Financial News

Apollo Medical Holdings, Inc. Reports Fourth Quarter and Year Ended December 31, 2019 Results

ALHAMBRA, Calif., March 12, 2020 /PRNewswire/ -- Apollo Medical Holdings, Inc. ("ApolloMed" or the "Company") (NASDAQ: AMEH), an integrated population health management company, announced today its consolidated financial results for the fourth quarter and year ended December 31, 2019.

"We closed out 2019 on a high note and are very pleased with our fourth quarter financial performance, which demonstrated meaningful improvements in revenue, net income and adjusted EBITDA. The year was marked by significant accomplishments including our acquisition of Alpha Care Medical Group and Accountable Health Care IPA, the closing of the series of transactions with Allied Physicians of California IPA, and our achievement of now managing over one million lives."

"Over the course of a successful 2019, we worked to build an organization that is both scalable and profitable. I believe we are well positioned to deliver sustainable growth as we continue to support the healthcare industry's shift to value-based care," stated Kenneth Sim, M.D., Executive Chairman and Co-Chief Executive Officer of ApolloMed.

Financial Highlights for the Fourth Quarter Ended December 31, 2019:

  • Total revenue of $178.8 million for the quarter ended December 31, 2019, an increase of 68% as compared to $106.6 million for the quarter ended December 31, 2018, primarily due to the acquisitions of Alpha Care Medical Group and Accountable Health Care IPA, which were acquired on May 31, 2019 and August 30, 2019, respectively.

  • Capitation revenue, net, of $148.6 million for the quarter ended December 31, 2019, representing 83% of our total revenue, an increase of 92% compared to $77.5 million for the quarter ended December 31, 2018.

  • Risk pool settlements and incentives revenue of $18.5 million for the quarter ended December 31, 2019, an increase of 62%, as compared to $11.4 million for the quarter ended September 30, 2019, primarily due to the timing of incentives revenue paid and recognized.

  • Net income attributable to Apollo Medical Holdings, Inc. of $6.7 million for the quarter ended December 31, 2019, compared to net loss attributable to Apollo Medical Holdings, Inc. of $3.1 million for the quarter ended December 31, 2018. The increase from the prior year was primarily due to preferred dividends received from Allied Physicians of California IPA ("APC") as a result of our completion of a series of transactions with APC on September 11, 2019.

  • Entered into a new management services agreement, effective January 1, 2020, to provide select management services to an independent practice association serving approximately 145,000 members in Southern California.

Financial Highlights for the Year Ended December 31, 2019:

  • Total revenue of $560.6 million for the year ended December 31, 2019, an increase of 8% as compared to $519.9 million for the year ended December 31, 2018.

  • Capitation revenue, net, of $454.2 million for the year ended December 31, 2019, representing 81% of our total revenue, an increase of 32% compared to $344.3 million for the year ended December 31, 2018.

  • Net income attributable to Apollo Medical Holdings, Inc. of $14.1 million, for the year ended December 31, 2019, an increase of 31% as compared to $10.8 million for the year ended December 31, 2018.

  • Net income of $17.7 million for the year ended December 31, 2019, a decrease of 71%, as compared to $60.3 million for the year ended December 31, 2018.

  • Adjusted EBITDA of $74.5 million for the year ended December 31, 2019, an increase of 11%, as compared to $67.2 million for the year ended December 31, 2018.

Guidance:

The following guidance on ApolloMed's total revenue, net income, EBITDA, and Adjusted EBITDA is based on ApolloMed's current view of existing market conditions and assumptions for the year ending December 31, 2020. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Refer to our discussion of "Forward-Looking Statements" within this earnings press release for additional details.

For the year ending December 31, 2020, we expect:

  • Total revenue between $665.0 million and $675.0 million,
  • Net income between $20.0 million and $30.0 million,
  • EBITDA between $55.0 million and $67.0 million, and
  • Adjusted EBITDA between $75.0 million and $90.0 million.

Refer to the "Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA" below and our discussion in "Use of Non-GAAP measures" below for additional information.

Recent Developments:

  • In February 2020, the Company updated Brandon Sim's title to Chief Technology Officer and VP of Engineering.

For more details on ApolloMed's December 31, 2019 year end results, please refer to the Company's Annual Report on Form 10-K to be filed with the U.S. Securities Exchange Commission ("SEC") and accessible at www.sec.gov.

