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Revenue Recognition | 12 Months Ended
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Dec. 31, 2018
Revenue from Contract with Customer [Abstract] |
Revenue Recognition |
| 17. | Revenue Recognition
At the adoption of Topic 606, the cumulative effect of initially applying the new revenue standard is required to be presented as an adjustment to the opening balance of retained earnings. This cumulative effect amount was determined to be related to the full risk pool arrangements of APC, a variable interest entity (see Note 19). Due to uncertainty surrounding the settlement of the related IBNR reserve, under ASC Topic 605, the Company has historically recognized revenue from full risk pool settlements under arrangements with hospitals when such amounts are known as the related revenue amounts were not deemed to be fixed and determinable until that time. Under ASC Topic 606, the transaction price includes an assessment of variable consideration; therefore, full risk pool settlements under these arrangements are recognized using the most likely method and amounts are only included in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur once any uncertainty is resolved. The assumptions for historical medical loss ratios, IBNR completion factors and constraint percentages were used by management in applying the most likely method. Accordingly, the Company has estimated an additional amount of revenue to recognize the expected amount that is most likely to be paid upon settlement of each of the open full risk pool fiscal year, which amount was included in the adoption date adjustment to retained earnings. Therefore, the cumulative net effect of initially applying Topic 606 in the amount of $10.2 million, which is comprised of $11.6 million of additional revenue, offset by $1.4 million in related management fee expense, has been presented as an adjustment to the opening balance of the mezzanine equity, “Noncontrolling interest in Allied Pacific of California IPA.” Consequently, as a result of APC recording additional receivables, NMM recorded a corresponding entry of $1.4 million to retained earnings related to management fee income. These adjustments were offset by an aggregate adjustment to deferred tax liability of $3.2 million. The impact of the adoption of ASU 2014-09 on the Company’s revenue, when comparing the amount of revenue recognized for the year ended December 31, 2018 to the revenue that would have been recognized under the prior revenue standard ASC 605, are summarized as follows: The table below presents the impact of the adoption of Topic 606 on the Company’s consolidated statements of income.
|  | Year Ended December 31, 2018 |
|  | Under ASC |  |  | Effect of ASC |  |  | As Reported |
|  | 605 |  |  | 606 |  |  | Under ASC 606 |
Risk pool settlements and incentives |  | $ | 64,498,841 |  |  | $ | 36,429,000 |  |  | $ | 100,927,841 |
Total revenue |  |  | 483,478,752 |  |  |  | 36,429,000 |  |  |  | 519,907,752 |
Provision for income taxes |  |  | 12,173,610 |  |  |  | 10,186,030 |  |  |  | 22,359,640 |
Net income |  |  | 34,024,521 |  |  |  | 26,242,970 |  |  |  | 60,267,491 |
Net income attributable to noncontrolling interest |  |  | 26,337,701 |  |  |  | 23,094,788 |  |  |  | 49,432,489 |
Net income attributable to Apollo Medical Holdings, Inc. |  | $ | 7,686,820 |  |  | $ | 3,148,182 |  |  | $ | 10,835,002 |
Earnings per share - basic |  | $ | 0.23 |  |  | $ | 0.10 |  |  | $ | 0.33 |
Earnings per share - diluted |  | $ | 0.21 |  |  | $ | 0.08 |  |  | $ | 0.29 |
The table below presents the impact of the adoption of Topic 606 on the Company’s consolidated balance sheet.
|  | December 31, 2018 |
|  | Under ASC |  |  | Effect of ASC |  |  | As Reported |
|  | 605 |  |  | 606 |  |  | Under ASC 606 |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Receivables, net – related party |  | $ | 12,292,325 |  |  | $ | 36,429,000 |  |  | $ | 48,721,325 |
Total assets |  |  | 476,570,049 |  |  |  | 36,429,000 |  |  |  | 512,999,049 |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |
Income taxes payable |  |  | 1,435,831 |  |  |  | 10,186,030 |  |  |  | 11,621,861 |
Deferred tax liability |  |  | 17,181,362 |  |  |  | 2,434,573 |  |  |  | 19,615,935 |
Mezzanine equity |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interest in Allied Pacific of California IPA |  |  | 202,022,241 |  |  |  | 23,094,788 |  |  |  | 225,117,029 |
Shareholders’ equity |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 14,640,021 |  |  |  | 3,148,182 |  |  |  | 17,788,203 |
Total liabilities, mezzanine equity and stockholders' equity |  | $ | 476,570,049 |  |  | $ | 36,429,000 |  |  | $ | 512,999,049 |
The cumulative effect of changes made to the Company’s consolidated balance sheet as of January 1, 2018 for the adoption of Topic 606 were as follows:
|  | Balance at December 31, 2017 |  |  | Adjustments due to Topic 606 |  |  | Balance at January 1, 2018 |
Current Assets |  |  |  |  |  |  |  |  |  |  |  |
Receivables, net – related party |  | $ | 12,514,492 |  |  | $ | 11,600,000 |  |  | $ | 24,114,492 |
Liabilities, Mezzanine Equity and Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Noncurrent Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax liability |  | $ | 24,916,598 |  |  | $ | 3,246,098 |  |  | $ | 28,162,696 |
Mezzanine equity |  |  |  |  |  |  |  |  |  |  |  |
Noncontrolling interest in Allied Pacific of California IPA |  | $ | 172,129,744 |  |  | $ | 7,351,434 |  |  | $ | 179,481,178 |
Stockholders’ Equity |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  | $ | 1,734,531 |  |  | $ | 1,002,468 |  |  | $ | 2,736,999 |
The Company operates as one reportable segment, the healthcare delivery segment, and in only a single state, California. The Company disaggregates revenue from contracts by service type and by payor. 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 each payor type for the year ended December 31, 2018 and 2017:
Year Ended December 31, |  | 2018 |  |  | 2017 |
Commercial |  | $ | 197,008,079 |  |  | $ | 116,947,692 |
Medicare |  |  | 187,862,209 |  |  |  | 120,448,509 |
Medicaid |  |  | 90,850,313 |  |  |  | 92,590,894 |
Other third parties |  |  | 44,187,151 |  |  |  | 26,368,835 |
Revenue |  | $ | 519,907,752 |  |  | $ | 356,355,930 |

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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