and coordinate care with local primary care physicians.
• Management stated that all mature hospital facilities were currently profitable as of the third quarter.
• Chief Operating Officer Bamburg reported that employee turnover was 9.6% through the first nine months of the year, which supports clinical continuity as patient volumes increase.
• The company is utilizing artificial intelligence and automation to streamline clinical workflows and assist physicians with patient care.
• Management noted that investment in business development directly contributed to same-hospital volume growth of 12.4% in the third quarter.

INDUSTRY GLOSSARY

• Independent Dispute Resolution (IDR): A federal process established by the No Surprises Act to resolve payment disputes between out-of-network providers and health plans.
• No Surprises Act (NSA): A federal law protecting patients from surprise medical bills for certain services and establishing arbitration for provider-payer disputes.
• Qualifying Payment Amount (QPA): A benchmark rate, generally the insurer's median in-network rate for a service in a geographic area, used in the IDR process.
• Independent Physician Association (IPA): A network of independent physicians that contracts with health plans to provide care to enrolled members.
• EMTALA: The Emergency Medical Treatment and Labor Act, which requires hospitals to stabilize and treat anyone coming to an emergency department regardless of ability to pay.
• Prudent Layperson Act: A standard requiring health plans to cover emergency services based on whether a reasonable person would have considered the situation an emergency.
• HALO MD: The company's service provider for medical arbitration and collection services.
• Micro-hospitals: Small-scale, fully licensed hospitals typically offering emergency services and limited inpatient beds.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Nutex Health 2026 third quarter earnings call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Vivian Sanders. Please go ahead.

Vivian Sanders: Good morning, everyone, and welcome to Nutex Health, Inc.'s Third Quarter 2026 Earnings Call. My name is Vivian Sanders, and I'm happy to serve as your moderator today. We're truly grateful for your participation and your continued interest in our company as we share the highlights of another exceptional quarter. Please note that this call is being recorded for future reference. Joining me this morning are some of our key leaders driving Nutex Health forward. Our Chairman and CEO, Dr. Tom Vo; our Chief Financial Officer, Jon Bates; our President, Dr. Warren Hosseinion; and our Chief Operating Officer, Wes Bamburg.

Together, they'll provide prepared remarks to give you a comprehensive view of our performance, strategies and vision, after which we'll open the floor for your questions. Before I turn things over to Dr. Bo, I'd like to take a moment to address a few important points. Today's discussion may include forward-looking statements, which reflect management's current expectations about our future performance. These statements are based on what we know today, but they're subject to risks, uncertainties and other factors that could cause our actual results to differ from what we'll share.

For a deeper dive into these forward-looking statements and the factors that may influence them, I encourage you to review the press release and Form 10-Q filed earlier this week as well as our various SEC filings. You'll find all the details there. Additionally, we may reference non-GAAP financial measures such as adjusted EBITDA during the call. For those interested in how these metrics reconciled to GAAP standards, please refer to the press release and the Form 10-Q, where we've included that information. With those housekeeping items out of the way, it's my pleasure to hand the call over to Dr. Tom Vo, our Founder and Chief Executive Officer. Dr. Vo, the floor is yours.

Thomas Vo: Thank you, Vivian, and good morning, everyone. I'm pleased to join you today to review Nutex Health's third quarter 2026 results. It was another strong quarter with solid financial results, steady collections, important reimbursement developments and continued growth in hospital volumes. I'll start with our financial and operational performance in the first nine months. For the first three quarters of 2026, total revenue reached $644.9 million, an 11% decrease from $723.6 million for the same period in 2025. Adjusted EBITDA decreased 13% from $243 million to $211.4 million for the first 3 quarters of 2026.

Net income attributable to Nutex increased to $152.9 million for the first 3 quarters of 2026, a 159% increase from $59 million for the same period in 2025. On the volume side, for the first 3 quarters of 2026, our hospitals recorded 154,300 total patient visits, up 10.2% from 140,100 during the same period in 2025. Same hospital growth was 6.3% in the first 9 months of 2026. On the balance sheet, net long-term debt went from $29.2 million at December 31, 2025, to $34.2 million at the end of Q3 2026, still very low relative to our revenue and our expansion pace.

Cash on hand grew to $249.9 million as of September 30, 2026, up from $185.6 million at year-end 2025. Net cash from operating activities was $188.1 million for the first 3 quarters of 2026 compared to $177.7 million in 2025, a 6% increase. Several factors supported our strong performance over the first nine months. Patient volume and acuity continue to rise, supported by renewed internal initiatives and investments. In particular, same hospital growth is significant for us as it means our growth strategy isn't wholly reliant on the opening of new hospitals. Earn-out expenses declined as most legacy facilities under development as of 2022 completed vesting, boosting net income.

Arbitration-related costs decreased following the renegotiation of the HALO MD contract in the second quarter of 2026. Collections remained strong through the third quarter of 2026. The investors may have noticed a decline in both revenue and adjusted EBITDA year-over-year through the first three quarters of 2026. The declines are not necessarily due to weaker collections in 2026, but rather due to an uneven revenue recognition for the first 9 months in 2025, primarily reflected by two factors. First, additional collection data available in 2025 supported higher collection estimates for 2024 services that was recognized in 2025. And second, ineligible charts were included from mid-2024 through the first three quarters of 2025 and adjusted in the fourth quarter of 2025.

