Greetings, and welcome to the Nutex Health Fourth Quarter 2024 Financial Results Call. At this time all participants are in a listen-only mode. 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 Nutex Health. Please begin.

Good morning, everyone, and welcome to Nutex Health 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 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, Josh DeTillio. Together, we'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 it over to Dr. Vo, 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 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 and the Form 10-K, which include 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 Nutex Health's fourth quarter and full year results for 2024. This has been a period of exceptional growth, operational refinements and innovation as we've worked to reshape how high quality concierge-level health care is delivered across the communities we serve. Our entire 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 achievements, 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 visits at our hospitals 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. Meanwhile 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 the 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 hard, specifically 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 recognize as of January 31, 2019 for a similar service in a similar region, adjusted annually 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 providers find that the QPA payment by the insurers is consistently lower than national benchmarks, the NSA has a provision where providers can appeal through a formal process of mediation, sometimes referred to as open negotiation, to resolve the dispute. However, if this nonbinding open negotiation still doesn't work, then the next step would be to escalate to arbitration or the IDR process to resolve the differences. While we've been participating in the open negotiation process since 2022, we have only started the arbitration process on roughly July 1, 2024. The main reason we pivoted from primarily using open negotiation, which is nonbinding and often ineffective, toward arbitration, which is binding in most cases, was because of the low success rate of open negotiations, where we only achieved roughly a 10% increase in collections from the original low payment amount. Once the prior administration made the 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 insurers. However, compared to open negotiations, there are significant disadvantages to the arbitration process: it is costly, very labor intensive and takes a long time to collect from the insurance companies. It also has 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 arbitration is not a decision we take lightly at all. 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 implemented arbitration, 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%. Some of this was a result of higher patient volume and acuity at our facilities, but a lot of it was also 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 roughly an 80% win rate. Of these over 80% arbitration wins, 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 increase from the IDR process, we typically find a 150% to 250% increase in reimbursement on the facility collection side compared to the initial payment. Again, this is consistent with public data and with data published by other providers that are also using arbitration. Once again, the goal of arbitration is to reach 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, Tampa. We are already working on new hospital pipelines for 2025, 2026, 2027 and 2028. Each new facility is designed to deliver concierge-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 are needed 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 system-wide, increasing inpatient admissions to our hospitals, increasing our revenue per patient by implementing efficient revenue cycle processes such as arbitration and mediation, maintaining low costs as well as aggressive debt management and debt payback. For those that have been in the health care industry for some time, you will know that every five to seven years there is 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. We are very excited about the future of Nutex as we begin 2025. So with that, I'll pass to Jon Bates, our CFO, to dive further into the financials. Jon?

