Apollo Medical Holdings, Inc. Reports Second Quarter Ended June 30, 2020 Results

ALHAMBRA, Calif., Aug. 7, 2020 /PRNewswire/ -- Apollo Medical Holdings, Inc. ("ApolloMed," and together with its subsidiaries and affiliated entities, the "Company") (NASDAQ: AMEH), an integrated population health management company, announced today its consolidated financial results for the second quarter ended June 30, 2020.

"We built upon the strong momentum we generated from early in the year and carried it into the second quarter, culminating in strong growth in revenue and net income attributable to the company. Our focus on fighting the pandemic remained at the forefront of our efforts in the quarter, during which we expanded our testing capacity and maintained focus on sustaining our essential business operations that empower our affiliated providers to care for patients and to help quell COVID-19 in our communities," stated Kenneth Sim, M.D., Executive Chairman and Co-Chief Executive Officer of ApolloMed.

Dr. Sim continued, "The further investments we've made in our advanced technologies and software will shape the future of our organization, while preserving the cutting-edge nature of our solution and ensuring the scalability required to support our growing membership base. As we close out a strong first half of 2020, we are well positioned to capitalize on ever changing industry dynamics and we are confident in our ability to deliver on our full year guidance."

Financial Highlights for the Second Quarter Ended June 30, 2020:

    --  Total revenue of $165.2 million for the quarter ended June 30, 2020, an
        increase of 27% as compared to $130.1 million for the quarter ended June
        30, 2019, primarily due to our acquisitions of Alpha Care Medical Group
        on May 31, 2019 and Accountable Health Care IPA on August 30, 2019,
        which companies contributed revenue of approximately, $32.5 million and
        $12.5 million, respectively, for the quarter ended June 30, 2020.
    --  Capitation revenue, net, of $140.9 million for the quarter ended June
        30, 2020, an increase of 37% compared to $103.2 million for the quarter
        ended June 30, 2019. Capitation revenue represented 85% of our total
        revenue for the quarter ended June 30, 2020.
    --  Risk pool settlements and incentives revenue of $12.0 million for the
        quarter ended June 30, 2020, an increase of 7%, as compared to $11.2
        million for the quarter ended June 30, 2019.
    --  Net income of $81.0 million for the quarter ended June 30, 2020 as
        compared to net income of $10.7 million for the quarter ended June 30,
        2019 driven primarily by the gain on the sale by Universal Care
        Acquisition Partners, LLC's ("UCAP") of its 48.9% investment in
        Universal Care, Inc. ("UCI") to Bright Health Company of California
        ("Bright"). UCAP is a 100% owned subsidiary of ApolloMed's affiliate,
        Allied Physicians of California IPA ("APC") and its 48.9% investment in
        UCI is an excluded asset that remains solely for the benefit of APC and
        its shareholders. As such, the gain on sale did not affect the net
        income and adjusted EBITDA attributable to ApolloMed.
    --  Net income attributable to Apollo Medical Holdings, Inc. of $7.0 million
        for the quarter ended June 30, 2020, as compared to net income
        attributable to Apollo Medical Holdings, Inc. of $3.5 million for the
        quarter ended June 30, 2019. The increase from the prior year was
        primarily due to preferred dividends ApolloMed received from APC.

Guidance:

The Company's stable, subscription-based revenue model allows it to maintain its previously disclosed 2020 guidance for total revenue, net income, EBITDA and adjusted EBITDA. Net income and EBITDA include the impact of the gain of approximately $99.6 million related to the sale of UCAP's 48.9% investment in UCI to Bright, which closed on April 30, 2020. As UCI was an excluded asset and remained solely for the benefit of APC and its shareholders, the gain on sale did not affect the net income and adjusted EBITDA attributable to ApolloMed.

The Company's guidance for the year ending December 31, 2020, is as follows:

    --  Maintain total revenue of between $665.0 million and $675.0 million,
    --  Maintain net income of between $100.0 million and $110.0 million,
    --  Maintain EBITDA of between $155.0 million and $167.0 million, and
    --  Maintain adjusted EBITDA of between $75.0 million and $90.0 million.

