|
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
|
Delaware
(State or other jurisdiction
of incorporation or organization)
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95-4472349
(IRS Employer Identification No.)
|
Large accelerated filer ¨
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Accelerated filer x
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Non-accelerated filer ¨
|
Smaller reporting company ¨
|
|
Emerging growth company ¨
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Title of Each Class
|
|
Trading Symbol
|
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Name of Each Exchange on Which Registered
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Common Stock, $0.001 par value per share
|
|
AMEH
|
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Nasdaq Capital Market
|
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PAGE
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September 30,
2019 |
|
December 31,
2018 |
||||
|
|
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|
||||
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
|
|
||
Loans 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 liabilities
|
101,741
|
|
|
101,741
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Operating lease liabilities
|
2,836,010
|
|
|
—
|
|
||
Current portion of long term debt
|
9,500,000
|
|
|
|
|||
Total current liabilities
|
105,195,228
|
|
|
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 liabilities
|
441,241
|
|
|
517,261
|
|
||
Operating lease liabilities
|
10,670,364
|
|
|
—
|
|
||
Long-term debt, net of current portion and deferred financing costs
|
234,149,063
|
|
|
—
|
|
||
|
|
|
|
||||
Total noncurrent liabilities
|
276,645,116
|
|
|
34,318,221
|
|
||
|
|
|
|
||||
Total liabilities
|
381,840,344
|
|
|
106,337,868
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 11)
|
|
|
|
|
|
||
|
|
|
|
||||
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
|
|
|
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
|
|
|
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
|
|
||||||
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
|
|
Net income
|
6,284,627
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,704,174
|
|
|
750,061
|
|
|
4,454,235
|
|
||||||
Shares issued for exercise of options and warrants
|
—
|
|
|
184,121
|
|
|
184
|
|
|
1,502,044
|
|
|
—
|
|
|
—
|
|
|
1,502,228
|
|
||||||
Share-based compensation
|
202,382
|
|
|
—
|
|
|
—
|
|
|
128,001
|
|
|
—
|
|
|
—
|
|
|
128,001
|
|
||||||
Stock subscription
|
549,998
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock issued in connection with acquisition of a business
|
414,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Costs related to issuance of preferred shares
|
(803,695
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends
|
(50,000,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balance at September 30, 2019
|
$
|
176,230,074
|
|
|
34,822,933
|
|
|
$
|
34,823
|
|
|
$
|
165,521,888
|
|
|
$
|
25,177,257
|
|
|
$
|
1,439,996
|
|
|
$
|
192,173,964
|
|
|
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
|
|
||||
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
|
|
||||||
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
|
|
||||||
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
|
|
||||||
Net income
|
29,030,555
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,106,397
|
|
|
488,488
|
|
|
9,594,885
|
|
||||||
Shares issued for exercise of options and warrants
|
—
|
|
|
184,019
|
|
|
184
|
|
|
1,226,532
|
|
|
—
|
|
|
—
|
|
|
1,226,716
|
|
||||||
Share-based compensation
|
202,383
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Acquisition of additional shares in consolidated equity
|
—
|
|
|
—
|
|
|
—
|
|
|
(443,384
|
)
|
|
|
|
443,184
|
|
|
(200
|
)
|
|||||||
Purchase of treasury shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
432,112
|
|
|
—
|
|
|
432,112
|
|
||||||
Dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(942,000
|
)
|
|
(942,000
|
)
|
||||||
Balance at September 30, 2018
|
$
|
225,147,257
|
|
|
33,025,189
|
|
|
$
|
33,025
|
|
|
$
|
162,810,695
|
|
|
$
|
17,100,065
|
|
|
$
|
5,182,884
|
|
|
$
|
185,126,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net income
|
$
|
18,952,664
|
|
|
$
|
62,208,688
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
13,792,581
|
|
|
14,819,627
|
|
||
Impairment of intangible
|
1,994,000
|
|
|
—
|
|
||
Loss on disposal of property and equipment
|
—
|
|
|
41,782
|
|
||
Provision for doubtful accounts
|
(1,363,415
|
)
|
|
—
|
|
||
Share-based compensation
|
1,005,898
|
|
|
1,238,708
|
|
||
Gain on loan assumption
|
(2,250,000
|
)
|
|
—
|
|
||
Unrealized (gain) loss from investment in equity securities
|
(6,283
|
)
|
|
10,218
|
|
||
(Income) loss from equity method investments