Thanks, Tom, and good morning, everyone. I'm very excited to break down the financials for Nutex Health's fourth quarter and full year 2024, a year where we didn't just grow but we began delivering transformative financial performance. Tom has given you the big picture, and I'm going to zoom in on some more detail, beginning with the fourth quarter of 2024, and then taking a little bit more about the full year of 2024. There is a lot to unpack. So let's start with the fourth quarter ended December 31, 2024, and compare those results to the same period in 2023. For the fourth quarter of 2024, our total revenue grew 270% or $187.9 million to $257.6 million versus $69.7 million for the fourth quarter of 2023. Of this increase, the arbitration process resulted in $169.7 million more in revenue in the fourth quarter compared to the same period in 2023, which amounted to approximately 90.3% of the $187.9 million increase in overall revenue. So of the $169.7 million arbitration revenue, $68.9 million related to dates of service for the fourth quarter of 2024, $70.5 million related to dates of service for the third quarter of 2024 and $30.3 million related to dates of service for periods prior to the third quarter of 2024. So of that total revenue increase, mature hospitals — which are hospitals open prior to December 31, 2021, and therefore provided two full years of comparative results — increased their revenue by 175.6% for the fourth quarter of 2024 versus the fourth quarter of 2023. For hospital division visits, we saw growth as well during the quarter as visits increased by 9.8% or 4,063 visits to 45,444 visits in the fourth quarter of 2024 versus 41,381 visits in the same period in 2023, with the mature hospitals growing at 3.1% in the fourth quarter of 2024 versus the fourth quarter of 2023. Additionally, the Population Health division revenue increased by just under $1 million or roughly about 11% to $7.9 million in the fourth quarter of 2024 from $7.1 million in a similar period in 2023. Now we discussed the growth in hospital revenue and visits that we've seen in the fourth quarter of 2024. Let's discuss the overall facility and corporate costs and the improvement in those areas. Total facility-level operating costs and expenses increased $59.5 million during the period, but only represented about 45% or $116 million of total revenue for the fourth quarter of 2024 versus 81.1% or about $56.5 million for the same period in 2023. So of the $59.5 million increase, $57.6 million related to arbitration costs for the additional arbitration revenue booked during the period, with cost of approximately $24 million related to the dates of service in the fourth quarter of 2024, another $24 million related to the dates of service for the third quarter of 2024, and then just about $9 million related to dates of service prior to the third quarter of 2024. As a result of the revenue and facility cost improvement, our 2024 fourth quarter gross profit was $141.6 million or 55% of total revenue as compared to $13.2 million or just 18.9% of total revenue in 2023, which is a 973% improvement in the fourth quarter of 2024 over 2023. From a corporate and other cost perspective, general and administrative expenses as a percentage of total revenue for the fourth quarter of 2024 decreased to 4.9% compared to 12.2% for the fourth quarter of 2023. When you look at operating income, which includes a negative impact of $14.7 million of noncash stock-based compensation expense, operating income was $114.2 million compared to an operating loss of $26 million in the fourth quarter of 2023, representing a $140 million improvement quarter-over-quarter. Net income attributable to Nutex Health was $61.7 million for the fourth quarter of 2024, again including that negative impact from stock-based compensation expense. The comparative net loss attributable to Nutex was $31.6 million for the fourth quarter of 2023, showing a $93.3 million improvement for the fourth quarter of 2024 over the same period in 2023. As referenced, adjusted EBITDA attributable to Nutex increased $90.5 million from $3.1 million in the fourth quarter of 2023 to $93.6 million in the fourth quarter of 2024. Now on to the 12 months ended December 31, 2024 compared to the 12 months ended December 31, 2023. Total revenue for the full year of 2024 grew by 93.8% or $232 million to $479.9 million versus $247.6 million for the full year of 2023. As mentioned previously, the arbitration process resulted in $169.7 million more in revenue in 2024 versus 2023, which amounted to approximately 73.1% of the $232 million of revenue increase. And as mentioned before, of the $169.7 million arbitration revenue, $68.9 million related to dates of service in the fourth quarter, just over $70 million related to dates of service for the third quarter and just over $30 million related to dates of service for periods prior to the third quarter of 2024. So of the total revenue increase, mature hospitals increased their revenue by 56.6% for 2024 versus the same period in 2023. Visits increased, as Tom mentioned earlier, by roughly 17% or 24,330 visits, up to 168,388 visits in 2024 versus 144,058 visits in the same period in 2023, with mature hospital visits growing at 6.5% in 2024 versus the same period in 2023. Additionally, the Population Health side grew by 4.4% to $30.9 million in the first 12 months of 2024 from $29.6 million in the same period in 2023. So in addition to the revenue and visit growth noted above, facility and corporate costs also showed improvement for the 12 months of 2024 relative to 2023. Total facility-level operating costs and expenses increased $70.8 million during the period, but only represented about 59% or $283 million of total revenue for the 12 months ended December 31, 2024 versus 86% or $212 million for the same period in 2023, a decrease of 26.9%. So of that $70.8 million for the period, as mentioned previously, $57.6 million related to arbitration costs for the additional arbitration revenue booked during the period with cost of approximately $24 million related to the dates of service for the fourth quarter, $24 million related to the dates of service for the third quarter and then roughly $9 million related to dates of service prior to the third quarter. So the gross profit for the 12 months for the full year of 2024 was $196.3 million, or just under 41% of total revenue as compared to $34.8 million or 14% of total revenue in the same period in 2023 — a 464% increase for the 12 months ended 2024 versus the same period in 2023. From a corporate and other cost perspective, G&A expenses as a percentage of total revenue for the 12 months of 2024 decreased to 8.7% or $41.9 million from 13.4% or $33.2 million for the same period in 2023. Operating income for the 12 months ended December 31, 2024 was a positive $130.6 million compared to an operating loss of just under $32 million for the 12 months ended 2023. Net income attributable to Nutex was $52.2 million for 2024 compared to that loss of $45.8 million for 2023, which was a $98 million positive increase. Adjusted EBITDA attributable to Nutex increased $112 million or just over 1,000% from $10.8 million in the first 12 months of 2023 to $123.7 million in the first 12 months of 2024. As Tom stated previously, we started the independent dispute resolution arbitration process in July of 2024. As part of the arbitration process, we first went through the required 30 business day open negotiation process for each claim that we believe we were paid less than the qualified payment amount on. And that QPA is defined as the median of the contracted rates the insurance plans recognized for similar services provided by a provider in the same or similar specialty and in the same geographic area as the service at issue. All of this, of course, is inflation adjusted. So if we are unsuccessful in open negotiations and still believe we were being paid below the QPA, then we enter the arbitration process. With the entire process — from entering open negotiations to getting arbitration to actually getting paid by the payer — taking on average at least three to five months, we did not begin to see the wins in ultimate payments from the payers from this effort until the early part of the fourth quarter of 2024. So as we finished out the year and the close process, we used our most recent results from the arbitration process to accrue revenue for all visits that had begun the open negotiations process at the end of the year. And as communicated previously, we have been submitting claims into the arbitration process for approximately 60% to 70% of our billable visits and achieving over an 80% win rate, and that's factoring in a 70% collection rate on each win, and we continue to refine our process each period based upon the most recent detail that we have. Finally, I'll comment on our balance sheet: it remains very strong with cash and cash equivalents at December 31 at just under $44 million, up from just under $22 million at the end of 2023, a 98.2% increase. The other sizable increase at the end of the year is the accounts receivable balance, which was $232 million compared to $58.6 million at the end of 2023. As discussed previously, the major increase for that relates to the arbitration process that we began back in July of 2024. Regarding cash flow, net cash from operating activities increased to $21.9 million for the 12 months ended December 31, 2024, up from just over $1 million for the same period in 2023. On the liability side, our total bank and equipment debt decreased by $1 million to $41.4 million, down from $42.4 million in December 2023, and again, with the majority of that debt relating to equipment loans in our hospitals for such things as MRIs, x-rays, ultrasounds, CT machines, etc. Outside of this normal $40-plus million of bank debt-type items, the other material items on the balance sheet are liabilities related to financing and operating lease liabilities. We talked about this a little bit in the third quarter and I want to reemphasize: those liabilities are really just future lease payments due to our landlords on our hospital facilities. They are reflected on the balance sheet because accounting rules require us to aggregate all these lease payments that we pay to a landlord for the entirety of a lease, which might be 15 to 20 years, and then present value that back to the inception of that lease and record both a right-of-use asset and a corresponding right-of-use liability on the balance sheet. As a result, on our balance sheet at December 31, 2024, the net asset balance for the operating and financing right-of-use assets amounted to $247 million, which is roughly 38% of total assets. And the net liability balance for the operating and financing right-of-use liabilities amounted to just under $300 million, which is 66% of total liabilities. Most investors and analysts do not view these right-of-use liabilities as real operating debt, so I wanted to clarify that for everybody. With all that said, our balance sheet remains very solid, and we have provided our company great flexibility that should allow us to execute on our growth plan in 2025 and beyond. Now on to Warren Hosseinion, our President, for a Population Health update. Warren?

