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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  ___ to ___.
Commission File No. 001-37392
B_montserrat (002).jpg
Apollo Medical Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware95-4472349
(State or Other Jurisdiction(I.R.S. Employer
of Incorporation)Identification Number)
1668 S. Garfield Avenue, 2nd Floor, Alhambra, California 91801
(Address of principal executive offices and zip code)
(626) 282-0288
(Registrant’s telephone number, including area code) 
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share
AMEH
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes     No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes     No




As of October 31, 2023, there were 58,283,589 shares of common stock of the registrant, $0.001 par value per share, issued and outstanding which includes 10,299,259 treasury shares that are owned by Allied Physicians of California, a Professional Medical Corporation d.b.a. Allied Pacific of California IPA (“APC”), a consolidated affiliate of Apollo Medical Holdings, Inc. These shares are legally issued and outstanding, but treated as treasury shares for accounting purposes.



APOLLO MEDICAL HOLDINGS, INC.
INDEX TO FORM 10-Q FILING
TABLE OF CONTENTS
PAGE
3


Glossary

The following abbreviations or acronyms that may be used in this document shall have the adjacent meanings set forth below:
120 Hellman 120 Hellman LLC
Accountable Health CareAccountable Health Care IPA, a Professional Medical Corporation
AAMGAll-American Medical Group
ACO Reach
ACO Realizing Equity, Access, and Community Health
AHMCAHMC Healthcare Inc.
AIPBPAll-Inclusive Population-Based Payments
AKMAKM Medical Group, Inc.
Alpha CareAlpha Care Medical Group, Inc.
AMGAMG, a Professional Medical Corporation
AMG PropertiesAMG Properties, LLC
AMHApolloMed Hospitalists, a Medical Corporation
AMMApollo Medical Management, Inc.
AP-AMHAP-AMH Medical Corporation
AP-AMH 2AP-AMH 2 Medical Corporation
APAACOAPA ACO, Inc.
APCAllied Physicians of California, a Professional Medical Corporation
APCMGAccess Primary Care Medical Group
APC-LSMAAPC-LSMA Designated Shareholder Medical Corporation
BAHABay Area Hospitalist Associates
CAIPA MSOCAIPA MSO, LLC
CDSCConcourse Diagnostic Surgery Center, LLC
CMSCenters for Medicare & Medicaid Services
DMHCCalifornia Department of Managed Healthcare
DMGDiagnostic Medical Group of Southern California
GPDCGlobal and Professional Direct Contracting
HSMSOHealth Source MSO Inc., a California corporation
ICCAHMC International Cancer Center, a Medical Corporation
IPAindependent practice association
JadeJade Health Care Medical Group, Inc.
LMALaSalle Medical Associates
MMGMaverick Medical Group, Inc.
MPPMedical Property Partners, LLC
MSSPMedicare Shared Savings Program
NGACONext Generation Accountable Care Organization
NMMNetwork Medical Management, Inc.
PMIOCPacific Medical Imaging and Oncology Center, Inc.
SCHCSouthern California Heart Centers
Sun LabsSun Clinical Laboratories
Tag 6Tag-6 Medical Investments Group, LLC
Tag 8Tag-8 Medical Investments Group, LLC
UCAPUniversal Care Acquisition Partners, LLC
UCIUniversal Care, Inc.
VIEvariable interest entity
ZLLZLL Partners, LLC
4



INTRODUCTORY NOTE
Unless the context dictates otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “we,” “us,” “our,” and similar words are references to Apollo Medical Holdings, Inc., a Delaware corporation (“ApolloMed”), and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
The Centers for Medicare & Medicaid Services (“CMS”) have not reviewed any statements contained in this Report, including statements describing the participation of APA ACO, Inc. (“APAACO”) in the Global and Professional Direct Contracting Model (“GPDC Model’) or the ACO Realizing Equity, Access, and Community Health Model (“ACO REACH Model”).
Trade names and trademarks of ApolloMed and its subsidiaries referred to herein, and their respective logos, are our property. This Quarterly Report on Form 10-Q may contain additional trade names and/or trademarks of other companies, which are the property of their respective owners. We do not intend our use or display of other companies’ trade names and/or trademarks, if any, to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.
NOTE ABOUT FORWARD-LOOKING STATEMENTS
    This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any statements about our business, financial condition, operating results, plans, objectives, expectations, and intentions, any projections of earnings, revenue, earnings before interest, taxes, depreciation, and amortization (“EBITDA”), Adjusted EBITDA, or other financial items, such as our projected capitation from CMS, our forward-looking guidance and our future liquidity; any statements of any plans, strategies, and objectives of management for future operations, such as the material opportunities that we believe exist for our Company; any statements concerning proposed services, developments, mergers, or acquisitions; any statements with respect to dividends or stock repurchases and timing, methods, and payment of same; any statements regarding the outlook on the GPDC Model, ACO REACH Model, or strategic transactions; any statements regarding management’s view of future expectations and prospects for us; any statements about prospective adoption of new accounting standards or effects of changes in accounting standards; any statements regarding our efforts to remediate the material weakness in our internal control over financial reporting and the timing of remediation; any statements regarding future economic conditions or performance; any statements of belief; any statements of assumptions underlying any of the foregoing; and other statements that are not historical facts. Forward-looking statements may be identified by the use of forward-looking terms, such as “anticipate,” “could,” “can,” “may,” “might,” “potential,” “predict,” “should,” “estimate,” “expect,” “project,” “believe,” “think,” “plan,” “envision,” “intend,” “continue,” “target,” “seek,” “contemplate,” “budgeted,” “will,” or “would,” and the negative of such terms, other variations on such terms or other similar or comparable words, phrases, or terminology. These forward-looking statements present our estimates and assumptions only as of the date of this Quarterly Report on Form 10-Q and are subject to change.
Forward-looking statements involve risks and uncertainties, many of which are difficult to predict and are outside of our control, and are based on the current beliefs, expectations, and certain assumptions of management. Some or all of such beliefs, expectations, and assumptions may not materialize or may vary significantly from actual results. Such statements are qualified by important economic, competitive, governmental, and technological factors that could cause our business, strategy, or actual results or events to differ materially from those in our forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in our Annual Report on Form 10-K/A for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on August 9, 2023, including the risk factors discussed under the heading “Risk Factors” in Part I, Item IA thereof, and those discussed in this Quarterly Report on Form 10-Q, including the risk factors discussed under the heading “Risk Factors” in Part II, Item 1A. Although we believe the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change, and significant risks and uncertainties that could cause actual conditions, outcomes, and results to differ materially from those indicated by such statements. Any forward-looking statement made by the Company in this Form 10-Q speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
5



PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
6


APOLLO MEDICAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

September 30,
2023
December 31,
2022
(Unaudited)As restated
Assets
Current assets
Cash and cash equivalents$273,941 $288,027 
Investments in marketable securities3,021 5,567 
Receivables, net95,892 49,631 
Receivables, net – related parties86,948 65,147 
Other receivables1,501 1,834 
Prepaid expenses and other current assets13,953 14,798 
Loans receivable 973 996 
Loan receivable – related party 2,125 
Total current assets
476,229 428,125 
Non-current assets
Land, property, and equipment, net128,575 108,536 
Intangible assets, net74,209 76,861 
Goodwill275,528 269,053 
Income taxes receivable15,943 15,943 
Loan receivable, non-current25,040  
Investments in other entities – equity method44,428 40,299 
Investments in privately held entities2,896 896 
Restricted cash345  
Operating lease right-of-use assets21,482 20,444 
Other assets8,586 6,056 
Total non-current assets597,032 538,088 
Total assets(1)
$1,073,261 $966,213 
Liabilities, mezzanine equity and equity
Current liabilities
Accounts payable and accrued expenses$53,136 $49,562 
Fiduciary accounts payable6,257 8,065 
Medical liabilities97,519 81,255 
Income taxes payable30,112 4,279 
Dividend payable638 664 
Finance lease liabilities655 594 
Operating lease liabilities3,528 3,572 
7


September 30,
2023
December 31,
2022
(Unaudited)As restated
Current portion of long-term debt2,991 619 
Other liabilities 8,121  
Total current liabilities
202,957 148,610 
Non-current liabilities
Deferred tax liability12,145 14,217 
Finance lease liabilities, net of current portion1,195 1,275 
Operating lease liabilities, net of current portion21,006 19,915 
Long-term debt, net of current portion and deferred financing costs206,213 203,389 
Other long-term liabilities14,105 20,260 
Total non-current liabilities254,664 259,056 
Total liabilities(1)
457,621 407,666 
Commitments and contingencies (Note 12)

Mezzanine equity
Non-controlling interest in Allied Physicians of California, a Professional Medical Corporation17,931 14,237 
Stockholders’ equity
Series A Preferred stock, $0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series B Preferred stock); 1,111,111 issued and zero outstanding
  
Series B Preferred stock, $0.001 par value per share; 5,000,000 shares authorized (inclusive of all preferred stock, including Series A Preferred stock); 555,555 issued and zero outstanding
  
Common stock, $0.001 par value per share; 100,000,000 shares authorized, 46,607,356 and 46,575,699 shares issued and outstanding, excluding 10,569,340 and 10,299,259 treasury shares, as of September 30, 2023 and December 31, 2022, respectively
47 47 
Additional paid-in capital362,889 360,097 
Retained earnings230,778 182,417 
Total stockholders’ equity593,714 542,561 
Non-controlling interest3,995 1,749 
Total equity597,709 544,310 
Total liabilities, mezzanine equity and equity$1,073,261 $966,213 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8


(1)The Company’s consolidated balance sheets include the assets and liabilities of its consolidated VIEs. The consolidated balance sheets include total assets that can be used only to settle obligations of the Company’s consolidated VIEs totaling $554.0 million and $523.7 million as of September 30, 2023 and December 31, 2022, respectively, and total liabilities of the Company’s consolidated VIEs for which creditors do not have recourse to the general credit of the primary beneficiary of $142.4 million and $131.8 million as of September 30, 2023 and December 31, 2022, respectively. The VIE balances do not include $317.7 million of investment in affiliates and $16.3 million of amounts due to affiliates as of September 30, 2023 and $304.8 million of investment in affiliates and $30.3 million of amounts due from affiliates as of December 31, 2022 as these are eliminated upon consolidation and not presented within the consolidated balance sheets. See Note 16 — “Variable Interest Entities (VIEs)” for further detail.
9