We are also starting to see slight differences between collections for hospital versus collections from the physician entity. Physician fee collections are slightly down compared to hospital collection in the third quarter. This may account for some of the decreases in revenue in addition to the factors that I mentioned above. And as a reminder, physician revenue are consolidated in the revenue but eliminated down at the net income level. We are continuing to follow this trend closely. In addition, we are seeing more stabilization of revenue this year compared to this time last year. Lastly, as more internal hospital development commences, the long-term debt would increase accordingly in future quarters. Jon will discuss these details in his report.

Turning to reimbursement. The quarter included several developments that positively reinforce our long-term view of the No Surprises Act, NSA and the independent dispute resolution IDR process. First, as discussed on our last earnings call, federal courts in California, Florida, Pennsylvania, Texas, Connecticut and Georgia issued decisions during the first half of 2026, reinforcing the finality of the IDR award and limiting insurers' ability to challenge arbitration outcomes in courts. In the third quarter, the District Court in Virginia reached a similar conclusion in a case involving Blue Cross Blue Shield of Virginia, bringing the number of states with provider favorable ruling on key IDR issues to at least 7.

We believe these rulings support our view that the laws payment and arbitration requirements should be enforced as written. Second, recent antitrust and consumer protection against insurers by the campus and Michigan attorney generals highlight intensifying regulatory challenges to the activities of insurers, focusing on planned administrative practices, in particular, fiduciary management, hidden fee structures and the lack of transparency of out-of-network pricing mechanism. Among other things, the Kansas lawsuit alleges that insurers inflate the revenue by making below-market initial out-of-network offer in the IDR process, creating an artificial cost savings to maximize the percentage-based administrative fee payable to the insurer, which is tied directly to the suppress payment benchmarks. Third, as disclosed in our August press release, the U.S.

Court of Appeal for the Fifth Circuit issued an unbank decision addressing calculation of the qualifying payment amount or QPA, under the NSA. The court ruled in favor of the Texas Medical Association and other plaintiffs on two of the three issues presented in validating the use of those rates in federal QPA calculations. The QPA is an important benchmark in the IDR process. We have consistently maintained that the use of those rates and other flawed methodologies can distort QPA calculations, contributing to substantial provider underpayments and result in an increase in the volume of IDR disputes. We view the court's decision as a meaningful progress toward a more transparent and balanced reimbursement framework.

Over time, more accurate upfront payments without the use of those rates should reduce the rate for costly and time-consuming arbitration. Fourth, earlier this month, CMS released the results of two latest formal audits, including CareSource of Indiana and the School Employees Retirement System of Ohio. In the CareSource audit, CMS identified deficiencies involving required NSA disclosures, timely delivery of QPA-related information and calculation of the QPA under application regulations. The School Employees Retirement System audit similarly identified deficiencies involving the lack of appropriate QPA disclosures and IDR-related notification requirements. These findings provide further evidence of inconsistent insurer compliance and payment practices, including continued noncompliance with federal guidelines.

We believe stronger oversight and enforcement can help providers receive more timely and accurate reimbursement. Fifth, we are closely monitoring the legislative developments in Washington, D.C., including 2 recent proposals that take materially different approaches to the future of the IDR framework. The Murphy bill will preserve independent arbitration while strengthening enforcement mechanisms and adding penalties for payers that do not timely satisfy IDR awards. We strongly support the Murphy bill and are advocating for its passage. The Pallone bill by contrast, would eliminate the IDR process beginning in 2028 and generally make the payer calculate the QPA the final reimbursement amount for on-network services with limited review of the methodology used to calculate those rates.

We firmly oppose the Pallone proposal. We believe the independent review through the current IDR process is essential when ensuring that reimbursement rates fail to reflect the fair market values as they currently do most of the time. We also expect strong opposition from other provider organizations should the legislation advance. We are also aware of other nonemergency specialties, physician specialties, including anesthesiology, surgery, radiology and medical transportation companies that also use the IDR to seek fair reimbursement. though we are unfamiliar with their outcomes or eligibility. While the Pallone proposal's intended target is the overall IDR process, it is unclear to us which specialty he is targeting.

We suspect that the Pallone bill may aim to limit other nonemergency providers access to the IDR. Federal and state Emtala requirements obligate our hospitals to evaluate every single patient that enters our emergency rooms. We expect similarly insurers to meet their federal obligations under the Prudent Layperson Act by paying fair and reasonable reimbursement to Amtala participating hospitals and emergency medicine providers. We also have no control over all the providers that provide nonemergency services. Nutex's goal is very simple. We seek fair market-based reimbursement for medically necessary care in our communities with comparable payments for comparable services in comparable settings.

Federal laws enacted to achieve this result should be enforced and median in rates calculated accurately without those rates distortions. Turning to growth. We remain confident in our hospital development pipeline and the opportunities ahead. For the remainder of 2026, our active development pipeline includes projects in San Antonio, Texas and Jacksonville, Florida, both of which are expected to open in the fourth quarter. Looking ahead, we have 4 additional projects under active construction with expected completion in late 2027 and early 2028. These facilities represent the next phase of our long-term expansion strategy. Operationally, our priorities remain increasing patient volumes, expanding service lines and appropriately growing observation and inpatient care across the network.

We continue to invest in technology, diagnostics, artificial intelligence and differentiated patient service to enhance clinical quality, improve efficiency and scale the Nutex model. As new technologies become available, our hospitals will be able to offer a broader range of care than ever before. Patient satisfaction remains a core strength. As highlighted in recent press release, our hospitals continue to earn recognition for quality and service, reinforcing our position as a trusted provider for physicians, healthcare professionals and their families in the communities we serve. Wes will provide additional report in his report. Bottom line is that we continue to operate a profitable business with strong cash flow and robust internal and external growth.

