Nutex Health Inc.

Greetings and welcome to the NewTex Health Shareholders Update conference call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Vivian Sanders, Corporate Director of Marketing and Business Development. Thank you. You may begin.

Good morning, everyone, and welcome to Nutex Health Inc's second quarter 2025 company update conference call. I'm Vivian Sanders, and I'm pleased to moderate today's discussion. Thank you for joining us as we review our performance and outline our plans for the future. This call is being recorded, and a replay will be available on our website. With me today are our key leaders, Dr. Tom Vo, Chairman and CEO, John Bates, Chief Financial Officer, Dr. Warren Hossinian, President, and Dr. Mike Chang, Chief Medical Officer. They will provide insights into our financial results, operational progress, clinical quality, and strategic direction, followed by a Q&A session. Before we begin, a few reminders. Today's discussion may include forward-looking statements based on management's current expectations. These are subject to risks and uncertainties that could cause actual results to differ. For details, please refer to our press release and form 8K filed last week and our other SEC filings. These preliminary results being presented today remain subject to the completion of normal quarter end and fiscal end accounting procedures and closing statement adjustments. and the quarterly review process conducted by our auditors. With that, I'm pleased to turn the call over to Dr. Tom Vo, our founder and CEO. Dr. Vo, the floor is yours.

Thank you, Vivian, and good morning, everyone. I am thrilled to present Nutex Health's preliminary results for the second quarter of 2025, which build on the strong momentum from our first quarter and reflect our continued execution of a patient-first, high quality care model our micro hospital approach combined with strong operational efficiency and effective revenue cycle management has driven continued robust growth let me first discuss our operational results and john will update everyone with our progress on the audit and interim review of our financials with our new auditor operationally Q2 2025 shows strong performance, with total patient visits reaching 45,573, a 10.6% increase from Q2 of 2024. For the first half of 2025, total patient visits were 93,842, a 15.5% increase from the first half of 2024. Total revenue increase to $244 million for the three-month ended June 30th, 2025, as compared to total revenue of $76.1 million for the same period in 2024, an increase of 220%. Gross profit was $124.8 million, or 51.1% of total revenue for the three-month ended June 30th, 2025, as compared to gross profit of $22.6 million or 29.70% of total revenue for the same period of 2024. Adjusted EBITDA attributed to NewTek's health was 73.3 million as compared to adjusted EBITDA attributed to NewTek's health of 6.8 million for the three-month ended June 30th, 2024. Net cash from operating activities was 78.2 million for the six-month ended June 30th, 2025. compared to $16.3 million for the same period in 2024. As of 6-30-2025, we had $96.7 million of cash in the bank. The strong performance was a testament to our strong fundamentals and dedication and collaboration from all the team members here at Nutex as we strive to fulfill our core mission of providing better access to healthcare. One driver of our financial success, in addition to strong volume growth and higher patient acuity, is our arbitration strategy under the No Surprises Act independent dispute resolution process. Congress enacted the No Surprises Act, quote, NSA, effective January 1, 2022, to protect patients from surprise medical bills incurred when they receive emergency medical services from out-of-network healthcare providers. Providers bill the insurers directly. And if the insurer doesn't pay or in view of the provider underpays for the medical services provided, the NSA creates the independent dispute resolution or IDR process for unresolved billing disputes between providers and insurers. The patient is not involved in this process. And payment is issued directly to the provider from the insurer. The IDR process safeguards providers by promoting fair reimbursement from payers, helping ensure their continued ability to deliver care. This process, though administratively intensive, is critical for securing fair compensation when insurers do not pay fair and reasonable awards, as is evidenced by the recent governmental data, which shows that during the second half of 2024, 85% of arbitration awards are in favor of the higher offers submitted by the providers. NUTEX undertakes extensive labor and cost-intensive efforts to comply with all applicable laws and regulations in each of the jurisdictions in which it operates, including the eligibility rules and effects at the time a claim is being submitted to federal arbitration. For more information on the NSA and IDI process, please go to our form 8K file on August 22nd, 2025 under term 8.01 and to CMS.gov under independent dispute resolution. On July 1st, 2024, we engaged HaloMD, a third-party expert, to work with us in challenging underpaid out-of-network claims. HALO-MD specializes in independent dispute resolution through the NSA and state regulation for auto network healthcare providers. New Text Health determines which claims to submit to arbitration. Given the complexity of the federal arbitration process and its interaction with state surprise billing laws, it is crucial for providers like New Text Health seek tech-enabled expert assistance in the highly complex submission process. This third-party expertise, such as that provided by HaloMD, is essential for navigating the complexity of submission of claims in bifurcated states where either state or federal law may apply, depending on the insurance coverage and services provided. As such, independent federal arbitration is now my necessity and an integral part of our revenue cycle management operating procedure. Next, I'd like to address a few items that were published in a recently highly misleading short seller report revolving around mainly HaloMD and allegations made by large insurers and several lawsuits against HaloMD. We strongly disagree with the allegations. in the short seller report. Further, we believe that the report misrepresents LUTEC's business, its claim process, and its ability to collect revenue. Further, we believe the short seller completely misunderstands the regulatory framework underpinning the independent federal arbitration system implemented under the No Surprises Act. Lutex Health has not been named in any lawsuit filed by Blue Cross Anthem or any other insurer against HaloMD. And Lutex Health has no hospital locations in jurisdiction for HaloMD as subject to alleviation initiated by insurers. In a press release issued on June 4th, 2025, with respect to the lawsuit filed by Blue Cross Blue Shield of Georgia, HALO-MD states that it is