Investments in Other Entities — Equity Method

Rollforward of Equity Method Investment (in thousands)



	December 31, 2019		Allocation of Income (Loss)			Contribution		March 31, 2020
LaSalle Medical Associates – IPA Line of Business	$	6,397	$	(643	)	$	—	$	5,754
Pacific Medical Imaging & Oncology Center, Inc.	1,396		87			—		1,483
Universal Care, Inc.	1,438		2,670			—		4,108
Diagnostic Medical Group	2,334		(5		)	—		2,329
531 W. College, LLC – related party	16,698		(111		)	300		16,887
MWN, LLC – related party	164		56			—		220
	$	28,427	$	2,054		$	300	$	30,781

LaSalle Medical Associates — IPA Line of Business

LMA was founded by Dr. Albert Arteaga in 1996 and currently operates six neighborhood medical centers through its network of more than 2,300 PCP and Specialists providers, treating children, adults and seniors in San Bernardino County, California. LMA’s patients are primarily served by Medi-Cal and they also accept Blue Cross, Blue Shield, Molina, Care 1st, Health Net and Inland Empire Health Plan. LMA is also an IPA of independently contracted doctors, hospitals and clinics, delivering high-quality care to more than 295,000 patients in Fresno, Kings, Los Angeles, Madera, Riverside, San Bernardino and Tulare Counties. During 2012, APC-LSMA and LMA entered into a share purchase agreement whereby APC-LSMA invested $5.0 million for a 25% interest in LMA’s IPA line of business. NMM has a management services agreement with LMA. APC accounts for its investment in LMA under the equity method as APC has the ability to exercise significant influence, but not control over LMA’s operations. For the three months ended March 31, 2020 and 2019, APC recorded losses from this investment of $0.6 million and $1.1 million, respectively, in the accompanying consolidated statements of income. The accompanying consolidated balance sheets include the related investment balance of $5.8 million and $6.4 million at March 31, 2020 and December 31, 2019, respectively.

LMA’s summarized balance sheets at March 31, 2020 and December 31, 2019 and summarized statements of operations for the three months ended March 31, 2020 and 2019 with respect to its IPA line of business are as follows (in thousands):

Balance Sheets



	March 31, 2020			December 31, 2019
Assets

Cash and cash equivalents	$	—		$	6,345
Receivables, net	8,901			5,124
Other current assets	3,380			3,526
Loan receivable	2,250			2,250
Restricted cash	686			683

Total assets	$	15,217		$	17,928

Liabilities and Stockholders’ (Deficit) Equity
Current liabilities	$	23,390		$	23,530
Stockholders’ deficit	(8,173		)	(5,602		)

Total liabilities and stockholders’ deficit	$	15,217		$	17,928

Statements of Operations



	Three Months Ended March 31,
	2020			2019

Revenues	$	46,304		$	46,406
Expenses	48,730			50,702

Net loss	$	(2,426	)	$	(4,296	)

Pacific Medical Imaging and Oncology Center, Inc.

Incorporated in California in 2004, PMIOC provides comprehensive diagnostic imaging services using state-of-the-art technology. PMIOC offers high-quality diagnostic services, such as MRI/MRA, PET/CT, CT, nuclear medicine, ultrasound, digital x-rays, bone densitometry and digital mammography, at its facilities.

In July 2015, APC-LSMA and PMIOC entered into a share purchase agreement whereby APC-LSMA invested $1.2 million for a 40% ownership interest in PMIOC.

APC and PMIOC have an Ancillary Service Contract together whereby PMIOC provides covered services on behalf of APC to enrollees of the plans of APC. Under the Ancillary Service Contract, APC paid PMIOC fees of approximately $0.6 million and $0.7 million, for the three months ended March 31, 2020 and 2019, respectively. APC accounts for its investment in PMIOC under the equity method of accounting as APC has the ability to exercise significant influence, but not control over PMIOC’s operations. During the three months ended March 31, 2020 and 2019, APC recorded income from this investment of approximately $0.1 million and $0.1 million, respectively, in the accompanying consolidated statements of income and has investment balances of $1.5 million and $1.4 million at March 31, 2020 and December 31, 2019, respectively.

Universal Care, Inc.

UCI is a privately held health plan that has been in operation since 1985. UCI holds a license under the California Knox-Keene Health Care Services Plan Act to operate as a full-service health plan. UCI contracts with CMS under the Medicare Advantage Prescription Drug Program.

On August 10, 2015, UCAP purchased 100,000 shares of UCI class A-2 voting common stock from UCI for $10.0 million, which shares comprise 48.9% of UCI's total outstanding shares and 50% of UCI’s voting common stock. APC accounts for its investment in UCI under the equity method of accounting as APC has the ability to exercise significant influence, but not control over UCI’s operations. During the three months ended March 31, 2020 and 2019, the Company recorded income from this investment of approximately $2.7 million and $1.0 million, respectively, in the accompanying consolidated statements of income and had investment balances of $4.1 million and $1.4 million at March 31, 2020 and December 31, 2019, respectively.

On April 30, 2020, UCAP completed its disposition of its 48.9% ownership interest in UCI to Bright for approximately $69.2 million in cash proceeds (including $16.5 million as repayment of indebtedness owed to APC), plus non-cash consideration consisting of shares of Bright Health, Inc.’s preferred stock having a stipulated value of approximately $33.3 million. In addition, pursuant to the terms of the SPA, upon release from escrow, APC is entitled to receive all or that portion of the following escrowed amounts that 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 (see Note 17).

