Apollo Medical Holdings Inc (AMEH)

[10 bagger]

AMEH.. $0.06 Finnaly we have earnings.. hank

Three Months Ended October 31, 2011 vs. Three Months Ended October 31, 2010...

The Company reported income from operations of $126,202 for the three months ended October 31, 2011, compared to a loss from operations of $3,384 recorded in the same period of 2010.

Net revenues for the three months ended October 31, 2011 of $1,431,965 increased $412,887, or 41%, over net revenues of $1,019,078 reported for the three months ended October 31, 2010. Net revenues are comprised of net billings by the Company 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 the acquisition of PCCM, new hospital contracts started in quarter, and expansion of services with new medical groups atexisting hospitals.

Physician practice salaries, benefits and other expenses for the three months ended October 31, 2011 were $1,097,132, at 77% of net revenues compared to $868,119 for the three months ended October 31, 2010, at 85% 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. Total physician compensation increased to $828,134 for the three months ended October 31, 2011, up 20.5% compared to $687,352 for the three month period ended October 31, 2010. The increase in physician costs are primarily related to new contracts started in the period and the acquisition of PCCM. Physician practice salaries, benefits and other expenses for LALC were $59,217 for the three months ended October 31, 2011.

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 $204,690, at 14% of net revenues, for the three months ended October 31, 2011 compared to general and administrative expenses of $152,013 for the three months ended October 31, 2010, at 15% of net revenues. The increase in expense is primarily the result of increased costs to support the continuing growth of our current operations and expansion in new service offerings and acquisitions. During the three months ended October 31, 2011, the Company incurred non-cash stock option compensation expenses of $7,333, related to stock option grants previously issued, an increase of $7,333 from the same period in the prior year. During the three months ended October, 31, 2011, the Company incurred bad debt expense of $5,254, an increase of $5,254 from the same period in the prior year. The remainder of the increase is attributable to increased costs associated with the acquisitions of AHI and PCCM in the quarter.

Depreciation and amortization expense was $3,941 for the three months ended October 31, 2011, and $2,303 for the comparable three-month period in 2010.

The Company reported income from operations of $126,202 for the three months ended October 31, 2011, compared to a loss from operations of $3,384 recorded in the same period of 2010. Increase in reported income from operations is primarily attributable to acquisition of PCCM, benefit from new hospital contracts and reduction of start-up losses in the quarter associated with the acquisition of AHI.


Interest expense and amortization of financing costs totaled $67,947 for the three months ended October 31, 2011, compared to interest and financing costs of $41,123 for the three months ended October 31, 2010. Interest expense and financing costs in 2011 includes interest on the subordinated borrowings of $33,250, and the amortization of financing costs of $9,375, related to the subordinated notes and a $25,000 charge related to an exercise price adjustment on warrants originally issued to a placement agent in connection with the Company’s convertible notes payable issuance in October 2009. Interest expense for the three months ended October 31, 2010 of $31,748 interest expense paid on the subordinated borrowings of $31,250, and the amortization of financing costs of $9,375, related to subordinated notes.

Net income was $58,204 for the three months ended October 31, 2011, compared to a net loss of $41,015 for the three months ended October 31, 2010. The increase in net income for the three months ended October 31, 2011 is primarily related to acquisition of PCCM, benefit from of new hospital contracts and reduction of start-up losses associated with the acquisition of AHI in the quarter.


Nine Months Ended October 31, 2011 vs. Nine Months Ended October 31, 2010


Net revenues for the nine months ended October 31, 2011 of $3,565,366 increased $703,708, or 25%, higher than net revenues of $2,861,658 reported for the nine months ended October 31, 2010. Net revenues are comprised of net billings by the Company 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 the acquisition of PCCM, new hospital contracts started in the period, and expansion of services with new and existing medical groups.


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Physician practice salaries, benefits and other expenses for the nine months ended October 31, 2011 were $2,993,020, at 84% of net revenues, compared to $2,407,524, at 84% of net revenues, for the nine months ended October 31, 2010. 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. Total physician compensation increased to $2,270,654 for the nine months ended October 31, 2011, up 34.3% compared to $1,690,372 for the nine month period ended October 31, 2010. The increases in physician costs are directly related to new contracts started in the period and the acquisition of PCCM.


