Apollo Medical Holdings, Inc. Reports Second Quarter 2023 Results
Company to Host Conference Call on Monday, August 7, 2023, at 2:30 p.m. PT/5:30 p.m. ET
ALHAMBRA, Calif., Aug. 7, 2023 /PRNewswire/ -- Apollo Medical Holdings, Inc. ("ApolloMed," and together with its subsidiaries and affiliated entities, the "Company") (NASDAQ:AMEH), a leading physician-centric, technology-powered healthcare company focused on enabling providers in the successful delivery of value-based care, today announced its consolidated financial results for the second quarter ended June 30, 2023.
Brandon Sim, Co-Chief Executive Officer of ApolloMed, stated, "Our strong second quarter performance reflects the sustained momentum and scalability of the ApolloMed model, with revenue up 29%, net income attributable to ApolloMed up 10%, and adjusted EBITDA up 44% compared to a year ago. We remain focused on our three key operational goals of growing our membership, empowering our providers, and improving patient outcomes, and we continue to drive meaningful progress in all three areas in California, Nevada, Texas, and beyond."
"We want to thank our providers and teammates for their hard work and dedication that resulted in our continued solid financial performance in the second quarter of 2023 and our confidence in reiterating our previously provided guidance for full-year 2023."
Financial Highlights for Second Quarter Ended June 30, 2023:
All comparisons are to the quarter ended June 30, 2022 unless otherwise stated.
- Total revenue of $348.2 million, up 29% from $269.7 million
- Care Partners revenue of $325.2 million, up 32% from $247.3 million
- Net income attributable to ApolloMed of $13.2 million, up 10% from $12.0 million
- Adjusted EBITDA of $35.8 million, up 44% from $24.9 million
Financial Highlights for Six Months Ended June 30, 2023:
All comparisons are to the six months ended June 30, 2022 unless otherwise stated.
- Total revenue of $685.5 million, up 29% from $533.0 million
- Care Partners revenue of $639.9 million, up 31% from $488.6 million
- Net income attributable to ApolloMed of $26.3 million, up 2% from $25.7 million
- Adjusted EBITDA of $65.6 million, up 11% from $59.3 million
Recent Operating Highlights Subsequent to the End of the Second Quarter:
- On July 12, 2023, the Company announced that it had entered into a definitive agreement to acquire assets of Texas Independent Providers, LLC ("TIP"), a value-based provider network with over 120 primary care providers that is expected to be an anchor for our high-quality Care Partners business in Houston. Through this transaction, ApolloMed intends to empower TIP's provider network to deliver best-in-class clinical outcomes and to improve the healthcare experience for patients. This transaction is expected to close in the third quarter of 2023, and TIP's providers are expected to be onboarded onto ApolloMed's Care Enablement platform by the end of 2023.
- On July 27, 2023, the Company formed a long-term partnership with a primary care group operating in California with over 50 providers. The group is expected to be onboarded onto ApolloMed's Care Enablement platform by September 1, 2023.
- On July 31, 2023, the Company announced a partnership with IntraCare, an operator of a value-based primary care provider network with over 425 providers located in Dallas, Fort Worth, El Paso, Austin, and Oklahoma City. Through this partnership, IntraCare's providers are expected to join ApolloMed's high-quality Care Partners business in these regions and onboarded onto ApolloMed's Care Enablement platform by the end of 2023. In addition, ApolloMed will lend IntraCare a $25 million senior secured convertible promissory note maturing in 2028 to further IntraCare's mission and growth.
Segment Results for the Second Quarter Ended June 30, 2023:
Three Months Ended June 30, 2023 | |||||||||||||
Care | Care | Care | Other | Intersegment | Corporate | Consolidated | |||||||
Total revenues | $ 34,975 | $ 325,246 | $ 26,718 | $ 157 | $ (38,887) | $ — | $ 348,209 | ||||||
% change vs. prior year quarter | 18 % | 32 % | 14 % | — | — | — | 29 % | ||||||
Cost of services | 15,162 | 292,119 | 22,523 | 70 | (36,998) | — | 292,876 | ||||||
General and administrative(1) | 12,175 | 5,298 | 3,626 | 926 | (2,933) | 9,212 | 28,304 | ||||||
Total expenses | 27,337 | 297,417 | 26,149 | 996 | (39,931) | 9,212 | 321,180 | ||||||
Income (loss) from operations | $ 7,638 | $ 27,829 | $ 569 | $ (839) | $ 1,044 | (2) | $ (9,212) | $ 27,029 | |||||
% change vs. prior year quarter | 4 % | 250 % | (83 %) | — | — | — | 76 % | ||||||
(1) Balance includes general and administrative expenses and depreciation and amortization. |
(2) Income from operations for the intersegment elimination represents rental income from segments renting from other segments. Rental income is presented within other income which is not presented in the table. |
Guidance:
ApolloMed is reiterating the following guidance for total revenue, net income, EBITDA, Adjusted EBITDA, and EPS - diluted, based on the Company's existing business, current view of existing market conditions and assumptions for the year ending December 31, 2023.
