Earnings Call Transcript - NUTX Q1 2026

Operator, Operator

Greetings, and welcome to the Nutex Health 2026 First Quarter Conference Call. Operator instructions were provided. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Rodriguez, Investor Relations Manager. Thank you. You may begin.

Jennifer Rodriguez, Investor Relations Manager

Good morning, everyone, and welcome to Nutex Health Inc First Quarter 2026 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 another exceptional quarter. 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, Wes Bamburg. Together, they will 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-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 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 reconcile to GAAP standards, please refer to the press release and 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.

Dr. Tom Vo, Chairman and CEO

Thank you, Jen, and good morning, everyone. It's a pleasure to be with you as we review Nutex Health's first quarter 2026 results. This first quarter has been one of renewed energy and vigor as we continue our mission of delivering high-quality, concierge-level, accessible health care to the communities we serve. Let's first discuss the first quarter 2026 financial and operational performance. Total revenue reached $216.5 million, a 2% increase from $211.8 million in Q1 2025. Net income increased to $46.8 million compared to $21.2 million in Q1 2025. Adjusted EBITDA dropped to $57.6 million, down 21% from $72.8 million in the prior period. Jon can discuss more but this has to do with the timing of recognition for IDR expenses in the first quarter of 2025 compared to the same period in 2026. On the volume side, our hospitals recorded 49,700 total patient visits, up 3.1% from 48,300 patients in Q1 2025. Six percent of that growth came from same hospitals, demonstrating their resilience and continued relevance in their markets. Please note that this year's flu season was much milder compared to the 2025 flu season. On the balance sheet, net long-term debt decreased from $29.2 million at December 31, 2025, to $24.3 million at the end of Q1 2026. This is very low relative to our revenue and expansion pace. Net cash from operating activities was $75.5 million for Q1 2026 compared to $51 million in 2025, a 48% increase. Cash on hand grew to $207.3 million as of March 31, 2026, up from $185.6 million at year-end 2025. In the first quarter of 2026, we completed our inaugural $25 million share repurchase program, retiring approximately 119,000 shares. We also initiated a second $25 million share repurchase program during the quarter, reflecting our continued confidence in the intrinsic value of Nutex Health. Our share repurchase activity underscores management's strong conviction in the long-term intrinsic value of Nutex Health and our disciplined approach to capital allocation. Operationally, we continue to invest in infrastructure that will support sustained growth in both emergency room and inpatient volumes. These investments are focused on scalability, efficiency and long-term operating leverage. We are also strengthening our leadership team with targeted additions in business development and IT and AI to support our next phase of growth. On the business development side, our focus is increasing community awareness and engagement, ensuring patients and physicians clearly understand the differentiated and unique care delivered at Nutex hospitals. From a technology standpoint, we are investing in both AI and IT to enhance patient care, streamline clinical workflows and enable innovation within our micro hospital model, while preserving the personalized concierge-level experience that defines Nutex. Technology is advancing at an unprecedented pace, and we believe Nutex