Blue Orca Shorts Nutex Over Ties to Alleged Insurance Fraud Scheme

Short seller Blue Orca Capital disclosed a short position in Nutex Health (NUTX) on Tuesday, alleging the healthcare provider may have benefited from a fraudulent medical billing scheme led by consulting firm HaloMD.

Nutex Health’s stock plummeted more than 17% in afternoon trade. On Stocktwits, retail sentiment around the healthcare facilities manager remained in ‘neutral’ territory over the past day amid ‘high’ levels of chatter.

According to Blue Orca’s report, HaloMD has been named in three recently filed federal lawsuits accusing it of defrauding insurers by manipulating the No Surprises Act (NSA) arbitration process. 

Although Nutex is not named in any of the lawsuits, Blue Orca claims the company’s dramatic revenue growth may be linked to HaloMD’s alleged tactics. Nutex reported a 214% increase in revenue year-on-year during the first quarter (Q1) results in May. Its stock has jumped more than 200% this year so far and climbed over 1,338% over the past 12 months. 

According to the short seller, the lawsuits describe a “coordinated fraudulent scheme” in which HaloMD purportedly flooded the NSA arbitration portal on behalf of clients to secure outsize insurance payments. The suits allege HaloMD’s methods delivered reimbursement rates up to eight times higher than standard in-network rates.

Blue Orca argues the allegations could help explain Nutex’s reported tripling of revenue per hospital visit. The firm warns that Nutex could soon be named in related litigation, potentially exposing it to significant legal and financial risk, including insurer efforts to claw back prior awards.

Even if lawsuits don’t materialize, Blue Orca believes the company's reliance on arbitration windfalls may no longer be sustainable if insurers and regulators move to close the loophole.

“Nutex will likely return to penny stock status once it can no longer use the NSA system to receive inflated reimbursements,” the report said.

Blue Orca also alleged that HaloMD’s CEO Alla LaRoque formerly worked as a “dancer” at the Palomino Club in Las Vegas, before operating day spas, appearing on Donald Trump’s ‘The Apprentice’, and declaring bankruptcy, citing a report by The New York Post.

Nutex has not publicly responded to the allegations yet.

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