Q4 2024 Nutex Health Inc Earnings Call
Unknown Executive: Greetings and welcome to the Nutex Health 4th Quarter 2024 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
Greetings and welcome to the new trucks off the fourth quarter of 2024 financial results call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Unknown Executive: If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: 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 New Ductile. Please begin.
Jennifer Rodriguez: I would now like to turn the call over to your host, Ms. Jennifer Rodriguez, and best relations for Nutex Health. Please begin.
Jennifer Rodriguez: Good morning, everyone, and welcome to Nutex Health's fourth quarter and full year 2024 earnings call.
Speaker Change: Good morning, everyone and welcome to new touch health fourth quarter and full year 'twenty 'twenty four earnings call. My name is Jennifer Rodriguez and I'm happy to serve at 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.
Jennifer Rodriguez: 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.
Speaker Change: Note that this call is being recorded for future restaurants. Joining me. This morning are some of the key leaders driving new pet health corporate our chairman and CEO Doctor Condo, our Chief Financial Officer, Jon Bates, Our President Doctor warned Houstonian, and our Chief operating officer, Josh to trio.
Jennifer Rodriguez: 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, they'll provide prepared remarks to give you a comprehensive view of our performance, strategies, and vision, after which we'll open the floor for your questions.
Speaker Change: Together, they will provide prepared remarks to give you a comprehensive view of our performance strategies transition after which we'll open the floor for your questions.
Jennifer Rodriguez: Before I turn it over to Dr. Vo, I'd like to take a moment to address a few important Today's discussion may include forward-thinking statements, which reflect management's current expectations about our future performance. These statements are based on what we know today, but they're subject to risks, uncertainties, and other factors that could cause our actual results to differ from what we'll share. For a deeper dive into these forward-looking statements and the factors that might influence them, I encourage you to review the press release and the Form 10-K filed earlier this week, as well as our various SEC filings.
Speaker Change: Before I turn things over to Doctor, though I'd like to take a moment to address a few important points.
Speaker Change: 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 actual results to differ from what will ship.
For a deeper dive into these forward looking statements and the factors that might influence them.
Speaker Change: I encourage you to review the press release and the Form 10-K filed earlier this week as well as our various SEC filings.
Jennifer Rodriguez: You'll find all the details there.
Speaker Change: You'll find all the details that.
Jennifer Rodriguez: 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, where we've included that information.
Speaker Change: Additionally, we may reference non G. A a P financial measures such as adjusted EBITDA during the call for.
Dr. Tom: For those interested in how these metrics reconcile G. A a P standards. Please refer to the press release and the Form 10-K, well. 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, Though our founder and Chief Executive Officer, Dr. Devote the floor is yours.
Thomas Vo: 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 our today's investors call.
Speaker Change: Thank you Jennifer.
Speaker Change: And good morning to everybody and thank you for joining us on today's investors call.
Thomas Vo: 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 refinement, 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 value. I'm excited to walk you through the details of our achievement, the strategies propelling us forward, and the challenges we're navigating, particularly with a No Surprises Act and its arbitration process, where we've seen some positive development.
Speaker Change: It is my pleasure to speak with you as we recap new techs Health's fourth quarter and full year results for 'twenty 'twenty four.
Speaker Change: This has been a period of exceptional growth operational refinement and innovation as we've worked to reshape how high quality Scots-irish level health care is delivered across the communities we serve.
Speaker Change: 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.
Speaker Change: I'm excited to walk you through the details of our cheaper at the strategy is propelling us forward and the challenges, we're navigating particularly with a no surprises act and its arbitration process, where we've seen some positive developments.
Thomas Vo: 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. Just that EBITDA increased from $10.8 million in 2023 to $123.7 million in 2024, up over 1000%. Our full year of 2024 net income was $52 million for 2024 compared to a loss of $46 million for 2023. On the patient volume side, our total visit at our hospital increased by 17 percent from 144,000 in 2023 to 168,000 in 2024. Of that 17% growth in patient volume, 6.5% was from a mature hospital.
Speaker Change: So let's start with our financial performance.
Speaker Change: For the full year of 'twenty 'twenty four our total revenue reached 479.9 billion.
Speaker Change: Up 94% from $247 6 million in 2023.
Speaker Change: Alright, just that EBITDA increase from $10 8 million in 2023 to 123 point 70 million in 2024.
Speaker Change: Up over 1000%.
Speaker Change: Our full year of 'twenty 'twenty four net income was 52 million for 2024 compared to a loss of 46 million for 2023.
Speaker Change: And the patient volume side, our total visits at our hospital increased by 17% from 144020 23 to 168000 in 'twenty 'twenty four.
Speaker Change: Of that 17% growth in patient volume six 5% was far more mature hospitals.
Thomas Vo: On the debt side, even with the four new hospitals that we opened in 2024, the current portion of a long-term debt increased only slightly from $10.8 million in 2023 to $14 million in 2024. while the net long-term debt actually decreased from $26 million in 2023 to $22 million in 2024, signifying our dedication to maintaining low debt and fiscal responsibility.
Speaker Change: On the debt side, even with the four new hospitals, we opened in 2020 for the car.
Speaker Change: Current portion of long term debt increased only slightly from $10 8 million in 2023 to 14 million in 'twenty 'twenty four.
Speaker Change: While the net long term debt actually decreased from 20 from 26 billion in 2000 $23 million to $22 million in 2024.
Finally, our dedication to maintaining low debt and fiscal responsibility.
Thomas Vo: 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.
Speaker Change: These figures reflect the success of our expansion strategy.
Speaker Change: If our mature facilities and the tireless dedication of our entire team to achieve three key metrics.
Speaker Change: E R patient volume increase in patient volume growth and revenue per patient growth.
Thomas Vo: Now, let's turn to a critical piece of our 2024 story, the No Surprises Act, or the NSA. and the Arbitration Process, otherwise known as Independent Dispute Resolution Process, or IDR. The NSA, effective January 1st, 2022, aimed to shield patients from surprise medical bills. A noble intent we fully support and fully adhere to. However, the flawed implementation of the NSA has hit providers like us very, very hard, especially on the revenue per patient reimbursement side. In 2022, our average insurer payments for emergency services dropped roughly 30%. The root issue is that insurers often pay below the qualifying payment amount or QPA.
Speaker Change: No.
Speaker Change: Let's turn to a critical piece of our 'twenty 'twenty four story, the no surprises act or the MSA.
Speaker Change: And the arbitration process, all the wife's known as independent dispute resolution process or I D. R.
Speaker Change: The NSA effective January 1st 2022 aimed to shield patients from surprise medical bills.
Speaker Change: A noble intent, we fully support and fully adhere to.
Speaker Change: However, the Florida MMA implementation of the NSA has hit providers like us very very hard, especially on the revenue per patient reimbursement side.
Speaker Change: In 2022, our average insurer payments for emergency services dropped roughly 30%.
Speaker Change: The root issue is that insurers often paid below the qualifying paying payment amount or a Q P. A.
Thomas Vo: which was described and mandated in the NFA. The QPA is the median contracted rate insurers recognize as of January 31, 2019, for a similar service in a similar region, adjusted manually by the Consumer Price Index. So in essence, the QPA is the amount that the insurers are required to pay providers according to the law. If the providers find that the QPA payment by the insurers is consistently lower than the national benchmark, The NSA has a provision where the providers can appeal through a formal process of mediation, sometimes referred to as open negotiation, to resolve the dispute.
Speaker Change: Which was described in mandate it and the NSA.
Speaker Change: The Q P. A is the median contracted rate insurers recognize as of January 31st 2019 for a similar service in a similar region adjusted manually by the consumer price index.
Speaker Change: So in essence, the Q P. A is the amount that the insurers are required to pay providers. According to the law.
Speaker Change: If they providers find that the Q P. A payment by the insurers is consistently lower than the national benchmarks.
Speaker Change: The NSA has a provision where the providers can appeal through a formal process of mediation, sometimes referred to as open negotiation to resolve the dispute.
Thomas Vo: However, if this non-binding, open negotiation still doesn't work, then the next step would be to escalate to arbitration or the IDR process to resolve the difference. And while we've been participating in the open negotiation process since 2022, we have only started the arbitration process on roughly around July 1st of 2024. The main reason that we pivoted from primarily using open negotiation, which is non-binding, and continuing and moving on toward arbitration, which is binding, in most cases was because of the low success rate of open negotiations, where we only achieved a roughly 10% increase in collections from the original low payment amount.
Speaker Change: However, if this nine binding open negotiation it still doesn't work the next step would be to escalate to arbitration.
Speaker Change: The idea of a process to resolve their differences.
Speaker Change: And while we've been participating in the open negotiation process since June 2022.
Speaker Change: We have only started the arbitration process on roughly around July 1st of 'twenty 'twenty four.
The main reason that we pivoted from primarily using open negotiation, which is non binding and continuing and moving on towards arbitration with just biding in most cases with because of the low success rate of open negotiations, where we only achieved a roughly 10% increase in collections from the original low payment amount.
Speaker Change: <unk>.
Thomas Vo: Once the previous administrations made arbitration process more streamlined, more efficient, and more cost effective, beginning in late 2023 and early 2024, we took advantage of this tool to leverage our positions with our insurers. However, compared to open negotiations, there are significant disadvantages to arbitration process. It's very costly, very labor intensive, and takes a long time to collect from the insurance company. It also has a lot of upfront costs like Medicare Ministry of Fees and Arbitrator Fees. To further add to the risk, the loser of this arbitration process bears the IDR arbitration fee cost. So entering into arbitration process is not a decision that we take lightly at all whatsoever.
Speaker Change: Once the previous administrations made arbitration process more streamlined more efficient and more cost effective beginning in late 2023 in early 'twenty 'twenty four we took advantage of this tool to leverage our position with their insurers.
Speaker Change: However, compared to open negotiations there are significant disadvantages to arbitration.
Speaker Change: Process.
Speaker Change: It's very costly very labor intensive and it takes a long time to collect from the insurance companies.
Speaker Change: It also has a lot of upfront cost like Medicare administrative fees, an arbitrator fils.
Speaker Change: To further add to the risk the loser this arbitrary process bearish the idea our arbitration fee cost.
