Apollo Medical Holdings, Inc. Reports: 3Q19 Total Revenues of $156.1 Million, Up 20.0% Over 2Q19; 3Q19 Adjusted EBITDA of $22.8 Million, Up 55.6% Over 3Q18; Capitated Membership of Over One Million Managed Lives; and Elite Status Awarded by APG
ALHAMBRA, Calif., Nov. 7, 2019 /PRNewswire/ -- Apollo Medical Holdings, Inc. ("ApolloMed" or the "Company") (NASDAQ: AMEH), an integrated population health management company, announced its consolidated financial results for the quarter ended September 30, 2019 today.
"We are very pleased with our third quarter financial and operational results. During the quarter, we expanded our fully-capitated membership base and network of contracted physicians through our acquisition of Accountable Health Care IPA. In October 2019, we announced a new management services agreement adding 145,000 member lives under management," stated Kenneth Sim, M.D., Executive Chairman and Co-Chief Executive Officer of ApolloMed.
"We continue to make meaningful progress towards our goal of reaching two million total lives under management. This progress is primarily driven by our recent acquisitions, which added 271,000 fully-capitated lives year to date, and our recently announced management services agreement, which will add 145,000 managed lives into our network in 2020. These transactions further expand our footprint into California's Los Angeles and Inland Empire markets. We see a robust national pipeline of managed IPAs that can be successfully incorporated onto our platform," continued Dr. Sim.
"Our patient-centric, physicians-led approach is unique to the market and positions us well to benefit from the continued shift towards value-based care. We remain confident that we will continue to grow our membership base and achieve our growth objectives," concluded Dr. Sim.
Financial Highlights for the Quarter Ended September 30, 2019:
-- Total revenue of $156.1 million for the quarter ended September 30,
2019, a decrease of 6% as compared to $166.7 million for the quarter
ended September 30, 2018, primarily due to the prior year adoption of a
revenue accounting standard on January 1, 2018, resulting in a
significant recognition of risk pool revenue of $46.8 million in the
third quarter of 2018.
-- Capitation revenue of $130.8 million, representing 84% of our total
revenue, an increase of 44% compared to $90.6 million for the quarter
ended September 30, 2018.
-- Adjusted EBITDA of $22.8 million for the quarter ended September 30,
2019, an increase of 56%, as compared to $14.6 million for the quarter
ended September 30, 2018.
-- Net income attributable to Apollo Medical Holdings, Inc. of $3.7 million
for the quarter ended September 30, 2019, compared to $9.1 million for
the quarter ended September 30, 2018. The decrease from the prior year
was primarily due to the adoption of a revenue accounting standard on
January 1, 2018, resulting in a significant recognition of risk pool
revenue of $46.8 million in the third quarter of 2018.
-- Total membership of one million managed lives as of September 30, 2019.
Fully-capitated lives of 540,000, under our consolidated Independent
Physicians Associations (IPA), at the end of the third quarter. An
increase of 103% compared to December 31, 2018, primarily due to the
acquisition of Alpha Care Medical Group and Accountable Health Care IPA.
-- Closed inaugural $290 million syndicated credit facility and series of
transactions with APC and AP-AMH.
-- Awarded Elite status for the America's Physician Groups Standards of
Excellence Survey for 2019.
For more details on ApolloMed's September 30, 2019 quarter end results, please refer to the Company's Quarterly Report on Form 10-Q to be filed with the U.S. Securities Exchange Commission and accessible at www.sec.gov.
