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Apollo Medical Holdings, Inc. Reports Second Quarter 2022 Results

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Company to Host Conference Call Today at 2 p.m. PT/5 p.m. ET

ALHAMBRA, Calif., Aug. 4, 2022 /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 and six months ended June 30, 2022.

ameh logo (PRNewsfoto/Apollo Medical Holdings, Inc.)
ameh logo (PRNewsfoto/Apollo Medical Holdings, Inc.)

Financial Highlights for Second Quarter Ended June 30, 2022:

  • Total revenue of $269.7 million, up 54% from $175.6 million for the prior-year quarter

  • Net income attributable to ApolloMed of $11.4 million, compared to $12.7 million for the prior-year quarter

  • Earnings per share - diluted ("EPS - diluted") of $0.25, compared to $0.28 per share for the prior-year quarter

  • Adjusted EBITDA of $36.9 million, up 14% from $32.4 million for the prior-year quarter

Financial Highlights for Six Months Ended June 30, 2022:

  • Total revenue of $533.0 million, up 52% from $351.7 million for the prior-year period

  • Net income attributable to ApolloMed of $25.7 million, compared to $25.8 million for the prior-year period

  • EPS-diluted of $0.56, compared to $0.58 per share for the prior-year period

  • Adjusted EBITDA of $75.1 million, up 19% from $63.2 million for the prior-year period

  • Cash and cash equivalents of $234.2 million as of June 30, 2022

Guidance:

ApolloMed is reiterating the following guidance for total revenue, net income, EBITDA, and Adjusted EBITDA, based on the Company's existing business, current view of existing market conditions and assumptions for the year ending December 31, 2022.

($ in millions)


2022 Guidance Range



Low


High

Total revenue


$             1,055.0


$             1,085.0

Net income


$                   38.0


$                   57.0

EBITDA


$                   81.0


$                 111.0

Adjusted EBITDA


$                 136.0


$                 166.0

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.

Management Commentary:

Brandon Sim, Co-Chief Executive Officer of ApolloMed, added, "During the second quarter of 2022, we delivered yet another quarter of profitability, achieving 54% growth on the top line as a result of continued organic membership growth in our core IPAs, more favorable membership mix, and participation in a value-based care model for the Medicare fee-for-service population. Despite utilization trending towards pre-pandemic levels and our ongoing investment in building out our team to support future business expansion, which have contributed to increased cost of services and operating expenses respectively, we reported solid bottom line results of $11.4 million, or EPS-diluted of $0.25, during the second quarter. Due to our strong performance in the first half of 2022, we are pleased to be reiterating our previously disclosed annual guidance and expect an eventful remainder of the year ahead, which will allow us to close out 2022 on a positive note. We continue to observe strong tailwinds within the physician enablement value-based care space and are uniquely positioned to continue enabling providers across the country due to our long operating history and proven track record of empowering independent physicians. We are excited to be in this unique position to help providers fundamentally change the way healthcare is delivered here in the U.S."

GAAP Financial Review for the Second Quarter Ended June 30, 2022:

  • Total revenue of $269.7 million for the quarter ended June 30, 2022, an increase of 54%, compared to $175.6 million for the quarter ended June 30, 2021. This was primarily driven by organic membership growth in ApolloMed's consolidated IPAs and participation in a value-based Medicare fee-for-service model.

  • Capitation revenue, net, of $227.6 million for the quarter ended June 30, 2022, an increase of 57%, compared to $144.6 million for the quarter ended June 30, 2021. Capitation revenue represented 84% of total revenue for the quarter ended June 30, 2022.

  • Net income of $10.6 million for the quarter ended June 30, 2022, compared to $59.5 million for the quarter ended June 30, 2021. The decrease was primarily a result of $1.9 million in unrealized losses as a result of a decrease in fair value of a payer partner's shares held as marketable securities and other investments, which compares to $83.8 million in unrealized gains as a result of a 1-to-3 conversion of a payer partner's preferred shares to common stock in the prior-year period. These payer partner shares are deemed "Excluded Assets" that are solely for the benefit of APC and its shareholders and do not impact net income attributable to ApolloMed.

  • Net income attributable to ApolloMed of $11.4 million for the quarter ended June 30, 2022, compared to $12.7 million for the quarter ended June 30, 2021. The decrease was primarily a result of increased cost of services related to increased utilization compared to the prior-year period and increased operating expenses related to the hiring of additional personnel to support the Company's growth and development.

  • EPS - diluted of $0.25 per share for the quarter ended June 30, 2022, compared to $0.28 per share for the quarter ended June 30, 2021.

GAAP Financial Review for the Six Months Ended June 30, 2022:

  • Total revenue of $533.0 million for the six months ended June 30, 2022, an increase of 52%, compared to $351.7 million for the six months ended June 30, 2021.