So with that, I'll turn the call over to our Chief Financial Officer, Jon Bates, for a detailed review of our financial results. Jon?

Jon Bates: Thanks, Tom, and good morning, everybody. And I'm going to provide some additional details on the financials for Nutex Health's third quarter and first nine months of 2026, another solid period where our earnings are strong and our cash flow continues to build as we plan for two future openings later this year, as Tom indicated, and continue to prove out our growth model year-over-year. So Tom provided a little bit of the bigger picture, let me provide a little more of the detail. So starting with the three months ended September 30, '26 compared to the same period in '25.

As you can see, total revenue for Q3 of '26 was $217.6 million compared to $267.8 million for the same period in '25. Hospital division revenue was $209.1 million for the third quarter of '26 compared to $260.2 million in the prior year period. It was a decrease of 19.7%. Revenue at same hospitals, which are hospitals that were opened by December 31, 2024, decreased by 20.1% for the third quarter of '26 compared to the same period in '25.

But the main reason, so everyone is aware for the revenue decrease period-over-period was due to the larger positive increase in revenue in the 2025 period as the IDR process began showing stronger realization of revenue in the first 9 months of 2025 with us experience the early success with the IDR process. And we discussed some of this in the quarter call, but it's a very similar discussion here.

And if you recall, the revenue per visit, which does include both ER and inpatient services back during the third quarter of 2025 was approximately $5,600 a visit, while cumulative revenue per visit from when we started the IDR process back in July of '24, carrying that through the end of '25 was closer to $4,200, which is more in line with what we have continued to see since then as we came into 2026. So revenue per visit in the Q3 of 2025, again, was positively impacted by adjustments to our collection percentage.

If you recall, it was closer to 65% at the end of December 31, 2024, which is based on what we knew at that point and increased pretty incrementally to 80% by the end of the third quarter of September of 2025. And this positive adjustment was a result of additional historical collection history that we saw realized through those first three quarters of 2025. And as historical collection percentage leveled out to the current average of just over about 80% by the end of 2025, the revenue per visit reflected has been much more consistent from then through 2026.

This helps explain why current revenue per visit is more in line with the historical average measured from the start of the IDR process. And so if there are no significant fluctuations in our collection percentages and other key metrics used to record revenue moving forward, we would expect the revenue visit metric to remain within this similar range. So just regarding the arbitration-related revenue, of the company billable visits, similar to what we discussed in the second quarter, approximately 50% to 60% are submitted through the IDR process, with 40% to 50% of all billable visits resulting in an award determination.

And when an award determination is made, Nutex has prevailed in over 80% of those terminations over the last nine months and collects on average over 80% of the award amounts as calculated on awards from inception through March of 2026. So hospital division visits did increase by 18.1% or 8,390 visits to 54,622 visits in Q3 of '26 versus 46,232 visits in the same period in '25, with same hospital visits growing at 12.4% over the same period. Talking about the Population Health division, revenue grew approximately 13% to $8.5 million for Q3 of 2026 versus $7.6 million for the same period in 2025. And Warren will talk a little bit more about that in a minute.

Total facility level operating costs and expenses represented 53.3% or $116.1 million of the total revenue for Q3 '26 versus the 42.2% or $112.9 million for the same period in '25. With regard to stock compensation expense for the three months ended September 30, 2026, it was $7.4 million compared to a $13.2 million expense for the same period in 2025, which was a $5.8 million decrease in quarter 3 of '26. Currently, there are only two facilities that are part of this major expense that goes into this line item with both of them completing their earn-out period in the fourth quarter of 2026.

The gross profit for the three months ended September 30, 2026, is $101.5 million or 46.7% of total revenue as compared to $54.9 million or 57.8% of total revenue in the same period in 2025, an 11.2% decrease for the three months ended September 30 of '26 versus '25. From a corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the three months ended September of '26 was 7.8% or $17 million compared to 4.2% or $11.3 million for the same period in '25.

Operating income for the three months ended September of '26 was $77.1 million compared to $130 million for the same period in '25, which is a decrease of $53.3 million. Net income attributable to Nutex was $40.2 million for 2026 period versus $55.4 million for 2025, a decrease of $15.2 million. Adjusted EBITDA attributable to Nutex went from $98.5 million in Q3 of '25 to $63.9 million in Q3 of '26. Now we'll move on to the nine months ended September '26 compared to the same period in '25. Total revenue for the first nine months of '26 was $64.9 million compared to $123.6 million for the same period in '25.

Hospital division revenue was $618.5 million for the first nine months of '26 compared to $700.5 million in the prior period, a decrease of 11.7%. And same-hospital revenue decreased corresponding 11.2% for the first nine months of '26 compared to the same period in '25. As discussed during the third kind of third quarter explanation for the decrease in revenue for this period, the main reason for the change period-over-period was due to the larger positive increase in revenue in the 2025 period as the IDR process began, showing stronger realization of revenue in the first nine months of '25 with us experiencing early success with the IDR process.

On the hospital visits for the nine-month period increased by 10.2% or 14,252 visits to 254,326 visits for the first nine months of 2026 versus 140,074 visits in the same period in '25, with same hospital visits growing at 6.3% over the same period. Regarding Population Health division, revenue grew approximately 14% to $26.3 million for the first nine months of '26 versus $23.1 million for the same period in 2025. Now in addition to the visit growth noted above, facility and corporate costs also showed improvement for the first nine months of 2026 relative to '25.

