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Organizational IPO readiness with Dr. Tom Vo, Chairman and CEO of Nutex Health

Joe Kornik: Welcome to the VISION by Protiviti interview. I'm Joe Kornik, Editor-in-Chief of VISION by Protiviti, where we explore topics being discussed in the C-suite and executive boardrooms worldwide. Today, we're joined by Dr. Tom Vo, Nutex Health CEO and chairman of the board. He has been instrumental in the startup and management of over 30 specialty hospitals and emergency centers throughout the U.S. Today, Dr. Tom will be sitting down with my Protiviti colleague, Managing Director, Justin Krystopher. Justin, I'll turn it over to you to begin.

Justin Krystopher: Great. Thank you, Joe. Tom, thank you so much for being with us today. Really looking forward to the conversation.

Tom Vo: Justin and Joe, thank you very much. Thank you to the Protiviti team for including me.

Krystopher: When I think about some of the things we've talked about in the past and some of the insights you've shared with me about your own journey, your new Texas journey of going public, I can't help to think about, what is your current view of the current state of the capital markets? What trends are you seeing that are out there and signals to investors that are kind of fueling the current influx of IPOs and other public offerings. Then, thinking back to 2023, 2024, what were the things that really influenced your decision to go out, to go public?

Vo: Yes. Thank you, Justin. To answer your question, what is the current IPO market like… I would say that the market is open for business. I would say that the market is hungry for great companies that have good cash flow, that have a great story to tell. But it is measured. It is measured for sure. The market is not like it was back in maybe 2021, before we became public, anymore. It's not just going to reward any company that is out there. The company that wants to do IPO now has to have a great story, has to have cash flow. If they don't have cash flow, they have to have a way to prove to the market that they will get cash flow. So, definitely, the market is open for business for the right company. I mean just this quarter alone, first quarter, I think there were something like over 20 IPOs. So, for sure, the public equity market is alive and robust right now as we speak.

Krystopher: Yes. We're definitely seeing that bent up demand, I think, from really having those slow years in 2023 and 2024 where there was virtually no activity. I think there's a lot of market volatility out there right now. There's a lot going on in the world. A lot of conflicts that just create uncertainty but that investor sentiment that we're definitely seeing is out there — investors are looking for those companies with strong fundamentals and the really great growth story and the growth potential. We're seeing those actually be very successful at the moment. Definitely agree with you. Tom, when you think back to 2023 and 2024 when new techs went out, what were some of the things that influenced your decision?

Vo: Yes. So, we were a private company for a good 12 years before we became public. So, our company started around 2011-ish but we didn't go public until around 2022. In 2022, one of the biggest — well, there's several factors — but I would say one of the biggest factor was growth. We wanted to tap into the public market in order to grow. Being public is a great way to do that, as you know. The other factor was, including myself, I have probably another over 200 private physicians who were investors in the company. So, my goal at that time was to sort of like reward the investors by making their investment a little bit more liquid so that they could sort of like cash out if they wanted to — but that's more of a secondary goal. Then, the third goal was to use the stock as a currency because as you know, the stock is a very strong currency, especially if you use it the correct way, say, with M&A or to reward our executive team or even to align ourselves with our day-to-day employees. It's a very strong tool because — I mean, as you know, most people, when they go to work, they work for cash, they work for a paycheck. Now, if they have equity, then they're going to work for equity in addition to working for cash. So, it's a very strong motivator. People have a lot more to gain than just the paycheck because the harder you work, the higher your equity hopefully will be. So, it's one of these things where when the ocean rises, all the boats rise. So, that was one of the main goals that I wanted to bring as we become public.

Krystopher: To really incentivize employees, the doctors that have been — to bring them up, bring them along with you.

Vo: That's right.

