AMEH - Earnings call transcript Q3 2021

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Operator

Greetings. Welcome to Apollo Medical Holdings Third Quarter 2021 Financial Results Call. [Operator Instructions] At this time, I’ll turn the conference over to Carolyne Sohn with Investor Relations. Carolyne, you may begin.

Carolyne Sohn

Thank you, operator, and hello, everyone. us. joining for you Thank www.apollomed.net. The press the available Inc.’s for website Medical the announcing quarter ended Apollo at company’s third the is section Holdings, September Investors results of release XX, at XXXX, has To provide some supplemental background on website. available its made the on its deck a results, additional company also of of this will available ApolloMed’s be replay A broadcast website at call. made this after conclusion the

plan, certain that started, statements to coronavirus information Private and for regarding this and of financial other would December provision remind statements long-term and as pandemic contains of conference discussed such can statements as well continued outlook and growth, and get like harbor I These identified we novel year XXXX. deliver the the meaning everyone to Before Securities the will strategy, the by operations, focus, and as impact accompanying integration COVID-XX call XX, things, any herein safe among future, Act of terms include, forward-looking within believe, to efforts growth anticipate, respond value, forward-looking be Litigation company’s the operational Reform the the of XXXX, variant ending results. sustainable the on ability environment, Delta strategic to business, XXXX guidance acquisition the or ability merger the company’s plans changing expect,

earnings the discuss is call to of results. with measures non-GAAP how Form and of are management understanding non-GAAP will reconciliation this available press most results measures X-K financial and believe on more we gain GAAP with investors SEC. helps our these filed comparable financial is measures a that financial measure the release We A financial providing certain better Additionally, consistent views in the our complete these measures. and

statements differ to correct. associated from the investing that that There the those and conditions results Exchange encourage obligation future which its except to can the be risks decision. subject not of reasonable a otherwise, required are Information any information, before assume as that forward-looking believes forward-looking in the review making dramatically those market today, you ApolloMed with actual Although filings as or uncertainties be could prove about in in reflected cause will company statements with no are The assurance by we result investment statements to expectations those of an included to company any its the and is projected. Securities expectations does law. events, in Commission, update to changes as risks new

would of I you also call to like slide for language, disclaimer information. to the two presentation refer Regarding further the conference

Sim. remarks XXXX. of is the third the over For the opening Co-CEO, and will Chairman, months with Please outlook who the the Kenneth of results With that, Sim. overview ApolloMed’s update will ahead, those then for on will quarter growth supplement, some with Brandon turn first there ApolloMed’s Chin, floor review three. Eric Kenneth and Chief XXXX of questions. the I’ll company today’s Officer, the opening Sim, highlights and Financial before Dr. call, Brandon Dr. the an the call for go Executive following will follow long-term along the developments. discuss quarter year-to-date with on make the the strategy conclude call remarks over a and to nine company’s company’s an accompanying to Dr. slide operational Chairman, Executive third you of turn latest Sim, On and company’s

Kenneth Sim

in by our afternoon. changes and for like you, thank conjunction of to we this leadership addressing begin earnings ApolloMed’s quarter with all you to joining afternoon third announced us to discuss would XXXX call results. Good Thanks. I this report the

key healthcare led creating the Since that X. Sim very into pandemic technology-powered Co-CEO, appoint Brandon global ApolloMed to model, joining transforming COVID-XX are as ApolloMed’s November has ApolloMed’s effective new and and company in pleased the efforts is the navigating it executing growth Brandon We company, today.