is exceptionally well positioned to harness these innovations to meaningfully improve patient outcomes while driving sustainable patient volume growth across our platform. As a smaller, more agile organization, we are able to adapt quickly and deploy new technologies far more efficiently than larger, more bureaucratic health care systems. In parallel, we continue to develop and grow new service lines, including medical detox programs, behavioral health services, outpatient imaging, outpatient procedures, personal injury services. Wes will add more on his operational report. With respect to our de novo pipeline, a significant development this quarter was the Board's approval for Nutex to begin directly investing in the development and construction of new hospital facilities. Historically, real estate development was undertaken by third-party developers alongside local physician partners. By internalizing this capability, Nutex can build a more secure, cost-efficient and scalable development pipeline while reducing reliance on external credit markets and alleviating the financial burden historically placed on physician partners. Nutex does not intend to hold these real estate assets on a longer-term basis. Our strategy is to invest capital upfront to develop and construct the facilities. And once a hospital is completed or has reached operational stabilization we expect to monetize the asset through a sale-leaseback transaction with a third-party owner such as a real estate investment trust or a REIT. And while a specific REIT partner has not yet been identified, proceeds from these transactions are expected to be recycled into future developments, allowing us to efficiently redeploy capital and continue to expand our footprint in a disciplined and capital-efficient manner. On the IPA front, we are expanding internal resources to bring additional management functions in-house, further reducing our dependence on third-party service providers and improving operational control and efficiency. Warren will discuss more on this later. From a payer strategy perspective, we continue to carefully evaluate all in-network contract opportunities. Each proposal is assessed against our existing reimbursement outcome under the IDR process. Our objective remains consistent. We are not seeking to collect more than peer hospitals offering similar services. We simply aim to receive comparable reimbursement for comparable care. Our goal is not to increase cost to insurers, but to ensure fair and equitable payments. On the legislative front, we continue to closely monitor developments related to the Murphy Bill, formerly known as the No Surprises Act Enforcement Act, and we will adjust our strategy as appropriate as that process evolves. More broadly, we are actively monitoring legislative and legal developments nationwide that could impact our business. We have seen several recent court decisions in states such as California, Florida and Pennsylvania that may be constructive for providers like Nutex. While these matters remain fluid, we believe these developments reinforce the importance of staying engaged in the regulatory and legal landscape, and we will continue to evaluate their potential implications for the company. Today, Nutex Health operates 27 hospital facilities across 12 states. In 2026, we remain on track to open three additional hospitals in the third and fourth quarters located in San Antonio, Texas; Jacksonville, Florida; and West Little Rock, Arkansas. Demand for the Nutex Health model remains strong. Physicians and community leaders across the country continue to approach us weekly with requests to bring new Nutex facilities to their markets. So with that, I'll turn it over to Jon Bates, our CFO, to walk through the financials in more detail. Jon?