APOLLO MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
September 30, December 31,
2019 2018
---
Assets
Current assets
Cash and cash equivalents $
230,298,252 $
106,891,503
Restricted cash 20,150
Investment in marketable
securities 1,154,480 1,127,102
Receivables, net 19,731,189 7,127,217
Receivables, net - related
parties 37,708,178 49,328,739
Other receivables 15,527,520 1,003,133
Prepaid expenses and other
current assets 10,495,938 7,385,098
Loan receivable -related
parties 6,425,000
Total current assets 321,360,707 172,862,792
Noncurrent assets
Land, property and equipment,
net 12,427,107 12,721,082
Intangible assets, net 114,166,305 86,875,883
Goodwill 237,134,772 185,805,880
Loans receivable - related
parties, net of current
portion 12,500,000 17,500,000
Investment in other entities -
equity method 35,840,105 34,876,980
Investment in a privately held
entity that does not report
net asset value per share 896,000 405,000
Restricted cash 746,104 745,470
Right-of-use assets 13,540,129
Other assets 1,633,153 1,205,962
Total noncurrent assets 428,883,675 340,136,257
Total assets $
750,244,382 $
512,999,049
Liabilities, mezzanine equity and stockholders'
equity
Current liabilities
Accounts payable and accrued
expenses $
35,539,917 $
25,075,489
Fiduciary accounts payable 1,734,142 1,538,598
Medical liabilities 53,819,647 33,641,701
Income taxes payable 1,392,492 11,621,861
Bank loan - 40,257
Dividend payable 271,279
Finance lease obligation 101,741 101,741
Lease liabilities 2,836,010
Total current liabilities 95,695,228 72,019,647
Noncurrent liabilities
Lines of credit - related
party - 13,000,000
Deferred tax liability 30,199,423 19,615,935
Liability for unissued equity
shares 1,185,025 1,185,025
Finance lease obligation 441,241 517,261
Lease liabilities 10,670,364
Long-term debt, net of
deferred financing costs 243,649,063
Total noncurrent liabilities 286,145,116 34,318,221
Total liabilities 381,840,344 106,337,868
Commitments and contingencies
Mezzanine equity
Noncontrolling interest in
Allied Physicians of
California, a Professional
Medical Corporation ("APC") 176,230,074 225,117,029
Stockholders' equity
Series A Preferred stock,
$0.001 par value; 5,000,000
shares authorized (inclusive
of all preferred stock,
including Series B Preferred
stock); 1,111,111 issued and
zero outstanding at September
30, 2019 and December 31,
2018, respectively -
Series B Preferred stock,
$0.001 par value; 5,000,000
shares authorized (inclusive
of all preferred stock,
including Series A Preferred
stock); 555,555 issued and
zero outstanding at September
30, 2019 and December 31,
2018, respectively -
Common stock, $0.001 par
value; 100,000,000 shares
authorized, 34,822,933 and
34,578,040 shares
outstanding, excluding
16,959,069 and 1,850,603
treasury shares, at September
30, 2019 and December 31,
2018, respectively 34,823 34,578
Additional paid-in capital 165,521,888 162,723,051
Retained earnings 25,177,257 17,788,203
190,733,968 180,545,832
Noncontrolling interest 1,439,996 998,320
Total stockholders' equity 192,173,964 181,544,152
Total liabilities, mezzanine
equity and stockholders'
equity $
750,244,382 $
512,999,049
APOLLO MEDICAL HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
---
Revenue
Capitation, net $
130,807,706 $
90,612,720 $
305,548,176 $
266,834,186
Risk pool settlements
and incentives 11,355,069 57,788,932 32,639,960 89,641,885
Management fee income 8,517,586 12,851,178 27,866,805 37,297,358
Fee-for-service, net 4,099,660 4,723,809 12,058,762 15,524,149
Other income 1,280,203 752,643 3,753,258 4,021,480
Total revenue 156,060,224 166,729,282 381,866,961 413,319,058
Operating expenses
Cost of services 131,129,813 96,268,804 315,925,388 280,589,061
General and
administrative expenses 7,949,814 9,040,336 30,031,329 31,481,810
Depreciation and
amortization 4,920,429 4,843,037 13,792,581 14,819,627
Provision for doubtful
accounts - (1,363,415)
Impairment of
intangibles 1,994,000 1,994,000
Total expenses 145,994,056 110,152,177 360,379,883 326,890,498
Income from operations 10,066,168 56,577,105 21,487,078 86,428,560
Other income (expense)
Income (loss) from
equity method
investments 2,053,730 (4,215,056) 1,161,791 (2,573,219)
Interest expense (827,905) (178,318) (1,349,933) (374,002)
Interest income 508,856 418,449 1,305,528 1,180,990
Other income 2,620,485 609,203 2,831,830 884,948
Total other income
(expense), net 4,355,166 (3,365,722) 3,949,216 (881,283)
Income before provision
for income taxes 14,421,334 53,211,383 25,436,294 85,547,277
Provision for income
taxes 3,682,472 14,585,942 6,483,630 23,338,589
Net income 10,738,862 38,625,441 18,952,664 62,208,688
Net income attributable
to noncontrolling
interests 7,034,688 29,519,043 11,563,610 48,277,734
Net income attributable
to Apollo Medical
Holdings, Inc. $
3,704,174 $
9,106,398 $
7,389,054 $
13,930,954
Earnings per share -
basic $
0.11 $
0.28 $
0.21 $
0.43
Earnings per share -
diluted $
0.10 $
0.24 $
0.20 $
0.37
Weighted average shares
of common stock
outstanding - basic 34,643,754 32,917,007 34,555,124 32,672,793
Weighted average shares
of common stock
outstanding - diluted 37,792,266 38,387,700 37,816,698 38,010,838
APOLLO MEDICAL HOLDINGS, INC.