Speaker Change: So entering into arbitration process is not a decision that would take lightly at all whatsoever.
Thomas Vo: 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.
Speaker Change: However.
Speaker Change: This results in a fair payment that is closer to the Q P. A payment that the insurers are required to pay by law. Then of course, we will proceed and use any tools necessary.
Thomas Vo: Since we have implemented the arbitration process, the results have been positive. As I mentioned earlier, while our patient volume increased by about 30% in 2024 compared to 2023, our revenue increased by about 94%. And some of this as a result, some of this was a result of higher patient volume and acuity to our facility, but a lot of it also was directly from our arbitration initiative. Since 2024, we have submitted roughly between 60% to 70% of our billable visits to the IDR or Arbitration Portal. Of these claims submitted, we have achieved a roughly 80% win rate.
Speaker Change: Since we have implemented the arbitration process the results have been positive.
Speaker Change: As I mentioned earlier, while our volume or patient volume increased by about 30% in 2024 compared to <unk> 23, a revenue increase by about 94%.
Speaker Change: And some of this as a result some of this was a result of higher patient volume and acuity to our facility, but a lot of it also.
Speaker Change: Also was directly from our arbitration initiative.
Speaker Change: Since July 24, we have submitted roughly between 60% to 70% of our billable visits to the I D R or arbitration Porto.
Speaker Change: Of these claims submitted we have achieved a roughly 80% win rate.
Thomas Vo: Of these over 80% plus arbitration wins, once again which are binding, we expect the insurers to pay 60-70% in the first 60 days and the rest later. In terms of revenue per visit increased from the IDR process, we typically find a 150% to 250% increase in reimbursement on the facility collection side, compared to the initial payment. And once again, this is all consistent with the public data and consistent with the data that are published by other providers that are also doing arbitration like we are. Once again, the goal of arbitration really is just to get to the QPA payment level, as outlined in the No Surprises Act.
Speaker Change: Of these over 80% plus depreciation winced once again, which are binding we expect the insurers to pay 60% to 70% in the first 60 days and the rest later.
In terms of revenue per visit increased from the idea of process, we typically find 150% to 250% increase in reimbursement under facility collection side compared to the initial payment.
Speaker Change: And once again this is all consistent with the public data and consistent with the data that are published by other providers that are also doing arbitration like we are.
Speaker Change: Once again the goal of arbitration really is just to get to the Q P. A payment level, it's outright and then no surprises Act.
Thomas Vo: And so far, arbitration seems to be working as it was designed to do.
Speaker Change: And so far arbitration seems to be working as it was designed to do.
Thomas Vo: Today, our network spans 24 hospitals across 11 states. In 2024, we hit our target of four new hospitals opening in Green Bay, Wisconsin, Post Falls, Idaho, Milwaukee, Wisconsin, and our very first hospital in Florida in Tampa. We are already working on new hospital pipelines for 2025, 2026, 2027, and 2028. Each new facility is designed to deliver cancerous level care, eliminating emergency room wait times, easing patient stress, and providing inpatient and outpatient services tailored to local needs. Communities and doctors across the country still reach out to us weekly to open new hospitals in their areas. We target high demand growth markets, ensuring every new site aligns with our mission to serve where we're needed the most.
Speaker Change: Today, our network spans 24 hospitals across 11 states.
Speaker Change: In 'twenty to 'twenty four we hit our target of four new hospitals opening of Green Bay, Wisconsin Post Falls, Idaho, Milwaukee, Wisconsin, and our very first hospital in Florida and Tampa.
Speaker Change: We are already working on new hospital pipelines for talking 'twenty, five 'twenty six 'twenty, seven and 'twenty 'twenty eight.
Speaker Change: Each new facility is designed to deliver passengers level care, eliminating emergency room wait times.
Speaker Change: You think patient stress and providing inpatient and outpatient services tailored to local needs.
Speaker Change: Communities and doctors across the country is still reach out to us weekly to open new hospitals and there are yes.
Speaker Change: We target high demand growth rate growth markets, ensuring every new site aligns with our mission to serve where where it needed the most.
Thomas Vo: Meanwhile, our mature hospitals are continuing to grow, expanding their offerings to meet evolving demands. On the corporate side, we are laser focused. on increasing hospital volume systems-wide, increasing inpatient admissions to our hospitals, increasing our revenue per patient by implementing efficient revenue cycle processes such as arbitration and mediation, and maintaining low costs as well as aggressive debt management and debt payback.
Speaker Change: Meanwhile, our mature hospitals are continuing to grow expanding their offerings to meet evolving demand.
Speaker Change: On the corporate side, we are laser focus on increasing hospital volume systems wide Inc.
Speaker Change: Increasing inpatient admissions to our hospitals, Inc.
Speaker Change: Increasing our revenue per patient by implementing efficient rubbing through cycle processes, such as arbitration and mediation.
Speaker Change: And maintain low cost as well as aggressive debt management and debt payback.
Thomas Vo: And for those that have been in the healthcare industry for some time, you will know that every five to seven years, there's a major disruption to our industry. That disruption for us came in 2022 with the No Surprises Act. The great news is that we were able to pivot and adapt to the current environment. Our company is designed to operate and continually be adaptable, flexible, and resilient to adjust to any future geopolitical, legislative, or financial challenges. just as we have done for the past 14 years.
Speaker Change: And for those that had been in the health care industry for some time, you'll know that every five to seven years, there's a major disruption to our industry.
Speaker Change: That disruption for us can be 2022 with that no surprises Act.
Speaker Change: The Great news is that we were able to pivot and adapt to the current environment.
Speaker Change: Our company is designed to operate and continually be adaptable flexible and resilient to adjust to any future geopolitical legislative.
Speaker Change: Or financial challenges.
Speaker Change: Just as we have done for the past 14 years.
Thomas Vo: So we are very excited about the future of Nutex as we begin 2025.
Speaker Change: So we are very excited about the future of new tax and so it would be good 2025.
Jon Bates: So with that, I'll pass to Jon Bates, our CFO, to dive further into the financials. Jon? Hey, 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 have begun 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 their results, and then talking 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 31st, 2024, and compare those results to the same period in 2023.
Speaker Change: So with that I'll pass to John Bates, our CFO to dive further into the financials.
Speaker Change: John.
John Bates: Hey, Thanks, Tom and good morning, everyone.
John Bates: I'm very excited to break down the financials for new Techs Health's fourth quarter and full year 2024, a year, where we didn't just grow but we have begun delivering transformative financial performance. Tom is giving you the big picture and I'm going to zoom in on some more detail beginning with the fourth quarter of 2024.
John Bates: And their results and then taking and then talk 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 so.
Jon Bates: So for the fourth quarter of 24, our total revenue grew 270%, or $187.9 million. 257.6 million. versus $69.7 million for the fourth quarter of 2020. 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 in 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 or periods prior to the third quarter of 2024.
So for the fourth quarter of 24, our total revenue grew 270% or $187 9 million.
John Bates: The $257 6 million.
John Bates: Versus $69 7 million for the fourth quarter of 2023.
John Bates: This increase the arbitration process resulted in a $169 7 million more in revenue in the fourth quarter compared to the same period in 2023.
John Bates: Which amounted to approximately 93% of the $187 9 million increase in overall revenue.
John Bates: So all of the $169 7 million of arbitration revenue $68 9 million related to data service for the fourth quarter of 'twenty four.
John Bates: $75 million related to data service for the third quarter of 2024.
John Bates: 33 million related to data servicer periods prior to the third quarter of 2024.
Jon Bates: So of that total revenue increase, mature hospitals, which are hospitals that are open prior to December 31 of 2021, and therefore they provided two full years of comparative results, they increased their revenue by 175.6% for the fourth quarter of 24 versus the fourth quarter of 22. For hospital division visits, we saw growth as well during the quarter as they increased by 9.8% or 4,063 visits to 45,444 visits in the fourth quarter of 24 versus 41,381 visits in the same period in 2023, with the mature hospitals growing at 3.1% in the fourth quarter of 24 versus the fourth quarter of 23.
John Bates: So that total revenue increase mature hospitals, which are hospitals or opened prior to December 31 of 2021.
John Bates: Therefore, they provided two full years of comparative results. They increased their revenue by 175, 6% for the fourth quarter 24 versus the fourth quarter of 23.
John Bates: For Hospital Division visits we saw growth as well during the quarter as they increased by nine 8% or 4063 visits to 45444 visits in the fourth quarter of 24 versus <unk> 41381 visits in the same period in 2023 with the mature hospitals growing at three.
John Bates: Three 1% in the fourth quarter 24 versus the fourth quarter of 'twenty three.
Jon Bates: Additionally, the population health division and revenue increased by just under a million dollars or roughly about 11 percent to 7.9 million in the fourth quarter of 24 from 7.1 million in a similar period in 23. Now we discussed the growth in the hospital revenue visits that we've seen in the fourth quarter of 2024. Now let's discuss the overall facility and corporate costs and the improvement in those areas. So 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 24 versus 81.1% or about $56.5 million for the same period in 23.
Additionally, the population Health Division revenue increased by just under a million dollars of roughly about 11% to $7 9 million in the fourth quarter of 'twenty four from $7 1 million in the similar period in 'twenty three.
John Bates: Now we discussed the growth in the hospital revenue visits that we've seen in the fourth quarter of 24, now, let's discuss the overall facility and corporate costs and the improvement in those areas.
John Bates: So 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 24 versus 81.1% or about $56 5 million for the same period in 'twenty three.
Jon Bates: So of the $59.5 million increase, $57.6 million related to arbitration costs for the additional arbitration revenue booked during the period, with costs 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.
John Bates: So of the $59 5 million increased $57 6 million related to arbitration costs for the additional arbitration revenue booked during the period with costs of approximately 24 million related to the data service in the fourth quarter of 'twenty for another 24 million related to the dates of service for the third quarter of 24.
John Bates: And then just about 9 million related to data service prior to the third quarter of 2024.
