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Investments in Other Entities | 12 Months Ended
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Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Other Entities |
| 7. | Investments in Other Entities
Equity Method Investments in other entities – equity method consisted of the following:
Years ended December 31, |  | 2018 |  |  | 2017 |
Universal Care, Inc. |  | $ | 2,635,945 |  |  | $ | 8,609,455 |
LaSalle Medical Associates – IPA Line of Business |  |  | 7,054,888 |  |  |  | 9,452,767 |
Diagnostic Medical Group |  |  | 2,257,346 |  |  |  | 1,847,411 |
Pacific Medical Imaging & Oncology Center, Inc. |  |  | 1,359,494 |  |  |  | 1,400,693 |
Pacific Ambulatory Surgery Center, LLC |  |  | 285,198 |  |  |  | 593,198 |
Accountable Health Care IPA – related party |  |  | 4,977,957 |  |  |  | - |
531 W. College, LLC – related party |  |  | 16,273,152 |  |  |  | - |
MWN, LLC – related party |  |  | 33,000 |  |  |  | - |
|  | $ | 34,876,980 |  |  | $ | 21,903,524 |
LaSalle Medical Associates LaSalle Medical Associates (“LMA”) was founded by Dr. Albert Arteaga in 1996 and currently operates four neighborhood medical centers through its network of more than 2,100 PCP and Specialists providers, treating children, adults and seniors in San Bernardino County. LMA’s patients are primarily served by Medi-Cal and they also accept Blue Cross, Blue Shield, Molina, Care 1 st , Health Net and Inland Empire Health Plan. LMA is also an IPA of independently contracted doctors, hospitals and clinics, delivering high quality care to more than 410,000 patients in Fresno, Kings, Los Angeles, Madera, Riverside, San Bernardino and Tulare Counties. During 2012, APC-LSMA and LMA entered into a share purchase agreement whereby APC-LSMA invested $5.0 million for a 25% interest in LMA’s IPA line of business. NMM has a management services agreement with LMA. APC accounts for its investment in LMA under the equity method as APC has the ability to exercise significant influence, but not control over LMA’s operations. For the year ended December 31, 2018, APC recorded a net loss of $2.4 million from its investment in LMA as compared to net income of $0.9 million for the year ended December 31, 2017, in the accompanying consolidated statements of income. During the year ended December 31, 2017, APC received dividends of $1.0 million, from LMA. The investment balance was $7.1 million and $9.5 million at December 31, 2018 and 2017, respectively. LMA’s IPA line of business summarized balance sheets at December 31, 2018 and 2017 and summarized statements of operations for the years ended December 31, 2018 and 2017 are as follows (unaudited): Balance Sheets
December 31, |  | 2018 (unaudited) |  |  | 2017 (unaudited) |
Assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 18,444,702 |  |  | $ | 21,065,105 |
Receivables, net |  |  | 2,897,337 |  |  |  | 2,433,116 |
Other current assets |  |  | 5,459,442 |  |  |  | 1,565,606 |
Loan receivable |  |  | 1,250,000 |  |  |  | 1,250,000 |
Restricted cash |  |  | 667,414 |  |  |  | 662,109 |
Total assets |  | $ | 28,718,895 |  |  | $ | 26,975,936 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current liabilities |  | $ | 26,837,814 |  |  | $ | 20,353,337 |
Stockholders’ equity |  |  | 1,881,081 |  |  |  | 6,622,599 |
Total liabilities and stockholders’ equity |  | $ | 28,718,895 |  |  | $ | 26,975,936 |
Statements of Operations
Years ended December 31, |  | 2018 (unaudited) |  |  | 2017 (unaudited) |
Revenues |  | $ | 239,031,485 |  |  | $ | 195,143,984 |
Expenses |  |  | 251,738,193 |  |  |  | 188,265,085 |
(Loss) Income from operations |  |  | (12,706,708 | ) |  |  | 6,878,899 |
Other Income |  |  | 173,356 |  |  |  | - |
(Loss) Income before income tax (benefit) provision |  |  | (12,533,352 | ) |  |  | 6,878,899 |
Income tax (benefit) provision |  |  | (3,334,332 | ) |  |  | 3,083,333 |
Net (loss) income |  | $ | (9,199,020 | ) |  | $ | 3,795,566 |