Refer to the "Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA" and "Use of Non-GAAP Financial Measures" below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of "Forward-Looking Statements" within this press release for additional information.

For more details on ApolloMed's financial results for the quarter ended June 30, 2020, please refer to ApolloMed's Quarterly Report on Form 10-Q to be filed with the U.S. Securities Exchange Commission ("SEC"), which is accessible at www.sec.gov.

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.

Note About Stockholders' Equity, Certain Treasury Stock and Earnings Per Share

As of the date of this press release, 302,732 holdback shares have not been issued to certain former shareholders of the Company's subsidiary, Network Medical Management, Inc. ("NMM"), who were NMM shareholders at the time of closing of the merger, as they have yet to submit properly completed letters of transmittal to ApolloMed in order to receive their pro rata portion of ApolloMed's common stock and warrants as contemplated under that certain Agreement and Plan of Merger, dated December 21, 2016, among ApolloMed, NMM, Apollo Acquisition Corp. ("Merger Subsidiary") and Kenneth Sim, M.D., as amended, pursuant to which Merger Subsidiary merged with and into NMM, with NMM as the surviving corporation. 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 ApolloMed is legally obligated to issue these shares in connection with the merger.

Shares of ApolloMed's common stock owned by APC, 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 guidance for the year ending December 31, 2020, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans, and merger integration efforts, as well as the impact of the 2019 Novel Coronavirus (COVID-19) pandemic on the Company's business, operations, and financial results. 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 SEC, including, without limitation the risk factors discussed in the Company's Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

Asher Dewhurst
(443) 213-0500
asher.dewhurst@westwicke.com


                                                                                              
            
              APOLLO MEDICAL HOLDINGS, INC.


                                                                                               
            
               CONSOLIDATED BALANCE SHEETS


                                                                                           
            (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)




                                                                                                                                                    June 30,                     December 31,


                                                                                                                                                        2020              2019






     
              Assets





     
              Current assets



     Cash and cash equivalents                                                                                                                              $
      152,441                      $
      103,189



     Restricted cash                                                                                                                                                        75



     Investment in marketable securities                                                                                                            117,656             116,539



     Receivables, net                                                                                                                                17,588              11,004



     Receivables, net - related parties                                                                                                              59,328              48,136



     Other receivables                                                                                                                               15,919              16,885



     Prepaid expenses and other current assets                                                                                                       11,188              10,315



     Loans receivable                                                                                                                                 6,425               6,425



     Loans receivable - related parties                                                                                                                                 16,500






     Total current assets                                                                                                                           380,545             329,068






     
              Noncurrent assets



     Restricted cash                                                                                                                                    746                 746



     Land, property and equipment, net                                                                                                               11,485              12,130



     Intangible assets, net                                                                                                                          94,790             103,012



     Goodwill                                                                                                                                       239,053             238,505



     Investments in other entities - equity method                                                                                                   26,817              28,427



     Investments in privately held entities                                                                                                          37,075                 896



     Operating lease right-of-use assets                                                                                                             20,219              14,248



     Other assets                                                                                                                                    22,487               1,681






     Total noncurrent assets                                                                                                                        452,672             399,645






     
              Total assets                                                                                                                                $
      833,217                      $
      728,713








     
              Liabilities, Mezzanine Equity and Shareholders' Equity





     
              Current liabilities



     Accounts payable and accrued expenses                                                                                                                   $
      24,788                       $
      27,279



     Fiduciary accounts payable                                                                                                                       1,853               2,027



     Medical liabilities                                                                                                                             70,273              58,725



     Income taxes payable                                                                                                                            42,210               4,529



     Dividend payable                                                                                                                                   431                 271



     Finance lease liabilities                                                                                                                          102                 102



     Operating lease liabilities                                                                                                                      3,350               2,990



     Current portion of long-term debt                                                                                                                9,500               9,500






     Total current liabilities                                                                                                                      152,507             105,423





     
              Noncurrent liabilities



     Deferred tax liability                                                                                                                          13,654              18,269