Krystopher: When you think about the right vehicle, the right path, I know there's a couple options out there, IPO, traditional IPO. Then, there's the SPAC, the SPAC merger route. There's direct listing or really private capital raise. I think, for folks that don't know your story, if you can just enlighten us a little bit on which path you chose. I think you highlighted it a little bit in your last response but what were those key factors that really took you down that path? What were the things that you thought were critical in making that decision?

Vo: Yes. I mean this is one of those HO question of, “Okay. Which is the best way to become public?” There's about three or four different ways to do it. Really, a lot of it is dependent on the company and what their culture is like, what their ultimate end goal is. Do they want capital? Do they want liquidity? Do they want to be more visible to the public? The way we did it was that we went out and looked for a shell company, a company that is considered public but may not be big enough or may not be profitable, that is traded on the pink sheet market as an example, that is not on one of the traditional market like NASDAQ or New York Stock Exchange, and then see if those are compatible, and then just work a deal with them, negotiate. So, that's exactly what we did. 

Now, when we became public, the good news with us is that we did not need cash. We were very profitable at that time. We were valued about $1.8 billion at that time. So, we were a bit of a unicorn at that time. So, the company that we found was a company that was also in healthcare, publishing health. They were valued at, I don't know, a couple hundred million. So, when we merged with them, I think we got diluted by about 7%. But the downside was, number one, we had zero visibility. We went from a private company one day to a public company the next day. We didn't go on any roadshow. We really didn't even use a banker to consummate the deal. Then, on top of that, nobody knows who you are. There is absolutely no investor research, IR or anything along that line. So, we had to start from ground zero. The day that we became public and get our name out, find analysts, talk with investors, talk with bankers, and so on and so forth. So, there is some downside to that but if you just want to become public just to be public and able to access the public capital, that will be an easy, or easier, way to do it so that you can do it faster.

Krystopher: Yes. So, it's a trade off of…

Vo: It’s a trade-off, a lot of trade-offs.

Krystopher: You can go out very quickly in that respect, but you don't have the visibility to those investors. You have to do a lot of work afterwards in public to really build up that reputation with the investment community and go out and really fundraise that way.

Krystopher: Correct. That's right. That's exactly right.

Krystopher: When you think about organizational readiness, from your experience, and maybe looking at using a bit of hindsight here, what governance and cultural shifts do you think were essential within your organization prior to going public? What was effective for really implementing these types of changes?

Vo: Yes. I mean going public is probably, if not the most important, one of the most important fundamental changes for the entire company. So, you have to basically prepare yourself mentally and organizationally to do that. It involves everybody from the top all the way down. So, as an example, when you're a private company, you may have a few investors, right? In our case, we probably had about maybe two or three physician investors that were all private. When you become public, now you have investors all over the world, right? So, these are other people's money that you have to take care of, and maintain, and be a steward of their investment. It's a huge responsibility. You have to make sure that you deliver, right? So, going public is one thing, like we talked about the three or four ways, but maintaining being public is a completely different animal altogether. In fact, in some ways, that is the harder task of being a public company is staying public, because once you do that, you need as much help as you can. 

Like for example, Justin, I know that you've been involved with a lot of public companies. You've seen a lot of potentials on downside and risk with being public. So, as a public company, you just have to basically be ready for anything. 

In the four years that we've been public, we've probably faced a lot of obstacles that I don't know if any other companies have faced. I'm sure a lot of companies have, but my point is that just in the four years, we probably faced activists; we faced restatements; we faced market downturns. We faced regulatory changes. So, my point is that — and I'm sure we're not alone — so, the point is that once you become public, you have to organize your organization to be prepared for basically anything. You have to be able to pivot. You have to be able to adapt to new market conditions, geopolitical — I mean, even like right now as an example. It's a perfect timing, a perfect example. So, the point is that you just have to be very adaptable, lead with conviction, put your head down, and don't worry about what the stock price does. Just continue to deliver and continue to execute.

