AMEH.. $0.0928.. Results of Operations and Operating Data
My take on this report is that AMEH is close to getting to critical mass from which earnings will start going to the bottom line.. Management has indicated thier confidence by converting a portion of thier debt and have in the past qtr. issued wts. to purchase stock at current prices.. The growh is rapid as are the costs that appear to be part of the growth.. While not carried as one time startup costs,, it is my opinion that each new contract has costs which will not be there on a continuing basis.. Cash burn has remained low and additional financing seems unlikely.. All in all a good report and I am egar to see the next one.. I will call the company sometime again this week and will report any findings.. hank
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Three Months Ended July 31, 2010 vs. Three Months Ended July 31, 2009
Apollo reported net revenues of $1,039,695 for the three months ended July 31, 2010, compared to net revenues of $580,942 for the comparable three month period ended July 2009. The revenue increase of $458,753, or 79%, was attributable to new hospital contracts, increased same-market area growth and expansion of services with existing medical group clients at new hospitals. Net revenues are comprised of net billings by AMH under the various fee structures from health plans, medical groups/IPA’s and hospitals, and income from service fee agreements.
Physician practice salaries, benefits and other expenses for the three months ended July 31, 2010 were $864,719, at 83% of net revenues, compared to $387,692 for the three months ended July 31, 2009, at 67% of net revenues. Cost of Services includes the payroll and consulting costs of the physicians, all payroll related costs, costs for all medical malpractice insurance and physician privileges. The increase in physician costs were attributable to start-up losses at new hospital contracts and expansions of services at new hospitals in the quarter.
General and administrative expenses include all salaries, benefits, supplies and operating expenses, not specifically related to the day-to-day operations of our physician group practices, including billing and collections functions, and our corporate management and overhead. General and administrative expenses were $190,516, at 18% of net revenues, for the three months ended July 31, 2010, higher by $68,411 from General and Administrative expenses of $122,105 for the three months ended July 31, 2009, at 21% of net revenues. In the second quarter of 2010, the Company recorded bad debt expense of $25,700 compared to bad debt expense of $1,791in the second quarter of 2009. Legal fees in the second quarter of 2010 of $26,775 compared to legal fees of $10,610. In addition, Apollo recorded an expense of $17,100 related to shares issued to a director, and incurred higher rent, audit and public company costs.
Depreciation and amortization expense was $2,993 for the three months ended July 31, 2010, and $10,338 for the comparable three-month period in 2009.
The Company reported a loss from operations of $18,533 for the three months ended July 31, 2010, compared to a profit from operations of $60,807 recorded in the same period of 2009. Although net revenues in 2010 continued to benefit from the addition of contracts with hospitals and the hiring of several additional physicians, the higher cost of services as a percent of revenue, 84% in the quarter just ended versus 67% in the second quarter of 2009, impeded the operating results.
Interest expense and amortization of financing costs totaled $40,840 for the three months ended July 31, 2010, compared to interest and financing costs of $4,958 in the three months ended July 31, 2009. Interest expense and financing costs in 2010 included interest on the subordinated borrowings of $31,250, and the amortization of financing costs of $9,375, related to these notes. Interest expense in the three months ended July 31, 2009 of $4,958 represents interest expense paid on the SBA loan with Wells Fargo Bank, interest expense on convertible notes and interest expense accrued at AMM for related party notes.
A net loss of $60,130 was reported for the three months ended July 31, 2010, compared to a net income of $55,849 for the three months ended July 31, 2009. The factors contributing to the net loss in the current quarter compared to the net income in the quarter ended July 2009 are discussed above.
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Six Months Ended July 31, 2010 vs. Six Months Ended July 31, 2009
Net revenues for the six months ended July 31, 2010 of $1,842,580 increased $760,455, or 70 percent, over net revenues of $1,082,125 reported for the six months ended July 31, 2009. Net revenues are comprised of net billings by AMH under the various fee structures from health plans, medical groups/IPA’s and hospitals, and income from service fee agreements. The increase was attributable to new hospital contracts, increased same-market area growth and expansion of services with existing medical group clients at new hospitals.
Physician practice salaries, benefits and other expenses for the six months ended July 31, 2010 were $1,539,405, at 84% of net revenues, compared to $807,247 , at 75% of net revenues, for the six months ended July310, 2009. Cost of Services includes the payroll and consulting costs of the physicians, all payroll related costs, costs for all medical malpractice insurance and physician privileges. The increase in physician costs was attributable to start-up losses on new hospital contracts and expansions of services at new hospitals in the quarter.
General and administrative expenses include all salaries, benefits, supplies and operating expenses, not specifically related to the day-to-day operations of our physician group practices, including billing and collections functions, and our corporate management and overhead. General and administrative expenses were $275,708, at 15% of net revenues, for the six months ended July 31, 2010. General and Administrative expenses were $294,668 for the six months ended July 31, 2009, at 27% of net revenues. In the six months ended July 2010, the Company recorded non-cash compensation expenses of $47,378, related to the issuance of shares for service, lower than the $95,167 of such non-cash costs in the first six months of 2009. Also, the Company recorded a reduction in bad debt expense of $64,566 in the six month period ended July 2010. The Company incurred higher legal fees, rent and consulting fees which partially offset the above two favorable factors. Depreciation and amortization expense was $5,999 for the six months ended July 31, 2010, and $20,675 for the comparable six-month period in 2009.
The Company reported a profit from operations of $21,468 for the six months ended July 31, 2010, compared to a loss from operations of $40,465 recorded in the same period of 2009. Net revenues in 2010 continued to benefit from the addition of contracts with hospitals and the hiring of several additional physicians. In addition, the operating profit in 2010 benefitted from the lower non-cash compensation costs and a favorable adjustment to bad debt expense.
Interest expense and the amortization of financing costs totaled $81,738 for the six months ended July 31, 2010, compared to interest and financing costs of $9,807 in the six months ended July 31, 2009. Interest expense and financing costs in 2010 included interest on the subordinated borrowings of $62,500, and the amortization of financing costs of $18,750, related to these notes. Interest expense in the six months ended July 31, 2009 of $9,807 included interest on the convertible notes, interest expense paid on the SBA loan with Wells Fargo Bank, and interest expense accrued at AMM for the related party notes.
Apollo reported a net loss of $60,973 for the six months ended July 31, 2010, compared to a net loss of $51,072 for the six months ended July 31, 2009. The reduction in the net loss was the result of the factors discussed above.
Liquidity and Capital Resources
At July 31, 2010, the Company had cash and cash equivalents of $534,332, compared to cash and cash equivalents of $665,737 at January 31, 2010. The cash balance at July 31, 2010 included $487,647 in a money market brokerage account. There were no short-term borrowings at July 31, 2010 or January 31, 2010. Long-term borrowings totaled $1,247,985 as of July 31, 2010 and $1,247,582 on January 31, 2010.