scientists This allowed ground expenses the the X.X serves proprietary healthcare operating care over leading greatly financial last an As engineers scale years, Chief up company Technology our and ApolloMed’s improvements. of Brandon Officer, across delivery development notable team platform system performance value-based leading of the and technology from built operating for to to data platform. systems, as local the reducing has effectively

by that clinical outcomes algorithmically More our also this care The us arrangements. helping succeed and management insights on is actionable take in can importantly, satisfaction so care providers streamlining utilization value-based and and and platform improved platform surfaces drive patient workflows. data

a at is the Directors over our I success by last lead marks ApolloMed management next As forward company who business few will as will continue leadership highlights that, look over working Chief like care. with the as continued been its to as Board this efforts company he years. the chapter. year and strategy, year-to-date for quarter engineering it truly right to with in third an Having ApolloMed And integrated executive results turn the incredible continuing Brandon’s go becoming milestone the Operating would a is built Board rapid to transition XXXX passion operational growth and Brandon? recent technology-powered time under of Brandon’s Chairman provide team. and and to operations has for and Co-CEO. Officer, With exciting Brandon well of of Brandon, as delivery and corporate those and healthcare I Directors major to continue we our development, serve witnessed will Board, now, efforts evolving confident leadership. developments. I to our that into closely has person incredibly efforts lead a are drive, value-based and the Executive spearheaded patients It the over for best-in-class ApolloMed’s Brandon toward to

Brandon Sim

patients commitment It has of Sim. healthcare providers way I ApolloMed. our to Lam, of forward growing you driving healthcare course, work shareholders. and equity incredibly much as of and at been is Co-CEO. steadfast and for I’m ability on ApolloMed’s on this you, align ApolloMed. all an this only this our company’s our delivery years change journey, have tirelessly, truly delivered for our opportunity amplify rapidly to on am position several in speak future unique pledge healthcare with and the long-term physician optimistic our stakeholders and of continuing also exciting Co-CEO, rest team empowerment continue our talented to passionate call value very to about bring and and about transforming in is Thank not reasons. to proudly lead in And earnings few Dr. we our I country. to closely continue look first ApolloMed at a serving to but even I Thomas glad as to the to continue Dr. my execute so here building with our here my and mission to all sustainable

first roots for and long physicians partnership to ApolloMed our The dedication history of partnerships. were and physician and ApolloMed, physicians in an segue and differentiator expertise and delivery to match. our a planted care integrated to groups hard advantage that ApolloMed differentiating by into understanding leadership advantage natural healthcare with value-based value-based The for alignment is led This risk is care taking our empowerment in is a second of physician independent successfully. our and deep have of the setting continued powerful

risk-bearing platform in California over in value-based participate more operating And experience have a and to to profitably arrangements We been in arrangements. care have only Southern all we than risk-bearing but independent country empowers decades. not used the in physicians for this two create that succeed such also groups value-based

expertise care advances, value-based practical engineering of where lot decades in of with our academic couple and experience technology had we a I’ve Third, and both settings.

what systems each build physician invest world-class that us modern marrying flexible group continuing not healthcare with delivered community allows are systems enough extremely patient to nationwide. and and It also reduce clinical delivery software of as clinical data helps handle expenses operating are us care learning, and integrated This to operating we healthcare of build committed and allows and Bayesian the operational engineering. advances make improve tailored only Dr. across outcomes, quality decision-making, already and the large-scale that in communities take scale country. puzzle satisfaction. local we allows sense geographies other also to what As piece delivery earlier, into worked of a bring mentioned expertise independent to last the in to This in Sim is and but serve and local we us machine to create proficiency has to to system,

bottom position final advantage, future unique competitive into financial achieved again will raising in are strong we consistent and deliver as top doubled We a more invest The Finally, as earnings record in use guidance that these third profitability returns. with we solid sustained the once this. confidence quarter are today evidence line. well shareholder growth to growth that than reporting our our full and elements line three of year on snowball our

on This at for between organic the have quarterly proud income are from that and am across year-over-year X% quarter are earnings net ApolloMed growth and our say full in in that on year, our between once attributable XXXX. platform thus million of the at of highest net particularly we revenue, line these now our results in that anticipate results were the to to Based our contributions top least our we ApolloMed and $XXX.X And pool attributable technology shareholders we $XX.X nine least all raising million delivered I income million months year-over-year XX% $XXX.X share million. company’s trends phenomenal $XX.X per continued risk to growth first and and growth, the to positive businesses, driven the our and history. represents growth seeing, by We nearly in year guidance to settlements far again incentives.