prepared to vigorously defend itself in this litigation in a manner that will highlight the lawsuit's meritless nature. Patient eligibility seems to have been a large point of contention in lawsuits, so a few clarifying points related to our situation. Lutex Health undertakes extensive labor and cost-intensive effort to comply with all applicable laws and regulations in each of the jurisdictions in which it operates, including the eligibility rules in effect at the time a claim is being submitted to the federal arbitration. The claims process for operating network claims differ from state to state and is highly complex due to mainly the bifurcated nature of many states. which have their own surprise billing rules for fully insured claims and for certain types of providers. Further, there are different rules in each state governing the determination whether individual claims may be bundled or batched when submitting to the certified independent dispute resolution entity. The short seller extrapolating from the Halo MD lawsuit, which does not apply to NewTax Health, seeks to allege that new tax help participate in an intentional flooding of the arbitration system, fortunately obtains large payment and could be subject to revenue . As we have outlined in detail in our form, aka file on August 22nd, 2025, the eligibility determination of the submission of auto network claims to the federal arbitration process are complex. we believe we meticulously adhere to the existing rules underlying those eligibility criteria. As further detail in our form 8K, according to the data published by CMS, LUTEX is part of an industry-wide trend, resulting in a large increase in the number of claims submitted for arbitration. During the final two quarters of 2024, providers initiated 1.5 million disputes, which represents more than 70 times the predicted annual caseload. Of those, 85% were decided in favor of the provider, the higher offer, resulting in a median winning offer of over four times the median in-network rate of each insurer. Contrary to the allegations contained in the short seller report, we believe that NewTax Health complies with the federal arbitration rules as currently in effect. With respect to revenue collection, the CMS has recently allowed the reopening of awards made prior to June 6, 2025, based purely on narrowly defined clerical, jurisdictional, or procedural errors by the independent federal arbitration entity. Neither insurers nor providers may challenge prior awards based on their own errors or on substantial grounds. Further, to address the potential of nonpayment by insurers in violation of the No Surprises Act, the No Surprises Act Enforcement Act has been recently reintroduced in Congress and the Senate. almost all claims are for auto network services. And the percentages of Medicare and Medicaid of our patients are less than 5%. Since our claims process and revenue cycle management team are all in-house, we believe we expend significant resources to review and determine which claims are set to the independent dispute resolution entity. Lastly, The short seller report also mentioned Neighbors Emergency Center bankruptcy in 2018. Neighbors Emergency Center was indeed co-founder by myself in 2008. However, I left Neighbors in 2011 to start NewTex Health. The two models are completely different. Neighbors was a freestanding ER model located only in Texas, whereas NewTex Health is a microhospital model. with facilities on a national level. Neighbors did eventually file for bankruptcy around 2018, seven years after I left its management team. On the regulatory front, we are not seeing any significant legislative changes to either the NSA or the IDR process. We feel that Congress is currently content with the NSA because it has done its job to protect the American public from surprise bills. Any changes to the NSA may potentially put the American public at risk. We expect the federal arbitration process for auto network services will continue to evolve and become more efficient and less complex. As an example, on July 1, 2025, the federal IDR portal was upgraded to streamline the arbitration process and enhance the quality of data submitted. We believe the proposed No Surprise Act Enforcement Act will also be beneficial to providers such as Nutex Health. It was reintroduced on July 23rd by a bipartisan, bicameral group, including Representative Greg Murphy of North Carolina, Raul Ruiz and Jimmy Panetta of California, John Joyce of Pennsylvania, Kim Schrier of Washington, and Bob Onder of Missouri. A companion legislation was also introduced by the Senate by Senators Roger Marshall of Kansas and Senator Michael Bennet of Colorado. If enacted, either version would offer significant benefit to providers participating in the NSA's IDR process. Importantly, both bills impose penalties for late or nonpayments for the non-prevalent party fails to make the required payment within 30 days of an IDR determination. A penalty imposed will be three times the difference between the initial payments and the IDR determination per claim. Interest will also apply to late or non-payments. The bills authorized the imposition of civil monetary penalties on health plans and insurers for violation of the NSA's balance building provision. would have discretion to assess penalties of up to $10,000 per violation, the same maximum penalty currently applicable to providers who violate these requirements. The bills also include the new HHS labor and treasury requirements aimed at better reporting transparencies for insurers and health plans. Please refer to our current report on Form 8K, dated August 20th, 2025, for additional information. Our growth strategy remains robust with over 15 hospital projects in development, including two confirmed opening by the end of 2025 and a potential third. These projects target high growth markets with strong demand for our microhospital model as discussed in Q1. We are also advancing our population health management division, planning to launch one to two independent physician association IPAs annually, particularly near our micro-hospitals to enhance care coordination and sentience. To drive organic growth, we're investing in existing facilities by expanding clinical services and optimizing workflow, a strategy we find from Q1 feedback to boost performance. Our combination of organic growth, new market entries, and strategic acquisitions position new techs for sustained success. To further enhance shareholder value, on July 30, 2025, the Board of Directors has authorized a stock repurchase program of up to $25 million of the company's common stock over the next six months. In summary, Q2 2025 was a transformative quarter with strong volume growth, strong cash generation, and a clear development pipeline. We remain committed to delivering value to patients and shareholders while navigating industry trends. I will now turn the call over to John Bates, our Chief Financial Officer.