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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from__________ to __________.

COMMISSION FILE NUMBER: 000-55274

NOBILIS HEALTH CORP.
(Exact name of registrant as specified in its charter)

British Columbia	98-1188172
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

11700 Katy Freeway, Suite 300, Houston, Texas	77079
(Address of principal executive offices)	(Zip Code)

(713)355-8614
(Registrant’s telephone number, including area code)

4120 Southwest Freeway, Suite 150, Houston, Texas 77027
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X]     NO [  ]

(Note: As a voluntary filer not subject to the filing requirements of Sections 13 or 15(d) of the Exchange Act, the registrant has filed all reports pursuant to Section 13 or 15(d) of the Exchange Act during the preceding 12 months as if it were subject to such filing requirements.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES [X]     NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   [  ]	Accelerated filer                   [  ]
Non-accelerated filer     [  ]	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES [  ]     NO [X]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date. 70,893,636 common shares as of August 13, 2015.

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TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures about Market Risk	31
Item 4. Controls and Procedures	31
PART II. OTHER INFORMATION	32
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3. Defaults Upon Senior Securities	32
Item 4. Mine Safety Disclosures	32
Item 5. Other Information	32
Item 6. Exhibits	32
Signatures	33

A list of our healthcare facilities (the “Nobilis Facilities”) and the abbreviations by which we refer to them in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2015 (“Quarterly Report”) appear below:

Healthcare Facility		Abbreviation
Northstar Healthcare Surgery Center - Houston		NHSC-H
Kirby Surgical Center		Kirby
Microsurgery Institute of Dallas		MSID
Northstar Healthcare Surgery Center - Scottsdale		NHSC-S
First Nobilis Hospital		FNH
First Nobilis Surgical Center		FNSC
Victory Medical Center Houston		VMC-H

In this Report, the terms "Nobilis", "we", "us", "our", "ours", or "the Company" refers to Nobilis Health Corp.

Page 2 of 33

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PART I.
FINANCIAL INFORMATION

Item 1. Financial Statements

NOBILIS HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

		June 30,			December 31,
		2015			2014
		(unaudited)
Assets
Current Assets:
Cash	$	31,668		$	7,568
Trade accounts receivable, net		51,148			42,175
Medical supplies		2,499			1,412
Prepaid expenses and other current assets		3,115			3,554
Total current assets		88,430			54,709
Property and equipment, net		11,587			9,087
Intangible assets		20,149			19,543
Goodwill		32,537			22,470
Notes receivable		150			659
Investments in associates		2,495			880
Other long-term assets		203			234
Total Assets	$	155,551		$	107,582
Liabilities and Shareholders' Equity
Current Liabilities:
Trade accounts payable	$	17,428		$	10,528
Accrued liabilities		11,614			9,112
Lines of credit		-			5,420
Subordinated notes payable		-			635
Current portion of debt		868			3,437
Current portion of capital leases		1,299			257
Other current liabilities		543			1,485
Total current liabilities		31,752			30,874
Long-term capital leases, net of current portion		1,820			573
Lines of credit		1,500			-
Long-term debt, net of current portion		18,054			10,582
Other long-term liabilities		73			252
Total liabilities		53,199			42,281
Shareholders' Equity:
Common stock (no par value; authorized unlimited shares, 70,867,494 and 59,418,227 shares issued and outstanding, respectively)		-			-
Additional paid in capital		215,842			179,293
Accumulated deficit		(135,312	)		(132,866	)
Accumulated other comprehensive loss		(54	)		(111	)
Total shareholders’ equity attributable to Nobilis Health Corp.		80,476			46,316
Noncontrolling interests		21,876			18,985
Total shareholders' equity		102,352			65,301
Total Liabilities and Shareholders' Equity	$	155,551		$	107,582

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NOBILIS HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)

		Three months ended June 30,						Six months ended June 30,
		2015			2014			2015			2014
Revenues:
Patient and net professional fees	$	45,366		$	15,114		$	80,424		$	27,235
Contracted marketing revenues		2,839			-			3,649			-
Factoring revenues		662			-			1,910			-
Total revenue		48,867			15,114			85,983			27,235
Cost of revenues		910			-			971			-
Gross Profit		47,957			15,114			85,012			27,235
Operating expenses:
Salaries and benefits		9,028			2,003			16,672			3,918
Drugs and supplies		7,940			2,405			12,889			3,969
General and administrative		20,587			6,006			33,770			11,912
Depreciation and amortization		955			305			1,592			603
Total operating expenses		38,510			10,719			64,923			20,402
Corporate costs:
Salaries and benefits		1,001			470			1,992			1,029
General and administrative		6,054			689			11,424			1,241
Legal expenses		741			351			1,212			622
Depreciation		30			29			56			61
Total corporate costs		7,826			1,539			14,684			2,953
Income from operations		1,621			2,856			5,405			3,880
Other expense (income):
Interest expense		294			60			784			113
Other income, net		(1,277	)		(85	)		(1,412	)		(66	)
Total other (income) expense		(983	)		(25	)		(628	)		47
Net income before income taxes and noncontrolling interests		2,604			2,881			6,033			3,833
Income tax		454			158			606			238
Net income		2,150			2,723			5,427			3,595
Net income attributable to noncontrolling interests		3,738			2,505			8,228			3,864
Net (loss) income attributable to Nobilis Health Corp.	$	(1,588	)	$	218		$	(2,801	)	$	(269	)
Net (loss) income per basic common share	$	(0.02	)	$	0.01		$	(0.05	)	$	(0.01	)
Net (loss) income per fully diluted common share	$	(0.02	)	$	0.01		$	(0.05	)	$	(0.01	)
Weighted average shares outstanding (basic)		63,531,390			43,411,318			61,872,658			43,301,603
Weighted average shares outstanding (fully diluted)		63,531,390			44,641,426			61,872,658			43,301,603

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NOBILIS HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)

		Three months ended June 30,						Six months ended June 30,
		2015			2014			2015			2014
Net (loss) income	$	(1,588	)	$	218		$	(2,801	)	$	(269	)
Other comprehensive income (loss):
Foreign currency translation adjustments		44			10			57			(53	)
Total other comprehensive income (loss)		44			10			57			(53	)
Comprehensive (loss) income attributable to Nobilis Health Corp.	$	(1,544	)	$	228		$	(2,744	)	$	(322	)

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NOBILIS HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

		Six months ended June 30,
		2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,801	)	$	(269	)
Adjustments to reconcile net loss attributable to Nobilis to net cash provided by operating activities:
Depreciation and amortization		1,648			664
Provision for bad debts		200			-
Noncontrolling interests		8,228			3,864
Foreign currency gain (loss)		57			(53	)
Share-based compensation		9,035			185
Recoupment of Indemnified expenses		(1,700	)		-
Amortization of deferred financing fees		33			-
Changes in operating assets and liabilities:
Trade accounts receivable		(6,453	)		(1,464	)
Medical supplies		(425	)		(101	)
Prepaids and other current assets		701			(242	)
Other long-term assets		(39	)		464
Trade accounts payable and accrued liabilities		(2,223	)		(846	)
Other current liabilities		(942	)		(38	)
Other long-term liabilities		(103	)		-
Net cash provided by operating activities		5,216			2,164
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,177	)		(1,124	)
Investment in associate		(120	)		(150	)
Note receivable		(197	)		-
Purchase of interest acquired in subsidiary		-			(346	)
Proceeds of sale of ownership interests of subsidiary		-			230
Acquisition of Victory		(1,436	)		-
Acquisition of Peak		(850	)		-
Deconsolidation of imaging centers and urgent care clinic		(166	)		-
Net cash used for investing activities		(3,946	)		(1,390	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to non controlling interests		(5,644	)		(2,158	)
Proceeds from exercise of stock options		432			28
Proceeds from exercise of stock warrants		4,335			-
Proceeds from private placement		28,395			-
Payments on capital lease obligations		(304	)		(24	)
Proceeds from debt and lines of credit		21,500			-
Payments of debt and lines of credit		(25,227	)		(34	)
Deferred financing fees		(657	)		-
Net cash provided by (used for) financing activities		22,830			(2,188	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		24,100			(1,414	)
CASH AND CASH EQUIVALENTS — Beginning of period		7,568			5,602
CASH AND CASH EQUIVALENTS — End of period	$	31,668		$	4,188
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	846		$	71
Cash paid for taxes	$	603		$	238
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash acquisition of property and equipment	$	4,860		$	-
Non-cash acquisition of goodwill	$	10,765		$	-
Non-cash acquisition of intangibles	$	1,233		$	-
Non-cash deconsolidation of property and equipment	$	2,828		$	-
Non-cash deconsolidation of goodwill	$	701		$	-
Non-cash purchase of medical equipment through capital lease	$	315		$	-
Athas settlement in lieu of contingent shares	$	5,685		$	-

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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NOBILIS HEALTH CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts and as otherwise noted)

1.	Nature of Operations and Basis of Presentation

Nature of Operations

Nobilis Health Corp. was incorporated on March 16, 2007 under the name "Northstar Healthcare Inc." pursuant to the provisions of the British Columbia Business Corporations Act ("BCBCA"). On December 5, 2014, Northstar Healthcare Inc. changed its name to Nobilis Health Corp. (the “Company”, “we”, “our”, “us”).