     Finance lease liabilities, net of current portion                                                                                                  355                 416



     Operating lease liabilities, net of current portion                                                                                             17,418              11,373



     Long-term debt, net of current portion and deferred financing costs                                                                            230,455             232,172






     Total noncurrent liabilities                                                                                                                   261,882             262,230






     
              Total liabilities                                                                                                                   414,389             367,653





     
              Mezzanine equity



     Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation                                                 210,980             168,725





     
              Stockholders' equity


      Series A Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series B Preferred stock); 1,111,111 issued and
       zero outstanding


      Series B Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of Series A Preferred stock); 555,555 issued and zero
       outstanding


      Common stock, $0.001 par value per share; 100,000,000 shares authorized, 36,309,513 and 35,908,057 shares outstanding, excluding
       17,475,707 and 17,458,810 treasury shares, at June 30, 2020, and December 31, 2019, respectively                                                   36                  36



     Additional paid-in capital                                                                                                                     163,986             159,608



     Retained earnings                                                                                                                               43,001              31,905


                                                                                                                                                     207,023             191,549





     Noncontrolling interest                                                                                                                            825                 786






     Total stockholders' equity                                                                                                                     207,848             192,335






     
              Total liabilities, mezzanine equity and stockholders' equity                                                                                $
      833,217                      $
      728,713


                                                                              
        
                APOLLO MEDICAL HOLDINGS, INC.


                                                                            
        
                CONSOLIDATED STATEMENTS OF INCOME


                                                                               
        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)




                                                                                                           Three Months Ended                               Six Months Ended

                                                                                         
              
                June 30,                       
        
               June 30,


                                                                                     2020                               2019             2020                      2019






     
                Revenue



     Capitation, net                                                                       $
              140,949                               $
        103,224                  $
          281,370  $
        174,740



     Risk pool settlements and incentives                                         12,003                                         11,191                        23,239                 21,285



     Management fee income                                                         8,690                                         10,353                        17,505                 19,349



     Fee-for-service, net                                                          2,270                                          3,878                         5,697                  7,959



     Other income                                                                  1,257                                          1,404                         2,463                  2,473





     Total revenue                                                               165,169                                        130,050                       330,274                225,806






     
                Operating expenses



     Cost of services                                                            136,079                                        101,363                       280,283                184,795



     General and administrative expenses                                          11,556                                         11,818                        23,390                 22,081



     Depreciation and amortization                                                 4,628                                          4,455                         9,330                  8,872



     Provision for doubtful accounts                                                                                           (2,314)                                            (1,363)





     Total expenses                                                              152,263                                        115,322                       313,003                214,385






     
                Income from operations                                          12,906                                         14,728                        17,271                 11,421





     
                Other income (expense)



     Income (loss) from equity method investments                                    834                                           (42)                        2,888                  (892)



     Gain on sale of equity method investment                                     99,647                                                                      99,647



     Interest expense                                                            (2,673)                                         (311)                      (5,541)                 (522)



     Interest income                                                                 863                                            474                         1,792                    797



     Other income                                                                  1,282                                             24                         1,384                    211





     Total other income (expense), net                                            99,953                                            145                       100,170                  (406)






     
                Income before provision for income taxes                       112,859                                         14,873                       117,441                 11,015





     
                Provision for income taxes                                      31,858                                          4,209                        33,453                  2,801





     
                Net income                                                      81,001                                         10,664                        83,988                  8,214






     Net income attributable to noncontrolling interest                           73,957                                          7,119                        72,892                  4,529





     
                Net income attributable to Apollo Medical Holdings, Inc.                   $
              7,044                                 $
        3,545                   $
          11,096    $
        3,685






     
                Earnings per share - basic                                                  $
              0.20                                  $
        0.10                     $
          0.31     $
        0.11





     
                Earnings per share - diluted                                                $
              0.19                                  $
        0.09                     $
          0.30     $
        0.10


                                                             
       
       APOLLO MEDICAL HOLDINGS, INC.