Jon Bates: 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 whopping 973% improvement in the fourth quarter of 2024 over 2023. From a corporate and other cost perspective, the general administrative expenses as a percentage of total revenue for the fourth quarter of 24 decreased to 4.9% compared to 12.2% for the fourth quarter of 23. When you look at operating income, which, as you can see, includes a negative impact of $14.7 million of a non-cash stock-based compensation expense, for the fourth quarter that operating income was $114.2 million compared to an operating loss of $26 million in the fourth quarter of 2003, representing a $140 million improvement quarter over quarter.
John Bates: As a result of the revenue and facility cost improvement our 2020 for fourth quarter gross profit was $141 6 million or 55% of total revenue as compared to $13 2 million or just 18 point, 90% of the total revenue and 23.
John Bates: Which is a whopping 973% improvement in the fourth quarter of 'twenty for over 23 from.
John Bates: From a corporate and other cost perspective, the general administrative expenses as a percentage of total revenue for the fourth quarter of 2004 decreased to 4.9% compared to 12, 2% for the fourth quarter of 'twenty three.
John Bates: When you look at operating income, which as you can see includes the negative impact of $14 7 million of noncash stock based compensation expense.
John Bates: For the fourth quarter that operating income was $114 2 million compared to an operating loss of 26 million in the fourth quarter of 23, three representing a $140 million.
John Bates: Improvement quarter over quarter.
Jon Bates: So net income attributable to Nutex Health was 61.7 million for the fourth quarter of 24, again, including that negative impact from the stock comp expense. And the comparative net loss attributed to Nutex $2.3 million improvement, fourth quarter, 24 over the same period in 2020. and route referencing adjusted EBITDA attributable to Nutex, it did increase $90.5 million from $3.1 in the fourth quarter of 2023 to $93.6 million in the fourth quarter of 2024. Now onto the 12 months ended December of 24 compared to the 12 months ended December 31st of 2023. Total revenue for the full year of 24 grew by 93.8%, or $232 million, to $479.9 million versus $247.6 million for the full year of 22.
John Bates: So net income attributable to new Techs health was $61 7 million for the fourth quarter of 24, again, including that negative impact from the stock comp expense.
John Bates: And the comparative net loss attributable to new tax was $31 6 million for the fourth quarter of 23, showing a 93.
John Bates: Point $3 million improvement fourth quarter 24 over the same period in 'twenty three.
And route referencing adjusted EBIDTA attributable both to new tax it did increased $90 5 million from $3. One in the fourth quarter of 'twenty three to $93 6 million in the fourth quarter of 'twenty four.
John Bates: Now on to the 12 months ended December of 'twenty four compared to the 12 months ended December 31 2023.
John Bates: Total revenue for the full year of 24 grew by 93, 8% or 232 million to $479 9 million versus $247 6 million for the full year of 'twenty three.
Jon Bates: 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, 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 the year of 2024 versus the same period in 2025.
John Bates: As mentioned previously the arbitration process resulted in the $169 7 million more in revenue.
John Bates: 24 versus 23, which amounted to approximately 73, 1% of the $232 million of revenue increase.
John Bates: And as mentioned before the $169 7 million arbitration revenue $68 9 million related to data 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 data service for periods prior to the third quarter of 2024.
John Bates: So of the total revenue increase mature hospitals increased their revenue by 56, 6% for the year of 24 versus the same period in 2023.
Jon Bates: Talking about visits, visits increased, as Tom mentioned earlier, by roughly 17 percent or 24,330 visits, up to 168,388 visits in 24 versus 144,058 visits in the same period in 23, with mature hospital visits growing at 6.5 percent in 2024 versus the same period in 23. Additionally, on the population health side, it 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 24 relative to 23.
Tom: Talking about visits visits increase as Tom mentioned earlier by roughly 17% or 24000.
Tom: 330 visits up to 168388 visits and 24 versus 144058 visits in the same period in 'twenty three with mature hospital visits growing at six 5%.
Tom: In 2024 versus the same period in 'twenty three.
Tom: Additionally, in the population health side, it grew by 4.4% to $30 9 million in the first 12 months or 24.
Tom: From $29 6 million in the same period in 2023.
Tom: So in addition to the revenue and visit growth noted above the sodium corporate costs also showed a premium for the 12 months of 24 relative to 23 total facility level operating costs and expenses increased $778 million during the period, but only represented about 59% or $283 million of total revenue.
Jon Bates: 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 of 24 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 costs of approximately $24 million related to the dates of service for the fourth quarter. 24 million related dates of service for the third quarter and then roughly 9 million related dates of service for the third quarter or prior.
Tom: For the 12 months ended December of 'twenty, four versus 86% or $212 million for the same period in 2023, a decrease of 26, 9%.
Tom: So of that $78 million for the period.
Tom: You mentioned 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 or the fourth quarter 'twenty.
Tom: 24 million related to data service for the third quarter, and then roughly 9 million relates to dates of service for the third quarter or prior.
Jon Bates: So the gross profit for the 12 months. 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 very large 464% increase for the 12 months into 2024 for the same period in 2023. From a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the 12 months of 24 decreased 8.7% or $41.9 million from 13.4% or $33.2 million for the same period in 23. Operating income for the 12 months into December of 24 is a positive $130,000.
Tom: 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 'twenty three.
Tom: Very large 464% increase for the 12 months ended 24 for the same period in 2003.
Tom: From a corporate and other cost perspective, the G&A expenses as a percentage of total revenue for the 12 months of 24 decreased eight 7% or $41 9 million from 13, 4% or $33 2 million for the same period in 'twenty three.
Tom: Operating income for the 12 months ended December 24 was a positive 130 <unk>.
Jon Bates: 0.6 million compared to an operating loss of just under $32 million for the 12 months into 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 1000%, from $10.8 million in the first 12 months of 2023 to $123.7 million in the first 12 months of 2024. Now as Tom stated previously, we started the Independent Dispute Resolution Arbitration process in July of 24. 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.
Tom: 6 million compared to an operating loss of just under $32 million for the 12 months ended 23.
Tom: Net income attributable to new tax was $52 2 million for 2024 compared to that loss of 48, $45 8 million for 'twenty, three which was a $98 million positive increase adjusted EBITDA attributable both to new tax increase of $112 million.
Tom: Or just over 1000% from $10 8 million in the first 12 months of 23 to $123 7 million in the first 12 months of 24.
Tom: Now as Tom stated previously we started at the independent dispute resolution arbitration process in July of 'twenty four.
As part of the arbitration process. We first went through the required 30 day 30 business day open negotiation process for each claim that we believe we were paid less and the qualified payment amount on and that Q P. A is defined as the median of the contracted rates the insurance plans recognized for <unk>.
Jon Bates: And that QPA is defined as the median of the contracted rates the insurance plans recognize for. similar services or same or similar services, services provided by a provider in the same or similar specialty, and then services provided in the same geographic area as the service at issue. All of this, of course, is inflation adjusted. So if we're unsuccessful in open negotiations and still believe we were being paid below the QPA, then we entered into the arbitration process. And with the entire process, from entering open negotiations to getting a win in 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 and ultimate payments.
Tom: Similar services or same or similar services.
Tom: This is provided by a provider in the same or similar specialty and then services provided in the same geographic area. As this service at issue. All of this of course is inflation adjusted so if we're unsuccessful in open negotiations and still believe we were being paid below the Q P. A.
Tom: We entered into the arbitration process and.
Tom: And what the entire process from entering open negotiations to getting a win in arbitration to actually getting paid by the payor taking on average at least three to five months, we did not begin to see the wins at ultimate payments.
Jon Bates: from the payers from this effort until the early part of the fourth quarter of 24. So as we finished out the year and the whole 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 on 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.
Tom: From the from the payers from this effort until the early part of the fourth quarter of 'twenty four.
Tom: So as we finished out the year and the whole call. Our close process. We use 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've been submitting claims on 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.
Tom: And we continue to refine our process each period based upon the most recent detail that we have.
Jon Bates: And finally, I'll talk about our balance sheet a little bit. It remains very strong with cash and cash equivalents at December at just under $44 million up from just under $22 million. from 2023, a 98.2% increase. The other sizable increase at the end of the year is the accounts receivable balance, which was at $232 million compared to $58.6 million at the end of 2023. And 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 has increased to $21.9 million for the 12 months ended December of 2024, all the way to $23.2 million as compared to just over $1 million for the same period in 2023.
Tom: And finally, I'll talk about our balance sheet, a little bit it remains very strong with cash and cash equivalents at December and just under 44 million up from just under 22 million.
Tom: From 2023, and 98, 2% increase the other sizable increase at the end of the year is the accounts receivable balance, which was at 232 million compared to $58 6 million at the end of 'twenty three and as discussed previously the major increase for that relates to the arbitration process that we began back in June.
Tom: In July of 2024.
Tom: Regarding cash flow net cash from operating activities increased to 21.9.
Tom: 9 million for the 12 months ended December 24, all the way to $23 2 million as compared to just over 1 million for the same period in 2023.
Jon Bates: 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 of 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. So outside of this normal 40 plus million of bank debt type items, the only other items of material that look like that on the balance sheet are liabilities related to financing and operating lease liabilities. And we talked about this a little bit in the third quarter, I wanted to reemphasize again.
Tom: On the liability side, our total bank.
Tom: And equipment debt decreased by 1 million to 41.4 million down from 42.4 million interest in December 'twenty, three and again with the majority of that debt related to equipment loans that are hospitals for such things as MRI is X rays ultrasound C T machines et cetera.
Tom: So outside of this normal 40 plus million of bank debt type.
Tom: Items, the only other items a materiality it looked like that on the balance sheet or liabilities relating to financing and operating lease liabilities.
Tom: And we talked about this a little bit in the third quarter I wanted to reemphasize again, and so those liabilities are really just future lease payments due to our landlords that are hospital facilities and they reflected on the balance sheet, because the accounting rules require us to aggregate. All these lease payments that we paid to a landlord for the entirety of its lease.
Jon Bates: And so those liabilities are really just future lease payments due to our landlords on our hospital facilities. And they reflect on the balance sheet because the accounting rules require us to aggregate all these lease payments that we pay to a landlord for the entirety of its lease. which might be 15 to 20 years of payments and then present value that back. for each to the inception of that lease and record both a right-of-use asset and, correspondingly, a right-of-use liability on the balance sheet. As a result, on our balance sheet at December 31 of 2024, the net asset balance for the operating and financing of right-of-use assets amounted to $247 million, which is roughly 38% of total assets.