We own and manage healthcare facilities (the "Nobilis Facilities") in Texas and Arizona; including hospitals and ambulatory surgery centers (“ASC”), referred to as the "Nobilis ASCs". The Nobilis ASCs are licensed ASCs that provide scheduled surgical procedures in a limited number of clinical specialties, which enables them to develop routines, procedures and protocols to maximize operating efficiency and productivity while offering an enhanced healthcare experience for both physicians and patients. In December 2014, the Company expanded its services to health care marketing and factoring of receivables when it acquired 100% interests of Athas Health, LLC (“Athas”).

The Nobilis ASCs do not offer the full range of services typically found in traditional hospitals, but instead focus on certain clinical specialties, including orthopedic surgery, podiatric surgery, ENT, pain management, gastro- intestinal, gynecology, and general surgery. Nobilis’ hospitals focus on these same specialties with the ability to take on more complex cases.

The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “Annual Report”). If not materially different, certain footnote disclosures included in the Annual Report have been omitted from this Quarterly Report on 10-Q.

The interim consolidated financial information in this report has not been audited. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim period consolidated financial statements, have been made. Results of operations reported for the interim periods are not necessarily indicative of results for the entire year.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the disclosures of contingent assets and liabilities. These accounting estimates reflect the best judgement of management, but actual results could differ.

For comparability, certain prior period amounts have been reclassified, where appropriate, to conform to the financial statement presentation used in the current period.

Recent Accounting Pronouncements

In May 2014, Financial Accounting Standards Board (“FASB”) issued guidance that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. In April 2015, the FASB decided to delay the effective date for the guidance. The guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In June 2014, the FASB issued amended guidance on the accounting for certain share-based employee compensation awards. The amended guidance applies to share-based employee compensation awards that include a performance target that affects vesting when the performance target can be achieved after the requisite service period. These targets are to be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award and compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved. The amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company does not expect adoption will have a material impact on its consolidated financial statements.

In February 2015, the FASB issued amended guidance on the consolidation of legal entities including limited partnerships and limited liability corporations. The guidance modifies the consolidation models to be analyzed in determining whether a reporting entity should consolidate certain types of legal entities. The guidance must be applied using one of two retrospective application methods and will be effective for fiscal years beginning after December 15, 2015, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in any interim period. The Company does not expect adoption will have a material impact on its consolidated financial statements.

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In April 2015, the FASB issued guidance in order to simplify the presentation of debt issuance costs. The guidance requires that debt issuance costs related to a recognized debt liability be presented as a direct deduction from the carrying amount of the debt liability rather than as a deferred charge asset as required under current guidance. The guidance also requires that the amortization of debt issuance costs be reported as interest expense. The guidance is effective for the Company starting January 1, 2016 and must be applied on a retrospective basis. Early adoption is permitted. The Company has chosen to early adopt this guidance as of the interim period ended March 31, 2015. No retrospective application was deemed necessary, as the Company did not have any debt issuance costs prior to the three months ended March 31, 2015. Approximately $0.6 million of debt issuance costs have been deducted from the carrying amount of debt as of June 30, 2015.

In June 2015, the FASB issued Accounting Standards Update No. 2015-10: Technical Corrections and Improvements (ASU 2015-10). ASU 2015-10 is part of an initiative to clarify the Accounting Standards Codification (Codification), correct unintended application of guidance, and make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2015-10 covers a wide range of topics in the Codification and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. The Company is currently evaluating the provisions of this accounting update and assessing the impact, if any, it may have on its financial position and results of operations.

2.	Deconsolidations

During the three month period ended March 31, 2015, we completed the deconsolidation of two imaging centers and one urgent care clinic in Houston. We resigned as the manager of these facilities resulting in loss of control and our rights to exercise significant influence. We retained investments in these facilities that are accounted for as cost method investments as of January 1, 2015. The revaluation of our remaining investments in these facilities resulted in no gain or loss due to the short term these investments were held. The deconsolidation resulted in the reversal of $0.7 million of goodwill.

3.	Investments in Associates

In March 2014, the Company acquired an ownership interest in Group of Pioneers Diagnostics (“GOP”), LLC, representing 40% of the outstanding share interests in GOP. The investment was previously accounted for using the equity method of accounting. In March 2015, the Company resigned as manager of GOP resulting in the loss of ability to exercise significant influence over the operating and financial activities of the investee. As a result, the investment will be accounted for under the cost method accounting. The carrying value of this investment at June 30, 2015 was $0.2 million, and is reflected in investments in associates in the consolidated balance sheets.

4.	Business Combinations

First Nobilis, LLC (“First Nobilis”)

In September 2014, the Company formed First Nobilis, a Texas limited liability Company. First Nobilis is owned 51% by the Company and 49% by a third party. First Nobilis formed two subsidiary Texas limited liability companies to be the new operating entities.

Upon formation of First Nobilis, effective September 1, 2014, Nobilis contributed $7.5 million in cash to the new entity. For a 49% ownership interest, a third party contributed medical supplies, intangible assets, and certain accounts payables and accounts receivables. This transaction was treated as a business combination. The fair value of the intangible assets and liabilities acquired were determined by independent third party valuation experts. The carrying amounts of all other net assets acquired approximate their fair values due to their short term nature.

Athas Health, LLC (“Athas”)

In December 2014, the Company completed its acquisition of Athas for total consideration of approximately $31.2 million (all $ denominations in US dollars). Athas is based in Dallas, Texas, and focuses on the delivery of specialized healthcare services in seven states through the use of contracted marketing services and factoring of receivables. The purchase price for Nobilis to acquire all of the ownership interests in Athas was broken down as follows: $3.0 million in cash upon closing, the issuance of a promissory note by Nobilis to the sellers for $12.0 million, the issuance at closing of 6,666,666 shares of Nobilis common stock that are subject to a lock up of up to two years, and the issuance of an additional 4,666,666 shares of Nobilis common stock issued over two years with half issued on the first anniversary of the closing and the second half issued on the second anniversary of the closing. Under the two year lock up period, the stock issued as part of the purchase price is subject to restrictions on transfer and may not be sold or pledged until the lock out period is released.

The fair value of the intangible assets acquired were determined by independent third party valuation experts. The carrying amounts of all other net assets acquired approximate their fair values due to their short term nature. The value of the stock issued for consideration was determined by third party valuation experts using the published stock price on the date of closing, less a discount for lack of marketability as a result of the two year lock up period on the shares issued.

Victory Medical Center Houston, L.P. (“Victory”)

In April 2015, the Company acquired a 55% ownership interest in Victory Medical Center Houston, L.P., which owns and operates Victory Healthcare Houston Hospital, surgical hospital located in the Texas Medical Center in Houston, Texas. The Company paid $1.4 million in cash and assumed certain leases and loans of Victory.

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The fair value of the intangible assets and physical equipment were determined by independent third party valuation experts. The carrying amounts of all other net assets acquired approximate their fair values due to their short term nature.

Subsequent to the acquisition date of April 24, 2015, the Partnership had $2.3 million in revenues and a net loss of $0.7 million which is included in the Company’s June 30, 2015 consolidated statements of operations.

The costs related to the transaction were nominal and were expensed during the three months ended June 30, 2015. These costs are included in the corporate general and administrative expenses in the June 30, 2015 consolidated statements of operations.

The following table summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date of acquisition (in thousands):

		April 24, 2015
Net assets acquired:
Cash	$	64
Trade accounts receivable		2,500
Other receivables		6,325
Prepaid expenses and other current assets		44
Inventory		662
Property and equipment		4,860
Other long-term assets		2
Trademark		280
Medicare license		940
Hospital license		13
Goodwill		9,447
Net assets acquired	$	25,137
Net liabilities acquired:
Trade accounts payable	$	6,266
Accrued liabilities		3,198
Long-term portion of Capital Leases		2,278
Long-term portion of Note Payable		6,052
Total liabilities acquired	$	17,794
Consideration:
Cash, net of cash acquired	$	1,436
Debt assumed		5,907
Total consideration	$	7,343

Peak Surgeon Innovations, LLC (“Peak”)

In June 2015, the Company acquired Peak, a provider of intraoperative neuromonitoring ("IOM") services for hospitals, surgery centers and other healthcare facilities. The Company acquired a 100% ownership interest in Peak for cash consideration of $0.9 million and stock consideration of $0.7 million provided to Bryan Hasse (the “Seller”). In addition to such cash and stock consideration, the Seller is eligible to receive a potential earnout payment (in cash or stock at the option of Seller) upon achievement by the IOM service line of certain EBITDA performance metrics.

The Company is currently in the process of determining the fair value of any potential intangible assets through the use of an independent third party valuation expert. The carrying amounts of all other net assets acquired approximate their fair values due to their short term nature.

Subsequent to the acquisition date of June 1, 2015, Peak had $0.3 million in revenues and net income of $0.1 million which is included in the Company’s June 30, 2015 consolidated statements of operations.

The costs related to the transaction were nominal and were expensed during the three months ended June 30, 2015. These costs are included in the corporate general and administrative expenses in the June 30, 2015 consolidated statements of operations.

