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Investments in Other Entities | 6 Months Ended
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Jun. 30, 2019
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Other Entities | Investments in Other Entities Equity Method Investment Summary Investments in other entities – equity method consisted of the following:
| June 30, 2019 |  | December 31, 2018
LaSalle Medical Associates – IPA Line of Business | $ | 6,827,190 |  |  | $ | 7,054,888 |
Pacific Medical Imaging & Oncology Center, Inc. | 1,511,276 |  |  | 1,359,494 |
Universal Care, Inc. | 8,159,432 |  |  | 2,635,945 |
Accountable Health Care IPA- related party | 665,372 |  |  | 4,977,957 |
Diagnostic Medical Group | 2,434,938 |  |  | 2,257,346 |
Pacific Ambulatory Surgery Center, LLC | — |  |  | 285,198 |
531 W. College, LLC – related party | 16,238,833 |  |  | 16,273,152 |
MWN, LLC – related party | 66,000 |  |  | 33,000 |
| $ | 35,903,041 |  |  | $ | 34,876,980 |
LaSalle Medical Associates Founded by Dr. Albert Arteaga in 1996, LaSalle Medical Associates (“LMA”) operates four neighborhood medical centers employing more than 120 dedicated healthcare professionals, treating children, adults and seniors in San Bernardino County, California. LMA’s patients are primarily served by Medi-Cal. LMA accepts Blue Cross, Blue Shield, Molina, Care 1st, 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 313,000 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 three months ended June 30, 2019 and 2018, APC recorded losses from this investment of $1.3 million and $0.6 million, respectively, in the accompanying condensed consolidated statements of income. For the six months ended June 30, 2019 and 2018, APC recorded losses from this investment of $2.4 million and $1.0 million, respectively, in the accompanying condensed consolidated statements of income. During the period ended June 30, 2019, the Company contributed $2.1 million to LMA as part of its 25% interest. The accompanying condensed consolidated balance sheets include the related investment balance of $6.8 million and $7.1 million at June 30, 2019 and December 31, 2018, respectively. LMA’s summarized balance sheets at June 30, 2019 and December 31, 2018 and summarized statements of operations for the six months ended June 30, 2019 and 2018 with respect to its IPA line of business are as follows: Balance Sheets
| June 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash and cash equivalents | $ | 6,338,344 |  |  | $ | 18,444,702 |
Receivables, net | 6,864,902 |  |  | 2,897,337 |
Other current assets | 3,526,319 |  |  | 5,459,442 |
Loan receivable | 2,250,000 |  |  | 1,250,000 |
Restricted cash | 676,774 |  |  | 667,414 |
Total assets | $ | 19,656,339 |  |  | $ | 28,718,895 |
Liabilities and Stockholders’ (Deficit) Equity
| June 30, 2019 |  | December 31, 2018
Current liabilities | $ | 23,536,048 |  |  | $ | 26,837,814 |
Stockholders’ (deficit) equity | (3,879,709 | ) |  | 1,881,081 |
Total liabilities and stockholders’ (deficit) equity | $ | 19,656,339 |  |  | $ | 28,718,895 |
Statements of Operations
| Six Months Ended June 30, 2019 |  | Six Months Ended June 30, 2018
Revenues | $ | 93,434,476 |  |  | $ | 110,311,466 |
Expenses | 102,845,266 |  |  | 113,744,898 |
Net loss | $ | (9,410,790 | ) |  | $ | (3,433,432 | )
Pacific Medical Imaging and Oncology Center, Inc. Incorporated in California in 2004, 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 its 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 interest in PMIOC. Pursuant to an Ancillary Service Contract with APC, PMIOC provides covered services on behalf of APC to enrollees under APC's health plans. Under the Ancillary Service Contract, APC paid PMIOC fees of approximately $0.6 million and $0.8 million, for the three months ended June 30, 2019 and 2018, respectively, and fees of approximately $1.4 million and $1.2 million for the six months ended June 30, 2019 and 2018, 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 three months ended June 30, 2019 and 2018, APC recorded income from this investment of approximately $81,315 and $62,606 respectively, in the accompanying condensed consolidated statements of income. For the six months ended June 30, 2019 and 2018, APC recorded income from this investment of $0.2 million and $36,581, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balances of $1.5 million and $1.4 million at June 30, 2019 and December 31, 2018, respectively. Universal Care, Inc. UCI is a privately held health plan that has been in operation since 1985. UCI holds a license under the California Knox-Keene Health Care Services Plan Act to operate as a full-service health plan. UCI contracts with CMS under the Medicare Advantage Prescription Drug Program. On August 10, 2015, UCAP purchased from UCI 100,000 shares of UCI class A-2 voting common stock from UCI for $10.0 million, which shares comprise 48.9% of UCI's total outstanding shares and 50% of UCI’s voting common stock. 