APOLLO MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
10


Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
(Restated)(Restated)
Revenue
Capitation, net$305,678 $227,571 $906,430 $677,253 
Risk pool settlements and incentives15,022 64,849 48,605 101,717 
Management fee income9,898 10,030 32,287 30,487 
Fee-for-service, net15,892 12,859 41,216 35,694 
Other revenue1,683 1,692 5,087 4,804 
Total revenue348,173 317,001 1,033,625 849,955 
Operating expenses
Cost of services, excluding depreciation and amortization275,375 240,768 857,648 691,566 
General and administrative expenses29,410 21,388 74,648 53,224 
Depreciation and amortization4,305 4,754 12,846 13,480 
Total expenses309,090 266,910 945,142 758,270 
Income from operations39,083 50,091 88,483 91,685 
Other income (expense)
(Loss) income from equity method investments(2,104)1,452 3,104 4,397 
Interest expense(3,779)(2,422)(10,680)(5,348)
Interest income3,281 223 9,617 690 
Unrealized loss on investments(342)(6,763)(5,875)(17,591)
Other income (expense)1,876 (1,318)4,265 2,328 
Total other (expense) income, net(1,068)(8,828)431 (15,524)
Income before provision for income taxes38,015 41,263 88,914 76,161 
Provision for income taxes10,042 17,366 30,971 29,537 
Net income27,973 23,897 57,943 46,624 
Net income (loss) attributable to non-controlling interest5,914 712 9,582 (2,275)
Net income attributable to Apollo Medical Holdings, Inc.$22,059 $23,185 48,361 $48,899 
Earnings per share – basic$0.47 $0.52 $1.04 $1.09 
Earnings per share – diluted$0.47 $0.50 $1.03 $1.06 
Weighted average shares used in computing earnings per share:
Basic
46,547,502 44,946,725 46,527,350 44,795,295 
Diluted
46,920,607 46,152,536 46,881,567 45,993,001 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
11


APOLLO MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF MEZZANINE AND STOCKHOLDERS’ EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
Mezzanine
Equity –
Non-controlling
Interest in APC
Retained
Earnings
Common Stock Outstanding
Additional
Paid-in 
Capital
Non-controlling
Interest
Stockholders’
Equity
SharesAmount
Balance at January 1, 2023 (restated)$14,237 46,575,699 $47 $360,097 $182,417 $1,749 $544,310 
Net (loss) income (restated)(1,729)— — — 13,132 1,085 14,217 
Shares issued for vesting of restricted stock awards— 57,825 — (109)— — (109)
Shares issued for exercise of options and warrants— 125,000 — 1,250 — — 1,250 
Purchase of treasury shares— (270,081)— (9,539)— — (9,539)
Share-based compensation— — — 3,445 — — 3,445 
Dividends— — — — — (120)(120)
Transfer of common control entities (restated)1,769 — — (2,447)— — (2,447)
Balance at March 31, 2023 (restated)$14,277 46,488,443 $47 $352,697 $195,549 $2,714 $551,007 
Net income3,245 — — — 13,170 1,067 14,237 
Purchase of non-controlling interest— — — — — (50)(50)
Sale of non-controlling interest— — — — — 106 106 
Shares issued for vesting of restricted stock awards— 42,734 — (464)— — (464)
Share-based compensation— — — 4,213 — — 4,213 
Issuance of shares for business acquisition— 22,340 — 800 — — 800 
Dividends(601)— — — — (96)(96)
Tax impact from dividends(3,076)— — — — — — 
Balance at June 30, 2023$13,845 46,553,517 $47 $357,246 $208,719 $3,741 $569,753 
Net income4,236 — — — 22,059 1,678 23,737 
Purchase of treasury shares(150)— — — — — — 
Shares issued for vesting of restricted stock awards— 53,839 — (63)— — (63)
Share-based compensation— — — 5,706 — — 5,706 
Dividends— — — — — (1,424)(1,424)
Balance at September 30, 2023$17,931 46,607,356 $47 $362,889 $230,778 $3,995 $597,709 

12


Mezzanine
Equity –
Non-controlling
Interest in APC
Retained
Earnings
Common Stock Outstanding
Additional
Paid-in 
Capital
Non-controlling
Interest
Stockholders’
Equity
SharesAmount
Balance at January 1, 2022 (restated)$56,535 44,630,873 $45 $310,876 $137,246 $5,940 $454,107 
Net (loss) income (restated)(3,252)— — — 13,764 938 14,702 
Purchase of non-controlling interest— — — — — (200)(200)
Sale of non-controlling interest— — — — — 36 36 
Share buy back(230)— — — — — — 
Shares issued for vesting of restricted stock awards— 81,779 — — — — — 
Shares issued for exercise of options and warrants— 124,735 — 1,573 — — 1,573 
Share-based compensation— — — 3,055 — — 3,055 
Issuance of shares for business acquisition— 18,756 — 1,000 — — 1,000 
Cancellation of restricted stock awards— (11,084)— (457)— — (457)
Dividends— — — — — (1,178)(1,178)
Balance at March 31, 2022 (restated)$53,053 44,845,059 $45 $316,047 $151,010 $5,536 $472,638 
Net (loss) income (restated)(2,019)— — — 11,950 1,346 13,296 
Shares issued for vesting of restricted stock awards— 108,933 — (253)— — (253)
Shares issued for exercise of options and warrants— 15,718 — 165 — — 165 
Purchase of treasury shares— (250,000)— (9,250)— — (9,250)
Share-based compensation— — — 3,920 — — 3,920 
Investment in non-controlling interest— — — — — 371 371 
Dividends(10,000)— — — — (1,374)(1,374)
Balance at June 30, 2022 (restated)$41,034 44,719,710 $45 $310,629 $162,960 $5,879 $479,513 
Net (loss) income (restated)(707)— — — 23,185 1,419 24,604 
Purchase of non-controlling interest— — — — — (4,138)(4,138)
Sale of non-controlling interest— — — — — 28 28 
Share buy back(168)— — — — — — 
Shares issued for vesting of restricted stock awards— 2,570 — (62)— — (62)
Shares issued for exercise of options and warrants— 162,242 — 1,046 — — 1,046 
Share-based compensation— — — 3,502 — — 3,502 
Dividends— — — — — (120)(120)
Balance at September 30, 2022 (restated)$40,159 44,884,522 $45 $315,115 $186,145 $3,068 $504,373 