Total facility level operating costs and expenses decreased $15.1 million during the period, representing 48.1% or $310.3 million of total revenue for the first nine months of '26 versus 45% or $325 million for the same period in 2025. And the main reason for most of the overall increase in this line was due to the contract services decrease during the period, primarily resulting from the reduction in the CMS fee and the impact from the amendment to the HALOMD contract that was signed in the second quarter of 2026 and was discussed back in the second quarter earnings call.

Total stock compensation expense for the nine months ended September 30 was $6.4 million compared to $119.6 million for the same period in 2025, which was $113.2 million decrease in '26. So we finalized one hospital earn-out at March 31, 2026, and as discussed previously, have two more facilities currently in their measurement periods with both of them completing the measurement period in the fourth quarter of 2026. The gross profit for the nine months ended September 30, 2026, was $334.5 million or 51.9% of total revenue as compared to $398.1 million or 55% of total revenue in the same period in '25.

From a corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the nine months ended September 30 of '26 was 7.5% or $48.1 million as compared to 4.7% or $33.8 million for the same period in '25. Operating income for the nine months ended September 30 of '26 was $280 million compared to $244.7 million for the same period in '25, an increase of $35.4 million. Net income attributable to Nutex was $152.9 million for 2026 compared to $59 million for 2025, an increase of $93.8 million.

Adjusted EBITDA attributable to Nutex was $211 million for the nine months ended September 30, '26 compared to $243 million for the same period in '25, a decrease of $31.5 million or 13%. Now looking at our balance sheet, and Tom referenced this earlier, at September 30, 2026, it remains extremely strong with total assets at just above $1 billion. And of that, it includes just under $250 million of cash as compared to $918 million in total assets and $185.6 million in cash and cash equivalents as of December 31, 2025. Additionally, accounts receivable, it increased by $36.6 million to $356.1 million in September -- or at September 30, '26 from $319.4 million at the end of 2025.

We had another strong collection quarter, which provides us continued confidence in this increase. Regarding cash flow, net cash from operating activities increased by $10.3 million for the nine months ended September 30, 2026, to $188.1 million as compared to $177.7 million for the same period in 2025. And as Tom alluded to earlier on the liability side, we really don't have much real debt. Our total bank equipment type debt decreased by less than $1 million to about $42.7 million at September 30, '26 from $43.5 million at the end of the year 2025. Again, with the majority of those items being equipment loans at hospitals for such items as MRIs, x-rays, ultrasounds and CT mines.

With all that said, our balance sheet remains very solid, and we provided our company the flexibility to execute on our growth plan in 2026 and beyond. Now on to Warren Hosseinion, our President, for the population health update. Warren?

Warren Hosseinion: Thank you, Jon, and good morning, everyone. It's great to be with you today to discuss how Nutex Health is advancing population health management. In the third quarter of 2026, we continue to make strides in this area. This morning, I would like to again focus on our strategy and our upcoming goals. Let's start with where we are today. Our Population Health Management division now oversees a diverse group of almost 40,000 members across our platform, including a mix of Medicare Advantage, commercial and Medicaid managed care members. We currently have independent physician associations or IPAs in Southern California, Houston, Phoenix and South Florida.

We have also set up two more in Dallas and San Antonio, where we plan on enrolling patients in 2027. Revenue for the division was $26.3 million for the nine months ended September 30, 2026, up from $23.1 million for the same period in 2025. The healthcare industry is undergoing significant transformation. Health care expenditures continue to place substantial pressure on employers, government programs, insurers and patients. At the same time, the population is aging, chronic conditions are becoming increasingly prevalent and the demand for accessible high-quality medical services continues to grow. The traditional fee-for-service model, which generally rewards the volume of services delivered is increasingly being supplemented by value-based care arrangements that emphasize quality, efficiency and patient outcomes.

We believe this transition represents a substantial long-term opportunity for organizations that can successfully manage patient populations, coordinate care and demonstrate measurable improvements in healthcare delivery. We believe our Population Health Management division is strategically positioned to participate in this transformation. Our approach is centered on the integration of physicians, facilities, technology and data analytics. By working collaboratively with providers and other healthcare partners, we seek to improve the coordination of care across the patient journey. Our core strategy revolves around physician networks. Our IPAs are comprised of networks of contracted and credentialed primary care physicians and specialists located around our facilities. Building strong partnerships with local doctors is critical.

By forming these IPAs, we are building awareness of our hospitals among the local community doctors and their patients. We believe that over time, these relationships will not only increase the volume of IPA and non-IPA patients to our hospitals, but also create a web of care that's seamless for patients. Our vision is that our hospitals and IPAs will work hand-in-hand to amplify our reach and effectiveness. We are fostering collaboration, sharing best practices and ensuring every provider is aligned with our patient-first culture. Going forward, our goal is to build one to two new IPAs around our hospitals every year. With that, I'll turn it over to Wes Bamburg, our Chief Operating Officer.

Wesley Bamburg: Thank you, Warren, and good morning, everyone. As Tom and Jon discussed, patient demand remained strong during the third quarter. I'll focus my comments this morning on how our hospitals are supporting that growth through clinical execution, business development and workforce stability. We saw that demand clearly in our patient volumes. Hospital visits increased 18.1% compared to the prior year, while same-hospital visits increased 12.4%. This growth reflects strong demand across our markets and continued execution at both newer and more established facilities. As our facilities mature, we continue to expand the range of care they can provide. We are investing in technology and clinical capabilities from advanced diagnostic imaging and specialty services that improve how we deliver care.