Jon Bates, Chief Financial Officer

Thanks, Tom, and good morning, everyone. I'm going to provide a little more color on the financials for Nutex Health's first quarter of 2026, another strong quarter where we are continuing to grow the business and improve our micro hospital model while we build the infrastructure to handle that growth year over year. Tom's given you a little bit of the big picture, and I'm going to attempt to provide a little more detail. Going forward, when we do talk about comparisons between periods for metrics like visits and revenue, I wanted to bring your attention that we're going to begin using the term 'same hospital' in our analytics, which basically means that the hospital data being compared period-to-period will have been fully opened in both periods presented. So in this case, hospitals in each period being compared under the same hospital definition were fully opened by December 31, 2024. Starting with revenues: Total revenue for Q1 of 2026 increased by 2.2% or $4.7 million to $216.5 million versus $211.8 million for the first quarter of 2025, with the Hospital division revenue being $207.6 million in 2026. Of the total revenue increase, Hospital division revenue grew 1.8% to $207.6 million from $203.9 million while same hospitals increased their revenue by 0.2% for the first quarter of 2026 compared to the same period in 2025. Hospital division visits increased by 3.1% or 1,473 visits to 49,742 visits in the quarter ended March 31, 2026, versus 48,269 visits in the same period in 2025, with same hospital visits growing at 0.6% over the same period. With regard to the Population Health division, it had revenue growth of approximately 14% to $8.9 million for the quarter ended March 31, 2026, versus $7.8 million for the same period in 2025. Now in addition to the revenue and visit growth noted above, facility and operating level costs also showed an increase for the first quarter of 2026 compared to the same period in 2025. Total facility level operating costs and expenses increased $31.3 million during the period, representing 57.6% or $124.8 million of the total revenue for Q1 of 2026 versus 44.1% or $93.5 million for the same period in 2025. Now of the $31.3 million increase for the period, $19.8 million of it related to arbitration costs for additional arbitration-related expense recorded during the period. An increase in these costs is primarily due to less settlement in open negotiations in the prior period as the company was increasing its IDR submissions beginning in the first quarter of 2025. Regarding arbitration-level revenue, we've continued to submit between 50% to 60% of our claims through the IDR process. When an award determination is made, we currently prevail in over 85% of those determinations and we currently have an average collection rate of over 80% of those determination wins. Now regarding arbitration costs, we do anticipate we ultimately will finalize around 24% to 26% of the overall revenue realized. But as a reminder, we currently are reporting 100% of the anticipated cost of the arbitration effort but only recording revenue based upon our current 80-plus percent collection rate. During the current period, these costs approximated a higher percentage—about 35% of the arbitration-related revenue—which we anticipate moving back to our lower averages in future periods. Total stock compensation expense for the three months ended March 31, 2026 was a $3.9 million gain compared to a $27.6 million expense for the same period in 2025, which was a $31.6 million increase year over year into Q1 of 2026. We did finalize one hospital earnout at March 31, 2026, and have two more facilities currently in their measurement periods with both of them completing their measurement period in the fourth quarter of 2026. Gross profit for the three months ended March 31, 2026 was $91.7 million or 42.4% of total revenue as compared to $118.3 million or 55.9% of total revenue in the same period in 2025 — a 13.5 percentage point decrease for the three months ended March 31, 2026 versus 2025. From a corporate and other cost perspective, the general and administrative expenses as a percentage of total revenue for the three months ended March 31, 2026 increased to 6.6% or $14.4 million from 4.7% or $10.0 million for the same period in 2025. Operating income for the three months ended March 31, 2026 was $81.3 million compared to $80.7 million for the same period in 2025, an increase of $0.6 million. Net income attributable to Nutex, Inc. was $46.8 million for 2026 compared to net income of $21.2 million for the period in 2025, which was an increase of $25.6 million. Adjusted EBITDA attributable to Nutex decreased $15.3 million or 21% from $72.8 million in Q1 of 2025 to $57.6 million in Q1 of 2026. Looking at our balance sheet, it remains very strong with cash and cash equivalents at March 31, 2026 of $207.3 million, up $21.8 million or 11.7% from the $185.6 million we had at the end of December 31, 2025. Additionally, accounts receivable increased by $20.2 million to $339.6 million at March 31, 2026 from $319.4 million at December 31, 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 $24.6 million for the three months ended March 31, 2026 to $75.5 million as compared to $51.0 million for the same period in 2025. And as Tom had mentioned earlier on the liability side, our total bank and equipment-type debt decreased by $2.1 million to $41.3 million at March 31, 2026 from $43.5 million at December 31, 2025. But the majority of that debt, as we've talked about before, relates to equipment loans at our hospitals for assets such as our MRIs, x-rays, ultrasound and CT machines. With all that said, our balance sheet remains very solid, and we have provided our company the flexibility to execute on our growth plan in 2026 and beyond. Now with that, on to Warren Hosseinion, our President, for a population health update. Warren?