|
(1,161,791
|
)
|
|
2,573,219
|
|
||
Deferred tax
|
(185,699
|
)
|
|
7,135,408
|
|
||
Changes in operating assets and liabilities, net of business combinations:
|
|
|
|
||||
Receivable, net
|
1,905,076
|
|
|
4,484,115
|
|
||
Receivable, net – related parties
|
5,864,052
|
|
|
(43,360,966
|
)
|
||
Other receivables
|
(13,719,229
|
)
|
|
—
|
|
||
Prepaid expenses and other current assets
|
(2,913,570
|
)
|
|
(80,618
|
)
|
||
Right-of-use assets
|
1,877,353
|
|
|
—
|
|
||
Other assets
|
(524,689
|
)
|
|
(26,931
|
)
|
||
Accounts payable and accrued expenses
|
4,868,437
|
|
|
31,701,367
|
|
||
Dividends payable
|
—
|
|
|
—
|
|
||
Incentives payable
|
—
|
|
|
(16,500,000
|
)
|
||
Fiduciary accounts payable
|
195,544
|
|
|
—
|
|
||
Medical liabilities
|
(6,226,426
|
)
|
|
(30,466,895
|
)
|
||
Income taxes payable
|
(10,229,369
|
)
|
|
(1,912,842
|
)
|
||
Operating lease liabilities
|
(1,790,313
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
10,084,821
|
|
|
31,864,880
|
|
||
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
||||
Payments for business acquisitions, net of cash acquired
|
(49,402,514
|
)
|
|
—
|
|
||
Advances on loans receivable
|
(7,425,000
|
)
|
|
(2,500,000
|
)
|
||
Purchases of marketable securities
|
(21,095
|
)
|
|
(9,013
|
)
|
||
Purchases of investment - equity method
|
(2,949,000
|
)
|
|
(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
|
(806,590
|
)
|
|
(867,732
|
)
|
||
Dividend received
|
240,000
|
|
|
207,410
|
|
||
Net cash used in investing activities
|
(60,364,199
|
)
|
|
(20,248,175
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
||||
Repayment of bank loan and lines of credit
|
(52,640,257
|
)
|
|
(375,485
|
)
|
||
Dividends paid
|
(60,670,309
|
)
|
|
(16,725,799
|
)
|
Change in noncontrolling interest capital
|
—
|
|
|
27,300
|
|
||
Payment of capital lease obligations
|
(76,020
|
)
|
|
(73,775
|
)
|
||
Proceeds from the exercise of stock options and warrants
|
2,400,330
|
|
|
3,574,046
|
|
||
Repurchase of shares
|
(40,000
|
)
|
|
—
|
|
||
Borrowings on line of credit and long-term debt
|
289,600,000
|
|
|
8,000,000
|
|
||
Proceeds from common stock offering
|
754,998
|
|
|
200,000
|
|
||
Cost of debt and equity issuance costs
|
(5,621,831
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
173,706,911
|
|
|
(5,373,713
|
)
|
||
|
|
|
|
||||
Net increase in cash, cash equivalents and restricted cash
|
123,427,533
|
|
|
6,242,992
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash, beginning of period
|
107,636,973
|
|
|
118,500,095
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
231,064,506
|
|
|
$
|
124,743,087
|
|
|
|
|
|
||||
Supplementary disclosures of cash flow information:
|
|
|
|
||||
Cash paid for income taxes
|
$
|
17,900,000
|
|
|
$
|
18,032,590
|
|
Cash paid for interest
|
999,582
|
|
|
287,332
|
|
||
|
|
|
|
||||
Supplemental disclosures of non-cash investing and financing activities
|
|
|
|
||||
Cashless exercise of stock options
|
$
|
—
|
|
|
$
|
47
|
|
Deferred tax liability adjustment to goodwill
|
$
|
11,539,600
|
|
|
$
|
1,110,456
|
|
Dividend declared included in dividend payable
|
$
|
271,279
|
|
|
$
|
—
|
|
APC stock issued in exchange for AMG
|
$
|
414,250
|
|
|
$
|
—
|
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
230,298,252
|
|
|
$
|
119,779,499
|
|
Restricted cash – short-term - distributions to former NMM shareholders
|
20,150
|
|
|
4,218,176
|
|
||
Restricted cash – letters of credit
|
746,104
|
|
|
745,412
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows
|
$
|
231,064,506
|
|
|
$
|
124,743,087
|
|
1.
|
Description of Business
|
1.
|
The Company loaned AP-AMH $545.0 million pursuant to a ten-year secured loan agreement. The loan bears interest at a rate of 10% per annum simple interest, is not prepayable (except in certain limited circumstances), requires quarterly payments of interest only in arrears, and is 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 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 purchased 1,000,000 shares of APC Series A Preferred Stock for aggregate consideration of $545.0 million in a private placement. Under the terms of the APC Certificate of Determination of Preferences of Series A Preferred Stock (the "Certificate of Determination"), AP-AMH is entitled to receive preferential, cumulative dividends that accrue on a daily basis and that are equal to the sum of (i) APC's net income from Healthcare Services (as defined in the Certificate of Determination), plus (ii) any dividends received by APC from certain of APC's affiliated entities, less (iii) any Retained Amounts (as defined in the Certificate of Determination).
|
3.
|