The accompanying notes are an integral part of these unaudited consolidated financial statements.
13


APOLLO MEDICAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
September 30,
20232022
(Restated)
Cash flows from operating activities
Net income $57,943 $46,624 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization12,846 13,480 
Amortization of debt issuance cost711 703 
Share-based compensation13,364 10,477 
Gain on sale of equity securities (2,272)
Unrealized loss on investments6,898 21,894 
Income from equity method investments(3,104)(4,397)
Unrealized gain on interest rate swaps(1,022)(4,302)
Deferred tax(3,936)(3,054)
Other 901 
Changes in operating assets and liabilities, net of business combinations:
Receivables, net(46,261)(58,325)
Receivables, net – related parties(21,801)(21,832)
Other receivables2,303 (31,988)
Prepaid expenses and other current assets(1,246)3,228 
Loan receivable, non-current(40) 
Right-of-use assets5,223 2,843 
Other assets(180)(682)
Accounts payable and accrued expenses(1,119)765 
Fiduciary accounts payable(1,808)(4,029)
Medical liabilities10,108 37,491 
Income taxes payable/receivable25,154 (10,395)
Operating lease liabilities(5,215)(3,059)
Other long-term liabilities 109 3,118 
Net cash provided by (used in) operating activities
48,927 (2,811)
Cash flows from investing activities
Payments for business and asset acquisitions, net of cash acquired(4,674)(5,614)
Proceeds from repayment of loans receivable – related parties2,200 4,051 
Purchase of marketable securities(2,125)(1,750)
Issuance of loan receivable(25,000) 
Purchase of investments - privately held(2,000) 
Purchase of investments - equity method(325) 
Purchases of property and equipment(21,472)(22,054)
Proceeds from sale of marketable securities 6,438 
Distribution from investment - equity method 400 
Contribution to investment - equity method(700)(1,785)
Net cash used in investing activities(54,096)(20,314)
14


Nine Months Ended
September 30,
20232022
(Restated)
Cash flows from financing activities
Dividends paid(2,266)(12,676)
Repayment of long-term debt(461)(3,714)
Payment of finance lease obligations(505)(417)
Proceeds from the exercise of stock options and warrants1,250 2,784 
Repurchase of shares(9,689)(9,648)
Proceeds from sale of non-controlling interest 67 
Purchase of non-controlling interest(50)(4,338)
Borrowings on loans3,149 1,986 
Net cash used in financing activities(8,572)(25,956)
Net decrease in cash and cash equivalents(13,741)(49,081)
Cash and cash equivalents beginning of period288,027 233,097 
Cash and cash equivalents end of period$274,286 $184,016 
Supplementary disclosures of cash flow information
Cash paid for income taxes$7,881 $41,811 
Cash paid for interest9,670 4,386 
Supplemental disclosures of non-cash investing and financing activities
Right-of-use assets obtained in exchange for operating lease liabilities$6,626 $ 
Tax impact from APC dividends to APC Shareholders$3,076 $ 
Fixed asset obtained in exchange for finance lease liabilities$ $398 
Common stock issued in business combination$ $1,000 
Mortgage loan$ $16,275 
Cashless exercise of warrants$ $694 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total amounts of cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows (in thousands):
September 30,
20232022
Cash and cash equivalents$273,941 $184,016 
Restricted cash
345  
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows$274,286 $184,016 


The accompanying notes are an integral part of these unaudited consolidated financial statements.