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The following table summarizes the preliminary fair values of the identifiable assets acquired and liabilities assumed at the date of acquisition (in thousands):

		June 1, 2015
Net assets acquired:
Cash	$	1
Trade accounts receivable		315
Prepaid expenses and other current assets		4
Goodwill		1,318
Net assets acquired	$	1,638
Net liabilities acquired:
Trade accounts payable	$	138
Consideration:
Cash, net of cash acquired	$	850
Stock issued as consideration		650
Total consideration	$	1,500

Unaudited Supplemental Pro Forma Information

The following unaudited supplemental pro forma financial information includes the results of operations for Athas, First Nobilis and Victory, and is presented as if each acquired company had been consolidated as of the beginning of the year immediately preceding the year in which the company was acquired. The Company utilized all historical data which was available and practicable to obtain. Certain information was not practicable to obtain for the three and six months ended June 30, 2014 for victory due to the bankruptcy proceedings of their former parent company. The unaudited supplemental pro forma financial information has been provided for illustrative purposes only and does not purport to be indicative of the actual result that would have been achieved by the combined companies for the periods presented, or of the results that may be achieved by the combined companies in the future. Further, results may vary significantly from the results reflected in the following unaudited supplemental pro forma financial information because of future events and transactions, as well as other factors.

Unaudited pro forma information for the Peak acquisition is not presented in the pro forma disclosure because the effects of such transaction is considered immaterial to the Company’s consolidated financial statements.

The unaudited supplemental pro forma financial information presented below has been prepared by adjusting the historical results of the Company to include historical results of the acquired businesses described above and was then adjusted: (i) to increase amortization expense resulting from the intangible assets acquired; (ii) to adjust earnings per share to reflect the common shares issued as part of the purchase consideration; (iii) to reduce interest expense from debt which was retained by the seller upon acquisition of the respective businesses; (iv) to adjust the carrying value of net property and equipment to its fair value and to increase depreciation expense for the incremental increase in the value of property and equipment; (v) to decrease expenses for management services which were provided by the preceding parent entity and to concurrently increase expenses for management services which are now provided by the Company; (vi) to adjust noncontrolling interest to properly reflect the minority ownership percentages which were not purchased by the Company; and (vii) to reverse income from discontinued operations. The unaudited supplemental pro forma financial information does not include adjustments to reflect the impact of other cost savings or synergies that may result from these acquisition.

The Company’s unaudited supplemental pro forma financial information is as follows (in thousands except for per share amounts):

		Three months ended			Three months ended			Six months ended			Six months ended
		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Revenue	$	48,867		$	24,472		$	86,556		$	52,144
Income (loss) before from operations		1,621			(2,030	)		4,738			(225	)
Net income attributable to noncontrolling interest		3,738			793			7,971			2,817
Net loss attributable to common stockholders		(1,588	)		(2,587	)		(3,379	)		(2,432	)
Net loss per basic common share	$	(0.03	)	$	(0.05	)	$	(0.05	)	$	(0.05	)

5.	Trade Accounts Receivable

A detail of accounts receivable as of June 30, 2015 and December 31, 2014 is as follows (in thousands):

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		June 30, 2015			December 31, 2014
Trade accounts receivable	$	51,287		$	40,985
Allowance for doubtful accounts		(1,584	)		(1,391	)
Receivables transferred		(429	)		(873	)
Receivables purchased		1,874			3,454
Trade accounts receivable, net	$	51,148		$	42,175

Bad debt expense was $0.2 million for the three and six months ended June 30, 2015 and was nil for the three and six months ended June 30, 2014.

As of June 30, 2015 and December 31, 2014, there remained a balance of $0.4 million and $0.9 million, respectively, in transferred receivables pursuant to the terms of the original agreement. The Company, from time to time, transfers to the third party certain of its accounts receivable payments on a non-recourse basis. For the three months ended June 30, 2015 and 2014, the Company received advanced payments of $0.5 million and $0.1 million, respectively. During the same time period, the Company transferred $2.1 million and $2.2 million of receivables, respectively. For the six months ended June 30, 2015 and 2014, the Company received advanced payments of $1.1 million and $0.3 million, respectively. During the same time period, the Company transferred $3.8 million and $3.8 million of receivables, respectively. Concurrently, upon collection of these transferred receivables, payment will be made to the transferee.

Athas Health, LLC (“Athas”) purchases receivables from physicians, at a discount, on a nonrecourse basis. The discount and purchase price vary by speciality. These purchased receivables are billed and collected by Athas, and Athas retains 100% of what is collected after paying the discounted purchase price. Following the transfer of the receivable, the transferor has no continued involvement and there are no restrictions on the receivables, and as such, these transfers of receivables are accounted for as sales transactions. Gross revenue from purchased receivables was $1.8 million and $4.3 million for the three and six months ended June 30, 2015, respectively. Revenue, net of the discounted purchase price, was $0.7 million and $1.9 million for the three and six months ended June 30, 2015, respectively. Accounts receivable for purchased receivables was $1.9 million as of June 30, 2015. Comparable prior period amounts are not presented, as Athas was acquired by Nobilis in December 2014.

6.	Concentrations

A summary of certain information about our payor concentration is as follows:

MEDICAL SERVICES SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		95.0%		97.3%
Workers compensation		4.6%		1.7%
Medicare		0.4%		1.0%
Total		100.0%		100.0%

MARKETING & FACTORING SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		100.0%		0.0%
Workers compensation		0.0%		0.0%
Medicare		0.0%		0.0%
Total		100.0%		0.0%

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CONSOLIDATED SEGMENTS
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		95.5%		97.3%
Workers compensation		4.1%		1.7%
Medicare		0.4%		1.0%
Total		100.0%		100.0%

MEDICAL SERVICES SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		95.0%		96.9%
Workers compensation		4.5%		2.2%
Medicare		0.5%		0.9%
Total		100.0%		100.0%

MARKETING & FACTORING SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		100.0%		0.0%
Workers compensation		0.0%		0.0%
Medicare		0.0%		0.0%
Total		100.0%		0.0%

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CONSOLIDATED SEGMENTS
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE 30, 2015 AND 2014

		2015 Patient and Net		2014 Patient and Net
Payors		Professional Fee Revenue		Professional Fee Revenue
		by Payor Mix		by Payor Mix
Private insurance and other private pay		95.3%		96.4%
Workers compensation		4.2%		2.6%
Medicare		0.5%		1.0%
Total		100.0%		100.0%

Two facilities represent approximately 76.63% of the Company’s contracted marketing revenue and five facilities represent approximately 78.82% of the Company’s contracted marketing accounts receivable for the six months ended and as of June 30, 2015.

7.	Intangible Assets

Intangible assets at June 30, 2015 and December 31, 2014 consist of the following (in thousands):

					June 30, 2015															December 31, 2014
		Term			Historical						Accumulated			Accumulated			Net Book						Accumulated			Accumulated
		(in years)			Cost			Additions			Amortization			Impairment			Value			Historical Cost			Amortization			Impairment			Net Book Value
Definite Life
Non-compete agreements		10-15		$	2,661		$	-		$	942		$	-		$	1,719		$	2,661		$	856		$	-		$	1,805
Internally developed software		5			1,980			-			231			-			1,749			1,980			33			-			1,947
Trade secret methodology		10			5,120			-			299			-			4,821			5,120			44			-			5,076
Physician relationships		20			4,000			-			167			-			3,833			4,000			62			-			3,938
Unfavorable lease		8			(290	)		-			(17	)		-			(273	)		(290	)		-			-			(290	)
Indefinite Life
Tradenames					1,200			-			-			-			1,200			1,200			-			-			1,200
Trademark					4,770			280			-			-			5,050			4,770			-			-			4,770
Medicare license					8,498			940			-			7,401			2,037			8,498			-			7,401			1,097
Hospital license					-			13			-			-			13
Total				$	27,939		$	1,233		$	1,622		$	7,401		$	20,149		$	27,939		$	995		$	7,401		$	19,543

Amortization expense was $0.3 million and nil for the three months ended June 30, 2015 and 2014, respectively, and $0.6 million and nil for the six months ended June 30, 2015 and 2014, respectively. Estimated amortization expense of intangible assets is $0.6 million for the remainder of 2015, $1.3 million for each of the next four years and $6.2 million thereafter.

8.

Goodwill

The following table provides information on changes in the carrying amount of goodwill, which is included in the accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014 (in thousands):

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		June 30, 2015			December 31, 2014
Cost	$	46,837		$	36,770
Accumulated impairment losses		(14,300	)		(14,300	)
Total	$	32,537		$	22,470
Cost		June 30, 2015			December 31, 2014
BALANCE - beginning of period	$	36,770		$	15,528
January 2014 business combination		-			701
September 2014 business combination		-			1,249
December 2014 business combination		-			19,292
Deconsolidation of imaging centers and urgent care clinic		(701	)		-
April 2015 business combination		9,447			-
June 2015 business combination		1,321			-
Total cost	$	46,837		$	36,770
Accumulated impairment
BALANCE - beginning of period	$	(14,300	)	$	(14,300	)
Impairment charges during the period		-			-
Total accumulated impairment	$	(14,300	)	$	(14,300	)

9.	Lines of Credit

On March 31, 2015, the Company secured a $5.0 million revolving line of credit (the “revolver”) from General Electric Capital Corporation. The revolver bears interest at a rate of 4% plus LIBOR per annum (4.70% at June 30, 2015) and requires quarterly payments. Principal amounts borrowed under the revolver may be repaid and re-borrowed periodically, maturing in March 2020. The revolver is collateralized by the accounts receivable and physical equipment of all of the Company’s 100% owned subsidiaries as well as the Company’s ownership interest in all less than wholly owned subsidiaries. The Company had $1.5 million outstanding on this revolver as of June 30, 2015.

