Nutex Health, Inc. Q2 FY2026 earnings call

Overall Financial Performance

• H1 2026 total revenue was $427.2 million, a 6% decrease YoY, driven by large positive revenue adjustments in H1 2025 from early IDR process collection percentage updates, which did not recur in 2026.
• H1 2026 net income attributable to NewTex was $112.6 million, a 3100% increase YoY from $3.5 million in H1 2025. Adjusted EBITDA increased 2% YoY to $147.5 million.
• As of Q2 end 2026, cash on hand was $205.2 million, net long-term debt was $31.1 million, and net cash from operating activities was $109.7 million, a 40% increase YoY.

IDR Process and Reimbursement Updates

• Multiple federal courts across six states ruled in favor of providers, reinforcing the finality of IDR awards and limiting insurers' ability to challenge outcomes, noting that insurers routinely submit lowball offers to out-of-network providers to maximize profits.
• CMS released a final IDR rule that improves process efficiency and transparency without changing the core reimbursement framework, including cutting administrative fees from $115 to $15 per dispute, an updated electronic portal, and shorter cooling-off periods. NewTex views the rule as constructive and confirms the IDR process will remain in place long-term.
• A retroactive amendment to the HaloMD contract shifted IDR vendor fees to a pay-on-collection basis, reduced service fees for new settlements starting July 1 2026, and gave NewTex the option to use alternative vendors or in-house dispute resolution going forward. Combined with the CMS fee cut, this will lower total arbitration costs by 25-30% in future periods.
• NewTex currently submits 50-60% of claims through IDR, prevails in over 85% of determinations, and collects over 80% of awarded amounts.

Growth Strategy and Pipeline

• NewTex has internalized real estate development capabilities to improve timeline, cost, and scalability control. Its strategy is to develop facilities, stabilize operations, then monetize via sell-leaseback transactions.
• Three pipeline facilities (West Little Rock, AR; San Antonio, TX; Jacksonville, FL) are expected to open in H2 2026. 2027 pipeline includes new developments in Florida and Oklahoma, with two to be owned and developed by NewTex. Beyond 2027, additional projects are already approved in Idaho, Florida, Pennsylvania, Ohio, and Arkansas.
• NewTex's scalable de novo development model differentiates it from large healthcare systems that rely primarily on acquisition-based growth.

Operational Highlights

• Patient satisfaction remains strong, with an average 4.8-star Google rating across 2,300+ reviews. Employee turnover was just 6.8% in H1 2026, well below industry benchmarks.
• Endoscopy services were launched in the quarter, and the company plans to expand additional service lines based on community demand. As facilities mature, they retain more higher-acuity inpatient patients locally, improving continuity of care and revenue per visit.

Population Health Division Strategy

• The division now covers nearly 40,000 patients across Medicare Advantage, commercial, and Medicaid Managed Care, with all existing IPAs except South Florida profitable in H1 2026. New IPAs in Dallas and San Antonio are still contracting providers and will start enrolling patients in 2027.
• The strategy builds local physician networks through IPA ownership opportunities, hospital admitting privileges, and quality-based incentives to drive patient volume to NewTex hospitals and create seamless aligned care.

1. Hospital Division: Q2 2026 revenue was $201.9 million, a 14.6% decrease year-over-year (YoY), accounting for 95.8% of total Q2 2026 revenue. Same-hospital revenue decreased 12.1% YoY, while total hospital visits increased 9.6% YoY to 49,962, with same-hospital visits growing 6.3% YoY. For the first half (H1) 2026, hospital division revenue was $409.4 million, a 7% decrease YoY, accounting for 95.8% of total H1 2026 revenue. Same-hospital revenue decreased 6% YoY, while total hospital visits increased 6.2% YoY to 99,704, with same-hospital visits growing 3.4% YoY.
2. Population Health Division: Q2 2026 revenue was $8.9 million, a 16% increase YoY, accounting for 4.2% of total Q2 2026 revenue. For H1 2026, revenue was $17.8 million, a 15% increase YoY, accounting for 4.2% of total H1 2026 revenue.

