Revenue and Income - Revenue for the three months ended March 31, 2022, was $263.3 million, an increase of $87.2 million or 50% compared to $176.1 million for the same period in 2021[262] - Capitation revenue increased by approximately $77.3 million, driven by organic membership growth in core IPAs and participation in a value-based Medicare fee-for-service model[262] - Net income attributable to Apollo Medical Holdings, Inc. for the three months ended March 31, 2022, was $14.3 million, compared to $13.2 million for the same period in 2021, an increase of $1.1 million[259] - Net income for the three months ended March 31, 2022, was $12,073,000, compared to $14,458,000 for the same period in 2021[274] - Adjusted EBITDA for the three months ended March 31, 2022, was $38,179,000, an increase from $30,518,000 in the same period of 2021, representing a growth of approximately 25.5%[274] Expenses - Total operating expenses for the three months ended March 31, 2022, were $237.0 million, an increase of $82.8 million or 54% compared to $154.3 million for the same period in 2021[258] - General and administrative expenses for the three months ended March 31, 2022, were $11.9 million, an increase of $2.5 million or 26% compared to $9.5 million for the same period in 2021[264] - Other expenses for the three months ended March 31, 2022, were $7.9 million, compared to $0.5 million in 2021, primarily due to an unrealized loss on investments of $9.0 million[266] Guidance and Projections - The company is raising its guidance for total revenue for 2022, with a low end of $1,055 million and a high end of $1,085 million[271] - The guidance for net income for 2022 is set between $38 million and $57 million[271] Membership and Patient Management - The company managed approximately 1.2 million patients as of March 31, 2022, compared to 1.1 million patients for the same period in 2021[261] - The company completed the acquisition of Jade Health Care Medical Group, adding approximately 13,000 members to its membership under capitated arrangements[252] Cash Flow and Investments - Cash provided by operating activities for the three months ended March 31, 2022, was $24,000,000, compared to $10,000,000 for the same period in 2021, indicating a significant increase of 140%[279] - Cash used in investing activities during the three months ended March 31, 2022, was $19.7 million, primarily due to property and equipment purchases of $17.5 million[280] - Total cash, cash equivalents, and investments in marketable securities as of March 31, 2022, amounted to $280.8 million, a slight decrease from $286.5 million at December 31, 2021[278] Debt and Leverage - The total debt balance as of March 31, 2022, was $188,635,000, with long-term debt amounting to $183,101,000[286] - The consolidated leverage ratio as of March 31, 2022, was 1.04, well below the required maximum of 3.75[292] - The average effective interest rate on total debt for the three months ended March 31, 2022, was 1.78%, down from 2.08% in the same period of 2021[295] Working Capital and Assets - Working capital as of March 31, 2022, totaled $284.0 million, a slight increase from $283.4 million at December 31, 2021[278] - Total Excluded Assets as of March 31, 2022, were $165,754,000, down from $174,802,000 at December 31, 2021[284] Borrowings and Interest Rates - As of March 31, 2022, the company had $180.0 million in outstanding borrowings under its Amended Credit Agreement, with interest rates based on LIBOR plus a spread of 1.25% to 2.50%[305] - Tag 8, a VIE consolidated by the company, had $1.3 million in outstanding borrowings for a Construction Loan, with interest rates determined by the bank's index rate[305] - The company had $7.3 million in outstanding borrowings for real estate loans related to ZLL, MPP, and AMG Properties, with interest rates subject to changes based on the Wall Street Journal Prime Rate[305] - A hypothetical 1% change in interest rates for the company's outstanding borrowings would have increased or decreased interest expense by $1.9 million for the three months ended March 31, 2022[305] - The company assumed $6.4 million in existing loans from MPP, $0.7 million from AMG Properties, and $0.7 million from ZLL upon acquisition[296] - The company has entered into intercompany loan agreements with AMH, MMG, AKM, SCHC, and BAHA, with a total intercompany facility of $23.25 million[299] - The maximum balance during the period for AMH's intercompany loan was $6.588 million, while MMG had a maximum balance of $3.663 million[299] Financial Condition and Accounting Policies - The company has no off-balance sheet arrangements that could materially affect its financial condition as of March 31, 2022[303] - Inflation has had a de minimis effect on the company's operations over the last two fiscal years[304] - The company’s critical accounting policies involve significant judgments and estimates that could lead to materially different results under varying assumptions[300]

Financial Performance - Total revenue for the three months ended September 30, 2021, was $227.1 million, a 26% increase from $180.1 million in the same period of 2020[270]. - Capitation revenue for the three months ended September 30, 2021, was $149.1 million, up 10% from $135.0 million in 2020[271]. - Risk pool settlements and incentives increased by 94%, reaching $59.9 million for the three months ended September 30, 2021, compared to $30.9 million in 2020[271]. - Net income attributable to Apollo Medical Holdings, Inc. for the three months ended September 30, 2021, was $34.3 million, a 105% increase from $16.7 million in 2020[273]. - For the nine months ended September 30, 2021, total revenue was $578.8 million, a 13% increase from $510.4 million in 2020[272]. - Revenue for the three months ended September 30, 2021, was $227.1 million, an increase of $47.0 million or 26% compared to the same period in 2020[275]. - Total revenue for the nine months ended September 30, 2021, was $578.8 million, an increase of $68.4 million or 13% compared