Thank you, Jon, and good morning, everyone. It is great to be with you today to discuss how Nutex Health is advancing population health management, a cornerstone of our mission to deliver sustainable, impactful health care. In 2024, we made strides in this area, and I'm excited to share the progress, the strategies driving it and our plans to keep pushing forward. This isn't just about numbers or operations; it's about improving patient care, reducing disparities and creating a health care model that works for everyone — patients, providers and communities alike. Let's start with where we are today. Our Population Health division currently manages over 40,000 patients across our platform. That's a broad reach, and it's growing because of the trust we've built through our independent physician associations, or IPAs. Revenue for the division hit $30.9 million in 2024, up slightly from $29.6 million in 2023. That growth might seem modest, but it's intentional. We divested two smaller entities that were unprofitable in 2024 to sharpen our focus on core operations, ensuring every dollar and effort aligns with our long-term vision. Our strategy revolves around building physician networks — both primary care physicians and specialists — around our hospitals. Building strong partnerships with local doctors is critical. These relationships create a web of care that's seamless for patients whether they are seeing a specialist, getting diagnostics or managing a chronic illness. It's all coordinated and connected. Our vision is that our hospitals and IPAs working hand-in-hand amplify our reach and effectiveness. We're not just adding doctors; we're fostering collaboration, sharing best practices and ensuring every provider is aligned with our patient-first culture. We are growing our IPAs strategically, focusing on areas near our hospitals to leverage existing relationships and infrastructure. In 2024, we laid the groundwork for new IPAs in Phoenix, Arizona and Dallas, Texas, with one or two more markets in the pipeline. Why Phoenix and Dallas? They are growing regions with health care gaps we can fill, and our hospital presence there gives us a head start. This isn't random expansion. It is deliberate, building on our strengths to maximize impact. By 2026, these new IPAs will broaden our patient base and deepen our influence on local health care delivery. Coordinating large physician networks takes effort — aligning incentives, standardizing care and managing data across systems. There is a lot of competition, and we are up against bigger players in some markets, but our edge is our integration: hospitals and IPAs feeding each other. Our 2024 progress — 40,000 members and $30.9 million in revenue — shows we are not just talking the talk. In 2026, we plan to scale this, refine it and keep proving that population health management continues to be a vital service for us. With that, I'll turn it over to Josh DeTillio, our Chief Operating Officer, to dive into our operations. Josh?