($ in millions) | 2023 Guidance Range | ||
Low | High | ||
Total revenue | $ 1,300.0 | $ 1,500.0 | |
Net income | $ 49.5 | $ 71.5 | |
EBITDA | $ 89.5 | $ 129.5 | |
Adjusted EBITDA | $ 120.0 | $ 160.0 | |
EPS – diluted | $ 0.95 | $ 1.20 | |
See "Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA" and "Use of Non-GAAP Financial Measures" below for additional information. There can be no assurance that actual amounts will not be materially higher or lower than these expectations. See "Forward-Looking Statements" below for additional information.
Conference Call and Webcast Information:
ApolloMed will host a conference call at 2:30 p.m. PT/5:30 p.m. ET today (Monday, August 7, 2023), during which management will discuss the results of the second quarter ended June 30, 2023. To participate in the conference call, please use the following dial-in numbers about 5 minutes prior to the scheduled conference call time:
U.S. & Canada (Toll-Free): +1 (877) 858-9810
International (Toll): +1 (201) 689-8517
The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=SC6cioUx.
An accompanying slide presentation will be available in PDF format on the "IR Calendar" page of the Company's website (https://www.apollomed.net/investors/news-events/ir-calendar) after issuance of the earnings release and will be furnished as an exhibit to ApolloMed's current report on Form 8-K to be filed with the SEC, accessible at www.sec.gov.
Those who are unable to attend the live conference call may access the recording at the above webcast link, which will be made available shortly after the conclusion of the call.
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 VIEs in which the Company is the primary beneficiary. Noncontrolling interests represent third party equity ownership interests in the Company's consolidated entities (including certain VIEs). The amount of net income attributable to noncontrolling interests is disclosed in the Company's consolidated statements of income.
Note About Stockholders' Equity, Certain Treasury Stock and Earnings Per Share
As of the date of this press release, 140,954 holdback shares have not been issued to certain former shareholders of the Company's subsidiary, Network Medical Management, Inc. ("NMM"), who were NMM shareholders at the time of closing of the merger, as they have yet to submit properly completed letters of transmittal to ApolloMed in order to receive their pro rata portion of ApolloMed's common stock and warrants as contemplated under that certain Agreement and Plan of Merger, dated December 21, 2016, among ApolloMed, NMM, Apollo Acquisition Corp. ("Merger Subsidiary") and Kenneth Sim, M.D., as amended, pursuant to which Merger Subsidiary merged with and into NMM, with NMM as the surviving corporation. 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 ApolloMed is legally obligated to issue these shares in connection with the merger.
Shares of ApolloMed's common stock owned by Allied Physicians of California, a Professional Medical Corporation d.b.a. Allied Pacific of California ("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, technology-powered, risk-bearing healthcare company. Leveraging its proprietary end-to-end technology solutions, ApolloMed operates an integrated healthcare delivery platform that enables providers to successfully participate in value-based care arrangements, thus empowering them to deliver outcomes-based medical care to patients in a cost-effective manner.
Headquartered in Alhambra, California, ApolloMed's subsidiaries and affiliates include management services organizations (MSOs), affiliated independent practice associations (IPAs), and entities participating in the Centers for Medicare & Medicaid Services Innovation Center (CMMI) innovation models. 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, such as statements about the Company's guidance for the year ending December 31, 2023, ability to meet operational goals, ability to meet expectations in deployment of care coordination and management capabilities, ability to decrease cost of care while improving quality and outcomes, ability to deliver sustainable revenue and EBITDA growth as well as long-term value, ability to respond to the changing environment, and successful implementation of strategic growth plans, acquisition strategy, 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/A for the year ended December 31, 2022, and any subsequent quarterly reports on Form 10-Q. Any forward-looking statement made by the Company in this release speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
Restatement
In connection with a review of the Company's income tax filing structure, the Company identified unintentional errors in its accounting for the income tax effects of certain intercompany dividends and certain net operating losses, which resulted in an understatement of income tax expense in prior periods and also had an impact on purchase accounting (goodwill) as a portion of the net operating losses affected by the errors pertained to acquisitions in prior periods. As a result of the errors, the Company has restated the December 31, 2022 consolidated balance sheet and the consolidated statement of operations for each of the three and six months ended June 30, 2022.
