Nutex Health Inc.

Greetings and welcome to the NewTex Health fourth quarter 2024 financial results call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Ms. Jennifer Rodriguez, Investor Relations for NewTex Health. Please begin.

Good morning, everyone, and welcome to NewTex Health's fourth quarter and full year 2024 earnings call. My name is Jennifer Rodriguez, 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 an exceptional year. Please note that this call is being recorded for future reference. Joining me this morning are some of the key leaders driving NewTex Health forward, our chairman and CEO, Dr. Tom Voe, our Chief Financial Officer, John Bates, our President, Dr. Warren Hosinian, and our Chief Operating Officer, Josh Dottilio. 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. Vo, I'd like to take a moment to address a few important points. Today's discussion may include forward-thinking 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 might influence them, I encourage you to review the press release and the Form 10-K 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 reconcile to GAAP standards, please refer to the press release in the Form 10-K, 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.

Thank you, Jennifer, and good morning to everybody, and thank you for joining us on today's Investors Call. It is my pleasure to speak with you as we recap NewTex Health's fourth quarter and full year results for 2024. This has been a period of exceptional growth, operational refinement, and innovation as we've worked to reshape how high-quality, concierge-level healthcare is delivered across the communities we serve. Our entire Our organization is committed to our mission of providing concierge-level care to the communities that we serve with a specific emphasis on patient-first values. I'm excited to walk you through the details of our achievement, the strategies propelling us forward, and the challenges we're navigating, particularly with the No Surprises Act and its arbitration process, where we've seen some positive developments. So let's start with our financial performance. For the full year of 2024, our total revenue reached 479.9 million, up 94% from 247.6 million in 2023. Our adjusted EBITDA increased from 10.8 million in 2023 to 123.7 million in 2024, up over 1,000%. Our full year of 2024 net income was 52 million for 2024 compared to a loss of 46 million for 2023. On the patient volume side, our total visit at our hospital increased by 17% from 144,000 in 2023 to 168,000 in 2024. Of that 17% growth in patient volume, 6.5% was from our mature hospitals. On the debt side, even with the four new hospitals that we opened in 2024, the current portion of long-term debt increased only slightly from $10.8 million in 2023 to $14 million in 2024, while the net long-term debt actually decreased from $26 million in 2023 to $22 million in 2024, signifying our dedication to maintaining low debt and fiscal responsibility. These figures reflect the success of our expansion strategy, the strength of our mature facilities, and the tireless dedication of our entire team to achieve three key metrics, ER patient volume increase, inpatient volume growth, and revenue per patient growth. Now, let's turn to a critical piece of our 2024 story, the No Surprises Act, or the NSA. and the arbitration process, otherwise known as independent dispute resolution process, or IDR. The NSA, effective January 1, 2022, aimed to shield patients from surprise medical bills, a noble intent we fully support and fully adhere to. However, the flawed implementation of the NSA has hit providers like us very, very hard, especially on the revenue per patient reimbursement side. In 2022, our average insurer payments for emergency services dropped roughly 30%. The root issue is that insurers often pay below the qualifying payment amount or QPA, which was described and mandated in the NSA. The QPA is the median contracted rate insurers recognized as of January 31, 2019, for a similar service in a similar region, adjusted manually by the Consumer Price Index. So, in essence, the QPA is the amount that the insurers are required to pay providers according to the law. If the providers find that the QPA payment by the insurers is consistently lower than the national benchmarks, The NSA has a provision where the providers can appeal through a formal process of mediation, sometimes referred to as open negotiation, to resolve the disputes. However, if this nine-binding open negotiation still doesn't work, then the next step would be to escalate to arbitration or the IDR process to resolve the differences. And while we've been participating in the open negotiation process since 2022, we have only started the arbitration process on roughly around July 1st of 2024. The main reason that we pivoted from primarily using open negotiation, which is non-binding, and continuing and moving on toward arbitration, which is binding, in most cases was because of the low success rate of open negotiations, where we only achieved a roughly 10% increase in collections from the original low payment amount. Once the previous administrations made arbitration process more streamlined, more efficient, and more cost-effective, Beginning in late 2023 and early 2024, we took advantage of this tool to leverage our positions with our insurers. However, compared to open negotiations, there are significant disadvantages to arbitration process. It's very costly, very labor intensive, and takes a long time to collect from the insurance companies. It also has a lot of upfront costs like Medicare administrative fees and arbitrator fees. To further add to the risk, the loser of this arbitration process bears the IDR arbitration fee cost. So entering into arbitration process is not a decision that we take lightly at all whatsoever. However, if this results in a fair payment that is close to the QPA payment that the insurers are required to pay by law, then of course we will proceed and use any tools necessary. Since we have implemented the arbitration process, the results have been positive. As I mentioned earlier, while our patient volume increased by about 30% in 2024 compared to 2023, our revenue increased by about 94%. And some of this was a result of higher patient volume and acuity to our facility, but a lot of it also was directly from our arbitration initiative. Since 2024, we have submitted roughly between 60 to 70% of our billable visits to the IDR or arbitration portal. Of these claims submitted, we have achieved a roughly 80% win rate. Of these over 80% plus arbitration wins, once again, which are binding, we expect the insurers to pay 60 to 70% in the first 60 days and the rest later. In terms of revenue per visit increased from the IDR process, we typically find a 150% to 250% increase in reimbursement on the facility collection side compared to the initial payment. And once again, this is all consistent with the public data and consistent with the data that are published by other providers that are also doing arbitration like we are. Once again, the goal of arbitration really is just to get to the QPA payment level as outlined in the No Surprises Act. And so far, arbitration seems to be working as it was designed to do. Today, our network spans 24 hospitals across 11 states. In 2024, we hit our target of four new hospitals opening in Green Bay, Wisconsin, Post Falls, Idaho, Milwaukee, Wisconsin, and our very first hospital in Florida in Tampa. We are already working on new hospital pipelines for 2025, 2026, 2027, and 2028. Each new facility is designed to deliver cancer-level care, eliminating emergency room wait times, easing patient stress, and providing inpatient and outpatient services tailored to local needs. Communities and doctors across the country still reach out to us weekly. to open new hospitals in their areas. We target high-demand growth markets, ensuring every new site aligns with our mission to serve where we're needed the most. Meanwhile, our mature hospitals are continuing to grow, expanding their offerings to meet evolving demand. On the corporate side, we are laser-focused on increasing hospital volume systems-wide increasing inpatient admissions to our hospitals, increasing our revenue per patient by implementing efficient revenue cycle processes such as arbitration and mediation, and maintain low cost as well as aggressive debt management and debt payback. And for those that have been in the healthcare industry for some time, you will know that every five to seven years, there's a major disruption to our industry. That disruption for us came in 2022 with the No Surprises Act. The great news is that we were able to pivot and adapt to the current environment. Our company is designed to operate and continually be adaptable, flexible, and resilient to adjust to any future geopolitical, legislative, or financial challenges, just as we have done for the past 14 years. So we are very excited about the future of NewTex as it will begin 2025. So with that, I'll pass to John Bates, our CFO, to dive further into the financials. John?