to the same period in 2020[277]. - Net income for the period increased to $83,500,000, up from $66,000,000 in the previous period, representing a growth of 26.5%[296]. - Adjusted EBITDA rose to $170,500,000, compared to $130,500,000 in the prior period, reflecting a significant increase of 30.7%[296]. Expenses - Operating expenses for the three months ended September 30, 2021, totaled $174.0 million, a 22% increase from $142.8 million in 2020[271]. - General and administrative expenses for the three months ended September 30, 2021, were $21.8 million, a 34% increase from $16.3 million in 2020[271]. - General and administrative expenses for the three months ended September 30, 2021, were $21.8 million, an increase of $5.5 million or 34% compared to the same period in 2020[280]. - Interest expense for the three months ended September 30, 2021, decreased to $1.0 million from $2.5 million in the same period in 2020, a reduction of $1.5 million[285]. Cash Flow and Liquidity - Cash, cash equivalents, and investments in marketable securities totaled $333.3 million as of September 30, 2021, an increase of 27.6% from $261.2 million at December 31, 2020[299]. - Cash provided by operating activities for the nine months ended September 30, 2021, was $82.5 million, a substantial increase from $48.8 million in the same period of 2020[301]. - Cash used in investing activities was $22.5 million, primarily due to property and equipment purchases of $16.4 million and business acquisitions of $2.6 million[302]. - Cash used in financing activities totaled $49.2 million, mainly for long-term debt repayment of $238.3 million and dividend payments of $31.1 million[303]. - The Company has sufficient liquidity to fund operations for at least the next 12 months, supported by a working capital increase of 39% to $310.5 million[299]. Debt and Financing - The Company’s total debt as of September 30, 2021, was $187,524,000, with long-term debt amounting to $182,813,000[308]. - The average effective interest rate on total debt decreased to 2.15% for the nine months ended September 30, 2021, down from 3.79% in the same period of 2020[315]. - The Company reported a consolidated leverage ratio of 1.06, well below the required maximum of 3.75 to 1.00[313]. - As of September 30, 2021, the company had $180.0 million in outstanding borrowings under its Amended Credit Agreement, with interest rates based on LIBOR plus a spread of 1.25% to 2.5%[326]. - The company entered into a construction loan agreement allowing it to borrow up to $10.7 million, with Tag 8 having $0.1 million in outstanding borrowings for this loan[317][326]. - The company has $7.4 million in outstanding real estate loans related to ZLL, MPP, and AMG Properties, with interest rates subject to changes based on the Wall Street Journal Prime Rate[326]. - The company has intercompany loan agreements totaling $23.25 million, with various entities having different maximum balances and interest rates of 10%[320]. - The maximum balance during the period for AMH under the intercompany facility was $6.588 million, while MMG had a maximum balance of $3.663 million[320]. Investments and Unrealized Losses - The company reported an unrealized loss on investments of $60.9 million for the three months ended September 30, 2021[271]. - The company reported an unrealized loss of $60.9 million for the three months ended September 30, 2021, driven by fluctuations in stock prices of a payor partner[287]. Strategic Agreements and Guidance - The company entered into an agreement to purchase the remaining 60% equity interests in DMG within three years, currently owning 40%[266]. - The company raised its full-year 2021 guidance due to continued organic growth and increased risk pool settlements, with revised net income guidance ranging from $48.0 million to $58.0 million[293]. - EBITDA for the full year 2021 is guided to be between $100.0 million and $119.0 million[294]. Operational Metrics - The company managed approximately 1.1 million patients as of September 30, 2021, consistent with the same period in 2020[274]. Economic Factors - Inflation has had a de minimis effect on the company's operations over the past two fiscal years[325]. Accounting Policies - The company’s critical accounting policies involve significant judgments and estimates that could lead to materially different results under varying assumptions[321].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common Stock, $0.001 par value per share AMEH Nasdaq Capital Market FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___. Commission ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Common Stock, $0.001 par value per share AMEH Nasdaq Capital Market FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___. Commission File ...

[Introductory Note](index=4&type=section&id=Introductory%20Note) This section defines the terms 'Company' and 'ApolloMed' as used in the Quarterly Report and clarifies that the Centers for Medicare & Medicaid Services (CMS) have not reviewed statements regarding APA ACO, Inc.'s participation in the Next Generation Accountable Care Organization (NGACO) Model - References to 'Company,' 'we,' 'us,' 'our,' and similar words refer to Apollo Medical Holdings, Inc. and its consolidated subsidiaries and affiliated entities, including consolidated variable interest entities ('VIEs')[7](index=7&type=chunk) - 'ApolloMed' specifically refers to Apollo Medical Holdings, Inc[7](index=7&type=chunk) - The Centers for Medicare & Medicaid Services ('CMS') have not reviewed any statements in this report describing APA ACO, Inc.'s ('APAACO') participation in the Next Generation Accountable Care Organization ('NGACO') Model[8](index=8&type=chunk) [Note About Forward-Looking Statements](index=4&type=section&id=Note%20About%20Forward-Looking%20Statements) This section provides a standard disclaimer regarding forward-looking statements, outlining their nature, the risks and uncertainties involved, and the factors that could cause actual results to differ materially from projections - The report contains 'forward-looking statements' as defined by the Private Securities Litigation Reform Act of 1995, covering business, financial condition, operating results, plans, objectives, expectations, and intentions, including guidance for the year ending December 31, 2020[10](index=10&type=chunk) - Forward-looking statements involve risks and uncertainties based on current beliefs and assumptions, which may not materialize or may vary significantly from actual results[11](index=11&type=chunk) - Factors that could cause material differences include economic, competitive, governmental, and technological factors, as well as specific risk factors discussed in the Annual Report on Form 10-K[11](index=11&type=chunk) [PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Consolidated Financial Statements – Unaudited](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20%E2%80%93%20Unaudited) This section presents the unaudited consolidated financial statements for Apollo Medical Holdings, Inc. for the three months ended March 31, 2020 and 2019, including balance sheets, income statements, statements of mezzanine and stockholders' equity, cash flows, and detailed notes to the financial statements [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202020%20and%20December%2031%2C%202019) The consolidated balance sheets show the company's financial position as of March 31, 2020, and December 31, 2019, indicating a slight decrease in total assets and an increase in total liabilities, while stockholders' equity also increased Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2020 | December 31, 2019 | | :----- | :------------- | :---------------- | | Total Assets | $724,415 | $728,713 | | Total Liabilities | $369,015 | $367,653 | | Total Stockholders' Equity | $197,961 | $192,335 | - Current assets decreased from **$329,068 thousand** at December 31, 2019, to **$318,063 thousand** at March 31, 2020[12](index=12&type=chunk) - Medical liabilities increased from **$58,725 thousand** at December 31, 2019, to **$63,698 thousand** at March 31, 2020[12](index=12&type=chunk) [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) The consolidated statements of income reveal significant revenue growth and a shift from a net loss in Q1 2019 to a net income in Q1 2020, primarily driven by increased capitation revenue and improved equity method investment performance Consolidated Statements of Income Highlights (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | Change ($) | Change (%) | | :----- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total Revenue | $165,105 | $95,758 | $69,347 | 72% | | Income (loss) from operations | $4,365 | $(3,307) | $7,672 | (232)% | | Net income (loss) | $2,987 | $(2,450) | $5,437 | (222)% | | Net income attributable to Apollo Medical Holdings, Inc. | $4,052 | $140 | $3,912 | 2794% | | Earnings per share – basic | $0.11 | $0.00 | - | - | - Capitation, net, increased by **$68,904 thousand (96%)** year-over-year[18](index=18&type=chunk) - Income from equity method investments improved significantly from a loss of **$850 thousand** in Q1 2019 to an income of **$2,054 thousand** in Q1 2020[18](index=18&type=chunk) [Consolidated Statements of Mezzanine and Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Mezzanine%20and%20Stockholders%27%20Equity%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) This statement details the changes in mezzanine equity and stockholders' equity for the three months ended March 31, 2020, and 2019, reflecting the impact of net income, share transactions, and dividends Mezzanine and Stockholders' Equity Highlights (in thousands) | Metric | Balance January 1, 2020 | Net (loss) income | Purchase of treasury shares | Dividends | Balance at March 31, 2020 | | :----- | :---------------------- | :---------------- | :-------------------------- | :-------- | :------------------------ | | Mezzanine Equity – Noncontrolling Interest in APC | $168,725 | $(1,161) | - | $(10,000) | $157,439 | | Total Stockholders' Equity | $192,335 | $4,147 | $(301) | - | $197,961 | - Share-based compensation contributed **$1,058 thousand** to additional paid-in capital in Q1 2020[20](index=20&type=chunk) - Retained earnings increased by **$4,052 thousand** in Q1 2020 due to net income[20](index=20&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202020%20and%202019) The consolidated statements of cash flows show a net decrease in cash, cash equivalents, and restricted cash for the three months ended March 31, 2020, primarily driven by cash used in operating and financing activities Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(9,293) | $(3,967) | | Net cash used in investing activities | $(943) | $(112) | | Net cash used in financing activities | $(12,061) | $(9,810) | | Net decrease in cash, cash equivalents and restricted cash | $(22,297) | $(13,889) | | Cash, cash equivalents and restricted cash, end of period | $81,713 | $93,748 | - Cash paid for interest increased significantly to **$2,619 thousand** in Q1 2020 from **$182 thousand** in Q1 2019[24](index=24&type=chunk) - Dividends paid were **$9,934 thousand** in Q1 2020, consistent with **$10,000 thousand** in Q1 2019[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the financial statements, covering business operations, significant accounting policies, recent acquisitions, debt and equity structures, related-party transactions, and subsequent events [1. Description of Business](index=13&type=section&id=1.