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Investments in Other Entities - Equity Method | 9 Months Ended
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Sep. 30, 2019
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Other Entities - Equity Method | Investments in Other Entities - Equity Method Equity Method Investment Summary Investments in other entities – equity method consisted of the following:
| September 30, 2019 |  | December 31, 2018
LaSalle Medical Associates – IPA Line of Business | $ | 6,426,903 |  |  | $ | 7,054,888 |
Pacific Medical Imaging & Oncology Center, Inc. | 1,542,506 |  |  | 1,359,494 |
Universal Care, Inc. | 8,794,659 |  |  | 2,635,945 |
Accountable Health Care - related party | — |  |  | 4,977,957 |
Diagnostic Medical Group | 2,714,008 |  |  | 2,257,346 |
Pacific Ambulatory Surgery Center, LLC | — |  |  | 285,198 |
531 W. College, LLC – related party | 16,139,073 |  |  | 16,273,152 |
MWN, LLC – related party | 222,956 |  |  | 33,000 |
| $ | 35,840,105 |  |  | $ | 34,876,980 |
LaSalle Medical Associates - IPA Line of Business 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 is also an IPA of independently contracted doctors, hospitals and clinics, delivering high quality care to more than 319,000 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 September 30, 2019 and 2018, APC recorded losses and income from this investment of $0.4 million and $0.2 million, respectively, in the accompanying condensed consolidated statements of income. For the nine months ended September 30, 2019 and 2018, APC recorded losses from this investment of $2.8 million and $0.8 million, respectively, in the accompanying condensed consolidated statements of income. During the period ended September 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 $6.4 million and $7.1 million at September 30, 2019 and December 31, 2018, respectively. LMA’s summarized balance sheets at September 30, 2019 and December 31, 2018 and summarized statements of operations for the nine months ended September 30, 2019 and 2018 with respect to its IPA line of business are as follows: Balance Sheets
| September 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash and cash equivalents | $ | 3,237,833 |  |  | $ | 18,444,702 |
Receivables, net | 7,778,735 |  |  | 2,897,337 |
Other current assets | 3,526,319 |  |  | 5,459,442 |
Loan receivable | 2,250,000 |  |  | 1,250,000 |
Restricted cash | 680,216 |  |  | 667,414 |
Total assets | $ | 17,473,103 |  |  | $ | 28,718,895 |
Liabilities and Stockholders’ (Deficit) Equity
| September 30, 2019 |  | December 31, 2018
Current liabilities | $ | 22,953,961 |  |  | $ | 26,837,814 |
Stockholders’ (deficit) equity | (5,480,858 | ) |  | 1,881,081 |
Total liabilities and stockholders’ (deficit) equity | $ | 17,473,103 |  |  | $ | 28,718,895 |
Statements of Operations
| Nine Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2018
Revenues | $ | 144,569,818 |  |  | $ | 177,696,760 |
Expenses | 155,581,757 |  |  | 180,445,655 |
Net loss | $ | (11,011,939 | ) |  | $ | (2,748,895 | )
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 $0.7 million and $0.7 million, for the three months ended September 30, 2019 and 2018, respectively, and fees of approximately $2.1 million and $1.9 million for the nine months ended September 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 September 30, 2019 and 2018, APC recorded income from this investment of approximately $31,230 and $4,990, respectively, in the accompanying condensed consolidated statements of income. For the nine months ended September 30, 2019 and 2018, APC recorded income from this investment of $0.2 million and $41,571, 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 September 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 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 September 30, 2019 and 2018, the Company recorded income and losses from this investment of approximately $0.6 million and $4.6 million, respectively, in the accompanying condensed consolidated statements of income. During the nine months ended September 30, 2019 and 2018, the Company recorded income and losses from this investment of approximately $6.2 million and $2.9 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balances of $8.8 million and $2.6 million at September 30, 2019 and December 31, 2018, respectively. UCI’s balance sheets at September 30, 2019 and December 31, 2018 and statements of income for the nine months ended September 30, 2019 and 2018 are as follows: Balance Sheets
| September 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash | $ | 29,568,915 |  |  | $ | 27,812,520 |
Receivables, net | 62,787,671 |  |  | 46,978,703 |
Other current assets | 33,786,968 |  |  | 18,670,350 |
Other assets | 10,799,827 |  |  | 661,621 |
Property and equipment, net | 3,319,680 |  |  | 2,786,996 |
Total assets | $ | 140,263,061 |  |  | $ | 96,910,190 |
Liabilities and Stockholders’ Deficit
| September 30, 2019 |  | December 31, 2018
Current liabilities | $ | 120,698,226 |  |  | $ | 89,731,133 |
Other liabilities | 25,067,577 |  |  | 25,024,043 |
Stockholders’ deficit | (5,502,742 | ) |  | (17,844,986 | )
Total liabilities and stockholders’ deficit | $ | 140,263,061 |  |  | $ | 96,910,190 |
Statements of Income
| Nine Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2018
Revenues | $ | 372,181,425 |  |  | $ | 240,633,955 |
Expenses | 370,597,312 |  |  | 246,765,335 |
Income before benefit from income taxes | 1,584,113 |  |  | (6,131,380 | )
Benefit from income taxes | (11,010,394 | ) |  | (130,023 | )
