EX-99.1 3 tm2018794d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

 

APOLLO MEDICAL HOLDINGS, INC.

 

SUMMARY OF UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

 

Overview

 

The following unaudited pro forma consolidated financial information is presented to give effect to the sale (the “Sale”), on April 30, 2020, by Universal Care Acquisition Partners, LLC, a Delaware limited liability company (“UCAP”) to Bright Health Company of California, Inc., a California corporation (“Bright”), of all of UCAP’s shares of capital stock in Universal Care, Inc., a California corporation doing business as Brand New Day ("Universal"). The transaction was previously described in the Current Report on Form 8-K filed on January 7, 2020, by Apollo Medical Holdings, Inc., a Delaware corporation (the “Company”), with the U.S. Securities and Exchange Commission (the “SEC”). For a discussion of the consideration paid to UCAP in connection with the Sale, please refer to the Current Report on Form 8-K to which this Exhibit 99.1 is attached.

 

UCAP has a 48.9% ownership interest in Universal (the “Percentage Interest”). UCAP is a wholly-owned subsidiary of Allied Physicians of California, a Professional Medical Corporation dba Allied Pacific of California IPA (“APC”), and both are consolidated variable interest entities of the Company. As set forth in the Company’s definitive proxy statement filed with the SEC on July 31, 2019 (the “Proxy Statement”), the Percentage Interest is an “Excluded Asset” that remains solely for the benefit of APC and its shareholders. As such, any proceeds or gain on the sale of APC’s indirect ownership interest in Universal will have no impact on the Series A Dividend payable by APC to AP-AMH Medical Corporation as described in the Proxy Statement and consequently the sale will not affect net income attributable to the Company.

 

Basis of preparation

 

The following unaudited pro forma consolidated financial information was based on and derived from the Company’s historical consolidated financial statements, adjusted for those amounts which were determined to be directly attributable to the Sale that are factually supportable in accordance with U.S. generally accepted accounting principles, which are subject to change and interpretation. Actual adjustments may also differ materially from the information presented. In addition, the unaudited pro forma consolidated financial information is based upon available information and assumptions that management considers to be reasonable, and such assumptions have been made solely for purposes of developing such unaudited pro forma consolidated financial information for illustrative purposes in compliance with the disclosure requirements of the SEC. The unaudited pro forma consolidated financial information is not necessarily indicative of what the financial position or income statement results would have actually been had the Sale occurred on the date indicated. In addition, this unaudited pro forma consolidated financial information should not be considered to be indicative of the Company’s future consolidated financial performance and income statement results.

 

The unaudited pro forma consolidated financial information should be read in conjunction with (i) the accompanying notes to the unaudited pro forma consolidated financial information; and (ii) the Company’s historical consolidated financial statements and accompanying notes in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC on March 16, 2020.

 

The following unaudited pro forma consolidated financial information is being presented to give effect to the Sale by reflecting the Company’s results as if the Sale had occurred on January 1, 2019 and does not assume any interest income on cash proceeds:

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2019

 

 

       Pro Forma       
   As Reported (A)   Adjustment     Pro Forma 
Assets                 
                  
Current assets                 
Cash and cash equivalents  $103,189,328   $69,242,988  (B)  $172,432,316 
Restricted cash   75,000    —      75,000 
Investment in marketable securities   116,538,673    —      116,538,673 
Receivables, net   11,003,563    —      11,003,563 
Receivables, net – related parties   48,136,313    —      48,136,313 
Other receivables   16,885,448    21,515,994  (B)   38,401,442 
Prepaid expenses and other current assets   10,315,093    —      10,315,093 
Loans receivable   6,425,000    —      6,425,000 
Loans receivable - related parties   16,500,000    (16,500,000) (C)   — 
                  
Total current assets   329,068,418    74,258,982      403,327,400 
                  
Noncurrent assets                 
Land, property and equipment, net   12,129,901    —      12,129,901 
Intangible assets, net   103,011,849    —      103,011,849 
Goodwill   238,505,204    —      238,505,204 
Loans receivable – related parties   —    —      — 
Investments in other entities – equity method   28,427,455    (1,438,199) (D)   26,989,256 
Investments in privately held entities   896,000    33,251,997  (B)   34,147,997 
Restricted cash   746,104    —      746,104 
Operating lease right-of-use assets   14,247,727    —      14,247,727 
Other assets   1,680,689    —      1,680,689 
                  
Total noncurrent assets   399,644,929    31,813,798      431,458,727 
                  
Total assets  $728,713,347   $106,072,780     $834,786,127 

 

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2019

             

 

       Pro Forma       
   As Reported (A)   Adjustment     Pro Forma 
Liabilities, Mezzanine Equity and Shareholders’ Equity                 
                  
Current liabilities                 
Accounts payable and accrued expenses  $27,279,579   $—     $27,279,579 
Fiduciary accounts payable   2,027,081    —      2,027,081 
Medical liabilities   58,724,682    —      58,724,682 
Income taxes payable   4,528,867    22,275,284  (F)   26,804,151 
Bank loan   —    —      — 
Dividend payable   271,279    —      271,279 
Finance lease liabilities   101,741    —      101,741 
Operating lease liabilities   2,990,686    —      2,990,686 
Current portion of long term debt   9,500,000    —      9,500,000 
                  
