Apollo Medical(US:AMEH)2024-08-08 22:55PART I Item 1. Condensed Consolidated Financial Statements Astrana Health's unaudited interim financial statements for Q2 2024 detail significant growth in assets, liabilities, revenue, and expenses, largely driven by acquisitions Condensed Consolidated Balance Sheet Highlights | Financial Metric | June 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $1,252,471 thousand | $933,361 thousand | | Total Liabilities | $773,775 thousand | $522,593 thousand | | Total Equity | $683,008 thousand | $616,651 thousand | Condensed Consolidated Statements of Income (Three Months) | Income Statement (Q2) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue | $486,265 thousand | $348,209 thousand | | Income from Operations | $30,066 thousand | $27,029 thousand | | Net Income Attributable to Astrana | $19,171 thousand | $13,170 thousand | | Diluted EPS | $0.40 | $0.28 | Condensed Consolidated Statements of Income (Six Months) | Income Statement (Six Months) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue | $890,621 thousand | $685,453 thousand | | Income from Operations | $60,205 thousand | $49,403 thousand | | Net Income Attributable to Astrana | $34,006 thousand | $26,302 thousand | | Diluted EPS | $0.71 | $0.56 | Condensed Consolidated Statements of Cash Flows (Six Months) | Cash Flow (Six Months) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $29,165 thousand | $33,522 thousand | | Net Cash used in Investing Activities | ($150,964) thousand | ($19,221) thousand | | Net Cash from (used in) Financing Activities | $153,603 thousand | ($8,062) thousand | - During the first half of 2024, the company completed several acquisitions, including CFC, AHMS, ADSC, and PCCCV, with a total net consideration of approximately $203.6 million707174 - Subsequent to the quarter end, the company announced a strategic partnership with Elation Health, including a $5.0 million convertible promissory note, and a definitive agreement to acquire Collaborative Health Systems, LLC (CHS) for $37.5 million plus potential earnouts207208 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting a 40% increase in Q2 2024 revenue driven by acquisitions and growth in the Care Partners segment, alongside updated 2024 financial guidance - Total revenue increased by 40% to $486.3 million in Q2 2024, up from $348.2 million in Q2 2023, primarily due to a $142.0 million increase in capitation revenue from recent acquisitions and full-risk plan transitions227 - For the six months ended June 30, 2024, total revenue grew 30% to $890.6 million, driven by a $207.7 million increase in capitation revenue from acquisitions and full-risk arrangements228 2024 Full-Year Financial Guidance | 2024 Full-Year Guidance | Low Range | High Range | | :--- | :--- | :--- | | Total Revenue | $1,750 million | $1,850 million | | Net Income Attributable to Astrana | $54 million | $66 million | | Adjusted EBITDA | $165 million | $185 million | | EPS – Diluted | $1.12 | $1.36 | - The company announced a definitive agreement to acquire Collaborative Health Systems, LLC (CHS) from Centene for $37.5 million, expanding its footprint to 17 states and adding over 129,000 Medicare members, with closing expected in Q4 2024215217 - As of June 30, 2024, the company managed approximately 1.0 million patients through its network of over 10,000 contracted physicians and 18 independent risk-bearing organizations212226 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk from variable-rate debt under its Amended Credit Agreement, with a 1% rate change impacting interest expense by $4.5 million quarterly - The company's primary market risk is interest rate risk associated with its variable-rate Term Loan and Revolver Loan under the Amended Credit Agreement280 - As of June 30, 2024, borrowings under the Term Loan were $289.0 million and under the Revolver Loan were $146.7 million280 - A hypothetical 1% change in interest rates would have increased or decreased the company's interest expense by $4.5 million for the three months ended June 30, 2024280 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of June 30, 2024, the Chief Executive Officer and Chief Financial and Operating Officer concluded that the company's disclosure controls and procedures were effective282 - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls283 PART II Item 1. Legal Proceedings The company is involved in various legal proceedings, which management believes will not have a material adverse effect on its financial condition or operations - The company is party to various lawsuits and claims arising from its normal business operations285 - In management's opinion, the ultimate liability from these proceedings is not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows285 Item 1A. Risk Factors No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2023 - There have been no material changes in the company's risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 29, 2024287 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase shares under its public plan in Q2 2024, but repurchased a small number for employee tax withholding obligations related to vested restricted stock - During Q2 2024, no shares were repurchased under the company's publicly announced share repurchase plan, with $40.5 million remaining available as of June 30, 2024290 - The company repurchased 28,285 shares during the quarter to satisfy tax withholding obligations for employees upon the vesting of restricted stock, separate from the public repurchase program292 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities - None293 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable293 Item 5. Other Information No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans or other pre-arranged trading arrangements during Q2 2024 - During the quarter ended June 30, 2024, no directors or executive officers adopted, modified, or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement294 Item 6. Exhibits This section lists all exhibits filed or incorporated by reference, including credit agreement amendments, equity plans, and Sarbanes-Oxley Act certifications - Key exhibits filed include the Fourth Amendment to the Amended and Restated Credit Agreement, the 2024 Equity Incentive Plan, and the Securities Purchase Agreement for the acquisition of Collaborative Health Systems, LLC298 - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included299