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 three months ended June 30, 2019 and 2018, the Company recorded income from this investment of approximately $4.5 million and $1.7 million, respectively, in the accompanying condensed consolidated statements of income. During the six months ended June 30, 2019 and 2018, the Company recorded income from this investment of approximately $5.5 million and $1.7 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balances of $8.2 million and $2.6 million at June 30, 2019 and December 31, 2018, respectively. UCI’s balance sheets at June 30, 2019 and December 31, 2018 and statements of income for the six months ended June 30, 2019 and 2018 are as follows: Balance Sheets
| June 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash | $ | 44,503,392 |  |  | $ | 27,812,520 |
Receivables, net | 48,820,720 |  |  | 46,978,703 |
Other current assets | 37,563,651 |  |  | 18,670,350 |
Other assets | 673,893 |  |  | 661,621 |
Property and equipment, net | 3,071,398 |  |  | 2,786,996 |
Total assets | $ | 134,633,054 |  |  | $ | 96,910,190 |
Liabilities and Stockholders’ Deficit
| June 30, 2019 |  | December 31, 2018
Current liabilities | $ | 115,966,346 |  |  | $ | 89,731,133 |
Other liabilities | 25,005,609 |  |  | 25,024,043 |
Stockholders’ deficit | (6,338,901 | ) |  | (17,844,986 | )
Total liabilities and stockholders’ deficit | $ | 134,633,054 |  |  | $ | 96,910,190 |
Statements of Income
| Six Months Ended June 30, 2019 |  | Six Months Ended June 30, 2018
Revenues | $ | 247,517,017 |  |  | $ | 149,825,595 |
Expenses | 239,388,926 |  |  | 146,614,334 |
Income before benefit from income taxes | 8,128,091 |  |  | 3,211,261 |
Benefit from income taxes | (3,167,384 | ) |  | (289,200 | )
Net income (loss) | $ | 11,295,475 |  |  | $ | 3,500,461 |
Accountable Health Care, IPA – Related Party Accountable Health Care IPA, a Professional Medical Corporation (“Accountable Health Care”) 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 Health Care capital stock (see Note 6). 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 Health Care’s current enterprise value. APC accounts for its investment in Accountable under the equity method of accounting. During the three and six months ended June 30, 2019, the Company recorded losses from this investment of $3.5 million and $4.3 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balances of $0.7 million and $5.0 million at June 30, 2019 and December 31, 2018, respectively. On July 24, 2019, an agreement was reached between Accountable Health Care and APC-LSMA whereby APC-LSMA will assume all liabilities and assets of Accountable Health Care, in exchange for payment to Dr. Jay of $7.3 million (see Note 17). Accountable Health Care’s balance sheets at June 30, 2019 and December 31, 2018 and statements of operations for the six months ended June 30, 2019 are as follows: Balance Sheets
| June 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash | $ | 3,501,839 |  |  | $ | 5,582,837 |
Receivables, net | — |  |  | 11,246,477 |
Other current assets | 30,940 |  |  | 30,940 |
Other assets | 1,312,768 |  |  | 1,312,768 |
Property and equipment, net | 138,690 |  |  | 138,690 |
Total Assets | $ | 4,984,237 |  |  | $ | 18,311,712 |
Liabilities and Stockholders’ Deficit
| June 30, 2019 |  | December 31, 2018
Current Liabilities | $ | 20,793,426 |  |  | $ | 16,824,083 |
Other Liabilities | 19,500,000 |  |  | 19,500,000 |
Stockholders’ deficit | (35,309,189 | ) |  | (18,012,371 | )
Total liabilities and stockholders’ deficit | $ | 4,984,237 |  |  | $ | 18,311,712 |
Statement of Operation
| Six Months Ended June 30, 2019
Revenues | $ | 46,813,524 |
Expenses | 64,063,864 |
Loss before provision for income taxes | (17,250,340 | )
Provision for income taxes | — |
Net loss* | $ | (17,250,340 | )
* | APC’s allocation of net loss commenced on September 21, 2018.