15


APOLLO MEDICAL HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.    Description of Business
Overview
Apollo Medical Holdings, Inc. (“ApolloMed”) is a leading physician-centric, technology-powered, risk-bearing healthcare company. Leveraging its proprietary end-to-end technology solutions, ApolloMed operates an integrated healthcare delivery platform that enables providers to participate successfully in value-based care arrangements, thus empowering them to deliver high-quality care to patients in a cost-effective manner. ApolloMed was merged with Network Medical Management (“NMM”) in December 2017 (the “2017 Merger”). As a result of the 2017 Merger, NMM became a wholly owned subsidiary of ApolloMed, and the former NMM shareholders own a majority of the issued and outstanding common stock of ApolloMed and maintain control of the board of directors. Unless the context dictates otherwise, references in these notes to the financial statements, the “Company,” “we,” “us,” “our,” and similar words are references to ApolloMed and its consolidated subsidiaries and affiliated entities, as appropriate, including its consolidated variable interest entities (“VIEs”).
Headquartered in Alhambra, California, ApolloMed’s subsidiaries and VIEs include management services organizations (“MSOs”), affiliated independent practice associations (“IPAs”), an accountable care organization (“ACO”) participating in the ACO REACH model, and clinical operations. Together, ApolloMed provides value-based care enablement services and care delivery with our consolidated care partners. The Company provides care coordination services to each major constituent of the healthcare delivery system, including patients, families, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, physician groups, and health plans. The Company’s physician network consists of primary care physicians, specialist physicians, and hospitalists.
Segments
The Company’s reportable segments changed from one to three in the first quarter of 2023 as a result of certain changes to the information regularly provided to the Company’s chief operating decision makers (“CODMs”) when reviewing the Company’s performance as well as an effort to provide additional transparency to investors and other financial statement users. The three segments identified by the Company are Care Partners, Care Delivery and Care Enablement, which are described as follows:
Care Partners
The Company’s Care Partners segment is focused on building and managing high-quality and high-performance provider networks by partnering with, empowering, and investing in strong provider partners with a shared vision for coordinated care delivery. By leveraging the Company’s unique care enablement platform and ability to recruit, empower, and incentivize physicians to effectively manage total cost of care, the Company is able to organize partnered providers into successful multi-payer risk-bearing organizations which take on varying levels of risk based on total cost of care across membership in all lines of business, including Medicare, Medicaid, commercial, and exchange. Through the Company’s network of IPAs, ACOs, and Restricted Knox-Keene licensed health plan, the Company’s healthcare delivery entities are responsible for coordinating and delivering high-quality care to their patients.
The Company’s consolidated IPAs consist of the following:
Allied Physicians of California, a Professional Medical Corporation d.b.a. Allied Pacific of California IPA (“APC”);
Alpha Care Medical Group, Inc. (“Alpha Care”);
Accountable Health Care IPA, a Professional Medical Corporation (“Accountable Health Care”);
Jade Health Care Medical Group, Inc. (“Jade”), (v) Access Primary Care Medical Group (“APCMG”); and
All American Medical Group (“AAMG”);
16


The Company’s ACO operates under the APA ACO, Inc. (“APAACO”) brand and participates in the Centers for Medicare & Medicaid Services (“CMS”) program that allows provider groups to assume higher levels of financial risk and potentially achieve a higher reward from participation in the program’s attribution-based risk-sharing model. The Company’s Restricted Knox-Keene licensed health plan is held by For Your Benefit Inc. (“FYB”).
Care Delivery
The Company’s Care Delivery segment is a patient-centric, data-driven care delivery organization focused on delivering high-quality and accessible care to all patients. The Company’ care delivery organization includes primary care, multi-specialty care, and ancillary care services. This segment includes the following:
Primary care clinics, operating under the AMG, a Professional Medical Corporation (“AMG”) and Valley Oaks Medical Group (“VOMG”) brands;
Multi-specialty care clinics and medical groups, operating under the ApolloMed Hospitalists, a Medical Corporation (“AMH”), Southern California Heart Centers, a Medical Corporation (“SCHC”), and AllCare Women’s Health brands; and
Ancillary service providers, operating under the 1 World Medicine Urgent Care Corporation (“1 World”), DMG, Concourse Diagnostic Surgery Center, LLC (“CDSC”), and Sun Clinical Laboratories (“Sun Labs”) brands.
On February 23, 2023, AP-AMH 2 purchased 100% of the shares of capital stock of AMG, 1 World, and Eleanor Leung M.D., a Professional Medical Corporation from APC-LSMA. As a result of these purchases, these entities are consolidated entities of AP-AMH 2. On May 1, 2023 the Company sold 25% of Eleanor Leung M.D. to two of its physicians. As a result, AP-AMH 2 owns 75% of Eleanor Leung M.D. AMG provides professional and post-acute care services to patients through its network of doctors and nurse practitioners, 1 World is an urgent care center, and Eleanor Leung M.D. provides specialized care for women’s health operating as AllCare Women’s Health.
Care Enablement
The Company’s Care Enablement segment is an integrated, end-to-end clinical and administrative platform, powered by the Company’s proprietary technology suite, which provides operational, clinical, financial, technology, management, and strategic services in order to enable success in the delivery of high-quality, value-based care for providers and payers. The Company provides solutions to providers, including independent physicians, provider and medical groups, and accountable care organizations, and payers, including health plans and other risk-bearing organizations. The Company’s platform meets providers and payers where they are, with a wide spectrum of solutions across the total cost of care risk spectrum, ranging from solutions for fee-for-service entities to global risk-bearing entities, and across patient types, including Medicare, Medicaid, commercial, and exchange-insured patients. This segment includes the Company’s wholly owned subsidiaries which operate as management services organizations, NMM and Apollo Medical Management (“AMM”), which enter into long-term management and/or administrative services agreements with providers and payers. By leveraging the Company’s care enablement platform, providers and payers can improve their ability to deliver high-quality care to their patients and achieve better patient outcomes.
Other Affiliates
The Company’s other affiliates are not included as a reportable segment and primarily consist of the following real estate operations:
Medical Property Partners, LLC (“MPP”);
AMG Properties, LLC (“AMG Properties”);
ZLL Partners, LLC (“ZLL”);
Tag-8 Medical Investment Group, LLC (“Tag 8”); and
Tag-6 Medical Investment Group, LLC (“Tag 6”).
17


