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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
(State or other jurisdiction
of incorporation or organization)
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95-4472349
(IRS Employer Identification No.)
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Large accelerated filer
¨
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Accelerated filer
x
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Title of Each Class
|
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Trading Symbol
|
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Name of Each Exchange on Which Registered
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Common Shares, par value $0.001 per share
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AMEH
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Nasdaq Capital Market
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PAGE
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•
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risks related to our ability to successfully locate new strategic targets and integrate our operations following mergers, acquisitions or other strategic transactions, including that the integration may be more costly or more time consuming and complex than anticipated and that synergies anticipated to be realized may not be fully realized or may take longer to realize than expected;
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•
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our dependence on a few key payors;
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•
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changes in federal and state programs and policies regarding medical reimbursements and capitated payments for health services we provide;
|
•
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the success of our focus on our NGACO, to which we have devoted, and intend to continue to devote, considerable effort and resources, financial and otherwise, including whether we can manage medical costs for patients assigned to us within
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•
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our expenses may exceed capitation payments, whether from CMS under the AIPBP Mechanism or health plans, which could lead to substantial losses, and uncertainty related to the final settlements of such incurred expenses and our actual earnings that are generally determined in subsequent periods;
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•
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general economic uncertainty;
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•
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the impact of emerging and existing competitors;
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•
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any adverse development in general market, business, economic, labor, regulatory and political conditions;
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•
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changing government programs in which we participate for the provision of health services and on which we are also significantly dependent in generating revenue;
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•
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changes in laws and regulations and other market-wide developments affecting our industry in general and our operations in particular, including the impact of any change to applicable laws and regulations relating to trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products, registration and licensure, healthcare reform and reimbursements for medical services from private insurance, on which we are significantly dependent in generating revenue and the impact, including additional costs, of mandates and other obligations that may be imposed upon us as a result of new or revised federal and state healthcare laws;
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•
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risks related to our ability to raise capital as equity or debt to finance our growth and strategic transactions;
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•
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our ability to retain key individuals, including members of senior management;
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•
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the impact of rigorous competition in the healthcare industry;
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•
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the impact of any potential future impairment of our assets;
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•
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the effectiveness of our compliance and control initiatives;
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•
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risks related to changes in accounting literature or accounting interpretations; and
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•
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the fluctuations in the market value of our securities.
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June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
52,726,305
|
|
|
$
|
106,891,503
|
|
Restricted cash
|
3,537,470
|
|
|
—
|
|
||
Investment in marketable securities
|
1,149,828
|
|
|
1,127,102
|
|
||
Receivables, net
|
16,707,314
|
|
|
7,127,217
|
|
||
Receivables, net – related parties
|
64,057,647
|
|
|
49,328,739
|
|
||
Other receivables
|
12,900,211
|
|
|
1,003,133
|
|
||
Prepaid expenses and other current assets
|
10,121,935
|
|
|
7,385,098
|
|
||
Loan receivable – related parties
|
6,425,000
|
|
|
—
|
|
||
|
|
|
|
||||
Total current assets
|
167,625,710
|
|
|
172,862,792
|
|
||
|
|
|
|
||||
Noncurrent assets
|
|
|
|
||||
Land, property and equipment, net
|
12,101,373
|
|
|
12,721,082
|
|
||
Intangible assets, net
|
109,069,858
|
|
|
86,875,883
|
|
||
Goodwill
|
209,313,824
|
|
|
185,805,880
|
|
||
Loans receivable – related parties
|
17,500,000
|
|
|
17,500,000
|
|
||
Investment in other entities – equity method
|
35,903,041
|
|
|
34,876,980
|
|
||
Investment in a privately held entity that does not report net asset value per share
|
405,000
|
|
|
405,000
|
|
||
Restricted cash
|
740,212
|
|
|
745,470
|
|
||
Right-of-use assets
|
14,319,371
|
|
|
—
|
|
||
Other assets
|
1,351,576
|
|
|
1,205,962
|
|
||
|
|
|
|
||||
Total noncurrent assets
|
400,704,255
|
|
|
340,136,257
|
|
||
|
|
|
|
||||
Total assets
|
$
|
568,329,965
|
|
|
$
|
512,999,049
|
|
Liabilities, Mezzanine Equity and Stockholders’ Equity
|
|
|
|
||||
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
30,658,273
|
|
|
$
|
25,075,489
|
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Fiduciary accounts payable
|
1,798,807
|
|
|
1,538,598
|
|
||
Medical liabilities
|
42,942,898
|
|
|
33,641,701
|
|
||
Income taxes payable
|
—
|
|
|
11,621,861
|
|
||
Bank loan
|
—
|
|
|
40,257
|
|
||
Finance lease obligation
|
101,741
|
|
|
101,741
|
|
||
Lease liabilities
|
2,836,010
|
|
|
—
|
|
||
|
|
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Total current liabilities
|
78,337,729
|
|
|
72,019,647
|
|
||
|
|
|
|
||||
Noncurrent liabilities
|
|
|
|
||||
Lines of credit – related party
|
44,600,000
|
|
|
13,000,000
|
|
||
Deferred tax liability
|
26,651,678
|
|
|
19,615,935
|
|
||
Liability for unissued equity shares
|
1,185,025
|
|
|
1,185,025
|
|
||
Finance lease obligation
|
466,771
|
|
|
517,261
|
|
||
Lease liabilities
|
11,416,750
|
|
|
—
|
|
||
|
|
|
|
||||
Total noncurrent liabilities
|
84,320,224
|
|
|
34,318,221
|
|
||
|
|
|
|
||||
Total liabilities
|
162,657,953
|
|
|
106,337,868
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 10)
|
|
|
|
|
|
||
|
|
|
|
||||
Mezzanine equity
|
|
|
|
||||
Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation (“APC”)
|
219,582,512
|
|
|
225,117,029
|
|
||
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Series A Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of all preferred stock, including Series B Preferred stock); 1,111,111 issued and zero outstanding at June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Series B Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of all preferred stock, including Series A Preferred stock); 555,555 issued and zero outstanding at June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock, par value $0.001; 100,000,000 shares authorized, 34,638,812 and 34,578,040 shares outstanding, excluding 1,944,054 and 1,850,603 treasury shares, at June 30, 2019 and December 31, 2018, respectively
|
34,639
|
|
|
34,578
|
|
||
Additional paid-in capital
|
163,891,843
|
|
|
162,723,051
|
|
||
Retained earnings
|
21,473,083
|
|
|
17,788,203
|
|
||
|
185,399,565
|
|
|
180,545,832
|
|
||
|
|
|
|
||||
Noncontrolling interest
|
689,935
|
|
|
998,320
|
|
||
|
|
|
|
||||
Total stockholders’ equity
|
186,089,500
|
|
|
181,544,152
|
|
||
|
|
|
|
||||
Total liabilities, mezzanine equity and stockholders’ equity
|
$
|
568,329,965
|
|
|
$
|
512,999,049
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Capitation, net
|
103,223,692
|
|
|
90,316,182
|
|
|
174,740,470
|
|
|
176,221,466
|
|
||||
Risk pool settlements and incentives
|
11,191,050
|
|
|
13,866,217
|
|
|
21,284,891
|
|
|
31,852,953
|
|
||||
Management fee income
|
10,352,619
|
|
|
12,371,608
|
|
|
19,349,219
|
|
|
24,446,180
|
|
||||
Fee-for-service, net
|
3,878,428
|
|
|
4,563,712
|
|
|
7,959,102
|
|
|
10,800,340
|
|
||||
Other income
|
1,403,777
|
|
|
1,548,812
|
|
|
2,473,055
|
|
|
3,268,838
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
130,049,566
|
|
|
122,666,531
|
|
|
225,806,737
|
|
|
246,589,777
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services
|
101,363,101
|
|
|
99,705,571
|
|
|
184,795,575
|
|
|
184,320,257
|
|
||||
General and administrative expenses
|
11,817,555
|
|
|
10,893,135
|
|
|
22,081,515
|
|
|
22,441,474
|
|
||||
Depreciation and amortization
|
4,454,571
|
|
|
4,918,078
|
|
|
8,872,152
|
|
|
9,976,590
|
|
||||
Provision for doubtful accounts
|
(2,314,429
|
)
|
|
—
|
|
|
(1,363,415
|
)
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total expenses
|
115,320,798
|
|
|
115,516,784
|
|
|
214,385,827
|
|
|
216,738,321
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income from operations
|
14,728,768
|
|
|
7,149,747
|
|
|
11,420,910
|
|
|
29,851,456
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Income from equity method investments
|
(42,282
|
)
|
|
1,669,861
|
|
|
(891,939
|
)
|
|
1,641,837
|
|
||||
Interest expense
|
(311,049
|
)
|
|
(110,683
|
)
|
|
(522,028
|
)
|
|
(195,684
|
)
|
||||
Interest income
|
473,664
|
|
|
492,723
|
|
|
796,672
|
|
|
762,541
|
|
||||
Other income
|
24,229
|
|
|
187,752
|
|
|
211,345
|
|
|
275,745
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total other (expense) income, net
|
144,562
|
|
|
2,239,653
|
|
|
(405,950
|
)
|
|
2,484,439
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before provision for income taxes
|
14,873,330
|
|
|
9,389,400
|
|
|
11,014,960
|
|
|
32,335,895
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Provision for income taxes
|
4,209,399
|
|
|
1,523,807
|
|
|
2,801,158
|
|
|
8,752,647
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
10,663,931
|
|
|
7,865,593
|
|
|
8,213,802
|
|
|
23,583,248
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling interests
|
7,118,715
|
|
|
5,201,491
|
|
|
4,528,922
|
|
|
18,758,691
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Apollo Medical Holdings, Inc.
