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Investments in Other Entities | 12 Months Ended
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Dec. 31, 2020
Equity Method Investments and Joint Ventures [Abstract] |
Investments in Other Entities | Investments in Other Entities Equity Method Investments in other entities – equity method consisted of the following (in thousands):
|  | December 31, 2019 |  | Allocation of Net Income (Loss) |  | Additional/ Initial Investment |  | Contribution |  | Sale |  | December 31, 2020
LaSalle Medical Associates – IPA Line of Business |  | $ | 6,396 |  |  | $ | 276 |  |  | $ | 6,375 |  |  | $ | — |  |  | $ | — |  |  | $ | 13,047 |
Pacific Medical Imaging & Oncology Center, Inc. |  | 1,396 |  |  | 17 |  |  | — |  |  | — |  |  | — |  |  | 1,413 |
Universal Care, Inc. |  | 1,438 |  |  | 3,560 |  |  | — |  |  | — |  |  | (4,998) |  |  | — |
Diagnostic Medical Group |  | 2,334 |  |  | 279 |  |  | — |  |  | — |  |  | — |  |  | 2,613 |
531 W. College, LLC – related party |  | 16,698 |  |  | (448) |  |  | — |  |  | 950 |  |  | — |  |  | 17,200 |
MWN, LLC – related party |  | 165 |  |  | 10 |  |  | — |  |  | — |  |  | (175) |  |  | — |
One MSO, LLC - related party |  | — |  |  | — |  |  | 2,395 |  |  | — |  |  | — |  |  | 2,395 |
Tag-6 Medical Investment Group, LLC - related party |  | — |  |  | — |  |  | 4,516 |  |  | — |  |  | — |  |  | 4,516 |
Tag-8 Medical Investment Group, LLC - related party |  | — |  |  | — |  |  | 2,108 |  |  | — |  |  | — |  |  | 2,108 |
|  | $ | 28,427 |  |  | $ | 3,694 |  |  | $ | 15,394 |  |  | $ | 950 |  |  | $ | (5,173) |  |  | $ | 43,292 |
LaSalle Medical Associates - IPA Line of Business LMA was founded by Dr. Albert Arteaga in 1996 and currently operates six neighborhood medical centers through its network of more than 2,300 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 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 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. On December 18, 2020, the Company exercised its option to convert the promissory note totaling $6.4 million due from Dr. Arteaga into an additional 21.25% interest in LMA's IPA line of business. As a result, APC-LSMA's interest in LMA's IPA line of business as of December 31, 2020 was 46.25% (See Note 7). 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, 2020, APC recorded net income of $0.3 million from its investment in LMA as compared to a net loss of $2.8 million for the year ended December 31, 2019, in the accompanying consolidated statements of income. The investment balance was $13.0 million and $6.4 million at December 31, 2020 and 2019, respectively. LMA’s unaudited summarized balance sheets at December 31, 2020 and 2019 and unaudited summarized statements of operations for the years ended December 31, 2020 and 2019 are as follows (in thousands): Balance Sheets
|  | December 31, 2020 (unaudited) |  | December 31, 2019 (unaudited)
Assets |  |  |  |
Cash and cash equivalents |  | $ | 9,350 |  |  | $ | 6,345 |
Receivables, net |  | 3,918 |  |  | 5,123 |
Other current assets |  | 881 |  |  | 3,526 |
Loan receivable |  | 2,250 |  |  | 2,250 |
Restricted cash |  | 691 |  |  | 684 |
Total assets |  | $ | 17,090 |  |  | $ | 17,928 |
Liabilities and Stockholders’ Deficit |  |  |  |
Current liabilities |  | $ | 21,589 |  |  | $ | 23,530 |
Stockholders’ deficit |  | (4,499) |  |  | (5,602) |
Total liabilities and stockholders’ deficit |  | $ | 17,090 |  |  | $ | 17,928 |
Statements of Operations
|  | Year Ended December 31, 2020 (unaudited) |  | Year Ended December 31, 2019 (unaudited)
Revenues |  | $ | 186,964 |  |  | $ | 194,020 |
Expenses |  | 185,724 |  |  | 205,153 |
Income (loss) from operations |  | 1,240 |  |  | (11,133) |
Other income |  | 8 |  |  | — |
Income (loss) before income tax benefit |  | 1,248 |  |  | (11,133) |
Income tax benefit |  | — |  |  | — |
Net income (loss) |  | $ | 1,248 |  |  | $ | (11,133) |
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 $2.2 million and $2.7 million for the years ended December 31, 2020 and 2019, 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, 2020, APC recorded net income of $17,470 from its investment as compared to net loss of $36,384 for the year ended December 31, 2019 in the accompanying consolidated statements of income and has an investment balance of $1.4 million and $1.4 million at December 31, 2020 and 2019, respectively. 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. In August 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. On April 30, 2020, UCAP completed the sale of its 48.9% ownership interest in UCI to Bright for approximately $69.2 million in cash proceeds (including $16.5 million as repayment of indebtedness owed to APC), plus non-cash consideration consisting of shares of Bright Health, Inc.’s preferred stock having an estimated fair value of approximately $36.2 million on the date of sale, included in investments in privately held entities. The fair value of the preferred shares was determined utilizing a market approach which includes significant unobservable inputs (Level 3) including forecasted revenue along with estimates of revenue multiples, volatility and time-to-liquidity. In addition, pursuant to the terms of the