10.

Debt

On March 31, 2015, the Company secured a $20.0 million term loan from General Electric Capital Corporation. The term loan bears interest at a rate of 4% plus LIBOR per annum (4.70% at June 30, 2015) and requires quarterly payments of principal and interest until the term loan matures in March 2020. The term loan is collateralized by the accounts receivable and physical equipment of all of the Company’s 100% owned subsidiaries as well as the Company’s ownership interest in all less than wholly owned subsidiaries.

The $20.0 million term loan primarily served to refinance all previously held debt and lines of credit. Debt issuance costs associated with the new credit facility approximated $0.6 million and are being amortized over the life of the loan.

Debt at June 30, 2015 consisted of the following (in thousands):

		June 30, 2015			December 31, 2014
Lines of credit	$	1,500		$	5,420
Subordinated notes payable		-			635
Term loan		19,550			14,019
Total debt		21,050			20,074
Less: current portion		868			9,492
Less: amortized loan fees		628			-
Long-term debt, net of current portion	$	19,554		$	10,582

11.	Share Based Compensation

The Company granted a total of 275,000 stock options during the three months ended June 30, 2015. Of the granted options, 75,000 of those vest ratably over a one year period, and 200,000 vest ratably over a three year period.

The following table summarizes stock option activity for the six months ended June 30, 2015.

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		Shares			Weighted-			Weighted-Average
		Underlying			Average Exercise			Remaining Life
		Options			Price			(years)
Outstanding at December 31, 2014		3,118,218		$	1.45			9.80
Granted		1,301,782		$	4.33			9.77
Exercised		(336,120	)	$	1.24			-
Forfeited		(407,213	)	$	1.14			-
Outstanding at June 30, 2015		3,676,667		$	2.13			9.69
Exercisable at June 30, 2015		1,257,611		$	2.59			9.76

The total intrinsic value of stock options exercised during the six months ended June 30, 2015 and 2014 was $2.7 million and $1.5 million, respectively. The total intrinsic value for all in-the-money vested outstanding stock options at June 30, 2015 was $6.9 million. Assuming all stock options outstanding at June 30, 2015 were vested, the total intrinsic value of in-the-money outstanding stock options would have been $22.4 million.

The Company recorded compensation expense relative to stock options of $1.1 million and $0.1 million for the three months ended June 30, 2015 and 2014, respectively, and $3.7 million and $0.1 million for the six months ended June 30, 2015 and 2014, respectively.

The fair values of stock options used in recording compensation expense are computed using the Black-Scholes option pricing model. The table below shows the assumptions used in the model for options awarded during the six months ended June 30, 2015.

		Six months ended June
		30, 2015
Expected price volatility		115% - 119%
Risk free interest rate		.01% - .03%
Expected annual dividend yield		0%
Expected option term (years)		10
Expected forfeiture rate		0%
Grant date fair value per share	$	2.97 - $6.31

For stock options, the Company recognizes share-based compensation net of estimated forfeitures and revises the estimates in the subsequent periods if actual forfeitures differ from the estimates. Forfeiture rates are estimated based on historical experience as well as expected future behavior. As of December 31, 2014, the Company utilized a forfeiture rate of 0% based on a minimal number of stock option issuances and little anticipated forfeitures in the near future.

12.	Shareholders’ Equity

In April 2015, the Company issued, through a private placement agreement, 7,847,668 Units, at a price of Cdn$9.00 per Unit. Each Unit is comprised of one treasury unit (a “Treasury Unit”) and one-half of one common share from Donald L. Kramer, Healthcare Ventures, Ltd (a company wholly owned by Dr. Kramer), Harry Fleming or from treasury. Each Treasury Unit is comprised of one-half of one common share of the Company and one-half of one common share purchase warrant exercisable for one additional share at a price of Cdn$11.50. Through the private placement, the Company raised proceeds of $28.4 million, net of offering costs and commissions of $1.9 million.

Earnings per share (“EPS”)

A detail of the Company’s EPS is as follows (in thousands except for share and per share amounts):

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		Three months ended			Three months ended			Six months ended			Six months ended
		June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Net loss (income) for the period	$	(1,588	)	$	218		$	(2,801	)	$	(269	)
Issued common shares at beginning of period		61,234,803			42,729,547			59,418,227			42,729,547
Effect of investment in subsidiary		-			431,771			-			-
Effect of private placement		974,205			-			489,794			-
Effect of June 2015 acquisition		21,698			-			10,909			-
Effect of stock based compensation		119,011			250,000			217,230			393,603
Effect of stock warrants		1,181,673			-			1,736,498			178,453
Weighted average common shares at end of period		63,531,390			43,411,318			61,872,658			43,301,603
Basic net loss per common share	$	(0.02	)	$	0.01		$	(0.05	)	$	(0.01	)

As the Company is in a loss position for the periods presented, the calculation of dilutive shares is unnecessary. Any increase in weighted-average share amounts would result in an anti-dilutive per share amount.

13.	Income Taxes

The Company files a consolidated federal income tax return. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are recognized to the extent that the realization of the related tax benefit through future taxable profits is probable. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period.

The Company applies recognition thresholds and measurement attributes for the financial statement recognition and of a tax position taken or expected to be taken in a tax return as it relates to accounting for uncertainty in income taxes. In addition, it is the Company’s policy to recognize interest accrued and penalties, if any, related to unrecognized benefits as income tax expense in its consolidated statement of operations.

14. Business Segment Information

A summary of the business segment information as of June 30, 2015 is as follows (in thousands):

		Six months ended June 30, 2015
					Marketing &
		Medical Services			Factoring			Corporate			Total
Revenues	$	77,488		$	8,495		$	-		$	85,983
Cost of goods sold		-			971			-			971
Gross Profit		77,488			7,524			-			85,012
Operating expenses		58,093			6,830			-			64,923
Corporate costs		-			-			14,684			14,684
Income (loss) from operations	$	19,395		$	694		$	(14,684	)	$	5,405
Other data:
Depreciation and amortization expense	$	931		$	661		$	56		$	1,648
Interest expense	$	-		$	80		$	704		$	784
Income tax expense	$	527		$	79		$	-		$	606
Intangible assets	$	7,078		$	13,071		$	-		$	20,149
Goodwill	$	13,245		$	19,292		$	-		$	32,537
Capital expenditures	$	1,365		$	127		$	-		$	1,492
Non-cash acquisition of property	$	4,860		$	-		$	-		$	4,860
Non-cash acquisition of intangibles and goodwill	$	11,998		$	-		$	-		$	11,998
Total assets	$	87,654		$	41,639		$	26,259		$	155,551
Total liabilities	$	23,168		$	5,108		$	24,923		$	53,199

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		Three months ended June 30, 2015
					Marketing &
		Medical Services			Factoring			Corporate			Total
Revenues	$	43,643		$	5,224		$	-		$	48,867
Cost of goods sold		-			910			-			910
Gross Profit		43,643			4,314			-			47,957
Operating expenses		34,727			3,783			-			38,510
Corporate costs		-			-			7,826			7,826
Income (loss) from operations	$	8,916		$	531		$	(7,826	)	$	1,621
Other data:
Depreciation and amortization expense	$	627		$	329		$	29		$	985
Interest expense	$	-		$	1		$	293		$	294
Income tax expense	$	400		$	54		$	-		$	454
Capital expenditures	$	838		$	130		$	-		$	968
Non-cash acquisition of property	$	4,860		$	-		$	-		$	4,860
Non-cash acquisition of intangibles and goodwill	$	11,998		$	-		$	-		$	11,998

The Company created the Marketing & Factoring operation segment in December 2014 following the acquisition of Athas. Prior to the acquisition of Athas, the Company operated under one operating segment and therefore, has not presented a prior period comparison of segment information.

15.	Litigation

The Company is involved in disputes or legal actions arising in the ordinary course of business. Management does not believe the outcome of such disputes or legal actions will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Effective June 30, 2015, the Company, Northstar Healthcare Subco, LLC (“Subco” and, together with the Company, “Nobilis”) entered into a Confidential Agreement (the “Agreement”) with Athas, certain seller parties (the “Athas Sellers”) to the Membership Interest Purchase Agreement dated as of November 26, 2014 (the “MIPA”) and certain other parties. Pursuant to the Agreement, the Athas Sellers agreed to reduce by 836,029 the number of common shares, in the aggregate, that were to be issued on the first and second anniversaries of the MIPA’s closing as contingent purchase price payments (the “Contingent Shares”). In addition, the Agreement accomplished (i) the financing of a $2.7 million debt owed by counterparties to the Agreement, (ii) recoupment of $1.7 million of indemnified expenses, and (iii) indemnification of counterparties with respect to litigation. Also pursuant to the Agreement, the Company accelerated the issuance of the remaining 3,830,638 Contingent Shares, which will be subject to restrictions on transfer.

16.	Subsequent Events

On July 30, 2015, the company formed Marsh Lane Surgical Hospital, LLC (“Marsh Lane”), a Texas limited liability company and wholly owned subsidiary of the Company and closed the purchase of certain assets (the “Acquisition”) pursuant to an asset purchase agreement (the “Purchase Agreement”) by and among Marsh Lane, the Company, Victory Parent Company, LLC, a Texas limited liability company (“VPC”), and Victory Medical Center Plano, LP, a Texas limited partnership (“Victory Plano”). The Acquisition was closed following the conclusion of bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “Bankruptcy Court”) initiated by Victory Plano. On June 12, 2015, Victory Plano filed for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the Bankruptcy Court. Following the Bankruptcy Court’s entry into the Sale Motion and Bidding Procedures Order, on July 29, 2015, the Bankruptcy Court entered into a Sale Order approving the terms and conditions of the Purchase Agreement and certain other financial arrangements as described below.