FOR MORE INFORMATION, PLEASE CONTACT:
Investor Relations
(626) 943-6491
[email protected]
Carolyne Sohn, The Equity Group
(408) 538-4577
csohn@equityny.com
APOLLO MEDICAL HOLDINGS, INC. | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||
(UNAUDITED) | ||||
June 30, | December 31, | |||
(Restated) | ||||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | $ 293,921 | $ 288,027 | ||
Restricted cash | 345 | — | ||
Investments in marketable securities | 3,789 | 5,567 | ||
Receivables, net | 66,927 | 49,631 | ||
Receivables, net – related parties | 82,820 | 65,147 | ||
Other receivables | 1,201 | 1,834 | ||
Prepaid expenses and other current assets | 15,088 | 14,798 | ||
Loans receivable | 973 | 996 | ||
Loan receivable – related party | — | 2,125 | ||
Total current assets | 465,064 | 428,125 | ||
Non-current assets | ||||
Land, property, and equipment, net | 123,859 | 108,536 | ||
Intangible assets, net | 74,421 | 76,861 | ||
Goodwill | 274,029 | 269,053 | ||
Income taxes receivable, non-current | 15,943 | 15,943 | ||
Investments in other entities – equity method | 45,831 | 40,299 | ||
Investments in privately held entities | 2,896 | 896 | ||
Operating lease right-of-use assets | 17,905 | 20,444 | ||
Other assets | 7,229 | 6,056 | ||
Total non-current assets | 562,113 | 538,088 | ||
Total assets(1) | $ 1,027,177 | $ 966,213 | ||
Liabilities, mezzanine equity and equity | ||||
Current liabilities | ||||
Accounts payable and accrued expenses | $ 49,904 | $ 49,562 | ||
Fiduciary accounts payable | 8,603 | 8,065 | ||
Medical liabilities | 100,047 | 81,255 | ||
Income taxes payable | 19,628 | 4,279 | ||
Dividend payable | 638 | 664 | ||
Finance lease liabilities | 591 | 594 | ||
Operating lease liabilities | 3,027 | 3,572 | ||
Current portion of long-term debt | 2,630 | 619 | ||
Total current liabilities | 185,068 | 148,610 | ||
Non-current liabilities | ||||
Deferred tax liability | 12,383 | 14,217 | ||
Finance lease liabilities, net of current portion | 1,078 | 1,275 | ||
Operating lease liabilities, net of current portion | 17,852 | 19,915 | ||
Long-term debt, net of current portion and deferred financing costs | 205,136 | 203,389 | ||
Other long-term liabilities | 21,383 | 20,260 | ||
Total non-current liabilities | 257,832 | 259,056 | ||
Total liabilities(1) | 442,900 | 407,666 | ||
Mezzanine equity | ||||
Non-controlling interest in Allied Physicians of California, a Professional Medical | 14,523 | 14,237 | ||
Stockholders' equity | ||||
Series A Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of | — | — | ||
Series B Preferred stock, par value $0.001; 5,000,000 shares authorized (inclusive of | — | — | ||
Common stock, $0.001 par value per share; 100,000,000 shares authorized, | 47 | 47 | ||
Additional paid-in capital | 357,246 | 360,097 | ||
Retained earnings | 208,720 | 182,417 | ||
Total stockholders' equity | 566,013 | 542,561 | ||
Non-controlling interest | 3,741 | 1,749 | ||
Total equity | 569,754 | 544,310 | ||
Total liabilities, mezzanine equity and equity | $ 1,027,177 | $ 966,213 | ||
(1) The Company's consolidated balance sheets include the assets and liabilities of its consolidated variable interest entities ("VIEs"). The consolidated balance sheets include total assets that can be used only to settle obligations of the Company's consolidated VIEs totaling $520.8 million and $515.1 million as of June 30, 2023 and December 31, 2022, respectively, and total liabilities of the Company's consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $145.8 million and $133.5 million as of June 30, 2023 and December 31, 2022, respectively. The VIE balances do not include $325.5 million of investment in affiliates and $5.4 million of amounts due to affiliates as of June 30, 2023 and $304.8 million of investment in affiliates and $30.3 million of amounts due from affiliates as of December 31, 2022 as these are eliminated upon consolidation and not presented within the consolidated balance sheets. |
APOLLO MEDICAL HOLDINGS, INC. | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) | ||||||||
(UNAUDITED) | ||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenue | ||||||||
Capitation, net | $ 300,549 | $ 227,623 | $ 600,753 | $ 449,682 | ||||
Risk pool settlements and incentives | 20,121 | 18,793 | 33,583 | 36,868 | ||||
Management fee income | 12,493 | 9,984 | 22,389 | 20,457 | ||||
Fee-for-service, net | 13,262 | 11,740 | 25,324 | 22,835 | ||||
Other revenue | 1,784 | 1,557 | 3,404 | 3,112 | ||||
Total revenue | 348,209 | 269,697 | 685,453 | 532,954 | ||||
Operating expenses | ||||||||