UCI’s balance sheets at March 31, 2020 and December 31, 2019 and statements of income for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

Balance Sheets



	March 31, 2020			December 31, 2019
Assets

Cash	$	34,757		$	33,890
Receivables, net	83,454			63,843
Other current assets	43,417			38,280
Other assets	885			882
Property and equipment, net	4,429			4,021

Total assets	$	166,942		$	140,916

Liabilities and Stockholders’ (Deficit) Equity
Current liabilities	$	148,902		$	128,330
Other liabilities	33,126			33,133
Stockholders’ deficit	(15,086		)	(20,547		)

Total liabilities and stockholders’ deficit	$	166,942		$	140,916

Statements of Income



	Three Months Ended March 31,
	2020		2019
Revenues	$	146,481	$	113,319
Expenses	141,771		111,408

Income before benefit from income taxes	4,710		1,911
Benefit from income taxes	—		(211		)

Net income	$	4,710	$	2,122

Diagnostic Medical Group

In May 2016, David C.P. Chen M.D., individually, and APC-LSMA, entered into a share purchase agreement whereby APC-LSMA acquired a 40% ownership interest in DMG.

APC accounts for its investment in DMG under the equity method of accounting as APC has the ability to exercise significant influence, but not control over DMG’s operations. For the three months ended March 31, 2020 and 2019, APC recorded losses and income from this investment of $5,244 and $0.2 million, respectively, in the consolidated statements of income. The accompanying consolidated balance sheets include the related investment balances of $2.3 million as of March 31, 2020 and December 31, 2019, respectively.

531 W. College LLC – Related Party

In June 2018, College Street Investment LP, a California limited partnership (“CSI”), APC and NMM entered into an operating agreement to govern the limited liability company, 531 W. College, LLC and the conduct of its business, and to specify their relative rights and obligations. CSI, APC and NMM, each owns 50%, 25% and 25%, respectively, of member units based on initial capital contributions of $16.7 million, $8.3 million, and $8.3 million, respectively.

On June 29, 2018, 531 W. College, LLC closed its purchase of a non-operational hospital located in Los Angeles from Societe Francaise De Bienfaisance Mutuelle De Los Angeles, a California nonprofit corporation, for a total purchase price of $33.3 million. On April 23, 2019, NMM and APC entered into an agreement whereby NMM assigned and APC assumed NMM's 25% membership interest in 531 W. College, LLC for approximately $8.3 million. Subsequently, APC has a 50% ownership in 531 W. College LLC with a total investment balance of approximately $16.9 million.

APC accounts for its investment in 531 W. College, LLC under the equity method of accounting as APC has the ability to exercise significant influence, but not control over the operations of this joint venture. For the three months ended March 31, 2020 and March 31, 2019, APC recorded losses of $0.1 million and $46,968, respectively, in the accompanying consolidated statements of income. During the period ended March 31, 2020, the Company contributed $0.3 million to 531 W. College LLC as part of its 50% interest and had investment balances of $16.9 million and $16.7 million, respectively, at March 31, 2020 and December 31, 2019.

531 W. College LLC’s balance sheets at March 31, 2020 and December 31, 2019 and statements of operations for the three months ended March 31, 2020 and 2019 are as follows (in thousands):

Balance Sheets



	March 31, 2020		December 31, 2019
Assets

Cash	$	48	$	139
Other current assets	124		17
Other assets	70		70
Property and equipment, net	33,697		33,581

Total assets	$	33,939	$	33,807

Liabilities and Members’ Equity

Current liabilities	$	1,114	$	1,062
Stockholders’ equity	32,825		32,745

Total liabilities and members’ equity	$	33,939	$	33,807

Statements of Operation



	Three Months Ended March 31,
	2020			2019
Revenues	—			—
Expenses	338			469
Loss from operations	(338		)	(469		)

Other income	$	21		$	289

Net loss	$	(317	)	$	(180	)

MWN LLC – Related Party

On December 18, 2018, NMM, 6 Founders LLC, a California limited liability company doing business as Pacific6 Enterprises (“Pacific6”), and Health Source MSO Inc., a California corporation (“HSMSO”) entered into an operating agreement to govern MWN Community Hospital, LLC and the conduct of its business and to specify their relative rights and obligations. NMM, Pacific6, and HSMSO each own 33.3% of the membership shares based on each member’s initial capital contributions of $3,000 and working capital contributions of $30,000. NMM invested an additional $0.3 million for working capital purposes in August, 2019. For the three months ended March 31, 2020, NMM recorded income from its investment in MWN LLC of $0.1 million in the accompanying consolidated statements of income and had an investment balance of $0.2 million as of March 31, 2020 and December 31, 2019.

Investment in privately held entity that does not report net asset value per share

MediPortal, LLC

In May 2018, APC purchased 270,000 membership interests of MediPortal LLC, a New York limited liability company, for $0.4 million or $1.50 per membership interest, which represented an approximately 2.8% ownership interest. In connection with the initial purchase, APC received a five-year warrant to purchase an additional 270,000 membership interests. Additionally, APC received a five-year option to purchase an additional 380,000 membership interests and a five-year warrant to purchase 480,000 membership interests, which MediPortal LLC will grant APC upon completion of its health portal. As of March 31, 2020, the health portal has not been completed. As APC does not have the ability to exercise significant influence, and lacks control, over the investee, this investment is accounted for using a measurement alternative which allows the investment to be measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.

AchievaMed

On July 1, 2019, NMM and AchievaMed, Inc., a California corporation ("AchievaMed"), entered into an agreement in which NMM would purchase 50% of the aggregate shares of capital stock of AchievaMed over a period of time not to exceed five years. As a result of this transaction NMM invested $0.5 million for a 10% interest. The related investment balance of $0.5 million is included in "Investment in privately held entities" in the accompanying consolidated balance sheets as of March 31, 2020.