Tom: Which might be 315 to 20 years of payments and then present value that back.
Tom: For each 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.
Tom: As a result on our balance sheet at December 31 of 24, the net asset balance of the operating and financing of right of use assets amounted to $247 million, which is roughly 38% of total assets.
Jon Bates: and the net liability balance for the operating and financing raw use liabilities amounted to just under $300 million, which is 66% of total liabilities. Now most investors and analysts don't view these right of use liabilities as real operating debt, so I just wanted to clarify that for everybody.
Tom: And the net liability balance of the operating and financing Rodriguez liabilities amounted to just under $300 million, which is 66% of total liabilities.
Tom: Most investors and analysts don't view these right to use liabilities as real operating debt. So I just wanted to clear that clarify that for everybody.
Jon Bates: 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 all of our growth plan in 2025 and beyond.
Tom: 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 all of our growth plan in 2025 and beyond.
Warren Hosseinion: Now on to Warren Hosseinion, our President for Population Health Update. 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, a cornerstone of our mission to deliver sustainable, impactful health care. In 2024, we make 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 healthcare model that works for everyone, patients, providers, and communities alike.
Ian: Now onto already seen Ian our president for population health update.
Tom: Warren.
Warren: Thank you John and good morning, everyone. It's great to be with you today to discuss how news new Tech health is advancing population health management.
Warren: A cornerstone of our mission to deliver sustainable impact for health care.
Warren: In 'twenty 'twenty four 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.
Warren: It isn't just about numbers or operation.
Warren: It's about improving patient care, reducing disparities and creating a health care model that works for everyone patients providers and communities alike.
Warren Hosseinion: 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.
Warren: Let's start with where we are today.
Warren: Our population Health Division currently manages over 40000 patients across our platform.
Warren: That's a broad reach and it's growing because of the trust we've built through our independent physician associations or IPA.
Warren: Revenue for the division hit $39 million in 'twenty 'twenty, four up slightly from $29 6 million in 2023.
Warren: That growth might seen modest, but it's intentional we divested two smaller entities that were unprofitable in 'twenty 'twenty four to sharpen our focus on core operations, ensuring every dollar and effort aligns with our long term vision.
Warren Hosseinion: 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're seeing a specialist, getting diagnostics, or managing a chronic illness, it's all coordinated and connected. Our vision is that our hospitals and ITAs 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.
Warren: Our strategy revolves around building physician networks, both primary care physicians and specialists around our hospitals building.
Warren: Building strong partnerships with local doctors is critical these relationships create a web of care that seamless for patients, whether they're seeing a specialist getting diagnostics or managing a chronic illness.
Warren: All coordinated and connected.
Warren: Our vision is that our hospitals and I T A's working hand in hand, amplify our reach and effectiveness.
Warren: We're not just adding doctors we're fostering.
Warren: Collaboration sharing best practices and ensuring every provider is aligned with our patient first culture.
Warren Hosseinion: We're growing our IPA 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 healthcare gaps we can fill and our hospital presence there gives us a head start. This isn't random expansion. It's deliberate building on our strengths to maximize impact. By 2026, these new IPAs will broaden our patient base and deepen our influence on local healthcare delivery.
Warren: We're growing our IPA strategically focusing on areas near our hospitals to leverage existing relationships and infrastructure.
Warren: In 2024, we laid the groundwork for new I P as in Phoenix, Arizona, and Dallas, Texas.
Warren: With one or two more markets in the pipeline.
Speaker Change: Why Phoenix and Dallas Dallas.
Our growing region with health care gaps, we can fill and our hospital presence there gives us a head start this.
Speaker Change: This isn't random expansion, it's deliberate building on our strengths to maximize impact.
Speaker Change: By 2026, these new Ips will broaden our patient base and deepen our influence on local health care delivery.
Warren Hosseinion: Coordinating large physician networks takes effort, aligning incentives, standardizing care, and managing data across systems. There's a lot of competition, and we're 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're 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.
Speaker Change: Coordinating large physician networks takes effort aligning incentives standardizing care and managing data across system.
Speaker Change: There's a lot of competition and were up against bigger players in some markets, but our edge is our integration hospitals in I P. Eight feeding each other.
Speaker Change: Our 'twenty 'twenty four progress 40000 members and $30 9 million in revenues shows we're not just talking the talk in.
Speaker Change: In 2026, we plan to scale this refine it and keep proving that population health management continues to be a vital service for us.
Joshua DeTillio: With that, I'll turn it over to Josh DeTillio, our Chief Operating Officer, to dive into our operation. 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.
Josh: With that I'll turn it over to Josh <unk>, our chief operating officers officer to dive into our operation.
Speaker Change: Josh.
Speaker Change: Thanks Warren.
Speaker Change: As Tom and John mentioned on volume overall Q4 hospital visits were 45444 up nine 8% from last year.
Speaker Change: For the whole year of 'twenty 'twenty four total patient visits were 168388 versus 144058 in 2023 an increase of 16, 9% we've been very intentional about growth in 'twenty 'twenty four with our hospital leadership and business development teams and have added a lot of specialists at our hospitals.
Speaker Change: Take care of more acute patients. The volume numbers also include a shift in service mix and acuity to more observation patients and in patients. This service have just isn't about volume, it's about meeting the community and patient demand to stay at our hospital instead of being transferred when appropriate keeping patients under observation helps avoid unnecessary admissions.
Joshua DeTillio: This service shift just isn't about volume. It's about meeting the community and patient demand to stay at our hospital 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.
Speaker Change: And the meeting them when they meet criteria helps foster a great continuum of care.
Joshua DeTillio: 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's 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.
Speaker Change: Cost management continues to be a very good story for us at new text inflation is it labor and supplies hard across the health care industry. We 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.
Speaker Change: And their experience, it's about delivering excellent care without burning out an exhausting our teams and our model works extremely well.
Speaker Change: In terms of supply chain savings as stated previously we continue to be on target for 2025 with the G. P. O realignment, we completed back in Q3 of 'twenty 'twenty four 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.
Joshua DeTillio: 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.
Speaker Change: On higher volume throughout 'twenty 'twenty, four well I'll also opening four new hospitals.
Speaker Change: And 'twenty 'twenty four 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.
Joshua DeTillio: 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 healthcare promises faster check-ins, predictive staffing, note-writing for doctors and nurses, which can free them up to see more patients, optimized 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're just in the early stages of AI in healthcare and hospitals, but we believe this transition will happen fast, and we want to be an early adopter.
Speaker Change: 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.
Speaker Change: You said, you're an optimized schedule spring resources for patient care and providing further cost savings. We believe we're just in the early stages a day I in health care and hospitals. We believe this transition will happen fast and we want to be an early adopter.
Joshua DeTillio: Lastly, one of our big competitive advantages and differentiators besides our concierge healthcare model is that we are deeply integrated into our communities and markets. In 2024, we've 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 in their family, they pick us because they know and trust that we'll 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 healthcare. As you know, healthcare 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 healthcare.
Speaker Change: Lastly, one of our big competitive advantages and Differentiators. Besides our concierge care model is that we are deeply integrated into our computer into our communities and markets in 'twenty 'twenty four we ramped up outreach and business development, including more health fairs school in clinic collaborations community events and patient education.
Speaker Change: This does this visibility builds trust and relationships when patients have an emergency in their family they pick us because they know and trust 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.
Speaker Change: Why our model in service continued to shape the future of health care.
Joshua DeTillio: Thank you.
Jennifer Rodriguez: Back to you, Jen. Thank you, Josh and team for those updates.
John Bates: Back to you John.
John Bates: Thank you, Josh and teams start up date.
Unknown Executive: I will now turn it over to our operator, Melissa, who will begin the Q&A portion of the call. Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question... You may press star 2 if you'd like to remove your question from For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.
John Bates: I will now turn it over to our operator, Melissa who will begin the Q&A portion of the call.
Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is into question. Kim you May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys one.
John Bates: Moment, please poll for questions.
Bill Sutherland: Our first question comes from the line of Bill Sutherland with The Benchmark Company. Please proceed with your question. Thank you, and good morning, everybody. Great, great work and the year just ended.
Speaker Change: Our first question comes from the line of Bill Sutherland with Benchmark Company. Please proceed with your question.
Bill Sutherland: Thank you and good morning, everybody.
Great Great work could be a year just ended.
Thomas Vo: So I think on top of everyone's minds is trying to think about your perspective about the arbitration process and just trying to get a handle on kind of what is what's a realistic way to think about what you can realize in the coming quarter. Yeah, hi, Bill. This is Tom. Great for you to join us. And thank you. So our philosophy on arbitration and Jon, feel free to chime in. But our philosophy on arbitration is that it is a tool that we can use from the NSA. And the tool allows for us to collect a fair rate.
Bill Sutherland: So I think on top of everyone's mind is trying to think about.
Bill Sutherland: Your.
Bill Sutherland: Secondly, about the arbitration process.
Bill Sutherland: And just trying to get a handle on kind of what is what's a realistic way to think about what you can realize.
Bill Sutherland: In the coming quarters.
Bill Sutherland: Yeah, Hi, Bill this is Tom a great for you to join US and thank you. So our philosophy on arbitration and John feel free to chime in but our philosophy on arbitration is that it is a tool.
Speaker Change: That we can't use from the NSA.
Speaker Change: And the tool allows for us to collect a fair rate and.
Thomas Vo: And really, that is the main reason why we use it. And a fair rate is, as Jon stated, is defined as the QPA, or essentially median in-net-worth. And really, all we want to do is just get to a median in-network, which is basically the right in the middle of where we should get paid. And that's basically it. And so, as long as the No Surprises Act is still in effect, as long as arbitration is within the rules and confines of the NSA, we will continue to use it. And hopefully, long term, the insurance company 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.
Speaker Change: And really that is the main reason why we use it and a fair rate is as John stated is defined as the Q P. A R. Essentially median in network.