Pacific Medical Imaging and Oncology Center, Inc. PMIOC was incorporated in 2004 in the state of California. PMIOC provides comprehensive diagnostic imaging services using state-of-the-art technology. PMIOC offers high quality diagnostic services such as MRI/MRA, PET/CT, CT, nuclear medicine, ultrasound, digital x-rays, bone densitometry and digital mammography at their facilities. In July 2015, APC-LSMA and PMIOC entered into a share purchase agreement whereby APC-LSMA invested $1.2 million for a 40% ownership in PMIOC. APC and PMIOC have an Ancillary Service Contract together whereby PMIOC provides covered services on behalf of APC to enrollees of the plans of APC. Under the Ancillary Service Contract APC paid PMIOC fees of $2.5 million and $2.3 million for the years ended December 31, 2018 and 2017, respectively. APC accounts for its investment in PMIOC under the equity method of accounting as APC has the ability to exercise significant influence, but not control over PMIOC’s operations. During the year ended December 31, 2018, PMIOC recorded a net loss of $41,199 from its investment as compared to net income of $0.1 million for the year ended December 31, 2017, in the accompanying consolidated statements of income and has an investment balance of $1.4 million at December 31, 2018 and 2017, respectively. Universal Care, Inc. Universal Care, Inc. (“UCI”) is a privately held health plan that has been in operation since 1985 in order to help its members through the complexities of the healthcare system. UCI holds a license under the California Knox-Keene Health Care Services Plan Act (Knox-Keene Act) to operate as a full-service health plan. UCI contracts with the CMS under the Medicare Advantage Prescription Drug Program. On August 10, 2015, UCAP, an entity solely owned 100% by APC with APC’s executives, Dr. Thomas Lam, Dr. Pen Lee and Dr. Kenneth Sim, as designated managers, purchased from UCI 100,000 shares of UCI class A-2 voting common stock (comprising 48.9% of the total outstanding UCI shares, but 50% of UCI’s voting common stock) for $10 million. APC accounts for its investment in UCI under the equity method of accounting as APC has the ability to exercise significant influence, but not control over UCI’s operations. During the years ended December 31, 2018 and 2017, APC recorded losses from this investment of $6.0 million and $2.3 million, respectively, in the accompanying consolidated statements of income and has an investment balance of $2.6 million and $8.6 million at December 31, 2018 and 2017, respectively. UCI’s balance sheets at December 31, 2018 and 2017 and statements of operations for the years ended December 31, 2018 and 2017 are as follows: Balance Sheets
December 31, |  | 2018 (unaudited) |  |  | 2017 (unaudited) |
Assets |  |  |  |  |  |  |  |
Cash |  | $ | 27,812,520 |  |  | $ | 21,872,894 |
Receivables, net |  |  | 46,978,703 |  |  |  | 18,618,760 |
Other current assets |  |  | 18,670,350 |  |  |  | 13,021,520 |
Other assets |  |  | 661,621 |  |  |  | 3,754,470 |
Property and equipment, net |  |  | 2,786,996 |  |  |  | 1,576,621 |
Total assets |  | $ | 96,910,190 |  |  | $ | 58,844,265 |
Liabilities and stockholders’ deficit |  |  |  |  |  |  |  |
Current liabilities |  | $ | 89,731,133 |  |  | $ | 54,421,532 |
Other liabilities |  |  | 25,024,043 |  |  |  | 10,051,952 |
Stockholders’ deficit |  |  | (17,844,986 | ) |  |  | (5,629,219 | )
Total liabilities and stockholders’ deficit |  | $ | 96,910,190 |  |  | $ | 58,844,265 |
Statements of Operations
Years ended December 31, |  | 2018 (unaudited) |  |  | 2017 (unaudited) |
Revenues |  | $ | 326,719,634 |  |  | $ | 188,389,384 |
Expenses |  |  | 335,242,582 |  |  |  | 193,196,938 |
Loss before income tax provision (benefit) |  |  | (8,522,948 | ) |  |  | (4,807,554 | )
Income tax provision (benefit) |  |  | 3,692,818 |  |  |  | (36,835 | )
Net loss |  | $ | (12,215,766 | ) |  | $ | (4,770,719 | )