|
$
|
3,545,216
|
|
|
$
|
2,664,102
|
|
|
$
|
3,684,880
|
|
|
$
|
4,824,557
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – basic
|
$
|
0.10
|
|
|
$
|
0.08
|
|
|
$
|
0.11
|
|
|
$
|
0.15
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share – diluted
|
$
|
0.09
|
|
|
$
|
0.07
|
|
|
$
|
0.10
|
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock outstanding – basic
|
34,540,059
|
|
|
32,674,459
|
|
|
34,518,461
|
|
|
32,548,662
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of common stock outstanding – diluted
|
37,962,555
|
|
|
37,850,679
|
|
|
37,896,837
|
|
|
37,935,773
|
|
|
Mezzanine
Equity –
Noncontrolling
Interest in APC
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Noncontrolling Interest
|
|
Common Stock Outstanding
|
|
Additional
Paid-in Capital
|
|
Retained
Earnings
|
|
Noncontrolling
Interest
|
|
Shareholders'
Equity
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance January 1, 2019
|
$
|
225,117,029
|
|
|
34,578,040
|
|
|
$
|
34,578
|
|
|
$
|
162,723,051
|
|
|
$
|
17,788,203
|
|
|
$
|
998,320
|
|
|
$
|
181,544,152
|
|
Net income
|
(3,000,021
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
139,664
|
|
|
410,228
|
|
|
549,892
|
|
||||||
Purchase of treasury shares
|
(40,000
|
)
|
|
(93,451
|
)
|
|
(93
|
)
|
|
93
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued for exercise of options and warrants
|
155,000
|
|
|
17,516
|
|
|
17
|
|
|
139,957
|
|
|
—
|
|
|
—
|
|
|
139,974
|
|
||||||
Share-based compensation
|
202,382
|
|
|
1,599
|
|
|
2
|
|
|
142,750
|
|
|
—
|
|
|
—
|
|
|
142,752
|
|
||||||
Dividends
|
(10,000,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at March 31, 2019
|
212,434,390
|
|
|
34,503,704
|
|
|
34,504
|
|
|
163,005,851
|
|
|
17,927,867
|
|
|
1,408,548
|
|
|
182,376,770
|
|
||||||
Net income
|
6,895,740
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,545,216
|
|
|
222,975
|
|
|
3,768,191
|
|
||||||
Purchase of treasury shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued for exercise of options and warrants
|
50,000
|
|
|
135,108
|
|
|
135
|
|
|
757,993
|
|
|
—
|
|
|
—
|
|
|
758,128
|
|
||||||
Share-based compensation
|
202,382
|
|
|
—
|
|
|
—
|
|
|
127,999
|
|
|
—
|
|
|
—
|
|
|
127,999
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(941,588
|
)
|
|
(941,588
|
)
|
||||||
Balance at June 30, 2019
|
$
|
219,582,512
|
|
|
34,638,812
|
|
|
$
|
34,639
|
|
|
$
|
163,891,843
|
|
|
$
|
21,473,083
|
|
|
$
|
689,935
|
|
|
$
|
186,089,500
|
|
|
Mezzanine
Equity –
Noncontrolling
Interest in APC
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Noncontrolling Interest
|
|
Common Stock Outstanding
|
|
Additional
Paid-in Capital
|
|
Retained
Earnings
|
|
Noncontrolling
Interest
|
|
Shareholders'
Equity
|
|||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance January 1, 2018
|
$
|
172,129,744
|
|
|
32,304,876
|
|
|
$
|
32,305
|
|
|
$
|
158,181,192
|
|
|
$
|
1,734,531
|
|
|
$
|
4,235,398
|
|
|
$
|
164,183,426
|
|
ASC 606 Adoption
|
7,351,434
|
|
|
|
|
|
|
|
|
1,002,468
|
|
|
|
|
1,002,468
|
|
||||||||||
Net income
|
12,970,752
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2,160,455
|
|
|
586,448
|
|
|
2,746,903
|
|
||||
Purchase price adjustment from merger
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares issued for exercise of options and warrants
|
—
|
|
|
309,826
|
|
|
310
|
|
|
1,923,474
|
|
|
—
|
|
|
—
|
|
|
1,923,784
|
|
||||||
Share-based compensation
|
202,382
|
|
|
37,593
|
|
|
38
|
|
|
631,524
|
|
|
—
|
|
|
—
|
|
|
631,562
|
|
||||||
Noncontrolling interest capital charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends
|
(2,000,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at March 31, 2018
|
190,654,312
|
|
|
32,652,295
|
|
|
32,653
|
|
|
160,736,190
|
|
|
4,897,454
|
|
|
4,821,846
|
|
|
170,488,143
|
|
||||||
ASC 606 Adoption
|
—
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Net income
|
4,857,625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,664,102
|
|
|
343,866
|
|
|
3,007,968
|
|
||||||
Purchase price adjustment from merger
|
—
|
|
|
—
|
|
|
—
|
|
|
868,000
|
|
|
—
|
|
|
—
|
|
|
868,000
|
|
||||||
Shares issued for exercise of options and warrants
|
200,000
|
|
|
188,875
|
|
|
188
|
|
|
423,357
|
|
|
—
|
|
|
—
|
|
|
423,545
|
|
||||||
Share-based compensation
|
202,382
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Noncontrolling interest capital charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,500
|
|
|
27,500
|
|
||||||
Balance at June 30, 2018
|
$
|
195,914,319
|
|
|
32,841,170
|
|
|
$
|
32,841
|
|
|
$
|
162,027,547
|
|
|
$
|
7,561,556
|
|
|
$
|
5,193,212
|
|
|
$
|
174,815,156
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
8,213,802
|
|
|
$
|
23,583,248
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
8,872,152
|
|
|
9,976,590
|
|
||
Loss on disposal of property and equipment
|
—
|
|
|
41,782
|
|
||
Provision for doubtful accounts
|
(1,363,415
|
)
|
|
—
|
|
||
Share-based compensation
|
675,515
|
|
|
1,036,326
|
|
||
Unrealized (gain) loss from investment in equity securities
|
(14,549
|
)
|
|
16,060
|
|
||
Income from equity method investments
|
891,939
|
|
|
(1,641,837
|
)
|
||