 

APOLLO MEDICAL HOLDINGS, INC.

 CONSOLIDATED BALANCE SHEETS




December 31,


December 31,



2019


2018






Assets










Current assets





Cash and cash equivalents


$

103,189,328



$

106,891,503


Restricted cash


75,000




Investment in marketable securities


116,538,673



1,127,102


Receivables, net


11,003,563



7,734,631


Receivables, net – related parties


48,136,313



48,721,325


Other receivables


16,885,448



1,003,133


Prepaid expenses and other current assets


10,315,093



7,385,098


Loans receivable


6,425,000




Loans receivable - related parties


16,500,000









Total current assets


329,068,418



172,862,792







Noncurrent assets





Land, property and equipment, net


12,129,901



12,721,082


Intangible assets, net


103,011,849



86,875,883


Goodwill


238,505,204



185,805,880


Loans receivable – related parties




17,500,000


Investments in other entities – equity method


28,427,455



34,876,980


Investments in privately held entities


896,000



405,000


Restricted cash


746,104



745,470


Operating lease right-of-use assets


14,247,727




Other assets


1,680,689



1,205,962







Total noncurrent assets


399,644,929



340,136,257







Total assets


$

728,713,347



$

512,999,049







Liabilities, Mezzanine Equity and Shareholders' Equity










Current liabilities





Accounts payable and accrued expenses


$

27,279,579



$

25,075,489


Fiduciary accounts payable


2,027,081



1,538,598


Medical liabilities


58,724,682



33,641,701


Income taxes payable


4,528,867



11,621,861


Bank loan




40,257


Dividend payable


271,279




Finance lease liabilities


101,741



101,741


Operating lease liabilities


2,990,686




Current portion of long term debt


9,500,000









Total current liabilities


105,423,915



72,019,647







Noncurrent liabilities





Lines of credit - related party




13,000,000


Deferred tax liability


18,269,448



19,615,935


Liability for unissued equity shares




1,185,025


Finance lease liabilities, net of current portion


415,519



517,261


Operating lease liabilities, net of current portion


11,372,597




Long-term debt, net of current portion and deferred financing costs


232,172,134









Total noncurrent liabilities


262,229,698



34,318,221







Total liabilities


367,653,613



106,337,868







Mezzanine equity





Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC")


168,724,586



225,117,029







Shareholders' equity





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





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





Common stock, par value $0.001; 100,000,000 shares authorized, 35,908,057 and 34,578,040 shares outstanding, excluding 17,458,810 and 1,850,603 Treasury shares, at December 31, 2019 and 2018, respectively


35,908



34,578


Additional paid-in capital


159,608,293



162,723,051


Retained earnings


31,904,748



17,788,203




191,548,949



180,545,832







Noncontrolling interest


786,199



998,320







Total shareholders' equity


192,335,148



181,544,152







Total liabilities, mezzanine equity and shareholders' equity


$

728,713,347



$

512,999,049


 

APOLLO MEDICAL HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME




Three Months Ended
December 31,


Year Ended

December 31,



2019


2018


2019


2018










Revenue









Capitation, net


$

148,619,848



$

77,472,872



$

454,168,024



$

344,307,058


Risk pool settlements and incentives


18,457,701



11,285,956



51,097,661



100,927,841


Management fee income


6,801,553



12,445,397



34,668,358



49,742,755


Fee-for-service, net


3,416,502



4,179,850



15,475,264



19,703,999


Other income


1,455,532



1,204,619



5,208,790



5,226,099











Total revenue


178,751,136



106,588,694



560,618,097



519,907,752











Operating expenses









Cost of services


151,879,511



80,543,050



467,804,899



361,132,111


General and administrative expenses


11,451,046



11,871,977



41,482,375



43,353,787


Depreciation and amortization


4,487,617



4,483,552



18,280,198



19,303,179


Provision for doubtful accounts


52



3,887,647



(1,363,363)



3,887,647


Impairment of goodwill and intangible assets




3,798,866



1,994,000



3,798,866











Total expenses


167,818,226



104,585,092



528,198,109



431,475,590











Income from operations


10,932,910



2,003,602



32,419,988



88,432,162











Other (expense) income









Loss from equity method investments


(8,062,650)



