Full Press Release Details
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:
Financial Highlights for the Year Ended December 31, 2019:
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:
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:
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.
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