Net income (loss) | $ | 12,594,507 |  |  | $ | (6,001,357 | )
Accountable Health Care – Related Party 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 Health Care currently has a network of over 400 primary and 700 specialty care physicians, and five community and regional hospital medical centers that provide quality health care services to more than 89,000 members of three 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 Health Care under the equity method of accounting. On August 30, 2019 APC and APC-LSMA, in connection with the settlement of a dispute with Dr. Jayatilaka, acquired the remaining outstanding shares of capital stock (comprising 75%) in Accountable Health Care in exchange for $7.3 million. In addition to the payment of $7.3 million APC assumed all liabilities and assets of Accountable Health Care (See Note 3). The Company recognized a gain of approximately $1.8 million as a result of the transaction , which represented the difference between the fair value of the 25% ownership held and the Company's basis at the time of acquisition. Such gain is included in income from equity method investment in the accompanying condensed consolidated statements of income. Effective September 1, 2019, Accountable Health Care's financial result is included in the condensed consolidated balance sheets as of September 30, 2019 and the condensed consolidated statements of income for the three and nine months ended September 30, 2019. 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 September 30, 2019 and 2018, APC recorded income from this investment of $0.3 million and $0.2 million, respectively, in the condensed consolidated statements of income. For the nine months ended September 30, 2019 and 2018, APC recorded income from this investment of $0.7 million and $0.9 million, respectively, in the condensed consolidated statements of income. During the nine months ended September 30, 2019 the Company received dividends from its investment in DMG of $0.2 million. The accompanying condensed consolidated balance sheets include the related investment balances of $2.7 million and $2.3 million as of September 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 nine months ended September 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 nine months ended September 30, 2018, APC recorded income from this investment of $0.1 million and $0.3 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. 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 $16.1 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 September 30, 2019 and December 31, 2018. For the three and nine months ended September 30, 2019, APC recorded losses from its investment in 531 W. College LLC of $0.1 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balance of $16.1 million and $16.3 million, respectively, related to APC’s investment at September 30, 2019 and APC's and NMM's investments at December 31, 2018. 531 W. College LLC’s balance sheets at September 30, 2019 and December 31, 2018 and statements of operations for the nine months ended September 30, 2019 and 2018 are as follows: Balance Sheet
| September 30, 2019 |  | December 31, 2018
Assets |  |  |
Cash | $ | 31,986 |  |  | $ | 158,088 |
Other current assets | 24,750 |  |  | 16,137 |
Other assets | 70,000 |  |  | 70,000 |
Property and equipment, net | $ | 33,412,652 |  |  | $ | 33,394,792 |
Total assets | $ | 33,539,388 |  |  | $ | 33,639,017 |
Liabilities and Members’ Equity |  |  |
Current liabilities | $ | 1,261,243 |  |  | $ | 1,007,413 |
Stockholders’ equity | 32,278,145 |  |  | 32,631,604 |
Total liabilities and members’ equity | $ | 33,539,388 |  |  | $ | 33,639,017 |
Statements of Operation
| Nine Months Ended September 30, 2019 |  | Nine Months Ended September 30, 2018
Revenues | — |  |  | — |
Expenses | 779,958 |  |  | 181,359 |
Loss from operations | (779,958 | ) |  | (181,359 | )
Other Income | $ | 426,500 |  |  | $ | 25,650 |
Net loss | $ | (353,458 | ) |  | $ | (155,709 | )
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 nine months ended September 30, 2019, NMM invested an additional $0.3 million for working capital purposes. For the three and nine months ended September 30, 2019, APC recorded losses from its investment in MWN LLC of $0.1 million, respectively, in the accompanying condensed consolidated statements of income. The accompanying condensed consolidated balance sheets include the related investment balance of $0.2 million and $33,000 as of September 30, 2019 and December 31, 2018, respectively. Investment in privately held entity that does not report net asset value per share MediPortal, LLC 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 will grant APC upon completion of its health portal. As of September 30, 2019, the health portal has not been completed. 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. AchievaMed On July 1, 2019, NMM and AchievaMed, Inc. a California corporation ("AchievaMed") entered into an agreement in which NMM would purchase 50% of the aggregate shares of capital stock of AchievaMed over a period of time not to exceed five years. As a result of this transaction NMM invested $0.5 million for a 10% interest. The related investment balance of $0.5 million is included in "Investment in a privately held entity that does not report net asset value per share" in the accompanying condensed consolidated balance sheet as of September 30, 2019.

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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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