APC purchased 15,015,015 shares of the Company's common stock for total consideration of $300.0 million in private placement. In connection therewith, the Company granted APC certain registration rights with respect to the Company's common stock that APC purchased, and APC agreed that APC votes in excess of 9.99% of the Company's then outstanding shares will be voted by proxy given to the Company's management, and that those proxy holders will cast the excess votes in the same proportion as all other votes cast on any specific proposal coming before the Company's stockholders.
|
4.
|
The Company licensed to AP-AMH the right to use certain tradenames for certain specified purposes 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, NMM, the Company 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 September 30,
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Commercial
|
$
|
25,429,304
|
|
|
$
|
28,463,636
|
|
Medicare
|
60,737,135
|
|
|
79,117,660
|
|
||
Medicaid
|
61,189,161
|
|
|
47,318,190
|
|
||
Other third parties
|
8,704,624
|
|
|
11,829,795
|
|
||
Revenue
|
$
|
156,060,224
|
|
|
$
|
166,729,281
|
|
Nine Months Ended September 30,
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Commercial
|
$
|
75,883,004
|
|
|
$
|
83,830,517
|
|
Medicare
|
155,729,758
|
|
|
186,449,517
|
|
||
Medicaid
|
122,836,562
|
|
|
109,870,854
|
|
||
Other third parties
|
27,417,637
|
|
|
33,168,170
|
|
||
Revenue
|
$
|
381,866,961
|
|
|
$
|
413,319,058
|
|
|
For the Three Months Ended
September 30, |
||||
|
2019
|
|
2018
|
||
|
|
|
|
||
Payor A
|
12.0
|
%
|
|
14.8
|
%
|
Payor B
|
11.7
|
%
|
|
18.4
|
%
|
Payor C
|
*
|
|
|
12.7
|
%
|
Payor D
|
12.0
|
%
|
|
16.7
|
%
|
Payor E
|
19.9
|
%
|
|
*
|
|
*
|
Less than 10% of total net revenues
|
|
As of
September 30, 2019 |
|
As of
December 31, 2018 |
||
|
|
|
|
||
Payor E
|
18.1
|
%
|
|
*
|
|
Payor F
|
28.0
|
%
|
|
34.1
|
%
|
Payor G
|
29.1
|
%
|
|
42.2
|
%
|
*
|
Less than 10% of total receivables and receivables - related parties, net
|
|
Fair Value Measurements
|
|
|
||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Money market funds*
|
$
|
194,428,575
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
194,428,575
|
|
Marketable securities – certificates of deposit
|
1,087,197
|
|
|
—
|
|
|
—
|
|
|
1,087,197
|
|
||||
Marketable securities – equity securities
|
67,283
|
|
|
—
|
|
|
—
|
|
|
67,283
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total
|
$
|
195,583,055
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
195,583,055
|
|
|
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
|
2,004,649
|
|
|
Network relationship intangible assets
|
29,858,000
|
|
|
Goodwill
|
24,637,507
|
|
|
Accounts Payable
|
(2,273,753
|
)
|
|
Deferred tax liabilities
|
(8,355,343
|
)
|
|
Medical liabilities
|
(14,719,714
|
)
|
|
Net assets acquired
|
$
|
45,055,564
|
|
|
|
||
Cash paid
|
$
|
45,055,564
|
|
|
Preliminary
Balance Sheet
|
||
Assets acquired
|
|
||
Cash and cash equivalents
|
$
|
581,965
|
|
Accounts receivable, net
|
5,150,060
|
|
|
Other current assets
|
198,056
|
|
|
Network relationship intangible assets
|
11,411,000
|
|
|
Goodwill
|
25,604,917
|
|
|
Accounts Payable
|
(2,993,325
|
)
|
|
Deferred tax liabilities
|
(3,193,209
|
)
|
|
Medical liabilities
|
(11,684,658
|
)
|
|
Subordinated Loan
|
(15,408,138
|
)
|
|
Net asset acquired
|
$
|
9,666,668
|
|
|
|
||
Equity investment contributed
|
$
|
2,416,668
|
|
Cash paid
|
$
|
7,250,000
|
|
Balance, January 1, 2019
|
$
|
185,805,880
|
|
|
|
||
Acquisition of Alpha Care
|
24,637,507
|
|
|
Acquisition of AMG
|
1,086,468
|
|
|
Acquisition of Accountable Health Care
|
25,604,917
|
|
|
|
|
||
Balance, September 30, 2019
|
$
|
237,134,772
|
|
4.
|
Intangible Assets, Net
|
|
Useful
Life
(Years)
|
|
Gross
September 30, 2019 |
|
Accumulated
Amortization
|
|
Net
September 30, 2019 |
||||||
Indefinite lived assets:
|
|
|
|
|
|
|
|
||||||
Medicare license
|
N/A
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
||||||
Network relationships
|
11-15
|
|
151,152,000
|
|
|
(57,503,773
|
)
|
|
93,648,227
|
|
|||
Management contracts
|
15
|
|
22,832,000
|
|
|
(9,146,391
|
)
|
|
13,685,609
|
|
|||
Member relationships
|
12
|
|
6,696,000
|
|
|
(2,086,523
|
)
|
|
4,609,477
|
|
|||
Patient management platform
|
5
|
|
2,060,000
|
|
|
(755,333
|
)
|
|
1,304,667
|
|
|||
Tradename/trademarks
|
20
|
|
1,011,000
|
|
|
(92,675
|
)
|
|
918,325
|
|
|||
|
|
|
$
|
183,751,000
|
|
|
$
|
(69,584,695
|
)
|
|
$
|
114,166,305
|
|
|
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
|
15
|
|
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 nine months ended September 30, 2019)
|
$
|
4,212,000
|
|
2020
|
15,757,000
|
|
|
2021
|
14,436,000
|
|
|
2022
|
13,559,000
|
|
|
2023
|
12,341,000
|
|
|
Thereafter
|
53,861,000
|
|
|
|
|
||
Total
|
$
|
114,166,000
|
|
5.
|
Investments in Other Entities - Equity Method
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