As consideration for the purchase of Victory Plano’s assets, Marsh Lane paid approximately $1.3 million in cash to be used by Victory Plano and VPC to cure and pay certain defaults under contracts assumed by Marsh Lane. The Purchaser also assumed Victory Plano’s indebtedness to LegacyTexas Bank in the amount of approximately $4.5 million. Marsh Lane also assumed Victory Plano’s capital equipment leases and its real estate lease.

In connection with the Purchase Agreement, Marsh Lane (the “Borrower”) entered into a Loan Agreement (the “Loan Agreement”) dated as of July 30, 2015 with LegacyTexas Bank, successor to ViewPoint Bank, N.A. (“Legacy”). The principal amount of the term loan (the “Term Note”) pursuant to the Loan Agreement is $4.5 million, which bears interest on the outstanding principal amount thereof at an annual rate equal to the lesser of the Applicable Rate (4.00% per annum plus the applicable LIBOR Rate) and the maximum lawful rate permitted under Texas or federal law, whichever is higher. All outstanding principal on the Term Note under the Loan Agreement is due and payable on July 30, 2020.

In connection with the Purchase Agreement and the Loan Agreement, on July 30, 2015, the Company entered into a guaranty (the “Guaranty”) to guaranty the Borrower’s obligations under the Loan Agreement. Pursuant to the Guaranty, the Company irrevocably and unconditionally guaranteed the full and punctual payment and performance of all Loan Agreement obligations, in the manner and to the extent set forth in the Guaranty. The guaranty and payment of obligations under the Guaranty are expressly subordinated in the manner and extent set forth in the Subordination Agreement.

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In connection with the Purchase Agreement and entry into the Legacy Loan Documents, Northstar Healthcare Acquisitions, L.L.C., a Delaware limited liability company and wholly owned subsidiary of the Company (“Northstar”), entered into the Second Amendment to Credit Agreement and Conditional Waiver, dated as of July 30, 2015, by and among the Northstar, General Electric Capital Corporation (“GE Capital”), and the other Credit Parties named therein, (the “Credit Agreement Amendment”). The Credit Agreement Amendment, among other things, amended certain covenants, definitions and other terms contained in the Credit Agreement to accommodate the transactions contemplated by Purchase Agreement and the entry into the Legacy Loan Documents, and GE Capital granted the Company additional time to incorporate into the Credit Agreement several new subsidiaries formed during the Company’s recent acquisitions and new service lines.

17.	Approval of Financial Statements

The consolidated financial statements were approved by the board of directors for issuance on August 13, 2015.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Quarterly Report”) and the documents that are incorporated by reference in this Quarterly Report contain certain forward-looking statements within the meaning of Canadian and United States securities laws, including the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts and may be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan” or “continue.” These forward-looking statements are based on current plans and expectations and are subject to a number of risks, uncertainties and other factors which could significantly affect current plans and expectations and our future financial condition and results. These factors, which could cause actual results, performance and achievements to differ materially from those anticipated, include, but are not limited to:

	•	the risk that we may face challenges managing our new Marketing Segment and may not realize anticipated benefits;
	•	our ability to successfully maintain effective internal controls over financial reporting;
	•	our ability to implement our business strategy, manage the growth in our business, and integrate acquired businesses;
	•	the risk of litigation and investigations, and liability claims for damages and other expenses not covered by insurance;
	•	the risk that payments from third-party payers, including government healthcare programs, may decrease or not increase as costs increase;
	•	adverse developments affecting the medical practices of our physician limited partners;
	•	our ability to maintain favorable relations with our physician limited partners;
	•	our ability to grow revenues by increasing case and procedure volume while maintaining profitability at the Nobilis Facilities;
	•	failure to timely or accurately bill for services;
	•	our ability to compete for physician partners, patients and strategic relationships;
	•	the risk of changes in patient volume and patient mix;
	•	the risk that laws and regulations that regulate payments for medical services made by government healthcare programs could cause our revenues to decrease;
	•	the risk that contracts are cancelled or not renewed or that we are not able to enter into additional contracts under terms that are acceptable to us; and
	•	the risk of potential decreases in our reimbursement rates.

The foregoing are significant factors we think could cause our actual results to differ materially from expected results. However, there could be additional factors besides those listed herein that also could affect us in an adverse manner.

You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from what we expect. You are cautioned not to unduly rely on forward-looking statements when evaluating the information presented in this Quarterly Report or our other disclosures because current plans, anticipated actions, and future financial conditions and results may differ from those expressed in any forward-looking statements made by or on behalf of Nobilis.

We have not undertaken any obligation to publicly update or revise any forward-looking statements. All of our forward-looking statements speak only as of the date of the document in which they are made or, if a date is specified, as of such date. Subject to an mandatory requirements of applicable law, we disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any changes in events, conditions, circumstances or information on which the forward-looking statement is based. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing factors and the risk factors set forth elsewhere in this report and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on April 2, 2015 (the “2014 Annual Report”).

Overview

The purpose of this section, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), is to provide a narrative explanation of our financial statements that enables investors to better understand our business, to enhance our overall financial disclosures, to provide the context within which our financial information may be analyzed, and to provide information about the quality of, and potential variability of, our financial condition, results of operations and cash flows. Our core business is the ownership, operation and management of outpatient surgery centers and surgical hospitals (the “Medical Segment”). We are also a provider of marketing services to our own affiliated entities as well as to third parties through our subsidiary Athas Health, LLC (“Athas”), which is a separate reportable business segment (the “Marketing Segment”).

Unless otherwise indicated, all financial and statistical information included in MD&A relates to our continuing operations, with dollar amounts expressed in thousands (except per share, per case and per procedure). Continuing operations information includes the results of 7 of our 8 healthcare facilities (the “Nobilis Facilities”) operated throughout the three and six months ended June 30, 2015 and 2014. The Nobilis Facilities are located in Texas and Arizona and consist of two hospitals in Houston, Texas and five ambulatory surgery centers, referred to as the "Nobilis ASCs" of which three are located in Houston, Texas, one in Dallas, Texas and one in Scottsdale, Arizona. Continuing operation information does not include the results of our recent acquisition of a Dallas-area hospital, which took place after June 30, 2015.

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Recent Developments

Acquisition of Peak Surgeon Innovations, LLC. In June 2015, the Company acquired Peak Surgeon Innovations, LLC ("Peak"), a provider of intraoperative neuromonitoring ("IOM") services for hospitals, surgery centers and other healthcare facilities. The Company acquired a 100% ownership interest in Peak for cash consideration of approximately $0.9 million and stock consideration of approximately $0.7 million provided to Bryan Hasse (the “Seller”). In addition to such cash and stock consideration, the Seller is eligible to receive a potential earnout payment (in cash or stock at the option of Seller) upon achievement by the IOM service line of certain EBITDA performance metrics.

Acquisition of Victory Plano Hospital, LP. On Jul 30, 2015, Marsh Lane Surgical Hospital, LLC (“Marsh Lane”), a Texas limited liability company and wholly owned subsidiary of the Company, closed the purchase of certain assets (the “Acquisition”) pursuant to an asset purchase agreement (the “Purchase Agreement”) by and among Marsh Lane, the Company, Victory Parent Company, LLC, a Texas limited liability company (“VPC”), and Victory Medical Center Plano, LP, a Texas limited partnership (“Victory Plano”). The Acquisition was closed following the conclusion of bankruptcy proceedings in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “Bankruptcy Court”) initiated by Victory Plano. On June 12, 2015, Victory Plano filed for relief under Chapter 11 of Title 11 of the United States Bankruptcy Code in the Bankruptcy Court. Following the Bankruptcy Court’s entry into the Sale Motion and Bidding Procedures Order, on July 29, 2015, the Bankruptcy Court entered into a Sale Order approving the terms and conditions of the Purchase Agreement and certain other financial arrangements.

As consideration for the purchase of Victory Plano’s assets, Marsh Lane paid approximately $1.3 million in cash to be used by Victory Plano and VPC to cure and pay certain defaults under contracts assumed by Marsh Lane. The Purchaser also assumed Victory Plano’s indebtedness to Legacy Texas Bank in the amount of approximately $4.5 million. Marsh Lane also assumed Victory Plano’s capital equipment leases and its real estate lease.

Surgical Assist. In June 2015, the Company established Nobilis Surgical Assist, LLC to launch its surgical assist ancillary service line. A third party will handle staffing of cases performed at the Nobilis Facilities, as well as certain administrative matters associated with this service line's operation. Together with the acquisition of Peak, the Company anticipates increased facility efficiency and revenue per case with the addition of these ancillary services.

Revenue Model and Case Mix
Revenues earned by the Nobilis Facilities vary depending on the procedures performed. For every medical procedure performed there are usually three separately invoiced patient billings:

	•	the surgical center fee for the use of infrastructure, surgical equipment, nursing staff, non-surgical professional services, supplies and other support services, which is earned by the Nobilis Facilities;
	•	the professional fee, which is separately earned, billed and collected by the physician performing the procedure, separate and apart from the fees charged by the Nobilis Facilities; and
	•	the anesthesiology fee, which is separately earned, billed and collected by the anesthesia provider, separate and apart from the fees charged by the Nobilis Facilities and the physicians.