Speaker Change: And really all we want to do is just get to a median and network, which is basically the right in the middle of where we should get paid and that's basically it and so as long as there are no surprises that is still in effect as long as arbitration is within the rules and confines of Manassei, we will continue to use it.
Speaker Change: And hopefully long term the insurance company will start paying us better and closer to the two P. A R. The median and at work right. So that we don't have to do arbitration.
Thomas Vo: uh... but it's uh...
Speaker Change: But it's a that's a a it's something that we're going to have to watch it very closely month by month quarter by quarter.
Jon Bates: that's a a something that we can have to watch a very closely month-by-month quarter by quarter Jon, do you have anything else to add? Absolutely. And Bill, great question. What I would say is, and we've talked about this when we were finishing up, say, the third quarter. We were early, early stage in this process, not knowing exactly where we'd land. And as we started to see some of these benefits happen and come through in the latter part of the fourth quarter, we're getting a better picture, at least what's happening currently. But I'll still say, this is very much in the early stages of this process.
Speaker Change: John do you have anything else to add absolutely and bill Great question, what I would say is and we've talked about this when we were finishing up say the third quarter. We were early early stage in this process not knowing exactly where we land.
Speaker Change: And as we started to see some of these benefits happen and come through in the latter part of the fourth quarter, we're getting a better picture at least what's happening currently but all but I'll still say this is very much in the early stages of this process. If you think about it when it takes three to five months or more to get paid on something.
Jon Bates: 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're watching and identifying and trying to determine what the realization will be. And I feel like, certainly, as we finished out the year and the financials you're seeing, we feel pretty confident in what we have in there. But as things progress, just like our business prior to even getting into the arbitration business, we were always... We were always watching and seeing or estimating what we were ultimately going to get paid.
Speaker Change: You have to go through a pretty long process to get there, so we're watching and identifying and trying to determine.
Speaker Change: Determined what the realization will be and I feel like certainly where as we finished out the year and then in the financials, you're seeing we feel pretty confident in what we have in there, but as things progress just like our business prior to even getting into the arbitration.
Speaker Change: Business, we were always.
We were always watching and seeing we're estimating what we ultimately get paid and then when cash came in we would we would adjust accordingly, and I think our our ability to predict was very very good in previous years, because we did have a lot more history and so now we're getting some history and I think now we finished out the year and rolling into the first quarter I think.
Jon Bates: And then when cash came in, we would adjust accordingly. And I think our ability to predict was very, very good in previous years because we did have a lot more history. And so now we're getting some history, and I think now we finished out the year and rolling into the first quarter, I think we'll have even more data as we go through each quarter this year. So we hope that the trend that we have would continue, but there's no guarantee of that. But the good news is that we feel solid about where we're at the end of the year, and we're very bullish on making sure that we're getting paid what would be the qualified payment amount, and we're watching to see if that will happen.
Speaker Change: We'll have even more you know.
Speaker Change: More data as we go through each quarter. This year. So we hope that it will the trend that we have.
Speaker Change: You know would continue but there's no guarantee of that but the good news is though we feel solid about where we were at the end of the year and where we're very bullish on making sure that we're getting paid what would be the qualified payment amount and we're watching to see if that that will happen, but great question.
Jon Bates: But great question.
Jon Bates: So Jon, so just to clarify a little bit more, the file size, if you will, that you have in arbitration is... Was there like a catch up process that occurred or is this, or we should think of it more just an ongoing process. I know you can't talk to whatever success rates will be but just in terms of the claims that you're going to be moving into arbitration, is it going to be at a similar pace? on a go forward basis. Assuming they don't step up and start negotiating more clearly. Yeah, that's a loaded question, a great question.
John Bates: So John So just to just to clarify a little bit more the file size if you will.
Speaker Change: That you have in.
Speaker Change: In the arbitration.
John Bates: Yes.
John Bates: Did you say.
Speaker Change: Like a catch up process that occurred or is this where we should think of it more of just an ongoing process. I know you cant talk to what ever success rates will be or but just in terms of the claims that you're going to be moving into arbitration is it going to be at a similar pace.
John Bates: On a go forward basis.
John Bates: Assuming that they don't step up and start negotiating more fairly.
John Bates: Yeah, It's a very it's a loaded question a great question and I think we'll better understand that in these these next couple of months as well, but we still take the same approach on as we look at visits visit by visit if.
Jon Bates: And I think we'll better understand that in these next couple months as well. But we still take the same approach on, as we look at visits, visit by visit. If we don't believe that we're getting paid, you know, equitably, then we're working through the process and going through what we've described as being the arbitration process in those cases. And we, as we mentioned back, even in the end of the third quarter, and in the press release that we did a month or two ago, that 60 to 70% of the visits, billable visits that we have seems to be in line with what we're consistently so far seeing that can go into this process.
John Bates: If we don't believe that we're getting paid equitably. Then then we're working through the process and then going through what we described as being the arbitration process in those cases, and we as we mentioned back even in the end of the third quarter.
John Bates: And then and there.
John Bates: A press release that we did a month or two ago.
John Bates: And that 60% to 70% of the digits billable visits that we have seems to be in line with what we're consistently so far seeing that that can go into this process. So.
Jon Bates: So. That piece, for now, is pretty consistent as it changes. We would certainly let you know, but I think that's all, that's one of the independent variables, right? Then you also have how many visits come in in general that drive up or down, and then different acuities, et cetera, that come into play. So the answer is, we see it being somewhat consistent at this point, and we'll adjust as necessary.
John Bates: That piece for now is pretty consistent as it changes and we would certainly let you know, but I think that's all that's one of the independent variables. Right. Then you also have how many visits come and in general the.
John Bates: The drive up or down and then different acuity et cetera that come into play. So the answer is we see it being somewhat consistent at this point and we'll adjust as necessary.
Bill Sutherland: Okay, that's good. I'll pass it along. Thanks a lot, guys. Thank you, Bill. Thank you.
Speaker Change: Okay. That's good I'll I'll pass it along thanks, a lot guys.
Bill Sutherland: Thank you Bill.
Speaker Change: Thank you. Our next question comes from the line of Carl Byrnes with Northland Capital markets. Please proceed with your question.
Carl Burns: Our next question comes in line of Carl Burns with Northland Capital Markets. Thanks for the question and congratulations on the quarter in the year. I'm wondering if you can maybe help me out a little bit with the hospital division and how you're currently recognizing revenue at the time of service. And then are you subsequently adjusting it, you know, after the IDR adjudication process is finalized? And then I have a follow up as well.
Carl Byrnes: Thanks for the question and congratulations on the quarter and the year I'm wondering if you can maybe help me out a little bit with the hospital division and how you're currently recognizing revenue at the time of service and then are you subsequently adjusting it.
Carl Byrnes: After the idea our adjudication process is finalized and then I have a follow up as well thanks.
Jon Bates: Sure. Okay. Thank you, Carl. Yeah.
Speaker Change: Sure. Okay. Thank you Karl a question, Yes. John go ahead, yeah, Yeah, Great question, Carl So we absolutely as we as we see visits every visit that comes in just like we did even pre arbitration.
Jon Bates: Jon, go ahead. Yep. Yeah. Great question, Carl. So we absolutely, as we see visits, every visit that comes in, just like we did even pre-arbitration. we would go back and analyze that specific visit and look back at similarities to that visit with adjudicated claims in previous periods and see what average reimbursement would be based on the acuity, the payer, and the location. And so we're continuing that exact same process, even adding this kind of new twist to it with the arbitration piece. And so we're doing our best to guesstimate exactly what will be realizable down the road today with a visit that walks in the door based on its similarities to a similar claim in the past and how it ultimately would get realized.
Carl Byrnes: We would go back and analyze that specific visit and look back its similarities to that visit.
Carl Byrnes: With adjudicated claims in previous periods and see what average reimbursement would be based on the acuity the payer and the location and so we're continuing that exact same process, even adding this.
Carl Byrnes: The new twist to it with the arbitration piece and so where we are doing our best to guesstimate guesstimate exactly what will be realizable down the road today with a visit that walks in the door based on its similarities to a claim similar claim in the past.
Carl Byrnes: And how it ultimately would get realized so as that continues to prove itself out and that continues to feed sort of the engine and the model and so it will adjust up or down based on the realization that happens just takes a little bit of time for that too to prove itself out but so.
Jon Bates: So as that continues to prove itself out and that continues to feed sort of the engine and the model, and so it will adjust up or down based on the realization that happens, just takes a little bit of time for that to prove itself out. So through the end of the year, to answer your question, Carl, so that process was in place and to the best of our data that we had at that point, which is all the information on the wins, losses, et cetera, through the end of December, we were able to go back and say, okay, for every visit that might not necessarily have gotten through the arbitration process if it was going there, but yet we believe it will go there or maybe it's in one stage of that process, we used our, you know, most recent data by location, as I mentioned, by acuity, by payer, and then tried to do our best to estimate exactly what we believe will happen when the ultimate realization of that receivable happens, whether it's a month, two months, or three months down the road.
Carl Byrnes: At the end of the year to answer your question falls, so that process is in place and to the best of our data that we had at that point, which is all the all the information on the wins losses et cetera through the end of December we were able to go back and say okay. For every visit that might not necessarily have gotten through the arbitration process. If it was going there.
Carl Byrnes: But yet we believe it will go there or maybe it's in one stage of that process.
Carl Byrnes: We used our most recent data by location as I mentioned by acuity.
Bye.
Carl Byrnes: Fair and and then tried to do our best estimate exactly what we believe will happen when the ultimate realization of that receivable.
Carl Byrnes: It happens, whether it's a month two months or three months down the road.
Jon Bates: Got it. That's very helpful. And then just sort of on that line, just as a follow up, you had adjusted EBITDA in the fourth quarter of, let's just call it 94 million, I think it was 93.7. And for the year, it was 123.7. So it was very loaded in the fourth quarter. How much of that would be attributable to IDR adjudication? Awards, or to kind of phrase it differently, how might we look at what would a normalized adjusted EBITDA number? potentially be or look like? Thanks. Yeah, so I know we described and I talked about it in my prepared comments talking to you a little bit about how the revenue side of things played out.
Carl Byrnes: Got it that's very helpful. And then just sort of on that line.
