Form: 8-K

Current report filing

November 8, 2019




  Exhibit 99.1
 
pressrelease_image1.jpg
 
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.– (PR Newswire) – November 7, 2019 – 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,
2019
 
December 31,
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
September 30,
 
Nine Months Ended
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

 
752,642

 
3,753,258

 
4,021,480

Total revenue
156,060,224

 
166,729,281

 
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

 
56,577,104

 
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

 
53,211,382

 
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

 
38,625,440

 
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

 
$
9,106,397

 
$
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, 2019
 
December 31, 2018
 
December 31, 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
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 Net income
$
10,738,862

 
$
38,625,440

 
$
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

 
57,814,288

 
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

 
$
14,620,141

 
$
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