%20Description%20of%20Business) Apollo Medical Holdings, Inc. is a physician-centric integrated population health management company operating in California, providing coordinated medical care through various subsidiaries and consolidated entities, primarily serving insured patients. Key transactions in 2019 included a $545.0 million loan to AP-AMH and APC's purchase of ApolloMed common stock - ApolloMed is a physician-centric integrated population health management company providing coordinated, outcome-based medical care in California, primarily to patients covered by private or public insurance[27](index=27&type=chunk) - Key operating subsidiaries include Network Medical Management, Inc. (NMM), Apollo Medical Management, Inc. (AMM), APAACO, and Apollo Care Connect, Inc[27](index=27&type=chunk) - In September 2019, ApolloMed loaned AP-AMH **$545.0 million**, which AP-AMH used to purchase APC Series A Preferred Stock. APC, in turn, purchased **$300.0 million** of ApolloMed's common stock[32](index=32&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=15&type=section&id=2.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis for preparing the unaudited consolidated financial statements in accordance with U.S. GAAP for interim information, detailing principles of consolidation, use of estimates, revenue recognition policies for various streams (capitation, risk pool, management fees, FFS), and the impact of recently adopted and upcoming accounting pronouncements - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and Form 10-Q instructions[48](index=48&type=chunk) - The Company consolidates entities where it has a controlling financial interest, including subsidiaries and Variable Interest Entities (VIEs) where it is the primary beneficiary[49](index=49&type=chunk) - Revenue primarily consists of capitation, risk pool settlements and incentives, NGACO All-Inclusive Population-Based Payments (AIPBP), management fee income, and Fee-for-Service (FFS) revenue, recognized when services are rendered or obligations are met[89](index=89&type=chunk) - The Company adopted ASU 2016-13 (Credit Losses) and ASU 2018-17 (VIEs) on January 1, 2020, with no material impact on consolidated financial statements. It is currently assessing the impact of ASU 2019-12 (Income Taxes) and ASU 2020-01 (Equity Securities)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [3. Business Combination and Goodwill](index=26&type=section&id=3.%20Business%20Combination%20and%20Goodwill) This note details the acquisitions of Alpha Care Medical Group and Accountable Health Care IPA in 2019, including their respective purchase prices, the fair values of assets acquired and liabilities assumed, and the resulting goodwill recognized - On May 31, 2019, APC and APC-LSMA acquired 100% of Alpha Care for approximately **$45.1 million** in cash[134](index=134&type=chunk) - On August 30, 2019, APC and APC-LSMA acquired the remaining 75% of Accountable Health Care for **$7.3 million**, with a total purchase price of **$25.1 million**[136](index=136&type=chunk) Goodwill Carrying Value (in thousands) | Date | Amount | | :--- | :----- | | Balance, January 1, 2020 | $238,505 | | Adjustments | $34 | | Balance, March 31, 2020 | $238,539 | [4. Intangible Assets, Net](index=28&type=section&id=4.%20Intangible%20Assets%2C%20Net) This note provides a breakdown of the company's amortized intangible assets, including network relationships, management contracts, and patient management platforms, and their net values as of March 31, 2020, and December 31, 2019, along with amortization expense and future estimates Intangible Assets, Net (in thousands) | Asset Type | March 31, 2020 (Net) | December 31, 2019 (Net) | | :--------- | :------------------- | :---------------------- | | Network relationships | $80,099 | $83,404 | | Management contracts | $12,626 | $13,156 | | Member relationships | $4,123 | $4,344 | | Patient management platform | $1,099 | $1,202 | | Trade name/trademarks | $893 | $906 | | **Total Intangible Assets, Net** | **$98,840** | **$103,012** | - Amortization expense was **$4.2 million** for the three months ended March 31, 2020, compared to **$3.9 million** for the same period in 2019[143](index=143&type=chunk) Estimated Future Amortization Expense (in thousands) | Year | Amount | | :--- | :----- | | 2020 (remaining) | $11,856 | | 2021 | $14,524 | | 2022 | $12,673 | | 2023 | $10,842 | | 2024 | $9,830 | | Thereafter | $39,115 | | **Total** | **$98,840** | [5. Investments in Other Entities — Equity Method](index=29&type=section&id=5.%20Investments%20in%20Other%20Entities%20%E2%80%94%20Equity%20Method) This note details the company's equity method investments in entities such as LaSalle Medical Associates (LMA), Pacific Medical Imaging and Oncology Center, Inc. (PMIOC), Universal Care, Inc. (UCI), Diagnostic Medical Group (DMG), and 531 W. College LLC, outlining ownership interests, financial performance, and the significant disposition of UCI Rollforward of Equity Method Investment (in thousands) | Entity | December 31, 2019 | Allocation of Income (Loss) | Contribution | March 31, 2020 | | :----- | :---------------- | :-------------------------- | :----------- | :------------- | | LaSalle Medical Associates – IPA Line of Business | $6,397 | $(643) | $0 | $5,754 | | Pacific Medical Imaging & Oncology Center, Inc. | $1,396 | $87 | $0 | $1,483 | | Universal Care, Inc. | $1,438 | $2,670 | $0 | $4,108 | | Diagnostic Medical Group | $2,334 | $(5) | $0 | $2,329 | | 531 W. College, LLC – related party | $16,698 | $(111) | $300 | $16,887 | | MWN, LLC – related party | $164 | $56 | $0 | $220 | | **Total** | **$28,427** | **$2,054** | **$300** | **$30,781** | - The Company recorded income from equity method investments of **$2.1 million** for the three months ended March 31, 2020, a significant improvement from a loss of **$0.9 million** in the prior year[146](index=146&type=chunk) - On April 30, 2020, UCAP completed the disposition of its **48.9% ownership interest** in UCI for approximately **$69.2 million** in cash and **$33.3 million** in Bright Health, Inc.'s preferred stock, plus escrowed amounts[153](index=153&type=chunk) [6. Loan Receivable and Loan Receivable – Related Parties](index=31&type=section&id=6.