Deferred tax
|
(549,198
|
)
|
|
706,813
|
|
||
Changes in operating assets and liabilities, net of business combinations:
|
|
|
|
||||
Receivable, net
|
587,637
|
|
|
4,410,363
|
|
||
Receivable, net – related parties
|
(12,665,493
|
)
|
|
(7,234,874
|
)
|
||
Other receivables
|
(11,897,078
|
)
|
|
—
|
|
||
Prepaid expenses and other current assets
|
(2,740,403
|
)
|
|
(2,772,749
|
)
|
||
Right-of-use assets
|
1,098,111
|
|
|
—
|
|
||
Other assets
|
(243,112
|
)
|
|
(95,258
|
)
|
||
Accounts payable and accrued expenses
|
3,340,115
|
|
|
(692,000
|
)
|
||
Dividends payable
|
—
|
|
|
617,210
|
|
||
Incentives payable
|
—
|
|
|
(16,395,926
|
)
|
||
Fiduciary accounts payable
|
260,209
|
|
|
(722,934
|
)
|
||
Medical liabilities
|
(3,818,517
|
)
|
|
2,881,017
|
|
||
Income taxes payable
|
(11,621,861
|
)
|
|
(298,439
|
)
|
||
Lease liabilities
|
(1,043,927
|
)
|
|
—
|
|
||
Net cash (used in) provided by operating activities
|
(22,018,073
|
)
|
|
13,415,392
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
||||
Payments for business acquisition, net of cash acquired
|
(41,518,084
|
)
|
|
—
|
|
||
Advances on loans receivable
|
(6,425,000
|
)
|
|
(2,500,000
|
)
|
||
Purchases of marketable securities
|
(8,177
|
)
|
|
(3,932
|
)
|
||
Purchases of investment - equity method
|
(2,158,000
|
)
|
|
(16,673,840
|
)
|
||
Purchases of a privately held entity that does not report net asset value per share
|
—
|
|
|
(405,000
|
)
|
||
Purchases of property and equipment
|
(376,419
|
)
|
|
(682,712
|
)
|
||
Dividend received
|
240,000
|
|
|
—
|
|
||
Net cash used in investing activities
|
(50,245,680
|
)
|
|
(20,265,484
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
||||
Repayment of bank loan
|
(8,040,257
|
)
|
|
(257,374
|
)
|
||
Dividends paid
|
(10,941,588
|
)
|
|
(12,000,000
|
)
|
||
Change in noncontrolling interest capital
|
—
|
|
|
27,500
|
|
Payment of capital lease obligations
|
(50,490
|
)
|
|
(48,999
|
)
|
||
Proceeds from the exercise of stock options and warrants
|
898,102
|
|
|
2,347,329
|
|
||
Repurchase of shares
|
(40,000
|
)
|
|
—
|
|
||
Borrowings on line of credit
|
39,600,000
|
|
|
8,000,000
|
|
||
Proceeds from common stock offering
|
205,000
|
|
|
200,000
|
|
||
Net cash provided by (used in) financing activities
|
21,630,767
|
|
|
(1,731,544
|
)
|
||
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash
|
(50,632,986
|
)
|
|
(8,581,636
|
)
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash, beginning of period
|
107,636,973
|
|
|
118,500,095
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
57,003,987
|
|
|
$
|
109,918,459
|
|
|
|
|
|
||||
Supplementary disclosures of cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
16,700,000
|
|
|
$
|
11,612,590
|
|
Cash paid for interest
|
438,976
|
|
|
144,544
|
|
||
|
|
|
|
||||
Supplemental disclosures of non-cash investing and financing activities
|
|
|
|
||||
Cashless exercise of stock options
|
$
|
—
|
|
|
$
|
47
|
|
Deferred tax liability adjustment to goodwill
|
8,355,343
|
|
|
1,110,456
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
52,726,305
|
|
|
$
|
101,132,237
|
|
Restricted cash – short-term - distributions to former NMM shareholders
|
—
|
|
|
8,040,870
|
|
||
Restricted cash – letters of credit
|
4,277,682
|
|
|
745,352
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
|
$
|
57,003,987
|
|
|
$
|
109,918,459
|
|
1.
|
Description of Business
|
1.
|
The Company agreed to lend AP-AMH
$545.0 million
pursuant to a
ten
-year secured loan agreement. The loan will bear interest at a rate of
10%
per annum simple interest, will not be prepayable (except in certain limited circumstances), will require quarterly payments of interest only, and will be secured by a first priority security interest in all of AP-AMH's assets, including the shares of APC Series A Preferred Stock to be purchased by AP-AMH, to the extent that AP-AMH
|
2.
|
AP-AMH has agreed to purchase
$545.0 million
of Series A Preferred Stock to be issued by APC to AP-AMH. Under the terms of the Series A Preferred Stock, AP-AMH is entitled to receive preferential, cumulative dividends that accrue on a daily basis and that are equal to the sum of (A) APC's net income from healthcare services, plus (B) any dividends received by APC from certain of APC's affiliated entities, less (C) any retained amounts.
|
3.
|
APC has agreed to purchase
$300.0 million
of the Company's common stock. The Company has agreed to grant APC certain registration rights with respect to the Company's common stock that APC purchases, and APC agreed to restrict its voting powers with respect to its shares.
|
4.
|
The Company agreed to license certain of its trademarks to AP-AMH for a fee equal to a percentage of the aggregate gross revenues of AP-AMH. The license fee is payable out of any Series A Preferred Stock dividends received by AP-AMH from APC.
|
5.
|
Through its subsidiary, the Company has agreed to provide certain administrative services to AP-AMH for a fee equal to a percentage of the aggregate gross revenues of AP-AMH. The administrative fee also is payable out of any APC Series A Preferred Stock dividends received by AP-AMH from APC.
|
2.