These entities are deemed Excluded Assets that are solely for the benefit of APC and its shareholders. As such, any income pertaining to APC’s interests in these properties has no impact on the Series A Dividend payable by APC to AP-AMH Medical Corporation, and consequently will not affect net income attributable to ApolloMed.
18



2.    Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated balance sheet at December 31, 2022 has been derived from the Company’s audited consolidated financial statements, but does not include all annual disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”). The accompanying unaudited consolidated financial statements as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, have been prepared in accordance with U.S. GAAP for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes to the financial statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022, as filed with the SEC on August 9, 2023. In the opinion of management, all material adjustments (consisting of normal recurring adjustments as well as intercompany accounts and transactions, which have been eliminated) considered necessary for a fair presentation have been made to make the consolidated financial statements not misleading, as required by Regulation S-X, Rule 10-01. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any future periods.
Principles of Consolidation
The consolidated balance sheets as of September 30, 2023 and December 31, 2022, and the consolidated statements of income for the three and nine months ended September 30, 2023 and 2022, include the following:
ApolloMed;
ApolloMed’s consolidated subsidiaries; NMM, AMM, APAACO, Orma Health Inc, Provider Growth Solutions, LLC, and FYB;
ApolloMed’s consolidated VIEs; AP-AMH, AP-AMH 2, Sun Labs, DMG, and VOMG;
AP-AMH 2’s consolidated subsidiaries; APCMG, Jade, AAMG, AMG, 1 World, and Eleanor Leung M.D., a Professional Medical Corporation;
AMM’s consolidated VIEs; SCHC and AMH;
NMM’s consolidated VIE; APC;
APC’s consolidated subsidiaries; Universal Care Acquisition Partners, LLC* (“UCAP”), MPP*, AMG Properties*, ZLL*, ICC, and 120 Hellman LLC* (“120 Hellman”);
APC’s consolidated VIEs; CDSC, APC-LSMA, Tag 8*, and Tag 6*; and
APC-LSMA’s consolidated subsidiaries; Alpha Care and Accountable Health Care.
* These entities are deemed Excluded Assets that are solely for the benefit of APC and its shareholders. As such, any income pertaining to APC’s interests in these properties has no impact on the Series A Dividend payable by APC to AP-AMH Medical Corporation, and consequently will not affect net income attributable to ApolloMed.
The unaudited consolidated interim financial statements have been prepared under the assumption that users of the interim financial data have either read or have access to our audited consolidated financial statements for the fiscal year ended December 31, 2022.

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Restatement of Previously Issued Financial Statements
The Company filed Amendment No. 1 on Form 10-K (“Form 10-K/A”) and Amendment No. 1 on Form 10-Q (“Form 10-Q/-A”) with the SEC on August 9, 2023 to restate previously issued consolidated financial statements and financial information as of December 31, 2022 and 2021 and for the fiscal years ended December 31, 2022, 2021 and 2020 in the Form 10-K/A and unaudited consolidated financial statements and financial information as of March 31, 2023 and for each of the three months ended March 31, 2023 and 2022 in the Form 10-Q/A. The Form 10-K/A also provided restated interim financial information for the quarterly fiscal 2022 periods.
Use of Estimates
The preparation of the consolidated financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include collectability of receivables, recoverability of long-lived and intangible assets, business combination and goodwill valuation and impairment, accrual of medical liabilities (incurred but not reported (“IBNR”) claims), determination of full-risk and shared-risk revenue and receivables (including constraints, completion factors and historical margins), income tax-valuation allowance, share-based compensation, and right-of-use assets and lease liabilities. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ materially from those estimates and assumptions.
Variable Interest Entities
On an ongoing basis, as circumstances indicate the need for reconsideration, the Company evaluates each legal entity that is not wholly owned by the Company in accordance with the consolidation guidance. The evaluation considers all of the Company’s variable interests, including equity ownership, as well as management services agreements. To fall within the scope of the consolidation guidance, an entity must meet both of the following criteria:
The entity has a legal structure that has been established to conduct business activities and to hold assets; such entity can be in the form of a partnership, limited liability company, or corporation, among others; and
The Company has a variable interest in the legal entity; i.e., variable interests that are contractual, such as equity ownership, or other financial interests that change with changes in the fair value of the entity’s net assets.
If an entity does not meet both criteria above, the Company applies other accounting guidance, such as the cost or equity method of accounting. If an entity does meet both criteria above, the Company evaluates such entity for consolidation under either the variable interest model if the legal entity meets any of the following characteristics to qualify as a VIE, or under the voting model for all other legal entities that are not VIEs.
A legal entity is determined to be a VIE if it has any of the following three characteristics:
The entity does not have sufficient equity to finance its activities without additional subordinated financial support;
The entity is established with non-substantive voting rights (i.e., where the entity deprives the majority economic interest holder(s) of voting rights); or
The equity holders, as a group, lack the characteristics of a controlling financial interest. Equity holders meet this criterion if they lack any of the following:
The power, through voting rights or similar rights, to direct the activities of the entity that most significantly influence the entity’s economic performance, as evidenced by:
Substantive participating rights in the day-to-day management of the entity’s activities;
Substantive kick-out rights over the party responsible for significant decisions;
20