%20Loan%20Receivable%20and%20Loan%20Receivable%20%E2%80%93%20Related%20Parties) This note describes the company's loan receivables, including a convertible secured promissory note with Dr. Albert Arteaga and advances to Universal Care, Inc. (UCI), and highlights the subsequent repayment of the UCI loan - A **$6.4 million** convertible secured promissory note with Dr. Albert H. Arteaga, CEO of LMA, was outstanding as of March 31, 2020, bearing interest at prime rate plus **1%**. APC has the right to convert it into a **21.25% interest** in LMA common stock[171](index=171&type=chunk)[172](index=172&type=chunk) - Loans receivable from related parties, primarily Universal Care, Inc. (UCI), totaled **$16.5 million** as of March 31, 2020, and December 31, 2019[175](index=175&type=chunk) - The **$16.5 million** indebtedness owed by UCI to APC was repaid on April 30, 2020, as part of the disposition of APC's ownership interest in UCI[175](index=175&type=chunk) [7. Accounts Payable and Accrued Expenses](index=32&type=section&id=7.%20Accounts%20Payable%20and%20Accrued%20Expenses) This note provides a breakdown of the company's accounts payable and accrued expenses, showing a decrease in total amounts primarily due to a significant reduction in contract liabilities Accounts Payable and Accrued Expenses (in thousands) | Category | March 31, 2020 | December 31, 2019 | | :------- | :------------- | :---------------- | | Accounts payable | $7,745 | $6,914 | | Capitation payable | $2,802 | $2,813 | | Subcontractor IPA payable | $2,886 | $3,360 | | Professional fees | $1,792 | $1,837 | | Due to related parties | $55 | $225 | | Accrued compensation | $4,162 | $3,238 | | Contract liabilities | $664 | $8,892 | | **Total** | **$20,106** | **$27,279** | - Contract liabilities decreased significantly from **$8,892 thousand** at December 31, 2019, to **$664 thousand** at March 31, 2020, with **$8.5 million** repaid to CMS for AIPBP capitation not earned[178](index=178&type=chunk)[118](index=118&type=chunk) [8. Medical Liabilities](index=32&type=section&id=8.%20Medical%20Liabilities) This note details the company's medical liabilities, which include claims reported and estimates for incurred but not reported (IBNR) claims, showing an increase in the ending balance for Q1 2020 compared to Q1 2019, reflecting higher medical care costs Medical Liabilities (in thousands) | Metric | March 31, 2020 | March 31, 2019 | | :----- | :------------- | :------------- | | Medical liabilities, beginning of period | $58,725 | $33,642 | | Total medical care costs | $85,326 | $34,975 | | Total paid | $(80,251) | $(45,437) | | **Medical liabilities, ending balance** | **$63,698** | **$23,266** | - Medical care costs related to claims incurred for the current period increased to **$85,928 thousand** in Q1 2020 from **$31,870 thousand** in Q1 2019[179](index=179&type=chunk) [9. Credit Facility, Bank Loan and Lines of Credit](index=33&type=section&id=9.%20Credit%20Facility%2C%20Bank%20Loan%20and%20Lines%20of%20Credit) This note describes the company's secured credit agreement, including a $100.0 million revolving credit facility and a $190.0 million term loan, detailing their terms, interest rates, financial covenants, and security interests. It also mentions the termination and reissuance of related party lines of credit under the new facility Credit Facility (in thousands) | Debt Type | March 31, 2020 | | :-------- | :------------- | | Term loan A | $185,250 | | Revolver loan | $60,000 | | **Total debt** | **$245,250** | | Less: Current portion of debt | $(9,500) | | Less: Unamortized financing costs | $(5,645) | | **Long-term debt** | **$230,105** | - The Credit Agreement provides for a five-year revolving credit facility of **$100.0 million** and a **$190.0 million** term loan, with quarterly principal payments[184](index=184&type=chunk) - As of March 31, 2020, the interest rate on Term Loan A was **3.57%** and Revolver Loan was **3.24%**. The company was in compliance with all financial covenants[188](index=188&type=chunk)[190](index=190&type=chunk) - Previous NMM and APC Business Loan Agreements with Preferred Bank were terminated and certain letters of credit reissued under the new Credit Agreement[198](index=198&type=chunk) [10. Mezzanine and Stockholders' Equity](index=36&type=section&id=10.%20Mezzanine%20and%20Stockholders%27%20Equity) This note explains the classification of noncontrolling interests in APC as mezzanine equity due to redemption features and provides details on the company's stock options, restricted stock awards, warrants, and treasury stock, including their impact on equity and related compensation expenses - Noncontrolling interests in APC are classified as mezzanine equity because the redemption feature of APC's shares is not solely within APC's control[205](index=205&type=chunk) - During Q1 2020, **100,000 stock options** were exercised, generating approximately **$0.2 million** in proceeds, and **97,447 restricted stock awards** were granted with a fair value of **$1.6 million**[209](index=209&type=chunk)[211](index=211&type=chunk) - **51,601 common stock warrants** were exercised in Q1 2020, resulting in approximately **$0.5 million** in proceeds[218](index=218&type=chunk) - APC held **17,307,214 shares** of ApolloMed's common stock as of March 31, 2020, which are treated as treasury shares for accounting purposes[219](index=219&type=chunk) [11. Commitments and Contingencies](index=38&type=section&id=11.%20Commitments%20and%20Contingencies) This note addresses the company's regulatory compliance, claims disputes, standby letters of credit, and ongoing litigation, including a significant arbitration demand against MMG, highlighting the inherent uncertainties in resolving these matters - APC, Alpha Care, and Accountable Health Care are in compliance with California DMHC regulations for minimum working capital, tangible net equity (TNE), cash-to-claims ratio, and claims payment requirements[223](index=223&type=chunk) - The company has established irrevocable standby letters of credit totaling **$8.2 million** for APAACO (CMS), **$0.3 million** for APC, and **$3.8 million** for Alpha Care[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - MMG is involved in an arbitration demand by Prospect Medical Group, Inc. and Prospect Medical Systems, Inc., seeking damages in excess of **$5.0 million** for alleged breach of contract and tortious interference[228](index=228&type=chunk) [12. Related-Party Transactions](index=40&type=section&id=12.