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 $706,312, at 20% of net revenues, for the nine months ended October 31, 2011, an increase of $278,592, compared to general and administrative expenses of $427,720 for the nine months ended October 31, 2010, at 15% of net revenues. The increase in general and administrative expenses for the nine months ended October 2011, are primarily the result of increased costs to support the continuing growth of our current operations and expansion of new services. The Company experienced one-time transaction costs of $79,408 associated with the acquisitions of AHI and PCCM. In addition, start-up losses at AHI during the nine months ended October 31, 2011 were $83,750. The Company recorded non-cash compensation expenses of $84,999 for the nine months ended October 31, 2011, related to the issuance of shares for service and non-cash stock option compensation expense, an increase of $37,833, compared to $47,166, of such non-cash costs recorded during the nine months ended October 31, 2010. Finally, the Company recorded bad debt expense of $5,254 during the nine months ended October 31, 2011 compared to a reduction in bad debt expense of $76,231 in the nine month period ended October 31, 2010.


Depreciation and amortization expense was $9,814 for the nine months ended October 31, 2011, and $8,330 for the comparable nine-month period in 2010.


The Company reported a loss from operations of $143,780 for the nine months ended October 31, 2011, compared to an income from operations of $18,084 recorded in the same period of 2010. Higher net revenues in 2011 were offset by higher physician and general and administration costs associated added to support continued growth of our operations, expansion of new service offerings and transaction and start-up losses related to the acquisition of AHI.


Interest expense and the amortization of financing costs totaled $149,974 for the nine months ended October 31, 2011, compared to interest and financing costs of $122,951 in the nine months ended October 31, 2010. Interest expense and financing costs in 2011 included interest on the subordinated borrowings of $96,849, and the amortization of financing costs of $28,125, related to the subordinated borrowings and $25,000 warrant re-pricing charge. During the nine month period ended, October 31, 2010, the Company incurred interest on the subordinated borrowings of $94,736, and the amortization of financing costs of $28,215, related to the subordinated borrowings .


Apollo reported a net loss of $293,559 for the nine months ended October 31, 2011, compared to a net loss of $100,388 for the nine months ended October 31, 2010. The increase in the net loss was the result of the factors discussed above.


Liquidity and Capital Resources


At October 31, 2011, the Company had cash and cash equivalents of $249,653, compared to cash and cash equivalents of $397,101 at January 31, 2011. The cash balance at October 31, 2011 included $205,075 in a money market brokerage account. There were no short-term borrowings at October 31, 2011 or January 31, 2011. Long-term borrowings totaled $1,399,191 as of October 31, 2011 and $1,248,588 on January 31, 2011.


Net cash used in operating activities totaled $302,232 in the nine months ended October 31, 2011, compared to net cash used in operations of $159,742 for the comparable nine months ended October 31, 2010. The primary changes in working capital during the nine months ended October 31, 2011 was composed of (i) an increase in accounts receivable of $180,190 and (ii) a decrease of accounts payable and accrued liabilities. The increase in our accounts receivable was due the acquisition PCCM and uncollected revenue from new contracts. Management uses days of sales outstanding (DSO) to measure the effectiveness of our collections. DSO decreased to 55 as of October 31, 2011 compared to 62 DSO as of January 31, 2011.


Net cash used by financing activities totaled $4,290 for the nine months ended October 31, 2011, compared to $211 provided by financing activities for the same period in 2010. During fiscal 2011, the Company completed a $150,000 private placement of convertible debt with a group of accredited investors. In addition, LALC distributed $154,290 to its sole shareholder.


During the nine months ended October 31, 2011, the Company advanced $825 to a non-affiliated Company. The Company invested $5,136 to acquire furniture and fixtures.


Liquidity


We continue to search for investment opportunities and anticipate that funds generated from operations, together with our current cash on hand and funds available under our revolving credit agreement will be sufficient to finance our working capital requirements and fund anticipated acquisitions, contingent acquisition consideration and capital expenditures.