  • Net income of $22.7 million for the six months ended June 30, 2022, compared to $74.0 million for the six months ended June 30, 2021.

  • Net income attributable to ApolloMed of $25.7 million for the six months ended June 30, 2022, compared to $25.8 million for the six months ended June 30, 2021.

  • EPS - diluted of $0.56 per share for the six months ended June 30, 2022, compared to $0.58 per share for the six months ended June 30, 2021.

Non-GAAP Measures for the Second Quarter Ended June 30, 2022:

  • EBITDA of $22.4 million for the quarter ended June 30, 2022, compared to $90.0 million for the quarter ended June 30, 2021.

  • Adjusted EBITDA of $36.9 million for the quarter ended June 30, 2022, an increase of 14%, compared to $32.4 million for the quarter ended June 30, 2021.

Non-GAAP Financial Review for the Six Months Ended June 30, 2022:

  • EBITDA of $46.1 million for the six months ended June 30, 2022, compared to $116.6 million for the six months ended June 30, 2021.

  • Adjusted EBITDA of $75.1 million for the six months ended June 30, 2022, an increase of 19%, compared to $63.2 million for the six months ended June 30, 2021.

Balance Sheet Highlights:

  • As of June 30, 2022, ApolloMed's cash and cash equivalents and investments in marketable securities were $273.7 million, working capital was $275.8 million, and total stockholders' equity was $485.8 million; compared to cash and cash equivalents and investments in marketable securities of $286.5 million, working capital of $283.4 million and total stockholders' equity of $460.5 million, respectively, as of December 31, 2021.

For more details on ApolloMed's financial results for the quarter ended June 30, 2022, please refer to ApolloMed's Quarterly Report on Form 10-Q to be filed with the U.S. Securities Exchange Commission ("SEC"), which is accessible at www.sec.gov.

Conference Call and Webcast Information:

ApolloMed will host a conference call at 2 p.m. PT/5 p.m. ET today (Thursday, August 4, 2022), during which management will discuss the results of the second quarter and six months ended June 30, 2022. 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 (866) 682-6100

International (Toll):

+1 (862) 298-0702

The conference call can also be accessed via webcast at: https://event.choruscall.com/mediaframe/webcast.html?webcastid=azum8Y5h.

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 high quality 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, 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, 2022, continued growth, acquisition strategy, ability to deliver sustainable long-term value, ability to respond to the changing environment, operational focus, strategic growth plans and merger integration efforts, as well as the impact of the COVID-19 pandemic on the Company's business, operations and financial results. 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, 2021, and any subsequent quarterly reports on Form 10-Q.

FOR MORE INFORMATION, PLEASE CONTACT:

Investor Relations
(626) 943-6491
investors@apollomed.net

Carolyne Sohn, The Equity Group
(415) 568-2255
csohn@equityny.com

APOLLO MEDICAL HOLDINGS, INC.

 CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)








June 30,
2022


December 31,
2021






Assets










Current assets





Cash and cash equivalents


$           234,223


$           233,097

Investments in marketable securities


39,490


53,417

Receivables, net


67,263


10,608

Receivables, net – related parties


81,526


69,376

Income taxes receivable


12,639


Other receivables


13,227


9,647

Prepaid expenses and other current assets


12,670


18,637

Loan receivable – related party



4,000






Total current assets


461,038


398,782






Non-current assets





Land, property, and equipment, net


87,146


53,186

Intangible assets, net


76,651


82,807

Goodwill


253,310


253,039

Loans receivable


539


569

Loan receivable - related party


2,125


Investments in other entities – equity method


43,820


41,715

Investments in privately held entities


896


896

Operating lease right-of-use assets


19,638


15,441

Other assets


5,901


5,928






Total non-current assets


490,026


453,581






Total assets(1)


$           951,064


$           852,363






Liabilities, mezzanine equity and stockholders' equity










Current liabilities










Accounts payable and accrued expenses


$             59,922


$             43,951

Fiduciary accounts payable


6,071


10,534

Medical liabilities


112,499


55,783

Income taxes payable



652

Dividend payable


556


556

Finance lease liabilities


524


486

Operating lease liabilities


3,253


2,629

 



June 30,
2022


December 31,
2021






Current portion of long-term debt


2,413


780

Total current liabilities


185,238


115,371






Non-current liabilities





Deferred tax liability


9,257


9,127

Finance lease liabilities, net of current portion


1,049


973

Operating lease liabilities, net of current portion


16,904


13,198

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


199,068


182,917

Other long-term liabilities


13,706


14,777






Total non-current liabilities


239,984


220,992






Total liabilities(1)


425,222


336,363






Mezzanine equity





Non-controlling interest in Allied Physicians of California, a Professional Medical
Corporation