Diagnostic Medical Group APC accounts for its 40% investment in Diagnostic Medical Group (“DMG”), a California professional corporation, under the equity method of accounting as APC-LSMA, a designated shareholder professional corporation, has the ability to exercise significant influence, but not control over DMG’s operations. APC-LSMA is controlled and consolidated by APC who is the primary beneficiary of this VIE. APC recorded income from this investment of $1.0 million and $0.4 million in 2018 and 2017, respectively, in the accompanying consolidated statements of income. During the years ended December 31, 2018 and 2017, APC received dividends of $0.6 million and $0.2 million, respectively, from DMG. The investment balance was $2.3 million and $1.8 million at December 31, 2018 and 2017, respectively. Pacific Ambulatory Surgery Center, LLC Pacific Ambulatory Surgery Center, LLC (“PASC”), a California limited liability company, is a multi-specialty outpatient surgery center that is certified to participate in the Medicare program and is accredited by the Accreditation Association for Ambulatory Health Care. PASC has entered into agreements with organizations such as healthcare service plans, independent practice associations, medical groups and other purchasers of healthcare services for the arrangement of the provision of outpatient surgery center services to subscribers or enrollees of such health plans. APC accounts for its 40% investment in PASC under the equity method of accounting as APC has the ability to exercise significant influence, but not control over PASC’s operations. APC recorded a loss from this investment of $0.3 million in 2018 as compared to income of $0.2 million in 2017, in the accompanying consolidated statements of income and has an investment balance of $0.3 million and $0.6 million at December 31, 2018 and 2017, respectively. Accountable Health Care, IPA – Related Party Accountable Health Care IPA (“Accountable”) is a California professional medical corporation that has served the local community in the greater Los Angeles County area through a network of physicians and health care providers for more than 20 years. Accountable currently has a network of over 400 primary and 700 specialty care physicians, and eight community and regional hospital medical centers that provide quality health care services to more than 160,000 members of seven federally qualified health plans and multiple product lines, including Medi-Cal, Commercial, Medicare and Healthy Families. On September 21, 2018, APC and NMM each exercised their option to convert their respective $5.0 million loans into shares of Accountable capital stock (see Note 8). As a result, APC’s $5.0 million loan was converted into a 25% equity interest with the remaining $5.0 million loan held by NMM to be converted into an equity interest that will be determined based on a third party valuation of Accountable’s current enterprise value, which has not been completed as of the filing of this Report. APC accounts for its investment in Accountable under the equity method of accounting. During the year ended December 31, 2018, the Company recorded losses from this investment of $22,043 in the accompanying consolidated statement of income. The accompanying consolidated balance sheet includes the related investment balance of $5.0 million at December 31, 2018.
Accountable’s balance sheet at December 31, 2018 and statement of operations for the year ended December 31, 2018 are as follows: Balance Sheet
December 31, |  | 2018 (unaudited) |
Assets |  |  |  |
Cash |  | $ | 5,582,837 |
Receivables, net |  |  | 11,246,477 |
Other current assets |  |  | 30,940 |
Other assets |  |  | 1,312,768 |
Property and equipment, net |  |  | 138,690 |
Total assets |  | $ | 18,311,712 |
Liabilities and Stockholders’ Deficit |  |  |
Current liabilities |  | $ | 16,824,083 |
Other liabilities |  |  | 19,500,000 |
Stockholders’ deficit |  |  | (18,012,371 | )
Total liabilities and stockholders’ deficit |  | $ | 18,311,712 |
Statement of Operations
Year ended December 31, |  | 2018 (unaudited) |
Revenues |  | $ | 96,204,337 |
Expenses |  |  | 99,690,049 |
Loss before income tax provision |  |  | (3,485,712 | )
Income tax provision |  |  | 800 |
Net loss* |  | $ | (3,486,512 | )
| * | APC’s allocation of net loss commenced on September 21, 2018.
