# Nutex Health Inc.: Form 10-Q for the period ended Mar 31, 2022

- Company: [Nutex Health Inc.](/companies/nutx.md) (CIK 1479681)
- Form: 10-Q
- Filed: 2022-05-13
- Accepted by EDGAR: May 13, 2022, 17:23 ET
- Period: 2022-03-31
- Accession: 0001607062-22-000334
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1479681/000160706222000334/nutx033122form10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1479681/000160706222000334/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-01-01 to 2022-03-31 | $6.2m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2022-01-01 to 2022-03-31 | $4.5m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2022-01-01 to 2022-03-31 | $1.7m | us-gaap:GrossProfit |
| Research and development | 3 months, 2022-01-01 to 2022-03-31 | $73.8k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2022-01-01 to 2022-03-31 | −$16.4m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2022-01-01 to 2022-03-31 | −$8.9k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-01-01 to 2022-03-31 | −$16.6m | us-gaap:NetIncomeLoss |
| Operating cash flow | 3 months, 2022-01-01 to 2022-03-31 | −$2.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2022-01-01 to 2022-03-31 | $1.4k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2022-03-31 | $12.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-03-31 | $15.0m | us-gaap:AssetsCurrent |
| Total assets | at 2022-03-31 | $83.3m | us-gaap:Assets |
| Current liabilities | at 2022-03-31 | $8.4m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-03-31 | $10.2m | us-gaap:Liabilities |
| Shareholders' equity | at 2022-03-31 | $73.1m | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 15,891 characters.

*The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. In addition, reference is made to our audited consolidated financial statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022.*

### Overview

The Company is a technology-enabled healthcare services company with two divisions: a Hospital Division and a Population Health Management Division.

The Hospital Division implements and operates innovative health care models, including micro-hospitals, specialty hospitals, and hospital outpatient departments (HOPDs). This division owns and operates 21 facilities in 8 states.

The Population Health Management Division owns and operates provider networks such as Independent Physician Associations (IPAs). Our Management Services Organizations (MSOs) provide management, administrative, and other support services to our affiliated hospitals and physician groups. Our cloud-based proprietary technology platform aggregates data across multiple information systems, settings, and sources to create a holistic view of each patient and provider, allowing us to deliver greater quality care more efficiently.

### Recent Developments

#### Merger with Nutex Health Holdco LLC

On April 1, 2022, the Compny completed its business combination with Nutex Health Holdco LLC (“Nutex”) following the satisfaction or waiver of the conditions set forth in the Agreement and Plan of Merger, dated as of November 23, 2021, among the Company, Nutex Acquisition LLC (“Merger Sub”), Micro Hospital Holding LLC (solely for the purposes of certain sections), Nutex Health LLC (solely for the purposes of certain sections) and Thomas T. Vo, solely in his capacity as the representative of the equityholders of Nutex (the “Merger Agreement”), pursuant to which Merger Sub merged with and into Nutex, with Nutex surviving as a wholly owned subsidiary of the Company (the “Merger”).

In connection with the Merger and as of the effective time of the Merger (the “Effective Time”) each unit representing an equity interest in Nutex issued and outstanding immediately prior to the Effective Time of the Merger (a“Nutex Membership Interest”) was converted into the right to receive 3.571428575 (the “Exchange Ratio”) shares of common stock of the Company, par value $0.001 per share (the “Company Common Stock”), as adjusted as set forth in the Merger Agreement, that results in the former Nutex equityholders (“Former Nutex Equityholders”) having a right to receive an aggregate of 592,791,712 shares of Company Common Stock.

The aggregate number of Nutex Membership Interests outstanding immediately prior to the Effective Time of the Merger was equal to (a) with respect to the facilities operating for less than 24 months (the “Ramping Hospitals”) and the facilities operating for more than 24 months (the “Mature Hospitals”), the aggregate EBITDA of Nutex based on the contributed percentages of the Ramping Hospitals and Mature Hospitals for the trailing 12-month period ended September 30, 2021 (“TTM EBITDA”) and (b) with respect to the facilities not yet open (the “Under Construction Hospitals”), the aggregate capital contribution amounts received from the contributing owners of the Under Construction Hospitals.

The aggregate number of shares of Company Common Stock issued in the Merger was equal to (x) with respect to the Ramping Hospitals and Mature Hospitals, (i) ten times TTM EBITDA (minus (A) the aggregate debt of the Nutex subsidiaries and Nutex facilities outstanding as of closing, ‎excluding guarantees of mortgage debt of the noncontrolled real estate entities and finance lease obligations ‎reported as indebtedness under GAAP but including any new debt incurred to finance any redemptions of Nutex Membership Interests, plus (B) up to $10,000,000 of cash held by the Nutex subsidiaries at closing ) divided by (ii) $2.80 plus (y) with respect to the Under Construction Hospitals, (a) the aggregate capital contribution amounts received from the contributing owners of the Under Construction Hospitals‎ divided by (b) $2.80 (collectively the “Merger Consideration”). The Merger Consideration was increased by 2,500,000 shares of Company Common Stock, shared pro rata among the Former Nutex Equityholders, in an amount equal to the shares of Company Common Stock issued to a certain consultant as required under the Merger Agreement.