We in the go earnings the at will full and I year later our during be call would and $X.XX discussion also strategy. between outlook which for updated guidance growth to the anticipate EPS least set represent $X.XX, of over growth on of year-over-year. diluted XX%

the due of participation capitation contributions increased as performance XXXX, our the year in XXXX. in as payroll pool organic following a provider increased a investment a this utilization, a reopening Fee-for-service and During We an that settlement bonus our continue of risk prior did shared and savings partner to utilization $X of period, the an increased able their ACO transaction ACO surgery XXX% at year hospitals quarter million at incur quarter, team. up Labs growth all-star result to utilization our to existing as of the decreased still from quarter. of for million income in revenue. OpEx well operational following and of from $X.XX nearly an this, period third Despite technical attributable result related higher in the We drove during payments solid $XX.X revenues year achieve to the the closing recording the and which also see savings from to revenues result doubled heart IPAs we in increased in settlement greater in compared increased services cost growth our Sun as during the to year-over-year in continued we increase incentive membership ApolloMed, our the year-over-year third centers QX were million period. as increase during of in and to Diluted shared XX% saw for period. EPS was net the increase $XX.X

net XX, the XXXX, in nine income months first for a to of total XXX% $XX.X $XXX.X increase for XXXX. to ended Diluted nine increased period XX% ApolloMed achieved and achieved September EPS million in of the attributable months the $X.XX XX% reporting growth revenue, For million. we

the of a of XXXX, remainder for the terms to we and utilization of COVID-XX during pandemic, ongoing to pre-COVID In as rates are third utilization of projection the our year. result current observing a is continue trends see quarter we this utilization increase the return

a and strategic CAIPA to post-closing also confident ability fully operational As return results now MSO on consistently model, in diluted delivering standpoint, on New execute total impressive had own a alliance our We we XX% York-based and we’ve the the basis. normal closed third investment prior From as we utilization very of periods. quarter. productive remain to does interest levels, in in an have our

risk-bearing, We and become not continue outcomes we platform in working model upon our to partnership technology and that onboard Value-based drive support yet our they and onto improved look clinical care so that their expanding may to will patients. benefit this care that the in for communities additional New commonplace to CAIPA administrative has local York, forward physicians state. introducing from value-based

Southern We California. in closed interest purchase also controlling across Laboratories, the full-service Clinical in on a of Sun locations lab XX CLIA-certified operating

comprehensive patients our care Lab’s We integrate platform working operations bring delivery Sun more continue high-quality and we services expansion Lab’s to across the Sun exploring where lab to opportunities nation. into are can

provided Primary Group, the risk-bearing to serves of payer Care senior counties contracted organization an is its senior with of closed working services we XXXX, a IPA the as that San California has and Care Northern members which Access arrangements on Access we also Primary them patients San the primarily professional successfully year acquisition MSO. partners capitated under began Lastly, Francisco. their that is Medical in since Mateo with

competent and in of IPAs the We the are Primary and our of health a to and Advantage approximately to Access I affiliated like primary local high-quality, largest specialty would culturally communities. collaboration affordable Anthem, XXX pleased is to several of Medicare plans and in one the that us country, network. over with providers ApolloMed care partnering provide to welcome Care’s part also members share X,XXX as care