531 W. College LLC – Related Party In June 2018, College Street Investment LP, a California limited partnership (“CSI”), APC and NMM entered into an operating agreement to govern the limited liability company, 531 W. College, LLC and the conduct of its business, and to specify their relative rights and obligations. CSI, APC and NMM, each owns 50%, 25% and 25%, respectively, of member units based on initial capital contributions of $16.7 million, $8.3 million, and $8.3 million, respectively. An agreement of purchase and sale and joint escrow instructions (“Purchase Agreement”) with an effective date of April 10, 2018 was entered into between 531 W. College, LLC and Societe Francaise De Bienfaisance Mutuelle De Los Angeles, a California nonprofit corporation, pursuant to which 531 W. College LLC agreed to purchase a former hospital located in Los Angeles, California. The total purchase price of the real estate was $33.3 million. In June 2018, APC, NMM and AMHC Healthcare, Inc. on behalf of CSI, wired $8.3 million, $8.3 million and $16.7 million, respectively into an escrow account for the benefit of 531 W. College, LLC to purchase the hospital pursuant to the Purchase Agreement. The transaction closed on June 28, 2018. APC and NMM accounts for its investment in 531 W. College, LLC under the equity method of accounting as APC and NMM have the ability to exercise significant influence, but not control over the operations of this joint venture. APC and NMM’s investment is presented as an investment in equity method in the accompanying consolidated balance sheet as of December 31, 2018. As of December 31, 2018, NMM and APC has recorded losses from its investment in 531 W. College LLC of $0.2 million, respectively, in the accompanying consolidated statement of income. The accompanying consolidated balance sheet includes the related investment balance of $16.3 million related to NMM and APC’s investment at December 31, 2018. 531 W. College LLC’s balance sheet and statement of operations at December 31, 2018 is as follows: Balance Sheet
December 31, |  | 2018 (unaudited) |
Assets |  |  |  |
Cash |  | $ | 158,088 |
Other current assets |  |  | 16,137 |
Other assets |  |  | 70,000 |
Property and equipment, net |  |  | 33,394,792 |
Total assets |  | $ | 33,639,017 |
Liabilities and Stockholders’ Equity |  |  |  |
Current liabilities |  | $ | 1,007,413 |
Stockholders’ equity |  |  | 32,631,604 |
Total liabilities and stockholders’ equity |  | $ | 33,639,017 |
Statement of Operations
Year ended December 31, |  | 2018 (unaudited) |
Revenues |  | $ | - |
Expenses |  |  | 875,771 |
Loss before other income |  |  | (875,771 | )
Other income |  |  | 162,451 |
Net loss |  | $ | (713,320 | )
MWN LLC – Related Party On December 18, 2018, NMM along with 6 Founders LLC, a California limited liability company doing business as Pacific6 Enterprises (“Pacific6”), and Health Source MSO Inc., a California corporation (“HSMSO”) entered into an operating agreement to govern MWN Community Hospital, LLC and the conduct of its business and to specify their relative rights and obligations. NMM, Pacific6, and HSMSO each owns 33.3% of membership shares based on each member’s initial capital contributions of $3,000 and working capital contributions of $30,000. As of December 31, 2018, NMM’s investment balance of $33,000 is included in investments in other entities - equity method in the accompanying consolidated balance sheet. Investment in privately held entity that does not report net asset value per share In May 2018, APC purchased 270,000 membership interests of MediPortal LLC, a New York limited liability company, for $0.4 million or $1.50 per membership interest, which represented approximately 2.8 % ownership. APC also received a 5-year warrant to purchase 270,000 membership interests. A 5-year option to purchase an additional 380,000 membership interests and a 5-year warrant to purchase 480,000 membership interests are contingent upon the portal completion date, which has not been completed as of December 31, 2018. As APC does not have the ability to exercise significant influence, and lacks control, over the investee, this investment is accounted for using a measurement alternative which allows the investment to be measured at cost, adjusted for observable price changes and impairments, with changes recognized in net income.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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