• The 2025 revenue decrease was driven by non-recurring positive collection percentage adjustments in H1 2025; revenue per visit in 2026 is consistent with the long-term average of ~$4,200 per visit since the IDR process launched, and is expected to remain stable barring major changes to collection metrics.
• After the CMS IDR fee cut and HaloMD contract amendment, normalized arbitration-related costs are expected to decrease from the historical 24-26% of arbitration revenue to the high teens to low 20% going forward, with overall contract services costs dropping 25-30% from historical levels.
• NewTex will maintain its target of 3-5 new hospital openings per year, with no near-term increase to this cadence despite a strong project pipeline. The company will continue evaluating opportunities based on financial performance.
• Revenue per patient is expected to trend gradually upward over time as NewTex increases inpatient acuity and adds higher-revenue procedural service lines across its facilities.
• Patient visit volume typically follows seasonal patterns: Q2 and Q3 are the lowest activity quarters, while Q4 and Q1 see higher volume due to cold and flu season.

• Insurer in-network reimbursement rates have only increased slightly despite recent favorable court rulings and regulatory changes, and remain below NewTex's target levels, requiring continued reliance on the IDR process for fair payment.
• De novo hospital development carries inherent cost, timeline, and execution risk, even with internalized development capabilities.
• Collection performance for IDR awards depends on continued legal and regulatory support for the IDR process; adverse changes to the framework or increased successful insurer challenges could negatively impact reimbursement and collection rates.
• New population health initiatives in new markets carry initial cash flow risk before reaching sufficient patient enrollment scale.

Q: Previously arbitration costs ran ~25% of arbitration revenue. What was the Q2 rate excluding one-time credits, and what is the new expected go-forward rate after the IDR rule change and HaloMD amendment? What is the steady-state revenue per visit run rate? And will NewTex increase its 3-5 hospital openings per year target to accommodate a larger pipeline? / A: Historical arbitration costs were 24-26% of arbitration revenue. After the recent changes, this is expected to fall to the high teens to low 20%, with overall contract services costs declining 25-30% total. Revenue per visit in Q2 2026 is consistent with the cumulative $4,000-$4,200 long-term average since IDR launched, and this range is a fair steady-state expectation for the future, with minor variability from higher inpatient volumes. NewTex will maintain its 3-5 new openings per year target for now, and will reevaluate only as financial conditions allow. (458 chars)

Q: Have favorable recent court rulings changed insurer behavior or payment levels? Will the lower $15 IDR fee lead NewTex to submit more marginal previously unchallenged claims to IDR? / A: Insurer payment levels remain largely steady state, with only very gradual, small increases that are still well below fair market rates. Qualifying Payment Amounts (QPAs) remain low, so NewTex will continue submitting roughly 60% of claims to IDR. The $100 fee reduction lowers the barrier to IDR for smaller claims, and NewTex may take a small number of previously marginal claims through the process, but this will not produce a material change in overall submission volumes. (367 chars)

Q: What drove the recent volume and acuity growth, and how will revenue per patient trend going forward? What prompted the HaloMD contract renegotiation, and when would NewTex use its new option to use alternative vendors or in-house IDR processing? / A: Recent growth comes from increased business development investment, AI-powered physician outreach, and IPA network relationship building, plus a focus on retaining higher-acuity inpatient patients instead of transferring them out. As this strategy continues and more service lines are added, revenue per patient will gradually increase. When the original HaloMD contract was signed in early 2024, the IDR process was still new with no finalized rules, so the contract was negotiated with limited data. After a year of operating experience, both sides agreed that updated terms made sense for the partnership, resulting in the amended agreement. The optionality gives NewTex flexibility to use in-house or alternative third-party processing for future facilities as market conditions evolve, and is a mutually beneficial outcome for both parties. (512 chars)

Q: How much has in-network revenue share increased as regulators and courts have supported IDR, and can NewTex remain profitable as an out-of-network provider if in-network deals remain slow? / A: There has only been a slight, immaterial increase in in-network revenue share to date, as progress on in-network contracting remains slow. The company notes that its business model has operated successfully as a mostly out-of-network provider for 15 years, and the No Surprises Act guarantees appropriate payment for emergency out-of-network care, so NewTex can remain profitable even if it remains mostly out-of-network long-term. In-network contracting is always a priority if terms are fair, but it is not a requirement for strong performance, and even in-network providers regularly have payment disputes leading to out-of-network status. (389 chars)