LaSalle Medical Associates – IPA Line of Business
|
$
|
6,426,903
|
|
|
$
|
7,054,888
|
|
Pacific Medical Imaging & Oncology Center, Inc.
|
1,542,506
|
|
|
1,359,494
|
|
||
Universal Care, Inc.
|
8,794,659
|
|
|
2,635,945
|
|
||
Accountable Health Care - related party
|
—
|
|
|
4,977,957
|
|
||
Diagnostic Medical Group
|
2,714,008
|
|
|
2,257,346
|
|
||
Pacific Ambulatory Surgery Center, LLC
|
—
|
|
|
285,198
|
|
||
531 W. College, LLC – related party
|
16,139,073
|
|
|
16,273,152
|
|
||
MWN, LLC – related party
|
222,956
|
|
|
33,000
|
|
||
|
$
|
35,840,105
|
|
|
$
|
34,876,980
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,237,833
|
|
|
$
|
18,444,702
|
|
Receivables, net
|
7,778,735
|
|
|
2,897,337
|
|
||
Other current assets
|
3,526,319
|
|
|
5,459,442
|
|
||
Loan receivable
|
2,250,000
|
|
|
1,250,000
|
|
||
Restricted cash
|
680,216
|
|
|
667,414
|
|
||
|
|
|
|
||||
Total assets
|
$
|
17,473,103
|
|
|
$
|
28,718,895
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Current liabilities
|
$
|
22,953,961
|
|
|
$
|
26,837,814
|
|
Stockholders’ (deficit) equity
|
(5,480,858
|
)
|
|
1,881,081
|
|
||
|
|
|
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
17,473,103
|
|
|
$
|
28,718,895
|
|
|
Nine Months
Ended September 30, 2019 |
|
Nine Months
Ended September 30, 2018 |
||||
Revenues
|
$
|
144,569,818
|
|
|
$
|
177,696,760
|
|
Expenses
|
155,581,757
|
|
|
180,445,655
|
|
||
|
|
|
|
||||
Net loss
|
$
|
(11,011,939
|
)
|
|
$
|
(2,748,895
|
)
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash
|
$
|
29,568,915
|
|
|
$
|
27,812,520
|
|
Receivables, net
|
62,787,671
|
|
|
46,978,703
|
|
||
Other current assets
|
33,786,968
|
|
|
18,670,350
|
|
||
Other assets
|
10,799,827
|
|
|
661,621
|
|
||
Property and equipment, net
|
3,319,680
|
|
|
2,786,996
|
|
||
|
|
|
|
||||
Total assets
|
$
|
140,263,061
|
|
|
$
|
96,910,190
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Current liabilities
|
$
|
120,698,226
|
|
|
$
|
89,731,133
|
|
Other liabilities
|
25,067,577
|
|
|
25,024,043
|
|
||
Stockholders’ deficit
|
(5,502,742
|
)
|
|
(17,844,986
|
)
|
||
|
|
|
|
||||
Total liabilities and stockholders’ deficit
|
$
|
140,263,061
|
|
|
$
|
96,910,190
|
|
|
Nine Months
Ended September 30, 2019 |
|
Nine Months
Ended September 30, 2018 |
||||
Revenues
|
$
|
372,181,425
|
|
|
$
|
240,633,955
|
|
Expenses
|
370,597,312
|
|
|
246,765,335
|
|
||
|
|
|
|
||||
Income before benefit from income taxes
|
1,584,113
|
|
|
(6,131,380
|
)
|
||
Benefit from income taxes
|
(11,010,394
|
)
|
|
(130,023
|
)
|
||
|
|
|
|
||||
Net income (loss)
|
$
|
12,594,507
|
|
|
$
|
(6,001,357
|
)
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Cash
|
$
|
31,986
|
|
|
$
|
158,088
|
|
Other current assets
|
24,750
|
|
|
16,137
|
|
||
Other assets
|
70,000
|
|
|
70,000
|
|
||
|
|
|
|
||||
Property and equipment, net
|
$
|
33,412,652
|
|
|
$
|
33,394,792
|
|
|
|
|
|
||||
Total assets
|
$
|
33,539,388
|
|
|
$
|
33,639,017
|
|
|
|
|
|
||||
Liabilities and Members’ Equity
|
|
|
|
||||
|
|
|
|
||||
Current liabilities
|
$
|
1,261,243
|
|
|
$
|
1,007,413
|
|
Stockholders’ equity
|
32,278,145
|
|
|
32,631,604
|
|
||
|
|
|
|
||||
Total liabilities and members’ equity
|
$
|
33,539,388
|
|
|
$
|
33,639,017
|
|
|
Nine Months
Ended September 30, 2019 |
|
Nine Months
Ended September 30, 2018 |
||||
Revenues
|
—
|
|
|
—
|
|
||
Expenses
|
779,958
|
|
|
181,359
|
|
||
Loss from operations
|
(779,958
|
)
|
|
(181,359
|
)
|
||
|
|
|
|
||||
Other Income
|
$
|
426,500
|
|
|
$
|
25,650
|
|
|
|
|
|
||||
Net loss
|
$
|
(353,458
|
)
|
|
$
|
(155,709
|
)
|
6.
|
Loan Receivable – Related Parties
|
7.
|
Accounts Payable and Accrued Expenses
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Accounts payable
|
$
|
4,353,117
|
|
|
$
|
4,481,544
|
|
Capitation payable
|
2,603,636
|
|
|
300,000
|
|
||
Subcontractor IPA risk pool payable
|
3,171,030
|
|
|
2,532,750
|
|
||
Professional fees
|
3,523,226
|
|
|
2,251,741
|
|
||
Due to related parties
|
482,552
|
|
|
1,488,313
|
|
||
Accrued compensation
|
4,427,951
|
|
|
4,996,906
|
|
||
Contract liabilities
|
16,978,405
|
|
|
9,024,235
|
|
||
|
|
|
|
||||
|
$
|
35,539,917
|
|
|
$
|
25,075,489
|
|
8.
|
Medical Liabilities
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Balance, beginning of period
|
$
|
33,641,701
|
|
|
$
|
63,972,318
|
|
Acquired (see Note 3)
|
26,404,372
|
|
|
—
|
|
||
Claims paid for previous period
|
(49,164,084
|
)
|
|
(36,549,348
|
)
|
||
Incurred health care costs
|
178,472,645
|
|
|
209,002,961
|
|
||
Claims paid for current period
|
(135,580,214
|
)
|
|
(167,537,480
|
)
|
||
Payment to CMS based on APAACO 2017 year settlement
|
—
|
|
|
(34,464,826
|
)
|
||
Adjustments
|
45,227
|
|
|
(781,924
|
)
|
||
|
|
|
|
||||
Balance, end of period
|
$
|
53,819,647
|
|
|
$
|
33,641,701
|
|
9.