|
Basis of Presentation
|
Three Months Ended June 30,
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Commercial
|
$
|
25,364,588
|
|
|
$
|
29,601,757
|
|
Medicare
|
57,964,880
|
|
|
54,776,111
|
|
||
Medicaid
|
36,276,874
|
|
|
26,959,315
|
|
||
Other third parties
|
10,443,224
|
|
|
11,329,348
|
|
||
Revenue
|
$
|
130,049,566
|
|
|
$
|
122,666,531
|
|
Six Months Ended June 30,
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Commercial
|
$
|
50,383,600
|
|
|
$
|
55,366,879
|
|
Medicare
|
95,062,722
|
|
|
107,331,859
|
|
||
Medicaid
|
61,647,399
|
|
|
62,552,664
|
|
||
Other third parties
|
18,713,016
|
|
|
21,338,375
|
|
||
Revenue
|
$
|
225,806,737
|
|
|
$
|
246,589,777
|
|
|
For the Six Months Ended
June 30, |
||||
|
2019
|
|
2018
|
||
|
|
|
|
||
Payor A
|
15.8
|
%
|
|
12.5
|
%
|
Payor B
|
14.3
|
%
|
|
15.7
|
%
|
Payor C
|
11.7
|
%
|
|
13.3
|
%
|
Payor D
|
*%
|
|
|
14.9
|
%
|
*
|
Less than
10%
of total net revenues
|
|
As of
June 30, 2019 |
|
As of
December 31, 2018 |
||
Payor E
|
29.0
|
%
|
|
34.1
|
%
|
Payor F
|
34.0
|
%
|
|
42.2
|
%
|
|
Fair Value Measurements
|
|
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds*
|
$
|
28,534,501
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28,534,501
|
|
Marketable securities – certificates of deposit
|
1,074,280
|
|
|
—
|
|
|
—
|
|
|
1,074,280
|
|
||||
Marketable securities – equity securities
|
75,548
|
|
|
—
|
|
|
—
|
|
|
75,548
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
29,684,329
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,684,329
|
|
|
Fair Value Measurements
|
|
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds*
|
$
|
85,500,745
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,500,745
|
|
Marketable securities – certificates of deposit
|
1,066,103
|
|
|
—
|
|
|
—
|
|
|
1,066,103
|
|
||||
Marketable securities – equity securities
|
60,999
|
|
|
—
|
|
|
—
|
|
|
60,999
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
86,627,847
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
86,627,847
|
|
3.
|
Business Combination and Goodwill
|
|
Preliminary
Balance Sheet
|
||
Assets acquired
|
|
||
Cash and cash equivalents
|
$
|
3,568,554
|
|
Accounts receivable, net
|
10,335,664
|
|
|
Other current assets
|
1,534,212
|
|
|
Network relationship intangible assets
|
29,858,000
|
|
|
Goodwill
|
23,507,944
|
|
|
Accounts Payable
|
$
|
(2,273,753
|
)
|
Deferred tax liabilities
|
(8,355,343
|
)
|
|
Medical liabilities
|
(13,119,714
|
)
|
|
Net assets acquired
|
$
|
45,055,564
|
|
|
|
||
Cash paid
|
$
|
45,055,564
|
|
Balance, January 1, 2019
|
$
|
185,805,880
|
|
Acquisition of Alpha Care
|
23,507,944
|
|
|
|
|
||
Balance, June 30, 2019
|
$
|
209,313,824
|
|
|
|
4.
|
Intangible Assets, Net
|
|
Useful
Life
(Years)
|
|
Gross
June 30, 2019 |
|
Accumulated
Amortization
|
|
Net
June 30, 2019 |
||||||
Indefinite Lived Assets:
|
|
|
|
|
|
|
|
||||||
Medicare license
|
N/A
|
|
$
|
1,994,000
|
|
|
$
|
—
|
|
|
$
|
1,994,000
|
|
Amortized Intangible Assets:
|
|
|
|
|
|
|
|
||||||
Network relationships
|
11-15
|
|
139,741,000
|
|
|
(54,094,505
|
)
|
|
85,646,495
|
|
|||
Management contracts
|
15
|
|
22,832,000
|
|
|
(8,616,362
|
)
|
|
14,215,638
|
|
|||
Member relationships
|
12
|
|
6,696,000
|
|
|
(1,820,905
|
)
|
|
4,875,095
|
|
|||
Patient management platform
|
5
|
|
2,060,000
|
|
|
(652,333
|
)
|
|
1,407,667
|
|
|||
Tradename/trademarks
|
20
|
|
1,011,000
|
|
|
(80,037
|
)
|
|
930,963
|
|
|||
|
|
|
$
|
174,334,000
|
|
|
$
|
(65,264,142
|
)
|
|
$
|
109,069,858
|
|
|
Useful
Life
(Years)
|
|
Gross
December 31, 2018 |
|
Accumulated
Amortization
|
|
Net
December 31, 2018 |
||||||
Indefinite Lived Assets:
|
|
|
|
|
|
|
|
||||||
Medicare license
|
N/A
|
|
$
|
1,994,000
|
|
|
$
|
—
|
|
|
$
|
1,994,000
|
|
Amortized Intangible Assets:
|
|
|
|
|
|
|
|
||||||
Network relationships
|
11-15
|
|
109,883,000
|
|
|
(48,361,773
|
)
|
|
61,521,227
|
|
|||
Management contracts
|
20
|
|
22,832,000
|
|
|
(7,447,581
|
)
|
|
15,384,419
|
|
|||
Member relationships
|
12
|
|
6,696,000
|
|
|
(1,289,667
|
)
|
|
5,406,333
|
|
|||
Patient management platform
|
5
|
|
2,060,000
|
|
|
(446,333
|
)
|
|
1,613,667
|
|
|||
Tradename/trademarks
|
20
|
|
1,011,000
|
|
|
(54,763
|
)
|
|
956,237
|
|
|||
|
|
|
$
|
144,476,000
|
|
|
$
|
(57,600,117
|
)
|
|
$
|
86,875,883
|
|
|
Amount
|
||
|
|
||
2019 (excluding the six months ended June 30, 2019)
|
$
|
8,155,000
|
|
2020
|
14,968,000
|
|
|
2021
|
13,257,000
|
|
|
2022
|
11,744,000
|
|
|
2023
|
10,090,000
|
|
|
Thereafter
|
48,862,000
|
|
|
|
|
||
|
$
|
107,076,000
|
|
5.
|
Investments in Other Entities
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
LaSalle Medical Associates – IPA Line of Business
|
$
|
6,827,190
|
|
|
$
|
7,054,888
|
|
Pacific Medical Imaging & Oncology Center, Inc.
|
1,511,276
|
|
|
1,359,494
|
|
||
Universal Care, Inc.