stock purchase agreement, APC has a beneficial interest in the equity method investment sold. The estimated fair value of such interest on April 30, 2020 was $15.7 million and is included in "Other assets" in the accompanying consolidated balance sheets. The beneficial interest is the result of a gross margin provision in the stock purchase agreement which entitles UCAP to potentially receive additional cash and preferred shares (currently held in an escrow account with cash of $15.6 million and preferred shares with an estimated fair value of $6.4 million, total estimated fair value of $22.0 million on the date of sale) based on the gross margin of UCI for calendar year 2020 as measured against a target. The amount to be received varies dependent upon the gross margin as compared to the target but cannot exceed the amounts that are in the escrow account. Additionally, the stock purchase agreement includes a tangible net equity provision that may result in the receipt or payment of additional amounts based on a comparison of final tangible net equity of UCI on the date of sale (determined with the benefit of one year of hindsight) as compared to the estimated tangible net equity at the time of sale. It is expected that settlement of the beneficial interest will begin in the second half of 2021. The Company determined the fair value of the beneficial interest using an income approach which includes significant unobservable inputs (Level 3). Specifically, the Company utilized a probability weighted discounted cash flow model using a risk-free treasury rate to estimate fair value which considered various scenarios of gross margin adjustment and the impact of each adjustment to the expected proceeds from the escrow account and assigned probabilities to each such scenario in determining fair value. The gross margin adjustment is defined as three times any deficit in actual gross margin of UCI for the year ended December 31, 2020 below a target gross margin unless such deficit is within a specific collar amount. The gain on sale of equity method investment recognized in connection with this transaction was determined as follows (in thousands):
| Amount
Cash proceeds (excludes proceeds to settle indebtedness owed to APC from UCI) | $ | 52,743 |
Preferred shares in Bright Health, Inc. | 36,179 |
Beneficial interest in UCI | 15,723 |
Less: Carrying value of equity method investment on date of sale | (4,998) |
Gain on sale of equity method investment | $ | 99,647 |
During the years ended December 31, 2020 and 2019, APC recorded income from this investment of $3.6 million and loss of $1.2 million, respectively, in the accompanying consolidated statements of income. As a result of the sale, there was no investment balance as of December 31, 2020 as compared to an investment balance of $1.4 million as of December 31, 2019. UCI’s unaudited balance sheet at December 31, 2019 and unaudited statements of operations for the four months ended April 30, 2020 and twelve months ended December 31, 2019 are as follows (in thousands): Balance Sheet
| December 31, 2019 (unaudited)
Assets |
Cash | $ | 33,890 |
Receivables, net | 63,843 |
Other current assets | 38,280 |
Other assets | 882 |
Property and equipment, net | 4,021 |
Total assets | $ | 140,916 |
Liabilities and stockholders’ deficit |
Current liabilities | $ | 128,330 |
Other liabilities | 33,133 |
Stockholders’ deficit | (20,547) |
Total liabilities and stockholders’ deficit | $ | 140,916 |
Statements of Operations
|  | Four Months Ended April 30, 2020 (unaudited) |  | Year Ended December 31, 2019 (unaudited)
Revenues |  | $ | 195,308 |  |  | $ | 500,375 |
Expenses |  | 189,028 |  |  | 502,567 |
Income (loss) before income tax provision |  | 6,280 |  |  | (2,192) |
Income tax provision |  | — |  |  | 258 |
Net income (loss) |  | $ | 6,280 |  |  | $ | (2,450) |
Diagnostic Medical Group APC accounts for its 40% investment in DMG, 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 recorded income from this investment of $0.3 million and $0.3 million in 2020 and 2019, respectively, in the accompanying consolidated statements of income. During the years ended December 31, 2020 and 2019, APC received dividends of $0 and $0.2 million, respectively, from DMG. The investment balance was $2.6 million and $2.3 million as of December 31, 2020 and 2019, respectively. Accountable Health Care, IPA 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 336 primary and 559 specialty care physicians, and is affiliated with one community regional hospital medical center that provides quality health care services to more than 73,000 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. 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. On August 30, 2019, APC and APC-LSMA entered into separate agreements with Dr. Jayatilaka to acquire the remaining outstanding shares of capital stock (comprising 75%) of Accountable Health Care in exchange for $7.3 million in cash. In addition to the payment of $7.3 million, APC assumed all liabilities and assets of Accountable Health Care. 