|
Credit Facility, Bank Loan and Lines of Credit
|
|
September 30, 2019
|
||
|
|
||
Term loan A
|
$
|
190,000,000
|
|
Revolver loan
|
60,000,000
|
|
|
Total debt
|
250,000,000
|
|
|
|
|
||
Less: Current portion of debt
|
(9,500,000
|
)
|
|
Less: Unamortized financing costs
|
(6,350,937
|
)
|
|
|
|
||
Long-term debt
|
$
|
234,149,063
|
|
|
Amount
|
||
2019 (excluding the nine months ended September 30, 2019)
|
$
|
2,375,000
|
|
2020
|
9,500,000
|
|
|
2021
|
10,687,500
|
|
|
2022
|
14,250,000
|
|
|
2023
|
15,437,500
|
|
|
Thereafter
|
197,750,000
|
|
|
|
|
||
Total
|
$
|
250,000,000
|
|
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
|
123,378
|
|
|
17.80
|
|
|
—
|
|
|
—
|
|
||
Options exercised
|
(203,524
|
)
|
|
5.77
|
|
|
—
|
|
|
2.4
|
|
||
Options forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Options outstanding at September 30, 2019
|
567,094
|
|
|
$
|
8.22
|
|
|
3.60
|
|
|
$
|
5.4
|
|
|
|
|
|
|
|
|
|
||||||
Options exercisable at September 30, 2019
|
466,216
|
|
|
$
|
5.07
|
|
|
2.74
|
|
|
$
|
5.3
|
|
September 30, 2019
|
Board Members
|
|
Executives
|
||||
Expected Term
|
3.0 years
|
|
|
4.0 years
|
|
||
Expected volatility
|
100.27
|
%
|
|
91.04
|
%
|
||
Risk-free interest rate
|
2.51
|
%
|
|
1.55
|
%
|
||
Market value of common stock
|
$
|
18.11
|
|
|
$
|
17.62
|
|
Annual dividend yield
|
—
|
%
|
|
—
|
%
|
||
Forfeiture rate
|
0
|
%
|
|
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 September 30, 2019
|
853,800
|
|
|
$
|
0.167
|
|
|
0.00
|
|
|
$
|
0.5
|
|
|
Three Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Share-based compensation expense:
|
|
|
|
||||
|
|
|
|
||||
General and administrative
|
$
|
202,382
|
|
|
$
|
202,382
|
|
|
|
|
|
||||
|
$
|
202,382
|
|
|
$
|
202,382
|
|
|
Nine Months Ended
September 30, |
||||||
|
2019
|
|
2018
|
||||
Share-based compensation expense:
|
|
|
|
||||
|
|
|
|
||||
General and administrative
|
$
|
607,146
|
|
|
$
|
607,146
|
|
|
|
|
|
||||
|
$
|
607,146
|
|
|
$
|
607,146
|
|
|
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
|
(133,221
|
)
|
|
9.21
|
|
|
—
|
|
|
1.4
|
|
||
Warrants expired/forfeited
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
||||||
Warrants outstanding at September 30, 2019
|
3,198,774
|
|
|
$
|
9.96
|
|
|
2.26
|
|
|
$
|
24.5
|
|
Exercise Price Per
Share |
|
Warrants
Outstanding |
|
Weighted
Average
Remaining
Contractual Life
|
|
Warrants
Exercisable
|
|
Weighted
Average
Exercise Price
Per
Share
|
||||||
$
|
9.00
|
|
|
971,165
|
|
|
1.04
|
|
971,165
|
|
|
$
|
9.00
|
|
10.00
|
|
|
1,399,667
|
|
|
2.55
|
|
1,399,667
|
|
|
10.00
|
|
||
11.00
|
|
|
827,942
|
|
|
3.19
|
|
827,942
|
|
|
11.00
|
|
||
|
|
|
|
|
|
|
|
|
||||||
$ 9.00 –11.00
|
|
|
3,198,774
|
|
|
2.26
|
|
3,198,774
|
|
|
$
|
9.96
|
|
11.
|
Commitments and Contingencies
|
12.
|
Related Party Transactions
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
AHMC – Risk pool and Capitation
|
$
|
11,215,000
|
|
|
$
|
35,771,000
|
|
|
$
|
39,165,000
|
|
|
$
|
69,169,000
|
|
HSMSO – Management fees, net
|
(160,000
|
)
|
|
(1,311,000
|
)
|
|
(1,075,000
|
)
|
|
(2,786,000
|
)
|
||||
Aurion – Management fees
|
(76,000
|
)
|
|
(78,000
|
)
|
|
(232,000
|
)
|
|
(242,000
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net total
|
$
|
10,979,000
|
|
|
$
|
34,382,000
|
|
|
$
|
37,858,000
|
|
|
$
|
66,141,000
|
|
13.
|
Income Taxes
|
14.
|
Earnings Per Share
|
Three Months Ended September 30,
|
|
2019
|
|
2018
|
||||
Earnings per share – basic
|
|
$
|
0.11
|
|
|
$
|
0.28
|
|
Earnings per share – diluted
|
|
$
|
0.10
|
|
|
$
|
0.24
|
|
Weighted average shares of common stock outstanding – basic
|
|
34,643,754
|
|
|
32,917,007
|
|
||
Weighted average shares of common stock outstanding – diluted
|
|
37,792,266
|
|
|
38,387,700
|
|
Nine Months Ended September 30,
|
|
2019
|
|
2018
|
||||
Earnings per share – basic
|
|
$
|
0.21
|
|
|
$
|
0.43
|
|
Earnings per share – diluted
|
|
$
|
0.20
|
|
|
$
|
0.37
|
|
Weighted average shares of common stock outstanding – basic
|
|
34,555,124
|
|
|
32,672,793
|
|
||
Weighted average shares of common stock outstanding – diluted
|
|
37,816,698
|
|
|
38,010,838
|
|
Three Months Ended September 30,
|
|
2019
|
|
2018
|
||
Weighted average shares of common stock outstanding – basic
|
|
34,643,754
|
|
|
32,917,007
|
|
10% shares held back pursuant to indemnification clause
|
|
1,511,332
|
|
|
3,039,609
|
|
Stock options
|
|
299,536
|
|
|
648,724
|
|
Warrants
|
|
1,337,644
|
|
|
1,782,360
|
|
Weighted average shares of common stock outstanding – diluted
|
|
37,792,266
|
|
|
38,387,700
|
|
Nine Months Ended September 30,
|
|
2019
|
|
2018
|
||
Weighted average shares of common stock outstanding – basic
|
|
34,555,124
|
|
|
32,672,793
|
|
10% shares held back pursuant to indemnification clause
|
|
1,511,332
|
|
|
3,039,609
|
|
Stock options
|
|
307,665
|
|
|
633,131
|
|
Warrants
|
|
1,442,577
|
|
|
1,665,305
|
|
Weighted average shares of common stock outstanding – diluted
|
|
37,816,698
|
|
|
38,010,838
|
|
15.