%20Related-Party%20Transactions) This note details various transactions with related parties, including management fees earned, payments for provider services, office leases, and risk-sharing agreements, highlighting the financial interactions with affiliated entities and board members - NMM earned approximately **$4.2 million** in management fees from LMA for the three months ended March 31, 2020, an increase from **$3.2 million** in the prior year[232](index=232&type=chunk) - APC paid approximately **$0.6 million** to PMIOC and **$1.8 million** to DMG for provider services in Q1 2020[233](index=233&type=chunk)[234](index=234&type=chunk) Net Fees Incurred and Income Earned Related to AHMC, HSMSO, and Aurion (in thousands) | Entity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----- | :-------------------------------- | :-------------------------------- | | AHMC – Risk pool and capitation | $11,999 | $11,600 | | HSMSO – Management fees, net | $(132) | $(650) | | Aurion – Management fees | $(75) | $(100) | | **Net total** | **$11,792** | **$10,850** | [13. Income Taxes](index=41&type=section&id=13.%20Income%20Taxes) This note explains the company's accounting for income taxes using the liability method, discusses the factors influencing its effective tax rate, the maintenance of a valuation allowance against deferred tax assets, and the ongoing assessment of the CARES Act's impact - The Company uses the liability method of accounting for income taxes (ASC 740), determining deferred taxes based on temporary differences between financial statement and tax bases of assets and liabilities[245](index=245&type=chunk) - A full valuation allowance is maintained against deferred tax assets related to loss entities due to uncertainty of realization from cumulative losses in recent years[247](index=247&type=chunk) - The effective tax rate for Q1 2020 differed from the U.S. federal statutory rate primarily due to state income taxes, income from flow-through entities, nondeductible permanent items, and changes in the valuation allowance[248](index=248&type=chunk) - The Company is analyzing the Coronavirus Aid, Relief and Economic Security Act (CARES Act) but does not expect it to impact the Q1 2020 annual estimated tax rate[250](index=250&type=chunk) [14. Earnings Per Share](index=41&type=section&id=14.%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share, including the weighted average number of common shares outstanding and the treatment of potentially dilutive securities and treasury shares Earnings Per Share Computations | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----- | :-------------------------------- | :-------------------------------- | | Earnings per share – basic | $0.11 | $0.00 | | Earnings per share – diluted | $0.11 | $0.00 | | Weighted average shares of common stock outstanding – basic | 36,010,268 | 34,496,622 | | Weighted average shares of common stock outstanding – diluted | 37,439,099 | 38,074,174 | - APC held **17,307,214 shares** of ApolloMed's common stock as of March 31, 2020, which are treated as treasury shares and excluded from the number of shares outstanding for EPS calculation[252](index=252&type=chunk) [15. Variable Interest Entities (VIEs)](index=42&type=section&id=15.%20Variable%20Interest%20Entities%20%28VIEs%29) This note defines Variable Interest Entities (VIEs) and the company's qualitative approach to determine the primary beneficiary for consolidation. It also provides a summary of the assets and liabilities of APC and its consolidated VIEs, emphasizing the limited recourse between creditors - A VIE is a legal entity whose equity owners lack sufficient equity at risk or lack decision-making rights, the obligation to absorb losses, or the right to receive expected residual returns[255](index=255&type=chunk) - The Company consolidates VIEs where it is the primary beneficiary, having both the power to direct activities that significantly affect economic performance and the obligation to absorb losses or right to receive benefits[255](index=255&type=chunk) Assets and Liabilities of APC and Consolidated VIEs (in thousands) | Metric | March 31, 2020 | December 31, 2019 | | :----- | :------------- | :---------------- | | Total Assets | $731,961 | $849,291 | | Total Liabilities | $107,186 | $114,499 | - Creditors of APC and its consolidated VIEs have no recourse to the Company, and vice versa[257](index=257&type=chunk) [16. Leases](index=44&type=section&id=16.%20Leases) This note details the company's operating and finance leases for corporate offices, doctors' offices, and equipment, outlining lease terms, associated costs, and supplemental cash flow information related to lease liabilities Components of Lease Expense (in thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :----- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $1,942 | $1,102 | | Total finance lease cost, net | $1,838 | $1,032 | - Operating leases have a weighted average remaining lease term of **7.33 years** and a weighted average discount rate of **6.10%** as of March 31, 2020[264](index=264&type=chunk) Future Minimum Lease Payments (in thousands) | Year | Operating Leases | Finance Leases | | :--- | :--------------- | :------------- | | 2020 (remaining) | $3,227 | $89 | | 2021 | $3,745 | $119 | | 2022 | $2,970 | $119 | | 2023 | $2,724 | $119 | | 2024 | $2,340 | $79 | | Thereafter | $8,484 | $0 | | **Total future minimum lease payments** | **$23,490** | **$525** | [17. Subsequent Events](index=46&type=section&id=17.