SUPPLEMENTAL INFORMATION
(UNAUDITED)
Capitated Membership
---
September 30, December 31, December 31,
2019 2018 2017
---
MSO 430,000 665,000 670,000
IPA 540,000 265,000 270,000
ACO 30,000 30,000 29,000
Total lives under
management 1,000,000 960,000 969,000
Reconciliation of Net Income to EBITDA and to Adjusted EBITDA
---
Three Months Ended
Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
---
Net income $
10,738,862 $
38,625,441 $
18,952,664 $
62,208,688
Depreciation and
amortization 4,920,429 4,843,037 13,792,581 14,819,627
Provision for
income taxes 3,682,472 14,585,942 6,483,630 23,338,589
Interest expense 827,905 178,318 1,349,933 374,002
Interest income (508,856) (418,449) (1,305,528) (1,180,990)
EBITDA 19,660,812 57,814,289 39,273,280 99,559,916
(Income) loss -
equity method
investments (2,053,730) 4,215,056 (1,161,791) 2,573,219
Other income (2,620,485) (609,203) (2,831,830) (884,948)
Adoption of
revenue
accounting
standard - (46,800,000) (49,640,000)
Provider bonus
payments 2,100,000 12,100,000
Net provision for
doubtful
accounts - (1,363,415)
Impairment of
intangibles 1,994,000 1,994,000
Severance
payments - 1,436,000
EBITDA adjustment
for recently
acquired IPAs 3,673,000 5,565,000
Adjusted EBITDA $
22,753,597 $
14,620,142 $
53,575,244 $
53,044,187
Use of Non-GAAP Financial Measures
This section contains non-GAAP financial measures, including Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), and Adjusted EBITDA. These measures are not in accordance with, or are an alternative to, measures derived from generally accepted accounting principles, or GAAP, and may be different from other non-GAAP financial measures used by other companies. The Company believes the presentation of these non-GAAP financial measures provides useful information to investors regarding various financial and business trends relating to the Company's financial condition and results of operations. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of ApolloMed's ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures. Reconciliation between certain GAAP and non-GAAP measures is provided above.
Note About Consolidated Entities
The Company consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights, and variable interest entities ("VIEs") in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company's consolidated entities (including certain VIEs). The amount of net income attributable to noncontrolling interests is disclosed in the Company's consolidated statements of income. Effective September 1, 2019 the condensed consolidated balance sheet as of September 30, 2019 and condensed consolidated statements of income for the three and nine months ended September 30, 2019, also includes the results of Accountable Health Care IPA.
Note About Stockholders' Equity, Certain Treasury Stock and Earnings Per Share
As of the date of this press release, 480,212 shares of ApolloMed's common stock to be issued as part of the merger (the "Merger") involving ApolloMed and Network Medical Management, Inc. ("NMM") in 2017 are subject to ApolloMed receiving from certain former NMM shareholders a properly completed letter of transmittal (and related exhibits) before such former NMM shareholders may receive their pro rata portion of ApolloMed common stock and warrants. Pending such receipt, such former NMM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the Merger. The Company's consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and the Company is legally obligated to issue these shares as of the closing of the Merger.
Shares of ApolloMed's common stock owned by Allied Physicians of California IPA, a Professional Medical Corporation, (d.b.a. Allied Pacific of California IPA), a VIE of the Company, are legally issued and outstanding but excluded from shares of common stock outstanding in the Company's consolidated financial statements, as such shares are treated as treasury shares for accounting purposes. Such shares, therefore, are not included in the number of shares of common stock outstanding used to calculate the Company's earnings per share.
About Apollo Medical Holdings, Inc.
ApolloMed is a leading physician-centric integrated population health management company, which, together with its subsidiaries, including a Next Generation Accountable Care Organization ("NGACO"), and its affiliated independent practice associations ("IPAs") and management services organizations ("MSOs"), is working to provide coordinated, outcomes-based high-quality medical care for patients, particularly senior patients and patients with multiple chronic conditions, in a cost-effective manner. ApolloMed focuses on addressing the healthcare needs of its patients by leveraging its integrated health management and healthcare delivery platform that includes NMM (MSO), Apollo Medical Management, Inc. (MSO), ApolloMed Hospitalists, a Medical Corporation, (hospitalists), APA ACO, Inc. (NGACO), Allied Physicians of California IPA (IPA), Alpha Care Medical Group, Inc. (IPA), Accountable Health Care IPA (IPA) and Apollo Care Connect, Inc. (Digital Population Health Management Platform). For more information, please visit www.apollomed.net.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as statements about the Company's continued growth, acquisition strategy, ability to delivery sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans, and merger integration efforts. Forward-looking statements reflect current views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based on the current expectations and certain assumptions of the Company's management, and some or all of such expectations and assumptions may not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statements due to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company's reports to the US Securities and Exchange Commission (the "SEC"), including, without limitation the risk factors discussed in the Company's Annual Report on Form 10-K filed with the SEC on March 18, 2019.
FOR MORE INFORMATION, PLEASE CONTACT:
Asher Dewhurst
(443) 213-0500
asher.dewhurst@westwicke.com
SOURCE Apollo Medical Holdings, Inc.