Total current liabilities   105,423,915    22,275,284      127,699,199 
                  
Noncurrent liabilities                 
Lines of credit - related party   —    —      — 
Deferred tax liability   18,269,448    —      18,269,448 
Liability for unissued equity shares   —    —      — 
Finance lease liabilities, net of current portion   415,519    —      415,519 
Operating lease liabilities, net of current portion   11,372,597    —      11,372,597 
Long-term debt, net of current portion and deferred financing costs   232,172,134    —      232,172,134 
                  
Total noncurrent liabilities   262,229,698    —      262,229,698 
                  
Total liabilities   367,653,613    22,275,284      389,928,897 
                  
Mezzanine equity                 
Noncontrolling interest in Allied Physicians of California, a Professional Medical Corporation ("APC")   168,724,586    83,797,496      252,522,082 
                  
Shareholders’ 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   —    —      — 

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2019

 

       Pro Forma       
   As Reported (A)   Adjustment     Pro Forma 
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, par value $0.001; 100,000,000 shares authorized, 35,908,057 and 34,578,040 shares outstanding, excluding 17,458,810 and 1,850,603 Treasury shares, at December 31, 2019 and 2018, respectively   35,908    —      35,908 
Additional paid-in capital   159,608,293    —      159,608,293 
Retained earnings   31,904,748    —      31,904,748 
    191,548,949    —      191,548,949 
                  
Noncontrolling interest   786,199    —      786,199 
                  
Total shareholders’ equity   192,335,148    —      192,335,148 
                  
Total liabilities, mezzanine equity and shareholders’ equity  $728,713,347   $106,072,780     $834,786,127 

 

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2019

                       

 

       Pro Forma       
   As Reported (A)   Adjustment     Pro Forma 
Revenue                 
Capitation, net  $454,168,024   $—     $454,168,024 
Risk pool settlements and incentives   51,097,661    —      51,097,661 
Management fee income   34,668,358    —      34,668,358 
Fee-for-service, net   15,475,264    —      15,475,264 
Other income   5,208,790    —      5,208,790 
                  
Total revenue   560,618,097    —      560,618,097 
                  
Operating expenses                 
Cost of services   467,804,899    —      467,804,899 
General and administrative expenses   41,482,375    —      41,482,375 
Depreciation and amortization   18,280,198    —      18,280,198 
Provision for doubtful accounts   (1,363,363)   —      (1,363,363)
Impairment of goodwill and intangible assets   1,994,000    —      1,994,000 
                  
Total expenses   528,198,109    —      528,198,109 
                  
Income from operations   32,419,988    —      32,419,988 
                  
Other (expense) income                 
(Loss) income from equity method investments   (6,900,859)   106,072,780  (E)   99,171,921 
Interest expense   (4,733,256)   —      (4,733,256)
Interest income   2,023,873    —      2,023,873 
Other income   3,030,203    —      3,030,203 
                  
Total other (expense) income, net   (6,580,039)   106,072,780      99,492,741 
                  
Income before provision for income taxes   25,839,949    106,072,780      131,912,729 
                  
Provision for income taxes   8,166,632    22,275,284  (F)   30,441,916 
                  
Net income   17,673,317    83,797,496      101,470,813 
                  
Net income attributable to noncontrolling interests   3,556,772    83,797,496      87,354,268 
                  
Net income attributable to Apollo Medical Holdings, Inc.  $14,116,545   $—     $14,116,545 
                  

 

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2019

 

       Pro Forma       
   As Reported (A)   Adjustment     Pro Forma 
Earnings per share – basic  $0.41   $—     $0.41 
                  
Earnings per share – diluted  $0.39   $—     $0.39 
                  
Weighted average shares of common stock outstanding – basic   34,708,429    34,708,429      34,708,429 
                  
Weighted average shares of common stock outstanding – diluted   36,403,279    36,403,279      36,403,279 

 

 

This unaudited pro forma consolidated financial information should be read in conjunction with the accompanying footnotes.

 

 

 

 

APOLLO MEDICAL HOLDINGS, INC.

 

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

 

 

The Company's unaudited pro forma consolidated financial information as of December 31, 2019 and for the year ended December 31, 2019 include the following adjustments:

 

(A) As reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC on March 16, 2020.

 

(B) Pro Forma adjustments includes receipt of cash consideration, shares of Bright Health, Inc.’s preferred stock, and the following escrowed amounts to the extent such escrowed amounts have not been offset or reserved for claims: (i) cash consideration of approximately $15.6 million, plus (ii) non-cash consideration consisting of shares of Bright Health, Inc.’s preferred stock having a stipulated value of approximately $5.9 million.

 

(C) Pro Forma adjustments includes repayment of indebtedness owed to APC.

 

(D) Pro Forma adjustments includes return of investment resulting from the sale of all of UCAP’s shares of capital stock in Universal. UCAP’s shares of capital stock in Universal have been treated as an equity method investments and, as such, there were no discontinued operations in connection with such sale.

 

(E) Represents the pro forma adjustment of the gain resulting from the sale of all of UCAP’s shares of capital stock in Universal on income from investments.

 

(F) Represents the tax impact on the pro forma adjustment of the gain resulting from the sale of all of UCAP’s shares of capital stock in Universal on income from investments.