That includes the thoughtful use of AI and automation to support our clinical teams, streamline workflows and help physicians spend more time with patients. Together, these investments broaden the services available in each community, allowing us to serve more patients locally, strengthening continuity of care and appropriately grow observation and inpatient services across the network. The physician relationships that Warren just discussed are also important to this strategy. Stronger alignment with local primary care physicians and specialists can improve care coordination, increase awareness of our hospitals capabilities and help patients receive appropriate care closer to home. We are also leveraging business development more systematically across the organization. Each of our facilities has local business development leadership focused on its markets.

We're offering support through a corporate structure that coordinates strategy and shares best practices. So through community events, outreach, sponsorships, physician engagement and other local initiatives, we are strengthening community relationships and increasing awareness of the services our hospitals provide. On to workforce. Workforce stability remains another important component of our performance. Employee turnover was 9.6% through the first nine months of 2026. Maintaining an experienced workforce supports clinical continuity, operational consistency and our ability to respond as patient volumes increase. This has a direct impact on our patient experience, which remains a key priority for us.

Our hospitals maintained an average Google rating of 4.76 stars during the period, reflecting the daily work of our physicians, nurses and hospital teams to deliver high-quality patient-centered care every day. From an operational perspective, our priorities remain straightforward: align staffing with demand, improve productivity and resource utilization, standardize effective practices that drive volume growth and prepare our infrastructure to support future hospital openings. Overall, the third quarter demonstrated that our existing hospitals can support meaningful volume growth while maintaining workforce stability, patient experience and operating discipline. We remain focused on translating that momentum into consistent execution and sustainable growth across the enterprise. Thank you, everyone, and I'll turn the call back over to Vivian.

Vivian Sanders: Thank you, Wes and team, for those updates. I will now turn it over to our operator, who will begin the Q&A portion of the call.

Operator: [Operator Instructions] Our first question will come from Jeffrey Cohen with Ladenburg Thalmann.

Jeffrey Cohen: Congratulations on the quarter. Just a couple from us. I think, Tom, you spoke about new facilities and new openings. So it sounds like -- and please clarify for me two in the fourth quarter and then for 2027, it sounds like four of which will all open in the back half of '27.

Thomas Vo: Yes. Thanks for working with us. But yes, we have two opening this year, hopefully, before the end of the year, and that's San Antonio and Jacksonville. And we have four that are under construction right now about to go vertical that we're hoping to open by the end of 2027 and a worst-case scenario beginning of 2028, depending on construction time.

Jeffrey Cohen: Okay. Perfect. Jon, could you talk about contract services and the Q3 contract services number was, I guess, in line with what we expected. Could you give us a sense or for what that may look like directionally for the fourth quarter or anything beyond?

Jon Bates: Yes. No, great question, Jeff. I mean we haven't given any specific guidance, but I know in previous calls, second quarter and we'll discuss it here. I mean the contract services line, one of the nice things about that was our impact from not only the CMS cost reduction, but of course, the renegotiation of the contract with our service provider Halo. And I think the impact from that, that you saw, we described it, we thought it would come to be around the same range as where it ended up in the third quarter.

And I would think moving forward, as you look at that, I think it should be somewhere in that same type of range in relation to revenue, assuming everything else stays the same. But I think that reduction that you would see even from -- if you look back at the first quarter of 2026, it was upwards close to $60 million or so. So I think the reduction down to a number somewhere in this range is probably what I would expect consistently. Certainly, as we grow and we get more visits and more revenue, that number might nominally go up. But as a percentage of where it's at, I think ultimately, it would stay pretty consistent.

But it's a great question, and that's kind of what we thought would happen. And so far, it happened in the third quarter, and I would expect that to continue as we move forward, barring any major changes.

Jeffrey Cohen: Okay. And then finally for us, could you talk a little bit about the net income to noncontrolling interest? I think we modeled in about $20 million on a quarterly basis. You came in lighter. What would you expect that to look like in the fourth quarter and beyond?

Jon Bates: Yes. I think you sort of look at it in relation to -- or we do sort of -- mathematically, it's in relation to the gross profit line that you would see. And it's been consistently up in the higher teens, potentially low 20%, right? And so I think that's kind of the range that we would expect and subject to other things changing. But remember, there's the two components that roll into that are the physician side, physician revenue and profit, which, of course, is 100% coming out through the NCI piece. And then you have the operations of the hospital, which we own on average a little over 80% of each of the hospitals.

The combination of the profit of those two has been somewhat consistent, somewhere in that high teens to maybe low 20% in relation to gross profit. And I think that's probably, I think, a good number to be looking at as we move forward.

Operator: Our next question will come from Bill Sutherland with StoneX.

Unknown Analyst: So I noticed, Jon, the revenue per visit slipped under $4,000 to about $3,800. And so should we think about kind of where you are now a good range for that number would be down at this level up to 4,200 or so each quarter.

Jon Bates: Yes. I mean that's a great question. As we look through the process, I think we talked about even at the end of last quarter, I mean, if you look at the revenue per visit really since July of '24 when we really started the IDR process, it has remained pretty consistent cumulatively all the way through the latter part of last year and even at the end of last year was in the, what, low $4,000 range. And it's been in the -- for this year, it's right around $4,000 for the first nine months of this year.

So whether that ends up slightly on the lower end or potentially even trending up as we continue to work with acuity and realization, it could go either way. But I think that range is certainly fair as we move forward, and it's been pretty consistent for many quarters if you look at it cumulatively from when we started this process. But I think that's a fair analysis as you look at it.