Our will ways consumers California. been similar be we Southern it forward for the both program, years expand Anthem contracted to come. through network partnership to has continuing upon partner to partnership, and offered finding through in payer the Covered which will physicians time, look and and of of this California our ours some span a affiliate to Northern

the Finally, delivered occasions, report XXXX am we’ve our that have again I phenomenal I for referenced once results. know on to performance impressive thrilled year we and several

is in ACO ACOs year, as the Our Gross million out analogous savings which $XX.X XX the total generated that the all XXXX of performance benchmark performance year. highest savings for expenditures, ranked the highest gross margin by or achieved million XX% in and over a more in beneficiary than analogous we savings ACO’s results. in result minus $XX aligned gross measure best total that expenditures next of defined the

mind $XX.X performance, $XX.X incredibly had of line. QX, financial ACO notable which and that to pleased bottom our our XX,XXX Keep million top serves million X.X contributing this the line our million our to we manage. We aligned over that impact in results are a by out members approximately on beneficiaries for

All amazing nurses covered the from benefit these providers our our thanks the and our administrative I’ve platform. accomplishments all of organization, of healthcare from far staff, tech-powered whom so to utilizing are throughout people other frontline to doctors,

we is providers care superior us. a have strength we the review from models they why validates ahead performance and why summary, our and many fee-for-service on invest us, leading stay platform expertise arrangements. coordination people join results. Eric, to clinical will our to incredibly this level. excited those and continue take Our that, our to turn CFO, our we over traditional ApolloMed’s our and to and with of I This In opportunities care the in our is execute ApolloMed it With next of transitioning value-based technology doctors opportunities financial the in and ApolloMed, am by to as I’ll

Eric Chin

a Thank the of $XXX.X quarter. $XXX.X million and million, prior strong organic driven you, in quarter of revenue, increase XX% achieved Brandon. reporting in growth total the the by the We year results increased third pool and incentives XXXX risk revenue primarily from

increased as quarter, and began risk second decreased when in was utilization a to the XX- XX-month these our pool revenue pandemic reflect primarily hospice partner hospitals the settlements the to hospitals incentives partner our lag. first revenues related in at As from XXXX,

increased expense as period. the IPAs increased our at of as XX% increased year primarily XXXX result to We increased ACO. APA Total the in consolidated year-over-year the $XXX.X compared savings from settlement services claims notable as quarter also a utilization million XXXX. to due ACO This prior operating the from year the well increase about claims in million saw a in third performance in to higher expense results period prior expenses year shared our was million of $X of $XXX.X cost at

payments incurred administrative well investments result to also general on as Brandon related settlement shared and which We provider increased from savings the expenses increased bonus as as ACO our staff, earlier. a in of touched increased our

million, to result third of income quarter ApolloMed of attributable in was an a XXX% $XX.X net of As million from the increase the increased revenue, net $XX.X XXXX. the

is in $X.XX year months period. in months XX% a reduction expense are technology utilization they and from the compares prior emphasis share of our million greater XXXX, platform. quickly provider bonus excluded These to I’ll payments. a of which from the in We million on and to management few on $XX.X equity Net we’ve to G&A value financial per million expenses also EBITDA the partially backed XX% OpEx of out related APC, in to due decrease as also increase a of go the calculated and its attributable company’s the million costs for placed in as $XXX.X from The Adjusted XX, over IPA, XXXX. incurred a method is due for revenue $XX.X primarily We refinancing nearly more representation losses the negative income, XX% the the to $X.X acquired the of the It increase loss of due positive figures, unrealized the discussed the non-cash income $XXX.X recently level increased reported the expenses million quarter-over-quarter QX as Adjusted in consistently closer meaningful passive investment the $XX year share in as results. prior of a year period, million backed business. million, nine EBITDA a payer third claims million Total per lines the Brandon prior by impact that performance was assets, period. our period. excluded basis $XX.X prior the prior EBITDA pre-COVID and which other the investments. for period. which result ended These increased adjusted payroll views the costs million income earnings in to Our offset how $X.XX were XXXX ended to primarily of increased returning was to a quarter ApolloMed increased a a up September past, with in of by to of out from $XXX.X are earlier. which $XXX.X affiliate, per impact year bucket it in increased in diluted and from the prior the fair were a assets result September included million from partner. are for from $XX.X share, EBITDA $XX.X G&A up a the debt to of the described for nine highlights shareholders. increased across million, XXXX. XX, XXXX, revenues solely first as months all nine Total was the our for benefit due quarter year consistent