Carl Byrnes: Just as a follow up you had adjusted EBITDA in the fourth quarter or let's just call. It 94 million I think it was $93 seven and for the year. It was $123 seven so it's very loaded in the fourth quarter.
Speaker Change: How much of that would be attributable to I E are you know adjudication.
Carl Byrnes:
Speaker Change: Awards or.
Speaker Change: Just to kind of phrase it differently how might we look at what would a normalized suggested EBITDA number.
Speaker Change: Potentially be or look like yet.
Speaker Change: So I I know, we described that I talked about it in my prepared comments talking to you a little bit about how the revenue side of things played out and I would I would say that our best.
Jon Bates: And I would I would say that our best situation right now that we would anticipate that it would follow a similar trajectory. So you have even of that arbitration revenue that we recorded in the fourth quarter, and I provided how, from a data service perspective, it related back to third quarter. It's really most of it was third and fourth quarter, and there was some that was prior to that period. So I think on a similar percentage basis, if I were projecting, which I'm not yet, but that would be where I would see it. I don't have any other data that tells me differently, but I think based on that trending, that would be where you would see the adjusted EBITDA, whether it's for the year of next year or whether it's quarter by quarter.
Speaker Change: Scenario or best situation right now that we would anticipate that it would that would follow a similar trajectory. So you have even of that arbitration revenue that we recorded in the fourth quarter and have provided how from a data service perspective, it related back to the third quarter is really most of it was third and fourth quarter and there was.
Speaker Change: Some that was prior to that period. So I think on a similar percentage basis, I would if I were projecting which which I'm not yet but that would be where I would see it I don't have any other.
Speaker Change: The other data that tells me differently, but I think based on that trending that would be where you would see the adjusted EBITDA, whether it's for the year of next year or whether it's quarter by quarter.
Carl Burns: Got it. Thanks. I'll jump back in the queue.
Speaker Change: Got it thanks, I'll jump back in the queue.
Speaker Change: Thanks, Paul.
Anthony Vendetti: Our next question comes from the line of Anthony Vendetti with Maxim Group. Thank you. I just have a couple questions.
Speaker Change: Our next question comes from the line of.
Speaker Change: Anthony Vendetti with Maxim Group. Please proceed with your question.
Speaker Change: Thank you.
Speaker Change: A couple of questions just one one more on the idea are and then.
Anthony Vendetti: Just one one more on the IDR and then a couple on the hospitals. So This independent dispute resolution, this amount was all accounted for here in the fourth quarter. Do you expect it to be, as you roll through this process in 2025, do you expect it to be spread more over the quarters, or is it likely that you do this kind of... Calculation at the end of the year when you do the full year audit and it's likely to be a fourth quarter event again.
Speaker Change: A couple on the hospitals.
Speaker Change: So.
Speaker Change: This this independent dispute resolution. This amount was all accounted for here in the fourth quarter do you expect.
Speaker Change: It could be as you roll through this process and 25 do you expect it to be spread more over the quarters or is.
Speaker Change: Is it is it likely that you do this kind of.
Speaker Change: Calculation at the end of the year when you do the full year audited and it's likely to be a fourth quarter event again.
Jon Bates: Anthony, great question. And it's not a backloaded scenario. Of course, it is in 2024 only based on the data that we had and the timing that we were able to work through it. So now as we get better and get more data, so now we're working that into the models every single month. So our intent is we're doing that every single month, first quarter, second quarter, third quarter. So it's not gonna be necessarily at all in a backloading scenario in 2025, excuse me, yeah, 2025. It'll be progressively updated throughout the year based on data that we have, just like we had really started to accumulate at the end of the fourth quarter, so.
Speaker Change: Anthony Great question and it is what it is not a back loaded scenario of course. It is in 2024 only based on the data that we had in the timing that we were able to work through it. So now as we get better and get more data. So now where we're working that into the model is every single month.
Speaker Change: So our our intent is we're doing that every single month first quarter second quarter third quarter. So it's not gonna be necessarily at all and are back loading scenario in 2025 excuse me add to that is when he thought it'll be progressively updated throughout the year based on data that we have just like we had.
Speaker Change: Really started to accumulate at the end of the fourth quarter. So.
Anthony Vendetti: Okay, great. That's helpful. Thanks, Jon.
Speaker Change: Okay great.
Speaker Change: That's helpful. Yeah. Thanks, John.
Anthony Vendetti: And then just on the hospital, so you opened four in 2024. Can you talk about how that is ramping up? I know some of them haven't hit the mature date in terms of gauging that, but can you talk about how patient volume is ramping in those hospitals? Is it fairly evenly? Is one hospital doing much better than the others? Can you talk about how that's playing out so far?
Speaker Change: And then just on the hospital you opened four in.
Speaker Change: 2024.
Speaker Change: Can you talk about how that how that is ramping up.
I know some of them arent they haven't hit the mature date in terms of gauging that but can you talk about how patient volume is ramping in in those hospitals is it is it fairly evenly just one hospital doing much better than the others can you talk about how that's playing out so far.
Thomas Vo: Yeah, hi, Anthony, this is Tom. So yes, absolutely. So the four hospitals that we opened up were in Green Bay, Wisconsin, Milwaukee, Wisconsin, Tampa, Florida, and Post Falls, Idaho. And, and as you know, medicines local, every facility is slightly different. But I would say that two of those hospitals are performing up to par and even better than expected. And then the other two are a little bit newer, like for example, Tampa opened late December. So we so we don't have a lot of data on that yet. But I would say half of them are performing better than than expected.
Speaker Change: Yeah, Hi, Anthony this is Tom so yes, absolutely. So the four hospitals that we open up we're in Green Bay, Wisconsin, Milwaukee, Wisconsin.
Speaker Change: Tampa, Florida, and our post falls, Idaho, and a and as you know medicines local every facility is slightly different but I would say that the two of those hospitals are performing up to par and even better than expected and then the other two are a little bit newer like for example.
Speaker Change: Tampa opened late December so we've got so we don't have a lot of data on that yet, but I would say half of them are performing better than expected and the other two are performing as expected.
Anthony Vendetti: And the other two are performing as expected. Okay, great.
Speaker Change: Okay, Great and then.
Thomas Vo: And then, um, can you provide a little more color at this point on the, the planned openings in in 25? You know, as we roll through this year? What's the schedule look like for the plan 25? Yeah, so we have three hospitals that are currently under development and they're under construction as we speak. And all three of them are scheduled to be open either third quarter or fourth quarter of this year, assuming that construction and everything else goes well. and then 2026 we have probably four more after that and then 2027 I think we have a couple more and then we're already working on hospital pipelines for 2028.
Speaker Change: Can you provide.
Speaker Change: A little more color at this point on the the planned openings in 'twenty five.
Speaker Change: As we roll through this year, what's the schedule look like for the planned 25 openings.
Speaker Change: Yeah. So we have a three hospitals that are currently under development and they are under construction as we speak.
Speaker Change: And all three of them are scheduled to be open either third quarter or fourth quarter of this year.
Speaker Change: Assuming that construction and everything else goes well.
Speaker Change: Okay, and then 'twenty 'twenty six we have are probably far more after that and then 27 I think we have a couple more and then we're already working on a hospital pipeline for 2028.
Thomas Vo: Okay, excellent.
Speaker Change: Okay excellent and then just just in terms of the mature hospitals.
Thomas Vo: And then just in terms of the mature hospitals in your portfolio, I know it's hard to gauge, but what is your expectation based on trends you're seeing for growth? Is it mid single digits? Do you think you can outperform that? Because I know the larger hospitals, they're lucky to get, you know, they're lucky to get low single digits, you know, depending on what they're what they're doing, or if they're changing specialty, sometimes they can increase that. But what are you seeing? And what's your expectations for your mature hospitals? Yeah, so great question. And I'll answer and then Josh, maybe could chime in also.
Speaker Change: In your portfolio I know, it's hard to gauge, but you know what what is your expectation.
Speaker Change: Based on trends you're seeing for for growth is it is it you know mid single digits.
Speaker Change: Do you think you can outperform that because I know the larger hospitals they were lucky to get.
Speaker Change: They're lucky to get low single digits.
Speaker Change: And depending on what their what they are doing or if they're changing specialty sometimes they can increase that but what are you. What are you seeing and what your expectations for your mature hospitals.
Speaker Change: Yeah. So great question and I'll answer and then Josh maybe you could chime in also saw so we're shooting for also single digits in our ER volume growth year over year, which I think is is doable and achievable Ah. However on top of that we're not just trying to get single digit E. Our volume we're also growing our other.
Thomas Vo: So we're shooting for also single digits in our AR volume growth year over year, which I think is doable and achievable. However, on top of that, we're not just trying to get single digit AR volume. We're also growing our other service lines. So for example, we're actually ramping up our specialists. We're ramping up our hospitalists so that we could admit more patients to our hospitals. So the idea of using all four walls of the hospital in order to bring as much patients through the ER and then after that do as much observation as we can and increase inpatient as much as we can.
Speaker Change: Surface mines. So for example, we're actually ramping up our specialists, we're wrapping up our hospitalist, so that we could admit more patients to our hospitals. So the idea of using all four walls of the hospital in order to Ah Ah Ah Ah, bringing so much patient through the ER and then after that do us much observation as we can and.
Speaker Change: Increased inpatient as much as we can and the only way to do that is to increase staffing and expertise. So that you could treat more people and more variety of illnesses.
Joshua DeTillio: And the only way to do that is to increase staffing and expertise so that you could treat more people and more variety of illnesses. Josh, do you have anything else to add to that? No, Tom, that was very, very well said. Increasing mature hospitals, ER visits, but then also the service mix is changing as well, so we're expecting a great year. Okay, and then, sure, go ahead, Tom. I'm sorry, I was gonna say one more thing that is very unique to us is that since we're small, we're able to pivot to a lot of different needs.
Speaker Change: Josh do you have anything else to add to that.
Josh: No Tom that was very very well said, increasing mature household ER visits, but then also the service mix is changing as well so we're expecting a great year.
Speaker Change: Yeah.
Speaker Change: Okay and then.
Speaker Change: Sure.