Warren Hosseinion, President

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 first 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 patients across our platform including a mix of Medicare Advantage, commercial and Medicaid managed care members. Revenue for the division was $8.9 million in Q1, up from $7.8 million in Q1 2025. Our strategy revolves around physician networks. Our IPAs, or independent practice associations, 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. Why do physicians join our IPA? We offer these physicians ownership in our IPA entities; they can also participate on the Board and committees of the IPA. We offer them the opportunity to get on the staff of our hospitals so they can admit and follow their own patients if they choose to. We also incentivize the physicians to achieve high-quality metrics. We believe that over time, these relationships will not only increase the volume of both 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. We're growing our IPA strategically focusing on areas near our hospitals to leverage existing relationships and infrastructure. Going forward, our growth strategy focuses on three areas: one, provider network expansion by partnering with primary care physicians and specialists; two, value-based contract growth by increasing the number of covered lives under management; and three, technology scaling by enhancing our analytics and care management platform. With that, I'll turn it over to Wes Bamburg, our Chief Operating Officer.

Wes Bamburg, Chief Operating Officer

Thank you, Warren. I'll focus my remarks on the operational drivers behind our first quarter performance and how we continue to balance growth, efficiency and execution as we scale the platform. Operationally, overall hospital visits increased year-over-year, reflecting continued demand across our markets and steady contributions from both newer and more established facilities. More importantly, we continue to improve patient acuity and drive a higher mix of observation and inpatient patients. On the care delivery side, we continue to strengthen coordination across clinical and care management teams. These actions are improving patient retention, supporting stronger clinical outcomes and reinforcing the operating leverage built into our model. From a cost management perspective, operating expenses increased during the quarter, driven primarily by higher patient volumes, increasing acuity and intentional staffing investments. Labor cost increased to $41.4 million for the quarter, representing approximately 19.1% of net revenue. This reflects deliberate staffing decisions tied directly to demand, including expanded clinical coverage and support resources required to manage higher acuity observation and inpatient services. As in prior periods, our focus remains on aligning staffing models with real-time volume rather than fixed assumptions, supported by centralized analytics, scheduling discipline and cross-training. Medical supply costs increased modestly to approximately $4 million or 5% during the quarter, reflecting higher utilization rather than pricing pressure. Over the past year, we have continued to benefit from vendor standardization and group purchasing initiatives, which have created a more stable and controlled supply cost foundation. As facilities continue to develop and utilization patterns normalize, we expect these efforts to continue supporting operating leverage and margin stability. In parallel, we remain focused on targeted technology investments that enhance operational efficiency and scalability. These include tools designed to improve patient access, documentation efficiency, coding accuracy and workforce productivity. So what does this all mean for the patient? During the quarter, we received over 2,400 patient reviews, delivering an average Google rating of 4.8 out of 5. This feedback underscores the distinct experience we deliver, one defined by minimal to no emergency room wait times, high-touch service and personalized care. These patient-centric principles remain core to our mission and a key differentiator for Nutex. In summary, the first quarter reflects continued progress in executing on our operating strategy and reinforcing the scalability of the micro hospital model. We remain focused on reliability, standardization and consistent execution, ensuring that every new Nutex facility delivers high-quality patient-centered care that supports long-term value creation. Thank you for your time. Back to you, Jen.

Jennifer Rodriguez, Investor Relations Manager

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

Operator instructions were provided. Our first question comes from the line of William Sutherland with The Benchmark Company.

William Sutherland, Analyst

Exciting news, Tom, about taking on the hospital development internally. When will that probably initiate? And how should we think about the balance sheet impact as you get into that?

Dr. Tom Vo, Chairman and CEO

William, thanks for asking, and great to have you on the call. So yes, the process has already started with three new projects in Florida. Typically, these projects take roughly 18 to 24 months to develop and open. So in other words, even if we start today, we may not open these for another two years. Once the facility opens at that time, we will then flip it to a REIT like I mentioned or some kind of a long-term real estate vehicle. Now as far as the balance sheet change, Jon could probably chime in, but each of these projects costs roughly $20 million to $30 million to build. Our thought is to have Nutex invest the down payments, get a financing vehicle of some type, and then once we flip it, get all that reimbursed. Jon, any further thoughts on the balance sheet question?

Jon Bates, Chief Financial Officer

Yes. I mean I think it's a great question, William. Obviously, when you have the asset on the books at the point you have it on the books, you're going to have the land and the building, and you'll have a mortgage of some kind or whatever cost to potentially finance it. So outside of that, then we'll decide to move on to the REIT concept, and there will be some slight changes there, but the main point at the start is going to be the asset and, of course, the mortgage.

William Sutherland, Analyst

So Tom, thanks for that. And so the current state of development, obviously, can be internal and external. The ones planned for 2027, would that include Florida? No. That would be too soon, right?

Dr. Tom Vo, Chairman and CEO

Yes. For the ones that are opening this year in 2026, those all have been financed externally. You're correct. In 2027, we have roughly four to five new projects, and I would say half of those were financed externally, and we're still working on one or two that will be financed by Nutex. Some of the 2027 projects have been in development for roughly six to 12 months now, so we're getting to a point of starting construction. The projects for 2027 are essentially starting construction now, and we have a pipeline where Nutex could start investing in those.

William Sutherland, Analyst

Got it. On the court cases, et cetera, I'm not sure what the status is of the Murphy Bill is. But it seems like the payer side is not getting many wins basically. I'm curious if there's a change in how you approach the negotiating process prior to arbitration or even just discussions outside of that. Any change in how they want to approach this whole process and maybe even being more realistic about what in-network reimbursement should look like for you?