Diagnostic Medical Group On May 14, 2016, David C.P. Chen M.D., Inc., a California professional corporation doing business as Diagnostic Medical Group (“DMG”), David C.P. Chen M.D., individually and APC-LSMA, entered into a share purchase agreement whereby APC-LSMA acquired a 40% ownership interest in DMG for total cash consideration of $1.6 million. APC accounts for its investment in DMG under the equity method of accounting as APC has the ability to exercise significant influence, but not control over DMG’s operations. For the three months ended June 30, 2019 and 2018, APC recorded income from this investment of $0.2 million and $0.4 million, respectively, in the condensed consolidated statements of income. For the six months ended June 30, 2019 and 2018, APC recorded income from this investment of $0.4 million and $0.7 million, respectively, in the condensed consolidated statements of income. During the six months ended June 30, 2019 the Company received dividends from its investment in DMG of $0.3 million. The accompanying condensed consolidated balance sheets include the related investment balances of $2.4 million and $2.3 million as of June 30, 2019 and December 31, 2018, respectively. 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 healthcare service plans, IPAs, medical groups and other purchasers of healthcare services for the provision of outpatient surgery center services to health plan subscribers and enrollees. On November 15, 2016, PASC and APC, entered into a membership interest purchase agreement whereby PASC sold 40% of its aggregate issued and outstanding membership interests to APC for total consideration of $0.8 million. During the six months ended June 30, 2019, the Company recognized an impairment loss of $0.3 million related to its investment in PASC as the Company does not believe it will recover its investment balance. Such impairment loss is included in loss from equity method investment in the accompanying condensed consolidated statements of income. APC accounted for its 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. For the three and six months ended June 30, 2018, APC recorded income from this investment of $87,407 and $0.1 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balance of $0.3 million as of December 31, 2018. In 2019, APC advanced $0.3 million to PASC for working capital purposes. The repayment of the advance is based on collections of PASC’s outstanding AR, and accordingly, the entire amount has been classified under “Other Assets” in the accompanying condensed consolidated balance sheets in the amount of $0.3 million as of June 30, 2019. 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. On June 29, 2018, 531 W. College, LLC closed its purchase of a non-operational hospital located in Los Angeles from Societe Francaise De Bienfaisance Mutuelle De Los Angeles, a California nonprofit corporation, for a total purchase price of $33.3 million. On April 23, 2019, NMM and APC entered into an agreement whereby NMM assigned and APC assumed NMM's 25% membership interest in 531 W. College, LLC for approximately $8.3 million. Subsequently, APC has a 50% ownership in 531 W. College LLC with a total investment balance of approximately $16.2 million. APC accounts for its investment in 531 W. College, LLC under the equity method of accounting as APC has the ability to exercise significant influence, but not control over the operations of this joint venture. APC's investment is presented as an investment in other entities - equity method in the accompanying condensed consolidated balance sheet as of June 30, 2019 and December 31, 2018 For the six months ended June 30, 2019, APC recorded losses from its investment in 531 W. College LLC of $34,319 in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balance of $16.2 million related to APC’s investment at June 30, 2019. 531 W. College LLC’s balance sheets at June 30, 2019 and December 31, 2018 and statements of operations for the six months ended June 30, 2019 are as follows: Balance Sheet
| June 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash | 141,616 |  |  | 158,088 |
Other current assets | — |  |  | 16,137 |
Other assets | 70,000 |  |  | 70,000 |
Property and equipment, net | $ | 33,394,792 |  |  | $ | 33,394,792 |
Total assets | $ | 33,606,408 |  |  | $ | 33,639,017 |
Liabilities and Members’ Equity |  |  |
Current liabilities | $ | 1,128,741 |  |  | $ | 1,007,413 |
Stockholders’ equity | 32,477,667 |  |  | 32,631,604 |
Total liabilities and members’ equity | $ | 33,606,408 |  |  | $ | 33,639,017 |
Statements of Operation
| June 30, 2019
Revenues | — |
Expenses | 538,437 |
Loss from operations | (538,437 | )
Other Income | $ | 384,500 |
Net loss* | $ | (153,937 | )
* | The Company’s investment in 531 W. College, LLC commenced on June 27, 2018.
MWN LLC – Related Party On December 18, 2018, NMM, 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 the membership shares based on each member’s initial capital contributions of $3,000 and working capital contributions of $30,000. During the six months ended June 30, 2019, NMM invested an additional $33,000 for working capital purposes. The accompanying condensed consolidated balance sheets include the related investment balance of $66,000 and $33,000 as of June 30, 2019 and December 31, 2018, respectively. 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 an approximately 2.8% ownership interest. In connection with the initial purchase, APC received a 5-year warrant to purchase an additional 270,000 membership interests. Additionally, APC received a 5-year option to purchase an additional 380,000 membership interests and a 5-year warrant to purchase 480,000 membership interests, which MediPortal LLC granted APC upon completion of its health portal, which has not been completed as of June 30, 2019. 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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