Overall revenue depends on procedure volume, case mix and payment rates of the respective payers.

The following table sets out the net patient service revenues, the number of procedures performed and the net patient service revenue per procedure at each of the Nobilis Facilities for six months ended June 30, 2015 and 2014:

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		Net Patient Service Revenue												Net Patient Service Revenue
		($)(in thousands)						Number of Cases (1)						($) per Case (2)
Nobilis Facility		2015			2014			2015			2014			2015			2014
NHSC-H	$	10,477		$	8,040			1,007			491		$	10,405			16,375
KIRBY		6,009			5,020			1,930			1,769			3,113			2,838
MSID		16,891			13,839			1,633			870			10,343			15,906
NHSC-S		8,151			31			549			5			14,847			-
FNH		30,573			-			1,121			-			27,273			-
FNSC		2,717			-			888			-			3,060			-
VMC-H		2,379			-			380			-			6,261			-
Total		77,198			26,930			7,508			3,135			10,282			8,590
Year over Year Growth		187%						139%						20%

Notes

(1)	This table refers to all cases performed, regardless of their contribution to net patient service revenue.
(2)	Calculated by dividing net patient service revenues by the number of cases.

The Nobilis Facilities focus on a limited number of high-volume, non-emergency procedures, most of which are billed on an “out of network” basis. Billing on an “out of network” basis means that we bill to entities not participating in the health insurance companies' ("Third Party Payors") provider networks, which negotiate discounted fees with providers and facilities in return for access to the patient populations covered by those Third Party Payors. The case mix at each Nobilis Facility is a function of the clinical specialties of the physicians on the medical staff and the equipment and infrastructure at each facility. The Nobilis Facilities intend to continue to refine their case mix as opportunities arise. The following table sets forth the combined number of cases and procedures by medical specialty performed for three months ended June 30, 2015 and 2014:

MEDICAL SERVICES SEGMENT
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

The following table for the Marketing Segment only includes cases generated through our marketing activities that are performed at the non-Nobilis Facilities during the reporting period after the acquisition of Athas.

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MARKETING SEGMENT
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

CONSOLIDATED SEGMENTS
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

Note:

A procedure is defined as the actual surgery or surgeries that are performed on the date of service for each patient (case). Each case typically includes numerous procedures. In Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2014 Annual Report, we provided the number of “unique” procedures per case as the total number of procedures during the period (i.e. a patient may have had three different procedures performed, however, one of the three procedures might have been performed numerous times during the case). In this Quarterly Report, we calculated the total number of procedures performed on a case, regardless of the fact that the same procedure may have been performed numerous times. These tables refer to all cases and procedures performed, regardless of their contribution to net patient service revenue.

Our total cases performed for the three months ended June 30, 2015, were 4,780, representing a total increase of 3,134 cases, or 190.4%, from the 1,646 cases in the same period in 2014. Cases at our existing facilities, or “same center facilities,” were 2,804, representing 1,158 of the total increase. The consolidated marketing programs are attributable to 833 of the increase, with 338 cases reported under the Marketing segment, and the remaining under the Medical Services segment. Cases generated by new facilities during the reporting period are attributable to 1,638 of the increase. Case volume primarily increased under the specialties of pain management, musculoskeletal interventions, spine and bariatric surgeries.

Our procedure volume for the three months ended June 30, 2015, increased by 108.2% to 11,849 from 5,690 during the prior corresponding period. Since case reimbursement is based on case type, an increase or decrease in the number of procedures per case has no effect on our reimbursement and net patient service revenue per case.

We receive payments for surgical procedures and related services from private health insurance plans, workers’ compensation, directly from patients and from government payer plans. A substantial portion of net patient service revenues generated by the Nobilis Facilities is based on payments received from private (non-government) insurance plans. We receive a relatively small amount of revenue from Medicare or Medicaid procedures. We also receive a relatively small portion of revenue directly from uninsured patients, who pay out of pocket for the services they receive. Insured patients are responsible for services not covered by their health insurance plans, and for deductibles, co-payments and co-insurance obligations under their plans. The amount of these deductibles, co-payments and coinsurance obligations has increased in recent years but does not represent a material component of the revenue generated by the Nobilis Facilities. The surgical center fees of the Nobilis Facilities are generated by our physician limited partners and the other physicians who use the Nobilis Facilities to provide services. The surgical center fees are billed and collected directly by the Nobilis Facilities.

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Patient and net professional fees and contracted marketing revenues are reported as the estimated net realizable amounts from patients, third-party Payors, and others for services rendered. Revenue is recognized upon the performance of the patient service. The amounts that we actually collect from third-party Payors, including private insurers, may vary even for identical procedures performed. An additional factor in the determination of net patient service revenue is our payer mix, as between private health insurance plans, workers’ compensation, directly from patients and from government payer plans. We review and evaluate historical collections and payment data, payer mix and current economic conditions on a periodic basis and adjust the estimated collections as a percentage of gross billings, which we use to determine net patient service revenue, as required based on final settlements and collections.

The following tables set out the payor mix at our Medical Segment, our Marketing Segment and on a consolidated basis for the three months ended June 30, 2015 and 2014. This information is not intended to provide a comprehensive comparison of financial results, as reimbursement by insurance carrier varies based on deductibles, plan coverage and cases performed.

MEDICAL SERVICES SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		95.0%			97.3%
Workers compensation		4.6%			1.7%
Medicare		0.4%			1.0%
Total		100.0%			100.0%

MARKETING & FACTORING SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		100.0%			0.0%
Workers compensation		0.0%			0.0%
Medicare		0.0%			0.0%
Total		100.0%			0.0%

CONSOLIDATED SEGMENTS
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE THREE MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		95.5%			97.3%
Workers compensation		4.1%			1.7%
Medicare		0.4%			1.0%
Total		100.0%			100.0%

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RESULTS OF OPERATIONS AS A PERCENTAGE OF PATIENT AND NET PROFESSIONAL FEES
FOR THE THREE MONTHS ENDED JUNE 30, 2015
AND FOR THE THREE MONTHS ENDED JUNE30, 2014

		Three months ended June 30,
		2015			2014
Revenues:		100%			100%
Cost of revenues		1.9%			0.0%
Gross Profit		98.1%			100%
Operating expenses:
Salaries and benefits		18.5%			13.3%
Drugs and supplies		16.2%			15.9%
General and administrative		42.1%			39.7%
Amortization		2.0%			2.0%
Total operating expenses		78.8%			70.9%
Corporate costs:
Salaries and benefits		2.0%			3.1%
General and administrative		12.4%			4.6%
Legal expenses		1.5%			2.3%
Amortization		0.1%			0.2%
Total corporate costs		16.0%			10.2%
Income from operations		3.3%			18.9%
Other expense (income):
Interest expense		0.6%			0.4%
Other expense (income), net		-2.6%			-0.6%
Total other expense (income)		-2.0%			-0.1%
Net income before income taxes and noncontrolling interests		5.3%			19.0%
Income tax		0.9%			1.0%
Net income		4.4%			18.0%
Net income attributable to noncontrolling interests		7.7%			16.6%
Net income attributable to Nobilis Health Corp.		-3.3%			1.4%

Consolidated Revenues

Our total revenues for the three months ended June 30, 2015, totaled $48.9 million, an increase of $33.8 million or 223.8%, compared to $15.1 million from the prior corresponding period. The Marketing segment accounted for $5.0 million of the increase. The Medical Services segment increased by $28.8 million, or 190.7%, compared to $15.1 million from the prior corresponding period. Same center facilities growth represented $6.5 million of the three month period increase, while the remaining $22.3 million increase is attributable to newly acquired facilities.

Operating Salaries

Operating salaries and benefits for the three months ended June 30, 2015, totaled $9.0 million, an increase of $7.0 million, or 350.0%, from $2.0 million the prior corresponding period. The Marketing segment accounted for $2.2 million of the increase while the Medical Services segment increased by $4.8 million, or 240.0% . Staffing costs at newly acquired facilities accounted for $4.1 million of the Medical Services segment’s increase. The remaining $0.7 million increase is attributable to additional staffing at same center facilities driven by increased case volumes. Operating salaries and benefits as a percent of revenues were 18.5% compared to 13.3% in the prior corresponding period. The increase was a result of the higher staffing needs at newly acquired hospitals.

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Medical supplies

Drugs and medical supplies expense for the three months ended June 30, 2015, totaled $7.9 million, an increase of $5.5 million or 229.2% from the prior corresponding period. Medical supplies costs at newly acquired facilities accounted for $4.6 million of the increase with the remaining $0.9 million attributable to same center growth. Drugs and medical supplies as a percent of revenues increased to 16.2% from 15.9% from the prior corresponding period due to lower operating margins at a newly acquired hospital.