Unknown Analyst: Yes. No, that's good. I just hadn't seen it slip under 4 in a while. You've got quite a bit of cash. What's the Board kind of discussing these days as far as capital deployment? Are there any external plans because certainly your internal growth doesn't require quite that level of cash?

Jon Bates: Yes, I'm more than happy to start that, and then Tom can jump in as well. I mean, similar to what we've described before, it's a great issue to have. We love it. And it's helping us really do a lot behind the scenes infrastructure-wise and just growing our business. Certainly, our money, first and foremost, is best spent, we believe, on opening up facilities and hospitals because they've done a phenomenal job, and we feel like the return makes the most sense there. And so we're definitely focusing on that and even looking for more opportunities as they come up. So then we're doing a lot of infrastructure behind the scenes system-wise expenses.

But certainly, we've talked about in the past that we've done buybacks, which we did some early part of this year, and that's sort of finished out. And we're always talking about things like potentially dividends and looking for other areas to invest. But that's sort of the order of events. But at this point, we're still discussing each. Tom, you might want to add to it.

Thomas Vo: Yes. It's a great problem to have, like Jon said. But obviously, we're focusing on growth, both internal and external. External growth, we're still targeting three to five hospitals per year. Internal growth, we're looking at everything that could help our patients once they get into our four walls, and that includes business development. And we did announce that we did invest quite a bit into the business development side, which, in my opinion, directly led to a great year-over-year hospital growth, as you can see. So the point is growth is number one. But then after that, everything is on the table. But we're actively debating on the Board level from that standpoint.

Unknown Analyst: Okay. So priorities haven't changed at this point.

Operator: We'll go next to Yuan Zhi with B. Riley Securities.

Yuan Zhi: Maybe first one is related to the behavior change from payers. I saw a recent New York Times article listed some payers that do not pay in as high as 80% of the cases. After the Fifth Circuit ruling, have those payers changed their behavior whether they would pay those arbitration award?

Thomas Vo: Yuan, I could start with that. And by the way, thanks for working with us and covering us. The good news is that so far, as you can see, payers are still paying. Jon stated that they've been paying roughly 80% of the time after an arbitration determination. And so they are paying, but we are watching it very, very closely. I also mentioned earlier that there is a slight difference between payer on the hospital side versus the professional side. The professional side is dropping a little bit, whereas the hospital side is pretty steady.

And then outside of that, obviously, there are other specialties that also use the IDR service in order to get more fair and reasonable rate. Now outside of emergency medicine, we're not as acutely knowledgeable about their percentages, winning percentages or eligibility. But at least from an emergency facility standpoint, an emergency physician standpoint, it looks like we're still collecting well. Jon, do you have anything else to add from that standpoint?

Jon Bates: No, I think you're right on, and it's a great question. I mean it's continued to remain pretty strong. We've had a good solid nine months of cash collections, as you can tell from looking at our cash flow with $180-some million in operating cash. So that's been consistent, and it certainly stayed pretty solid even in the third quarter on that is too. So outside of watching the different areas around the hospital reimbursement versus the physician reimbursement, that's what we're focusing on right now. And remember, all we're trying to get is a reasonable and fair payment similar to what we would say a median in-network rate is.

If we get that, we're perfectly fine, and that's fair in the middle. So as long as that continues, the win rates still have been good. The 80% collection rate is solid. But I mean, ultimately, we feel like we should still get 100%. I mean we realize that might not happen, but it's a legal determination and we feel like we should get it only to try to get up to our -- we believe to be fair and reasonable rate. So that's kind of how we look at it, and that's how the quarter is going.

Yuan Zhi: Got it. And then you mentioned there are a couple of proposed deals. With now the Democratics are in control of Congress, do you anticipate any near-term policy change that would impact your business or this arbitration process?

Thomas Vo: Yes. I think the answer is we don't know, but anybody could propose any bill, obviously, as you know, Yuan. So there's a big difference between a bill proposal, taking it through committee, taking it through passage in both the House and the Senate and then ultimately get the sign-off by the executive office. So we're still a long ways away from any of that happening. Obviously, insurance company will do everything they can to maximize their profit. And the way they maximize their profit is to underpay providers. So it's a yin and yang that's been happening since the beginning of time. And so we expect to see this sort of like cabin mouse game being played in Congress.

But so far, even though we see it, it doesn't mean that it's going to happen.

Operator: We'll hear next from Thomas McGovern with Maxim Group.

Thomas McGovern: So we just talked about shifting payer behavior, but I'm curious to understand the shift in provider behavior as well. CMS reduced the federal IDR administration fee down to $15 back in June. I'm just curious, obviously, that was intended to get more providers involved. Do you know that on a systemwide, have they seen higher engagement from providers? Just trying to understand how engagement is trending within IDR.

Jon Bates: Yes, it's a great question. It's early in that process. I think generally, it has slightly increased. But outside of that, I think we need a couple more quarters to sort of watch the process. And as we've talked about before, I mean, it's nice to lower it from $115 to $15, $100 is great, but that's $100. So the question is, is that enough to change people's decision if they feel like they're not being paid purely on the front end. I think in some cases, it does. In other cases, I don't know that it has that much of a difference outside.

But I think the other positives of what the CMS has done is the portal is opening up, so the information being able to go from outside in through it and for the whole process of the IDR, it just becomes more efficient. And so I think in the end, it's going to really help with just the cleanliness of the data going in. I think the timeliness of things happening, I think it will be quicker as well. So I think that might be as much or bigger of a positive from some of those changes that we talked about in the second quarter.