(5,552,066)



(6,900,859)



(8,125,285)


Interest expense


(3,383,323)



(186,513)



(4,733,256)



(560,515)


Interest income


718,345



77,648



2,023,873



1,258,638


Other income


198,373



737,183



3,030,203



1,622,131











Total other expense, net


(10,529,255)



(4,923,748)



(6,580,039)



(5,805,031)











Income (loss) before provision for income taxes


403,655



(2,920,146)



25,839,949



82,627,131











Provision for income taxes


1,683,002



(978,949)



8,166,632



22,359,640











Net (loss) income


(1,279,347)



(1,941,197)



17,673,317



60,267,491











Net (loss) income attributable to noncontrolling interests


(8,006,838)



1,154,755



3,556,772



49,432,489











Net income (loss) attributable to Apollo Medical Holdings, Inc.


$

6,727,491



$

(3,095,952)



$

14,116,545



$

10,835,002











Earnings (loss) per share – basic


$

0.19



$

(0.09)



$

0.41



$

0.33











Earnings (loss) per share – diluted


$

0.18



$

(0.09)



$

0.39



$

0.29











Weighted average shares of common stock outstanding – basic


35,163,089



33,550,160



34,708,429



32,893,940











Weighted average shares of common stock outstanding – diluted


36,717,834



33,550,160



36,403,279



37,914,886


 

APOLLO MEDICAL HOLDINGS, INC.

SUPPLEMENTAL INFORMATION







Capitated Membership







December 31,
2019


December 31,
2018


December 31,
2017







     MSO

421,000



665,000



670,000


     IPA

530,000



265,000



270,000


     ACO

29,000



30,000



29,000








Total lives under management

980,000



960,000



969,000


 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA














Three Months Ended
December 31,


Year Ended
December 31,



2019


2018


2019


2018










 Net (loss) income


$

(1,279,346)



$

(1,941,198)



$

17,673,317



$

60,267,491


     Depreciation and amortization


4,487,617



4,483,552



18,280,198



19,303,179


     Provision for income taxes


1,683,002



(978,949)



8,166,632



22,359,640


     Interest expense


3,383,323



186,513



4,733,256



560,515


     Interest income


(718,345)



(77,648)



(2,023,873)



(1,258,638)


EBITDA


7,556,251



1,672,270



46,829,530



101,232,187











     Loss from equity method investments


8,062,650



5,552,066



6,900,859



8,125,285


     Other income


(198,374)



(737,183)



(3,030,204)



(1,622,131)


     Adoption of revenue accounting standard








(49,640,000)


     Provider bonus payments






12,100,000




     Net provision for doubtful accounts




3,887,647



(1,363,363)



3,887,647


     Impairment of goodwill and intangible assets




3,798,866



1,994,000



3,798,866


     Severance payments








1,436,000


     EBITDA adjustment for recently acquired IPAs


5,507,000





11,070,000




Adjusted EBITDA


$

20,927,527



$

14,173,666



$

74,500,822



$

67,217,854


 

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA






Year Ending



December 31, 2020






Low


High

 Net income


$20,000,000



$30,000,000


     Depreciation and amortization


18,000,000



20,000,000


     Provision for income taxes


10,000,000



11,000,000


     Interest expense


8,000,000



9,000,000


     Interest income


(1,000,000)



(3,000,000)


EBITDA


55,000,000



67,000,000







     Loss from equity method investments


5,000,000



6,000,000


     EBITDA adjustment for recently acquired IPAs


15,000,000



17,000,000


Adjusted EBITDA


$75,000,000



$90,000,000


Use of Non-GAAP Financial Measures

This press release contains the non-GAAP financial measures Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA, of which the most directly comparable financial measure presented in accordance with GAAP is net (loss) income. These measures are not in accordance with, or an alternative to, U.S. generally accepted accounting principles, ("GAAP"), and may be different from other non-GAAP financial measures used by other companies. The Company uses Adjusted EBITDA as a supplemental performance measure of our operations,  for financial and operational decision-making, and as a supplemental means of evaluating period-to-period comparisons on a consistent basis. Adjusted EBITDA is calculated as earnings before interest, taxes, depreciation, and amortization, excluding losses from equity method investments and other income earned that is not related to the Company's normal operations. Adjusted EBITDA also excludes non recurring items, including those resulting from our adoption related to Accounting Standards Codification 606 - Revenue Recognition, provider bonus payments, net provision for doubtful accounts, impairment of goodwill and intangible assets, severance payments, and the effect on EBITDA of certain IPAs we recently acquired.