Dr. Tom Vo, Chairman and CEO

Yes. The answer is that we are constantly and always looking at new contracts that are submitted by payers, and we are always trying to get in-network where possible. You are correct that recently, we've had three very positive court cases that are pro-provider in California, Florida, and Pennsylvania. So those are all fantastic news for us. However, it is a long war, so to speak. We've won a few battles, but this will be a continuing process as insurance companies are always going to push back. This is consistent with our experience with insurance companies for the past 15 years. That will not change anytime soon. Having said that, however, the good news is that we are seeing more and, I would say, better offers from the insurance companies, and we are evaluating all of them.

William Sutherland, Analyst

Okay. One housekeeping question, if I might, on the stock-based compensation. Just trying to understand what's in that number? You probably discussed it in the Form 10-Q, but I just haven't gotten there yet.

Dr. Tom Vo, Chairman and CEO

Yes. So if you recall, the details are in the 10-Q and we're happy to talk more about it. Effectively, what we do is we measure the earnouts based on the earnings over the last 12 months of each of those facilities that are in an earn-out period. We then apply a multiplier based on the share price at the time and the value of their business. So it can go up or down based on whether EBITDA and/or the price at the time change. We accrue that along the way. In this case, in March, we actually had one that finalized, so it got resolved to the exact number. Whatever that change is flows through stock-based compensation and ultimately through equity. In this period it just happened to go down slightly based on those factors and pushed through in the current period. I hope that answers your question.

William Sutherland, Analyst

Yes, it does. And then how should we think about the effective tax rate for the rest of the year?

Dr. Tom Vo, Chairman and CEO

Yes, actually it's a great question. I think as you look at the first quarter, it's probably more in line with what I would expect. There's some ups and downs, but generally, I think this first quarter is probably more representative of what we would see. Somewhere in the high teens to 20% for an effective tax rate is where I would expect us to be, and we'll watch it as we go. Some of the variables that swung it from previous years' higher numbers were permanent differences related to stock compensation and other items. As those items have resolved, the impact is less material going forward. So starting somewhere in the high teens to 20% is not a bad way to think about it.

Operator, Operator

Our next question comes from the line of Thomas McGovern with Maxim.

Thomas McGovern, Analyst

So first, on the arbitration costs increasing to 35% and historically being in that mid-20% range—I think you indicated that you expect to return to that 24% to 26% range. Just curious what gives you confidence in that returning back down to lower levels? Do you have an internal timeline on when you expect these figures to return back to stable levels? And also, if you could talk about what drove the increase in the quarter, that would be appreciated.

Dr. Tom Vo, Chairman and CEO

Yes, sure. It's just timing and the accounting mechanics. As we've discussed previously, we record 100% of the arbitration-related costs up front, but we only recognize revenue based on our expected collection rate, which is currently over 80%. That difference can make the percentage look higher in a particular quarter. If you look back over the last four or five quarters, it's actually averaged in that mid- to high-20% range, which is where I think it will ultimately land when the realization happens. I think over the second, third and fourth quarters of this year you'll start to see it move back towards that 24%–26% range as the timing mismatches resolve. So another quarter or two and it should normalize back into that lower number.

Thomas McGovern, Analyst

Understood. Appreciate that. I also want to take a look at revenue per visit, which declined again this quarter slightly. Is that just a function of the IDR award dynamics? Or are we seeing something from payer mix or patient acuity? Looking forward to 2026, how do you expect this metric to trend over time? I know you had initiatives to hopefully drive this—will the new service offerings play a role, or are you mostly just looking to increase the inpatient visit rate?

Dr. Tom Vo, Chairman and CEO

Good question. Remember that 2025 saw an aggregation of IDR-related revenue recognition as we began the process in mid-2024 and collection percentages increased through the period. That made revenue per visit look higher in some prior periods. If you normalize across the period when we started the arbitration process in July 2024 through December 2025, the average rate per visit was roughly in the $4,000 to $4,200 range. I think that's a reasonable steady-state expectation for revenue per visit, assuming similar visit mix. We are working to increase acuity and the proportion of observation and inpatient cases, which supports higher revenue per visit over time. We also continue to work with payers via IDR and negotiation to improve realization. As we execute on these initiatives and as collection dynamics normalize, I would expect reimbursement to remain solid and potentially improve modestly over time.

