- Nutex Health (NUTX) is a small hospital and healthcare services company.
- The company recently completed a merger with Clinigence Holdings.
- Past financial results are not indicative of the company’s current prospects; wait for more data to come out.
Nutex Health (NASDAQ:NUTX) is a Houston-based company. Clinigence Holdings traded on the over-the-counter markets under the symbol “CLNH”. The two companies recently merged and the resulting company took the name Nutex, changed to the symbol “NUTX” and listed on the Nasdaq Sotck exchange.
Nutex has set up a network of “micro-hospitals” in various states across the country. He sees these small facilities serving a unique need for patients and healthcare providers. Clinigence operates a healthcare and data services operation that helps providers optimize their budgeting and allocation of medical and financial resources. In theory, there could be significant benefits to combining this type of data-driven healthcare information player with a chain of hospitals.
Either way, none of these companies are particularly big as things stand, and this merger wouldn’t normally generate much media coverage. However, NUTX stock went wild, with shares surging from $4 to $52 just as the merger closed in April. NUTX stock has returned to a more reasonable price of $8 now that the initial excitement around the deal has dissipated. With stocks down sharply from their peak, but still up significantly year-to-date, what can an investor do with Nutex stock?
Be careful with the low P/E ratio
On paper, it might seem like NUTX stock is a deep value play. Many financial screeners and websites show that Nutex is highly profitable and therefore trades at a price to earnings (P/E) ratio of 2 or 3. If this figure is accurate and representative of Nutex’s future prospects, it would make of NUTX stock a strong buy.
Unfortunately, it is not clear whether Nutex’s past profitability will be repeatable or not. The company’s most recent quarterly results painted a much less rosy picture.
In the last quarter, the company lost $16.8 million in total on just $6.2 million in net revenue. It’s not great. However, there are two massive caveats. First, the majority of this loss was due to stock-based compensation rather than operating expenses. Another part of the loss is due to expenses incurred to facilitate the merger between Nutex and Clinigence Holdings.
As if that were not enough, these quarterly results only reflect Clinigence’s results during the last quarter. We will need to see quarterly results in the future to see how the combined business functions as a single entity.
Nutex is a complicated situation
This is a business in transition. He recently filed a 10-Q with updated financial results. However, they are dated March 31, 2022 and therefore reflect the company before it finalized its merger with Nutex.
We can see that as of March 31, the entity had $13 million in cash, 48 million shares outstanding, and other such metrics. However, these numbers will change drastically once Nutex is included in the overall results. This level of complexity makes it difficult to assess whether or not Nutex stock might be a good deal.
That said, the P/E ratio displayed online does not reflect the company’s current business outlook and is therefore not sufficient to indicate value. As such, investors should do much more due diligence on the company before making a decision to buy or sell.
Review of NUTX shares
Nutex could eventually become a solid investment. As we see quarterly results in the coming months, there will be a lot more financial results and up-to-date information, which will give us a better idea of the company’s true long-term prospects.
For now, however, NUTX stock appears to be popular with social media and short-term traders looking to exploit volatility in Nutex stock price. It’s very good, as a profession. But wait until you have more information before making serious long-term investments in this company.
As of the date of publication, Ian Bezek had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.