Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Organization and Basis of Presentation

Note 1 - Organization and Basis of Presentation

The consolidated financial statements presented are those of Nutex Health Inc., formerly known as Clinigence Holdings, Inc., (the “Company”) and its wholly-owned subsidiaries, Accountable Healthcare America, Inc. (“AHA”), AHP Management, Inc. (“AHP”), Clinigence Health, Inc. (“Clinigence”), and Procare Health, Inc. (“Procare”). The Company’s name was changed to Nutex Health Inc. on April 1, 2022 in connection with a reverse merger. In October 2018, Clinigence was incorporated as a wholly-owned subsidiary of Clinigence LLC. The Company is a population health analytics company that provides turnkey SaaS solutions that enable connected intelligence across the care continuum by transforming massive amounts of data into actionable insights. The Company’s solutions help healthcare organizations throughout the United States improve the quality and cost-effectiveness of care, enhance population health management and optimize provider networks. The Company enables risk-bearing healthcare organizations achieve their objectives on the path to value-based care. The Company’s platform automatically extracts and delivers targeted data insights from its cloud-based analytics engine directly to the workflows and technologies of its customers. This enhances end-user workflows with actionable analytics, seamlessly delivers data from disparate sources to the point of engagement, automates the delivery of data to ensure on-time access, and reduces dependency on non-essential applications from the end-user’s workflow. All of this allows the healthcare organization to enable population health management, manage cost and utilization, improve quality, identify gaps in care, risk stratify and target patients, increase collaboration among providers and to optimize network provider performance.

AHA was organized to acquire a series of companies providing a broad array of health and managed care services to Medicare members. AHA’s initial focus is on acquiring Accountable Care Organizations (“ACO’s”), Managed Service Organizations (“MSO’s”) and Primary Care Physician Practices (“PCP’s”) with significant numbers of Medicare members.

AHP is a privately held medical management company and provider network that manages its affiliated medical group, AHP Independent Physicians Association.

ProCare is a leading management services organization (“MSO”) that currently provides services for one health maintenance organization (“HMO”) and three independent physician associations (“IPAs”) in Southern and Northern California.

Interim Financial Statements

The following (a) condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements, and (b) the unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022.

Business Acquisitions

Merger With Procare Health, Inc.

On October 15, 2021, Clinigence Holdings, Inc., a Delaware corporation (“Parent” or the “Company”), Clinigence Procare Health Inc, a Delaware corporation (“Merger Sub”), Procare Health, Inc., a California corporation (“Procare”), Anh Nguyen (“Majority Stockholder”), and Tram Nguyen (“Minority Stockholder” and together with Majority Stockholder, the “Stockholders”) entered into an agreement and plan of merger (the “Merger Agreement”). The transactions contemplated by the Merger Agreement were consummated on October 15, 2021 (the “Procare Closing”).

The Merger Agreement provided for the merger of Merger Sub with and into Procare, hereafter referred to as the “Procare Acquisition.” As a result of the Procare Acquisition, Merger Sub ceased to exist, and Procare became the surviving corporation and a direct wholly owned subsidiary of Clinigence, and the former stockholders of Procare, the Stockholders, have a direct equity ownership in Clinigence. Merger Sub was renamed Procare Health, Inc. Merger Sub was originally incorporated in Delaware on September 30, 2021 and had no operating activity prior to the reported transaction.

Merger With AHP Health Management Services Inc.

On February 25, 2021, Clinigence Holdings, Inc., a Delaware corporation (“Parent” or the “Company”), AHP, Inc., a California corporation (“AHP”), AHP Acquisition Corp., a Delaware corporation, a wholly owned subsidiary of Parent (“Merger Sub”), and Robert Chan (the “Shareholders’ Representative”) entered into an agreement and plan of merger (the “AHP Merger Agreement”). The transactions contemplated by the AHP Merger Agreement were consummated on February 26, 2021 (the “AHP Closing”).

The AHP Merger Agreement provided for the merger of Merger Sub with and into AHP, hereafter referred to as the “AHP Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and AHP became the surviving corporation and a direct wholly owned subsidiary of Clinigence, and the former stockholders of AHP (the “AHP Stockholders”) have a direct equity ownership in Clinigence. Merger Sub was renamed AHP Health Management Services Inc. Merger Sub was originally incorporated in Delaware on January 26, 2021 and had no operating activity prior to the reported transaction.

AHP was a privately held company with controlling interest in its’ affiliate Associated Hispanic Physicians of Southern California IPA, a California Medical corporation, (“AHPIPA”). A key term of the AHP Merger Agreement is that at Closing, AHP Management Inc entered into a Management Services Agreement with AHPIPA (the “Management Services Agreements”) making AHPIPA a Variable Interest Entity (VIE) of Clinigence.

Merger With Accountable Healthcare America, Inc.