%20Subsequent%20Events) This note reports on significant events occurring after the reporting period, specifically the disposition of Universal Care, Inc. (UCI) by UCAP and a substantial dividend distribution by APC to its shareholders - On April 30, 2020, UCAP completed the sale of its **48.9% ownership interest** in UCI for approximately **$69.2 million** in cash proceeds and **$33.3 million** in Bright Health, Inc.'s preferred stock, plus additional escrowed amounts[269](index=269&type=chunk) - On May 4, 2020, APC's board of directors approved a **$20.0 million** dividend distribution to its shareholders, which was paid on May 6, 2020[270](index=270&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2020, highlighting significant revenue growth, changes in expenses, and an updated 2020 guidance, primarily influenced by recent acquisitions and the disposition of an investment - Total revenue for Q1 2020 was **$165.1 million**, a **72% increase** from **$95.8 million** in Q1 2019, primarily driven by the acquisitions of Alpha Care and Accountable Health Care, and the APA ACO program[285](index=285&type=chunk) - Net income attributable to Apollo Medical Holdings, Inc. increased significantly to **$4.1 million** in Q1 2020 from **$0.1 million** in Q1 2019, a **2794% increase**[282](index=282&type=chunk) Updated 2020 Guidance (in millions) | Metric | Previous Range (March 12, 2020) | Updated Range | | :----- | :------------------------------ | :------------ | | Total Revenue | $665.0 - $675.0 | $665.0 - $675.0 (Maintained) | | Net Income | $20.0 - $30.0 | $100.0 - $110.0 (Adjusted) | | EBITDA | $55.0 - $67.0 | $155.0 - $167.0 (Adjusted) | | Adjusted EBITDA | $75.0 - $90.0 | $75.0 - $90.0 (Maintained) | - The increase in net income and EBITDA guidance is primarily due to the expected gain of approximately **$80.0 million** from the sale of UCAP's **48.9% investment** in UCI, which closed on April 30, 2020[299](index=299&type=chunk) - Cash, cash equivalents, and investment in marketable securities totaled **$198.0 million** at March 31, 2020, with working capital at **$211.5 million**[305](index=305&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, specifically focusing on interest rate risk associated with its credit facility, and quantifies the potential impact of interest rate fluctuations on its financial performance - The company is exposed to interest rate risk due to **$245.3 million** in outstanding borrowings under its Credit Agreement, which bear variable interest rates[339](index=339&type=chunk) - A hypothetical **1% change** in interest rates would have increased or decreased the company's interest expense for the three months ended March 31, 2020, by **$2.5 million**[339](index=339&type=chunk) [Item 4. Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2020, despite a delay in filing the Quarterly Report on Form 10-Q due to the COVID-19 outbreak and a change in independent registered public accounting firm - Management, including Co-Chief Executive Officers and Chief Financial Officer, concluded that disclosure controls and procedures were effective as of March 31, 2020[340](index=340&type=chunk) - The filing of the Q1 2020 Form 10-Q was delayed due to circumstances related to the COVID-19 outbreak (work-from-home policy, disrupted interactions) and a change in the independent registered public accounting firm from BDO USA, LLP to Ernst & Young LLP[342](index=342&type=chunk) - No other changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the period[341](index=341&type=chunk) [PART II OTHER INFORMATION](index=60&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides additional information including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the normal course of business, primarily medical malpractice claims and contract disputes, acknowledging the inherent uncertainty in their resolution and potential material adverse effects - The company is involved in pending and threatened legal actions, mostly involving claims of medical malpractice related to services provided by affiliated hospitalists[344](index=344&type=chunk) - Many payor and provider contracts are complex and subject to differing interpretations, which may lead to claims disputes[344](index=344&type=chunk) - The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the company's financial condition, cash flows, or results of operations[344](index=344&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) This section highlights key risk factors affecting the business, emphasizing the potential adverse impact of a national or localized outbreak of a highly contagious disease, such as COVID-19, on the company's operations and financial results - The company's operations and financial results could be adversely affected by an epidemic outbreak or other public health crisis, such as the COVID-19 pandemic[347](index=347&type=chunk)[348](index=348&type=chunk) - Precautionary measures like work-from-home policies implemented due to COVID-19 may impact employee attendance, productivity, recruitment, and the ability to effectively provide management services[348](index=348&type=chunk) - An extended outbreak could disrupt critical infrastructures and supply chains for pharmaceuticals and medical supplies[348](index=348&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the issuance of common stock during the three months ended March 31, 2020, resulting from the exercise of certain warrants, which were exempt from registration under federal securities laws - During Q1 2020, the Company issued **44,356 shares** of common stock[351](index=351&type=chunk) - These shares were issued from the exercise of certain warrants at exercise prices between **$9.00** and **$10.00 per share**, generating approximately **$414,110** in proceeds[351](index=351&type=chunk) - The issuances were exempt from registration provisions of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) and/or Regulation D[351](index=351&type=chunk) [Item 3. Defaults Upon Senior Securities](index=61&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period [Item 4. Mine Safety Disclosures](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that the disclosures related to mine safety are not applicable to the company [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report under this item [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists all exhibits incorporated by reference into or filed/furnished with the Quarterly Report on Form 10-Q, including various agreements, corporate documents, and certifications - The exhibits include merger agreements, restated certificates of incorporation, amendments to bylaws, and a stock purchase agreement[354](index=354&type=chunk) - Certifications of Principal Executive Officers and Principal Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002 are filed/furnished[354](index=354&type=chunk) - XBRL (eXtensible Business Reporting Language) documents, including the Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, and Presentation Linkbase, are filed[354](index=354&type=chunk)[355](index=355&type=chunk)

