Mergers and Acquisitions (Tables)
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3 Months Ended |
Mar. 31, 2018 |
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| Schedule of Business Acquisitions, by Acquisition |
Total estimated purchase consideration consisted of the following: | Equity consideration (1) | | $ | 61,092,050 | | | Estimated fair value of ApolloMed preferred stock held by NMM (2) | | | 19,118,000 | | | Estimated fair value of NMM’s noncontrolling interest in APAACO (3) | | | 5,129,000 | | | Estimated fair value of the outstanding ApolloMed stock options (4) | | | 187,333 | | | Total estimated purchase consideration | | $ | 85,526,383 | | Immediately following the Effective Time, pre-Merger ApolloMed stockholders continued to hold an aggregate of 6,109,205 shares of ApolloMed common stock.
| | (2) | Estimated fair value of ApolloMed’s preferred shares held by NMM | NMM currently owns all the shares of ApolloMed Series A preferred stock and Series B preferred stock, which was acquired prior to the Merger. As part of the Merger, the ApolloMed Series A preferred stock and Series B preferred stock is remeasured at fair value and included as part of the consideration transferred to ApolloMed. The fair value of the Series A preferred stock and Series B preferred stock is reflective of the liquidation preferences, claims of priority and conversion option values thereof. In aggregate, the Series A and Series B preferred stock were valued to be $19,118,000. The valuation methodology was based on an Option Pricing Method (“OPM”) which utilized the observable publicly traded common stock price in valuing the Series A preferred stock and the Series B preferred stock within the context of the capital structure of the Company. OPM assumptions included an expected term of 2 years, volatility rate of 37.9%, and a risk-free rate of 1.8%. The fair value of the liquidation preference for the Series A preferred stock and the Series B preferred stock was determined to be $12,745,000 and the fair value of the conversion option was determined to be $6,373,000 or an aggregate total fair value of $19,118,000.
| | (3) | Estimated fair value of NMM’s 50% share of APA ACO Inc. | Prior to the Merger, APAACO was owned 50% by ApolloMed and 50% NMM. NMM’s noncontrolling interest in APAACO has been remeasured at fair value as of the closing date and is added to the consideration transferred to ApolloMed as a result of NMM relinquishing its equity investment in APAACO in order to obtain control of ApolloMed. The fair value of NMM’s noncontrolling interest in APAACO has been estimated to be $5,129,000 using the discounted cash flow method and NMM recorded a gain on investment for the same amount to reflect the fair value of this investment prior the Merger. | | (4) | Estimated fair value of the ApolloMed outstanding stock options | The estimated fair value of the outstanding ApolloMed stock options is included in consideration transferred in accordance with ASC 805. The outstanding ApolloMed stock options are expected to vest in conjunction with the Merger due to a pre-existing change-of-control provision associated with the awards. There is no future service requirement.
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| Business Combination, Equity consideration |
| Number of shares of the combined company that would be owned by pre-Merger ApolloMed stockholders (1)
| | | 6,109,205 | | | Multiplied by the price per share of ApolloMed’s common stock (2)
| | $ | 10.00 | | | Equity consideration | | $ | 61,092,050 | | | | (1) | Represents the number of shares of the combined company that pre-Merger ApolloMed stockholders would own at closing of the Merger. | | | (2) | Represents the closing price of ApolloMed’s common stock on December 8, 2017. |
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| Schedule of Recognized Identified Assets Acquired and Liabilities Assumed |
Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of ApolloMed, the accounting acquiree, are recorded at the Merger date fair values and added to those of NMM, the accounting acquirer. The following table sets forth the preliminary allocation of the purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed of ApolloMed and MMG (see “MMG Transaction” below), with the excess recorded as goodwill: | Assets acquired | | | | | | Cash and cash equivalents | | $ | 36,367,555 | | | Accounts receivable, net | | | 7,261,588 | | | Other receivables | | | 3,211,028 | | | Prepaid expenses | | | 249,193 | | | Property, plant and equipment, net | | | 1,114,332 | | | Restricted cash | | | 745,220 | | | Fair value of intangible assets acquired | | | 14,984,000 | | | Deferred tax assets | | | 2,301,972 | | | Other assets | | | 217,241 | | | Total assets acquired | | $ | 66,452,129 | | | Liabilities assumed | | | | | | Accounts payable and accrued liabilities | | $ | 8,632,893 | | | Medical liabilities | | | 39,353,540 | | | Line of credit | | | 25,000 | | | Convertible note payable, net | | | 5,376,215 | | | Convertible note payable - related party | | | 9,921,938 | | | Noncontrolling interest | | | 3,142,000 | | | Total liabilities assumed and noncontrolling interest | | $ | 66,451,586 | | | Net liabilities assumed | | $ | (913,468) | | | Goodwill | | $ | 85,525,840 | |
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| Business Acquisition, Pro Forma Information |
The pro forma combined historical results, as if ApolloMed had been acquired as of January 1, 2017, are estimated as follows (unaudited): | | | Three Months
Ended
March 31, 2017 | | | Net revenues | | $ | 98,467,260 | | | Net loss attributable to Apollo Medical Holdings, Inc. | | $ | (351,982) | | | Weighted average common shares outstanding: | | | | | | Basic | | | 33,601,022 | | | Earnings per share: | | | | | | basic | | $ | (0.01) | | | Weighted average common shares outstanding: | | | | | | diluted | | | 33,601,022 | | | Earnings per share: | | | | | | diluted | | $ | (0.01) | |
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