|
8,159,432
|
|
|
2,635,945
|
|
||
Accountable Health Care IPA- related party
|
665,372
|
|
|
4,977,957
|
|
||
Diagnostic Medical Group
|
2,434,938
|
|
|
2,257,346
|
|
||
Pacific Ambulatory Surgery Center, LLC
|
—
|
|
|
285,198
|
|
||
531 W. College, LLC – related party
|
16,238,833
|
|
|
16,273,152
|
|
||
MWN, LLC – related party
|
66,000
|
|
|
33,000
|
|
||
|
$
|
35,903,041
|
|
|
$
|
34,876,980
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,338,344
|
|
|
$
|
18,444,702
|
|
Receivables, net
|
6,864,902
|
|
|
2,897,337
|
|
||
Other current assets
|
3,526,319
|
|
|
5,459,442
|
|
||
Loan receivable
|
2,250,000
|
|
|
1,250,000
|
|
||
Restricted cash
|
676,774
|
|
|
667,414
|
|
||
|
|
|
|
||||
Total assets
|
$
|
19,656,339
|
|
|
$
|
28,718,895
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Current liabilities
|
$
|
23,536,048
|
|
|
$
|
26,837,814
|
|
Stockholders’ (deficit) equity
|
(3,879,709
|
)
|
|
1,881,081
|
|
||
|
|
|
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
19,656,339
|
|
|
$
|
28,718,895
|
|
|
Six Months
Ended June 30, 2019 |
|
Six Months
Ended June 30, 2018 |
||||
Revenues
|
$
|
93,434,476
|
|
|
$
|
110,311,466
|
|
Expenses
|
102,845,266
|
|
|
113,744,898
|
|
||
|
|
|
|
||||
Net loss
|
$
|
(9,410,790
|
)
|
|
$
|
(3,433,432
|
)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash
|
$
|
44,503,392
|
|
|
$
|
27,812,520
|
|
Receivables, net
|
48,820,720
|
|
|
46,978,703
|
|
||
Other current assets
|
37,563,651
|
|
|
18,670,350
|
|
||
Other assets
|
673,893
|
|
|
661,621
|
|
||
Property and equipment, net
|
3,071,398
|
|
|
2,786,996
|
|
||
|
|
|
|
||||
Total assets
|
$
|
134,633,054
|
|
|
$
|
96,910,190
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Current liabilities
|
$
|
115,966,346
|
|
|
$
|
89,731,133
|
|
Other liabilities
|
25,005,609
|
|
|
25,024,043
|
|
||
Stockholders’ deficit
|
(6,338,901
|
)
|
|
(17,844,986
|
)
|
||
|
|
|
|
||||
Total liabilities and stockholders’ deficit
|
$
|
134,633,054
|
|
|
$
|
96,910,190
|
|
|
Six Months
Ended June 30, 2019 |
|
Six Months
Ended June 30, 2018 |
||||
Revenues
|
$
|
247,517,017
|
|
|
$
|
149,825,595
|
|
Expenses
|
239,388,926
|
|
|
146,614,334
|
|
||
|
|
|
|
||||
Income before benefit from income taxes
|
8,128,091
|
|
|
3,211,261
|
|
||
Benefit from income taxes
|
(3,167,384
|
)
|
|
(289,200
|
)
|
||
|
|
|
|
||||
Net income (loss)
|
$
|
11,295,475
|
|
|
$
|
3,500,461
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash
|
$
|
3,501,839
|
|
|
$
|
5,582,837
|
|
Receivables, net
|
—
|
|
|
11,246,477
|
|
||
Other current assets
|
30,940
|
|
|
30,940
|
|
||
Other assets
|
1,312,768
|
|
|
1,312,768
|
|
||
Property and equipment, net
|
138,690
|
|
|
138,690
|
|
||
|
|
|
|
||||
Total Assets
|
$
|
4,984,237
|
|
|
$
|
18,311,712
|
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Current Liabilities
|
$
|
20,793,426
|
|
|
$
|
16,824,083
|
|
Other Liabilities
|
19,500,000
|
|
|
19,500,000
|
|
||
Stockholders’ deficit
|
(35,309,189
|
)
|
|
(18,012,371
|
)
|
||
|
|
|
|
||||
Total liabilities and stockholders’ deficit
|
$
|
4,984,237
|
|
|
$
|
18,311,712
|
|
|
Six Months
Ended June 30, 2019 |
||
Revenues
|
$
|
46,813,524
|
|
Expenses
|
64,063,864
|
|
|
|
|
||
Loss before provision for income taxes
|
(17,250,340
|
)
|
|
Provision for income taxes
|
—
|
|
|
|
|
||
Net loss*
|
$
|
(17,250,340
|
)
|
*
|
APC’s allocation of net loss commenced on September 21, 2018.
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash
|
141,616
|
|
|
158,088
|
|
||
Other current assets
|
—
|
|
|
16,137
|
|
||
Other assets
|
70,000
|
|
|
70,000
|
|
||
|
|
|
|
||||
Property and equipment, net
|
$
|
33,394,792
|
|
|
$
|
33,394,792
|
|
|
|
|
|
||||
Total assets
|
$
|
33,606,408
|
|
|
$
|
33,639,017
|
|
|
|
|
|
||||
Liabilities and Members’ Equity
|
|
|
|
||||
|
|
|
|
||||
Current liabilities
|
$
|
1,128,741
|
|
|
$
|
1,007,413
|
|
Stockholders’ equity
|
32,477,667
|
|
|
32,631,604
|
|
||
|
|
|
|
||||
Total liabilities and members’ equity
|
$
|
33,606,408
|
|
|
$
|
33,639,017
|
|
|
June 30,
2019 |
||
Revenues
|
—
|
|
|
Expenses
|
538,437
|
|
|
Loss from operations
|
(538,437
|
)
|
|
|
|
||
Other Income
|
$
|
384,500
|
|
|
|
||
Net loss*
|
$
|
(153,937
|
)
|
*
|
The Company’s investment in 531 W. College, LLC commenced on June 27, 2018.
|
6.
|
Loan Receivable – Related Parties
|
7.
|
Accounts Payable and Accrued Expenses
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Accounts payable
|
$
|
4,768,708
|
|
|
$
|
4,481,544
|
|
Specialty capitation payable
|
300,000
|
|
|
300,000
|
|
||
Subcontractor IPA risk pool payable
|
2,760,162
|
|
|
2,532,750
|
|
||
Professional fees
|
3,249,220
|
|
|
2,251,741
|
|
||
Due to related parties
|
1,072,563
|
|
|
1,488,313
|
|
||
Contract liabilities
|
15,471,349
|
|
|
9,024,235
|
|
||
Accrued compensation
|
3,036,271
|
|
|
4,996,906
|
|
||
|
|
|
|
||||
|
$
|
30,658,273
|
|
|
$
|
25,075,489
|
|
8.
|
Medical Liabilities
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Balance, beginning of period
|
$
|
33,641,701
|
|
|
$
|
63,972,318
|
|
Acquired from Alpha Care (see Note 3)
|
13,119,714
|
|
|
—
|
|
||
Claims paid for previous period
|
(39,744,468
|
)
|
|
(36,549,348
|
)
|
||
Incurred health care costs
|
96,521,548
|
|
|
209,002,961
|
|
||
Claims paid for current period
|
(60,439,690
|
)
|
|
(167,537,480
|
)
|
||
Payment to CMS based on APAACO 2017 year settlement
|
—
|
|
|
(34,464,826
|
)
|
||
Adjustments
|
(155,907
|
)
|
|
(781,924
|
)
|
||
|
|
|
|
||||
Balance, end of period
|
$
|
42,942,898
|
|
|
$
|
33,641,701
|
|
9.
|
Bank Loan and Lines of Credit
|
10.