Thanks, Warren. As Tom and Jon mentioned on volume overall, Q4 hospital visits were 45,444, up 9.8% from last year. For the whole year of 2024, total patient visits were 168,388 versus 144,058 in 2023, an increase of 16.9%. We've been very intentional about growth in 2024 with our hospital leadership and business development teams and have added a lot of specialists at our hospitals to take care of more acute patients. The volume numbers also include a shift in service mix and acuity to more observation patients and inpatients. This service shift isn't just about volume. It's about meeting community and patient demand to stay at our hospitals instead of being transferred when appropriate. Keeping patients under observation helps avoid unnecessary admissions, and admitting them when they meet criteria helps foster a great continuum of care. Cost management continues to be a very good story for us at Nutex. Inflation has hit labor and supplies hard across the health care industry. We've worked very hard to stay lean this year. We don't struggle with the staffing challenges and turnover that large hospitals do. Our employees love working with us. We have a great culture, a better pace and are totally focused on our patients and their experience. It is about delivering excellent care without burning out and exhausting our teams, and our model works extremely well. In terms of supply chain savings, as stated previously, we continue to be on target for 2025 with the GPO realignment we completed back in Q3 of 2024. We continue to work on corporate contracts for services with corporate discounts and we'll keep at it in 2025. We held costs essentially flat except for the arbitration expenses on higher volume throughout 2024 while also opening four new hospitals. In 2024, we also incorporated several new software packages, including HR and procurement software. For 2025, we want to expand our technology with more software and AI to save costs and provider and back office time. Some of the new AI tools are showing increased promise and our better cash flow position will allow us to pilot some of these AI agents. The latest AI for health care promises faster check-ins, predictive staffing, note writing for doctors and nurses, which can free them up to see more patients, optimize coding and personalized treatment and care plans. It can also predict supply usage and optimize schedules, freeing resources for patient care and providing further cost savings. We believe we are just in the early stages of AI in health care and hospitals, but we believe this transition will happen fast and we want to be an early adopter. Lastly, one of our big competitive advantages and differentiators besides our concierge care model is that we are deeply integrated into our communities and markets. In 2024, we ramped up outreach and business development, including more health fairs, school and clinic collaborations, community events and patient education. This visibility builds trust and relationships. When patients have an emergency, their family picks us because they know and trust we will take excellent care of them. We also get a lot of repeat visits. We have great doctors, leaders and employees who are some of the best in health care. As you know, health care is all about people, and we believe we have the very best people, which is why our model and service continue to shape the future of health care. Thank you. Back to you, Jen.

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

Our first question comes from the line of Bill Sutherland with The Benchmark Company. Please proceed with your question.

Good morning everybody. Great, great work in the year just ended. So I think on top of everyone's mind is trying to think prospectively about the arbitration process and just trying to get a handle on kind of what is a realistic way to think about what you can realize in the coming quarters?

