Apollo Medical Holdings, Inc. Reports Second Quarter 2022 Re...| MENAFN.COM

Friday, 19 August 2022 03:15 GMT

Apollo Medical Holdings, Inc. Reports Second Quarter 2022 Results'


(MENAFN- PR Newswire)

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.

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 .

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: .

An accompanying slide presentation will be available in PDF format on the 'IR Calendar' page of the Company's website ( ) 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 .

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 .

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[email protected]

Carolyne Sohn, The Equity Group(415) 568-2255[email protected]

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.

SOURCE Apollo Medical Holdings, Inc.

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