Apollo Medical Holdings, Inc.

Greetings. Welcome to Apollo Medical Holdings first quarter 2023 financial results. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Caroline Song, Vice President of Investor Relations. Thank you. You may begin.

Thank you, Operator, and hello, everyone. Thank you for joining us. The press release announcing Apollo Medical Holdings, Inc.' 's results for the first quarter ended March 31, 2023, is available at the Investors section of the company's website at www.apollomed.net. To provide some additional background on its results, the company has made a supplemental deck available on its website. A replay of this broadcast will also be made available at Apollo Med's website after the conclusion of this call. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terms such as anticipate, believe, expect, future, plan, outlook, and will, and include, among other things, statements regarding the company's guidance for the year ending December 31st, 2023, continued growth, ability to decrease cost of care while improving quality and outcomes, ability to deliver sustainable revenue and EBITDA growth as well as long-term value, ability to respond to the changing environment, ability to offset anticipated losses in the care enablement segment, ability to successfully implement operational streamlining and successful implementation of strategic growth plans, acquisition strategy, and merger integration efforts. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risks associated with investing in ApolloMed is included in its filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions, or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer you to slide two of the conference call presentation for further information. For those of you following along with the accompanying supplement, there is an overview of the company on slide three. On today's call, the company's co-chief executive officer, Brandon Sim, will discuss first quarter 2023 highlights and the latest operational developments. Chief Financial Officer, Chan Basha, will follow with a review of Apollo Med's results for the first quarter ended March 31st, 2023. Brandon will conclude the remarks with an update on the company's outlook and long-term growth strategy before opening the floor for questions. With that, I'll turn the call over to Apollo Med's Co-Chief Executive Officer, Brandon Sim. Please go ahead, Brandon.

