Saturday, June 21, 2014

Apollo Medical - Nothing but Net

Note:  This is a "guest column" written by a friend of Growth Stock Insider (Jody Cain of Financial Profiles).  The information has been obtained from sources believed to be reliable but it is not guaranteed either bgy the author or Growth Stock Insider.

Apollo Medical Holdings, Inc. (ApolloMed) (AMEH: $0.53) is a leading integrated healthcare services company for patients, hospitals, health plans, physicians and other key healthcare stakeholders. ApolloMed’s mission is to provide high-quality, cost-effective inpatient and outpatient care for all patients with a particular focus on acute, high-risk and senior populations.  In addition to providing hospitalist, ICU and physician advisory services at more than 50 hospitals, facilities and clinics, ApolloMed provides medical management and care coordination for more than 1,000 physicians and tens of thousands of patients through its value-based, results-driven solutions. ApolloMed has been providing the solutions that lead to measureable results for nearly a decade and has core networks in California, Ohio and Mississippi.

ApolloMed is successfully capitalizing on changing healthcare dynamics:  ApolloMed’s goals are aligned with the current industry dynamics of providing high-quality, cost-efficient healthcare services.  Healthcare costs currently top $2.7 trillion in the U.S., representing about 18% of the total U.S. GDP, with more than 50% going to hospitals and physicians.  These costs continue to rise, driven in part by increasing numbers of older Americans who account for high levels of healthcare expenditures, and by more Americans gaining healthcare coverage under the Affordable Care Act.  Fee-for-service healthcare plans lead to inefficiencies based on the absence of a comprehensive, integrated approach.  Health plans are moving away from the fee-for-service framework to a more integrated accountable care model.  ApolloMed has the capability to assume a full range of financial risk offerings.

ApolloMed has a proven ability to grow healthcare networks:  ApolloMed offers inpatient and outpatient solutions and has undergone rapid growth by building networks that include hospitalist services, Accountable Care Organization (ACO), independent physician associations (IPA) and outpatient clinics.  The company is validating its model by developing partnerships with industry leaders, including Fresenius Medical Care for end-stage renal disease and a strategic partnership; Boehringer Ingelheim for COPD chronic care management; and Rite Aid for community-based health treatment for patients with chronic and poly-chronic conditions.

Driving revenues through “Best in Class” medical management and operational efficiencies:  ApolloMed provides the management and data analysis infrastructure to support improved case management and physician-led programs.  The company’s incentive are aligned with physicians and hospitals.  Its financial risk offerings include Low Risk through traditional contract billing or physician staffing through hospitalists services and clinics (more than 80% of fiscal 2014 revenues); shared savings through its ACO, which is a 50/50 split in cost-savings with Medicare (ApolloMed showed a $3.1 million preliminary interim cost savings with potential distribution in 2H14); and partial and full Risk through its IPAs. This is a capitated model with health plans providing a per-member/per-month fee and ApolloMed’s IPA assuming all responsibility for patient care and financials.

ApolloMed is positioned for aggressive growth through its defined strategy.  The company strengthened its balance sheet to support growth through a strategic investment from partner Fresenius Medical Care for up to $12 million announced in April 2014.  The investment includes $2 million in equity at $1 per share, which is 2Xs the current stock price.  The company is focused on strategic acquisitions and partnerships that expand its network and service offerings.  The company is also looking to improve the economics of its ACO and IPA through its increasing scale.  The company has developed a platform and infrastructure that can be replicated in additional geographies. 

ApolloMed is physician led by Chief Executive Officer Warren Hosseinion, M.D., who founded the company with Chief Medical Officer Adrian Vazquez, M.D. in 2001.  Recently the company announced the appointment of Mitchell R. Creem as CFO, who is a seasoned healthcare executive with more than 30 years of industry experience, including CEO for the Keck Hospital of USC and USC Norris Cancer Hospital and Associate Vice Chancellor and Chief Financial Officer for the UCLA Medical Science.  Senior management is rounded by Chief Strategy Officer Mark Meyers, who has more than 30 years of healthcare experience and is the former Senior Vice President of Operations for Dignity Health.

This blog contains certain forward-looking statements with respect to Apollo Medical Holdings, Inc.  Forward-looking statements are statements that are not descriptions of historical facts and include statements regarding management's intentions, beliefs, expectations, plans or predictions of the future, within the meaning of the Private Securities Litigation Reform Act of 1995. Because such statements include risks, uncertainties and contingencies, actual results may differ materially and in adverse ways from those expressed or implied by such forward-looking statements. Additional information concerning Apollo Medical Holdings, Inc. and its business including additional factors that could materially and adversely affect its financial results including, but not limited to, the risks described in its annual report on Form 10-K and in other filings with the SEC.

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