I think we are seeing some of it now, but I think it's going to be another quarter or two until we really see it realize itself, but really good question.

Thomas Vo: Yes. Thomas, remember that there are other factors besides for the CMS fees. Obviously, to Jon's point, CMS has made it much easier for providers to initiate IDR and arbitration. However, there are other factors. For example, the IDR arbitration process is still between four to six months. And so for any group that wants to initiate this process, they have to have cash flow to last them four to six months, right, without getting payments. And then on top of that, you have the IDR fees, which is a lot more expensive than $15.

And so the point is that -- and this is why only 5% of providers like us actually do arbitration simply because they either don't have the cash to initiate it nor do they have the cash flow to wait four to six months before a determination occurs nor do they may not have the expertise or the willingness to do that. So there's a lot more factors that are out there, limiting the providers' ability to do IDR process. And then with some new guidelines that recently came up, the windows to do IDR is actually tightened so that you really have to be very diligent in sticking with the process so that you get an IDR win.

So it's not as easy as what people think.

Thomas McGovern: Understood. I appreciate that color. And then looking at New Texas utilization of the IDR process, you guys always provide us these metrics on your submission rate, your win rate, cash collection. One of the new -- I mean, you might have touched on it in a one-off conversation in the past, but the 40% to 50% of billable visits resulting in an award determination is something new that we're seeing in the press release. Can you contextualize this for us? Can you let us know how does this compare to averages you've seen in other quarters?

Jon Bates: Yes, that's good. Actually, it's been very consistent. As we're looking at it behind the scenes, thinking we want to kind of get as close to explaining ultimately what turns into revenue, we wanted to talk more about that. All that's saying as it describes is the visit that ultimately gets to the end and has a determination win or loss. And so it's been very consistent for some time period. So that part hasn't changed. We just added that just for some clarity. And as we move forward, I think maybe speak more to that because I think it has more relevance ultimately in what ultimately turns into realized revenue.

Operator: Moving on to Ben Haynor with Lake Street Capital Markets.

Benjamin Haynor: So first off for me, just on the strategy of these IPAs in the backyard of your micro hospitals one or 2 of these a year. Is this kind of based on the experience that you've had where you have these things coinciding currently? Or any more you can share on kind of the experience and the thought process behind that?

Thomas Vo: Yes, I could start and then maybe Warren, our President, could chime in. But the answer is that having an IPA or a group of primary care doctors out in the community that is surrounding your hospital is a great business development strategy because these doctors have patients that need to go to the hospital sometimes. And so the idea is why not have those doctors send their patients to a Nutex hospital in which they are a part of rather than a third-party hospital in which the doctors are not a part of or a member. And so it just makes perfect sense.

And then the other really big goal is patient care because once you have these doctors in the community send the patients to our hospital, the doctors actually communicate with each other. And so the care is coordinated and it's much better. Whereas when the doctor has to send a patient to, once again, a big box hospital, there is no communication. And so sometimes the patient get lost. And ultimately, the care is worse when you don't have that relationship. Warren, do you want to add into that?

Warren Hosseinion: Yes. Thanks for your question. Just echoing what Tom said, we're not trying to be the largest IPA in the locations where we are. We're trying to essentially have primary care physician and specialist partners that are near our facilities. They are loyal to essentially our organization, and they can send their -- not just their IPA patients, but especially their commercial patients to our ERs. And we can communicate back quickly to them. We're close to their practices. And as Tom mentioned, it increases care coordination. So yes, it's both good for patient care. It's good for the providers.

We're close to them and also brings more volume to our ERs, but at the same time, on the IPA patients in those locations where we see Medicare patients, we can evaluate those patients and reduce unnecessary utilization as well. So I hope that answers your question.

Benjamin Haynor: That makes sense and it seems like a great strategy. And secondly for me, you mentioned the kind of the difference that's developing between hospital and physician collections. Is there anything identifiable that you can point to on that? Or just kind of luck of the draw or random.

Jon Bates: Are you talking about reduction in reimbursement for the physician side versus the hospital side? Is that what your question was?

Benjamin Haynor: Yes, yes. Yes. Sorry, if I wasn't clear there, Joe.

Jon Bates: No, that's OK. No, I mean, I don't think there's anything specific other than I think it's been a general slight trend down. And so we're just watching it, but nothing material, but something that we're seeing while the hospital side seems to be remaining pretty consistent. We'll watch it and let you know if anything.

Thomas Vo: And then we definitely keep track of it internally. I'm sorry, Ben. I was going to say we definitely keep track of it internally, but we haven't broken it out yet in our queue.

Benjamin Haynor: Okay. Got it. The visit growth seems obviously like it's picking up, the four new hospitals added quite a bit. What's behind it? Is it new services, business development, just more time with the community realizing that you're there? What do you guys think is driving that?

Thomas Vo: Yes. Wes, do you want to take this on, but we believe it's a combination of factors. Obviously, we did mention that we have invested heavily into business development and hospital growth, same hospital growth. so that obviously, the numbers look like it's working. But there are other factors that are involved, including changing the mindset of our local leaders, changing the mindset of our local business development directors, more targeted differentiated marketing through our Google and Internet, SEO, things along that line. So it's a multi-disciplined approach. Wes, do you want to clarify on that?

Wesley Bamburg: No, Tom, I think you summarized it well. I would categorize it largely in two buckets. It's the organization that we have around business development, as I shared earlier, taking those best practices and scaling that across the enterprise as we're seeing success in one location versus another and then systematically expanding the services that we offer, whether that be through outpatient imaging or through some of the other new services that we're providing. So more organized on how we're approaching business development and marketing and then continue to expand the services we provide.