Krystopher: Tom, those are some great points. I mean when I think about the work we do here, Protiviti, from an organizational readiness standpoint, we spend a lot of time with the executive teams not only helping them go public but really assessing where their organization is from a maturity perspective and spending a lot of time benchmarking them in many ways, events. What are their public peers? What are those public reporting cycles that go along with living as a public company and then surviving as a public company. Then, what are those governance elements that have to be built in and added? SOX being one of the big ones right out of the gate, especially not going traditional IPO route, you're going with another company that's already public. Your timeline for SOX compliance becomes — is essentially their timeline, right? You're marrying into that timeline by doing it that way. So, it does create a lot of challenges and a lot of compression with getting a whole lot of stuff done in a very short period of time. Then, also, at the same time, really scaling up your infrastructure to be able to maintain that going forward. 

In my own experience, I guess a lot of times, we'll get a company to the goal line, and they'll go IPO, and they'll be listed. We tend to stay on for a couple of quarters, if not almost the full year afterwards in some capacity, transitioning things off to new headcounter as they're developing and building that infrastructure, really passing stuff off, providing elements of training in that way. So, it's definitely common what you're going through. I think a lot of companies do experience that. I think maybe a little bit of bad luck that you're getting it all in the first four years, but definitely seems like par for the course.

Vo: Yes. I agree. No matter how much you prepare to be public, you can never be prepared for anything. No matter how much you prepare, change will come. So, if you don't adapt change, you're going to be changed, regardless if you're ready or not.

Krystopher: That's great advice, I think, to give out to any of the founders, any executive teams that are thinking about this is, yes, you got to be agile. You got to be ready for that change because you might not know what it is, but you do know there will be some element of change that's going to come out of this type of endeavor. 

Tom, just double clicking back on a point you'd made earlier and think about traditional IPO versus SPAC versus reverse merger or direct listing, one of the areas where I think you're at somewhat of a disadvantage is in investor communication strategies, where going the road you went down, you didn't have the roadshow. You didn't have that relationship getting established up front with analysts and with investors. Can you maybe go into a little bit on what strategies you use to really get in touch with that investor community and build your brand with those investors? What could you recommend for a company that's contemplating this or a newly public company that's similar fact pattern, SPAC or reverse merger? What could they do? What are those best practices they could follow?

Vo: Yes. With our company, to your point, we were pretty much invisible in the beginning. We didn't have any analyst coverage. It took us a long time to get even one. We didn't have a road show, to your point. So, every time we went out to talk with investor bankers, we had to explain the story. In fact, that's still happening now. One more unique aspect for our company is that we are a very unique company. There's no other company like us. So, people are confused about who we are. They don't understand who we are and what we do, in some ways. So, we have to probably work five times harder in order to explain a story. 

Having said that, I mean there's a few things that I would advise the executive to consider as you go out and market each company. Number one is execution is the key, right? Even if they don't know who you are, as long as you keep executing — and it may take 10 quarters to get the name out. It may take 12 quarters. This is not an overnight thing. Even if you're the most charismatic, well-spoken CEO out there, people are still going to wait until they see you execute. So, number one is you have to execute. You have to focus on the core business first. Then, you can go out and tell your story. If your core business, if the execution is not up to par, no matter how great you are, how eloquent you are, how charismatic you are, the market's not going to invest. So, that's the first thing. Execute. Focus on the core business. 

Number two is, keep things simple. When you go out and explain to investors, keep it simple, keep it succinct, keep it short so that people understand your goals and objectives. 

Then, number three, you just have to basically put your head down and continue to focus on the core business in spite of any potential bad news or negativity that are out there, right? So, when you become public, you're essentially a target. So, there will be days when you have some negative press, negative sort of forces that work against your company, and you have to basically react to it. So, the way that you react to it is also very relevant and very important. So, it's not just telling the story, but it's also explaining, not compromising the core business but you have to be able to explain when something potentially negative had happened to the company. You have to basically tell the investor, tell the analyst exactly what happened. Then, tell the analyst or the investor how you are going to go around and fix it, and get the ship back on the right track.

