Executive Summary

Revenue and earnings materially outperformed: total revenue $211.8M (+213.8% YoY) and diluted EPS $2.56 vs $(0.08) in Q1’24, driven primarily by sustained wins and collections in No Surprises Act (NSA) Independent Dispute Resolution (IDR) arbitration; adjusted EBITDA rose to $72.8M from $(0.4)M YoY .
Versus S&P Global consensus, revenue beat by ~$77.5M (Consensus: $134.2M*, Actual: $211.8M) and EPS exceeded the Primary EPS consensus ($1.62* vs S&P “Primary EPS” actual $1.7757*; company-reported diluted EPS $2.56 indicates a likely beat though methodologies differ)*. Expect estimate revisions higher, but note metric definitional differences [Values retrieved from S&P Global].
Arbitration accounted for ~$105M YoY uplift in recognized revenue (of which ~$60M related to Q1’25 dates of service), reinforcing improved reimbursement levels; management still cautions Q1 may not be steady-state as timing and payer behaviors normalize .
Key catalysts: continued IDR throughput and 80%+ win rates, AR collections cadence (~120 days blended), and 3 new Texas hospitals slated for 2H’25; risks include regulatory changes to NSA/IDR and potential payer behavior shifts .

What Went Well and What Went Wrong

What Went Well

Sustained acceleration in reimbursement and margins: gross profit $118.3M (55.9% of revenue), operating income $72.2M, and net income attributable to Nutex $14.6M; adjusted EBITDA $72.8M with finance lease payment disclosure added for transparency .
Arbitration success scaled: ~60–70% of billable visits submitted, >80% win rate; ~$105M YoY revenue uplift in Q1 with $60M tied to Q1 dates of service—supporting higher revenue per visit versus initial insurer payments .
Management tone confident on growth vectors: 3 new hospitals planned in Texas for 2H’25; focus on inpatient/observation mix and continued cost discipline; AI initiatives to enhance staffing, documentation, and coding productivity .

Quotes:

“We are excited to provide yet another solid quarter with $14.6 million in net income… and a record high $51.0 million in net cash from operating activities” — CFO Jon Bates .
“We will continue optimizing operations and maintaining a lean cost structure to support sustained growth” — COO Josh DeTillio .
“We are now seeing more consistent financial results… with more fair and reasonable payments from the arbitration process” — CEO Tom Vo .

What Went Wrong

Earnings quality sensitivities: non-cash stock-based compensation of $36.1M tied to under-construction/ramping hospitals weighed on GAAP metrics (one-time obligations; three remaining earn-outs to complete by early Q3’25) .
Collections timing/normalization: AR build and blended ~120-day cash conversion as IDR-related cash comes later; management emphasized Q1 may not be steady state yet .
Regulatory/IDR process risk: favorable outcomes today, but future changes to NSA/IDR or payer responses could slow recoveries; company explicitly caveats outlook given evolving rules and IDRE capacity .

Financial Results

Headline P&L and Margins (USD Millions, except per-share; oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue	$78.8	$257.6	$211.8
Gross Profit	$21.9	$141.6	$118.3
Gross Margin %	27.8%	55.0%	55.9%
Operating Income	$9.7	$114.2	$72.2
Operating Margin %	12.3%	44.3%	34.1%
Net Income Attrib. to NUTX	$(8.8)	$61.7	$14.6
Net Income Margin %	(11.2)%	24.0%	6.9%
Diluted EPS ($)	$(1.72)	$11.12	$2.56
EBITDA	$4.34	$78.44	$43.09
Adjusted EBITDA	$13.46	$93.65	$72.82

Notes: Adjusted EBITDA reflects updated methodology starting Q1’25 to separately disclose finance lease payments under ASC 842 .

Segment Revenue (USD Millions; oldest → newest)

Segment	Q3 2024	Q4 2024	Q1 2025
Hospital Division	$71.7	$249.7	$203.9
Population Health Mgmt.	$7.06	$7.92	$7.84
Total	$78.8	$257.6	$211.8

KPIs and Balance Sheet Snapshots (oldest → newest)

KPI	Q3 2024	Q4 2024	Q1 2025
Hospital Division Visits (units)	41,668	45,444	48,269
IDR Arbitration Revenue Mix (by DOS recognized in period)	n/a	$68.9M Q4 DOS; $70.5M Q3 DOS; $30.3M pre-Q3 DOS	$60.0M Q1 DOS; $26.0M Q4 DOS; $19.0M pre-Q4 DOS
Cash & Cash Equivalents (end)	$46.9	$43.6	$87.7
Net Cash from Operating Activities (period)	n/a	n/a (FY’24 $23.2)	$51.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
New hospital openings (count/locations)	2025	Not quantified	3 hospitals in Texas (Houston, San Antonio, Sherman) slated for Q3–Q4 2025	New detail/timing
Capital allocation	2025+	Not specified	Considering reinvestment in hospitals/IPAs, M&A tuck-ins; evaluating buybacks/dividends opportunistically (no authorization announced)	New color; no formal action
Adjusted EBITDA methodology	Q1 2025 onward	Prior presentation	Now separately deducts finance lease payments under ASC 842 in reconciliation	Methodology update
Quantitative financial guidance	2025	None	None provided; management cites ongoing normalization of arbitration cash flows	Maintained “no formal guidance”