Operator: We'll go next to Eugene Mannheimer with Freedom Capital Markets.

Eugene Mannheimer: On the great numbers. Just asking here, so of your portfolio of 28 hospitals, how many of them of the mature sites that have been opened more than 18 months are profitable today?

Jon Bates: Say that one more time. What do you ask? Of the ones that are in the same hospital, you want to know about profitability? Is that what you said?

Eugene Mannheimer: Yes, the mature hospitals, because I know the newer ones, right, are ramping, so may not be profitable. But those that had open doors for 18 months or more, how many of those are profitable today?

Thomas Vo: Yeah, I think all of them are. The three that we opened last year are Archview, St. Louis, Red River in Sherman, Texas, and Humble in Houston. Two of those three are profitable already. The ones that are mature, yeah, I think all of them are profitable.

Eugene Mannheimer: Yes. Good to hear that. Okay. And you mentioned the percent of claims or visits going to IVR. It seems like those that percent is on the decline relative to a year ago. And I'm just curious if that's a function of payers paying more appropriately on first pass or are open negotiations resulting in better outcomes, thereby pre-empting the need to dispute? I'm just trying to understand that.

Jon Bates: Yes. It's an interesting dynamic. And I think we're definitely seeing a little bit more on the front end, not material, but a little bit more of paying slightly better on the front end. You also do see a little bit more in open negotiations, but not a lot in open negotiations. So I would say it's more that they're paying slightly better on the front end. And as a result, we're not having to submit as many. And the goal is, as we move forward to submit less and less if we can get paid fairly from the start.

And we do think that, that the whole change in the legality of making sure they can't use the dose rates in the calculations as we watch that closely, the more and more that they do that the right way, that will minimize our need in a lot of cases to have to go through arbitration, which is a win-win. So we're hoping that will be the case, and we'll watch it closely. And hopefully, that number will continue to go down.

Eugene Mannheimer: Got it. Okay. And finally, real helpful to provide those numbers around billable visits that go through the IDR. Under what circumstances would an award determination not be made? Because it sounds like it's not made 100% of the time.

Jon Bates: Well, when you're talking about -- OK, so you have a combination of things. So if it's not getting -- it's a time period. Sometimes they're slower to get to the determination. That's gotten better. I know late last year, we had the scenario where they got caught up on a lot of their determinations and cleared a lot of those out. But yes, other items that potentially don't ultimately get to a determination could be a situation which we think is driven more off of the data we're getting in EOBs from payers, which they've consistently not put accurate and complete data. So you could have situations where they submit an EOB, don't have enough information on the plan.

We can't tell which plan it is. Ultimately, it's the IDRE that makes the determination, is it legitimate or not legitimate to be submitted in the process. So some of those, when they get in there, we get clarification at that point that it's not a plan that can go through the process of the IDR process. So we have some of that happening. And so that's one of the ones that we watch. We also have situations where -- and we're getting better at this, too, where we have a lot of doctors working in our facilities.

If a doctor in some of our states work at other facilities and maybe are under contract at that other facility that we're not aware of. And so when it comes in, payment happens, we're like, well, you're at our facility, you're working with us, we're not aware. We didn't know potentially that they were -- had a contract with one of these that was in network. So it goes mistakenly through the IDR process and then we get notified that, oh, yes, this individual doctor might have a plan somewhere be in network with someone else. And so that would be an example. So those are several of the examples that make that up.

Thomas Vo: But the example that Jon gave, that was on the professional physician side and not on the hospital side.

Jon Bates: Correct.

Eugene Mannheimer: All right. That's helpful.

Jon Bates: And you also -- one last thing, it happens, and I think it's less and less too. If we get good information, it's hard for this to happen, but we don't get good information sometimes to determine whether it's, say, a federal versus the state run in the states where we do have the bifurcated process. It's possible. It might go to one and should go to the other. It doesn't mean we can't then resubmit to the other. But at the moment, it's gone through that process, it would get kicked back and we have to reanalyze and then decide.

So there's a myriad of items, but those are kind of the major ones, and we believe that with this portal improvement and some of the regulatory work that's happening and making them have to be cleaner on what they provide as payers, I think hopefully, that will shrink that down. So the difference will actually be less and less as we move forward.

Eugene Mannheimer: Okay. Great. And my final one here, you obviously have now a lot more visibility into your volumes and revenue per visit. Do you think you might be at a juncture where you can provide some guidance around 2027, whether that's directional or volume-driven?

Jon Bates: Yes. Absolutely. I think as we talked about before, that now that we're getting to what I believe to be a much better cadence, consistent cadence and everything is starting to become a lot easier actually to understand, hopefully, not only for us, but hopefully for the shareholder and anyone looking at it. I think there's a healthy discussion as we finish out the year to potentially start providing a little more detail on that future look. So hold on tight, but I think there's a good chance that will happen.

Operator: This now concludes our question-and-answer session. I would like to turn the floor back over to Vivian Sanders for closing comments.

Vivian Sanders: Thank you all for those valuable questions and answers. For all of those joining us today, if you have more questions, email us at investors@ntekhealth.com, and we'll get back to you promptly. On behalf of Nutex's management team, thank you all for joining us for our third quarter 2026 earnings call. We've covered a lot, growth, strategy, challenges and our vision, and we appreciate your time and interest. A recording of this call will be available on our website for a limited time. So feel free to revisit it. Take care, everyone, and we look forward to keeping you updated on our journey.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

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