Yeah, hi, Bill, this is Tom. Great to have you join us and thank you. Our philosophy on arbitration, and Jon, feel free to chime in, is that arbitration is a tool we can use under the NSA, and the tool allows us to collect a fair rate. That is the main reason why we use it. A fair rate, as Jon stated, is defined as the QPA or essentially the median in-network. Really, all we want to do is just get to a median in-network rate, which is basically right in the middle of where we should get paid. And that's basically it. As long as the No Surprises Act is still in effect and arbitration is within the rules and confines of the NSA, we will continue to use it. Hopefully, long term, the insurance companies will start paying us better and closer to the QPA or the median in-network rate so that we don't have to do arbitration. But that's something we'll watch very closely month by month and quarter by quarter. Jon, do you have anything else to add?

Absolutely. Bill, great question. What I would say is, and we've talked about this when we were finishing up the third quarter, we were early in this process, not knowing exactly where we would land. As we started to see some of these benefits come through in the latter part of the fourth quarter, we are getting a better picture of what's happening currently. But I'll still say this is very much in the early stages. If you think about it, when it takes three to five months or more to get paid on something, you have to go through a pretty long process to get there. So we are watching, identifying and trying to determine what the realization will be. I feel confident in what we have in there as we finished out the year and the financials you're seeing, but as things progress, just like our business prior to arbitration, we always tracked and estimated what we ultimately get paid, and when cash came in, we would adjust accordingly. Our ability to predict was very good in previous years because we had more historical consistency. Now we're getting history for the arbitration process, and as we finished out the year and roll into the first quarter, I think we'll have even more data each quarter, so we hope the trend we've seen will continue, but there is no guarantee. The good news is we feel solid about where we were at the end of the year, and we're very focused on making sure we are getting paid what would be the qualified payment amount, and we're watching to see how that evolves. It's a great question.

So Jon, just to clarify a little bit more, the file size, if you will, that you have in arbitration — was it like a catch-up process that occurred? Or should we think of it as more an ongoing process? I know you can't talk to specific future success rates, but in terms of the claims that you're moving into arbitration, is it going to be at a similar pace on a go-forward basis, assuming insurers don't step up and start negotiating more fairly?

Yes, that's a great question and a loaded one. I think we'll better understand that in the coming months as well. But we're taking the same approach: visit-by-visit, if we don't believe we are getting paid equitably, then we're working through the process and going through arbitration in those cases. As we mentioned back at the end of the third quarter and in our press release, 60% to 70% of billable visits appears to be consistent with what we've seen so far that can go into this process. So for now that piece is pretty consistent, and if it changes, we will let you know. That is one independent variable; you also have visit volumes and acuities that can drive it up or down. So we see it being somewhat consistent at this point and we'll adjust as necessary.

Okay, that's good. I'll pass along. Thanks a lot, guys.

Thanks, Bill.

Our next question comes from the line of Carl Byrnes with Northland Capital Markets. Please proceed with your question.

Thanks for the question and congratulations on the quarter and the year. I'm wondering if you can help me with the hospital division and how you are currently recognizing revenue at the time of service? And then are you subsequently adjusting it after the IDR adjudication process is finalized? I have a follow-up as well. Thanks.

Jon, go ahead.

Great question, Carl. We absolutely, as we see visits, do the same basic process we did pre-arbitration. For every visit that comes in, we analyze that specific visit and look back at similar adjudicated claims in previous periods to see what average reimbursement would be based on acuity, payer and location. We are continuing that exact same process while adding this arbitration element. We do our best to estimate what will be realizable down the road today for a visit that walks in the door, based on its similarities to similar claims in the past and how they ultimately realized. As that continues to prove itself out, it feeds our engine and model, and it will adjust up or down based on actual realization. It just takes time for that to prove itself. Through the end of the year, that process was in place and, to the best of our data at that point — which included all information on wins and losses through the end of December — we were able to estimate for every visit that might not yet have completed arbitration, if we believed it would go through the process, or might be in one stage of that process, what the likely realization would be when the ultimate payment occurs, whether that be a month, two months or three months down the road.

Got it. That's very helpful. And then as a follow-up, you had adjusted EBITDA in the fourth quarter of $93.7 million and for the year $123.7 million, so it's very loaded in the fourth quarter. How much of that would be attributable to IDR adjudication awards? Or phrased differently, how might we look at a normalized adjusted EBITDA number — what might that look like?