Thomas McGovern, Analyst

Got it. Final question from me: on the selective self-development of some de novo facilities, do you have an internal target for the mix of facilities Nutex will invest in versus having an external real estate partner? Does this change how you approach long-term expansion strategy—would this allow more rapid expansion or more selective expansion in particular markets?

Dr. Tom Vo, Chairman and CEO

Great question. We're looking at each location selectively on a case-by-case basis and will pursue the option that we believe brings the most value to shareholders. There will be occasions when external developers co-invest with us, and that's still an option. The reason we're doing this is to ensure a steady pipeline, reduce costs and maintain a robust pipeline so we can consistently do three to five openings per year. Internal development provides more control and the ability to ensure continuity even when external financing markets are tight.

Operator, Operator

Our next question comes from the line of Eugene Mannheimer with Freedom Capital Markets.

Eugene Mannheimer, Analyst

Congrats on a good start to the quarter and year. I wanted to ask a little bit about patient volumes. The 3% growth year-on-year seems a little modest to me considering that you opened three hospitals last year. I'm just wondering—were the openings skewed toward year-end, which is why we didn't see more throughput on the volume side?

Dr. Tom Vo, Chairman and CEO

Yes, Eugene, thanks for joining us. The answer is multifold. You're correct that two of the openings were late in December 2025 and one opened in January 2026, so they are fairly new and ramping, which mutes the year-over-year volume impact in Q1. The second reason is that 2025 had a much heavier flu season than this year, and this year's milder flu season reduced traffic versus last year. That said, the new facilities are growing as projected and we're developing processes to accommodate more patients to drive continued volume growth.

Eugene Mannheimer, Analyst

Got it. On IDR, can you quantify the revenue from IDR in the quarter? And is the pivot toward higher acuity manifesting in the numbers today?

Jon Bates, Chief Financial Officer

We submit roughly 50% to 60% of our claims through the IDR process, so that's a good general sense of the piece of it. We treat arbitration as part of our overall business now, and we don't break it out as much day-to-day. Regarding acuity, yes, it's reflected in our numbers. You're seeing a higher mix of observation and inpatient care, which supporting the revenue and reimbursement trends we've been discussing. The reimbursement rate has stayed relatively consistent from the inception of the IDR process in mid-2024 through December 2025 and into Q1 2026, which is encouraging.

Eugene Mannheimer, Analyst

Great. One last question on the Population Health segment—Q1 was strong at 14% year-over-year but revenues have been lumpy. How should we think about this segment longer term in terms of growth of both lives and contracted physicians?

Warren Hosseinion, President

Eugene, thanks for the question. In 2025, each of our IPAs in Southern California, Houston and Southern Florida generated cash on a stand-alone basis. Our goal is to build networks of physicians around our facilities—not necessarily the largest IPA, but effective networks that build awareness and send patients to our hospitals. Some physicians join and become owners in IPA entities; some participate on boards and committees. We've seen anecdotally that these physicians send non-HMO/PPO commercial patients to our ERs. The objective is to build these networks, provide excellent care, and drive IPA and non-IPA volumes to our facilities. That strategy, rather than pursuing sheer scale, is what we believe will generate durable results.

Dr. Tom Vo, Chairman and CEO

Yes, and to add, the LA IPA is our most mature and established, which is one reason it's more profitable. Houston and Phoenix are coming along nicely and are producing profit as well. We do have hospitals around both of those markets. The Miami location is also slightly profitable, and we have a hospital opening in the Hallandale area in 2027 that will complement that, as well as the Palm Beach hospital. We're also expanding to Dallas and San Antonio, where we have planned hospitals opening. The strategy is to surround hospitals with networks of primary care and specialist physicians to drive consistent patient flow.

Operator, Operator

We have reached the end of the question-and-answer session. Mr. Rodriguez, I'd like to turn the floor back over to you for closing comments.

Jennifer Rodriguez, Investor Relations Manager

Thank you all for those valuable questions and answers. For all those joining us today, if you have more questions, please e-mail us at investors@nutexhealth.com, and we'll get back to you promptly. On behalf of the Nutex management team, thank you all for joining us for our first 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 there. Take care, everyone, and we look forward to keeping you updated on our journey.

Operator, Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.