|
Mezzanine and Stockholders’ Equity
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
||||||
Options outstanding at January 1, 2019
|
647,240
|
|
|
$
|
5.62
|
|
|
4.13
|
|
|
$
|
9.2
|
|
Options granted
|
45,000
|
|
|
18.11
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
(111,000
|
)
|
|
4.56
|
|
|
—
|
|
|
1.4
|
|
||
Options forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Options outstanding at June 30, 2019
|
581,240
|
|
|
$
|
6.79
|
|
|
3.44
|
|
|
$
|
5.8
|
|
|
|
|
|
|
|
|
|
||||||
Options exercisable at June 30, 2019
|
547,490
|
|
|
$
|
5.74
|
|
|
3.18
|
|
|
$
|
5.8
|
|
|
June 30,
2019 |
||
Expected Term
|
3.0 years
|
|
|
Expected volatility
|
100.27
|
%
|
|
Risk-free interest rate
|
2.51
|
%
|
|
Market value of common stock
|
$
|
18.11
|
|
Annual dividend yield
|
—
|
%
|
|
Forfeiture rate
|
0
|
%
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
||||||
Options outstanding at January 1, 2019
|
853,800
|
|
|
$
|
0.167
|
|
|
0.75
|
|
|
$
|
0.5
|
|
Options granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Options expired/forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Options outstanding and exercisable at June 30, 2019
|
853,800
|
|
|
$
|
0.167
|
|
|
0.25
|
|
|
$
|
0.5
|
|
|
Three Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Share-based compensation expense:
|
|
|
|
||||
|
|
|
|
||||
General and administrative
|
$
|
202,382
|
|
|
$
|
202,382
|
|
|
|
|
|
||||
|
$
|
202,382
|
|
|
$
|
202,382
|
|
|
Six Months Ended
June 30, |
||||||
|
2019
|
|
2018
|
||||
Share-based compensation expense:
|
|
|
|
||||
|
|
|
|
||||
General and administrative
|
$
|
404,764
|
|
|
$
|
404,764
|
|
|
|
|
|
||||
|
$
|
404,764
|
|
|
$
|
404,764
|
|
|
Shares
|
|
Weighted
Average
Exercise Price
|
|
Weighted
Average
Remaining
Contractual
Term
(Years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
||||||
Warrants outstanding at January 1, 2019
|
3,331,995
|
|
|
$
|
9.93
|
|
|
2.97
|
|
|
$
|
33.1
|
|
Warrants granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Warrants exercised
|
(41,624
|
)
|
|
9.41
|
|
|
—
|
|
|
0.3
|
|
||
Warrants expired/forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Warrants outstanding at June 30, 2019
|
3,290,371
|
|
|
$
|
9.93
|
|
|
2.48
|
|
|
$
|
22.3
|
|
Exercise Price Per
Share |
|
Warrants
Outstanding |
|
Weighted
Average
Remaining
Contractual Life
|
|
Warrants
Exercisable
|
|
Weighted
Average
Exercise Price
Per
Share
|
||||||
$
|
9.00
|
|
|
1,053,269
|
|
|
1.29
|
|
1,053,269
|
|
|
9.00
|
|
|
10.00
|
|
|
1,408,220
|
|
|
2.80
|
|
1,408,220
|
|
|
10.00
|
|
||
11.00
|
|
|
828,882
|
|
|
3.44
|
|
828,882
|
|
|
11.00
|
|
||
|
|
|
|
|
|
|
|
|
||||||
9.00 –11.00
|
|
|
3,290,371
|
|
|
2.48
|
|
3,290,371
|
|
|
$
|
9.93
|
|
11.
|
Commitments and Contingencies
|
12.
|
Related Party Transactions
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
AHMC – Risk pool and Capitation
|
$
|
16,350,000
|
|
|
$
|
14,000,000
|
|
|
$
|
27,950,000
|
|
|
$
|
33,400,000
|
|
HSMSO – Management fees, net
|
(265,000
|
)
|
|
(975,000
|
)
|
|
(915,000
|
)
|
|
(1,475,000
|
)
|
||||
Aurion – Management fees
|
(100,000
|
)
|
|
(100,000
|
)
|
|
(200,000
|
)
|
|
(200,000
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net total
|
$
|
15,985,000
|
|
|
$
|
12,925,000
|
|
|
$
|
26,835,000
|
|
|
$
|
31,725,000
|
|
13.
|
Income Taxes
|
14.
|
Earnings Per Share
|
Three Months Ended June 30,
|
|
2019
|
|
2018
|
||||
Earnings per share – basic
|
|
$
|
0.10
|
|
|
$
|
0.08
|
|
Earnings per share – diluted
|
|
$
|
0.09
|
|
|
$
|
0.07
|
|
Weighted average shares of common stock outstanding – basic
|
|
34,540,059
|
|
|
32,674,459
|
|
||
Weighted average shares of common stock outstanding – diluted
|
|
37,962,555
|
|
|
37,850,679
|
|
Six Months Ended June 30,
|
|
2019
|
|
2018
|
||||
Earnings per share – basic
|
|
$
|
0.11
|
|
|
$
|
0.15
|
|
Earnings per share – diluted
|
|
$
|
0.10
|
|
|
$
|
0.13
|
|
Weighted average shares of common stock outstanding – basic
|
|
34,518,461
|
|
|
32,548,662
|
|
||
Weighted average shares of common stock outstanding – diluted
|
|
37,896,837
|
|
|
37,935,773
|
|
Three Months Ended June 30,
|
|
2019
|
|
2018
|
||
Weighted average shares of common stock outstanding – basic
|
|
34,540,059
|
|
|
32,674,459
|
|
10% shares held back pursuant to indemnification clause
|
|
1,519,805
|
|
|
3,039,609
|
|
Stock options
|
|
363,593
|
|
|
692,506
|
|
Warrants
|
|
1,539,098
|
|
|
1,444,105
|
|
Weighted average shares of common stock outstanding – diluted
|
|
37,962,555
|
|
|
37,850,679
|
|
Six Months Ended June 30,
|
|
2019
|
|
2018
|
||
Weighted average shares of common stock outstanding – basic
|
|
34,518,461
|
|
|
32,548,662
|
|
10% shares held back pursuant to indemnification clause
|
|
1,519,805
|
|
|
3,039,609
|
|
Stock options
|
|
368,273
|
|
|
720,103
|
|
Warrants
|
|
1,490,298
|
|
|
1,627,399
|
|
Weighted average shares of common stock outstanding – diluted
|
|
37,896,837
|
|
|
37,935,773
|
|
15.
|
Variable Interest Entities (VIEs)
|
|
June 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
23,985,866
|
|
|
$
|
71,726,342
|
|
Restricted cash
|
3,537,470
|
|
|
—
|
|
||
Investment in marketable securities
|
1,074,280
|
|
|
1,066,103
|
|
||
Receivables, net
|
14,612,603
|
|
|
3,904,586
|
|
||
Receivables, net – related party
|
54,309,170
|
|
|
45,258,916
|
|
||
Prepaid expenses and other current assets
|
6,263,045
|
|
|
3,647,654
|
|
||
Loan receivable - related party, short term
|
6,425,000
|
|
|
—
|
|
||
Total current assets
|
110,207,434
|
|
|
125,603,601
|
|
||
|
|
|
|
||||
Noncurrent assets
|
|
|
|
||||
Land, property and equipment, net
|
9,191,430
|
|
|
9,602,228
|
|
||
Intangible assets, net
|
83,395,176
|
|
|
58,984,420
|
|
||
Goodwill
|
79,721,384
|
|
|
56,213,450
|
|
||
Loans receivable – related parties
|
12,500,000
|
|
|
12,500,000
|
|
||
Investment in a privately held entity that does not report net asset value per share
|
4,725,000
|
|
|
4,725,000
|
|
||
Investments in other entities – equity method
|
36,060,869
|
|
|
26,707,404
|
|
||
Restricted cash
|
740,212
|
|
|
745,470
|
|
||
Right-of-use assets
|
3,989,196
|
|
|
—
|
|
||
Other assets
|
1,063,164
|
|
|
839,085
|
|
||
|
|
|
|
||||
Total noncurrent assets
|
231,386,431
|
|
|
170,317,057
|
|
||
|
|
|
|
||||
Total assets
|
$
|
341,593,865
|
|
|
$
|
295,920,658
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
6,982,147
|
|
|
$
|
6,378,751
|
|
Fiduciary accounts payable
|
1,798,807
|
|
|
1,538,598
|
|
||
Medical liabilities
|
36,756,473
|
|
|
24,983,110
|
|
||
Income taxes payable
|
—
|
|
|
11,621,861
|
|
||
Amount due to affiliate
|
13,084,786
|
|
|
11,505,680
|
|
||
Bank loan
|
—
|
|
|
40,257
|
|
||
Lease liabilities
|
837,984
|
|
|
—
|
|
||
Capital lease obligations
|
101,741
|
|
|
101,741
|
|
||
|
|
|
|
||||
Total current liabilities
|
59,561,938
|
|
|
56,169,998
|
|
||
|
|
|
|
||||
Noncurrent liabilities
|
|
|
|
||||
Lines of credit
|
39,600,000
|
|
|
—
|
|
||
Deferred tax liability
|
21,383,614
|
|
|
15,693,159
|
|
||
Liability for unissued equity shares
|
1,185,025
|
|
|
1,185,025
|
|
||
Lease liabilities
|
3,073,114
|
|
|
—
|
|
||
Capital lease obligations
|
466,771
|
|
|
517,261
|
|
||
|
|
|
|
||||
Total noncurrent liabilities
|
65,708,524
|
|
|
17,395,445
|
|
||
|
|
|
|
||||
Total liabilities
|
$
|
125,270,462
|
|
|
$
|
73,565,443
|
|
16.
