Benchmark analyst increased the price target for Nutex Health (NASDAQ: NUTX) shares to $150, up from the previous $60, while reiterating a Buy rating on the stock. The adjustment follows Nutex Health's fourth-quarter performance, where the company reported a significant adjusted EBITDA of $94 million. The company's impressive performance has driven its stock up 168% year-to-date, with a remarkable 93.8% revenue growth in the last twelve months.This was notably driven by its first-time revenue from the successful recovery of out-of-network claims, facilitated by the No Surprise Act (NSA) arbitration process.
The NSA, which began in January 2022, initially led to a decline in Nutex's average payments by approximately 30% as payers often paid below the median contracted rate. However, with limited success in improving payments through negotiations, Nutex pivoted towards arbitration in mid-2024, taking advantage of a more streamlined process by the Department of Health and Human Services (HHS). This strategic shift has contributed to the company's robust financial metrics, showing a healthy current ratio of 2.08, indicating strong liquidity to meet short-term obligations. This strategic shift resulted in Nutex submitting between 60-70% of visits for arbitration and achieving an over 80% success rate with claims in 2024.
Benchmark's analyst anticipates that Nutex will persist with this approach into 2025. The firm's revised model takes a conservative stance on the impact of these efforts. Additionally, Nutex's positive outlook is supported by initiatives aimed at increasing patient volumes, particularly by focusing on higher-value services. These strategies are expected to contribute to the company's ongoing growth and margin expansion
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