Yes. I discussed some of that in my prepared remarks. Our best view based on the data is that the arbitration revenue recorded in the fourth quarter related back to the third quarter as well, and much of it was third and fourth quarter with some that was prior. So on a similar percentage basis, if you were to project, that would be where I'd expect things to land. I don't have specific forward guidance, but based on that trending, that's how I'd think about adjusted EBITDA for future quarters or years. We will refine as we get more data and as payments actually come in.

Got it. Thanks. I'll jump back in the queue.

Our next question comes from the line of Anthony Vendetti with Maxim Group. Please proceed with your question.

Thank you. Just a couple of questions — one more on the IDR and then a couple on the hospitals. On the independent dispute resolution, this amount was all accounted for in the fourth quarter. Do you expect, as you roll through this process in 2025, that it will be spread more over the quarters? Or is it likely you do this kind of calculation at the end of the year when you do the full year audit and it will be a fourth quarter event again?

Anthony, great question. It is not a backloaded scenario. In 2024 it was recorded the way it was due to the timing and data we had. Now as we get more data, we're working it into the models every single month. Our intent is to update these estimates monthly — first quarter, second quarter, third quarter — so it will be progressively updated throughout the year based on current data, not backloaded to the fourth quarter.

Great. That's helpful. And then on the hospitals: you opened four in 2024. Can you talk about how those are ramping? I know some are newer and haven't hit the mature date for gauging, but how is patient volume ramping in those hospitals? Is it fairly even or is one doing much better than the others?

Yes, Anthony, this is Tom. The four hospitals opened were in Green Bay, Wisconsin; Milwaukee, Wisconsin; Tampa, Florida; and Post Falls, Idaho. Medicine is local and every facility is slightly different. Two of those hospitals are performing up to par and even better than expected. The other two are newer — for example, Tampa opened late December, so we don't have a lot of data on that yet. So roughly half are performing better than expected and the other two are performing as expected.

Okay. Great. Can you provide a little more color on planned openings in 2025? What's the schedule look like?

We have three hospitals currently under development and construction, and all three are scheduled to open in either the third quarter or fourth quarter of this year, assuming construction goes well. In 2026 we have probably four more after that, then a couple more in 2027, and we are already working on hospital pipelines for 2028.

Okay. In terms of mature hospitals in your portfolio, what's your expectation based on trends for growth? Mid-single digits? Can you outperform that? What are you seeing and expecting for your mature hospitals?

Great question. We're shooting for single-digit ER volume growth year-over-year, which I think is doable and achievable. But on top of that, we're not just trying to get single-digit ER volume; we're also growing other service lines. We're ramping up specialists and hospitalists so we can admit more patients. The idea is to use all four walls of the hospital to bring patients through the ER and then keep them for observation or admit them when appropriate to foster a continuum of care. That requires increasing staffing and expertise so we can treat more people and more variety of illnesses. Josh, anything to add?

Tom summed it up well: we expect increases in mature hospital ER visits and a change in service mix as we bring on more specialists and hospitalists. So we're expecting a strong year.

For hiring hospitalists, intensivists and such, are those specialists hard to come by? Do you use executive recruiters or someone that helps staff your hospitals?

The answer is both yes and no. Medicine is local, and often specialists come to us because they are dissatisfied with their local hospital or they prefer to admit patients to us. We have an in-house recruiting team, but many specialists come via personal relationships with our local physicians. Our local physicians are often community leaders and know many of the specialists, so through those relationships we get a lot of specialists who want to send patients to our hospitals.

Lastly on the IDR, you've said you're submitting about 60% to 70% of your claims and your win rate is about 80%. Have insurers come back and said they'll reimburse better upfront so you don't have to go through the process? Or do you expect in 2025 to submit about the same percentage of claims to the IDR process?

If insurers pay better upfront and pay closer to the QPA, then we don't have to submit claims to arbitration. The arbitration process was designed as a last-ditch effort so providers can get a fair payment, not as the first form of payment. Unfortunately, because of low upfront payments, we've had to use it more. If insurers start paying better initially, we won't need to go through arbitration. In time, I think insurers may come around and start paying better because if they lose 80% of the time, they also bear the expense of arbitration when they lose, which could be an incentive. But this is new and there's a lot of uncertainty.