|
Variable Interest Entities (VIEs)
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
201,806,867
|
|
|
$
|
71,726,342
|
|
Restricted cash
|
20,150
|
|
|
—
|
|
||
Investment in marketable securities
|
1,087,197
|
|
|
1,066,103
|
|
||
Receivables, net
|
17,992,524
|
|
|
3,904,586
|
|
||
Receivables, net – related party
|
36,046,032
|
|
|
45,258,916
|
|
||
Prepaid expenses and other current assets
|
5,557,928
|
|
|
3,647,654
|
|
||
Loan receivable - related party, short term
|
6,425,000
|
|
|
—
|
|
||
Total current assets
|
268,935,698
|
|
|
125,603,601
|
|
||
|
|
|
|
||||
Noncurrent assets
|
|
|
|
||||
Land, property and equipment, net
|
9,698,849
|
|
|
9,602,228
|
|
||
Intangible assets, net
|
91,539,651
|
|
|
58,984,420
|
|
||
Goodwill
|
107,551,295
|
|
|
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
|
35,840,977
|
|
|
26,707,404
|
|
||
Restricted cash
|
746,104
|
|
|
745,470
|
|
||
Right-of-use assets
|
3,758,391
|
|
|
—
|
|
||
Other assets
|
1,058,601
|
|
|
839,085
|
|
||
|
|
|
|
||||
Total noncurrent assets
|
267,418,868
|
|
|
170,317,057
|
|
||
|
|
|
|
||||
Total assets
|
$
|
536,354,566
|
|
|
$
|
295,920,658
|
|
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
8,811,988
|
|
|
$
|
6,378,751
|
|
Fiduciary accounts payable
|
1,734,142
|
|
|
1,538,598
|
|
||
Medical liabilities
|
48,759,183
|
|
|
24,983,110
|
|
||
Income taxes payable
|
1,393,492
|
|
|
11,621,861
|
|
||
Amount due to affiliate
|
26,859,007
|
|
|
11,505,680
|
|
||
Bank loan
|
—
|
|
|
40,257
|
|
||
Dividends payable
|
271,279
|
|
|
—
|
|
||
Lease liabilities
|
837,984
|
|
|
—
|
|
||
Capital lease obligations
|
101,741
|
|
|
101,741
|
|
||
|
|
|
|
||||
Total current liabilities
|
88,768,816
|
|
|
56,169,998
|
|
||
|
|
|
|
||||
Noncurrent liabilities
|
|
|
|
||||
Lines of credit
|
—
|
|
|
—
|
|
||
Deferred tax liability
|
23,765,062
|
|
|
15,693,159
|
|
||
Liability for unissued equity shares
|
1,185,025
|
|
|
1,185,025
|
|
||
Lease liabilities
|
2,861,560
|
|
|
—
|
|
||
Capital lease obligations
|
441,241
|
|
|
517,261
|
|
||
|
|
|
|
||||
Total noncurrent liabilities
|
28,252,888
|
|
|
17,395,445
|
|
||
|
|
|
|
||||
Total liabilities
|
$
|
117,021,704
|
|
|
$
|
73,565,443
|
|
16.
|
Leases
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
|
|
|
|
||||
Operating lease cost
|
$
|
1,488,706
|
|
|
$
|
3,831,665
|
|
|
|
|
|
||||
Finance lease cost
|
|
|
|
||||
Amortization of lease expense
|
$
|
25,530
|
|
|
76,019
|
|
|
Interest on lease liabilities
|
4,200
|
|
|
13,170
|
|
||
|
|
|
|
||||
Sublease income
|
$
|
(102,849
|
)
|
|
$
|
(308,929
|
)
|
|
|
|
|
||||
Total finance lease cost, net
|
$
|
1,415,587
|
|
|
$
|
3,611,925
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Supplemental Cash Flows Information
|
|
|
|
||||
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
||||
Operating cash flows from operating leases
|
$
|
1,676,800
|
|
|
$
|
3,949,665
|
|
Operating cash flows from finance leases
|
4,200
|
|
|
13,170
|
|
||
Financing cash flows from finance leases
|
25,530
|
|
|
76,019
|
|
||
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
|
||||
Operating leases
|
—
|
|
|
15,417,482
|
|
||
Finance leases
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
|
|
|
Nine Months Ended September 30, 2019
|
||||
Weighted Average Remaining Lease Term
|
|
|
|
||||
|
|
|
|
||||
Operating leases
|
|
|
6.80 years
|
|
|||
Finance leases
|
|
|
4.92 years
|
|
|||
|
|
|
|
||||
Weighted Average Discount Rate
|
|
|
|
||||
|
|
|
|
||||
Operating leases
|
|
|
6.12
|
%
|
|||
Finance leases
|
|
|
3.00
|
%
|
September 30, 2019
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (excluding the nine months ended September 30, 2019)
|
$
|
956,587
|
|
|
$
|
29,730
|
|
2020
|
3,375,924
|
|
|
118,920
|
|
||
2021
|
2,281,608
|
|
|
118,920
|
|
||
2022
|
1,979,546
|
|
|
118,920
|
|
||
2023
|
1,723,977
|
|
|
118,920
|
|
||
Thereafter
|
6,368,798
|
|
|
79,278
|
|
||
|
|
|
|
||||
Total future minimum lease payments
|
16,686,440
|
|
|
584,688
|
|
||
Less: imputed interest
|
3,180,066
|
|
|
41,706
|
|
||
Total lease liabilities
|
13,506,374
|
|
|
542,982
|
|
||
Less: current portion
|
2,836,010
|
|
|
101,741
|
|
||
Long-term lease liabilities
|
$
|
10,670,364
|
|
|
$
|
441,241
|
|
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
|
|
1.
|
The Company loaned 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, is not prepayable (except in certain limited circumstances), requires quarterly payments of interest only in arrears, and is 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 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 purchased 1,000,000 shares of APC Series A Preferred Stock for total aggregate consideration of $545.0 million in a private placement. Under the terms of the APC Certificate of Determination of Preferences of Series A Preferred Stock (the "Certificate of Determination"), AP-AMH is entitled to receive preferential, cumulative dividends that accrue on a daily basis and that are equal to the sum of (i) APC's net income from Healthcare Services (as defined in the Certificate of Determination), plus (ii) any dividends received by APC from certain of APC's affiliated entities, less (iii) any Retained Amounts (as defined in the Certificate of Determination).
|
3.