|
Leases
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
|
||||
Operating lease cost
|
$
|
1,240,275
|
|
|
$
|
2,342,959
|
|
|
|
|
|
||||
Finance lease cost
|
|
|
|
||||
Amortization of lease expense
|
$
|
25,339
|
|
|
$
|
50,489
|
|
Interest on lease liabilities
|
4,391
|
|
|
8,970
|
|
||
|
|
|
|
||||
Sublease income
|
$
|
(105,900
|
)
|
|
$
|
(206,080
|
)
|
|
|
|
|
||||
Total finance lease cost, net
|
$
|
1,164,105
|
|
|
$
|
2,196,338
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
Supplemental Cash Flows Information
|
|
|
|
||||
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
1,239,312
|
|
|
$
|
2,272,865
|
|
Operating cash flows from finance leases
|
4,391
|
|
|
8,970
|
|
||
Financing cash flows from finance leases
|
25,339
|
|
|
50,489
|
|
||
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
||||
Operating leases
|
6,441,363
|
|
|
15,417,482
|
|
||
Finance leases
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
|
|
|
Six Months Ended June 30, 2019
|
||||
Weighted Average Remaining Lease Term
|
|
|
|
||||
|
|
|
|
||||
Operating leases
|
|
|
6.87 years
|
|
|||
Finance leases
|
|
|
5.00 years
|
|
|||
|
|
|
|
||||
Weighted Average Discount Rate
|
|
|
|
||||
|
|
|
|
||||
Operating leases
|
|
|
6.18
|
%
|
|||
Finance leases
|
|
|
3.00
|
%
|
June 30, 2019
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (excluding the six months ended June 30, 2019)
|
$
|
1,917,285
|
|
|
$
|
59,460
|
|
2020
|
3,615,177
|
|
|
118,920
|
|
||
2021
|
2,421,637
|
|
|
118,920
|
|
||
2022
|
2,077,157
|
|
|
118,920
|
|
||
2023
|
1,797,423
|
|
|
118,920
|
|
||
Thereafter
|
6,487,401
|
|
|
79,278
|
|
||
|
|
|
|
||||
Total future minimum lease payments
|
18,316,080
|
|
|
614,418
|
|
||
Less: imputed interest
|
4,063,320
|
|
|
45,906
|
|
||
Total lease obligations
|
14,252,760
|
|
|
568,512
|
|
||
Less: current portion
|
2,836,010
|
|
|
101,741
|
|
||
Long-term lease obligations
|
$
|
11,416,750
|
|
|
$
|
466,771
|
|
December 31, 2018
|
Operating Leases
|
|
Finance Leases
|
||||
2019
|
$
|
2,848,000
|
|
|
$
|
119,000
|
|
2020
|
2,267,000
|
|
|
119,000
|
|
||
2021
|
783,000
|
|
|
119,000
|
|
||
2022
|
487,000
|
|
|
119,000
|
|
||
2023
|
489,000
|
|
|
119,000
|
|
||
Thereafter
|
243,000
|
|
|
79,000
|
|
||
|
|
|
|
||||
Total future minimum lease payments
|
7,117,000
|
|
|
674,000
|
|
17.
|
Subsequent Events
|
1.
|
The Company agreed to lend AP-AMH
$545.0 million
pursuant to a
ten
-year secured loan agreement. The loan will bear interest at a rate of
10%
per annum simple interest, will not be prepayable (except in certain limited circumstances), will require quarterly payments of interest only, and will be secured by a first priority security interest in all of AP-AMH's assets, including the shares of APC Series A Preferred Stock to be purchased by AP-AMH, to the extent that AP-AMH is unable to make any interest payment when due because it has received dividends on the APC Series A Preferred Stock purchased with respect to such payment date in an amount insufficient to pay in full such interest payment, then the outstanding principal amount of the loan will be increased by the amount of any such accrued but unpaid interest, and any such increased principal amounts will bear interest at the rate of
10.75%
per annum simple interest.
|
2.
|
AP-AMH has agreed to purchase
$545.0 million
of Series A Preferred Stock to be issued by APC to AP-AMH. Under the terms of the Series A Preferred Stock, AP-AMH is entitled to receive preferential, cumulative dividends that accrue on a daily basis and that are equal to the sum of (A) APC's net income from healthcare services, plus (B) any dividends received by APC from certain of APC's affiliated entities, less (C) any retained amounts.
|
3.
|
APC has agreed to purchase
$300.0 million
of the Company's common stock. The Company has agreed to grant APC certain registration rights with respect to the Company's common stock that APC purchases, and APC agreed to restrict its voting powers with respect to its shares.
|
4.
|
The Company agreed to license certain of its trademarks to AP-AMH for a fee equal to a percentage of the aggregate gross revenues of AP-AMH. The license fee is payable out of any Series A Preferred Stock dividends received by AP-AMH from APC.
|
5.
|
Through its subsidiary, the Company has agreed to provide certain administrative services to AP-AMH for a fee equal to a percentage of the aggregate gross revenues of AP-AMH. The administrative fee also is payable out of any APC Series A Preferred Stock dividends received by AP-AMH from APC.
|
|
For the Three Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2019
|
|
June 30,
2018
|
|
$ Change
|
|
%
Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Capitation, net
|
$
|
103,223,692
|
|
|
$
|
90,316,182
|
|
|
$
|
12,907,510
|
|
|
14
|
%
|
Risk pool settlements and incentives
|
11,191,050
|
|
|
13,866,217
|
|
|
(2,675,167
|
)
|
|
(19
|
)%
|
|||
Management fee income
|
10,352,619
|
|
|
12,371,608
|
|
|
(2,018,989
|
)
|
|
(16
|
)%
|
|||
Fee-for-services, net
|
3,878,428
|
|
|
4,563,712
|
|
|
(685,284
|
)
|
|
(15
|
)%
|
|||
Other income
|
1,403,777
|
|
|
1,548,812
|
|
|
(145,035
|
)
|
|
(9
|
)%
|
|||
Total revenue
|
130,049,566
|
|
|
122,666,531
|
|
|
7,383,035
|
|
|
6
|
%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
101,363,101
|
|
|
99,705,571
|
|
|
1,657,530
|
|
|
2
|
%
|
|||
General and administrative expenses
|
11,817,555
|
|
|
10,893,135
|
|
|
924,420
|
|
|
8
|
%
|
|||
Depreciation and amortization
|
4,454,571
|
|
|
4,918,078
|
|
|
(463,507
|
)
|
|
(9
|
)%
|
|||
Provision for bad debt
|
(2,314,429
|
)
|
|
—
|
|
|
(2,314,429
|
)
|
|
—
|
%
|
|||
Total expenses
|
115,320,798
|
|
|
115,516,784
|
|
|
(195,986
|
)
|
|
—
|
%
|
|||
Income from operations
|
14,728,768
|
|
|
7,149,747
|
|
|
7,579,021
|
|
|
106
|
%
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|||||||
Income from equity method investments
|
(42,282
|
)
|
|
1,669,861
|
|
|
(1,712,143
|
)
|
|
(103
|
)%
|
|||
Interest expense
|
(311,049
|
)
|
|
(110,683
|
)
|
|
(200,366
|
)
|
|
181
|
%
|
|||
Interest income
|
473,664
|
|
|
492,723
|
|
|
(19,059
|
)
|
|
(4
|
)%
|
|||
Other income
|
24,229
|
|
|
187,752
|
|
|
(163,523
|
)
|
|
(87
|
)%
|
|||
Total other income, net
|
144,562
|
|
|
2,239,653
|
|
|
(2,095,091
|
)
|
|
(94
|
)%
|
|||
Income before provision for income taxes
|
14,873,330
|
|
|
9,389,400
|
|
|
5,483,930
|
|
|
58
|
%
|
|||
Provision for income taxes
|
4,209,399
|
|
|
1,523,807
|
|
|
2,685,592
|
|
|
176
|
%
|
|||
Net income
|
$
|
10,663,931
|
|
|
$
|
7,865,593
|
|
|
$
|
2,798,338
|
|
|
36
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to noncontrolling interests
|
7,118,715
|
|
|
5,201,491
|
|
|
1,917,224
|
|
|
37
|
%
|
|||
Net income attributable to Apollo Medical Holdings, Inc.