Operating General and Administrative

Our operating general and administrative expense for three months ended June 30, 2015, totaled $20.6 million, an increase of $14.6 million, or 243.3%, from the prior corresponding period. The Marketing Segment contributed to $1.3 million of the increase. The remaining $13.3 million increase is due to an increase in marketing expenses, physician contracting, general infrastructure development, such as rent, telecommunication, travel, and consulting, and an increase in operations associated with the newly acquired medical services facilities. Newly acquired facilities contributed to $2.9 million of the increase. Marketing expenses allocated to the Medical Services segment increased by $5.3 million to $6.1 million for the three months ended June 30, 2015, from $0.8 million for the corresponding period in 2014. The increase in marketing expenses is related to our strategic growth initiatives of growing our bariatric, spine, podiatry and gynecological brands. For the development of the marketing programs, the Company enters into independent contractor agreements with physicians to provide services to the Company including administrative, management and marketing services. This expense increased by $0.9 million to $1.7 million for the three months ended June 30, 2015 from $0.8 million for the corresponding period in 2014. Expenses related to general infrastructure development increased by $1.1 million to $1.7 million in 2015 from $0.6 million in 2014.

In addition, operating general and administrative expenses contained revenue cycle management expenses. From time to time, we transfer to third parties certain of our accounts receivable payments on a non-recourse basis in return for advancement on payment to achieve a faster cash collection. The advancement payment varies by specialty and on average represents between 20% and 50% of the amounts transferred. We do not have any other relationship with third parties of this nature other than the vendor relationship described herein. For three months ended June 30, 2015 and 2014 we received advancement payments of $0.5 million and $0.1 million, respectively. During the same period, we transferred $2.1 million and $2.2 million, respectively, of receivables, net of advancement payment, representing a decrease in revenue cycle management expenses of $0.1 million.

Depreciation

Depreciation for the three months ended June 30, 2015, totaled $1.0 million, an increase of $0.7 million or 233.3% from the prior corresponding period. This increase is primarily due to an increase in property and equipment from newly acquired facilities.

Corporate General and Administrative

In total, corporate costs for the three months ended June 30, 2015, totaled $7.8 million, representing an increase of $6.3 million or 420.0% from the prior corresponding period. The increase was primarily attributable to additional corporate staff and legal expenses related to mergers and acquisitions, and non-cash compensation. Corporate salaries and benefits increased by $0.5 million to $1.0 million for the three months ended June 30, 2015 from $0.5 million for the corresponding period in 2014. Legal expenses increased by $0.4 million to $0.7 million for the three months ended June 30, 2015 from $0.3 million for the corresponding period in 2014. Non-cash compensation increased by $6.1 million to $6.2 million for the three months ended June 30, 2015 from $0.1 million for the corresponding period in 2014. The increase in non-cash compensation is attributable to an accelerated vesting of senior executive share-based compensation related to a change of positions. We present corporate costs as a separate section from the operating expenses of the revenue generating facilities to illustrate our operational efficiency.

Net income attributable to non-controlling interests are based on ownership percentages in the Nobilis Facilities that are owned by third parties.

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Six months ended June 30, 2015

The Nobilis Facilities focus on a limited number of high-volume, non-emergency procedures, most of which are billed on an “out of network” basis. The case mix at each Nobilis Facility is a function of the clinical specialties of the physicians on the medical staff and the equipment and infrastructure at each facility. The Nobilis Facilities intend to continue to refine their case mix as opportunities arise. The following table sets forth the combined number of cases and procedures by medical specialty performed for six months ended June 30, 2015 and 2014:

MEDICAL SERVICES SEGMENT
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

The following table for the Marketing Segment only includes cases generated through our marketing activities that performed at the non-Nobilis Facilities during the reporting period after the acquisition of Athas.

MARKETING SEGMENT
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

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CONSOLIDATED SEGMENTS
CASE AND PROCEDURE MIX OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

Note:

A procedure is defined as the actual surgery or surgeries that are performed on the date of service for each patient (case). Each case typically includes numerous procedures. In Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2014 Annual Report, we provided the number of “unique” procedures per case as the total number of procedures during the period (i.e. a patient may have had three different procedures performed, however, one of the three procedures might have been performed numerous times during the case). In this Quarterly Report, we calculated the total number of procedures performed on a case, regardless of the fact that the same procedure may have been performed numerous times. These tables refer to all cases and procedures performed, regardless of their contribution to net patient service revenue.

Our total cases performed for the six months ended June 30, 2015, were 8,296, representing a total increase of 5,151 cases, or 163.8%, from the 3,145 cases in the same period in 2014. Cases at same center facilities were 5,119, representing 1,984 of the total increase. The consolidated marketing programs are attributable to 1,541 of the increase, with 623 cases reported under the Marketing segment, and the remaining under the Medical Services segment. Cases generated by new facilities during the reporting period are attributable to 2,544 of the increase. Case volume primarily increased under the specialties of pain management, musculoskeletal interventions, spine and bariatric surgeries.

Our procedure volume for the six months ended June 30, 2015, increased by 103.2% to 20,970 from 3,145 during the prior corresponding period. Since case reimbursement is based on case type, an increase or decrease in the number of procedures per case has no effect on our reimbursement and net patient service revenue per case.

We receive payments for surgical procedures and related services from private health insurance plans, workers’ compensation, directly from patients and from government payer plans. A substantial portion of net patient service revenues generated by the Nobilis Facilities is based on payments received from private (non-government) insurance plans. We receive a relatively small amount of revenue from Medicare or Medicaid procedures. We also receive a relatively small portion of revenue directly from uninsured patients, who pay out of pocket for the services they receive. Insured patients are responsible for services not covered by their health insurance plans, and for deductibles, co-payments and co-insurance obligations under their plans. The amount of these deductibles, co-payments and coinsurance obligations has increased in recent years but does not represent a material component of the revenue generated by the Nobilis Facilities. The surgical center fees of the Nobilis Facilities are generated by our physician limited partners and the other physicians who use the Nobilis Facilities to provide services. The surgical center fees are billed and collected directly by the Nobilis Facilities.

Patient and net professional fees and contracted marketing revenues are reported as the estimated net realizable amounts from patients, third-party payors, and others for services rendered. Revenue is recognized upon the performance of the patient service. The amounts that we actually collect from third-party payors, including private insurers, may vary even for identical procedures performed. An additional factor in the determination of net patient service revenue is our payer mix, as between private health insurance plans, workers’ compensation, directly from patients and from government payer plans. We review and evaluate historical collections and payment data, payer mix and current economic conditions on a periodic basis and adjust the estimated collections as a percentage of gross billings, which we use to determine net patient service revenue, as required based on final settlements and collections.

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The following tables set out the payer mix at our Medical Segment, our Marketing Segment and on a consolidated basis for the six months ended June 30, 2015 and 2014. This information is not intended to provide a comprehensive comparison of financial results, as reimbursement by insurance carrier varies based on deductibles, plan coverage and cases performed.

MEDICAL SERVICES SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		95.0%			96.9%
Workers compensation		4.5%			2.2%
Medicare		0.5%			0.9%
Total		100.0%			100.0%

MARKETING & FACTORING SEGMENT
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		100.0%			0.0%
Workers compensation		0.0%			0.0%
Medicare		0.0%			0.0%
Total		100.0%			0.0%

CONSOLIDATED SEGMENTS
PATIENT AND NET PROFESSIONAL FEE REVENUE BY PAYORS OF THE NOBILIS FACILITIES
FOR THE SIX MONTHS ENDED JUNE30, 2015 AND 2014

		2015 Patient and Net			2014 Patient and Net
Payors		Professional Fee Revenue			Professional Fee Revenue
		by Payor Mix			by Payor Mix
Private insurance and other private pay		95.3%			96.4%
Workers compensation		4.2%			2.6%
Medicare		0.5%			1.0%
Total		100.0%			100.0%

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RESULTS OF OPERATIONS AS A PERCENTAGE OF PATIENT AND NET PROFESSIONAL FEES
FOR THE SIX MONTHS ENDED JUNE30, 2015
AND FOR THE SIX MONTHS ENDED JUNE 30, 2014

		Six months ended June 30,
		2015			2014
Revenues:		100%			100%
Cost of revenues		1.1%			0.0%
Gross Profit		98.9%			100%
Operating expenses:
Salaries and benefits		19.4%			14.4%
Drugs and supplies		15.0%			14.6%
General and administrative		39.3%			43.7%
Amortization		1.9%			2.2%
Total operating expenses		75.6%			74.9%
Corporate costs:
Salaries and benefits		2.3%			3.8%
General and administrative		13.3%			4.6%
Legal expenses		1.4%			2.3%
Amortization		0.1%			0.2%
Total corporate costs		17.1%			10.8%
Income from operations		6.2%			14.2%
Other expense (income):
Interest expense		0.9%			0.4%
Other expense (income), net		-1.6%			-0.2%
Total other expense (income)		-0.7%			0.2%
Net income before income taxes and noncontrolling interests		6.9%			14.1%
Income tax		0.7%			0.9%
Net income		6.2%			13.2%
Net income attributable to noncontrolling interests		9.6%			14.2%
Net income attributable to Nobilis Health Corp.		-3.4%			-1.0%

Consolidated Revenues

Our total revenues for the six months ended June 30, 2015, totaled $86.0 million, an increase of $58.8 million or 216.2%, compared to $27.2 million from the prior corresponding period. The Marketing segment accounted for $8.5 million of the increase, while the Medical Services segment increased by $50.3 million, or 184.9%, compared to $27.2 million from the prior corresponding period. Same center facilities growth represented $11.3 million of the six month period increase, while the remaining $39.0 million is attributable to newly acquired facilities.