Speaker Change: Oh, I'm, sorry, I was going to say one more thing that is very unique to us is that is that since we're small we're able to pivot to a lot of different needs and so what we do is we find what the community needs and we try to pivot to solve that need and so and so that's the beauty of having a hospital has pretty much all of the functions of a particular.
Thomas Vo: And so what we do is we find what the community needs, and we try to pivot to solve that need. And so that's the beauty of having a hospital that has pretty much all the functions of a regular hospital. So I just wanna say that. And so every market is slightly different. And so we're sort of like tailor the need of that market for our hospital.
Speaker Change: So I just wanted to say that and so every every.
Speaker Change: Market is slightly different and so we're sort of like Taylor.
Speaker Change: The needs of that market for a hospital.
Thomas Vo: Okay, and Tom, you touched on an important point, right, which is for hospitals, hiring not just ER physicians, but, but hospitalists or intensivists that that that that can continue to see the patients and continue to treat the patients once they are in your setting. Are those particular specialists hard to come by? And do you have an executive recruiter or someone that helps to staff your hospitals? The answer is yes and no. So by that what I mean is going back to the medicine is local kind of concept, a lot of the time the specialists actually come to us because they are somehow either dissatisfied with their local hospital or they don't want to admit their patients to the local hospitals and so they admit their patients to us and we take care of them, right?
Speaker Change: Okay, and Tom you touched on an important point right, which is.
Speaker Change: For hospitals hiring not just ER physicians, but but hospitalists intensivists debt that debt.
Speaker Change: You know that that can continue to see the patient and continue to treat the patients once they're in you're setting are those are those particular specialist hard to come by and do you have a an executive recruiter or someone that helps to staff your hospitals.
Speaker Change: The answers are yes and no.
Speaker Change: So so by that what I mean, as you know going back to the medicine medicine. Its local kind of concept a lot of the time the specialists actually come to us because they are somehow either dissatisfied with their local hospital or or are they don't want to admit their patients to the local hospitals and so they had met their patients to us.
Speaker Change: And we take care of them right. So that's one and then in terms of using a a recruiter or some type of we are we have we do have an in house recruiting team. However.
Thomas Vo: So that's one. And then in terms of using a recruiter of some type, we do have an in-house recruiting team. However, the best way that we get specialists are through personal relationship with our local physicians. And so our local physicians are all sort of like superstars of the communities that they live in. And so they tend to know pretty much everybody in terms of the healthcare dynamics. And so through those relationships, we get a lot of specialists that want to send their patients to our hospital. That's great.
Speaker Change: The best way that we do we get specialists are through personal our relationship with our local physicians and so and so our local physicians are all sort of like superstars of the communities that they live in and so they they tend to know pretty much everybody in terms of the health care.
Speaker Change: Dynamics and so through those relationships, we get a lot of specialist that want to send their patients to our hospital.
Thomas Vo: And then just lastly, I'm going to switch back for the last question to the IDR. So you've been, you know, in your commentary, you said you've been submitting about 60 to 70% of your claims to the IDR process, and your win rate's about 80%. As you've demonstrated to these insurance companies that, you know, you're willing to A, go through this process, and your win rate's been so high, have the insurance companies come back and said, okay, you know what, going forward, we're going to start reimbursing. So we don't have to, we don't have to go through this process.
That's great.
Speaker Change: And then just lastly, I'm going to switch back for the last question to the idea or so you've been.
Speaker Change: And in your commentary you said, you've been submitting about 60% to 70%.
Speaker Change: Your claims to the idea of our process and your win rates about 80%.
Speaker Change: As you demonstrated to these insurance companies that you're willing to go through this process and your win rate has been so high had the insurers have the insurance companies come back and said, Okay. You know what.
Going forward, we're going to start reimbursing. So we don't have to we don't have to go through this process are you expecting in 'twenty five for it to be similar in that you're still expecting to submit about 60 or 70% of your claims to the idea of a process.
Thomas Vo: Or are you expecting in 25, for it to be similar in that you're still expecting to submit about 60 or 70% of your claims to the IDR process? Yeah, I think the answer is that if the insurance company pay better up front and pay close to the QPA or the median net worth, then we don't have to submit anything to the arbitration process. And by the way, the arbitration process was designed as sort of like the last ditch effort so that the providers like us could use it to get a fair payment. It wasn't designed to be the first form of payment, if that makes sense.
Speaker Change: Yeah, I think the answer is that is that if the insurance company pay better upfront and pay close to the Q P. A R. R. R. The meeting and then we don't have to submit anything to the arbitration process and by the way the arbitration process with design as sort of like the last ditch effort.
Speaker Change: So that the providers like us could use it to get a fairly I mean, it wasn't designed to be the first form of a payment if that makes sense.
Thomas Vo: But unfortunately, because of the way that this whole thing came about with a low payment up front, we have to use it as a last ditch effort. But if the insurance company starts to pay better the first time or in the beginning, then we wouldn't have to go through it. And so I think that in time, and we'll see how this whole process works, I think in time the insurance company will come around and start to pay a little bit better because if they lose 80% of the time, then that means that the expenses associated with the arbitrator is also borne by the insurance company or by the loser, right, unfortunately.
Speaker Change: But unfortunately because of the way that that this whole thing came about with a low payment upfront we have to use it as a last ditch effort, but if they start companies start to pay back. The first time are in beginning that then we wouldn't have to go through it and so I think that in time and we'll see how this whole process works I think in terms of the insurance company will come around.
Speaker Change: And and I start to pay a little bit better because if they lose 80% of the time that that means that the expenses associated with the arbitrator is.
Speaker Change: He's also borne by the insurance company.
John Bates: Or by the loser right. Unfortunately, and so I think that may be an incentive for them to come around but I will say I mean, I think that this is very new like John said and there's a lot of there's a lot of Oh thinks that that is uncertain at this point.
Thomas Vo: And so I think that may be an incentive for them to come around. But we'll see. I mean, I think that this is very new, like John said, and there's a lot of things that is uncertain at this point. Understood.
Speaker Change: Understood that that was great color. Thanks, so much for all the information I appreciate it and I'll hop back in the queue.
Gene Manheimer: Hey, that was great caller. Thanks so much for all the information. Appreciate it. And I'll hop back in the queue. Thank you, Anthony. Thank you.
Speaker Change: Thank you ma'am.
Speaker Change: Thank you. Our next question comes from the line of Jin Manheimer with Freedom capital markets. Please proceed with your question.
Gene Manheimer: Our next question comes from the line of Gene Manheimer with Freedom Capital Markets. Thanks and good morning, everybody. Congratulations on the above average quarter. Nicely done. Thank you, Gene. Yeah, you're welcome.
Jin Manheimer: Hey, thanks.
Speaker Change: Good morning, everybody congratulations on the above average quarter nicely done.
Jin Manheimer: Hey, following.
Jin Manheimer: <unk>.
Jin Manheimer: Yeah Youre welcome.
Thomas Vo: Following up on Anthony's line of questioning, it sounds like then, Tom, you're going to get you're going to collect the money one way or the other, right, either through dispute, or through a blanket increase in reimbursement. So we shouldn't be viewing the dispute process as a. Extraordinary or one time event, but it'll it'll be in the course of business going forward. Yeah, that's right. So so the way to think about this is that and you know, I think Jon spoke about this is that the increase in the revenue for the fourth quarter was actually spanned over the third and fourth quarter.
Speaker Change: Following up on Anthony's line of questioning it sounds like then Tom you were going to get you're going to collect the money one way or the other right either through dispute or through a well.
Jin Manheimer: Blanket increase in reimbursement.
So we shouldn't be viewing the dispute process is.
Jin Manheimer: Extra ordinary or one time event, but it'll it'll be in the course of business going forward.
Jin Manheimer: Yeah, that's right. So so the way to think about this is that and you know I think John spoke about this is that the increase in the revenue for the fourth quarter was actually span over the third and fourth quarter.
Thomas Vo: when we started doing the arbitration. And so, and I'm just going to put in a very layman's term is that we couldn't report in the third quarter because the arbitration process was not completed yet. And so, we didn't know how much we were going to win. So, the 80% win, that was all that was in the fourth quarter. And so, once we saw that, then Jon obviously reported that in the fourth quarter, right? So, and so, and so, the other way to think about it is that that revenue, that is revenue that we should have gotten from day one, had the insurance company pay a fair rate.
Jin Manheimer: When we started doing the arbitration and so and I'm just going to put in a very layman's term is that is that we couldnt. We can report in the third quarter because the arbitration process was not completed yet and so we didn't know how much we weren't going to win so so the 80% win that was all of that was in the fourth quarter.
Jin Manheimer: And so once we saw that then John obviously reported that in the fourth quarter right, So and so and so the other way to think about it is that that revenue.
Jin Manheimer: That is revenue that we should have gotten from day one.
Jin Manheimer: The insurance company to pay a fair rate and so that revenue in our opinion should be the Q P. A.
Thomas Vo: And so, that revenue, in our opinion, should be the QPA. because we went through a very expensive formal binding process where you have two sides arguing using the letter of the law according to the NSA, and so we feel confident that that final payment is probably as close to the QPA as we think it should be. So going forward, to Jon's point, we are still going to continue to evaluate each patient and determine whether or not the payment is, we think it's fair according to market value, and if it is fair, then we accept it.
Jin Manheimer: Because we went through a very expensive formal binding process, where you have two sites are alike.
Jin Manheimer: Arguing using the letter of the law. According Savannah say and so we feel confident that that final payment is probably as close to the Q P. A as we think it should be right so going forward.
Jin Manheimer: To Johns point, we are still kind of continue to evaluate each patient and determine whether or not the payment is we think is fair. According to market value and if it is fair that we accept it if it is not fair then we'd run it through the queue first starting with open negotiation.
Thomas Vo: If it is not fair, then we run it through the queue, first starting with open negotiation, and then if that doesn't work, then put it through the arbitration. But once again, as I mentioned, arbitration is not cheap. It's not free. It's very expensive, time-consuming, lots of stress on our team to do it, but unfortunately if we have to do it, we're going to have to do it. Yep, yep. No, that all makes sense, Tom.