|
$
|
3,545,216
|
|
|
$
|
2,664,102
|
|
|
$
|
881,114
|
|
|
33
|
%
|
|
For the Six Months Ended
|
|
|
|
|
|||||||||
|
June 30,
2019
|
|
June 30,
2018
|
|
$ Change
|
|
%
Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Capitation, net
|
$
|
174,740,470
|
|
|
$
|
176,221,466
|
|
|
$
|
(1,480,996
|
)
|
|
(1
|
)%
|
Risk pool settlements and incentives
|
21,284,891
|
|
|
31,852,953
|
|
|
(10,568,062
|
)
|
|
(33
|
)%
|
|||
Management fee income
|
19,349,219
|
|
|
24,446,180
|
|
|
(5,096,961
|
)
|
|
(21
|
)%
|
|||
Fee-for-services, net
|
7,959,102
|
|
|
10,800,340
|
|
|
(2,841,238
|
)
|
|
(26
|
)%
|
|||
Other income
|
2,473,055
|
|
|
3,268,838
|
|
|
(795,783
|
)
|
|
(24
|
)%
|
|||
Total revenue
|
225,806,737
|
|
|
246,589,777
|
|
|
(20,783,040
|
)
|
|
(8
|
)%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
184,795,575
|
|
|
184,320,257
|
|
|
475,318
|
|
|
—
|
%
|
|||
General and administrative expenses
|
22,081,515
|
|
|
22,441,474
|
|
|
(359,959
|
)
|
|
(2
|
)%
|
|||
Depreciation and amortization
|
8,872,152
|
|
|
9,976,590
|
|
|
(1,104,438
|
)
|
|
(11
|
)%
|
|||
Provision for bad debt
|
(1,363,415
|
)
|
|
—
|
|
|
(1,363,415
|
)
|
|
—
|
%
|
|||
Total expenses
|
214,385,827
|
|
|
216,738,321
|
|
|
(2,352,494
|
)
|
|
(1
|
)%
|
|||
Income from operations
|
11,420,910
|
|
|
29,851,456
|
|
|
(18,430,546
|
)
|
|
(62
|
)%
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|||||||
Income from equity method investments
|
(891,939
|
)
|
|
1,641,837
|
|
|
(2,533,776
|
)
|
|
(154
|
)%
|
|||
Interest expense
|
(522,028
|
)
|
|
(195,684
|
)
|
|
(326,344
|
)
|
|
167
|
%
|
|||
Interest income
|
796,672
|
|
|
762,541
|
|
|
34,131
|
|
|
4
|
%
|
|||
Other income
|
211,345
|
|
|
275,745
|
|
|
(64,400
|
)
|
|
(23
|
)%
|
|||
Total other income, net
|
(405,950
|
)
|
|
2,484,439
|
|
|
(2,890,389
|
)
|
|
(116
|
)%
|
|||
Income before provision for income taxes
|
11,014,960
|
|
|
32,335,895
|
|
|
(21,320,935
|
)
|
|
(66
|
)%
|
|||
Provision for income taxes
|
2,801,158
|
|
|
8,752,647
|
|
|
(5,951,489
|
)
|
|
(68
|
)%
|
|||
Net income
|
$
|
8,213,802
|
|
|
$
|
23,583,248
|
|
|
$
|
(15,369,446
|
)
|
|
(65
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to noncontrolling interests
|
4,528,922
|
|
|
18,758,691
|
|
|
(14,229,769
|
)
|
|
(76
|
)%
|
|||
Net income attributable to Apollo Medical Holdings, Inc.
|
$
|
3,684,880
|
|
|
$
|
4,824,557
|
|
|
$
|
(1,139,677
|
)
|
|
(24
|
)%
|
|
|
|
|
|
|
Six Months Ended June 30, 2019
|
|||||||||||||||||
Entity
|
|
Facility
|
|
Interest
rate
per Annum
|
|
Maximum
Balance
During
Period
|
|
Ending
Balance
|
|
Principal Paid
During Period
|
|
Interest
Paid
During
Period
|
|||||||||||
AMH
|
|
$
|
10,000,000
|
|
|
10
|
%
|
|
$
|
5,403,941
|
|
|
$
|
5,403,941
|
|
|
$
|
770,000
|
|
|
$
|
—
|
|
ACC
|
|
1,000,000
|
|
|
10
|
%
|
|
1,288,643
|
|
|
1,283,078
|
|
|
5,565
|
|
|
—
|
|
|||||
MMG
|
|
3,000,000
|
|
|
10
|
%
|
|
3,148,477
|
|
|
3,148,477
|
|
|
—
|
|
|
—
|
|
|||||
AKM
|
|
5,000,000
|
|
|
10
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SCHC
|
|
5,000,000
|
|
|
10
|
%
|
|
4,321,481
|
|
|
4,321,481
|
|
|
—
|
|
|
—
|
|
|||||
BAHA
|
|
250,000
|
|
|
10
|
%
|
|
4,065,992
|
|
|
4,065,992
|
|
|
—
|
|
|
—
|
|
|||||
|
|
$
|
24,250,000
|
|
|
|
|
$
|
18,228,534
|
|
|
$
|
18,222,969
|
|
|
$
|
775,565
|
|
|
$
|
—
|
|
Exhibit
No.
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
APOLLO MEDICAL HOLDINGS, INC.
|
|
|
|
|
Dated: August 9, 2019
|
By:
|
/s/ Thomas Lam
|
|
|
Thomas Lam
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Dated: August 9, 2019
|
By:
|
/s/ Eric Chin
|
|
|
Eric Chin
Chief Financial Officer
(Principal Financial Officer)
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Thomas S. Lam
|
|
Thomas S. Lam
Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Eric Chin
|
|
Eric Chin
Chief Financial Officer
|
Date:
|
August 9, 2019
|
/s/ Thomas S. Lam
|
|
|
Thomas S. Lam
Chief Executive Officer
|
Date:
|
August 9, 2019
|
/s/ Eric Chin
|
|
|
Eric Chin
Chief Financial Officer
|