The obligation to absorb the entity’s expected losses; or
The right to receive the entity’s expected residual returns.
If the Company determines that any of the three characteristics of a VIE are met under Accounting Standards Codification (“ASC”) 810, Consolidation, the Company will conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.
Variable Interest Model
If an entity is determined to be a VIE, the Company evaluates whether the Company is the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and economics. The Company consolidates a VIE if both power and benefits belong to the Company; that is, the Company has:
The power to direct the activities of a VIE that most significantly influence the VIE’s economic performance (power), and
The obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE (economics).
The Company consolidates VIEs whenever it is determined that the Company is the primary beneficiary. Refer to Note 16 — “Variable Interest Entities (VIEs)” to the consolidated financial statements for information on the Company’s consolidated VIEs. If there are variable interests in a VIE, but the Company is not the primary beneficiary, the Company may account for the investment using the equity method of accounting.

Business Combinations
The Company uses the acquisition method of accounting for all business combinations, which requires assets and liabilities of the acquiree to be recorded at fair value, to measure the fair value of the consideration transferred, including contingent consideration, to be determined on the acquisition date, and to account for acquisition-related costs separately from the business combination.
Reportable Segments
As of September 30, 2023, the Company operates in three reportable segments:
Care Partners;
Care Delivery; and
Care Enablement.
Refer to Note 1 — “Description of Business” and Note 18 — “Segments” to the consolidated financial statements for information on the Company’s segments.
Cash and Cash Equivalents
The Company’s cash and cash equivalents primarily consist of money market funds and certificates of deposit. The Company considers all highly liquid investments that are both readily convertible into known amounts of cash and mature within ninety days from their date of purchase to be cash equivalents.
The Company maintains its cash in deposit accounts with several banks, which at times may exceed the insured limits of the Federal Deposit Insurance Corporation (“FDIC”). The Company believes it is not exposed to any significant credit risk with respect to its cash and cash equivalents. As of September 30, 2023 and December 31, 2022, the Company’s deposit accounts with banks exceeded the FDIC’s insured limit by approximately $301.8 million and $324.7 million, respectively. The Company has not experienced any losses to date and performs ongoing evaluations of these financial institutions to limit the Company’s concentration of risk exposure.
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Receivables, Receivables – Related Parties, Other Receivables and Loan Receivable - Related Party
The Company’s receivables are comprised of accounts receivable, capitation and claims receivable, risk pool settlements, incentive receivables, management fee income, and other receivables. Accounts receivable are recorded and stated at the amount expected to be collected.
The Company’s receivables – related parties are comprised of risk pool settlements, management fee income, and other receivables. Receivables – related parties are recorded and stated at the amount expected to be collected.
The Company’s loan receivable and loan receivable – related party consists of promissory notes that accrue interest per annum. As of September 30, 2023, promissory notes are expected to be collected by their maturity dates.
Capitation and claims receivables relate to each health plan’s capitation and are received by the Company in the month following the month of service. Risk pool settlements and incentive receivables mainly consist of the Company’s full risk pool receivable, which is recorded quarterly based on reports received from the Company’s hospital partners and management’s estimate of the Company’s portion of the estimated risk pool surplus for open performance years. Settlement of risk pool surplus or deficits occurs approximately 18 months after the risk pool performance year is completed. Other receivables consist of receivables from fee-for-services (“FFS”) reimbursement for patient care, certain expense reimbursements, transportation reimbursements from the hospitals, and stop-loss insurance premium reimbursements.
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer creditworthiness, current economic trends, and changes in customer payment patterns to evaluate the adequacy of these reserves. The Company also regularly analyzes the ultimate collectability of accounts receivable after certain stages of the collection cycle using a look-back analysis to determine the amount of receivables subsequently collected and adjustments are recorded when necessary. Reserves are recorded primarily on a specific identification basis.
Receivables are recorded when the Company is able to determine amounts receivable under applicable contracts and agreements based on information provided and collection is reasonably likely to occur. In regard to the credit loss standard, the Company continuously monitors its collections of receivables and our expectation is that the historical credit loss experienced across our receivable portfolio is materially similar to any current expected credit losses that would be estimated under the current expected credit losses (“CECL”) model.
Concentrations of Credit Risks
The Company disaggregates revenue from contracts by service type and payer type. This level of detail provides useful information pertaining to how the Company generates revenue by significant revenue stream and by type of direct contracts. The consolidated statements of income present disaggregated revenue by service type. The following table presents disaggregated revenue generated by payer type for the three and nine months ended September 30, 2023 and 2022 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Commercial
$43,495 $41,774 $122,421 $125,938 
Medicare
222,387 188,416 660,855 469,797 
Medicaid
65,469 72,054 201,920 209,277 
Other third parties
16,822 14,757 48,429 44,943 
Revenue
$348,173 $317,001 $1,033,625 $849,955 