Thank you, Caroline, and good evening, everyone. Thank you for joining us today. We began 2023 with a strong first quarter as we continue to rapidly scale our leading value-based care enablement and delivery platform, while maintaining our long history of outstanding clinical outcomes, great healthcare experiences for our members, and sustained profitability. I will first summarize our key quarterly financial results and reporting improvements, and then provide updates on operations. For the first quarter, ended March 31st, 2023, We reported total revenue of $337.2 million, a 28% increase from the prior year quarter, and $29.8 million in adjusted EBITDA. We are also introducing segment-based reporting, details of which are included on slide seven of our earnings supplement. As our business continued to grow, we felt it was important for us to provide greater clarity into each segment's revenue, growth, and operating profitability. which are the metrics by which we also evaluate our businesses, excluding non-operator factors. We believe this information will allow investors to better evaluate changes in the operating results of our business segments outside of non-operational factors that affect net income, thus providing insight into both operations and other factors impacting our reported results. Beginning with the first quarter ended March 31, 2023, we are reporting our financial results based on the following three business segments, care enablement, care partners, and care delivery. Our care enablement segment is an integrated end-to-end clinical administrative platform powered by our proprietary technology suite, which provides operational, clinical, financial, technology, management, and strategic services to providers and payers. Revenue for this segment is primarily comprised of management and software fees charged as a percentage of gross revenue or on a per member per month basis. Our care partner 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 our unique care enablement platform, and ability to recruit, empower, and incentivize physicians, we are able to organize partnered providers into successful 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. Revenue for this segment is primarily comprised of capitation and risk-full settlements and incentives. Finally, our care delivery segment seeks to provide high-quality and accessible health care services through a patient-centric care delivery organization. It consists of outpatient clinics providing primary care, multi-specialty care including cardiology and women's health, and urgent care, as well as ancillary services such as ambulatory surgical centers, diagnostic, laboratory, and imaging services, and hospitals. Revenue for this segment is primarily earned based on fever service reimbursement. capitation, and performance-based incentives. Moving next to operations, we continue to execute on our operational goals of, one, growing our membership in core and new geographies, two, moving members along the risk ladder towards global risk value-based contracts, and three, enabling our providers to deliver excellent patient outcomes in order to manage that risk effectively. On the first goal, we've seen strong and steady progress. As Sean will detail later, we grew our care partners business by over 30% from the prior year quarter due to organic membership growth and a more favorable payer mix in our risk-bearing business. We also continue to make inroads in our newer Nevada and Texas geographies following our acquisition of Valley Oaks Medical Group last October. Since that time, we have increased unique members seen by 120%. and we're very excited about the ongoing growth in those regions as we continue to provide excellent care to members of those communities. We believe that this growth will be sustainable for the years to come as we execute on our second operational target in moving towards taking global risk on total cost of care for our patients. Last week, we closed on the acquisition of Foyer Benefit, or FYB, along with receiving regulatory approval for the change in control of FYB's full-service restricted Knox-Keene licensed health plan, which will allow us to take global risk for the professional and institutional cost of care for members in the plan. This is a significant opportunity for us to deploy our care coordination and management capabilities more effectively and enhances our demonstrated ability to decrease total cost of care while improving quality and patient outcomes. We expect that this will drive both revenue and EBITDA growth over the next several years. As guided to you in the past, we plan to assume additional risk in a prudent, measured fashion over the next several years. But we strongly believe that the infrastructure, technology, and operations we have developed position us strongly to succeed in this transition. Finally, on our third goal, we continue to see MLR trends be favorable versus both prior periods and in-line quarter-over-quarter. This is the result of improvements we've made in medical costs in our existing markets, as well as new ones we've added over the past year. In addition to executing on our three stated goals above, we also strongly believe in investing in the care delivery ecosystem at large. While we have built what we believe to be a world-class platform for managing global in a multi-payer setting across all patient types, we also know that there are others building innovative and exciting solutions in the value-based care delivery ecosystem. To that end, in recent months, we have made small venture investments in areas we feel will enhance our ability to empower providers in the delivery of value-based care. We led the pre-seed funding for Third Way Health, a company looking to transform the front office for care delivery organizations, and also invested in two other companies, One focused on providing care to high-risk Medicare members, and another focused on delivering technology-enabled services and infrastructure for value-based care providers and organizations. We're excited by the progress we have made so far in working with these innovators and look forward to continuing those partnerships. I also have two more operational updates to share. Recently, we were unable to come to mutually agreeable terms for the renewal of a management services contract with LaSalle Medical Associates, one of our clients in our care enablement business with approximately 370,000 members. That contract will thus terminate by the end of August of this year. In 2022, LaSalle contributed $21.4 million in net revenue on an annualized basis for the care enablement business. I want to emphasize that that the impact of LaSalle only impacts our care enablement segment and that that impact is under 2% of our total revenues for 2022. There will be no effect on our risk-bearing care partners segment. We expect to partially offset losses in revenue from this contract as we continually add new clients to our care enablement business. We are also taking this opportunity to streamline our operations and organizational structure which have grown significantly over the course of the past several years. While this was necessary to support the growth of the company, we currently have over 1,500 employees across our organization. We will be focusing on performance management, especially within our operating departments, in order to ensure that the profitability and margins in our care enablement segment remain on track against our expectations. We are confident that we will be able to continue delivering high-quality healthcare experiences and driving positive outcomes for our members with the leaner operating structure that will position the company for greater success. Given the strength of our first quarter, and despite the recent development, we are reiterating our full year 2023 guidance on both the top and bottom line, which is listed in full on slide 11 of our supplements. We aim to continue growing membership in our core California markets while scaling rapidly in our newer markets, making progress on moving patient cohorts towards global risk and managing towards excellent clinical and financial outcomes. We are excited by our progress so far on these fronts and believe we are well positioned going forward into the rest of 2023. Before I turn it over to Chan, I wanted to congratulate him on his official appointment as Chief Financial Officer of ApolloMed, effective last Friday. He will continue in his role as Chief Strategy Officer, and we're very pleased to have his leadership in the areas of finance, operations, strategy, and corporate development. Bringing his over 20 years of experience in these areas at various other healthcare companies, Sean has made invaluable contributions over the past year, and I'm thrilled to continue building with him in the years ahead. With that, I'll turn it over to John.