                                                               
       
       SUPPLEMENTAL INFORMATION





       
     
                  Capitated Membership (in thousands)

    ---

                                                                       June 30,                    December 31,      December 31,
                                                                           2020                             2019               2018

                                                                                                                              ---




       
          MSO                                                          519                                  421                665



       
          IPA                                                          541                                  530                265



       
          ACO                                                           29                                   29                 30





       
     Total lives under management                                    1,089                                  980                960



       
                
                  Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands)

    ---



                                                                                                                                  Three Months Ended                         Six Months Ended
                                                                                                                          June 30,                                  June 30,


                                                                                                                  2020                            2019          2020                            2019






       Net income                                                                                                     $
              81,001                             $
            10,664               $
        83,988   $
      8,214



            Depreciation and amortization                                                                       4,628                                    4,455                               9,330          8,872



            Provision for income taxes                                                                         31,858                                    4,209                              33,453          2,801



            Interest expense                                                                                    2,673                                      311                               5,541            522



            Interest income                                                                                     (863)                                   (474)                            (1,792)         (797)




       
                EBITDA                                                                                    119,297                                   19,165                             130,520         19,612





            (Income) loss from equity method investments                                                        (834)                                      42                             (2,888)           892



            Gain on sale of equity method investment                                                         (99,647)                                                                   (99,647)



            Other income                                                                                      (1,282)                                    (24)                            (1,384)         (211)



            Provider bonus payments                                                                             2,000                                                                       2,000         10,000



            Provision for doubtful accounts                                                                                                           (2,314)                                          (1,363)



            Net loss adjustment for recently acquired IPAs                                                      4,070                                                                       8,833




       
                Adjusted EBITDA                                                                                   $
              23,604                             $
            16,869               $
        37,434  $
      28,930



       
                
                  Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA (in thousands)

    ---

                                                                              
              
                Year Ending


                                                                                                   December 31, 2020





                                                                            Low                                        High



         Net income (1)                                                           $
              100,000                                 $
     110,000


             Depreciation and
              amortization                                               18,000                                                20,000


             Provision for
              income taxes                                               30,000                                                31,000


             Interest expense                                             8,000                                                 9,000


             Interest income                                            (1,000)                                              (3,000)


                     EBITDA
                        (1)                                            155,000                                               167,000




             Income from
              equity method
              investments (2)                                          (95,000)                                             (94,000)


             Net loss
              adjustment for
              recently
              acquired IPAs                                              15,000                                                17,000


                     Adjusted EBITDA                                    $75,000                                               $90,000




     
     (1) Net income and EBITDA includes the
              gain on sale of UCAP's 48.9%
              investment in UCI to Bright,
              which closed on April 30, 2020.
              UCAP is a 100% owned subsidiary
              of APC and its 48.9% investment
              in UCI is an excluded asset that
              remains solely for the benefit of
              APC and its shareholders. As
              such, the gain on sale did not
              affect the net income and
              adjusted EBITDA attributable to
              ApolloMed.



     
     (2) Income from equity method
              investments is mainly attributed
              to the sale of UCAP's 48.9%
              investment in UCI to Bright,
              which closed on April 30, 2020.
              UCAP is a 100% owned subsidiary
              of APC and its 48.9% investment
              in UCI is an excluded asset that
              remains solely for the benefit of
              APC and its shareholders. As
              such, the gain on sale did not
              affect the net income and
              adjusted EBITDA attributable to
              ApolloMed.

Use of Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles ("GAAP") is net income (loss). These measures are not in accordance with, or alternatives to GAAP, and may be different from other non-GAAP financial measures used by other companies. The Company uses adjusted EBITDA as a supplemental performance measure of our operations, for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding income from equity method investments and other income earned that are not related to the Company's normal operations. Adjusted EBITDA also excludes the effect on EBITDA of certain IPAs we recently acquired.

The Company believes the presentation of these non-GAAP financial measures provides investors with relevant and useful information, as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core and non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of the Company'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. To the extent this release contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. The reconciliation between certain GAAP and non-GAAP measures is provided above.

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SOURCE Apollo Medical Holdings, Inc.