In addition, owners of the Under Construction Hospitals and Ramping Hospitals are eligible, in the future and based on attainment of the performance thresholds set forth below, to receive a one-time additional issuance of Company Common Stock. Specifically, on the 24-month anniversary of the opening date of the applicable Ramping Hospital, such owner is eligible to receive such owner’s pro rata share of a number of shares of Company Common Stock equal to (a)(i) the TTM EBITDA of the applicable Ramping Hospital times (ii) ten minus (iii) the initial equity value received at the closing of the Merger Agreement minus (iv) such owner’s pro rata share of the aggregate debt of the applicable Ramping Hospital outstanding as of the closing of the Merger divided by (b) the greater of (i) the price of the Company Common Stock and (ii) $2.80. On the 24-month anniversary of the opening date of the applicable Under Construction Hospital, such owner is eligible to receive such owner’s pro rata share of a number of shares of Company Common Stock equal to (a)(i) the TTM EBITDA of the applicable Under Construction Hospital times (ii) ten minus (iii) the aggregate amount of such owner’s capital contribution minus (iv) such owner’s pro rata share of the aggregate Debt of the applicable Under Construction Hospital outstanding as of the Closing of the Merger divided by (b) the greater of (i) the price of the Company Common Stock at the time of determination and (ii) $2.80.

The Merger was disclosed on the Company’s current report on Form 8-K filed on April 1, 2022.

### Key Financial Measures and Indicators

#### Operating Revenues

Our revenue primarily consists of capitation revenue and SaaS subscription services. The form of billing and related risk of collection for such services may vary by type of revenue and the customer.

#### Operating Expenses

Our largest expense is the patient care cost paid to contracted physicians, and the cost of providing management and administrative support services to our affiliated physician groups. These services include providing utilization and case management, physician practice billing, revenue cycle services, physician practice management, administrative oversight, coding services, and other consulting services.

### Results of operation

#### CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

#### THREE MONTHS ENDED MARCH 31,

#### (UNAUDITED)

| Sales | 2022 | 2021 |
| --- | ---: | ---: |
| Capitation revenue, net | $5,386,064 | $1,594,712 |
| SaaS revenue | 333,445 | 419,633 |
| Management service revenue, net | 489,666 | — |
| Total sales | 6,209,175 | 2,014,345 |
| Cost of sales | 4,492,930 | 1,587,473 |
| Gross profit | 1,716,245 | 426,872 |
| Operating expenses |  |  |
| Research and development | 73,750 | 76,720 |
| Sales and marketing | 11,055 | 9,739 |
| General and administrative expenses | 17,782,908 | 4,426,292 |
| Amortization | 216,453 | 64,044 |
| Total operating expenses | 18,084,166 | 4,576,795 |
| Income (loss) from operations | (16,367,921) | (4,149,923) |
| Other income (expenses) |  |  |
| Income from forgiveness of debt | 260,087 | — |
| Interest income | 368 | 114 |
| Interest expense - debt obligations | (186,916) | (334,331) |
| Interest expense - accretion of debt discount | (283,692) | — |
| Total other income (expenses) | (210,153) | (334,217) |
| Loss from operations before income tax benefit | (16,578,074) | (4,484,140) |
| Income tax benefit - current | 8,889 | — |
| Net loss | (16,569,185) | (4,484,140) |
| Net income attributable to noncontrolling interest | 193,856 | (39,581) |
| Net income (loss) attributable to Clinigence Holdings, Inc. | $(16,763,041) | $(4,444,559) |

31

### Revenue

Our revenue for the three months ended March 31, 2022, was $6,209,175, as compared to $2,014,345 for the three months ended March 31, 2021. The increase was primarily attributable to the AHP and Procare acquisitions.

### Cost of Services

Expenses related to cost of services for the three months ended March 31, 2022, were $4.5 million, as compared to $1.6M for the same period in 2021. The overall increase was primarily due to the AHP acquisition.

### Sales and Marketing

Sales and Marketing expense for the three months ended March 31, 2022, was $11,055, compared to $9,739 for the three months ended March 31, 2021. The increase was primarily attributable to press releases issue during the quarter.

### Research and Development

Research and Development expense for the three months ended March 31, 2022, was $73,750 compared to $76,720 for the three months ended March 31, 2021. The increase was primarily attributable to the increase of research and development efforts for our Clinigence Health subsidiary.

### General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2022, were $17.8 million, as compared to $4.4 million for the same period in 2021. The increase was primarily attributable to $14.2 million in stock based compensation and $1.24 million in legal, accounting and filing fees related to the Nutex Merger.

### Amortization

Amortization expense for the three months ended March 31, 2022, was $216,453 as compared to $64,044 for the same period in 2021. This amount includes the amortization of intangible assets acquired from AHP, AHA and Procare.

### Interest Expense

Interest expense for the three months ended March 31, 2022, was $470,609 as compared to $334,331 for the same period in 2021. The Interest expense reflected was primarily for accretion of debt combined with interest incurred on convertible debt related to the acquisition of AHA.