Patient Care Coordination - Apollo Medical Holdings, Inc. coordinates care for over 980,000 patients in California as of December 31, 2019[19]. - The company has a network of more than 7,000 contracted physicians through independent practice associations (IPAs)[19]. - The company has a broader physician network comprising 36 additional independent contractors providing medical services as of December 31, 2019[124]. - The company’s affiliated medical groups provide hospitalist services at multiple facilities, generating revenue through administrative and clinical services[21]. - The company has developed expertise in population health management, resulting in improved Risk Adjustment Factor (RAF) scores and higher payments from health plans[87]. Revenue Streams - The company operates under one reportable segment, the healthcare delivery segment, with diversified revenue streams including capitation payments, risk pool settlements, management fees, and fee-for-service reimbursements[24]. - ApolloMed's revenue from capitation payments includes payments made by CMS from the NGACO model[24]. - Revenue streams include capitation revenue primarily from managed care providers, with payments based on the number of enrollees[66]. - Management fee income includes fees for non-medical services provided to IPAs and healthcare providers, which may vary based on performance metrics[74]. - The company participates in shared risk arrangements that can generate additional revenue based on enrollee utilization of institutional services[71]. Value-Based Care - The company emphasizes value-based healthcare focusing on patient satisfaction, high-quality care, and cost efficiency[18]. - The shift to value-based care models is driving the healthcare market to seek more efficient delivery methods, moving away from fee-for-service models[42]. - Integrated medical systems are positioned to leverage scale and expertise to improve care quality and lower costs, benefiting from industry trends[47]. - The company is positioned to benefit from trends in the U.S. healthcare industry towards value-based care, emphasizing patient satisfaction, high-quality care, and cost efficiency[18]. Regulatory Environment - The company operates under extensive regulations from federal, state, and local agencies, which could adversely affect its business and financial condition[94]. - Violations of the False Claims Act can result in fines ranging from $5,500 to $11,000 per false claim, plus treble damages[101]. - The federal Anti-Kickback Statute imposes criminal fines of up to $25,000 and civil fines of up to $50,000 per violation, along with potential exclusion from federal healthcare programs[104]. - The Stark Law prohibits physicians from referring patients to entities with which they have a financial relationship, with civil penalties of up to $15,000 per violation[109]. - The company expects increased enforcement efforts related to privacy and security regulations under HIPAA, which could lead to civil penalties ranging from $100 to $50,000 per violation[112]. - The Knox-Keene Act regulates managed care plans in California, and the company may face liabilities if found to be operating without the necessary licenses[115]. Financial Performance - The company completed a merger with NMM, resulting in NMM becoming a wholly owned subsidiary and former NMM shareholders owning over 80% of ApolloMed's common stock[20]. - The company received excess payments of approximately $34.5 million for the first performance year and approximately $7.8 million for the second performance year under the NGACO alternative payment arrangement[65]. - Four key payors accounted for 51.6%, 61.5%, and 54.6% of total net revenue for the years ended December 31, 2019, 2018, and 2017, respectively[80]. - The average monthly AIPBP received from CMS was approximately $7.3 million starting February 2018, reduced to $5.5 million in October 2018, and adjusted to approximately $3.7 million from September 2019[78]. Market Trends - U.S. healthcare expenditures are projected to grow by 5.5% annually from 2018 to 2027, reaching $6.0 trillion by 2027[39]. - Medicare spending increased by 6.4% to $750.2 billion in 2018, while Medicaid spending rose by 3.0% to $597.4 billion, accounting for 21% and 16% of total health expenditures respectively[39]. - The healthcare spending in the U.S. was approximately $3.6 trillion in 2018, representing 17.7% of the U.S. GDP[42]. - The healthcare industry is highly competitive, with significant competition from larger healthcare management companies and provider networks[88]. Operational Structure - The company operates management service organizations (MSOs) that provide administrative and management services to affiliated physician groups[26]. - The company’s integrated operations include IPAs, MSOs, and outpatient clinics, focusing on risk- and value-based care for Medicare, Medicaid, and commercial patients[22]. - The company consolidates revenue and expenses of its medical affiliates as their primary beneficiary from the execution of the MSAs[97]. - As of December 31, 2019, ApolloMed and its subsidiaries had 555 employees, including 547 full-time and 8 part-time, with an additional 141 physicians and staff employed by consolidated VIEs[124].