Cost of services, excluding depreciation and amortization | 292,876 | 230,070 | 582,273 | 450,798 | ||||
General and administrative expenses | 24,056 | 19,894 | 45,236 | 31,837 | ||||
Depreciation and amortization | 4,248 | 4,351 | 8,541 | 8,725 | ||||
Total expenses | 321,180 | 254,315 | 636,050 | 491,360 | ||||
Income from operations | 27,029 | 15,382 | 49,403 | 41,594 | ||||
Other income (expense) | ||||||||
Income from equity method investments | 2,723 | 1,512 | 5,207 | 2,945 | ||||
Interest expense | (3,632) | (1,854) | (6,901) | (2,927) | ||||
Interest income | 3,327 | 421 | 6,335 | 467 | ||||
Unrealized gain (loss) on investments | 859 | (1,866) | (5,533) | (10,829) | ||||
Other income | 1,185 | 3,034 | 2,389 | 3,647 | ||||
Total other income (expense), net | 4,462 | 1,247 | 1,497 | (6,697) | ||||
Income before provision for income taxes | 31,491 | 16,629 | 50,900 | 34,897 | ||||
Provision for income taxes | 14,009 | 5,352 | 20,930 | 12,170 | ||||
Net income | 17,482 | 11,277 | 29,970 | 22,727 | ||||
Net income (loss) attributable to non-controlling interest | 4,312 | (673) | 3,668 | (2,987) | ||||
Net income attributable to Apollo Medical Holdings, Inc. | $ 13,170 | $ 11,950 | $ 26,302 | $ 25,714 | ||||
Earnings per share – basic | $ 0.28 | $ 0.27 | $ 0.57 | $ 0.57 | ||||
Earnings per share – diluted | $ 0.28 | $ 0.26 | $ 0.56 | $ 0.56 | ||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | |||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
(in thousands) | 2023 | 2022 (restated) | 2023 (restated) | 2022 (restated) | |||||
Net income | $ 17,482 | $ 11,277 | $ 29,970 | $ 22,727 | |||||
Interest expense | 3,632 | 1,854 | 6,901 | 2,927 | |||||
Interest income | (3,327) | (421) | (6,335) | (467) | |||||
Provision for income taxes | 14,009 | 5,352 | 20,930 | 12,170 | |||||
Depreciation and amortization | 4,248 | 4,351 | 8,541 | 8,725 | |||||
EBITDA | 36,044 | 22,413 | 60,007 | 46,082 | |||||
Income from equity method investments | (297) | (180) | (546) | (328) | |||||
Other, net | (1,618) | (1) | — | (216) | (1) | — | |||
Stock-based compensation | 4,213 | 3,920 | 7,658 | 6,975 | |||||
APC excluded assets costs | (2,570) | (1,247) | (1,304) | 6,537 | |||||
Adjusted EBITDA | $ 35,772 | $ 24,906 | (2) | $ 65,599 | $ 59,266 | (2) | |||
(1) Other, net for the three and six months ended June 30, 2023 relates to non-cash changes in the fair value of our financing obligation to purchase the remaining equity interests, changes in the fair value of our contingent liabilities, and changes in the fair value of the Company's Collar Agreement. |
(2) Adjusted EBITDA under the historical method for the three and six months ended June 30, 2022 was $36.9 million and $75.1 million, respectively. See "Use of Non-GAAP Financial Measures" below for additional information on change of methodology. |
Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA | |||
2023 Guidance Range | |||
(in thousands) | Low | High | |
Net income | $ 49,500 | $ 71,500 | |
Interest expense | 1,000 | 1,000 | |
Provision for income taxes | 23,000 | 38,000 | |
Depreciation and amortization | 16,000 | 19,000 | |
EBITDA | 89,500 | 129,500 | |
Loss (income) from equity method investments | (750) | (750) | |
Other, net | 3,250 | 3,250 | |
Stock-based compensation | 16,000 | 16,000 | |
APC excluded assets costs | 12,000 | 12,000 | |
Adjusted EBITDA | $ 120,000 | $ 160,000 | |
Use of Non-GAAP Financial Measures
This earnings release contains the non-GAAP financial measures EBITDA and Adjusted EBITDA, of which the most directly comparable financial measure presented in accordance with U.S. generally accepted accounting principles ("GAAP") is net income. These measures are not in accordance with, or alternatives to GAAP, and may be calculated differently from similar 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 income or loss from equity method investments, non-recurring and non-cash transactions, stock-based compensation, and APC excluded assets costs. Beginning in the third quarter ended September 30, 2022, the Company has revised the calculation for Adjusted EBITDA to exclude provider bonus payments and losses from recently acquired IPAs, which it believes to be more reflective of its business.
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 or 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 the Company'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. The reconciliation between certain GAAP and non-GAAP measures is provided above.
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SOURCE Apollo Medical Holdings, Inc.