Operating Salaries

Operating salaries and benefits for the six months ended June 30, 2015, totaled $16.7 million, an increase of $12.8 million or 328.2%, from $3.9 million the prior corresponding period. The Marketing segment accounted for $4.4 million of the increase while the Medical Services segment increased by $8.4 million, or 215.4% . Staffing costs at newly acquired facilities accounted for $7.6 million of the Medical Services segment’s increase. The remaining $0.8 million increase is attributable to additional staffing at same center facilities driven by increased case volumes. Operating salaries and benefits as a percent of revenues were 19.4% compared to 14.4% in the prior corresponding period. The increase was a result of the higher staffing needs at newly acquired hospitals.

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Medical supplies

Drugs and medical supplies expense for the six months ended June 30, 2015, totaled $12.9 million, an increase of $8.9 million or 222.5% from the prior corresponding period. Medical supplies costs at newly acquired facilities accounted for $7.3 million of the increase with the remaining $1.6 million attributable to same center growth. Drugs and medical supplies as a percent of revenues increased to 15.1% from 14.6% from the prior corresponding period due to lower operating margins at a newly acquired hospital.

Operating General and Administrative

Our operating general and administrative expense for six months ended June 30, 2015, totaled $33.8 million, an increase of $21.9 million, or 184.0%, from the prior corresponding period. The Marketing Segment contributed to $1.7 million of the increase. The remainder of the $20.2 million increase is due to an increase in marketing expenses, physician contracting, general infrastructure development, such as rent telecommunication, travel, and consulting, and an increase in operations associated with the newly acquired medical services facilities. Newly acquired facilities contributed to $7.1 million of the increase. Marketing expenses allocated to the Medical Services segment increased by $9.8 million to $11.7 million for the six months ended June 30, 2015, from $1.9 million for the corresponding period in 2014. The increase in marketing expenses is related to our purchase of Athas in December 2014, and the associate creation of our Marketing business segment, and strategic growth initiatives of growing our bariatric, spine, podiatry and gynecological brands. For the development of the marketing programs, the Company enters into independent contractor agreements with physicians to provide services to the Company including administrative, management and marketing services. This expense increased by $1.4 million to $3.1 million for the six months ended June 30, 2015 from $1.7 million for the corresponding period in 2014. Expenses related to general infrastructure development increased by $1.7 million to $3.1 million in 2015 from $1.3 million in 2014.

In addition, our operating general and administrative expenses contained revenue cycle management expenses. From time to time, we transfer to third parties certain of our accounts receivable payments on a non-recourse basis in return for advancement on payment to achieve a faster cash collection. The advancement payment varies by specialty and on average represents between 20% and 50% of the amounts transferred. We do not have any other relationship with third parties of this nature other than the vendor relationship described herein. For six months ended June 30, 2015 and 2014 we received advancement payments of $1.1 million and $0.3 million, respectively. During each respective periods, we transferred $3.8 million and $3.8 million, respectively, of receivables, net of advancement payment.

Depreciation

Depreciation for the six months ended June 30, 2015, totaled $1.6 million, an increase of $1.0 million or 166.7% from the prior corresponding period. This increase is primarily due to an increase in property and equipment from newly acquired facilities.

Corporate General and Administrative

In total, corporate costs for the six months ended June 30, 2015, totaled $14.7 million, representing an increase of $11.7 million or 390.0% from the prior corresponding period. The increase was primarily attributable to additional corporate staff and legal expenses related to mergers and acquisitions, and non-cash compensation. Corporate salaries and benefits increased by $1.0 million to $2.0 million for the six months ended June 30, 2015 from $1.0 million for the corresponding period in 2014. Legal expenses increased by $0.6 million to $1.2 million for the six months ended June 30, 2015 from $0.6 million for the corresponding period in 2014. Non-cash compensation increased by $8.9 million to $9.0 million for the six months ended June 30, 2015 from $0.2 million for the corresponding period in 2014. The increase in non-cash compensation is attributable to an accelerated vesting of senior executive share-based compensation related to a change of Company positions and additional stock based compensation granted to the company’s Chief Executive Officer. We present corporate costs as a separate section from the operating expenses of the revenue generating facilities to illustrate our operational efficiency.

Net income attributable to non-controlling interests are based on ownership percentages in the Nobilis Facilities that are owned by third parties.

Liquidity, Capital Resources and Financial Condition

We are dependent upon cash generated from operating activities of the Nobilis Facilities, which are the major source of financing for our operations, growth initiatives, acquisitions and for meeting our contractual obligations. Our primary sources of liquidity are cash generated from operating activities of the Nobilis Facilities, available cash and cash equivalents, and available borrowings under our term loan with General Electric Capital Corporation (the “Term Loan”) described in Note 9 – Lines of Credit. We expect to be able to fund our operating activities for the remainder of 2015 with cash flows generated from our operations, available cash and cash equivalents, financing activities and access to the Term Loan.

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Cash and cash equivalents at June 30, 2015 and December 31, 2014 were $31.7 million and $7.6 million, respectively. For the six months ended June, 2015, we experienced operating cash flows of approximately $5.2 million, primarily attributable to increased case volumes.

As of June 30, 2015, the Company had consolidated net working capital of $56.7 million compared to $23.8 million as of December 31, 2014. The increase is primarily due to increased cash related to a private placement (as described below), and increased accounts receivables related to increased case volumes. Total accounts receivable were $51.1 million with accounts payables and accrued liabilities totaling $29.0 million.

We have a $25 million debt financing facility with GE Capital, Healthcare Financial Services (“GE”). Pursuant to the Credit Agreement and ancillary agreements (collectively, the “Loan Agreement”), the term loan bears interest at a rate of 4% plus LIBOR per annum and amortizes over 20 years with required quarterly payments of principal and interest until the loan matures in March 2020. The revolving loan also bears interest at a rate of 4% plus LIBOR per annum and amounts borrowed under the revolver may be repaid and re-borrowed periodically with a maturity of March 2020. The credit facility is collateralized by the accounts receivable and physical equipment of all 100% owned subsidiaries as well as the Company’s ownership interest in all less-than-wholly owned subsidiaries.

In May 2015, the Company issued, through a private placement agreement, 7,847,668 Units, at a price of Cdn$9.00 per Unit. Each Unit is comprised of one treasury unit (a “Treasury Unit”) and one-half of one common share from Donald L. Kramer, Healthcare Ventures, Ltd (a company wholly owned by Dr. Kramer), Harry Fleming or from treasury. Each Treasury Unit is comprised of one-half of one common share of the Company and one-half of one common share purchase warrant exercisable for one additional share at a price of Cdn$11.50. Through the private placement, the Company raised proceeds of $28.4 million, net of offering costs and commissions of $1.9 million.

Critical Accounting Policies

A summary of significant accounting policies is included in our 2014 Annual Report. Our critical accounting policies are further described under the caption “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2014 Annual Report. There have been no changes in the nature of our critical accounting policies or the application of those policies since December 31, 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to market risk from exposure to changes in interest rates based on our financing, investing and cash management activities. We do not, however, hold or issue financial instruments or derivatives for trading or speculative purposes. At June 30, 2015, the following components of our Loan Agreement bears interest at variable rates at specified margins above either the agent bank’s alternate base rate or the LIBOR rate: (i) a $20 million, 5-year term loan; and (ii) a $5 million, 5-year revolving credit facility.

Although changes in the alternate base rate or the LIBOR rate would affect the cost of funds borrowed in the future, we believe the effect, if any, of reasonably possible near-term changes in interest rates on our remaining variable rate debt or our consolidated financial position, results of operations or cash flows would not be material. Holding other variables constant, including levels of indebtedness, a 0.125% increase in current interest rates would have no estimated impact on pre-tax earnings and cash flows for the next twelve month period given the 0.70215% LIBOR floor that exists in our Loan Agreement.

We currently believe we have adequate liquidity to fund operations during the near term through the generation of operating cash flows, cash on hand and access to our senior secured revolving credit facility. Our ability to borrow funds under Loan Agreement is subject to, among other things, the financial viability of the participating financial institutions. While we do not anticipate any of our current lenders defaulting on their obligations, we are unable to provide assurance that any particular lender will not default at a future date.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2015. Based on this evaluation, the CEO and CFO have concluded that, as of June 30, 2015, our disclosure controls and procedures were effective, in that they ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II

Item 1. Legal Proceedings

There have been no material changes to the legal proceedings we previously described in our 2014 Annual Report during the three months ended June 30, 2015.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On May 1, 2015, Bryan Hasse (the “Seller”) and Northstar Subco, LLC (the “Purchaser”), a wholly owned indirect subsidiary of the Company, entered into a Membership Interest Purchase Agreement, as amended on May 28, 2015, pursuant to which Purchaser purchased 100% of the units of Peak Surgeon Innovations, LLC and Seller received 89,749 shares of our common shares, valued at C$8.83 per share. In connection with this issuance to Seller, we relied on the exemption from registration under Section 4(a)(2) of the Securities Act based on our belief that the transaction did not involve any public offering.

The proceeds will be used for general working capital.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit	Description
10.1	Confidential Agreement effective as of June 30, 2015, by and among Nobilis Health Corp,, Northstar Healthcare Subco, LLC, and certain other parties named therein (certain portions of the Confidential Agreement have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment, which request has been granted).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes- Oxley Act of 2002
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

NOBILIS HEALTH CORP.

Date: August 13, 2015

Chief Financial Officer
(Principal Financial and Duly Authorized
Officer)

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