Krystopher: Do that in a very, very tight turnaround time. So, something happens, you have to disclose it. You have to also come up with that solution very quickly, at least a plan for what that solution will be.

Vo: That's right. People always want a plan, right? They don't want to hear your explanations, right? You don't have to sugarcoat it. You just basically tell them the truth, tell them your plans, and how you are going to turn things around.

Krystopher: Tom, when you think about the lessons learned along the way, the past couple of years, reflecting on that journey for going public, what advice could you give to really aspiring public companies, aspiring founders that are out there that might be listening, that are — the market's hot again. The market's heating up. We see a lot of activity, particularly with SPACs at the moment. What should they be considering before making a decision like this? What advice or lesson could you maybe share and enlighten some of these founders with?

Vo: Yes. I think in order to answer your question, maybe what I should do is explain to the executives what we went through since we've been public. So, we were a private company for a good, I would say, 12 years. Every single one of those years, we were a very profitable company — like 30%, 40% margins. The one year that we became public, there was a regulatory issue where our revenue dropped by about 35%— the year that we became public. So, the only thing that the public investors saw was a drop in 35% revenue, and that drop went straight to the bottom line. So, now, a 90% drop in profitability, right? So, that resulted in banks reaching out to us, calling out the loans. That resulted in our stock. Our stock just dropped by about 80%. That resulted in not one, but two reverse splits. Then, on top of that, we had to change auditor. So, we had some other disagreement and that we had to restate last year, 2025. Then, the good news though was that we rebounded. We turned things around. It took us about two years to turn things around but even when we turned things around, people still didn't believe it because our revenue essentially doubled overnight because of all the changes that we made. So, even though we turned things around, the public still didn't believe it. The public still thought it was sort of like a one-time thing, right? So, they didn't give us the benefit of the doubt.

Krystopher: Right. It's almost amplified by being a public company, right? If you're private, it happens and you explain it, you can talk to the board. As a public entity, now all of a sudden there's lawsuits, right? There's people that are going after you. There's people that are — things that are happening that are adding additional stress into something that just wasn’t there as a as a private company. So, it's really just having that thick skin and that resilience on top of being very agile, surrounding yourself with really the right people and the right advisors, the right experts, building that right team internally. I think these are all very critical aspects.

Vo: Yes. Absolutely. I mean, as a public company CEO or executive, or directors and officers, I mean people are going to talk about you, unfortunately. People are going to say negative things, right? I mean we've had a few of those in the past couple of years with activist reports and things like that. A lot of it may or may not be untrue or a lot of it may be in a different context, right? So, you just have to put your head down and continue through it. The hardest part of that, though, is that not only are you a public company, or the public sees those, but internally, your internal employees see that. So, you just have to make sure that you lead with conviction. You need to make sure that you have to basically get the right people underneath you that understand that no matter what happens, no matter what anybody says, that the team is still functional and the team is still growing, right? So, this is where I think leading with a very, I would say, definite mission and value statement and vision is very crucial because the entire team has to adhere to that mission and understand that no matter what obstacles anybody throws at us, we can still perform. Basically, ignore any negativity, ignore anything that comes away and just perform day-to-day, and continue to do the best for whatever service that you're doing. In our case, it's seeing patients, right? No matter what happens, no matter what anybody says, continue to take care of that patient in front of you. If you put your head down and do that, then most of the time you'll be fine.

Krystopher: That's really wonderful advice to hear and just really great lesson in keeping that tone at the top there, even through the adversity. Tom, that was my last question. I can't thank you enough for taking the time out of your day to do this. Really appreciate it. Really loved the candid conversation. Thank you once again.

Vo: Yes. Thank you, Justin. Really great to be here and great talking with you.

Krystopher: Absolutely. Joe, back over to you to wrap it up.

Joe Kornik: Thanks, Justin. Thanks, Tom. Thank you for watching. I'm Joe Kornik, we’ll see you next time.