$XXX.X sheet. the We remain execute ended well-positioned compared cash over and Turning to of We at and with our cash the to the equivalents to growth quarter million initiatives. million third balance in XXXX. end $XXX.X on well-capitalized

and million XXXX, at Our $XXX.X $XXX.X from September equity working the $XXX.X XX, at XX, from million December increased stockholders’ to end million to capital increased million XXXX. at total $XXX.X of XXXX

end sheet, the down debt the third balance further the $XXX.X of total Moving at quarter million. was

with compared XX.XX the coverage consolidated We total times of are interest net consolidated safely X.XX in to times also maximum and permitted of with for of ratio ratio the permitted like over minimum of remainder our debt compared it XXXX. for X.XX covenants times I’d the to Brandon? compliance a to discussion a times. our outlook leverage strategy Brandon turn X.XX to growth now back and

Brandon Sim

XXXX anticipate months Thanks, were year activity have to as transactions the and half the in well. the of to announced we pleased We several of first of close had final the plenty Eric. of

we our in the previously X growing by mark will population to toward and near-term working our end the million-member member we continue lives X We believe goal approximately future. year, the reach of reaching the of million stated

we want what we when to do act it valuations. However, especially invest the responsibly in, in comes of to quality backdrop

which be believe qualities lines. in and good potentially it longer this organization comes pipeline, translated ApolloMed fit when to valuations has we for whether certain into have a a might We transaction in time mind an leads differentiated found to we

be deals while with value we working that to and we maximize will identify shareholder the right remain confident long-term execute to able physicians. like-minded However, on

optimistic as We about as due where with term, in the payers also clients. to growth are partnerships the organic near well several positive new are tailwinds pipeline we of seeing

XXXX are strong As the our it full the business positive guidance are due to our nine organic we to seeing the raising have across again to the we we projections the months outstanding be financial and trends relates in business, of pleased current results once year. growth for first and achieved year

$XXX EPS listed ApolloMed XX net million to Revenues year of net of supplement, noted EBITDA to partner, and the between in into guidance $XX.X traded we on following. EBITDA comments. EBITDA a a the impacts income $XXX.X $XX.X of APC’s XXXX, to passive mind $X.XX to for investment Please our payer $X.XX, December $XX.X account million adjusted million which XX, and of As million. Eric million, his to of income publicly million keep anticipate updated earlier $XXX $XXX.X ending $XXX.X to $XXX.X of million potential in million, that attributable now take income of $XX million, any the net slide million, not to of do diluted in

also EBITDA of potential in transactions this do we XXXX. For attributable acquisitions we net These any may emphasis or metrics remainder other not and to adjusted the shareholders on guidance consider place the income metrics. major ApolloMed business reason, complete greater

to here any very developments that As next closing to and position model, it with a to With and let’s be and to also make care technology truly Suisse to forward guidance out up update we a reevaluate a Global close, strong on been am far We energized has Healthcare a for year With so Credit event. XXXX that, strong us our open Q&A. excited tailwinds, brief for note. investors week, look To successfully, take Virtual the the mention I’ll opportunities on ApolloMed. value-based before by that during at speaking healthcare in moment engineering productive taking see operator, markets Conference look the difference physician-centric delivery sure forward expertise year we as our arise, nationwide. risk be and our and we material will I our financial and appropriate. we will as the expertise

Operator

Thank you. remarks. turn to this time, the back management for I’ll At floor further

Brandon Sim

for all your today. time you Thank

with of in always our California, to should are Alhambra, you investors with the be feel our any Relations to Angeles and welcome reach our additional you quarterly to next call. us Los area. visitors you. open firm, questions. We any in look Group, to speaking Investor forward We a to dialogue free to out or offices Equity Please Thank all again on

Operator

conference. concludes today’s This

You at thank your time and for participation. you lines may disconnect your this we

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