39,997


55,510






Stockholders' 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, $0.001 par value per share; 100,000,000 shares authorized,
44,719,710 and 44,630,873 shares issued and outstanding, excluding 11,175,702 and
10,925,702 treasury shares, at June 30, 2022, and December 31, 2021, respectively


45


45

Additional paid-in capital


310,629


310,876

Retained earnings


169,292


143,629



479,966


454,550






Non-controlling interest


5,879


5,940






Total stockholders' equity


485,845


460,490






Total liabilities, mezzanine equity and stockholders' equity


$           951,064


$           852,363


(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 $599.7 million and $567.0 million as of June 30, 2022 and December 31, 2021, 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 $143.7 million and $91.7 million as of June 30, 2022 and December 31, 2021, respectively. The VIE balances do not include $431.3 million of investment in affiliates and $36.0 million of amounts due from affiliates as of June 30, 2022 and $802.8 million of investment in affiliates and $6.6 million of amounts due from affiliates as of December 31, 2021 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,



2022


2021


2022


2021

Revenue









Capitation, net


$       227,623


$       144,550


$   449,682


$   289,290

Risk pool settlements and incentives


18,793


16,214


36,868


34,224

Management fee income


9,984


8,143


20,457


16,693

Fee-for-service, net


11,740


4,621


22,835


7,707

Other income


1,557


2,110


3,112


3,782










Total revenue


269,697


175,638


532,954


351,696










Operating expenses









Cost of services, excluding depreciation and amortization


230,070


136,214


450,798


276,829

General and administrative expenses


19,894


14,199


31,837


23,663

Depreciation and amortization


4,351


4,237


8,725


8,434










Total expenses


254,315


154,650


491,360


308,926










Income from operations


15,382


20,988


41,594


42,770










Other income (expense)









Income (loss) from equity method investments


1,512


(3,134)


2,945


(3,812)

Interest expense


(1,854)


(1,853)


(2,927)


(3,376)

Interest income


421


563


467


912

Unrealized (loss) gain on investments


(1,866)


83,769


(10,829)


83,769

Other income (expense)


3,034


(15,883)


3,647


(14,579)










Total other income (expense), net


1,247


63,462


(6,697)


62,914










Income before provision for income taxes


16,629


84,450


34,897


105,684










Provision for income taxes


6,038


24,920


12,233


31,696










Net income


10,591


59,530


22,664


73,988










Net (loss) income attributable to non-controlling interest


(808)


46,872


(2,999)


48,179










Net income attributable to Apollo Medical Holdings, Inc.


$         11,399


$         12,658


$     25,663


$     25,809










Earnings per share – basic


$              0.25


$              0.29


$          0.57


$          0.60










Earnings per share – diluted


$              0.25


$              0.28


$          0.56


$          0.58

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA
















Three Months Ended

June 30,


Six Months Ended
June 30,

(in thousands)


2022


2021


2022


2021










Net income


$         10,591


$         59,530


$      22,664


$    73,988

Interest expense


1,854


1,853


2,927


3,376

Interest income


(421)


(563)


(467)


(912)

Provision for income taxes


6,038


24,920


12,233


31,696

Depreciation and amortization


4,351


4,237


8,725


8,434

EBITDA


22,413


89,977


46,082


116,582










(Income) loss from equity method investments


(1,512)


3,134


(2,945)


3,812

Other income


(3,034)

(1)

15,883


(3,647)

(1)

14,579

Unrealized loss (gain) on investments


1,866


(83,769)


10,829


(83,769)

Provider bonus payments


401



401


Stock-based compensation


3,920


1,556


6,975


2,902

APC excluded assets costs


6,957


148


7,707


397

Net loss adjustment for recently acquired IPAs


5,923


5,514


9,712


8,708

Adjusted EBITDA


$         36,934


$         32,443


$      75,114


$    63,211


(1) Other income includes gain on sale of equity securities.

 

Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA














2022 Guidance Range




(as of May 5, 2022)

(in thousands)









Low


High

Net income



$               38,000


$               57,000

Interest expense



4,000


4,000

Provision for income taxes



20,000


31,000

Depreciation and amortization



19,000


19,000

EBITDA



81,000


111,000







Provider bonus payments



16,000


16,000

Stock-based compensation



13,000


13,000

APC excluded assets costs



9,000


9,000

Net loss adjustment for recently acquired IPAs



17,000


17,000

Adjusted EBITDA



$             136,000


$             166,000

Use of Non-GAAP Financial Measures

This press 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 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 income or loss from equity method investments, unrealized gain or loss, provider bonuses, APC excluded assets costs, stock-based compensation, net loss adjustment for recently acquired IPAs, and other income or expenses recognized that are not related to the Company's normal operations. Adjusted EBITDA also excludes 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 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.

 

Cision
Cision

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SOURCE Apollo Medical Holdings, Inc.