A quieter week in activist short selling produced one explosive report as Capybara Research became the second short seller to target healthcare services company Nutex Health, following Blue Orca Capital's July report. This time, the allegations are far more severe: fraud, embezzlement, and systematic self-dealing by CEO Thomas Vo that has driven more than a dozen physician partners to sue and sever ties with the company. Meanwhile, broader market discussions continued as The Economist explored strategies for shorting overvalued companies in frothy markets, and Nvidia pushed back against comparisons to Enron amid questions about its AI revenue recognition.

This Week's New Report

• One devastating report released this week targeting a healthcare services company already under scrutiny, with allegations far exceeding the previous short seller's concerns
• Capybara Research exposed Nutex Health ($NUTX) as what the report characterizes as a long-running pattern of fraud and embezzlement, with CEO Thomas Vo allegedly diverting millions from physician partners into entities he controls—the stock plummeted 16.1% for the week
• This marks the second activist short report on NUTX in four months, following Blue Orca Capital's July report that questioned the company's business model and growth sustainability
• Capybara's investigation uncovered more than a dozen facilities that have cut ties with Nutex after alleging wrongdoing, including lawsuits describing "brazen acts of fraud and embezzlement resulting in the loss of millions of dollars"
• The report documents a pattern of partner revolts spanning years, with physician groups in Austin, Kyle, San Angelo, and Albuquerque all suing Nutex and Vo, then taking control of their facilities and operating independently

New Activist Reports

Nutex Health Inc. NUTX

NASDAQ | Capybara Research

Capybara Research's explosive report on systematic fraud and embezzlement had an immediate and devastating impact on Nutex Health. The stock crashed 22% intraday to a low of $107.09 before recovering somewhat to close down 13.1% at $119.21 on the report date. The selling pressure continued throughout the week as investors digested the extensive allegations, with the stock ultimately closing down 16.1% at $115.11 by week's end. This represents the second significant decline for NUTX following a short report, after Blue Orca Capital's July critique. The sustained downward pressure suggests the market is taking seriously the documented pattern of physician partner revolts and the multiple lawsuits describing fraud and self-dealing.

Nutex Health Inc. is a Houston-based physician-led healthcare services company that operates micro-hospitals, specialty hospitals, and emergency room facilities across multiple states. Founded and controlled by CEO and Chairman Thomas Vo, who holds approximately 33% of the company, Nutex provides hospital operations, population health management, and billing and collections services for affiliated entities. The company's business model typically involves three separate entities at each facility: an ER operating company (majority-owned by Nutex), a physician group (owned by doctors and some Nutex insiders), and a real estate company (often owned by Vo and related parties). Nutex manages the physician and real-estate entities, controls billing and collections, and charges management fees, creating what Capybara Research characterizes as significant conflicts of interest.

• More than a dozen facilities have severed ties with Nutex after alleging fraud, embezzlement, and self-dealing by CEO Thomas Vo and the company
• Austin ER physicians and a former Nutex board member sued alleging Vo secretly redirected "hundreds of thousands of dollars" into entities he controlled, with the lawsuit describing "brazen acts of fraud and embezzlement resulting in the loss of millions of dollars"
• Kyle ER partners (including a Texas state senator) sued Nutex and Vo for fraud in December 2023, voted 6-1 to remove Vo as manager, and a court transferred control of the facility to physicians who now operate independently—an outcome Capybara claims was never disclosed to shareholders
• Concho Valley ER lawsuit alleged Vo "intentionally and fraudulently injured" the facility through self-dealing and used a related company as a "personal slush fund" to divert physician revenue
• Albuquerque hospital physicians allege Vo unilaterally altered their share-exchange contract after a 1-for-15 reverse stock split, signing on behalf of both Nutex and the selling physicians without their consent
• Multiple physicians and former employees describe large undocumented "management fees" justified by Vo as necessary to "support the stock price"
• Former billing staff allege Nutex subsidiary Tyvan prioritized collections at facilities where Vo had larger stakes and neglected facilities where physicians questioned him
• Nutex's own 2023 internal audit found the company lacked adequate billing technology and failed to negotiate at least 30,000 claims, with poor records suggesting the true number could be higher
• One facility's owners allege an employee under Vo's supervision stole an estimated $500,000 via gift cards and personal purchases, with local police reportedly investigating
• Capybara Research conducted over eight months of investigation including interviews with more than twenty people connected to Nutex and review of lawsuits, state filings, billing data, and property records

Activ8 Newswire

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