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The Company had major payers that contributed the following percentages of net revenue:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023202220232022
Payer A***10.0 %
Payer B37.4 %40.1 %39.0 %34.2 %
Payer D12.4 %***
*Less than 10% of total net revenues
The Company had major payers that contributed to the following percentages of receivables and receivables – related parties:
As of September 30,
2023
As of December 31,
2022
(Restated)
Payer B32.0 %26.0 %
Payer C44.0 %52.0 %
Revenue Recognition
The Company receives payments from the following sources for services rendered:
Commercial insurers;
Federal government under the Medicare program administered by CMS;
State governments under the Medicaid and other programs;
Other third-party payers (e.g., hospitals and IPAs); and
Individual patients and clients.
Revenue primarily consists of the following:
Capitation revenue;
Risk pool settlements and incentives;
GPDC/ACO REACH revenue;
Management fee revenue; and
FFS revenue.
Revenue is recorded in the period in which services are rendered or the period in which the Company is obligated to provide services. The form of billing and related risk of collection for such services may vary by type of revenue and the customer.
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GPDC/ACO REACH Capitation Revenue
CMS contracts with Direct Contracting Entities (“DCEs”), which are composed of healthcare providers operating under a common legal structure and accept financial accountability for the overall quality and cost of medical care furnished to Medicare FFS beneficiaries aligned to the entity. The combination of the FFS model and the GPDC and ACO REACH model changes the distribution of responsibilities, risks, costs, and rewards among CMS, DCEs, and providers. By entering into a contract with CMS, a DCE voluntarily takes on operational, financial, and legal responsibilities and risks that no party has, individually or collectively, under the existing FFS model. Each DCE bears the economic costs, and reaps the economic rewards of fulfilling its responsibilities and managing its risks as a DCE. APAACO participated in the GPDC Model for Performance Year 2022 and is currently participating in the ACO REACH model for Performance Year 2023, beginning January 1, 2023.
For each performance year, CMS will pay a total benchmark amount, determined unilaterally by CMS in advance but subject to prospective adjustments throughout the year, for the totality of care provided to the DCE’s population of aligned beneficiaries over the course of that year. The benchmark is net of a quality withholding applied by CMS. At the end of each performance year, a portion, or all, of the quality withholding can be earned based on APAACO’s performance. GPDC/ACO REACH capitation revenue is recognized based on the estimated transaction price to transfer the service for a distinct increment of the series (i.e., month) and is recognized net of quality incentives/penalties.
Income Taxes
Federal and state income taxes are computed at currently enacted tax rates less tax credits using the asset and liability method. Deferred taxes are adjusted for both items that do not have tax consequences and for the cumulative effect of any changes in tax rates from those previously used to determine deferred tax assets or liabilities. Tax provisions include amounts that are currently payable, changes in deferred tax assets and liabilities that arise because of temporary differences between the timing of when items of income and expense are recognized for financial reporting and income tax purposes, changes in the recognition of tax positions and any changes in the valuation allowance caused by a change in judgment about the realizability of the related deferred tax assets. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.
The Company uses a recognition threshold of more-likely-than-not and a measurement attribute on all tax positions taken or expected to be taken in a tax return in order to be recognized in the consolidated financial statements. Once the recognition threshold is met, the tax position is then measured to determine the actual amount of benefit to recognize in the consolidated financial statements.
3.    Business Combinations, Asset Acquisitions, and Goodwill
Texas Independent Providers, LLC
On September 1, 2023, the Company acquired certain assets relating to Texas Independent Providers, LLC (“TIP”). The acquired assets allow the Company to provide high-quality care services to Medicare Advantage patients in Texas. The purchase price consisted of cash funded on September 1, 2023.
FYB
On May 1, 2023, the Company acquired 100% equity interest in FYB. FYB is licensed by the California Department of Managed Health Care as a full-service Restricted Knox-Keene licensed health plan, which enables FYB to assume full financial responsibility, including both professional and institutional risk, for the medical costs of its members under the Knox-Keene Health Care Service Plan Act of 1975.
Chinese Community Health Care Association (“CCHCA”)
On March 1, 2023, the Company acquired certain healthcare assets from CCHCA. The acquired assets allow the Company to provide high-quality care to more patients in the San Francisco Community. The purchase price consisted of cash funded on May 1, 2023.
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The acquisitions were accounted for under the acquisition method of accounting. The fair value of the consideration for the acquired companies was allocated to acquired tangible and intangible assets and liabilities based on their fair values. The excess of the purchase consideration over the fair value of the net tangible and identifiable intangible assets acquired was recorded as goodwill. Determining the fair value of assets and liabilities acquired requires the Company to make estimates and use valuation techniques when market value is not readily available. The results of operations from the acquisitions have been included in the Company’s financial statements from the date of acquisition. Transaction costs associated with business acquisitions are expensed as they are incurred.
At the time of acquisition, the Company estimates the amount of the identifiable intangible assets based on a valuation and the facts and circumstances available at the time. The Company determines the final value of the identifiable intangible assets as soon as information is available, but not more than one year from the date of acquisition.
Goodwill is not deductible for tax purposes. The Company had no impairment of its goodwill or indefinite-lived intangible assets during the nine months ended September 30, 2023 and 2022.
The change in the carrying value of goodwill for the nine months ended September 30, 2023 was as follows (in thousands):
Balance, January 1, 2023 (restated)$269,053 
Acquisitions5,423 
Adjustments1,052 
Balance, September 30, 2023$275,528 

4.    Intangible Assets, Net
At September 30, 2023, the Company’s intangible assets, net, consisted of the following (in thousands):
Useful
Life
(Years)
Gross September 30,
2023
Accumulated
Amortization
Net September 30,
2023
Indefinite lived assets:
TrademarksN/A$2,150 $— $2,150 
Amortized intangible assets:
Network relationships
11-21
150,679 (102,603)48,076 
Management contracts
1522,832