Apollo Medical(US:AMEH)2023-05-09 04:16Financial Data and Key Metrics Changes - The company reported total revenue of $337.2 million for Q1 2023, a 28% increase from $263.3 million in the prior year quarter [20][24] - Adjusted EBITDA for the period was $29.8 million, with reported EBITDA of $24 million, up 1.2% from $23.7 million in the prior year [24] - Net income attributable to Apollo Med was $14.6 million, a 3% increase from $14.3 million in Q1 2022, with diluted earnings per share remaining flat at $0.31 [24] Business Segment Data and Key Metrics Changes - Care enablement segment revenue was $30.6 million, a 4% increase from $29.4 million in the prior year, but operating income decreased by 49.3% to $5.7 million due to investments in infrastructure and technology [21] - Care partners segment revenue increased by 30.4% to $314.7 million, with operating income rising 28.2% to $22.3 million, driven by organic membership growth and a favorable payer mix [22] - Care delivery segment revenue rose by 24.9% to $25.4 million, but the segment reported an operating loss of $1 million compared to an operating income of $1.1 million in the prior year due to expansion investments [23] Market Data and Key Metrics Changes - Membership under management in the care enablement segment was approximately 1.3 million, with about 650,000 members also in the care partners business [21] - The company has seen a 120% increase in unique members in newer markets like Nevada and Texas since acquiring Valley Oaks Medical Group [11] Company Strategy and Development Direction - The company is focused on growing membership in core and new geographies, moving members towards global risk contracts, and enabling providers to deliver excellent patient outcomes [10][12] - Recent acquisitions, including For Your Benefit, will allow the company to take on global risk for professional and institutional costs, enhancing its care coordination capabilities [12] - The company is also investing in the care delivery ecosystem through venture investments in innovative solutions for value-based care [14] Management's Comments on Operating Environment and Future Outlook - Management reiterated full-year 2023 guidance for both revenue and net income, emphasizing confidence in growth despite recent developments [18] - The company is streamlining operations and organizational structure to ensure profitability and margins remain on track [17] - Management expressed optimism about the long-term prospects of the business and operational strategy [26] Other Important Information - The company ended Q1 2023 with $274.6 million in cash and cash equivalents, down from $288 million at the end of 2022, while total stockholders' equity increased to $563.2 million [25] - The company repurchased $9.5 million worth of shares during the first quarter as part of a $50 million share repurchase authorization [25] Q&A Session Summary Question: Insights on G&A investments and care enablement - Management discussed investments in analytics and software engineering, which have contributed to increased G&A, and expect revenue to offset these costs in the near future [31][32] Question: Impact of Medicaid redetermination - Management indicated that the impact of Medicaid redetermination is included in guidance, with expectations to capture many members during the process [35] Question: LaSalle Medical Group contract termination - The termination was due to pricing terms not supporting long-term margins, which are typically in the 20% to 30% range [38] Question: Workforce trimming and Medicare pressures - Management confirmed a potential 5% workforce reduction to ensure robust margins in the care enablement business, with no significant pressure observed in the Medicare segment [42] Question: Opportunities with the Restricted Knox-Keene license - Management highlighted plans to operationalize the license across California, expecting initial breakeven results with long-term margin alignment [46][49] Question: ACO REACH program performance - Management noted that the ACO REACH program is currently breakeven, with ongoing evaluations to determine its long-term viability [56] Question: Timing for converting capitated lives under Knox-Keene - Management indicated that the conversion will be phased in over the next 18 to 24 months, with expectations for gradual revenue and EBITDA growth [59][61]