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 loss from equity method investment in the accompanying consolidated statements of income for the year ended December 31, 2019. Effective September 1, 2019, Accountable Health Care's financial results are included in the consolidated balance sheets and the consolidated statements of income for the year ended December 31, 2019 and going forward. 531 W. College LLC In June 2018, College Street Investment LP, a California limited partnership (“CSI”), a related party, 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. In June 2018, APC, NMM and AHMC Healthcare, Inc. ("AHMC") 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. 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 of equity method in the accompanying consolidated balance sheets as of December 31, 2020 and 2019. During the years ended December 31, 2020 and 2019, NMM and APC recorded losses from its investment in 531 W. College LLC of $0.4 million and $0.2 million, respectively, in the accompanying consolidated statements of income. During the years ended December 31, 2020 and 2019, APC contributed $1.0 million and $0.7 million, respectively to 531 W. College, LLC as part of its 50% interest. The accompanying consolidated balance sheet includes the related investment balance of $17.2 million and $16.7 million, respectively, related to APC's investment at December 31, 2020 and 2019. 531 W. College LLC’s unaudited balance sheets at December 31, 2020 and 2019 and unaudited statements of operations for the years ended December 31, 2020 and 2019 are as follows (in thousands): Balance Sheets
|  | December 31, 2020 (unaudited) |  | December 31, 2019 (unaudited)
Assets |  |  |  |
Cash |  | $ | 648 |  |  | $ | 139 |
Other current assets |  | 17 |  |  | 17 |
Other assets |  | 70 |  |  | 70 |
Property and equipment, net |  | 33,697 |  |  | 33,581 |
Total assets |  | $ | 34,432 |  |  | $ | 33,807 |
Liabilities and Stockholders’ Equity |  |  |  |
Current liabilities |  | $ | 32 |  |  | $ | 1,061 |
Stockholders’ equity |  | 34,400 |  |  | 32,746 |
Total liabilities and stockholders’ equity |  | $ | 34,432 |  |  | $ | 33,807 |
Statements of Operations
|  | Year Ended December 31, 2020 (unaudited) |  | Year Ended December 31, 2019 (unaudited)
Revenues |  | $ | — |  |  | $ | — |
Expenses |  | 1,053 |  |  | 1,010 |
Loss from operations |  | (1,053) |  |  | (1,010) |
Other income |  | 64 |  |  | 475 |
Provision for Income Taxes |  | 3 |  |  | — |
Net loss |  | $ | (992) |  |  | $ | (535) |
MWN LLC 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 ("MWN") 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. NMM invested an additional $0.3 million, as part of its 33.3% interest, for working capital purpose. On October 30, 2020 NMM sold its shares in MWN to Pacific6 for $0.5 million in the form of a promissory note (see Note 7) and as a result of the sale, NMM recognized a gain of $0.2 million. One MSO LLC On December 31, 2020, APC purchased a 50% membership interest in One MSO LLC ("One MSO") for $2.4 million. One MSO owns an office building in Monterey Park, California that is currently being leased to tenants including NMM. Tag-6 Medical Investment Group, LLC and Tag-8 Medical Investment Group, LLC On December 31, 2020, APC purchased a 50% member interest in Tag-6 Medical Investment Group, LLC ("Tag 6") for $4.5 million. On December 31, 2020, APC purchased 50% member interest in Tag-8 Medical Investment Group, LLC ("Tag 8") for $2.1 million. Tag 6 and Tag 8 both own vacant land in Alhambra, California with plans to develop medical offices in the future. Both Tag 6 and Tag 8 shares common ownership with certain board members of APC and as such are considered related parties. Investment in privately held entities 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 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 were contingent upon the portal completion date, however the Company did not exercise the option after completion of the portal. 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. During the year ended December 31, 2020, there were no observable price changes to APC's investment. AchievaMed On July 1, 2019, NMM and AchievaMed, Inc., a California corporation ("AchievaMed"), entered into an agreement in which NMM would purchase up to 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 entities" in the accompanying consolidated balance sheet as of December 31, 2020. As NMM 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. During the year ended December 31, 2020, there were no observable price changes to NMM's investment. Bright Health, Inc. In April 2020, UCAP completed the sale of its 48.9% ownership interest in UCI to Bright for approximately $69.2 million in cash proceeds (including $16.5 million as repayment of indebtedness owed to APC), plus non-cash consideration consisting of shares of Bright Health, Inc.’s preferred stock having an estimated fair value on the transaction date of approximately $36.2 million. The related investment balance of $36.2 million is included in “Investment in privately held entities” in the accompanying consolidated balance sheet as of December 31, 2020. During the year ended December 31, 2020, there were no observable price changes to the Company's investment and no indicators of impairment.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
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