The Company believes the presentation of these non-GAAP financial measures provides investors with relevant and useful information as it allows investors to evaluate the operating performance of the business activities without having to account for differences recognized because of non-core and non-recurring financial information. When GAAP financial measures are viewed in conjunction with non-GAAP financial measures, investors are provided with a more meaningful understanding of ApolloMed's ongoing operating performance. In addition, these non-GAAP financial measures are among those indicators the Company uses as a basis for evaluating operational performance, allocating resources and planning and forecasting future periods. Non-GAAP financial measures are not intended to be considered in isolation, or as a substitute for, GAAP financial measures. To the extent this release contains historical or future non-GAAP financial measures, the Company has provided corresponding GAAP financial measures for comparative purposes. Reconciliation between certain GAAP and non-GAAP measures is provided above.

Note About Consolidated Entities

The Company consolidates entities in which it has a controlling financial interest. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights, and variable interest entities ("VIEs") in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company's consolidated entities (including certain VIEs). The amount of net (loss) income attributable to noncontrolling interests is disclosed in the Company's consolidated statements of income.

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

As of the date of this press release, 535,392 shares of ApolloMed's common stock to be issued as part of the merger (the "Merger") involving ApolloMed and Network Medical Management, Inc. ("NMM") in 2017 are subject to ApolloMed receiving from certain former NMM shareholders a properly completed letter of transmittal (and related exhibits) before such former NMM shareholders may receive their pro rata portion of ApolloMed common stock and warrants. Pending such receipt, such former NMM shareholders have the right to receive, without interest, their pro rata share of dividends or distributions with a record date after the effectiveness of the Merger. The Company's consolidated financial statements have treated such shares of common stock as outstanding, given the receipt of the letter of transmittal is considered perfunctory and the Company is legally obligated to issue these shares as of the closing of the Merger.

Shares of ApolloMed's common stock owned by APC, a VIE of the Company, are legally issued and outstanding but excluded from shares of common stock outstanding in the Company's consolidated financial statements, as such shares are treated as treasury shares for accounting purposes. Such shares, therefore, are not included in the number of shares of common stock outstanding used to calculate the Company's earnings per share.

About Apollo Medical Holdings, Inc.

ApolloMed is a leading physician-centric integrated population health management company, which, together with its subsidiaries, including a Next Generation Accountable Care Organization ("NGACO"), and its affiliated IPAs and management services organizations ("MSOs"), is working to provide coordinated, outcomes-based high-quality medical care for patients, particularly senior patients and patients with multiple chronic conditions, in a cost-effective manner.  ApolloMed focuses on addressing the healthcare needs of its patients by leveraging its integrated health management and healthcare delivery platform that includes NMM (MSO), Apollo Medical Management, Inc. (MSO), ApolloMed Hospitalists, a Medical Corporation, (hospitalists), APA ACO, Inc. (NGACO), Allied Physicians of California IPA (IPA), Alpha Care Medical Group, Inc. (IPA), Accountable Health Care IPA (IPA) and Apollo Care Connect, Inc. (Digital Population Health Management Platform).  For more information, please visit www.apollomed.net.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as statements about the Company's guidance for the year ending December 31, 2020, continued growth, acquisition strategy, ability to delivery sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans, and merger integration efforts. Forward-looking statements reflect current views with respect to future events and financial performance and therefore cannot be guaranteed. Such statements are based on the current expectations and certain assumptions of the Company's management, and some or all of such expectations and assumptions may not materialize or may vary significantly from actual results. Actual results may also vary materially from forward-looking statements due to risks, uncertainties and other factors, known and unknown, including the risk factors described from time to time in the Company's reports to the SEC, including, without limitation the risk factors discussed in the Company's Annual Report on Form 10-K, for the year ended December 31, 2019, filed with the SEC and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

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

 

Cision View original content:http://www.prnewswire.com/news-releases/apollo-medical-holdings-inc-reports-fourth-quarter-and-year-ended-december-31-2019-results-301022085.html

SOURCE Apollo Medical Holdings, Inc.

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