|
APC purchased 15,015,015 shares of the Company's common stock for total consideration of $300.0 million in private placement. In connection therewith, the Company granted APC certain registration rights with respect to the Company's common stock that APC purchased, and APC agreed that APC votes in excess of 9.99% of the Company's then outstanding shares will be voted by proxy given to the Company's management, and that those proxy holders will cast the excess votes in the same proportion as all other votes cast on any specific proposal coming before the Company's stockholders
|
4.
|
The Company licensed to AP-AMH the right to use certain tradenames for certain specified purposes 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, NMM, 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
|
|
|
|
|
|||||||||
|
September 30, 2019
|
|
September 30, 2018
|
|
$ Change
|
|
%
Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Capitation, net
|
$
|
130,807,706
|
|
|
$
|
90,612,720
|
|
|
$
|
40,194,986
|
|
|
44
|
%
|
Risk pool settlements and incentives
|
11,355,069
|
|
|
57,788,932
|
|
|
(46,433,863
|
)
|
|
(80
|
)%
|
|||
Management fee income
|
8,517,586
|
|
|
12,851,178
|
|
|
(4,333,592
|
)
|
|
(34
|
)%
|
|||
Fee-for-services, net
|
4,099,660
|
|
|
4,723,809
|
|
|
(624,149
|
)
|
|
(13
|
)%
|
|||
Other income
|
1,280,203
|
|
|
752,642
|
|
|
527,561
|
|
|
70
|
%
|
|||
Total revenue
|
156,060,224
|
|
|
166,729,281
|
|
|
(10,669,057
|
)
|
|
(6
|
)%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
131,129,813
|
|
|
96,268,804
|
|
|
34,861,009
|
|
|
36
|
%
|
|||
General and administrative expenses
|
7,949,814
|
|
|
9,040,336
|
|
|
(1,090,522
|
)
|
|
(12
|
)%
|
|||
Depreciation and amortization
|
4,920,429
|
|
|
4,843,037
|
|
|
77,392
|
|
|
2
|
%
|
|||
Impairment of intangibles
|
1,994,000
|
|
|
—
|
|
|
1,994,000
|
|
|
—
|
%
|
|||
Total expenses
|
145,994,056
|
|
|
110,152,177
|
|
|
35,841,879
|
|
|
33
|
%
|
|||
Income from operations
|
10,066,168
|
|
|
56,577,104
|
|
|
(46,510,936
|
)
|
|
(82
|
)%
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|||||||
Income (loss) from equity method investments
|
2,053,730
|
|
|
(4,215,056
|
)
|
|
6,268,786
|
|
|
(149
|
)%
|
|||
Interest expense
|
(827,905
|
)
|
|
(178,318
|
)
|
|
(649,587
|
)
|
|
364
|
%
|
|||
Interest income
|
508,856
|
|
|
418,449
|
|
|
90,407
|
|
|
22
|
%
|
|||
Other income
|
2,620,485
|
|
|
609,203
|
|
|
2,011,282
|
|
|
330
|
%
|
|||
Total other income (expense), net
|
4,355,166
|
|
|
(3,365,722
|
)
|
|
7,720,888
|
|
|
(229
|
)%
|
|||
Income before provision for income taxes
|
14,421,334
|
|
|
53,211,382
|
|
|
(38,790,048
|
)
|
|
(73
|
)%
|
|||
Provision for income taxes
|
3,682,472
|
|
|
14,585,942
|
|
|
(10,903,470
|
)
|
|
(75
|
)%
|
|||
Net income
|
$
|
10,738,862
|
|
|
$
|
38,625,440
|
|
|
$
|
(27,886,578
|
)
|
|
(72
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to noncontrolling interests
|
7,034,688
|
|
|
29,519,043
|
|
|
(22,484,355
|
)
|
|
(76
|
)%
|
|||
Net income attributable to Apollo Medical Holdings, Inc.
|
$
|
3,704,174
|
|
|
$
|
9,106,397
|
|
|
$
|
(5,402,223
|
)
|
|
(59
|
)%
|
|
For the Nine Months Ended
|
|
|
|
|
|||||||||
|
September 30, 2019
|
|
September 30, 2018
|
|
$ Change
|
|
%
Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Capitation, net
|
$
|
305,548,176
|
|
|
$
|
266,834,186
|
|
|
$
|
38,713,990
|
|
|
15
|
%
|
Risk pool settlements and incentives
|
32,639,960
|
|
|
89,641,885
|
|
|
(57,001,925
|
)
|
|
(64
|
)%
|
|||
Management fee income
|
27,866,805
|
|
|
37,297,358
|
|
|
(9,430,553
|
)
|
|
(25
|
)%
|
|||
Fee-for-services, net
|
12,058,762
|
|
|
15,524,149
|
|
|
(3,465,387
|
)
|
|
(22
|
)%
|
|||
Other income
|
3,753,258
|
|
|
4,021,480
|
|
|
(268,222
|
)
|
|
(7
|
)%
|
|||
Total revenue
|
381,866,961
|
|
|
413,319,058
|
|
|
(31,452,097
|
)
|
|
(8
|
)%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Cost of services
|
315,925,388
|
|
|
280,589,061
|
|
|
35,336,327
|
|
|
13
|
%
|
|||
General and administrative expenses
|
30,031,329
|
|
|
31,481,810
|
|
|
(1,450,481
|
)
|
|
(5
|
)%
|
|||
Depreciation and amortization
|
13,792,581
|
|
|
14,819,627
|
|
|
(1,027,046
|
)
|
|
(7
|
)%
|
|||
Provision for bad debt
|
(1,363,415
|
)
|
|
—
|
|
|
(1,363,415
|
)
|
|
—
|
%
|
|||
Impairment of intangibles
|
1,994,000
|
|
|
—
|
|
|
1,994,000
|
|
|
—
|
%
|
|||
Total expenses
|
360,379,883
|
|
|
326,890,498
|
|
|
33,489,385
|
|
|
10
|
%
|
|||
Income from operations
|
21,487,078
|
|
|
86,428,560
|
|
|
(64,941,482
|
)
|
|
(75
|
)%
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|||||||
Income (loss) from equity method investments
|
1,161,791
|
|
|
(2,573,219
|
)
|
|
3,735,010
|
|
|
(145
|
)%
|
|||
Interest expense
|
(1,349,933
|
)
|
|
(374,002
|
)
|
|
(975,931
|
)
|
|
261
|
%
|
|||
Interest income
|
1,305,528
|
|
|
1,180,990
|
|
|
124,538
|
|
|
11
|
%
|
|||
Other income
|
2,831,830
|
|
|
884,948
|
|
|
1,946,882
|
|
|
220
|
%
|
|||
Total other income (expense), net
|
3,949,216
|
|
|
(881,283
|
)
|
|
4,830,499
|
|
|
(548
|
)%
|
|||
Income before provision for income taxes
|
25,436,294
|
|
|
85,547,277
|
|
|
(60,110,983
|
)
|
|
(70
|
)%
|
|||
Provision for income taxes
|
6,483,630
|
|
|
23,338,589
|
|
|
(16,854,959
|
)
|
|
(72
|
)%
|
|||
Net income
|
$
|
18,952,664
|
|
|
$
|
62,208,688
|
|
|
$
|
(43,256,024
|
)
|
|
(70
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income attributable to noncontrolling interests
|
11,563,610
|
|
|
48,277,734
|
|
|
(36,714,124
|
)
|
|
(76
|
)%
|
|||
Net income attributable to Apollo Medical Holdings, Inc.