On February 25, 2021, Clinigence Holdings, Inc., a Delaware corporation (“Parent” or the “Company”), Accountable Healthcare America, Inc., a Delaware corporation (“AHA”), and AHA Acquisition Corp., a Delaware corporation, a wholly owned subsidiary of Parent (“Merger Sub”) entered into an agreement and plan of merger (the “AHA Merger Agreement”). The transactions contemplated by the AHA Merger Agreement were consummated on February 26, 2021 (the “AHA Closing”).

The AHA Merger Agreement provided for the merger of Merger Sub with and into AHA, hereafter referred to as the “AHA Acquisition.” As a result of the Acquisition, Merger Sub ceased to exist, and AHA became the surviving corporation and a direct wholly owned subsidiary of Clinigence, and the former stockholders of AHA (the “AHA Stockholders”) have a direct equity ownership in Clinigence. Merger Sub was renamed Accountable Healthcare America, Inc. Merger Sub was originally incorporated in Delaware on January 2, 2020 and had no operating activity prior to the reported transaction.

Pursuant to the Procare Merger Agreement, at the Closing, the former Procare Stockholders were entitled to receive an aggregate of 759,036 Company Shares, 607,229 shares of which were valued at $4.00 per share with the remaining 151,807 shares valued at $446,018, are being held back and will be released subject to Procare achieving certain earnings milestones. Pursuant to the AHP Merger Agreement, at the Closing, the former AHP Stockholders were entitled to receive 19,000,000 Company Shares valued at $2.06 per share, inclusive of outstanding AHP options and warrants assumed by the Company, which constitutes 45% of the outstanding Company Shares on a fully diluted basis inclusive of outstanding options and warrants. For each share of AHP Shares, each former AHP Stockholder was entitled to receive 19,000,000 shares of Company Shares valued at $2.06 per share. Pursuant to the AHA Merger Agreement, at the Closing, the former AHA Stockholders were entitled to receive 14,034,472 Company Shares, inclusive of certain outstanding AHA options and warrants assumed by the Company, which constitutes 35% of the outstanding Company Shares on a fully diluted basis inclusive of outstanding options and warrants.

The following table presents the preliminary allocation of the value of the common shares issued for Procare to the acquired identifiable assets, liabilities assumed and goodwill:

	Fair Value
Cash	$	81,316
Accounts receivable		284,847
Property and equipment		7,192
Management contracts		1,864,530
Trademarks		226,230
Accounts payable		(95,236	)
Deferred tax liability - intangibles		(439,060	)
Goodwill		945,115
Purchase price	$	2,874,934

The following table presents the allocation of the value of the common shares issued for AHA to the acquired identifiable assets, liabilities assumed and goodwill:

	Fair Value
Cash	$	697,191
Other current assets		2,100
Investment in ACMG		7,134,000
PHP technology		2,183,000
Loan to Clinigence		85,000
Accounts payable		(1,143,106	)
Due to related party		(128,176	)
Notes payable		(1,784,155	)
Deferred tax liability - intangibles		(545,750	)
Goodwill		22,789,787
Purchase price	$	29,289,591

On December 24, 2021, the AHA Investment in ACMG was sold for $5,887,806. Cash of $4,554,676 was received at Closing, and a receivable of $1,333,130 was recorded. The Stock Purchase Agreement (SPA) also contains additional earn out consideration payments upon which AHA is expected to receive its pro-rata portion (“Additional Contingent Consideration”), However, we cannot assign a definitive value to the Additional Contingent Consideration at this time and we have determined to write down the remainder of the investment in ACMG to zero upon receipt of the Closing payment, and Goodwill was increased by $1,246,194, the difference between the initial investment in ACMG of $7,134,000 and the sales price of $5,887,806.

The following table presents the allocation of the value of the common shares issued for AHP to the acquired identifiable assets, liabilities assumed and goodwill:

	Fair Value
Cash	$	3,105,877
Accounts receivable		269,315
Deposits and other assets		26,178
Member relationships		6,444,000
Trademarks		545,000
Accounts payable		(2,683,896	)
Distribution payable		(300,000	)
Deferred tax liability - intangibles		(1,747,250	)
Goodwill		33,480,776
Purchase price	$	39,140,000

On September 30, 2021, the Company paid out an arbitration settlement on behalf of AHP. Pursuant to the merger agreement with AHP this triggered the release of 1,076,372 common shares that were subject to a holdback provision pending the outcome of the arbitration case (the “AHP Litigation Holdback Shares”) back to the Company. As a result of the release of the AHP Litigation Holdback shares to Clinigence Holdings, Inc. goodwill was decreased by $1,122,636.

Liquidity and Management Plans

The Company has an accumulated deficit of $48,651,518 and approximately $5.4 million in convertible debt that matures within the current year. As a result, the Company has suffered recurring losses and requires significant cash resources to execute its business plans. These losses are expected to continue for an extended period of time. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern.

Historically, the Company’s 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.

As of March 31, 2022, the Company had approximately $12.7 million in cash and cash equivalents. 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. Therefore, such conditions of substantial doubt as of March 31, 2022 have subsequently been alleviated.

The Company recognizes it will need to raise additional capital in order to continue to execute its business plan in the future. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company or whether the Company will become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds, it will have to further scale back its operations.