Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Nutex Health Inc (NUTX, Financial) reported a 29% increase in total revenue for the second quarter of 2024 compared to the same period in 2023.
- The company saw a 28% increase in hospital visits, indicating strong demand for its services.
- Nutex Health Inc (NUTX) achieved a significant improvement in gross profit, which increased by 134% in the second quarter of 2024 compared to the previous year.
- The company has a strong balance sheet with cash and cash equivalents increasing by 85.5% to $40.8 million by the end of June 2024.
- Nutex Health Inc (NUTX) is expanding its footprint with four new hospitals under construction, expected to open within the next 6 to 12 months.
Negative Points
- Despite improvements, Nutex Health Inc (NUTX) reported a net loss of $364,000 for the second quarter of 2024.
- The company faced noncash impairments of assets and goodwill totaling $6.7 million due to divestitures in its population health division.
- Nutex Health Inc (NUTX) experienced attribution issues in its Houston IPA, affecting patient assignments and potentially impacting revenue.
- The company has a high level of liabilities, with $241 million related to operating and financing right-of-use liabilities.
- Nutex Health Inc (NUTX) anticipates seasonality in its business, with potential volume declines during summer months.
Q & A Highlights
Q: Can you provide more details on the population health side of the business?
A: Warren Hosseinion, President of Nutex Health Inc, explained that the population health side saw a 10.8% year-over-year growth in the first half of 2024. The Independent Physician Association (IPA) in Los Angeles is performing well, generating significant free cash flow. The Houston IPA faced attribution issues but is working to resolve them, with some patients already reassigned back. The new IPA in Florida is growing steadily, and plans are in place to start one to two new IPAs annually. Divestitures of cash-burning subsidiaries are expected to enhance net income and EBITDA starting in September.
Q: Can you give more detail on the current debt situation?
A: Jon Bates, CFO of Nutex Health Inc, stated that the overall bank equity-type debt decreased slightly from $42.4 million at the end of 2023 to $40.9 million in June 2024. The majority of the $340 million in liabilities is related to operating and financing right-of-use liabilities, which are future lease payments for hospital facilities. These are not considered real operating debt by most analysts and investors.
Q: What seasonality should we expect in the second half of the year?
A: Thomas Vo, CEO of Nutex Health Inc, noted that there is a seasonal drop in volume during the summer as people go on vacation. However, volumes typically increase from August as children return to school. The fourth quarter is expected to see further strength due to flu season and ongoing COVID-19 cases.
Q: How is the company managing costs, particularly labor and supplies?
A: Joshua Detillio, COO of Nutex Health Inc, highlighted that labor, supplies, and contract services are being closely managed. New HR software, Workday, has streamlined approvals and control, and a new labor management software is planned for implementation. Aligning pricing with supply vendors is projected to save several million dollars annually. Contract renegotiations are ongoing to eliminate overlaps and leverage corporate size for better pricing.
Q: What are the plans for new hospital openings and growth?
A: Dr. Tom Vo mentioned that four new hospitals are under construction, expected to open in the next 6 to 12 months. Beyond 2025, the company plans to open one to three new hospitals per year, focusing on locations with high demand for small hospitals. The company remains disciplined in its growth strategy, ensuring new locations are strategically chosen.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