Understood. That was great color. Thanks so much. I'll hop back in the queue.

Our next question comes from the line of Gene Mannheimer with Freedom Capital Markets. Please proceed with your question.

Hi, thanks and good morning everybody. Congratulations on the above-average quarter, nicely done. Following up on Anthony's line of questioning, it sounds like then, Tom, you're going to get the money one way or the other, either through dispute or through a blanket increase in reimbursement. So we shouldn't view the dispute process as an extraordinary or one-time event, but rather as part of the course of business going forward?

Yes, that's right. As Jon said, the increase in revenue for the fourth quarter actually spanned third and fourth quarter when we started arbitration. We couldn't report it in the third quarter because the arbitration process was not completed yet and we didn't know how much we would win. So the 80% win rate and associated revenue adjustments were reflected in the fourth quarter when we had the data. Another way to think about it is that the revenue we recognized is revenue we believe we should have gotten from day one had insurers paid a fair rate. In our view that fair rate is the QPA, because we went through a formal binding process under the law. Going forward, we will evaluate each patient to determine if the payment is equitable — if it is, we accept it; if not, we start with open negotiation and then go to arbitration if needed. Arbitration is not cheap and very time consuming, but sometimes it's necessary.

That makes sense. Jon, you recognized $69 million from dates of service in Q4 and $70 million in Q3. Is that the ballpark number to think about going forward, or could there be a lot of variation?

I can speak to that. As you know, there's always variation, especially in early stages. We don't know exactly how it will translate into Q1 or Q2 and beyond, but it's starting to show a trend. We're doing the calculations behind the scenes to estimate month by month now that we have data through January and February and soon March. That will start to prove it out. The dates of service related to those wins do start to show a pattern, but I can't commit to the exact direction going forward. It's starting to give us a pattern of what to expect.

Okay. You noted $30 million of dispute-related revenue for dates of service prior to Q3. How far back does that go? Was that in Q2?

Most of that relates to the second quarter. To remind everyone, the process started in July, but you can't enter open negotiations or arbitration until you get the first payment from the insurer. So you have some that were in the second quarter and even a couple that might have been in early 2024 because it sometimes takes three, four or five months on some claims to get the first payment. Predominantly, though, the wins relate to third and fourth quarter dates of service, with a little trickle into the second quarter and a very small piece from 2023.

Got it. Thank you. Are the disputed claims specific to certain payers or across the board?

Great question. It's not specific to one payer; it's pretty across the board. We're payer agnostic in this respect. It's more about whether we believe the payment is equitable relative to the QPA. Some pay a bit better upfront, but generally this is a pervasive issue rather than something limited to one payer in one location.

Very good. All right. Thanks and congrats again.

Our next question is a follow-up from the line of Carl Byrnes with Northland Capital Markets. Please proceed with your question.

Thanks for the color. You're experiencing success with increasing revenue on a per-visit basis driven by acuity and specialists. Can you quantify that in terms of percent year-over-year increase on a normalized basis? I'm trying to look at it on a normalized basis because driving acuity and higher-dollar procedures is one of your initiatives.

Let me make sure I understand. Are you asking about the arbitration component relative to the non-arbitration component or revenue per visit in general year-over-year?

I'm asking about revenue per visit on a normalized basis and how much you've increased it via acuity and different services, ignoring arbitration for the moment.

I don't have a single precise normalized number to give you for future quarters, but you can see the progression in our financials. In the K we filed, revenue per visit was around $1,514 per visit for the prior period. For the full year 2024, under the current scenario with arbitration starting midyear, the blended number is higher — around the mid-$2,000s per visit. As you look forward, it will likely be somewhere between the full year 2023 and full year 2024 numbers, accounting for arbitration and changes in acuity. We will refine that as we get more data.

Got it. Thanks. Congratulations again.

Ladies and gentlemen, we've come to the end of our time allowed for questions. I'll turn the floor back to Ms. Rodriguez for any final comments.

Thank you all for the valuable questions and answers. For all those joining us today, if you have more questions, please email [email protected] and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our fourth quarter and full year 2024 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 there. Take care, everyone, and we look forward to keeping you updated on our journey.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.