|
$
|
7,389,054
|
|
|
$
|
13,930,954
|
|
|
$
|
(6,541,900
|
)
|
|
(47
|
)%
|
|
|
|
|
|
|
Nine Months Ended September 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
|
%
|
|
$
|
5,601,308
|
|
|
$
|
5,601,308
|
|
|
$
|
770,000
|
|
|
$
|
—
|
|
ACC
|
|
1,000,000
|
|
|
10
|
%
|
|
1,288,643
|
|
|
1,283,078
|
|
|
5,565
|
|
|
—
|
|
|||||
MMG
|
|
3,000,000
|
|
|
10
|
%
|
|
3,310,270
|
|
|
3,310,270
|
|
|
—
|
|
|
—
|
|
|||||
AKM
|
|
5,000,000
|
|
|
10
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
SCHC
|
|
5,000,000
|
|
|
10
|
%
|
|
4,508,707
|
|
|
4,507,214
|
|
|
—
|
|
|
—
|
|
|||||
BAHA
|
|
250,000
|
|
|
10
|
%
|
|
4,065,992
|
|
|
4,065,992
|
|
|
—
|
|
|
—
|
|
|||||
|
|
$
|
24,250,000
|
|
|
|
|
$
|
18,774,920
|
|
|
$
|
18,767,862
|
|
|
$
|
775,565
|
|
|
$
|
—
|
|
•
|
AP-AMH may never be able to repay the AP-AMH Loan.
|
•
|
Whether or not AP-AMH pays us, we will be obligated to pay principal and interest on the secured senior credit facility we are entering into in order to make the AP-AMH Loan.
|
•
|
The terms of the credit agreement we will need to secure could restrict our operations, particularly our ability to respond to changes in our business or to take specified actions, and an event of default under such credit agreement could harm our business.
|
•
|
In connection with the credit facility, the creditor will have a first priority perfected security interest over all of our assets and those of our subsidiaries, and such creditor would be able to foreclose on our assets if we default on our obligations under the credit facility and security agreement.
|
•
|
AP-AMH will be required to fund APC losses and deficits but may not have the funds to do so.
|
•
|
There may be a timing disconnect between APC achieving net income subject to the Series A Dividend, declaring and paying dividends to AP-AMH and AP-AMH’s payments to ApolloMed, and any failure to pay or late payment of dividends could materially impact our financial results.
|
•
|
The impact of the APC Transactions may prove to be negative in future periods.
|
•
|
If there is a change in accounting principles or the interpretation thereof affecting our anticipated accounting treatment for the APC Transactions, it could impact our earnings per share.
|
•
|
The Series A Dividends payable to AP-AMH must be declared by the APC board, and that board could fail to do so.
|
•
|
APC may be prohibited from paying or unable to pay the Series A Dividends, including under the California Corporations Code, which could cause the APC Transactions structure to collapse.
|
•
|
We may have no recourse against AP-AMH if it is unable to make its payments to ApolloMed and NMM.
|
•
|
The entitlement to receive the Series A Dividend will not necessarily mean that AP-AMH will be distributing all of the net income from APC’s Healthcare Services business and assets.
|
•
|
Regulators could determine that the post-APC Transactions consolidated structure amounts to ApolloMed violating California’s corporate practice of medicine doctrine.
|
•
|
ApolloMed could be subject to the California Finance Lenders Law as a result of the AP-AMH Loan.
|
•
|
We may be deemed an investment company, which could impose on us burdensome compliance requirements and restrict our activities.
|
Exhibit
No.
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
**
|
|
Furnished herewith
|
|
APOLLO MEDICAL HOLDINGS, INC.
|
|
|
|
|
Dated: November 8, 2019
|
By:
|
/s/ Kenneth Sim
|
|
|
Kenneth Sim, M.D.
Executive Chairman & Co-Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
Dated: November 8, 2019
|
By:
|
/s/ Thomas Lam
|
|
|
Thomas Lam, M.D., M.P.H.
Co-Chief Executive Officer & President
(Principal Executive Officer)
|
|
|
|
Dated: November 8, 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/ Kenneth Sim
|
|
Kenneth Sim
Co-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/ Thomas Lam
|
|
Thomas Lam
Co-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:
|
November 8, 2019
|
/s/ Kenneth Sim
|
|
|
Kenneth Sim
Co-Chief Executive Officer
|
Date:
|
November 8, 2019
|
/s/ Thomas Lam
|
|
|
Thomas Lam
Co-Chief Executive Officer
|
Date:
|
November 8, 2019
|
/s/ Eric Chin
|
|
|
Eric Chin
Chief Financial Officer
|