### Interest Income

Interest income for the three months ended March 31, 2022, was $368 as compared to $114 for the three months ended March 31, 2021. Interest income reflects interest earned on cash held in deposit accounts.

### Income from Forgiveness of Debt

Income from forgiveness of debt was $260,087 for the for the three months ended March 31, 2022, as a result of the forgiveness of payment protection plan loan.

### Net Income (Loss) Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $193,856 for the three months ended March 31, 2022 and compared toa net loss of $39,581 for the three months ended March 31, 2021. The was due to income from AHP VIE.

### LIQUIDITY AND CAPITAL RESOURCES

### General

We had cash of $12,716,228 for the three months ended March 31, 2021, compared to $ 15,314,328 as of December 31, 2021, a decrease of $2,598,100.

We generate cash primarily from capitations, risk pool settlements and incentives, fees for medical management services provided to our physician groups, as well as FFS reimbursements and recurring SaaS Subscriptions.

Historically, the Company’s has experienced significant losses and the major sources of cash have been comprised of proceeds from various public and private offerings of its common stock, debt financings, and option and warrant exercises. During the year ended December 31, 2021, the Company raised approximately $14.4 million in gross proceeds from various public and private offerings of its common stock. Although the Company expects to have sufficient capital to fund its obligations, as they become due, in the ordinary course of business until at least December 31, 2022, the actual amount of cash that it will need to operate is subject to many factors. During the year ended December 31, 2022, the Company expects to collect the receivable of $1.3 million from the sale of its ACMG investment. The Company also decreased its debt in 2021. With the funds raised and the other mitigating factors the Company believes that it has enough cash to fund its operations for one year from the date of filing.

### Cash Flow Activity

Cash used in operating activities for the three months ended March 31, 2022, was $2,378,658 as compared to cash used in operating activities of $567,063 for the three months ended March 31, 2021. The increase in cash used in operating activities was primarily driven by our operating revenues not being sufficient to cover our on-going obligations. Additional contributing factors include an increase in accounts receivable of $146,621, an increase in account payable and accrued expenses of $121,168, a decrease in customer deposits of $1,960, a decrease in prepaid expenses and other current assets of $173,891, income from forgiveness of debt of $260,087, amortization and depreciation expense of $229,036, interest expense associated with debt discount of $283,692, accrued interest of $2,731, lese liability of $11,291, deferred revenue of $81,808 and stock-based compensation expense of $14,196,876.

Cash used in investing activities during the three months ended March 31, 2022, was $184,442 primarily due to distributions to the AHP shareholders for period prior to acquisition, compared to cash provided by investing activities of $3,888,267from acquisitions during the three months ended March 31, 2021.

Cash used in financing activities for the three months ending March 31, 2022, was $35,000 and consisted of proceeds from the sale of common stock of $100,000, proceeds from the exercise of warrants of $25,000 offset by payments on notes payable of $150,000 and payments of financing costs for capital raise of $10,000.

### Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires our management to make judgments, assumptions, and estimates that affect the amounts of revenue, expenses, income, assets, and liabilities, reported in our consolidated financial statements and accompanying notes. Actual results and the timing of recognition of such amounts could differ from those judgments, assumptions, and estimates. In addition, judgments, assumptions, and estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. Understanding our accounting policies and the extent to which our management uses judgment, assumptions, and estimates in applying these policies, therefore, is integral to understanding our financial statements. Critical accounting policies and estimates are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. We summarize our most significant accounting policies in relation to the accompanying consolidated financial statements in Note 2 thereto. Please also refer to the Critical Accounting Policies section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

### Off-Balance Sheet Arrangements

As of March 31, 2022, we had no off-balance sheet arrangements that are or have been reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

## Controls and procedures

As filed, 1,997 characters.

### Evaluation of Disclosure Controls and Procedures

As of March 31, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including Chief Executive Officers and Chief Financial Officer, concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15(d)-15(e) under the Exchange Act, were effective as of March 31, 2022, to ensure that information required to be disclosed by us in this Quarterly Report on Form 10-Q or submitted under the Exchange Act is (i) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to our management, including our principal executive officers and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under Exchange Act) during our first fiscal quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

## Risk factors

As filed, 1,980 characters.

Our business, financial condition, and operating results are affected by a number of factors, whether currently known or unknown, including risks specific to us or the healthcare industry, as well as risks that affect businesses in general. In addition to the information and risk factors set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022. The risks disclosed in such Annual Report and in this Quarterly Report could materially adversely affect our business, financial condition, cash flows, or results of operations and thus our stock price. We believe there have been no material changes in our risk factors from those disclosed in the Annual Report. However, additional risks and uncertainties not currently known or which we currently deem to be immaterial may also materially adversely affect our business, financial condition, or results of operations.

These risk factors may be important to understanding other statements in this Quarterly Report and should be read in conjunction with the consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q. Because of such risk factors, as well as other factors affecting the Company’s financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

Our operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, which could harm our business, reputation, financial condition, and operating results.

Filed May 13, 2022.
Source: SEC EDGAR, the filing index for accession 0001607062-22-000334. Last ingested by Listed: Nov 5, 2026, 16:37 ET. No prices; not investment advice.