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
NSA/IDR arbitration success, cash timing	IDR launched Jul’24; 60–70% submissions; >80% win rate; Q4 revenue included $169.7M YoY arbitration uplift with DOS mix	Q1 revenue uplift ~$105M YoY; 60–70% submissions; >80% wins; blended ~120 days to collect; not yet steady state	Positive execution; normalization underway
Payer behavior/regulatory outlook	Monitoring NSA/IDR refinements; backlog; expectation of continued process use	Notes bill H.R.9572 proposing penalties for late payer remittance; more IDREs being added	Framework improving; policy tailwinds possible
Volume/acuity mix	Mature hospital visits +3.8% in Q3; year 2024 +6.5% mature; grew observation/inpatient	Q1 visits 48,269 (+20.5% YoY); mature +5.3–5.6%; building specialist bench to expand observation/inpatient	Improving demand/acuity
Cost discipline/supply chain	GPO/vendor realignment; corporate G&A leverage	Labor at 16.4% of revenue; supplies down 28% YoY despite openings; stable facility costs ex-arbitration	Sustained efficiency
Technology/AI	Planned exploration of AI tools in 2025	AI for check-in, staffing, clinical notes, coding; pilots expected to improve throughput	Execution phase
Network expansion	4 openings in 2024; pipeline into 2028	3 openings in TX in 2H’25; IPA member base >40k; Medicare Advantage growth	Continued build-out

Management Commentary

“Our net cash flow from operating activities in the first quarter of 2025 was $51 million… surpassing the cash flow for the entire year of 2024” — CEO Tom Vo .
“Of the $105 million in arbitration revenue, $60 million… Q1’25 DOS; $26 million Q4’24; $19 million pre-Q4’24” — Press Release .
“General and administrative expenses as a percentage of revenue decreased to 4.7%” — CFO Jon Bates .
“We’re exploring technology investments, including AI, for patient check-ins, staffing optimization, provider note writing and coding accuracy” — COO Josh DeTillio .

Q&A Highlights

Sustainability/normalization: Management expects continued trending but not a steady state yet; wants 1–2 more quarters of data to refine normalization of per-visit reimbursement and timing .
Earn-out stock comp: Three under-development hospital earn-outs expected to conclude by early Q3’25; reduces future non-cash stock comp noise .
Capital deployment: Options include accelerating de novo builds, population health (IPAs), targeted M&A, with buybacks/dividends considered but not prioritized ahead of growth .
AR/collections cadence: Blended ~120 days, with initial payment at ~30–45 days and IDR remainder ~4–5 months post-DOS .
Volume/acuity expansion: Bed capacity available; adding cardiology/neurology and other specialists to drive observation/inpatient growth through 2025 .

Estimates Context

Metric	Q1 2025 Consensus	Q1 2025 Actual	Surprise
Revenue ($)	$134,242,550*	$211,789,000	+$77,546,450
Primary EPS (S&P definition)	$1.62*	$1.7757*	+0.1557
Company-reported Diluted EPS ($)	—	$2.56	—

Notes: Consensus and Primary EPS values marked with asterisks are Values retrieved from S&P Global. Company EPS uses diluted EPS as reported in Nutex filings/press release and is not directly comparable to S&P “Primary EPS.” The magnitude of revenue outperformance and company-reported diluted EPS both indicate a significant beat; analysts may need to recalibrate models for arbitration timing/mix and share/EPS methodology alignment .

Key Takeaways for Investors

Revenue and EPS upside primarily stemmed from sustained IDR arbitration success and higher realized reimbursement; expect sell-side revisions upward, but incorporate arbitration normalization and timing into models .
Cash generation inflected: $51.0M operating cash flow in Q1 with cash doubling to $87.7M Q/Q, providing capacity to fund 2H’25 openings and selective investments without pressure to lever up .
Earnings quality considerations: elevated non-cash stock comp ($36.1M) tied to legacy earn-outs should taper after early Q3’25; updated Adjusted EBITDA methodology enhances comparability going forward .
Watch AR and collections cadence: ~120-day blended DSO and payer-specific variability could introduce quarterly lumpiness even if trends remain favorable .
Regulatory trajectory a swing factor: more IDREs and potential late-payment penalties (H.R.9572) would be tailwinds; adverse NSA/IDR rule changes or payer tactics represent key risks .
Operational growth drivers intact: specialist recruitment and inpatient/observation focus support revenue per visit and margin resilience; 3 Texas hospital openings in 2H’25 are near-term catalysts .
Near-term trading setup: Positive momentum narrative (beats, cash build, pipeline) vs. skepticism on arbitration durability; updates on DOS mix, win rates, and cash conversion likely to move shares around prints .

Additional Documents Reviewed (Q1 2025 and context)

Q1’25 8‑K/Press Release with full financials and non-GAAP reconciliations .
Q1’25 Earnings Call Transcript (full) –.
NSA/IDR Arbitration Update (Feb 5, 2025) .
Q4’24 Press Release and Earnings Call (trend baseline into Q1’25) – –.
Q3’24 Press Release (pre-IDR scaling baseline) –.

Nutex Health, Inc. (NUTX)·Q1 2025 Earnings Summary