Jin Manheimer: And then if.
Jin Manheimer: If that doesn't work then put them through the arbitration, but once again as I mentioned arbitration is not cheap it's not free it's very expensive.
Jin Manheimer: Time consuming.
Lots of a stress on our team to do it but.
Jin Manheimer: Unfortunately, we have to do it we're going to have to do it.
Jin Manheimer: Yep Yep.
Tom: That all makes sense, Tom So I mean as John pointed out.
Jon Bates: So I mean, as Jon pointed out, you recognize 70 million or 69 million from dates of service in Q4, 70 million in Q3. So is that kind of the ballpark number to think about going forward, or could there be a lot of variation around that number?
Jin Manheimer: Recognized.
Jin Manheimer: 70 million or $69 million from dates of service in Q4 of 70 million in Q3.
Jin Manheimer: So is that kind of the ballpark number to think about.
Jin Manheimer: Going forward or could it could there be a lot of variation around that number.
John Bates: John you want to tackle that I can speak to that I mean, I mean, you know as well as I do that there is always going to be variation is in its early stages. It is.
Jon Bates: I can speak to that. I mean, you know as well as I do that there's always going to be variation in this, in as early stages as it is. We do not know how it will translate into first or second quarter and beyond, but it's starting to show a trend. That's what I would say. And we're trying to look at it, and certainly we're doing the calcs, the behind the scenes. and __________. prove this out. But I mean, the trend that we saw, as I described, you know, the dates of service that those those wins did relate to is starting to show kind of a trend, whether that will be up or down going forward.
John Bates: We do not know what Palo will translate into first or second quarter and beyond but it's starting to show.
John Bates: That's what I would say and we're trying to look at it and certainly we're doing the couch the behind the scenes.
John Bates: To come up with what the estimate should be now a month by month by month as we really were able to kind of go through the process at the end of the year based on all the data we had at that point well now we have data in January and February and we'll have something in larger shortly so all of that will start to improve.
John Bates: Prove this out but I mean, the trend that we saw as I described.
John Bates: The data service that those those wins did relate to is starting to show kind of a trend whether that will be up or down going forward I can't I cannot commit to that of course, but I think it's starting to give us a pattern of what we should expect.
Jon Bates: I can't I can't commit to that, of course. But I think it's starting to give us a pattern of what we should expect. Okay, that's fair, Jon.
Speaker Change: Okay, No that's fair John and just two more from me. So there there was 30 million of dispute related revenue for dates of service prior to Q3, how far back does that go.
Jon Bates: And just two more from me. So there was $30 million of dispute-related revenue for dates of service prior to Q3. How far back does that go? Was most of it in Q2? Most of that is Q2. But there are, just to remind everybody, the process started in July, but you can't go into the open negotiations arbitration process until you get the first payment from the insurance provider. Don Morgan here at 512-277-4251. on some of these claims to get that first payment. And you can't start the process until then, but predominantly third and fourth quarter, then you have a little trickle into the second quarter.
Speaker Change: It was most of that is is Q2.
Speaker Change: But there are just to remind everybody. The process started in July but you don't you can't go into the open negotiations arbitration process until you get the first payment from the insurance provider.
Speaker Change: In this case. So you have some that were of course second quarter as well you even have a couple that were.
Speaker Change: Even in the early part of last year, one or two a very small piece of money being been toward 2023, because it takes sometimes three or four or five months.
Speaker Change: And some of these claims to get that first payment and you can't start that process until then but predominantly third and fourth quarter. Then you have a little trickle into the second quarter.
Jon Bates: Much past that, it's pretty small into the first quarter of last year and even prior to that. Okay. Predominantly third and fourth. Got it. Thank you.
Speaker Change: Much past that it's pretty small into the first quarter of last year and even prior to that so it's.
Speaker Change: Predominantly third and fourth quarter.
Speaker Change: Got it thank you and lastly.
Jon Bates: And lastly, these claims that you're disputing, do they tend to be specific to certain payers? Or are they across the board? Yeah, great question. It's not a specific payer. It's pretty across the board. And it's not – we're really payer agnostic from that respect. It's more about what we believe to be the equitable QPA type payment. And it just so happens if it happens to be one payer in one location or another, it honestly does not matter. And we're seeing it sort of across the board. There are some that pay a little bit better and a little bit more up front.
Speaker Change: These claims that should this.
Speaker Change: Disputing do they tend to be specific to certain payers or are they across the board.
Speaker Change: Yeah, Great question, there's not a specific payer, it's it's pretty across the board and it's not we're really payer agnostic from that respect it's more about what we believe to be the the equitable Q P. A type payment and then just so happens if it happens to be one payer in one location.
Speaker Change: Or another.
Speaker Change: Honestly it does not matter and we're seeing it sort of across the board. There are some that pay a little bit better and a little bit more upfront, but generally it's more of a pervasive situation than it is specific to one payer in one location.
Jon Bates: But generally, it's more of a pervasive situation than it is specific to one payer in one location. Very good. All right. Thanks. And congrats again. Thank you.
Speaker Change: Very good alright, thanks, and congrats again.
Speaker Change: Thank you.
Speaker Change: Thank you. Our next question is from the line of Carl Byrnes with Northland Capital markets. Please proceed with your question.
Carl Burns: Our next question is a follow-up from the line of Karl Burns with Northland Capital Markets. Please proceed with your question. Thanks for the follow up. You've obviously had, you're experiencing great success with increasing revenue on a per visit basis, you know, driven by acuity and specialists and hospitals and such.
Carl Byrnes: Thanks for the follow up you've obviously had you're experiencing great success with our increasing revenue on a per visit basis.
Speaker Change: You know driven by acuity and specialists and hospitals and such I'm.
Thomas Vo: I'm wondering if you you might be able to kind of quantify that in terms of a percent in year over year increase on a normalized basis. Thanks. Let me make sure I understand your question. Step back in if you don't mind. So you're talking about year-over-year basis. Are we talking about the arbitration component? relative to the non-arbitration component? What is your question again? No, I'm just, I'm wondering if you're able to look at, you know, the revenue per visit on a normalized basis and quantify that at all in terms of what you've been able to achieve in terms of increased acuity that would drive revenue per visit.
Speaker Change: Wondering if you might be able to kind of quantify that in terms of a percent.
Speaker Change: Year over year increase on a normalized basis. Thanks.
Speaker Change: Let me make sure I understand your question.
Speaker Change: Step back and if you don't mind, so you're talking about year over year basis are we talking about the arbitration component.
Speaker Change: Relative to the non arbitration component what is your question again.
Speaker Change: No I'm just I'm wondering if you're able to look at the revenue per visit.
Speaker Change: On a normalized basis and you can quantify that at all in terms of what you've been able to achieve.
Speaker Change: Terms of the increased acuity drive revenue per visit forgetting about it I'm just trying to look at a normalized basis because that's one of your initiatives is to you know drive acuity and.
Jon Bates: Forgetting about, I'm just trying to look at it on a normalized basis because that's one of your initiatives is to drive acuity and, you know, you know, various procedures that are high dollar Okay, well, I don't know that I can speak specifically to a number that it's going to be as you move forward, but I mean, you can, you can see. within the financials that's presented kind of that progression of you're asking about revenue per visit. So I know it's a little backloaded into the fourth quarter, but if you look at it compared to, say, 23, or revenue per visit.
Speaker Change: Okay.
Speaker Change: You know various procedures that are high dollar value.
Speaker Change: Okay, well I don't know that I can speak specifically to a number that is going to be as you move forward, but I mean, you can you can see.
Speaker Change: Within.
Speaker Change: The the financials as presented kind of that progression of you're asking about revenue per visit.
Speaker Change: So I know, it's a little back loaded into the into the fourth quarter, but if you look at it compared to say 'twenty three our revenue per visit.
Jon Bates: I think if you saw in the K that we filed at the end of last year was over $1,500, just maybe $1,514 a visit. And then if you go forward into, say, for the full year of 24 under this scenario, it's a little under, it's around $2,600 or so. And I think you have still a muddied picture of what you're looking at when it comes in there. So I think as you look forward, it's going to be somewhere in between those numbers is how we look at it at this point. We don't know exactly where that will be.
Speaker Change: I think if you saw that in the K that we filed at the end of last year was over $500 maybe 500.
Speaker Change: $1514 a visit and then if you go forward.
To say for the full year of 24 under this scenario, it's a little under around 2600, or so and I think you have.
Speaker Change: Still a muddied picture of what Youre looking at when it comes in there. So I think as you look as you look forward, it's going to be somewhere in between those numbers is my is how we look at it at this point, we don't know exactly where that will be but it's somewhere between where you would see for the full year 'twenty four and four year of.
Carl Burns: But it's somewhere between where you would see for the full year of 24 and full year of 23 with, of course, arbitration starting mid-year of 24. Got it. Thanks. Congratulations again. Yeah, thank you. Great question. Thank you.
Speaker Change: <unk> 23, with a course arbitration starting mid year of 'twenty four.
Speaker Change: Got it thanks, congratulations again.
Speaker Change: Yeah. Thank you great question.
Speaker Change: Yeah.
Jennifer Rodriguez: 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 Thank you all for those valuable questions and answers. For all those joining us today, if you have more questions, please email us at investors at nutexhealth.com, and we'll get back to you promptly.
Speaker Change: Thank you, 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.
Speaker Change: Thank you all for that type of questions and answers.
Speaker Change: Joining us today, if you have more questions. Please email us at <unk>.
Speaker Change: <unk> at <unk> Dot Com and we'll get back to you promptly.
Jennifer Rodriguez: 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, strategies, challenges, and our vision, and we appreciate your time and attention. A recording of this call will be available on our website for a limited time, so feel free to revisit it. Take care, everyone, and we look forward to keeping you updated on our. Thank you.
Speaker Change: On behalf of the new tax management team. Thank you all for joining us for our fourth quarter and full year 2024 earnings call.
Speaker Change: Heard a lot growth strategy talented and our vision and we appreciate your time and interest.
Speaker Change: This call will be available on our website for a limited time, so feel free to read this but you can't take care, everyone and we look forward to keeping you updated on our journey.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.
Unknown Executive: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.